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Broadridge Financial Solutions, inc (BR 0.52%)
Q4 2021 Earnings Call
Aug 12, 2021, 8:30 a.m. ET


  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Good morning and welcome to the Broadridge Fourth Quarter and Full Year 2021 Earnings Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Edings Thibault, Head of Investor Relations. Please go ahead.

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W. Edings Thibault -- Vice President and Head of Investor Relations

Thank you, Eily. Good morning and welcome to Broadridge's fourth quarter and fiscal year 2021 earnings call. Our earnings release and the slides that accompany this call may be found on the Investor Relations section of broadridge.com. Joining me on the call this morning are Tim Gokey, our CEO and our CFO, Edmund Reese.

Before I turn the call over to Tim, a few standard reminders. We will be making forward-looking statements regarding Broadridge on today's call that involve risks. A summary of these risks, can be found on the second page of the slides, and a more complete description on our annual report on Form 10-K. We will also be referring to several non-GAAP measures, which we believe provide investors with a more complete understanding of Broadridge's underlying operating results. An explanation of these non-GAAP measures and reconciliations to their comparable GAAP measures can be found in the earnings release and presentation.

Let me now turn the call over to Tim Gokey, Tim?

Tim Gokey -- Chief Executive Officer, Management

Thank you, Edings. Good morning, everyone, and thank you for joining us today. I'll begin with our key messages and then provide an overview of our performance against our strategic objectives across Governance, Capital Markets and Wealth & Investment Management, then I'll close with some thoughts about our future before Edmund reviews the financials. Let's get started.

I have four headlines. First, Broadridge delivered a strong fiscal year '21. Recurring revenues rose 10%; adjusted EPS rose 13% and our sales teams delivered a 10th consecutive year of record sales. Our results demonstrate how well positioned Broadridge is to take advantage of increasing investor participation and the growing need to digitize and neutralize Financial Services.

Second, we're executing against the strategic growth plan we laid out at our Investor Day in December. We're building the next generation of Governance products, growing the scope of our Capital Markets business across the trade lifecycle, and building our Wealth Management franchise.

Third, we remain committed to balanced capital allocation. In fiscal '21, we increased our level of investment on our internal platforms, completed the largest acquisition in our history, and returned nearly $250 million in capital to shareholders. Yesterday, our Board approved an 11% increase in our annual dividend per share. Broadridge has now increased its annual dividend every year since becoming a public company with double-digit increases in eight of the last nine years.

Fourth and last, we expect another strong year in fiscal '22. Our guidance calls for 12% to 15% recurring revenue growth, further margin expansion, 11% to 15% adjusted EPS growth, and another year of record sales. A combination of strong fiscal year '21 results and our guidance for fiscal '22 leaves Broadridge extremely well positioned to achieve the higher end of our three-year growth objectives.

As we close out the first year of our current three-year cycle, I want to give you an update on our progress against our strategic growth plans for each of our three franchise businesses, starting with Governance or ICS, on Slide 4.

ICS recurring revenue rose 11% in fiscal '21 to $2.1 billion, driven by both new sales and internal growth. Strength of our Governance franchise comes from its position at the heart of a network linking broker dealers, corporate issuers, asset managers, and tens of millions of individual and institutional investors. Our fiscal '21 results highlight how our strategy of innovating at the core while providing incremental value to all network participants drives incremental and sustainable growth for Broadridge.

I'll start with our core regulatory business. The big story here is the very strong position growth we're seeing across equities. Equity stock record growth, which is our measure of the number of positions held by shareholders grew 26% in fiscal '21 including 33% in the seasonally strongest fourth quarter. We continues to be struck by the broad based nature of this growth. We're seeing growth across large and small issuers not simply a handful of mega-cap tech or main stocks.

Looking at industry sectors; tech and consumer cyclical stocks are leading the growth with 42% and 37% growth respectively. We're also seeing double-digit growth across virtually other sector including 33% growth in healthcare needs and 20% plus in basic materials and industrials. This broad based participation is a key reason why we believe that fiscal year '21's strong growth is an extension of the long-term trend that's been driving higher equity and fund position growth over the past decade and why we're forecasting continued growth in fiscal '22.

At Broadridge, we're able to meet this increased demand because we've invested in scaling our capacity. After the initial COVID surge last spring, we invested in new distribution capacity to build incremental flexibility across our network, enabling us to seamlessly ensure that holders of more than 500 million positions got the communications they needed to participate in corporate governance.

We've also invested in new digital capabilities, including QR codes that make voting on your mobile device easier than ever. Our Governance franchise is also increasingly global with gains from our Shareholder Rights Directive II solution and the continued expansion of our European Fund Communications business. We're also expanding the suite of data driven solutions we provide for our fund clients, driven in part by another year of double-digit growth across our data and intelligence products.

We're growing our relationships with corporate issuers. We conducted almost 2,400 virtual shareholder meetings in fiscal '21, up from 1,500 a year ago. We become the clear choice for America's leading companies with more than 75% of S&P 100 companies using Broadridge to host their annual meetings in 2021.

In turn, increased demand for our VSM capabilities has enabled us to deepen our client relationships, leading to strong growth in our suite of other annual meeting services and Disclosure Solutions products.

Finally in customer communications, our strategy is focused on using our print capability as a door opener for growing our digital business. So, it was encouraging to see strong double-digit growth in digital revenues which offset lower print revenues and helped to drive higher earnings. All in all, it is a very strong year for our Governance franchise.

Now let's turn to Capital Markets on Slide 5. In Capital Markets we're driving trading innovation across the front office, enabling our clients to simplify and improve their global post-trade technology, providing strong enterprise and data component solutions, and building new network enabled solutions using AI, digital ledger and other innovative technologies.

