Broadridge Financial Solutions Inc.
11/03/2026 | Press release | Distributed by Public on 11/03/2026 11:44
Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with our Condensed Consolidated Financial Statements and accompanying Notes thereto included elsewhere herein. Certain information contained in "Management's Discussion and Analysis of Financial Condition and Results of Operations" are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Statements that are not historical in nature and which may be identified by the use of words such as "expects," "assumes," "projects," "anticipates," "estimates," "we believe," "could be," "on track" and other words of similar meaning, are forward-looking statements. These statements are based on management's expectations and assumptions and are subject to risks and uncertainties that may cause actual results to differ materially from those expressed. Our actual results, performance or achievements may differ materially from the results discussed in this Item 2. because of various factors, including those set forth elsewhere herein. See "Note about forward-looking statements" and "Risk Factors" included in this Quarterly Report on Form 10-Q.
OVERVIEW
Broadridge Financial Solutions, Inc. ("Broadridge" or the "Company"), a Delaware corporation, is a global financial technology leader powering investing, corporate governance, and communications. The Company delivers technology-driven solutions to banks, broker-dealers, asset and wealth managers, public companies, investors, and mutual funds, that enable the Company's clients to operate, innovate and grow. The Company's trusted expertise and transformative technology solutions help financial services companies enhance investor engagement, optimize trading and investing, and digitize communications. The principal markets in which the Company operates are located in North America and Europe. The Company operates in two reportable segments: Investor Communication Solutions ("ICS") and Global Technology and Operations ("GTO").
ACQUISITIONS
We frequently review our businesses to ensure we have the necessary assets to execute our strategy. We expect to acquire businesses when we identify a compelling strategic need, such as a product, service or technology that helps meet client demand, a way to achieve business scale that enables competition and operational efficiency, or similar considerations. The results of operations for acquired businesses are included in our consolidated results from the respective dates of acquisition.
Acquisitions of Businesses
In April 2026, the Company acquired CQG, Inc. ("CQG"). CQG is a Denver-based execution management system provider to futures and options market participants. CQG is included in the Company's GTO reportable segment.
In January 2026, the Company acquired Acolin Group Holdco Limited ("Acolin"). Acolin is a European provider of cross-border fund distribution and regulatory services. Acolin is included in the Company's ICS reportable segment.
In September 2025, the Company acquired LDI-MAP, LLC ("iJoin"), a retirement plan technology provider specializing in participant onboarding, engagement, and analytics solutions for the retirement industry. iJoin is included in the Company's ICS reportable segment.
In August 2025, the Company acquired Signal Agency Ltd. ("Signal"), a UK-based provider of design, technology and consulting services that support omni-channel communications for financial services and other firms. Signal is included in the Company's ICS reportable segment.
We acquired these four businesses for an aggregate purchase price of $282.8 million, net of cash acquired.
CONSOLIDATION AND BASIS OF PRESENTATION
The Condensed Consolidated Financial Statements have been prepared in accordance with U.S generally accepted accounting principles ("GAAP"). In management's opinion, the Condensed Consolidated Financial Statements contain all normal recurring adjustments necessary for a fair presentation of results reported. The results of operations reported for interim periods presented are not necessarily indicative of the results of operations for subsequent periods. Refer to Note 1, "Basis of Presentation" to our Condensed Consolidated Financial Statements under Item 1 of Part 1 of this interim report on Form 10-Q for a more detailed discussion.
CRITICAL ACCOUNTING ESTIMATES
In presenting the Condensed Consolidated Financial Statements, management makes estimates and assumptions that affect the amounts reported and related disclosures. Management continually evaluates the accounting policies and estimates used to prepare the Condensed Consolidated Financial Statements. The estimates, by their nature, are based on judgment, available information, and historical experience and are believed to be reasonable. However, actual amounts and results could differ from these estimates made by management. In management's opinion, the Condensed Consolidated Financial Statements contain all normal recurring adjustments necessary for a fair presentation of results reported. The results of operations reported for the periods presented are not necessarily indicative of the results of operations for subsequent periods. Certain accounting policies that require significant management estimates and are deemed critical to our results of operations or financial position are discussed in the "Critical Accounting Policies" section of Part II, Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the 2026 Annual Report.
KEY PERFORMANCE INDICATORS
Management focuses on a variety of key indicators to plan, measure and evaluate the Company's business and financial performance. These performance indicators include Revenue, Recurring revenue, and Closed sales as well as not generally accepted accounting principles measures ("Non-GAAP") of Adjusted Operating income, Adjusted Net earnings, Adjusted earnings per share, Free cash flow, and Recurring revenue growth constant currency. In addition, management focuses on select operating metrics specific to Broadridge of Position Growth and Internal Trade Growth, as defined below.
Refer to the section "Explanation and Reconciliation of the Company's Use of Non-GAAP Financial Measures" for a reconciliation of Adjusted Operating income, Adjusted Net earnings, Adjusted earnings per share, Free cash flow and Recurring revenue growth constant currency to the most directly comparable GAAP measures, and an explanation for why these Non-GAAP metrics provide useful information to investors and how management uses these Non-GAAP metrics for operational and financial decision-making. Refer to the section "Results of Operations" for a description of Closed sales and an explanation of why Closed sales is a useful performance metric for management and investors.
