DFIN

Image source: The Motley Fool. Thursday, July 30, 2026, at 9 a.m. ET Head of Investor Relations - Michael Zhao President and Chief Executive Officer - Daniel Leib Executive Vice President and Chief Financial Officer - David Gardella Operator: Hello, everyone. Thank you for joining us, and welcome to Donnelley Financial Solutions Second Quarter Earnings Conference Call. [Operator Instructions] I will now hand the conference over to Mike Zhao, Head of Investor Relations. Please go ahead. Michael Zhao: Thank you. Good morning, everyone, and thank you for joining Donnelley Financial Solutions Second Quarter 2026 Results Conference Call. This morning, we released our earnings report, including a set of supplemental trending schedules of historical results, copies of which can be found in the Investors section of our website at dfinsolutions.com. During this call, we'll refer to forward-looking statements that are subject to risks and uncertainties. For a complete discussion, please refer to the cautionary statements included in our earnings release and further detailed in our most recent annual report on Form 10-K, quarterly report on Form 10-Q and other filings with the SEC. Further, we will discuss certain non-GAAP financial information, such as adjusted EBITDA and adjusted EBITDA margin. We believe the presentation of non-GAAP financial information provides you with useful supplementary information concerning the company's ongoing operations and is an appropriate way for you to evaluate the company's performance. They are, however, provided for informational purposes only. Please refer to the earnings release and related tables for GAAP financial information and reconciliations of GAAP to non-GAAP financial information. I am joined this morning by Dan Leib and Dave Gardella. I will now turn the call over to Dan. Daniel Leib: Thank you, Mike, and good morning, everyone. We continue to build on the positive momentum in our operating performance during the second quarter, highlighted by consolidated net sales growth, year-over-year growth in adjusted EBITDA, adjusted EBITDA margin expansion and increases in both operating cash flow and free cash flow, all in the context of an unsettled environment. We delivered second quarter net sales of $224.2 million, which increased 2.8% compared to the second quarter of 2025 and included a 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%. Moving forward, we expect this dynamic to continue. With print and distribution representing a smaller component of overall sales, the long-term secular decline in this area will be more than offset by growth elsewhere in our portfolio, resulting in sustained consolidated revenue growth. The combination of our improved revenue profile, modest consolidated net sales growth and disciplined cost management yielded second quarter adjusted EBITDA of $82.3 million and adjusted EBITDA margin of 36.7%, both of which exceeded last year's second quarter and once again, were significantly stronger than historical periods with similar revenue profiles. One area I would like to highlight is the continued momentum in our software offerings, where we delivered record quarterly net sales of nearly $100 million, representing year-over-year net sales growth of approximately 8%. Software solutions accounted for 44.3% of total net sales in the second quarter, an increase of approximately 200 basis points from last year's software solutions net sales mix. As a reminder, the second quarter, largely due to the annual meeting and proxy season, historically represents our largest quarter overall, yet represents a seasonal low for software as a percentage of revenue. On a trailing 4-quarter basis, software solutions net sales comprised 47.9% of total net sales, an increase of approximately 280 basis points from the second quarter 2025 trailing 4-quarter period. Our second quarter software solutions net sales growth continues to be led by the performance of ActiveDisclosure, which grew approximately 29% year-over-year, marking the fourth consecutive quarter of 20% plus growth. ActiveDisclosure's strong growth continues to be driven by an increase in net client count and higher average value per client, combined with the migration of activities previously served by our traditional services offerings, including an increase in the number of transactional documents being completed on ActiveDisclosure compared to last year's second quarter, a trend we expect to continue going forward. With the most modern technology on the market, improved go-to-market execution and expanding AI-driven capabilities, including functions powered by Active Intelligence such as iXBRL tagging for SEC filings. We believe ActiveDisclosure is well positioned for future growth. Venue and Arc Suite each delivered modest sales growth in the second quarter. In the case of Venue, our strong sales execution, a resilient level of underlying activity and the continued customer adoption of New Venue combined to more than offset a large deal room that benefited Venue's robust second quarter 2025 performance. We remain encouraged by Venue's performance and expect the adoption of New Venue to continue to contribute to Venue's performance. As it relates to Arc Suite, we delivered approximately 2% sales growth, a continuation of the more modest growth rate from the first quarter this year. As I have stated previously, we expect the growth profile of Arc Suite to be more modest during periods outside of