Financial Data and Key Metrics Changes - The company reported a consolidated net sales growth of 10.4% year-over-year for Q4 2025, with total net sales reaching $172.5 million [4][22] - Adjusted EBITDA increased by $14.1 million or approximately 44% year-over-year, resulting in an Adjusted EBITDA margin of 26.6%, up approximately 630 basis points from Q4 2024 [5][24] - For the full year 2025, consolidated Adjusted EBITDA was $239.8 million, a 10.4% increase year-over-year, with an Adjusted EBITDA margin of 31.3%, up approximately 350 basis points from 2024 [6][24] Business Line Data and Key Metrics Changes - Software solutions net sales grew by 8.7% year-over-year, reaching $358.4 million, comprising approximately 47% of total net sales for 2025 [9][10] - The capital market software solutions segment saw net sales of $60 million, a 20% increase from Q4 2024, driven by strong growth in Venue and Active Disclosure [25] - Active Disclosure sales increased by 20.2% year-over-year, with total subscription revenue up approximately 12% [26] Market Data and Key Metrics Changes - The company experienced a 29% increase in transactional revenue in Q4 2025, totaling $48.6 million, driven by a recovery in deal completions following a government shutdown [29] - The capital markets compliance revenue decreased by 15.5% year-over-year, attributed to lower compliance work volume [30] Company Strategy and Development Direction - The company is transitioning to chapter three of its transformation, focusing on sustained growth and increasing the revenue mix towards predictable revenue streams [18][19] - The introduction of new products like ArcFlex and enhancements in existing offerings are aimed at capturing market demand and improving client experience [14][12] - The company plans to maintain a disciplined approach to capital allocation while pursuing profitable growth opportunities [20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the ongoing momentum in capital markets and expects to capture an uptick in deal activity in 2026 [19][38] - The company anticipates continued decline in print and distribution sales but expects this to be offset by growth in software solutions [20][38] - Management does not foresee major SEC rule changes for 2026, positioning the company well to capture future demand from regulatory changes [20] Other Important Information - The company repurchased approximately 3.6 million shares in 2025, representing about 12% of outstanding shares, at an average price of $48.36 per share [4][36] - Free cash flow for Q4 was $47.9 million, with a full-year total of $107.8 million, reflecting improved operational performance [34] Q&A Session Summary Question: How much of the outperformance in Q4 was volume versus price? - Management indicated that the outperformance was predominantly driven by volume, particularly in capital markets transactional revenue, with modest contributions from price [46][47] Question: What were the drivers behind the strong margins in Q4? - The increase in margins was attributed to a favorable sales mix, cost control initiatives, and operating leverage from higher sales growth [49][50] Question: Can you discuss the relative TAM for ArcFlex compared to ArcSuite? - ArcFlex can be sold as a standalone product, and there is significant interest in the market for alternative investment solutions, driven by the growth in private funds [55][56] Question: How do you see the double-digit software growth for 2026? - Continued strong growth is expected from Active Disclosure and Venue, while ArcSuite's growth may be more variable due to fewer regulatory changes [67][69]

Investor Presentation February 2026 DFINsolutions.com © 2026 DFIN. All rights reserved This presentation is the intellectual property of DFIN. The ideas expressed in it may not be adopted or reproduced without prior permission from and compensation to DFIN. Forward Looking Statements and Use of Non-GAAP Financial Measures USE OF FORWARD-LOOKING STATEMENTS This presentation includes certain "forward-looking statements" within the meaning of, and subject to the safe harbor created by, Section 21E of the Secur ...

