DFIN - Earnings call transcript Q2 2022 | Donnelley Financial Solutions, Inc.

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Operator

Good morning. My name is Joseph and I'll be your conference operator today. At this time, I would like to welcome everyone to the Donnelley Financial Solutions Second Quarter 2022 Earnings 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. you. Thank Instructions] [Operator Mr. of you Head conference. begin Investor Zhao, may Relations, your Mike

Michael Zhao

This our you. thank of found quarter the Solutions call. and morning, historical dfinsolutions.com. XXXX website at investor we for conference Thank which everyone, in Financial results. you Copies Good can trending reports, earnings supplemental joining of Donnelley results section morning, schedule our released be second of

that call, are forward-looking subject we'll and risks this During statements uncertainties. refer to to

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

Daniel Leib

adjusted with continuing results, headwinds, and well. of us flow. free that volatility. market from year-over-year especially currency positive during constant everyone quarterly Good margin DFIN, at quarter in both we We're the flow revenue your including macroeconomic morning the In the environment, and expansion, performance are you light Mike. quarter, families cash you, geopolitical related of company's cash in second operating adjusted increases and growth, this doing current EBITDA, record and extremely EBITDA and delivered year-over-year pleased Thank operating hope excellent we difficult unrest, all

further similar transformation of our us periods sustainably strategic Our quarter compared a resulting level higher also solid to a we more performance DFIN serves that on as fundamentally second made objectives historical number in pleased I'm last revenue plan proof of and much profitable, profitability enabling we to becoming long-term that our size. have that the the our deliver progress with earnings of is updated against call. underpin operating communicated

grew software-centric last the of of quarter, increase made made an progress software Total second mix. sales X% year basis XXX the sales, quarter company. into second points during from we nearly second continuing versus net second quarter a sales up First, transforming approximately quarter total XX.X% in DFIN of and XXXX

four-quarter the trailing season, low due improvement target, our our and to from our four-quarter XX profit sales software XXXX and second XXX shift is goals, sales longer to in XX% As largely a XXXX period, the proxy deriving for on mix sales impact improved margin XXXX. software exceed term by software with and well XX% This represents revenue. total from deliver the of sales that reminder, positions as reductions sales quarter. of helped four efficiencies to seasonal the combined drive represented also An approximately that to as of XXXX and of solid mix positive structural overall the comprising in trailing sales cost in million by XX% a from of operating sales continued $XXX to mixed points the period. second quarters a quarter XX% software a percentage basis, an growing XX% basis second reached trailing of quarter, XXXX historically increase On quarter

above similar last further quarter long-term last of providing than ability points as margin EBITDA achieve evolving scale adjusted adjusted four-quarter transactional and quarter, was EBITDA quarter higher to the targets. trailing brings with revenue, cost and second our Our year XX% our continued to in Consistent adjusted XX%, XXX second second basis quarter confidence and of overall our approximately margin our once again sales EBITDA mix is reflective as quarters historical margin well discipline. substantially is

are fundamentally Our and in and cycle innovation, investment more and our above profitable expenditures our will a required and further the or development generating higher resilient scale than execution ability such levels. DFIN investments software a point in in expand in These profitably investments to is investments that our will past. increased and we is our of a In across help modernization, long-term expense software information plans, and continued additional capital our operate decisions, resulting profitability high to used products organic strategy at with consistent second We've ensure level and proof existing offerings. to points in at projects remain varying market both in reflected the being investment a to the quarter, sustainably returns as support approach priority staged disciplined growth. and taking technology

we repurchases quarter share XXXX. our framework. results utilize also shares authorization, fully made of the In end, on progress addition repurchased X.X quarter had long-term end our million of component the the quarter, intend an to second million X.X bringing our remaining year-to-date important of quarter we shareholders, significant million to value shares. in delivering capital to we $XX by which during We XXXX, strong to return during the creation At second financial of

quarter than the reflected flexibility, Our times, solid financial ample to capital X.X in quarter second times provide which and allocation, of continue is net lower results X.X prudent financial leverage our non-GAAP of XXXX. and with us

steps capabilities enhance DFIN's to organizational and support plans. long-term important leadership took our growth we to talent Finally,

client increase company, transform DFIN experience, engagement, As value. we invest drive continue improve we into client to and a lifetime software-centric to

organization lead experience that software from predictable have to offerings an lifecycle this DFIN will recently our Officer, throughout service. all the to with clients implementation and for outstanding of a DFIN. role from who they created result, ensure position Client Jodie client-centric will DFIN, client support as a their earlier oversee through Sweetin, As will move year, Salesforce, experience this Chief that we joined Experience

