Broadridge Financial Solutions Inc (BR) — Q3 2024 Transcript

Thank you, Andrea. Good morning, everybody, and welcome to Broadridge's third quarter fiscal year 2024 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, Edmund Reese. Before I turn the call over to Tim, a few standard callouts. One, we'll 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 Broadridge'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, Edings, and good morning. It's great to be here to review our third quarter results and update you on our full year outlook. Overall, I'm pleased with the performance of our business in a complex environment. We see a market in which the underlying fundamentals are solid, where capital markets and retail investor activity are beginning to strengthen, and where our clients are highlighting the need for continued technology investment. While all that is going on, those same clients are being careful with their spending as they weigh the new higher for longer scenario as well as other tail risks. These trends play to Broadridge's strength. Our testing is indicating that healthy markets are driving a pickup in investor participation and position growth, and are delivering innovative solutions across governance, capital markets and wealth. Sales continue to be strong, highlighting our clients' willingness to move ahead with solutions that address revenue, cost or regulatory needs. My conversations with clients make it clear that they see Broadridge as a partner in helping them grow their business and adapt to change. It's a strong position, and it will be further enhanced as we put our cash flow to work with a balance of capital returns and targeted M&A. So, let's dig into the quarter. First, Broadridge reported 4% recurring revenue growth and 9% adjusted EPS growth. Those results were modestly impacted by the timing of annual meetings, which pushed some governance revenues into the fourth quarter. Second, we continue to execute against our strategy to drive the democratization and digitization of investing, simplify and innovate trading, and modernize wealth management. Our strategy is supported by long-term trends, including position growth, which we continue to see in the mid to high single digit range. Third, that execution is coming through in our closed sales, which rose 29% in the quarter and are now up 19% year-to-date. We expect that positive momentum to continue in the fourth quarter. Fourth, we remain on track to achieve our objective for 100% free cash flow conversion for the full year. That positions us to use our capital to increase share repurchases and to fund strategic tuck-in M&A. Finally, as we move through our seasonally large fourth quarter, Broadridge is on track to deliver another year of steady and consistent growth, in line with our long-term financial objectives. We are reaffirming our outlook for fiscal '24, adjusted EPS at the middle of our 8% to 12% range, with recurring revenue growth at constant currency at the low end of our 6% to 9% range. With strong year-to-date sales, we also expect record closed sales of $280 million to $320 million. Now, let's turn from the headlines to slide four to review highlights of our execution, starting with our governance franchise. ICS recurring revenue increased by 1% in the third quarter, influenced by the timing of regulatory communications on our quarterly growth. In regulatory communications, revenues remained stable despite a 5% growth in equity position. The peak for proxy communications occurs at the end of March, so any changes to the annual meeting schedule can affect quarterly revenues. This year, Easter fell in the last week of March instead of April as it did last year, which led many companies to postpone their annual meeting dates. This resulted in a shift of regulatory revenue from March to April, effectively moving it from the third to the fourth quarter. This timing adjustment will not affect our full-year results. Other than timing issues, position growth trends were varied. As mentioned, equity position growth was 5%, which aligns with our expectations, driven by strong double-digit growth in managed accounts. However, record growth for funds and ETFs decreased by 1% for the quarter. Quarterly fund position growth can fluctuate more than the annual number due to the timing and types of communications sent during that timeframe. Overall, the ongoing effects of lower fund flows and a shift to money market funds that started over a year ago have negatively impacted growth, particularly for active funds. Year-to-date fund record growth was 2%. Looking forward, fund flows are showing improvement, and our analysis suggests a slight increase in the fourth quarter. For the year, we anticipate stock record growth of 6% and fund record growth of 3%. Promoting and facilitating the democratization of investing is a crucial element of our long-term growth strategy. This was notably demonstrated in a significant proxy contest with Disney, where Broadridge managed and distributed multiple rounds of communications to millions of registered and beneficial shareholders holding nearly 2 billion shares on behalf of numerous broker/dealer clients. Each vote underwent multiple reviews and was verified by an independent accounting firm, ensuring all parties had confidence in the accuracy of the Broadridge votes. Daily vote tallies were accessible to all participants, culminating in an annual meeting hosted on Broadridge's virtual platform with results immediately known once the meeting concluded. Contests like Disney serve as excellent showcases for issuers, investors, broker/dealer clients, and regulators, highlighting how Broadridge's substantial investments in technology and digital communications, along with our dedication to accuracy, boost investor confidence in our markets. Beyond high-profile contests, we are also improving investor engagement by expanding voting choices across funds. Recently, we have launched services with five of the largest asset managers, encompassing a range of retail and institutional focused funds and ETFs. This is generating