Edmund Reese
Chief Financial Officer at Broadridge Financial Solutions
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've 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 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. What's driving positive momentum in the business. First closed sales through the first three quarters are up 19% over last year. In 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 in 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% in AOI margins of 21.4% expanded 40 basis points. And adjusted EPS rose 9% to $2.23. Finally, and 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 print 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 the GTO recurring revenue grew 9% to $425 million. Capital markets revenue increased 8%, led by new sales and higher equity and fixed income trading volumes. I will also note that we continue 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 the 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 eleven consecutive quarters and more modest equity volume growth. Let's now move to slide ten 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 have 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 eleven. 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 continued 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 twelve. 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 costs, 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 on the free cash flow on slide 14. Q3 '24 free cash flow was $167 million, $5 million better than last year. [Indecipherable] three quarters free cash flow is a positive $259 million relative to $47 million in the first nine months of 2023. These results were being driven by our continued strong earnings growth in 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 through the 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 in the 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 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 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 the 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 in closed sales of $280 million to $320 million. And I'll also note that we remain on track to drop 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 in 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 '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.
