Everybody, we'll go ahead and get started this morning. Thank you for joining us here on the second day of the Morgan Stanley TMT Conference, second day of four, so still a lot of really interesting people to have conversations with. This session we're with Broadridge and Broadridge's CFO, Edmund Reese. But before I get started with Edmund, just a quick introduction. I'm James Faucette, a senior research analyst covering fintech for Morgan Stanley. I do have an important disclosure I need to read. Please see Morgan Stanley Research Disclosure website at morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. Edmund, great to have you here. Thank you very much for joining us at the TMT Conference for the second year in a row. Always glad to have you here.
Maybe for those that aren't familiar with Broadridge and maybe have just seen how well the stock has done and how consistently the business grows, etc., can you give us an overview of Broadridge, the problems you're solving for your customers, and where you fit in the value chain?
Well, thanks for having me again for a second year, James, and good morning to everyone here. I think it is important to start with a question like that, an overview of the company and what we do. We are a global leading fintech. We provide technology solutions in a very complex and highly regulated financial services industry. We are a $24 billion market cap company, and we generate $6 billion in revenue. If you look at our performance, what you just mentioned over the last 10 years, it has been strong top-line and bottom-line growth. Our recurring revenue CAGR over the last decade is 10%. We're now a $4 billion recurring revenue company. Our earnings growth over that time period has been at a 14% CAGR. We finished fiscal year 2023 at just over $7 per share.
During that same time, we have consistently increased the dividend, resulting in an average dividend yield of 2%. That's important because when you take that revenue growth, the earnings growth, with consistent capital return to shareholders, what you get is a high compounding TSR business. Our annualized total shareholder returns have been 22% over that 10-year period. That far outpaces the S&P 500. Our business is split into three components, three growing franchises. The first one provides critical investor communications. The second is focused on trading technology. The third is on technology for wealth advisors. First, our governance or our investor communications business, that's a $2.5 billion recurring revenue business. It's been growing at a 9% level on average over the last five years.
The core of that business is our position at the center of a network where we're linking public companies, and we're linking fund companies to the banks and brokers that hold their securities, and eventually to the underlying institutional and retail investors that own those securities. The growth in that business has really been driven by this increasing trend of investor participation in the securities markets. That really manifests itself through equity and fund position growth. When you look back over the last 10 years, you see that the population growth, more people investing, that's contributed 2-4 points of position growth over that time. When we think over the long term, we expect to see mid- to high single-digit growth because those new investors are opening up more accounts and holding more positions per account.
On top of that position growth, we use our position to drive other digital communications for it, to help with regulatory and investor engagement for issuers, and funds as well. We have a strong leadership position. We believe that as long as we innovate to increase investor engagement and drive digital delivery of communications, we'll be in a pretty good position in that business. Our second business is the capital markets business. That's a $965 million recurring revenue business, and it's been growing at 14% on average over the last five years. We are a leading capital markets tech provider, processing over $10 trillion in equity and fixed-income trades per day on technology solutions that cut across the trade lifecycle. Capital markets are facing pressure for faster settlement times and other regulatory change. They're facing pressure on the economics in trading.
They have risk from fragmented legacy systems. So we look to capitalize on that $24 billion market opportunity. And our growth strategy is to land and expand with our modules that simplify trading and connectivity for those capital market firms while innovating to drive efficiency, as well with capabilities like distributed ledger and AI. So that's the second business and where we're focused. The third and final one is the wealth franchise. That's a $560 million recurring revenue business. It's been growing at 10% on average over the last five years. And we are a leading wealth fintech provider. We have relationships with 14 of the 15 largest U.S. wealth advisors with five of the six top Canadian banks. That's a $12 billion market opportunity, and wealth advisor firms are looking to, you know, to digitize their operations. Really, they're trying to differentiate their offering.
They're trying to attract and retain advisors and really digitize their operations and technologies. And so we've built a next-gen platform that, with modular solutions that allow us to, enhance the investor experience to, help advisors be more productive and to digitize their operations. And we'll look to monetize that platform, driving value across full-service brokerage firms, independents, and RIAs, and other, other, private banks in the U.S. and in Canada. So those are the three businesses. They're really underpinned by what I call a simple financial model that's anchored in sustainable long-term growth. That model starts with organic recurring revenue growth that's driven by our sales. We supplement that organic revenue growth with M&A, and we look to drive 7%-9% recurring revenue growth. Next is our margin.
