Yahoo Finance

Ashima Ghei

Thanks, Tim. Good morning. It's great to be here with you today.
I'll start with the headline, which is that Broadridge delivered strong third-quarter results, including 8% recurring revenue growth constant currency and 9% adjusted EPS growth. And just as importantly, we remain on track to deliver another year of steady and consistent growth in fiscal '25.
Before I dive into my discussion of those results and our guidance, I want to make four call-outs. First is revenue. Our third-quarter recurring revenue includes the impact of two headwinds: the first is FX, and the second is the movement of a meaningful wealth management license renewal into the fourth quarter. Taken together, these two items represented a 160-basis-point headwind to our reported third-quarter recurring revenue growth. Second, we continue to take a disciplined approach towards managing our expense base. During the quarter, we made the difficult decision to reduce our distribution footprint by closing a print operation in our Customer Communications business, resulting in a $5 million restructuring charge.
My third call-out is that as of last week, we have records for over 90% of proxy positions for the full year, which, when combined with our recurring revenue backlog, gives us a high degree of confidence in our full-year recurring revenue and adjusted EPS guidance, even in this uncertain environment. Finally, capital. We are on track to deliver on our free cash flow conversion target for the year, giving us significant flexibility to pursue our balanced capital allocation strategy.
With that, let's go into the numbers on slide 6. In the quarter, recurring revenues grew 8% on a constant currency basis, driven by 6% organic growth and 2 points from our acquisition of SIS. Adjusted operating income grew 10%, driven by strong organic recurring revenue growth. AOI margin rose 100 basis points to 22.4%, and adjusted EPS increased 9% to $2.44. Finally, we delivered closed sales of $71 million, year-to-date sales, $174 million.
Let's move to slide 7. Third-quarter recurring revenue grew 8% to $1.2 billion, in line with our full-year guidance for 6% to 8% growth. Our growth was primarily driven by new sales, balanced across ICS and GTO, as well as internal growth from higher trade volumes and higher positions.
Let's turn to slide 8 to look at the growth across our ICS and GTO segments. ICS recurring revenues rose 6% to $740 million. Regulatory revenues grew 6%. 15% growth in equity positions was driven by a healthy 11% growth in equity revenue positions, with the balance coming from the strong growth in smaller non-revenue positions that Tim highlighted. Fund position growth was 6%. Overall revenue growth from strong position growth was offset by mix, including slower growth in international.
Looking ahead to the fourth quarter, we expect mid-teens equity position growth, including low double-digit equity revenue positions, as well as mid-single-digit fund position growth. Together, this should drive high single-digit regulatory revenue growth.
Data-driven Fund Solutions revenue increased 8%, driven by double-digit growth in our data and insight products. Issuer revenue growth of 2% was driven by strength in our shareholder engagement solutions, partly offset by a modest decline in disclosure solutions revenues.
Customer Communications revenue growth was 5%, led by double-digit growth in digital revenue as we continue to execute our print-to-digital strategy. Overall, we continue to expect full-year ICS recurring revenue growth to be in line with our 6% to 8% recurring revenue growth guidance range for the full company.
Turning to GTO, revenue grew 11% to $464 million. Capital Markets revenues grew 10%, driven by strong growth in both our global post-trade capabilities, which benefited from higher trading volumes, as well as our BTCS front office solutions. Higher licensed revenue contributed 3 points to Capital Markets growth in the quarter.
Wealth & Investment Management growth was 13%, driven by the acquisition of SIS, which more than offset a 3% decline in organic revenue growth, driven by lower licensed revenues. Lower licensed revenue included a 5-point headwind to Wealth Management organic growth from the license renewal shift from Q3 to Q4 that I highlighted in my opening remarks.
In Q4, we expect strong Wealth Management growth, driven by high single-digit organic growth, including that timing benefit from licensed revenue and continued contribution from SIS. For the full year, we continue to expect overall GTO recurring revenue growth to be in line with the 6% to 8% recurring revenue guidance.
Now, let's move to slide 9 to review our key volume indicators. Broadridge continues to benefit from strong growth in investor participation across both equities and funds. Third-quarter equity position growth was 15%. For the full year, we now expect mid-teens equity position growth.
We are now in the peak period for annual meetings. As of last week, we have received record data for over 90% of proxies expected for this fiscal year. These records, combined with our testing, give us a high degree of confidence in both our position growth and revenue outlook.
Finally, based on recent trends, our forecast calls for low double-digit growth in equity revenue positions. Mutual fund and ETF position growth was 6% in the third quarter. We expect a similar level of growth in the fourth quarter. In GTO, trade volumes rose 14% on a blended basis, led by double-digit growth in both equity and fixed income trade volumes. Strong trade volume growth continued into April, and we expect continued double-digit growth in the fourth quarter.