Capital Markets revenue grew 8% to $701 million, driven by new client additions and the acquisition of Itiviti, which has given us a new capability to drive innovation across the trade lifecycle. While the Itiviti integration is only just beginning, I'm excited by the progress we've made. Itiviti recently closed its largest-ever sale and we're on track to leverage Broadridge's relationships to drive more meaningful sales in the quarters ahead.

Client feedback has continue to be positive and the sales pipeline, especially in EMEA and APAC, is strong. A key driver of our revenue growth is our continued success at bringing clients under our global platforms, enabling them to simplify their global technology. We're also enhancing those platform capabilities. A great example is the exchange-traded derivatives platform onto which were on-boarding R.J. O'Brien.

I'm also tremendously excited by the continued progress in developing new capabilities based on next-gen AI and DLT technology. Our LTX fixed income platform continues to progress well. We have more than 70 buy and sell side users in the platform and we're adding more every week. And the average initiated trade is north of $3.5 million, indicating demand for increased liquidity in fixed income markets.

We also recently launched our Digital Ledger Repo platform and are averaging $35 billion worth of transactions daily, a number which will grow as more clients, including UBS, come onto the platform. While both of these products are small today, each is bringing an innovative and differentiated solution to a multi-billion dollar market.

Now let's turn to Wealth & Investment Management franchise on Slide 6. In Wealth, we're extending our services around our core back office capabilities, growing our suite of component solutions and building a modular platform that will link our individual capabilities across a modern technology architecture.

The biggest driver behind our 6% growth in Wealth & Investment Management revenues was revenue from new sales. During the year, we added new clients to both our core back office platform and saw strong demand for our digital solution suite. Our work with UBS on the digital transformation of the Wealth Management industry remains one of our most exciting initiatives. Broadridge -- the Broadridge Wealth Management platform is an important part of UBS' own multi-year transformation plan for its North American Wealth business.

As we line around UBS' goals around sequencing, we're already rolled out Select Components and we expect to rollout the additional platform components over the next 18 to 24 months. Based on the terms of our contract, we'll begin recognizing revenue when we complete the delivery of the full suite.

Meanwhile, this platform continues to draw attention from other clients. We are pleased to announce last month that RBC Wealth Management will become our second client on the Broadridge Wealth Platform. RBC is pursuing its own digital transformation journey and our platform will accelerate their ability to enhance the client experience, optimize advisor productivity and digitizes back office. We're excited to be a key technology partner in that journey.

Beyond our work in the Wealth platform, we continue to make progress in expanding our digital solutions with the AdvisorStream tuck-in acquisition and by extending our partner network. Lastly, I was pleased to see strong growth in our Investment Management technology revenues, which grew by 12%; strong revenue from sales of existing solutions; continued platform development; and new product additions. We're making solid progress on our Wealth & Investment Management growth strategy.

As I wrap up my strategy update, I want to highlight the common denominator behind our execution across Governance, Capital Markets and Wealth & Investment Management. Broadridge is investing in driving near, medium and long-term growth. We've investing to process higher position counts, more virtual shareholder meetings and handle surges in trading volumes which are critical in fiscal '21 and will remain important in fiscal '22 and '23.

At the same time, we're investing in initiatives that will carry our growth momentum forward, including our data intelligence products, the emergence of a European governance hub, Itiviti, and our Wealth platform. And finally, I see tangible signs of products that have the potential to extend our growth runway well into the next decade like digital communications, Digital Ledger Repo and fixed income AI. These are solutions that our clients value, as evidenced by the traction that we're gaining in the market for each of them.

This mix of near, medium and long-term growth businesses across the company are exciting. What does that mean for Broadridge? Let's turn to Slide 7. As we enter fiscal '22, I've never been more optimistic about Broadridge's long-term growth prospects. When I look across our Company, I see a leadership team that's stronger than ever, focused on how we engage our associates, better serve our clients and create value for our shareholders. That team is executing against our growth plans across Governance, Capital Markets and Wealth & Investment Management.

We're finding ways to help our clients accelerate digitization, drive mutualization benefits and enable the increasing democratization of investing. Even more tangibly, we are on track to deliver another strong year. Our strong backlog gives us visibility into new revenue over the next 12 to 24 months and we see continued position growth as new investors enter the market and current investors continue to diversify their portfolios.

In short, we see another year ahead of low teens revenue and adjusted EPS growth. The net result of strong fiscal year '21 results, continued execution against our growth strategy and an outlook for continued growth in '22 means that Broadridge is well positioned to deliver at the higher end of our three-year growth objectives including, 7% to 9% recurring revenue growth and 8% to 12% adjusted EPS growth.

Before I conclude, I want to thank all Broadridge associates for their work over the past year. Little in the past 12 months has been easy, but they have found the way to adapt to the new virtual environment. They stayed focused on our clients and they are helping drive the transformation of the financial services industry that is enabling better financial lives for millions. Thank you.

Let me now turn it over to Edmund.

Edmund Reese -- Chief Financial Officer

Thank you, Tim, and good morning, everyone. As you can see from the financial summary on Slide 8, Broadridge delivered strong fiscal '21 results, capped off by a strong fourth quarter and demonstrating significant progress toward our three-year objectives. Fiscal '21 recurring revenues increased 10% to $3.3 billion, driven by strong growth in both ICS and GTO.

That strong growth enabled us to make the near, medium and long-term investments in our technology platforms and our digital products while driving 60 basis points of AOI margin expansion for the year. Higher revenues and higher margins drove 13% adjusted EPS growth to $5.66.

In the fourth quarter, revenues rose 15% year-over-year to $1.1 billion, driven by growth in ICS and the acquisition of Itiviti. Adjusted operating income rose 4% as we continued our ongoing investments and adjusted EPS grew 2% to $2.19. Our results came in at the high end of our latest full-year guidance range and above our three-year recurring revenue and adjusted EPS growth objectives.

