Broadridge's 2026Q1 Earnings Call: Contradictions Emerge on Sales Cycles, Capital Markets Growth, and Digital Assets

Date of Call: November 4, 2025

Financials Results

• Revenue: $1.6B, up 12% YOY
• EPS: $1.51 adjusted EPS, up 51% YOY
• Operating Margin: 15.8% adjusted operating income margin, up 280 basis points YOY

Guidance:

• Recurring revenue growth expected at the higher end of the 5%–7% range (constant currency).
• Adjusted EPS growth reaffirmed at 8%–12%.
• Adjusted operating income margin expected to be 20%–21%.
• Closed sales expected to be $290M–$330M for fiscal '26.
• Event-driven revenue expected to normalize to ~$50M–$60M per quarter; Q2 adjusted EPS expected to be ~13%–15% of full year.
• Free cash flow conversion targeted to exceed 100%.

Business Commentary:

* Strong First Quarter Results and Revenue Growth: - Broadridge Financial Solutions reported 8% recurring revenue growth on a constant currency basis and 51% growth in adjusted EPS for Q1 2026. - The growth was driven by a positive economic backdrop, strong equity markets, and a healthy capital market environment.

• Governance and Capital Markets Performance:
• Governance revenues rose by 5%, driven by revenue from sales and healthy position growth, with equity position growth at 12%.

• Capital Markets revenues increased by 6% due to a combination of new sales and higher trading volumes, boosted by tokenization and digital asset revenues.

• Acquisitions and Strategic Investments:

• Broadridge completed two tuck-in acquisitions, Signal and iJoin, to strengthen its governance and wealth management businesses.

• These acquisitions contributed to increased recurring revenue growth and expanded Broadridge's product offerings.

• Digital Assets and Tokenization:

• Broadridge recognized $4 million in digital asset revenues related to its role as a Super Validator on the Canton Network.

• This revenue contribution highlights the potential of tokenization and digital assets as emerging megatrends in financial services.

• Shareholder Engagement and Innovation:

• Broadridge is developing new voting solutions and digital client communications to enhance shareholder engagement and position itself as a technology leader in financial services.
• These innovations are supported by ongoing investments in technology and strategic partnerships.

Sentiment Analysis:

Overall Tone: Positive

• Management repeatedly described a "strong first quarter," raised recurring revenue outlook to the higher end of 5%–7%, reported 51% adjusted EPS growth to $1.51, and reaffirmed full-year targets (8%–12% EPS growth, $290M–$330M Closed sales), signaling confidence in growth and investments.

Q&A:

• Question from Michael Infante (Morgan Stanley): Why wouldn't EPS similarly track toward the high end given the high incremental margin of the event-driven revenue and recurring revenue tracking to the high end?
  Response: Recurring revenue outlook was raised due to acquisitions and organic strength, but management will maintain EPS guidance (8%–12%) because incremental revenue early in the year will be balanced by continued investments across tokenization, digital assets, shareholder engagement, digital communications, AI and platform initiatives.

• Question from Michael Infante (Morgan Stanley): After participating in the PIPE using Canton holdings, do you plan to convert some holdings to cash to mitigate GAAP volatility and how would a 10% Canton Coin move affect GAAP EPS?
  Response: Management expects GAAP volatility from coin holdings, plans to liquidate over time rather than hold indefinitely, and views coin-related revenue as small (about 1 point to Capital Markets); they did not provide a specific EPS sensitivity to a 10% move.

• Question from Kyle Peterson (Needham & Company, LLC): Have you seen any impact on sales cycles or deal closings from the recent government shutdown?
  Response: No material impact observed; selling environment remains stable, pipeline healthy and growing, and many sales cycles are longer than short-term shutdown windows.

• Question from Kyle Peterson (Needham & Company, LLC): How should we think about digital assets and tokenization's role in Broadridge near-term and long-term?
  Response: Tokenization is viewed as a 10‑year megatrend; Broadridge is building Distributed Ledger Repo, leveraging the Canton Network, focusing initially on less-liquid fixed income/repurchase/collateral use cases and expanding to other assets (including wealth integration), with early revenue emerging now.

• Question from Scott Wurtzel (Wolfe Research, LLC): Aside from normalization of event-driven revenue, is there anything else driving the 2Q EPS guide of ~13%–15% of full year?
  Response: No—management said the Q2 guide is driven primarily by the difficult compare to last year's event-driven activity and there are no other significant items to call out.

• Question from Scott Wurtzel (Wolfe Research, LLC): Can you summarize the position growth trends in the quarter and how they compared with expectations?
  Response: Position growth remains strong: total equity positions +12% (revenue positions +7%); fund position growth was +2% this quarter due to timing noise but underlying fund growth is mid-single-digits; testing points to continued strength into the second half.

• Question from Puneet Jain (JPMorgan Chase & Co): Is it common to be paid in coins as a Super Validator and how will you realize returns on your Canton Network investment?
  Response: Yes—Super Validator compensation is commonly paid in coins per network protocol; the Super Validator role is separate from DLR, the initial investment to operate it was modest, and returns depend on coin minting and market price.

