01—Abstract
Summary
Summary of the 10-Q filed January 31, 2025. Cited figures are marked; the original filing is the authoritative source.
Broadridge Financial Solutions, Inc. reported results for the three and six months ended December 31, 2024 in its quarterly report on Form 10-Q.
Revenues rose to $1,589.2 milliona for the quarter, up $184.2 million, or 13%, from $1,405.0 million, and net earnings increased to $142.4 million from $70.3 million. Operating income was $210.7 million versus $124.4 million, and diluted EPS was $1.20 compared with $0.59. For the six months, revenues were $3,012.1 million (up 6%), net earnings were $222.2 million, and diluted EPS was $1.88.
Growth was driven by higher event-driven mutual fund communications revenue, a postage rate increase that lifted Distribution revenues, Net New Business in Investor Communication Solutions, and the SIS acquisition in Global Technology and Operations. Cash flow and balance sheet items warrant attention. Net cash flows from operating activities were $111.2 millionb for the six months, down from $127.8 million, mainly due to higher payments on payables and accrued expenses.
Free cash flow (a non-GAAP measure) was $56.3 millionc versus $91.4 million. The company acquired Kyndryl's Securities Industry Services business for $185.5 million cash payments on November 1, 2024. Total debt rose to $3,668.8 million principal, and the company entered a new $1.5 billion five-year revolving credit facility in December 2024.
Cash dividends paid totaled $196.2 milliond for the six months. The filing reports that disclosure controls were effective as of December 31, 2024, with no material changes to internal control over financial reporting, and no material changes to risk factors from the 2024 Annual Report. Adjusted diluted EPS (non-GAAP) was $1.56 for the quarter versus $0.92 a year earlier.
02—Key points
Key Highlights
- Quarterly revenues of $1,589.2 million, up $184.2 million or 13%, with Event-driven revenues up 126% on higher mutual fund communications volume.
- Quarterly net earnings of $142.4 million versus $70.3 million; diluted EPS of $1.20 versus $0.59.
- Operating income of $210.7 million for the quarter versus $124.4 million, with operating margin of 13.3% versus 8.9%.
- Six-month operating cash flow of $111.2 million, down from $127.8 million; free cash flow (non-GAAP) of $56.3 million versus $91.4 million.
- Acquired Kyndryl's Securities Industry Services (SIS) business in Canada on November 1, 2024 for $185.5 million in cash payments, adding to Global Technology and Operations.
- Total debt principal of $3,668.8 million at December 31, 2024, with a new $1.5 billion revolving credit facility maturing December 2029.
- Repurchased no shares under the share repurchase program in the quarter; 7.3 million shares remained available for repurchase.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2025, Broadridge Financial Solutions kept $0.09.
- Revenue$1.59B100.0%
- Cost of revenue−$1.15B72.1%
- Gross profit$443.4M27.9%
- Operating costs−$232.7M14.6%
- Operating income$210.7M13.3%
- Interest, other & tax−$68.3M4.3%
- Net income$142.4M9.0%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2025filed January 31, 2025Financial Statements
Q2 FY2025 against Q2 FY2024
| Line item | Q2 FY2025Q2 FY2024 | Change |
|---|---|---|
| Revenue | $1.59B$1.41B | +13.1% |
| Cost of Revenue | $1.15B$1.06B | +8.4% |
| Gross Profit | $443.40M$347.80M | +27.5% |
| SG&A Expenses | $232.80M$223.40M | +4.2% |
| Operating Expenses | $1.38B$1.28B | +7.6% |
| Operating Income | $210.70M$124.40M | +69.4% |
| Interest Expense | $36.60M$40.00M | −8.5% |
| Net Income | $142.40M$70.30M | +102.6% |
| EPS (Basic) | $1.22$0.60 | +103.3% |
| EPS (Diluted) | $1.20$0.59 | +103.4% |
| Shares Outstanding (Basic) | 117.10M117.70M | −0.5% |
| Shares Outstanding (Diluted) | 118.30M119.10M | −0.7% |
05—Questions
Frequently Asked Questions
What drove the increase in Broadridge's revenue this quarter?
Revenues rose $184.2 million, or 13%, to $1,589.2 million. Event-driven revenues increased $69.3 million, or 126%, on higher mutual fund communications volume; Distribution revenues rose $33.6 million, or 7%, mainly from a postage rate increase of approximately $30 million; and Recurring revenues rose $81.3 million, or 9%, including contributions from Net New Business and the SIS acquisition.
How did profitability change compared with the prior-year quarter?
Operating income increased to $210.7 million from $124.4 million, and net earnings rose to $142.4 million from $70.3 million. Diluted EPS was $1.20 versus $0.59. The effective tax rate was 19.1% versus 19.9%, and interest expense, net decreased to $32.7 million from $36.3 million.
Why did operating cash flow decline for the six months?
Net cash flows from operating activities were $111.2 million versus $127.8 million. The filing attributes the decrease mainly to higher cash payments related to accrued expenses, accounts payable and taxes payable of $85.1 million, and an increase in accounts receivable of $64.8 million from higher client billings, partially offset by higher net earnings.
What acquisitions did Broadridge complete, and what did they cost?
On November 1, 2024, Broadridge acquired Kyndryl's Securities Industry Services business in Canada for cash payments of $185.5 million, recording goodwill of $38.3 million and intangible assets of $149.1 million. The purchase price allocation is not yet final, and discussions with the Canadian Competition Bureau are ongoing. A separate immaterial acquisition in the first quarter had an aggregate purchase price of $8.0 million.
How much debt does Broadridge carry, and what changed in its credit facilities?
Total debt principal was $3,668.8 million at December 31, 2024, with carrying value of $3,655.6 million, compared with $3,355.1 million carrying value at June 30, 2024. In December 2024 the company entered an amended and restated $1.5 billion five-year revolving credit facility maturing in December 2029, replacing the prior facility, and it reported compliance with all covenants.
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