Good morning. My name is Kanesia, and I will be your conference operator today. At this time, I would like to welcome everyone to the Broadridge Third Quarter Fiscal Year 2018 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.
Thank you. I would like to turn the conference over to Mr. Eddings Thibault, Head of Investor Relations. Sir, you may begin.
Thank you, Carnesia. Good morning, everybody, and welcome to Broadridge's Q3 2018 earnings conference 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 Rich Daley, our CEO Tim Gokey, our President and Chief Operating Officer and Jim Young, our Chief Financial Officer. Before I turn the call over to the management team, a few standard reminders.
During today's conference call, we will be making forward looking statements regarding Broadridge that evolve risks. A summary of these risks can be found on the 2nd page of the slides. We encourage participants to refer to our SEC filings, including our Annual Report on 110 ks for complete discussion of forward looking statements and risk factors based by our business. We will also be referring to several non GAAP financial measures, including adjusted operating income, adjusted EPS and free cash flow. We believe these non GAAP measures provide investors with a more complete understanding of underlying operating results.
An explanation of our use of these non GAAP measures and reconciliations to their comparable GAAP measures will be found in the earnings release and in the earnings presentation. Let me now turn the call over to Rich Hale. Rich?
Thanks, Eddings. Good morning to all of you joining us on this call. I'm delighted to report another strong quarter for our business. And with only 2 months to go before year end, I'm also pleased to note that Broadridge is firmly on track to deliver strong full year 2018 results as well. I'll leave this morning with the highlights of our 3rd quarter earnings on Slide 5.
Tim will then discuss the performance of our 2 segments, and Jim will review our financials and walk you through our outlook for fiscal 2018, including the drivers behind the increase in our adjusted EPS guidance. I will then close with some additional thoughts on how we are balancing delivering attractive short term results while investing for the long term. So let's get started. Broadridge reported strong 3rd quarter results. Total revenues rose 6% to $1,100,000,000 driven by recurring fee revenue growth of 8% and to a lesser extent by 9% growth in event driven revenues.
Strong organic recurring revenue growth resulted in a 13% increase in adjusted operating income and a 90 basis point increase of margin expansion. Broadridge's adjusted EPS was also helped by a tax benefit related to equity compensation and the reduction in corporate tax rates, which further contributed to a 45% year over year increase in adjusted EPS to $1 per share. Our 3rd quarter numbers benefited from a confluence of positive factors, which contributed to our strong results. The first and most important factor was the continuing benefit we see from the long term trends that have been a consistent driver of Broadridge's growth. These trends, which include mutualization and the increasing demand for data and analytics, have driven the strong sales results we reported over the past several years.
The onboarding of our sales backlog remains the single biggest engine of our annual organic revenue growth. That backlog gives us excellent visibility into our organic revenue growth over the next 12 to 18 months. The second driver was the increase in market volatility that occurred in the quarter. Higher trading volumes helped our Capital Markets and Wealth Management businesses as well as our customer communications product line. The third factor was the continued strength in event driven revenues.
All three of these factors coming together in a single period produced a very strong quarter. Tim will discuss this in more detail in just a few moments. Now let's move to one of my favorite topics. Year to date closed sales were $100,000,000 through the end of March. Broadridge recorded $38,000,000 in closed sales in the 3rd quarter, down 20% from a year ago.
We remain on track to hit our full year sales targets as we expect a very healthy close to fiscal 2018. As you know, brokerage's quarterly closed sales results have historically been weighted towards the 4th quarter, and results for any single quarter can be heavily influenced by the timing of large deals. Our pipeline today is very strong, and it includes some large deals, where we are in active dialogues with clients. These dialogues are progressing well, and we expect 1 or more of these deals to contribute meaningfully in the Q4. Next, let's discuss guidance.