• Question from Puneet Jain (JPMorgan Chase & Co): What were the puts and takes that drove the one-point increase in recurring revenue guidance?
  Response: The guidance uplift reflects modest contribution from tuck‑ins (iJoin and Signal, totaling under ~50bps), continued organic strength (backlog conversion, position growth) and some digital asset revenue; a headwind from lower interest rates was accounted for and two Fed cuts were baked into assumptions.

• Question from Patrick O'Shaughnessy (Raymond James & Associates, Inc.): Will tokenized equities recorded on blockchain reduce the need for intermediated communications between issuers and shareholders?
  Response: No—management sees tokenized equities as still subject to securities regulation and that intermediaries will retain asset‑servicing and governance obligations, creating opportunities for Broadridge to provide disclosure, proxy and governance solutions.

• Question from Patrick O'Shaughnessy (Raymond James & Associates, Inc.): What percentage of GTO revenue is tied to trading volumes and how durable is the current volume-driven growth?
  Response: About one‑third of GTO revenues are linked to trade volumes (roughly half of that is direct paper trade); elevated volumes have driven recent double‑digit growth, but management expects continued strong growth without assuming persistently very elevated volumes.

Contradiction Point 1

Sales Cycle Length and Stability

It involves differing perspectives on the stability and length of the sales cycle, which are critical for understanding the company's growth trajectory and forecasting revenue.

Has the government shutdown impacted your sales cycle or client interactions? How do digital assets and tokenization align with Broadridge's business strategy? - [Kyle Peterson](Needham & Company)

2026Q1: Sales cycle remains stable; no impact from the government shutdown. Strong close to fiscal '25; positive client conversations continue. - [Timothy Gokey](CEO)

Are you seeing any elongation in the sales cycle, and how do you assess the strength of your sales pipeline for fiscal 2026? - [Michael Nicholas Infante](Morgan Stanley)

2025Q4: Sales cycles have been longer this past year compared to previous ones, but not significantly different now. - [Timothy Gokey](CEO)

Contradiction Point 2

Capital Markets Revenue Growth Expectations

It involves differing expectations for capital markets revenue growth, which is a key component of the company's overall financial performance.

Why isn't EPS guidance reflecting the high end of the range despite higher recurring revenue guidance? - [Michael Infante](Morgan Stanley)

2026Q1: Capital markets revenue growth for the year is now expected to be 5% to 7%. - [Ashima Ghei](CFO)

What factors caused capital markets revenue guidance to be below the total GTO segment? - [Scott Darren Wurtzel](Wolfe Research)

2025Q4: Capital markets grew 4% in Q4 and 6% in the full year. - [Ashima Ghei](CFO)

Contradiction Point 3

Digital Assets and Tokenization Revenue Contribution

It involves differing expectations for the contribution of digital assets and tokenization to overall revenue, which are critical for understanding the company's future growth prospects.

Did the government shutdown impact your sales cycle or client conversations? How do digital assets and tokenization fit into Broadridge's business strategy? - [Kyle Peterson](Needham & Company)

2026Q1: Canton Coin revenue translates to about 1 point of capital markets growth, varying by minting activity and coin price. - [Ashima Ghei](CFO)

Can you explain the role of the distributed ledger repo (DLR) in driving closed sales and discuss regulatory challenges to broader adoption of tokenized rails? - [Michael Nicholas Infante](Morgan Stanley)

2025Q4: DLR has processed over $200 billion, larger than the crypto market excluding Tether. - [Timothy Gokey](CEO)

Contradiction Point 4

Sales Cycle and Closing Process

It involves the status of the sales cycle and process, which directly impacts the company's revenue projections and investor expectations.

Has the government shutdown impacted your sales cycles or client interactions? How do digital assets and tokenization align with Broadridge's business strategy? - [Kyle Peterson](Needham & Company)

2026Q1: Sales cycle remains stable; no impact from the government shutdown. Strong close to fiscal '25; positive client conversations continue. - [Timothy Gokey](CEO)

Can you elaborate on current demand conditions, particularly the pause in clients' willingness to invest, and its impact on sales? - [Dan Perlin](RBC Capital Markets)

2025Q3: We're pleased with our performance year-to-date, with Q3 sales up 9% excluding Tailored Shareholder Reports sales. There is some uncertainty affecting our sales closing process, particularly in Q4. - [Tim Gokey](CEO)

Contradiction Point 5

Impact of Digital Assets on Revenue

It relates to the contribution of digital assets to Broadridge's revenue, which is crucial for understanding the company's growth strategy and financial outlook.

Has the government shutdown affected your sales cycle or client conversations? How do digital assets and tokenization align with Broadridge's business strategy? - [Kyle Peterson](Needham & Company)

2026Q1: Canton Coin revenue translates to about 1 point of capital markets growth, varying by minting activity and coin price. The balance sheet impact of coins is recognized as volatile and adjusted out of adjusted EPS. - [Ashima Ghei](CFO)

How does equity growth impact revenue growth, and could there be an opportunity to reduce revenue volatility from license renewals? - [Michael Infante](Morgan Stanley)

2025Q3: Equity position growth had limited direct revenue impact, with 11% growth in revenue positions. Non-revenue positions, including smaller ones, are positive for long-term growth. - **Traceability:** (2026Q1-2, 2025Q3-3)