Ashima Ghei
Interim Chief Finance Officer at Broadridge Financial Solutions
Thank you, Tim. It's great to join all of you to discuss the strong results and to review our guidance for fiscal '25. Broadridge has a long track record of delivering strong and sustainable top and bottom line growth with strong shareholder returns. And this year was no different. Fiscal '24 recurring revenue grew 6% constant currency and adjusted EPS grew 10%. Before I go through the results, I want to call out the key items that give me confidence that we are on track to deliver on our fiscal '25 guidance and our three-year growth objectives.
First, sales and backlog, record closed sales of $342 million, drove a 13% increase in revenue backlog, giving us strong visibility into our revenue growth in fiscal '25 and '26. Second, position growth, equity position growth was 6% in '24 and fund position growth was 3%. Our current testing shows a modest improvement in those trends with continued mid to high single-digit growth in equities and mid-single digit growth in funds. Third, expenses, investments and margins. We have a long history of driving operating leverage. This quarter, we completed a restructuring initiative that will position us to continue to fund long-term growth investments, grow core margin and deliver earnings growth. Fourth and last capital allocation, in fiscal '24, we repurchased 2.3 million shares for $450 million and have recently announced three tuck-in M&A investments. That capital will contribute directly to our top and bottom line growth. These four areas position us well to deliver our three-year financial objectives and our fiscal '25 guidance, which calls for 5% to 7% recurring revenue, constant currency growth, almost all organic, and 8% to 12% adjusted EPS growth.
With that, let's go through the numbers on slide eight. Fiscal '24 recurring revenues grew to $4.2 billion, up 6% on an organic, constant currency. Basis. Adjusted operating income grew 9%. Adjusted EPS grew 10% to $7.73 and we reported record closed sales of $342 million, which drove our recurring revenue backlog to $450 million. Turning now to the fourth quarter headline numbers. Recurring revenue grew 5% on a constant currency basis to $1.3 billion. Adjusted operating income grew 5% and AOI margin was 28.8%. Adjusted EPS rose 9% to $3.50. And closed sales rose 74% to a fourth quarter record $157 million. Moving to slide nine, fourth-quarter recurring revenue rose 5% to $1.3 billion, driven by a combination of converting revenue from sales and mid-single digit position growth. For the full year, recurring revenue growth was 6%, essentially all organic. And in line with our three year organic growth objective of 5% to 8%.
Let's turn to the next slides to review the growth across our ICS and GTO segments. In Q4, ICS recurring revenue grew 6%, powered by growth across all four product lines. We also saw the benefit of the timing delays we had called out in our Q3 results, which added 1 point to fourth quarter growth. For the full year, ICS recurring revenues were up 5% to $2.6 billion. Regulatory revenue grew 7% in Q4 and 5% for the full year, in line with position, growth. Looking ahead, we expect continued mid-single-digit revenue growth in fiscal '25, in line with our position testing. Data-driven fund solutions revenue increased by 7% in the fourth quarter, and for the full year driven by growth in retirement and workplace solutions and our data and analytics products.
The acquisition of AdvisorTarget, which closed on June 1, made a very modest contribution to growth. Issuer revenue grew 5% in Q4 and 7% for the full year, led by growth in our registered shareholder solutions and disclosure products. Customer communications recurring revenue rose 3% in the fourth quarter and 2% for the full year as we continue to execute, our print-to-digital strategy. Digital revenues grew double digits for both the quarter and the year. We expect customer communications growth to accelerate in fiscal '25, driven by a combination of digital growth and new client wins. Looking ahead to fiscal '25, we expect stronger ICS recurring revenue growth, driven by revenue from strong fiscal '24 sales, continued mid-single digit position growth and strong growth in digital, which will more than offset the loss of 33 [Phonetic] revenues and lower float income.
