We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
BR's Q1 Earnings Beat Estimates on Strong Recurring Revenue Growth
Read MoreHide Full Article
Key Takeaways
Broadridge's Q1 earnings of $1.56 per share beat estimates by 13.9%, while revenues rose 5% to $1.67B.
BR's recurring revenues grew 11% y/y to $1.08 billion, aided by organic growth and acquisitions.
Broadridge reaffirms fiscal 2027 targets of 6-8% recurring revenue growth and 8-12% adjusted EPS growth.
Broadridge Financial Solutions, Inc. (BR - Free Report) reported solid first-quarter fiscal 2027 results, with both earnings and revenues surpassing the Zacks Consensus Estimate.
BR's adjusted earnings of $1.56 per share beat the consensus estimate by 13.9% and increased 3% year over year.
Broadridge Financial Solutions, Inc. Price, Consensus and EPS Surprise
Total revenues of $1.67 billion exceeded the consensus mark by 1.5% and rose 5% year over year. Recurring revenues increased 11% to $1.08 billion, while closed sales grew 10% to $35.6 million.
BR’s shares have lost 17.3% over the past year compared with the industry’s 7.3% decline. The Zacks S&P 500 composite has risen 11.4% over the same time frame.
Image Source: Zacks Investment Research
BR's Recurring Revenue Growth Accelerates
Recurring revenues increased 11% on both a reported and constant-currency basis. Organic growth contributed 9 percentage points, including 4 points from closed sales and 7 points from internal growth, partly offset by a 2-point drag from client losses. Acquisitions added 2 points.
Event-driven revenues declined 41% to $67.4 million, primarily due to lower mutual fund proxy revenues. Distribution revenues advanced 4% to $518.2 million, driven mainly by approximately $18 million of postage-rate increases.
Broadridge's ICS Segment Posts Revenue Gains
Investor Communication Solutions (ICS) revenues increased 2% to $1.15 billion. Recurring revenues grew 10% to $567.6 million, reflecting 8 percentage points of organic growth and 1 point from acquisitions.
Regulatory recurring revenues increased 17% to $230.3 million, supported by equity revenue position growth of 11% and mutual fund and ETF position growth of 16%. Data-driven fund solutions revenues rose 10% to $121.6 million, aided by acquisitions and higher data and analytics revenues. Issuer revenues grew 4% to $34 million, while customer communications revenues advanced 3% to $181.6 million.
ICS earnings before income taxes declined 18% to $103.9 million. The segment's pre-tax margin contracted to 9% from 11.2%, as lower event-driven revenues and higher operating expenses offset recurring revenue growth.
BR's GTO Segment Delivers Strong Profit Growth
Global Technology and Operations (GTO) recurring revenues increased 12% to $515.5 million. On a constant-currency basis, revenues grew 13%, driven by 10 percentage points of organic growth and 3 points from the CQG acquisition.
Capital Markets revenues increased 17% to $327.2 million, supported by organic growth, higher software term license revenues and CQG contributions. Wealth and Investment Management revenues rose 5% to $188.3 million, benefiting from organic growth and higher software term license revenues.
GTO earnings before income taxes increased 47% to $98.6 million. Its pre-tax margin expanded to 19.1% from 14.6%, as revenue growth more than offset higher technology and revenue-related expenses.
Broadridge's Margins & Earnings Face Pressure
Operating income declined 8% to $173.5 million, while the operating margin contracted 150 basis points to 10.4%. Adjusted operating income decreased 9% to $229.6 million.
The adjusted operating margin declined 200 basis points to 13.8%. Net earnings fell 43% to $94.8 million, while adjusted net earnings remained nearly flat at $177.9 million. The effective tax rate decreased to 13.6% from 22.4%, primarily due to higher discrete tax benefits relative to pre-tax income.
