Broadridge Financial Solutions, Inc.

Good day and welcome to the Broadridge Fiscal Third Quarter 2026 Earnings Conference Call. All participants will be in a 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 touchtone phone. And 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 Mr. Eddings Thiebaud, Head of Investor Relations. Please go ahead.

Thank you, Chuck, and good morning, everybody, and welcome to Broadridge's third 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 Gayi. 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 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 gap measures can be found in the earnings release and presentation. Let me now turn the call over to our CEO, Tim.

Thank you, Eddings, and good morning. Roger delivered strong third-quarter financial results, and we're on track to deliver a strong fiscal 2026. The market backdrop remains positive. Equity markets have been resilient in the face of geopolitical uncertainty. And capital markets remain active, driving strong position growth, higher trading volumes, and elevated event-driven activity, all of which are benefiting Broderidge. At the same time, we've always been focused on driving steady and sustainable growth by aligning our business with the long-term trends that are shaping the financial services industry. And so I'm pleased to report they're also squarely on track to deliver on our three-year financial targets for the fifth consecutive cycle. Looking ahead, we're already investing in the next wave of industry innovation. Broadridge is transforming shareholder engagement, leading in tokenization, driving digitization, and scaling our AI capabilities. And we're using our strong free cash flow to return capital to shareholders, even as we make tuck-in acquisitions that strengthen and extend our value proposition. The bottom line is that Broadridge is well-positioned to drive steady and sustainable growth for a long time to come. As we close out fiscal 2026, we're delivering strong results today, including double-digit earnings growth, and we're putting in place the building blocks for long-term growth tomorrow and beyond. To see how all this plays out, let's go to the headlines on slide three. First, Brodgers delivered strong third quarter results, including 6% recurring revenue growth constant currency and 11% adjust the DPS growth. Second, our growth is being driven by the execution of our strategy to democratize and digitize governance, simplify and innovate capital markets, and modernize wealth management. Third, as I just said, we are taking active steps to address future growth opportunities by leading in tokenization, driving the digitization of communications, and scaling AI. Fourth, We are leveraging our strong free cash flow to make growth-accretive acquisitions like Acolyn and CQG, while returning capital to shareholders with share buybacks at attractive levels, as Ashma will touch on. Fifth and last, based on our strong performance, we are raising our fiscal 26 guidance for recurring revenue and adjusted EPS growth to at or above 7% for recurring revenue growth constant currency and to 10% to 12% for adjusted EPS. These results demonstrate the power of our strategy and proven ability to execute. So let's turn to slide four to look at the key drivers of that execution, starting with our governance business. Governance recurring revenues rose 8% in constant currency, driven by new sales and continued growth in investor participation. Investor participation trends remained very strong, with total equity position growth at 15%, and equity revenue position growth of 11%. We continued to benefit from strong growth in managed accounts and steady mid-single-digit growth in self-directed accounts. Mutual fund and ETF position growth was also healthy at 6%, driven by demand for passive funds. Beyond position growth, our innovations to power shareholder engagement are building momentum. Our pass-through voting solution is now enabling voting choice for shareholders of 900 funds with assets under management of more than $8 trillion. Our new standing voting instruction solution, which enables retail shareholders to set their default voting instructions, is also off to a strong start. Our pilot clients are benefiting from exceptional response rates. Nearly 10% of Exxon's retail shareholder base enrolled in just one year. and 30% of respondents had not voted at the prior meeting, highlighting the power of this program to engage new voters. We're also now live and supporting proxy voting for institutional asset managers looking to enhance their voting processes and reduce their reliance on proxy advisors. Beyond voting, our data-driven fund solutions business reported strong growth, driven in part by our ACWIN acquisition. We're seeing a lot of early interest from our U.S. fund clients on how they can use the Ackland capabilities to accelerate their growth in Europe. In our capital markets business, healthy 6% underlying growth was offset by lower license revenues compared to the prior year. We're seeing good growth in our post-trade solutions where our global platform capability is enabling clients to simplify their back-office technology stack across multiple geographies and asset classes. we also continue to see robust demand for our front office solutions. Earlier this morning, we closed the acquisition of CQG, a leading provider of futures and options trading, execution management, and market connectivity. This acquisition accelerates our expansion into futures and options, where we are well advanced in building a next generation order management solution with a tier one global bank. CQG will add highly complimentary execution management algorithmic trading, and analytics capabilities. Our goal is to create an institutional-grade end-to-end trading suite for global futures and options, and CQG is a nice accelerator of that strategy. Turning to wealth management, recurring revenue rose 8% in constant currency, powered by strong growth in Canada. We acquired SIS last year to deepen our relationships with key clients and accelerate the rollout of our platform. Now that strategy is paying off with attractive organic growth. We've strengthened our core technology platforms, built connectivity to our wealth components, and I'm proud to announce, just gone live with the first phase of our wealth platform solution for a leading Canadian wealth manager. And as the market continues to evolve, we're leading that change. Two weeks ago, we announced the launch of our next generation digital asset platform, building on our unified suite of solutions. The platform will enable Canadian wealth managers to accelerate their offering of digital assets, including crypto, and tokenized equities, funds, and alternatives. I'll close my review of our results with sales. Year-to-date closed sales were $147 million, 16% below last year, even as deal origination and pipeline were substantially up. Where we like the demand and pipeline we're seeing, based on our progress toward closing, we're updating our sales guidance for the year to $240 to $290 million. We're seeing robust demand that's taking longer to close than we expected, due in part to a mix of bigger, larger, more complex deals this year. Some examples include wealth platform sales and GTO, and on the ICS side, larger