[Special Note Regarding Forward-Looking Statements](index=4&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section cautions readers about forward-looking statements, which are subject to risks and uncertainties, and outlines key risk factors - The report contains forward-looking statements subject to risks and uncertainties, based on the Company's beliefs and assumptions. These statements are **not guarantees of future performance** and readers should not place **undue reliance** on them[14](index=14&type=chunk)[16](index=16&type=chunk) - **Key risk factors** include global economy and financial market volatility, failure to offer high-quality customer support, client retention, data security breaches, inability to adapt to new technologies, competitive market pressures, and effects of operating in international markets[15](index=15&type=chunk)[18](index=18&type=chunk) [Part I. Financial Information](index=6&type=section&id=Part%20I%20FINANCIAL%20INFORMATION) This part presents the unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results [Item 1: Condensed Consolidated Financial Statements (Unaudited)](index=6&type=section&id=Item%201%3A%20Condensed%20Consolidated%20Financial%20Statements%20%28Unaudited%29) This section presents DFIN's unaudited condensed consolidated financial statements for periods ended June 30, 2025, and December 31, 2024, including key financial statements and notes [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section details the company's consolidated statements of operations, including net sales, income from operations, and earnings per share Three Months Ended June 30, 2025 vs. 2024 (in millions) | Metric | 2025 (in millions) | 2024 (in millions) | Change (in millions) | % Change | | :---------------------- | :----- | :----- | :----- | :------- | | Software solutions | $92.2 | $85.6 | $6.6 | 7.7% | | Tech-enabled services | $85.2 | $102.2 | $(17.0) | (16.6%) | | Print and distribution | $40.7 | $54.9 | $(14.2) | (25.9%) | | **Total net sales** | **$218.1** | **$242.7** | **$(24.6)** | **(10.1%)** | | Income from operations | $52.8 | $64.5 | $(11.7) | (18.1%) | | Net earnings | $36.1 | $44.1 | $(8.0) | (18.1%) | | Basic EPS | $1.30 | $1.50 | $(0.20) | (13.3%) | | Diluted EPS | $1.28 | $1.47 | $(0.19) | (12.9%) | Six Months Ended June 30, 2025 vs. 2024 (in millions) | Metric | 2025 (in millions) | 2024 (in millions) | Change (in millions) | % Change | | :---------------------- | :----- | :----- | :----- | :------- | | Software solutions | $176.8 | $165.9 | $10.9 | 6.6% | | Tech-enabled services | $161.7 | $185.1 | $(23.4) | (12.6%) | | Print and distribution | $80.7 | $95.1 | $(14.4) | (15.1%) | | **Total net sales** | **$419.2** | **$446.1** | **$(26.9)** | **(6.0%)** | | Income from operations | $98.6 | $109.1 | $(10.5) | (9.6%) | | Net earnings | $67.1 | $77.4 | $(10.3) | (13.3%) | | Basic EPS | $2.38 | $2.63 | $(0.25) | (9.5%) | | Diluted EPS | $2.33 | $2.56 | $(0.23) | (9.0%) | [Condensed Consolidated Statements of Comprehensive Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section presents the condensed consolidated statements of comprehensive income, detailing net earnings and other comprehensive income components Comprehensive Income (in millions) | Period | 2025 (in millions) | 2024 (in millions) | | :-------------------------- | :----- | :----- | | **Three Months Ended June 30,** | | | | Net earnings | $36.1 | $44.1 | | Other comprehensive income (loss), net of tax | $1.7 | $0.1 | | **Comprehensive income** | **$37.8** | **$44.2** | | **Six Months Ended June 30,** | | | | Net earnings | $67.1 | $77.4 | | Other comprehensive income (loss), net of tax | $2.3 | $(0.2) | | **Comprehensive income** | **$69.4** | **$77.2** | [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides the condensed consolidated balance sheets, outlining assets, liabilities, and stockholders' equity Balance Sheet Highlights (in millions) | Metric | June 30, 2025 (in millions) | December 31, 2024 (in millions) | | :-------------------------------- | :------------ | :---------------- | | Cash and cash equivalents | $33.8 | $57.3 | | Total current assets | $266.6 | $232.5 | | Total assets | $874.7 | $841.6 | | Total current liabilities | $207.1 | $224.1 | | Long-term debt | $184.3 | $124.7 | | Total liabilities | $442.6 | $405.5 | | Total equity | $432.1 | $436.1 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents the condensed consolidated statements of cash flows, summarizing cash movements from operating, investing, and financing activities Cash Flow Summary (Six Months Ended June 30, in millions) | Activity | 2025 (in millions) | 2024 (in millions) | | :-------------------------------- | :----- | :----- | | Net cash provided by operating activities | $30.7 | $28.3 | | Net cash used in investing activities | $(29.9) | $(19.1) | | Net cash (used in) provided by financing activities | $(25.5) | $3.5 | | Net (decrease) increase in cash and cash equivalents | $(23.5) | $11.9 | | Cash and cash equivalents at end of period | $33.8 | $35.0 | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) This section details the condensed consolidated statements of changes in stockholders' equity, including net earnings and share repurchases Changes in Stockholders' Equity (Three Months Ended June 30, in millions) | Metric | 2025 (in millions) | 2024 (in millions) | | :-------------------------- | :----- | :----- | | Net earnings | $36.1 | $44.1 | | Other comprehensive income | $1.7 | $0.1 | | Share-based compensation expense | $7.5 | $7.5 | | Common stock repurchases | $(34.6) | $(19.2) | | Total Equity at June 30 | $432.1 | $441.5 | Changes in Stockholders' Equity (Six Months Ended June 30, in millions) | Metric | 2025 (in millions) | 2024 (in millions) | | :-------------------------- | :----- | :----- | | Net earnings | $67.1 | $77.4 | | Other comprehensive income (loss) | $2.3 | $(0.2) | | Share-based compensation expense | $13.5 | $12.5 | | Common stock repurchases | $(76.7) | $(28.0) | | Total Equity at June 30 | $432.1 | $441.5 | [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed notes to the condensed consolidated financial statements, offering additional context and disclosures [Note 1. Overview, Basis of Presentation and Significant Accounting Policies](index=12&type=section&id=Note%201.%20Overview%2C%20Basis%20of%20Presentation%20and%20Significant%20Accounting%20Policies) This note outlines DFIN's business, basis of financial statement presentation, significant accounting policies, and impact of new accounting standards - DFIN is a global provider of software and technology-enabled financial regulatory and compliance solutions, serving public and private companies and investment firms. The company's strategy is **shifting towards software solutions and tech-enabled services**, **moving away from physical print and distribution**[33](index=33&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk) CECL Reserve Changes (in millions) | Metric | June 30, 2025 (in millions) | June 30, 2024 (in millions) | | :-------------------------- | :------------ | :------------ | | Balance, beginning of year | $25.0 | $18.9 | | Provisions charged to expense | $4.8 | $10.1 | | Write-offs, reclassifications and other | $(4.2) | $(4.5) | | Balance, end of period | $25.6 | $24.5 | - The company is evaluating the impact of new FASB ASUs (**2023-09** and **2024-03/2025-01**) on income tax and expense disaggregation disclosures, effective for fiscal years beginning after December **15, 2024**, and **2026/2027** respectively[43](index=43&type=chunk)[44](index=44&type=chunk) [Note 2. Revenue](index=15&type=section&id=Note%202.%20Revenue) This note details the company's revenue recognition policies and provides disaggregated revenue information by segment and service type - Revenue is recognized upon transfer of control of services or products, which include software solutions (ActiveDisclosure, Arc Suite, Venue), tech-enabled services (document composition, EDGAR filing), and print and distribution offerings[45](index=45&type=chunk)[46](index=46&type=chunk) Disaggregation of Revenue (Three Months Ended June 30, 2025 vs. 2024, in millions) | Segment | 2025 Software Solutions (in millions) | 2025 Tech-enabled Services (in millions) | 2025 Print and Distribution (in millions) | 2025 Total (in millions) | 2024 Software Solutions (in millions) | 2024 Tech-enabled Services (in millions) | 2024 Print and Distribution (in millions) | 2024 Total (in millions) | | :------------------------------------------ | :---------------------- | :------------------------- | :-------------------------- | :--------- | :---------------------- | :------------------------- | :-------------------------- | :--------- | | Capital Markets - Software Solutions | $59.1 | — | — | $59.1 | $57.3 | — | — | $57.3 | | Capital Markets - Compliance and Communications Management | — | $65.6 | $27.9 | $93.5 | — | $81.3 | $32.5 | $113.8 | | Investment Companies - Software Solutions | $33.1 | — | — | $33.1 | $28.3 | — | — | $28.3 | | Investment Companies - Compliance and Communications Management | — | $19.6 | $12.8 | $32.4 | — | $20.9 | $22.4 | $43.3 | | **Total net sales** | **$92.2** | **$85.2** | **$40.7** | **$218.1** | **$85.6** | **$102.2** | **$54.9** | **$242.7** | Disaggregation of Revenue (Six Months Ended June 30, 2025 vs. 2024, in millions) | Segment | 2025 Software Solutions (in millions) | 2025 Tech-enabled Services (in millions) | 2025 Print and Distribution (in millions) | 2025 Total (in millions) | 2024 Software Solutions (in millions) | 2024 Tech-enabled Services (in millions) | 2024 Print and Distribution (in millions) | 2024 Total (in millions) | | :------------------------------------------ | :---------------------- | :------------------------- | :-------------------------- | :--------- | :---------------------- | :------------------------- | :-------------------------- | :--------- | | Capital Markets - Software Solutions | $111.0 | — | — | $111.0 | $110.3 | — | — | $110.3 | | Capital Markets - Compliance and Communications Management | — | $125.4 | $52.0 | $177.4 | — | $147.3 | $57.6 | $204.9 | | Investment Companies - Software Solutions | $65.8 | — | — | $65.8 | $55.6 | — | — | $55.6 | | Investment Companies - Compliance and Communications Management | — | $36.3 | $28.7 | $65.0 | — | $37.8 | $37.5 | $75.3 | | **Total net sales** | **$176.8** | **$161.7** | **$80.7** | **$419.2** | **$165.9** | **$185.1** | **$95.1** | **$446.1** | [Note 3. Goodwill](index=17&type=section&id=Note%203.%20Goodwill) This note presents the goodwill balances by segment, including foreign exchange adjustments, as of June 30, 2025 Goodwill Balances by Segment (in millions) | Segment | Net book value at Dec 31, 2024 (in millions) | Foreign exchange adjustments (in millions) | Net book value at June 30, 2025 (in millions) | | :------------------------------------------ | :----------------------------- | :--------------------------- | :------------------------------ | | Capital Markets - Software Solutions | $99.9 | $0.1 | $100.0 | | Capital Markets - Compliance and Communications Management | $252.5 | $0.3 | $252.8 | | Investment Companies - Software Solutions | $53.0 | $0.1 | $53.1 | | Investment Companies - Compliance and Communications Management | — | — | — | | **Total** | **$405.4** | **$0.5** | **$405.9** | [Note 4. Leases](index=17&type=section&id=Note%204.%20Leases) This note provides details on cash paid for leases and the components of lease expense for operating and finance leases Cash Paid Related to Leases (in millions) | Period | 2025 (in millions) | 2024 (in millions) | | :-------------------------- | :----- | :----- | | **Three Months Ended June 30,** | | | | Operating leases | $2.6 | $3.8 | | Finance leases | $0.8 | $0.8 | | **Six Months Ended June 30,** | | | | Operating leases | $5.5 | $7.7 | | Finance leases | $1.7 | $1.4 | Lease Expense Components (in millions) | Period | 2025 (in millions) | 2024 (in millions) | | :-------------------------- | :----- | :----- | | **Three Months Ended June 30,** | | | | Net operating lease expense | $0.9 | $1.4 | | Total finance lease expense | $0.6 | $0.7 | | **Six Months Ended June 30,** | | | | Net operating lease expense | $1.9 | $2.7 | | Total finance lease expense | $1.2 | $1.4 | [Note 5. Restructuring, Impairment and Other Charges, net](index=18&type=section&id=Note%205.