BR's Operating Metrics Reflect Solid Position Growth
Equity position growth reached 16% in the quarter compared with 12% a year earlier. Equity revenue position growth improved to 11% from 7%, reflecting expansion in revenue-generating positions across Broadridge's governance network.
Internal trade growth was 7% compared with 17% in the prior-year quarter. The metric remained below the company's 10-year average of 9%, indicating slower growth in trading volumes among clients with activity-linked contracts.
Broadridge ended the quarter with cash and cash equivalents of $284.1 million, down from $402.9 million at the end of fiscal 2026. Long-term debt increased to $3.35 billion from $3.25 billion.
Operating cash flow increased to $93.2 million from $42.3 million a year earlier. Free cash flow improved to $76.3 million from $12.7 million. The company repurchased approximately $200 million of shares and paid $111.2 million in dividends during the quarter.
BR Reaffirms Fiscal 2027 Financial Targets
For fiscal 2027, Broadridge continues to expect recurring revenue growth of 6-8% on a constant-currency basis. Adjusted operating margin is projected at about 21%, while adjusted earnings per share growth is anticipated in the 8-12% range.
Free cash flow conversion is expected to exceed 100%, and closed sales are projected between $290 million and $330 million.
Management also highlighted progress in digital engagement, tokenization and artificial intelligence (AI) initiatives. The company remains on track to achieve $25 million in AI-related savings during fiscal 2027.
Broadridge currently carries a Zacks Rank #4 (Sell).
Trane Technologies plc (TT - Free Report) reported better-than-expected third-quarter 2026 results. TT’s earnings per share of $4.86 outpaced the Zacks Consensus Estimate by 2.5% and increased 25.3% from the year-ago quarter. TT’s revenues of $6.76 billion surpassed the consensus estimate by 5% and improved 17.7% year over year.
Equifax (EFX - Free Report) reported better-than-expected third-quarter 2026 results. EFX’s adjusted earnings per share of $2.26 outpaced the Zacks Consensus Estimate by 3.2% and increased 10.8% from the year-ago quarter. EFX’s revenues of $1.69 billion marginally surpassed the consensus estimate and improved 9.6% year over year.
View the Zacks #1 Rank List
Image: Bigstock
BR's Q1 Earnings Beat Estimates on Strong Recurring Revenue Growth
Key Takeaways
Broadridge Financial Solutions, Inc. (BR - Free Report) reported solid first-quarter fiscal 2027 results, with both earnings and revenues surpassing the Zacks Consensus Estimate.
BR's adjusted earnings of $1.56 per share beat the consensus estimate by 13.9% and increased 3% year over year.
Broadridge Financial Solutions, Inc. Price, Consensus and EPS Surprise
Broadridge Financial Solutions, Inc. price-consensus-eps-surprise-chart | Broadridge Financial Solutions, Inc. Quote
Total revenues of $1.67 billion exceeded the consensus mark by 1.5% and rose 5% year over year. Recurring revenues increased 11% to $1.08 billion, while closed sales grew 10% to $35.6 million.
BR’s shares have lost 17.3% over the past year compared with the industry’s 7.3% decline. The Zacks S&P 500 composite has risen 11.4% over the same time frame.
Image Source: Zacks Investment Research
BR's Recurring Revenue Growth Accelerates
Recurring revenues increased 11% on both a reported and constant-currency basis. Organic growth contributed 9 percentage points, including 4 points from closed sales and 7 points from internal growth, partly offset by a 2-point drag from client losses. Acquisitions added 2 points.
Event-driven revenues declined 41% to $67.4 million, primarily due to lower mutual fund proxy revenues. Distribution revenues advanced 4% to $518.2 million, driven mainly by approximately $18 million of postage-rate increases.
Broadridge's ICS Segment Posts Revenue Gains
Investor Communication Solutions (ICS) revenues increased 2% to $1.15 billion. Recurring revenues grew 10% to $567.6 million, reflecting 8 percentage points of organic growth and 1 point from acquisitions.
