What Broadridge Financial Solutions (BR) Said on Its Q1 Earnings Call

Key Points

• Broadridge reported a strong fiscal 2027 first quarter, with constant-currency recurring revenue up 11%, organic growth of 9%, total revenue rising 5% to $1.7 billion and adjusted EPS increasing 3% to $1.56. The company reaffirmed its full-year outlook.
• Growth was driven by investor-position expansion and demand for capital-markets technology, while investments in platforms, tokenization and AI reduced the adjusted operating margin to 13.8%. AI generated $6 million in productivity savings during the quarter, with $25 million expected for the full year.
• Broadridge returned significant capital to shareholders, repurchasing $200 million of stock and paying $111 million in dividends during the quarter. Management also highlighted tokenized-securities initiatives, stronger trade volumes and capacity for continued buybacks, investments and acquisitions.

Broadridge Financial Solutions NYSE: BR reported a strong start to fiscal 2027, with first-quarter recurring revenue rising 11% on a constant-currency basis and adjusted earnings per share increasing 3% to $1.56. The company reaffirmed its full-year outlook, citing continued investor participation, demand for capital-markets technology and progress in digital engagement, tokenization and artificial intelligence initiatives.

Chief Executive Officer Tim Gokey said the company benefited from a favorable market backdrop that supported financial-services clients and contributed to double-digit growth in investor positions. “Our business is performing very well,” Gokey said, adding that Broadridge is funding investments in new growth markets while maintaining shareholder returns.

Quarterly Revenue and Earnings

Recurring revenue grew 11% in constant currency during the seasonally smallest quarter, including 9% organic growth. Total revenue rose 5% to $1.7 billion. The company said lower event-driven revenue reduced total revenue growth by 3 percentage points after an unusually strong event-driven quarter a year earlier.

Adjusted operating income margin was 13.8%, down 200 basis points year over year. Chief Financial Officer Ashima Ghei said the decline reflected lower event-driven revenue, which typically carries higher incremental margins, as well as increased investments in growth initiatives including platforms, tokenization and AI.

Adjusted EPS of $1.56 exceeded the company’s expectations, according to Ghei, aided by timing benefits in regulatory revenue and a lower effective tax rate. Broadridge reported a 14% tax rate in the first quarter, though it continues to expect a full-year tax rate of approximately 22%.

The company also recorded a $40 million non-cash loss from the decline in the value of its digital asset holdings. The loss was reported in other non-operating income and excluded from adjusted EPS. Broadridge said it will continue to mark its Canton holdings to market quarterly and could record future non-GAAP gains or losses based on digital-asset price movements.

• Closed sales increased 10% year over year to $36 million.
• Free cash flow rose to $76 million from $13 million a year earlier.
• Broadridge repurchased $200 million of shares during the quarter, bringing repurchases since the start of the calendar year to $650 million.
• The company returned another $111 million to shareholders through dividends in the quarter.

Segment Performance and Volume Trends

In the company’s Investor Communication Solutions, or ICS, governance segment, recurring revenue rose 10% to $568 million, including a 1 percentage point benefit from acquisitions. Regulatory revenue increased 17%, driven by 11% growth in equity revenue positions and 16% growth in fund positions.

Ghei said the timing of certain fund communications added 3 percentage points to regulatory revenue growth. While first-quarter fund position growth benefited from job timing, Broadridge’s testing indicates high-single-digit growth for the remainder of the year, accelerating from 6% growth in fiscal 2026.

Total equity position growth was 16%, while revenue positions grew 11%. Broadridge expects mid-teens total equity position growth in the fiscal second quarter and low-double-digit growth for the full year. Data-driven fund solutions revenue increased 10%, while issuer revenue grew 4%, led by disclosure solutions. Customer communications revenue rose 3%, as digital-solution growth offset slower print growth.

Global Technology and Operations, or GTO, recurring revenue increased 13%, including 10% organic growth. Capital-markets revenue climbed 17%, with 12% organic growth and a 5 percentage point contribution from the CQG acquisition. Wealth and investment-management revenue rose 6%, entirely organically, led by growth in Canada.

Trade volumes increased 7% during the quarter, driven by equity trading volumes. Gokey said clients are preparing for the start of 23x5 trading on Dec. 6, and Broadridge is ready to support the transition across its front- and back-office applications.

Tokenization, Digital Engagement and AI

Management highlighted several developments in tokenized securities. Gokey said Broadridge intends to provide a horizontal governance layer across different tokenized-equity models and blockchain networks, helping issuers, intermediaries and investors manage shareholder rights and voting.

The company recently announced a governance-services agreement with Kraken Payward and cited existing relationships with Ondo and Alpaca. Broadridge also said it will provide the core governance layer for the New York Stock Exchange’s planned tokenized-equity marketplace and support issuers with digital transfer-agency services.

In fixed income and collateral markets, Broadridge’s Distributed Ledger Repo platform now supports cross-border atomic settlement for G7 securities alongside tokenized U.S. Treasuries. The company expects further increases in DLR volumes over the next six months based on signed clients and implementations. It also launched DLX, an operating platform intended to connect tokenized and traditional markets across multiple asset classes.

Broadridge also pointed to momentum in Standing Voting Instructions programs. Gokey said Goldman Sachs and Tesla recently launched SVI engagement programs, following earlier campaigns by Exxon and others. Separately, the company said it is assisting clients with potential SEC e-default requirements and seeing interest in its Wealth InFocus digital communications platform.

On AI, Broadridge reported $6 million in productivity savings during the first quarter and said it remains on track for $25 million in savings for the full year. Management said the savings will help fund investments while supporting earnings growth. The company also expanded its AI-powered institutional voting offering to global equities and signed another Tier 1 wealth manager during the quarter.

Outlook and Capital Allocation

Broadridge reaffirmed its fiscal 2027 guidance for constant-currency recurring revenue growth of 6% to 8%, adjusted operating income margin of approximately 21%, adjusted EPS growth of 8% to 12%, and closed sales of $290 million to $330 million.

The company expects ICS recurring revenue growth to fall within its 6% to 8% target range, while GTO growth is expected to be at the higher end of that range. Broadridge expects interest rates to be neutral to growth in the second quarter and become a modest tailwind during the second half of the fiscal year.

Ghei said Broadridge expects second-quarter EPS to represent approximately 12% to 14% of full-year results, reflecting normalized event-driven revenue and tax-rate effects. Management said margin pressure should moderate in the second half as comparisons with elevated prior-year event revenue ease and investment spending normalizes.

With a leverage ratio of 2 times at quarter-end, Broadridge said it has capacity to continue share repurchases, fund organic investments, maintain its dividend and pursue strategic tuck-in acquisitions. The company plans to host an Investor Day in New York on Dec. 8, where it expects to provide updated growth strategies and financial objectives for fiscal 2027 through fiscal 2029.

About Broadridge Financial Solutions (NYSE:BR)

Broadridge Financial Solutions, Inc NYSE: BR is a financial technology and business services company that provides communications, data, and technology solutions to financial institutions, public companies, and investors. Its services support the administration and communication of financial information across the investment lifecycle.

The company's offerings include investor communications, proxy and corporate governance services, securities processing, trade and portfolio management, and technology platforms for wealth and investment management firms.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.