By Andrew Welsch

Shares of Broadridge Financial fell 4.9% Thursday after the company reported quarterly earnings that beat Wall Street estimates but also adjusted guidance based on a weaker economic outlook.

The fintech company reported adjusted earnings per share of $2.44 for the quarter ending March 31, three cents higher than Wall Street forecasts, according to FactSet. For the same period last year, Broadridge reported earnings of $2.23.

Total revenue came in at $1.81 billion, up 5% from $1.73 billion for the same period a year ago. Wall Street analysts had expected $1.86 billion, according to FactSet.

Broadridge provides record-keeping, software, and technology to financial institutions, including wealth management companies. Shares of the company are up 2.2% this year compared with a 3.9% decline for the S&P 500.

The company lowered guidance for closed sales -- which represent estimates of expected annual recurring fee revenue for new client contracts -- to $240 million to $300 million from $290 million to $330 million. The company said it expected adjusted EPS guidance to be in the middle of the 8% to 12% range that it had previously provided. It also reaffirmed its 6% to 8% recurring revenue guidance.

Tim Gokey, chief executive of the fintech company, said on a Thursday morning earnings call that the company's pipeline of new business is strong, but economic uncertainty is creating some headwinds.

"There's now significant uncertainty about the health of the economy and the impact of tariffs," he said. "And we are seeing the closing process taking longer in Q4 than it did in Q3." He added that because of Broadridge's backlog of previously closed business it has yet to onboard, the company doesn't expect these headwinds to impact its full year 2026 results.

He expanded on the point in response to analyst questions during the earnings call, saying the company isn't losing out on prospective clients. But CEOs at other companies have told him that they are taking something of a wait-and-see-approach on making new investments. "The pipeline is very strong," he said. "Origination activity continues to be very strong. It's just we want to be cautious here about this elongation that we're seeing."

Broadridge's business model can weather periods of market volatility and economic uncertainty, Gokey said. "More broadly, periods of uncertainty have historically strengthened Broadridge's position in the marketplace, " he said. "Our recurring revenue business model helps insulate us from market swings and gives us the visibility to fund ongoing growth investments."

Write to Andrew Welsch at andrew.welsch@barrons.com

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May 01, 2025 14:33 ET (18:33 GMT)

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