Broadridge Financial Solutions, Inc. · NYSE:BR

Broadridge Financial Solutions — Q3 2021 Earnings Presentation

52 slides from Broadridge Financial Solutions's earnings presentation, May 24, 2021

  1. Slide 1: Scaling a FinTech Leader: Fourth Quarter Fiscal Year 2021 Investor Presentation

    0© 2021 | Scaling a FinTech Leader Fourth Quarter Fiscal Year 2021 Investor Presentation EXHIBIT 99.1

  2. Slide 2: Forward-looking statements

    1© 2021 | 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") may contain “forward-looking statements” within the meaning of the Private Securities Litigati

  3. Slide 3: Forward-looking statements: Itiviti Acquisition

    2© 2021 | Forward-looking statements Factors related to the acquisition of Itiviti Holding AB (“the Itiviti Acquisition”) discussed in this presentation that could cause actual results to differ materially from those contemplated by the forward-looking statements include: • potential litigation rela

  4. Slide 4: Use of Non-GAAP financial measures and KPIs

    3© 2021 | Use of Non-GAAP financial measures and KPIs 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”) and Free cash flow

  5. Slide 5: A clear plan for sustained growth and top quartile TSR

    4© 2021 | A clear plan for sustained growth and top quartile TSR A global Fintech leader addressing a large and growing market Three franchise businesses executing on clear growth strategies Balanced capital allocation driving sustainable and consistent revenue and earnings growth 2014 Invest for Gr

  6. Slide 6: Broadridge is a global Fintech leader

    5© 2021 | Broadridge is a global Fintech leader Managing governance process for more than 80% of U.S. shares Powering $10T per day in fixed income and equity trades Distributing more than 6B critical communications each year 80% SHARES $10 TRILLION 6 BILLION Broadridge powers the critical infrastruc

  7. Slide 7: We have a strong track record of delivering growth and value

    6© 2021 | We have a strong track record of delivering growth and value $1,642 $1,742 $1,897 $2,452 $2,612 $2,760 $3,036 $2.25 $2.47 $2.73 $3.13 $4.19 $4.66 $5.03 0 1 2 3 4 5 6 0 500 1000 1500 2000 2500 3000 3500 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 Recurring revenue Adjusted EPS $M excep

  8. Slide 8: Broadridge has a $46 billion and growing market opportunity

    7© 2021 | Technology and operations spend by global banks is over $190 Billion Broadridge has a $46 billion and growing market opportunity $46B CURRENT OPPORTUNITY $19B GOVERNANCE $15B CAPITAL MARKETS $12B WEALTH

  9. Slide 9: We are committed to ongoing investment that supports future growth

    8© 2021 | • Building new products like LTX • Enhancing key growth products (e.g. VSM offering), and to meet new regulations (e.g. SRD II solution) • Adding digital capabilities PRODUCT PLATFORM PEOPLE We are committed to ongoing investment that supports future growth • Platform development including

  10. Slide 10: Our recurring revenue is broad based and growing across business segments

    9© 2021 | $1.9B RECURRING REVENUE $1.2B RECURRING REVENUE Our recurring revenue is broad based and growing across business segments and product categories INVESTOR COMMUNICATION SOLUTIONS GLOBAL TECHNOLOGY & OPERATIONS $0.2B $1.5B $1.9B Regulatory Customer Communications Issuer Wealth & Investment M

  11. Slide 11: Broadridge acquired Itiviti for $2.5 billion

    10© 2021 | Significantly strengthens Capital Markets Franchise, with a highly complementary product suite extending our reach into the front office and enhancing its multi-asset capabilities Drives additional global scale and reach outside of North America, enhancing Broadridge’s ability to serve it

  12. Slide 12: Segment Strategy: Investor Communication Solutions (ICS)

    11© 2021 | Segment Strategy: Investor Communication Solutions (“ICS”)

  13. Slide 13: ICS Strategy: extend our strong and growing Governance franchise

    12© 2021 | ICS Strategy: We will extend our strong and growing Governance franchise Grow End-to-End Issuer Solutions Build Data-Driven Fund Solutions Drive Next-Gen Regulatory Transform Omni-Channel Communications Leading position at the heart of a powerful governance network Recurring revenues of $

  14. Slide 14: Our network links investors, asset managers, and issuers across North America

    13© 2021 | 170M+ Retail shareholder accounts 120,000+ Institutional shareholders 30,000+ Mutual funds and ETFs ISSUERS OF SECURITIES SHAREHOLDERS 200,000+ Financial advisors 9,000+ Corporate issuers REGULATORY BODIES & TRADE ASSOCIATIONS 1,000+ Banks and broker-dealers Our network links investors, a