%20Restructuring%2C%20Impairment%20and%20Other%20Charges%2C%20net) This note details restructuring, impairment, and other charges, primarily related to employee terminations and reorganization efforts Restructuring, Impairment and Other Charges, net (in millions) | Period | 2025 (in millions) | 2024 (in millions) | | :-------------------------- | :----- | :----- | | **Three Months Ended June 30,** | | | | Employee Terminations | $0.9 | $1.2 | | Other Charges | $0.1 | $0.1 | | **Total** | **$1.0** | **$1.3** | | **Six Months Ended June 30,** | | |\ | Employee Terminations | $3.7 | $2.9 |\ | Other Charges | $0.2 | $0.2 |\ | **Total** | **$3.9** | **$3.1** | - For the three months ended June **30, 2025**, **$0.9 million** in restructuring charges related to approximately **10** employee terminations. For the six months, **$3.7 million** related to approximately **50** employee terminations, primarily due to reorganization in capital markets and investment companies operations[59](index=59&type=chunk) [Note 6. Retirement Plans](index=19&type=section&id=Note%206.%20Retirement%20Plans) This note outlines net pension plan expense and discusses the ongoing termination process for the company's primary defined benefit plan Net Pension Plan Expense (Income) (in millions) | Period | 2025 (in millions) | 2024 (in millions) | | :-------------------------- | :----- | :----- | | **Three Months Ended June 30,** | | | | Interest cost | $2.5 | $2.7 | | Expected return on assets | $(2.5) | $(3.3) | | Amortization, net | $0.4 | $0.3 | | **Net pension plan expense (income)** | **$0.4** | **$(0.3)** | | **Six Months Ended June 30,** | | | | Interest cost | $5.1 | $5.5 | | Expected return on assets | $(5.0) | $(6.7) | | Amortization, net | $0.8 | $0.6 | | **Net pension plan expense (income)** | **$0.9** | **$(0.6)** | - The Company commenced the termination process for its primary defined benefit plan in August **2024**, **expecting** settlement through lump sum distributions and annuity purchases. A cash contribution to fully fund the Plan is **anticipated** in **2025**, with pension settlement charges **expected** in the second half of **2025**[63](index=63&type=chunk) [Note 7. Commitments and Contingencies](index=20&type=section&id=Note%207.%20Commitments%20and%20Contingencies) This note addresses the company's involvement in legal proceedings and other commitments, which are not expected to materially impact financial results - The Company is involved in various legal proceedings and preference items in the ordinary course of business. Management believes that the final resolution of these matters will not have a **material effect** on the Company's consolidated results of operations, financial position, or cash flows[64](index=64&type=chunk) [Note 8. Debt](index=20&type=section&id=Note%208.%20Debt) This note details the company's debt composition, including the Term Loan A and Revolving Facilities, and related interest expense Debt Composition (in millions) | Metric | June 30, 2025 (in millions) | December 31, 2024 (in millions) | | :-------------------------- | :------------ | :---------------- | | Term Loan A Facility | $113.6 | $125.0 | | Borrowings under the Revolving Facility | $77.0 | — | | Unamortized debt issuance costs | $(0.5) | $(0.3) | | **Total debt** | **$190.1** | **$124.7** | | Less: current portion of long-term debt | $5.8 | — | | **Long-term debt** | **$184.3** | **$124.7** | - On March **13, 2025**, the Company amended its credit agreement, establishing a **$115.0 million** Term Loan A Facility and a **$300.0 million** Revolving Facility. Proceeds were used to retire the **$125.0 million** Delayed Draw Term Loan A Facility[65](index=65&type=chunk)[66](index=66&type=chunk) Interest Expense, net (in millions) | Period | 2025 (in millions) | 2024 (in millions) | | :-------------------------- | :----- | :----- | | **Three Months Ended June 30,** | | | | Interest incurred | $4.1 | $4.3 | | Interest income, net of loss on debt extinguishment | $(0.3) | $(0.6) | | **Interest expense, net** | **$3.8** | **$3.7** | | **Six Months Ended June 30,** | | | | Interest incurred | $7.4 | $8.6 | | Interest income, net of loss on debt extinguishment | $(0.5) | $(1.3) | | **Interest expense, net** | **$6.9** | **$7.3** | [Note 9. Earnings per Share](index=21&type=section&id=Note%209.%20Earnings%20per%20Share) This note provides details on basic and diluted net earnings per share and the weighted average number of common shares outstanding Net Earnings Per Share | Period | 2025 Basic (per share) | 2025 Diluted (per share) | 2024 Basic (per share) | 2024 Diluted (per share) | | :-------------------------- | :--------- | :----------- | :--------- | :----------- | | **Three Months Ended June 30,** | | | | | | Net earnings per share | $1.30 | $1.28 | $1.50 | $1.47 | | **Six Months Ended June 30,** | | | | | | Net earnings per share | $2.38 | $2.33 | $2.63 | $2.56 | Weighted Average Number of Common Shares Outstanding (in millions) | Period | 2025 Basic (in millions) | 2025 Diluted (in millions) | 2024 Basic (in millions) | 2024 Diluted (in millions) | | :-------------------------- | :--------- | :----------- | :--------- | :----------- | | **Three Months Ended June 30,** | | | | | | Weighted-average shares outstanding | 27.7 | 28.2 | 29.4 | 30.0 | | **Six Months Ended June 30,** | | | | | | Weighted-average shares outstanding | 28.2 | 28.8 | 29.4 | 30.2 | [Note 10. Capital Stock](index=23&type=section&id=Note%2010.%20Capital%20Stock) This note discusses the company's share repurchase program, including the new $150 million authorization and details of common stock repurchases - The Board authorized a **new $150 million share repurchase program** on May **15, 2025**, replacing the previous program, with an expiration date of December **31, 2026**. As of June **30, 2025**, the remaining authorized amount was **$150.0 million**[72](index=72&type=chunk) Common Stock Repurchases (in millions, except per share data) | Period | 2025 Repurchases (in millions) | 2025 Shares | 2025 Avg Price (per share) | 2024 Repurchases (in millions) | 2024 Shares | 2024 Avg Price (per share) | | :-------------------------- | :--------------- | :------------ | :------------- | :--------------- | :------------ | :------------- | | **Three Months Ended June 30,** | | | | | | | | Common stock repurchases | $34.3 | 787,152 | $43.56 | $19.2 | 317,388 | $60.65 | | **Six Months Ended June 30,** | | | | | | | | Common stock repurchases | $76.1 | 1,648,453 | $46.18 | $28.0 | 457,281 | $61.25 | [Note 11. Comprehensive Income](index=24&type=section&id=Note%2011.%20Comprehensive%20Income) This note provides a breakdown of other comprehensive income and changes in accumulated other comprehensive loss, including translation adjustments Other Comprehensive Income (Loss), Net of Tax (in millions) | Period | 2025 (in millions) | 2024 (in millions) | | :-------------------------- | :----- | :----- | | **Three Months Ended June 30,** | | | | Translation adjustments | $1.4 | $(0.1) | | Adjustment for net periodic pension and other postretirement benefits plans | $0.3 | $0.2 | | **Other comprehensive income (loss)** | **$1.7** | **$0.1** | | **Six Months Ended June 30,** | | | | Translation adjustments | $1.7 | $(0.6) | | Adjustment for net periodic pension and other postretirement benefits plans | $0.6 | $0.4 | | **Other comprehensive income (loss)** | **$2.3** | **$(0.2)** | Changes in Accumulated Other Comprehensive Loss (Six Months Ended June 30, in millions) | Component | Balance at Dec 31, 2024 (in millions) | Net change in accumulated other comprehensive loss (in millions) | Balance at June 30, 2025 (in millions) | | :------------------------------------------ | :---------------------- | :------------------------------------------------- | :----------------------- | | Pension and Other Postretirement Benefits Plans | $(66.4) | $0.6 | $(65.8) | | Translation Adjustments | $(15.5) | $1.7 | $(13.8) | | **Total** | **$(81.9)** | **$2.3** | **$(79.6)** | [Note 12. Segment Information](index=26&type=section&id=Note%2012.%20Segment%20Information) This note outlines DFIN's four reportable segments and provides detailed financial performance data, including net sales and Adjusted EBITDA - DFIN operates through four reportable segments: Capital Markets – Software Solutions (CM-SS), Capital Markets – Compliance and Communications Management (CM-CCM), Investment Companies – Software Solutions (IC-SS), and Investment Companies – Compliance and Communications Management (IC-CCM). Corporate includes unallocated SG&A and employee benefits plan costs[78](index=78&type=chunk)[79](index=79&type=chunk)[80](index=80&type=chunk)[81](index=81&type=chunk)[82](index=82&type=chunk) Segment Net Sales and Adjusted EBITDA (Three Months Ended June 30, 2025 vs. 2024, in millions) | Segment | 2025 Net Sales (in millions) | 2024 Net Sales (in millions) | % Change Net Sales | 2025 Adj EBITDA (in millions) | 2024 Adj EBITDA (in millions) | % Change Adj EBITDA | | :------------------------------------------ | :------------- | :------------- | :----------------- | :-------------- | :-------------- | :------------------ | | Capital Markets - Software Solutions | $59.1 | $57.3 | 3.1% | $22.4 | $21.2 | 5.7% | | Capital Markets - Compliance and Communications Management | $93.5 | $113.8 | (17.8%) | $36.8 | $45.8 | (19.7%) | | Investment Companies - Software Solutions | $33.1 | $28.3 | 17.0% | $14.2 | $11.1 | 27.9% | | Investment Companies - Compliance and Communications Management | $32.4 | $43.3 | (25.2%) | $12.6 | $18.3 | (31.1%) | | **Total** | **$218.1** | **$242.7** | **(10.1%)** | **$86.0** | **$96.4** | **(10.8%)** | Segment Net Sales and Adjusted EBITDA (Six Months Ended June 30, 2025 vs. 2024, in millions) | Segment | 2025 Net Sales (in millions) | 2024 Net Sales (in millions) | % Change Net Sales | 2025 Adj EBITDA (in millions) | 2024 Adj EBITDA (in millions) | % Change Adj EBITDA | | :------------------------------------------ | :------------- | :------------- | :----------------- | :-------------- | :-------------- | :------------------ | | Capital Markets - Software Solutions | $111.0 | $110.3 | 0.6% | $36.3 | $37.0 | (1.9%) | | Capital Markets - Compliance and Communications Management | $177.4 | $204.9 | (13.4%) | $73.5 | $77.2 | (4.8%) | | Investment Companies - Software Solutions | $65.8 | $55.6 | 18.3% | $27.0 | $19.1 | 41.4% | | Investment Companies - Compliance and Communications Management | $65.0 | $75.3 | (13.7%) | $24.8 | $26.5 | (6.4%) | | **Total** | **$419.2** | **$446.1** | **(6.0%)** | **$161.6** | **$159.8** | **1.1%** | [Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202%3A%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's analysis of DFIN's financial performance, condition, and outlook, covering key metrics, segment results, and influencing factors [Company Overview](index=31&type=section&id=Company%20Overview) This section provides an overview of DFIN's business as a global provider of financial regulatory and compliance solutions, emphasizing its shift towards software - DFIN is a **leading global provider of innovative software and technology-enabled financial regulatory and compliance solutions**. The company's strategy focuses on **investing in advanced software solutions** (ActiveDisclosure, Arc Suite, Venue) and **maintaining market leadership in tech-enabled services and print/distribution**[91](index=91&type=chunk)[92](index=92&type=chunk)[93](index=93&type=chunk) - A prevailing trend shows clients **increasingly utilizing software solutions in conjunction with tech-enabled services**, while **shifting away from physical print and distribution**, except where regulatorily required[91](index=91&type=chunk) [Market Volatility/Cyclicality and Seasonality](index=31&type=section&id=Market%20Volatility%2FCyclicality%20and%20Seasonality) This section discusses the impact of market volatility and seasonality on DFIN's segments and the company's strategies to mitigate these effects - The Capital Markets