regulatory changes, while over the longer term, still exhibiting the strong growth we have delivered historically based in part on a dynamic and evolving regulatory environment. In addition to serving regulatory changes as they occur, we remain encouraged by the market opportunities associated with the expansion of private investments. As private investment institutions and administrators face expanding reporting, compliance and disclosure requirements, DFIN is well positioned to support their evolving needs through software solutions offerings, including ArcFlex. Coupled with our deep domain and service expertise, DFIN offers unparalleled end-to-end financial and regulatory reporting solutions, purpose-built to serve the growing private funds market. As we continue to evolve towards a higher sales mix of software solutions during the second quarter, that mix shift was accelerated by a reduction in print and distribution net sales, which declined by approximately $6 million or 15% compared to the second quarter of 2025. This decrease was driven primarily by a reduction in the printing and distribution of annual reports and proxy statements. Over a longer horizon, print and distribution net sales have declined from approximately $385 million at the time of our spin-off to approximately $108 million on a second quarter 2026 trailing 4-quarter basis, representing a reduction of 72%. While this reduction reflects long-term secular decline in demand and the proactive exit of certain lower-margin work, the pace of decline has also been accelerated by regulatory changes such as SEC Rules 30e-3 and 498A in 2021 as well as the recent Tailored Shareholder Reports regulation in 2024, all of which structurally reduced the market demand for printed products. Looking ahead, the industry is entering another regulatory-driven shift away from print. On July 16, the SEC proposed Regulation E-Delivery, a new rule that would establish electronic delivery as the default method for a broad range of investor communications materials, including prospectuses, mutual fund annual and semiannual shareholder reports, proxy statements and other required communications. This new regulation, if enacted, reinforces the long-term trend towards digital distribution of shareholder communication materials and will further accelerate the industry's migration away from print. Based on the SEC's customary rule-making process, which includes a public comment period, final rule adoption and subsequent implementation and transition periods, we expect the industry-wide impact to take place during 2028. While we continue to refine our estimates, we believe the proposal has the potential to materially reduce demand for printed products over time. Our flexible operating model and digital delivery capabilities position DFIN to both manage the impact of lower print volumes and support clients as they manage the complexity of content management and digital distribution in an electronic delivery environment. Before turning the call over to Dave, I'd like to highlight a few organizational updates. First, as we continue to evolve towards a software-centric company, we strengthened our leadership team with the appointment of Ken Napolitano as Chief Revenue Officer. In this newly created role, Ken is focusing on accelerating growth by enhancing our go-to-market capabilities and deepening our customer relationships to support our long-term growth strategy. We also strengthened our Board of Directors with the addition of Joe Binz, a finance leader in the technology industry. Joe brings valuable experience and perspective that will support our long-term strategy and continue to focus on creating value for our shareholders. Finally, our efforts to transform our culture and enhance employee experience are once again being recognized in the marketplace. During the second quarter, DFIN was recognized as the #1 Most Loved Workplace on the 2026 Global 100 Most Loved Workplaces list published in the Economist. This recognition is a further proof point of the progress we are making transforming DFIN into an employer of choice that attracts, develops and retains talented professionals who share our culture, which emphasizes accountability, collaboration and integrity, creating a strong culture in which the well-being of employees is a strategic priority has allowed us to transform our business and drive value for clients, employees and shareholders. Before I share a few closing remarks, I would like to turn the call over to Dave to provide more details on our second quarter results and our outlook for the third quarter. Dave? David Gardella: Thanks, Dan, and good morning, everyone. As Dan noted, we delivered strong results in the second quarter by continuing to build on the positive momentum in our operating performance, highlighted by the third consecutive quarter of consolidated net sales growth, higher adjusted EBITDA, adjusted EBITDA margin expansion and an increase in both operating cash flow and free cash flow from last year's second quarter. We continue to deliver solid growth in our software solutions offering during the quarter, which grew 7.8% year-over-year and reached record quarterly net sales of $99.4 million. In addition, we experienced a stronger-than-expected increase in the level of capital markets transactions compared to last year's second quarter. By continuing our shift toward a more profitable sales mix while also driving operating efficiencies, we expanded our