  15. Slide 15: ICS Segment product breakdown

    14© 2021 | Regulatory 8% Data-Driven Fund Solutions 12% Issuer Customer Communications 14% -2% ICS Segment product breakdown 6% TOTAL ICS 3YR CAGR $0.2B $1.5B $1.9B Regulatory Customer Communications Issuer Data-Driven Fund Solutions $157 M $792M $573M $339M ICS PRODUCT CATEGORIES FY17-FY20 THREE YE

  16. Slide 16: Recurring revenue benefits from the tailwind in position growth

    15© 2021 | Recurring revenue benefits from the tailwind in position growth… TOTAL U.S. EQUITY AND U.S. MUTUAL FUND & ETF POSITIONS FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 U.S. Equity Positions U.S. Mutual Fund & ETF Positions 8% 10YR CAGR 6% 10YR CAGR

  17. Slide 17: Segment Strategy: Global Technology & Operations (GTO)

    16© 2021 | Segment Strategy: Global Technology & Operations (“GTO”)

  18. Slide 18: GTO Strategy: Grow Capital Markets and next-gen Wealth franchises

    17© 2021 | GTO Strategy: Grow Capital Markets franchise and continue building next-gen Wealth & Investment Management franchise 1. In equity and fixed income trades processed on average per day Capital Markets Wealth & Investment Management • Leading provider of back office capabilities • Strong set

  19. Slide 19: GTO Segment product breakdown

    18© 2021 | Capital Markets Wealth & Investment Management 8% 14% GTO Segment product breakdown 11% TOTAL GTO 3YR CAGR Wealth & Investment Management Capital Markets $650M $524M $1.2B RECURRING REVENUE GTO PRODUCT CATEGORIES FY17-FY20 THREE YEAR CAGR All financial metrics are FY20 unless otherwise no

  20. Slide 20: Itiviti positions Broadridge as a global leader across the trade life cycle

    19© 2021 | Simplification Clients are looking to simplify their technology stack and operating models and reduce solution fragmentation Mutualization Market pressures are accelerating front office mutualization Front-to-back digitization Firms are looking to drive deeper integration and automation a

  21. Slide 21: Broadridge Business Model

    20© 2021 | Broadridge Business Model

  22. Slide 22: The Broadridge financial model drives steady revenue growth

    21© 2021 | The Broadridge financial model is focused on driving steady revenue growth and consistent earnings per share growth, generated by: Continued margin expansion from our scale and operational efficiencies Balanced capital allocation leveraging our strong free cash flow businesses Investments

  23. Slide 23: Long runway for growth and a high-quality revenue mix

    22© 2021 | $50B+ ADDRESSABLE MARKET $50B $1B $2B $3B $4B Total Addressable Market Amounts may not sum due to rounding We have a long runway for growth and a high-quality revenue mix… 42% FY17 FY20 REVENUE MIX 65% RECURRING REVENUE $4.5B TOTAL REVENUE $4.1B -3% 7% 58% 65% $3.0B 35% $3B FY20 ■ Recurri

  24. Slide 24: Long history of expanding margins

    23© 2021 | 80 bps annual FY17-20 average Adjusted Operating Income margin expansion Efficiency Contributions from business reengineering and internal growth Digital Margin expansion due to mix shift toward digital M&A Primarily weighted to early-stage businesses Investment Strategic investment align

  25. Slide 25: High free cash flow conversion

    24© 2021 | 119% 109% 106% 118% 98% 85% FY15 FY16 FY17 FY18 FY19 FY20 1. Calculated as Free cash flow / Adjusted Net earnings (Non-GAAP). Information about our use of Non-GAAP measures and a reconciliation to closest GAAP measures may be found on slides 44-50 2. FY20 drops below 100% Cash Flow Yield

  26. Slide 26: Targeted acquisitions to support growth

    25© 2021 | 4% 50%42% 3% $802M M&A SPEND1 19% PORTFOLIO IRR3 10% AVERAGE REVENUE GROWTH2 Capital Markets WealthData-Driven Fund Solutions Issuer TARGETED M&A FY18-FY20 …and allows us to make targeted acquisitions to support growth Note: Amounts may not sum due to rounding 1. For acquisitions from FY1

  27. Slide 27: Steady earnings over time resulting in top quartile TSR growth

    26© 2021 | This simple financial model has produced steady and consistent earnings over time resulting in top quartile TSR growth FY14 - FY17 (CAGR) FY17 - FY20 (CAGR) Organic Recurring revenue growth1 5% 5% Recurring revenue growth 7%2 7% Adj. Operating Income Margin (bps/ year) (Non-GAAP) 532 80 A

