Broadridge Financial Solutions, Inc. Q1 FY2026 earnings call

Management Statement and Operational Highlights

• Strong First Quarter Results: Broadridge delivered 8% recurring revenue growth constant currency and 51% growth in adjusted EPS, with recurring revenue outlook raised to the higher end of the 5%-7% range.
• Strategy Execution: Focus on democratizing/digitizing investing, simplifying/innovating trading, and modernizing wealth management; pipeline growing as clients seek to accelerate change.
• Governance Business: Governance revenues up 5%; work on shareholder engagement solutions (e.g., pilot with ExxonMobil); completed tuck-in acquisitions of Signal and iJoin.
• Capital Markets Business: Revenues up 6% driven by new sales and higher trading volumes; tokenization as a megatrend with progress in DLR and Canton Network.
• Wealth Management: Revenues up 22% with progress in onboarding SIS clients.

Segment Performance

• ICS (Governance) Segment: Recurring revenues rose 5% to $518 million, including a 1 point benefit from acquisitions and a 1 point headwind from lower interest rates. Regulatory revenues grew 4% with 7% growth in equity revenue positions and 2% in fund positions. Data-driven fund solutions revenue grew 2%, issuer revenues grew 6%, and customer communications revenues rose 8%.
• GTO (Capital Markets) Segment: Revenues grew 12% in Q1, including 6% organic. Capital Markets revenues grew 6% driven by Global Post Trade solutions and digital asset revenues. Trade volumes rose 17% driven by double-digit growth in equity and fixed income volumes.
• Wealth and Investment Management Segment: Revenues grew 22% driven by 5% organic growth and the SIS acquisition.

Guidance

• Recurring revenue outlook raised to the higher end of the 5%-7% range.
• Reaffirmed guidance for 8%-12% adjusted EPS growth and Closed sales of $290 million to $330 million.
• Expect event-driven revenues to return to historic average of $50 million to $60 million per quarter for the rest of fiscal '26.
• Anticipate mid-teens equity position growth in Q2 and low double-digit full-year growth, with fund positions at mid-single digits.

Risks

• Digital Asset Volatility: GAAP volatility due to fluctuations in Canton Coin values, expected to continue.
• Interest Rate Impact: Lower interest rates have a headwind on certain segments, partially offset by acquisitions and organic growth.

Question and Answer

• Q: On recurring revenue outlook vs EPS reiteration A: Ashima explained that acquisitions from iJoin and Signal, strong underlying business, backlog conversion, position growth, and digital asset revenues contribute to recurring revenue growth, while EPS guidance is maintained due to strategic investments and strong start.
• Q: Canton Coin impact on GAAP EPS A: Timothy noted GAAP volatility is expected, and the company intends to liquidate holdings over time. Ashima added revenue impact is about 1 point to capital markets.
• Q: Impact of government shutdown on sales cycles A: Tim stated no slowdown in conversations due to government shutdown, with strong sales cycle stability and healthy pipeline.
• Q: Digital assets and tokenization role A: Tim discussed tokenization as a megatrend, with applications in multiple asset classes, and Ashima noted Canton Coin revenue impact and balance sheet volatility.
• Q: 2Q EPS guide and event-driven revenue A: Ashima said 2Q EPS is about 13%-15% of full year due to normalization of event-driven revenue.
• Q: Super Validator status and Canton Network returns A: Tim explained Super Validator role is separate from Distributed Ledger Repo, and payment in coins is common. Ashima discussed Canton Coin revenue impact and guidance increase drivers.
• Q: Tokenized equities impact on communications A: Tim said tokenized equities are subject to same regulations, creating opportunity for Broadridge to manage complexity.
• Q: Trade volume growth durability in GTO segment A: Ashima said about 1/3 of GTO revenues tied to trade volumes, with durable growth expected despite not relying on very elevated volumes.