segments are **highly susceptible to market volatility**, with **demand for transactional and Venue offerings dependent on global IPOs, M&A, and debt offerings**. Compliance offerings and Investment Companies segments are less impacted[94](index=94&type=chunk) - The company experiences seasonality due to quarterly/annual public company reporting cycles and semi-annual/annual filings for investment companies, leading to peak periods requiring **increased** staffing[95](index=95&type=chunk) - DFIN aims to **mitigate market volatility by driving annual recurring revenue** and offering services in demand during down markets, such as bankruptcy/restructuring tools and upstream transactional products like Venue[94](index=94&type=chunk)[95](index=95&type=chunk) [Services and Products](index=32&type=section&id=Services%20and%20Products) This section outlines DFIN's diverse service and product offerings, including software solutions, tech-enabled services, and print and distribution - DFIN's offerings include software solutions (ActiveDisclosure, Arc Suite, Venue), tech-enabled services (document composition, SEC EDGAR filing, transactional solutions), and print and distribution (conventional and digital printed products)[96](index=96&type=chunk) [Government Regulations and Regulatory Impact](index=32&type=section&id=Government%20Regulations%20and%20Regulatory%20Impact) This section addresses the impact of new SEC regulations and the demand for structured data on DFIN's business and transition to software solutions - New and amended SEC rules, along with **increased** demand for structured, machine-readable data (e.g., iXBRL), are **driving significant changes in the regulatory environment**. These changes enable DFIN to offer new value-added functionality and **accelerate its transition from print to software solutions**[97](index=97&type=chunk) [Segments](index=32&type=section&id=Segments) This section describes DFIN's four operating segments: Capital Markets Software Solutions, Capital Markets Compliance, Investment Companies Software Solutions, and Investment Companies Compliance - The company's four operating segments are Capital Markets – Software Solutions (CM-SS), Capital Markets – Compliance and Communications Management (CM-CCM), Investment Companies – Software Solutions (IC-SS), and Investment Companies – Compliance and Communications Management (IC-CCM). Corporate handles unallocated SG&A and employee benefits costs[98](index=98&type=chunk) - CM-SS provides Venue and ActiveDisclosure subscriptions for transactional and compliance processes. CM-CCM offers tech-enabled services and print/distribution for deal solutions and SEC compliance[99](index=99&type=chunk)[100](index=100&type=chunk) - IC-SS provides the Arc Suite platform for managing compliance and regulatory information. IC-CCM offers tech-enabled services and print/distribution for regulatory and investor communications, including iXBRL filings and proxy services[101](index=101&type=chunk)[102](index=102&type=chunk) [Executive Overview](index=33&type=section&id=Executive%20Overview) This section provides an executive summary of DFIN's financial performance, highlighting changes in net sales and income from operations - For the three months ended June **30, 2025**, net sales **decreased** by **10.1%** to **$218.1 million**, primarily due to **lower** tech-enabled services and print/distribution sales, partially offset by a **7.7%** **increase** in software solutions sales. Income from operations **decreased** by **18.1%** to **$52.8 million**[103](index=103&type=chunk)[104](index=104&type=chunk) - For the six months ended June **30, 2025**, net sales **decreased** by **6.0%** to **$419.2 million**, driven by **declines** in tech-enabled services and print/distribution, partially offset by a **6.6%** **increase** in software solutions sales. Income from operations **decreased** by **9.6%** to **$98.6 million**[105](index=105&type=chunk)[106](index=106&type=chunk) - The **decline** in income from operations was **partially mitigated by lower cost of sales and SG&A expenses**, driven by reduced sales volumes, **lower** bad debt expense, and cost control initiatives[104](index=104&type=chunk)[106](index=106&type=chunk) [Financial Review](index=33&type=section&id=Financial%20Review) This section discusses the financial statements' GAAP conformity and the use of Segment Adjusted EBITDA as a key non-GAAP performance measure - Financial statements are prepared in conformity with GAAP, requiring extensive use of management's estimates. The **chief operating decision maker reviews segment net sales and Segment Adjusted EBITDA** to assess performance and allocate resources[107](index=107&type=chunk)[108](index=108&type=chunk) - Segment Adjusted EBITDA is a **non-GAAP measure**, defined as earnings before interest, taxes, depreciation, and amortization, adjusted for certain non-recurring items. It is used to monitor budget, analyze trends, and identify profitability improvement actions[108](index=108&type=chunk) [Results of Operations for the Three and Six Months Ended June 30, 2025 as Compared to the Three and Six Months Ended June 30, 2024](index=34&type=section&id=Results%20of%20Operations%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20as%20Compared%20to%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202024) This section analyzes the consolidated financial performance for the three and six months ended June 30, 2025, compared to the prior year Consolidated Financial Performance (Three Months Ended June 30, in millions) | Metric | 2025 (in millions) | 2024 (in millions) | Change (in millions) | % Change | | :---------------------- | :----- | :----- | :----- | :------- | | Software solutions | $92.2 | $85.6 | $6.6 | 7.7% | | Tech-enabled services | $85.2 | $102.2 | $(17.0) | (16.6%) | | Print and distribution | $40.7 | $54.9 | $(14.2) | (25.9%) | | **Total net sales** | **$218.1** | **$242.7** | **$(24.6)** | **(10.1%)** | | Total cost of sales | $79.2 | $86.5 | $(7.3) | (8.4%) | | SG&A expenses | $70.0 | $76.1 | $(6.1) | (8.0%) | | Income from operations | $52.8 | $64.5 | $(11.7) | (18.1%) | | Net earnings | $36.1 | $44.1 | $(8.0) | (18.1%) | Consolidated Financial Performance (Six Months Ended June 30, in millions) | Metric | 2025 (in millions) | 2024 (in millions) | Change (in millions) | % Change | | :---------------------- | :----- | :----- | :----- | :------- | | Software solutions | $176.8 | $165.9 | $10.9 | 6.6% | | Tech-enabled services | $161.7 | $185.1 | $(23.4) | (12.6%) | | Print and distribution | $80.7 | $95.1 | $(14.4) | (15.1%) | | **Total net sales** | **$419.2** | **$446.1** | **$(26.9)** | **(6.0%)** | | Total cost of sales | $152.2 | $166.6 | $(14.4) | (8.6%) | | SG&A expenses | $135.8 | $148.9 | $(13.1) | (8.8%) | | Income from operations | $98.6 | $109.1 | $(10.5) | (9.6%) | | Net earnings | $67.1 | $77.4 | $(10.3) | (13.3%) | - Software solutions net sales **increased** due to **higher** sales from TSR, Arc Suite, and ActiveDisclosure. Tech-enabled services and print and distribution net sales **decreased** primarily due to **lower** capital markets transactional and compliance volumes, and **lower** investment companies compliance volumes[111](index=111&type=chunk)[112](index=112&type=chunk)[113](index=113&type=chunk)[123](index=123&type=chunk)[124](index=124&type=chunk)[125](index=125&type=chunk) [Information by Segment](index=37&type=section&id=Information%20by%20Segment) This section provides a detailed breakdown of net sales and Adjusted EBITDA performance for each of DFIN's four operating segments - **Capital Markets – Software Solutions (CM-SS):** * **3 Months:** Net sales **increased** **3.1%** to **$59.1 million**, driven by ActiveDisclosure. Segment Adjusted EBITDA **increased** **5.7%** to **$22.4 million**, with margin **up 90 bps** to **37.9%** * **6 Months:** Net sales **increased** **0.6%** to **$111.0 million**, driven by ActiveDisclosure, offset by **lower** Venue sales. Segment Adjusted EBITDA **decreased** **1.9%** to **$36.3 million**, with margin **down 80 bps** to **32.7%** due to **higher** SG&A[137](index=137&type=chunk)[139](index=139&type=chunk)[140](index=140&type=chunk)[141](index=141&type=chunk)[142](index=142&type=chunk)[143](index=143&type=chunk)[144](index=144&type=chunk) - **Capital Markets – Compliance and Communications Management (CM-CCM):** * **3 Months:** Net sales **decreased** **17.8%** to **$93.5 million** due to **lower** tech-enabled services, transactional, and compliance volumes. Segment Adjusted EBITDA **decreased** **19.7%** to **$36.8 million**, with margin **down 80 bps** to **39.4%** * **6 Months:** Net sales **decreased** **13.4%** to **$177.4 million** due to **lower** tech-enabled services, transactional, and compliance volumes. Segment Adjusted EBITDA **decreased** **4.8%** to **$73.5 million**, but margin **increased** **370 bps** to **41.4%** due to **lower** SG&A[145](index=145&type=chunk)[146](index=146&type=chunk)[147](index=147&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk)[150](index=150&type=chunk)[151](index=151&type=chunk) - **Investment Companies – Software Solutions (IC-SS):** * **3 Months:** Net sales **increased** **17.0%** to **$33.1 million**, driven by TSR offering and ArcReporting. Segment Adjusted EBITDA **increased** **27.9%** to **$14.2 million**, with margin **up 370 bps** to **42.9%** due to price **increases** * **6 Months:** Net sales **increased** **18.3%** to **$65.8 million**, driven by TSR offering and ArcReporting. Segment Adjusted EBITDA **increased** **41.4%** to **$27.0 million**, with margin **up 660 bps** to **41.0%** due to price **increases**[152](index=152&type=chunk)[154](index=154&type=chunk)[155](index=155&type=chunk)[156](index=156&type=chunk)[157](index=157&type=chunk)[158](index=158&type=chunk) - **Investment Companies – Compliance and Communications Management (IC-CCM):** * **3 Months:** Net sales **decreased** **25.2%** to **$32.4 million** due to **lower** print and distribution compliance volumes. Segment Adjusted EBITDA **decreased** **31.1%** to **$12.6 million**, with margin **down 340 bps** to **38.9%** * **6 Months:** Net sales **decreased** **13.7%** to **$65.0 million** due to **lower** print and distribution compliance volumes. Segment Adjusted EBITDA **decreased** **6.4%** to **$24.8 million**, but margin **increased** **300 bps** to **38.2%** due to **lower** cost of sales[159](index=159&type=chunk)[160](index=160&type=chunk)[161](index=161&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk)[164](index=164&type=chunk)[165](index=165&type=chunk) - **Corporate Unallocated Expenses:** * **3 Months:** **Increased** **5.4%** to **$9.7 million** due to **higher** healthcare expense * **6 Months:** **Decreased** **1.7%** to **$17.1 million** due to **lower** incentive compensation expense, partially offset by **higher** consulting expense[166](index=166&type=chunk)[167](index=167&type=chunk)[168](index=168&type=chunk) [Non-GAAP Measures](index=41&type=section&id=Non-GAAP%20Measures) This section defines Adjusted EBITDA as a non-GAAP measure and provides reconciliations to net earnings for the reported periods - Adjusted EBITDA is a **non-GAAP measure** used to assess operating results and financial performance, providing a more meaningful comparison of core business operations by excluding certain non-recurring or non-cash items[169](index=169&type=chunk)[170](index=170&type=chunk) Adjusted EBITDA Reconciliation (Three Months Ended June 30, in millions) | Metric | 2025 (in millions) | 2024 (in millions) | | :-------------------------------------- | :----- | :----- | | Net earnings | $36.1 | $44.1 | | Restructuring, impairment and other charges, net | $1.0 | $1.3 | | Share-based compensation expense | $7.5 | $7.4 | | Depreciation and amortization | $15.1 | $14.3 | | Interest expense, net | $3.8 | $3.7 | | Income tax expense | $12.6 | $17.1 | | **Adjusted EBITDA** | **$76.3** | **$87.2** | Adjusted EBITDA Reconciliation (Six Months Ended June 30, in millions) | Metric | 2025 (in millions) | 2024 (in millions) | | :-------------------------------------- | :----- | :----- | | Net earnings | $67.1 | $77.4 | | Restructuring, impairment