Turning to GTO on slide 11, Q4 recurring revenue growth was 4%. For the full year, GTO revenues grew 8% to $1.6 billion. At the high end of our three year, 5% to 8% organic growth objective, driven by strong growth across both our capital markets and wealth businesses. Capital markets revenue grew 6% in the fourth quarter. Strong growth in revenue from sales and higher trading volumes more than offset lower license revenue. Full year revenues increased 8%, powered by strong growth in BTCS and revenue from sales from new global post trade clients. Wealth and investment management revenue increased 7% for the full year. Fourth-quarter growth was flat as revenue from new sales was offset by the E-trade deconversion and lower license revenue. We expect the impact of E-trade will continue to weigh on the wealth and investment management growth through the first half of fiscal '25, especially in the first quarter. Looking ahead to fiscal '25, we expect GTO revenue growth to be at the low end of our 5% to 7% recurring revenue guidance range. With stronger growth in capital market and lower growth in wealth and investment management, excluding the impact of E-trade, wealth and investment management, growth would be at the higher end of the 5% to 7% recurring revenue guidance. Now
Let's turn to slide 12 to review volume trends. Position growth returned to mid to high single digits for both equities and funds in the fourth quarter. Equity position growth rose to 7% in the fourth quarter, in line with our testing. Full-year growth was 6%, driven almost entirely by double-digit growth in managed accounts. Our fiscal '25 first-half testing continues to show healthy mid-to-high single-digit growth. Fund position growth metric rebounded to 6% in the quarter. Full-year fund position growth was 3%, driven by growth in passive funds and double-digit growth in money market funds. Fund flows have strengthened in recent months. And our current testing of underlying fund positions is indicating a modest pick up to between 4% to 5%.
Turning to trade volumes. Trade volumes grew 15% on a blended basis in Q4, driven by both higher fixed income and equity volumes. For the full year, trading volumes were up 13%. Let's now move to slide 13 for the drivers of recurring revenue growth. For the quarter, recurring revenue growth was 5%, virtually all organic and balanced between net new business and internal growth. Revenue from closed sales provided five points of growth. Our recurring revenue retention rate was 97% for the quarter and for the full year. Adjusting for the E-trade, deconversion retention rates remained at 98%. And internal growth, primarily positions in trading volumes contributed 3 points.
Lastly, we closed two small acquisitions in our ICS segment. AdvisorTarget contributed less than 5 basis points to fourth-quarter revenue growth. And CompSci closed at the beginning of July. We expect these two acquisitions will contribute approximately 20 basis points to fiscal '25 recurring revenue growth. I'll finish the guidance on revenue on slide 14. Total revenue grew 6% in Q4 to $1.9 billion. And recurring revenue was the largest contributor with 4 points of growth. Event-driven revenue was $76 million and contributed 1 point to Q4 growth. Event-driven revenue benefited from higher levels of mutual fund proxy and equity contest activity versus the fourth quarter of last year.
Low to no margin distribution revenue increased 4% and contributed 1 point to total revenue growth driven by higher postal rates. Remember, these have a dilutive impact on our adjusted operating income margin. So let's turn to margins on slide 15. Adjusted operating income margin for Q4 was 28.8%. As the positive impact from operating leverage was offset by the timing of annual expenses. On a full-year basis, adjusted operating income margin was 20%, up 20 basis points from fiscal '23. The combination of operating leverage and the benefits from our fiscal '23 restructuring enabled us to absorb the deconversion of E-trade and higher amortization from our wealth platform, while increasing our investments in long-term growth and meeting our earnings objectives. The net impact of higher float revenue and distribution which have little impact on earnings increased margins by 30 basis points.
During the fourth quarter, we completed the restructuring program we began last year to realign some of our businesses and streamline our management structure. We incurred $56 million in fourth quarter charges which were not included in our calculation of adjusted operating income and adjusted EPS. We estimate that these actions will generate over $100 million in annualized cost savings, which will position us to fund investments, further scale our business, and deliver earnings growth. Rounding out the fourth quarter non-GAAP items, I would also note that we incurred $10 million in charges to settle various legal matters.
Let's move ahead to closed sales on slide 16. Broadridge had a very strong sales year. Fiscal '24 sales rose 39% to a record $342 million, driven by a very strong fourth quarter, where closed sales grew 74% to $157 million. As you heard from Tim, we benefited from strong sales of our tailored shareholder report solutions and digital, as well as strong growth across both our capital markets and wealth and investment management solutions. These strong sales lifted our revenue backlog to $450 million, equal to 11% of our fiscal '24 recurring revenue. I'll now turn to cash flow on slide 17. Broadridge generated free cash flow of $943 million in fiscal '24, up 26% from fiscal '23. Free cash flow conversion increased to 102% from 90% in fiscal '23 and 42% in '22. Returning to a more historic levels after a period of higher investment. We expect free cash flow conversion of approximately 95% to 105% in fiscal '25.
