Broadridge Financial Solutions, Inc. · NYSE:BR

Broadridge Financial Solutions — Q3 2022 Earnings Presentation

48 slides from Broadridge Financial Solutions's earnings presentation, Mar 3, 2022

  1. Slide 1: Scaling a Global Fintech Leader

    0© 2022 | Scaling a Global Fintech Leader Third Quarter Fiscal Year 2022 Investor Presentation EXHIBIT 99.1

  2. Slide 2: Forward-Looking Statements

    1© 2022 | 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: Use of Non-GAAP financial measures, KPIs and foreign exchange rates

    2© 2022 | 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 (“

  4. Slide 4: A clear path for long term growth

    3© 2022 | A clear path for long term growth A global Fintech leader addressing a large and growing market Three franchise businesses executing on clear growth strategies grounded in long term trends Long track record delivering consistent growth and strong total shareholder returns 2014 Invest for G

  5. Slide 5: Broadridge is a global Fintech leader

    4© 2022 | Broadridge is a global Fintech leader Manage more than 2 billion critical mutual fund and equity proxy communications per year Powering $9T per day in fixed income and equity trades >2 BILLION $9 TRILLION Broadridge powers the critical infrastructure behind investing, governance, and commu

  6. Slide 6: $52 billion and growing market opportunity

    5© 2022 | Technology and operations spend by global banks is over $190 Billion Broadridge has a $52 billion and growing market opportunity $52B CURRENT OPPORTUNITY $19B GOVERNANCE $21B CAPITAL MARKETS $12B WEALTH

  7. Slide 7: Three strong growing franchises with $3.2 billion in Recurring revenue

    6© 2022 | Capital Markets $661M Recurring Revenue 8% Four-Year Average Growth Wealth & Investment Management $525M Recurring Revenue 13% Four-Year Average Growth Governance $2.0B Recurring Revenue 7% Four-Year Average Growth $3.2B FY’21 RECURRING REVENUE Three strong growing franchises with $3.2 bil

  8. Slide 8: Long term growth supported by commitment to ongoing investment

    7© 2022 | • Platform development including for Wealth and Global Post-Trade Management (GPTM) • Continue to scale key products such as SRD II • Enhancing data intelligence capabilities • Scaling to meet incremental position growth and trade growth • Adding QR codes to facilitate mobile proxy voting

  9. Slide 9: Track record of delivering consistent growth and strong TSR

    8© 2022 | Track record of delivering consistent growth and strong TSR FY’14 – FY’17 (CAGR) FY’17 – FY’20 (CAGR) Three-year Growth Objectives (CAGR) FY’20 – FY’23 Organic Recurring revenue growth1 5% 5% 5-7% Recurring revenue growth 7%2 7% 7-9% Adj. Operating Income Margin expansion (bps/ year) (Non-

  10. Slide 10: Investor Communication Solutions Segment Overview

    9© 2022 | Investor Communication Solutions SEGMENT OVERVIEW

  11. Slide 11: ICS Strategy

    10© 2022 | ICS Strategy 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 A leader at the heart of a powerful governance network Recurring revenues of $2.0B and 4-year a

  12. Slide 12: Our network links investors, asset managers, and issuers across North America

    11© 2022 | Our network links investors, asset managers, and issuers across North America 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 & TRA

  13. Slide 13: Key volume drivers: position and trade volume growth

    12© 2022 | 1% 2% 8% 7% 3% 8% 11% 6% 10% 26% 9% 11% 11% 8% 4% 4% 10% 9% 2% 10% FY'12 FY'13 FY'14 FY'15 FY'16 FY'17 FY'18 FY'19 FY'20 FY'21 Equity MF/ETF ITG EQUITY & MUTUAL FUND/ETF POSITION GROWTH Key volume drivers: position and trade volume growth 1% (4)% 8% 3% 2% 3% 13% 6% 9% 12%INTERNAL TRADE GR