Revenues
Revenues are primarily generated from fees for processing and distributing investor communications and fees for technology-enabled services and solutions. The Company monitors revenue in each of our two reportable segments as a key measure of success in addressing our clients' needs. Revenues from fees are derived from both recurring and event-driven activity. The level of recurring and event-driven activity the Company processes directly impacts distribution revenues. While event-driven activity is highly repeatable, it may not recur on an annual basis. Event-driven revenues are based on the number of special events and corporate transactions the Company processes. Event-driven activity is impacted by financial market conditions and changes in regulatory compliance requirements, resulting in fluctuations in the timing and levels of event-driven revenues. Distribution revenues primarily include revenues related to the physical mailing of proxy materials, interim communications, transaction reporting, customer communications and fulfillment services as well as administrative services related to our fund processing solutions.
Recurring revenue growth represents the Company's total annual revenue growth, less growth from event-driven and distribution revenues. We distinguish recurring revenue growth between organic and acquired:
•Organic - Includes recurring revenue generated from Net New Business and Internal Growth.
•Acquired - Includes recurring revenue generated from acquired services in the first twelve months following the date of acquisition. This type of growth comes as a result of our strategy to purchase, integrate, and leverage the value of assets we acquire.
Revenues and Recurring revenue are useful metrics for investors in understanding how management measures and evaluates the Company's ongoing operational performance. See "Results of Operations" as well as Note 3, "Revenue Recognition" to our Condensed Consolidated Financial Statements in this Form 10-Q.
Position Growth and Internal Trade Growth
The Company uses select operating metrics specific to Broadridge of Position Growth and Internal Trade Growth in evaluating its business results and identifying trends affecting its business. Position Growth is comprised of "equity position growth" and "mutual fund/ETF position growth." Equity position growth measures the estimated annual change in positions eligible for equity proxy materials. Equity revenue position growth excludes small or fractional equity positions for which the Company does not recognize revenue ("non-revenue positions"). Mutual fund/ETF position growth measures the estimated change in mutual fund and exchange traded fund positions eligible for interim communications. These metrics are calculated from equity proxy and mutual fund/ETF position data reported to Broadridge for the same issuers or funds in both the current and prior year periods.
Internal Trade Growth represents the estimated change in daily average trade volumes for Broadridge securities processing clients whose contracts are linked to trade volumes and who were on Broadridge's trading platforms in both the current and prior year periods. Position Growth and Internal Trade Growth are useful non-financial metrics for investors in understanding how management measures and evaluates Broadridge's ongoing operational performance within its Investor Communication Solutions and Global Technology and Operations reportable segments, respectively.
Position Growth and Internal Trade Growth for the three months ended September 30, 2026, and 2025, are as follows:
|
Three Months Ended September 30, |
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| 2026 | 2025 | ||||||||||
| Position Growth | |||||||||||
| Equity positions | 16 | % | 12 | % | |||||||
| Equity revenue positions | 11 | % | 7 | % | |||||||
| Mutual fund / ETF positions | 16 | % | 2 | % | |||||||
| Internal Trade Growth | 7 | % | 17 | % | |||||||
Results of Operations
The following discussions of Analysis of Condensed Consolidated Statements of Earnings and Analysis of Reportable Segments refer to the three months ended September 30, 2026 compared to the three months ended September 30, 2025. The Analysis of Condensed Consolidated Statements of Earnings should be read in conjunction with the Analysis of Reportable Segments, which provides a more detailed discussion concerning certain components of the Condensed Consolidated Statements of Earnings.
The following references are utilized in the discussions of Analysis of Condensed Consolidated Statements of Earnings and Analysis of Reportable Segments:
"Amortization of Acquired Intangibles and Purchased Intellectual Property" and "Acquisition and Integration Costs" represent certain non-cash amortization expenses associated with acquired intangible assets and purchased intellectual property assets, as well as certain transaction and integration costs associated with the Company's acquisition activities, respectively.
"Gains or Losses on Digital Assets" represent the unrealized gains or losses, as applicable, related to the mark to market of the Company's digital asset holdings and the realized and unrealized gains or losses, as applicable, associated with the Canton Digital Asset Treasury transaction. Refer to Note 8, "Fair Value of Financial Instruments" for details related to realized and unrealized gains or losses.
"Net New Business" refers to recurring revenue from Closed sales for the initial twelve-month contract period after which the client goes live with the Company's service(s), less recurring revenue from client losses.
"Internal Growth" is a component of recurring revenue and generally reflects year over year changes in existing services to our existing customers' multi-year contracts beyond the initial twelve-month period in which it was included in Net New Business.
"Recurring revenue growth constant currency" refers to our Recurring revenue growth presented on a constant currency basis to exclude the impact of foreign currency exchange fluctuations.
"Restructuring and Other Related Costs" consists of severance and other costs related to workforce actions resulting, in part, from the Company's AI and productivity initiatives in fiscal year 2027 and the closure of substantially all operations of a production facility in fiscal year 2026.
The following definitions describe the Company's Revenues:
Revenues in the Investor Communication Solutions segment are derived from both recurring and event-driven activity, in addition to distribution revenues. The level of recurring and event-driven activity we process directly impacts revenues. While event-driven activity is highly repeatable, it may not recur on an annual basis. The types of services we provide that comprise event-driven activity are:
•Mutual Fund Proxy: The proxy and related services we provide to mutual funds when certain events occur requiring a shareholder vote including changes in directors, sub-advisors, fee structures, investment restrictions, and mergers of funds.
•Mutual Fund Communications: Mutual fund communications services consist primarily of the distribution on behalf of mutual funds of supplemental information required to be provided to the annual mutual fund prospectus as a result of certain triggering events such as a change in portfolio managers. In addition, mutual fund communications consist of notices and marketing materials such as newsletters.
