DFIN - Earnings call transcript Q1 2024 | Donnelley Financial Solutions, Inc.

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Operator

Thank you for standing by. My name is Kath, and I will be your conference operator today. At this time, I would like to welcome everyone to the Donnelley Financial Solutions First Quarter 2024 Earnings Conference Call.

[Operator Instructions]. I would now like to turn the call over to Mike Zhao, Head of Investor Relations. ahead. go Please

Michael Zhao

trending morning, section Financial Good This thank for found a you we of results. Thank can our which First everyone, website quarter Donnelley be supplemental including report, Solutions our the Call. of XXXX joining historical released Copies Investors you. in earnings and schedule of Results morning, dfinsolutions.com. Conference at

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

release on statements For further a on refer please our in recent detailed with and complete and earnings most to the in filings included Form our cautionary SEC. XX-K, Form discussion annual other the report quarterly XX-Q report

earnings Further, EBITDA of with informational you supplementary for of financial financial provided non-GAAP margin appropriate non-GAAP Please information information refer non-GAAP EBITDA, useful you are, company's an ongoing concerning and for we financial GAAP way the organic however, and We evaluate is the They discuss adjusted and purposes information. presentation reconciliations operations only. adjusted net financial performance. information release certain company's related the for to to and information, provides such to will the sales. GAAP as tables believe

by Floyd this over I Dan Gardella, joined Eric Dave Johnson, Dan. to morning I'm now turn Clay, Strimling Craig Turner. Kami call and Leib, will the

Daniel Leib

sales approximately as cash sales the of $XXX.X improvements and sales organic tech-enabled first in balance of free with sales flow and nearly in encouraged margin declining expansion million, to growth, an you, with growth momentum last distribution services XX%, operating print basis adjusted I we an building in flow. performance net EBITDA our sales revenue quarter by strong net Software XX% . We organic of net growth composition compared both cash positive on to am which Mike, our profitability. mix net good the from Solutions our net Thank delivering and increasing morning, improved profile EBITDA, first organic everyone. XXXX net We and delivered improved increased and sales on quarter to started adjusted by year-over-year year, the sales increasing XXXX. continue X.X% X% drive consolidated

net revenue of first similar EBITDA combination adjusted once the EBITDA first modest improved and which $XX.X cost last profile. of consolidated stronger of periods yielded year's profile million with quarter growth of quarter management and than historical sales margin are adjusted XX.X%, both again significantly above The revenue and

performance progress well in are financial Our highlights positions targets. long-term first continued us updated to achieve we our the making quarter transformation and our

driver a is which our A quarterly first our results in key of quarter the new net million portfolio, $XX.X sales, of software record. performance reached solutions

to an sales last the Software Solutions the the on from first an quarters. few quarter organic the increase first XX% versus growth over basis of accelerated in XXXX, trends growth net quarter

The growth our in product, performance sales room Software by growth. net which Venue, of virtual XX% Solutions sales was posted the led data

as venues results offerings. alike. well the public by Venue's private resilient, application that serves deals announced and M&A stable our which than strong in strong both ecosystem are as broad across companies encouraged execution sales We transactional more within demand This unannounced reflects performance across and

growth improved our each in trends sales, the year-over-year product software basis growth a first momentum Arc sequential As recurring and the the with our fourth the of on in XXXX. Suite both delivering of solutions compared ActiveDisclosure demonstration to a stronger software further of products, quarter net compliance quarter,

first XXX of Solutions up trailing basis quarter in sales, net of increase Software first of now total represents an quarter net X-quarter X up quarter XXX and from XXXX excess Solutions basis mix. sales year's are total approximately a approximately sales, first points last trailing points net of million Software made period. the from XX.X% quarter net On XX.X% $XXX sales basis,

Looking half suite our the this each ahead, improve to disclosure year. growth further second the in in active of we for expect rates

of improvement rate transition. tailored primarily tailwind this the is case platform ActiveDisclosure, improved reports Suite, overlapping shareholder recent driven For the Arc is by last driven wins, by combined growth from the In with the regulation. year's

the our a higher-margin XXXX. sales, evident toward As continue such toward a and declined in proportionately of higher software by aligned a of from sales mix. was distribution proxy financial the compared the with and during tech-enabled or we sales net mix by of This evolve to revenue, statements first mostly XX% mix services accelerated annual a million and mix shift reduction benefiting reports quarter profile which $XX software quarter, the associated heavier that first our approximately to to printing print solutions, was of reduction mix solutions in strategy sales and manage while with distribution