and other charges, net | $3.9 | $3.1 | | Share-based compensation expense | $13.5 | $12.5 | | Gain on sales of long-lived assets | $(0.5) | $(9.8) | | Depreciation and amortization | $29.2 | $28.2 | | Interest expense, net | $6.9 | $7.3 | | Income tax expense | $23.8 | $25.2 | | **Adjusted EBITDA** | **$144.5** | **$142.4** | [Liquidity and Capital Resources](index=43&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses DFIN's liquidity, capital resources, cash flow activities, debt structure, and compliance with debt covenants - DFIN believes it has **sufficient liquidity** from cash on hand, operating cash flows, and its Revolving Facility to support operations, invest in **growth**, service debt, and fund share repurchases[176](index=176&type=chunk) Cash Flow Summary (Six Months Ended June 30, in millions) | Activity | 2025 (in millions) | 2024 (in millions) | | :-------------------------------- | :----- | :----- | | Net cash provided by operating activities | $30.7 | $28.3 | | Net cash used in investing activities | $(29.9) | $(19.1) | | Net cash (used in) provided by financing activities | $(25.5) | $3.5 | | Net (decrease) increase in cash and cash equivalents | $(23.5) | $11.9 | - Net cash provided by operating activities **increased** by **$2.4 million** to **$30.7 million** for the six months ended June **30, 2025**, primarily due to timing of supplier payments and receivables collections, partially offset by **higher** employee-related compensation payments[183](index=183&type=chunk)[188](index=188&type=chunk) - Net cash used in investing activities was **$29.9 million**, primarily for **$30.0 million** in capital expenditures for software development. Net cash used in financing activities was **$25.5 million**, including **$88.7 million** in treasury share repurchases and debt payments, partially offset by revolving facility borrowings[183](index=183&type=chunk)[185](index=185&type=chunk) Debt Structure (in millions) | Metric | June 30, 2025 (in millions) | December 31, 2024 (in millions) | | :-------------------------- | :------------ | :---------------- | | Term Loan A Facility | $113.6 | $125.0 | | Borrowings under the Revolving Facility | $77.0 | — | | **Total debt** | **$190.1** | **$124.7** | | Current availability under Revolving Facility | $221.5 | N/A | | Net Available Liquidity | $255.3 | N/A | - The company was **in compliance with its debt covenants** as of June **30, 2025**, and **expects** to remain so. Capital expenditures for fiscal year **2025** are projected to be approximately **$60 million** to **$65 million**[183](index=183&type=chunk)[194](index=194&type=chunk) [Item 3: Quantitative and Qualitative Disclosure About Market Risk](index=46&type=section&id=Item%203%3A%20Quantitative%20and%20Qualitative%20Disclosure%20About%20Market%20Risk) This section confirms no significant changes to the company's market risk disclosures since the latest Annual Report on Form 10-K - **No significant changes** to the Company's market risk disclosures were identified during the period[199](index=199&type=chunk) [Item 4: Controls and Procedures](index=46&type=section&id=Item%204%3A%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with a new quote-to-cash process being implemented - The Chief Executive Officer and Chief Financial Officer concluded that the Company's **disclosure controls and procedures were effective** as of June **30, 2025**[200](index=200&type=chunk) - The Company is **implementing a new quote-to-cash (QTC) process**, including new systems, to **improve** the efficiency and effectiveness of business transactions, invoicing, reporting, and underlying systems, which is a significant component of internal control over financial reporting[201](index=201&type=chunk) [Part II. Other Information](index=46&type=section&id=Part%20II%20OTHER%20INFORMATION) This part includes other required disclosures such as legal proceedings, risk factors, equity security sales, and exhibits [Item 1: Legal Proceedings](index=46&type=section&id=Item%201%3A%20Legal%20Proceedings) This section refers to Note 7 of the Condensed Consolidated Financial Statements for details on the company's legal proceedings - For details on legal proceedings, refer to Note **7**, Commitments and Contingencies, in the Unaudited Condensed Consolidated Financial Statements[202](index=202&type=chunk) [Item 1A: Risk Factors](index=46&type=section&id=Item%201A%3A%20Risk%20Factors) This section confirms no material changes to the risk factors previously identified in the Annual Report on Form 10-K - **No material changes** to the risk factors identified in the Annual Report occurred during the three months ended June **30, 2025**[203](index=203&type=chunk) [Item 2: Unregistered Sales of Equity Securities and Use of Proceeds](index=47&type=section&id=Item%202%3A%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details common stock repurchases during the quarter and highlights the new $150 million share repurchase program authorized in May 2025 Issuer Purchases of Equity Securities (April 1, 2025 - June 30, 2025) | Period | Total Number of Shares Purchased (shares) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (shares) | Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (dollars) | | :-------------------------- | :------------------------------- | :--------------------------- | :----------------------------------------------------------------- | :----------------------------------------------------------------- | | April 1, 2025 - April 30, 2025 | 682,271 | $42.34 | 682,271 | $20,574,060 | | May 1, 2025 - May 31, 2025 | 106,224 | $51.53 | 104,881 | $150,000,000 | | June 1, 2025 - June 30, 2025 | 410 | $57.01 | — | $150,000,000 | | **Total** | **788,905** | **$43.58** | **787,152** | | - On May **15, 2025**, the Board authorized a **new $150 million share repurchase program**, replacing the previous one, with an expiration date of December **31, 2026**. Repurchases may occur on the open market or privately, in compliance with Rule **10b-18** or under a Rule **10b5-1** plan[204](index=204&type=chunk) [Item 3: Defaults Upon Senior Securities](index=47&type=section&id=Item%203%3A%20Defaults%20Upon%20Senior%20Securities) This section confirms that there were no defaults upon senior securities during the reporting period - There were **no defaults** upon senior securities[205](index=205&type=chunk) [Item 4: Mine Safety Disclosures](index=47&type=section&id=Item%204%3A%20Mine%20Safety%20Disclosures) This section states that the disclosure requirements for mine safety are not applicable to the company - Mine safety disclosures are **not applicable** to the Company[206](index=206&type=chunk) [Item 5: Other Information](index=47&type=section&id=Item%205%3A%20Other%20Information) This section discloses that the company's President and CEO, Daniel N. Leib, adopted a Rule 10b5-1 trading plan for the sale of 35,000 shares of common stock - On June **11, 2025**, Daniel N. Leib, President and CEO, **adopted a Rule 10b5-1 trading plan** to sell up to **35,000** shares of common stock between November **13, 2025**, and December **31, 2025**, if the market price is within a specified range[207](index=207&type=chunk) [Item 6: Exhibits](index=48&type=section&id=Item%206%3A%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including corporate governance documents and executive certifications - Key exhibits include Amended and Restated Certificate of Incorporation, Amended and Restated By-laws, and certifications by the CEO and CFO (Rule **13a-14(a)**, Rule **15d-14(a)**, Rule **13a-14(b)**, Rule **15d-14(b)**, and Section **1350**)[209](index=209&type=chunk) - The report also includes Inline XBRL Instance Document, Taxonomy Extension Schema, and the cover page formatted in Inline XBRL[209](index=209&type=chunk) [Signatures](index=49&type=section&id=Signatures) This section confirms the official signing of the report by the Executive Vice President and Chief Financial Officer - The report was **duly signed on behalf of Donnelley Financial Solutions, Inc.** by **David A. Gardella, Executive Vice President and Chief Financial Officer**, on July **31, 2025**[211](index=211&type=chunk)[212](index=212&type=chunk)[213](index=213&type=chunk)

Financial Data and Key Metrics Changes - The company reported total net sales of $218.1 million for Q2 2025, a decrease of $24.6 million or 10.1% from Q2 2024 [12] - Adjusted EBITDA was $76.3 million, a decrease of $10.9 million or 12.5% from the previous year, with an adjusted EBITDA margin of 35%, down approximately 90 basis points from Q2 2024 [15][19] - Free cash flow for the quarter was $51.7 million, an increase of $14.9 million compared to Q2 2024 [23] Business Line Data and Key Metrics Changes - Software Solutions net sales grew approximately 8% year over year, with recurring compliance software offerings growing about 15% [5][12] - Capital Markets Software Solutions segment net sales were $59.1 million, an increase of 3.1% year over year, driven by Active Disclosure [16] - Capital Markets Compliance and Communications Management segment net sales decreased by 17.8% to $93.5 million, primarily due to lower transactional revenue [17] Market Data and Key Metrics Changes - The company experienced a decline in capital markets transactional revenue, which was at the lowest level in its history, with $34.8 million recorded in Q2 [17][18] - The overall transactional activity in Q2 remained well below historical norms, with IPO transactions and large public company M&A deals below last year's levels [18] - The IPO market showed signs of recovery with a total of 14 IPOs greater than $100 million in Q2, but the overall number of IPOs in the first half of 2025 decreased by 14% compared to the same period in 2024 [36][37] Company Strategy and Development Direction - The company is focused on transforming into a leading provider of compliance and regulatory solutions, predominantly through software and services [11] - The strategy includes a shift towards recurring software offerings and improving operational efficiencies while managing costs [11][28] - The company remains committed to its five-year plan updated in February, aiming for a sustainable business model despite ongoing market challenges [11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about improving market conditions and a positive trajectory in the second quarter, despite a prolonged downturn in capital markets transactional activity [6][28] - The company anticipates Q3 consolidated net sales in the range of $165 million to $175 million, reflecting a cautious outlook due to lower print and distribution sales [25] - Management highlighted the importance of maintaining a strong balance sheet and robust free cash flow to support long-term value creation [28] Other Important Information - The company repurchased approximately 787,000 shares for $34.3 million during Q2, with a new share repurchase program authorized for up to $150 million [24][25] - Non-GAAP unallocated corporate expenses were $9.7 million, reflecting higher investments in transformation and healthcare expenses [23] Q&A Session Summary Question: Can you provide more detail on the assumptions behind the Q3 guidance? - Management indicated that the guidance for transactional sales in Q3 reflects a cautious optimism based on recent market activity, with a range of $35 million to $40 million [33][34] Question: What is the outlook for the capital markets given the improving pipeline? - Management acknowledged the improving pipeline but emphasized the uncertainty in timing and the need for a conservative outlook [57][58] Question: How does the company view share repurchases moving forward? - Management reiterated that share repurchases are a key component of capital allocation, with a strategy to be more aggressive at lower stock prices [60][62] Question: Any updates on the pension plan annuitization process? - Management confirmed that the annuitization process is underway and expected to occur in Q3, with further updates to be provided [64]

