Broadridge Raises Full-Year Earnings Guidance After Recurring Revenue Growth
The financial technology provider raised its adjusted earnings outlook for fiscal 2026 as recurring revenue grew 9% in the second quarter. Strong organic expansion and acquisition of digital assets offset event-driven activity declines and margin pressure from rising distribution costs.
Broadridge Financial Solutions, Inc. (NYSE: BR ) reported a 9% increase in recurring revenue for the second quarter of fiscal 2026, leading the company to raise its full-year revenue guidance. Net income reached $1.714 billion for the period ended December 31, 2025, while GAAP net income was significantly boosted by non-operating gains related to digital asset holdings.
Reported Profits for Promoting Digital Assets
The company reported diluted earnings per share of $2.42, a 102% increase from the year-ago period. This attack was primarily driven by a gain of $137 million in digital assets and a gain of $53 million related to the contribution of Canton coins to the Canton Digital Asset Treasury 4. On an adjusted basis, which excludes these measurement changes and other non-recurring items, earnings per share increased by 2% to $159.
Increased Revenue Offset by Decreased Margin
Net income increased 8% to $1.71 billion compared to $1.59 billion in the year-ago quarter. Recurring revenue, the company’s key metric, reached $1.07 billion, supported by organic growth of 7% and contributions from 3, 5 acquisitions. Event-driven revenue decreased 27% to $91 million, a decrease due to lower activity in mutual fund proxy 8. Distribution revenue increased 14% to $553 on higher communication fees, up from a higher rate of $553 million.
Operating income decreased 2% to $206 million, GAAP margins contracted to 12.0% from 13.3% 3, 8. The Investor Communication Solutions (ICS) segment saw pre-tax margin decrease to 11.1% from 15.1% due to lower event-driven revenue and Global Converse expenses and 10% of Global Converse, expenses of Global Converse rose 12%. The Operations segment (GTO) reported an increase in pre-tax margin to 16.1% from 11.3%.
Higher Salary Forecast and Expansion Plans
Management raised its fiscal 2026 guidance for adjusted earnings per share to 9% to 12%, from 8% to 12%. The company reaffirmed its outlook for recurring revenue growth in the high end of the 5% to 7% range on a recurring basis and maintained its closed-end sales target of $290 million to $330 million.
The stated operational strategy focuses on digitization of funds, modernization of wealth management, and innovation in trading platforms. Capital allocations remain focused on tokenization and digital communications, as well as strategic M&A, demonstrated by the acquisition of Acolin Group for 70 million in January 2026 to expand European fund distribution services.
Sector and many trends
Broadridge’s performance came on the back of increased investor participation, with fixed income positions up 11% and mutual fund/ETF positions up 15%. However, macroeconomic factors such as higher postage rates and higher float revenues negatively impacted adjusted operating margins by 40 basis points during the quarter. The company’s results also show the growth of the institutional integration of digital assets, as evidenced by its large gains from the Canton Digital Asset Treasury.
Investment thesis
A case of bull
- Strong Organic Growth: The company achieved 7% recurring revenue growth and a 24% increase in closed sales for the quarter, reflecting healthy demand for core services.
- Position Growth: Double-digit increases in equity and ETF positions suggest a strong case for the company’s investor relations business.
- Strategic Expansion: Acolin’s acquisition and growth in digital asset revenue point to successful diversification into new geographic and technology markets.
Bear the Case
- Margin Compression: Operating margins faced pressure from higher technology costs, volume-related costs, and a 14% increase in distribution costs.
- Event Driven Revenue Dynamics: The 27% decline in event-driven revenue highlights the unpredictable nature of this segment, which can weigh heavily on ICS’ overall profitability.
Advertisement