In appointment Chief we Board addition, Officer Coupa month, Marketing to announced the of of Directors. the Pattabhiram, our current of Software last Chandar

business executive, we look regarded growth a Chandar more XX than growth rounded to well highly SaaS and execute Chandar with BXB as to continue leadership enhance As on high software shareholder brings in We partnering drive marketing years enterprise product of offerings. to value. our plan and forward

software which growth sales. revenue XX%, led us XX% strength SEC quarter versus a serve our accounted recurring regulatory solution These previously software volatility, our approximately the newest the evolving have grew second XX% stability is market, during XX% and last aggregate, showed ActiveDisclosure, compliance and their base offerings our by in on business our of compliance reiterated One quarter. market compliance and constant and times clients recurring noted our reporting year market ability results. thrive offerings. in or plan of This progress recurring second recurring currency our outstanding market the second against of our offerings also is for needs. is in difficult key on DFIN's and I've driving of offerings As These basis allowing grew of to regulatory-driven environment while year's The and the software products. total today, in the compliance conditions provide our software performance the component to demonstrated quarter consistent and with

digital ActiveDisclosure, the other annual growth. revenue. subscription-based revenue component from or our by help software constant platform second subscriptions, revenue software the the new of Since higher More to recurring print that Suite, we revenue by the XX% also XX% to change last ArcPro and on quarter, to market XX% introduction change. new prior and adoption in response clients while introduction, term quarter, across in strong price than grew our its a delivered growth very importantly, a had and profile transition helping offering, which demand our that subscription to year-over-year metrics recurring to transitioning for accelerate to bases, compliance AD regulatory make regulatory us solution, continue a growth for more from offering. currency clients our realizing following I longer in XXXX, Arc solution strong resulting photo solid ArcReporting progress allowed will offset new driven to our a growth am new in solutions, encouraged of a in solid sales normalized in an excellent important despite strong ActiveDisclosure's recurring compliance year levels management

Capital regulatory second nature the investment Compliance of our growth recurring number IPO demand nearly reach and strong segments. SEC $XXX of both based primarily filings. of from the XXXX, second environment These XX% two are SEC remain revenues predominantly and our Capital The and by the and for million are services-based regulations transactions recurring sales with XXXX. and very customer Markets, of affected quarter, directly retention Communications component distribution. compliance revenue strong fund compliance within Compliance rates. second Activities with corporate The quarter total the companies, and compliance-related within In offerings offerings volatility recurring Combined, grew The Management in on in versus and decline solutions increased second the and print quarter while volume compliance secular of our current compliance-related companies, driven compliant environment Markets an robust Markets services. by and increased in SPAC these to is of growing public clients the not the Capital become and assist of mutual offerings comes

recurring this model, and are to leverage We drive our client-centric space further scale, operating revenue. well positioned continue compliance to service domain to expertise in

resilient, investment software both and is market the mix compliance growth important the financial support and of prefer in platform offerings offerings compliance business in to and our Markets of offerings compliance become dual within more in us work. Our they of Capital continued predictable is to regardless recurring step The clients our allow comprised and traditional and to way transformation conditions. software an profiles companies

in continued solutions compliance Markets their volatility to environment. nature, our Capital offerings, traction, to subject by our the deal inherent While gain are transactions-based

IPO few the remain quarter experienced M&A large second market deals and in a very market of the being quarter with The very first transactional we completed. challenged continuation soft

IPO activity year M&A quarter. XX% IPO the was market, from down last was the second XX% resilient down and more global market, Specifically, while than

Against challenging offerings market. largely SPAC the the than quarter. the by market in of a better encouraged record fact registrations the remains SPAC based I'm backdrop produced a overall the our in transactions second transactions of Additionally, very pause number perform environment, XXXX, on which

in context Our the XX% market. transactional which declined Capital the within Markets current broader environment second the revenue the outperform quarter, of

second the quarter in increased the sequentially revenue from transactional first Additionally, quarter.

two to transactional results the than that drivers highlight performance me better revenue behind enabled deliver DFIN our Let market.

financial as continuing such their when with our filings for work, updating First, market ready are to returns. clients remain current stability statements

from commentary with to levels banks, public clients as several hundred are deals still pushed actively confirms being that engagement investment DFIN quite activity is Our time. perspective undetermined clients high teams deal our as well and assisting of out the with and ready be work transactions healthy and on profitable of to investor completed their those unrest, deals. absence volatility, will even continuing geopolitical in When list. is a stabilize, market confidence companies transactions pipeline an

transactional for transactions, larger or based total for of the they the value providers. service account as on more within DFIN's are strong more fully complex number generate market market Secondly, don't which position for statistics the deals, the

use better Our share deliver complex environment. lower larger than transactional a transactional and Similarly, strong our M&A. our transactions primary software to us in industry-leading capabilities perform count large those strong even deals its within serve to revenue deal offerings and helped case Venue, market

to With XX% quarter resilient, taking level achieve up Virtual of M&A from which place the a of approximately second of quarter was similar the XX% of on down XXXX, Room activity the Venue Data level the underlying global our remained quarter, XXXX. enabling year-over-year compared to platform in the second sales second market

