Broadridge Financial Solutions Inc (BR) — Q1 2025 Transcript

Thank you, Chuck. Good morning, everybody, and welcome to Broadridge's first quarter fiscal year 2025 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 Interim CFO, Ashima Ghei. 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 Broadridge'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 Tim Gokey. Tim?

Thank you, Edings, and good morning. I'm pleased to be here with you today to discuss our first quarter results. I want to thank you all for joining, especially on Election Day, which reminds us all of the incredible privilege and power of voting. Stepping back, global financial markets remain robust and the demand for what we do remains healthy, driven by long-term trends, including the democratization of investing, digitization of communications, acceleration of trading, growing importance of AI and the data that powers it, and ever-present regulatory change. At the same time, uncertainty remains high given the U.S. Election and other geopolitical events. It's an environment in which the Broadridge business model stands out, and I'm pleased to report that we are very much on track to deliver another strong year with consistent top and bottom-line growth, powered by a strong backlog of revenue from sales, continued healthy position growth, and resilient trading volumes. So let's dive into the headlines. First, Broadridge reported solid first quarter results. After absorbing the impact of the E-Trade deconversion, recurring revenue grew 4% in constant currency, driven by our governance and capital markets franchises. Adjusted EPS was $1, as we cycled through the E-Trade impact and lower event-driven revenues for the quarter. Second, we continue to execute on our strategy to enable our clients to democratize and digitize investing, simplify and innovate trading, and modernize wealth management. That execution is driving our results in the form of continued product innovation, a growing pipeline, and strong sales. Third, we're strengthening our business with targeted investments, including the acquisition of SIS, which closed last week. SIS will grow our Canadian business and accelerate our ability to bring wealth innovation to that market. Fourth, as I said a moment ago, Broadridge is on track to deliver strong full-year results. We're raising our fiscal ‘25 recurring revenue guidance to 6% to 8%, reflecting our recently completed acquisition of SIS and strong organic growth over the balance of the year. We're also reaffirming our guidance for adjusted EPS growth and strong closed sales, and we are on track to achieve our three-year financial objectives. To sum up, our business is performing well. So let's dive into that performance on Slide 4. I'll start with our governance business, where we continue to drive democratization and digitization, deliver innovation, and help our clients adapt to regulatory change. ICS recurring revenues rose 5% in constant currency, driven by strong revenue from sales and continued growth in investor participation. Looking across our product lines, we reported strong growth in data-driven fund solutions and issuer solutions. Investor participation continues to drive healthy position growth. Equity record growth for companies whose meeting was processed during the quarter was 3%. Our fiscal first quarter is our seasonally smallest quarter and is more impacted by the mix of companies hosting their annual meetings, which this quarter included fewer large-cap growth companies. Underlying trends, including double-digit growth in managed accounts, remained robust, and we continue to see mid to high single-digit growth overall for the first half and, as Ashima will share with you, for the seasonally larger second half. Fund and ETF position growth, which is less seasonal, was 6% in the first quarter. Underlying fund position growth trends remained stable with continued strong growth in passive fund positions and double-digit growth in money market fund positions. With the Fed having cut rates late in the quarter, it's too soon to assess whether lower rates will drive positive fund position growth. New sales were the biggest driver of our governance revenue growth, which reflects our focus on driving innovation and enabling clients to adapt to regulatory change. During the quarter, we onboarded hundreds of fund clients onto our new tailored shareholder reporting solution, helping them communicate more effectively with their clients. That success is not only contributing to our revenue growth, it's driving growing interest in our digital composition capabilities. We also introduced our new governance client experience during the quarter, giving our broker clients a single dashboard to monitor their critical communications across proxies, fund documents, and other communications. This new cloud-based experience leveraged the investments we made in our wealth platform, highlighting the broader benefits we are seeing from that investment across Broadridge. A key factor in the success of our governance and communications business has been our ability to drive the digitization of investor and customer communications. At last year's Investor Day, we highlighted our Wealth and Focus platform, which transforms the full spectrum of wealth client communications by creating personal interactive digital communications combined with streamlined physical statements for those that so choose. We're now lapping the first full year of client implementations. And as we scale up the volume of communications, the impact on client engagement rates has been even better than in our initial trials. We're seeing open rates 20% higher and click-through rates more than 5 times that of standard communications. That's up from the