Broadridge Financial Solutions, Inc.

Good morning and welcome to the Broadridge Fiscal Second Quarter 2026 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 a touch-tone phone. To withdraw your question, 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 and Corporate Communications. Please go ahead.

Thank you, Drew. And good morning, everybody. Welcome to Broadridge's second quarter fiscal year 2026 earnings conference 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 Chief Executive Officer, and our Chief Financial Officer, Ashma Gay. Before I turn the call over to Tim, I want to make a few standard reminders. One, 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 and a more complete description on our annual report, Form 10-K. 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 the presentation. Let me now turn the call over to our CEO. Tim. Thank you, Ed.

Good morning. I'm delighted to be here this morning to discuss our strong second quarter results. and provide an update on some of our strategic initiatives. Entering the second half of our fiscal year, the market backdrop remains positive. US equity markets rose 16% in calendar 25, and they largely remained strong in January. Our clients are clearly benefiting from strong capital markets activity, and so are we. I'm especially excited to be here today because the accelerating pace of technology and a pro-innovation regulatory agenda are together creating exciting change. And Broadage is uniquely positioned to help our industry drive innovation at scale. A few examples. Toganization continues to gain steam across capital markets, wealth, and asset management. In shareholder engagement, a quiet revolution is transforming how funds and public companies engage shareholders and manage proxy. Digital communications are driving down the cost of interacting with shareholders and increasing investor engagement. And of course, AI is enabling all this at a faster pace. These are the kinds of transformational changes we have built Broadridge to address. And our ability to drive innovation at scale is creating opportunity for the future, even as it translates into results today. So let's dig into those results, starting with the headlines on page three. First, Broadridge delivered a strong second quarter, including 8% recurring revenue growth constant currency and adjusted EPS of $1.59. Second, we continue to execute on our strategy to democratize and digitize investing, to simplify and innovate trading, and to modernize wealth management. We're beginning to see positive incremental impact from delivering new forms of shareholder engagement. extending our omnichannel digital capabilities, and driving tokenization across governance, capital markets, and wealth, all enhanced by our platform and AI capabilities. Third, we remain committed to balanced capital allocation to drive shareholder value. We're on track to deliver another year of 100% plus free cash flow conversion, which gives us ongoing flexibility pursue additional compelling M&A opportunities while returning capital to shareholders. Fourth and last, we remain on track to deliver strong results in fiscal 26 and beyond. We are reaffirming our 26 guidance for recurring revenue growth, margins, and closed sales, and we are raising our outlook for adjusted EPS growth to 9 to 12 percent. That outlook keeps us on track to deliver on our three-year top and bottom line objectives. Let's move to the drivers of those results on slide four, starting with our governance business, where we continue to drive the democratization and digitization of investing. Governance recurring revenues rose 9% constant currency, driven by revenues from sales and continued position growth. Investor participation trends remain healthy across both equities and funds. Total equity position growth remained strong at 17%, with revenue position growth at 11%, driven by growth in managed accounts. Looking ahead, we're seeing low teens position growth for the second half, which should drive high single-digit growth in revenue positions. Fund position growth, which was hurt by timing in Q1, strengthened as expected from 2% in Q1 to 15% in Q2. Looking through the timing noise, fund position growth was 8% for the first half. Looking ahead, we continue to see fund position growth for the year trending in the mid to high single digits, in line with stage one. We've also seen higher than expected event-driven activity across both fund elections and corporate events, which gives us the opportunity to accelerate our innovation roadmap for the benefit of our clients, and our shareholders. Beyond position growth, our business is benefiting from our investments in innovation, starting with what we are calling a quiet revolution in shareholder engagement. This coming proxy season, we expect more than 600 funds covering $4 trillion of assets to use our voting choice solution, up from 400 funds and $2 trillion last year, and fewer than 100 funds two years ago. We are also rolling out our AI native custom policy engine and vote implementation capabilities for institutional investors like J.D. Morgan and Wells Fargo, who are seeking to reduce their reliance on proxy advisors. This is a powerful example of how our AI capabilities are enabling new revenue. And we continue to build on our pilot program, first launched with ExxonMobil, to enable retail shareholders to provide standing voting instructions for annual meetings. We also continue to make progress in driving the digitization of communications, closing a significant sale to extend our flagship Wealth in Focus platform to cover a million additional accounts. I'm also excited to note the rapid progress we are making in addressing the tokenization opportunity in equities. I said on our last call that we see tokenized equities as an opportunity for Broadridge, and recent client and institute conversations have only reinforced that conviction. The last several weeks have seen announcements by the major exchanges and the DTCC on their plans to build tokenized trading capabilities for equities, as well as announcements by issuers themselves of tokenized equity offerings. As tokenized equities scale, providers will need to ensure they meet the same governance and disclosure requirements as traditional equities. And for real liquidity, the market will need to access broker-dealers who are our core clients, even as we increasingly serve new intermediaries as well. For both, the challenge is to gather communications from every issuer and fund, distribute them accurately according to client's preferences, take back and reconcile votes, and ensure regulatory requirements are met and that proxy voting is accurate, transparent, and documented. And that's our core competency. And for issuers, While tokenized equities enable real benefits, they also represent new complexity. Issuers will now have registered shares, beneficial shares, and potentially tokenized shares across multiple models of tokenization and multiple layer one networks. The opportunity for Broadridge is to simplify that complexity for brokers and platforms, issuers, investors, and regulators, just like providers simplify that complexity in traditional models today. To make this happen, we expect to integrate tokenized and digital assets into our property capabilities by the end of this year. From there, we'll extend those capabilities to include other parts of the servicing model, including corporate actions and disclosures. We'll