We are raising our adjusted EPS guidance and reaffirming our prior guidance on total revenue, recurring revenue, adjusted operating income margin, free cash flow and as I have just said, closed sales. In terms of adjusted EPS, we are raising our guidance for adjusted EPS growth for the year to 31% to 35% from 27% to 31%. Incorporated in our new guidance are: 1, strong results over the 1st 9 months of the year and at this point in the year, our line of sight into full year numbers 2, a higher than forecasted tax benefit from equity compensation and 3, increased investment as we take advantage of the growth opportunities we see to redeploy some of our strong operating profits back into the business. I'll touch more on this on my wrap up. With our strong outlook for fiscal 2018, Broadridge is on track to achieve the 3 year financial targets we laid out at our Investor Day this past December.
We believe the combination of investments we have already made over the past 5 years to grow our governance and capital markets franchises, to broaden our product lineup and to strengthen our sales capabilities have enabled Broadridge to reinforce its strong market position and high 97% client retention rate. The value we deliver to our clients is the reason why we are in a position to report the kind of results we reported this morning and why Broadridge is so well positioned to deliver on its 3 year objectives. For example, our ability to benefit from the strong underlying growth in equity or mutual fund and ETF positions is a direct result of the investments we have made to build the complex technology and physical infrastructure that underpin corporate governance. Corporate issuers and mutual funds rely on Broadridge to communicate efficiently with millions of investors and accurately count tens of millions of votes. And when conflicts do arise, as with Qualcomm this past quarter, they know that Broadridge will ensure that their message is delivered to shareholders and that the votes we process will be counted quickly and accurately, which is what gives all parties such high confidence in the work performed by Broadridge.
Remember, if Broadridge standards were universally applied, there would never be another snake pit situation like the PNG proxy fight. In addition, Vortgage's ability to benefit from the underlying demand for our data and analytics products is a direct result of the investments we have made to integrate our data into our solution set as well as a result of tuck in acquisitions to acquire additional data products. Finally, Broadridge's Capital Markets franchise helps deliver scalable post trade processing and other technology solutions to our clients. These clients benefit from the investments we have made in enhancing our technology and processes to create integrated and global platforms. By using Broadridge, they do not have to bear the course of building and maintaining excess capacity to handle a kind of volume associated with volatile trading periods.
They know that Broadridge will provide that capacity to them on demand. The investments we have made in the past have put Broadridge in a strong position it is today, and we are continuing to invest in our business. Given the opportunities we see ahead and the combination of stronger operating results and a lower tax rate that are benefiting our results this year, we have increased investment spending over the few months. We believe these incremental investments will only further strengthen Broadridge's ability to achieve its 3 year objectives and deliver long term sustainable growth. I will now turn the call over to Tim to provide a more in-depth review of our operating results.
Thank you, Rich. Let's turn to Slide 6 for an update on the performance of our 2 segments. I'm really pleased with the operational momentum we are seeing in both of our segments, which is a testament to the strong work by our teams to align our businesses about longer term growth drivers. In both our Investor Communications and Global Technology Operations segments, these trends are driving underlying growth. At the same time, both segments are also benefiting from the uptick in market volatility that we saw in the quarter.
Let's start with Investor Communications, where total revenues rose 4% led by 5% growth in recurring fee revenues. What's really nice to see here is positive growth across all of our reported revenue product groups. Excluding customer communications, ICS recurring fee revenues rose a very healthy 7%. Importantly, Broadridge continued to benefit from strong demand trends at our core mutual fund governance products. Mutual fund and ETF interim revenue growth was 8%, which translated into healthy double digit revenue growth.
On the equity side, the impact of strong stock record growth was muted by mix shift in the quarter. But we expect these trends to translate into higher growth in the 4th quarter, which is where roughly 60% of proxy activity takes place. With visibility into more than 90% of proxy at this point, we now expect full year stock record growth to be 10%. Other ICS revenues grew 7%, led by strong growth in our mutual fund solutions and data driven products. We've worked hard to build more solutions and data oriented capabilities into our IPS product suite.