significant interest from additional asset managers and for a broader array of fund categories. Additionally, we are advancing our tailored shareholder report solution to assist the funds industry in navigating regulatory changes, currently in production testing, with a complete rollout starting in July. Turning to capital markets. Revenues rose 8% to $266 million, driven by strong growth in BTCS, which continues to deliver on the pillars of our original acquisition case. During the quarter, we signed a leading U.S. and global bank as the first client for global futures and options SaaS platform. This new capability will build on our existing products and significantly expand our derivatives trading solutions. It also represents another step forward in our goal of expanding BTCS' capabilities across asset classes and to our U.S. client base, which was a key part of our long-term growth plan at the time of the acquisition. On the post-trade side, we completed the implementation of our global post-trade platform for a leading Nordic bank. Our platform consolidates the bank's legacy in-house systems, streamlining its operations across 25 European markets and 10 custodians across both equities and fixed income. This particular bank was a long-term BTCS client. So, it's also another example of leveraging our front office relationship to extend our solutions across the trade life cycle. We also continue to see nice traction with our digital ledger repo and in AI with our BondGPT and OpsGPT solutions. Turning now to Wealth and Investment Management. Revenues rose 11% to $159 million as strong growth from UBS and the license revenue was partially offset by the E-Trade transition. In the first full year since the rollout of our wealth platform, we are seeing significant interest in our broad suite of wealth capabilities, and that's driving strong sales momentum with year-to-date Wealth Investment Management sales up 75%. I'm especially pleased to see strong interest in Canada for wealth component capabilities. Canada accounts for approximately a third of our Wealth and Investment Management revenues, and we see a long-term opportunity to adapt our wealth tools for Canadian firms. Moving to sales. Closed sales rose 29% in the third quarter and are up 19% year-to-date. We benefited from strong sales of our digital and print solutions for the new tailored shareholder reports, and we continue to see significant print and digital opportunities in customer communications. Our pipeline remains at record levels as clients focus on solutions that drive revenue growth, like our front office trading tools, and meet their regulatory requirements like tailored shareholder reports. That combination of strong sales and a record pipeline is giving us increased confidence in our ability to achieve record closed sales in line of $280 million to $320 million full year guidance. Let's move to slide five for some additional thoughts on our quarter and outlook. First, we are poised to deliver another year of mid single digit organic recurring revenue growth and double-digit earnings growth, right in line with the long-term growth goals we laid out at our Investor Day in December. In a quarter impacted by the timing of annual meetings, we reported 9% adjusted EPS growth. Now one month into the fourth quarter, we have high visibility into our remaining volumes. For the full year, we're tracking to recurring revenue growth of 6%, adjusted EPS growth of approximately 10% and record closed sales. Second, our growth continues to be driven by long-term trends, increasing investor engagement, the demand for digitization, accelerating trading, regulatory change, leveraging data and AI, and the need to modernize wealth management have all combined to drive strong sales over the first three quarters. As a result, we're going into our largest sales quarter with a strong pipeline and increasing visibility. Position growth has moved from pandemic highs and overall trends remain in line with the mid to high single digit growth rate of the past decade. Looking beyond the fourth quarter, the outlook for financial services firms appears to be improving. Capital markets activity is picking up and innovation is driving sales growth as our clients increase their level of investment. At the same time, strong equity markets are driving investor engagement and fund investors are beginning to rotate out of money market funds, both of which bode well for future position growth. Third, we're executing on our growth strategy. We are driving shareholder engagement and governance, enhancing our digital capabilities and customer communications, delivering innovative new capabilities in capital markets and are expanding our ability to drive growth and wealth across North America. We're also investing to strengthen our product teams, sales capabilities and technology capabilities including of course AI. Fourth, we're on track to achieve our 100% free cash flow conversion objective and the combination of strong free cash flow and our investment-grade balance sheet positions us to return additional capital to shareholders. We're also seeing a growing number of attractive M&A opportunities to further complement our organic growth. Finally, Broadridge remains well-positioned to drive long-term growth. We remain on track to deliver on our three-year growth objectives of 7% to 9% recurring revenue growth constant currency, 5% to 8% organic, and 8% to 12% adjusted EPS growth with fiscal '24 right in line with those goals. And with continued execution supported by long-term demand trends, we are well-positioned to continue to grow beyond FY '26 as we attack our $60 billion and growing market opportunity. I want to close by thanking our associates around the world. The market for what we do continues to evolve and Broadridge will be evolving as well. We're seizing the opportunities in front of us. And your focus on serving our clients, as shown by our strong accomplishments this quarter and over a long period, continues to set us apart. Thank you. And with that, let me turn it over to Edmund.