You know, the operating leverage in our business as we get scale, bringing on new customers, our shift to higher-margin digital business, a higher-margin digital business, and our continued expense discipline can drive 80-120 basis points of margin expansion in a typical year. We use those levers to create investment capacity while delivering 50 basis points of margin expansion and delivering 8%-12% earnings growth. Our objective is to take that earnings growth and convert that to 100% free cash flow, which leads me to the capital allocation policy where we're committed to a growing dividend that grows in line with earnings. We'll evaluate M&A if it meets our strategic and financial criteria, or we'll return any excess to shareholders. So look, I think we're off to a good start in fiscal year 2024, on track for another strong year of strong recurring revenue growth, earnings growth.
Free cash flow has been strong. I said in fiscal 2024, we'd expect to return $700 million-$800 million to shareholders in dividends and share repurchases. So I think it's good to give that little overview. I sum that up by saying we have a long runway of delivering value for shareholders, got three growing businesses and a clear path for growth, a simple financial model that, generates strong free cash flow and balances investment with capital return to shareholders. And we're off to a strong start. So that might have taken a minute or two longer than you wanted, but I think it's important to folks hear it.
No, I thought it was a great overview, Edmund. And it, I think, tees up a lot of the questions and things that I want to dig into with you this morning. First, look, I think a couple months ago or a little past 2 months, you had a very detailed and thorough Investor Day in December. And in as part of that, you provided new 3-year financial targets that were largely in line with the ones that you had outlined at your prior Investor Day , but I would say with a touch more optimism, particularly on recurring revenue growth. And the high end of the range was raised slightly. Look, there's obviously you provide ranges for a reason.
Yeah.
How are you thinking about some of the drivers that would get you to the high end of the range versus some of the headwinds that might emerge that would push you to the low end?
Let's just hit on what the range was. First, I do think we're unique in that we provide three-year top-line and bottom-line growth of dividends. That's what you heard in the Investor Day . Like, over the last 2-3-year cycles, we said that our organic recurring revenue growth would be 5%-7% with 0-2 points from M&A to get to 7%-9%. We've raised that range. That's what you're talking about. To 5%-8% over the next three years. The answer to the question, though, James, goes back to what I just said a moment ago. We're very intentional about using that language, simple financial model.
So when I think about the 2024 - 2026 time period, I mean, there are three things that I highlight in there, and you hit on recurring revenue. So two of those things really have to do with the recurring revenue. One is converting sales to revenue.
You'll remember during Investor Day , one of my favorite charts was looking over the last 10 years. We have had this consistent track record of 6 points of recurring revenue growth from converting sales to revenue. When you think about our sales in the current year, the midpoint of our guidance would suggest a 10-year 9% CAGR in sales. We use those sales to replenish, replenish our revenue backlog, which currently sits at $400 million or 10% of our recurring revenue. It gives us high confidence in the guidance as we bring on, you know, bring those clients live and bring them the revenue. So first really is the continued sales and converting that, that to revenue. Second for me is position growth.
So as I just said, the equity and fund position growth, as I just said, the objectives are 5%-8% organic revenue growth. And embedded in that is mid- to high single-digit position growth. I think that level of position growth plus any pricing actions that we should take, that together will drive 2-3 points of internal growth. So I just talked about 5%-8% overall.
2-3% internal at position growth at those levels. And as I said a moment ago, population growth, more investors coming in, more accounts per investor, and more positions per account, I think that's a long-term tailwind to continue to drive position growth in that level. And the third item that I'd highlight is margin and margin expansion to be in particular, both two components of that, the organic, the operating leverage in our business and the actions that we take to be able to drive, improvement. You know, you can generate 50-70 basis points from the scale in our business, 20-30 points from moving to a more higher-margin, more digital business and 10-20 basis points.
From our own. And again, those things allow us to invest in not just the short-term but medium and long-term and deliver that 8%-12% earnings growth. So it's all about executing. The drivers of growth are sources of annual growth and long-term growth are stable. It's all about executing. On the sales, get the position growth and drive that margin expansion. We think we can do that through any economic environment. And I think that's what gives us confidence in the three-year objectives.