its like in will our update Dave regulation of But an cover provide to results detail. July date. first, compliance reports XXXX readiness more for ahead the I'd tailored shareholder our on

reporting last great with are previously, technology comply and initial release the SaaS with Including go-to-market mutual market As help solution first regulation. aimed fourth funds exchange-traded to I've making operationalize the in we the year. this clients TSR progress shared the to plans and our our to development during quarter of fund of our being

serve that giving solutions I'm our a ability the have DFIN in in the for the solutions As by services. we work or shop to the unmatched they scale TSR to handoffs excited regulation, we continue via compliance end-to-end one-stop to process. wish clients SaaS-based an traditional either compliance eliminates way All mature and offerings, created

on tagging, leading iXBRL full manager. The reviewing level, investment at Arc and all via our test execute we Suite and calculations, announced solution the financial TSR the of clients filing a financial a offers a ability our successfully the last for to our solution. filed share The the completed report close companies demonstration SaaS large a asset reporting offering. of software In behalf through test filing iXBRL and ArcReporting product. further readiness, component to including fund software generation class of single SEC TAG was product a arc an Form NCSR, week, DFIN

with Further, host This integrated for the the data fund's flow guarantees filing Arc that our successful results distribute complex processing the end-to-end test from and single and level. Suite to the a consistency them financial file, create, platform. reconciliation reports clients, eliminates class web at within dynamic offers demonstrates ArcReporting need share enabling straight-through postproduction financial all

This addition offered new on those regulatory completed we early In full reporting, our is a In the ready DFIN for traditional successfully to SEC test approach. services and serve was done industry-leading filing to shareholder clients behalf in the a tagging manager the test filing areas including of April, of leveraging requirements, document iXBRL capabilities. DFIN's the tailored prefer our filing. functionality large highlights via that of by based on asset tagging to who compliance report of expertise compliance CSR another also iXBRL the deep by service and

go demonstrate test an the [ regulation. deliver July very our clients journey XXXX to our DFIN With in a less complex leadership solution and well the DFIN's remains filings represent revenue and ] Our the the associated Gelder milestone industry until commitment months to compliance than regulation. while readiness important successful recent in with a reports positioned streamlined opportunities recurring for tailored date, X capturing to serve

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

David Gardella

Dan, and you, good Thank everyone. morning,

performance, to quarter I'd X discuss Before financial I first like housekeeping our recap items.

our in balance First, was we Arizona, consolidated which sheet Phoenix, sale completed $XX.X an The the as of previously XXXX during resulted asset XXXX. gain net proceeds fees and shut Management on for first line other was This $X.X first million, office, million received gain land in was net an of the net The was nonrefundable recorded held XXXX of was were sale segment and results. quarter $X.X the quarter which of in a of $XX.X we sale. of XXXX. reflected from under the $XX.X and and quarter, to our sale million received operating of pretax in related and down recognized in in which We of operating in site the demolished item. million recorded XXXX excluded Markets is million recognized of within income $X.X Capital Communications gain pretax Compliance million the the non-GAAP net

as on completed the the business XXXX. we earnings fourth last sale call, in quarter of quarter's our eBrevia of Second, discussed

XXXX, with approximately negatively million approximately full impacts million For $X the comparison sales disposition the sales for $X year by year-over-year each impact total net net quarter.

The comparisons impact on EBITDA is and adjusted de our profit gross minimis.

the organic disposition eBrevia included of For our sales sales organic A as reported purposes changes earnings of currency exchange net as sales for of the rates. change in well change is release. in year-over-year impacts adjusts foreign change net reconciliation discussions, to net

quarter turning Now our first results. to

continuing XXXX. quarter EBITDA flow cash net a XX.X%. during adjusted driving improvements a sales our we compared By expanded margin operating and more positive demonstrate profitable increase momentum noted, first our cash quarter Dan As year-over-year efficiencies, also of sales XXX continue by mix both the consolidated by operating while points adjusted in the EBITDA, to performance first shift we to first delivering strong basis free in our in quarter and flow to growth, toward

an basis, quarter $X.X X.X% consolidated the first an $XXX.X basis X.X% and XXXX. million increase a and a from On or first net total of of on on quarter of basis the XXXX organic reported were sales million, for

offset higher of earlier. XX% on transactional Dan decline year-over-year a majority highlighted capital related which million in revenue, combined markets Software investment print and revenue growth than or net The decline basis, distribution Solutions and sales in companies that increased vast more the $XX.X with with organic compliance to markets that capital sales an

