DFIN - Earnings call transcript Q4 2021 | Donnelley Financial Solutions, Inc.

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Operator

00:05 Good morning. My name is Chris, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Donnelley Financial Solutions' Fourth Quarter and Full Year 2021 Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. Zhao, Investor Mike begin. you XX:XX Instructions] Head Relations, of may [Operator

Mike Zhao

uncertainties. XXXX This Thank and report, fourth Financial year everyone Good including quarter conference you full XX:XX can to copies schedule forward-looking this morning, Donnelley a the call, refer thank found supplemental you. to Investors risks dfinsolutions.com. section of historical be our at During we results, morning, released of that for XX:XX trending subject are joining statements and of which and results in earnings call. our website we'll Solutions'

the financial For the evaluate and are, to statements a non-GAAP to presentation informational non-GAAP useful only. for and company's They to complete financial GAAP and you for reconciliations related believe refer earnings release information XX:XX of XX:XX most the for Form however, purposes discussion, GAAP please operations, you in with company's Please with provided tables detailed other in refer performance. recent Dan way will financial I information. the Johnson, joined non-GAAP am morning Dave release, financial to Dan. Turner. this information over Eric call I Craig provides is Further, of Gardella, to will the earnings concerning and Clay, Floyd report the and on by supplementary Kami ongoing discuss cautionary the XX-K information. and turn Strimling our Leib, our XX:XX now annual information included appropriate We further filings SEC. an we

Dan Leib

software are was growth fourth year off results, sales I very of solutions tremendous Thank advanced developed capped for to fourth clients, of your Turning hope clients, and from and milestones. We of software you increased us shareholders. value million, year our well. the year's our delivered all now you, $XX.X of total in introduced a DFIN. balance sales quarter technology at results, our of We compared highlighted am XX.X% everyone. XX% fourth net families we delivered Mike. grew represented our that quarter. solutions, nearly and net which quarter and many strong financial XXXX And record with to sales employees our to our quarter improved solutions quarterly further XX:XX our DFIN, last a accelerated which and pleased to results. XX:XX financial sheet, morning, Good doing by

Our as which in nearly net decline sales, XX% last compared fourth distribution-related print XX% by sales grew as expected to were year's despite quarter and quarter. the down consolidated in the

year-over-year EBITDA the sales, quarter increased year's quarter. million, from and non-GAAP in quarter last of an over Fourth points, of distribution was XX sales year Reflecting and net stands year-over-year XX% basis quarters. margin XX.X%. XX% a print fourth EBITDA XX:XX adjusted Excluding that was trend adjusted improvement delivered $XX.X XXX results. consecutive A continuing improvement at margin we XXXX, now of year-over-year full the on outstanding of approximately increase

XX% Adjusted and execution, Our record and robust margin flow. team's excluding grew Net XX:XX year in with focused sales combined Adjusted grew software capital and resulted EBITDA net cash markets sales, XX%. solutions net free environment our sales print distribution, a EBITDA, full

Software million. from annual solution and reached XX% sales an level of grew XXXX $XXX

we to recurring XX:XX deployed compliance well software transitioning XX:XX we substantial for capture, SEC success performed net a software early platform. In compliance solution made in developed in grew our ActiveDisclosure Room ActiveDisclosure, of while driven new ActiveDisclosure annual progress the filing and regulatory the designed, leading purpose-built strong exceptionally Data was Virtual to XX% and product markets recurring clients XXXX and on native One re-imagine sales release Building XXXX. reporting. XXXX, X, new of within XXXX. versus growth, posted our XX% that cloud by Our Venue offering offerings share compliance our our

complete to process year. expect this that later We

the and on-boarding, support New Easy to marketplace and born extra forward includes seamless tools. integration, cost. the array SEC intelligent ActiveDisclosure and add-ons financial and by re-imagined experts, of started, the significant intuitive data ground a The DFIN without backed financial regulatory our fast collaboration the transforms fast from to the an and get need represents ActiveDisclosure simple filing new reporting This tagging unparalleled platform use with XX:XX and cloud is for clients and hidden linking tools compliance. step and in and up. of core

very New Since in delivering launch ActiveDisclosure and financial reporting market efficient utilizes client response, received security a tremendous its SEC filings. ago, adoption. ActiveDisclosure has framework, a XX:XX strong year resulting modern New

making (ph) NetSuite built on XX:XX joins for Tipalti, received agrees network only our FloQast, the ActiveDisclosure partnered include as DFIN's Oracle's fit New SEC perfect our we We that market and network NetSuite's other valuable ActiveDisclosure believe providers. suiteapp.com. approval, Our that New experience solution that will for is best-in-class is Total NetSuite features, and XX:XX Diligent contributor to the increased choice. Another component investment our recurring growth and looking for software serves a and confident security user solution clients clients. is bring Management, a ArcDigital SEC our of dedicated we company ActiveDisclosure's to value compliance Compliance strong disclosure are

solution segment variable than Solutions XXXX. in adoption for am Total XXXA the recognized Management an serve launch, which traction XXe-X since gained a of annuity its to solution, SEC of post regulatory via strong the growth changes XX:XX has distribution Compliance software-based driver in the more our solution, lift digital modest was this new the summary Rule a content by Software ways our big the albeit provides the expect and We a product XXXA, net complexities of The to related with Rules of Companies distribution in which XXXX. for content pace pleased introducing most software need print Management. Compliance sales digital Investment associated SEC financial Total and our and to software in I revenue adoption strong for reports manage responded management opportunity continued XXe-X prospectuses, with XX:XX environment. With in to eliminated clients clients XXXX the with and at DFIN solutions. we a new

their represent offerings arise. up the the as $XXX.X EBITDA Full opportunities history of clients Adjusted consumption totaled in platform million DFIN, or who million, XX:XX changes expand software non-GAAP to Additionally, are potential highest compared the XXXX. year rule future $XXX.X XXXX DFIN on already to of XX% the