Financial Performance - Fourth-quarter 2025 net sales were $172.5 million, a 10.4% increase from $156.3 million in the fourth quarter of 2024[3] - Full-year 2025 net sales totaled $767.0 million, down 1.9% from $781.9 million in 2024[3] - Total net sales for Q4 2025 reached $172.5 million, a 10.5% increase from $156.3 million in Q4 2024[28] - Total net sales for the twelve months ended December 31, 2025, were $767.0 million, a decrease of 1.6% compared to $781.9 million in 2024[28] - Reported net sales for the three months ended December 31, 2025, were $172.5 million, representing a 10.4% increase from $156.3 million in 2024[43] - For the twelve months ended December 31, 2025, reported net sales totaled $767.0 million, down 1.9% from $781.9 million in 2024[43] Earnings and Profitability - Adjusted EBITDA for the fourth quarter of 2025 was $45.8 million, a 44.5% increase from $31.7 million in the fourth quarter of 2024[3] - Adjusted EBITDA margin expanded to 26.6%, an increase of approximately 630 basis points year-over-year[9] - Full-year 2025 adjusted non-GAAP net earnings were $121.3 million, a 16.7% increase from $103.9 million in 2024[3] - Gross profit for Q4 2025 was $95.0 million, representing a gross margin of 55.1%, compared to 50.7% in Q4 2024[28] - Net earnings for Q4 2025 were $6.2 million, with diluted earnings per share of $0.23, compared to $6.3 million and $0.21 in Q4 2024[28] - For the twelve months ended December 31, 2025, net earnings were $32.4 million, a decrease from $92.4 million in 2024[41] - Adjusted EBITDA for the twelve months ended December 31, 2025, was $239.8 million, up from $217.3 million in 2024, representing an increase of 10.5%[49] - The adjusted EBITDA margin for the twelve months ended December 31, 2025, was 31.3%, compared to 27.8% in 2024, indicating an improvement of 5.6%[47] Cash Flow and Liquidity - Net cash provided by operating activities for the twelve months ended December 31, 2025, was $164.9 million, compared to $171.1 million in 2024[41] - Free cash flow for the twelve months ended December 31, 2025, was $107.8 million, slightly up from $105.2 million in 2024[41] - The company had total liquidity of $262.1 million as of December 31, 2025, down from $356.3 million in 2024[49] Debt and Capital Structure - Total liabilities increased to $421.2 million in 2025, up from $405.5 million in 2024[28] - Total debt increased to $171.3 million as of December 31, 2025, compared to $124.7 million in the previous year, marking a rise of 37.3%[49] - Non-GAAP Net Debt as of December 31, 2025, was $146.8 million, significantly higher than $67.4 million in 2024[49] - The company utilized $61.0 million of its $300.0 million revolving credit facility as of December 31, 2025[49] - The company reported a Non-GAAP Gross Leverage ratio of 0.7x for the twelve months ended December 31, 2025, compared to 0.6x in 2024[49] Shareholder Returns - The company repurchased 1,255,108 shares for $60.7 million in the fourth quarter of 2025, with a remaining share repurchase authorization of $53.8 million as of December 31, 2025[5] - Treasury share repurchases amounted to $185.0 million for the twelve months ended December 31, 2025, compared to $81.6 million in 2024[41] Future Guidance and Strategy - Guidance for the first quarter of 2026 includes total net sales of $200 million to $210 million and an adjusted EBITDA margin of 33% to 35%[11] - The company aims to expand its recurring software offerings to drive predictable performance and achieve long-term goals[6] - The company plans to focus on expanding its software solutions and tech-enabled services segments to drive future growth[47] Restructuring and Charges - The company reported a restructuring charge of $5.6 million for Q4 2025, compared to $2.1 million in Q4 2024[28] - The company reported a restructuring, impairment, and other charges of $6.6 million for the twelve months ended December 31, 2024[34] - The company reported a pension plan settlement charge of $82.8 million for the twelve months ended December 31, 2025[41] Capital Expenditures - Capital expenditures for the twelve months ended December 31, 2025, totaled $57.1 million[37] - Capital expenditures for the twelve months ended December 31, 2025, were $57.1 million, down from $65.9 million in 2024[41]

Core Viewpoint - Donnelley Financial Solutions (DFIN) will hold a conference call on February 17, 2026, to discuss its fourth-quarter fiscal year 2025 financial results and provide a business update [1]. Group 1: Conference Call Details - The conference call and webcast will take place at 9:00 a.m. Eastern time on February 17, 2026 [1]. - A live webcast will be available on the Company's investor relations website, and participants are encouraged to register at least fifteen minutes prior to the event [2]. - A replay of the webcast will be accessible after the call, along with the earnings press release and related financial tables [2]. Group 2: Financial Reporting - DFIN's financial report for the fourth quarter will be released before the market opens on February 17, 2026, via a filing with the SEC on Form 8-K [3]. - The financial report will also be posted on the Company's investor relations website [3]. Group 3: Company Overview - DFIN is a leading global provider of compliance and regulatory software and services, addressing investment company regulatory compliance needs and complex capital markets transactions [4]. - The company's mission is to empower clients with necessary software and support for public company filings, investment company filings, and enhancing workflow efficiency [4]. - DFIN emphasizes transparency and collaboration, leveraging deep expertise in every engagement [4].

