Broadridge Financial Solutions, Inc. · NYSE:BR
Broadridge Financial Solutions — Investor Presentation (November 2024)
56 slides from Broadridge Financial Solutions's investor presentation, Nov 13, 2024
Slide 1: Powering and transforming financial markets
Powering and transforming financial markets Investor Presentation November 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: Broadridge has a 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: Broadridge is a 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 that redefines wealth management technology
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: We are executing a 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: Broadridge's strong business and financial model is 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: Our steady and consistent earnings growth and capital return has resulted in a 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 44 – 55 Our steady and consistent earnings growth and capital return has resulted in a compoundin
Slide 25: The model begins with Recurring revenue growth, anchored in conversion of 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: Demand and secular tailwinds support 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: Broadridge has a long history of being able to expand 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: Broadridge generates 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: We are 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: This model has consistently delivered on its three-year objectives over multiple cycles
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: Q1'25 results
Q1’25 results Broadridge’
Slide 33: Key messages as of November 5, 2024 earnings call
33 Key messages as of November 5, 2024 earnings call Broadridge delivered solid Q1’25 results, including 4% Recurring revenue growth constant currency, $1.00 of Adjusted EPS and record Closed sales Broadridge is executing on its growth strategy across Governance, Capital Markets, and Wealth & Invest
Slide 34: Fiscal year 2025 guidance as of November 5, 2024 earnings call
34 Fiscal year 2025 guidance as of November 5, 2024 earnings call FY’25 GUIDANCE UPDATES Recurring revenue growth constant currency (Non-GAAP) 6 – 8% Previously 5 – 7% Adjusted Operating income margin (Non-GAAP) ~20% No Change Adjusted earnings per share growth (Non-GAAP) 8 – 12% No Change Closed sa
Slide 35: Summary financial results
35 Summary financial results FIRST QUARTER $ in millions, except per share data 2025 2024 Inc./(Dec.) Recurring revenues $900 $871 3% Total revenues 1,423 1,431 (1%) Operating income 134 148 (9%) Adjusted Operating income (Non-GAAP) 185 199 (7%) Diluted earnings per share $0.68 $0.76 (11%) Adjusted
Slide 36: First quarter 2025 Recurring revenues
36 4% 8% 9% 9% 6% 6% 2% 7% FY'20 FY'21 FY'22 FY'23 FY'24 FY'25 Guidance 16% 10% 9% First quarter 2025 Recurring revenues Q1 RECURRING REVENUES FISCAL YEAR RECURRING REVENUE GROWTH Q1'24 Q1'25 $900 +4% $ in millions; growth in constant currency Information about our use of Non-GAAP measures and recon
Slide 37: First quarter 2025 segment Recurring revenues
37 First quarter 2025 segment Recurring revenues $164 $31 $108 $190 Q1'24 Q1'25 Regulatory Customer Comms. Data-Driven Fund Solutions Issuer 8% 3% 6% 6% ICS RECURRING REVENUES GTO RECURRING REVENUES $493 $ in millions; growth in constant currency +5% +2% Information about our use of Non-GAAP measure
Slide 38: Key volume drivers: position and trade growth
38 8% 6% 5% 7% 3%3% 5% (1%) 6% 6% Q1'24 Q2'24 Q3'24 Q4'24 Q1'25 Key volume drivers: position and trade growth 15% 12% 11% 15% 10% INTERNAL TRADE GROWTH EQUITY & MUTUAL FUND/ETF POSITION GROWTH 1. Q1’24 equity position growth represented 6% of total fiscal year 2024 positions. Q2’24: 9% | Q3’24: 30%
Slide 39: Operating income margin and Adjusted Operating income margin
39 Operating income margin and Adjusted Operating income margin 17.5% 18.1% 18.7% 19.8% FY'20 FY'21 FY'22 FY'23 FY'24 FY'25 Guidance 13.3% 15.4% 15.6%9.4%10.4% Q1'24 Q1'25 +60 bps +60 bps OPERATING INCOME MARGIN ADJUSTED OPERATING INCOME MARGIN (NON- GAAP) 13.0% +110 bps ~20.0% 13.9% Information abo
Slide 40: Free cash flow and Free cash flow conversion
40 85% 84% 48% 90% 102% FY'20 FY'21 FY'22 FY'23 FY'24 FY'25 (E) Free cash flow $ in millions ($76) ($158) Q1'24 Q1'25 Q1’25 FREE CASH FLOW FISCAL YEAR FREE CASH FLOW CONVERSION 1. Information about our use of Non-GAAP measures and reconciliations to GAAP measures may be found on slides 44 – 55 2. Fr
