Broadridge Financial Solutions, Inc. · NYSE:BR
Broadridge Financial Solutions — Q2 2023 Earnings Presentation
31 slides from Broadridge Financial Solutions's earnings presentation, Feb 2, 2023
Slide 1: Scaling a Global Fintech Leader
Scaling a Global Fintech Leader EARNINGS CONFERENCE CALL Fiscal Second Quarter 2023 | © 2023 0
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation and other written or oral statements made from time to time by representatives of Broadridge Financial Solutions, Inc. ("Broadridge" or the "Company") contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act
Slide 3: Use of Non-GAAP financial measures, KPIs and Foreign exchange rates
Use of Non-GAAP financial measures, KPIs and Foreign exchange rates Use of Non-GAAP Financial Measures This presentation includes certain Non-GAAP financial measures including Adjusted Operating income, Adjusted Operating income margin, Adjusted Net earnings, Adjusted earnings per share (“EPS”), Fre
Slide 4: Key messages
Key messages Broadridge delivered strong second quarter results including 8% 1 Recurring revenue growth constant currency and 11% Adjusted EPS growth Continued execution highlights strength and resilience of the 2 Broadridge business model Investor participation remained strong, with second quarter
Slide 5: Broadridge is executing across Governance, Capital Markets, and Wealth & Investment Management
Broadridge is executing across Governance, Capital Markets, and Wealth & Investment Management $ in millions; growth rates in constant currency Q2’23 Highlights Extend Governance • 9% equity position growth highlights continued investor participation $467M +10% YoY • Driving innovation in Pass-Throu
Slide 6: Broadridge's business model is built for growth through the economic cycle
Broadridge’s business model is built for growth through the economic cycle Broadridge is delivering on the growth plan we shared at our 2020 Investor Day We have strong market positions based on mission-critical infrastructure 1 that enables corporate governance and powers trading and investing We h
Slide 7: Summary financial results
Summary financial results $ in millions, except per share data SECOND QUARTER SUMMARY FINANCIAL RESULTS 2023 2022 Inc./(Dec.) Recurring revenues $840 $793 6% Constant currency growth – Non-GAAP 8% Total revenues 1,293 1,260 3% Operating income 108 69 57% Adjusted Operating income – Non-GAAP 173 141
Slide 8: Recurring revenue increased 8% in second quarter 2023
Recurring revenue increased 8% in second quarter 2023 $ in millions RECURRING REVENUE GROWTH CONSTANT CURRENCY 16% +8% $840 10% 10% 6 - 9% FY'20 FY'21 FY'22 FY'23 Q2'22 Q2'23 Guidance Information about our use of Non-GAAP measures and reconciliations to GAAP measures may be found on slides 21 – 29 |
Slide 9: Second quarter 2023 segment Recurring revenues
Second quarter 2023 segment Recurring revenues $ in millions ICS RECURRING REVENUES GTO RECURRING REVENUES Constant Currency +10% +6% Growth $467 $373 $181 9% Regulatory Capital Markets $235 12% Data-Driven $96 11% Fund Solutions $27 12% Issuer Wealth & Customer Investment $163 11% $138 (3%) Comms.