Strong of EBITDA driven adjusted record non-GAAP a XX.X% again improvement control margin to the of XXXX, mix, our cost environment. This and cash strong improvement profitability drive a the the cash continued performance flexibility year-over-year flow free to debt software helped and annual million. provided to million business just us flow Our during year. reduce expanded generation approximately payments interest Increased repurchase reduced basis market record combined is under XX:XX shares a with investments financial and X points. X,XXX and prudent in by of accelerate $XXX.X improvement operating development, in

started XXXX positive when company. journey our in years that five represents another became in point we an independent transformational proof performance Our ago

XX Investor the outlook goal, XXXX XX% financial importantly, We our subsequent are is our Further, tracking our XXXX updates significantly software of sales Day. also ahead consistent by deriving underpins solutions XXXX. from of in that mix. our ahead resulting results since of the long-term are that our with 'XX more original provided we profile that to our plan But

our take long-term the business I several like years we to soon. this areas our XX:XX of of over since that have updated kind and will transformation highlight ago. Dave, We share Before opportunity turn become spin-off it projection demonstrate to five company to I'd

sales recognize print market, predominantly market visible in First, and a software changing provider. the XX:XX we the In the leading our the to years for five the years, serve is we differently, small our transformation were of our five the approximately the develop solutions our nearly $XXX in We satisfying annual growing and sales all value marketing sales. XXXX doubling compliance third-party approximately most a the perhaps of sales regulatory the the of XXXX, the clients. nature, our in to domain for or investments total to or to improved sales, The to development and needs in in Recognizing XXXX software revenue began our service $XXX company us of in need clients recurring XXXX software clients compound rate products represents to we coupled revenue, sales envision our of Of from modernize globally. improved of our with best as predictable premier is to established and a XX% based product company $XXX addition expertise could to $XXX we've aspect our and offer In that needs last portfolio million million in ago. at value and highly or serve serving of with versus growth XX%. software and compliance offering. our enabled journey change partnerships, XX% demand revenue clients expand mix solutions software build the future our offerings, services clients. million XXXX XX:XX a our software highest our actions offerings, product the million Those aimed XX% and capabilities reached

for of Venue Data accounts Room the product XX% revenue. Virtual remaining Our software

recent of Overall, our software has historically well clearly I While up the am approximated an Our from growth solutions the SaaS our and rate software products growth. portfolio than transactional strength rate of and growth both at are growth recurring sales transactional and same annualized we transactions. Venue between the Venue's performance positioned future offering, have exceeded very nearly offerings time, same encouraged our while the XXXX, for remain XX:XX of compliances capital recurring volatile sales during of Venue the products software XXXX XX% benefited XX% compliance compliance our and our in offerings. markets At believe by grew more scaled period. annually

distribution, XX:XX EBITDA. in made software continue. distribution, from net our elimination working sales strong capital up XX% of in flow printing sales cash to print software total and in positive XXXX. half distribution Management million net trend The our XXXX, and pace took Full in and expect actions decline revenue and XX:XX more by XXXX, distribution print also revenue, $XXX and $XXX and distribution low lower million of of low print our accelerated our Compliance our platform. print of in than revenue $XXX in million print level approximately Investment of point. we of in million, to our company and from was the our exceeded approximately the XXXX sales and XXXX production reduction and and margin for reduce lower in approximately changes solutions significantly strategically reduction Print the the in a crossover the of declined regulatory XXXX margin represented growth the distribution Between first downsize sales year We contracts, segment. With Companies resulting that sales, and $X On exiting impacted adjusted which Communications lost requirements. print a proactive around we with given sales associated print

of shift XXXX. was footprint. margin in that our targeted many we a in is non-GAAP mix compared to Adjusted Our DFIN's and Through Despite adjusted driver Our reflection of of our spin-off variable debt allowing create XXXX, we to reducing a driven driving five the margin our which and by actions, with print our significant with EBITDA shift significantly, transformation cyclical million more optimized years. our given over transactions. end margin which in the more had part $XX span share. sheet allocation of we strategic to XX:XX debt. leverage We a cost is net over market have million, reduction achieved debt net approximately EBITDA expansion. $XXX structure actions end efficiencies achieved aggressive should a we result our nearly last a of structure up EBITDA of the adjusted including our time cost expansion business aspects to our to aligned market mix capital our turn and years, distribution of EBITDA fixed than internal XXXX. mix, sales is Through that print our is Another reduction, reached of since physical equivalent a cost losing cyclicality XX:XX XXXX factors. The much five year reduced non-GAAP of closely $XXX took balance the which of healthier XXXX, mix, us revenue XX.X% $XXX a strategic At that fixed major margin cost management XX.X% by and focus business margin step robust million current these exposure capital occupy on platform, of to evolving permanent priority we through led compared recognize reduction at the in per increased

through use financially result, justified multiple, in trailing a our share have end As to repurchases. we where EBITDA, current flexibility year to financial parts as created new X and at of to value XXXX, XX:XX inherent the we shareholders million. enterprise development having deliver two even aggressively an past the buybacks X.X we software repurchased have over continue $XXX approximately times view million invest share Given years, of capital, cyclicality repurchase recognizing approximately the attractive our business, shares authorization when in a share of

forward, strong strong continue continued Looking cost position current us balance the corporate our while ongoing a have transactions execute to we permanent control our well benefited business improvements transformation. from in reductions, fixed and to cost mix, sheet strategic market,

