Broadridge Financial Solutions, Inc. · NYSE:BR
Broadridge Financial Solutions — Investor Presentation (September 2024)
60 slides from Broadridge Financial Solutions's investor presentation, Sep 10, 2024
Slide 1: Powering and transforming financial markets
Powering and transforming financial markets Investor Presentation September 2024 EXHIBIT 99.1
Slide 2: Forward-Looking Statements
2 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 A
Slide 3: Use of Non-GAAP financial measures, KPIs and foreign exchange rates
3 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”), F
Slide 4: Broadridge is powering and transforming financial services
4 Broadridge is powering and transforming financial services Unique network and business model with a clear growth strategy across our three franchises Platform-based model with recurring revenue structure creates unique value for clients and investors Steady and consistent earnings growth and capit
Slide 5: Long track record of delivering growth and shareholder value
5 Broadridge has a long track record of delivering growth and shareholder value $2.7 $2.9 $4.1 $4.3 $4.4 $4.5 $5.0 $5.7 $6.1 $6.5 $2.47 $2.73 $3.13 $4.19 $4.66 $5.03 $5.66 $6.46 $7.01 $7.73 FY'15 FY'16 FY'17 FY'18 FY'19 FY'20 FY'21 FY'22 FY'23 FY'24 Adjusted EPS Total Revenue ($B) 10% Recurring Reve
Slide 6: We have a unique network and business model
6 We have a unique network and business model Regulatory Bodies & Trade Associations Broker-dealers & Wealth Managers Investors Public Companies & Funds 10,000+ Corporate issuers 1,000+ Banks and broker-dealers 30,000+ Mutual funds and ETFs 200,000+ Financial advisors 150,000+ Institutional sharehol
Slide 7: Powering a scale business at the intersection of financial services
7 Powering a scale business at the intersection of financial services Wealth Managers 30,000+ Mutual funds and ETFs 120,000+ Institutional shareholders 170M+ Retail shareholder accounts Capital Markets Firms Asset Managers Corporate Issuers • 14 of 15 largest U.S. wealth providers • 30% U.S. advisor
Slide 8: We serve a $225B addressable market of which $60B+ is vended
8 We serve a $225B addressable market of which $60B+ is vended Source: McKinsey & Co. Governance Capital Markets Wealth & IM $25B $24B Broadridge Vended Addressable Market 27%73% Total Addressable Market $12B $225B $60BBR Vended
Slide 9: Our growth is underpinned by secular demand drivers
9 Our growth is underpinned by secular demand drivers Digitization of communications Acceleration of trading Democratization of investing Data and artificial intelligence Regulation Governance Capital Markets Wealth & IM
Slide 10: We have aligned our business around these long-term drivers
10 We have aligned our business around these long-term drivers Extend Governance ▪ Scaled to enable doubling of equity and fund positions ▪ Crossed $100M threshold in digital revenues ▪ Expanded data & analytics with European fund data, board reporting ▪ Extended our capabilities across the entire t
Slide 11: We have a clear plan for long-term growth
11 Driving Democratization and Digitization in Governance ✓ Drive democratization in regulatory communications ✓ Digitize communications ✓ Leverage data for asset management ✓ Simplify corporate governance Simplifying Trading in Capital Markets ✓ Optimize trading and connectivity ✓ Simplify post-tra
Slide 12: Investor Communication Solutions (ICS)
Investor Communication Solutions (“ICS”)
Slide 13: We continue to extend our strong and growing Governance franchise
13 FY'20 FY'21 FY'22 FY'23 FY'24 We continue to extend our strong and growing Governance franchise $2.6B ICS Recurring Revenue Avg. annual growth 8% 10% Regulatory Data-Driven Fund Solutions Issuer Customer Communications 8% 14% 04% Note: Growth in constant currency. Information about our use of Non
Slide 14: We have a unique network and business model…