Company Overview - DFIN is a leader in assisting companies with regulatory reporting requirements, holding the 1 SEC Filing Agent position for both corporations and fund companies[10] - DFIN's portfolio includes market-leading software solutions like ArcSuite, ActiveDisclosure and Venue, with ~80% of the top 50 global fund complexes as clients[10] - DFIN's offerings are essential for recurring regulatory compliance needs and capital markets transactions such as IPOs and M&A[11] Financial Performance and Metrics (Q2 2025 TTM) - Software sales reached $341 million, expected to grow at a double-digit rate annually[14] - The company's revenue mix is shifting towards high-margin software solutions, offsetting declining low-margin print & distribution[14] - Adjusted EBITDA reached $219.4 million, resulting in an attractive valuation with EV / Q2 2025 TTM EBITDA at 9.1x[25, 27] - Free Cash Flow was $109.3 million, leading to a Free Cash Flow multiple of 16.8x[25] - Net debt stood at $156.3 million, resulting in a net leverage ratio of 0.7x[21, 24] Segment Performance (Q2 2025 TTM) - Capital Markets segment net sales totaled $509 million, with $214 million from Software Solutions and $294 million from Compliance & Communications Management[12] - Investment Companies segment net sales were $247 million, comprising $126 million from Software Solutions and $120 million from Compliance & Communications Management[12] - Capital Markets EBITDA was $170 million with a 33% margin, while Investment Companies EBITDA was $87 million with a 35% margin[12] Capital Allocation and Shareholder Focus - The company repurchased approximately 787,000 shares of common stock during Q2 2025 for $34.3 million, at an average price of $43.56 per share[63] - A new stock repurchase program of up to $150 million was authorized, expiring December 31, 2026[50, 63]

[Executive Summary](index=1&type=section&id=Executive%20Summary) [Q2 2025 Financial Highlights](index=1&type=section&id=Q2%202025%20Financial%20Highlights) DFIN achieved record software solutions net sales, strong Adjusted EBITDA margin, and improved cash flows, alongside active share repurchases, despite an overall net sales decrease | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (%) | | :-------------------------------- | :---------- | :---------- | :--------- | | Software Solutions Net Sales | $92.2 | $85.6 | +7.7% | | Software Solutions % of Total Sales | 42.3% | 35.3% | +7.0 pp | | Net Earnings | $36.1 | $44.1 | -18.2% | | Diluted EPS | $1.28 | $1.47 | -12.9% | | Adjusted EBITDA | $76.3 | $87.2 | -12.5% | | Adjusted EBITDA Margin | 35.0% | 35.9% | -0.9 pp | - Operating Cash Flow increased by **$12.2 million** and Free Cash Flow increased by **$14.9 million** from Q2 2024[6](index=6&type=chunk) - The Company repurchased **787,152 shares** for approximately **$34.3 million** at an average price of **$43.56 per share**. A new **$150 million** stock repurchase program was authorized, replacing the previous one[6](index=6&type=chunk) | Metric | As of June 30, 2025 | | :----------- | :------------------ | | Gross Leverage | 0.9x | | Net Leverage | 0.7x | [CEO Commentary](index=1&type=section&id=CEO%20Commentary) The CEO highlighted successful software-focused strategy and recurring compliance software growth, despite macroeconomic headwinds, emphasizing increased recurring sales and disciplined capital allocation - Software solutions net sales increased by **7.7%** compared to Q2 2024, driven by ActiveDisclosure and Arc Suite, which grew approximately **15%** in aggregate[4](index=4&type=chunk) - Software solutions net sales constituted **42.3%** of total net sales in Q2 2025, up from **35.3%** in Q2 2024, positioning the company to achieve its long-term target of **60%** software revenue by **2028**[4](index=4&type=chunk) - Encouraged by improving market activity trends as the quarter progressed, despite persistent macroeconomic headwinds and market uncertainty suppressing demand for transactional offerings[5](index=5&type=chunk) - Focus for the second half of the year includes investing to drive a more recurring sales mix, aggressively managing the cost structure, and disciplined capital allocation to deliver long-term value[5](index=5&type=chunk) [Financial Performance Overview](index=2&type=section&id=Financial%20Performance%20Overview) [Net Sales](index=2&type=section&id=Net%20Sales) Total net sales for Q2 2025 decreased by 10.1% year-over-year, driven by lower print and distribution volumes and reduced capital markets transactional revenue, partially offset by software solutions growth | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change ($M) | Change (%) | | :------------ | :----------------- | :----------------- | :---------- | :--------- | | Total Net Sales | $218.1 | $242.7 | -$24.6 | -10.1% | - The decrease in net sales was primarily driven by lower print and distribution volumes within capital markets and investment companies compliance offerings, and a reduction in capital markets transactional revenue[7](index=7&type=chunk) - The decline was partially offset by higher software solutions net sales in Arc Suite and ActiveDisclosure[7](index=7&type=chunk) [Net Earnings](index=2&type=section&id=Net%20Earnings) Net earnings and diluted EPS decreased in Q2 2025 compared to Q2 2024, influenced by after-tax charges from share-based compensation and restructuring | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change ($M) | Change (%) | | :-------------- | :----------------- | :----------------- | :---------- | :--------- | | Net Earnings | $36.1 | $44.1 | -$8.0 | -18.1% | | Diluted EPS | $1.28 | $1.47 | -$0.19 | -12.9% | - Q2 2025 net earnings included after-tax charges of **$6.0 million** (**$0.21 per diluted share**), primarily from share-based compensation and restructuring, impairment, and other charges[8](index=8&type=chunk) - Q2 2024 net earnings included after-tax charges of **$5.7 million** (**$0.19 per diluted share**) from similar items[8](index=8&type=chunk) [Adjusted EBITDA and Non-GAAP Net Earnings](index=2&type=section&id=Adjusted%20EBITDA%20and%20Non-GAAP%20Net%20Earnings) Adjusted EBITDA and margin decreased in Q2 2025 due to lower capital markets transactional volumes, partially offset by higher software sales and cost control, with Non-GAAP net earnings also declining | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change ($M) | Change (%) | | :--------------------- | :----------------- | :----------------- | :---------- | :--------- | | Adjusted EBITDA | $76.3 | $87.2 | -$10.9 | -12.5% | | Adjusted EBITDA Margin | 35.0% | 35.9% | -0.9 pp | | - The decrease in Adjusted EBITDA and margin was primarily attributed to lower capital markets transactional volumes[9](index=9&type=chunk) - This decline was partially offset by higher software solutions net sales, cost control initiatives, and lower selling expenses due to decreased sales volumes[9](index=9&type=chunk) | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change ($M) | Change (%) | | :--------------------- | :----------------- | :----------------- | :---------- | :--------- | | Non-GAAP Net Earnings | $42.1 | $49.8 | -$7.7 | -15.4% | | Non-GAAP Diluted EPS | $1.49 | $1.66 | -$0.17 | -10.2% | [Financial Guidance](index=2&type=section&id=Financial%20Guidance) [Third-Quarter 2025 Guidance](index=2&type=section&id=Third-Quarter%202025%20Guidance) DFIN provided Q3 2025 guidance, projecting total net sales between $165 million and $175 million, with an Adjusted EBITDA margin of 23% to 25% | Metric | Third-Quarter Guidance (Millions) | | :---------------------------- | :--------------------- | | Total Net Sales | $165 to $175 | | Adjusted EBITDA Margin | 23% to 25% | | Capital Markets Transactional Net Sales | $35 to $40 | - Adjusted EBITDA margin guidance is provided on a non-GAAP basis only, without a GAAP reconciliation due to the impracticality of preparing such a reconciliation without unreasonable efforts[13](index=13&type=chunk) [Company Information](index=2&type=section&id=Company%20Information) [Company Results and Conference Call](index=2&type=section&id=Company%20Results%20and%20Conference%20Call) DFIN's Q2 2025 earnings press release is available on its investor relations website, and a conference call and webcast were held on July 31, 2025, with a replay available online - The earnings press release (Exhibit 99.1 to Form 8-K) and a supplemental trending schedule are available on investor.dfinsolutions.com[14](index=14&type=chunk) - A conference call and webcast were held on **July 31, 2025**, at **9:00 a.m. Eastern time**, with a replay available on the investor relations website[15](index=15&type=chunk)[16](index=16&type=chunk) [About DFIN](index=3&type=section&id=About%20DFIN) DFIN is a global provider of innovative software and technology-enabled financial regulatory and compliance solutions, offering expertise, enterprise software, and data analytics - DFIN provides domain expertise, enterprise software, and data analytics for financial regulatory and compliance solutions[17](index=17&type=chunk) - The company aims to deliver confidence with the right solutions amidst fluctuating markets, evolving regulations, and advancing technology[17](index=17&type=chunk) [Investor Contact](index=3&type=section&id=Investor%20Contact) For investor inquiries, contact Mike Zhao, Investor Relations, via email at investors@dfinsolutions.com - Investor Relations contact: **Mike Zhao**, **investors@dfinsolutions.com**[18](index=18&type=chunk) [Non-GAAP Financial Measures](index=4&type=section&id=Non-GAAP%20Financial%20Measures) [Use of Non-GAAP Information](index=4&type=section&id=Use%20of%20Non-GAAP%20Information) DFIN uses non-GAAP financial measures like Adjusted EBITDA and Free Cash Flow to provide additional insights into operating results and liquidity, enhancing financial performance assessment and comparability - Non-GAAP measures (e.g., Adjusted EBITDA, Free Cash Flow, organic net sales) are used to provide useful information about operating results and liquidity, and to enhance the overall ability to assess financial performance[19](index=19&type=chunk) - These adjusted measures exclude certain costs, expenses, gains, and losses that management believes are not indicative of ongoing operations, such as share-based compensation and restructuring charges[20](index=20&type=chunk) - Free Cash Flow is defined as net cash flow provided by operating activities less capital expenditures, providing insight into cash generation after capital investment[21](index=21&type=chunk) - Organic net sales adjust reported net sales for changes in foreign currency exchange rates and the impact of dispositions[22](index=22&type=chunk) - Non-GAAP measures should be considered in addition to, not as a substitute for, GAAP measures and may not be comparable to similarly-titled measures of other companies[23](index=23&type=chunk) [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) [Use of Forward-Looking Statements](index=4&type=section&id=Use%20of%20Forward-Looking%20Statements) This news release contains forward-looking statements about DFIN's business, strategy, and future financial performance, subject to risks and uncertainties, with actual results potentially differing materially from expectations - The news release includes forward-looking statements about DFIN's business, strategy, plans, and future financial condition and performance[24](index=24&type=chunk) - These statements involve known and unknown risks and uncertainties, many beyond DFIN's control, which could cause actual results to differ materially from current expectations[24](index=24&type=chunk) - DFIN specifically declines any obligation to publicly release the results of any revisions to these forward-looking statements[24](index=24&type=chunk) [Condensed Consolidated Financial Statements](index=5&type=section&id=Condensed%20Consolidated%20Financial%20Statements) [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) DFIN's balance sheet as of June 30, 2025, shows increased total assets and liabilities compared to December 31, 2024, while total equity slightly decreased | Metric (Millions) | June 30, 2025 | December 31, 2024 | Change ($M) | | :-------------------------- | :------------ | :---------------- | :---------- | | Total Current Assets | $266.6 | $232.5 | +$34.1 | | Total Assets | $874.7 | $841.6 | +$33.1 | | Total Current Liabilities | $207.1 | $224.1 | -$17.0 | | Long-Term Debt | $184.3 | $124.7 | +$59.6 | | Total Liabilities | $442.6 | $405.5 | +$37.1 | | Total Equity | $432.1 | $436.1 | -$4.0 | - Cash and cash equivalents decreased from **$57.3 million** to **$33.8 million**[26](index=26&type=chunk) - Receivables, net, increased significantly from **$138.0 million** to **$202.0 million**[26](index=26&type=chunk) [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For Q2 2025, DFIN experienced decreased total net sales and net earnings compared to Q2 2024, driven by declines in tech-enabled services and print, despite software solutions growth | Metric (Millions) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :-------------------------- | :------ | :------ | :------ | :------ | | Software solutions | $92.2 | $85.6 | $176.8 | $165.9 | | Tech-enabled services | $85.2 | $102.2 | $161.7 | $185.1 | | Print and distribution | $40.7 | $54.9 | $80.7 | $95.1 | | **Total Net Sales** | **$218.1** | **$242.7** | **$419.2** | **$446.1** | | **Net Earnings** | **$36.1** | **$44.1** | **$67.1** | **$77.4** | | Diluted EPS | $1.28 | $1.47 | $2.33 | $2.56 | | Gross Profit | $124.3 | $142.4 | $238.7 | $252.4 | | Gross Margin | 57.0% | 58.7% | 56.9% | 56.6% | - Software solutions net sales increased by **7.7%** in Q2 2025 YoY, while tech-enabled services decreased by **16.6%** and print and distribution decreased by **25.9%**[28](index=28&type=chunk) - Income from operations decreased from **$64.5 million** in Q2 2024 to **$52.8 million** in Q2 2025[28](index=28&type=chunk) [Reconciliation of GAAP to Non-GAAP Measures (Q2 & H1 2025)](index=7&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Measures%20(Q2%20%26%20H1%202025)) This section reconciles GAAP net earnings to adjusted non-GAAP measures for Q2 and H1 2025, detailing adjustments for restructuring and share-based compensation to derive non-GAAP net earnings and diluted EPS | Metric (Millions) | Q2 2025 GAAP | Q2 2025 Adjusted Non-GAAP | | :-------------------------------- | :----------- | :------------------------ | | Net Earnings | $36.1 | $42.1 | | Net Earnings per Diluted Share | $1.28 | $1.49 | | Income from Operations | $52.8 | $61.2 | | Operating Margin | 24.2% | 28.1% | | Total Non-GAAP Adjustments (Net Earnings Impact) | | $6.0 | | Metric (Millions) | H1 2025 GAAP | H1 2025 Adjusted Non-GAAP | | :-------------------------------- | :----------- | :------------------------ | | Net Earnings | $67.1 | $78.7 | | Net Earnings per Diluted Share | $2.33 | $2.73 | | Income from Operations | $98.6 | $115.3 | | Operating Margin | 23.5% | 27.5% | | Total Non-GAAP Adjustments (Net Earnings Impact) | | $11.6 | - Key adjustments for Q2 2025 included **$1.0 million** for restructuring, impairment and other charges, net, and **$7.5 million** for share-based compensation expense[31](index=31&type=chunk) [Reconciliation of GAAP to Non-GAAP Measures (Q2 & H1 2024)](index=8&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Measures%20(Q2%20%26%20H1%202024)) This section reconciles GAAP net earnings to adjusted non-GAAP measures for Q2 and H1 2024, detailing adjustments for similar non-recurring items to provide a comparable view of operational performance | Metric (Millions) | Q2 2024 GAAP | Q2 2024 Adjusted Non-GAAP | | :-------------------------------- | :----------- | :------------------------ | | Net Earnings | $44.1 | $49.8 | | Net Earnings per Diluted Share | $1.47 | $1.66 | | Income from Operations | $64.5 | $72.9 | | Operating Margin | 26.6% | 30.0% | | Total Non-GAAP Adjustments (Net Earnings Impact) | | $5.7 | | Metric (Millions) | H1 2024 GAAP | H1 2024 Adjusted Non-GAAP | | :-------------------------------- | :----------- | :------------------------ | | Net Earnings | $77.4 | $77.6 | | Net Earnings per Diluted Share | $2.56 | $2.57 | | Income from Operations | $109.1 | $114.2 | | Operating Margin | 24.5% | 25.6% | | Total Non-GAAP Adjustments (Net Earnings Impact) | | $0.2 | - Key adjustments for Q2 2024 included **$1.3 million** for restructuring, impairment and other charges, net, and **$7.4 million** for share-based compensation expense[36](index=36&type=chunk) [Segment Adjusted EBITDA and Supplementary Information](index=9&type=section&id=Segment%20Adjusted%20EBITDA%20and%20Supplementary%20Information) DFIN's segment performance for Q2 and H1 2025 shows varied results, with Capital Markets and Investment Companies Software Solutions growing in net sales and Adjusted EBITDA, while other segments declined | Segment (Millions) | Q2 2025 Net Sales | Q2 2024 Net Sales | Q2 2025 Adj. EBITDA | Q2 2024 Adj. EBITDA | | :------------------------------------------------ | :---------------- | :---------------- | :------------------ | :------------------ | | Capital Markets - Software Solutions | $59.1 | $57.3 | $22.4 | $21.2 | | Capital Markets - Compliance and Communications Management | $93.5 | $113.8 | $36.8 | $45.8 | | Investment Companies - Software Solutions | $33.1 | $28.3 | $14.2 | $11.1 | | Investment Companies - Compliance and Communications Management | $32.4 | $43.3 | $12.6 | $18.3 | | Consolidated | $218.1 | $242.7 | $76.3 | $87.2 | - Capital Markets - Software Solutions saw a **3.1%** increase in net sales and a **5.7%** increase in Adjusted EBITDA in Q2 2025 YoY[40](index=40&type=chunk) - Investment Companies - Software Solutions reported a **17.0%** increase in net sales and a **27.9%** increase in Adjusted EBITDA in Q2 2025 YoY[40](index=40&type=chunk) - Consolidated Adjusted EBITDA margin for Q2 2025 was **35.0%**, a slight decrease from **35.9%** in Q2 2024[40](index=40&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For H1 2025, DFIN generated positive net cash from operating activities but experienced net cash outflows from investing and financing, resulting in a net decrease in cash and cash equivalents | Cash Flow Activity (Millions) | H1 2025 | H1 2024 | | :---------------------------- | :------ | :------ | | Net cash provided by operating activities | $30.7 | $28.3 | | Net cash used in investing activities | ($29.9) | ($19.1) | | Net cash (used in) provided by financing activities | ($25.5) | $3.5 | | Net (decrease) increase in cash and cash equivalents | ($23.5) | $11.9 | | Cash and cash equivalents at end of period | $33.8 | $35.0 | | Metric (Millions) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :---------------- | :------ | :------ | :------ | :------ | | Free Cash Flow | $51.7 | $36.8 | $0.7 | ($3.4) | - Capital expenditures for H1 2025 were **$30.0 million**, slightly down from **$31.7 million** in H1 2024[43](index=43&type=chunk) [Reconciliation of Reported to Organic Net Sales - By Segment](index=11&type=section&id=Reconciliation%20of%20Reported%20to%20Organic%20Net%20Sales%20-%20By%20Segment) This reconciliation shows foreign exchange impact on segment net sales, revealing organic net sales changes largely mirrored reported changes, with software solutions segments growing organically while compliance and communications management segments declined | Segment | Q2 2025 Reported Net Sales Change (%) | Q2 2025 Organic Net Sales Change (%) | | :------------------------------------------------ | :------------------------------------ | :----------------------------------- | | Capital Markets - Software Solutions | 3.1% | 2.8% | | Capital Markets - Compliance and Communications Management | (17.8%) | (17.8%) | | Investment Companies - Software Solutions | 17.0% | 16.3% | | Investment Companies - Compliance and Communications Management | (25.2%) | (25.2%) | | Consolidated | (10.1%) | (10.3%) | | Segment | H1 2025 Reported Net Sales Change (%) | H1 2025 Organic Net Sales Change (%) | | :------------------------------------------------ | :------------------------------------ | :----------------------------------- | | Capital Markets - Software Solutions | 0.6% | 0.6% | | Capital Markets - Compliance and Communications Management | (13.4%) | (13.3%) | | Investment Companies - Software Solutions | 18.3% | 18.1% | | Investment Companies - Compliance and Communications Management | (13.7%) | (13.6%) | | Consolidated | (6.0%) | (5.9%) | - Foreign exchange rates had a minimal impact on consolidated net sales change, with a **0.2% positive impact** in Q2 2025 and a **0.1% negative impact** in H1 2025[45](index=45&type=chunk) [Reconciliation of Reported to Organic Net Sales - By Services and Products](index=12&type=section&id=Reconciliation%20of%20Reported%20to%20Organic%20Net%20Sales%20-%20By%20Services%20and%20Products) This reconciliation details reported and organic net sales changes by service and product type, highlighting strong organic growth in software solutions, while tech-enabled services and print experienced significant organic declines | Product/Service | Q2 2025 Reported Net Sales Change (%) | Q2 2025 Organic Net Sales Change (%) | | :------------------- | :------------------------------------ | :----------------------------------- | | Software Solutions | 7.7% | 7.2% | | Tech-enabled Services | (16.6%) | (16.7%) | | Print and Distribution | (25.9%) | (25.7%) | | Consolidated | (10.1%) | (10.3%) | | Product/Service | H1 2025 Reported Net Sales Change (%) | H1 2025 Organic Net Sales Change (%) | | :------------------- | :------------------------------------ | :----------------------------------- | | Software Solutions | 6.6% | 6.5% | | Tech-enabled Services | (12.6%) | (12.5%) | | Print and Distribution | (15.1%) | (14.9%) | | Consolidated | (6.0%) | (5.9%) | - Foreign exchange rates had a minor impact on organic net sales changes across all product/service categories[47](index=47&type=chunk) [Reconciliation of Net Earnings to Adjusted EBITDA](index=13&type=section&id=Reconciliation%20of%20Net%20Earnings%20to%20Adjusted%20EBITDA) This section provides a detailed reconciliation of net earnings to Adjusted EBITDA for various periods, outlining adjustments for restructuring charges, share-based compensation, depreciation, and amortization | Metric (Millions) | TTM June 30, 2025 | Q2 2025 | Q1 2025 | Q4 2024 | Q3 2024 | | :-------------------------------- | :---------------- | :------ | :------ | :------ | :------ | | Net Earnings | $82.1 | $36.1 | $31.0 | $6.3 | $8.7 | | Total Non-GAAP Adjustments | $137.3 | $40.2 | $37.2 | $25.4 | $34.5 | | Adjusted EBITDA | $219.4 | $76.3 | $68.2 | $31.7 | $43.2 | | Adjusted EBITDA Margin % | 29.1% | 35.0% | 33.9% | 20.3% | 24.1% | | Metric (Millions) | TTM June 30, 2024 | Q2 2024 | Q1 2024 | Q4 2023 | Q3 2023 | | :-------------------------------- | :---------------- | :------ | :------ | :------ | :------ | | Net Earnings | $106.1 | $44.1 | $33.3 | $10.6 | $18.1 | | Total Non-GAAP Adjustments | $127.0 | $43.1 | $21.9 | $30.7 | $31.3 | | Adjusted EBITDA | $233.1 | $87.2 | $55.2 | $41.3 | $49.4 | | Adjusted EBITDA Margin % | 29.0% | 35.9% | 27.1% | 23.4% | 27.4% | - Adjustments include restructuring, impairment and other charges, share-based compensation expense, depreciation and amortization, interest expense, and income tax expense[49](index=49&type=chunk)[50](index=50&type=chunk) [Debt and Liquidity](index=14&type=section&id=Debt%20and%20Liquidity) [Debt and Liquidity Summary](index=14&type=section&id=Debt%20and%20Liquidity%20Summary) As of June 30, 2025, DFIN maintained significant liquidity with $255.3 million in net available liquidity, though total debt increased, leading to higher gross and net leverage ratios | Metric (Millions) | June 30, 2025 | December 31, 2024 | June 30, 2024 | | :---------------------------- | :------------ | :---------------- | :------------ | | Availability under Revolving Facility | $221.5 | $299.0 | $244.0 | | Cash and cash equivalents | $33.8 | $57.3 | $35.0 | | Net Available Liquidity | $255.3 | $356.3 | $279.0 | | Total Debt | $190.1 | $124.7 | $179.6 | | Non-GAAP Gross Leverage | 0.9x | 0.6x | 0.8x | | Non-GAAP Net Debt | $156.3 | $67.4 | $144.6 | | Non-GAAP Net Leverage | 0.7x | 0.3x | 0.6x | - Borrowings under the Revolving Facility increased to **$77.0 million** as of June 30, 2025, from **$0 million** at December 31, 2024[53](index=53&type=chunk) - The company had the ability to utilize the remaining **$221.5 million** of its **$300.0 million** Revolving Facility without violating terms as of June 30, 2025[53](index=53&type=chunk)