That's gratifying to see that having an impact. Revenues from our wealth management product set also rose nicely and we benefited from the acquisition of Summit Financial and from a much lesser extent than the 2 small data product acquisitions we made earlier this year, Spence Johnson and the Morningstar Fund Advisors product Constant indications revenues rose 3% in
the quarter.
Much of that growth was driven by post sale revenue as higher trading activity generated an increased volume of mutual fund prospectuses we distributed on behalf of brokers to their clients. Excluding that pickup, customer communications revenues were flat as our recent new sales wins offset lower than expected client losses. ICF event driven revenues were up 9%. Event driven revenues from mutual fund proxy activity declined from expected as we started to lap some of the larger mutual fund proxy events of the last 4 quarters. That decline was more than offset in the 3rd quarter, however, by an increase in equity related proxy activity with much of that coming from the Qualcomm contest.
Looking forward to the 4th quarter,
we expect event driven revenues to be lower than in 2017. As you know, Q4 2017 event driven revenues benefited from the proxy load at one of the largest mutual fund ETF comp losses as well as 2 large equity contests. We don't see a similar level of activity this coming quarter, especially on the mutual fund side. So we don't see a significant equity contest at the moment either. Let's turn to our GTO segment, which reported very strong 13% revenue growth.
As is typically the case, onboarding new sales in both our Capital Markets and Wealth Management clients remain the biggest overall driver of growth. During the quarter, we successfully brought a major client online with one of the biggest clearance and settlement platforms in Europe. And we brought the Japanese operations of another large global client on from global post rate management platform. Both these milestones represent significant proof points in the implementation of our new global technology platform, for which we continue to see strong client demand. Internal growth was also a significant driver.
Increased market volatility in the quarter contributed to strong internal growth with equity trading volumes up sharply across our platforms. We also benefited from increased professional and managed services. More broadly, we continue to see strong demand for our Capital Markets and Wealth Management solutions. As Rich noted, we're in dialogues with several large about transformational initiatives and our clients remain under intense pressure to grow revenues, reshape their businesses and take costs. Beyond these business model changes, a consistent theme in my conversation with clients is the recognition that new technologies are bringing additional opportunities and challenges to their businesses.
Our clients are turning to Broadridge to help them manage these technology and they see the investments we are making in digital, AI, cloud and blockchain as setting us apart from others. On the blockchain front, we continue to make investments to maximize the benefits of distributed ledger technology. After running a non risk meeting in blockchain each of the past 2 years, we now have built an end to end distributed ledger technology solution for the U. S. Proxy market and we conducted the 1st annual meeting on blockchain for North American issuer.
That process conducted in parallel to our standard technology highlighted the potential benefit the blockchain could bring in terms of automating information and increasing transparency. We have 2 more proxy blockchain books on tap for the Q4 as well. We also took a tangible step to enhance our digital communications capabilities with the acquisition of ActivePath in March. We're excited to integrate ActivePath capabilities with their existing digital products to enable our clients to more effectively communicate with the customers at significantly lower cost. Our investments in blockchain and digital communications are both examples of how Broadridge is focused on enabling our clients to get ahead of the challenges they face today, while attacking the opportunities that these shifts will present tomorrow.
Our clients see that commitment and are rewarding us for it. For me, it's an exciting time to be a broad reach between the strong momentum we're seeing in our current business and the investments we're making in new technologies and capabilities. We're making Ready For Next, a reality for our clients. Let me now turn it over to Jim for a review of our financial results. Jim?
Thanks, Tim, and
good morning, everyone. We had a very strong Q3 as our results benefited from continued strong operating trends, robust market activity, higher event driven revenues and tax benefits. I'll start my remarks with a few callouts. 1st, 7% organic recurring revenue growth. The engine of our organic growth continues to be the onboarding of new sales.
In this quarter, we also saw a nice pickup in internal growth, which drove 4 points of growth and boosted organic growth. As Tim noted, we are benefiting at the margin from a sharp pickup in our client's equity trading volumes as well as the continued growth in mutual fund interims and stock record growth. The latter matters most, of course, in our Q4 when the bulk of the proxy revenue is earned. 2nd, event driven revenues. Event driven activity was modestly stronger than anticipated.