•Equity Proxy Contests and Specials, Corporate Actions, and Other: The proxy services we provide in connection with shareholder meetings driven by special events such as proxy contests, mergers and acquisitions, and tender/exchange offers.
Event-driven revenues are based on the number of special events and corporate transactions we process. Event-driven activity is impacted by financial market conditions and changes in regulatory compliance requirements, resulting in fluctuations in the timing and levels of event-driven revenues. As such, the timing and level of event-driven activity and its potential impact on revenues and earnings are difficult to forecast.
Generally, mutual fund proxy activity has been subject to a greater level of volatility than the other components of event-driven activity. For the three months ended September 30, 2026, mutual fund proxy revenues were 74% lower than the three months ended September 30, 2025. During fiscal year 2026, mutual fund proxy revenues were flat compared to the prior fiscal year. Although it is difficult to forecast the levels of event-driven activity, we expect that the portion of revenues derived from mutual fund proxy activity may continue to experience volatility in the future.
Distribution revenues primarily include revenues related to the physical mailing of proxy materials, interim communications, transaction reporting, customer communications and fulfillment services, as well as administrative services related to our fund processing solutions.
Distribution cost of revenues consists primarily of postage-related expenses incurred in connection with our Investor Communication Solutions segment, as well as administrative services expenses related to our fund processing solutions. These costs are reflected in Cost of revenues.
Closed sales represent an estimate of the expected annual recurring revenue for new client contracts that were signed by Broadridge in the current reporting period. Closed sales does not include event-driven or distribution activity. We consider contract terms, expected client volumes or activity, knowledge of the marketplace and experience with our clients, among other factors, when determining the estimate. Management uses Closed sales to measure the effectiveness of our sales and marketing programs, as an indicator of expected future revenues and as a performance metric in determining incentive compensation.
Closed sales is not a measure of financial performance under GAAP, and should not be considered in isolation or as a substitute for revenue or other income statement data prepared in accordance with GAAP. Closed sales is a useful metric for investors in understanding how management measures and evaluates our ongoing operational performance.
The inherent variability of transaction volumes and activity levels can result in some variability of amounts reported as actual achieved Closed sales. Larger Closed sales can take up to 12 to 24 months or longer to convert to revenues, particularly for the services provided by our Global Technology and Operations segment. For the three months ended September 30, 2026 and for the fiscal year ended June 30, 2026, we reported Closed sales net of a 5% allowance adjustment. Consequently, our reported Closed sales amounts will not be adjusted for actual revenues achieved because these adjustments are estimated in the period the sale is reported. We assess this allowance amount at the end of each fiscal year to establish the appropriate allowance for the subsequent year using the trailing five years actual data as the starting point, normalized for outlying factors, if any, to enhance the accuracy of the allowance.
Closed sales for the three months ended September 30, 2026 were $35.6 million, an increase of $3.0 million, or 10%, compared to $32.5 million for the three months ended September 30, 2025. Closed sales for the three months ended September 30, 2026 and September 30, 2025 are net of an allowance adjustment of $1.9 million and $1.7 million, respectively.
ANALYSIS OF CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
Three Months Ended September 30, 2026 versus Three Months Ended September 30, 2025
The table below presents Condensed Consolidated Statements of Earnings data for the three months ended September 30, 2026 and 2025, and the dollar and percentage changes between periods:
|
Three Months Ended September 30, |
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| Change | |||||||||||||||||||||||
| 2026 | 2025 | $ | % | ||||||||||||||||||||
| (in millions, except per share amounts) | |||||||||||||||||||||||
| Revenues | $ | 1,668.7 | $ | 1,589.4 | $ | 79.3 | 5 | ||||||||||||||||
| Cost of revenues | 1,240.3 | 1,166.8 | 73.5 | 6 | |||||||||||||||||||
| Selling, general and administrative expenses | 254.9 | 233.9 | 21.0 | 9 | |||||||||||||||||||
| Total operating expenses | 1,495.2 | 1,400.7 | 94.5 | 7 | |||||||||||||||||||
| Operating income | 173.5 | 188.8 | (15.3) | (8) | |||||||||||||||||||
| Margin | 10.4 | % | 11.9 | % | |||||||||||||||||||
| Interest expense, net | (27.1) | (24.2) | (3.0) | 12 | |||||||||||||||||||
| Other non-operating income (expenses), net | (36.7) | 48.5 | (85.2) | NM | |||||||||||||||||||
| Earnings before income taxes | 109.7 | 213.1 | (103.4) | (49) | |||||||||||||||||||
| Provision for income taxes | 14.9 | 47.7 | (32.8) | (69) | |||||||||||||||||||
| Effective tax rate | 13.6 | % | 22.4 | % | |||||||||||||||||||
| Net earnings | $ | 94.8 | $ | 165.4 | $ | (70.6) | (43) | ||||||||||||||||
| Basic earnings per share | $ | 0.83 | $ | 1.41 | $ | (0.58) | (41) | ||||||||||||||||
| Diluted earnings per share | $ | 0.83 | $ | 1.40 | $ | (0.57) | (41) | ||||||||||||||||
| Weighted-average shares outstanding: | |||||||||||||||||||||||
| Basic | 113.6 | 117.0 | |||||||||||||||||||||
| Diluted | 114.3 | 118.0 | |||||||||||||||||||||
_____________
NM - Not Meaningful
Revenues
The table below presents Condensed Consolidated Statements of Earnings data for the three months ended September 30, 2026 and 2025, and the dollar and percentage changes between periods:
|
Three Months Ended September 30, |
|||||||||||||||||||||||
| Change | |||||||||||||||||||||||
| 2026 | 2025 | $ | % | ||||||||||||||||||||
| ($ in millions) | |||||||||||||||||||||||
| Recurring revenues | $ | 1,083.1 | $ | 977.5 | $ | 105.6 | 11 | ||||||||||||||||
| Event-driven revenues | 67.4 | 113.8 | (46.4) | (41) | |||||||||||||||||||
| Distribution revenues | 518.2 | 498.1 | 20.0 | 4 | |||||||||||||||||||
| Total | $ | 1,668.7 | $ | 1,589.4 | $ | 79.3 | 5 | ||||||||||||||||
| Points of Growth | |||||||||||||||||||||||||||||
| Net New Business | Internal Growth | Acquisitions | Foreign Exchange | Total | |||||||||||||||||||||||||
| Recurring revenue Growth Drivers | 2pts | 7pts | 2pts | (0pts) | 11 | % | |||||||||||||||||||||||
Revenues increased $79.3 million, or 5%, to $1,668.7 million from $1,589.4 million.