  28. Slide 28: Three-year Growth Objectives FY20-FY23

    27© 2021 | Three-year Growth Objectives (CAGR) FY20 – FY23 Organic Recurring revenue growth 5-7% Recurring revenue growth 7-9% Adj. Operating Income Margin expansion (bps/year) (Non-GAAP) 50+ Adj. Earnings per Share Growth (Non-GAAP) 8-12% We set new three-year growth objectives for FY20 – FY23 at I

  29. Slide 29: Itiviti expected to be accretive to top and bottom-line growth

    28© 2021 | Itiviti is expected to be accretive to Broadridge’s top and bottom-line growth and generate a double-digit IRR . . . Broadridge Itiviti Change Improved Recurring Revenue Mix1 65% 100% +200 bps Organic Recurring Revenue Growth2 5-7% 8-10% +20 bps Adjusted Operating Income Margin1,3 18% +30

  30. Slide 30: Itiviti on track to close in May

    29© 2021 | Itiviti is on track to close in May and is expected to deliver significant near- and long-term benefits FY’21 FY’22 FY20 - FY23 Investor Day CAGR Objectives Recurring Revenue Growth Contribution 1 pt ~8 pts 2.5-3.0 pts Adjusted EPS1 Growth Contribution ~(1 pt) 2-3 pts 2 pts 1. Non-GAAP me

  31. Slide 31: FY'21 Guidance Updates

    30© 2021 | FY’21 Guidance Updates / Changes Recurring revenue growth 8-10% Raised from higher end of 3-6% Total revenue growth 8-10% Raised from higher end of 1-4% Adj. Operating Income Margin (Non-GAAP) ~18% No change Adj. Earnings per Share Growth (Non-GAAP) 11-13% Raised from higher end of 6-10%

  32. Slide 32: Third Quarter Fiscal 2021 Results

    31© 2021 | Third Quarter Fiscal 2021 Results

  33. Slide 33: Summary financial performance

    32© 2021 | Summary financial performance $ in millions, except per share data THIRD QUARTER SUMMARY FINANCIAL RESULTS 2021 2020 Inc./(Dec.) Recurring revenues $900 $835 8% Total revenues 1,390 1,250 11% Operating income 239 226 6% Adjusted Operating income (Non-GAAP) 284 262 8% Adjusted Operating in

  34. Slide 34: Recurring revenue increased 8% in third quarter

    33© 2021 | Recurring revenue increased 8% in third quarter 2021 RECURRING REVENUE GROWTH 6% 6% 10% FY'18 FY'19 FY'20 FY'21 8 - 10% Guidance $835 $900 Q3'20 Q3'21 +8% $ in millions

  35. Slide 35: Third quarter 2021 segment recurring revenues

    34© 2021 | Regulatory Customer Comms. Data-Driven Fund Solutions Issuer Note: Amounts may not sum due to rounding $164 $163 $35 $44 $89 $90 Q3'20 Q3'21 $529 $586 +11% $ in millions $136 $146 $169 $167 Q3'20 Q3'21 $305 $314 Capital Markets Wealth & Investment Management +3% +28% (1%) +1% +20% (1%) +7

  36. Slide 36: Key volume drivers: position and trade volume growth

    35© 2021 | Key volume drivers: position and trade volume growth 7% 11% 7% 11% 16% 24% 20% 1% 6% 0% 2% 6% 5% 7% Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Equity MF/ETF EQUITY & MUTUAL FUND/ETF POSITION GROWTH TOTAL INTERNAL TRADE VOLUME GROWTH (1)% (11)% 26% 22% 12% 24% 12%

  37. Slide 37: Third quarter 2021 recurring revenue growth drivers

    36© 2021 | $576M $1,211M $623 $835 $900 Q3'20 Recurring Revenue Closed Sales Client Losses Internal Growth Acquisitions Q3'21 Recurring Revenue Third quarter 2021 Recurring revenue growth drivers THIRD QUARTER 2021 RECURRING REVENUES GREW 8% TO $900M Note: Amounts may not sum due to rounding. +6 pts

  38. Slide 38: Third quarter 2021 total revenue growth drivers

    37© 2021 | Third quarter 2021 total revenue growth drivers $68 $51 $40 $31 $39 $68 $46 $45 $74 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 EVENT-DRIVEN REVENUE $52M FY14-FY20 AVERAGE1 $ in millions Pts contribution to growth $1,250 $1,390 Q3'20 Total Revenue Recurring Event-Driven Distribu

