Broadridge Leverages Tokenization and AI to Raise FY 2026 Outlook Amid Slower Deal Closures

Broadridge’s third‑quarter earnings showed the firm’s core franchise still expanding at a healthy clip. Recurring revenue rose 6% year‑over‑year on a constant‑currency basis, driven by 5% organic growth and a modest contribution from recent acquisitions.

Adjusted earnings per share jumped 11% to $2.72, while free cash flow surged to $591 million for the first three quarters, up from $393 million a year earlier. “We delivered strong third‑quarter results… and we are putting in place the building blocks for long‑term growth tomorrow and beyond,” CEO Tim Gokey said, underscoring the company’s dual focus on short‑term performance and future‑centric initiatives.

Segment‑level detail reveals a nuanced picture. The Investor Communication Services (ICS) governance business posted an 8% rise in recurring revenue to $800 million, with regulatory revenues up 9% on the back of 11% growth in equity‑position volumes and 6% fund‑position growth. Data‑driven fund solutions, bolstered by the Acolin acquisition, added another 8% to revenue.

In the Global Technology Operations (GTO) segment, recurring revenue grew 3% to $488 million; capital‑markets revenues were $295 million, and the recent acquisition of CQG added a 3‑point boost to the capital‑markets line‑item while a 5‑point license‑revenue headwind weighed on wealth‑management earnings. Wealth and investment management revenue climbed 8%, led by strong Canadian growth and higher U.S. trading volumes.

The company’s growth narrative is anchored in three pillars: tokenization, digitization of communications, and artificial intelligence. Broadridge now processes more than $350 billion of daily repo volume on its Distributed Ledger Repo (DLR) platform, a figure the firm says dwarfs the entire cryptocurrency market. It also announced the first on‑chain proxy voting for a U.S.

public company and a partnership with a leading global marketplace to provide governance services for tokenized real assets. “We are the leading provider of voting solutions for issuers… and we solve the complexity of beneficial, registered and tokenized shares with a single pane of glass,” Gokey explained, positioning the firm to capture the emerging tokenized‑equity market regardless of whether issuers, intermediaries or synthetic exchanges drive adoption.

AI is another growth lever. The newly launched custom policy voting engine, which parses proxy materials weeks ahead of meetings, is already being used by an asset manager overseeing $800 billion in assets.

Broadridge’s AI‑enhanced global demand model tracks $120 trillion of assets, and its managed‑services business reports a 25% productivity lift, with a target of 50%. “AI is enabling us to deliver new services, become more embedded in our clients’ agentic workflows and drive our own productivity,” CFO Ashima Ghei said.

Guidance was the headline of the call. The firm raised its FY 2026 recurring‑revenue growth target to at least 7% (up from a prior range of 5‑7%) and its adjusted EPS growth outlook to 10‑12% (previously 9‑12%). Adjusted operating‑income margin guidance remains at 20‑21%, with an expectation of a modest dip in Q4 due to continued investment in growth initiatives.

However, the company trimmed its FY 2026 closed‑sales forecast to $240 million‑$290 million, down from the prior $260 million‑$320 million range, citing “larger, more complex deals” that are taking longer to close. The pipeline, now over $1 billion, is 20% higher than a year ago, and the firm expects the sales‑to‑recurring‑revenue conversion impact to be limited to 10‑30 basis points.

Analysts pressed on the sales slowdown and the commercial viability of the custom policy engine. Scott Wurtzel of Wolfe Research asked about the lengthening sales cycles, and Gokey replied that deal origination is up 25% and the pipeline is robust, but “larger engagements… take longer to close.” When asked about the tail‑winds from the policy‑engine product, Gokey said the offering could drive “nice growth… over the next three years” but cautioned that the impact would be incremental rather than transformative in the near term.

Dan Perlin of RBC Capital Markets focused on tokenization, probing whether Broadridge’s position was truly defensible. Gokey outlined three possible tokenization models—issuer‑sponsored, intermediary‑led, and synthetic—and argued that Broadridge’s existing relationships with issuers, broker‑dealers and digital‑exchange platforms position it to win across all scenarios. He added that the tokenization effort also unlocks capital‑markets efficiencies, noting that the DLR platform already handles “more than $350 billion a day,” and that real‑time repo capabilities could enable new trade types.

Kyle Peterson of Needham asked about the firm’s capital‑allocation flexibility given the strong cash flow. Ashima Ghei reaffirmed a “balanced capital allocation” policy, noting $681 million returned to shareholders this year (including $350 million of buybacks) and $294 million spent on four strategic acquisitions. With leverage at 1.9×—below the target 2‑2.5× range—the company expects to generate over $1.1 billion of free cash flow for FY 2026, leaving ample room for both additional buybacks and opportunistic M&A.

The market reacted modestly. Broadridge shares rose 1.21% in morning trade, trading at $160.75, still 40.6% below the 52‑week high and down 27.97% year‑to‑date. The modest price gain reflects investor appreciation for the raised outlook, tempered by concerns over the slower sales conversion and the company’s reliance on still‑nascent tokenization and AI revenue streams.

Overall, Broadridge is betting that its leadership in tokenized governance, AI‑driven analytics and digitized communications will sustain growth after the current sales lag eases. The firm’s ability to convert a deep pipeline into recurring revenue, while maintaining a strong free‑cash‑flow position, will be the litmus test for investors over the next 12‑18 months.