In particular, the Qualcomm proxy contest generated a higher level of activity than we had anticipated. Looking ahead to the Q4, we expect a decline in event driven activity, as I'll discuss later in my remarks. 3rd, excess tax benefit or ETB, as I'll refer to it here. As most of you will recall, changes in accounting standards have moved the impact of the tax benefit from equity based compensation from the cash flow statement into the tax provision on the income statement. Over the 1st two quarters of the year, we realized just $3,000,000 in ETB.
In the 3rd quarter, Broadridge recorded $16,000,000 in ETB or $0.13 per share, which significantly lowered our tax provision. We are assuming a similar level of ETB in the 4th quarter as well, which would put the full year slightly above our historical 4 year average, recognizing that ETB is very volatile year to year. 4th, investment. Given the numerous opportunities we see in the market, we've increased our level of investment spend in fiscal year 2018. Incremental investments include projects aimed at enhancing our digital offerings, executing on our cloud initiative, building out our data infrastructure, supporting mutual funds and pursuing efficiency initiatives.
These investments will strengthen our business over the medium to long term. 5th and last, guidance. We are raising our adjusted our guidance for adjusted EPS growth in fiscal 2018 to a range of 31% to 35% from 27% to 31% and our guidance for diluted EPS growth to a range of 28% to 33% from 22% to 26%, and we are reaffirming our other guidance measures. The guidance reflects our strong operating results, the incremental investments we are making in fiscal 2018 and the increase in ETV. Let's move to this slide, starting with the revenue slide on Page 7.
In the Q3, total revenues grew 6% to $1,100,000,000 with growth across the board and recurring, event driven and distribution Recurring fee revenues up 8% all in and 7% organic were the biggest contributor growth of 5 points. Onboarding of new business or closed sales, as shown here, was the largest organic contributor. Internal growth contributed 4 points to recurring fee revenues growth. About 2 thirds of this came from our GTO segment, where as Tim noted, a 28 percent year over year increase in our client equity trade volumes and increased professional and managed services translated into a nice uptick in revenue. Acquisitions, primarily a combination of our Mifin solution, message automation and the Summit document management business also contributed Distribution revenues rose $9,000,000 in
the quarter,
mainly driven
by Distribution revenues rose $9,000,000 in the quarter, mainly driven by higher event driven activity and contributed another point to revenue growth. You can find the 9 month year to date revenue results on Slide 8, and I will skip ahead to Slide 9. Adjusted operating income rose 13% to $152,000,000 in the 3rd quarter. Adjusted operating income margin rose 90 basis points to 14.1%. Our margins benefited from the strong organic growth.
When we get a lift from internal growth, which is essentially a higher volume of activity over our existing infrastructure, the marginal profitability of that organic growth tends to be quite favorable. So in this quarter, the uptick in trading volumes contributed nicely to margin expansion. In addition, higher event driven revenues also contributed to growth in adjusted operating income. The impact of those higher volumes and healthy event driven activity was partially offset by the incremental investments. We expect the level of those investments to pick up in the Q4 as we close out a number of projects.
Adjusted EPS grew 45 percent or $0.31 to $1 per share. Approximately $0.12 of that growth came from the growth in core operating performance with the balance coming from a lower tax provision, including $0.13 from VTB and $0.06 from the impact of the Tax Act. Broadridge's effective tax rate was 12.9% in the 3rd quarter, down from 28.6% in the same period last year. The biggest driver of the decline in effective tax rate was a $16,000,000 ETB related to equity compensation, which lowered the tax rate by 12.5 percentage points. Excluding that benefit, the effective tax rate would have been 25.4%, which reflects the partial year benefit from the Tax Act.
