Good morning, everyone, and welcome to Broadridge First Quarter 2020 Earnings Conference Call. All participants will be After today's Please also note, today's event is being recorded. At this time, I'd like to turn the conference call over to Mr. Eddings Thibault, Head of Investor Relations. Sir, please go ahead.
Thank you, Jamie. Good morning, and welcome to Broadridge's fiscal first quarter 2020 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 Goe, our CEO and our CFO, Jim Young. Before I turn the call over to Tim, a few standard reminders.
We will be making forward looking statements on today's call regarding Broadridge that involve risks. A summary of these risks can be found on the second page of the slides, in 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.
Thank you, weddings, and good morning to everyone on the call today. Broadridge had a solid first quarter and is well positioned for the year. We generated 8% recurring revenue growth. We had record first quarter sales, and we continue to feel good about our underlying business trends. We also completed tuck in acquisitions across each of our franchises that will strengthen Broadridge and drive long term growth.
While the largely anticipated lower event driven activity impacted our results in this seasonally small quarter, We are well positioned to deliver a strong fiscal year 2020, and we are reaffirming our full year guidance. Moreover, ongoing industry trends continue to underline why Broadridge is so well positioned for longer term growth. This morning, I'll provide you with a brief overview of our first quarter results. And given the increase of level of M and A we've seen over the past few months. I'll review how it fits together to strengthen our franchises.
Jim will then follow with an overview of our financial results. Including the shift of our Wealth Advisor solutions from ICS to GTO. As always, we'll close with your questions. Let's get started on Slide 4. Broadridge reported solid first quarter results.
As you analyze the quarter, keep in mind that Q1 is our seasonally lightest of the year. Typically, We generated anywhere from 12% to 14% of our full year adjusted EPS in the first quarter, and that's right where we ended up. With that in mind, let's touch on the headline to $623,000,000, driven in large part by the acquisitions we made in the 4th quarter, which are performing well. Organic growth was light at 2%, but we expect it to accelerate through the year, driven by stronger growth in both ICS and GTO from onboarding the sales that have already taken place. With the $330,000,000 backlog Jim mentioned last quarter, we have very good line of sight on our ability to generate revenue for sales.
As expected, Event driven revenues declined significantly relative to the first quarter of 2019. Recall that in 2019, benefited from our proxy campaign at a significant mutual fund topplex. The lapping of that large campaign drove most of the decline in the event driven revenues and earnings. And Jim will give an update on how this plays into our full year forecast. Last point, end results.
Strong sales. Closed sales rose more than 100 percent to $38,000,000, a 1st quarter record which speaks to the strength of our underlying business. Our first quarter sales are especially gratifying coming off our strong 4th quarter. And are an indication of the momentum we see in the market. I'm pleased with the investments we've made in our business over the past few months with targeted tuck in M and A across all three of our franchise focus areas.
As I'll discuss in a few minutes, our investments over the past 24 months have collectively strengthened our business and improved our long term growth profile across governance, capital markets, and Wealth And Investment Management. Finally, the key takeaway from the quarter is that Broadridge remains on track to deliver another strong 8% to 10% recurring fee revenue growth and 8% to 12% adjusted EPS growth in fiscal year 2020. This outlook positions us to deliver on the 3 year growth objectives we shared with you at our 2017 Investor Day. Including at the high ongoing industry trends have only strengthened my confidence in our growth outlook and the potential opportunity in front of us. The past few months have brought increased evidence of the financial services industry is facing significant structural cost pressures.
The moves by online brokers to slash trading commissions and by global banks to realign this strategic focus have driven home the challenges the industry faces, In addition, regulatory change remains the constant with the SEC moving rapidly to implement regulation best interest. And then moves in Europe towards a shareholder rights directive. These challenges are helping drive our growth. Financial Services firms need to move rapidly to adapt their businesses and evolve how they serve their clients. That's causing them to embrace industry solutions to neutralize critical non differentiating functions tapped into more and better data, and raise the effectiveness of their communications.
