Broadridge Financial Solutions, Inc.

Good day and welcome to the Broadbridge Fiscal Second Quarter 2023 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. 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. At this time, I'd like to turn the conference over to Eddings Thiebaud, Head of Investor Relations. Please go ahead.

Thank you, Allison, and good morning, everybody, and welcome to Broderidge's second quarter fiscal year 2023 earnings call. Our earnings release and the slides that accompany this call may be found on the investor relations section of broadridge.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. One, we will be making forward-looking statements on today's call regarding Broadridge that involve risks. A summary of these risks can be found on the second page of the slides. and a more complete description on our annual report on Form 10-K. Two, we'll 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 the comparable GAAP measures can be found in the earnings release and presentation. With that done, let me now turn the call over to Tim Gokey. Tim?

Thanks, Edding. Good morning and thank you for joining us. I'm pleased to be here to review our strong second quarter performance. I'll start with a quick summary of our results and key headlines, followed by a review of our business. I'll close with some thoughts on why my recent client meetings have given me even more confidence that Broadridge remains well positioned to grow, even in an uncertain market. On slide three, Brodger delivered another strong quarter. Recurring revenues rose 8% on a constant currency basis, with strong growth across both our segments. Adjusted EPS rose 11%, driven by the combination of strong growth and disciplined expense management. Second, this performance highlights the strength and resilience of our business. Clearly, the market backdrop remains uneven. Equity markets rose slightly in the quarter, capping off a year of strongly negative returns. Rates continued to rise. Volatility remained high. Asset managers pulled back on discretionary expenditures, and the dollar remained very strong. In the face of this uncertainty, Broadridge's resilient business model, with 93% recurring fee revenues, continued to perform. Moreover, our long-term business drivers remain healthy. We're benefiting from a strong sales backlog, robust investor participation, and significant demand for our digital solutions, which, along with disciplined cost management, are enabling us to drive top and bottom line growth. Third, investor participation, in particular, remains at very healthy levels. Broadridge benefited from mid- to high-single-digit position growth across both funds and equities, and we expect to see further growth ahead in the second half. Fourth, we are executing on our long-term growth initiatives. We're innovating in governance, including pass-through voting, tailored shareholder reports, and digital communications. And we continued our strong momentum in capital markets. Fifth and finally, we are reaffirming our guidance for the full year. We continue to expect to deliver 6% to 9% recurring revenue growth constant currency, expanding margins, and 7% to 11% adjusted EPS growth. Now let's turn to slide four for a review of our results, beginning with our governance or ICS business, which reported another strong quarter. The biggest driver of our 10% growth in ICS continues to be new sales in our fund solutions and customer communications businesses, Equity position growth remained strong, driven by double-digit growth in managed accounts and mid-single-digit growth in non-managed accounts. Fund position growth, while still healthy, slowed to 6% as investors rotated away from the traditional active strategies into ETFs and passes. Looking ahead to the seasonally larger second half of the year, we expect further growth across both equities and funds. Demand for innovative solutions remains strong, as evidenced by significant interest amongst our asset manager clients to offer their investors, both institutional and retail, choice on how their underlying shares are voted. Just yesterday, we launched a new pilot for individual investors with another leading passive asset manager, and were in discussions with a number of other fund complexes. We're also continuing to work with our fund clients to develop our future roadmap for tailored shareholder reports, which will fill a critical need for the industry. Beyond our regulatory products, we're seeing strong demand for digital communications, with a second major client signing for our Wealth and Focus platform during the quarter. This omnichannel product suite offers enhanced investor engagement while delivering near-term cost savings through increased digitization of critical communications. That is proving to be a compelling combination for our customer communications clients. We've been investing steadily in building these capabilities over the past few years, and I'm pleased to see that investment now turning into meaningful revenue with key clients. Turning to capital markets, recurring revenues rose 12%, driven in part by the continued strong performance of Broadridge Trading and Connectivity Solutions, or BTCS, where our market share gains are driving growth. I was also pleased to see cross-selling start to contribute to new sales as well, as we want a new client in the quarter that has long been targeted by BTCS and that made the decision to switch now based on their trust in Broadridge. Our other capital markets products also performed well, as our themes of simplifying globally, front to back, and within the front office are resonating with clients. We also continue to see progress in digital ledger repos, with a strong pipeline of discussions with new institutions. Wealth and investment management declined year over year as positive core growth was offset by lower license revenue. We continue to hit key wealth management platform milestones. UBS advisors are transitioning onto the latest generation of our workstation with continued very positive feedback. We've now completed development of all 29 platform areas and testing for 26 to 29. We are working closely with the new management at UBS as they refine their approach to rolling out the remainder of the platform, and we continue to expect to begin to recognize revenue in mid-calendar 23. Our sales pipeline is strong, and as Edmund will discuss, our investment levels have decreased as we shift into this new phase. Moving to closed sales, year-to-date closed sales were $94 million. Client engagement around our next-generation technology remains high, and our pipeline entering calendar 23 is stronger than it ever has been. As a result, our sales expectations for fiscal 23 are unchanged. I'll close my remarks on slide five. Over the past several weeks, I've met with more than 30 CEO and C-suite clients in North America and Europe. The message from them is clear. They are continuing to push on next-generation technology. They are looking for long-term partners that invest in their business, and they'd like a componentized approach that creates value along the way. These critical needs are strongly aligned with our strategy and direction, and I'm confident that Broadridge is well-positioned for growth in a market that remains uncertain. That confidence starts with our strong market positions across all three of our franchises, based on the mission-critical infrastructure we provide that enables corporate governance, empowers trading and investing, and is coupled with our strong track record of innovation and client service. We've invested to bring more value to clients and to meet their need for next-generation technology by building or acquiring critical solutions and adding talent and technology. These investments are playing a key role in driving the strong revenue growth we reported today and we expect to see over the balance of the year. Importantly, we're innovating. As we talked about today, we're continuing to deliver new governance solutions. Our digital communications capabilities are gaining traction in the market. Our BTCS business is helping to drive the growth of our capital markets franchise. and we continue to progress wealth and investment management. By aligning with the long-term needs of our clients, we're attacking a $60 billion market opportunity, and we're scaling into a global fintech leader. In an uncertain market, our resilient business model, driven by recurring revenue, client focus, and a long track record of disciplined expense management, gives us the visibility and confidence to deliver for shareholders. As a result, We're reaffirming our full-year guidance for 69% constant currency recurring revenue growth and 7% to 11% adjusted EPS growth. And in turn, we expect to deliver at or above the higher end of our three-year objectives. When we do that, it will be the fourth consecutive three-year period in which we've delivered on our objectives. Finally, we're past the peak investment period on our platform solutions. positioning us to begin to return to a more historical strong free cash flow conversion and giving us additional flexibility to drive returns for our shareholders. In sum, Broadridge is delivering on the growth plan we shared at our last investor day. I want to close by thanking our associates. The work Broadridge does is important and makes a difference for millions of investors. None of it would be possible without our associates' talent, knowledge, and effort, which enables us to deliver exceptional products and service at scale for our clients and for our clients' clients. So thank you. Now, I'll turn the call over to Edmund for a review of our financials.