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    DFIN
    Earnings call· Jun 2026(Q2 FY26)

    Donnelley Financial Solutions Q2 FY26 earnings call DFIN

    Jul 30, 2026 Source

    Executive summary

    Donnelley Financial Solutions Q2 FY26 — Strong Software Growth and Margin Expansion

    Donnelley Financial Solutions delivered a strong second quarter, driven by robust software solutions growth, particularly ActiveDisclosure, and expanding adjusted EBITDA margins. The company continues its strategic transformation towards a software-centric model, successfully offsetting the secular decline in print and distribution, though a new SEC proposal for electronic delivery poses a future headwind to print demand. Management remains focused on disciplined cost management and strategic capital deployment, including share repurchases.

    Highlights

    5

    • Consolidated net sales grew 2.8% to $224.2 million, marking the third consecutive quarter of growth.

    • Software solutions net sales reached a record $99.4 million, growing 7.8% year-over-year and comprising 44.3% of total net sales.

    • ActiveDisclosure grew approximately 29% year-over-year, its fourth consecutive quarter of 20%+ growth, driven by client count and transactional filings.

    • Adjusted EBITDA increased 7.9% to $82.3 million, with adjusted EBITDA margin expanding 170 basis points to a record 36.7%.

    • Free cash flow improved by $9.5 million to $61.2 million, driven by higher adjusted EBITDA, lower cash taxes, and lower capex.

    Concerns

    3

    • Print and distribution net sales declined 15% or approximately $6 million, continuing a long-term secular decline accelerated by regulatory changes.

    • SEC's proposed Regulation E-Delivery, if enacted, is expected to materially reduce demand for printed products over time, with industry-wide impact anticipated in 2028.

    • Adjusted non-GAAP SG&A expense increased $3.1 million to $65.7 million, driven by higher selling expense, bad debt, and incentive compensation.

    Guidance & targets

    3
    CategoryTargetConfidence
    Consolidated Net Sales
    $175 million to $185 million
    high materiality
    High
    Adjusted EBITDA Margin
    26% to 28%
    high materiality
    High
    Capital Markets Transactional Revenue
    $45 million to $50 million
    medium materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Capital Markets Software Solutions
    Growth primarily driven by ActiveDisclosure. Nonsubscription revenue increase reflects higher transactional filings transitioning to ActiveDisclosure, including S-1 documents for IPOs. Adjusted EBITDA margin decreased 180 bps YoY due to higher selling and incentive compensation expenses, partially offset by cost control.
    ActiveDisclosure growth: 29%Total subscription revenue growth: 15%Nonsubscription revenue growth: 69%
    		$65.7 million11.2%—36.1%
    Capital Markets Compliance and Communications Management
    Increase driven by higher transactional revenue, offsetting lower compliance volume due to reduced proxy/annual report printing and shifts to ActiveDisclosure. Higher transactional revenue exceeded expectations. Adjusted EBITDA margin increased 250 bps YoY due to higher transactional sales and cost control, partially offset by higher bad debt expense.
    Capital Markets transactional revenue: $47.3 millionCapital Markets transactional revenue growth: 36%Capital Markets compliance revenue decline: $10.1 million
    		$95.9 million2.6%—41.9%
    Investment Companies Software Solutions
    Growth driven by an increase in subscription revenue. Arc Suite's growth was more modest compared to the prior year's uplift from tailored shareholder reports. Encouraged by market opportunity in private investments. Adjusted EBITDA margin increased 40 bps YoY due to price uplifts and cost control, partially offset by higher service-related costs.
    		$33.7 million1.8%—43.3%
    Investment Companies Compliance and Communications Management
    Decrease primarily driven by lower print and distribution volume, reflecting the secular decline in demand for printed materials. Adjusted EBITDA margin increased 230 bps YoY due to favorable sales mix and cost control, partially offset by lower sales volume.
    Print and distribution volume decline: $2.6 million
    		$28.9 million-10.8%—41.2%

    Operational metrics

    19
    Consolidated Net Sales
    $224.2 millionup 2.8% YoY
    Q2 FY26

    Included strong mix of revenue with software solutions net sales growing approximately 8%, tech-enabled services net sales increasing nearly 6% and Print and distribution net sales declining 15%.