  14. Slide 14: ICS Segment Overview

    13© 2022 | ICS Segment Overview FY'18 FY'19 FY'20 FY'21 11% 7% ICS FISCAL YEAR RECURRING REVENUES $568 $570 $156 $189 $331 $344 $783 $940 FY'20 FY'21 $1,839 $2,042 YoY Growth +20% +4% +21% 0% Regulatory Customer Communications Data-Driven Fund Solutions Issuer Avg. Annual Growth 4% 7% 6% $2.0B

  15. Slide 15: Global Technology and Operations Segment Overview

    14© 2022 | Global Technology and Operations SEGMENT OVERVIEW

  16. Slide 16: GTO Fiscal Year Recurring Revenues

    15© 2022 | $701M $558M GTO FISCAL YEAR RECURRING REVENUES $492 $525 $615 $661 FY'20 FY'21 $1,107 $1,186 +7% +7% YoY Growth FY'18 FY'19 FY'20 FY'21 Wealth & Investment Management Capital Markets 18% 4%10% 7% 10% Avg. Annual Growth $1.2B GTO Strategy: Grow Capital Markets franchise and continue buildi

  17. Slide 17: Capital Markets Overview

    16© 2022 | Capital Markets Overview 1. In equity and fixed income trades processed on average per day • A global leader in post-trade processing for cash securities • Continued growth driven by evolution of global banks • Launching AI-powered fixed income trading platform • Itiviti adds strength, sc

  18. Slide 18: Simplification, mutualization, front-to-back digitization

    17© 2022 | 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

  19. Slide 19: Wealth & Investment Management Overview

    18© 2022 | • Leading provider of back-office capabilities • Strong set of differentiated component solutions for front- and middle-office • Launching the industry’s only unified front-to-back technology platform • Growing Integrated Investment Management Suite Wealth & Investment Management Overview

  20. Slide 20: Broadridge Business Model

    19© 2022 | Broadridge Business Model

  21. Slide 21: The Broadridge financial model

    20© 2022 | 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

  22. Slide 22: Long runway for growth and a high-quality revenue mix

    21© 2022 | Note: Percentages based on gross revenues before impact of FX. Long runway for growth and a high-quality revenue mix 41% FY’18 RECURRING REVENUE GROWTH AS % OF TOTAL $4.4B 59% 67% ■ Recurring Revenue ■ Event-Driven and Distribution Revenue $5.0B 36% 64% FY’21 $52B TOTAL ADDRESSABLE MARKET

  23. Slide 23: Maintaining closed sales momentum

    22© 2022 | FY'20 FY'21 FY'22 $240 – $280 $228 $232 Guidance We are maintaining closed sales momentum… $ in millions CLOSED SALES FY'20 FY'21 FY’21 SALES BACKLOG $355 $385 12% 12% % OF RECURRING REVENUE

  24. Slide 24: Continuing to expand margin

    23© 2022 | 13.8% 15.0% 13.8% 13.6% …while continuing to expand margin Note: Information about our use of Non-GAAP measures and a reconciliation to closest GAAP measures may be found on slides 40-47 15.9% 17.1% 17.5% FY'18 FY'19 FY'20 FY'21 FY'22 +120 bps +40 bps +60 bps Efficiency Contributions from

  25. Slide 25: Capital allocation

    24© 2022 | YTD'21 YTD'22 $1.94 $2.16 $2.30 33% 11% 6% DIVIDENDS PER SHARE M&A Client Platform Investments CapEx and Software Capital allocation 2 1. Includes Software purchases and capitalized internal use software. 2. Net investments on new client conversions, including development of platform capa

  26. Slide 26: Fiscal Year 2022 Guidance

    25© 2022 | Fiscal Year 2022 Guidance FY’22 Guidance Updates / Changes Recurring revenue growth 12-15% High end Adjusted Operating income margin (Non-GAAP) ~19% ~18.5% Adjusted earnings per share growth (Non-GAAP) 11-15% No change Closed sales $240-$280M No change 1. As of February 1, 2022 1

  27. Slide 27: Earnings Conference Call Second Quarter Fiscal Year 2022

    26© 2022 | Scaling a Global Fintech Leader E A R N I N G S C O N F E R E N C E C A L L Second Quarter Fiscal Year 2022