Got it. So let's talk about, you know, the demand environment. And that's kind of where, you know, at least from a top-line perspective, everything starts, is that, you know, how would you characterize the general sales and demand environment? I think if I've got my statistics right, you delivered about $106 million in closed sales in the second half of your fiscal 2024, which was up about 12%. And you reiterated your outlook for $280 million-$320 million of closed sales, given the continued strength in January. So I guess, you know, are we in the kind of right ballpark in terms of where your objectives are? But more importantly, anything you can speak to as it relates to the linearity of closed sales since January? Are things gotten better, worse, stayed about the same, kind of what's happening from a sales pipeline perspective?
Of course, you have your stats right, James. It is up 12%. And that's in our first half, our fiscal year is July 1 through June. So for the first half of the year, it's up 12%. And, and your numbers are correct. I think the first thing that I'll point out in response to that question is that the revenue in the current year is not really driven by the current year closed sales.
It's driven by the backlog that drives a lot of the revenue in this year and even a decent chunk as we go into the next year as well. But you're exactly right. We are very pleased by 12% growth in closed sales through the first six months. We have, and I also said during Q2 that January was off to a good start as well. So we continue to see momentum. Within your question, you highlighted the end of last year, our fiscal 2023. And I would say our first quarter in particular saw some things that were close to signing and being complete.
In 2023 coming across the finish line and helping us in the first half, to help us get off to a good start. But to your question about linearity and what's driving it, look, I think we are seeing places where we've invested. In places where we're innovating. So think our BTCS front office trade capabilities. That was strong. Our wealth business, where obviously we just had a platform built there, that had a strong level of sales. And when I think about the back half of the years, things like our Tailored Shareholder Report solutions or other digital delivery communications in our Customer Communications business, those things, you know, have a strong outlook for the back half of the year.
So our pipelines at an all-time level, including strong growth in wealth, which is important to us given the investment that we just made. And so we feel very, very good about the $280 million-$320 million objective that we have for this year because of those reasons. And hopefully, that gives you some thought.
Yeah, no, it does. And I guess I'm just wondering, like, how you would parse, you know, especially for the second half of the year, the impact from delayed deals, previously delayed deals that are now getting across the finish line, and also some of your newer front office solutions and wealth. Like, c an you help us parse, like, where we should expect some of those?
I think the delayed deals impact is over in my mind.
Okay, so you're done.
We're done with that. I think the good news when they were delayed is we didn't see any conversations go dark. Like, we didn't lose any to a competitor o r the pipeline didn't drop. They built up the pipeline, and we were able to bring, you know, those to closure. And I think that's part of why you saw a 12% growth for the first six months of the year. And when I think across the back half, the second half, like, parsing out to your point where it should you should see strong growth in our investor communications businesses, particularly in total shareholder reporting.
Right, right, right.
You know, that's a need that has to, it's a regulatory need that will go live in July. So there's no choice. We're either gonna win it.
Right, right, right.
Or lose it. And you'll start to see that come through in sales in the second half of the year. Our Customer Communications business across financial services and health; you see strong sales in there as well. And then again, our BTCS business and wealth are two places in the capital markets. So the answer to your question is this broad-based growth across each of our franchises. But those are some of the specific products that you should expect to see growth in the second half of the year.
So, if there was variance off, like, that target, positive or negative, and maybe you can hit on each, where would it go in your mind, where would it most likely stem from?
Yeah. Again, I don't think it would stem from us losing, you know, any particular deal. I think it would just be you. You can't imagine when you have to go through the procurement organization, then the chief investment officer.
Right, right, right.
And then the lead of the business to get these things assigned. So the cycles can sometimes be elongated. And you might see that in the capital markets, in the GTO business more than you see in the governance business, because of the regulatory need in the governance business versus the discretion that companies have, where they're trying to.
Right, right, right.
Lower costs, where they're trying to be compliant, get rid of risk, in the capital markets space. So there's more discretion there. And you could see elongated sales cycles in that business. But again, the pipelines are at very strong levels, and I think they're strong across each of the franchises.
So, I wanna, so it's, I think it's pretty easy to recognize the breadth of the moat in the governance business in particular. You know, like, it's that. That's a place where, you know, it's your ability to engage and retain customers is really, you know, and I don't think a lot of people or investors have doubts about that. But let's talk about the competitive positioning in capital markets and the wealth business. Maybe let's start with capital markets. How do you see Broadridge, competitively in that market? Who do you run into? What do you feel like is the generalized level of intensity in that market right now?