initial numbers we shared with you last year, which means an even better experience for investors. Turning to capital markets, where we are simplifying and innovating trading, recurring revenues grew 5%, driven by new sales and higher trading volumes. Since the end of the summer, markets have been driven by the interplay of growth and inflation, as I'm sure you can all attest. That uncertainty has driven higher fixed income trading volumes. Periods of intense volatility highlight the scalability, flexibility, and reliability of our post-trade technology as markets react to sudden change. We're also continuing to deliver innovative solutions, again by leveraging the data management investments we made as part of our wealth platform. Our new Tradeverse solution enables trading firms to bring together and harmonize multi-asset class trade data throughout the trade lifecycle. Improving data quality and accessibility will enable clients to reduce errors and unlock insights across the front, middle and back office and further simplify their operations. We're also helping clients adapt to regulatory changes in both the EU and the U.S. with a new resilient solution for a global post-trade platform and by adapting our distributed ledger capabilities to make it easier for firms to meet centralized clearing requirements for U.S. Treasury. Turning now to Wealth and Investment Management. Recurring revenue declined 4% as the deconversion of E-Trade offset healthier 6% underlying growth. The onboarding of new sales remained the key driver of that growth, which is why I'm pleased to see a strong pipeline of new opportunities across both the U.S. and Canada. This pipeline includes component solutions as well as broader opportunities with larger wealth managers. We continue to see strong interest in solutions that drive operational efficiency and or client and advisor engagement. Last week, we closed an approximately $185 million acquisition of Kyndryl’s SIS business to further expand our wealth business in Canada. Over the years, we've built a strong Canadian technology business providing core back office functions, including clearing and settlement, serving many of the largest banks, broker-dealers and wealth managers in Canada. More recently, we've expanded for retail bank distribution as well, and in addition, a suite of component solutions that enrich the advisor and investor experience. The acquisition of SIS gives us additional attractive clients. It also gives more opportunity for the broader set of wealth components that we're bringing to all our Canadian clients through a common integration layer, APIs, and component-based approaches to drive productivity for advisors, enhance investors' experience, and streamline operations. A great example is a multi-year transformation we're doing for a large Canadian bank. We're working with them to create a unified one bank experience by linking their wealth and investment accounts to the retail banking clients. We recently completed the transition of more than 1 million accounts as part of this implementation, creating a simplified and enhanced end user experience and a more efficient and streamlined set of internal processes for the bank. We're excited about the potential to bring more of that innovation to an even larger set of Canadian financial services firms. I'll wrap up my review of our business with closed sales. Broadridge recorded a first quarter record $57 million in closed sales. That performance is even more impressive given our fourth quarter and fiscal ‘24 results, and it underscores the breadth of our products and how our solutions are helping our clients grow and drive efficiency. During the quarter, we saw strong demand for customer communications and class action services and governance and for selecting components in capital markets and wealth. I was excited to see another sale of our distributed ledger repo solution to a major bank, which is a great example of how our innovation is driving sales. Most importantly, our pipeline of new sales opportunities remains strong. I'll close with some summary callouts on Slide 5. First, we delivered solid first quarter results. Second, Broadridge is executing on our long-term growth plan. We're helping our clients address the growing number of new investors to drive digitization and to adapt to regulatory change. We're delivering innovation for capital markets clients and expanding our wealth management business. Third, our plans are anchored in long-term trends that are driving the financial services industry, including the democratization and acceleration of trading, the growing importance of AI and the data that powers it, and the need to adapt to an ever-evolving regulatory environment. That long-term focus has enabled Broadridge to become a trusted and increasingly transformative partner for our clients, creating significant value for our shareholders. We have driven steady and sustainable top and bottom-line financial results through the ups and downs of financial markets and through administrations of both parties. Fourth, our execution has us on track to deliver another year of strong and sustainable results in fiscal ‘25, including 6% to 8% recurring revenue growth in constant currency and 8% to 12% adjusted EPS growth. And longer-term, we remain on track to achieve the three-year financial objectives we laid out at our last Investor Day, which will mark the fifth three-year cycle in which we've delivered on our goals. Before I turn it over to Ashima, I want to thank the 15,000 Broadridge associates around the world. Their hard work, focus on serving our clients, and success in bringing innovation to our industry is what powers our growth. Thank you. Now, I'll turn it over to Ashima. Ashima?