Slide 10: Key volume drivers: position and trade growth
Key volume drivers: position and trade growth EQUITY & MUTUAL FUND/ETF POSITION GROWTH FY’21 FY’22 10Y Avg. 1,2 26% 18% 10% 2 10% 14% 8% ITG 3 12% 1% 5% 20% 17% 17% 12% 10% 10% 11% 9% 9% 6% Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 INTERNAL TRADE 1% (6)% 8% 6% 5% GROWTH 1. Q2’22 equity position growth represent
Slide 11: Second quarter 2023 Recurring revenue growth drivers
Second quarter 2023 Recurring revenue growth drivers $ in millions. Pts contribution to growth RECURRING REVENUE GROWTH CONSTANT CURRENCY WAS 8% 8 pts ORGANIC GROWTH 6 pts 4 pts 0 pts 8% 6% (2) pts (2) pts $793 $840 Q2'22 Recurring Closed Sales Client Losses Internal Growth Acquisitions Q2'23 Recurr
Slide 12: Second quarter 2023 Total revenue growth drivers
Second quarter 2023 Total revenue growth drivers $ in millions. Pts contribution to growth SECOND QUARTER 2023 TOTAL REVENUE GROWTH DRIVERS 4 pts 1 pt 3% (2) pts 0 pts $1,293 Q2'22 Total Revenue Recurring Event-Driven Distribution FX Q2'23 Total Revenue QUARTERLY EVENT-DRIVEN REVENUE $70 $65 $63 $58
Slide 13: Operating income margin and Adjusted Operating income margin
Operating income margin and Adjusted Operating income margin OPERATING INCOME MARGIN OPERATING 13.8% 13.6% 13.3% 5.5% 8.3% INCOME MARGIN 13.4% 18.7% ~50bps 18.1% ADJUSTED 17.5% OPERATING 11.2% INCOME MARGIN (NON- GAAP) +40 +60 +60 bps bps bps FY'20 FY'21 FY'22 FY'23 Q2'22 Q2'23 Guidance | © 2023 12
Slide 14: Closed sales remain on track with fiscal year 2023 guidance
Closed sales remain on track with fiscal year 2023 guidance $ in millions CLOSED SALES $280 $270 – $310 $112 $231 $94 FY'21 FY'22 FY'23 H1'22 H1'23 | © 2023 13
Slide 15: Client platform spend and FCF conversion
Client platform spend and FCF conversion $ in millions NET CLIENT PLATFORM SPEND 1 FREE CASH FLOW CONVERSION (LTM)2,3 56% $163 50% 51% $154 48% 41% $114 $97 $78 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 1. Net investments on new client conversions, including development of platform
Slide 16: Capital allocation
Capital allocation $ in millions, except per share data SELECT USES OF CASH YTD’23 TOTAL CAPITAL RETURNS 4 CapEx and $33 Software 1 $578 Client Platform $241 Investments 2 $269 $248 $253 $131 M&A 3 $0 FY'19 FY'20 FY'21 FY'22 FY'23 6 DIVIDENDS PER SHARE $1.94 $2.16 $2.30 $2.56 $2.90 YOY GROWTH 33% 11
Slide 17: Fiscal Year 2023 Guidance
Fiscal Year 2023 Guidance FY’23 Guidance Updates/ Changes Recurring revenue growth 6 - 9% No Change constant currency - Non-GAAP Adjusted Operating income margin Increase of No Change - Non-GAAP ~ 50 bps Adjusted earnings per share growth 7 - 11% No Change - Non-GAAP Closed sales $270M - $310M No Ch
Slide 18: Broadridge is on track to deliver at or above the higher end of our 3-year objectives
Broadridge is on track to deliver at or above the higher end of our 3-year objectives INVESTOR DAY FY20-FY23 FY20-FY23 CAGR GROWTH OBJECTIVES PERFORMANCE 1 Organic Recurring revenue growth 5 – 7% Above Recurring revenue growth 2 7 – 9% Above Adjusted Operating income margin – Non-GAAP 50+ bps/yr In
Slide 19: Appendix
Appendix aoc & Ve Broadridge’
Slide 20: Supplemental Reporting Detail - Product Line Reporting
Supplemental Reporting Detail ‒ Product Line Reporting (Unaudited) 2021 2022 2023 Q2% Dollars in millions FY Q1 Q2 Q3 Q4 FY Q1 Q2 Growth Investor Communication Solutions ("ICS") Regulatory $938 $165 $166 $ 321 $ 423 $1,075 $171 $181 9% Data-driven fund solutions 342 83 89 90 102 364 93 96 9% Issuer
Slide 21: Explanation of Non-GAAP measures and Reconciliation of GAAP to Non-GAAP measures
Explanation of Non-GAAP measures and Reconciliation of GAAP to Non-GAAP measures | © 2023 20