Yeah. Okay. So I'll focus my answer on the capital markets and wealth management business. But I have to start with we don't take our leadership to maintain our leadership position. In governance, we have to invest in enhancing our products and invest in the digital capabilities there to meet the regulatory needs that the public companies and funds are facing, to meet their objectives of driving investor engagement. When you think about things that I just mentioned, like TSR. Pass-through, those are investments that we're making that are meeting those needs. Our objective in the governance business is 100% retention. We don't take that for granted. So yeah.
You're maintaining a healthy level of paranoia. Sounds like you're right.
We should maintain paranoia in that business.
Right, right.
And I have to say it, that we invest there. So just putting that aside, coming t o your specific questions, first, in GTO in general, we are often competing against in-house proprietary solutions.
They're legacy systems. They are seeing increased costs for maintenance. They're seeing more risk. They're less compliant. They are less resilient. And so we believe that given those challenges, global capital markets firms can use a mutualized industry solution where the partners investing can put them on new technology, help, and do that in a more cost-efficient manner in general. I would say that about the GTO space. In capital markets in particular, on the vended side of the business, it really varies by solution and in some cases by market. So you talked about who are we competing against. In the international markets, I would say, particularly in front office space, there are two vendors on the vended side, two competitors who have about 50% of the vended space.
I would say in the U.S., on the post-trade side, there are competitors who are established with strength in equities and fixed income on the post, on the post-trade side of the capital markets business. So our acquisition of Itiviti now BTCS, I think, has given us capabilities in the front office a llowed us to move into the international markets and have solutions across front, middle, and back as well that helps us compete there. I would say that to the point that you were making, many of those competitors have been less focused on investing in the products or providing the customer service. So we've made headway going into the international markets and taking market share and displacing some of those competitors. On the wealth side of the table, it is more, you know, more greenfield, I would say.
You have a $12 billion market opportunity in no provider that has the scale and breadth across all of the solutions. So again, what you have are wealth advisors who are using their own proprietary solutions and stitching together a number of vendors in that. And you have sort of new fintechs coming in who are trying to solution a particular issue. You have established players who focus on the front office. You have new entrants in. It's a very complex North American wealth advisory market. And you have some, you know, big name.
Competitors who are trying to, you know, penetrate this very complex market. We compete against them. Then you have the established players who have maybe not invested as much or service. It's a very fragmented marketplace. We believe that our investment in a next-gen platform that has front, middle, and back office capabilities and the relationships that we already have in place through our governance business with the top wealth advisors in North America puts us in a pretty good place to attack the market opportunity, and continue to drive progress.
So I wanna make sure I've been monopolizing time here. If anybody has any questions from the audience, please raise your hand. We'll get you a microphone. But let's dig into to BTCS a little bit. As you mentioned, is that via the Itiviti acquisition, you added some front office capabilities to your existing back office positioning. But you know, you also got some incremental revenue diversification from that and, and I would say incremental penetration opportunities within the sell side. But wondering how we should think about what drives success there and how much opportunity or ability does BTCS have to be a driver of the capital markets more broadly? Like, what's that sale cycle gonna look like going forward versus what it had been previously? And does that change the growth dynamics at all?
Yeah. Yeah. I mean, you see, in my opening comments, I talked about the capital markets business growing 14% on average over the last five years. BTCS was a major contributor to that given that we purchased it in 2021, in May of 2021. And so look, we're very pleased with both the strategic performance and the financial performance of BTCS. As I said a moment ago, capital markets firms are challenged. They're facing a ton of challenge when it comes to simplifying their trading a nd their connectivity in the front office. In BTCS, our solutions in BTCS are all about optimizing trading, particularly in the front office. And we are progressing. You're asking how do they do it? We're progressing against the three goals that we had in mind. One is really going into those international markets, competing against those two players.
Displacing them, which we've been doing in the international markets now that you have the scale of Broadridge. Two is bringing their capabilities into North America with existing Broadridge clients. And, you know, there are some specific examples where we've had wins where BTCS has been talking to clients. And because you're now sort of backed by Broadridge, that door's open, and we've been able to sign some sales. So I think that's key. Go into the international markets, drive the BTCS sales, win market share, come into North America with our existing clients, bring front office capabilities to them. And the third, really, and we're really engaged in on that second one, by the way, in the fixed income space. And we're now also building capabilities in ETDs as well.