Summary of Donnelley Financial Solutions (NYSE:DFIN) FY Conference Call Company Overview - Donnelley Financial Solutions specializes in helping clients comply with SEC regulations, serving public corporations, pre-IPO corporations, mutual funds, ETFs, and regulated insurance companies [2][4] - The company has transitioned to a business model where nearly 50% of its revenue comes from software solutions, with the remainder from tech-enabled services [2][7] Core Business Segments Compliance and Transactions - The business is divided into compliance (e.g., 10-Ks, 10-Qs, proxy statements) and transactions, with compliance now accounting for 75% of revenue [4][5] - Event-driven revenue is approximately 25% of the overall business, indicating a strong recurring revenue base [4] Software Products - Key software products include: - **ActiveDisclosure**: Focused on corporate compliance - **Venue**: A data room solution for completing deals - **ArcSuite**: Targeted at mutual funds and ETFs for financial reporting [4][5] Tech-Enabled Services - This segment involves providing traditional services where the company prepares compliance and transactional documents for clients, which remains a competitive advantage [9][10] Print and Distribution - Print services now account for about 15% of total revenue, down from 40% in 2016, with gross margins improving from low 20% to mid-40% [12][13] Market Dynamics and Growth Opportunities - The company aims to derive 60% of total sales from software solutions by 2028, with ongoing market share growth and price increases as key strategies [7][8] - The capital markets activity is expected to rebound, potentially increasing revenue by over $100 million, with incremental margins projected at 50%-60% [16][17] Regulatory Changes - Recent regulations, such as the Tailored Shareholder Reports, have positively impacted revenue, with ongoing opportunities from new SEC regulations [20][21] Artificial Intelligence Integration - The company is leveraging AI to enhance product offerings and internal operations, with a balanced approach to opportunities and risks [23][24] - AI initiatives include the Active Intelligence tool for benchmarking and document management [24] Margin Improvement - EBITDA margins have increased from mid-teens to nearly 30%, with a long-term goal of exceeding 30% [28][29] - Factors contributing to margin improvement include a shift towards software, disciplined cost management, and pricing strategies [30][32] Capital Allocation Strategy - The company maintains a balanced approach to capital allocation, focusing on organic investments while remaining open to M&A opportunities that align with strategic goals [33][34] Future Outlook - Excitement surrounds the transition to sustained growth, with a focus on expanding capabilities and addressing new market opportunities, particularly in private markets [36][38] - The company is well-positioned to benefit from larger clients and regulatory changes, enhancing its value proposition [45][46] Key Takeaways - Donnelley Financial Solutions is transitioning towards a software-centric business model, with significant growth potential in compliance and capital markets - The integration of AI and a disciplined approach to cost management are expected to drive future profitability - The company is strategically positioned to capitalize on regulatory changes and market dynamics, with a focus on sustainable growth and client relationships

Core Insights - Donnelley Financial Solutions (DFIN) will participate in the 28th Annual Needham Growth Conference in New York on January 13, 2026, with CEO Dan Leib and CFO Dave Gardella scheduled for a fireside chat at 8:45 AM EST [1]. Company Overview - DFIN is a leading global provider of compliance and regulatory software and services, addressing the end-to-end regulatory compliance needs of investment companies, complex capital markets transactions, and essential financial reporting throughout the corporate lifecycle [3]. - The company's mission is to empower clients with necessary software and support to manage public company filings, investment company filings, private reporting, and beneficial owner reporting, while enhancing workflow efficiency [3]. - DFIN emphasizes its deep expertise in driving transparency and collaboration, built on confidence and reliability [3].