I'll wrap up my discussion of recurring revenue growth on slide 10. Revenues from closed sales remain the biggest driver the biggest driver of our recurring revenue growth at 5 points, as we onboard revenues from our $450 million year-end backlog. That growth was partially offset by 2 points of losses, resulting in a revenue retention rate of 98%. Internal growth contributed 2 points, primarily driven by fund and equity position growth and higher trading volumes. As a result, organic revenue growth was 6%.
Acquisitions contributed 2 points, primarily driven by the revenue from SIS. Finally, changes in FX reduced our reported recurring revenue growth by 90 basis points, driven by the decline in the Canadian dollar relative to the US dollar. The 90-basis-point third-quarter headwind from FX marks the largest quarterly impact since fiscal '23. Given the recent weakening of the US dollar, we see a much more subdued FX impact outlook going forward and a headwind of only 20 basis points for the full year, versus our constant currency guidance.
Let's close this discussion of revenues on slide 11. Total revenue increased 5% to $1.8 billion, driven by 5 points of growth from recurring revenues. Event-driven revenues declined $14 million to $53 million, as we lapped two notable proxy event contests in Q4 of last year. We expect fourth-quarter activity to be in line with our $55 million to $60 million historic quarterly average. Low-to-no margin distribution revenues grew 4%, contributing 1 point to total revenue growth, as the approximately $32 million impact of postage rate increases more than offset lower mail volumes.
Turning now to margins on slide 12. Adjusted operating income margins was 22.4%, an increased of 100 basis points, driven by the operating leverage from higher recurring revenue. This was impacted by a 10-basis-point headwind from changes in float income and distribution revenues.
During the quarter, we recognized $11 million of non-GAAP acquisition, integration, and restructuring charges. $5 million of this was related to the closing of the print operation I noted earlier, with most of the remaining related to the integration of our SIS acquisition.
As I noted in my opening remarks, we are committed to maintaining our expense discipline while continuing to deliver strong returns to our shareholders and funding reinvestment in our business. That's enabled by the operating leverage in our scale business, which provides the flexibility to manage our expense base across market cycles. For the year, we remain on track to generate 50 basis points plus of underlying core margin expansion.
Let's move on to sales. Closed sales were $71 million, $8 million lower than Q3 '24. Year-to-date sales are $174 million, compared to $185 million last year. Fiscal '24 closed sales benefited from strong sales of our Tailored Shareholder Reports solution, which fund companies were required to implement last July. Excluding TSR sales, closed sales rose 9% for both the quarter and the year-to-date period.
Turning to our cash flows. Q3 free cash flow was $337 million, an increase of $170 million from Q3 '24, driven by higher earnings and modestly lower capital investment. Year-to-date free cash flow was $393 million, versus $259 million for the first nine months of fiscal '24. We continue to expect free cash flow conversion of 95% to 105% in fiscal '25.
Turning next to capital allocation on slide 15. Year to date, we have deployed $78 million in capital spending and software and returned approximately $300 million to shareholders via our dividend. Platform investments were $9 million, as we continue to work with clients to manage our onboarding spend. We have also deployed $193 million for targeted M&A investments, primarily to purchase SIS. As I noted earlier, our strong balance sheet and capital-light business model give us significant flexibility to continue to fund growth investments, pursue value-accretive strategic M&A, and repurchase shares.
Let's conclude by reviewing our full-year guidance on page 16, followed by closing key messages. With two months left and high visibility into fiscal '25 position growth, we continue to expect recurring revenue growth constant currency of 6% to 8% for the full year, with only a modest headwind from changes in FX rates. We expect our recurring revenue growth to be balanced across both our ICS and GTO segments.
We also continue to expect fiscal '25 AOI margin of approximately 20%, and adjusted EPS growth in the middle of our 8% to 12% range. We now expect closed sales of between $240 million to $300 million. And I will also note that we continue to expect free cash flow conversion of 95% to 105% of adjusted earnings.
To bring all of this together and highlight what it means for our financial objectives, I will share some concluding thoughts. First, Broadridge reported strong third-quarter results. Second, we remain very much on track to deliver strong fiscal year results, including 6% to 8% recurring revenue growth and adjusted EPS growth in the middle of our 8% to 12% guidance range.
Third, and probably most relevant for the environment that we are in, I want to emphasize the resilience of our business model. Broadridge has a long history of delivering consistent, sustainable recurring revenue growth. The combination of recurring revenue growth and the operating leverage in our scale business allows us to drive margin expansion and earnings growth while funding growth investment. We've done this across multiple three-year cycles, and we are on track to do it again.
With that, let's take your questions.