As we see playing out in our record sales and backlog, no one is better positioned than Broadridge to provide these solutions. So while the challenges faced by the industry are real, They only reinforced the underlying trends that have fueled our growth, and they highlight why we remain so excited about our outlook. Now let's turn to Slide 5 for a review of our results. I'll start with our ICS segment where recurring revenues, excluding customer communications, rose 10%, driven by 6% organic growth and the addition of the TD Ameritae Retirement Assets. The biggest organic driver was higher mutual fund and ETF revenues, where recent share gains helped drive growth Equity stock record growth was solid at 7%, while fund an ATM interim record growth slowed to 1%.
Dipping early in the quarter before rebounding. Temporary slowdowns and interim record growth are not unusual, and we expect interim record growth to rebound over the course of fiscal 2020. Our ICS segment also benefited from strong demand for our data and analytics products. The acquisition of the TD assets added nicely to our growth. And I'm pleased with the progress we're making in integration of that business.
Customer Communications revenues fell 2%, driven by combinations of client losses and volume attrition. As expected, event driven revenues declined steeply year over year we lapped exceptionally strong mutual fund proxy activity in the first quarter of fiscal 'nineteen and revenues returned to more normalized levels. We see event driven revenue picking up in the second half of the year, driven in part by proxy campaigns at a large mutual fund complex. I continue to be excited by the momentum in our GTO business, where we grew 15% for the quarter and expect mid teens growth the remainder of the year. Organic growth of 3% was held back in the quarter by an onboarding delay, which is now complete.
And we therefore expect organic growth to pick up meaningfully in the second quarter and for the remainder of the year. The acquisition of RFP have also contributed nicely to first quarter results, driven in part by strong license sales. While these sales were in RPM's pipeline when we acquired the business, we were able to expand the scope of a particularly meaningful solution for a large client as a result of the Broadridge relationship. So it's good to see an early return on our expected revenue synergies. We also took another step toward the creation of a separate Wealth Management business within our GTO segment by transferring advisor solutions products from VyCS to GTO.
While modest from a revenue perspective, this is a small but meaningful move toward pulling together our wealth solutions into a more unified whole. Jim will share the details. Finally, and importantly, Broadridge posted record 1st quarter sales. We continue to see strong sales momentum across multiple platforms. Notable wins included the sale of our global post trade management technology platform for major European bank.
As well as an increase in the governance services we provide to a major asset manager. It's early in the year and we face tough comp in the second quarter as a result of our landmark sale to UBS last year, but we're off to a strong start. Broadridge has been very active on the M and A front in the past few months, making multiple acquisitions to strengthen our business. I want to take a few minutes to review our recent deals and why they will help us achieve our strategic goals. Let's turn to Slide 6 to start that discussion.
Acquisitions are an integral part of our capital stewardship and investment strategy and are tightly aligned with the franchise strategy we laid out at our last Investor Day Since the end of fiscal 2017, we've made 13 tuck in acquisitions deploying a total of almost $700,000,000. These investments are tightly linked to our strategic goals. In governance, our strategy is to build the next generation of governance communications, to extend our services across the government's network. We invested more than $300,000,000 in the past 24 months to help accelerate that strategy. We significantly expanded our data driven solutions, most recently, with FI360 and the TD Ameritrade assets.
FI360 provides fiduciary focus accreditation, data analytics for retirement advisors and intermediaries, that broadens our data and list capabilities and strengthens our solution set for regulation and faster interest. We've also added to our issuer product suite. Broadened our regulatory communications footprint and strengthened by digital capabilities. And well, We're creating the open architecture solutions in the future for investors, advisors and operations. Acquisitions are playing an important role in this vision.
And we've invested nearly $350,000,000 since the end of fiscal 2017. The biggest acquisition was RPM, which strengthens our wealth business in Canada, and extends our capabilities to integrate banking into Wealth Management. We also acquired new capabilities around securities based lending, and most recently advisor compensation. In Capital Markets, we're driving the growth of our business globally. As much as that growth has been organic, but I'm pleased that we were able to acquire Shadow Financial in October, broadening our capabilities into new asset classes including exchange traded derivatives and cryptocurrencies.
Across governance, capital markets and wealth management, our M and A investments have helped accelerate our strategic objectives and strengthened our long term growth profile. It deepened our relationships with key clients, added talent, brought new capabilities and given us additional addressable market in which to invest organically. These investments have had clear financial benefits as well. In total, they should contribute approximately $175,000,000 for FY 'twenty exit recurring revenue run rate, adding 2 points to our 3 year revenue CAGR in line with our Investor Day objectives. Moreover, we expect them to be accretive for organic growth with a blended growth rate well above our corporate average.