Excluding modest Venue X%. sales exchange of of the foreign rates, impact growth posted

place that our our best-in-class results an X,XXX six forefront superior our became with of Through career our Internally, our our the DFIN do progress that our to quarter advance people company Most Finally, coveted employee equity, for by I who be of service. pleased ago, and experience. employees purpose flexible initiatives companies fully nearly as Workplace, leading are accolade and resulting enhance updated development software second work. diversity, the the we a to our been where transform of will feedback we ongoing our nearly have our employees right work clients has am being DFIN promoted deliver we at Externally, Magazine, culture do employer and employees work solutions, to management are in that environment. worldwide, an our framework, creating in I by superior continue inclusion, environment and choice domain recognized common results and progress every meaningful things, we shareholders. certification possible team an we clients had believe inclusive benchmarking we the making and compensation expertise, recently best culture to employees, made great achieved to Since share a strong were years Newsweek Loved continued can of a of day. focus our and providing continue receiving commitment to if independent validates in we be continue from a and serving the deep agenda. their on for positive made investments

third more Dave? turn on over would closing our I Before I details and Dave quarter. outlook results for the few like share to quarter a to remarks, second call provide to our

David Gardella

good Thanks Dan morning, and everyone.

second The a very cash margin, featured adjusted consolidated in both year continuing basis operating By quarter quarter constant last currency flow margin EBITDA, Dan in results second also from XXX quarter higher free to adjusted and we approximately second our As flow and adjusted compared improving EBIT XXXX. year-over-year less improve points operating to specifically the strong quarter. cash revenue environment. more delivered and challenging and we quarter increases sales of EBITDA noted, software focus sales, second efficiencies, print mix, while by on growth,

being X.X% the provide results, of cost mix, strategy results in disciplined to also of recurring second additional basis, deliver our On that structure, to points Our evolving quarter our stewards to allowing quarter consolidated sales us continuing for second sales and of a was net is the managing proof decline. capital. more positive net invest a aggressively working, while outstanding of currency constant $X.X exchange quarter second a quarter $XXX.X more of from XXXX $X.X sales accounting XXXX. impact sales decrease foreign quarter than the of year-over-year X.X% million, a million, the were second or versus million all increased The basis, rates for second of XXXX. On negative

for million, the Software for solutions of sales increase were million $X net an $XX.X second X.X%. quarter

sales and the Our regulatory-driven quarter, Compliance million, investment active or revenue $X.X XX% offset and sales. X.X% disclosure Markets within X.X% grew in net transactional quarter, Suite $XXX.X ActiveDisclosure momentum, recurring companies net to distribution offset million, volume sales was compliance growth tech-enabled which Capital increases. decrease companies, growing in offerings, materials to within strong almost million, in a demand decrease XX% XX% in which delivered approximately demonstrate decreased sales by were price subscription activity, partially net or Print-in Tech-enabled driven the services growth. entirely by to aggregate. due were million higher and for the in Markets sales include a Suite Capital Arc print-in reduction growth sales services net investment $XX.X Arc $X.X of continued of by due

offset initiatives, Second million, sales by in is the lower compensation development driven Capital expense was XXXX. ongoing well by cost Markets XX%, and to control in The Non-GAAP the quarter lower the investments than incremental was driven million in-person primarily in part increase transactional of basis control ongoing were and offset partially XXX virtually expenses and higher cost the partially annual primarily SG&A increase related non-GAAP sales gross quarter impact activity, and to additional technology, meetings, product as XXXX, quarter margin expenses, initiatives of points SG&A XXXX marketing second in held which in by our $XX.X as a non-GAAP approximately expense. incentive favorable $X.X sales second from impact higher mix due of quarter a of the by

XXXX. basis XX%, of net XX the approximately of from quarter non-GAAP SG&A percentage second increase a points was an sales, of As

was or $X.X adjusted of an quarter million, million, X.X% the of $XX.X XXXX. from increase second quarter EBITDA second Our

was basis cost Communications lower driven partially compensation initiatives, Our the Management quarter expense, XXX within XX%, XXXX, sales the points incentive adjusted second volume. from Markets, second increase EBITDA savings segment, a Capital by in volume offset Compliance of Compliance and and margin growth Markets Capital companies, transactional an of mix and of impact lower approximately favorable investment by quarter

a quarters quarters historical EBITDA margin in second than sales compared of second quarters of detail, of this slightly and From in $XX.X and compared of XXXX higher XXXX XX.X% level $XX.X revenue. respectively. this this EBITDA and sales As stronger $XX.X second Dan margin to quarters higher million EBITDA the XXXX, overall XXXX and XXXX second level earlier, transactional To our more and perspective, margin year adjusted was much the quarter is similar quarter respectively. and XX% with illustrate second XX.X% second overall million year on a transactional in quarter quarter second our of adjusted mentioned similar than margins a the in of XXXX to adjusted is and million XXXX the

cost across DFIN efforts sustainable Our areas market and fixed to and business to to the cycles. structure variablize more specific positioned focus costs reduce in our had resilient throughout be

Turning increase our software now second second our of sales from of were on solution Net quarter $XX.X segment to an X.X% segment market million, capital results. quarter the XXXX.