Excluding print grew XX%. and net distribution, sales approximately

and a non-GAAP the ongoing lower transformation. volume XXXX, offset incremental XX.X% print adjusted by margin sales approximately first control overall to including our mix, primarily gross accelerate higher quarter First quarter by driven investments XXX points of the impact was cost of and basis partially favorable initiatives, than

$X.X Adjusted the XXXX. the quarter a from SG&A million of $XX.X million, non-GAAP increase quarter in expense first was

higher non-GAAP of XX.X%, of SG&A in of the partially from and The As percentage increase primarily lower by expense third-party increase offset driven an sales quarter net points a expenses expenses as was approximately selling by result XXXX. compensation control an adjusted non-GAAP basis expense, impact first bad initiatives. higher the of debt of increase sales, was in higher XX and adjusted cost SG&A incentive a

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

increase and XXX first the offset of XX.X%, partially EBITDA incentive cost margin of a by approximately First compensation higher an overall basis control adjusted driven sales quarter mix from points XXXX, by favorable higher was primarily initiatives, expense. quarter sales,

XX.X% segment of virtual which first in growth record strong Turning last year-over-year XX.X% basis our our year were the quarter from organic product, up room on venue, sales. our achieved million, or in an an now and first sales segment Solutions Capital the quarter $XX by to $XX.X Markets Software results. increase driven Net of million was data quarterly

with an on recent during quarter, the higher continued first trend, benefit to venue the page platform the volume Consistent in pricing. from increase and

sales large first strong projects execution half account growth. those several the our of in sales net with addition, wins client quarter for in In Venue's combined approximately resulted to quarter

to consistent testament our as As to demand data level Dan performance execution. as the sales noted of a strong well recurring is platform earlier, Venues room for our virtual

a the continue Going Venue compared to large deliver year-over-year outsized at achieved robust the pace more moderate the forward, given this to impact expect solid year first of quarter to rate we in the of we projects. growth, growth albeit

which overlapping of accelerated growth, started addition second to XXXX. venues during the quarter In

in quarter, XX, offset driven of first sales in lower including activity. XX disclosure disclosure, primarily active service active File X% revenue product our partially Section by compliance filing increased Net the growth recurring by approximately

trend filings for well as weak client we a expect transition beneficial demand as term. elevated we subscription-based continues to to The a continue to which by churn model, a in impacted near the as be ownership market IPO

the last first of modest first sequentially year-over-year Following a year. the in revenue revenue ActiveDisclosure fourth increased and flat subscription was decline subscription quarter versus in X% quarter, quarter

revenue. price count, During the of to with quarter improvement a net continued average expand is client made we in consecutive the the progress ActiveDisclosure, solid client per foundation higher ActiveDisclosure quarter, combined count future adoption client of in for generating third The resulting first growth.

in from sales growth, of level achieved the new product ] approximately count the is illustrate create future XXXX. To ActiveDisclosure's ACV double first quarter a greater logos detail, foundation this the enhancements first for The during in [ growth. with coupled in momentum strong we quarter cloning

we we expect have rate be of as the the XXXX in stated continued half half in of first experienced XXXX to out play we growth some than previously, the first headwinds stronger the in ActiveDisclosure's As half XXXX. of second in to

sales quarter offset data basis EBITDA the growth a offering first and and in high-margin and by incremental XXXX, of was to investments from of for control the in cost XX.X% an Adjusted room margin primarily due initiatives, the Venue and partially sales our increase higher approximately mix segment favorable points marketing. in X,XXX sales

Markets, million revenue. Net sales that $XX.X offset million, revenue, transactional XXXX quarter predominantly Capital first Communications our or and earlier, lower-margin compliance I decrease higher were of and in distribution lower from in by X.X% Management driven a segment by Compliance and the capital noted Dan of $X partially print and markets

the an transactional of quarter growth offering following million of million represents revenue, capital years In year's of this market $X the X quarter first we quarter, compared $XX in first last approximately or recorded revenue first and XX% to of year-over-year increase decline.

first of deal during quarter volume by in both market We the offerings in to quarter increased debt the the across year-over-year improvement and activity XXXX. resulted encouraged are IPOs first which compared

basis. soft deal In to the averages. historical So year-over-year M&A short, compared on was a remains activity environment down

Markets very future products well DFIN to a is While picks of outlook demand related activity for the capture remains market when Capital share for up. and uncertain, transactional services transactional positioned significant environment

