Broadridge(BR) - 2025 Q4 - Annual Report

PART I Business Broadridge is a global financial technology company operating in two segments: Investor Communication Solutions (ICS) and Global Technology and Operations (GTO) - Broadridge operates through two main business segments: Investor Communication Solutions (ICS) and Global Technology and Operations (GTO)[15] Segment Revenue Contribution (Fiscal Years 2025 & 2024) | Segment | FY 2025 Revenue % | FY 2024 Revenue % | | :--- | :--- | :--- | | Investor Communication Solutions (ICS) | ~74% | ~75% | | Global Technology and Operations (GTO) | ~26% | ~25% | - The company's growth strategy is centered on three key themes: driving democratization and digitization in governance, simplifying and innovating trading in capital markets, and modernizing wealth and investment management[48] - As of June 30, 2025, Broadridge had approximately 15,000 full-time associates across 21 countries[84] Investor Communication Solutions The Investor Communication Solutions (ICS) segment provides comprehensive services including regulatory, data-driven fund, corporate issuer, and customer communications solutions - ICS provides Regulatory Solutions, handling the entire proxy materials distribution and voting process for banks, broker-dealers, and corporate issuers[17] - The company offers Data-Driven Fund Solutions to help asset management clients optimize product distribution and maintain compliance using data, analytics, and predictive modeling[27] - Corporate Issuer Solutions provide a single source for shareholder communications, including proxy services, virtual shareholder meetings, SEC filings, and stock transfer agency services[29][30][31] - Customer Communications Solutions support various industries with omni-channel management of transactional, marketing, and regulatory communications through the Broadridge Communications Cloud platform[33][34] Global Technology and Operations The Global Technology and Operations (GTO) segment offers mission-critical SaaS-based infrastructure automating the front-to-back transaction lifecycle for global financial markets - The GTO segment provides a SaaS platform that automates the front-to-back transaction lifecycle for equities, fixed income, mutual funds, and derivatives, covering order capture, clearing, settlement, and regulatory reporting[36] - Capital Markets Solutions offer global, multi-asset-class technology for trade processing, securities financing, and collateral management, processing trades in over 90 markets[39] - Wealth and Investment Management Solutions deliver a modern, open-architecture platform to improve advisor productivity and investor experience, covering digital onboarding, account management, and data-driven digital marketing[42][43][44] Human Capital Management Broadridge's human capital strategy focuses on employee engagement, talent development, and competitive benefits for its approximately 15,000 associates - The company's human capital strategy is centered on the "Service-Profit Chain," which connects engaged associates with client satisfaction and long-term stockholder value[85] - In fiscal year 2025, Broadridge received an 81% overall favorable rating in the annual Great Place to Work survey, with 83% of associates stating it is a "great place to work"[87] - Broadridge invests in employee development through various initiatives, including Broadridge University, leadership programs, tuition reimbursement, and a specialized AI Academy to build foundational AI skills[88] Risk Factors The company faces significant risks from regulatory changes, client concentration, cybersecurity threats, market activity declines, and acquisition integration challenges - Changes in laws and regulations, particularly from the SEC or stock exchanges, could alter client communication requirements and negatively impact the company's services and profitability[98] - Broadridge derives a large percentage of its revenues from a small number of clients; its largest client accounted for approximately 7% of consolidated revenues in fiscal year 2025[101] - Security breaches or cybersecurity incidents represent a significant risk, as the company processes