Core Thesis - Donnelley Financial Solutions, Inc. (DFIN) is facing significant challenges in its software-led growth strategy, with deteriorating retention rates and competitive pressures impacting its revenue projections [2][5][6] Financial Performance - As of December 1st, DFIN's share price was $47.98, with a trailing P/E ratio of 43.80 [1] - The company's stock price has depreciated approximately 19.27% since a previous bullish coverage due to unmet software targets [6] Software and Revenue Challenges - DFIN has repeatedly pushed out its long-term software revenue targets from 2026 to 2028, indicating a weakening core software business [2] - The company is projected to see a shift in its revenue mix to 60% software, which is increasingly deemed unrealistic due to declining gross and net retention rates [2][3] Customer Retention and Competition - DFIN is experiencing structurally worsening churn, losing recurring 10-K clients to competitors like Workiva, which retains customers at significantly higher rates [4] - The customer base primarily consists of sub-$100 million market-cap companies, leading to increased attrition driven by bankruptcies [4] Margin and Investment Trade-offs - Management faces a trade-off between preserving margins through limited R&D investment or accelerating investment at the cost of margin pressure [3] - Recent margin gains have been primarily driven by price hikes, which are nearing exhaustion, indicating limited future pricing power [3][5] Future Outlook - With regulatory tailwinds fading and retention deteriorating, software growth is expected to decelerate sharply, leading to a potential compression of DFIN's valuation multiple [5] - The company’s ability to achieve its original $500 million software revenue goal appears increasingly unattainable, raising concerns about its future performance [3][5]

Financial Performance - Total net sales for Q3 2025 were $175.3 million, a decrease of 2.3% compared to $179.5 million in Q3 2024[20] - Software solutions revenue increased to $90.7 million in Q3 2025, up 10.3% from $82.2 million in Q3 2024[20] - Tech-enabled services revenue decreased to $68.6 million in Q3 2025, down 8.8% from $75.2 million in Q3 2024[20] - Net loss for Q3 2025 was $40.9 million, compared to net earnings of $8.7 million in Q3 2024[20] - Comprehensive income for the nine months ended September 30, 2025, was $89.2 million, compared to $87.1 million for the same period in 2024[23] - For the nine months ended September 30, 2025, total net sales were $594.5 million, a decrease from $625.6 million in the same period of 2024, representing a decline of about 5.0%[50] - Net earnings for the nine months ended September 30, 2025, were $26.2 million, a decrease from $86.1 million in 2024, representing a decline of 69.6%[27] - The company reported a loss before income taxes of $57.9 million for the three months ended September 30, 2025, compared to earnings before income taxes of $15.4 million in the same period of 2024[90] Assets and Liabilities - Total assets decreased to $816.3 million as of September 30, 2025, from $841.6 million as of December 31, 2024[25] - Cash and cash equivalents decreased to $22.7 million as of September 30, 2025, down from $57.3 million at the end of 2024[25] - Total liabilities decreased to $393.2 million as of September 30, 2025, from $405.5 million at the end of 2024[25] - Total debt as of September 30, 2025, was $154.7 million, an increase from $124.7 million as of December 31, 2024[68] Cash Flow and Expenditures - Net cash provided by operating activities for the nine months ended September 30, 2025, was $105.1 million, down from $114.7 million in 2024, a decrease of 8.5%[27] - Capital expenditures for the nine months ended September 30, 2025, were $45.2 million, compared to $50.8 million in 2024, reflecting a reduction of 10.9%[27] - Capital expenditures for the three months ended September 30, 2025, were $15.2 million, compared to $19.1 million in the same period of 2024, indicating a decrease of approximately 20.4%[94] Pension and Settlement Charges - The company incurred a pension plan settlement charge of $82.8 million in Q3 2025[20] - The company recognized a non-cash settlement charge of $82.8 million during the three and nine months ended September 30, 2025, due to the Plan Settlement[66] - The net pension plan expense for the three months ended September 30, 2025, was $0.4 million, compared to a net income of $0.2 million for the same period in 2024[64] - The company made a $12.5 million cash contribution to fully fund the pension plan obligations during the three months ended September 30, 2025[65] Shareholder Activities - The weighted average number of diluted shares outstanding decreased to 28.5 million in the nine months ended September 30, 2025, from 30.1 million in the same period in 2024[20] - Common stock repurchases for the three months ended September 30, 2025, amounted to $35.5 million, with 659,367 shares repurchased at