Broadridge surges on earnings beat, raised outlook
Adjusted EPS rose 2% to $1.59, beating estimates, as recurring revenue grew 9%
Broadridge Financial Solutions shares surged in Tuesday trading after the financial technology provider reported stronger-than-expected fiscal second-quarter results and raised its full-year guidance, reflecting resilient demand for its investor communications and securities processing services.
The New York-based company, which processes proxy votes and shareholder communications for most U.S. public companies, said adjusted earnings per share increased 2% year-over-year to $1.59, well above the $1.36 analyst consensus. Total revenue reached $1.71 billion, up 8% from the prior year and exceeding Wall Street's approximately $1.61 billion forecast.
The performance prompted Broadridge to raise its fiscal 2026 adjusted EPS growth outlook to 9% to 12%, compared with its previous range of 8% to 12%. The company also reaffirmed that recurring revenue growth would be at the higher end of its 5% to 7% constant-currency guidance range, while maintaining its target of $290 million to $330 million in closed sales.
Recurring revenue, which accounts for the majority of Broadridge's business and provides steady cash flow, grew 9% (8% on a constant currency basis) to $1.07 billion in the quarter. CEO Tim Gokey highlighted "strong event-driven activity" and the company's ability to "drive innovation at scale" as key contributors to the performance.
"The continued execution across our business model, particularly in recurring revenue streams, demonstrates the resilience of our offerings even in a complex macro environment," Gokey said in a prepared statement.
Analysts noted that Broadridge's results underscore the defensive nature of its business, which benefits from essential regulatory and compliance services that are relatively insulated from economic cycles. The company also reported continued margin expansion, a priority for management as it balances growth investments with profitability.
Shares of Broadridge rose 4.22% on Tuesday, adding approximately $937 million to the company's market capitalization, according to market data. The stock has gained about 12% over the past year, outperforming the S&P 500 Information Technology sector.
The earnings beat arrives amid a challenging backdrop for fintech providers, as some peers have faced pressure from reduced deal activity and cautious client spending. Broadridge's diversified mix of recurring and transaction-based revenue, however, has provided insulation. Approximately 94% of the company's shares are held by institutional investors, reflecting its status as a defensive technology play.
Looking ahead, investors will watch for updates on Broadridge's progress in integrating recent acquisitions and scaling its newer digital solutions. The company has invested in cloud-based platforms and data analytics capabilities to expand beyond its core proxy and compliance services into adjacent markets such as wealth management and insurance.
Broadridge's raised guidance suggests management sees continued momentum, despite potential headwinds from interest rate volatility and geopolitical uncertainty. The company's next major catalyst will be its fiscal third-quarter results, typically reported in late spring.