DFIN

• Overall Operational Performance

  • The company delivered three consecutive quarters of consolidated net sales growth, with YoY increases in adjusted EBITDA, adjusted EBITDA margin, operating cash flow, and free cash flow, against a macroeconomic backdrop of ongoing uncertainty.
  • Software Solutions achieved record quarterly net sales of ~$100 million (up ~8% YoY), accounting for 44.3% of total net sales (up 200 bps YoY). On a trailing four-quarter basis, Software Solutions makes up 47.9% of total net sales, up 280 bps YoY.
  • Print and Distribution net sales declined 15% YoY, a continuation of the long-term secular decline in demand, accelerated by recent regulatory shifts away from printed investor communications. Print sales have fallen 72% since DFIN's spinoff, to a trailing four-quarter total of ~$108 million as of Q2 2026.

• Product and Growth Highlights

  • Active Disclosure (capital markets software) grew 29% YoY, marking the fourth consecutive quarter of 20%+ growth, driven by higher net client count, higher average client value, and migration of traditional transactional document work onto the platform. Growth was partially fueled by higher S-1/IPO filing activity, with IPO transactions accounting for one-third of Active Disclosure's Q2 growth.
  • Venu delivered 1% YoY net sales growth (14% sequential growth from Q1 2026), with resilient underlying activity offsetting a large comparable project in Q2 2025. Adoption of the new Venu platform continues to progress.
  • ArcSuite delivered ~2% YoY net sales growth, a steady modest rate expected outside of major regulatory change cycles. The company sees significant long-term opportunity from growing compliance and disclosure requirements for private investment funds, supported by the ArcFlex solution.

• Organizational and Strategic Updates

  • DFIN appointed Ken Napolitano as the new Chief Revenue Officer to accelerate growth by strengthening go-to-market capabilities and customer relationships, aligning with the company's strategic shift to a software-centric business model.
  • Joe Binns, a technology industry finance leader, joined the board of directors to support long-term strategic growth.
  • DFIN was recognized as the #1 Most Loved Workplace on the 2026 Global 100 Most Loved Workplaces list, highlighting progress in cultural transformation.

• Financial Performance Highlights

  • Adjusted non-GAAP gross margin was 66%, up 230 bps YoY, driven by favorable mix shift to higher-margin software, cost control, and price increases.
  • Free cash flow improved $9.5 million YoY to $61.2 million, driven by higher adjusted EBITDA, lower cash tax payments, and lower capital expenditures. The company ended the quarter with a non-GAAP net leverage ratio of 0.7x, maintaining a strong balance sheet.
  • The company repurchased 763,000 shares for $34.7 million in Q2 2026, with $125.4 million remaining in the $150 million share repurchase authorization as of quarter end.

• For Q3 2026, management expects consolidated net sales in the range of $175 million to $185 million, with the midpoint representing ~3% YoY revenue growth. Growth in software (primarily Active Disclosure and Venu) and higher capital markets transactional revenue will offset continued declines in print and distribution sales.
• Management projects Q3 2026 adjusted EBITDA margin between 26% and 28%, which is essentially flat YoY at the upper end of the range.
• Capital markets transactional revenue is expected to be between $45 million and $50 million, with the midpoint representing ~$6 million YoY growth, reflecting the continued momentum in transaction activity seen over recent quarters. The range from low to high primarily reflects uncertainty around the timing of deal completion and revenue recognition.