•Recurring revenues increased $105.6 million, or 11%, to $1,083.1 million. Recurring revenue growth constant currency (Non-GAAP) was 11%, driven by 9pts from Organic growth.
•Event-driven revenues decreased $46.4 million, or 41%, as lower mutual fund proxy revenues were partially offset by higher equity and other revenue.
•Distribution revenues increased $20.0 million, or 4%, driven primarily by the postage rate increase of approximately $18 million.
Total operating expenses. Operating expenses increased $94.5 million, or 7%, to $1,495.2 million from $1,400.7 million:
•Cost of revenues - the increase of $73.5 million primarily reflects higher expenses in technology, labor, and distribution costs in our ICS segment, including the increase in postage rates of approximately $18.0 million, and higher expenses related to acquisitions.
•Selling, general and administrative expenses - the increase of $21.0 million primarily reflects higher labor and compensation-related expenses, including Restructuring and Other related costs.
Interest expense, net. Interest expense, net was $27.1 million, an increase of $3.0 million, from $24.2 million. The increase was primarily due to higher average borrowings and higher borrowing costs.
Other non-operating income (expenses), net. Other non-operating expenses for the three months ended September 30, 2026 were $36.7 million, compared to Other non-operating income of $48.5 million for the three months ended September 30, 2025. The decreased Earnings before income taxes was primarily as a result of non-cash Losses on Digital Assets of $40.2 million in the current year period compared to a gain of $45.8 million in the prior year period. Refer to Note 8, "Fair Value of Financial Instruments" for details related to the Company's Canton Coin holdings and the Canton Digital Asset Treasury.
Provision for income taxes.
•Effective tax rate for the three months ended September 30, 2026: 13.6%
•Effective tax rate for the three months ended September 30, 2025: 22.4%
The decrease in the effective tax rate for the three months ended September 30, 2026 was primarily attributable to transferable federal tax credits which relate to the prior tax year.
ANALYSIS OF REPORTABLE SEGMENTS
Broadridge has two reportable segments: (1) Investor Communication Solutions and (2) Global Technology and Operations.
The primary components of "Corporate and Other" are certain gains, losses, centrally managed activities, and non-operating expenses that have not been allocated to the reportable segments, such as interest expense.
Certain corporate expenses, as well as certain centrally managed expenses, are allocated based upon budgeted amounts in a reasonable manner. Because the Company compensates the management of its various businesses on, among other factors, segment profit, the Company may elect to record certain segment-related operating and non-operating expense items in Corporate and Other rather than reflect such items in segment profit.
Revenues
|
Three Months Ended September 30, |
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| Change | |||||||||||||||||||||||
| 2026 | 2025 | $ | % | ||||||||||||||||||||
| ($ in millions) | |||||||||||||||||||||||
| Investor Communication Solutions | $ | 1,153.2 | $ | 1,130.0 | $ | 23.2 | 2 | ||||||||||||||||
| Global Technology and Operations | 515.5 | 459.5 | 56.0 | 12 | |||||||||||||||||||
| Total | $ | 1,668.7 | $ | 1,589.4 | $ | 79.3 | 5 | ||||||||||||||||
Earnings Before Income Taxes
|
Three Months Ended September 30, |
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| Change | |||||||||||||||||||||||
| 2026 | 2025 | $ | % | ||||||||||||||||||||
| ($ in millions) | |||||||||||||||||||||||
| Investor Communication Solutions | $ | 103.9 | $ | 126.4 | $ | (22.5) | (18) | ||||||||||||||||
| Global Technology and Operations | 98.6 | 67.3 | 31.2 | 47 | |||||||||||||||||||
| Corporate and Other | (92.8) | 19.3 | (112.2) | (581) | |||||||||||||||||||
| Total | $ | 109.7 | $ | 213.1 | $ | (103.4) | (49) | ||||||||||||||||
The amount of amortization of acquired intangibles and purchased intellectual property by segment is as follows:
|
Three Months Ended September 30, |
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| Change | |||||||||||||||||||||||
| 2026 | 2025 | $ | % | ||||||||||||||||||||
| ($ in millions) | |||||||||||||||||||||||
| Investor Communication Solutions | $ | 6.2 | $ | 9.8 | $ | (3.6) | (37) | ||||||||||||||||
| Global Technology and Operations | 32.8 | 41.0 | (8.2) | (20) | |||||||||||||||||||
| Total | $ | 38.9 | $ | 50.8 | $ | (11.8) | (23) | ||||||||||||||||
Investor Communication Solutions
The table below presents Revenues and Earnings before income taxes for the Investor Communications Solutions segment:
|
Three Months Ended September 30, |
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| Change | |||||||||||||||||||||||
| 2026 | 2025 | $ | % | ||||||||||||||||||||
| ($ in millions) | |||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| Recurring revenues | $ | 567.6 | $ | 518.0 | $ | 49.6 | 10 | ||||||||||||||||