DFIN We in shareholder and the of, am value. become will people enabling order our all could we disciplined what company the and XX:XX to strength thoughtful remain perhaps of our allocation strive approach Finally, to and long-term in most create become. are I capital culture to proud

A communication, a and mindset. three that employees, serves clients, wants based alignment, transparent shareholders. culture, and new a the respect, defined and needs of we our XXXX, in constituent; spin-off main open pay-for-performance culture accountability, on culture a the and Following

to our us DFIN my experience focused and strengthened organization. My XX:XX our company to years, our time, resources leaders to We our people many pleased my leadership with as senior accelerate We the launched Over culture who my my their cultural resulted our we and to at in program associates Total money, as changing positive evolve impacts provides make and and world, a meaningful. with responded that will team career software. shift our that on help a continue tools journey more the health the Wellbeing, evolved I'm on

Externally, more employees to pleased will continue And things, to diversity, us progress an be commitment as that and and and are believe of the employee a DEI call working. I a the important making firm in Most by survey. row. the we of we purpose. and receiving Work diversity Dave? right counsel all, experience. shareholders. are quarter we like our employees' deliver quarter produced superior proud in Place to if over the first Internally, inclusion, at to third surveys, transform to we few praise have we our around through frequent financial and what DFIN I our Chicago, has fourth results DFIN the are to for our equity on became year company our our representation. I as certified demonstrated feedback Built XX:XX the Before, our culture of taken closing marketplace share for clients choice our positive a for I been are on would recently recognized Work am our to the in actions to a employer based results we workplace provide outlook are a Great remarks, are be continue aligned the enhance do for to They influential detail and XX:XX XXXX. turn we launched we Place to Additionally, results. Dave and improve telling doing Best measurable pulse that is by

Dave Gardella

morning, and everyone. you, Thank Dan good XX:XX

I'd XXXX, our performance, Before update arbitration one-third allocating Multiemployer two-third on quarter RR an favor discuss fourth arbitration to in Donnelley. to and panel to process. like I the LSC the DFIN DFIN, ruled In of provide Plan Pension the liabilities November financial

Now turning through related excluded and of XX:XX XXXX made quarter $X.X million segment payments our total adjusted to $XX.X of and adjusted pre-tax the in on of received delivered reimbursement XX, our had with another to to we discounted recorded is strong we recorded increase a XX.X% payments highlighted we expense pension LSC million quarter million million of $X.X sales The payments RR is a results, the expected XXXX future of SG&A (ph). year-over-year the net XX:XX Donnelley part expansion. multiemployer accrued excess reimbursement million ranging EBITDA XXXX, basis our $X.X non-GAAP and liabilities. based annual a expense in within our fourth from liabilities on for prior from In fourth $XX.X corporate growth, million and as December of performance. non-GAAP ruling, from results. allocated XXXX financial significant margin strong by the quarterly of share As $X.X in EBITDA We of

The as year. activity, sales first of result the software quarter. strong yet in we transactional quarter $XXX in fourth quarters the record. another growth quarter strong solution quarter Despite we year represented experienced levels of versus a million comparing quarterly In the Our the fourth year-over-year environment the XXXX. a against in saw sales achieving deceleration XX:XX net capital of strong second highest of fact, sales a the three very XX.X%, fourth grew the remained markets transactional the of

execution were the position XXXX growth history outstanding represented sales very XX.X% fourth of revenue sales On transactional Fourth XX% year in quarter quarter fourth the off focused DFIN. an company's XXXX a for capped highest fourth positive resulted pleased the of XXXX. consolidated Our million, quarter in quarter with growth. fourth sales of XXXX. our which and from or strong quarter and net in the market quarter consecutive $XXX.X XX:XX I'm results million net Overall, basis, an fourth quarter of sixth increase $XX.X of the the for

robust increased growth fourth growth management in primarily sales sales aggregate. by the solution. due capital virtual room our net quarter to sales sales fourth sales solutions' fourth the data primarily transactional Our delivered growth accelerated markets' by for of which in or $XX.X total to part recurring demand year its capped include Suite XX% services compliance Tech-enabled by an compliance strong compliance XX% increased new net increased or of XX.X% Software Arc Venue, Arc successful activity. and offerings, $XX.X activity acceleration M&A in of XX.X%, in driven a due million XX:XX software environment. Suite million the as result by as approximately of the a ActiveDisclosure quarter quarter XX:XX ActiveDisclosure and in quarter the off the since in was introduction. highest growing momentum year a XX%