14 We have a unique network and business model… Regulatory Bodies & Trade Associations Broker-dealers & Wealth Managers Investors Public Companies & Funds 10,000+ Corporate issuers 1,000+ Banks and broker-dealers 30,000+ Mutual funds and ETFs 200,000+ Financial advisors 150,000+ Institutional shareh
Slide 15: Sustainable fundamentals underscore consistent position growth
15 Sustainable fundamentals underscore consistent position growth Position Growth (~9%) More Positions per Investor (5-7%) More Investors (2-4%) Investing Population Growth Market Participation Growth Population growth brings new investors An increasing portion of the population invests Demographics
Slide 16: Driving democratization and digitization in Governance
16 Enable democratization via next-gen Regulatory Deliver Data-Driven Fund Solutions Simplify governance for Issuers Transform omni-channel Customer Communications GROWTH OPPORTUNITIES • Continued equity, mutual fund, and ETF position growth • Constant need for innovative compliance solutions • Glob
Slide 17: Global Technology & Operations (GTO)
Global Technology & Operations (“GTO”)
Slide 18: Leading technology provider for capital markets and wealth management
18 FY'20 FY'21 FY'22 FY'23 FY'24 Broadridge is a leading technology provider for capital markets and wealth management $1.6BGTO Recurring Revenue Avg. annual growth 13% 10% Capital Markets Wealth & Inv. Mgmt. 15% Note: Growth in constant currency. Information about our use of Non-GAAP measures and r
Slide 19: Capital Markets: Broadridge technology powers the entire trade lifecycle
19 Capital Markets: Broadridge technology powers the entire trade lifecycle Initiate order Buy-side Sell-side Middle-office Lifecycle Events • Trade Confirmation • Allocation of Trade to Sub-accounts • Trade Validation Middle-office Matching and Allocation Market Participants Back-office Lifecycle E
Slide 20: Component based ecosystem with open architecture for wealth management
20 Component based ecosystem with open architecture that redefines wealth management technology Flexible, scalable platform designed to help firms drive innovation and perform more efficiently Delivers digital, modernized advisor capabilities with easy integration through published APIs Integrated t
Slide 21: Clear growth strategy across Capital Markets and Wealth Management
21 GROWTH OPPORTUNITIES We are executing a clear growth strategy across Capital Markets and Wealth Management • Personalizing the investor experience • Optimizing advisor productivity • Digitizing operations • Optimizing trading and connectivity • Simplifying post-trade • Delivering transformation a
Slide 22: A financial model powering sustainable long-term growth with high returns
A financial model powering sustainable long-term growth with high returns
Slide 23: Financial model positioned to drive sustainable, long-term growth
23 Broadridge’s strong business and financial model is positioned to drive sustainable, long-term growth Recurring Revenue Balanced Capital Allocation TSR Adjusted EPS ~100% Free cash flow conversion and mid-to-high teen ROIC 7-9% Sustainable growth (5-8% organic) 8-12% Steady and consistent growth
Slide 24: Steady earnings growth and capital return resulting in compounding TSR
24 Jun-14 Jun-15 Jun-16 Jun-17 Jun-18 Jun-19 Jun-20 Jun-21 Jun-22 Jun-23 Jun-24 BR S&P500 Note: Information about the use of Non-GAAP measures and reconciliations to GAAP measures may be found on slides 49 – 59 Our steady and consistent earnings growth and capital return has resulted in a compoundin
Slide 25: Model begins with Recurring revenue growth anchored in Closed sales
25 The model begins with Recurring revenue growth, with growth anchored in conversion of Closed sales RECURRING REVENUE GROWTH 65% RECURRING DISTRIBUTION EVENT-DRIVEN $6.5B FY’24 TOTAL REVENUE REVENUE COMPOSITION RECURRING REVENUE GROWTH Growth in constant currency Note: Information about our use of