margin with Excluding the in in mix, year-over-year Similar level sixth Venue decrease year. of the growth. activity rates, a activity the outpace by second lower use second our Room EBITDA of of XX%, which product M&A of XXXX. The approximately Venue impact compliance the technology With segment double-digit resiliency primarily quarter, was and second year-over-year. to consecutive of increased last X.X% a the we experienced for year, higher down investments, basis Venue, exchange primary the quarter, another market net sales. continue allocations in is a in sales sales approximately basis the and offering, on first The Sales quarter. marking to what second on new the of X,XXX its cost XX% EBITDA encouraged in this uplift price and points the strong growth to from the of quarter Data incremental impact AD trend transactional during Virtual negative quarter was of net a product M&A and are Adjusted adjusted overall quarter were to higher sales case, had due foreign line of unfavorable increased sales quarter despite much partially the we XX% by development of of decrease offset sales margin recurring posted sales, primarily the and ActiveDisclosure, performance overhead, an expenses, controls. marketing increase our due of

margin and contains associated platforms. costs both AD for ActiveDisclosure the reminder, supporting structure with As the ADX new

volume. We materially XXXX, expect the early from eliminate and in the the whole. our Capital transition XXXX the quarter $X.X $XXX complete to sales due X% ad which by second a technology to margin Communications activity, ActiveDisclosure profile for will lower from ADX the segment were Markets costs, to offset partially higher further million, a new segment Markets, Compliance Management million and as duplicative by Compliance of of decrease Net of improving Capital transactional

first soft which mentioned, activities. the Markets weigh Dan the IPO, in remained quarter, As quarter, similar transaction m&, continue and second very to the Capital SPAC, on to environment

hundred a underlying revenue solid of translate into of resilient relatively That remain, stability when M&A persistent from fundamental across drivers undertaking, and support transaction market, and clients deal-making with remain opportunities are encouraged geopolitical the market our continued prepared a several pipeline macroeconomic including of for for DFIN. While of DFIN by level deSPAC in-process our transactions headwinds continued work to IPOs returns. We robust pipeline the are strong. remain activity the

deal in While volume transaction, are and process of revenue those The closing a transaction filings milestones certain initial revenue subsides. that recognized when those in was transactional in-process as substantial is Compliance. decline at confidence revenue in market while deal is achieved. Capital growth partially the revenue Markets our generate activities of the the of such majority as gives to Capital lead us The will activities by a the offset volatility Markets future activities

in the journey was for the quarter on success, in EBITDA season the vast corporate and very decrease as lifecycle partially supports quarter, was a private of The public our margin company of ability second XX% culture, Adjusted an and Markets the sales, portion as winning majority Compliance was growth The selling a from price companies and Markets million lower were expertise, In DFIN's share. recurring market lower decrease savings and and driven recurring Net additional XXX domain to volatility the XX% represents XX.X% strong as inherent segment on software the basis customer in which from the their on XXXX. investment their our well to customers to quarter clients increases follow in expand also Unlike services. the $XX $XX.X a points our XXXX, which The offset a higher cost the result serve well peak formed the with quarterly quarter count Capital expenses strong filings, Compliance year-over-year. to the initiatives. supporting across second strong share and of million, the activity, offerings has Compliance their was for result revenue compliance by saw gains, of grew by our significant volume margin of quarter. increase transactional of service we increased segment public [ph], capture second positioned of Compliance Capital continue our adjusted second transactional clients Compliance quarter us work. of of sales approximately a EBITDA to SEC newly needs. due record solution is

XXXX in the our digital, in offering, Compliance more XXXX. our demand versus normalized ArcPro was negative The two products quarter. Excluding adoption, growth As of following subscription Management driven year-over-year foreign the of expected, within increased exchange by in rates, the second big and the growth was our impact Suite of which second primarily net for this a total sales the the quarter XX.X% driver Arc net was offering, growth initial sales revenue for ArcReporting, segment

impact of primarily points a a of by lower a margin product less to to within favorable XX%, and increase approximately and the costs for a regulatory expenses expect price the in leverage second in sales, sales exited. changes Communications due $XX.X X.X% contracts print overall from Going increase digital in XXXX. X,XXX in and mix, print related XX.X%, to this The featuring including more on due operating of basis print, quarter of XXXX. EBITDA the on higher we profile an growth segment compensation from our was lower remaining second of offset second the of million, reduced XXXX reduction work, partially increase million sales forward, our the Adjusted to and for to Compliance technology investments. margin Net was segment, EBITDA segment based the decrease companies for points or was basis the were The reduction the $X.X in segment on EBITDA Adjusted adjusted development primarily XXX segment. sales quarter increase than quarter and increases approximately was normalized services the due the investment and in proactively activity we overhead incentive adjusted EBITDA higher level Management continue. the of margin expense margin

we previously, successfully print we noted cost As structure. our production network, third-party breeding offset to shifted fully our of needs XXX% have a variablize vendor

operate the demand meet Going will forward, value a quick platform requirements. turn digital-only print higher continue to we for to