an average price of $53.79 per share[78] - The company’s treasury share repurchases amounted to $123.1 million for the nine months ended September 30, 2025, compared to $64.4 million in 2024, an increase of 91.5%[27] - As of September 30, 2025, the remaining authorized amount for stock repurchases was $114.5 million[76] Segment Performance - The company operates through four reportable segments, focusing on software solutions and compliance management for capital markets and investment companies[84] - The Capital Markets segment provides software solutions and tech-enabled services to assist clients with SEC compliance, including initial public offerings and mergers[85] - The Investment Companies segment offers a comprehensive suite of cloud-based solutions for mutual fund companies and other investment entities to comply with SEC regulations[87] - Segment Adjusted EBITDA for the three months ended September 30, 2025, was $61.3 million, compared to $52.4 million for the same period in 2024, representing a year-over-year increase of 16.9%[90] - Total Segment Adjusted EBITDA for the nine months ended September 30, 2025, was $222.9 million, compared to $212.2 million for the same period in 2024, showing an increase of 5.5%[92] Revenue Recognition and Estimates - Revenue recognition is based on the transfer of control of promised services or products, with significant judgment required for arrangements with multiple performance obligations[48] - Contract assets increased to $18.8 million as of September 30, 2025, from $13.8 million at December 31, 2024, with revenue recognized exceeding prior estimates by approximately $8.6 million for Q3 2025[52] - Unbilled receivables rose to $26.8 million at September 30, 2025, compared to $24.1 million at December 31, 2024, reflecting the company's assessment of realizable selling price[53] - Contract liabilities increased to $63.8 million as of September 30, 2025, from $52.9 million at December 31, 2024, with $46.1 million of revenue recognized during the nine months ended September 30, 2025, that was included in deferred revenue[54] - Future estimated revenue related to unsatisfied performance obligations is approximately $175 million, with about 50% expected to be recognized over the next twelve months[55]

Financial Data and Key Metrics Changes - The company reported total net sales of $175.3 million for Q3 2025, a decrease of $4.2 million or 2.3% from Q3 2024 [17] - Adjusted EBITDA was $49.5 million, an increase of $6.3 million or 14.6% from the previous year, with an adjusted EBITDA margin of 28.2%, up approximately 410 basis points [21] - Free cash flow for the quarter was $59.2 million, $8.1 million lower than Q3 2024, primarily due to unfavorable working capital and a one-time cash contribution related to the pension plan settlement [31] Business Line Data and Key Metrics Changes - Software solutions net sales grew by 10.3% year-over-year, accounting for approximately 52% of total sales in the quarter [5][17] - ActiveDisclosure, a recurring compliance software product, saw sales growth of approximately 26%, marking the third consecutive quarter of double-digit growth [7][22] - Venue's sales increased by approximately 3% year-over-year, benefiting from stable demand across public and private companies [9][23] Market Data and Key Metrics Changes - Capital markets transactional revenue was recorded at $41.8 million, down $3.5 million from last year's Q3, despite a 25% year-over-year increase in U.S. IPO activity [25][26] - Compliance revenue decreased by $2.8 million or 15.4% compared to Q3 2024, driven by lower volume of compliance work [26] Company Strategy and Development Direction - The company is focused on transforming into a software-centric business, aiming to derive approximately 60% of total sales from software solutions by 2028 [6] - Continued investments in modernization and innovation of software products are expected to drive future growth [11] - The company is preparing its 2026 operating plan and extending its long-range plan through 2030, with an emphasis on growing the software solutions portfolio [37] Management's Comments on Operating Environment and Future Outlook - The ongoing U.S. government shutdown has impacted capital markets deal activity, delaying many transactions [12][13] - Despite the shutdown, the company remains well-positioned to capture latent demand when market activity normalizes [14][37] - The company expects Q4 2025 consolidated net sales in the range of $150 million to $160 million, reflecting a slight reduction compared to the previous year [33] Other Important Information - The company completed the termination of its primary defined benefit pension plan, resulting in a non-cash pre-tax settlement charge of $82.8 million [15][16] - The company repurchased approximately 659,000 shares of common stock during Q3 for $35.5 million [32] Q&A Session Summary Question: Impact of government shutdown on Q4 margins - Management indicated