Slide 41: Closed sales
41 FY'20 FY'21 FY'22 FY'23 FY'24 FY'25 Guidance Closed sales $ in millions $246 Q1'24 Q1'25 $48 $57 $342 $280 CLOSED SALES $231 $290 – $330 $224
Slide 42: Capital allocation
42 $93 FY'20 FY'21 FY'22 FY'23 FY'24 FY'25 (E) $8 M&A Client Platform Investments CapEx and Software SELECT USES OF CASH Q1’25 TOTAL CAPITAL RETURNS Capital allocation $ in millions, except per share data $2.16 $2.30 $2.56 $2.90 $3.20 $3.52 11% 6% 11% 13% 10% 10% DIVIDENDS PER SHARE 2 1. Includes So
Slide 43: 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 44: Explanation and Reconciliation of the Company's Use of Non-GAAP Financial Measures
44 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 been presented
Slide 45: Excluded items from Adjusted Operating income
45 We exclude certain of these items from our Adjusted Operating income (as applicable) and other adjusted earnings measures because excluding such information provides us with an understanding of the results from the primary operations of our business and enhances comparability across fiscal report
Slide 46: Reconciliation of GAAP to Non-GAAP Measures (Three Months Ended Sept. 30)
46 Reconciliation of GAAP to Non-GAAP Measures (Unaudited) Three Months Ended Sept. 30, Dollars in millions 2024 2023 Operating income (GAAP) $134.4 $148.4 Adjustments: Amortization of Acquired Intangibles and Purchased Intellectual Property 48.2 50.8 Acquisition and Integration Costs 2.2 — Adjusted
Slide 47: Reconciliation of GAAP to Non-GAAP measures (Fiscal Year)
47 Reconciliation of GAAP to Non-GAAP measures Fiscal 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 Intangible
Slide 48: Reconciliation of GAAP to Non-GAAP Measures: Adjusted EPS (Three Months)
48 (a) Calculated using the GAAP effective tax rate, adjusted to exclude $3.1 million and $5.0 million of excess tax benefits associated with stock-based compensation for the three months ended September 30, 2024, and 2023, respectively. For purposes of calculating the Adjusted earnings per share, t
Slide 49: Footnotes: Restructuring and other related costs
49 (a) Restructuring and Other Related Costs for the three months and fiscal year ended June 30, 2024 includes $56.0 million of severance and professional services costs directly related to the Corporate Restructuring Initiative. The fiscal year ended June 30, 2024 also includes a $7.0 million asset
Slide 50: Reconciliation of GAAP to Non-GAAP: Adjusted EPS (Fiscal Year)
50 (Unaudited) Fiscal 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 Pur
Slide 51: Footnotes: Restructuring and other related costs
51 (a) Restructuring and Other Related Costs for the fiscal year ended June 30, 2024 includes $56.0 million of severance and professional services costs directly related to the Corporate Restructuring Initiative. The fiscal year ended June 30, 2024 also includes a $7.0 million asset impairment charg
Slide 52: Reconciliation of GAAP to Non-GAAP Measures: Three Months Ended September 30, 2024
52 Three Months Ended September 30, 2024 Investor Communication Solutions Regulatory Data-Driven Fund Solutions Issuer Customer Comms. Total Recurring revenue growth (GAAP) 6% 6% 8% 3% 5% Impact of foreign currency exchange 0% 0% 0% 0% 0% Recurring revenue growth constant currency (Non-GAAP) 6% 6% 8
Slide 53: Reconciliation of GAAP to Non-GAAP Measures: Fiscal Year Ended June 30, 2024
53 Reconciliation of GAAP to Non-GAAP Measures (Unaudited) 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 r
Slide 54: Reconciliation of GAAP to Non-GAAP Measures: Fiscal Year Ended June 30, 2023
54 Reconciliation of GAAP to Non-GAAP Measures (Unaudited) Fiscal Year Ended June 30, 2023 Investor Communication Solutions Regulatory Data-Driven Fund Solutions Issuer Customer Comms. Total Recurring revenue growth (GAAP) 6% 11% 12% 9% 8% Impact of foreign currency exchange 0% 1% 0% 0% 0% Recurring
Slide 55: Reconciliation of GAAP to Non-GAAP measures: Fiscal year 2025 guidance
55 Reconciliation of GAAP to Non-GAAP measures: Fiscal year 2025 guidance Fiscal Year 2025 FY25 Recurring revenue growth Impact of foreign currency exchange (a) (0.5%) - 0% Recurring revenue growth constant currency (Non-GAAP) 6 - 8% FY25 Adjusted Operating income margin (b) Operating income margin
Slide 56: Contact
Contact Investor Relations broadridgeir@broadridge.com
Broadridge Financial Solutions — Investor Presentation (November 2024) on 6ix