1. Capital Markets Software Solutions: Net sales of $65.7 million, up 11.2% year-over-year (YoY). Growth was driven by 29% YoY growth in Active Disclosure, with 15% growth in total subscription revenue and 69% growth in non-subscription revenue. This segment contributed 29.3% of total Q2 2026 net sales. Adjusted EBITDA margin was 36.1%, down 180 basis points (bps) YoY.
2. Capital Markets Compliance and Communications Management: Net sales of $95.9 million, up 2.6% YoY. Capital markets transactional revenue rose 36% YoY to $47.3 million, while compliance revenue fell $10.1 million YoY due to lower print and proxy/annual report volumes. This segment contributed 42.8% of total Q2 2026 net sales. Adjusted EBITDA margin was 41.9%, up 250 bps YoY.
3. Investment Companies Software Solutions: Net sales of $33.7 million, up 1.8% YoY, driven by higher subscription revenue. This segment contributed 15.0% of total Q2 2026 net sales. Adjusted EBITDA margin was 43.3%, up 40 bps YoY.
4. Investment Companies Compliance and Communications Management: Net sales of $28.9 million, down 10.8% YoY, primarily due to lower print and distribution volumes (which accounted for $2.6 million of the decline). This segment contributed 12.9% of total Q2 2026 net sales. Adjusted EBITDA margin was 41.2%, up 230 bps YoY. Overall consolidated Q2 2026 net sales: $224.2 million, up 2.8% YoY. Excluding print and distribution, net sales increased 6.9% YoY. Total adjusted EBITDA was $82.3 million, up 7.9% YoY, with an adjusted EBITDA margin of 36.7%, up 170 bps YoY.

• Long-term secular decline in print and distribution demand will continue, and the recently proposed SEC Regulation E-Delivery (which would make electronic delivery the default for most investor communications) will materially accelerate this decline if enacted, with impact beginning in 2028.
• Capital markets transaction revenue is tied to broader macroeconomic conditions, geopolitical tensions, and market volatility, which can impact deal volume and lead to variability in quarterly results.
• The shift of traditional revenue to the Active Disclosure software platform results in slightly lower overall revenue, though it is expected to deliver higher adjusted EBITDA margins over time.
• ArcSuite growth will remain modest during periods without major regulatory changes, which could impact top-line growth expectations in the near term.

Q: How is the newly proposed SEC Regulation E-Delivery different from prior print-related regulations like 30E3, and what is the timeline for implementation?

A: Regulation E-Delivery is broader in scope than prior print-related rules. It was proposed in mid-July 2026, so the company is still assessing its full impact. The rule will go through a public comment period, potential revisions, and final adoption before implementation, with industry-wide impact expected to begin in 2028. DFIN has already variableized most of its print requirements, so it is well positioned to manage the transition to digital delivery and capture new software and service opportunities from the shift.

Q: Can you elaborate on the strength of the current capital markets rebound, and what expectations do you have for Q3?

A: After a very weak Q2 2025 (driven by tariff volatility and macro uncertainty), the second quarter of 2026 saw a solid rebound in IPO and M&A transaction volume, with DFIN maintaining its historical market share of ~50% for large IPOs. Momentum has built gradually over the last several quarters, following the 2025 slowdown and late 2023 U.S. government shutdown. Q3 guidance reflects continued momentum, with transaction revenue expected to be up ~$6 million YoY, matching the resilient activity environment seen in Q2.

Q: Beyond mix shift to software, what impact are cost saving initiatives having on margin expansion, and what do those initiatives entail?

A: Cost discipline is a core part of DFIN's culture, and ongoing initiatives cover a wide range of areas, including third-party spend optimization, headcount alignment, and leveraging AI to improve productivity. Many savings come from simplifying internal processes to both reduce costs and deliver a better client experience, supported by improved internal tooling and performance measurement. These efforts complement margin expansion from the ongoing mix shift to higher-margin software.

Q: What assumptions drive the range of your Q3 capital markets transaction revenue guidance, and what is your outlook for market health?

A: The $45 million to $50 million range primarily reflects uncertainty around the timing of deal completion and revenue recognition, not material differences in underlying market activity. Management assumes the capital markets environment will remain similar to the resilient level seen in Q2 2026, and this assumption has held true through the first month of Q3 (July 2026). Overall, management feels positive about current market conditions, and activity has played out as expected so far.