Edmund Reese
Chief Financial Officer at Broadridge Financial Solutions
Thank you, Tim, and good morning everyone. I'm pleased to be here discussing another quarter of strong performance. As you've just heard Broadridge's performance remains resilient and our long-term growth drivers are quite stable. Organic growth from new sales, strong underlying volume trends and the progress integrating Itiviti helped us deliver very strong top line growth and adjusted EPS growth in line with both our guidance and three-year objectives.
Turning to slide 7, you can see that strong performance. In Q2 Broadridge's recurring revenues grew 19% to $798 million. Adjusted operating income increased 19% to $141 million and AOI margins were flat at 11.2%, with a drag from low to no margin distribution revenue. And adjusted EPS increased 12% to $0.82. I'll note that we will continue to see operating income growth, partially offset by higher interest expense related to the acquisition of Itiviti, until we grow over the incremental interest expense in Q1 '23.
Let's get into the details of those results, starting with recurring revenues on Slide 8. Recurring revenues grew from $673 million in Q2 '21 to $798 million in Q2 '22, an increase of 19%, well above our fiscal '22 guidance range. Organic growth accounted for 9 points of the 19% increase, driven by the conversion of our healthy revenue backlog in volume growth. Itiviti revenues which were in line with our expectations drove most of the remaining 9 points of growth.
Now let's turn to Slide 9 to look at growth across our ICS and GTO businesses. Both of our business segments had healthy organic revenue growth. Part of that growth is driven by the secular tailwinds in stock and fund position growth. But as I noted, the biggest driver across both is the contribution from new sales. It is clear that the investments that we've been making in our technology platforms have reinforced our value propositions, boosted our sales and are contributing significantly to this growth.
ICS recurring revenues grew by 10% all organic to $427 million powered by both new sales and continued strong volumes. Regulatory revenues had the largest contribution to ICS recurring revenue rising 15% to $166 million, driven by strong growth in mutual fund and ETF communications and the continued equity position growth in our US proxy business. Data driven fund solutions revenue grew 3% to $89 million, as assets under administration in our mutual fund trade processing unit grew from both new client onboardings and growth with existing clients.
Our issuer business delivered $24 million in revenue up 14%, as we continue to see growth in our disclosure products. Finally, customer communications revenue rose 9% to $148 million. While we've been expecting modest top line growth in this business, our unusually high growth in Q2 was driven by new client wins in our print business, which we can use as an entry point to pursue higher margin digital business.
Turning to GTO, recurring revenues grew by 30% to $371 million. Organic growth reached 8%. Wealth & Investment Management revenues increased by 15% to $146 million. This growth was primarily organic driven by an uptick in license revenue from a large client renewal, continued momentum from onboarding of new component sales, as well as higher retail trading. Capital market revenues grew to $224 million, an increase of 41% with Itiviti continuing to be the largest contributor.
Organic recurring revenues increased 3% as revenue from new sales were offset by lower equity trading volumes. We continue to expect both our Capital Markets business and Wealth franchise to deliver fiscal '22 growth in line with our three-year objective of 5% to 7% organic growth.
Let's turn to Slide 10 for a closer look at the volume trends. Broadridge continues to benefit from the long-term trends that we've made invest -- that have made investing more accessible. The biggest driver of our internal growth was mutual fund and ETF volumes, which grew 12%, reflecting steady fund inflows over the past several quarters. We expect low double-digit growth to continue for the second half of the year.
Our 20% equity position growth in Q2 was in line with the projection that we provided on our last earnings call. As we approach the Spring proxy season which typically generates over 80% of our equity communications, our latest record position testing shows continued strength with low double-digit growth in the second half of the year.
For the full-year, we expect to be ahead of our historical averages, delivering low to mid-teens growth. And as you can see by our results, investor participation in financial markets has continued to increase and our digital platform investments and our proxy business have positioned us to support this growth. We remain encouraged by the long-term tailwind and it's positive impact on our business.
Turning to the bottom of the slide, trading volumes increased 1% as higher fixed income volumes offset the impact of lower equity volumes. Given elevated equity volumes in Q3 '21, we continue to expect lower volumes in the third quarter and full-year trading volume growth to be essentially flat for the year.
Turning now on the Slide 11, where we summarize the drivers of recurring revenue growth. Recurring revenues rose 19%, propelled by 9% organic growth and a 9.0 contribution from Itiviti. Revenue from closed sales was the biggest driver of our organic growth with strong contribution in both ICS and GTO. Internal growth contributed 4 points to recurring revenue, driven by higher fund in ETF communications and ICS and a significant renewal that drove increased license revenue in GTO.
Itiviti was the biggest driver of our acquisition growth, contributing $61 million, while our tuck-in acquisitions made in Q4 '21 in Q1 '22 are also performing in line with expectations. I'll finish with a discussion on revenue with a view of total revenue on Slide 12.