Slide 26: Organic Recurring revenue growth of 5-8% for FY'24-FY'26
26 The demand for our products and secular tailwinds supports organic Recurring revenue growth of 5-8% for FY’24-FY’26 RECURRING REVENUE GROWTH RECURRING REVENUE GROWTH DRIVERS Beginning Recurring revenue Closed Sales Client Losses Internal Growth Acquisitions Ending Recurring revenue 5-7pts (2)pts
Slide 27: Long history of expanding margins
27 120 10 40 80 120 40 60 60 110 20 FY'15 FY'16 FY'17 FY'18 FY'19 FY'20 FY'21 FY'22 FY'23 FY'24 20.0% FY'15 FY'24 AOI MARGIN EXPANSION HISTORY (bps; NON-GAAP) 50 bps Avg Annual Expansion Target 10 Year average Annual AOI margin expansion 70 bps Broadridge has a long history of being able to expand m
Slide 28: Operating leverage through scale, digital growth and cost efficiency
28 Broadridge generates operating leverage through scale, higher- margin digital growth and cost efficiency, allowing us to fund growth investments while delivering margin expansion RECURRING REVENUE GROWTH EARNINGS GROWTH BALANCED CAPITAL ALLOCATION Scale Digital Expense Mgt & Efficiency Investment
Slide 29: Investments are a key part of our financial model
29 Investments are a key part of our financial model. We invest in high return opportunities that enable us to sustain a high level of Recurring revenue growth RECURRING REVENUE GROWTH CAPEX Client Platform Investment OPEX Medium Term Long Term Product Enhancement Digital (e.g. InFocus) DLR Sales &
Slide 30: Committed to strong and balanced capital stewardship
30 We are committed to strong and balanced capital stewardship… M&A Internal Investment Dividend Share repurchase Maintain investment grade Drive ~100% FCF conversion, monetize recent investments, return ROIC to mid-high teens Capital Allocation Priorities ✓ Fund high return internal investments ✓ G
Slide 31: Model has consistently delivered on three-year objectives
31 This model has consistently delivered on its three-year objectives over multiple cycles CAGR 3-YEAR OBJECTIVES FY’24 – FY’26 FY’24 RESULTSFY’14 – FY’17 FY’17 – FY’20 FY’20 – FY’23 Organic Recurring revenue growth1 5% 5% 8% 5 – 8% 6% Recurring revenue growth 7%2 7% 11%3 7 – 9% 6% Adj. Operating in
Slide 32: Q4'24 and FY'24 results
Q4’24 and FY’24 results Broadridge
Slide 33: Key messages as of August 6, 2024 earnings call
33 Key messages as of August 6, 2024 earnings call Broadridge is executing on our strategy to democratize and digitize Governance, simplify and innovate in Capital Markets, and modernize Wealth Management Broadridge reported record Closed sales of $342 million, up 39% year-over-year with strong grow
Slide 34: Fiscal year 2025 guidance
34 Fiscal year 2025 guidance as of August 6, 2024 earnings call FY’25 GUIDANCE Recurring revenue growth constant currency (Non-GAAP) 5-7% Adjusted Operating income margin (Non-GAAP) ~20% Adjusted earnings per share growth (Non-GAAP) 8-12% Closed sales $290 - $330M
Slide 35: Summary financial results
35 $ in millions, except per share data Q4’24 Inc./(Dec.) FY’24 Inc./(Dec.) Recurring revenues $1,326 5% $4,223 6% Total revenues 1,944 6% 6,507 7% Operating income 441 (3)% 1,017 9% Adjusted Operating income (Non-GAAP) 559 5% 1,303 9% Adjusted Operating income margin (Non-GAAP) 28.8% (10)bps 20.0%
Slide 36: Fourth quarter and fiscal year 2024 Recurring revenues
36 Fourth quarter and fiscal year 2024 Recurring revenues Q4 RECURRING REVENUES FISCAL YEAR RECURRING REVENUE GROWTH Q4'23 Q4'24 $1,326 +5% $ in millions; growth in constant currency Information about our use of Non-GAAP measures and reconciliations to GAAP measures may be found on slides 49 – 59 4%
Slide 37: ICS Q4 and fiscal year 2024 segment Recurring revenues