Thank you, Tim. Good morning, everyone. I'll begin my discussion this morning with four key callouts. First, Broadridge delivered solid first quarter results. Recurring revenue growth, constant currency of 4% included 170 basis points headwind from the E-Trade deconversion. That impact will subside in the second quarter, and we expect organic recurring revenue growth to strengthen over the balance of the year. Second, our key revenue growth drivers remain strong. Closed sales rose 21% over a very healthy Q1 ‘24. And our forward position growth testing, which now includes the second half of the year, continues to support our mid to high single-digit outlook. Third, we are raising our recurring revenue growth outlook for the year to 6% to 8% from 5% to 7%. Our increased guidance reflects both the acquisition of SIS, which closed on November 1 and is expected to add 1 point to our growth and strengthening organic growth for the balance of the year, as I noted earlier. We expect organic recurring revenue growth of 6% to 7% over the next three quarters, driven by our $450 million sales backlog, mid to high single-digit position growth, and the lapping of the E-Trade deconversion. Fourth, as a result, we continue to expect to deliver strong fiscal year ‘25 results, including 50 basis points plus of underlying core margin expansion, 8% to 12% adjusted EPS growth, and $290 million to $330 million of closed sales. With that, let's get to the numbers on Slide 6. Recurring revenues rose 4% on a constant currency basis, virtually all organic. Adjusted operating income decreased 7%, driven by lower event-driven and the impact of the E-Trade deconversion. AOI margins were 13% and adjusted EPS was $1 per share, both modestly above our expectations, driven by timing of investment spend. Finally, as Tim noted, we delivered closed sales of $57 million, up 21% from last year. Let's move to Slide 7. Recurring revenue grew 4% to $900 million. Our growth was driven by a strong contribution from new sales, partially offset by lower growth in Wealth and Investment Management. Let's turn to Slide 8 to look at the growth across our ICS and GTO segments. ICS recurring revenues rose 5% to $493 million. Regulatory revenues rose 6%, driven by fund position growth of 6%. As a reminder, equity proxy revenues are not a meaningful driver of revenue growth in the first quarter, given the seasonally low volume levels. Data Driven Fund Solutions revenue increased 6%, driven by growth in our Retirement and Workplace solutions and our data and analytics products. M&A contributed one point to fund solution growth. Issuer revenue also grew 8%, led by strong growth in our shareholder engagement solutions. And customer communications revenue growth was 3%, as we continued to benefit from onboarding new clients. Looking ahead, we continue to expect ICS recurring revenues to grow in line with our 6% to 8% recurring revenue growth outlook, driven by revenue from new sales and mid to high single-digit position growth. Turning to GTO, revenues rose 2% to $407 million. Capital Markets revenues grew 5%, driven by the growth of our global post-trade capabilities, which benefited from higher fixed income trading volumes as well as our BDCs front office solutions. Lower license revenues were a modest headwind. Wealth and Investment Management revenues declined 4% as we continue to cycle through the impact of the E-Trade deconversion. Excluding that impact, revenues rose 6%, powered by growth of our back office capabilities as well as our component solutions. The E-Trade deconversion impact is expected to decline from a 10 point impact in Q1 to a 4 to 6 point headwind in the second quarter, which will be the last quarter with any impact. As Tim noted, we closed the acquisition of SIS on November 1 and expect to record SIS revenues in our Wealth and Investment Management product line. Including the benefit from SIS, we now expect overall GTO revenue growth at the high-end of our 6% to 8% recurring revenue growth outlook, including low double-digit growth in Wealth and Investment Management. Next, let's turn to Slide 9 to look at our key volume indicators. Broadridge continues to benefit from the secular growth in investor participation across both equities and funds. Equity position growth was 3%, driven by managed accounts and in line with our testing at the end of fiscal 2024. First quarter equity position growth was impacted by the mix of companies hosting their annual meetings. This is not unusual given the much smaller number of proxies processed in the quarter. For context, first quarter volumes accounted for only 6% of the annual total in fiscal ‘24. It's important to call out that we expect first half position growth will be firmly in the mid to high single-digit range, in line with our prior testing. And looking further ahead, our forward testing is showing continued mid to high single-digit position growth during the more meaningful second half of the year as well. Mutual fund and ETF position growth was 6%, and our current testing is indicating continued mid-single-digit growth. Turning to trade volumes on the bottom of the slide. Trade volumes rose 10% on a blended basis, led by double-digit growth in fixed income volume. I'll wrap up my discussion of recurring revenue growth on Slide 10. Revenue from closed sales