And as Tim has highlighted, our sales team closed the year on a high note and pushed us modestly above our closed sales guidance range. So let's get into the details of those results starting with recurring revenue on Slide 9. The momentum in our business driven by the trends in increased investor participation in digital solutions continued into the fourth quarter and helped Broadridge post another year of 10% recurring revenue growth.

Our recurring revenue growth was powered by 8% organic growth, which came in well above our 5% to 7% three-year growth objectives. The combination of organic growth coupled with 2 points of growth from our acquisition of FundsLibrary and Fi360 in fiscal year '20, and then Itiviti in May, pushed our fiscal year '21 recurring revenue growth above our 7% to 9% objective as well. So a strong start to our three-year recurring revenue growth objectives.

Now let's look at this quarter's recurring revenue growth by business beginning with ICS on Slide 10. ICS revenues grew by 17% to $719 million in the fourth quarter. All of that growth, organic. The biggest driver of that growth was in our regulatory business, which grew 27% to $381 million. Fourth quarter stock record growth was 33% and mutual fund record growth was 11%, both key drivers of growth in regulatory.

We also benefited from strong growth in international and our investment in the Shareholder Rights Directive II solution is paying back and contributing to recurring revenue growth. For the full year, regulatory revenues rose 20%.

Issuer revenue also contributed to growth, rising 20% in the fourth quarter to $106 million and 21% growth for the full year. As Tim noted, our continued success in providing virtual shareholder meeting services has helped drive revenue growth of our other annual meeting services and document disclosure products.

Fund solutions lapped the drag from lower interest income and recurring revenue grew 7% in the fourth quarter. Full year revenues rose 5% driven by the fiscal year '20 acquisitions mentioned earlier and revenue from net new business.

Customer communication revenues was down 1% in the quarter as declines in the low margin print revenue offset digital growth. For the full year, customer communications revenue growth was slightly positive, but more importantly, higher margin digital revenues within customer communications grew by 15%.

Turning to GTO on Slide 11; GTO recurring revenues rose 10% to $346 million in the quarter driven by 18% growth in our Capital Markets business and 1% growth in Wealth & Investment Management. Across both Capital Markets and Wealth, solid revenue growth from new business was offset by $7 million of lower license revenue, which declined as expected, and modestly lower trading volume. Our acquisition of Itiviti closed in mid-May and contributed $29 million to revenue growth in the Capital Markets franchise.

For the full year, GTO revenues rose 7% to $1.3 billion, driven by 4 points of organic growth and 3 points from acquisitions. Organic growth was driven by new sales and internal growth was essentially flat as the benefit of higher full year trading volumes was offset by lower license revenue, which declined relative to an unusually high fiscal year '20 level. We expect modest growth in license revenues in fiscal year '22.

So Broadridge's recurring revenue growth benefited from strong volume growth both in ICS and our GTO business segments. So let's turn to Slide 12 for a closer look at volume trends. Equity stock record growth rose to a record 26% in fiscal '21, well above the 6% to 8% trend in the past decade. Fourth quarter proxy volumes which accounted for 55% of full year distributions benefited from 33% stock record growth. We also saw strength in mutual fund and ETF regulatory communications, driven by strong fund inflows as we lap last spring's COVID driven withdrawals.

Looking ahead to fiscal '22, we continue to model stock record growth growing at a healthy low-teens pace, though the seasonally light first half before reverting to more trend line mid-to-high single digit growth in the much more meaningful seasonal second half. We're also expecting mid-to-high single-digit fund record growth.

Turning to trading volumes in the bottom of the slide, fourth quarter volumes slipped 1% driven by a combination of tough year-over-year comps and lower overall market volatility. Fourth quarter volumes also declined on a sequential basis as elevated levels in Q3, '21 driven by market volatility subsided. Trading volumes rose 12% for the full year. As we look ahead to fiscal '22, we expect trading volumes to be essentially flat for the year with modestly higher volumes in the first half of the year offset by lower volumes in the third quarter.

Shifting to a view of growth drivers of recurring revenue on Slide 13, organic growth rose to 11% in the fourth quarter, driven by a combination of new sales and the seasonal impact of higher proxy volumes. New sales contributed 6 points to growth with balanced contribution from both ICS and GTO. Internal growth of 7 points was primarily driven by proxy volumes as is typically the case in our fourth quarter. Acquisitions contributed 3 points, almost all of that came from Itiviti with only a modest contribution from our mid-June acquisition of AdvisorStream.

Client losses subtracted 2 points of growth in both the fourth quarter and for the full year, marking another year of 98% client revenue retention rates. High retention rates reflect the value of the services we offer, our commitment to client services and/or a tangible outcome of our service profit chain culture. I'll round out our revenue drivers discussion on Slide 14 with a look at total revenue.

Total revenues rose a healthy 12% in the fourth quarter. Recurring revenue was the primary contributor to that growth and Broadridge received a further boost from an uptick in event driven revenues as well as 2 points of growth from higher distribution revenue. While higher distribution revenues contributed to our overall growth, their share of the full-year total revenues declined to 31%, down from 32% in fiscal year '20 and 38% five years ago. We expect that the share of low to no margin distribution revenues will continue to decline as we remain focused on growing recurring revenues, FX was a modest positive, reflecting the weakening of the U.S. dollar.

Looking down the slide, event driven revenues rose $5 million year-over-year in the fourth quarter to $73 million, driven by higher proxy contest activity. For the full year, event driven revenues rebounded from a cyclical low to a healthy $237 million. That rebound was broad based across the full range of event driven activities. Higher mutual fund communications contributed roughly a quarter of the growth as did higher revenues from proxy contest as well as higher revenues from capital markets activity and other communications.