The third area I'd point out is sort of front-to-back capability. Simplifying that, f rom end-to-end trade lifecycle with clients. You know, I always bring up the example where I talked to one client who had 24 different vendors across the front, t he back solution. And so to invest alongside Broadridge, who now has this capability both in the back office and front with BTCS and simplify that process, there's a lot of excitement about that. And so BTCS has been progressing on that, hitting the financial objectives, double-digit growth, 30%+ margins in line with our thesis when we made the acquisition. And, from a strategic standpoint, this expansion into the international markets.
So we're just very pleased with the performance thus far and the outlook for it. The sales cycle for BTCS is very much like the capital markets overall business, the post-trade capabilities as well. We have a strong pipeline there, growth in those sales. So those sales will drive the double-digit revenue growth at continued very good margins in that business.
Got it. Got it. Got it. So let's go to the wealth business. Okay. Can you speak about the progress in driving incremental module sales this year? How big can that be? And, what's the how do we think about contribution from UBS versus others? Just trying to dimensionalize where we're at in development of that business.
Yeah. Where we are at is that we're very pleased to have completed the platform build in fiscal 2023. That was a major milestone for us. Through this past July, go live with UBS on that and recognize what we said that in fiscal 2024, we'd have approximately $75 million in revenue on this platform. That was all contracted. So all that's playing out UBS advisors and their management team, you know, we're hearing positive feedback on what has been implemented there. The focus now, our pivot is on sales to get to the second part of your question.
We have a tangible, actionable sales plan in place that goes beyond the PowerPoints and the client demos and the workshops. It's really, you know, we created a sandbox where clients can take their data, put it in the application, use the application itself.
James, remember, there's 30 capabilities that we built here. And some of those modules are, you know, they're strong relative to other options in the industry, things like the ops console , things like client onboarding or tax and billing. It might seem sort of arcane to you and I here. But very important for that space. And that's resonating. And it's not just. It's important that it's resonating across the spectrum of prospects that we have. Tier ones, both in Canada and U.S., strong conversation there. The independents as well. So you take all of that combined, and we continue to feel. You asked how much. We've continued to feel very confident in the $20 million-$30 million in incremental sales on top of what we were doing in wealth before t his platform build.
One of the concerns that a lot of investors have had, and I think it's probably, you know, alleviating a little bit, but is just time to pay back on the investment that's been made. On the wealth management platform, what that looks like? I know that, you know, Broadridge has a long history of being very disciplined and regimented about its return expectations. So just help us think through, like, where we're at on the wealth management platform.
Well, we're-
The potential for that.
We're right now—I just said the revenue number. We know what the amortization for the platform is going to be as well, $57 million on average. And so you have right now all of the expense in the—so as we bring on new clients. The $20 million-$30 million more per year, incremental per year, there's no more sort of platform build. It's primarily investment. So those clients are coming on at incrementally higher margins.
We do that for the next few years. We'll get to returns that are we'll get to margins that are sort of more in line with Broadridge and a return on the overall investment that's acceptable, obviously, above our cost of capital. We do that for a number of years. We'll get to more attractive returns on the platform. So our key, the bottom line to that question, is our key right now is continue to hit the $23, the $30 million in incremental sales, you know, keep the conversion costs down, and we'll bring those on at incremental margins and get to our returns.
So I couldn't get through one of these sit-downs this year without asking about everybody's favorite topic, AI, generative AI. Interesting announcement re surrounding OpsGPT, and, and trade fail resolution, especially for T+1 circumstances. From a pricing and monetization perspective, is this an innovation that you can and intend to charge separately for? I guess we've heard from some of our companies who are viewing AI-related product improvements as natural extensions of their platform. But not necessarily separate SKUs. Kinda talk through both the capabilities, what you hope that delivers for your customers, and then what you think the charging mechanism may be.
Yeah. It's a great question. And you're right. It is the topic du jour. It's coming up all the time. First, for us, when I think about AI, it is having a safe environment with all of our client data. So we've sort of created a safe environment that protects data from going out but allows our engineers and product designers to be able to innovate in it. The result of that has been, you know, we intend to lead in the space in AI. And we think that the opportunity there is dependent upon having use cases and having differentiated data. We have differentiated data in our capital markets business given the coverage that we have across fixed income and equity. We have differentiation, we have strong data in our governance business a s well.