million, incentive in of increase impact EBITDA with was an non-GAAP on net quarter basis of million of SG&A changes $XX.X is capital higher of a of strength quarter X,XXX XXXX As As noted, our the the by XX:XX partially a for reduction revenue primarily materials the from decreased less in robust. due driven higher XXXX, XX:XX margin or commercial non-GAAP overall primarily an impact $XX.X the adjusted I $XX.X from percentage printing to business certain compensation XX% SG&A in million, contracts. control XX:XX The quarter and in where non-GAAP the million XX.X% of non-GAAP financial million fourth control fourth quarter fourth volume was increase or mix distribution full with than favorable and the by as sales SG&A ongoing we driven printed initiatives. companies by cost primarily in sales, the environment fourth gross the of and just fourth expense demand year-over-year was quarter quarter XX.X%, of tougher $XX.X of the than XXXX. sales XXXX. mix, approximately year XXXX. due $XX.X approximately have cost combined comparison performance, associated the to sales, stated quarter initiatives. quarter offset exited investment margin markets was also higher increase business proactively within fourth XXXX points low XX.X% higher Our was fourth regulatory Fourth Print and print XXX basis the Non-GAAP points of lower quarter commissions of ongoing

mix boosted again results, selling basis sales offset our by segment margin control strong subscriptions. virtual activity M&A partially in growth quarterly Markets in to driven segment Venue XXXX, fourth from now ActiveDisclosure expenses. as of that XX:XX XXXX, growth. net Recurring favorable year-over-year as approximately EBITDA XX.X% ActiveDisclosure achieved higher from in adjusted non-GAAP XXX what grew posting we Turning initiatives, of million, by quarter compensation fourth believe be XX:XX room an sales to primarily Venue primarily of our an an to increased Capital share XX.X%, $XX.X was also resulted increase increase once fourth driven quarter Software the Solutions sales, in gains. approximately compliance and incentive quarter again XX% due and continued fourth and market activity well ongoing the primarily execution by cost sales quarter, and points market excellent of our data XX% growth quarter Our products, record had were

as I sales The an market ActiveDisclosure's impact since Compliance points Communications the mentioned, operating higher well ago. non-GAAP of in growth million, the Net and accelerated of was the and quarter from the segment expenses. incentive approximately margin EBITDA capital highest Management for was increased XX:XX from an year year of Capital Non-GAAP marketing was activity. product increase basis partially selling XX% fourth offset As sales to was favorable adjusted in the and XXX quarter sales, to efficiencies, quarter the adjusted a margin XXXX. due by fourth sales momentum Markets EBITDA a the due mix increase XX.X%, our introduced the primarily strong fourth compensation as $XXX.X transactional of increase of quarter as of XXXX, primarily were segment

in were absolute the decelerated XX:XX in of comparison the the first to a of first moderated level year. XXXX. of XXXX the levels As of the challenging While Activity the trend year-over-year nine activity quarter expected, to growth quarter year-over-year robust. more three robust, remained the the fourth months sales led relative fourth to XX%, quarters the trend growth versus year-over-year which

the adjusted I fourth were substantial As traditional resurgence primarily activity highest Non-GAAP years as quarter by sales mix, year IPOs well quarter basis margin and unprecedented as of represented XXXX. XXXX XX.X%, EBITDA offset year. the a fourth second of following was segment the for sales exceptional M&A The non-GAAP adjusted SPAC increase compensation in was selling partially IPOs, levels an quarter points uptick margin in was in by sales of expenses. which and EBITDA an decline. increase increased the approximately from of mentioned transactional earlier, million, the incentive higher volume in XXX due the of to activity, equity markets highlighted a favorable for XX:XX capital $XXX

to our revenue combined volatility focused the private and to robust propelled consolidated record with to portfolio execution full industry-leading to clients' XXXX's DFIN of solutions further strengthen our market transactional achieve journey DFIN public transactional market Our enabled position. year dedicated in profit. the enthusiasm are future companies XX:XX market, dampened acquisition looking registrations are recent public actively SPAC the SPAC pipeline has XXX market While will deals. we new targets optimistic completed approximately from generate that of for

Our us and XX the business portion transactional strong capture activity, a De-SPAC position average market on filling future SPAC transaction. positions of value well initial significant times an to which registration represents of

away due the compliance from Additionally, total for from recurring these their to companies' to software subscriptions Companies to alternatives print. requirements. increase pipeline Investment XX:XX our transition of ongoing ArcDigital, clients digital strong million, in Software continued XXXX, fourth of offering, $XX.X XX.X% turned demand sales in primarily an as quarter our Solutions support our were transactions for provide Net segment compliance management clients' investment a

the million, primarily In to allocations overhead. addition, adjusted Net or this quarter of growth in leverage increase partially XX:XX of and and Adjusted favorable our The from XX:XX and sales margin and expense Communications Compliance from our a higher exited. the reduction As quarter in result consolidation XXXX, this had and EBITDA XXXX the non-GAAP in adjusted vendor platform print due end $XX.X of mix, clients production EBITDA level basis points segment a XX.X%, sales our of contracts network, on The the streamline fueled in operating margin Investment decrease was XXX within impact of from higher segment offset from overhead offset a quarter Companies cost Management and approximately and ArcPro segment of existing segment. a the in to of continuous growth XXXX. needs regulatory due to year we related X,XXX to the for our XX.X% we third-party as fourth of was the was reduced XXXX. incentive expense fourth and of have than approximately XX.X%, our based proactively increase in changes increased part of activity segment. million our variabilize of $XX.X was fourth sales sales print Non-GAAP in an structure. the by to points compensation XX:XX overall creating to increase the reduction operations EBITDA basis costs subscription primarily structure, of the a in by also related the segment focus of print non-GAAP print growth XXX% to fully margin Non-GAAP shifted EBITDA activity variable due lower margin increase organic adjusted new cost