| Event-driven revenues | 67.4 | 113.8 | (46.4) | (41) | |||||||||||||||||||
| Distribution revenues | 518.2 | 498.1 | 20.0 | 4 | |||||||||||||||||||
| Total | $ | 1,153.2 | $ | 1,130.0 | $ | 23.2 | 2 | ||||||||||||||||
| Earnings Before Income Taxes | |||||||||||||||||||||||
| Earnings before income taxes | $ | 103.9 | $ | 126.4 | $ | (22.5) | (18) | ||||||||||||||||
| Pre-tax Margin | 9.0 | % | 11.2 | % | |||||||||||||||||||
| Three Months Ended September 30, 2026 | |||||||||||||||||||||||||||||
| Points of Growth | |||||||||||||||||||||||||||||
| Net New Business | Internal Growth | Acquisitions | Foreign Exchange | Total | |||||||||||||||||||||||||
| Recurring revenue Growth Drivers | 2pts | 6pts | 1pt | (0pts) | 10 | % | |||||||||||||||||||||||
For the three months ended September 30, 2026:
•Recurring revenues increased $49.6 million, or 10%, to $567.6 million. Recurring revenue growth constant currency (Non-GAAP) was 10%, driven by 8pts of Organic growth.
•By product line, Recurring revenue growth and Recurring revenue growth constant currency (Non-GAAP) were as follows:
◦Regulatory rose 17% and 17%, respectively. Equity revenue position growth was 11% and Mutual fund/ETF position growth was 16%.
◦Data-driven fund solutions increased 10% and 10%, respectively, driven by growth from the acquisitions of Acolin and iJoin and in data and analytics revenues.
◦Issuer rose 4% and 4%, respectively, driven by growth in disclosure solutions.
◦Customer communications rose 3% and 3%, respectively, driven by growth in digital and print revenues, as well as the acquisition of Signal.
•Event-driven revenues decreased $46.4 million, or 41%, as lower mutual fund proxy revenues were partially offset by higher equity and other revenue.
•Distribution revenues increased $20.0 million, or 4%, driven primarily by the postage rate increases of approximately $18.0 million.
•Earnings before income taxes decreased $22.5 million, or 18%, to $103.9 million. The earnings benefit from higher Recurring revenue was offset by lower Event-driven revenues and higher Operating expenses. Operating expenses rose 5%, or $45.7 million, to $1,049.2 million driven by higher distribution and technology expenses, as well as the impact of acquisitions.
Global Technology and Operations
The table below presents Revenues and Earnings before income taxes for the Global Technology and Operations segment:
|
Three Months Ended September 30, |
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| Change | |||||||||||||||||||||||
| 2026 | 2025 | $ | % | ||||||||||||||||||||
| ($ in millions) | |||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| Recurring revenues | $ | 515.5 | $ | 459.5 | $ | 56.0 | 12 | ||||||||||||||||
| Earnings Before Income Taxes | |||||||||||||||||||||||
| Earnings before income taxes | $ | 98.6 | $ | 67.3 | $ | 31.2 | 47 | ||||||||||||||||
| Pre-tax Margin | 19.1 | % | 14.6 | % | |||||||||||||||||||
| Three Months Ended September 30, 2026 | |||||||||||||||||||||||||||||
| Points of Growth | |||||||||||||||||||||||||||||
| Net New Business | Internal Growth | Acquisitions | Foreign Exchange | Total | |||||||||||||||||||||||||
| Recurring revenue Growth Drivers | 2pts | 8pts | 3pts | (0pts) | 12 | % | |||||||||||||||||||||||
For the three months ended September 30, 2026:
•Recurring revenues increased $56.0 million, or 12%, to $515.5 million. Recurring revenue growth constant currency (Non-GAAP) was 13%, driven by 10pts of Organic growth and 3pts from the acquisition of CQG.
•By product line, Recurring revenue growth and Recurring revenue growth constant currency (Non-GAAP) were as follows:
◦Capital Markets rose 17% and 17%, respectively, driven by 12pts of Organic growth, including a 4pt benefit from higher software term license revenues and 5pts from the acquisition of CQG.
◦Wealth and Investment Management rose 5% and 6%, respectively, all Organic, including 3pts of higher software term license revenues.
•Earnings before income taxes increased $31.2 million, or 47%, to $98.6 million, as higher revenues more than offset higher expenses. Operating expenses rose 6%, or $24.8 million, to $417.0 million driven by higher revenue and technology expenses, as well as the impact of the CQG acquisition.
Corporate and Other
Loss before income taxes was $92.8 million for the three months ended September 30, 2026, a $112.2 million reduction compared to Earnings before income taxes of $19.3 million for the three months ended September 30, 2025.
•The decreased earnings before income taxes for the three months ended September 30, 2026 was primarily due to the non-cash Losses on Digital Assets of $40.2 million in the current year period compared to a gain of $45.8 million in the prior year period, and Restructuring and Other Related Costs of $15.2 million in the current year period. Refer to Note 8, "Fair Value of Financial Instruments" for details related to the Company's Canton Coin holdings and the Canton Digital Asset Treasury.