Going forward, we're not forecasting that the major fund complex goes to proxy. And while there might be some quarterly cyclicality, we expect full year fiscal '22 event driven revenues to be approximately $220 million, in line with the fiscal year '15 through fiscal year '21 long-term average.

Turning to Slide 15, for the full year, adjusted operating income margin expanded 60 basis points to 18.1%, slightly ahead of our latest guidance and multi-year objectives. AOI margin declined 180 basis points to 22.8% in the fourth quarter on the back of our planned fiscal year '21 investment spend. We have a strong track record and high confidence in our ability to make growth accretive investments while still expanding margins and delivering near term profit growth in line with our adjusted EPS three-year growth objective.

Before I move to our uses of cash and our balance sheet, let me touch on closed sales in our revenue backlog on Slide 16. Thanks to a strong fourth quarter, Broadridge recorded another year of strong closed sales with balanced growth across both our ICF and GTO segments. I was especially pleased to see strong growth in our smaller sales, those under $2 million in annualized values which rose 11%. These small sales represent the bread and butter of our long-term growth and reflect the broad demand we are seeing across our businesses.

Our sales performance pushed our overall backlog, a measure of past sales that have not yet been recognized into revenue, to $400 million, up from $355 million last year and steady at 12% of recurring revenue. As a CFO, I appreciate the added visibility into our future revenues that our backlog gives me.

Moving to capital allocation on the next slide. Broadridge remains committed to a capital allocation policy that balances internal investment, M&A and capital return to shareholders. In fiscal year '21, we generated $557 million of free cash flow, up $58 million from fiscal year '20. Given the size of the market opportunity we see in front of us, we're continuing to prioritize making investments in our business, both internal and external. The biggest use of our cash was the $2.6 billion acquisition of Itiviti, which was completed in the fourth quarter.

Late in the fourth quarter, we also completed the additional tuck-in acquisition of AdvisorStream. Since the close of the quarter, we've made two more very small tuck-in acquisitions for the assets of Jordan & Jordan and the remaining share of Alpha Omega. We invested almost $300 million in continued platform build-outs, as we add to our capabilities across Wealth Management and Capital Markets, and another $100 million in capex and software development.

Total capital returned to shareholders was $248 million. The 11% increase in our annual dividend approved by our Board was in line with our long-term 45% pay-out ratio policy and will increase capital returns in fiscal year '22. As a result of the Itiviti acquisition, our total debt rose to $3.9 billion, up from $1.8 billion at the end of fiscal year '20. Our leverage ratio at year end was 3.5 times. We remain focused on an investment grade credit rating and target a 2.5 times leverage ratio by the end of fiscal '23.

I'll close my prepared remarks this morning with some comments on our fiscal year '22 guidance, which is on Slide 18. Our guidance for fiscal '22 calls for low teen recurring revenue growth, healthy margin expansion and another year of strong adjusted EPS growth. Let's take each point in turn starting with recurring revenues. We expect to grow recurring revenues by 12% to 15% in fiscal year '22. That includes organic revenue growth of 5% to 7% with growth balanced across both ICS and GTO. We're not modeling in any revenue contribution from the UBS contract in fiscal '22.

As Tim noted, we expect to complete the rollout of the full Wealth Management platform suite over the next 18 to 24 months and will begin to recognize revenues at that time. We expect the contribution from acquisitions to add an additional 7 points to 8 points, with most of that coming from Itiviti.

Our more recent acquisitions of AdvisorStream, J&J and Alpha Omega should contribute less than $10 million combined to fiscal '22 recurring revenues. As always, we do not forecast the impact of any future tuck-in acquisitions that we might make.

In addition to recurring revenue, we expect mid-single digit distribution revenue growth, driven in part by a postal rate increase. Event driven revenues should, as I indicated earlier, be more in line with our fiscal '15 to '21 seven-year average level of approximately $220 million.

For modeling purposes, between recurring revenue, distribution and event-driven revenues, total revenue growth should be in the range of 9% to 13%. We are expecting our adjusted operating income margin of approximately 19%, up from 18.1% in fiscal year '21, driven by a combination of incremental scale, digital, and efficiency gains as well as the addition of the higher margin Itiviti business.

Finally, we expect adjusted EPS growth to be in the range of 11% to 15%. Included in our EPS outlook is an expectation that our tax rate will essentially be flat at approximately 21% and that we'll see a modest increase in our overall share count. On our last guidance point, we expect another year of record closed sales. Our outlook calls for closed sales in the range of $240 million to $280 million. This guidance emphasize the strength of our financial model and our ability to drive sustainable revenue growth, expand our margins while maintaining a balanced capital allocation policy in delivering steady and consistent adjusted EPS growth.

That concludes my remarks on our fiscal year '22 guidance. But before I turn the call over for your questions. I have one more final administrative note. Beginning with our first quarter results, we'll be updating how we report foreign exchange. As you know, we've historically used a fixed exchange rate for our segment revenues and for recurring revenue. The difference between the fixed internal rate and the actual rate are recorded in our FX revenue line, which was negative $132 million in fiscal year '21.

With the continued growth in our international revenues, especially after the acquisition of Itiviti, the time is right to adjust our reporting. Going forward, we will be changing our internal rate to one that is much closer to the actual rate. This will have the impact of shrinking our reported negative FX revenue to a much smaller number and lowering our segment and recurring revenue numbers by the same amount. These changes will have no significant impact on our reported recurring revenue growth rate nor will they have any impact on our reported total revenue or profitability metrics.

