BR - NYSE

Good day, and welcome to the Broadridge Financial Solutions Third Quarter and Fiscal Year 2024 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to hand the call over to Edings Thibault, Head of Investor Relations. Please go ahead.

Thank you, Andrea. Good morning, everybody, and welcome to Broadridge's third quarter fiscal year 2024 earnings conference call. Our earnings release and the slides that accompany this call may be found on the Investor Relations section of broadridge.com. Joining me on the call this morning are Tim Gokey, our Chief Executive Officer; and our Chief Financial Officer, Edmund Reese. Before I turn the call over to Tim, a few standard callouts. One, we'll be making forward-looking statements on today's call regarding Broadridge that involve risks. A summary of these risks can be found on the second page of the slides and a more complete description on our annual report on Form 10-K. Two, we'll also be referring to several non-GAAP measures, which we believe provide investors with a more complete understanding of Broadridge's underlying operating results. An explanation of these non-GAAP measures and reconciliations to their comparable GAAP measures can be found in the earnings release and presentation. Let me now turn the call over to Tim Gokey. Tim?

Thank you, Edings, and good morning. It's great to be here to review our third quarter results and update you on our full year outlook. Overall, I'm pleased with the performance of our business in a complex environment. We see a market in which the underlying fundamentals are solid, where capital markets and retail investor activity are beginning to strengthen, and where our clients are highlighting the need for continued technology investment. While all that is going on, those same clients are being careful with their spending as they weigh the new higher for longer scenario as well as other tail risks. These trends play to Broadridge's strength. Our testing is indicating that healthy markets are driving a pickup in investor participation and position growth, and are delivering innovative solutions across governance, capital markets and wealth. Sales continue to be strong, highlighting our clients' willingness to move ahead with solutions that address revenue, cost or regulatory needs. My conversations with clients make it clear that they see Broadridge as a partner in helping them grow their business and adapt to change. It's a strong position, and it will be further enhanced as we put our cash flow to work with a balance of capital returns and targeted M&A. So, let's dig into the quarter. First, Broadridge reported 4% recurring revenue growth and 9% adjusted EPS growth. Those results were modestly impacted by the timing of annual meetings, which pushed some governance revenues into the fourth quarter. Second, we continue to execute against our strategy to drive the democratization and digitization of investing, simplify and innovate trading, and modernize wealth management. Our strategy is supported by long-term trends, including position growth, which we continue to see in the mid to high single digit range. Third, that execution is coming through in our closed sales, which rose 29% in the quarter and are now up 19% year-to-date. We expect that positive momentum to continue in the fourth quarter. Fourth, we remain on track to achieve our objective for 100% free cash flow conversion for the full year. That positions us to use our capital to increase share repurchases and to fund strategic tuck-in M&A. Finally, as we move through our seasonally large fourth quarter, Broadridge is on track to deliver another year of steady and consistent growth, in line with our long-term financial objectives. We are reaffirming our outlook for fiscal '24, adjusted EPS at the middle of our 8% to 12% range, with recurring revenue growth at constant currency at the low end of our 6% to 9% range. With strong year-to-date sales, we also expect record closed sales of $280 million to $320 million. Now, let's turn from the headlines to slide four to review highlights of our execution, starting with our governance franchise. ICS recurring revenue rose 1% in the third quarter as the timing of regulatory communications impacted our quarterly growth. In regulatory communications, revenues were flat despite 5% equity position growth. As many of you know, the peak period for proxy communications falls right at the end of March, so any shift in the annual meeting schedule can have an impact on quarterly revenues. This year, with Easter in the last week of March instead of April last year, we saw a substantial number of companies push back to date for their annual meeting. That change led to a shift of regulatory revenue from March to April, or from the third to fourth quarter. This timing shift will have no impact on our full year results. Outside of timing, position growth trends were mixed. As I noted, equity position growth was 5%, in line with our testing, driven by double-digit growth in managed accounts. Fund and ETF record growth declined to negative 1% for the quarter. Quarterly fund position growth can vary more widely than the full year number, because it is impacted by the timing and types of communications that are distributed during any particular quarter. More broadly, the cumulative impact of lower fund flows and the shift to money market funds that began over a year ago has weighed on growth, especially for active funds. Year-to-date fund record growth was 2%. Looking ahead, fund flows are improving and our testing indicates a modest pickup in the fourth quarter. As Edmund will outline, for the year, we expect stock record growth of 6% and fund record growth of 3%. Driving and enabling the democratization of investing is a key part of our long-term growth strategy. There's no better opportunity to demonstrate that -- what that means than in a large and very visible proxy fight. As part of the Disney contest, Broadridge processed and distributed multiple rounds of communications to millions of registered and beneficial shareholders holding almost 2 billion shares on behalf of hundreds of our broker/dealer clients. Each vote was subject to multiple reviews and a process verified by an independent accounting firm so that all sides could be highly confident in the accuracy of the Broadridge votes. Vote tallies were available daily to all participants. The process culminated with an annual meeting posted on Broadridge's virtual shareholder meeting platform and the outcome was known immediately when the meeting closed. Contests like Disney are a great showcase for issuers, investors, our