Again, this kind of ETB is not unusual for Broadridge, but this is the 1st year of adopting new accounting rules for stock based compensation, which required the ETB impact to be included in the income statement rather than solely as part of cash flows. You can find the 9 month year to date operating income and EPS results on Slide 10, and I will move to Slide 11 for a brief discussion of our ICS and GTO segment results. Our ICS segment had a solid quarter with revenue up 4% and earnings up 23%. ICS recurring fee revenues rose 5% to $403,000,000 On an organic basis, revenues rose 4% with balanced growth from both net new business and internal growth. Acquisitions contributed an additional one point to ICS recurring revenue growth.
ICS earnings before taxes rose 23 percent to $93,000,000 driven by higher recurring fee revenues. Also, higher event driven contest activity compensated for the large grow over from last year's strong mutual fund proxy activity. Our GTO segment continued to perform very well, growing its revenue 13% to $235,000,000 Organic growth is a very strong 12% with only a modest contribution from acquisitions. The biggest contributor to the strong organic growth was internal growth, which was boosted in part by the impact of the higher trading volumes. In total, internal growth accounted for 7 points of overall growth.
Excluding losses, sales driven growth added 8 points, which matches the performance in the last two quarters. QTO earnings for HORTACTUS rose 34 percent to $57,000,000 and margins grew by almost 400 basis points. Revenues associated with higher trading volumes tend to carry higher degree of marginal profitability and those volumes were an important driver of the GTO segment margin expansion in the quarter. Moving to Slide 12. Broadridge generated $115,000,000 of free cash flow in the 3rd quarter $204,000,000 year to date.
We invested $18,000,000 in capital expenditures in the 3rd quarter. We also spent $33,000,000 to acquire ActivePath to enhance our digital communications capabilities across both our customer communications and governance businesses and to acquire the Morningstar Fund Advisory product line to further add to our suite of data driven solutions. As Rich and Tim have noted, we also continue to make progress in strengthening our blockchain capabilities. In fact, during the quarter, the achievement of certain development milestones triggered the payment of the final tranche of the total $135,000,000 we spent to acquire the technology assets of Imba Share, the blockchain investment we made in fiscal 2017. All in, we have deployed approximately $103,000,000 year to date for acquisitions.
Finally, we continue to return capital to shareholders in the form of our dividends. Let's turn to guidance, which was laid out on Slide 13. We are raising our guidance for adjusted EPS growth to 31% to 35% from 27% to 31% and reaffirming our guidance for recurring revenue growth, total revenue growth, margins, free cash flow and closed sales. In addition, we are raising our GAAP diluted EPS growth guidance to 28% to 33%. Let me share a few thoughts on each point.
Our recurring revenue guidance is unchanged. With Q3 year to date growth of 6%, we continue to expect recurring fee revenue growth to be in the range of 4% to 6%. We also continue to expect total revenue growth to be approximately 2% to 4%, which with 8% growth year to date implies contraction in the Q4. Our outlook assumes event driven revenues, while still on track for a record year, will decline by 30% to 40% in the 4th quarter as we lap some significant mutual fund proxy activity in Q4 of year. In addition, we do not see on our radar significant equity proxy contest similar to those at Qualcomm, ADP or PNG, although contest activity can spin up relatively quickly.
We continue to expect our adjusted operating income margin to be approximately 16% as we expect to meet our margin expansion goals while maintaining disciplined investment. The contraction in Q4 total revenues, coupled with increased investment, means that our adjusted operating income, which is up 32% year to date, will also contract in the 4th quarter. We are raising our outlook for adjusted EPS growth to 31% to 35%, up from 27% to 31%. Our revised adjusted EPS guidance incorporates our strong year to date performance, 63% growth in our outlook for the Q4. Also included in our outlook is an increase in our ETB forecast assumption to $35,000,000 for fiscal year 2018.