Explanation and Reconciliation of the Company's Use of Non-GAAP Financial Measures
The Company's results in this Quarterly Report on Form 10-Q are presented in accordance with U.S. GAAP except where otherwise noted. In certain circumstances, Non-GAAP results have been presented. These Non-GAAP measures are Adjusted Operating income, Adjusted Operating income margin, Adjusted Net earnings, Adjusted earnings per share, Free cash flow and Recurring revenue growth constant currency. These Non-GAAP financial measures should be viewed in addition to, and not as a substitute for, the Company's reported results.
The Company believes our Non-GAAP financial measures help investors understand how management plans, measures and evaluates the Company's business performance. Management believes that Non-GAAP measures provide consistency in its financial reporting and facilitates investors' understanding of the Company's operating results and trends by providing an additional basis for comparison. Management uses these Non-GAAP financial measures to, among other things, evaluate our ongoing operations, and for internal planning and forecasting purposes. In addition, and as a consequence of the importance of these Non-GAAP financial measures in managing our business, the Company's Compensation Committee of the Board of Directors incorporates Non-GAAP financial measures in the evaluation process for determining management compensation.
Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted Net Earnings and Adjusted Earnings Per Share
These Non-GAAP measures reflect Operating income, Operating income margin, Net earnings, and Diluted earnings per share, and are adjusted to exclude the impact of certain costs, expenses, gains and losses and other specified items, the exclusion of which management believes provides insight regarding our ongoing operating performance. Depending on the period presented, these adjusted measures exclude the impact of certain of the following items:
(i) Amortization of Acquired Intangibles and Purchased Intellectual Property, which represent non-cash amortization expenses associated with the Company's acquisition activities.
(ii) Acquisition and Integration Costs, which represent certain transaction and integration costs associated with the Company's acquisition activities.
(iii) Restructuring and Other Related Costs, which represent severance related to workforce actions resulting, in part, from the Company's AI and productivity initiatives in fiscal year 2027 and severance and other costs related to the closure of substantially all operations of a production facility in fiscal year 2026. Refer to Note 14, "Payables and Accrued Expenses" for further details.
(iv) Gains or Losses on Digital Assets, which represent the unrealized gains or losses, as applicable, related to the mark to market of the Company's digital asset holdings and the realized and unrealized gains or losses, as applicable, associated with the Canton Digital Asset Treasury transaction. Refer to Note 8, "Fair Value of Financial Instruments" for details related to realized and unrealized gains or losses.
We exclude Acquisition and Integration Costs, Restructuring and Other Related Costs, and Gains or Losses on Digital Assets from our Adjusted Operating income (as applicable) and other adjusted earnings measures because excluding such information provides us with an understanding of the results from the primary operations of our business and enhances comparability across fiscal reporting periods, as these items are not reflective of our underlying operations or performance.
We also exclude the impact of Amortization of Acquired Intangibles and Purchased Intellectual Property, as these non-cash amounts are significantly impacted by the timing and size of individual acquisitions and do not factor into the Company's capital allocation decisions, management compensation metrics or multi-year objectives. Furthermore, management believes that this adjustment enables better comparison of our results as Amortization of Acquired Intangibles and Purchased Intellectual Property will not recur in future periods once such intangible assets have been fully amortized. Although we exclude Amortization of Acquired Intangibles and Purchased Intellectual Property from our adjusted earnings measures, our management believes that it is important for investors to understand that these intangible assets contribute to revenue generation. Amortization of intangible assets that relate to past acquisitions will recur in future periods until such intangible assets have been fully amortized. Any future acquisitions may result in the amortization of additional intangible assets.
Free Cash Flow
In addition to the Non-GAAP financial measures discussed above, we provide Free cash flow information because we consider Free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated that could be used for dividends, share repurchases, strategic acquisitions, other investments, as well as debt servicing. Free cash flow is a Non-GAAP financial measure and is defined by the Company as Net cash flows provided by operating activities less Capital expenditures as well as Software purchases and capitalized internal use software.
Recurring Revenue Growth Constant Currency
As a multi-national company, we are subject to variability of our reported U.S. dollar results due to changes in foreign currency exchange rates. The exclusion of the impact of foreign currency exchange fluctuations from our Recurring revenue growth, or what we refer to as amounts expressed "on a constant currency basis," is a Non-GAAP measure. We believe that excluding the impact of foreign currency exchange fluctuations from our Recurring revenue growth provides additional information that enables enhanced comparison to prior periods.
Changes in Recurring revenue growth expressed on a constant currency basis are presented excluding the impact of foreign currency exchange fluctuations. To present this information, current period results for entities reporting in currencies other than the U.S. dollar are translated into U.S. dollars at the average exchange rates in effect during the corresponding period of the comparative year, rather than at the actual average exchange rates in effect during the current fiscal year.