  39. Slide 39: Adjusted Operating Income Margin and Operating Income Margin

    38© 2021 | Adjusted Operating Income Margin and Operating Income Margin 15.9% 17.1% 17.5% FY'18 FY'19 FY'20 FY'21 21.0% 20.4% Q3'20 Q3'21 ~18% Guidance +80bps +120bps +40bps 13.8% 15.0% 13.8% 18.1% 17.2% Adjusted Operating Income Margin (Non-GAAP) OPERATING INCOME MARGIN (GAAP)

  40. Slide 40: Closed Sales remain on track with fiscal year guidance

    39© 2021 | Closed Sales remain on track with fiscal year 2021 guidance CLOSED SALES PERFORMANCE $215 $233 $239 FY'18 FY'19 FY'20 FY'21 CLOSED SALES TO DATE $127 $124 Q3'20 Q3'21 $190- $235 $ in millions Guidance

  41. Slide 41: Capital allocation

    40© 2021 | Capital allocation $71 $0 $205 CapEx and Software M&A Client Platform Spend $2.5B acquisition of Itiviti 4. Capital returns to shareholder per share through Annual Dividend and total share repurchase net of option proceeds $391 $578 $269 FY18 FY19 FY20 1 1. Net cash spent on new client co

  42. Slide 42: Appendix

    Appendix ae pa Broadridge’

  43. Slide 43: Supplemental revenue reporting detail

    42© 2021 | Confidential and Proprietary | Supplemental revenue reporting detail (Unaudited) In the second quarter of fiscal year 2021, the Company recast its disaggregated revenue by product line disclosures to reflect internal realignment of the Company’s revenue reporting. Prior period amounts hav

  44. Slide 44: Non-GAAP measures

    43© 2021 | 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, r

  45. Slide 45: Non-GAAP measures

    44© 2021 | Non-GAAP measures Tax Act items represent the net impact of a U.S. federal transition tax on earnings of certain foreign subsidiaries, foreign jurisdiction withholding taxes and certain benefits related to the remeasurement of the Company’s net U.S. federal and state deferred tax liabilit

  46. Slide 46: Reconciliation of GAAP to Non-GAAP measures

    45© 2021 | Confidential and Proprietary | Reconciliation of GAAP to Non-GAAP measures (Unaudited) (a) Calculated using the GAAP effective tax rate, adjusted to exclude $1.7 million and $14.6 million of excess tax benefits associated with stock-based compensation for the three and nine months ended M

  47. Slide 47: Reconciliation of GAAP to Non-GAAP measures

    46© 2021 | Confidential and Proprietary | Reconciliation of GAAP to Non-GAAP measures (Unaudited) (a) Calculated using the GAAP effective tax rate, adjusted to exclude $1.7 million and $14.6 million of excess tax benefits associated with stock-based compensation for the three and nine months ended M

  48. Slide 48: Reconciliation of GAAP to Non-GAAP measures

    47© 2021 | Confidential and Proprietary | Reconciliation of GAAP to Non-GAAP measures (Unaudited) Note: Amounts may not sum due to rounding. Year ended June 30, Dollars in millions 2020 2019 2018 2017 Operating income (GAAP) $624.9 $652.7 $598.1 $534.0 Adjustments: Amortization of Acquired Intangibl

  49. Slide 49: Reconciliation of GAAP to Non-GAAP Measures

    48© 2021 | Reconciliation of GAAP to Non-GAAP Measures FISCAL YEAR Dollars in millions, except per share amounts 2020 2019 2018 2017 Diluted earning per share (GAAP) $3.95 $4.06 $3.56 $2.70 Adjustments: Amortization of Acquired Intangibles and Purchased Intellectual Property 1.05 0.74 0.68 0.60 Acqu

  50. Slide 50: Reconciliation of GAAP to Non-GAAP measures

    49© 2021 | Reconciliation of GAAP to Non-GAAP measures (Unaudited - dollars in millions, except per share amounts) Fiscal Years Ended June 30, 2017 2016 2015 2014 Operating income (GAAP) $ 531.6 $ 500.3 $ 466.9 $ 418.2 Adjustments: Amortization of Acquired Intangibles and Purchased Intellectual Prop

  51. Slide 51: Reconciliation of GAAP to Non-GAAP measures

    50© 2021 | Reconciliation of GAAP to Non-GAAP measures FISCAL YEAR Dollars in millions 2020 2019 2018 2017 2016 2015 2014 Net cash flows provided by operating activities (GAAP) $598.2 $617.0 $693.6 $515.9 $437.7 $431.4 $387.7 Capital expenditures and Software purchases and capitalized internal use s

  52. Slide 52: Broadridge Investor Relations Contact

    51© 2021 | W. Edings Thibault Tel: 516-472-5129 Email: Edings.Thibault@Broadridge.com Broadridge Investor Relations Contact

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