Our prior forecast calls for $20,000,000 of ATB. The expected $35,000,000 of ATB on a net basis would contribute $0.27 for full year EPS results. Netting this all out implies single digit adjusted EPS growth in the 4th quarter. Our free cash flow guidance remains at $500,000,000 to $550,000,000 Finally, as Rich noted, we continue
to expect closed sales to be in
the range of and $70,000,000 to $210,000,000 To close, Broadridge reported strong financial results. And with 2 months remaining, we are on track for a strong fiscal 2018.
We
are investing in our business through internal development and through acquisitions and building on the demand for our governance, capital markets and wealth management businesses. With our fiscal 2019 operating plan beginning to take shape, we are confident in our ability to deliver on these 3 year financial objectives we set at our Investor Day in December and updated last quarter. We look forward to sharing with you our fiscal 2019 guidance on our August call. Back to Rich.
Thanks, Jim. I'm on Slide 14 of the presentation. I'll begin with a quick recap of the key highlights from today's call. 1st, Vergert reported strong third quarter results. Next, we are raising our adjusted EPS guidance to 31% to 35%.
And finally, Broadridge is on track to achieve its 3 year Investor Day growth targets. To sum it up, we're pleased with our year to date performance and the operating momentum we are seeing in our business. One of the keys to our success over the past decade has been our focus on building long term value for our clients, associates and shareholders. Our 3 year objectives play an important role, reminding us of that. When we sign long term contracts, either in our governance franchise or in our capital markets franchise, we're making a commitment to our clients that we'll provide high quality services over the next 5 to 7 years, and we are also implicitly committing to reinvest in those services and ensure that we are integrating new technologies into our product set.
Today, these technologies include cloud based applications, blockchain, AI and digital capabilities. Our proven track record of delivering innovative and differentiated solutions to complex challenges that drive long term value sets us apart from our competitors, and it's why I believe our 97% retention rate has room to improve. That longer term focus is why we have increased our level of investment over the course of this year. As CEO, in a year with strong performance, it is an easy decision to make these investments, especially when I consider the growth opportunities in our governance and capital market franchises as well as in wealth management. It's an easy call.
One example of these investments is our acquisition of ActivePath last month. ActivePath's innovative digital technology will allow our clients quickly compose and project the kind of digital content typically found on brand websites and apps into interactive email with new levels of personalization, engagement and security. The ActivePath acquisition represents another step forward in the creation of a powerful omnichannel communications platform for our clients. Investments like ActivePath, along with other ongoing investments in new technologies like blockchain and AI and enhancing our fixed income network capabilities are a key reason why Broadridge is well positioned to deliver long term value to our clients and shareholders. I'm proud of our associates and the business we have built over the past 3 decades here at Broadridge.
However, when I think about the potential opportunities that these investments represent, I have to believe that we are only just getting started into making Broadridge all it can become. I've said it before and I'll say it again today, it's really a great time to be at Broadridge. Before I turn the call over to Q and A, I want to thank my fellow Broadridge associates. Their commitment to the service profit chain is the driving force behind our success. Now let's take your questions.
Your first question comes from David Togut with Evercore ISI.
Good morning. This is Anthony Cyganovich on behalf of David Togut. I was hoping could you quantify your prospect pipeline of potential new equity and fixed income trade processing contracts?
I'm going to start
it off here. So I believe what you're referring to is the sales activity. And so again, we continue to feel very good about the pipeline we have. We believe that's directly correlated to the investments that we make in the business.
I'm going to ask Tim to
comment a little bit more about how those relationships are expanding with our clients because of these investments we're making. But overall, the ability to retain clients because of the quality of the service as we have and the technology we're adding and the ability to attract clients, whether it be for those loss sheet that aren't on some of our products already, as well as new offerings we have continues to be stronger. Tim, why don't you specifically talk about how these relationships are
growing even deeper? Yes. And just as a direct answer to the question, because our sales cycles are long, if you look at our pipeline, it is multiples of what our annual sales are. And so you have to really sort of take the next layer down. And I think the great news is that we have a strong pipeline across each of our franchises, governments, communications, capital markets, wealth.