Total revenue growth was a healthy 19% in Q2. Recurring revenues was the largest contributor driving 12 points of growth, with elevated distribution revenue driving 5 points of growth and continued year-over-year contribution from event driven revenues, which added 2 points of growth. Low to no margin distribution revenues continued to grow at a double-digit pace and reached 17% year-over-year, which is significantly higher than we expected at the beginning of the year.
Growth came from higher customer communications mailings as well as significant increases from higher postage rates. We expect continued high levels of distribution revenue for the full-year and I'll reiterate that this revenue suppresses our reported margin. Over the long-term, we expect that the share of distribution revenue as a percentage of total revenue will decline. Finally, we reported another quarter of strong event driven revenue on the back of healthy mutual fund proxy activity.
We expect event driven revenue to remain healthy in the second half of the year and believe that our $55 million seven year quarterly average is the best modeling assumption for Q3 and Q4.
Now the margins on Slide 13. Adjusted operating income margin in Q2 was flat at 11.2% is our strong growth in recurring and event-driven revenue was offset by increases in low margin distribution revenue and growth investments. No margin distribution volumes and pass-through revenue from postage rate increases are higher than what we expected at the beginning of the year. This incremental distribution revenue will negatively impact our adjusted operating income margin by an additional 40 basis points to 50 basis points on the full-year versus our original guidance.
Like many other companies, we're seeing a modest impact from higher labor inflation, as we seek to add and retain talent, but we remain confident that we can find the efficiencies to offset these costs. Separately, we are also modestly increasing our investments. As in the past, we're taking advantage of stronger than expected position growth and above trend event driven revenues as we remain committed to ongoing investments that support our growth.
In our ICS business we have investments to build NextGen capabilities on our digital platforms for fund communications SRD 2 and an upgraded VSM platform, all of which we expect to have a near-term impact on our results. In GTO, we continue to invest in our global post-trade management system. Our deal DLT enabled platforms including our Repo and private market hub solutions and of course, executing the front to back Itiviti product roadmap that Tim highlighted earlier.
Given the higher distribution revenue and our continued commitment to investment, we are lowering our fiscal year adjusted operating income margin guidance by 50 basis points from approximately 19% to approximately 18.5%. Broadridge has a long track record of steady margin expansion and continuous accretive investment, using a high revenue growth and efficiency gains to create capacity, while delivering steady and consistent earnings growth.
We expect this to continue in fiscal year '22. Let's move to Closed sales on Slide 14. We reported second quarter Closed sales of $83 million, which brings our year-to-date total to $113 million and keeps us very much on track to achieve another year of record Closed sales, in line with our guidance range of $240 million to $280 million. We were encouraged to see strong Closed sales across both ICS and GTO, with ICS registering just over half of Closed sales for the quarter.
As Tim noted, Itiviti was a strong contributor to GTO sales in Q2, which I see is early validation of our investment case. And finally, let's turn to cash flow and capital allocation on Slide 15. I'll start with a reminder that Broadridge's free cash flow generation typically begins the year negative and strengthens as the year goes on. We generated $28 million of free cash flow in the quarter, bringing our year-to-date free cash flow to negative $124 million.
We continue to invest heavily in our next-gen platforms, especially our Wealth Management platform. For the first six months of fiscal year '22, we've invested $29 million in Capex and software and $236 million in our platforms. We are at peak investment levels for our wealth platform and that spending will decline as we move to future phases. As Tim said, we remain on track to deliver the Wealth Management platform and I expect that we'll begin to recognize revenue in mid calendar year 2023.
Looking ahead, we remain committed to elevating potential evaluating potential tuck-in M&A opportunities that meet our strategic profile. We will also continue returning capital to shareholders primarily through our dividends. We remain focused on paying down debt and maintaining an investment grade credit rating.
I'll close my prepared remarks with a quick review of our guidance and some final thoughts on our second quarter results. Starting with recurring revenue, we now expect recurring revenue growth for fiscal '22 to be at the high end of our 12% to 15% guidance range. As I noted earlier, we are reducing our adjusted operating income margin guidance from approximately 19% to approximately 18.5%, reflecting the impact of higher distribution revenues and continued growth investments.
Third, we are reaffirming -- we're reaffirming our expectations for strong adjusted EPS growth in the range of 11% to 15%. Finally, after a strong start to the year, we continue to expect Closed sales in the range of $240 million to $280 million. I'll also add that we expect third quarter EPS to be flat to marginally lower, driven by tough comparisons to elevated equity volumes and high event driven revenue, as well as the timing of investments. We expect strong earnings growth in the fourth quarter.
With that, let me reiterate today's key messages. Broadridge's financial model is strong and resilient. We continue to deliver strong operating results, which drove another quarter of high top line growth and double-digit earnings growth. Looking ahead, we expect continued strong recurring revenue growth, enabling us to continue to balance growth investments, with delivering steady and consistent earnings for our shareholders.
With that, let's take your questions. Operator?