    Adjusted EBITDA
    $82.3 millionup 7.9% YoY
    Q2 FY26

    Exceeded last year's second quarter and significantly stronger than historical periods with similar revenue profiles.

    Adjusted EBITDA Margin
    36.7%up 170 bps YoY
    Q2 FY26

    Also a quarterly record for DFIN. Driven by higher overall sales, favorable sales mix, and cost control initiatives.

    Software Solutions Net Sales
    $99.4 millionup 7.8% YoY
    Q2 FY26

    Record quarterly net sales. Accounted for 44.3% of total net sales in Q2 FY26, an increase of approximately 200 basis points from last year.

    Software Solutions Net Sales Mix (Trailing 4-quarter)
    47.9%up 280 bps YoY
    Trailing 4-quarter (Q2 FY26)

    Increase from the Q2 FY25 trailing 4-quarter period.

    ActiveDisclosure Net Sales Growth
    29%YoY
    Q2 FY26

    Fourth consecutive quarter of 20%+ growth. Driven by increase in net client count, higher average value per client, and migration of activities from traditional services.

    Venue Sales Growth
    1%YoY
    Q2 FY26

    Offset a large deal room that benefited Q2 FY25 performance. Delivered strong sequential growth of 14% from Q1.

    Arc Suite Sales Growth
    2%YoY
    Q2 FY26

    Continuation of more modest growth rate from Q1 FY26. Growth profile expected to be more modest outside of regulatory changes.

    Print and Distribution Net Sales Decline
    $6 milliondown 15% YoY
    Q2 FY26

    Driven primarily by reduction in printing and distribution of annual reports and proxy statements. Declined from approximately $385 million at spin-off to approximately $108 million on a trailing 4-quarter basis (72% reduction).

    Net Sales Growth (Excluding Print and Distribution)
    6.9%YoY
    Q2 FY26

    Excluding print and distribution, second quarter net sales increased by 6.9%.

    Adjusted Non-GAAP Gross Margin
    66%up 230 bps YoY
    Q2 FY26

    Driven by growth in Software Solutions and capital markets transactional net sales, cost control initiatives, and price uplifts.

    Adjusted Non-GAAP SG&A Expense
    $65.7 millionup $3.1 million YoY
    Q2 FY26

    Increase primarily driven by higher selling expense related to higher sales volume, higher bad debt expense, and higher incentive compensation expense, partially offset by cost control initiatives.

    Total Debt
    $204 million
    Q2 FY26

    As of June 30, 2026.

    Non-GAAP Net Debt
    $178.7 million
    Q2 FY26

    Includes $96.5 million drawn on revolver. As of June 30, 2026.

    Non-GAAP Net Leverage Ratio
    0.7x
    Q2 FY26

    As of June 30, 2026.

    Shares Repurchased (Q2 FY26)
    763,000 shares
    Q2 FY26

    Part of balanced capital deployment plan.

    Shares Repurchased (YTD FY26)
    1.4 million shares
    YTD Q2 FY26

    Through June 30, 2026.

    Share Repurchase Authorization Remaining
    $125.4 million
    Q2 FY26

    As of June 30, 2026.

    Non-GAAP Unallocated Corporate Expenses
    $8.1 milliondecrease of $1.6 million YoY
    Q2 FY26

    Primarily driven by lower third-party expenses.

    Product announcements

    1
    ProductTypeDetails
    ActiveDisclosure AI-driven capabilitiesupdate

    Risks & headwinds

    3
    SEC Regulation E-Delivery proposalIndustry-wide impact expected in 2028.

    Potential to materially reduce demand for printed products over time.

    Mitigation: Flexible operating model and digital delivery capabilities position DFIN to manage impact and support clients.