Across
all of these,
what we're seeing is clients continuing to need to transform their business to grow revenues to reduce costs. And we're seeing that with existing clients, we're seeing it with new clients. It's a mix of both near term and long term deals and that's a mix that we obviously like.
Great. Thanks. That's helpful. Just as a follow-up, could you talk about your acquisition pipeline now that you're nearly 2 years post the completion of the DST and ACC business?
Sure. Well, first thing I want to say is
that our commitment to be good stewards of our shareholders' capital remains unchanged. So we've been very happy with our efforts to date and its ability to contribute value. The standards of having one clear strategic fit, so that we're viewed as being the logical owner, all right, and an appropriate owner where we can leverage our strong brand and distribution channel remains a clear criteria. 2, we set a pretty high financial return standard there as well. And so candidly, I would have continue to execute against the strategy that has served us very well.
Great. Thank you.
And the next question comes from Peter Heckmann with Davidson.
Just following up, it looks like CD Ameritrade completed the SnapTraderie conversion. I just wanted to see if you had said, wait till that closes, we'll give you an update. So any update there and any contribution in the quarter that is worth calling out?
I'm sorry, Peter, was that a question about Scott Yes, I'm sorry, yes. Yes, well, that continues to be pretty much the same as we have discussed previously. It is that deal closed and we continue to receive payments from the new owner and continue to be in discussions with them about longer term how we'll work together. So there's not really any change to that from what we previously discussed.
Okay. Okay. And then just you alluded to this in your comments on the Q4, but you're looking at it appears to be the event driven proxy business probably generated revenue around $280,000,000 in fiscal 2018 and that's about $100,000,000 more than your 6 year average in that business. Just based on market trends and other dynamics, preliminarily, would you assume for fiscal 2019 that the venture in proxy would revert to that multiyear average? Or are there things going on that may lead to stronger event driven proxy compared to the prior 6 years?
Pete, this is Jim. As you say, 2018 is shaping up to be a record year, which is terrific. We love it when this revenue comes in. We don't entirely anchor our business off of this. So we look forward to updating in August.
But as we think about '19, clearly, there's enough activity, but we look more broadly across the whole business, including the strong recurring revenue growth and the sales activity, which should set us up pretty nicely for next year and really our 3 year horizon.
And I'd add that I've been doing this now pretty close to 4 decades. And event driven, although not as predictable as the strong percentage of recurring revenue we have, has consistently grown and it's terrific in that it's going through a relatively cost infrastructure, and it's adding value at a very nice rate, which gives us lots of flexibility to do other things, including the investments. So from my point of view, event driven for a very, very long period of time in my career has been a high quality additive, has consistently grown over that period of time. There may be a little bit of year to year blipping here and there. But I anticipate that it will continue to grow.
And with technology, we'll even have more opportunities to bring new activities into some of these dialogues. For example, in proxy contests, social activity should give us some very good opportunities as we go forward, not just for a proxy contest, but also for giving issuers a better way to communicate with their base in the way that these consumers and shareholders are used to getting communications.
Okay. That's helpful. And just to clarify then, you're saying you believe event driven will grow from this stage in fiscal 2018 in 2019 or it will grow over time?
Rich, it will grow over time. We think a long term perspective has grown very nicely over time. We'll give you our latest thinking in August on what we think next year. But I think the real takeaway, Pete, is the business is really well balanced right now and we think we can achieve our growth objectives through a variety of ways.
Yes, yes. No question. The rest of the business doing quite well. I just wanted to clarify that issue.
Your next question is from Chris Donat with Sandler O'Neill.
Hi. Good morning, gentlemen. It's Chris Donat here. I wanted to ask first on the closed sales guidance because it implies that your June quarter would be a record quarter of something like $70,000,000 to 110,000,000 dollars I guess, Rich, what I'm curious about is you sound very confident about it. How do you feel about the timing of this?
Do you really care if it's a June quarter event, given that it appears that you got a lot of large deals in there?