And so we've been focused on products, over 27 of them in play. Three or so we've announced. OpsGPT is one of those. And what has been exciting is moving from idea to production in a very short amount of time. On OpsGPT, specific to your question, we are focused on exactly what you said. I think it's early days, but we are focused on going beyond just allowing it to be a part of the value proposition but being able to charge additionally for it as well.
It's still early days. We have to prove out the use cases. We're using one of our groups internally to prove out the use case as well. But the objective is, in some of these cases, to charge incrementally for it. Certainly, no very modest impact of anything on our financials for fiscal year 2024. But we'll continue to look at that. I think beyond the products is the productivity impact as well. So, you know, we have Copilot rolled out across over 20% of our technology stack right now, helping with code development over 400 engineers. We'll move that number up to 1,000 before the end of our fiscal year.
There's certainly an opportunity on the productivity side, particularly in code development. I would say also we have a small client service business. There's opportunity there as well when you think about efficiency and then, I think, other functional areas as well. It's way too early to start thinking about that as a significant impact. We will use investment capacity that we have today to be able to invest in AI, both the products and the productivity side. We'll update you when we're ready to see, you know, it monetized in a way that's significant to our financials.
Got it. And then, you know, in your preamble to our, our conversation here, you, you talked and gave a pretty clear outline of, of capital allocation. But I wanted to dig in there, just for a little incremental color here towards the end of our conversation. You commented that inclusive of or it back at your Investor Day, specifically, you commented that inclusive of incremental debt capacity, you would expect to have about $3 billion of free cash flow to spend between 2024 and 2026, fiscal year 2024 and fiscal year 2026. Clearly, the stock has performed extremely well of late. And, you know, I guess, is it fair to assume that we could see some buyback even though the, the, the shares have performed as well? And I think you were very explicit that you expect dividends to grow at the same rate as, as earnings.
Yeah.
But any other nuances or things that we should be aware of? From a capital structure perspective, especially?
Yeah. I mean, the first thing I'll always point out, James, as you know, is that we are an organic growth company. The objectives are 5%-8% growth with 0-2 points from M&A. And so, why we do M&A when it fits our overall criteria. But to your point, the policy continues to be the same as it was. I think our dividends have grown at a double-digit level, 11 out of the past 12 years. So it's gonna grow in line with earnings. We will pursue M&A, but it has to fit our high financial and strategic return criteria. But we will not let any excess cash sort of build on the balance sheet. We'll return that back. And as a result, particularly as you think about fiscal year 2024, where we, you know, have five and a half months left in our fiscal year.
Right, right.
I think, you know, you'll see, I don't expect to see significant M&A. And what that means is that between the dividend that we've already paid and share repurchases, $700 million-$800 million, we did $250 million in share repurchases in the first quarter. You can see another, I'm sorry, $150 million. You can see another $200 million-$300 million in the back half would be my thoughts on it as well. But over the long term and it's not that we sort of plan it this way, but you've seen balanced dividends and share repurchases versus investment in M&A. I think over the long term, you'll continue to see that very balanced.
That makes sense.
In our capital allocation policy. I think that fares well for shareholders as well. When you look at the returns on both the M&A side and the capital return, the share repurchase side of it over our history.
Just in the last minute here, so just wanted a quick detail, make sure that we don't get tripped up on, key impact of or potential impact of interest rates. You know, if we do see interest rate reductions in the coming fiscal year, how should we think about the moving pieces between headwinds from float income versus lower levels of interest expense, any rule of thumb that we should be following there?
Yeah. The short answer to that is 'cause interest, you know, it's noise for Broadridge. It impacts recurring revenue growth, has no impact on earnings, which is the key part here, and then also impacts reported margin expansion, which really has no, but the sort of rule of thumb from my standpoint or what you would know from a modeling standpoint is that we roughly have about $2 billion in deposits. We have, you know, and just under $1.5 billion in variable debt as well. So as interest rates change, you don't see all of that impact on the deposits 'cause we share some of that revenue with the, the retirement companies that, you know, we're holding those deposits on behalf.
But my rule of thumb is 100 basis points impact on interest rates, one way or the other. We're largely hedged. It's less than $5 million i mpact to earnings for Broadridge. So we're largely hedged. And it's neutral for us when we think about it.
Got it. Well, Edmund, thank you so much for joining us today. Out of time. But if you have any follow-up questions, I'm sure Edmund and the team will be happy to entertain them. Thank you so much. Appreciate it.
Thank you, James. Thank you.
That was great.