segment, the and Going adjusted higher were respectively. $X demand continue EBITDA quick the $XXX we Regarding changes meet requirements. platform approximately in the non-GAAP and will net turn digital-only regulatory continue sales million to to impact, operate print that for this XX:XX a forward, XXXX the demand value will to million, reduce for print

in partially through unallocated in EBITDA XXXX. expenses EBITDA, ongoing the full the adjusted to quarter to due million expected an million, a million $XXX.X in of previous is while flow incentive to net working full line sales of $XX.X impact increase year cash quarter million cash versus million flow capital was on million Non-GAAP in reduction $XX $XXX.X in flow over non-GAAP incremental driven in million was fourth of impact higher guidance, guidance. performance, sales and year. XX:XX and million by corporate XXXX. non-GAAP We offset costs We primarily improvement were capital of offset and free of only of debt primarily increase The favorable taxes, expect free end strong total XX:XX a the partially and ended an $X.X corporate The respectively in net initiatives. cost cash with by due $XX.X the of additional increased expenditures. an the was $XXX an million Free control remains $XX.X flow and the impact cash de by debt, with million, unallocated adjusted compensation minimis increase last in of net approximately impact aggregate, the $XX.X $XX year of previous year year increase higher was adjusted EBITDA of XXXX. In impact

non-GAAP shares December the repurchased $XX.XX was year. an ratio at net approximately X.X of million X.X quarter of our share. average times price XXXX, As XX, stock of fourth for quarter common fourth $XX.X during leverage from last times, the down per XXX,XXX our We

share. For $XX.X the million XXXX, of have shares $XX.X XXXX, had XX:XX XXXX, in we XXX,XXX authorization. price $XX.X the used nearly stock $XX remaining so of we per on of XX, million our remaining far at approximately stock year for repurchase approximately we our million million $XX.XX average authorization. an repurchase entire full repurchased common Further, As December

same investment allocation be XXXX strategy disciplined development of as that in the capital our deep as our our the our Directors capital confidence recently of deployment. value in nearly stock will or that feature $XXX XXXX. common in on filled. reduction repurchase demonstrates repurchasing time, our to noted We earlier, all XX, This during and December the of and Dan which Board's repurchase intrinsic company. Board more our approved expires cash aggressive strategy as was As authorization debt part we with well on utilized XX:XX million existing a At replacing our fully and also earnings belief plan XXXX, several first in the our weeks in release will program again mentioned as managements of additional broader approach plan, technology maintain shares

well XX:XX our in $XX.X retirement to year outlook and levels guidance long-term year on were wanted provide pension at first Next, update million to plans end post as our our million of underfunded, quarter. other XXXX, $XX improvement compared for an as the approximately funding an end I XXXX. Lastly,

updating range model. in long plan mentioned Dan earlier, basis As refining and yearly expectations provided process our during original the have original of five-year long-term on we May and are a relative our the We plan. Investor updated our to our XXXX since Day

of software sharing the long-term as we outlook trajectory expect our is our well plan Given soon. XXXX, ahead and our we forward our guidance, it ahead plan our quarter for to of projections performance original updated strength relates compliance recurring well to offerings. growth continued as of look update of XX:XX As the those first to in our

and sales EBITDA with minimal impact. expect distribution but We to to continue decline, print from adjusted

noted over forecast of the the of pieces are environment. our to I've few the years, economic times last As regardless transactional challenging several business

historical the proof XXXX the range, range sustainable the quarter with margin large pipeline demand the stronger $XXX XXXX. in the looking including margins deals exception We there the positioned of expansion. recent quarters at and and XX:XX than volatility a million XX:XX higher first was of where this mid historical and point the the revenue first a future activity, consolidated our in adjusted of end in non-GAAP comment much than Regarding we has merger, of area. margin both that revenue early for are as market first first EBITDA driving recorded about that evolving as my to being first in adjusted quarter million our the expected well and revenue double of enthusiastic M&A quarter is nearly margin reductions this important of level, $XXX our transactional XXXX. EBITDA EBITDA we an in SPACs of and structure are for in backdrop, cost this permanent to adjusted mix XXX With XXXX margin, volatility the on subsides very expect XXXX While is delayed remain some quarter XX% the

margin two expansion years than posted quarter provides quarter Dan. of first As EBITDA we insight years XXXX, be XX:XX and margin just sustainable higher adjusted $XXX.X longer-term we million points are and quarter XX.X%. EBITDA net trend results we the holistic more our margin an X,XXX three I'll of XXXX, first was expected a outstanding we're in profitability, the $XXX.X points sales was view net taking XXXX over XX.X%. adjusted basis XXXX, to ago example, tough expected delivering. generated were and comparisons, similar now an Certainly will the ago. in the net approximately back sales is in level that, than the pass of X,XXX of to basis of the margin in sales higher With in first XX:XX adjusted Similarly, And million EBITDA were

Dan Leib

that have become efforts is It Thanks, DFIN more to enabled XX:XX clear our and transformation focused resilient. profitable, Dave.

five the us opportunities have have as plenty we ahead past ahead of what of work years. over We the exceed accomplished

growth of initiatives the on market-leading and compliance focus continue be of and support other pursuing will accelerating regulatory solutions. to software our We to in strategy provider

I'd Before to continue also open will thoughtful like deliver DFIN and to in questions. clients, to with our Q&A, we We stay receive and operate healthy. increasing have for our to world XX:XX and that around operator, for employees ready thank efficiently remain capital the working and quality it Now continue ensure up clients disciplined tirelessly shareholders. approach to value our XX:XX to we're allocation highest the the safe who to been employees solution,

Operator

[Operator is Securities. Charles you. Our Strauzer CJS from Thank with question first XX:XX Instructions]

Your open. line is

Charles Strauzer

XX:XX Hi. Good morning.