  28. Slide 28: Key messages

    27© 2022 | Key messages Recurring revenue grew 19%, propelled by revenue from Closed sales, robust governance trends, and the continued successful integration of Itiviti Growth reflects disciplined execution against our multi-year plan across Governance, Capital Markets, and Wealth & Investment Mana

  29. Slide 29: Summary financial results

    28© 2022 | Summary financial results $ in millions, except per share data SECOND QUARTER SUMMARY FINANCIAL RESULTS 2022 2021 Inc./(Dec.) Recurring revenues $798 $673 19% Total revenues 1,260 1,055 19% Operating income 69 79 (13%) Adjusted Operating income (Non-GAAP) 141 119 19% Adjusted Operating in

  30. Slide 30: Recurring revenue increased 19% in second quarter 2022

    29© 2022 | FY'19 FY'20 FY'21 FY'22 Recurring revenue increased 19% in second quarter 2022 $673 $798 Q2'21 Q2'22 RECURRING REVENUE GROWTH 10%10% $ in millions Guidance High end of 12 - 15% 6% +19%

  31. Slide 31: Second quarter 2022 segment Recurring revenues

    30© 2022 | $127 $146 $158 $224 Q2'21 Q2'22 $136 $148 $21 $24 $86 $145 $166 Q2'21 Q2'22 Regulatory Customer Comms. Data-Driven Fund Solutions Issuer $ in millions + 14% + 9% + 3% +15% ICS RECURRING REVENUES GTO RECURRING REVENUES Second quarter 2022 segment Recurring revenues $427 $387 Capital Market

  32. Slide 32: Second quarter 2022 Recurring revenue growth drivers

    31© 2022 | INTERNAL TRADE GROWTH (ITG) 24% 20% 33% 39% 20% 5% 7% 11% 9% 12% Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Equity MF/ETF EQUITY & MUTUAL FUND/ETF POSITION GROWTH Key volume drivers: position and trade volume growth 24% 12% (1)% 2% 1% FY’20 FY’21 26% 10% 10% 2% ITG 12%9% 1. Q2’21 positions represented

  33. Slide 33: Second quarter 2022 Total revenue growth drivers

    32© 2022 | Second quarter 2022 Recurring revenue growth drivers SECOND QUARTER 2022 RECURRING REVENUES GREW 19% TO $798M ICS $387M 8 pts (2) pts 4 pts 0 pts $427M GTO $285M 6 pts (2) pts 4 pts 22 pts $371M $ in millions Pts contribution to growth $673 $798 Q2'21 Recurring Revenue Closed Sales Client

  34. Slide 34: Operating income margin and Adjusted Operating income margin

    33© 2022 | $45 $73 $72 $76 $65 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 $1,055 $1,260 Q2'21 Total Revenue Recurring Event-Driven Distribution FX Q2'22 Total Revenue Second quarter 2022 Total revenue growth drivers QUARTERLY EVENT-DRIVEN REVENUE +12 pts +2 pts +5 pts 0 pts 19% SECOND QUARTER 2022 TOTAL REVENUE

  35. Slide 35: Closed sales remain on track with fiscal year 2022 guidance

    34© 2022 | 17.1% 17.5% 18.1% FY'19 FY'20 FY'21 FY'22 15.0% 13.8% 13.6% 5.5%7.5% 11.2% 11.2% Q2'21 Q2'22 +120 bps +40 bps +60 bps OPERATING INCOME MARGIN (GAAP) ADJUSTED OPERATING INCOME MARGIN (NON- GAAP) ~18.5% Guidance Operating income margin and Adjusted Operating income margin OPERATING INCOME M

  36. Slide 36: Appendix

    35© 2022 | FY'20 FY'21 FY'22 $76 $113 YTD'21 YTD'22 $228 $232 Guidance Closed sales remain on track with fiscal year 2022 guidance $ in millions $240 – $280M CLOSED SALES

  37. Slide 37: Supplemental Reporting Detail - Product Line Reporting

    Appendix ve pa Broadridge’