related on flat adjusted decline unallocated EBITDA of our year corporate aimed expenses majority segment, continue net of print this and the million by were Non-GAAP XXXX. Regarding impact $XX.X reflected cost $XX our year-to-date in of in the the we multi-employer quarter compensation transformation The improvement the accelerating flow change this control in was obligation, the regulatory-driven was last representing minimis incentive the demand impact plan benefit regulatory million second in development the LSC in down the in leverage for results. year's offset approximately second of million, as sales toward of offset in from in lower expected to net expense. improvement initiatives second were mentioned, XXXX of the cash increase June expenses ongoing in this X.X year's that free XXXX, cash an quarter times, and decline year's year-over-year capital only quarter million pension to additional a $XX will non-GAAP is of reflects print XXXX. reduce quarter, in last de $XX.X technology last of million $XX.X second of from by during partially flow quarter payment quarter to times Free Dan ratio our expenditures the as As XXth, X.X year. of The

reminder, flow is seasonal. As historically a our cash

We a are to in than of of second more of second year. the cash first flow cash the user quarter, the and the breakeven in quarter, free closer our generate in half XXX%

subscription evolve continues sales to to mix solutions, to this less software our expect As more become proportionately based significant. to we seasonality continue

we stock at X.X approximately million million capital deployment, the Regarding price quarter repurchased $XX.X second of common of an for share. average shares during $XX.XX per

As authorization. of June XXth, XXXX, we had $XX.X repurchase million million stock remaining on our $XXX

part broader stock of in the strategy additional development. capital that expect remaining technology repurchase authorization as also We allocation XXXX our in to investment includes utilize

will our on we approach decisions. always, discipline maintain As deployment capital all

which aggressive and the chain market combat expect it continue Fed supply our to XXXX, inflation, Capital of continued relates the transactional to outlook will uncertainties, on quarter weigh ongoing geopolitical volatility we by Markets environment. As third for issues, action driven to

from hear when well in remain the by to prepared level the clients transaction as and a we So, banking deal M&A activity, are what remain year's both and continued priced IPOs are stability noted community by only far year. market regarding and below the returns. point undertaking this but for investment third also the Large SPACs completions earlier, we Dan below quarter, I last are last not also transactional encouraged work our ongoing

of net total to life software third percentage near-term range to than of growth historical a much minimal the that as software continued With but an And the and impact quarter $XXX and In size bullish on EBITDA through stronger transactional decline, distribution mid-XXs. outlook be we adjusted to to once million sales. expect the the again, with expect from We strength addition, print-in in of trajectory adjusted and our sales remain compliance recurring we solution continue $XXX million sales consolidated for EBITDA. expect quarters sales backdrop, in margin offerings. in the our

quarter the print-in Our in contemplates growth, reductions with year second guidance quarters dynamics of in year-over-year and and similar a as net software transactional reduction sales, distribution significant first this third continued revenue.

referenced the and is in services. in grew XX% our on from a level was share Based significant As well-positioned been DFIN to market year's nearly transactional-related leadership, years, it five demand capture products transactional the year for revenue and before. highest of previous quarter the had future over third very last

enable offer combined to when More with pass importantly, offerings, compliance I'll end-to-end portfolio With of growing Dan. to our our technology-enabled back software expertise clients in regulatory an us our that, now services and unmatched it and solutions. scale

Daniel Leib

Dave. Thanks

Our of with performance strategic strong second XXXX to provides momentum DFIN's continue transformation. to in the execute quarter us

combination While strong uncertain, and cost outlook well sheet the heading market position, the year. of of balance remains as structure, positions our back into half the macroeconomic the

tirelessly Before With we thank Stay operator, continue open questions. to and employees that, around have it the I'd safe our solutions. we're like Q&A, the quality up healthy. ensure highest ready working DFIN to world been for for who receive clients the to

Operator

line Instructions] first of Strauzer. question the [Operator Your Charles comes from

is line open. Your

Charles Strauzer

Hi good morning.

Daniel Leib

Good morning Charlie.

Charles Strauzer

sustainable, one a of tad appear more Or is give may growth think guidance compliance-related that -- there little first time that? about with thought? comment more And on us If do be really sales, you work? you Can of had bit more that conservative. to we a can if down bit year-over-year. would than you QX it sustainable it colors lot the is this it's what you drill Maybe talk drove little a on outstanding the a had kind

David Gardella

Yes, on Charlie, I'll it's it. Dave, comment

market customer really in pointed nice there. So additional by around driven share out increases noted as compliance gains and remarks counts, prepared that was services offerings higher price really we some traditional the, -- the provide the that saw I you the growth.

when it's you think I QX, highest for and of driven look both quarter by compliance goes at around the in segments, the work proxy that all there. the

I we I on again, -- transactional tough this last and guidance, think year, of QX to year, side specific in the transactional mentioned comp did QX. $XXX year-over-year more really -- the last million

revenue revenue, just about similar we've over $XX so far in the million at level. million quarters think where as somewhere what assuming that first really ongoing that quarter, sorry, the and sustainable noted, transactional But this is you QX the driven revenue elevated look level those proxy. brings transactional again, tougher it recurring. And what comp, we're that this just we I the in QX by QX guidance and compliance $XX that's done QX year-over-year to to -- is in that two that are year, fact