Question and Answer Session

Operator

(Operator Instructions) Dan Perlin, RBC Capital Markets.

Dan Perlin

Thanks. Good morning. I wanted to just maybe touch on the demand environment a little bit more closely. It sounds like there's this dichotomy where you've got client demand that's there, and now, maybe you're starting to get a sense that there's a little bit of a pause in willingness to make these investments. Tim, I know you called that out a little bit in your prepared remarks, so maybe you can just dive a little bit deeper into those conversations and what maybe some of the nuances are.

Timothy Gokey

Yeah. Thanks, Dan. And I think this is the one that we ourselves have been really looking at and talking about amongst ourselves. First of all, we're really pleased with our performance year to date, excluding the Tailored Shareholder Reports sales. As I said earlier, we grew 9% in Q3 and year to date, and that puts us right in the middle of our full-year sales guidance as of the end of Q3.
And we're just trying to interpret what we're seeing over the past few weeks, but I think it's somewhat the same as what others are seeing, which is there is a fair bit of uncertainty out there. And so we think that is -- we only have a few data points here because it's literally only been a couple weeks since April 2, but we think we're seeing an elongation in our closing process.
I had a conversation last week with the CEO of the investment bank of one of our major global clients, and I just asked them what are they thinking, what's their conversation around their executive table. And they said they're continuing to move full speed ahead on anything that reduces cost or simplifies operations, but that they are taking more of a wait-and-see approach on investments and new revenue opportunities.
Now, I think the good news is the vast majority of our work falls in that bucket of cost and simplification, and we don't know how long this period of elongation will last, but as you know, a large proportion of our sales fall in Q4. So even a couple of weeks could make a material difference in what our Q4 is. We're not seeing any clients walking away from deals or not losing any mandates.
If you look at our pipeline, the vast majority of it is deep in negotiations. And I've said before, if something happens in June or it happens in July or it happens in August, it doesn't really make that much difference in terms of our long-term growth and that our revenues for next year are really broadly locked already based on the backlog that we have.
So this isn't a '26 revenue issue. It isn't a long-term growth issue. It's certainly not a demand issue. The pipeline is very strong. Origination activity continues to be very strong. It's just we want to just be cautious here about this elongation that we're seeing.
Last thing is just I really like the areas where we're seeing the momentum in the pipeline. It's the areas that we've been investing, and it's the areas that will help our clients in an uncertain environment: omnichannel communications, which is with the wealth and focus that we've talked about, which is helping people to move to digital, saving them money; data analytics, which is helping them target their sales force; front and back office simplification, which is bringing lower cost, better operations, modernization to our clients; Distributed Ledger Repo, direct cost saving; everything we're doing on the Wealth side similarly.
So I really like the areas. And again, we feel great about the demand. We're just being cautious on what's going to happen over the next few weeks.