We intend to publish our historical revenue results at a restated rate ahead of our first quarter earnings so that you have a chance to adjust your models. Again, this is a change that will begin with our first quarter earnings report. It will lower our reported recurring revenue with little if any change to growth rates and will have no impact on total revenue, operating profit or adjusted EPS.

With that administrative note out of the way, let's open up the call for your questions, operator?

Questions and Answers:


We will now begin the question-and-answer session. [Operator Instructions] Our first question today comes from David Togut with Evercore ISI.

David Togut -- Evercore ISI -- Analyst

Thank you. Good morning. For your fiscal '22 guidance, could you discuss some of the potential tailwinds that take you to the high end of the 12% to 15% recurring revenue and 11% to 15% EPS growth range and the headwinds that might land you toward the lower end of that range?

Edmund Reese -- Chief Financial Officer

Yeah. Hi, David. Thanks for joining this morning. Look, first I'd start off by saying that the fiscal '22 growth is strong across both our organic business and the contribution from acquisitions, and I think positions us well for the three-year -- against the three-year objectives that we have positions us well to be toward the high end of that. We still need to execute on sales, converting our sales to revenue and the Itiviti integration. We feel very confident with that and I think that will actually position us well.

I think as we think about some of the areas, you heard us say earlier that we're positioning volume growth to return to mid-single digit levels. That obviously can be a tailwind, but we feel confident based on our view into the first -- the next two quarters that that is -- that we can expect that level of event driven revenues I think is also something that on a quarterly level has been quite cyclical. We've returned to more historical levels this year in fiscal year '21 and I think that growth was broad-based. So we feel confident about that as we go into -- as we go into fiscal year '22 as well.

And I'll tell you that we feel good about the margin expansion that helps us get to a strong point from an adjusted EPS growth standpoint as well, that's driven both by Itiviti and the continued scale of efficiency gains that we get in our core business as well. So as you think about the variability in our model going into fiscal year '22, I think we will continue to focus on executing on sales, converting that sales to revenue, driving the Itiviti integration, I think event driven revenue is more in line with what we've historically seen and volumes are back to mid-single-digit levels. And I think that's what drives the range for us.

And Tim might want to add a point just about the strategy there.

Tim Gokey -- Chief Executive Officer, Management

Yeah just to add into I guess how Edmund started which is, as we are looking at the strong year we're having this year, I -- actually I was initially thinking will we be able to keep that same momentum going. And as we saw the trends coming together in the second half of the year and putting together our plans for next year, it just became apparent, the strong underlying momentum in the business and -- so we're definitely benefiting from Itiviti, but you peel Itiviti out and the organic growth that's underneath there is right in line with our with our three-year metrics. So, we feel really good about the guide for this year and about what it says for our momentum as an overall company.

David Togut -- Evercore ISI -- Analyst

Appreciate that. And just as a follow-up, Tim, in your prepared remarks you underscored your focus on near, intermediate and long-term growth. That's a bit of a shift for Broad, which historically is focused more on intermediate and longer-term growth. Is it just the strength in the underlying metrics that you referenced or are there other factors that give you more conviction in the near-term growth prospects of the Company?

Tim Gokey -- Chief Executive Officer, Management

Yeah, thanks David. I didn't mean for that to sound like the shift that it might have sounded to you. I just think that with the volume increases that we've been seeing that -- making sure that we have everything in place in all of our facilities with all of our technology to support those you know really the organic numbers that we're seeing. That was really what we're referring to. And so really as -- and you're very familiar, we take a long-term view. We invest for the future. That's what we're doing and -- but there are some near term tailwinds and we need to make sure we provide great service to our clients.

David Togut -- Evercore ISI -- Analyst

Understood. Thanks so much.


Our next question comes from Michael Young with Truist Securities.

Michael Young -- Truist Securities -- Analyst

Hey, good morning. Thanks for taking the question. Wanted to maybe just start kind of high level, things last year were ahead of schedule. I think this year we'll be -- the outlook is that it will be the same. So, maybe just big picture, Tim, what areas have you been able to invest in maybe more on a strategic basis to accelerate some of those medium-term growth dynamics that might sustain this kind of growth rate beyond some of maybe the macro support?

Tim Gokey -- Chief Executive Officer, Management

Yeah, absolutely, Michael, and we were really pleased to be able to invest in our products and platforms this year and in our people and we have real money in our budget for next year from these investments we made this year. So we see these things coming to life. I think you can almost tick down the strategies and you see investments really almost across the board because you look at the regulatory business we're investing to really build that out in Europe between the Shareholder Rights Directive and our European fund communications business.

You look at our funds business and the investments that we're making in our data and intelligence business, that continues to be a very strong growth for us and we see a lot of future runway there. We've been investing clearly in our VSM capability, but also in our disclosure business for corporate issuers, and of course, our ongoing investments in digital communications.

So, right across the whole Governance suite you see investments in each of those areas. And when you look at the product roadmaps, we're able to accelerate some of those product roadmaps and you look at the number of innovations that we have delivered over the past 18 months in things like core proxy and core distribution regulatory communications, it is markedly up.

And then on the Capital Markets and Wealth Management side, really there, the investments in things like Digital Ledger Repo, things like LTX, applying AI to fixed income trading are making a big difference and so we're just excited across the whole portfolio and you are -- that's why you're seeing strength in the underlying growth into each of those areas.

Edmund Reese -- Chief Financial Officer

And Tim, I'll just add, we're able to make those investments that you're talking about and continue to expand margins in line with our three-year objectives and do that while continuing to deliver this double-digit EPS growth here. So it really is the right time for us to invest for growth now.