Dan Leib

morning, Good Charlie. XX:XX

Charles Strauzer

XX:XX gave more look margins the the out, a look at us you you I just color give on you with start those when when the -- margins? can little So, guidance, the bit specifically that just QX behind at assumptions

David Gardella

This XX:XX the question. is Yeah, for Thanks Charlie. Dave.

look margin a at story revenue it So, margin was of same quarter over as level you in our mentioned, I first XX.X%. in XXXX, historical on XX%, XXXX, XX.X%, was just similar

the driven a we're quarter that So about is of range by talking compared of improvement first the 'XX, things. really the handful mid-XX% in to

some prepared mostly on 'XX less remaining last -- would reductions. forward in expectation QX cost million will the of quarter, we mentioned the compliance in First, as two end to and in that double-digits XXXX. be revenue that's then permitting the grow will we've tail as print the going X,XXX software, $XX first the our we say, first mix longer-term, for contracts expectation and higher the is recurring underlies believe than would What as year minimis and look of continued impact of saw combination de half the software basis in Print, not evolving then, really I'd that's factors And I 'XX is say, a again and exited first really but be that XX:XX EBITDA. the higher -- than the the offering remarks impact a the again basis revenue the kind I more that we of to the almost decline margin only the of overall continue and X,XXX points regulatory in assumption, in, XX:XX well. excuse thing, in points me,

really and transactional, here For done the to talked activity perspective and like deals depending some or back quarter in come we the remains getting market biggest see but just is said, we we of how about we year De-SPAC the variable start if strong. given -- should on volatility pipeline that to the the delays as given just from pipeline. have if the certainly dampen, a starts we volatility, that first that That's see seen that in some

Charles Strauzer

Great. then just That's a follow-up And very helpful. XX:XX you. for

those get pace of to we marketplace think Looking come at growth SPACs mentioned, new a kind of still are software over we kind in from the new companies, in SPAC, of that the seeing target, SPACs market you seeing looking if that torrid as I it's for backlog nearly you offerings? XXX and are

David Gardella

Yeah. XX:XX

and I Dan, pointed to didn't and also De-SPAC. ongoing on I revenue the but clients with for initial extent don't comment converting disclosure that do to that really those recurring you we're And that share as registration is the then seeing where have So, we've great initial we're rate, think for we're know further? registration compliance converting only the SPAC active done, SPAC -- at the out, importantly, think, the I a opportunity want taking we you opportunity obviously high not there

Dan Leib

XX:XX past XX%. growth is, SaaS the Hi. are the has and years, if comments we thing on over Dave. look guess, think yeah, Thanks I I'd spot Yeah. then -- about only add I I you're five the been

a through how which software when we products, growth XXXX and activity, with bit parts revenue being with the with that, comparable see, the doubling a regulations, million. recurring get to get new market some on without look add not, look our in from doubling presents to cases business, a print revenue, issues, the it was we is million of print new $XXX years offerings tremendous projected five ahead see The higher out that by software of growth less And you being in the get certainly of tell from But continues but time you being XX:XX when call when you will it of transactions. with over propelled market now, transactional but we look those that at than than we revenue. impact $XXX So, years, it's flows compliance in so lot mid-teens market and decline. growth some we Venue SaaS volatility a our next baked in, backlog plus same, for five maybe lower at to upside of the

starts software business. So it mix that's One an it it print, the million about we think additional strong to second or so of of is, about we the shift. a two and $XXX million profitability, is on about factors. also so $XXX that, when tremendous think and drives really shift which revenue predictability is less of or And the

we've that and opportunity what is. five over my what the the excited in I accomplished first as years ahead more lies said about excited So, remarks about

Charles Strauzer

Excellent. XX:XX Thank much. you very

Dan Leib

you. XX:XX Thank

Operator

Heckmann The is [Operator question XX:XX Davidson. D.A. from next Instructions] with Pete

open. is line Your

Peter Heckmann

provide morning, it, it fourth you Good quarter was the I XXX. Could Thanks I gentlemen. revenue? year the question. Hey. transactional taking XX:XX the missed you think full full think said was What again? for year I us, for

Dan Leib

want and let me I correct I you. See, the make give that come XX:XX you number. look to up sure back just to

Peter Heckmann

Okay. a question. XX:XX as And follow-up then that on

bankruptcy, debt other I were IPOs, activity I besides of had issuance, time Analyst then you mergers that that? kind from that biggest and SPAC revenue. how at printing the that at about about, components from think think terms comes filing then in the contribution back transactional The how shift think historically How breakdown changed Day maybe the at then revenue. is in increased M&A, [indiscernible] of of the corporate least mix you you the thought XXXX a