Dan Perlin

Yeah. No, that's great color. Just a quick follow-up, if you wouldn't mind. On the equity position growth and the call-out between kind of smaller positions, not really driving revenues, but over time, that is expected to build versus kind of revenue producing. Again, can you just maybe tease out a little bit the nuance there and how that is, again, going to impact the business maybe going forward? It seems like that position growth could stay elevated, but the revenue piece of that. So I'm just trying to make sure that we understand maybe the spread differential between revenue producing versus not. Thank you.

Timothy Gokey

Yeah, thank you. And that's, again, one -- we've talked quite a bit in the past about model-based investing and direct indexing and how we thought that would be something that would be -- help us sustain over a long period sort of the high single-digit growth that we've always talked about for positions. But we hadn't really seen it in the data.
And the reason we called it out this quarter is because we really are beginning to see it. And so what we've seen is the same very robust growth in the revenue positions, double-digit, which is very pleased to see that. But then on top of that, we saw quite rapid growth in these smaller positions. And we're still teasing all of that out. It's interesting to think about is building up -- pretty soon, we'll be talking about a position backlog because we're building up the set of small positions that are becoming material now that as those begin to scale, they could begin to bleed into revenue positions.
I'm not going to sit here and say I think that is yet something I would talk about as a major source of future growth. But I do think it's supportive of the long-term trends of the upper-single digits that we've always talked about. And then, we're in a more robust period right now. And so we really like it. And we wanted to call it out and also call out the way it just shows the system is working both for investors and for the other stakeholders.

Dan Perlin

Excellent. Thank you so much.

Operator

Scott Wurtzel, Wolfe Research.

Scott Wurtzel

Hey. Good morning, guys. Thank you for taking my questions. I just wanted to go with one on the sales to start. I'm just wondering when you're seeing these elongations potentially in the sales cycles, is that happening in specific product lines or geographies?

Timothy Gokey

Scott, thank you. Not as far as we can tell right now. We're still parsing through the data. And again, we have literally three weeks of data points, and it's sort of almost day by day in terms of things.
But there's not anything that I can point to and say, wow, it's falling off the table over here. It's really something that we're continuing to monitor. I will be somewhat embarrassed but happy if we come back here in June and say, oops, it was all nothing and everything closed the way we expected it to. But it's just something that we're watching and being cautious about.

Scott Wurtzel

Got it. That's helpful. And then just one quick follow-up on the margin side of things. The margin expansion you drove during the quarter was pretty strong still holding your guidance for the year. So just wondering as we think about the fourth quarter, are there incremental planned investments maybe or anything with the revenue mix that we should be thinking about?

Ashima Ghei

Yeah. Scott, great question. I'll remind you, we're a full-year company. We plan our business. We look at our business from a full-year perspective. And within that context, we look at driving margin expansion, funding incremental investments, all with the aim of delivering what I already shared. We're looking to deliver earnings at the midpoint of our 8% to 12% earnings guidance.
So in that context, I'll think about margins almost as a means to an end. We are absolutely investing in our business, and we do expect high levels of investment spend in Q4, which could translate into some margin impact. But we're really focused on the full year and delivering at the midpoint of our 8% to 12% guidance.

Timothy Gokey

Yeah, and I'll just add to that. We're an organic growth company. We invest to drive that organic growth as we've delivered consistently over the past 10 years. And when I look at the areas, whether it's omnichannel communications, data analytics, front-to-back office simplification, the wealth side, we have a whole set of things that we think are really exciting for our clients that we're investing in. And when we have the opportunity, we take that.

Scott Wurtzel

Great. Thank you, guys.

Operator

Michael Infante, Morgan Stanley.