Adjusted growth to XX.X%, revenue EBITDA in the partially initiatives, high-margin incentive margin and markets was due sales mix expense. debt capital expense margin adjusted primarily favorable lower by sales first control an a distribution The offset basis compensation in increase transactional points the from bad approximately higher of EBITDA well impact and XXX quarter for the increase XXXX. as featuring of of higher was print and cost as segment

segment quarter Investment from benefited XXXX, X.X% increase lower subscription X%, first million, quarter onetime services driven approximately were revenue, revenue. which growth Net Company of an of by first sales which to in partially higher the ArcSuite Solutions versus by increased compared implementation in offset our Software by $XX.X of the XXXX, revenue

revenue As remain tailored to previously, drive Arc second We we on to expect have the in half future incremental from revenue recurring XXXX. growth shareholder revenue well reports, Suite starting stated based we changes capture from opportunities of stronger growth. regulatory positioned the

XXXX. margin for the development product offset of a EBITDA and investments was from higher growth due cost technology XX.X%, and points the decrease in higher as adjusted to support decrease in tailored opportunities partially The segment of of by XXX quarter was Adjusted control basis shareholder margin initiatives such approximately sales. EBITDA primarily first reports

$X.X and primarily $XX of XXXX distribution in to Net for sales Investment decrease printed X% a Companies million print first Management in or materials. were our million, Compliance revenue reduction from Communications and a quarter secular the of related driven decline by segment demand and long-term in the

XX.X%, than Adjusted lower approximately was due XXXX. margin of was EBITDA the sales quarter partially adjusted in first the lower initiatives. for margin offset primarily control decrease by XXX basis the segment impact EBITDA cost of points to The

at of lower of our higher corporate accelerating health first costs. XXXX, impact cost control unallocated $X.X expenses care aimed by the million an the Non-GAAP partly driven a and expenses increase the from $X.X decrease million in initiatives quarter were quarter of in by expenses primarily offset and third-party transformation

compared primarily an negative year-over-year to quarter free of the improvement improvement Free $XX.X the capital, $XX.X software technology an partially by increase EBITDA in XXXX. in by products working cash million them. and of investments million driven support to and quarter offset favorable first The to underlying related was higher in expenditures in flow capital cash flow our is adjusted the

$XXX.X on as $XX.X including million and had of a our our of $XX million of to million with $XXX.X quarter We From we the on non-GAAP million liquidity the revolver. net hand. well of perspective, $XXX debt, ended cash as remaining total drawn revolver access debt million

leverage our X.Xx. March ratio non-GAAP was of XXXX, As net XX,

reminder, our cash seasonal. As historically is flow a

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

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

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

we deployment. towards will approach capital forward, balanced take to a Going continue

capital disciplined and net strategy We investments transformation, deployment our each area. drive key share remain to view organic will of repurchases components debt our continue as to this in reduction and

As This to reduction profile of in second heavy our historically sales continues a our overall mix the and becoming sales highlighted XXXX, it earlier the of second expansion. print margin we of significant distribution component expect over distribution long-term mix facilitates quarter, is time sales. and our improve less to of which we revenue for quarter our outlook relates and to continue the print comprised in

as our million EBITDA Compared $XXX second year, $XXX expected net low quarter of guidance expect that as revenue last range. sales approximately the to is quarter last in backdrop, the midpoint print distribution reduction of With consolidated the growth and consolidated Solutions adjusted year's sales implies consolidated quarter in in net of XX% $XXX to and offset we second in to to Software second the million the margin flat million the sales range sales.

this last sales approximately $X this up we $XX million first in quarter. million, million quarter year's assumes Further, $XX of $X million capital from second approximately year's the up markets guidance transactional and recorded from

With now pass back Dan. that, I'll to it

Daniel Leib

Thanks, Dave.

