Tim Gokey
Chief Executive Officer at Broadridge Financial Solutions
Edings, thank you very much. Good morning, everyone. I am pleased to be here to discuss our strong start to fiscal '23. There's a lot to cover. So I'll walk through our strong results for the quarter, provide a business overview and then share some thoughts on why Broadridge is well-positioned to drive profitable growth over the balance of fiscal '23 and beyond. Before I start, I think it's helpful to provide some context given the volatile conditions the market and economy are experiencing. Despite market declines, we have seen continued growth in investor positions.
Given our forward testing, we have visibility about six months ahead, which puts us well into the busy part of proxy season, and we see continued solid growth in investor positions over that period. Our conversations with our large broker-dealer and asset manager clients also continue to be positive as our clients continue to drive to modernize their technology. With that as a backdrop, let's start with our strong results. Recurring revenues rose 9% on a constant currency basis, with strong growth across both our segments. Adjusted EPS was $0.84, down year-over-year, but modestly ahead of our expectations.
All in all, a strong start to the year. Second, as I mentioned, demand for our solutions remains strong. We continue to benefit from increasing investor participation, which is fueling very healthy stock record growth. After a record sales year in fiscal '22, we're off to a good start to fiscal '23, keeping us on track to deliver on our closed sales guidance. Third, we continue to drive long-term growth across our three franchises. In governance, we're enabling increasing shareholder engagement for our fund clients. In capital markets, we're delivering on trading innovation and global simplification. And in wealth, we're seeing a growing pipeline for a powerful suite of modular solutions.
Fourth, remember that our fiscal year extends six months into calendar '23. Today, we are reaffirming our guidance for that full period, including 6% to 9% constant currency recurring revenue growth, continued margin expansion and 7% to 11% adjusted EPS growth. That puts us on track to deliver at or above the higher end of our growth objectives for the three-year period ending next June. When we do, it will be the fourth consecutive three-year period covering 12 years in total that we've delivered on our recurring revenue and adjusted EPS objectives.
Fifth and last, we remain well-positioned to deliver continued growth in the years ahead even as the economy faces growing uncertainty. Providing mission-critical services that power investing in governance positions us to deliver resilient growth through the ups and downs of the financial cycle. Our visibility into position growth and our $430 million backlog gives us confidence in our outlook for this year, and our investments which are attracting growing interest from clients, positioned Broadridge to deliver increasing returns and long-term growth well into the future.
Now let's turn to slide 4 for an update on our business. I'll begin with our ICS or governance business, which had another strong quarter. The biggest driver of that growth was new sales, especially in our Fund Solutions and Customer Communications businesses. Position growth remains robust despite market headwinds, rising 9% for equities in the smallest quarter for equity proxies and 11% for funds. This growth is being driven by continued activity in managed accounts on the equity side and by continued strong demand for passive investments on the fund side.
Beyond the first quarter, we're now seeing increasing visibility into position growth for the seasonally more meaningful second half of our fiscal year, and the outlook remains very healthy. As you know, we continue to drive innovation and governance, especially around digital solutions. Last year, we rolled out end-to-end vote confirmation for nearly 3,000 public companies. We pioneered pass-through voting for funds, updated our proxy vote app and delivered nearly 2,500 virtual shareholder meetings. This year, we're continuing to innovate.
Last month, Charles Schwab announced it is leveraging our network capability to query a sample of retail shareholders to help guide Schwab's voting and select Schwab funds and ETFs. We're seeing similar interest in pass-through voting, including for retail fund shareholders from several of our largest asset management clients. Beyond our regulatory solutions, we saw growth across our other product lines. Customer Communications revenue rose 11%, driven by both print and digital. One digital contributor was the launch of our omni-channel Wealth InFocus Solution with Cetera.
Today, wealth clients may receive as many as 120 communications a year from their wealth manager. Wealth InFocus consolidates the critical information across various client and regulatory communications. Creating a single simple communication simplifies the investor experience while providing advisers with new communications opportunities, all at lower cost. Following our early rollout, nearly 90% of participants prefer the new solution. It's an exciting example of how our digital capabilities are creating increased engagement at lower cost.
Before I leave our governance business, I want to update you on a new SEC regulation on tailored shareholder reports for funds and ETF that was announced last week. Many of you recall we first highlighted this regulation when it was initially proposed in August 2020, and we've been providing occasional updates since. The SEC voted 5-0 last week to implement a measure that replaces the existing long-form annual and semiannual reports with a shorter 2- to 3-page summary document.