Michael Infante

Hi, guys. Thanks for taking our question. I just wanted to circle back on Dan's earlier question, just in terms of the differential between equity position growth and revenue growth. Is there a way to quantify what revenue growth maybe would have been if the size of positions was more in line with historical trends? I just wanted to clarify just because the comp in 3Q in regulatory was quite a bit easier than what you faced in 2Q of last year. Thanks.

Timothy Gokey

Yeah, I think the -- and I'll let Ashima add on to this, but I think it's -- I'm thinking about it as less about the sort of the proportion, and it's more about we saw really the growth in revenue positions that we expected and then we had this add-on of other positions.
But Ashima, why don't you add on to that?

Ashima Ghei

Oh, absolutely. So let me try to break this down for you, Michael. So if you think about the drivers of growth, specifically in our regulatory business and in our revenue growth, like I said in my remarks before, equity position growth was 15%. Having said that, equity revenue position growth was 11%. That is the part that contributed to the revenue growth. And additionally, we saw 6% growth in fund positions.
I'll just reiterate what Tim already said. This higher participation in the smaller positions is a positive for us in the long term when the accounts grow in size, but they don't help our current revenue. So 11% is the number you should have in mind.
Moreover, when you think about our regulatory revenues, only 75% to 80% are directly impacted by equity and fund position growth, with the balance being in other regulatory communications and our international proxy business. And these other businesses were a little slower than the position growth in the quarter.
So hopefully, that gives you context in bridging our regulatory position growth. I will also add that if you look at last year, I know there was a little bit of timing, Q3 versus Q4, there's nothing material that I have to call out this quarter in terms of seasonality across quarters.

Michael Infante

Okay, very helpful. Maybe just on some of the license activity. I know there are obviously some comp dynamics. Tim, I think in the past, you've mentioned there could be an opportunity to sort of smooth some of the quarterly revenue volatility from license renewals by switching to more of a subscription model. I know it's still -- license is still only a low single-digit percentage of your overall recurring revenue. But where are you just in that journey from transitioning from license to subscription? Thanks.

Timothy Gokey

Yeah. Typically, where this happens is areas where we've made acquisitions and where those acquired companies were less mature than we are and we're operating more on a license model. That's typically often companies earlier in their growth phase operate with that business model.
And when we do that, we begin to try to work clients over to a SaaS model, but that takes time. And in this quarter, particularly on the Wealth side, there was a significant transaction that will close in the fourth quarter. We had expected to close in the third. That caused a change this quarter and we'll see the benefit of that next quarter. So I think we're well advanced, but we're there continues to be a tale of these things that -- and every time it comes up for renegotiation, we have that conversation.

Ashima Ghei

Yeah. And you already said this, Michael, but I'll just reiterate. You're right. For the full year, license revenue is like less than 5% of the GTO revenues. So completely agree with your sentiment there. It doesn't really have a material impact on our revenue growth for the full year. It creates quarterly noise, as you're well aware.

Michael Infante

Thank you.

Operator

Puneet Jain, JPMorgan.

Puneet Jain

Hey. Thanks for taking my question. Tim, totally agree that timing of bookings doesn't impact medium-term growth rates, but can you also recap what the new administration policies and priorities, such as deregulation, potentially fewer disclosure requirements could mean for Broadridge?