Reconciliation of such Non-GAAP measures to the most directly comparable GAAP measures (unaudited)
|
Three Months Ended September 30, |
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| 2026 | 2025 | |||||||||||||
| (in millions) | ||||||||||||||
| Operating income (GAAP) | $ | 173.5 | $ | 188.8 | ||||||||||
| Adjustments: | ||||||||||||||
| Amortization of Acquired Intangibles and Purchased Intellectual Property | 38.9 | 50.8 | ||||||||||||
| Acquisition and Integration Costs | 1.9 | 7.2 | ||||||||||||
| Restructuring and Other Related Costs (a) | 15.2 | 4.4 | ||||||||||||
| Adjusted Operating income (Non-GAAP) | $ | 229.6 | $ | 251.2 | ||||||||||
| Operating income margin (GAAP) | 10.4 | % | 11.9 | % | ||||||||||
| Adjusted Operating income margin (Non-GAAP) | 13.8 | % | 15.8 | % | ||||||||||
|
Three Months Ended September 30, |
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| 2026 | 2025 | |||||||||||||
| (in millions) | ||||||||||||||
| Net earnings (GAAP) | $ | 94.8 | $ | 165.4 | ||||||||||
| Adjustments: | ||||||||||||||
| Amortization of Acquired Intangibles and Purchased Intellectual Property | 38.9 | 50.8 | ||||||||||||
| Acquisition and Integration Costs | 1.9 | 7.2 | ||||||||||||
| Restructuring and Other Related Costs (a) | 15.2 | 4.4 | ||||||||||||
| Gains or Losses on Digital Assets | 40.2 | (45.8) | ||||||||||||
| Subtotal of adjustments | 96.3 | 16.6 | ||||||||||||
| Tax impact of adjustments (b) | (13.2) | (3.9) | ||||||||||||
| Adjusted Net earnings (Non-GAAP) | $ | 177.9 | $ | 178.1 | ||||||||||
|
Three Months Ended September 30, |
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| 2026 | 2025 | |||||||||||||
| Diluted earnings per share (GAAP) | $ | 0.83 | $ | 1.40 | ||||||||||
| Adjustments: | ||||||||||||||
| Amortization of Acquired Intangibles and Purchased Intellectual Property | 0.34 | 0.43 | ||||||||||||
| Acquisition and Integration Costs | 0.02 | 0.06 | ||||||||||||
| Restructuring and Other Related Costs (a) | 0.13 | 0.04 | ||||||||||||
| Gains or Losses on Digital Assets | 0.35 | (0.39) | ||||||||||||
| Subtotal of adjustments | 0.84 | 0.14 | ||||||||||||
| Tax impact of adjustments (b) | (0.12) | (0.03) | ||||||||||||
| Adjusted earnings per share (Non-GAAP) | $ | 1.56 | $ | 1.51 | ||||||||||
(a) Restructuring and Other Related Costs for the three months ended September 30, 2026 represent severance related to workforce actions resulting, in part, from the Company's AI and productivity initiatives. The Company continues to evaluate expanding these actions as it investigates additional AI and other productivity initiatives.
Restructuring and Other Related Costs for the three months ended September 30, 2025 consist of severance and other costs related to the closure of substantially all operations of a production facility. Actions and associated costs related to the closure were completed in the third quarter of fiscal year 2026.
Costs incurred are not reflected in segment profit and are recorded within Corporate and Other.
(b) Calculated using the GAAP effective tax rate, adjusted to exclude $0.1 million and $1.9 million of excess tax benefits associated with stock-based compensation for the three months ended September 30, 2026 and 2025, respectively. For purposes of calculating the Adjusted earnings per share, the same adjustments were made on a per share basis.
|
Three Months Ended September 30, |
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| 2026 | 2025 | ||||||||||
| (in millions) | |||||||||||
| Net cash flows from operating activities (GAAP) | $ | 93.2 | $ | 42.3 | |||||||
| Capital expenditures and Software purchases and capitalized internal use software | (16.9) | (29.6) | |||||||||
| Free cash flow (Non-GAAP) | $ | 76.3 | $ | 12.7 | |||||||
| Three Months Ended September 30, 2026 | |||||||||||||||||||||||||||||
| Investor Communication Solutions | Regulatory | Data-Driven Fund Solutions | Issuer | Customer Communications | Total | ||||||||||||||||||||||||
| Recurring revenue growth (GAAP) | 17 | % | 10 | % | 4 | % | 3 | % | 10 | % | |||||||||||||||||||
| Impact of foreign currency exchange | 0 | % | 0 | % | 0 | % | 0 | % | 0 | % | |||||||||||||||||||
| Recurring revenue growth constant currency (Non-GAAP) | 17 | % | 10 | % | 4 | % | 3 | % | 10 | % | |||||||||||||||||||
| Three Months Ended September 30, 2026 | |||||||||||||||||
| Global Technology and Operations | Capital Markets | Wealth and Investment Management | Total | ||||||||||||||
| Recurring revenue growth (GAAP) | 17 | % | 5 | % | 12 | % | |||||||||||
| Impact of foreign currency exchange | 0 | % | 1 | % | 0 | % | |||||||||||
| Recurring revenue growth constant currency (Non-GAAP) | 17 | % | 6 | % | 13 | % | |||||||||||
| Three Months Ended September 30, 2026 | |||||
| Consolidated | Total | ||||
| Recurring revenue growth (GAAP) | 11 | % | |||
| Impact of foreign currency exchange | 0 | % | |||
| Recurring revenue growth constant currency (Non-GAAP) | 11 | % | |||
Financial Condition, Liquidity and Capital Resources
Cash and cash equivalents consisted of the following:
|
September 30, 2026 |
June 30, 2026 |
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| (in millions) | ||||||||||||||
| Cash and cash equivalents: | ||||||||||||||
| Domestic cash | $ | 56.3 | $ | 103.1 | ||||||||||
| Cash held by foreign subsidiaries | 151.7 | 241.0 | ||||||||||||
| Cash held by regulated entities | 76.1 | 58.8 | ||||||||||||
| Total cash and cash equivalents | $ | 284.1 | $ | 402.9 | ||||||||||
At September 30, 2026, Cash and cash equivalents were $284.1 million and Total stockholders' equity was $2,614.0 million. At the current time, and in future periods, we expect cash generated by our operations, together with existing cash, cash equivalents, and borrowings from the capital markets, to be sufficient to cover cash needs for working capital, capital expenditures, strategic acquisitions, dividends and common stock repurchases.