Michael Young -- Truist Securities -- Analyst

Great. And my follow-up is on sales. The sales backlog obviously being up 13% from where it was at the end of last year, but closed sales were pretty similar year-over-year. So, is there an expectation that more of that is going to come to fruition in 2022? And then, would that be sort of pull forward or additional closings as a result of may be reopening from the pandemic versus -- and so we should expect maybe a slight reduction in the size of the sales backlog or do you think that the things are in place to continue to drive growth or stability of that sales backlog into 2023?

Tim Gokey -- Chief Executive Officer, Management

Yeah, Michael. Thank you. Look we are really excited also about our sales guide for next year at $240 million to $280 million. I think that really shows how, as we continue to add on new solutions like Itiviti, we see an increased market for us that brought to us a lot of additional sales resources. And so we do see higher sales for us. In terms of how that will affect the backlog, it is, when you look at the mix of sales, we had a lot of sales this year that were not strategic sales, they were a lot -- and we had a lot of singles this year.

And as we bring on the Itiviti sales, those also tend to be a little bit smaller, a little bit faster to implement. So I think sometimes when you see the mix between some of the very large strategic projects and the singles and doubles, the singles and doubles come online usually sort of within a year versus within two years. And so, I think we may see some fluctuations in backlog, I'm not sure how to imply what that means for the momentum of our business. It does flex a little bit based on the product mix.

What I will say though is seeing that backlog grow again this year, having $400 million of revenue that we know is going to come live over the next two years, it gives us a lot of confidence in the revenue from sales portion of our growth formula and that is the largest part of our growth formula. And so it is -- as CEO and when you think about the environment that we have out there and all the concerns we have to know that that revenue is already been sold, the projects are in flight, is happening, it gives a lot of confidence in that and it makes me sleep just a little bit better at night.

Michael Young -- Truist Securities -- Analyst

Fair enough. Thanks.


Our next question comes from Darrin Peller with Wolfe Research.

Darrin Peller -- Wolfe Research -- Analyst

Hey, thanks guys. I want to start off with the record in the position growth we're seeing being so dramatic and really the infrastructure you guys have said you expanded and built out to handle the capacity from a physical standpoint. But then, if you can also just remind us the difference in the margin profile of digital versus physical what that's going to be for you guys going forward both from a revenue yield and a margin standpoint?

And then just as a quick follow-up on that same segment, when you think about your assumptions for next year, I think you said, back to the mid to high single-digit record growth, you just alluded that I think in David's question also being probably conservative. It does seem conservative when you look at the growth rates now. So if you could just expand on that, is that really what you think is the likely outcome or is that really just conservatism in your outlook. Thanks.

Tim Gokey -- Chief Executive Officer, Management

Yeah. Darrin, it's Tim. Let me just -- just a little bit of step back and then I'm going to let Edmund add on to things. I do think it was a really remarkable year from the standpoint of position growth and we do see it though as part of the long-term trends that are driving position growth across equities and funds and ETFs. And those as you know, are the democratization investing, managed accounts, more nascently, direct indexing.

And so we see -- we see those trends continuing in the future. The record growth this year, very broad based, which really reinforces our view that it's part of these -- of these long-term trends. In terms of the investments to support it, it was really around ensuring the resiliency of the network and being able to produce sort of all output from multiple places and that -- it just is not a major thing, but it was just something that we thought we needed to do.

So, not really almost with an even interim model, but just to show the ongoing investments that we always make in our business. I'm going to let Edmund comment on the margin profile, and sort of our confidence about next year and sort of why we believe that and then I'll add on at the end.

Edmund Reese -- Chief Financial Officer

Great. So let me first start with the confidence in the next year, Darrin. We look at -- we have some insight into stock record positions for companies that we expect to proxy in the next one to two quarters and when you look at that testing, which I would say, covers the large majority of distributions and maybe there is some movement between the time that we test and the time that we actually mail, but the information has been quite reliable. And when you look at that, you see what we said in my prepared remarks, low-teen growth through the first half of the year, and mind you that's coming off of 16% growth in Q1 last year and 24% growth in Q2 of last year. So low teen growth coming off of that.

And that's helpful, that gives us great insight but I'll remind you that the first half is our seasonally light period of the year. If you look at '21 or look at '20, the first half of the year was 13% of overall volumes. So what really is more important is the back half of the year and we are assuming and modeling more normal levels in the second half of the year that we return to historical levels and you combine that and that's what gets us to the mid-to-high single-digit growth level.

So you're not -- I don't expect to see 33% and 26% coming out of the fourth and full-year numbers that we see. But we have good insight into the next six months or so and I think what we have modeled positions us well, first of all, for fiscal year '22 and gives us confidence in that.

As we think about the margins of the business. Clearly, overall in our business, what we're able to drive bringing on new customers without a new business, without incremental cost to scale in our business, the efficiency gains that we're able to get, I think helps us be able to expand margins, but specifically on print and digital.

It was good to see our customer communications business not just driving the earnings growth that we've seen there. But now to see digital, which is a higher margin business because there is very low to no margin in the distribution revenue starting to grow in recurring revenue, which is a higher business for us. So you might see lower revenue in that business but it comes at a higher margin and we feel good about the progress we're making on that.

Tim Gokey -- Chief Executive Officer, Management

And then...

Darrin Peller -- Wolfe Research -- Analyst

Alright, that was very helpful. Go ahead, Tim. Sorry.

Tim Gokey -- Chief Executive Officer, Management

Yeah Darrin, just I think the other piece that sometimes people think about is, when we've seen this, this very large growth, is that -- does that tend to fluctuate? Do it go up? And then what happens when the markets really goes through different place? And if you -- if you really trace back to sort of previous times of high growth, we have -- what we haven't seen is big fall backs after that.

What we've seen is position sort of consolidating at the new level, and then beginning to grow again at more modest pace, and that's -- If you look back to all the market cycles really over the past 20 years or even almost 30 years, that's the pattern that we've seen.