Timothy Gokey

Yeah, absolutely. And if I think sort of broadly about the evolving regulatory environment and what that means for Broadridge, I think when you think about the big issues that the administration is pursuing around tariffs and trade and cultural issues, those really don't affect us and really that much our financial services clients.
I think that the biggest thing right now, Paul Atkins has now been formally installed at the SEC. The SEC is the area that is really the area that affects us the most, and it's in good hands. And we think that we can make a positive contribution in the policy areas that touch us, including in digital assets, in shareholder engagement, in digital delivery. And so we're actually very positive on where that's going to go.
If we think about digital assets, obviously, there's a lot that the administration is doing, also the SEC is doing. They've had many roundtables asking for industry feedback. We think the opportunity there is, as we've talked about, that when there's good disclosure, it really is good for innovation, helps investors have the confidence.
And so there is some debate inside the digital asset industry about how much disclosure to have, but we've provided views on that. And it won't surprise you to hear that we have a product that could help solve that, that we are talking to people about. It's live with a couple of the exchanges. And so we think that's an opportunity for us.
The other -- another area is around shareholder engagement proxy reform. We're continuing to see growing interest in our Pass-Through Voting solution as the passive managers are looking to extend voting preference choice to their end investors. We're also creating a data-driven voting solution that would allow people to have an alternative view to the proxy advisory firms.
Now, we're not a proxy advisor and won't be, but we can provide the data and technology behind that. And another issue that I think could come up over the next few years is around digitization, where we've made huge investments to really improve the investor experience and help make it more cost-effective for industry, and we're partnering with the industry on moving that forward.
So I think across all those areas, the common theme is, yes, there's regulatory change. There's a big agenda out there, and the pipeline to get it all done is not that big. But we can help the industry move forward with technology. And so we always think about private market solutions with technology to help achieve the objectives that really focus on both sides of the aisle have around making investments better for all investors and all stakeholders.

Puneet Jain

Got it. No, that's very helpful. And then, like the work that's being delayed, like the closed sales that are being delayed, are these typically long implementation cycle type of deals, or are these like the quick, short-term deals, which could have generated revenue in fiscal '26 as well? I'm just trying to think about the waterfall impact, like if things remain weak in bookings, for more than a quarter, like the waterfall impact on revenue.

Timothy Gokey

Yeah. I think, Puneet, we're not seeing the -- we're not seeing any particular area be impacted. So it's hard to say across all of our sales, probably the in-year conversion is call it a third. I think, actually, the shorter-term sales tend to be simpler and are less affected by uncertainty. So I don't have the data to tell you, but my hypothesis would be that it's actually the more complex, longer sales that are longer conversion sales that are more impacted. But I don't -- I'm not looking at a sheet of paper telling me that. I'm just intuiting that.

Ashima Ghei

Yeah. Puneet, let me just add, let's put it in perspective. If you look at the midpoint of our prior guidance versus the midpoint of our guidance now, we're talking about $40 million of sales. Even if all of that were to impact revenue, that's way less than a -- that's less than a percent of our recurring revenue.
To a fraction of that, given what Tim just said, most of our conversion cycles range between 12 to 24 months. The impact for near-term, in terms of the revenue for the fall that you were expecting, would be very fractional, less than a quarter of what the full-year impact. And we're talking about a delay here, not reduction, so I really wouldn't expect much of an impact over the longer term either.

Puneet Jain

Yeah. No, understood. Very helpful. Thank you.

Operator

Patrick O'Shaughnessy, Raymond James.

Patrick O'Shaughnessy

Hey. Good morning. Starting out with your Wealth platform sale that you mentioned, can you give a little bit more color on what's within that suite of solutions that you sold to that client?

Timothy Gokey

Yeah, Patrick, thank you very much. It is -- the core piece is, I'll call it the Wealth Operating Model, that is the data layer that allows the client to connect different things that they are building with things that we're building with the third-party solutions. I'll call it the Wealth Operating System. And then there are components on top of that, several components on top of that. And in fact, there are future opportunities for additional components later on. So I think we're excited about them pursuing this.
It is interestingly -- I think if I were on the other side of the call, I might be concerned about, oh, is this a large deal that is going to have a significant onboarding cost? And I can tell you with confidence that that's not the case. This is technology that's already built. There's a little bit of conversion. There's some upfront charging. So it's not really something I think you're going to see any sort of a big impact on.
And then just beyond this sale that I did call out, I just -- I didn't say it before, but I would be remiss if I didn't mention now. So we have these 34 components that are currently live. We have 40 others that are in the process of being onboarded with other clients. So that's one of the things that makes us feel really good about -- it's not just this one sale. It's pretty broad in terms of the demand that we're seeing.