broker/dealer clients and regulators of how Broadridge's significant investments in technology and digital communications, combined with our commitment to accuracy, enhance investor confidence in our markets. Outside of highly visible contests, we continue to enhance investor engagement by supporting the growth and voting choice across funds. In recent months, we've gone live with five of the largest asset managers across a mix of both retail and institutional focused funds and ETFs. This, in turn, is leading to strong interest to extend this service from more asset managers and for a wider set of fund categories. We're also continuing the rollout of our tailored shareholder report solution as we help the funds industry navigate regulatory change. We're in production testing now and we go fully live beginning in July. Turning to capital markets. Revenues rose 8% to $266 million, driven by strong growth in BTCS, which continues to deliver on the pillars of our original acquisition case. During the quarter, we signed a leading U.S. and global bank as the first client for global futures and options SaaS platform. This new capability will build on our existing products and significantly expand our derivatives trading solutions. It also represents another step forward in our goal of expanding BTCS' capabilities across asset classes and to our U.S. client base, which was a key part of our long-term growth plan at the time of the acquisition. On the post-trade side, we completed the implementation of our global post-trade platform for a leading Nordic bank. Our platform consolidates the bank's legacy in-house systems, streamlining its operations across 25 European markets and 10 custodians across both equities and fixed income. This particular bank was a long-term BTCS client. So, it's also another example of leveraging our front office relationship to extend our solutions across the trade life cycle. We also continue to see nice traction with our digital ledger repo and in AI with our BondGPT and OpsGPT solutions. Turning now to Wealth and Investment Management. Revenues rose 11% to $159 million as strong growth from UBS and the license revenue was partially offset by the E-Trade transition. In the first full year since the rollout of our wealth platform, we are seeing significant interest in our broad suite of wealth capabilities, and that's driving strong sales momentum with year-to-date Wealth Investment Management sales up 75%. I'm especially pleased to see strong interest in Canada for wealth component capabilities. Canada accounts for approximately a third of our Wealth and Investment Management revenues, and we see a long-term opportunity to adapt our wealth tools for Canadian firms. Moving to sales. Closed sales rose 29% in the third quarter and are up 19% year-to-date. We benefited from strong sales of our digital and print solutions for the new tailored shareholder reports, and we continue to see significant print and digital opportunities in customer communications. Our pipeline remains at record levels as clients focus on solutions that drive revenue growth, like our front office trading tools, and meet their regulatory requirements like tailored shareholder reports. That combination of strong sales and a record pipeline is giving us increased confidence in our ability to achieve record closed sales in line of $280 million to $320 million full year guidance. Let's move to slide five for some additional thoughts on our quarter and outlook. First, we are poised to deliver another year of mid single digit organic recurring revenue growth and double-digit earnings growth, right in line with the long-term growth goals we laid out at our Investor Day in December. In a quarter impacted by the timing of annual meetings, we reported 9% adjusted EPS growth. Now one month into the fourth quarter, we have high visibility into our remaining volumes. For the full year, we're tracking to recurring revenue growth of 6%, adjusted EPS growth of approximately 10% and record closed sales. Second, our growth continues to be driven by long-term trends, increasing investor engagement, the demand for digitization, accelerating trading, regulatory change, leveraging data and AI, and the need to modernize wealth management have all combined to drive strong sales over the first three quarters. As a result, we're going into our largest sales quarter with a strong pipeline and increasing visibility. Position growth has moved from pandemic highs and overall trends remain in line with the mid to high single digit growth rate of the past decade. Looking beyond the fourth quarter, the outlook for financial services firms appears to be improving. Capital markets activity is picking up and innovation is driving sales growth as our clients increase their level of investment. At the same time, strong equity markets are driving investor engagement and fund investors are beginning to rotate out of money market funds, both of which bode well for future position growth. Third, we're executing on our growth strategy. We are driving shareholder engagement and governance, enhancing our digital capabilities and customer communications, delivering innovative new capabilities in capital markets and are expanding our ability to drive growth and wealth across North America. We're also investing to strengthen our product teams, sales capabilities and technology capabilities including of course AI. Fourth, we're on track to achieve our 100% free cash flow conversion objective and the combination of strong free cash flow and our investment-grade balance sheet positions us to return additional capital to shareholders. We're also seeing a growing number of attractive M&A opportunities to further complement our organic growth. Finally, Broadridge remains well-positioned to drive long-term growth. We remain on track to deliver on our three-year growth objectives of 7% to 9% recurring revenue growth constant currency, 5% to 8% organic, and 8% to 12% adjusted EPS growth with fiscal '24 right in line with those goals. And with continued execution supported by long-term demand trends, we are well-positioned to continue to grow beyond FY '26 as we attack our $60 billion and growing market opportunity. I want to close by thanking our associates around the world. The market for what we do continues to evolve and Broadridge will be evolving as well. We're seizing the opportunities in front of us. And your focus on serving our clients, as shown by our strong accomplishments this quarter and over a long period, continues to set us apart. Thank you. And with that, let me turn it over to Edmund.