remains the biggest driver of our recurring revenue growth at 6 points. As we onboard revenues from our $450 million backlog, net growth was partially offset by 4 points of losses, including the deconversion of E-Trade, which accounted for almost half of our overall losses. Internal growth contributed one point, primarily driven by fund position growth and higher trading volumes, which more than offset lower regulatory fee revenues. As a result, organic revenue growth was 3%. Rounding out the recurring revenue growth drivers, the two tuck-in acquisitions we made in May and July contributed 20 basis points. I'll also remind you that the acquisition of SIS did not close until November, so it did not contribute to our first quarter growth. And changes in FX reduced our reported growth by 20 basis points. With the recent weakening of the dollar, we now forecast FX to be a modest positive for growth over the balance of the year. Let's close our discussions of revenues on Slide 11. Total revenue was flat at $1.4 billion, as 2 points of growth from recurring revenue were offset by a decline in event-driven revenue and modestly lower distribution revenue. Event-driven revenues were $63 million in line with our 7-year quarterly average and $27 million lower than an unusually high Q1 ‘24. Looking ahead, we continue to expect full year event-driven revenue to be at the high end of our historical levels, driven in part by a major mutual fund proxy campaign, which is expected to occur in the second quarter. Low to no margin distribution revenues declined 3%, representing a 1 point headwind to total revenue growth. The impact of higher postal rates was more than offset by a decline in mail volumes linked to our event-driven activities. We now expect distribution revenue growth to be in the mid to high single-digit range for fiscal ‘25, driven by higher postal rates and customer communication print volumes. Turning now to margins on Slide 12. Adjusted operating income margin was 13%, a decline of 90 basis points from Q1 ‘24. This was driven by the decline in event-driven revenues, the E-Trade deconversion, and ongoing reinvestment. Together, these factors more than offset the operating leverage we generated from higher recurring revenues and the benefits of our fourth quarter restructuring initiative. The net impact of changes in float income and distribution revenues reduced AOI margins by approximately 30 basis points in the quarter. For the year, we remain on track to generate 50 basis points plus of underlying core margin expansion. Let's move on to sales. Closed sales were $57 million, up $10 million or 21% from Q1 ‘24, driven by strong demand for our governance solutions. Closed sales are the biggest driver of our long-term growth, so I'm encouraged by a strong start to fiscal ‘25, especially coming off our record fiscal ‘24 sales. Turning to our cash flows. I'll start with a reminder that Broadridge's cash flow generation is typically negative in the fiscal first quarter and strengthens throughout the year. Q1 ‘25 free cash flow was negative $158 million, a decrease from negative $76 million in Q1 ‘24. The decline was driven by an increase in cash taxes and severance payments related to our fourth quarter ‘24 restructuring initiative as well as lower net income. We continue to expect free cash flow conversion of 95% to 105% in fiscal 2025. Turning next to capital allocation on Slide 15. During the quarter, we invested $32 million in capital spending and software and returned $93 million to shareholders in our quarterly dividend. We also have made two tuck-in M&A investments. The first was an acquisition to strengthen our issuer business, which closed on July 1, and then we also closed the acquisition of SIS on November 1 for approximately $185 million. We remain committed to balanced capital allocation. The combination of our quarterly dividend payments and the acquisition of SIS is expected to absorb approximately $600 million of our cash, giving us ample capacity to fund additional tuck-in M&A and or repurchase additional shares over the balance of the year. Let's start to wrap by reviewing our outlook for fiscal ‘25 on Page 16. As I said in the beginning of my remarks, Broadridge is on track to deliver strong fiscal ‘25 results. We are raising our recurring revenue guidance to 6% to 8% from 5% to 7%, and our guidance now incorporates the impact of the SIS acquisition. We continue to expect adjusted operating income margin of approximately 20%, adjusted EPS growth of 8% to 12%, and closed sales of between $290 million to $330 million. Additionally, we expect 27% to 28% of our earnings to be generated in the first half of the year, in line with our performance over the last 10 years. Finally, let me summarize my key messages. Broadridge delivered solid Q1 financial results. The demand and secular trends driving our growth remain strong, and our testing is showing continued mid to high single-digit equity and mid-single-digit fund position growth for the year. Last, we are on track to deliver strong fiscal ‘25 results. We are raising our recurring revenue growth guidance to reflect the benefit from the acquisition of SIS and reaffirming our adjusted EPS and sales guidance, highlighting the strength of our business and financial model. With that, let's take your questions. Chuck?