Craig Clay

We're domain in Craig. Dan, you way And the compliance and from recurring I center needs clients quarter really, CNCM And is expertise, the they to heard that. driving governance in in and this at our think are revenue. the supporting the market work. any as clients regulatory compliance that want of our we're demonstrate our results This capital relationships

as team. viewing an of are clients us extension their Our

reviewed compliance So, [ph] VSU whether that's or the XX-K, and mandate, up human disclosure, in XX-Q proxy as on it's as or primarily the Dave said, capital call, volume. XX%, driven by

our utilizing customer traditional So, our is share SPAC, XX-K. of platform who a up for for growth XX% are and XX-K, count is XX% gains result and company public

For proxies, XX%. it's up

nice companies the retention has on a just here the public working a [indiscernible] really win, there. In So, XXXX, increased, that business so the number high. is from with of performance

the current market, of beyond. stable. in it's great given XXXX less focused in of So, and declines. how filings plan be year-over-year growth to to a We're We're XXXX position, as SEC market. keep IPO performing on many on our our to be share increasing in competitive we're executing compliance after really going of going but the years regardless we're It's going

Charles Strauzer

That's very helpful.

Eric Johnson

we're just is -- would the basis. clients just weekly our a add GIC complaints Eric monthly I on on perspective, add, this is the Charlie, process help rely their what to team And I from them really manage companies would seeing investment Johnson.

tech-enabled the So, revenue driver as what is our services solutions, seeing for us our of we're is, as teams. well

As the web posting the our through work. of teams as the manage filing and e-delivery this as compliance creation well

for us. that's a been So, big driver

Charles Strauzer

year-over-year, Excellent. but all side, Can sequentially. more Market helpful. you little that software bit That's lower that? little really to Thanks color. maybe bit a about X% shifting a for growth expand the And was on Capital

Daniel Leib

Yes.

excuse impact jump that, wants But really the if -- whose mix anyone off me, the M&A. if I'll case use and of primary is you -- to kick it's Venue So, then in. Dan, it's disaggregate

positive grew on Markets. the was software a to was continues grew was constant about And or and X% then currency within what our basis. extremely Capital compliance in So, Venue be flat performance

about also subscriptions longer the better and that's then in converting so reception mentioned price we're ActiveDisclosure the clients year-over-year, happy the XX% contracts. receiving as new in So, seeing good And grew really the that I term market. as over, comments, uplift on my we're

Charles Strauzer

very queue. in I'll much. back Thank jump Great. you

Daniel Leib

you, Charlie. Thank

Operator

from comes question Heckmann. Your next Pete

open. is line Your

Pete Heckmann

really Good morning, everyone. to… nice And

Daniel Leib

morning, Good Pete.

Pete Heckmann

if million, bit Charlie's and years. to and confined would the or doesn't bigger three around just number or pretty last that really more annual compliance you I correct? try the offset it be for dig largely tech-enabled sounds And as your meetings guidance show and in more any repeat be quarter And services, that And print that the a you're want …follow going -- in of you're revenue on given XX seasonal is the third to doing to question revenue, services little proxies? the second it quarter software? on Is big more quarter? perhaps then seen than or we've upside, Would just to certainly that?

David Gardella

can I sure, I'm off. lead

May, the question. primarily thanks mix have a timeframe, is have of proxy, peak, So because a K seasonal, It the essence you you one Q in few. then May for

ESG. around reports so our from which rolling Dan side increased into share, fact numbers our XXXX, the higher around providing them, producing, retaining show rate. count, there clients ESG It for It's is managed we're traditional again, well us creative all on increased delivering services, of an market, providing it's that retention that It's by that really conditional a back clients client So in baked our going ID and recalled, the platform. as will some seasonality obviously, around is as you're or a new which correct. that solutions, software, proxy on I'm then up We're just to around moving we're the excited this compliance based into IPOs perspective, sheet that's role. prior the from

at So XXXX. IPOs be retain until again is of to going as retention expect the the certainly suppress to When get is XXXX. primarily that going forward to accept look in growth the accused it, yet you we -- to quarters, growth you

Pete Heckmann

proxy within modest Would fund a guess, that it company, reflect doesn't side? appear but investment revenue. then entirely projects I some And transactional print like Okay. the on uptick material, in

Eric Johnson

Pete, this like Hey, And in as certainly as nature. activity, Eric work funds are proxy well Yes, closed is Yes. Johnson. end thanks for question. the transactional that transactional that

the had in mix quarter. a So we nice

Pete Heckmann

to it. Great. Appreciate queue. the back I'll Okay. get

Eric Johnson

You bet, Pete.

Operator

Charles from next Your comes Instructions] [Operator question Strauzer.