Patrick O'Shaughnessy

Yeah, that's very helpful. Thank you. And then, I apologize if I missed this earlier, but did you provide any color on kind of current position count growth trends, what your early testing for next fiscal year looks like in light of recent market weakness?

Ashima Ghei

Yeah. So I'll just give more color here. Looking into Q4, we're expecting low-double-digit equity revenue positions, remember revenue positions, and mid-double-digit equity position growth. And we're expecting continued mid-single-digit fund position growth.
We feel good about the full year given that we already have records for 90% of the positions and frankly haven't seen any real impact during the month of April in spite of the volatility. Talking about FY26, we're seeing strong trends for '26 as well. We didn't share any specific numbers yet.

Timothy Gokey

And Patrick, just we do get data sort of each week that adds incrementally on to what we know. And so each week in the month of April, we're seeing incremental impact on this, and we haven't seen any fall-off or any material change.

Patrick O'Shaughnessy

All right. Terrific. Thank you.

Operator

Peter Heckmanm, D.A. Davidson.

Peter Heckmann

Hey. Good morning. Thanks for taking the question. Tim, I didn't hear you mention it, but do you have any early thoughts on some of the public-private kind of retail investment vehicles that are being discussed that would basically create a hybrid product? I'm not sure exactly how they would be created, but do you see that as an opportunity? And would there be any unique accounting needs?

Timothy Gokey

Yeah, Peter, it's a great question. It is. Certainly, as we talk to our fund clients and as we talk to ICI, one of the things that the fund industry is very focused on is giving, and the administration is focused on, access to more retail investors to private assets. And one of the ways to do that is by lowering what it is to be a qualified investor and things like that. But another route that's very promising is increasing the amount of private assets that are available inside 40 Act and ETFs.
And that is something that that we think would be positive for us. That's sort of the part of the industry that we're focused on. And we frankly think it's a good thing for investors because when you I have invested in some of these private assets myself personally, and it is really complicated, and the paperwork back and forth. And then I feel as me, and I feel like I'm pretty sophisticated, but going up against someone who's really sophisticated.
And so the giving access to investors to these assets, but doing it with professional management representing you is a better way to invest. And we think that will be as that evolves, that can be a real opportunity, as Larry Fink talked about in his letter, for people to and retirement folks to participate in private assets, but to do it in a sort of safe and very professionalized way. And that will be a benefit to the 40 Act and ETF part of the industry.

Peter Heckmann

Okay, that's helpful. And then just lastly, any thoughts on kind of the M&A pipeline, whether there's -- you view this as a relatively attractive or unattractive market to go hunting for tuck-in deals?

Timothy Gokey

Yeah, I think it is -- the M&A market is pretty uncertain. I think we -- everyone began the year thinking there'd be a lot of things out there. And that is just less clear right now in terms of scale. And we certainly have seen people put processes off.
That said, there are opportunities. I think as you and I have talked about in the past, a pretty significant portion of our deals have been proprietary deals where it's sort of a unique situation, which is one of the ways we've gotten really good value. And so there are opportunities like that.
If you see us do something, it's really the principles we have whether it's this environment or a different environment, are really the same, which is we're an investment-grade company, we do our internal investment, we pay a good dividend, and then we do look for M&A opportunities. But if we don't find them, we're very happy to do share buybacks. So if you see us execute, it will be because there's something compelling. And if you don't see us execute, you'll see us doing share buybacks.

Peter Heckmann

Sure. Okay, that's helpful. Appreciate it.

Operator

This concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks.

Timothy Gokey

Well, I'd like to just thank everyone for joining today. We reported what we believe are really strong results for the third quarter. We are seeing really good demand for our products. While we're showing some caution today when we look at the underlying trends, whether it's position growth, whether it's trades, whether it's our backlog, we feel really good about the future. And we feel really good about the demand that we're seeing from our clients in the areas that we're investing, where we think we can make a real difference.
So with that, thank you very much, and we look forward to talking to you next quarter.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.