The past 6 months have been busy on the M and A front, and I'm excited about what we've been able to execute. We've been talking to many of these prospects for some time. Some cases for years. With our strong cash flow and balance sheet, we are able to act when the right opportunity comes. Even when multiple properties come for sale over a short period of time.
As CEO, it's great to have that flexibility. So no change for our capital allocation strategy and we'll continue to look for attractive tuck ins. I'll now turn the call over to Jim for a review of our financials, but before I do, let me summarize my key messages. First, we reported solid 1st quarter results with 8% recurring revenue growth and record 1st quarter sales. 2nd, ongoing industry trends underlying why Broadview is well positioned for longer term growth.
3rd, we continue to make the investments across our that accelerate our strategic objectives and position Broadridge for that growth. And 4th, we are on track to deliver a strong fiscal 2020 8% to 10% recurring fee revenue growth and 8% to 12% growth in adjusted EPS. It's an exciting time to be at Broadridge. We're on track to deliver another strong year and energized by the opportunity to play a key role in transforming the financial services industry. Before I turn it over to Jim, I want to thank our nearly 12,000 associates around the world for their hard work and dedication to our clients and to the service fabric chain.
The work they do strengthens our clients and enables better financial lives for all of us, for millions of others.
Jim? Thanks, Tim, and good morning, everyone. Broadridge reported a solid first quarter, and we are on track to deliver a strong fiscal year 2020. Before reviewing our results, I'll quarter of the year. Consistent with the outlook we provided in August and our historical average, our Q1 adjusted EPS came in at 13% of our full year adjusted EPS guidance at the midpoint 2nd, acquisitions fiscal year to date through early November We have invested $179,000,000 in 4 targeted tuck in acquisitions, aligned with our franchise strategy.
We expect that these acquisitions will contribute dilutive in fiscal 2020 after accounting for financing costs. These investments, coupled with our seasonally negative free cash flow in Q1, pushed our adjusted leverage ratio up to 2.2 times at September 30, slightly above our long term target of 2.0 times. This was a temporary spike and we expect to finish the year close to our target. 3rd, event driven activity. As expected, event driven fee revenue declined notably from record first quarter a year ago, driving a decline in 1st quarter earnings.
At $40,000,000, Q1 event fees were also a bit lower than our expectations. However, this level of event fees is in line with prior periods normalizing for significant mutual fund proxy activity or notable proxy contest. We now expect event fees to be at the low end of our initial full year expectation of a decline of 5 to 15%. 4th, some modest changes to our segment reporting. As part of our strategy of building a Wealth Management franchise, We have consolidated our Advisor Solutions products into GTO from ICS, representing $43,000,000 of annual revenue in fiscal 2019.
All fiscal 'nineteen segment numbers have been revised to reflect this change, and I'll be referring to the revised numbers in my remarks. The supplemental product revenue breakout in the appendix of this presentation shows the revised numbers for all four quarters of fiscal 'nineteen. 5th, and most importantly, guidance, we expect to deliver a strong fiscal year 2020 and are reaffirming our full year guidance across all metrics. Let's turn to Slide 7 for a review of our first quarter revenue drivers. I'll start with recurring fee revenues.
Recurring fee revenues rose 8% in the quarter. Acquisitions carried the load with 6 points of growth coming from our fiscal fourth quarter 2019 acquisitions, RPM, TD, and Rockall. Organic recurring fee growth in the quarter was light at 2%. Onboarding of new business or closed sales is shown here was the largest organic contributor as we continue to onboard sales across both our ICS and GTO segments and chip away at our healthy revenue backlog. Internal growth, which has been a consistent contributor to organic growth, was modestly negative in the first quarter, driven by slower growth in mutual fund and ETF interims, lower customer communications volumes, and less professional services work.
As Tim touched on, we expect organic revenue growth to accelerate in the remainder of the year, driven by GTO onboardings, healthy proxy volumes and a return to a more normalized levels of interim record growth, among other factors. Moving down to total revenue. Total revenues declined 2% to $949,000,000 in the quarter. Strong gains in recurring fee revenues were offset by the largely expected declines in event driven fee and related distribution revenues, following record event driven levels a year ago. And finally, the weaker British pound and the acquisitions of RPM and Rockall had a modest negative impact on our FX line.
