And – but then as we look forward, I think the thing that really is giving us the confidence is the forward testing, which again, is showing the mid-high for equities and the mid single for funds. But really, the long-term trends we haven’t really seen any change in those. So we’re – that’s why we’re confirming where we are.
Darrin Peller: Okay, thanks a lot.
Operator: The next question is from Matthew Roswell of RBC Capital Markets. Please go ahead. Matthew, is your line muted?
Matthew Roswell: Hopefully you can hear me now.
Tim Gokey: Yes.
Matthew Roswell: Excellent, sorry about that. It’s Matt Roswell on for Dan Perlin. Congratulations on a nice quarter. Just a couple of quick questions, hopefully. What was the FX impact in the quarter? And how should we think about it for the rest of the year?
Edmund Reese: Yes. Matt, that’s – I’ll just be quick on that one. In the quarter, on our recurring – it was not material on our recurring revenue, 15 basis points benefit to us. What we said when we gave guidance in Q4 is that we expected a modest 0.5 point benefit to earnings, and that’s not us trying to do our own estimates of FX, but just looking at what current rates sit at today. And I think we’re still largely in that range. If you look at our 10-K, and you’ll see that a change in the U.S. dollar of 10% against the currencies that matter to our economics, primarily the pound, the Canadian dollar and increasingly with BTCS, the euro and the Swedish corona, there is about a $15 million impact on earnings. So that gives you some sense about what the overall impact can be, but we’ve been specific about what we think for fiscal 2024.
Matthew Roswell: Okay. And then on the margin expansion for the remainder of the year, is there anything we should look out for in terms of either seasonality or grow over compared to last year?
Edmund Reese: And that’s a great one to point out, Matt, because I think looking at the margins in any particular quarter is not – you should certainly be looking at that on a full year basis, given the timing of our investments and the timing of some things that are recurring versus nonrecurring? The short answer of what you should expect is that approximately 20%, which is margin expansion. And there’s a couple of things going on there, right. There is setting aside the float income that we see in our ICS business, which is a benefit to the overall reported margin expansion but has no impact to our earnings because we have the interest expense that offsets that. The second component that you see impacting the reported rate is the distribution revenue, particularly with no margin postal rate increases in it that has no impact to our earnings.
The impact of those two things together for the full year, we estimate to be dilutive by about 50 basis points and what we said is we’d be able to overcome that and continue to deliver margin expansion in the 50 basis points range absorbing the amortization associated with the Wealth management platform. So you put those two things together, to dilutive impact from the items that I mentioned, our ability to be able to drive margin expansion after absorbing the wealth management platform and you get to this approximately 20%. And I think the first quarter is a strong testament to that. I put those two things aside, we drove 100 basis points with the amortization in our overall results. So we continue to feel very good about that guidance. And finally, I think it’s just important – it’s important for us to drive that margin expansion because it allows us to both hit the earnings objectives that we have and fund.
Matthew Roswell: Hello?
Edmund Reese: We’re still here, Matt.
Matthew Roswell: Okay, all right. Just lost you for a second there. And then I guess the final question I have is just what’s the repurchase assumptions in the guidance?
Edmund Reese: Well, look, I think you have seen over the – as Tim said in his earlier remarks, our focus has been on paying down the debt and building out the wealth management in our capital markets platforms now that we are past that elevated investment phase and with the expectation of approximately 100% of free cash flow conversion. When you think about that, we have a dividend that we pay $3.20 a share at our share, as you can expect, just under $400 million of that going towards the dividend. The rest of that capacity will either be devoted to M&A, if we find the right opportunities, as Tim just said, that meet our strategic and financial criteria or return back to investors in the form of share repurchases. So I think those are the components you need to think about what that range of share repurchases is – approximately 100% free cash flow conversion the dividend and the rest of that capacity towards M&A and share repurchases.
Tim Gokey: And I think the only thing I would add to that is we tend to wait on that until we really have high confidence on how the year is coming out. So that from a – it’s really almost more of a 2025 question because any share repurchase we do would tend to be later in the year and not affect our weighted average share count for this year.
Matthew Roswell: Excellent, thank you. Thank you for all the color.
Tim Gokey: Yes.
Operator: The next question is from James Faucette of Morgan Stanley. Please go ahead.
James Faucette: Great. Thank you. I wanted to ask a couple of questions here. First, on the announcement of the UBS go live on the DLP platform, is that incremental to the $75 million of contribution outlined previously? Or is that project already contemplated in that number?
Tim Gokey: Great to clarify that is – that’s part of the $75 million.
James Faucette: Okay, thank you for that. And then I wanted to ask a more broad-reaching question around competition. I think we all know about the competitive dynamics at play within the proxy space. But there were – have been one or two announcements of more AI-focused players that seem to be pretty well funded that are looking to get into the space. Anything to call out in terms of changes in competitive dynamics or where there may be some incremental investment needed from your perspective?
Tim Gokey: Dave, I don’t think there’s anything significant that is incremental to what has been out there. I think that we always say that competition has always been significant in this area. And even though people like to talk about us as a market utility, the – we’ve always had in-house – competition from in-house and from other players. And we think that we win that on the merits by being safer for our clients, more resilient, less cyber risk, smarter in terms of better all-in economics when you take into account all the things we can provide our clients based on our unique network. So we don’t really see a change, and we are certainly – we’ve already talked about on the AI side that we are going to be a leader in AI in our spaces.