  38. Slide 38: Explanation of Non-GAAP measures and Reconciliation of GAAP to Non-GAAP measures

    37© 2022 | 1Confidential and Proprietary | Supplemental Reporting Detail ‒ Product Line Reporting (Unaudited) In the second quarter of fiscal year 2021, the Company changed its presentation of product line revenue reporting. Beginning with the first quarter of fiscal year 2022, the Company also revi

  39. Slide 39: Non-GAAP measures

    38© 2022 | Explanation of Non-GAAP measures and Reconciliation of GAAP to Non-GAAP measures

  40. Slide 40: Non-GAAP measures

    39© 2022 | 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

  41. Slide 41: Reconciliation of GAAP to Non-GAAP Measures

    40© 2022 | Non-GAAP measures We exclude Acquisition and Integration Costs, IBM Private Cloud Charges, Real Estate Realignment and Covid-19 Related Expenses, Investment Gains, and the Software Charge, from our Adjusted Operating Income (as applicable), as well as other adjusted earnings measures, bec

  42. Slide 42: Reconciliation of GAAP to Non-GAAP Measures

    41© 2022 | 1Confidential and Proprietary | Reconciliation of GAAP to Non-GAAP Measures Note: Amounts may not sum due to rounding. Year ended June 30, Dollars in millions 2021 2020 2019 2018 2017 2016 2015 2014 Operating Income (GAAP) $678.7 $624.9 $652.7 $598.1 $534.0 $502.3 $468.5 $418.3 Adjustment

  43. Slide 43: Reconciliation of GAAP to Non-GAAP Measures

    42© 2022 | 1Confidential and Proprietary | Reconciliation of GAAP to Non-GAAP Measures (Unaudited) Year ended June 30, Dollars in millions, except per share amounts 2021 2020 2019 2018 2017 2016 2015 2014 Diluted earnings per share (GAAP) $4.65 $3.95 $4.06 $3.56 $2.70 $2.53 $2.32 $2.12 Adjustments:

  44. Slide 44: Reconciliation of GAAP to Non-GAAP Measures

    43© 2022 | 1Confidential and Proprietary | Reconciliation of GAAP to Non-GAAP Measures (Unaudited) (a) Calculated using the GAAP effective tax rate, adjusted to exclude $7.1 million and $11.5 million of excess tax benefits associated with stock-based compensation for the three and six months ended D

  45. Slide 45: Reconciliation of GAAP to Non-GAAP Measures

    44© 2022 | 1Confidential and Proprietary | Reconciliation of GAAP to Non-GAAP Measures (Unaudited) (a) Calculated using the GAAP effective tax rate, adjusted to exclude $7.1 million and $11.5 million of excess tax benefits associated with stock-based compensation for the three and six months ended D

  46. Slide 46: Fiscal Year 2022 Adjusted Earnings Per Share Growth Rate

    45© 2022 | 1Confidential and Proprietary | Reconciliation of GAAP to Non-GAAP Measures (Unaudited) Year ended June 30, Dollars in millions 2021 2020 2019 Operating income (GAAP) $678.7 $624.9 $652.7 Adjustments: Amortization of Acquired Intangibles and Purchased Intellectual Property 153.7 122.9 87.

  47. Slide 47: Broadridge Investor Relations Contacts

    46© 2022 | 1Confidential and Proprietary | Fiscal Year 2022 Adjusted Earnings Per Share Growth Rate (a) Diluted earnings per share – GAAP (5) – 0% growth Adjusted earnings per share – Non-GAAP 11-15% growth Adjusted Operating Income Margin (b) Operating income margin % - GAAP ~13.5% Adjusted Operati

  48. Slide 48: 47© 2022 | W. Edings Thibault Edings.Thibault@Broadridge.com Sean Silva Sean.Silva@Broadridge.com Broadridge Investor…

    47© 2022 | W. Edings Thibault Edings.Thibault@Broadridge.com Sean Silva Sean.Silva@Broadridge.com Broadridge Investor Relations Contacts

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