Broadridge’s Second Quarter a Tad Bit Soft, but Outlook Intact

Narrow-moat Broadridge reported an OK second quarter. Adjusted EPS of $0.91 was essentially in line with the FactSet consensus estimate of $0.90, but revenue of $1.29 billion missed the consensus of $1.35 billion. We attribute the miss to lower event-driven mutual fund revenue, which can be hard to predict, and lower license revenue in wealth management. While management, perhaps to its detriment, classifies all global technology and operations segment as recurring, some revenue is tied to volumes and there is a small amount of lumpy license revenue. Broadridge maintained its fiscal 2023 guidance and position growth remains mostly healthy. Overall, we are not too concerned with the revenue miss, and there was little in Broadridge’s earnings report that would alter our long-term view of the firm. We will maintain our $185 per share fair value estimate.