Broadridge(US:BR)2025-05-01 12:30Financial Data and Key Metrics Changes - Broadridge reported strong third quarter results with 8% recurring revenue growth and 9% adjusted EPS growth [7][23] - The company reaffirmed guidance for 6% to 8% recurring revenue growth in constant currency and expects adjusted EPS growth in the middle of the 8% to 12% range [8][42] - Recurring revenues grew 8% to $1,200 million, driven by new sales and higher trade volumes [27][36] Business Line Data and Key Metrics Changes - Governance recurring revenues rose 6%, with equity position growth strengthening to 15% [10][28] - Capital Markets reported 10% recurring revenue growth, benefiting from higher trading volumes and strong demand for global post-trade solutions [13][30] - Wealth and Investment Management revenues grew 13%, driven by the acquisition of SIS [15][30] Market Data and Key Metrics Changes - Market trading volumes have been unusually high, positively impacting Broadridge's technology performance [5][6] - The company has a $450 million revenue backlog, providing strong visibility into growth over the next 12 to 18 months [6][20] - Equity position growth is expected to remain in the mid-teens for the full year, with mutual fund and ETF position growth at 6% [31][95] Company Strategy and Development Direction - Broadridge is focused on digitizing and democratizing investing, simplifying trading, and modernizing wealth management [7][19] - The company aims to help clients reduce costs and drive innovation amid market uncertainty [6][21] - Investments in digital solutions and customer communications are expected to drive future growth [12][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering strong fiscal year results despite market volatility [7][20] - The company noted that periods of uncertainty have historically strengthened its market position [21][43] - Management highlighted the importance of being a trusted partner for clients navigating regulatory changes and market dynamics [22][80] Other Important Information - Broadridge's recurring revenue model provides insulation from market swings, allowing for ongoing growth investments [21][43] - The company is committed to maintaining expense discipline while funding reinvestment in the business [38][40] - Free cash flow for Q3 was $337 million, significantly higher than the previous year [40][41] Q&A Session Summary Question: Demand environment and investment willingness - Management noted a cautious approach from clients regarding new investments, focusing on cost reduction and operational simplification [49][50] Question: Equity position growth and revenue impact - Management highlighted robust growth in revenue positions and smaller positions, which are expected to grow into larger revenue-generating accounts over time [54][56] Question: Sales cycle elongation - Management indicated that elongation in sales cycles is being monitored but has not been linked to specific product lines or geographies [61][62] Question: Margin expansion and planned investments - Management confirmed that they are investing in the business while maintaining margin expansion, with a focus on full-year performance [63][64] Question: Regulatory environment and opportunities - Management expressed optimism about the evolving regulatory landscape and its potential benefits for Broadridge's offerings [80][82] Question: M&A pipeline attractiveness - Management acknowledged uncertainty in the M&A market but indicated that proprietary deals may still present opportunities [103][104]