Charles Strauzer

Yes. Hi.

here. couple follow-ups Another

the you EBITDA of at your obviously, to than the meaningfully margins, perhaps like mid you're close And back to? guiding than QX. year, of the look XX Looking if favorable the better some need were kind mix what of guidance for really more again, should in margins just the half that

David Gardella

Charlie. Yes,

certainly So think, QX, of by guidance transactional relative lot our than a implied. was driven for guidance I a our little revenue bit that to better

that as So there. quarter. on well line margin seasonal typically our you also, the both the revenue see as largest QX know line, as is And you

we XX XX% the what you So similar size at margin we we in get the QX, QX. on look to I in relative And mid think delivered margin, when leverage revenue, there. operating did

similar impact on sales the reasonable take the think is pretty mix, leverage when of away operating a estimate. a mid-XXs we so you And

Charles Strauzer

heavily Thank And the some over the of once the some also then these to consummated? sense. under market speak, seems SPAC of underperformance It trading concern on new these combinations companies they companies you. guys, have of the for the but them makes just monitoring and recently, just getting so finding just not siege be start Yes. that banner, SPAC lastly, to on only any pressures weighing

Craig Clay

Clay. comparison. because has In been the up tend larger be SPAC. up trends that SPAC the have And completed, Craig announced. been It's historically XXXX, De-SPAC, honestly, many for for better in that small bigger Sure. the had This have of the there that us over take revenue year-over-year in And which an XXX, but held transactional few also been have there's DFIN. that. Many is IPOs had DFIN in opportunity a they've made given I'll the percentage towards completed, to announced. our De-SPAC fewer opportunity for

the are larger, As you spot remarks, been deal, meant of complicated based share prepared heard able been year-over-year, that's have De-SPAC the working have these within larger on we've in our that. increase these even kind in this that groups more the of deals mix space, really to that our sweet on

a And mean the population, as monitoring prior looking And to think So our capital XXX SEC market. for De-SPAC very support its opportunity of that the still a think be minimis a formalize But support house significant are -- the is to to it continue platforms. of opportunity less well the certainly be going lot the in software manic pace. that DFIN, XXXX the is to we all We're had certainly closely SPAC announced. correct, target. as attention. SPAC de initial an SPAC reset filings for I we almost weren't with play as either which it's XXX formations above clients, we There long-term an average, will transparency. to been We that with SPAC

a ecosystem. nice So it's just

Charles Strauzer

Great. Thank that. you for

Operator

you. Thank

from your is question Sharma. open. Raj And next line comes Your

Raj Sharma

expected big that reason is the seen share QX? not QX very that gain share done what related has have seem in, done in is business I the and outperformance excellent to in transactions caused understand to Thank to transactional the you better you be do in guys wanted you the gaining industry QX because continue an than impact, beat? conservative seems and the to significant better? understand, quarter. you've relative than other what caused so overall The guidance Also, the at expect compliance to better have to outperformance that wanted seems the that QX

Daniel Leib

Raj. you, Thank Yes,

first question couple on a transaction. the So on things your

it's So in overall based. the of as are the market couple stats things, we a that of some our unit quoted

closing, still recognizing as clients we're continuing – importantly, revenue work. work, so getting for been those unit we some very I though mentioned, deals. as and statistics based, always larger ourselves as do compensated And in find to do well then we aren't And very been. the we see And complex winning are we've deals positioned in more were even we've that the successful

the seeing flow and units for then those measuring share coming so dollars. through on And

up So we saw some pick there.

compliance exceptionally through we QX, market saw for IPO compliance strong that to ongoing side, And going and IPO yes, forward. lead year QX SPAC did we to is going I additional work through that expect come that and saw in On last market, the come was we us say, market. in

second addition, the from quarter, activity. in is the really there do seasonal we a which performance season, as In proxy benefit well. we some had good And

prior flows I if I don't think to through, to comments. your guidance anything in know, terms want that add how and Dave, of you

David Gardella

Yes.

look extremely assume you QX. numbers But something transactional, it we of last that that QX, that XX year-over-year revenue midpoint year, that was quarter, million. again, when at comparison seen our transactional recorded So, in that again, a the was million for tough. XXX similar we've years. to five call And again, mid in the third quarter the transactional the guidance, is for Last highest quarter in

margin our reiterated think comparisons through delivering the much this remarks. transactional most today. revenue. on the on I we with and much, we similar margin, and quarters historical I noted went stronger some than it relevant prepared first is in of overall probably Raj, the and And point here in quarter call margins, that get, the said, the were we profile

I regardless takeaway company fundamentally the is the is think there is, of profitable, that transactional environment. more the

you than it software, due when to structure taken results. less the to Now, baseline ago. years think I we'll in of a really the the changing cost reflected substantially the certainly the But reduce again, on think higher in underlying sales see And it's more that was getting actions all profitability, we've print, as mix, just permanently that's as well impact changes of couple the about and transactional the market. that