digital transformation sales and customer communications. Those $5 million plus deals are powering a very strong pipeline and also take longer to close. While we're lowering our outlook for fiscal 26, we feel good about the future. The pipeline I just mentioned is higher than it ever has been, well north of a billion dollars. And we're seeing our product focus driving new demand. We're enhancing our trading solutions and driving the suite of shareholder engagement solutions I highlighted earlier. We're also building a track record of successful wealth platform and digital communication transformations, while linking more of our solutions to our data platform layer, all of which are driving active client discussions. Now let's turn from the execution behind today's results to what we're doing to drive long-term growth on slide five. The financial services market is evolving rapidly, driven by the accelerating pace of technology and an innovation-friendly regulatory environment. Change has always been good for Broadridge, as we help our clients adapt with a mutualized approach. We see the current set of changes as a significant opportunity, and we're leaning into them. First, we're leading in tokenization. Broderidge is building on our industry-leading role in tokenizing more than $350 billion per day on our distributed ledger repo platform. In governance, we're now powering on-chain voting and disclosure. In wealth management, We're creating an end-to-end solution for crypto and tokenized equities, funds, and alternatives. And in capital markets, we're scaling our market-leading digital asset capabilities in multiple directions. In a few weeks, we will be the first to power on-chain proxy voting for natively issued tokenized securities for a U.S. public company. As part of that process, we're consolidating and recording voting for beneficial shares, registered shares, and tokenized shares to create a unified view for issuers to see all of their votes in one place and take the friction out of managing multiple ownership bases. In addition, we announced an agreement earlier this week with a leading global marketplace for tokenized real assets, including U.S. equities, to provide proxy voting and other governance activities for their clients. And we're just getting started. Whether shares are tokenized by an issuer or a third party, Broderidge is stepping up to power the governance capabilities for issuers and investors and make tokenized equities real. And investors will be able to express their voting preferences across their holdings, including tokenized holdings, through Broderidge's institutional-grade proxy vote platform. We're also working with our wealth management clients to accelerate the launch of crypto and other tokenized assets to their clients. Our Canadian Digital Assets Suite will support the governance and trading of digital assets in a seamless and integrated environment that includes our own capabilities, as well as a growing ecosystem of digital asset partners. And on the capital market side, we're extending the capabilities of our market-leading DLR platform to new trade types, geographies, and asset classes. And our worldwide trade routing network is transmitting crypto order flow for a growing number of clients. Second, we're driving the digitization of communications. The time is coming to shift the default delivery method for investor communications, and we're helping to drive the change. The SEC has indicated it's taking a fresh look at moving to a digital default option for investors who do not request paper delivery. We've been working with the industry and our clients to move this forward, and while the timing is uncertain, we anticipate a proposal in this area over the coming months. We believe this evolution will be positive for Broadridge and our clients. We've already digitized nearly 90% of proxy and mutual fund communications, saving funds and public companies hundreds of millions of dollars per year. Now, as we look forward to increasing electronic delivery for other communications, including statements and prospectuses, we're helping our clients prepare as they think about how to take advantage of such a change while also maintaining and improving the experience for clients. We expect the implementation process of any actions would occur over a few years and primarily affect our low to no margin distribution of revenue. We expect the impact on recurring revenue and earnings will be broadly neutral. On one hand, migration to a digital default could have an impact on our recurring revenue of a few percent, mostly in our customer communications business. On the other hand, we believe this evolution will create demand for new services, such as the Wealth in Focus solution, which is already enabling omnichannel communications to millions of investors. Like tailored shareholder reports, we expect these new opportunities to more than offset lost recurring revenue. The end result will be a more valuable brokerage that's growing faster with higher margins. Finally, we're scaling AI by building on top of our common data ontology, shared API architecture, and the operating workflows we already run at scale. Our AI capabilities are powering new products, accelerating our software development cycle, and driving productivity gains. Let me give you three examples. Our new custom policy engine, which is fully AI-native, is able to read and analyze source materials and apply clients' voting policies across thousands of companies. Today, that capability is already enabling asset managers with more than $800 billion AUM to implement their own voting policies without a proxy advisor. Now we're building on that progress to modernize the entire front-to-back workflow supporting institutional voting by leveraging agentic AI to enhance our core institutional voting platform. One of our fastest growing products is our AI-powered global demand model, which tracks 120 trillion in global assets and is assisting products and marketing decisions for nearly two dozen and growing leading asset managers. And on the productivity side, our managed services business has already seen a 25% increase in productivity, with line of sight to 50%. Going forward, we're extending our Broadridge platform to a growing number of core applications. This platform, with its common data and APIs, positions Broadridge to create an agentic layer our clients can use directly or can leverage to create their own solutions using our embedded services. In sum, AI is enabling Broadridge to deliver new services, become more embedded in our clients' agentic workflows, and drive our own productivity. Stepping back, we believe that each of tokenization, Digitization and AI are growth drivers for Broadridge as we help our clients and our industry take advantage of the next wave of transformation in financial services. And we're building that tomorrow while continuing to deliver today with another year of strong and steady growth in fiscal 26. Before I turn the call over to Ashima, I want to thank our Broadridge associates. They're delivering superior service to our clients today while building the products and capabilities that will power the exciting future of governance, capital markets, and wealth for a long time to come. And on that note, let me turn it over to Ashma. Ashma?