Our make and execution that a in past. the proof quarter the more offers our performance and structurally in point resilient continue further durable to than DFIN first strategy

also opportunities we profitable capital. being our transformation aggressively structure continue disciplined on continuing our recurring in cost to invest journey, will to of progress growth to we As manage stewards drive and while revenue

We the changes created excited opportunities by regulatory by the horizon. are on

solutions regulations. comply creating help are focused and we recurring clients with on meantime, best-in-class to the compliance our In regulatory those

receive to the solutions. it the I'd been to around clients ensure thank have who world like Q&A, Before highest tirelessly up working for DFIN continue the we employees our open to quality

we're ready questions Now with for that,

Operator

Charlie comes And from with Strauzer first the CJS question Instructions]. Securities. line of your [Operator

Charles Strauzer

one nice margin, base EBITDA on our thing to the morning side. want versus ] margin improvement model. just I touch this [ year-over-year also on the

the based when in -- ] drive look Are well? [ that -- here? expected guidance of continue they factors as of to help you Just of along kind that QX, kind at

David Gardella

Yes, is for I'll it. Charlie, question. this Dave. the take Thanks

favorable So things most obviously, Venue growth prepared room in in margin incremental very the notably I a tremendous the offering the QX, driving in point One we we that the saw that the are remarks. that highlighted X few there. is things and on mix data would margins And high. to

revenue, X improvement. And margin the when those really right? decline lower-margin print put of together, a so look at drives or you and You lot the the that XX% in things

thing point second the work cost sorry, -- The to, structure, the would continue would from I disciplined or third do I would to perspective. really be on thing to point cost we being a

from As can cost forward be be you -- obviously, at an comps disciplined we as to look a assume some we go perspective. perspective, from and continue cost I tougher there, overall beyond, QX think we'll we'll overlapping structure

would probably to in venue then to of some the QX start in the tougher things few And then about prepared the one overlap in perspective, point of remarks, from much from QX, the thing software mix QX, in as that -- tough we drove in a year. had we One, back ActiveDisclosure is perspective really the in growth, there. venue. but half in I and Suite ramping and large Arc and growth different comps noted to particular a for we the which expect expect overcome, growth, of we up rooms the half a data noted don't

to down. year look software from growth, would as margin's flat to back starting we come the which what then year. of roughly noted you incremental a QX, expect the we like would half improve to Overall, roughly last And we But say the in print there. with certainly, that said, to I perspective, delivered also

Charles Strauzer

side, and clients obviously, good if the IPOs? market, there there performance, pipeline. a your just about in could transactions you of good at tone When kind And the to obviously handful of there's improving of deals, what's you IPO the more it. legal out the look to that Got and lead aftermarket banking coming talk out

Craig Clay

Craig It's take Clay, that. I'll

that leading fees a on finally debt start many think, After quarter up. this I issuance, decline. had from banks indicator were first, transactional new of with quarters Investment the I'll M&A and market.

increase Fed quarter XX%, raising the the first So 'XX, the since when it's highest rates. started of

than a care see. So et in to Spring, of have what sector, in IPOs. of nice certainly XX% at feels to to IPO if is price. IPO It look BB raised improvement. X from companies a the quarter. the you in bit have their is improved DFIN health We good that more that Bright There billion names the trading $XX of Foods, well supported million, QX XX happened pleased came were little lot $X are A XX XX% those the above had filings. great cetera. which of of the quarter,

So this IPO the for market. is positive

us exciting look future. to telling clients Our as are that thing it's an they the

April, for over overall that. the largest new issuance, Viking. of deals of you had average 'XX. look at by XX-year XX and but very combined $XXX And the month, busiest to since proceeds, above support will a by offering in the It This I IPOs billion share was was I we happy market billion. just $X.X of deal think in our deal April, if month we the historical XX% it. The barely greater the $X were is raised take million, was than count X think $XXX November million

night, So the in top and Viking the the shares price -- last several or number of of this -- the during trading at begins during offering starts increased price to they call. range, the they times.

large tech positive continued for DC, market, Another comeback. the

was which see. to nice So rubric, we had

we April, the X, from million. small of in prior new There had was filings month over a X. $XXX which So also were increase

several highly the clients previously remain by encouraged We're publicly process working are deals encouraged remain process, So marquee that but our deals are that as we pent-up filed. commented, in the with demand. we

still some have are also that confidential. We

and week up. the clients move they'll public, Journal we respond public to go last companies remain are IPO the market think Wall taking steps The the opens. their when our given mentioned bodes to potentially success well And or Street would that recent

the we're gone IPO We have the summer. the normalize will continue into out that receptivity the haven't and that encouraged by IPOs of But to market that seen publicly.

Operator

comes question the next Your Davidson. of with line Pete from Heckmann D.A.