Next, I'll cover the performance of our ICS and GTO segments on Slide 8. As I indicated earlier in my remarks, these results reflect the relocation of certain advisor solutions products from ICS to GTO for both periods. I'll start with ICS. Recurring fee revenues grew 4%. Looking at the drivers behind the 4% increase, solid net new business gains contributed 3 points, inclusive of the impact from known client losses in customer communications.
Internal growth dipped to slightly negative, largely from the impact of the slowdown in interim record growth to 1%, weaker customer communication volumes and some equity proxy activity that pushed to later in the year. The TD Ameritrade assets acquisition that closed in Q4 of fiscal 2019 contributed an additional two points of growth. Going forward, we expect the acquisitions of FI360 in Apertura will also contribute to ICS recurring revenue growth. We expect ICS organic growth to pick up over the balance of fiscal year 'twenty as we benefit from the full weight of higher proxy volumes the continued contribution from our data and analytics products. ICS total revenues declined 7% driven primarily the in at the low end of our earlier estimate of a decline of 5% to 15% from the $244,000,000 we reported in fiscal 2019.
Turning to GTO. GTO revenue growth accelerated to 15% in Q1, driven by 12 points of growth from the RPM And Rockall acquisitions. RPM included some strong license sales that Tim referenced in his remarks. On the organic front and as Tim also noted, we are back on schedule in terms of major onboarding activity and we to deliver mid to high single digit organic growth for the full year. Looking forward, we expect that the revenue growth contribution from acquisitions will wane a bit, even with the addition of shadow and financial database services, and that stronger organic growth will fill that half as we continue to expect recurring revenue growth in the mid teens for the year.
Let's turn to profits on Slide 9. Adjusted operating income declined $19,000,000 or 16 percent in the first quarter, driven by the decline in event driven fee revenues. Remember that event revenues carry significant levels of incremental profitability as they leverage an existing cost infrastructure. So when those revenues come down significantly, as they did in Q1, income drops, especially in small earnings quarters like Q1. Below the operating income line, we benefit modestly from investment gains and our effective tax rate was 12.4%.
Included in that number are excess tax benefits for equity compensation of $5,700,000, down from $7,000,000 a year ago. We continue to expect full year ETP benefit of $20,000,000. Adjusted EPS fell 14% to $0.68 for the quarter, representing 13% of our full year adjusted EPS guidance at the midpoint This result is very consistent with the outlook we provided in August and a typical earnings contribution for the seasonally small first quarter. Let's turn to cash flow and the balance sheet on Slide 10. Free cash flow is typically negative in the first quarter, and that was again the case in fiscal 2020.
Broadridge generated free cash flow of negative $107,000,000 in the first quarter. As Tim noted, Tuck in M and A is an important part of our capital allocation framework and is tightly aligned with our strategic objectives. Broadridge invested $179,000,000 in the 1st 4 months of fiscal 'twenty, completing 4 acquisitions. The 2 largest deals Shadow and FI360 accounted for $39,000,000 $120,000,000, respectively, enclosed in the second quarter. We also made 2 other smaller acquisitions, 1 in September 1 in October.
We expect the fiscal 2019 2020 acquisitions combined will contribute 4 plus points to our recurring revenue growth in fiscal 2020. Given our typical reinvestment approach and financing costs, we expect modest EPS contribution in fiscal 2020 for these combined deals. It has been a busy few quarters, and we are very pleased with our acquisitions. In the quarter, Broadridge also invested $20,000,000 in capital expenditures and returned $55,000,000 to shareholders in the form of the quarterly dividend. Again, Broadridge's leverage ratio using adjusted debt to EBITDAR at September 30th was 2.2 times, we anticipate that it will tick up a bit again in Q2, reflecting the $120,000,000 purchase price for FI360.
Was a temporary spike above the long term target of 2.0x and as a result of the seasonally negative Q1 free cash flow and the timing of M and A closings. There is no change to our capital allocation strategy and leverage target. As we benefit from the seasonally stronger free cash flows in the second half of the year, we expect to de lever in the normal course and to generate an additional flexibility to pursue attractive tuck in M and A opportunities and or repurchase shares while finishing the year in line with our 2.0 times leverage target. Separately, You will note that $399,000,000 now appears as current portion of long term debt. This is because we have $400,000,000 in senior notes coming due in September 2020.