Thank you, Tim, and good morning, everyone. Let me start by saying that I'm pleased with the third quarter results relative to our full year guidance. While third quarter recurring revenue growth was impacted by the timing of annual meetings, we are entering the seasonally larger fourth quarter in a strong position. Through three quarters, we reported 6% recurring revenue growth, 11% adjusted EPS growth, and have received 98% of proxy records through April. That gives us a high confidence interval in our ability to deliver 6% recurring revenue growth, approximately 20% adjusted operating income margin and adjusted EPS growth of approximately 10%. Of equal importance is our cash flow performance for the year. We are on track for 100% free cash flow conversion, which will allow us to return a total of $700 million to $800 million to shareholders through the dividend and with share repurchases of $350 million to $450 million. So, with clarity on fiscal 2024, in my view, what matters most to achieving our three-year financial objectives are the wins that we have at our back, which are driving positive momentum in the business. First, closed sales through the first three quarters are up 19% over last year. And our healthy pipeline reinforces our conviction that we will achieve 15% to 30% sales growth in our full year '24 guidance. Second, while our testing shows 6% equity and 3% fund and ETF position growth for full year '24, the early testing for Q1 '25 is consistent with more recent increased retail market activity and our long-term outlook of mid to high single digit growth. Third, we continue to focus on actively managing our expenses and finalizing our restructuring effort in the fourth quarter to create investment capacity for organic growth in fiscal '25 and '26, while delivering continued earnings growth. Finally, our free cash flow conversion is definitively back at historical levels, positioning us to supplement our organic growth with accretive tuck-in M&A or return capital to shareholders. As a result, when I look ahead, I see strong momentum in the Broadridge business. Strong closed sales, driving five to eight points of growth from new sales, position growth supporting two to three points from internal growth, M&A investment contributing additional growth, and active expense discipline that will enable Broadridge to continue to invest in organic growth and deliver continued earnings growth. We continue to execute the Broadridge financial model and that gives me confidence that we remain on track to deliver again on our three-year financial objectives and on mid- to high teens ROIC. So, now turning to the financial summary on slide six. You see the performance for the third quarter. Recurring revenue rose to $1.1 billion, up 4% on a constant currency basis, all organic. Adjusted operating income increased 7%. And AOI margins of 21.4% expanded 40 basis points. And adjusted EPS rose 9% to $2.23. Finally, as Tim noted, we delivered third quarter closed sales of $80 million, up 29% over Q3 '23. On slide seven, you see that recurring revenue grew 4% to $1.1 billion in Q3 '24. Recurring revenue growth driven by converting our backlog to revenue and growth in GTO was impacted by proxy communications that were delayed into our fiscal Q4. So, for more context on this point, March is typically a heavy month for proxy communications, accounting for almost a quarter of our full year positions. As Tim mentioned, in 2024, we saw a modest delay in the timing of annual meetings, which pushed volumes from March into April. While that lowered our Q3 revenue, we have since processed virtually all of those delayed positions, and that will benefit regulatory revenue in the fourth quarter. On slide eight, we can see recurring revenue growth across our ICS and GTO segments. In Q3, ICS recurring revenue grew 1% largely impacted by the quarterly noise that I just mentioned. Regulatory revenue was flat as mid single digit equity position growth in revenue from sales were partially offset by the timing of the annual meetings. As I explained earlier, while these timing variances have no real impact on full year revenues, they can result in quarters that vary from our reported position growth. We continue to expect full year regulatory revenues to be in line with mid single digit position growth. Data driven fund solutions revenue increased by 4% due to higher float revenue in our retirement and workplace products as well as growth in our data and analytics products. Issuer revenue was up 3% driven by strong sales of our disclosure solutions and higher float income in our registered shareholder solutions. Our Q3 registered shareholder solutions were also impacted by the timing of the annual meeting cycle. So, I will note that the issuer business has grown 10% year-to-date and we still expect high single digit full year revenue growth. Customer communications revenue rose 1% as growth in higher margin digital revenue was offset by the lower growth of lower margin print. We expect volumes to increase in the fourth quarter as we onboard new clients. For the full year, we