Peter Heckmann

noticed that We had ourselves.

accounted think of that the a retention DFIN? said top XX% the Or kind do some to? Just that maybe mix have rate high of what amongst you think XX% I competitive of XX. solutions fortunate top the of going But are you just attribute fallen there off? that we better XX, IPOs out? I competitors from Or were

Craig Clay

Thanks Yes. the question. for

it's think factors. number I a of

I to think our public clients' portfolio private dedicated industry-leading We're of solutions. our journey. to

this have we space. history a So rich in

busy, their and I think importantly, the play most market team, when the them to manage that deal we gets an providing software important part make helping of on surveying happen. project

think I their best So our clients turning them. about provide in need can solution the it's to for of who moment somebody

are I clients' but these it has heard leading a in also, think event-driven their associated these -- compliance thing for that's most DFIN VDR so deals that indicator. exciting that the providing ongoing this our the But support dual compliance, recurring almost also pipeline with results, the platform. one as software a transactions, track. you venue subscriptions every it's And supports IPO market of it as the is

work I have helps the ActiveDisclosure that the do And think services trust the it's here get when are or the then them software, their DFIN is what clients come getting the they're what they deal they do. that and any, done. our that in to if support, getting, whether clients

Peter Heckmann

confidence incremental live. any to change on the or thought Any helpful. as the the report in then Okay. potential around higher to DFIN That's in process that tailored how one we shareholder benefit quarter go And number? about get closer

Daniel Leib

Yes.

start, Let a I Dave we with report shareholder may is me and is report. few new a the have -- and I'll think tailored this -- But Eric financial the comments. Dan. then regulation,

have with our this and ArcReporting module now we Suite with funds Arc the yes, we TSR within reporting software that's integrated and on a ArcReporting. within so financial offering at position And side, look great new is

file our model then it existing so and And the upon the creates underlying generates data N-CSR TSR, the SEC. into flows and and assemble data we with reporting, the builds itself, tag TSR the the then ultimately TSR using those for

seeing I but the So out a module. we've seeing that's clients configuring guess, to of play been the really in we're we're well good any marketplace, onboarding, process pretty the of little, -- We've progress not seen more in set. TSR

On the documents now, distribution is the distributed. side, and the requirement printed for

play And the out print to the some of continues market. in

the on on we're last mentioned pressure we As call, printing the seeing price certainly side. more

to Eric. so comment want And let well Dave on print as the may as

Eric Johnson

and for the Dan, thanks question, Pete. Yes. Thanks,

draw Just we've on your to N-CSR full-form been our tagged test Where X iXBRL recent Dan's releases. I to comments, building attention TSR. would able and X press successfully file

in serve services as this our represents traditional our test well think tremendous way I in filing job clients so our SaaS reporting. help ability getting to July work type they clients via as to and a has ARC the prefer And team our product completed of done well advance that solution the of our deadline.

pleased So very . with the progress perspective. from that

a regulatory be leader software. does DFIN's reflect investment company's and in to which trending Our the seems software, revenue position as mix toward reporting

consistent. we're the that's years. operating mentioned, past So few as our consistent And Dan over with somewhat been plan

continue We print. exit to low margin

we DFIN and we're straight our that through make provide to from take operating operating relates we'll will under around can perspective, we same it where TSR can plan certainly to work. that value end-to-end a our easing where sense add we -- stay and have efficiency, need But printing, to. As true projects And that low-margin we print where clients that for processing discipline.

David Gardella

strategy would I around bigger the some it there of to in ties both print the and into pricing. just and Pete, the discipline jump how and talked Eric on about And our approach Dan

margins distribution, look historical think a I strong print gross our there's at and you really if for trend there.

gross $XXX margin, of million, profit so XX% $XX Going back to dollars. north in XXXX, $XXX million had we million, sales gross

we're X-quarter sales, gross where currently you margin XX%. profit are with dollars that $XX contrast I basis, think $XXX of on trailing million. million is Gross at a

taking or dollars revenue more so, So sales and over gross print last X years of our actually $XXX million few we've increasing profit our cut bucks. out half X, a in than by million

-- taking done it and job disciplined have the reduced And We've cost offset equally. of our is a pricing We printing. great distribution, not We've really know again, outsourced would operating driven XXX% And not same. the have within revenues say, made more all revenue kind trend. our of the all this right? level, then created model. and We to print structure with I high We approach even our variable.

at profitability, only at at And and to to here. underlying have look so we'll results the distribution the print continue also not or customer level financial offering the level drive continue but for we to the

Peter Heckmann

just got hear you You mean can magnitude more. you got didn't second Would one here, be I quarter I -- numbers. first in sneak down about same Okay. by think print the as it, I I've But [indiscernible] quarter? while but just the of that would terms in

David Gardella

Yes.