37 ICS fourth quarter and fiscal year 2024 segment Recurring revenues $171 $141 $122 $477 Q4'23 Q4'24 Regulatory Customer Comms. Data-Driven Fund Solutions Issuer 5% 3% 7% 7% ICS Q4 RECURRING REVENUES ICS FISCAL YEAR RECURRING REVENUES $910 $ in millions; growth in constant currency +6% +5% Informat
Slide 38: GTO Q4 and fiscal year 2024 segment Recurring revenues
38 $600 $1,049 FY'23 FY'24 GTO fourth quarter and fiscal year 2024 segment Recurring revenues GTO Q4 RECURRING REVENUES GTO FISCAL YEAR RECURRING REVENUES Capital Markets Wealth & Investment Management $1,649 $ in millions; growth in constant currency +4% +8% Information about our use of Non-GAAP me
Slide 39: Key volume drivers: position and trade growth
39 6% 8% 6% 5% 7% 8% 3% 5% (1%) 6% Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 Key volume drivers: position and trade growth 3% 15% 12% 11% 15% INTERNAL TRADE GROWTH EQUITY & MUTUAL FUND/ETF POSITION GROWTH 1. Q4’24 equity position growth represented 55% of total fiscal year 2024 positions. Q1’24: 6% | Q2’24: 9%
Slide 40: Fourth quarter 2024 Recurring revenue growth drivers
40 $1,259 Q4'23 Recurring revenues Closed Sales Client Losses Internal Growth Acquisitions Q4'24 Rec. Rev. Constant Currency FX Q4'24 Recurring revenues RECURRING REVENUE GROWTH CONSTANT CURRENCY WAS 5% Fourth quarter 2024 Recurring revenue growth drivers ICS $858M 4 pts (2) pts 4 pts 0 pts 6% 0 pts
Slide 41: Fourth quarter 2024 Total revenue growth drivers
41 FOURTH QUARTER 2024 TOTAL REVENUE GROWTH DRIVERS $59 $87 $55 $76 Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 $61M FY’18-FY’24 QUARTERLY AVERAGE Fourth quarter 2024 Total revenue growth drivers $1,839 Q4'23 Total Revenues Recurring Event-Driven Distribution FX Q4'24 Total Revenues QUARTERLY EVENT-DRIVEN REVENUE
Slide 42: Operating income margin and Adjusted Operating income margin
42 Operating income margin and Adjusted Operating income margin 17.5% 18.1% 18.7% FY'20 FY'21 FY'22 FY'23 FY'24 13.6% 13.3% 15.4%22.7%24.7% Q4'23 Q4'24 +60 bps +60 bps OPERATING INCOME MARGIN ADJUSTED OPERATING INCOME MARGIN (NON- GAAP) 28.8% +110 bps 20.0% 28.9% Information about our use of Non-GAA
Slide 43: Closed sales and Recurring revenue backlog
43 FY'20 FY'21 FY'22 FY'23 FY'24 Closed sales $ in millions $280 FY'23 FY'24 $400 $450 $246 $231 CLOSED SALES RECURRING REVENUE BACKLOG 10% 11%% OF RECURRING REVENUE $342 $224 1. Recurring Revenue Backlog represents an estimate of first year revenues from Closed sales that have not yet been recogniz
Slide 44: Free cash flow conversion
44 Free cash flow conversion FREE CASH FLOW CONVERSION 1,2 1. Free cash flow conversion equals annual Free cash flow divided by Adjusted Net earnings 2. Information about our use of Non-GAAP measures and reconciliations to GAAP measures may be found on slides 49 – 59 85% 84% 48% 90% 102% FY'20 FY'21
Slide 45: Capital allocation
45 $368 $413 FY'21 FY'22 FY'23 FY'24 FY'25 (E) M&A Client Platform Investments CapEx and Software SELECT USES OF CASH FISCAL YEAR 2024 TOTAL CAPITAL RETURNS Capital allocation $ in millions, except per share data $2.30 $2.56 $2.90 $3.20 $3.52 6% 11% 13% 10% 10% DIVIDENDS PER SHARE 2 1. Includes Soft
Slide 46: Fiscal year 2024 Recurring revenue growth drivers
46 $3,987 FY'23 Recurring revenues Closed Sales Client Losses Internal Growth Acquisitions FY'24 Rec. Rev. Constant Currency FX FY'24 Recurring revenues RECURRING REVENUE GROWTH CONSTANT CURRENCY WAS 6% Fiscal year 2024 Recurring revenue growth drivers ICS $2,461M 5 pts (2) pts 2 pts 0 pts 5% 0 pts
Slide 47: Fiscal year 2024 Total revenue growth drivers
47 FISCAL YEAR 2024 TOTAL REVENUE GROWTH DRIVERS Fiscal year 2024 Total revenue growth drivers $6,061 $6,507 FY'23 Total Revenues Recurring Event-Driven Distribution FX FY'24 Total Revenues 4 pts 1 pt 2 pts 7%0 pts $ in millions. Pts contribution to growth
Slide 48: 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
Slide 49: Non-GAAP Measures Explanation and Reconciliation
