Broadridge Financial Solutions, Inc.

Good morning and welcome to the Broadridge second quarter fiscal year 2021 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Eddings Thiebaud, Head of Investor Relations. Please go ahead.

Thank you, Andrew. Good morning, everybody, and welcome to Broderidge's Fiscal Second Quarter 21 Earnings Call. Our earnings release and the slides that accompany this call may be found on the Investor Relations section of Broderidge.com. Joining me on the call this morning are Tim Gokey, our CEO, and our CFO, Edmund Reese. Before I turn the call over to Tim, a few standard reminders. We will be making forward-looking statements on today's call regarding Broderidge that involve risks. A summary of these risks can be found on the second page of the slides in a more complete description on our annual report on Form 10-K. We will also be referring to several non-GAAP measures which we believe provide investors with a more complete understanding of Broderidge's underlying operating results. An explanation of these non-GAAP measures and reconciliations to their comparable GAAP measures can be found in the earnings release and presentation. Let me now turn the call over to Tim Gokey. Tim?

Thank you, Eddings. Good morning, and thank you for joining us. I'd like to start with a special welcome to Edmund Reese, our new CFO, on his first Broadridge earnings call. I know many of you were introduced to Edmund during our virtual investor day in December, and I hope you came away as impressed as I've been over the past two months. This morning, I'll provide an overview of the key messages from this quarter and give you an update on our progress against the growth plan we discussed in December. Edmund will review our financial results and we'll close with your questions. Let's get started. After a strong second quarter, Broadridge is on track to deliver another solid year of top and bottom line growth. We now expect to be at the higher end of our guidance range for both recurring revenue and adjusted EPS growth. That guidance reflects our strong quarterly results. For the quarter, Broadridge delivered 7% recurring revenue growth, continued margin expansion, and 38% adjusted EPS growth in a seasonally small quarter. We continue to execute against the growth plan we outlined in December. I'll highlight later some of the specific steps we've taken on key initiatives across governance, capital markets, and wealth and investment management. Our strong second quarter results and outlook for the second half of the year have given us the opportunity to step up our investment. I'm pleased to see us increasing our investment in our technology, products, and people to meet our clients' growing needs as they face accelerating trends towards next-generation mutualization, resiliency, and digital transformation. Finally, our outlook for the year means we are off to a strong start toward achieving our latest set of three-year growth objectives, including 7% to 9% recurring revenue growth and 8% to 12% adjusted EPS growth. We remain focused on long-term growth, which has helped us deliver consistent, sustainable, top-quartile total shareholder returns. Our focus on long-term growth is the reason why I remain excited by our progress against our clear strategy. Let's turn to slide four for an update on some recent achievements against these goals. I'll start with our governance franchise, where we are delivering next-generation regulatory capabilities, building data-driven solutions for funds, delivering end-to-end solutions for issuers, and driving omnichannel communications. During the quarter, we made strong progress on each of these fronts. First, a next-gen regulatory. We're making strong progress on building a European regulatory communications hub for the Shareholder Rights Directive 2. We're winning new clients across the EU, including major institutions in both Italy and Spain. We're also working with other technology providers, including a leading Danish bank technology player and a leading French governance solutions provider. to deliver Broderidge's SRD2 solutions. Broderidge also made strong progress against delivering data-driven solutions to mutual funds. A key part of this effort is our growing data and insights business. Based on our unique data, we enable funds to better understand at an aggregate level who and importantly where their shareholders are. The compelling value of these solutions was further demonstrated by a multi-million dollar sale in the second quarter to a leading global fund company. We'll be using our data solutions for multiple use cases, including enabling the repatriation of tens of millions of dollars of dividends to their U.S. shareholders. On the issuer side, we continue to see strong demand for virtual shareholder meetings. During the past calendar year, we hosted meetings for 83% of the S&P 100. And we're seeing strong renewal rates as we begin the lead up to the 2021 proxy season. We continue to enhance our VSM capabilities by rolling out the first phase of an enhanced platform, which will enable corporate issuers to leverage our unique capabilities around shareholder validation while using the meeting platform of their choice. Finally, in omnichannel communications, we continued with double-digit growth in our digital communications revenue in the first half, building on last year's strong performance. Let me turn now to our capital markets franchise. where we continue to drive important mutualization benefits to our global clients. Broadridge is already the leading global post-trade provider for cash securities, processing over $10 trillion in equity and fixed income trades per day. During the quarter, we took an important step toward expanding beyond cash securities into exchange-traded derivatives – We announced that RJO Bryant, the largest independent futures