and transfers sensitive personal, confidential, and proprietary data for its clients[102][106] - The company's revenues are susceptible to declines in securities market participation and activity, which can reduce demand for proxy communications, event-driven services, and trade processing[112] - Acquisitions and the integration of acquired businesses present risks, including valuation challenges, complex integration processes, and potential unforeseen liabilities that could adversely affect operating results[137] Unresolved Staff Comments The company reports no unresolved staff comments from the Securities and Exchange Commission - None[143] Cybersecurity Broadridge's cybersecurity program, overseen by the Audit Committee and CISO, integrates into enterprise risk management, adhering to NIST and ISO 27001 standards - The cybersecurity risk management program is part of the overall enterprise risk management (ERM) process, overseen by a management Risk Committee and the Board's Audit Committee[146][150] - The company's information security program is managed by a Chief Information Security Officer (CISO) who reports to the Chief Technology Officer and provides quarterly updates to the Audit Committee[149][150] - Broadridge aligns its program with industry standards, including the NIST Framework and ISO 27001 certification, and employs various technical controls like encryption, monitoring, and penetration testing to protect against threats[145][148] Properties Broadridge operates from 43 facilities, primarily leased, with key production sites for ICS totaling 2.3 million square feet across multiple locations - The company operates from 43 facilities, with 10 leased production-related sites totaling 2.3 million square feet for its ICS business[151] Legal Proceedings The company reports no material pending legal proceedings beyond routine litigation incidental to its business operations - There are no material pending legal proceedings outside of ordinary routine litigation[152] Mine Safety Disclosures This item is not applicable to the company - Not applicable[153] PART II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Broadridge's common stock trades on the NYSE, with the Board approving a quarterly dividend increase and the company repurchasing shares under its program - On August 4, 2025, the Board approved a quarterly cash dividend increase to $0.975 per share, raising the expected annual dividend from $3.52 to $3.90 per share[156] Issuer Purchases of Equity Securities (Q4 FY2025) | Period | Total Shares Purchased | Average Price Paid per Share | Shares Purchased as Part of Program | Remaining Authority (Shares) | | :--- | :--- | :--- | :--- | :--- | | April 2025 | 123,939 | $244.72 | — | 7,251,347 | | May 2025 | 389,483 | $236.24 | 388,140 | 6,863,207 | | June 2025 | 33,993 | $244.66 | 33,990 | 6,829,217 | | Total Q4 | 547,415 | $238.68 | 422,130 | 6,829,217 | Reserved This item is reserved Management's Discussion and Analysis of Financial Condition and Results of Operations Broadridge reported 6% revenue growth to $6.9 billion in FY2025, with operating income up 17% and diluted EPS up 21%, driven by recurring and event-driven revenues and strategic acquisitions Fiscal Year 2025 vs. 2024 Financial Highlights | Metric | FY 2025 | FY 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenues | $6,889.1M | $6,506.8M | $382.3M | 6% | | Operating Income | $1,188.6M | $1,017.1M | $171.4M | 17% | | Net Earnings | $839.5M | $698.1M | $141.4M | 20% | | Diluted EPS | $7.10 | $5.86 | $1.24 | 21% | - Recent acquisition activity includes the purchase of SIS (wealth management solutions in Canada) and CompSci (SEC filing software) in fiscal 2025 for an aggregate price of $193.5 million[169][170] - Key performance indicators showed strong operational growth, with equity positions up 16% and internal trade growth at 13% for fiscal year 2025[188] Cash Flow Summary (FY 2025 vs. 2024) | Cash Flow Activity | FY 2025 ($M) | FY 2024 ($M) | | :--- | :--- | :--- | | Net cash from operating activities | 1,171.3 | 1,056.2 | | Net cash from investing activities | (316.2) | (148.0) | | Net cash from financing activities | (600.8) | (855.5) | | Free