Broadridge Financial Solutions, the technology firm which provides proxy processing services for more than 90% of public companies and mutual funds in North America, has been hit by what it termed an unprecedented decline in mutual fund “event-driven” revenues.
The New York-based firm said today that net earnings from continuing operations slumped to $11m (€8m) in the fiscal second quarter – 79% lower than the $52m posted in the same period a year ago. Revenues were down 16% to $442m.
“The second quarter operating results are disappointing as a result of the unprecedented cyclical decline in mutual fund event-driven revenues,” said chief executive Richard Daly in a statement.
He pointed out that event-driven revenues are cyclical and difficult to predict.
The earnings slump was a “disappointing one-timeevent”, Daly added – and predicted that 2011’s second-half results would be “significantly greater” than the first half. But he said the firm’s core business remains strong and “has performed within expected ranges”.
As a result, it has changed its forecast for how much its event-driven mutual fund revenues would decline.
It now reckons they will fall by $175m in the 2011 fiscal year, against the $75m fall it had earlier predicted. It also cut its earnings per share forecast to the $1.30-1.40 range.
But the firm does not believe there has been a “secular change” in the causes of mutual fund proxy campaigns, the main drivers of its event-driven revenues.
Late last year Broadridge, spun out of Automatic Data Processing in 2007, signed an alliance with IVOX, the Germany-based proxy voting firm.
Broadridge’s earnings announcement