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 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 million 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, which are driving positive momentum in the business. First, closed sales through the first three quarters are up 19% over last year. And 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, and 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%. And AOI margins of 21.4% expanded 40 basis points. And adjusted EPS rose 9% to $2.23. Finally, 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 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 to GTO. Recurring revenue grew 9% to $425 million. Capital markets revenue increased 8%, led by new sales in higher equity and fixed income trading volumes. I will also note that we continued 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 to 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 11 consecutive quarters, and more modest equity volume growth. Let's now move to slide 10 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 had 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 11. 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 continue 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 12; 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 cost 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 to free cash flow on slide 14. Q3 '24 free cash flow was $167 million, $5 million better than last year. Through three quarters, free cash flow is a positive $259 million, relative to $47 million in the first nine months of 2023. These results are being driven by our continued strong earnings growth and 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 due to 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 into 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 $1 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 million 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 to 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, and closed sales of $280 million to $320 million and I'll also note that we remain on track to drive 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 and 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 fiscal '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?

Thank you. Good morning. I'll ask my question and the follow-up both upfront. So first, given the solid early demand for OpsGPT and BondGPT, where do you see the biggest opportunity to increase Gen AI-related product development? And then the follow-up, since you've deleveraged the balance sheet, now we're a few years post the Itiviti acquisition, where do you see the greatest white space for your acquisition opportunities?