    Long-term secular decline in print and distributionOngoing.

    Print and distribution net sales declined approximately $6 million or 15% YoY in Q2 FY26. Reduced 72% from spin-off to $108 million on a trailing 4-quarter basis.

    Mitigation: Growth in software solutions and tech-enabled services expected to more than offset decline. Proactive exit of certain lower-margin work.

    Higher SG&A expensesQ2 FY26.

    Adjusted non-GAAP SG&A increased $3.1 million YoY in Q2 FY26, to 29.3% of net sales.

    Mitigation: Partially offset by cost control initiatives. Higher selling expense is related to higher sales volume, which yields higher gross margins and EBITDA.

    What to watch in Q3 FY26

    5

    Capital Markets transactional revenue

    Q3 FY26
    Current$47.3 million in Q2 FY26
    Target$45 million to $50 million in Q3 FY26

    Why it matters

    This revenue stream is highly sensitive to market activity and a key driver of overall sales growth, indicating market health.

    Further, our estimates assume capital markets transactional revenue in the range of $45 million to $50 million, which at the midpoint is up approximately $6 million from last year's third quarter.

    Q&A highlights

    6

    How does the new E-Delivery proposal differ from 30e-3, and what are the key steps for its implementation?

    The E-Delivery proposal is broader than 30e-3. It was released in mid-July, will undergo a public comment period, potential adjustments, and if passed, is expected to impact the industry in 2028. DFIN is assessing its breadth and notes its platform is highly variabilized for print requirements.

    “It is broader than 30e-3. And so we're still in the assessment phase... In terms of process, as I mentioned, just came out, there will be a comment period back to the SEC and then there will be adjustments to the proposed reg or not. And if and when passed, the current thinking is that it would go into effect and have impact in 2028.”

    asked by Charles Strauzer · answered by Daniel Leib

    2 min read4 chapters

    Detailed Narrative

    01

    SEC Regulation E-Delivery Proposal

    The SEC proposed Regulation E-Delivery in mid-July, aiming to establish electronic delivery as the default method for a broad range of investor communications, including prospectuses, mutual fund reports, and proxy statements. This proposal is broader than previous regulations like 30e-3 and 498A and is expected to further accelerate the industry's migration away from print. If enacted, following a public comment period and transition, the industry-wide impact is anticipated in 2028. DFIN is assessing the proposal's breadth and believes its flexible operating model and digital delivery capabilities position it to manage the impact of lower print volumes.

    02

    Organizational and Cultural Updates

    DFIN strengthened its leadership team with the appointment of Ken Napolitano as Chief Revenue Officer, a newly created role focused on accelerating growth and enhancing go-to-market capabilities. Joe Binz, a finance leader in the technology industry, was added to the Board of Directors to provide valuable experience and support the company's long-term strategy. DFIN also received recognition as the #1 Most Loved Workplace on the 2026 Global 100 Most Loved Workplaces list, highlighting its efforts to transform its culture and enhance employee experience, attracting and retaining talented professionals.

    03

    Strategic Transformation and Milestone

    The company continues its strategic transformation towards a software-centric model, with software solutions comprising 44.3% of total net sales in Q2 FY26 and 47.9% on a trailing 4-quarter basis. This evolution is successfully offsetting the secular decline in print and distribution. In October, DFIN will celebrate its 10-year anniversary as an independent public company, marking a decade of business evolution, modernization of software offerings, and strengthened market position, positioning it for future growth and value creation.

    04

    Capital Markets Environment

    The capital markets transactional environment demonstrated resilience and positive momentum in Q2 FY26, with increases in the number of regular way IPO transactions over $100 million and completed public company M&A deals in the U.S. compared to Q2 FY25. DFIN maintained its historical market share for these completed transactions, reflecting its strong market position. This positive momentum is expected to continue into Q3 FY26, contributing to the company's revenue guidance.

    AI-generated summary of the company’s earnings call. Not investment advice.