We expect existing domestic cash, cash equivalents, cash flows from operations and borrowing capacity to continue to be sufficient to fund our domestic operating activities and cash commitments for investing and financing activities, such as regular quarterly dividends, debt repayment schedules, and material capital expenditures, for at least the next 12 months and thereafter for the foreseeable future. In addition, we expect existing foreign cash, cash equivalents, cash flows from operations and borrowing capacity to continue to be sufficient to fund our foreign operating activities and cash commitments for investing activities, such as material capital expenditures, for at least the next 12 months and thereafter for the foreseeable future. If these funds are needed for our operations in the U.S., we may be required to pay additional foreign taxes to repatriate these funds. However, while we may do so at a future date, the Company does not need to repatriate future foreign earnings to fund U.S. operations.
Our financing strategy is designed to maintain adequate liquidity and financial flexibility, support our operating and strategic investment needs, and provide efficient access to capital markets. We maintain a diversified borrowing profile through a mix of debt instruments enabling us to manage our capital structure, funding costs, and refinancing risk. Our borrowings include: the Fiscal 2025 Revolving Credit Facility, Fiscal 2026 Term Loan, Fiscal 2020 Senior Notes, Fiscal 2021 Senior Notes, and Fiscal 2026 Senior Notes, each of which are senior unsecured obligations of the Company and are ranked equally in right of payment.
Future principal payments on the Company's outstanding debt are as follows:
| Years ending June 30, | 2027 | 2028 | 2029 | 2030 | 2031 | Thereafter | Total | |||||||||||||||||||||||||||||||||||||
| (in millions) | $ | - | $ | - | $ | - | $ | 1,148.7 | $ | 1,750.0 | $ | 500.0 | $ | 3,398.7 | ||||||||||||||||||||||||||||||
Please refer to Note 12, "Borrowings" to our Condensed Consolidated Financial Statements in Item 1. of Part I of this Quarterly Report on Form 10-Q for a more detailed discussion, including outstanding borrowings and available capacity under the Company's borrowing arrangements.
Cash Flows
|
Three Months Ended September 30, |
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| Change | |||||||||||||||||
| 2026 | 2025 | $ | |||||||||||||||
| (in millions) | |||||||||||||||||
| Net cash flows from operating activities | $ | 93.2 | $ | 42.3 | $ | 50.9 | |||||||||||
| Net cash flows from investing activities | (20.5) | (100.0) | 79.5 | ||||||||||||||
| Net cash flows from financing activities | (192.4) | (214.2) | 21.8 | ||||||||||||||
| Effect of exchange rate changes on Cash and cash equivalents | 0.8 | 1.1 | (0.2) | ||||||||||||||
| Net change in Cash and cash equivalents | $ | (118.8) | $ | (270.8) | $ | 152.0 | |||||||||||
| Free cash flow: | |||||||||||||||||
| Net cash flows from operating activities (GAAP) | $ | 93.2 | $ | 42.3 | $ | 50.9 | |||||||||||
| Capital expenditures and Software purchases and capitalized internal use software | (16.9) | (29.6) | 12.7 | ||||||||||||||
| Free cash flow (Non-GAAP) | $ | 76.3 | $ | 12.7 | $ | 63.6 | |||||||||||
The increase in cash from operating activities of $50.9 million in the three months ended September 30, 2026, as compared to the three months ended September 30, 2025 was primarily due to a decrease in cash used for Accounts payable and accrued expenses of $113.4 million, partially offset by a decrease in Net earnings of $70.6 million.
The increase in cash from investing activities of $79.5 million in the three months ended September 30, 2026, as compared to the three months ended September 30, 2025, was primarily driven by a decrease in cash used for acquisitions of $54.4 million as well as a decrease in cash used for Software purchases and capitalized internal use software of $12.8 million.
The increase in cash from financing activities of $21.8 million in the three months ended September 30, 2026 as compared to the three months ended September 30, 2025, primarily reflects an increase in net borrowings of $96.7 million, partially offset by an increase in cash used for stock buybacks net of cash proceeds for stock option issuances of $64.1 million.
Seasonality
Processing and distributing proxy materials and annual reports to investors comprises a large portion of our Investor Communication Solutions business. We process and distribute the greatest number of proxy materials and annual reports during our third and fourth fiscal quarters. The recurring periodic activity of this business is linked to significant filing deadlines imposed by law on public reporting companies. This has caused our revenues, operating income, net earnings, and cash flows from operating activities to be higher in our third and fourth fiscal quarters. The seasonality of our revenues makes it difficult to estimate future operating results based on the results of any specific fiscal quarter and could affect an investor's ability to compare our financial condition, results of operations, and cash flows on a fiscal quarter-by-quarter basis.
Contractual Obligations
Refer to Note 16, "Contractual Commitments, Contingencies and Off-Balance Sheet Arrangements" to our Consolidated Financial Statements under Item 1. of Part I of this Quarterly Report on Form 10-Q for a more detailed discussion of the Company's contractual obligations.
Recently-issued Accounting Pronouncements
Please refer to Note 2, "New Accounting Pronouncements" to our Condensed Consolidated Financial Statements under Item 1. of Part I of this Quarterly Report on Form 10-Q, for a discussion on the impact of new accounting pronouncements.
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