Core Insights - Donnelley Financial Solutions, Inc. (DFIN) reported a decrease in net sales for Q2 2025, totaling $218.1 million, down 10.1% from Q2 2024, primarily due to lower print and distribution volumes and reduced capital markets transactional revenue [3][5][7] - The company achieved record software solutions net sales of $92.2 million, a 7.7% increase year-over-year, with software solutions now accounting for 42.3% of total net sales, up from 35.3% in the previous year [5][7][8] - Adjusted EBITDA for Q2 2025 was $76.3 million, reflecting a decrease of $10.9 million compared to the same quarter in 2024, with an adjusted EBITDA margin of 35.0% [7][8][10] Financial Performance - Net earnings for Q2 2025 were $36.1 million, or $1.28 per diluted share, compared to $44.1 million, or $1.47 per diluted share, in Q2 2024 [4][5][8] - The company reported an increase in operating cash flow by $12.2 million and free cash flow by $14.9 million year-over-year [5][7] - Gross leverage was reported at 0.9x and net leverage at 0.7x as of June 30, 2025 [5][7] Market Outlook - The company expressed optimism regarding improving market activity trends despite ongoing macroeconomic challenges, indicating a focus on transitioning to a more recurring sales mix and disciplined capital allocation [2][5] - Guidance for Q3 2025 includes total net sales projected between $165 million and $175 million, with an adjusted EBITDA margin expected to range from 23% to 25% [10][11]

Company Overview - Donnelley Financial Solutions (DFIN) is a leading global provider of innovative software and technology-enabled financial regulatory and compliance solutions [4] - The company offers domain expertise, enterprise software, and data analytics for every stage of clients' business and investment lifecycles [4] Upcoming Events - DFIN will hold a conference call and webcast on Thursday, July 31, 2025, at 9:00 a.m. Eastern time to discuss its second-quarter fiscal year 2025 financial results and provide a general business update [1] - A live webcast of the call will be available on the company's investor relations website, and a replay will be accessible after the conference call [2] Financial Reporting - DFIN's financial report for the second quarter will be released before the market opens on July 31, 2025, via a filing with the SEC on Form 8-K [3]

```markdown Part I: Financial Information [Item 1: Condensed Consolidated Financial Statements (unaudited)](index=4&type=section&id=Item%201%3A%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) The unaudited condensed consolidated financial statements for the three months ended March 31, 2025, show a slight decrease in total net sales to $201.1 million compared to $203.4 million in the prior year period. Net earnings decreased to $31.0 million from $33.3 million. The balance sheet indicates total assets of $852.8 million and total equity of $419.9 million as of March 31, 2025. Cash flows from operations were negative, at -$37.7 million, a larger outflow than the -$27.9 million in the same period of 2024 Condensed Consolidated Statements of Operations (Three Months Ended March 31) | | 2025 (in millions) | 2024 (in millions) | | :--- | :--- | :--- | | **Total net sales** | $201.1 | $203.4 | | Income from operations | $45.8 | $44.6 | | **Net earnings** | $31.0 | $33.3 | | Diluted EPS | $1.05 | $1.09 | Condensed Consolidated Balance Sheets Highlights | | March 31, 2025 (in millions) | December 31, 2024 (in millions) | | :--- | :--- | :--- | | Cash and cash equivalents | $16.2 | $57.3 | | Total assets | $852.8 | $841.6 | | Long-term debt | $183.7 | $124.7 | | Total equity | $419.9 | $436.1 | Condensed Consolidated Statements of Cash Flows (Three Months Ended March 31) | | 2025 (in millions) | 2024 (in millions) | | :--- | :--- | :--- | | Net cash used in operating activities | $(37.7) | $(27.9) | | Net cash (used in) provided by investing activities | $(13.3) | $0.2 | | Net cash provided by financing activities | $9.5 | $48.6 | | Net (decrease) increase in cash | $(41.1) | $20.6 | [Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202%3A%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In Q1 2025, DFIN experienced a 1.1% decrease in net sales to $201.1 million, primarily due to lower capital markets compliance volumes affecting tech-enabled services, which was partly offset by growth in software solutions, especially the new TSR offering. Despite the sales dip, income from operations grew 2.7% to $45.8 million, thanks to reduced cost of sales and lower SG&A expenses. The company's liquidity remains solid, supported by a newly amended and restated credit agreement providing a $115.0 million term loan and a $300.0 million revolving facility. The company continues its strategic shift towards software solutions to mitigate market volatility [Executive Overview](index=30&type=section&id=Executive%20Overview) For the first quarter of 2025, net sales decreased by 1.1% to $201.1 million year-over-year, driven by a $6.4 million decline in tech-enabled services, partially offset by a $4.3 million increase in software solutions, notably from the Tailored Shareholder Reporting (TSR) offering. Income from operations increased by 2.7% to $45.8 million, benefiting from lower cost of sales ($7.1 million) and SG&A expenses ($7.0 million), which compensated for the absence of a $9.8 million gain on an asset sale that occurred in Q1 2024 - Q1 2025 net sales decreased by **$2.3 million (1.1%)** YoY to **$201.1 million**[109](index=109&type=chunk) - The sales decrease was driven by a **$6.4 million** drop in tech-enabled services from lower capital markets compliance volumes, partly offset by a **$4.3 million** rise in software solutions, including a **$3.0 million** increase from the TSR offering[109](index=109&type=chunk) - Income from operations increased by **$1.2 million (2.7%)** to **$45.8 million**, due to lower costs, which offset the impact of a **$9.8 million** gain on a land sale in the prior-year quarter[110](index=110&type=chunk) [Results of Operations](index=31&type=section&id=Results%20of%20Operations) In Q1 2025, total net sales fell 1.1% to $201.1 million. Software solutions sales grew 5.4% to $84.6 million, driven by the TSR offering and Arc Suite, while tech-enabled services sales dropped 7.7% to $76.5 million due to lower compliance volumes. Total cost of sales decreased by 8.9%, and SG&A expenses fell by 9.6%, leading to a 2.7% increase in income from operations. However, net earnings declined by 6.9% to $31.0 million, affected by a higher effective tax rate and the absence of a significant one-time gain from an asset sale recorded in Q1 2024 Consolidated Results of Operations (Q1 2025 vs Q1 2024) | | 2025 (in millions) | 2024 (in millions) | % Change | | :--- | :--- | :--- | :--- | | **Total net sales** | $201.1 | $203.4 | (1.1%) | | Software solutions | $84.6 | $80.3 | 5.4% | | Tech-enabled services | $76.5 | $82.9 | (7.7%) | | **Income from operations** | $45.8 | $44.6 | 2.7% | | **Net earnings** | $31.0 | $33.3 | (6.9%) | - SG&A expenses decreased by **$7.0 million (9.6%)** primarily due to **$2.7 million** lower bad debt expense and **$2.0 million** lower selling and marketing expenses[121](index=121&type=chunk) - Other operating income was significantly lower, as the prior year period included a **$9.8 million** net gain on the sale of land[124](index=124&type=chunk) - The effective income tax rate rose to **26.5%** in Q1 2025 from **19.6%** in Q1 2024, driven by a decrease in the net favorable impact of discrete adjustments[127](index=127&type=chunk) [Information by Segment](index=33&type=section&id=Information%20by%20Segment) In Q1 2025, segment performance varied. Capital Markets-Software Solutions saw a 2.1% sales decline and a 12.0% drop in Adjusted EBITDA. In contrast, Capital Markets-Compliance and Communications Management sales fell 7.9%, but its Adjusted EBITDA surged 16.9% due to significant cost reductions. Investment Companies-Software Solutions was a strong performer, with sales up 19.8% and Adjusted EBITDA jumping 60.0%, driven by the TSR offering. Investment Companies-Compliance and Communications Management also showed strength, with a 1.9% sales increase and a 48.8% rise in Adjusted EBITDA from higher-margin sales Capital Markets – Software Solutions (Q1 2025 vs Q1 2024) | | 2025 (in millions) | 2024 (in millions) | % Change | | :--- | :--- | :--- | :--- | | Net sales | $51.9 | $53.0 | (2.1%) | | Segment Adjusted EBITDA | $13.9 | $15.8 | (12.0%) | Capital Markets – Compliance and Communications Management (Q1 2025 vs Q1 2024) | | 2025 (in millions) | 2024 (in millions) | % Change | | :--- | :--- | :--- | :--- | | Net sales | $83.9 | $91.1 | (7.9%) | | Segment Adjusted EBITDA | $36.7 | $31.4 | 16.9% | Investment Companies – Software Solutions (Q1 2025 vs Q1 2024) | | 2025 (in millions) | 2024 (in millions) | % Change | | :--- | :--- | :--- | :--- | | Net sales | $32.7 | $27.3 | 19.8% | | Segment Adjusted EBITDA | $12.8 | $8.0 | 60.0% | Investment Companies – Compliance and Communications Management (Q1 2025 vs Q1 2024) | | 2025 (in millions) | 2024 (in millions) | % Change | | :--- | :--- | :--- | :--- | | Net sales | $32.6 | $32.0 | 1.9% | | Segment Adjusted EBITDA | $12.2 | $8.2 | 48.8% | [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains sufficient liquidity through cash, operating cash flows, and its revolving facility. As of March 31, 2025, cash and cash equivalents were $16.2 million. Net cash used in operating activities increased to $37.7 million from $27.9 million in the prior year, mainly due to timing of payments and collections. In March 2025, the company amended its credit agreement, securing a new $115.0 million Term Loan A Facility and a $300.0 million Revolving Facility, both maturing in 2030. This refinancing retired the previous term loan. As of quarter-end, $75.0 million was drawn on the revolver, leaving $224.0 million available and total net available liquidity of $240.2 million - On March 13, 2025, the company amended and restated its credit agreement, establishing a new **$115.0 million** Term Loan A Facility and a **$300.0 million** Revolving Facility, both maturing in March 2030[159](index=159&type=chunk) - Proceeds from the new facilities were used to retire the full **$125.0 million** of the then-outstanding Delayed Draw Term Loan A Facility[160](index=160&type=chunk) Net Available Liquidity as of March 31, 2025 | Item | Amount (in millions) | | :--- | :--- | | Revolving Facility Capacity | $300.0 | | Less: Borrowings | $(75.0) | | Less: Letters of Credit Impact | $(1.0) | | **Current Availability** | **$224.0** | | Plus: Cash and cash equivalents | $16.2 | | **Net Available Liquidity** | **$240.2** | - The company was in compliance with all debt covenants as of March 31, 2025[163](index=163&type=chunk) [Item 3: Quantitative and Qualitative Disclosure About Market Risk](index=34&type=section&id=Item%203%3A%20Quantitative%20and%20Qualitative%20Disclosure%20About%20Market%20Risk) The company reports that there have been no significant changes to its market risk profile as disclosed in its Annual Report on Form 10-K for the year ended December 31, 2024 - There have been no significant changes to the Company's market risk from what was disclosed in the Annual Report[168](index=168&type=chunk) [Item 4: Controls and Procedures](index=34&type=section&id=Item%204%3A%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of March 31, 2025. The company is currently implementing a new quote-to-cash (QTC) process for some of its software services, which represents a significant change to its internal control over financial reporting - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of March 31, 2025[169](index=169&type=chunk) - The Company is implementing a new quote-to-cash (QTC) process, including new systems, for certain software services. This project is considered a significant component and change to the Company's internal control over financial reporting[170](index=170&type=chunk) Part II: Other Information [Item 1: Legal