To support our capital allocation plans and subject to market conditions we will consider opportunistically raising additional debt capital at some point over the next couple of quarters in order to appropriately manage our upcoming maturities. Let's turn to guidance on recurring fee revenue growth to be in the range organic growth at both ICS and GTO to pick up through the year. We expect total revenue growth to be in the range of 3% to 6% including a decline in event driven fee revenues of close to 15%. We expect our adjusted We expect adjusted EPS growth to be 8% to 12%. We expect closed sales to be in the range of $190,000,000 to $230,000,000.
Finally, as you think about Q2, please note that we expect event driven revenues to be in line with Q1 results before strengthening in the second half of the year. With event driven revenues at this level, we expect Q2 adjusted EPS to be level at the 1st quarter result the approximately 26% or so of full year adjusted EPS that the first half typically represents. So to sum up, we're off to a solid start to fiscal 2020 and we remain on track to deliver a strong fiscal 2020 and our full year guidance. And importantly, we are also on track to meet our 3 year objectives, which conclude at the end of fiscal 2020. Jamie will now open it up for questions.
You. Questions. Our first question today comes from David Togut from Evercore ISI. Please go with your question.
Thank you. Good morning, Tim and Jim. Just a quick question on organic revenue growth expectations for fiscal 2020, looks like the first quarter came in a little light at 2%. As you look at the 8% to 10% recurring fee revenue growth, which you're reiterating in your 2020 guide, how many percentage points of that growth comes from organic, versus acquisitions?
Good morning, David. This is Jim. As I said, we think about four points or so will come from the acquisitions, which keeps us right in target for mid single digit organic growth contribution. As you point out, we feel really good over the balance of the year, especially as we see these GTO on boardings ramp over the course of the year.
Growth from acquisitions for FY 'twenty. So that's a change?
Correct. Because we just added We just added these 4 acquisitions, which will add about a point to our revenue growth.
Understood. And then just a final question. So with the organic growth coming in about a point below expectation or else or at least looking at the 8 to 10 point, revenue growth guide for recurring fee revenue growth, is there anything changing in your expectations or is it just this delay in the onboarding at GTO?
Yes, David, when we look at kind of Q1 relative to the rest of the year, we definitely see a few transitory items you had slightly low interim record growth. So we expect that to pick up with onboarding come in later in the quarter as opposed to the beginning of the quarter. So we'll get the full quarter benefit. Next quarter, a small you can have things like we had some equity proxy activity that fell in Q1 last year, but now appears to be pushing to later in the year. So those are the types of things that lead us to believe that the 2 percent organic for the quarter is light and that we pick up the pace starting in Q2 and put us track for that mid single digit organic growth
Our next question comes from Darren Peller from Wolfe Research. Please go ahead with your question.
I just want to start off. I mean, it's good to see the M and A activity contributing, but I mean, to follow-up on Dave's point a little bit about the organic side, what what, 1st of all, would growth have been if the implementations were more on time on the GTO side? And then I think more importantly, what would you say is the pro form a growth profile of GTO now? In other words, had you owned all these deals a year ago and it was in your run rate, what would the growth profile of GTO be?
Darren, this is Jim. Look, I think as opposed to sort of looking at what Q1 would have been, we come back to feeling like this year is going to be a mid single digit organic growth rate. And then what we measure is we can have some ups and downs and especially in a small quarter. So again, we feel really solidly on track for this mid single digit organic growth rate. And as you think about GTO, we look at this business actually being above that average for the year.
So targeting GTO to be mid to high single digit organic growth. The acquisitions, as Tim mentioned, generally speaking, are accretive to that growth rate. So on balance as those annualize in, we expect they're relatively small, the grand scheme of things for GTO. But on balance, they they'll help the growth rate. But again, targeting mid to high single digit growth for GTO with a really big revenue backlog behind us feels like definitely a good spot.
Okay. Yes. Just to add on to that, Darren, I think it's an interesting question in your head, we owned these businesses a year ago, we'd probably be reporting higher organic now because they are, they are experiencing very nice year on year growth within those businesses. So we feel good about the profile, especially on the GTO side where we're expecting really good revenue from sales this year.
