Broadridge Financial Solutions (NYSE:BR) Q2 2026 Earnings call February 03, 2026 08:30 AM ET Company ParticipantsAlex Kram - Investment AdvisorAshima Ghei - CFOEdings Thibault - Head of Investor RelationsKyle Peterson - Managing DirectorMichael Infante - VP of Equity ResearchPatrick O'Shaughnessy - Managing DirectorTim Gokey - CEOConference Call ParticipantsMatthew Roswell - Research AnalystOperatorG ood morning and welcome to the Broadridge Fiscal Second Quarter 2026 Earnings Conference call. All participa ...

Financial Data and Key Metrics Changes - Broadridge reported a strong second quarter with 8% recurring revenue growth in constant currency and adjusted EPS of $1.59, reflecting a 2% increase year-over-year [4][23] - Total revenue increased by 8% to $1.7 billion, driven by 5 points of growth from recurring revenue, while event-driven revenues declined by $34 million compared to the previous year's record [29][30] - Adjusted operating income margin decreased by 110 basis points to 15.5%, primarily due to lower event-driven revenues [30] Business Line Data and Key Metrics Changes - Governance recurring revenues rose by 9% in constant currency, driven by sales and continued position growth, with total equity position growth at 17% [6][23] - Capital markets recurring revenues grew by 6%, benefiting from balanced demand across front and back office solutions and tokenization revenues [12][25] - Wealth management recurring revenues increased by 11%, propelled by strong organic growth and contributions from recent acquisitions [15][25] Market Data and Key Metrics Changes - U.S. equity markets rose by 16% in calendar 2025, positively impacting client capital markets activity [3] - Investor participation trends remained healthy across both equities and funds, with fund position growth strengthening from 2% in Q1 to 15% in Q2 [7][27] - Event-driven revenues reached $91 million in Q2, contributing to a record $204 million in the first half of the fiscal year [21] Company Strategy and Development Direction - Broadridge is focused on democratizing and digitizing investing, simplifying trading, and modernizing wealth management, with a commitment to balanced capital allocation [5][19] - The company is investing in key product initiatives around tokenization, shareholder engagement, and digital communications to drive future growth [21][22] - Broadridge aims to integrate tokenized and digital assets into its proxy capabilities by the end of the year, addressing the complexities of governance in a tokenized world [11][19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the market backdrop and the accelerating pace of technology, highlighting the potential of tokenization and AI in driving innovation [3][4] - The company reaffirmed its guidance for recurring revenue growth at the higher end of 5%-7% and raised its adjusted EPS growth outlook to 9%-12% [22][34] - Management emphasized the importance of maintaining a client-focused culture to drive success and set the stage for continued growth [20] Other Important Information - Broadridge recorded a $187 million non-cash mark-to-market gain related to its digital asset holdings, bringing the total value of these holdings to $265 million [21][31] - The company completed three tuck-in acquisitions in fiscal 2026, totaling $126 million, including the acquisition of Acolin [22][33] - Free cash flow generated in the first half of fiscal 2026 was $319 million, significantly up from $56 million in the previous year [32] Q&A Session Summary Question: Concerns about tokenization potentially cutting Broadridge out of the process - Management views tokenized equities as a significant opportunity that will create new demand for U.S. equities, emphasizing the complexity of governance that will still require Broadridge's services [36][38] Question: Financial implications of partnerships with J.P. Morgan and Wells Fargo - Management indicated that these partnerships could represent a multi-hundred million dollar market opportunity, enhancing revenue per position in the governance business [42][44] Question: Obstacles for SEC regarding tokenized equities - Management believes that the SEC's concerns about complexity can be addressed, and they do not foresee a need for exemptive relief [48][49] Question: Visibility into closed sales outlook for the second half - Management expressed confidence in the sales pipeline, noting a 20% increase in pipeline creation and reaffirming guidance for closed sales of $290 million-$330 million [54][57] Question: Updates on Canton Network and asset classes - Management confirmed ongoing discussions to expand the Canton Network to additional asset classes and emphasized the importance of real-time capabilities [64][66]