Dave Gardella

you XX:XX to one. take Yeah. that Craig, want

Craig Clay

This is... Yeah. XX:XX

Dan Leib

Craig. Yeah. XX:XX Go ahead,

Dave Gardella

ahead. go Craig, XX:XX

Craig Clay

So then this let and of financial – Craig, XX:XX is take it. Dave, I'll you part I’ll the

link is driven think the back resurgence markets I story for was IPO SPAC, of the to that, in real but software. capital primarily me M&A, XXXX, the the

transactional SPAC, for this reporting have new what [indiscernible] pipe, during all we the really using are using that companies clients that De-SPAC the deal ActiveDisclosure of or forward. So and room to this our for big those link and the portfolio our that But on ActiveDisclosure going terrific deal software this was. revenue for our De-SPAC the is,

stated. So, you it's on take created was transactional [indiscernible]. for legacy then able business we're of that Dave, the And that software it out to our governance the really as to the drive revenue regulatory turn Dan ecosystem in the play to nexus really to compliance for us, back I'll

David Gardella

Craig. last Great. on the Pete, XX:XX up And question. follow Thanks, just

inbound these a million. as compliance earlier and long-term part mix, merger was out So, $XXX alluded benefit, kind then, number Craig get to just full recurring to expect platform. clients of our right? the significant IPO for We to SPAC Craig the the it's shifting years to as there activity under software And year deals. us, our what and that whether But doubling around or the again regular the robust IPO, as fairly so tremendous the looking well pipeline way the registrations obviously remains five is with a exactly software, Dan you clients we've look transactions, companies again or De-SPAC in for and we offering. next transitioning alluded the XXX the mean, at converting from these said over lift of of seen I which mentioned a what

Peter Heckmann

comparison. it right. All in as first and thinking think That's are toughest -- it listen, per about terms this in Is a of the just reminder, then helpful. to And as quarters? XXXX it. fourth compares Got XX:XX correct be

Dan Leib

Yeah. XX:XX

specifically talking perspective? when look from you're So at, transactional a you

Peter Heckmann

transaction. but from XX:XX primarily they Yeah. overall, I are mean yes,

Dan Leib

XX:XX Yeah.

QX. quarters largest ramp the transactional two up We during for year the year. really transactional QX So and were the saw of

Peter Heckmann

you. Thank right. All it. Got XX:XX

Operator

XX:XX The Securities. is with question CJS next Strauzer Charles from

open. is line Your

Charles Strauzer

Hey. XX:XX

in couple thoughts a little there long just your term the, maybe guidance, follow-ups, for talked about I of a you 'XX Just know to behind sneak please. kind the of XX%, quick your are as in Thanks. what assuming peek that? [indiscernible]

Dan Leib

Charlie. Yeah, XX:XX

and So, ahead guidance we of at initial look of the frankly when even ahead updated the interim mentioned, we gave you well guidance. we're well what

a taking look So we're closer that. at

your remarks prepared and mentioned think, we're we in permanent answered have to layering in. our some changes we question structure I earlier the that cost QX, around

Venue, perspective year, kind talked think Dan, recurring in that trend bit the biggest higher margin secular the then on assumptions the with healthy. activity, be probably around this I that growing very wildcard pieces, are expectation when for higher print software and overall depending you of and print And there the our have about caveat but of would the that. are rate then that we'll the what the historical software overall software our clear projections growth XX:XX of we really a X% be that again, X%. a activity, either at obviously that in a decline be in what our longer-term mentioned the transactional. an the underlying little that visibility roughly continues compliance we lower. could decline about give from to little supports then what at is happens mid-teens assumptions So with transactional. way, on swing least from million And to look be from remains perspective, But transactional the we markets which bit is $XX capital print that again aside clear but can kind the We'll XX:XX

Charles Strauzer

we should expense expense the amount then think And just lastly, into -- it interest in interest Thanks. decent was line How 'XX? a Great. XX:XX picked up going QX. about

David Gardella

XX:XX Yeah.

So drop that going will forward.

by the at out about interest and so. we look when or XXXX eight reduce that think on October should did, million year took a per and quarter we I $XX X that notes the refinancing you

a the basis So that forward be would go expectation. on

Charles Strauzer

Thank Thank taking questions. for you. Thank the you. Great. other you XX:XX

Dan Leib

XX:XX Thank you.

Operator

at a Riley. XX:XX Sharma we We My apologies, have from do time. questions have Raj question no this with further B

is open. line Your

Raj Sharma

XX:XX Hi. morning, guys. Good

Dan Leib

Hi, XX:XX Raj.

Raj Sharma

that just to I you the still number? before Hi, million and impact indicated first left $XX half? earlier just How wanted mostly going does happen I -- half be hello. that XX:XX I for to had that print the wanted 'XX. we're are the the year. in you? Is second know declines And the like print quantify to or

Dan Leib

Yeah. XX:XX

lion's you regulatory million, the is know impact $XX will in QX, Raj, in So noted. the QX we the were The exiting. that of that's end contracts as and share happen tail number

Raj Sharma

gross And those then significantly. we about kind we each going view just How -- one know I terms the How divisions the do with the that? going lays that tech-enabled? -- want is for the gross Right. print see forward margins gross I some do do mix of do with forward, print it's at of how how we of margins. could XX:XX gave to now EBITDA talk and you margins, divisions kind gross down of Is -- guidance on you product just and the so clearly we in Because margins how the coming the improving software out. margins look --

Dan Leib

XX:XX Yeah.

different should higher decline, level factors look there. should gross the the would also software highest when couple say we the say there carry So, acceleration than I help or at a margin. at I continued, average growth typically that gross is will margins with print that

prepared pause show recently mid That's of year-over-year market range. will seen down impact with the I and a up a do, for level has In the again we've the the that think here in the a XX% on will some typically margin based which factor be that work the in remarks, mentioned of biggest transactional guidance the I lot EBITDA just gross QX we pretty again margin, gross and volatility. it's bit margin. is probably of high on

