Broadridge Financial Solutions Inc (BR) Q1 2025 Earnings Call Highlights: Navigating Growth ...

GuruFocus News
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In This Article:

  • Recurring Revenue Growth: 4% in constant currency, with a 170-basis-point headwind from the E-Trade deconversion.

  • Adjusted EPS: $1 per share.

  • Closed Sales: $57 million, up 21% from last year.

  • ICS Recurring Revenues: Increased 5% to $493 million.

  • GTO Revenues: Rose 2% to $407 million.

  • Equity Position Growth: 3% in the first quarter.

  • Fund and ETF Position Growth: 6% in the first quarter.

  • Trade Volumes: Increased 10% on a blended basis.

  • Total Revenue: Flat at $1.4 billion.

  • Event-Driven Revenues: $63 million, in line with the seven-year quarterly average.

  • Adjusted Operating Income Margin: 13%, a decline of 90 basis points from Q1 '24.

  • Free Cash Flow: Negative $158 million in Q1 '25.

  • Capital Spending and Software Investment: $32 million.

  • Dividend Payments: $93 million returned to shareholders.

  • Acquisition of SIS: Closed for approximately $185 million.

  • Fiscal '25 Recurring Revenue Guidance: Raised to 6% to 8%.

  • Adjusted EPS Growth Guidance: 8% to 12% for fiscal '25.

Release Date: November 05, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Broadridge Financial Solutions Inc (NYSE:BR) reported solid first-quarter results with a 4% growth in recurring revenue in constant currency, despite the impact of the E-Trade deconversion.

  • The company is executing its strategy effectively, driving product innovation, growing its sales pipeline, and achieving strong sales.

  • Broadridge is strengthening its business through targeted investments, including the acquisition of SIS, which is expected to enhance its Canadian business and wealth innovation capabilities.

  • The company raised its fiscal 2025 recurring revenue guidance to 6% to 8%, reflecting strong organic growth and the SIS acquisition.

  • Broadridge recorded a first-quarter record of $57 million in closed sales, indicating strong demand for its solutions and a robust sales pipeline.

Negative Points

  • Recurring revenue growth was partially offset by a 4% decline in wealth and investment management revenues due to the E-Trade deconversion.

  • Adjusted operating income decreased by 7%, impacted by lower event-driven revenues and the E-Trade deconversion.

  • The company's adjusted EPS remained at $1, with no increase in EPS guidance despite the top-line revenue raise, suggesting lower incremental margins.

  • Free cash flow was negative $158 million in Q1, a decline from the previous year, driven by increased cash taxes and severance payments.

  • The acquisition of SIS is expected to be slightly dilutive to Broadridge's margins and neutral to EPS in the first year.

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