49 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 h
Slide 50: Exclusions from Adjusted Operating income and adjusted earnings measures
50 We exclude Acquisition and Integration Costs, Restructuring and Other Related Costs, Litigation Settlement Charges, Russia-Related Exit Costs, Real Estate Realignment and Covid-19 Related Expenses, Investment Gains, the Software Charge, Gain on Acquisition-Related Financial Instrument, IBM Privat
Slide 51: Reconciliation: Three Months Ended June 30, 2024
51 Three Months Ended June 30, 2024 Investor Communication Solutions Regulatory Data-Driven Fund Solutions Issuer Customer Comms. Total Recurring revenue growth (GAAP) 7% 7% 5% 3% 6% Impact of foreign currency exchange 0% 0% 0% 0% 0% Recurring revenue growth constant currency (Non-GAAP) 7% 7% 5% 3%
Slide 52: Reconciliation: Fiscal Year Ended June 30, 2024
52 Fiscal Year Ended June 30, 2024 Investor Communication Solutions Regulatory Data-Driven Fund Solutions Issuer Customer Comms. Total Recurring revenue growth (GAAP) 5% 8% 7% 1% 5% Impact of foreign currency exchange 0% 0% 0% 0% 0% Recurring revenue growth constant currency (Non-GAAP) 5% 7% 7% 2% 5
Slide 53: Reconciliation of GAAP to Non-GAAP measures: Q4 earnings and operating income
53 3 Months Ended June 30, Dollars in millions 2024 2023 Net earnings (GAAP) $323.2 $324.1 Adjustments: Amortization of Acquired Intangibles and Purchased Intellectual Property 48.9 51.6 Acquisition and Integration Costs 2.9 4.8 Restructuring and Other Related Costs (a) 56.0 20.4 Litigation Settleme
Slide 54: Reconciliation of GAAP to Non-GAAP measures: Q4 EPS
54 3 Months Ended June 30, Dollars in millions, except per share amounts 2024 2023 Diluted earnings per share (GAAP) $2.72 $2.72 Adjustments: Amortization of Acquired Intangibles and Purchased Intellectual Property 0.41 0.43 Acquisition and Integration Costs 0.02 0.04 Restructuring and Other Related
Slide 55: Reconciliation of GAAP to Non-GAAP Measures: Operating income
55 Reconciliation of GAAP to Non-GAAP Measures Year ended June 30, Dollars in millions 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 Operating Income (GAAP) $1,017.1 $936.4 $759.9 $678.7 $624.9 $652.7 $598.1 $534.0 $502.3 $468.5 $418.3 Adjustments: Amortization of Acquired Intangibles and P
Slide 56: Reconciliation: Net earnings
56 Year ended June 30, Dollars in millions 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 Net earnings (GAAP) $698.1 $630.6 $539.1 $547.5 $462.5 $482.1 $427.9 $326.8 $307.5 $287.1 $263.0 Adjustments: Amortization of Acquired Intangibles and Purchased Intellectual Property 200.3 214.4 250.2 1
Slide 57: Reconciliation: Diluted earnings per share
57 Year ended June 30, Dollars in millions, except per share amounts 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 Diluted earnings per share (GAAP) $5.86 $5.30 $4.55 $4.65 $3.95 $4.06 $3.56 $2.70 $2.53 $2.32 $2.12 Adjustments: Amortization of Acquired Intangibles and Purchased Intellectual
Slide 58: Reconciliation: Free cash flow and conversion
58 Reconciliation of GAAP to Non-GAAP measures Fiscal Year Ended June 30, Dollars in millions 2024 2023 2022 2021 2020 Net cash flows from operating activities (GAAP) $1,056.2 $823.3 $443.5 $640.1 $598.2 Capital expenditures and Software purchases and capitalized internal use software (113.0) (75.2)
Slide 59: Reconciliation: Fiscal year 2025 guidance
59 Reconciliation of GAAP to Non-GAAP measures: Fiscal year 2025 guidance Fiscal Year 2025 FY25 Recurring revenue growth Impact of foreign currency exchange (a) 0% - 0.5% Recurring revenue growth constant currency (Non-GAAP) 5-7% FY25 Adjusted Operating income margin (b) Operating income margin % (G
Slide 60: Contact Investor Relations
Contact Investor Relations broadridgeir@broadridge.com
Broadridge Financial Solutions — Investor Presentation (September 2024) on 6ix