Okay. And then just on the BRCC side, I mean, I guess that's been still a headwind. Some of that was still transitory from, I think, a year or 2 years ago at this point a year and a half ago. Where are we on that? In terms of that business, do you foresee that business turning leveling off or inflecting at some point soon?
Yes, Darren, it's Tim. We are expecting VRCC to be a contributor to earnings growth in fiscal 2020, but not to revenue growth. And, we are continuing to, as you mentioned, work through the off boarding of a major client The good news is that, that client is taking longer to go away, which means that we've made more revenue and the bad news is we're still talking about it. But, we think that's going to actually continue throughout fiscal 2020. We had anticipated it would be done by now.
I think the other point here is that we do continue to have discussions with large clients about their in house transactional communications. That was a a key part of our midterm investment thesis. And we are seeing good growth in digital products, which is part of our long term thesis, not enough to offset the print volumes.
Okay. That's helpful. Just one last quick one. I mean, in terms of the backlog, it continues to look strong. Can you talk about the flow through the $330,000,000 revenue backlog?
And then in terms of new bookings also, how much of that was in organic versus organic, but more importantly, just the timing of the flow through of the backlog over the next few quarters and year and beyond.
Yes, Darren, so obviously, the revenue backlog features prominently in our revenue growth. So in that mid single digit organic growth rate that we're targeting, we need a number of points of growth, the majority of our points of growth coming from that backlog. So I won't give you an exact quantification of that, but that is our driver every year. So but we'll anticipate ending the year with continued healthy backlog as we add to it. But again, this is a business that always is thinking about how do we add 6 7, 8 points of growth coming from that backlog.
And that can give you a sense of the type of revenue conversion we have going on in any one period.
All right. That's helpful, Jim. Thanks guys.
Our next question comes from Peter Heckmann from D. A. Davidson. Please go ahead with your question.
Good morning, gentlemen. Can you talk about some of the puts and takes of both universal proxy and end to end confirms those things that the SEC looks like they're relatively serious about pursuing, and how broad range would work to facilitate that for, for the industry.
Yes. Thanks, Peter. It's Tim. And that's a, definitely Good question. And we are, while I'd say broadly, there hasn't been anything on the regulatory front that is, there's really significant since our last call.
The SEC is contained to work on, issues around the, around proxy they made some statements around investment advisors. There was a meeting just yesterday, and some work on proxy plumbing. And when they talk about proxy plumbing, what they're largely talking about some of the things you mentioned, which is end to invoke confirmation and, and potentially universal proxy card. We are well set up to deliver on both of those. We are introducing end to end confirmation for those clients where we're the tabulator this year, which is a significant portion of public companies.
We are working with the industry to introduce that for all public companies. We need cooperation from others as a working group the SEC has established, but we think this is a positive development for corporate governance and a positive development for us, not in any particular fee, characteristic but just in terms of increasing everyone's overall confidence. With respect to universal proxy, that's something that we are definitely able to support and have prototypes around and, look forward to implementing whatever is decided by the, by the SEC and the industry.
Our next question comes from Chris Donott from Sandler O'Neill. Please go ahead with your question.
I wanted to ask one about the, I guess, sort of this year and longer term expectations for ETF position growth. And this is related to the number of brokers going to 0 commissions. It seems to be the part of the proliferation of ETFs over the last 5 to 10 years. So some brokers doing launching their own ETF and then having a promotional pricing on commissions for that. Seems like the economic rationale for those ETFs is going away.
And I would think one outcome might be that you see the industry consolidate on a handful of the really large liquid ETFs. Is that something you think might happen and would that potentially lead to fewer ETF positions or even how do you think in general about what the if the 0 commission brokerage fees have any impact on ETF ownership?
Yes. Chris, very interesting question. I think that ETFs are a really nice vehicle to have a lot of benefits for clients in terms of their liquidity and other characteristics and intraday pricing. And so I think they're going to continue to be very popular It is true that there has been some trend around brokers introducing ones. I don't know how widely held those are.
So I think actually the bigger trend is with more proliferation of different factory ETFs and sector ETFs. And now people are talking about active ETFs. So there is a lot that is, causing change there. I think another interesting sort of analogy is that while the number of public companies has stopped growing and even gone down, physician growth has continued. So I'm not sure that there's a correlation between physician growth and the number of choices out there.