David, thank you very much. It's Tim and thank you for the question on AI. It's an area that we're pretty excited about, as you know and we have talked about being a leader in AI in our space. We've talked about how we're bringing that to -- really into all of our products. We think in the future, every product will be part -- will have AI as part of it and then to introduce commercial products as well and use it for internal efficiency, and do all that in a safe way. We are really pleased by the progress of OpsGPT and BondGPT. With OpsGPT, we're in production with our first client and we're actively engaged with another five. BondGPT, we have three proofs-of-concepts underway, eight additional discussions. So there's lots of good activity around those. We're also doing things in the asset management side with our global demand model, where we have six of the largest 50 asset managers already signed up and an additional 10 of the largest 100 in contracting. So, I think people are really attracted to these use cases. When we see sort of the biggest areas going forward, I think it's really deepening in these sort of unique areas that -- where it really makes sense for us to be the one to invest. It doesn't make sense for others to invest in the sort of depth of capital markets or in some of these marketing areas in asset management and we think there's real opportunity for us there. We're excited about how it's going to drive things in the fixed income world. When you think about this in the future, it's really there will be a commodity part of it where it's part of just having a good product, and then there will be a more exclusive part of it where, if you have proprietary data, you can really leverage something and create something unique and we think there are definitely areas where we have proprietary data. So we continue to be excited about AI. It will be a while for it to sort of begin to show in the economics, but we begin to be excited about it. I think on the M&A side, let me just turn to that, I think that's a really important question and David, as you know, our growth is primarily organic and we have a long runway for that with the $60 billion market opportunity and as you know, our three-year objective for M&A is sort of one point to two points and we've been on this sort of pause post our BTCS acquisition, but now as you point out, having reached our leverage and our free cash flow conversion goals, we do have flexibility to invest. And I think in past calls, I have been cautious about buyers and sellers coming together on price and I do think now, looking at the market that, that logjam is beginning to break up. We are beginning to see more tuck-in opportunities that have the potential to meet both our strategic and financial criteria and as you know, we always look for opportunities that tightly align with our strategy where we're the right owner and that's IRR sort of in the really attractive mid-to-high teens well in excess of our cost of capital. So we do think that there will be opportunities this year. We think there'll be opportunities when you look across the areas that we do. Wealth management has some very interesting things going on. Data and analytics have some very interesting things going on and we're beginning to see all the PE firms really polishing up their properties to make them look attractive to strategics like ourselves and so we think there will be a stream of opportunities. We'll be very, very selective. If you see us do something, you'll know that we're doing it because it's very attractive and will -- and enough opportunities out there that we can be very disciplined in doing things that we think will have very good returns for shareholders.

And I'll just add, Tim, the opportunities are out there. David, we have two months left in this fiscal year, which is why I highlight the fact that the majority of our capital will be allocated towards share repurchases in this fiscal year, but as I said a number of times in my prepared remarks, we're in a really, really strong position because of the point that you made on being at the right leverage ratio and the capital we're generating through our free cash flow. So as Tim said, there are very attractive opportunities out there as we go into our next fiscal year and I think we'll be in a great capital position to be able to supplement our organic growth with M&A.

Understood. Thanks so much, Tim and Edmund.

The next question comes from Will Vu of Wolfe Research. Please go ahead.

Hey guys. Thanks for taking my questions. This is Will on for Darrin here. I had two related to some of the bookings trends. First and foremost, you guys in the past have talked about some of the underlying bookings being more -- or being less transformative. And I was curious as to if you guys can comment on some of the more recent characteristics within your pipeline. Are you seeing any deal sizes expanding or any of that. And then my second question being, as we look on the wealth management side, kind of curious how -- what opportunities are really resonating with some of your prospective customers that you're seeing on this end? Thanks.