exchange and clearing firm, has selected Broadridge's global derivatives platform. Our scalable and agile solution will enable RJO to streamline and modernize its operations with one unified global technology platform. We're also bringing network value to our clients by extending to the front office and fixed income. As we described at Investor Day, our AI-driven corporate bond trading platform, LTX, remains on track for a broader launch this year. We're now live in a soft launch with select clients, and we continue to receive positive feedback. Full launch with more than 10 dealers and 35 buy-side clients will be later this year. Turning to wealth and investment management, as we laid out in December, our goal is to build a leading technology and operations provider to the wealth management industry by providing both a growing list of differentiated component solutions and by delivering a next-generation industry wealth technology platform. First and foremost, we have continued to demonstrate the value of our leading wealth back office platform by seamlessly processing the recent spike of record trading volumes driven by high volatility and increased retail participation. These volumes have challenged the industry as homegrown systems have struggled to scale. Our performance has continued to drive home the value of a mutualized industry solution. At the same time, we continue to extend our suite of component solutions, working with multiple partners to bring new and innovative solutions to our clients, and we continue to make strong progress toward the launch of our next-generation wealth management platform with UBS. The net of all of this, across governance, capital markets, and wealth and investment management, is that we are seeing strong execution on tangible deliverables coupled with unique innovation that gives us confidence on our longer-term growth is on track. Let's turn now to a brief review of our recurring revenue results on slide five. Edmund will cover our financial performance in more detail, but I want to share my key takeaways from our 7% recurring revenue growth in the second quarter. First, I was pleased to see balanced growth across both segments, with 7% growth in ICS and 8% growth in GTO. Second, as I look at the drivers of growth in ICS, what stands out is the impact of strong stock record growth, which reached 24%. And even in a seasonally small quarter, growth, strong growth in regulatory revenues, our business is clearly benefiting from the long-term technology trends that have lowered the cost to retail investors of buying and owning individual shares. These trends, which include the widespread introduction of commission-free trading, are having a broader and longer-term impact on investor behavior that goes beyond the very recent volatility in a few high-profile names. Stock record growth has been healthy across virtually all of our broker-dealer clients. and has been especially strong among online brokers who are leading many of these changes. As Edmund will discuss, we expect these growth trends to remain favorable in the second half of the year. Third, I'm also pleased to see a strong growth contribution from both our data-driven fund solutions as well as our issuer business. Customer communications revenues are flat, with strong growth in digital revenues balancing modest COVID declines in print volume. Fourth and last, strong sales onboarding and higher trading volumes are driving the growth in our GTO segment. As I noted earlier, much of the impact from higher trading levels is coming on the retail side, which clearly benefited our wealth and investment management business in the second quarter. More important from my perspective is that year-to-date growth in both capital markets and wealth has been balanced at 7% and 9% respectively. Let me wrap up my comments with some final thoughts about how to put our strong second quarter and first half in context. Simply put, Our performance in the first half of fiscal 21 gives me even more confidence that Broadridge will continue to deliver steady and consistent revenue and earnings growth in the years to come. As we shared at our investor day, We have a large and growing $46 billion market opportunity, three strong and going franchise businesses, and a clear, targeted growth plan to take advantage of long-term trends around next-generation mutualization, resilience, and digital transformation. We are on track to deliver another solid year of recurring revenue growth, margin expansion, and adjusted EPS growth at the higher end of our 6% to 10% range. Our strong results and disciplined cost actions have put us in a position to deliver against the higher end of our revenue and earnings guidance for fiscal 21 while making investments that will sustain our growth through fiscal 23 and beyond. We are investing in our technology platforms and strengthening our product development teams. We're also investing in our human capital by rewarding our associates, increasing our diversity, equity, inclusion, and career development investments, and upping our recruiting for new talent. all of which will enhance our talent base going forward. As we enter the seasonally larger second half, Broadridge is delivering in the short term and investing for the long term. That's a great place to be and a strong formula for long-term value creation. Before I hand it over to Edmund, I want to thank our associates around the world for the important work they do and for their commitment to the service profit chain. whether working from home or socially distanced on the production floor. They are persevering and delivering for our clients at an extraordinary rate. They truly are enabling better financial lives for millions of investors around the globe. And their engagement in this powerful mission is what drives us forward. Thank you. Edmund, over to you.