Tim Gokey
Chief Executive Officer at Broadridge Financial Solutions
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 US.. election and other geopolitical impacts.
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 it's 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, on 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 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 five 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 trade growth 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 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 approach 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 remain strong.
I'll close with some summary call-outs 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 our 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 digitization of investing, 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 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?