that the lower transactional revenue would negatively impact margins, but a recovery from healthcare expenses would help offset this [42][43] Question: SEC reporting frequency changes - Management is monitoring developments regarding the proposal to reduce reporting frequency and believes their subscription model provides insulation from potential impacts [50][52] Question: Resurgence of SPAC IPOs and DFIN's participation - Management noted a decline in market share due to the nature of recent SPAC deals but emphasized participation in quality deals [55][56] Question: Venue performance and timing of M&A deals - Management expressed optimism about Venue's performance and indicated that while the government shutdown has delayed some M&A deals, underlying activity remains strong [62][64] Question: Capital allocation strategy - Management reiterated that maintaining financial flexibility and being opportunistic with share repurchases are top priorities [76]

Financial Data and Key Metrics Changes - The company reported total net sales of $175.3 million for Q3 2025, a decrease of $4.2 million or 2.3% from Q3 2024 [17] - Adjusted EBITDA was $49.5 million, an increase of $6.3 million or 14.6% from the previous year, with an adjusted EBITDA margin of 28.2%, up approximately 410 basis points from Q3 2024 [21] - Free cash flow for the quarter was $59.2 million, $8.1 million lower than Q3 2024, primarily due to unfavorable working capital and a one-time cash contribution related to the pension plan settlement [31] Business Line Data and Key Metrics Changes - Software solutions net sales grew by 10.3% year-over-year, accounting for approximately 52% of total sales in the quarter [5][17] - ActiveDisclosure saw a significant sales growth of approximately 26%, while ArcSuite's growth was more modest at around 10% due to overlapping benefits from previous regulatory changes [7][9] - Venue's sales increased by approximately 3% compared to the same quarter last year, benefiting from stable demand across public and private companies [9][10] Market Data and Key Metrics Changes - The capital markets transactional revenue was reported at $41.8 million, down $3.5 million from Q3 2024, primarily due to lower foreign issuer transaction volumes [25][26] - The company experienced a 25% year-over-year increase in U.S. IPO activity, although this was offset by a soft market for foreign issuance transactions [25][26] - The ongoing government shutdown has impacted capital markets deal activity, delaying many planned transactions [12][13] Company Strategy and Development Direction - The company is focused on transforming into a software-centric business, aiming to derive approximately 60% of total sales from software solutions by 2028 [6] - Continued investments in modernization and innovation of software products are expected to drive future growth [11] - The company is preparing its 2026 operating plan and extending its long-range plan through 2030, with an emphasis on growing software solutions and operational transformation [37] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to perform well despite the uncertainty caused by the government shutdown, highlighting strong client relationships and market leadership [14][37] - The outlook for Q4 2025 includes expected consolidated net sales in the range of $150 million to $160 million, reflecting a slight reduction compared to the previous year [33] - Management anticipates that the government shutdown will lead to a temporary softening in capital markets transactional revenue, with expectations for recovery once operations resume [34][36] Other Important Information - The company completed the termination of its primary defined benefit pension plan, resulting in a non-cash pre-tax settlement charge of $82.8 million [15][16] - The company repurchased approximately 659,000 shares of common stock during Q3 for $35.5 million, with $114.5 million remaining on its current stock repurchase authorization [32] Q&A Session Summary Question: Impact of government shutdown on Q4 margins - Management indicated that the lower transactional revenue would negatively impact margins, but a healthcare recovery would help offset this [42][43] Question: SEC reporting frequency changes - Management is monitoring developments regarding potential changes to SEC reporting frequency and believes their subscription model provides insulation from most impacts [50][52] Question: Resurgence of SPAC IPOs - Management noted a decline in share of SPAC deals due to increased competition and a focus on quality deals [55][56] Question: Venue performance and timing of M&A deals - Management expressed optimism about Venue's performance and indicated that while the government shutdown has delayed some M&A deals, underlying activity remains strong [62][64] Question: Capital allocation priorities - Management reiterated that maintaining financial flexibility and being opportunistic with share repurchases are top priorities [76]