also extend those solutions to digital wallets to create a seamless client experience regardless of where investors hold their equities and other tokenized assets. Since our last update, we have talked to and worked with dozens of clients, regulators, and industry partners. Feedback from them on our roadmap has been universally positive. There is a clear market need, and we are stepping into it, ensuring that governance complexity does not inhibit market growth. And as we open the market to new investors and new products, that will drive additional position growth, just as innovation has done in the past. I'll close my review of governance by noting that we also continue to strengthen our business with M&A. In early January, we closed the acquisition of Acklin, which will augment the suite of services we offer to funds in Europe across their lifecycle, from creation and registration to ongoing distribution. The acquisition of Acklin, like the tuck-in deals we completed earlier this year for iJoin and Signal, extends our product and geographic reach. Turning next to capital markets, where we are simplifying and innovating trading, recurring revenues grew 6% on a constant currency basis. Our capital markets business is benefiting from balanced demand across our front and back office solutions, and from tokenization revenues, including the growing adoption of our distributed ledger repo platform and revenue from CantonCoin. Volumes on our market-leading DLR platform, Distributed Ledger Repo platform, continue to grow as we add new clients. We tokenized $384 billion per day in December, or $9 trillion for the month. That's more than double where we were in June. As demand for our tokenized collateral solution grows, we are on track to launch a real-time repo capability in fiscal year 26. which will incorporate stablecoin to make repos a real trading and financing instrument and further scale volumes. I'm also pleased to note that we completed SocGen's first digital bond issuance in the US during the second quarter. This issuance highlights the flexibility and power of our DLR platform to tokenize a wide range of assets. So it should be no surprise to know that Broadridge will be extending our tokenization platform to other asset classes, including deposits, in fiscal 27. Beyond DLR, we are also actively working to enable our primary trade processing engines to support digital assets alongside traditional assets by the end of fiscal 26 across both capital markets and wealth management. And speaking of wealth management, recurring revenues grew 11% during the quarter, propelled by strong organic growth and the final month of M&A revenue from the acquisition of SIS. Our wealth platform continues to gain recognition in the marketplace and was recently named a leader in wealth management technology by IDC. That recognition is contributing to a growing pipeline of platform opportunities. I'll finish my review this morning with closed sales. After a slower start in Q1, I'm pleased to report that our sales momentum is picking up. Q2 closed sales rose 24% to $57 million. In addition, new pipeline generation, which is our measure of new sales opportunities, rose more than 20% over the first half of fiscal 25, driven in part by the transformational opportunities I just mentioned. Clients are engaging with us on tokenization, shareholder engagement, and digital communications, as well as more traditional needs like preparing for T plus one in Europe and 23 by five trading in the US. Those conversations are driving multiple exciting pipeline opportunities and keeping us on track to deliver on our closed sales guidance. I'll close my remarks with a few key takeaways on slide five. First, Broadridge is delivering strong results today with 8% recurring revenue growth and adjusted EPS of $1.59 in the second quarter. More importantly, we're on track to deliver a strong fiscal 26 with recurring revenue growth constant currency at the higher end of 5% to 7% and adjusted EPS growth of 9% to 12%. And with this guidance, we're on track to deliver on our top and bottom line objectives for the three years ending this June, which will be the fifth consecutive three-year period in which we met our goals. Second, we're actively putting in place the building blocks for continued growth tomorrow. I started my comments this morning by calling out the shifts we're seeing in the financial services industry. In each of those areas, we're investing to create what we will believe will be a significant opportunity tomorrow. We're leading in tokenized trading, and we're extending that capability to new uses and asset classes. As tokenized equities begin to emerge, we'll accelerate that adoption by addressing the full suite of proxy, Other asset servicing needs so that tokenization platforms can focus on gathering assets, driving liquidity, and reducing trading costs. We're actively enabling the next generation of shareholder engagement. Asset managers and issuers are dramatically changing the way they interact with investors, equity owners, and fund owners, and Broadridge is enabling that change with a suite of new solutions. We're driving the next generation of digital communications. A wealth and focus platform is already making communication between wealth managers and their clients more effective, more engaging, and less costly. And we're leveraging our strong AI and platform capabilities to rapidly build these and other new solutions while improving productivity. With our deep domain knowledge and critical role at the intersection of financial services, AI will both expand Broadridge's opportunities and drive efficiency improvements. Third, given all these opportunities, we are managing our investments and capital wisely and with balance to deliver for shareholders today and tomorrow. We're leveraging the unexpected benefit of more event revenue to accelerate our roadmap in each one of the key initiatives I just noted, even while delivering higher earnings. And we're carefully balancing capital allocation in light of the strategic opportunities we see for both share buybacks and for strategic Tuckian M&A. With the pace of industry evolution starting to accelerate, Broadridge has never been better positioned to play a critical role in helping our clients grow and win. And I've never been more excited about the opportunities that we have in front of us. Before I turn the call over to Ashima, I want to thank our Broadridge Associates. We often talk about the importance of culture because we see firsthand how our focus on clients drives success and sets the stage for continued growth. With that client-focused culture and unprecedented depth in financial markets, our associates have been and are the key to make Broadridge the trusted and transformative partner for the financial services industry. Thank you. I also want to take a moment to thank Brett Keller, who will be leaving our board at the end of April. Brett has been an invaluable counselor for nearly 11 years and will miss his wisdom and insight. And I want to welcome Trish Moscone and our own Chris Perry to the board. Trish brings a wealth of experience from senior consulting roles at both McKinsey and BCG and from her senior executive positions at BlackRock and Synchrony. And Chris brings a long career in wealth, data, and financial services generally, along with intimate knowledge of Broadridge's most important clients. Trish and Chris, welcome. Now let me turn it over to Ashima. Ashima?