expect low single digit top line growth driven by double-digit growth of higher margin digital revenue and low single digit print growth. This is in line with our print-to-digital strategy, which should yield expanding margins and continued low double-digit earnings growth. Looking ahead to Q4, we expect ICS at the high-end of our organic growth objectives, with recurring revenue growth of 7% to 9%, driven in part by the benefit of timing differences. Turning to GTO. Recurring revenue grew 9% to $425 million. Capital markets revenue increased 8%, led by new sales in higher equity and fixed income trading volumes. I will also note that we continued to see strong performance in our front office BTCS solutions, which again had double-digit recurring revenue growth in the third quarter. Wealth and Investment Management revenue grew 11%, powered by the UBS contract and higher license revenue, partially offset by the E-Trade transition, which began late in the fiscal first quarter. Looking ahead, we continue to expect capital markets growth in the fourth quarter to be impacted by growing over high Q4 '23 license revenue. And we will also have another full quarter impact from the E-Trade transition in our wealth business. That said, GTO recurring revenue growth is 9% year-to-date, giving us high confidence that full year growth will be well within our 5% to 8% organic growth objectives for both businesses. Turning to slide nine for a discussion of volume trends. Equity position growth was 5% in the quarter, in line with our testing. Growth was driven by continued double-digit growth in managed accounts. We are now in the peak period for annual meetings and proxies. And through the end of April, we've received record data for 98% of proxies that are expected for the year. This data gives us high confidence in our outlook for position growth. For the full year, we expect equity position growth of approximately 6%. And while still early, our testing data is extending in the Q1 '25 and is showing mid single digit growth, continuing to support our outlook for mid to high single digit equity position growth. We continue to be encouraged by expanding investor participation in financial markets serving as a long-term tailwind that drives growth in our business. Fund and ETF positions declined by 1%. For the full year, we expect position growth of 3% with slower growth in passive funds and declines in active funds. Turning now to trade volumes on the bottom of the slide. Trade volumes grew 11% on a blended basis in Q3. Once again, we saw a difference in asset classes with increased volatility driving double-digit fixed income volume growth, now 11 consecutive quarters, and more modest equity volume growth. Let's now move to slide 10 for the drivers of recurring revenue growth. Recurring revenue grew 4% constant currency. Revenue from net new business contributed three points of growth. Internal growth, primarily trading volumes, expanding client relationships and float income, offset by the timing of proxy communications, contributed one point. Foreign exchange had a non-material 20 basis point positive impact on recurring revenue growth and based on current rates, we expect a similar benefit in full year recurring revenue growth, relative to fiscal year '23. I'll wrap up the revenue discussion with a view of total revenue on slide 11. Total revenue grew 5% in Q3 to $1.7 billion, with recurring revenue being the largest contributor, delivering three points of growth. Low to no margin distribution revenues contributed one point to total revenue growth. Distribution revenue grew 4% due to postal rate increases, which are a headwind to our adjusted operating income margin. We continue to expect distribution revenue to grow in the high single digit range, driven by the continued impact of postal rate increases. Event driven revenue was $67 million, up 29% over last year and adding one point to revenue growth. As anticipated, we saw more normalized levels of mutual fund proxy activity and elevated contest activity, including our work with Disney in Q3. With the combination of increased mutual fund proxy activity and higher contest activity, we now expect $260 million to $280 million in full year event driven revenue. In our Q2 call, we mentioned that we expected event driven revenue to trend above our historical levels for the full year. We modestly increased growth investments in Q2 based on the above trend event driven revenue. We continue to make investments in Q3 as we are committed to investing in long-term growth, while still delivering on our short-term fiscal '24 adjusted EPS guidance. Turning now to margins on slide 12; adjusted operating income margin was up 40 basis points from prior year to 21.4%. The net impact of higher distribution revenue and higher float income, which have an immaterial impact on earnings growth as I detailed at Investor Day, increased margins by 20 basis points in the quarter. Adjusted operating income margin continued to benefit from the operating leverage on our higher recurring and event revenue and the benefit from our restructuring