the is quarter. So proportionately the quarter, in or quarter print print I typically second say, a heavy -- second should

roughly what QX. about same as in the so we saw And

Operator

comes next Peterson the question Needham. with line of Kyle Your from

Kyle Peterson

I you of usage pricing unpack wanted little some appreciate The the of your bit touch the to bit volume a see would of whether of impact you really client what just little helpful. versus on -- -- such. of and could But Great. I or just a new the color kind guys was wanted new it's on wins, outside kind more. impressive. clients Venue growth to really if be

Craig Clay

Thanks Craig. is This for Sure. question. the

was and reviewed Dave a you It XX%, little as that from saw, growth, bit. XX% sequentially great impact will QX. think I up

driven high record revenue, So factors. by X

comps was driven So we're second XXXX, move Dave of we'll The XXXX. into half increase have of page as we by activity. QX's the count as quarter mentioned, tougher lowest overlapping

reinforcing activity volatile these rooms, well stability as as staying open underlying existing the a rooms, pricing. versus demand are of rooms higher less M&A. higher is little new The And Venue. So longer, again, on

stream becoming is has in -- of see project. stable transactional in we demand what reoccurring an revenue software the more been nature, the event-driven sort for So

you had some large we [ mentioned no Dave those growth. Even out, projects. when ] strip nice

Our clients ] are dealmaking well up. [ telling us is looking as the

And so we're as [ seeing ]. that precursor a to Venue dealmaking

think the on Fed I are anymore. companies not waiting

of the rate So a sort of volume has recent fund in the when past current M&A interest interest peaks rates the dealmaking of was barrier level rate to a not X%. came area, the average and been about U.S. itself before in prior X

being that's pleased large for looked demand to to -- there's So amounts high-quality work. our capital assets. pipeline. put we keep to of And with seeing we're

we're executing well. heard You've

announced, in as mentioned, application the as Dan IPO resilient. it's broad it's public space, more just unannounced, Venues And in whether private, or the whether ecosystem, stated, it's I

great sales So is here, going clients. what's to us continue share we're on expansion, our and got product which to delivering serving execution, focus

Kyle Peterson

some whether on to capital down? of brain you really sell I And you of allocation some I are guys if helpful. follow-up thinking to have maybe or able it's time. assets from It putting debt divested buybacks about kind work how over I or potential your guys that about a were just here. proceeds the land, thinking to get balancing, for could how That's seems like on guys pay are you guys just But you know and some pick capital wanted M&A the and

Daniel Leib

I'll to Yes, and weigh Dave start Yes. wants if in.

So really to have to same. more the the We flexibility and we the sure use. make highest of best financial want We execute strategy.

financial have up flexibility. built We ample

from down the two across will mean, capital priorities. X accelerating the the targeted towards paying But then priorities. this all proceeds be in aspects more at remain land [ buying ] capital disciplined the back continue. obviously coffers sale will into so no that of highest deployment. and seen of you've with shares those those investment or the along And changes building I We and all are the transformation. case And the And extremely organic and priorities debt. the in of go us

David Gardella

would M&A. I asked Yes. just Kyle, you Dan, about specifically reiterate,

drive capital use of pointed shareholder the best As certainly the organic repurchases. Dan is share out, perspective, a from the And view returns return investment. our to

think against have opportunities I purely rich, certainly valuations are those from the for an our aligned perspective. that we think still weighed are especially that look pretty strategy at organic with we M&A we opportunities, when

keep we stay And the so -- on very, on that radar, but driving . returns. the best disciplined very

Operator

the Sharma comes from question Raj next B. Your Riley. with of line

Rajiv Sharma

also, revenue a idea does year have what gross year? have profile And up push couple your this of TSRs the could questions. I be the business? and the from margin software view that contribution of a of next reasonable One, that

David Gardella

quarter, in -- TSR, annualized we of that basis said coming Yes, said million with $XX on We XXXX. to roughly last Raj. million contribution so $XX an half from

software, about the and is still As a we I is, higher lot and much we're right, margins the incremental that in of print certainly to on think side, at with delivers margins. earlier on we higher play point, where happy very talked which your

yes, more on expansion, proportionately this and so right, with that's less shift margin And part software go-forward a basis, the of mix proportionately. print

The other is say would heavily we're thing I TSR. still investing pretty in

you'll beyond, TSR investment. this we in to of think the starting to past 'XX get margin so what and more I initial hit relates see when it product development And expansion to start specifically as

Rajiv Sharma

forward, to year, disclosure on headwinds, of just then a caused on from growth last version. Got going you earlier transition in I rate about first quarter? talked help there Could kind that in could was -- side, active it. what disclosure a were then switch recap on me And half the the is you've pickup. know you second And that the going the What digital active how what's coming? the we expect understand -- could there weakness some

Craig Clay

Craig. the it's Thanks for Raj, question.

the you mentioned, X% in AD grew So as quarter. yes,

So declined in compared to X% was X% QX. in recent in X% It up QX. QX and trend, It grew in X% QX.

