Broadridge Financial Solutions Inc. (BR) shares enjoyed a surge in trading following the release of their first-quarter results. While the company’s revenue fell 1% year-over-year to $1.42 billion, slightly missing the consensus estimate of $1.48 billion, several positive factors contributed to the share price boost.
The company saw strong growth in its recurring revenues, which climbed 3% to $900 million. This indicates a stable and growing base of ongoing business. However, Distribution revenues dipped 3% to $460 million. The Event-driven segment saw a more significant decline, with revenues dropping 28% to $63 million during the quarter. Despite these challenges, the company’s closed sales surged a notable 21% to $57 million in the quarter, indicating a positive trend in new business acquisition.
Adjusted operating income also experienced a decline, falling 7% to $185 million, with the margin contracting to 13.0% from 13.9% a year ago. However, the company’s adjusted earnings per share (EPS) of $1.00, while down 8% year-over-year, beat the consensus expectation of $0.97. As of the end of September, Broadridge held $292.8 million in cash and equivalents, providing financial flexibility.
Looking ahead, Broadridge Financial Solutions has raised its recurring revenue constant currency growth outlook to 6% – 8%, compared to the previous range of 5% – 7%. The company also reaffirmed its adjusted EPS growth guidance of 8% – 12%.
Tim Gokey, Broadridge CEO, stated, “We continue to execute on our strategy to democratize and digitize investing, simplify and innovate trading, and modernize wealth management. That execution is driving our results in the form of strong sales, a growing sales pipeline, and continued product innovation.” This focus on innovation and digital transformation is likely to attract investors seeking exposure to the future of financial services.
Investors interested in gaining exposure to Broadridge Financial Solutions can consider investing in the Motley Fool Mid-Cap Growth ETF (TMFM) and the Bahl & Gaynor Small/Mid Cap Income Growth ETF (SMIG).
The positive outlook, coupled with the strong sales performance and commitment to digitization, suggests a promising trajectory for Broadridge Financial Solutions. With a strong financial position and a focus on innovation, the company is well-positioned to navigate the evolving financial landscape and capitalize on emerging growth opportunities.