Slide 22: Non-GAAP Measures
Non-GAAP Measures Explanation and Reconciliation of the Company’s Use of Non-GAAP Financial Measures The Company’s results in this presentation are presented in accordance with U.S. generally accepted accounting principles ("GAAP") except where otherwise noted. In certain circumstances, results have
Slide 23: Non-GAAP Measures
Non-GAAP Measures We exclude Acquisition and Integration Costs, IBM Private Cloud Charges, Real Estate Realignment and Covid-19 Related Expenses, Investment Gains, Russia- Related Exit Costs, the Software Charge, and Loss (Gain) on Acquisition-Related Financial Instrument from our Adjusted Operating
Slide 24: Reconciliation of GAAP to Non-GAAP Measures
Reconciliation of GAAP to Non-GAAP Measures (Unaudited) Three Months Ended December 31, 2022 Data-Driven Customer Investor Communication Solutions Regulatory Issuer Total Fund Solutions Comms. Recurring revenue growth (GAAP) 9% 9% 12% 10% 9% Impact of foreign currency exchange 1% 2% —% —% 1% Recurri
Slide 25: Reconciliation of GAAP to Non-GAAP Measures
Reconciliation of GAAP to Non-GAAP Measures (Unaudited) Six Months Ended December 31, 2022 Data-Driven Customer Investor Communication Solutions Regulatory Issuer Total Fund Solutions Comms. Recurring revenue growth (GAAP) 6% 10% 14% 10% 9% Impact of foreign currency exchange —% 2% —% —% 1% Recurrin
Slide 26: Reconciliation of GAAP to Non-GAAP Measures
Reconciliation of GAAP to Non-GAAP Measures (Unaudited) Three Months Ended Dec. 31 Six Months Ended Dec. 31 Dollars in millions 2022 2021 2022 2021 Operating income (GAAP) $107.9 $68.9 $195.4 $172.1 Adjustments: Amortization of Acquired Intangibles and Purchased Intellectual Property 53.7 62.5 109.5
Slide 27: Reconciliation of GAAP to Non-GAAP Measures
Reconciliation of GAAP to Non-GAAP Measures (Unaudited) Three Months Ended Dec. 31 Six Months Ended Dec. 31 Dollars in millions, except per share amounts 2022 2021 2022 2021 Diluted earnings per share (GAAP) $0.48 $0.40 $0.91 $0.97 Adjustments: Amortization of Acquired Intangibles and Purchased Inte
Slide 28: Reconciliation of GAAP to Non-GAAP Measures
Reconciliation of GAAP to Non-GAAP Measures (Unaudited) FY 2021 FY 2022 FY 2023 Dollars in millions Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Net cash flows (used in) provided by operating activities (GAAP) $ 106.2 $ 450.5 $ (135.4) $ 40.8 $ 80.7 $ 457.4 $ (204.5) $ 123.1 Capital expenditures and Software purchases a
Slide 29: Reconciliation of GAAP to Non-GAAP Measures
Reconciliation of GAAP to Non-GAAP Measures (Unaudited) Year ended June 30, Dollars in millions 2022 2021 2020 Operating income (GAAP) $759.9 $678.7 $624.9 Adjustments: Amortization of Acquired Intangibles and Purchased Intellectual Property 250.2 153.7 122.9 Acquisition and Integration Costs 24.5 1
Slide 30: Reconciliation of GAAP to Non-GAAP Measures: Fiscal Year 2023 Guidance
Reconciliation of GAAP to Non-GAAP Measures: Fiscal Year 2023 Guidance (Unaudited) Fiscal Year, 2023 FY23 Recurring revenue growth (a) Impact of foreign currency exchange – Recurring revenue growth constant currency – Non-GAAP 6-9% FY23 Adjusted Operating income margin (b) Operating income margin %
Slide 31: Broadridge Fiscal Second Quarter 2023 Earnings Conference Call
Broadridge Fiscal Second Quarter 2023 Earnings Conference Call Contacts Replay Options W. Edings Thibault Online replay available at Greg Faje broadridge-ir.com Sean Silva broadridgeir@broadridge.com Telephone replay available through February 9, 2023 Live Call Information Domestic Date: February 2,
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