Broadridge Financial Solutions’ Strong Q3 and Positive Outlook

Broadridge Financial Solutions ((BR)) has held its Q3 earnings call. Read on for the main highlights of the call.

Broadridge Financial Solutions’ recent earnings call painted a picture of robust financial health and optimism for future growth, despite some market challenges. The company reported strong revenue and EPS growth for the third quarter, maintaining high revenue retention and a significant backlog, which bodes well for its future prospects. While challenges such as elongated sales processes and foreign exchange impacts were noted, the overall sentiment remained positive.

Strong Third Quarter Performance

Broadridge delivered impressive results for the third quarter of fiscal 2025, with an 8% increase in recurring revenue and a 9% growth in adjusted EPS. These figures highlight the company’s ability to sustain growth even amidst market uncertainties.

High Revenue Retention and Backlog

The company achieved a remarkable 98% revenue retention rate and boasts a $450 million revenue backlog. This strong retention and backlog provide Broadridge with excellent visibility into future growth, underscoring its stable financial foundation.

Governance Business Growth

Broadridge’s Governance business saw a 6% rise in recurring revenues, driven by new sales and increased investor participation. Notably, equity positions grew by 15%, indicating robust engagement and interest in this segment.

Capital Markets Segment Success

The Capital Markets segment reported a 10% growth in recurring revenue, fueled by strong trading volumes and a rising demand for global post-trade solutions. This success underscores Broadridge’s strategic positioning in the capital markets.

Wealth and Investment Management Expansion

Revenues in the Wealth and Investment Management segment grew by 13%, supported by the acquisition of SIS and successful platform integrations. This expansion highlights Broadridge’s commitment to strengthening its foothold in the wealth management sector.

Positive Outlook for Fiscal 2025

Broadridge remains optimistic about its fiscal 2025 performance, projecting 6% to 8% recurring revenue growth and adjusted EPS growth in the middle of the 8% to 12% guidance range. This outlook is supported by strong free cash flow and continued demand for digital solutions.

Elongation in Sales Process

Market uncertainty has led to delays in closing some deals, impacting short-term sales guidance. However, Broadridge remains confident that these delays will not affect its long-term growth trajectory.

License Revenue Timing Impact

A significant wealth management license renewal was moved to the fourth quarter, creating a 5-point headwind to organic revenue growth in the Wealth and Investment Management segment. This timing shift is a temporary setback in an otherwise strong growth narrative.

FX Impact on Reported Revenue

Changes in foreign exchange rates reduced reported recurring revenue growth by 90 basis points for the third quarter. Despite this impact, Broadridge’s overall financial performance remained strong.

Guidance and Future Outlook

Broadridge reaffirmed its guidance for fiscal year 2025, projecting 6% to 8% recurring revenue growth on a constant currency basis and adjusted EPS growth in the middle of the 8% to 12% range. The company emphasized its strong visibility into future growth, supported by a high revenue retention rate and significant backlog. Despite economic uncertainties, Broadridge is confident in achieving its three-year growth objectives.

In summary, Broadridge Financial Solutions’ earnings call highlighted a strong financial performance and a positive outlook for future growth. The company’s robust revenue retention, significant backlog, and strategic expansions in key segments underscore its resilience and potential for continued success. While challenges such as elongated sales processes and FX impacts were noted, the overall sentiment remains optimistic, positioning Broadridge well for the future.