Thanks. Good morning. I just wanted to revisit the guidance there for a second. I think it's pretty clear on the raising of the recurring numbers around the acquisition and then E-Trades, I guess, headwind kind of abating. But not raising the EPS again kind of suggests that the incremental margins associated with what's being brought on are lower or there's something else that's offsetting it? I think you mentioned a couple. But maybe if you could talk about some of those puts and takes to kind of reconcile why we did a top line raise but not something else in earnings?

Sure. I'll take that, Dan. Thanks for your question. Happy to provide some color on the guidance. You're absolutely right. We are raising our recurring revenue growth guidance to 6% to 8%, right, like you pointed out. It reflects the acquisition of SIS, and it also reflects our additional comfort and confidence sitting where we are at the end of Q1 given the sales activity, given the position growth that we're specifically now targeting 6% to 7% organic growth over the balance of the year. We are also feeling good about our event activity. Having said that, we think about a high level of high margin event activity as a means to create investment capacity. So what we're really targeting is in line with our guidance, with 8% to 12% EPS growth, and seeking the opportunity to reinvest for further growth opportunities.

And I would just add to that. I think the obviously, a key part of the rise is the SIS acquisition. And in the first year, we expect that to be neutral to EPS. So it's really the other factors that Ashima was talking about in terms of the reinvestment on event and doing good about organic really leaves us right in that same range.

Got it. That's great. Thank you. Just a quick follow-up on M&A and your appetite here. I mean, you have done a couple of deals, relatively small tuck-ins. You clearly have a lot more capacity. And I think in the past couple of quarters, you kind of alluded to maybe environment getting a little bit better, in terms of maybe prices and opportunities that you see out in the market, that pipeline getting bigger. So just as we sit here today, I'm just curious where you are thinking you might want to place some incremental dollars this year?

Yes. Thanks, Dan. Just starting with the principles that you well know, which is we're an organic growth company. Our growth is primarily there and we have a long runway given the addressable market we have. But M&A has been an attractive way to meet the needs of our clients. And over three years, we're expecting sort of 1 to 2 points contribution to recurring revenue from M&A. If you look at where the market is right now, first of all, we're excited that we've been able to make some compelling purchases, including SIS. And certainly, we're seeing many PEs bringing things to market. We're tracking a pretty strong pipeline of opportunities. And I think as always, the art is in finding those deals that meet the combination of our financial criteria and where we think we are really the right or the best owner. And that's obviously all in the context of balanced capital allocation, mid to high-teens ROIC. So we're definitely looking at things. We're definitely keeping that financial framework in mind. And so if you do see us execute, it will be because we see something that we think is compelling. And if we don't see the right opportunities, we remain very comfortable with repurchasing broader shares.