initiative that we began in Q4 '23 to realign some of our businesses and streamline our management structure. As part of the initiative, we exited a small non-core GTO business in Q3 '24 and we remain on track to complete the restructuring initiative and have the remaining restructuring charge by the end of the fiscal year. The restructuring charges are excluded from our calculation of adjusted operating income and adjusted EPS. We have a long track record of disciplined expense management. This discipline, along with the operating leverage inherent in our business model, allows us to invest in long-term growth investments and meet our earnings growth objectives. Looking ahead, we continue to expect adjusted operating income margin to increase year-over-year to approximately 20%. Let's move ahead to closed sales on slide 13. Third quarter closed sales were $80 million, up 29% from $62 million in Q3 2023, and bringing our year-to-date total to $185 million, 19% above Q3 year-to-date '23. Our strong performance on closed sales has been in product areas where we've been investing and innovating, such as tailored shareholder reports, BTCS, and wealth. We continue to see clients willing to invest in areas that either drive revenue, lower cost or address regulatory requirements. With the performance through three quarters and our five-year history of closing on average 40% of full year sales in the fourth quarter, we continue to have high confidence in meeting our full year guidance of $280 million to $320 million, again, strengthening our revenue backlog and providing strong momentum entering fiscal year '25. I'll turn now to free cash flow on slide 14. Q3 '24 free cash flow was $167 million, $5 million better than last year. Through three quarters, free cash flow is a positive $259 million, relative to $47 million in the first nine months of 2023. These results are being driven by our continued strong earnings growth and lower client platform spend. Free cash flow conversion was 108% in Q3 '24, up from 63% last year. This is consistent with our expectations and has us on track for free cash flow conversion of 100% for fiscal year '24. On slide 15, you can see that over the first nine months of the year, we invested $109 million on our technology platforms and converting clients to our platforms. Additionally, before option proceeds, we returned $424 million in capital to shareholders due to dividend and share repurchases year-to-date. And given our expectations for 100% free cash flow conversion, we are positioned to return additional capital to shareholders in fiscal year '24. We continue to estimate $350 million to $450 million in total share repurchases for the full year, which includes an additional $200 million to $300 million in the fourth quarter. And let me put this into context for you. While we are still early in this current fiscal '24 to fiscal '26 three-year cycle, our capital allocation is unfolding right in line with our expectations. As I said at Investor Day, we are in a strong capital position, on track to generate approximately $3 billion of free cash flow, with another $1 billion available at our 2.5 times leverage objective. After the dividend, we are off to a strong start, balancing investment for growth with capital return to shareholders, which we expect to reach $700 million to $800 million this year and we remain well-positioned to execute accretive tuck-in M&A. We expect that this balanced capital allocation will increase ROIC to mid to high-teens level over the next three years. Turning to guidance on slide 16. We continue to execute the Broadridge financial model in fiscal '24. With two months left and high visibility in the fiscal '24 position growth, we expect recurring revenue growth constant currency to be approximately 6% for the full year, at the low end of our guidance range. We continue to expect AOI margin expansion to approximately 20%. Adjusted EPS growth at the middle of our 8% to 12% range, and closed sales of $280 million to $320 million and I'll also note that we remain on track to drive 100% free cash flow conversion and have capital return of $700 million to $800 million through dividends and share repurchases in fiscal 2024. To bring all of this together and highlight what it means to our financial objectives, I will conclude by emphasizing what I said earlier. First, the results through the third quarter and the visibility into the fourth quarter, give us confidence in delivering a fiscal 2024 in line with our guidance, marking a strong start to the fiscal '24 to fiscal '26 three-year cycle. Second, we have positive momentum in our business, including strong sales demand, growing investor participation, the actions we are taking to create investment capacity and sustain our steady and consistent growth, additionally, we have the capital capacity for accretive tuck-in M&A to supplement our organic growth. Finally, those two items, fiscal year '24 performance and positive forward momentum, position us to deliver on our three-year financial objective. And with that, let's take your questions. Andrea?