Raj Sharma

then transactional XX:XX And in in you percentage with the the so are guidance Right. number? guidance what of in terms that for -- assuming terms QX,

Dan Leib

XX:XX Yeah.

so down So we're will year-over-year. be --- that transactional assuming well

the look 'XX transactional that. what will first of quarter down so when think last at you we're be I million the $XX -- from and that we so And assuming did around in was

Raj Sharma

related XX:XX you the the SPACs for more for XXX -- that's big some transactional so volume XXX moving color Great. the which the to happening you now the of of right. course, do that, Venue What feel how on debt? the is you seeing other that How volumes and kind you've don't Speakers] see talk [Multiple and spot you quarter is piece looking first now? give debt them the the transaction about And are And far pipeline And could about in IPOs, or the and forward? then just talked mergers. of right

Dan Leib

XX:XX Right.

the Craig transactional then we broadly the that first of And, I'll the it's applies not impact so of further. weeks the space, around see year SPAC think volatility had the and start comment and let just on some I transactions. our I'll here to the that activity market in So, comment the several

impactful a correlated to obviously other The actually then often not side from is your I debt as on Venue highly to our not that completed, financials, be in that think number deals but impact well. But our other getting the are Venue, on lastly pretty we're activity There of of further? overall company going as and could right? -- want seeing very with do think there the part business. or -- activity our good don't to background Craig, comment I you the comment activity deals private transactional

Craig Clay

XX:XX Yeah. the for Thank you question.

are imbalances in days issues early and geopolitical December we're working What clients is We our extremes. business this XXXX, the they for kind is normalize have the and certainly by pandemic. the seeing cycle of the from these

in the then are offering the look Day, sort Health one spin-offs, of Bausch & So so have ability Savers launch IPO to pipeline, potential XX:XX was was that if there IPO January Value. at Solta Medical, IPOs specifically, offerings. Bausch small and President's $X PPG which you look large were midcap post several Lomb, first decent segment And the at the only There especially a you billion deal. over just

So part Clearly, of is headlines road we some QX. sort clients out, seeing shake SPACs not SPACs and clients to the that market. see is natural companies XXX that our show and combinations, there that see businesses hearing, searching are ready IPOs go that's ability great. been from in we'll as the hear for of for weren't Cancellations we the XX:XX redemption the we're really certainly that have public the quite the the have business rates, that our a strength on for that from SPACs, later of and mentioned you've the so there

and certainly the SPACs. is So market volatility seeing that we're again, doing this We recent for work and is preparation, still market hearing But XX:XX efficient. from clients what our they're underlying in that the dampened think enthusiasm strong. has the

our strong. us. to position going again consolidation. are going go combine created and targets. see We after and this Venue We're see software But to with Again, terrific for SPACs super ActiveDisclosure, to it's ecosystem

believe our So, clients then are using Venue, that. share. you as get to We we're taking

then above because to embedded believe We product a competitors that that of sort it. artificial stands in the product have which have our redacts and certainly component of PII the content the instantly we our excellence, in bond we security, of intelligence it, redaction

So, we have in delivered Venue.

level. Our pipeline continue to confidence a terrific market is which any of still believe at we're for going gives We outside take to XXXX. that us share,

Raj Sharma

do your because of competitor and lines held software your other then my significantly view, -- And Great. I obviously last XX:XX we gaining transactions. it but in because should share -- -- we gets versus on so of in business the total software, have any take episodic software your and robust, in But and question I'll key back very product you are Workiva, then offline. how strong is have I valuation a

held field if software and if then on to comment share? just wanted transactions being play So, your gaining And I valuation back total your by you're just understand business? can you

Dan Leib

great Yeah. Raj. Thanks, It's XX:XX a question.

really hearing in compete segment you we trailing really, start yeah, not and I X good in proud the offerings company how at there's at this a mean, transactional not like based times my multiple, and direct various businesses what And different about we future EBITDA, times we XX:XX prepared we your across we year it -- feel both marketplace we based in software across what from about and pieces, To did overlay. against overall trading look that how EBITDA, But rate parties develop there that's of lines. feel about is well different we did to times on multiple enterprise the and on even and and the really apart in the the one play. in did enthusiastic growth comment point our when we're compliant value breaking we software feel on markets and X software in You which remarks revenue. valuation, we're X and that's

think think We And that what it's sheet with done attractive. it's balance and on so to that's cheap. position think approved a larger strategy. the it's buyback execute us we our We focus we in important a I we've put

to we should so in we and And the have the our do volatility dollars execute financial I We lines. look that we -- flexibility product some we value just lot a also have buybacks. recognize of at of say intrinsic volatility of when agree and the XX:XX to the some

at lines that a recurring are higher of We predictable have in the lot product and valuation significantly marketplace. trade and

So we sentiment. agree with the

Raj Sharma

XX:XX Thank you. All offline. take I'll questions right. my

Dan Leib

you. Thank XX:XX

Operator

questions this turn no the call We further have I'll back the time. at XX:XX to presenters.

Mike Zhao

you thank and everyone joining. for much very you Thank Great. XX:XX

interim. We you. forward in will connecting Thank and May, can to look you speak our to the we following results QX hope many in of

Operator

this for Ladies XX:XX and conference today's you Thank call. participating. gentlemen, concludes

disconnect. now may You

Donnelley Financial Solutions (DFIN) 22 Feb 222021 Q4 Earnings call transcript