The SEC is aiming to use these shorter reports to provide key information in a more digestible format to keep investors better informed and more engaged at lower cost than long-form reports. We're still studying the full implications of the new rule, but let me offer some thoughts. There is no question that the shorter reports will create a better investor experience overall and especially for digital delivery. They will also create a path to even further digitization, which, as you know, is currently about 80%.
Long term, that's positive for funds and for Broadridge. On the other hand, our fund clients are concerned about the cost and complexity of the new rule because they'll have to compose both long-form and short-form reports. And we estimate the impact on Broadridge, assuming no offset from new services would be a $30 million reduction in recurring revenue phasing in over our fiscal '25 and '26. Just as we did with 30e-3 which also had its complexities, we will work with our clients to create a cost-effective industry solution, which will be good for investors and good for funds.
Moving to capital markets; revenues rose 14% constant currency, driven by strong growth from Broadridge Trading and Connectivity Solutions and from new sales. BTCS continues to perform well with strong sales and very positive client conversations about simplifying global trading and longer term, driving front to back. We also saw strong growth in the rest of our capital markets business powered by new sales and increased fixed income trading. We achieved a key milestone with the implementation of our next-gen global post-trade platform across the North American fixed income operations of a major U.S.-based bank, and we've already begun the next phase, which will extend to unified global equities and fixed income.
Turning to Wealth Management; revenues rose 5%, driven by revenue from new sales. I'm pleased to report that our wealth sales pipeline is growing substantially, up 25% year-on-year as we begin to bring to market completed modular solutions from our new wealth platform. We're now demoing live solutions to our clients, which is creating a much deeper level of engagement, and we're seeing real client interest. We're confident that our sales of module solutions from the new platform are on track to meaningfully contribute to our FY '23 closed sales with an even bigger impact in FY '24.
These modular solutions are part of the broader wealth platform we're creating with UBS as an anchor client, and UBS has been a fantastic partner. We're now making very exciting progress in that broader solution. We're development complete on 26 of our 29 platform areas, with the remaining three to be complete this month. On the testing side, we're completing the fourth of five integrated testing cycles with integration testing largely complete by the end of the calendar year. So it's great progress that keeps us on track for full rollout.
And as Edmund will outline, we are now through the peak of our investment in this key program. With that, let me take a step back and put our growth strategy in context. The parts of wealth management technology and operations that we touch are a $16 billion addressable market and wealth managers face a pressing need to modernize and digitize through operations. We expect that the wealth management platform and the suite of module solutions we are building will put Broadridge in a position to be a leading provider in the growing wealth space for the next decade and beyond. That position taken together with the benefits we're already seeing to our product and technology capability across Broadridge should strengthen our ability to build an increasingly strong, profitable and high-return business going forward.
I'll close my remarks on slide 5. As we move from more uncertain macroeconomic outlook, Broadridge's resilience becomes an even greater strength. Demand for the critical services we provide has remained strong, giving us confidence in this year, are forward-looking to investor participation in the next six months and our $430 million backlog gives us good visibility. As a result, we are reaffirming our guidance for fiscal '23 and will deliver at the high end of our three-year objectives. Longer term, we're serving a $60 billion market with growth driven by long-term secular trends.
FinTech innovation is forcing banks to digitize and innovations like managed accounts, zero commission trading, direct investing and pass-through voting are continuing to drive investor participation. As our clients seek to reduce costs partly in response to macroeconomic trends, their need for Broadridge's low-cost platform solutions increases. Third, we've built a strong and resilient business model, focusing on recurring revenues and sustained growth. Excluding our distribution revenues, fully 93% of our revenues are recurring, covered by multiyear contracts across all three of our franchises.
This revenue is supported by our long history of putting our clients first, which has driven a 98% revenue retention rate. At the same time, growth enables us to drive scale efficiencies, compelling our margins and funding additional investments to help drive additional growth going forward. Fourth, as we look beyond fiscal '23, the investments we have made and are making in our digital capabilities and our wealth and other technology platforms and extending our capital markets business leave us better positioned than ever to drive long-term profitable growth with increasing returns through this cycle and beyond.
Finally, to support this long-term growth, we are also driving forward on sustainability. We recently released our latest sustainability report highlighting our commitment to drive sustainable growth, engage our talent and diverse associates and reduce our and our clients' emissions. I encourage you to go to our site and review our progress. Before I turn the call over to Edmund, let me take a moment to thank our associates. None of what we do is easy and none of it would be possible without their focus on clients, on creating the future and on delivering results today. Thank you.
Now, I'll turn the call over to Edmund to review our financials. Edmund?