Darrin Peller -- Wolfe Research -- Analyst

That's helpful, thanks. My very -- just quick follow-up on GTO for a minute. How should we think about the growth of the components of this segment, when -- just looking at the current quarter, I mean I know -- like I guess organically, excluding the deal, it looked a little lower than we expected, but the -- I know the underlying trends are obviously strong and the bookings are strong. So if you could just touch on that for a minute. [Speech Overlap].

Edmund Reese -- Chief Financial Officer

Darrin, I don't spend a whole lot of time looking at the quarterly numbers for the GTO components. If you were to look back at Q3, you would have seen the opposite of what you saw in the fourth quarter in terms of more of the growth being in Wealth Management and less being and Capital Markets. We're coming off a year of 7% growth in GTO. That I think is the important thing. Now 3 points of that is driven by the Itiviti acquisition and 4 points of that was organic.

So I think as we think about the growth going forward, trading volumes coming off at still 12% in fiscal year '21 over tough comps and maybe less volatility going into fiscal '21, I think we expect to get back in our organic core business back into the 5% to 7% growth range across both of those business is really driven by net new sales, as Tim talked about earlier in both our Capital Markets business and Wealth Management business.

In Q4, we were growing over some license revenues -- higher license revenues in fiscal year '20 and lower trading volumes. But I think you'll start to see driven by new sales, us getting back to the 5% to 7% three-year objectives that we have across both of our businesses.

Darrin Peller -- Wolfe Research -- Analyst

Great. All right, well, thanks guys.


Our next question comes from Chris Donat with Piper Sandler.

Christopher Donat -- Piper Sandler -- Analyst

Good morning. Thanks for taking my question. Tim, wanted to ask one more question on position -- equity position growth, and I appreciate the color you've given us on the different types of stocks involved and the trends like democratization and managed accounts and direct indexing. Can you give us some color on the -- from the perspective of the brokerage firms that are involved, any generalities you can make there? I imagine with democratization we're seeing more sort of the start-up kind of brokers or is there a lot of activity coming out of the traditional wirehouses also?

Tim Gokey -- Chief Executive Officer, Management

Yeah. I'm glad you asked. We are definitely seeing higher growth rates in the online brokers. However, we are seeing very strong growth across all segments and brokerage firms and the traditional firms are also seeing double-digit growth. And given your exercise, the absolute amount of positions is actually bigger in that channel, while the percentage might be bigger in some of the online ones.

So it is really -- it is one of the things also that we think is very interesting. We did a really landmark study of investing patterns and investor's base looking at across $7 trillion of assets that we concluded last year and it really did show how the millennials are here and their proportion of positions and growth is really interesting. But nevertheless we are seeing really strong growth across all segments of brokerage firms.

Christopher Donat -- Piper Sandler -- Analyst

Okay. And then just one sort of on recent news in customer concentration. With the news that Robinhood is acquiring Say Technologies, which has some sort of, what I think are kind of interesting solutions on the Investor Communication side. I don't -- I'll ask if you'll quantify Robinhood as the size of a customer, but I imagine it fits in the context of what I see in your 10-K that like your -- I think, yeah, your largest customer was 6% of revenues in the last couple of fiscal years and your five largest were about 20% of revenues. Is there any way to help think about Robinhood and if they're customer, any risk to that business?

Tim Gokey -- Chief Executive Officer, Management

Absolutely. So, first of all, I would say just -- we view this acquisition as a positive because it really validates the importance of retail shareholder engagement. Robinhood has been a big leader in that area and their investment in it is, I think will be a wake up to other firms, and I'll come back to that in a second. So just to be very clear, Robinhood is a Broadridge client, but it's not a proxy client currently. So we really don't see any impact on our -- direct impact on our business.

What we do see though, Chris, is we've been really leading in innovation in proxy communications, creating APIs, I talked about that product's rollout and the acceleration of road map, creating opportunities for our clients to leverage that event as an opportunity to really engage their retail clients and for corporations to engage their retail clients.

And so we think this is going to create sort of heightened interest in a wide range of communications and engagement topics, all of which we really welcome. I think the thing that we bring is, we have this unique role at the center of the network linking tens of millions of investors, corporate issuers, broker-dealers and that network can be really powerful to help corporations engage with their retail shareholders.

Christopher Donat -- Piper Sandler -- Analyst

Okay. Thanks very much, Tim.


Our next question then comes from Patrick O'Shaughnessy with Raymond James.

Patrick O'Shaughnessy -- Raymond James -- Analyst

Hey, good morning. If I recall correctly, the UBS go live was supposed to be originally completed during this summer, and I think you said today 18 to 24 months is what you're looking at right now. What's driving that extended implementation timeline versus your prior expectations? And how does that impact opportunities in your ability to win other wealth mandates?

Tim Gokey -- Chief Executive Officer, Management

Sure. Thank you, Patrick. And just as a step back, it is -- the Wealth management industry and the trends that we're seeing there is -- just continuing to undergo significant change with everything that's going on in asset management and fee compression and then how that plays into Wealth Management. And so wealth managers are continuing to evolve their strategies and their technologies to compete.

And so, this digital transformation that we're working on, it is one of the most exciting initiatives and the UBS partnership is part of that -- is part of their transformation and our mandate with them has grown since our initial agreement. So we are live with components. We're working with them in terms of how we optimize that to align with the pace of their broader digital transformation.

In terms of how that affects the -- our ability to bring on others, I think we are excited to announce RBC and I think that really validates the needs that others see for a similar [Phonetic] digital transformation. We have a lot of ongoing discussion with other clients and the guidance that we've provided fully incorporates all of that. It doesn't have any revenues from UBS in this next fiscal year, but we're still continuing to grow and UBS knows we'll come on top of that.