So Chris, first of all, my cardiologist isn't that concerned yet because there's a reasonable amount of time to go and we've had significant 4th quarter sales closed activity, for the majority of years, I've been running Broadridge and running the business. So it's some degree nature of the beast. 2nd of all, what we have is we have multiple ways we see in which we can achieve our targets for the year, and we're pursuing all of those.
Okay. And then just because it sounds like you do have some larger closed sales out there, Are those the sort of things that might not hit FY 2019 revenues as it takes a while to implement them? Or am I thinking about them as being too big if that's
So I'll break it into 2 parts, Chris. So first of all, we see on the multiple tasks we have to achieve the targets, there were some very large deals that we're looking at, but we see ways clear ways to achieve the guidance without the largest of deals. With that said, we'd like all of it to happen, but it will play out over the time. So now for the larger the deal, generally speaking, that would mean a longer conversion period. One of the things I specifically pointed out in my comments was the closed sales backlog we have right now yet to be implemented gives us confidence as we look at 2019 and even over the next 12 to 18 months.
So I really like what we did at Investor Day, where Jim gave you some insight into that sales backlog. And we're discussing how we can make that something more consistent we can give you. Hopefully, we'll be there when we talk about 2019 or during the 2019 fiscal year.
Okay. And then one question for Tim. Tim, you commented that full year stock record growth looks like it will be around 10% for the fiscal year. Any commentary? I mean, it's been better than it has been in some recent years.
Any commentary on what's likely driving that growth?
Yes. I think, as you know, this has been for long term trends here have been pretty steady and the long term trend is sort of mid single digits. It's above that right now. I think the market have been very strong this fiscal year. The leading indicators that you tend to see here are fund flows.
That's sort of an example of sort of driving into the sort of the retail side. I think the other factors above sort of the overall market activity in addition though are the continued growth of managed accounts, the continued growth of global advisors, which tend to create additional positions above and beyond market activity and those are trends that we see continuing.
Got it. Thanks very much.
Your next question is from Puneet Jain with JPMorgan.
Yes. Hi. Good quarter, guys. Can you update us on the $250,000,000 backlog you disclosed in December? Maybe qualitative comments there will be helpful.
And also if you can talk about how is backlog converting into revenue?
Yes. Hi, Vinit, it's Jim. The backlog, as Rich mentioned, we'll plan to sort of try to give you some visibility. But in short, as you recall, we talked about, as of December, about $250,000,000 in backlog. We continue to chip away at that, continue to add sales.
It's probably right now at equilibrium as we add more and convert more. Obviously, with this Q4, we hope to build significantly on that backlog. As Rich mentioned, it gives us great visibility into next year and even into 2020, which puts us in a really good position for planning, in particular investments, which is great. And then sort of as we think about the onboarding that we're seeing, we've really had some strong contributions from those closed sales numbers. In particular, I mentioned GTO growing 8% on a closed sales basis from revenue.
So that's a really high rate of ads. And if we think about all in for Broadridge, we've been in the neighborhood of about 6 points of growth coming from our closed sales. So continues to produce really strong revenue growth and obviously the visibility that comes with
it. Got it. And it's been almost a year since NACC client issues. How should we think about long term growth in that business? It seems like a great strategy.
So is it just about adding logos? Or is there anything else you need to do to get there?
Yes, Puneet, this is Tim. And look, we feel very pleased with the progress. We were pleased to see our customer engagements turn to growth this quarter. I think longer term, we are continuing to see a lot of client belief in our thesis around omnichannel communications delivery, which is on the physical side, but also on the digital side. And that combination, we're seeing a lot of appetite both in client discussions and in our sales pipeline.
And so while the next few quarters with implementation timelines and with the little bit of uncertain timing of the runoff of a significant client that we knew was leaving at the time of the acquisition. The next couple of quarters are a little difficult to predict. But long term, we feel very nice about the thesis and we feel very nice about the long term growth prospects there.
Got it. Thank you.