Will, thanks. It's Tim. I'll take those. I think on the booking trends, we are -- I do think that the main thrust continues to be lots of, I don't want to say exactly bite-sized opportunities, but very manageably-sized opportunities. And so we do have some that are, call it, more than $5 million, but we don't have any of these sort of mega things that will take many years to influence. So we really feel good about sort of that flow that we're seeing. We are seeing in areas of demand, and I mentioned this a little bit in the script, but we're seeing it around things that will drive revenue, certainly on the BTCS side, certainly around adviser tools, securities class action, other things that really drive revenue nicely. We're seeing things that drive costs, lots of activity around print to digital and of course, regulatory with tailored shareholder report. So all areas that really align with the investments that we've been making and so that really makes us feel good about the return on the investments that we're going to see. And I think that, that really -- your sort of second part of the question was about wealth management and I think that is just emblematic of getting return on areas where we've made significant investments. As you know, a very attractive market, we've talked about the $16 billion market, how it's growing, and we're getting really good traction with a whole series of component sales. Our sales were up 75% for the year. Our current pipeline is over $200 million. And when you say sort of what opportunities are people looking for, I think that it's a combination of each has sort of a different specific pain point and want to address it, but at the same time, they're looking to sort of say, how do I begin to put in place a digital road map and sort of a North Star that they can build to over time? So, I think the open API framework, the enterprise integration service layer, all of those things in terms of how we can bring things together, they really like that as a vision. Meanwhile, they tend to say, let me start with an existing pain point like tax, like client onboarding, like corporate actions, some things that are very tangible. And so we have great conversations going on both here in the US, but also lots of good conversations in Canada. So we feel really good about the outlook there.

That's great. Thanks.

The next question comes from Patrick O'Shaughnessy of Raymond James. Please go ahead.

Hey. Good morning, guys. When you kind of think about the factors that are driving 6% recurring revenue growth this fiscal year as compared to the high end of your range of 9%, what are the factors that are kind of resulting in revenue coming towards the lower end of the range and then how does that inform your outlook point for next year?

Good morning, Patrick. Thanks for that question. I did want an opportunity to dive deeper into that. So, thanks for the question. We are tracking, to your point, 6% at the low end of what I would highlight is a strong organic recurring revenue range and there are two items that are really impacting that. First, I would say, is position growth. You know that our outlook was mid to high single digit position growth, and you just heard both Tim and I talk about 6% equity position growth and fund growth at about 3% for the full year. So that's one thing relative to the outlook that we had. The second, as you know, a strong component of our recurring revenue growth is converting sales to revenue and there I'd highlight lower revenue in our customer communications business. But again, you heard me talk about starting to see that tick up in the fourth quarter as we onboard new clients. So, I think the key point for me is that we do have positive momentum going into fiscal '25 and '26 with sales, which impacts next year revenue, estimated to be up 15% to 30%, and position growth starting to tick up. I was very deliberate about mentioning Q1 '25 testing data showing mid single digit at this point. I think that's a good trend, because as we know, it normally ticks up. So, look, delivering 6% in fiscal '24 and momentum going into fiscal '25, I think has us in a pretty good place relative to the three-year objectives. The second part of your question is like would it -- it's all focused on the go forward and what it means for the outlook. And for me, as you know, I like to put that in terms of our three-year objectives. And as I just mentioned, we have great line of sight into fiscal year '24. And I would say that's a strong start on the three-year cycle. And I'll just remind you, we're coming off a year of 7% recurring revenue growth and 9% adjusted EPS growth, and now sort of on track to deliver approximately 6% and 10%, respectively. And so, those numbers are right in line with our guidance, right in line with the growth algorithm as we think about the long-term objective. And I just talked about the drivers of growth being stable and the momentum that we have moving forward. So, we feel good about where we are relative to the three-year objectives. And as our usual practice, we'll come back and talk more specifically about '25 in a more robust way on our Q4 call.

Yeah. I appreciate that. A quick follow-up. Just to make sure I'm understanding your commentary on timing and shareholder meetings getting pushed into April from March. So that would show up in the regulatory revenues line and the issuer revenues line, but no impact to data driven fund solutions or customer communications. Am I understanding that correctly?

That's primarily right. You're very astute in picking it up. Those are the two areas that we called out. So, you'll see it in both of those businesses in the registered shareholder solutions and issuer, and then obviously, the regulatory business.

All right. terrific. Thank you.

Thank you very much, Andrea. Thank you to everyone on the call. Thank you for your interest in Broadridge. As I said earlier, we're now well into our seasonally largest quarter. We're looking to delivering full year results, as Edmund just said, of 6% recurring revenue growth, double-digit EPS growth. That's going to mark a strong start to our three-year objectives. And we will look forward to seeing you in August.