Patrick O'Shaughnessy -- Raymond James -- Analyst

Got it. Appreciate that. And then speaking of RBC, can you speak to the implementation timeline for that install?

Tim Gokey -- Chief Executive Officer, Management

Yes. And one thing on RBC that I think is an important context, first of all, RBC, just backing up, it's a very important client for us. It's a client across our businesses in U.S., in Canada, in Wealth Management, in Capital Markets. So it's very broad and deep relationship. And really pleased to be able to help them with the transformation they're engaged in their U.S. Wealth Management business.

We expect that to go live over the next 18 to 36 months and since it's already a back office client, the scope of incremental services and scope of incremental investment is more limited than UBS, but it's very exciting for us. And Patrick, it's particularly interesting because their business, it's a unique. They have a high net worth business, it's what they've done with City National; they have sort of traditional regional broker dealer and then their Correspondent as well. And so it really hits on a lot of different segments of the industry that make it pretty interesting.

Patrick O'Shaughnessy -- Raymond James -- Analyst

Great, thank you.


Our next question comes from Peter Heckmann with D.A. Davidson.

Peter Heckmann -- D.A. Davidson & Company -- Analyst

Hey, good morning. Thanks for taking my questions. I missed a little bit of the call, but I believe you expect a roughly 6% decline in event-driven proxy in 2022 to about $220 million. Would you expect about a normal level of event driven proxy revenue in the fiscal first quarter, may be something in the $45 million range?

Edmund Reese -- Chief Financial Officer

Hey, Peter. Thanks for joining this morning. So you're right, we said, if you look at the last seven years, the average has been about $220 million. If you look at that on a quarterly basis, you're going to see movement and cyclicality each quarter. I think on the slide we showed that the average has been roughly $50 million to $55 million per quarter. And I think that is a good range to think about your modeling on a quarterly basis.

I think the key thing about event driven revenue though is that as I looked at fiscal year '21, the growth, as I said in my prepared remarks, was broad based. So, it wasn't any one particular contest that drove the growth. It was across the mutual fund proxy, it was across contest, it was across Capital Markets. And I don't think we're looking for any big one item in fiscal year '22 either. So I think that gives us confidence that we'll return back to the type of average full year numbers that you've seen over the last seven years.


Our next question comes from Puneet Jain with J.P. Morgan.

Puneet Jain -- J.P. Morgan -- Analyst

Hey, thanks for taking my question. So my question is on margins, can you break down expected margin expansion into ICS and GTO? It seems like there are going to be lot of segment-specific dynamics like record growth in ICS and Itiviti in GTO segment this year?

Edmund Reese -- Chief Financial Officer

Yeah. So maybe I'll start, Puneet, with one or two comments and Tim might want to jump in on just the business itself. But you look across our businesses, particularly for recurring revenue in our ICS business across regulatory that is volume-driven, across our data driven-solutions, across our issuer businesses; those businesses really are scale businesses, so as we bring on new volume, as we bring on new customers they do come on at attractive and accretive margins in those business and the same thing as we think about our SaaS platforms in Capital Markets and Wealth Management as well. So, the margins are quite high there.

As we think about the customer communications business, you see a margin dynamic as you move from the lower no margin print business to higher margin digital business as well. But overall, I think as we think about what we expect to do in fiscal '22 and going forward, you can expect collectively we'll balance the growth in each of those businesses with our investments and being able to deliver margin expansion overall in that 50 basis points type range. But Tim, you might want to add.

Tim Gokey -- Chief Executive Officer, Management

I just want -- obviously I was going to add on almost that last point, which is just, we really do think about our margin delivery on an overall basis and it really can be affected particularly in any quarter, but even in any year across businesses by where investments fall in that year and -- but both these business have very attractive margin characteristics -- margin profiles and also underlying characteristics as they grow, it creates additional margin and that is something that really does allow us to continually reinvest in the business to provide more value to our clients, to provide great careers for associates and long-term growth for our shareholders.


This concludes our question-and-answer session, I'd like to turn the call back over to management for any closing remarks.

Tim Gokey -- Chief Executive Officer, Management

Well, I'd like to thank everyone this morning for participating in our call. Before we conclude, I do want to highlight two Directors who recently joined our Board. As you know, our Board plays an important role in the oversight of Broadridge and I'm pleased that we have continued to add valuable insight and diverse experiences. Melvin Flowers brings along invaluable experience in both technology and finance; and Annette Nazareth brings deep experience at the confluence of corporate governance, financial markets and regulatory matters.

Broadridge's ability to continue to attract this kind of talent to our Board, I think, highlights the important role that we play in Governance, in financial markets. We're really excited to have Melvin and Annette joining the Board. We just had a meeting earlier this week and was able to be with them at least virtually. So, welcome Annette and Melvin.

And with that final note, I just want to thank all of you for your interest in Broadridge. We look forward to updating you again in a few months. And just are really excited about what we talked about this morning and about the opportunity going forward to really continue to make a difference for our industry and for millions of investors. Thank you.


[Operator Closing Remarks]

Duration: 65 minutes

Call participants:

W. Edings Thibault -- Vice President and Head of Investor Relations

Tim Gokey -- Chief Executive Officer, Management

Edmund Reese -- Chief Financial Officer

David Togut -- Evercore ISI -- Analyst

Michael Young -- Truist Securities -- Analyst

Darrin Peller -- Wolfe Research -- Analyst

Christopher Donat -- Piper Sandler -- Analyst

Patrick O'Shaughnessy -- Raymond James -- Analyst

Peter Heckmann -- D.A. Davidson & Company -- Analyst

Puneet Jain -- J.P. Morgan -- Analyst

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