Thank you. Good morning. I'll ask my question and the follow-up both upfront. So first, given the solid early demand for OpsGPT and BondGPT, where do you see the biggest opportunity to increase Gen AI-related product development? And then the follow-up, since you've deleveraged the balance sheet, now we're a few years post the Itiviti acquisition, where do you see the greatest white space for your acquisition opportunities?

Thank you very much, David. It's Tim, and I appreciate your question about AI. We're quite enthusiastic about it, as we've mentioned our intention to lead in AI within our industry. We’re integrating AI into all of our products, and we believe that in the future, every product will incorporate AI, both for commercial offerings and to enhance internal efficiency, all while ensuring safety. We're pleased with the advancements of OpsGPT and BondGPT. We have our first client in production with OpsGPT and are actively working with five more. For BondGPT, we are conducting three proofs-of-concept and are in discussions with eight additional prospects. There’s a lot of positive momentum around these initiatives. Additionally, on the asset management front, our global demand model has already attracted six of the top 50 asset managers, with another 10 from the top 100 currently in the contracting stage. I think people are really drawn to these use cases. Looking ahead, the key areas for us involve deepening our investment in unique spaces where it makes sense for us to participate. It doesn't make sense for others to invest significantly in the complexities of capital markets or certain marketing aspects in asset management, and we see genuine opportunities there. We're enthusiastic about how this will impact the fixed income sector. In the future, we foresee a basic commodity aspect, where having a decent product is essential, alongside a more exclusive segment where having proprietary data allows for unique leverage and creation. We believe there are definitely areas where we possess proprietary data. We remain excited about AI, and while it might take some time to reflect in our financials, we are beginning to feel optimistic about it. I think on the M&A side, let me just turn to that, I think that's a really important question and David, as you know, our growth is primarily organic and we have a long runway for that with the $60 billion market opportunity and as you know, our three-year objective for M&A is sort of one point to two points and we've been on this sort of pause post our BTCS acquisition, but now as you point out, having reached our leverage and our free cash flow conversion goals, we do have flexibility to invest. And I think in past calls, I have been cautious about buyers and sellers coming together on price and I do think now, looking at the market that, that logjam is beginning to break up. We are beginning to see more tuck-in opportunities that have the potential to meet both our strategic and financial criteria and as you know, we always look for opportunities that tightly align with our strategy where we're the right owner and that's IRR sort of in the really attractive mid-to-high teens well in excess of our cost of capital. We believe there will be opportunities this year across the areas we cover. Wealth management and data and analytics have some promising developments. Additionally, we are noticing private equity firms enhancing their assets to appeal to strategic buyers like us, which suggests a steady stream of opportunities. We will be very selective in our actions. If we pursue something, it will be because it is highly attractive, and we are confident that there are enough opportunities for us to be disciplined in pursuing investments that we believe will yield excellent returns for shareholders.