Let's move next to capital allocation on slide 18. We continue to take a balanced approach to capital allocation. In fiscal '24, we made platform investments of $41 million. And deployed $113 million on capital expenditures and software spend. Fiscal '24 also marked a return to tuck-in M&A. In total, we enhanced our data and analytics solutions with the $35 million acquisition of AdvisorTarget and closed the smaller acquisition of CompSci on July 1 to augment our issuer capabilities. In May, we announced the proposed acquisition of SIS from Kyndryl for approximately $200 million. SIS is a leading Canadian wealth and capital markets technology platform with annual revenues of $80 million to $85 million. The acquisition is expected to close during the first half of our fiscal year. And will not have a significant impact on our margins or adjusted EPS during the first year of operation. Given the inherent timing, uncertainty of regulatory review, we have not included it in our guidance. We will add SIS to our fiscal '25 guidance after it closes.
After internal and external investments, we return excess capital to shareholders. We returned $781 million to shareholders in fiscal '24 through a combination of dividends and share repurchases. During the fourth quarter, we repurchased 300 million [Phonetic] of shares, bringing our total gross repurchase in fiscal '24 to $450 million. Finally, we repaid $60 million of debt, ending the year with 2.2 times leverage ratio below our long-term target of 2.5. Last night, our Board approved a 10% dividend increase to $3.52 per share. As Tim noted, this is our 12th double digit increase in the last 13 years, which emphasizes both our sustained earnings growth and our long-term commitment to balance capital allocation.
I'll close my prepared remarks this morning with some detail on our guidance on slide 19. We expect another year of sustainable, recurring revenue growth, core margin expansion, strong adjusted EPS growth and very healthy closed sales in fiscal '25. Let me walk through each of those points, starting first with revenue. We expect recurring revenue growth, constant currency of 5% to 7%, almost all organic, driven by new sales as we onboard our $450 million revenue backlog. We expect ICS recurring revenues to be at the higher end of that range with GTO lower. We expect event-driven revenues to be at the high end of our historic range, driven by a proxy campaign at a major mutual fund complex in our second quarter. Distribution revenues are forecast to grow at low double-digit rate power, powered by higher postage rates and stronger BRCC print volume. We expect these low to no margin revenues to have a dilutive impact on our reported margins.
Second, let's move to margin. We expect adjusted operating income margin will be approximately 20%. We anticipate the combination of higher operating leverage and disciplined expense management will enable us to deliver over 50 basis points of underlying core margin expansion in line with our three year financial objectives. We expect this to be partially offset by the impact of higher distribution revenues and lower float income. Third, EPS, we expect adjusted EPS growth of 8% to 12%, embedded in this outlook is an expected tax rate of 21%. Fourth, we expect another year of strong closed sales. Our guidance range of $290 million to $330 million, reflects continued growth from our fiscal '24 results, excluding sales of tailored shareholder report solutions.
And lastly, I will remind you that our guidance does not include the impact of SIS. Taken together, our fiscal '25 guidance highlights the strength of the Broadridge business model. Now, before I conclude, let me offer some insight on our first quarter. We expect our first quarter earnings will account for 10% to 11% of our full-year adjusted EPS at the low end of our historical low end of our historical range, driven in part by lower event-driven revenue versus Q1 of '24 and E-trade impact.
So let's wrap up with a quick summary of the key takeaways from our strong fiscal '24 results. First, Broadridge delivered another year of strong and sustainable recurring revenue and adjusted EPS growth. Second, our record closed sales, highlight the strong demand for our solutions and give us increased visibility into future growth. Third, we are putting our strong free cash flow to work for shareholders with another double-digit dividend increase, strategic and value accretive acquisitions, and share repurchases. Finally, Broadridge is poised to deliver another strong year in fiscal '25, keeping us well on track to achieve our three-year growth objectives for the fourth consecutive cycle.
With that, let's move to Q&A.