I will just since you mentioned 0 commissions, just let me talk a little bit about that because I think people actually wondering a little bit about what is the impact of that. And I think that is something that is, the timing is hard to, hard to determine. So the timing may be unexpected, but essentially, it's just the long term trends that we've seen. The biggest impact is really clearly on the online brokers, Fidelity, Schwab, E*TRADE and Ameritrade, those are not as significant part of our wealth book. We're more focused on Enviser And Wealth Managers.
And what we are seeing is that the change is creating the need for all wealth managers to evolve their business model in terms of how they add value because it's not as much from the asset management side and from the stock taking and trading side. And so to accomplish that evolution, they need to invest in technology for the differentiation. And, and I think that is really favoring us as we work with clients to create, you know, broad reenter services that It helps them not only take down costs, but also support these new sources of differentiation. So it's just one of those clear signals that the world continues to evolve, which is why technology is so important.
Got it. And thanks for that piece on the the evolution of the industry. Related to that, I'm just wondering, and you just said that the online books are a small piece of your revenues, but given lower commissions, do you think your pricing or really your contracts might change with on the GTO side and being more fixed and less volumetric going forward or is it too soon to tell on that?
Yes, I think it's too early to tell. It is these are contracts who are all pretty long term in nature. We've had discussions with some wealth managers about the idea of focusing our contracts more on more in positions than a number of positions than on the number of trades because you really look at what the cost drivers are and their revenue drivers on their side is more about positions. And we we we're looking for a long term construct between us and our clients that aligns with their revenue model and aligns with our cost model. And physicians may be a better way to go on that, but those are long term discussions, and I wouldn't expect really see any impact, in the years.
And our next question comes from Puneet Jain from JP Morgan. Please go ahead with your question.
Hey, thanks for taking my question. I know you expect closed sales to contribute to growth acceleration rest of the year. Can you also review expected trends in internal growth? Sure.
As you recall, a couple of key drivers in there are going to be interim record growth, which comes in fairly evenly throughout the year. As we mentioned, a little low this quarter, we're expecting it to come back. So that'll pick up in terms of contribution. And then probably the single biggest contributor to that internal growth is our equity position growth, SRG as we refer to it. And that's really back half weighted, even specifically Q4.
So as those come into play, we expect really nice internal growth contribution as we get to the back half of the year. Other than that, there are always puts and takes throughout the rest of the business, a little bit of professional services here and there, but the really big drivers are to keep eye on that, along with trade growth, which, was always a contributor, to some degree, in that mix, but really it's the position growth that we keep our eye on as we think about that, that sort of full year number.
Got it. And it's been quite a while since you closed the UBS contract. Are you seeing any benefits from flywheel effect from closing the UBS deal with other Wealth Management clients? Or is it too early for that?
Yes, Puneet, it's Tim. First of all, just we continue to make very good progress on UBS itself. And, I'm really excited about the technology there. It has created lots of discussions with other large wealth managers And when we talk about the pain points and this open architecture platform of the future, there's a lot of head nodding and a lot of positivity. All that said, as you pointed out, these conversations are long term in nature.
So there's nothing imminent to report. What I would say is separate from the the creation of the new platform and, and the conversations about that with other wealth managers is that we are continuing in other ways to strengthen our wealth capability and our wealth platform. And you certainly saw that with some of the M and A. Seeing that with moving some of these product lines into GTO. When you look at some of our recent onboardings, they do include a significant wealth component.
So when we look at the underlying, what's happening in our wealth business as we develop that into our 3rd franchise, we're seeing good progress, good progress there. So we think the strategy is on track and we continue to be excited about the opportunity.
Got it. Thank you.
Like to turn the conference call back over to management for any closing remarks.
Well, thank you. I just want to thank everyone for being here today And to summarize, we feel very good about 8% as a recurring fee revenue number. Obviously, the record sales and our underlying business trends As you heard, we're reiterating our full year guidance and we continue to have really good confidence in the long term trend and in the investments that we're making to support that growth. So thank you very much again and look forward to talking to you again next quarter.
Ladies and gentlemen, that does conclude today's conference call. We do thank you for joining today's presentation. You may now disconnect your lines.