Great. Thank you for those clarifications on the outlook, etcetera. Wanted to touch really quickly on digital and then some developments in the market generally. You've got digital revenue growing double-digits in fiscal year ‘24, and digital revenue on average is converting faster and the better onboarding efficacy you referred to last call. I was surprised to see customer communications growth in the quarter consistent with fiscal fourth quarter. What's the driver there? And is there still line of sight to that business accelerating to mid-single-digit or even high single-digit growth in this coming fiscal year?

Yes, thank you for the question. I want to emphasize that we expect our BRCC revenues to increase from the fiscal year 2024 levels for the remainder of the year. This growth is primarily coming from new sales and an uptick in digital. We secured a significant contract in the fourth quarter, which involves a full transition of all print and digital operations for a major financial services provider. Although the revenue from this contract was recognized late in the first quarter and thus didn't affect our first quarter results, it will influence the rest of the year and highlight the benefits of moving from print to digital. Additionally, we previously discussed our wealth and focus initiative featured during our Investor Day last year, which has received positive feedback and has built a solid pipeline. We are quite optimistic about achieving higher growth throughout 2025, driven by the recent sales that are already in place. Consequently, we are confident in anticipating mid to high single-digit growth in BRCC for the full year.

Got it. I appreciate that. I have a broader, long-term question. During the quarter, I came across an article featuring one of the leaders in international post-trade. It indicated that while this isn't a pressing issue at the moment, there are early signs that T+1 might lead to higher costs for brokers, especially concerning securities lending and foreign exchange. How is Broadridge addressing this situation? Additionally, what insights is the industry concentrating on ahead of the rollout in Europe and beyond?

Yes, James, very interesting question. And it's interesting because I think there's a bit of a dichotomy here between the U.S. and Europe. The T+1 implementation went very smoothly here in the U.S.; the sale rates and straight-through processing rates and same-day confirmation rates all went up quite a bit. And I think people were expecting there to be some issues and there weren't. Now, Europe has yet to do T+1, and they're looking at when to do that. But what they're seeing is just some of the tension between T+1 in the U.S. is not in Europe and how is that causing sort of disconnect in some of those ancillary services, and it's being tapered over at this point with people. And so I think we are hearing the same thing that that's causing some challenges for people. I think in terms of how we can help, it's a little bit of a question of how quickly they'll move to T+1 and sort of eliminate that disparity in the dates between here and there. And in the meantime, we obviously have a managed service for our clients who are where we're doing that for them on both sides; we can help them with our BPO. And if there's going to be a significant timing gap, then it would be creating some technology to help.

Hi, thanks for taking my question. So some of the consulting companies have definitely gotten more positive on the outlook for financial services in the U.S., like the large banks, capital market clients. Are you also seeing any changes in backlog conversion into revenue or the flow of deals from pipeline into backlog? Are you seeing any change in clients' behavior as it relates to how they take decisions?

Thank you, Puneet. When it comes to project execution, we did not experience the slowdown that others have reported. However, we did notice a lengthening of the sales pipeline, resulting in longer closure times. This might be due to the increasing focus on regulatory and cost-related projects that our clients prioritize for implementation. Unlike others, we haven't faced significant implementation delays. Overall, we are encouraged by the sales closes we are seeing, which have started the year strong and positively impact our full-year compensation. This positive trend is evident in governance and communication solutions, as well as select areas in capital markets and wealth management. Specifically, our sales in digital communications, class actions, and wealth have been robust, and our pipeline is strong compared to last year. With a backlog of $450 million as of August, we are confident in our outlook and have good visibility into our medium-term recurring revenue, supporting our three-year projections. One last point is that we are paying close attention to revenue conversion rates from sales, and we are observing improvements compared to last year, thanks to efforts from both our clients and our team.