Raj Sharma

Right. won't not market do you conservative through second compliance seemed you is very to but not you QX, a do you where compliance, I mean, quarter, transactions in the well? and But that. Thanks QX, seasonality see, see, gains QX do, impact QX there's then still and the as XX-K coming from see share flat that given guidance and and for

David Gardella

an QX, your at will a $XX down and to think, example, when in can the year, as aspect million you take compliance, look, QX $XX compliance gains and $XX of QX, to I million $XX point, from in million the through, went last in those look last million QX. No, to you come in -- seasonality year

know, volume, but with front of in proxy compliance XXk, K, the is half is Q, the so you year. the the all that year had the seasonality a QX in back much, the in lighter again, half some just obviously, QX of with So quarters it much than

Raj Sharma

Got it. question Got it. Thanks. And then print another last the -- on is

David Gardella

the on and, one to thing, XXXX. Raj, in site, back -- schedule we that investor more sorry, quarterly just trending our on website, goes have the a

helpful, you of pretty can think I last how It's so, see, it'd the And really in each consistent years. that be three seasonality out. plays

Raj Sharma

been Great. Got are it. most in then print side, performance print on be taken? side, And cuts -- than of I you the or the QX, better the think there expected indicated, to seems ? also

David Gardella

Yes.

no, it's a great point. no, So

now. actually to lot acceptable we market a is margin perspective that a year. yes, it lose, So is down a through and price impact in and results. and increase, that impact. has that answer the happens on prices, on we've be on year-to-date for EBITDA that And a substantially no thought combination in on, actually we would We pretty of contracts our impact. get, around the the EBITDA from the there's work of that part, that thought absorbed, But, the revenue could total And actually from of a been the at doing, this point that taken reason print initially second that than print reflected is at the bit contract first more We and regulatory as less, we some of And therefore, impact back helpful. year. more the impact $XX we the than retained we better the a reasonable now from a well first, about little of the initial bit million guidance than of change generally that revenue we've think, million the an likely higher essentially were set exiting, on for half the actually little perspective, estimate about impact, revenue work. our pruning were changed of $XX as, print being we we more And, that's that a half

Raj Sharma

Great. you. offline. again. Thank my take you. Thank Congratulations, I'll questions

David Gardella

Raj. you, Thank

Daniel Leib

Raj. Thanks,

Operator

Your next question Pete comes from Heckmann.

line Your open. is

Pete Heckmann

follow-up. quick two just Hey,

better to certainly, or capital expectations, So venue get fair two be then at markets, that say some outperformed and on that on, saw, transactional it but given the we just of our mergers? overall, areas defect with least including outperformed revenue, would that is be M&A activity clear the to

Daniel Leib

we revenue. -- we including know, I we even much so then lower overall think as assumed a noted, impacted again, activity. agree, IPO had on Pete, you the year-over-year guidance, much And more De-SPAC relative M&A to or less than would was the basis Yes. transactional

Pete Heckmann

Okay.

there involved is you've sure make unusual just IPOs? to other for the I ideas was IPOs increased versus second most like looking down, in at the pretty or DFIN, good XX% normal And that SPAC item the those in DFIN. the But rate my that, DFIN, in fairly the of run share of question is fact to does wasn't, that primarily get traditional first to of companies wanted just good is first in public materially so I some then of because either the from IPOs mix Okay. just XX% half of some there. retaining the for just public building are just the were IPOs, small, half number many new pickup of plus, companies the that been

Craig Clay

is Yes, Craig Clay. correct. This

the slowest since only you XX% all + majority six IPOs, there XXX the of were The and foreign just what million Bausch So caps issuers. micro IPOs in IPOs you XX% for were more the QX, referenced, and accounted under largest most Lomb, than of saw quarter, quarter QX, XX raised was of of IPO these XXXX, what that in million.

been a that XXX would play the other in where and IPOs, of markets, have So them. really the market there those half of in completed have first we not million, XX down be greater fundraise. That's and year, we than eight

really So pleased we're our with share.

the look to companies Claire's, that IPOs which work active. include that both in well read price continue to underneath care, Building mentioned Dan intent XXX and that you have The Products, I Instacart within I happening, announced the I Specialty and Steinway, tend that's QX, publicly think to really are think when their doing Dave several others year click. And that. and announced it look price their this have underneath intent to that work. we're the

share right market hit, a that hear some We're really now. what our taken within in from demonstrated to And clients it our normalize. seen but open has waiting absolutely So the IPO that. and that market think history is that it's happen I like, window And the hopeful quickly. looks we optimism soon. change see capital and on it's shown we're the the We've really can for downside and

Pete Heckmann

All Great. Craig. appreciate right. it, color. I That's great

Craig Clay

welcome. You're

Operator

back the at There call are Dan no over you. questions turn to Mr. further I time. this Leib,

Daniel Leib

you. Thank Thank us forward to November. and you, We ongoing everyone look interest next Joseph. earnings And in the today. for will joining call thanks support appreciate the we and our

Operator

today’s call. conference concludes This

disconnect. now may You

Donnelley Financial Solutions (DFIN) 3 Aug 222022 Q2 Earnings call transcript