And I'll just add, Tim, the opportunities are out there. David, we have two months left in this fiscal year, which is why I highlight the fact that the majority of our capital will be allocated towards share repurchases in this fiscal year, but as I said a number of times in my prepared remarks, we're in a really, really strong position because of the point that you made on being at the right leverage ratio and the capital we're generating through our free cash flow. So as Tim said, there are very attractive opportunities out there as we go into our next fiscal year and I think we'll be in a great capital position to be able to supplement our organic growth with M&A.

Understood. Thanks so much, Tim and Edmund.

Hello everyone. I appreciate you taking my questions. This is Will stepping in for Darrin. I have two questions regarding the trends in bookings. Firstly, in the past, you've mentioned that some of the underlying bookings have been less transformative. Could you provide insights into the recent characteristics of your pipeline? Are you observing any increases in deal sizes? Secondly, regarding the wealth management sector, I am curious about the opportunities that are particularly appealing to your prospective customers. Thank you.

Thanks, Will. It's Tim. I'll address that. Regarding booking trends, we continue to see many opportunities that are manageable in size, rather than large, transformative deals that take years to materialize. While we do have some opportunities exceeding $5 million, we feel positive about the steady flow we are experiencing. We're observing demand in areas that drive revenue, particularly in BTCS, adviser tools, securities class actions, and other areas that effectively enhance our revenue. We are observing several factors influencing our costs, including significant activity shifting from print to digital formats and regulatory requirements related to tailored shareholder reports. These align closely with the investments we have been making, which gives us confidence about the returns we will achieve. Regarding your second question about wealth management, this illustrates our ability to gain returns in areas where we have invested substantially. As you know, the market is very appealing; we've discussed the $16 billion market and its growth, and we are experiencing excellent traction with various component sales. Our sales increased by 75% this year, and our current pipeline exceeds $200 million. When it comes to opportunities that clients are pursuing, they each have distinct pain points to address, but they are also interested in developing a digital roadmap and identifying a guiding vision to work towards over time. So, I think the open API framework, the enterprise integration service layer, all of those things in terms of how we can bring things together, they really like that as a vision. Meanwhile, they tend to say, let me start with an existing pain point like tax, like client onboarding, like corporate actions, some things that are very tangible. And so we have great conversations going on both here in the US, but also lots of good conversations in Canada. So we feel really good about the outlook there.

Hey. Good morning, guys. When you kind of think about the factors that are driving 6% recurring revenue growth this fiscal year as compared to the high end of your range of 9%, what are the factors that are kind of resulting in revenue coming towards the lower end of the range and then how does that inform your outlook point for next year?

Good morning, Patrick. Thanks for that question. I did want an opportunity to dive deeper into that. So, thanks for the question. We are tracking, to your point, 6% at the low end of what I would highlight is a strong organic recurring revenue range and there are two items that are really impacting that. First, I would say, is position growth. You know that our outlook was mid to high single digit position growth, and you just heard both Tim and I talk about 6% equity position growth and fund growth at about 3% for the full year. So that's one thing relative to the outlook that we had. The second, as you know, a strong component of our recurring revenue growth is converting sales to revenue and there I'd highlight lower revenue in our customer communications business. But again, you heard me talk about starting to see that tick up in the fourth quarter as we onboard new clients. So, I think the key point for me is that we do have positive momentum going into fiscal '25 and '26 with sales, which impacts next year revenue, estimated to be up 15% to 30%, and position growth starting to tick up. I was very deliberate about mentioning Q1 '25 testing data showing mid single digit at this point. I think that's a good trend, because as we know, it normally ticks up. So, look, delivering 6% in fiscal '24 and momentum going into fiscal '25, I think has us in a pretty good place relative to the three-year objectives.

Yeah. I appreciate that. A quick follow-up. Just to make sure I'm understanding your commentary on timing and shareholder meetings getting pushed into April from March. So that would show up in the regulatory revenues line and the issuer revenues line, but no impact to data driven fund solutions or customer communications. Am I understanding that correctly?

That's primarily right. You're very astute in picking it up. Those are the two areas that we called out. So, you'll see it in both of those businesses in the registered shareholder solutions and issuer, and then obviously, the regulatory business.

Thank you very much, Andrea. Thank you to everyone on the call. Thank you for your interest in Broadridge. As I said earlier, we're now well into our seasonally largest quarter. We're looking to delivering full year results, as Edmund just said, of 6% recurring revenue growth, double-digit EPS growth. That's going to mark a strong start to our three-year objectives. And we will look forward to seeing you in August.