Got it. And then, on the other side, ICS side within the regulatory business, like the stock record growth came at 3%. You expect that to improve. How much visibility you have? Or what confidence you have that stock record growth improves from here to mid-single digits?

Yeah. So Puneet, I'll start by just reminding you. I know you know this, but I'll just start off by reminding that the stock record growth that you saw for Q1 reflects the growth for those specific issuers that set out their proxies in the July to September time period, right? They typically end up being very small companies and 1 or 2 large issuers really make a swing in the growth rates. The 3% was actually in line with what we'd expected at the end of last year, given the mix of companies that we were aware of. Just like we're expecting Q2 now to be at the high single-digit growth rate, which together across the first half of the year, we're expecting to be solidly in the mid to high single-digit growth rate. Our testing for equity has proven to be reliable, especially when we're looking at 2, 3 quarters out; we have a fairly good idea because we do it at an issuer level. We have a fairly good idea of how it's going to trend out. As we sit here right now, we've started testing a much more material second half of the year as well, and it's showing mid to high single-digit growth. So I feel pretty good about it.

And Puneet, I'd just add that I think the bigger picture here is about the broad drivers that remain very positive, especially the momentum in managed accounts. The overall market environment, as Ashima said, the testing has been pretty accurate showing a strong full year. We're also seeing this on the fund side, where it's more mid-single to high single-digit. And then beyond that, we have all the innovation that we've talked about with voting choice and direct indexing. And so I think overall, I think the thing we want people to take away is that the positive trends are giving us confidence in the year, but also in the longer-term duration.

A follow-up question on SIS. Can you provide the specific revenue contribution that you expect from that business this year? And, SIS, would you have still raised your constant currency recurring revenue guide for the year?

Yes. I'll start on this and let Ashima add anything. First of all, the number for SIS is just shy of $60 million for this year. When we examine our overall wealth and investment management business, we really like our position in Canada, as it's an attractive market. We serve many leading institutions and numerous smaller ones as well. We're excited to welcome these important new clients and see an opportunity to leverage our wealth platform investment in the Canadian market. We're introducing technology that's already in place, and we have a larger client base to provide it to. This reinforces our commitment to being a leading technology provider in Canada. As for whether we would have increased guidance without this, what we're signaling is increased confidence in our organic growth. I’m not sure that our guidance would have changed significantly. The increase you're noticing is primarily related to SIS. However, we want to ensure that no one leaves thinking that we're weakening on the organic side, as we are seeing positive trends for the remainder of the year.

Yes. Patrick, I want to provide some specifics about SIS. The purchase price is around $185 million, and we anticipate it will contribute a little over a percentage point to Broadridge's overall growth. In response to an earlier question, we do expect it to slightly dilute Broadridge's margins, but we do not foresee any significant impact on earnings due to this. It will, however, be beneficial for wealth growth, leading to low double-digit growth for the wealth business and GTO growth projected at the higher end of 5% to 8%. Specifically for SIS, we're guiding for just over 1 percentage point added to Broadridge growth, slight margin dilution, and no impact on earnings.

Terrific. That's very helpful. And then looking at your core sales number, typically, your fiscal first quarter represents less than 15% of your full year sales activity. But this past quarter, close sales was closer to 20% to the midpoint of your full year fiscal '25 outlook. Was there any unusual pull forward this quarter? Or are things perhaps just trending maybe a little bit better than what you would have expected?

Yes, Patrick, it's always good to get a strong start on the year. I don't think I want to signal any increase in our expectation. I think the $290 million to $330 million is a really good range for us. I wouldn't call it pull forward, but there's always the timing of sort of the medium-sized deals that can fall in one quarter versus another. And so I just want you to take away that we feel like we have a good start to the quarter. We feel we have a good first half, and we're feeling good about the full year.

Thank you, Chuck. I just want to thank everyone on the call for your interest in Broadridge, especially so on Election Day. Have a great morning.