cash flow (Non-GAAP) | 1,056.4 | 943.2 | Analysis of Consolidated Statements of Earnings Total revenues increased 6% to $6.9 billion in FY2025, driven by recurring and event-driven growth, leading to a 17% rise in operating income and expanded operating margin Revenue Breakdown and Growth Drivers (FY 2025) | Revenue Type | FY 2025 ($M) | Growth vs. FY 2024 (%) | | :--- | :--- | :--- | | Recurring | 4,507.9 | 7% | | Event-driven | 319.3 | 12% | | Distribution | 2,062.0 | 3% | | Total | 6,889.1 | 6% | Recurring Revenue Growth Drivers: - Net New Business: 3 pts - Internal Growth: 2 pts - Acquisitions: 2 pts - Operating expenses increased by $210.9 million (4%), primarily due to costs from the SIS acquisition, a $58 million impact from higher postage and distribution costs, and expenses related to higher revenues[205][211] - Net interest expense decreased by $15.4 million (11%) to $122.7 million, mainly due to lower average borrowing rates[205] Analysis of Reportable Segments In FY2025, ICS revenue grew 5% and GTO revenue grew 8%, both segments showing increased earnings before income taxes, while Corporate and Other segment loss decreased Segment Revenues (FY 2025 vs. 2024) | Segment | FY 2025 ($M) | FY 2024 ($M) | Change (%) | | :--- | :--- | :--- | :--- | | Investor Communication Solutions | 5,113.0 | 4,857.9 | 5% | | Global Technology and Operations | 1,776.1 | 1,648.9 | 8% | | Total | 6,889.1 | 6,506.8 | 6% | Segment Earnings Before Income Taxes (FY 2025 vs. 2024) | Segment | FY 2025 ($M) | FY 2024 ($M) | Change (%) | | :--- | :--- | :--- | :--- | | Investor Communication Solutions | 1,054.0 | 950.4 | 11% | | Global Technology and Operations | 201.4 | 173.3 | 16% | | Corporate and Other | (196.7) | (246.3) | (20)% | | Total | 1,058.7 | 877.4 | 21% | - ICS recurring revenue growth of 6% was driven by Net New Business (5 pts) and Internal Growth (1 pt)[214] - GTO recurring revenue growth of 8% was driven by organic growth (4 pts) and the acquisition of SIS (4 pts)[216][218] Financial Condition, Liquidity and Capital Resources As of June 30, 2025, Broadridge maintained strong liquidity with $561.5 million in cash and $1.37 billion available credit, supporting its $3.25 billion total debt and future obligations Key Balance Sheet Items (as of June 30) | Item | 2025 ($M) | 2024 ($M) | | :--- | :--- | :--- | | Cash and cash equivalents | 561.5 | 304.4 | | Total Assets | 8,545.0 | 8,242.4 | | Total Debt (Carrying Value) | 3,252.3 | 3,355.1 | | Total Stockholders' Equity | 2,655.1 | 2,168.2 | - As of June 30, 2025, the company had $1,366.5 million in remaining borrowing capacity under its revolving credit facility[243] Contractual Obligations as of June 30, 2025 | Obligation | Total ($M) | Less than 1 Year ($M) | 1-3 Years ($M) | 4-5 Years ($M) | After 5 Years ($M) | | :--- | :--- | :--- | :--- | :--- | :--- | | Debt | 3,263.5 | 500.0 | 880.0 | 883.5 | 1,000.0 | | Interest and facility fee on debt | 352.6 | 121.9 | 115.2 | 93.8 | 21.7 | | Facility and equipment operating leases | 232.7 | 42.7 | 81.1 | 49.7 | 59.3 | | Purchase obligations | 633.7 | 240.7 | 306.8 | 84.5 | 1.7 | | Total | 4,482.6 | 905.3 | 1,383.1 | 1,111.4 | 1,082.7 | Quantitative and Qualitative Disclosures About Market Risk Broadridge faces market risks from interest rate fluctuations and foreign currency exposure, with hedging strategies in place for Euro-based net investments - As of June 30, 2025, $1,012.6 million (31%) of the company's total debt is based on floating interest rates; a hypothetical 100 basis point rate increase would have reduced FY2025 pre-tax earnings by about $13.8 million[257] - Approximately 14% of fiscal year 2025 revenues were generated outside the U.S., exposing the company to foreign currency risk; a hypothetical 10% decrease in key foreign currencies against the U.S. dollar would have lowered FY2025 pre-tax earnings by approximately $23.9 million[258][260] - The company utilizes cross-currency swap derivative contracts with a notional amount of €880 million to hedge a portion of its net investment in Euro-based subsidiaries[259] Financial Statements and Supplementary Data This section presents the company's audited consolidated financial