Proceedings](index=34&type=section&id=Item%201%3A%20Legal%20Proceedings) The company is party to certain litigation and other dispute resolution proceedings arising in the ordinary course of business. Management does not believe the final resolution of these matters will have a material effect on the company's financial results, position, or cash flows - The Company is involved in ordinary course litigation but does not expect the outcomes to have a material effect on its financial condition[62](index=62&type=chunk)[171](index=171&type=chunk) [Item 1A: Risk Factors](index=34&type=section&id=Item%201A%3A%20Risk%20Factors) There were no material changes to the risk factors identified in the company's Annual Report on Form 10-K for the year ended December 31, 2024, during the first quarter of 2025 - No material changes to the risk factors disclosed in the Annual Report occurred during the three months ended March 31, 2025[172](index=172&type=chunk) [Item 2: Unregistered Sales of Equity Securities and Use of Proceeds](index=35&type=section&id=Item%202%3A%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the first quarter of 2025, the company repurchased a total of 1,119,578 shares at an average price of $48.30 per share. Of these, 861,301 shares were purchased under its publicly announced repurchase program. As of March 31, 2025, $49.5 million remained available for future repurchases under the current authorization, which expires on December 31, 2025 Issuer Purchases of Equity Securities (Q1 2025) | Period | Total Shares Purchased | Average Price Paid | Shares Purchased Under Program | | :--- | :--- | :--- | :--- | | Jan 2025 | 84,984 | $61.50 | 84,984 | | Feb 2025 | 209,882 | $51.79 | 209,882 | | Mar 2025 | 824,712 | $46.05 | 566,435 | | **Total** | **1,119,578** | **$48.30** | **861,301** | - As of March 31, 2025, **$49.5 million** remained authorized for repurchase under the program expiring December 31, 2025[82](index=82&type=chunk)[173](index=173&type=chunk) [Item 5: Other Information](index=35&type=section&id=Item%205%3A%20Other%20Information) On March 19, 2025, Daniel N. Leib, the company's President and CEO, adopted a Rule 10b5-1 trading plan. The plan pertains to the potential exercise of 47,400 vested stock options and the sale of up to 10,000 shares of common stock, contingent on specific market price conditions during a trading window from August 14, 2025, to September 30, 2025 - On March 19, 2025, President and CEO Daniel N. Leib adopted a Rule 10b5-1 trading plan for exercising stock options and selling common stock[177](index=177&type=chunk) [Item 6: Exhibits](index=36&type=section&id=Item%206%3A%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including the Amended and Restated Credit Agreement, CEO and CFO certifications required under the Sarbanes-Oxley Act, and Inline XBRL data files - Key exhibits filed include the Amended and Restated Credit Agreement (Exhibit 10.1), CEO/CFO certifications (Exhibits 31.1, 31.2, 32.1, 32.2), and XBRL data files[179](index=179&type=chunk) ```

Financial Data and Key Metrics Changes - The company reported net sales of $201.1 million for Q1 2025, a decrease of $2.3 million or 1.1% from Q1 2024 [19] - Adjusted EBITDA was $68.2 million, an increase of $13 million or 23.6% year-over-year, with an adjusted EBITDA margin of 33.9%, up approximately 680 basis points from the previous year [21][19] - Adjusted non-GAAP gross margin was 63.7%, approximately 310 basis points higher than Q1 2024, driven by a favorable sales mix and cost control initiatives [20] Business Line Data and Key Metrics Changes - Software Solutions net sales represented 42.1% of total net sales, an increase of approximately 260 basis points year-over-year [7] - ActiveDisclosure sales grew approximately 11% year-over-year, while Venue sales declined by approximately 9% [22] - The Investment Company Software Solutions segment saw net sales increase by 20.2% year-over-year, primarily driven by tailored shareholder report solutions [26] Market Data and Key Metrics Changes - Capital Markets Compliance revenue decreased by $7.8 million year-over-year, primarily due to the exit from low-margin proxy statement activities [25] - The global equity deal market showed modest recovery in January and February but faced increased volatility in March, impacting overall deal activity [25] - Approximately 75% of the company's revenue is based on recurring sources, providing stability during market volatility [14] Company Strategy and Development Direction - The company aims to derive approximately 60% of total net sales from Software Solutions by 2028, focusing on becoming a software-centric company [8] - Continued investment in software offerings and technologies, including automation and AI-driven tools, is a priority to support growth and operational efficiency [12] - The company is committed to maintaining a disciplined approach to capital allocation, including share repurchases and organic investments [32] Management's Comments on Operating Environment and Future Outlook - Management acknowledged uncertainty in the global operating environment but expressed confidence in the company's strong balance sheet and liquidity to execute its strategy [16] - The company does not anticipate significant operational impacts from recent tariffs due to its predominantly U.S.-based operations [13] - Future growth is expected to be supported by latent demand for transactions and a favorable regulatory landscape, although market volatility must subside for this to materialize [36] Other Important Information - The company amended and extended its credit agreement, providing for a $115 million Term Loan A and extending the maturity of a $300 million revolving credit facility [17] - Free cash flow for the quarter was negative $51 million, primarily due to unfavorable working capital timing [30] - The company repurchased approximately 861,000 shares for $41.8 million during the first quarter, with additional repurchases in April [31] Q&A Session Summary Question: What drove the higher margins and revenue performance? - Management attributed the higher margins to incremental cost reduction actions and higher capital markets transactional sales, which exceeded guidance [38][39] Question: Can you provide more detail on Q2 segment-level guidance? - Management expects ActiveDisclosure to continue performing well, while Venue will face tough comparisons. Compliance revenue is expected to decline modestly [42][43] Question: How has the active disclosure side performed in terms of market share? - Management noted continued progress in client growth and revenue retention, with a strong market position in active disclosure services [54][60] Question: What is the outlook for share repurchases? - Management indicated a consistent approach to being more aggressive at lower prices while maintaining share repurchases as a priority in capital deployment [79][82]

Financial Data and Key Metrics Changes - The company reported net sales of $201.1 million for Q1 2025, a decrease of $2.3 million or 1.1% from Q1 2024 [18] - Adjusted EBITDA was $68.2 million, an increase of $13 million or 23.6% year-over-year, with an adjusted EBITDA margin of 33.9%, up approximately 680 basis points from the previous year [20] - Adjusted non-GAAP gross margin was 63.7%, approximately 310 basis points higher than Q1 2024, driven by a favorable sales mix and cost control initiatives [18][19] Business Line Data and Key Metrics Changes - Software Solutions net sales represented 42.1% of total net sales, an increase of approximately 260 basis points from the previous year, with organic growth of about 6% [6][7] - ActiveDisclosure sales grew approximately 11%, while Venue sales declined by about 9% year-over-year [20][21] - Capital Markets Compliance and Communications Management segment net sales decreased by $7.2 million or 7.6% on an organic basis, primarily due to lower compliance volume [24] Market Data and Key Metrics Changes - Approximately 75% of the company's revenue is based on recurring sources, providing stability during market volatility [14] - The global deal environment remained soft, with capital markets transactional revenue at $48.6 million, a modest increase from the previous year [24] - The company maintained a strong market share despite the challenging transactional environment [24] Company Strategy and Development Direction - The company aims to derive approximately 60% of total net sales from Software Solutions by 2028, focusing on becoming a software-centric company [7] - Investments are being made in software offerings and technologies, including automation and AI-driven tools, to modernize operations and enhance client experience [12] - The company is prioritizing high-quality transactions and has seen a reduction in bad debt expense due to this strategy [19][38] Management's Comments on Operating Environment and Future Outlook - Management anticipates a challenging operating environment driven by market volatility and ongoing uncertainty, with expectations for Q2 2025 net sales in the range of $215 million to $235 million [31] - The company does not foresee significant impacts from recently announced tariffs due to its predominantly U.S.-based operations [13] - Management remains optimistic about the latent demand for transactions and a favorable regulatory landscape supporting future growth [15][34] Other Important Information - The company repurchased approximately 861,000 shares for $41.8 million during Q1 2025, with an additional 657,000 shares repurchased in April [30] - Free cash flow for the quarter was negative $51 million, primarily due to unfavorable working capital timing [28][29] - The company amended and extended its credit agreement, providing for a $115 million Term Loan A and extending the maturity of a $300 million revolving credit facility [16] Q&A Session Summary Question: What drove the higher margins and revenue performance? - Management attributed the higher margins to incremental cost reduction actions and higher capital markets transactional sales, which exceeded guidance [36][37] Question: Can you provide more detail on Q2 guidance by segment? - Management expects ActiveDisclosure to perform well, while Venue will face tough comparisons. Compliance revenue is expected to decline modestly [40][41] Question: How is the competitive landscape for ActiveDisclosure? - Management noted that they are seeing good progress in client acquisition and pricing, with a strong market position due to their ability to invest in software features [51][52] Question: What is the outlook for ARC Suite growth? - Management indicated that growth is expected to continue, driven by the tailored shareholder report regulation and strong fundamentals in the ARC Suite platform [67][70] Question: Will share buybacks continue at the current pace? - Management confirmed that they will remain aggressive with share repurchases at lower prices while maintaining a disciplined approach to capital deployment [77][81]

Company Overview - DFIN is a leader in assisting companies with their regulatory reporting requirements[9] - DFIN's portfolio of software solutions and regulatory experts support corporations and money managers in SEC compliance document creation, formatting, filing, and distribution[10] - Approximately 80% of the top 50 global fund complexes work with DFIN[10] Financial Performance & Metrics - Q1 2025 TTM net sales reached $779.6 million[12, 25] - Q1 2025 TTM Adjusted EBITDA was $230.3 million, resulting in a 29.5% margin[12, 19, 25] - Q1 2025 TTM Free Cash Flow was $94.4 million[25] - Net leverage as of March 31, 2025, was 0.8x[14, 25, 51] - Software sales in Q1 2025 TTM reached $334 million[14] Capital Allocation & Shareholder Value - From 2020 to 2024, the company repurchased 8.3 million shares for $276.4 million, at an average price of $33.42 per share[48] - A $150 million share repurchase program is in place, expiring December 31, 2025[49] Segment Performance (Q1 2025 TTM) - Capital Markets segment net sales were $527 million, with an EBITDA of $178 million and a 34% margin[12] - Investment Companies segment net sales were $253 million, with an EBITDA of $90 million and a 36% margin[12]