Broadridge Financial Solutions, Inc. · NYSE:BR
Broadridge Financial Solutions — Q3 2023 Earnings Presentation
31 slides from Broadridge Financial Solutions's earnings presentation, May 2, 2023
Slide 1: Scaling a Global Fintech Leader
Scaling a Global Fintech Leader EARNINGS CONFERENCE CALL Fiscal Third 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 third quarter results, including 9% growth 1 in Recurring revenue constant currency, 10% growth in Adjusted Operating income, 6% growth in Adjusted EPS, and increased Free cash flow Investor participation was strong, with third quarter equity position 2 growt
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 Q3’23 Highlights Extend Governance • Position growth on track for mid-to high-single digit growth across both $693M mutual funds/ETFs and equities +11% YoY
Slide 6: On track to deliver a strong Fiscal 2023 across key metrics
Broadridge is on track to deliver a strong Fiscal 2023 across key operating, strategic, and financial metrics Resilient position growth and continued enhancements underline the 1 strength of our Governance business Digital momentum positions Customer Communications as next-gen 2 omnichannel provider
Slide 7: Summary financial results
Summary financial results THIRD QUARTER $ in millions, except per share data 2023 2022 Inc./(Dec.) Recurring revenues $1,082 $1,003 8% Constant currency growth – Non-GAAP 9% Total revenues 1,646 1,534 7% Operating income 287 246 17% Adjusted Operating income – Non-GAAP 345 313 10% Adjusted Operating
Slide 8: Recurring revenue increased 9% in third quarter 2023
Recurring revenue increased 9% in third quarter 2023 $ in millions RECURRING REVENUE GROWTH CONSTANT CURRENCY 16% +9% $1,082 10% 10% Higher end of 6 - 9% FY'20 FY'21 FY'22 FY'23 Q3'22 Q3'23 Guidance Information about our use of Non-GAAP measures and reconciliations to GAAP measures may be found on s
Slide 9: Third quarter 2023 segment Recurring revenues
Third quarter 2023 segment Recurring revenues $ in millions ICS RECURRING REVENUES GTO RECURRING REVENUES Constant Currency +11% +7% Growth $693 $388 Regulatory $346 8% Capital $246 5% Markets Data-Driven $102 14% Fund Solutions $58 25% Issuer Wealth & Investment $143 10% Customer $188 10% Managemen
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. 26% 18% 10% 10% 14% 8% ITG 3 12% 1% 5% 17% 17% 10% 10% 11% 10% 9% 9% 6% 6% Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 INTERNAL TRADE (6)% 8% 6% 5% 1% GROWTH 1. Q3’22 equity position growth represented 29%
Slide 11: Third quarter 2023 Recurring revenue growth drivers
Third quarter 2023 Recurring revenue growth drivers $ in millions. Pts contribution to growth RECURRING REVENUE GROWTH CONSTANT CURRENCY WAS 9% 9 pts ORGANIC GROWTH 6 pts 5 pts 0 pts 9% 8% (2) pts (1) pt $1,003 $1,082 Q3'22 Recurring Closed Sales Client Losses Internal Growth Acquisitions Q3'23 Recu
Slide 12: Third quarter 2023 Total revenue growth drivers
Third quarter 2023 Total revenue growth drivers $ in millions. Pts contribution to growth THIRD QUARTER 2023 TOTAL REVENUE GROWTH DRIVERS 5 pts 3 pts 7% (0) pts 0 pts $1,646 Q3'22 Total Revenue Recurring Event-Driven Distribution FX Q3'23 Total Revenue QUARTERLY EVENT-DRIVEN REVENUE $70 $59 $63 $58M
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% 16.0% 17.4% INCOME MARGIN 21.0% 20.4% 18.7% ~50bps 18.1% ADJUSTED 17.5% OPERATING INCOME MARGIN (NON- GAAP) +40 +60 +60 bps bps bps FY'20 FY'21 FY'22 FY'23 Q3'22 Q3'23 Guidance | © 2023 1
Slide 14: Closed sales
Closed sales $ in millions CLOSED SALES Near low $280 end of $270 – $310 $231 $169 $156 FY'21 FY'22 FY'23 Guidance YTD'22 YTD'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 $163 63% 51% $114 50% 48% $97 $78 $74 41% Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 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 $47 Software 1 $578 Client Platform $315 Investments 2 $269 $248 $253 $214 M&A 3 $0 FY'19 FY'20 FY'21 FY'22 YTD FY'23 6 DIVIDENDS PER SHARE $1.94 $2.16 $2.30 $2.56 $2.90 YOY GROWTH 33
Slide 17: Fiscal Year 2023 Guidance
Fiscal Year 2023 Guidance Prior FY’23 Guidance Updates/ Changes Recurring revenue growth 6 - 9% Higher end 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 Near Closed sales $270M -
Slide 18: On track to deliver at or above the higher end of 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 Q3% Dollars in millions FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Growth Investor Communication Solutions ("ICS") Regulatory $938 $165 $166 $ 321 $ 423 $1,075 $171 $181 $346 8% Data-driven fund solutions 342 83 89 90 102 364 93 96 10
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 March 31, 2023 Data-Driven Customer Investor Communication Solutions Regulatory Issuer Total Fund Solutions Comms. Recurring revenue growth (GAAP) 8% 13% 25% 10% 10% Impact of foreign currency exchange 1% 1% —% —% 1% Recurrin
Slide 25: Reconciliation of GAAP to Non-GAAP Measures
Reconciliation of GAAP to Non-GAAP Measures (Unaudited) Nine Months Ended March 31, 2023 Data-Driven Customer Investor Communication Solutions Regulatory Issuer Total Fund Solutions Comms. Recurring revenue growth (GAAP) 7% 11% 20% 10% 9% Impact of foreign currency exchange —% 2% —% —% 1% Recurring
Slide 26: Reconciliation of GAAP to Non-GAAP Measures
Reconciliation of GAAP to Non-GAAP Measures (Unaudited) Three Months Ended Mar. 31 9 Months Ended Mar. 31 Dollars in millions 2023 2022 2023 2022 Operating income (GAAP) $286.8 $246.0 $482.2 $418.2 Adjustments: Amortization of Acquired Intangibles and Purchased Intellectual Property 53.3 60.8 162.8
Slide 27: Reconciliation of GAAP to Non-GAAP Measures
Reconciliation of GAAP to Non-GAAP Measures (Unaudited) Three Months Ended Mar. 31 9 Months Ended Mar. 31 Dollars in millions, except per share amounts 2023 2022 2023 2022 Diluted earnings per share (GAAP) $1.67 $1.49 $2.58 $2.46 Adjustments: Amortization of Acquired Intangibles and Purchased Intell
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 Q3 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 $ 94.1 Capital expenditures and Software p
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 Third Quarter 2023 Earnings Conference Call
Broadridge Fiscal Third 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 May 9, 2023 Live Call Information Domestic Date: May 2, 2023 Dial-
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