statements for fiscal years 2023-2025, including statements of earnings, balance sheets, and cash flows, along with the independent auditor's unqualified opinion Consolidated Statements of Earnings (Years ended June 30) | (In millions, except per share) | 2025 | 2024 | 2023 | | :--- | :--- | :--- | :--- | | Revenues | $6,889.1 | $6,506.8 | $6,060.9 | | Operating income | $1,188.6 | $1,017.1 | $936.4 | | Net earnings | $839.5 | $698.1 | $630.6 | | Diluted earnings per share | $7.10 | $5.86 | $5.30 | Consolidated Balance Sheets (As of June 30) | (In millions) | 2025 | 2024 | | :--- | :--- | :--- | | Total current assets | $1,817.1 | $1,540.9 | | Total assets | $8,545.0 | $8,242.4 | | Total current liabilities | $1,861.2 | $1,421.8 | | Total liabilities | $5,889.9 | $6,074.2 | | Total stockholders' equity | $2,655.1 | $2,168.2 | Consolidated Statements of Cash Flows (Years ended June 30) | (In millions) | 2025 | 2024 | 2023 | | :--- | :--- | :--- | :--- | | Net cash flows from operating activities | $1,171.3 | $1,056.2 | $823.3 | | Net cash flows from investing activities | $(316.2) | $(148.0) | $(80.4) | | Net cash flows from financing activities | $(600.8) | $(855.5) | $(714.7) | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company reports no changes in or disagreements with its accountants regarding accounting and financial disclosure - None[464] Controls and Procedures Management concluded that disclosure controls and internal control over financial reporting were effective as of June 30, 2025, with no material changes reported - Management concluded that disclosure controls and procedures were effective as of June 30, 2025[466] - Based on an assessment using the COSO framework, management determined that the company's internal control over financial reporting was effective as of June 30, 2025[470] - No material changes in internal control over financial reporting occurred during the fiscal quarter ended June 30, 2025[473] Other Information CEO Timothy C. Gokey adopted a Rule 10b5-1 trading plan on May 14, 2025, for the sale of company securities, set to expire in February 2026 - CEO Timothy C. Gokey adopted a Rule 10b5-1 trading plan on May 14, 2025, for the sale of company securities, which will expire in February 2026[474] Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This item is not applicable to the company - None[476] PART III Directors, Executive Officers and Corporate Governance Information regarding directors, executive officers, and corporate governance is incorporated by reference from the forthcoming definitive proxy statement - Information for this item is incorporated by reference from the forthcoming Proxy Statement[479] Executive Compensation Information regarding executive compensation is incorporated by reference from the forthcoming definitive proxy statement - Information for this item is incorporated by reference from the forthcoming Proxy Statement[480] Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information regarding security ownership is incorporated by reference from the forthcoming definitive proxy statement - Information for this item is incorporated by reference from the forthcoming Proxy Statement[481] Certain Relationships and Related Transactions, and Director Independence Information regarding certain relationships, related transactions, and director independence is incorporated by reference from the forthcoming definitive proxy statement - Information for this item is incorporated by reference from the forthcoming Proxy Statement[482] Principal Accounting Fees and Services Information regarding principal accounting fees and services is incorporated by reference from the forthcoming definitive proxy statement - Information for this item is incorporated by reference from the forthcoming Proxy Statement[483] PART IV Exhibits, Financial Statement Schedules This section lists the financial statements, financial statement schedules, and exhibits filed as part of the Annual Report on Form 10-K - This item lists the financial statements, financial statement schedules, and exhibits filed with the Form 10-K[485] Form 10-K Summary This item is not applicable - Not Applicable[486]