Regulatory recurring revenues increased 17% to $230.3 million, supported by equity revenue position growth of 11% and mutual fund and ETF position growth of 16%. Data-driven fund solutions revenues rose 10% to $121.6 million, aided by acquisitions and higher data and analytics revenues. Issuer revenues grew 4% to $34 million, while customer communications revenues advanced 3% to $181.6 million.
ICS earnings before income taxes declined 18% to $103.9 million. The segment's pre-tax margin contracted to 9% from 11.2%, as lower event-driven revenues and higher operating expenses offset recurring revenue growth.
BR's GTO Segment Delivers Strong Profit Growth
Global Technology and Operations (GTO) recurring revenues increased 12% to $515.5 million. On a constant-currency basis, revenues grew 13%, driven by 10 percentage points of organic growth and 3 points from the CQG acquisition.
Capital Markets revenues increased 17% to $327.2 million, supported by organic growth, higher software term license revenues and CQG contributions. Wealth and Investment Management revenues rose 5% to $188.3 million, benefiting from organic growth and higher software term license revenues.
GTO earnings before income taxes increased 47% to $98.6 million. Its pre-tax margin expanded to 19.1% from 14.6%, as revenue growth more than offset higher technology and revenue-related expenses.
Broadridge's Margins & Earnings Face Pressure
Operating income declined 8% to $173.5 million, while the operating margin contracted 150 basis points to 10.4%. Adjusted operating income decreased 9% to $229.6 million.
The adjusted operating margin declined 200 basis points to 13.8%. Net earnings fell 43% to $94.8 million, while adjusted net earnings remained nearly flat at $177.9 million. The effective tax rate decreased to 13.6% from 22.4%, primarily due to higher discrete tax benefits relative to pre-tax income.
BR's Operating Metrics Reflect Solid Position Growth
Equity position growth reached 16% in the quarter compared with 12% a year earlier. Equity revenue position growth improved to 11% from 7%, reflecting expansion in revenue-generating positions across Broadridge's governance network.
Internal trade growth was 7% compared with 17% in the prior-year quarter. The metric remained below the company's 10-year average of 9%, indicating slower growth in trading volumes among clients with activity-linked contracts.
Broadridge's Cash Flow Supports Shareholder Returns
Broadridge ended the quarter with cash and cash equivalents of $284.1 million, down from $402.9 million at the end of fiscal 2026. Long-term debt increased to $3.35 billion from $3.25 billion.
Operating cash flow increased to $93.2 million from $42.3 million a year earlier. Free cash flow improved to $76.3 million from $12.7 million. The company repurchased approximately $200 million of shares and paid $111.2 million in dividends during the quarter.
BR Reaffirms Fiscal 2027 Financial Targets
For fiscal 2027, Broadridge continues to expect recurring revenue growth of 6-8% on a constant-currency basis. Adjusted operating margin is projected at about 21%, while adjusted earnings per share growth is anticipated in the 8-12% range.
Free cash flow conversion is expected to exceed 100%, and closed sales are projected between $290 million and $330 million.
Management also highlighted progress in digital engagement, tokenization and artificial intelligence (AI) initiatives. The company remains on track to achieve $25 million in AI-related savings during fiscal 2027.
Broadridge currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Earnings Snapshots
Trane Technologies plc (TT - Free Report) reported better-than-expected third-quarter 2026 results. TT’s earnings per share of $4.86 outpaced the Zacks Consensus Estimate by 2.5% and increased 25.3% from the year-ago quarter. TT’s revenues of $6.76 billion surpassed the consensus estimate by 5% and improved 17.7% year over year.
Equifax (EFX - Free Report) reported better-than-expected third-quarter 2026 results. EFX’s adjusted earnings per share of $2.26 outpaced the Zacks Consensus Estimate by 3.2% and increased 10.8% from the year-ago quarter. EFX’s revenues of $1.69 billion marginally surpassed the consensus estimate and improved 9.6% year over year.