Donnelley Financial Solutions, Inc. Q4 FY2025 earnings call

Key Achievements: Finished 2025 with strong fourth quarter results, 10.4% consolidated net sales growth, adjusted EBITDA growth, and strong margin. Software solutions and event-driven transactional offerings had double-digit growth. Accelerated share buyback in Q4, repurchasing ~1.3 million shares. Full year 2025 saw Software Solutions net sales growth of 8.7%, adjusted EBITDA growth, record adjusted EBITDA margin, and higher free cash flow. ### Software Solutions Highlights: 2025 full year Software Solutions net sales were $358.4 million, ~47% of total net sales. Recurring compliance products ActiveDisclosure and Arc Suite had aggregate growth of ~13%. ActiveDisclosure sales up 17% y-o-y, Arc Suite net sales growth ~11%. New products launched in 2025 include Venue Virtual Data Room, ArcFlex, and Active Intelligence. ### AI Deployment: Deploying AI across product offerings and internal operations. Active Intelligence helps clients streamline compliance and reporting. AI also used in internal operations to modernize business processes. ### 2026 Operating Priorities: Transition to Chapter 3 (sustained growth chapter). Focus on accelerating business mix shift, growing recurring SaaS revenue, maintaining share in core traditional businesses, managing costs and driving operational efficiencies via AI tools, and disciplined capital allocation.

Capital Markets Software Solutions: Net sales were $60 million, up 20% y-o-y. Venue and ActiveDisclosure each grew ~20% y-o-y. Adjusted EBITDA margin was 30.2%, up ~360 basis points y-o-y. ### Capital Markets, Compliance and Communications Management: Net sales were $61.6 million, up $8.3 million or 15.6% y-o-y. Transactional revenue was $48.6 million, up ~$11 million or 29% y-o-y. Adjusted EBITDA margin was 33.6%, up ~810 basis points y-o-y. ### Investment Company Software Solutions: Net sales were $30.9 million, down $0.7 million or 2.2% y-o-y. Adjusted EBITDA margin was 37.9%, up ~90 basis points y-o-y. ### Investment Companies Compliance and Communications Management: Net sales were $20 million, down $1.4 million y-o-y. Adjusted EBITDA margin was 26.5%, up ~410 basis points y-o-y.

2026 First Quarter: Expected consolidated net sales in range of $200 million to $210 million, consolidated adjusted EBITDA margin in range of 33% to 35%. Transactional sales expected in range of $45 million to $50 million. ### Full Year 2026: Capital spending projected to be between $55 million and $60 million, approximately flat from 2025.

Q: How much of the outperformance in Q4 was volume versus price?

A: Price was not significant, predominantly volume. Much of it was on capital markets transactional revenue and Venue and AD showing 20% growth. Government shutdown in first half of Q4, recovery was quicker than expected, combined with strong underlying activity level.

Q: Any more color on drivers behind margin outperformance?

A: Mix of sales changing, cost structure management, growth in software sales, especially transactional in Q4, operating leverage pushing margin higher. Long-term guidance for margins north of 30%, ahead of projections.

Q: When looking at capital allocation, are you seeing anything more interesting with lower valuation multiples?

A: Expectations haven't adjusted quickly. Valuations persist at lower level with AI overhang, will take time. Folks sitting on assets and looking for liquidity.

Q: Talk about relative TAM for ArcFlex relative to Arc Suite and if they're sold together.

A: ArcFlex can be sold standalone. Synergy with existing relationships on TPA side. ArcFlex designed for alternative investment managers, TAM in private market, more interest as assets grow in private space.

Q: Dive in deeper on double-digit software growth for 2026, broken up by product and capital markets vs investment companies.

A: Expect continued strong growth from ActiveDisclosure and Venue in 2026. Arc Suite growth lumpy due to regulatory changes. ArcFlex expected to drive incremental revenue starting in 2027, with possible tail end benefit in 2026.