So we're our make consecutive client the net platform. growth. third of of the future It's to continuing growth quarter toward progress

mentioned, built QX One of platform we're Section ActiveDisclosure. the to leading what items within Within a have filing excited results, XX drove

as new lower driven So subscription product But Section there a the transition model disclosing. the XX, publicly from activity owners within in fewer the beneficial as IPOs. quarter, was XX by filing driven Section well to

topic. that covered we've So

] continued last SPAC keep as also result lack able also to that against the XX of not was liquidations. in We're customer the year. negatively half The a our first a of IPOs, we're lower up impacting associated own of client, [ count churn

with revenue. in Now price we're offsetting that service increases

to the in We're what excited that adoption and prospective have progress making 'XX. quarter's slowly favorable. are expect half in is So question, this of QX the some expand second we AD of being to your we in to but metrics see, reflected result, the we've been what by

them will mention. [ of ] some So

which a 'XX, have mid-teens our migrated we exciting. much seen QX So in past again ActiveDisclosure third average growth. consecutive is quarter of. off we've It's the better in I which X, of versus net price than mentioned quarters. up client

Dave ACV, show the to of logo approximately moving double which new in future stated, QX to is As had on 'XX. start Again, we net platform quarters. what's will

VAD related ] by It's is for the transition to able it And We're what opportunity growth can excitement in because to us, build. market. wants for half less product the stronger. newest clients expect the 'XX fit-for-purpose It's we what So also see our be we of accordingly. and overlap price And we second the the churn. pay the for DFIN. market than [ competitor. have an We're we platform going to opportunity in an our leading clients the

better recognizing the the or product want are driven our get choice. clients market all market the decades of product editor have It's improvements, serving value So They to SEC changes. this a as the They our with our track in such product. by in clients. newest and

our future ActiveDisclosure current because see needs, reporting clients AD their compliance pipeline important most and strong. So our are for as DFIN leader. using is clients and the our

Rajiv Sharma

that? said quarter, of Have second a print a declines helpful know had in bit sort And have understand X% very the color than would -- color. the is in have to -- ongoing I going every you know were that in and be out? little that's print expected. on Can declines bottomed on years. more of lastly flat. you they're Yes, me market. -- Is quarter. last still I the several you that, print help It's print-heavy more a They line the declines taken just We print the please? expected you quite expected decline a a And few

David Gardella

think perspective, we the to And couple smaller appreciate the of intended point secular X% a to and becoming Yes. address that time. the print I is just Raj, I see follow-up decline I'd smaller there. from things. over One,

point, XXXA, really managing volume, volume your the the distribution cost XXe-X change print with about we've nice drop, default print in done To only but not a overall of side from Rule the job the talked to as and XXXX right, as electronics. print, we saw

cetera. of structure, the cost has we use the my strategy to et a a earlier to margin At us. good over from gone print print in margin Gross as that the time, variablize some XX% to and that's for work catalyst be point And same XX%. to proved that lower exit

sense so take us. around the at jobs, for what continuing the is a clients and or makes that we're economics look economics I whether certain And not to around say would print certain print

more driving the pretty driving we but revenue margin. and here, saw first I change by significant software, change, that really right, dollars less as think print, in mix, driven profit much profit quarter in not

We playing is will in see QX that to continue dynamic same out. because that

eye customer that of get to we're we year, I of as aggregate the again, mix, starts customer into our as half on overall the the going that the think offering overall economics keep to -- certainly and back well. pieces temper. economics continue But the the component to an drives

Operator

Q&A I for concludes our now turn back the Dan to session. remarks. will conference That closing Leib

Daniel Leib

We few a in look again. forward everyone, . and Thanks in and you, speaking months Thank Okay. joining. interim. both for you, thank call to our with the on you

Operator

gentlemen, all and joining. for today's you call. that concludes Ladies Thank

now may disconnect. You

Donnelley Financial Solutions (DFIN) 1 May 242024 Q1 Earnings call transcript