second quarter adjusted EBITDA margin by approximately 170 basis points to 36.7%, also a quarterly record for DFIN. On a consolidated basis, total net sales for the second quarter of 2026 were $224.2 million, an increase of $6.1 million or 2.8% from the second quarter of 2025. The growth in software solutions net sales, which increased $7.2 million or 7.8% compared to the second quarter of last year, combined with the higher event-driven transactional revenue more than offset declines in capital markets and investment companies compliance revenue, part of which was related to a reduction in the demand for printed products consistent with recent trend. Excluding print and distribution, second quarter net sales increased by 6.9%. Second quarter adjusted non-GAAP gross margin was 66%, approximately 230 basis points higher than the second quarter of 2025, driven by the growth in Software Solutions and capital markets transactional net sales, the impact of cost control initiatives and price uplifts. Adjusted non-GAAP SG&A expense in the quarter was $65.7 million, a $3.1 million increase from the second quarter of 2025. As a percentage of net sales, adjusted non-GAAP SG&A was 29.3%, an increase of approximately 60 basis points from the second quarter of 2025. The increase in adjusted non-GAAP SG&A was primarily driven by an increase in selling expense related to higher sales volume, higher bad debt expense and higher incentive compensation expense, partially offset by the impact of cost control initiatives. Our second quarter adjusted EBITDA was $82.3 million, an increase of $6 million or 7.9% from the second quarter of 2025. Second quarter adjusted EBITDA margin was 36.7%, an increase of approximately 170 basis points from the second quarter of 2025. The increases in adjusted EBITDA and adjusted EBITDA margin were primarily driven by higher overall sales, a favorable sales mix and cost control initiatives, partially offset by higher selling expense related to higher sales volume and higher incentive compensation expense. Turning now to our second quarter segment results. Net sales in our Capital Markets Software Solutions segment were $65.7 million, an increase of $6.6 million or 11.2% from the second quarter of last year, primarily driven by growth in ActiveDisclosure, which grew approximately 29%. Total subscription revenue increased by approximately 15%, primarily driven by the continued growth in client count and the ongoing adoption of service subscription packages, while nonsubscription revenue increased approximately 69%, reflecting an increase in the volume of certain traditional activities transitioning to ActiveDisclosure, primarily related to the use case for transactional filings. During the second quarter, we experienced a higher usage of ActiveDisclosure in the creation and filing of S-1 documents for certain IPO transactions compared to last year and accounted for approximately 1/3 of ActiveDisclosure's total second quarter growth. We expect this trend to continue in the future, driven by the capabilities of our software platform, combined with the evolving client preference to work in a hybrid environment, leveraging both our software and unmatched service and domain expertise. We remain encouraged by ActiveDisclosure's solid foundation for future revenue growth, a part of which will be influenced by the pace of traditional activities transitioning on to the platform. During the second quarter, Venue posted $37.5 million in revenue, an increase of approximately 1% compared to the second quarter of last year, which benefited from a large project. In addition, Venue delivered strong sequential growth in revenue, increasing approximately 14% from the first quarter. A resilient level of underlying activity taking place on the platform, coupled with positive market reception of New Venue creates a strong foundation for continued sales growth. Adjusted EBITDA margin for the segment was 36.1%, a decrease of approximately 180 basis points from the second quarter of 2025, primarily due to higher selling expense and higher incentive compensation expense, partially offset by cost control initiatives. Net sales in our Capital Markets Compliance and Communications Management segment were $95.9 million, an increase of $2.4 million or 2.6% from the second quarter of 2025, driven by higher transactional revenue, partially offset by lower compliance volume. In the second quarter, we recorded $47.3 million of capital markets transactional revenue, which exceeded the high end of our expectations and was up approximately $13 million or 36% from the second quarter of 2025, overlapping record low transactional revenue in last year's second quarter, during which global equity deal volume declined sharply as a result of tariff-induced market volatility and macroeconomic uncertainty. Entering this year's second quarter, despite escalating geopolitical tensions, the capital markets transactional environment remained resilient. The positive momentum in the equity deal environment, which had been building over the last few quarters continued into the second quarter of 2026, resulting in increases in the number of regular way IPO transactions that raised over $100 million and completed public company M&A deals in the U.S. compared to the second quarter of 2025. For transactions that were completed in the second quarter, we maintained our historical market share, reflective of DFIN's strong market position. Capital Markets compliance revenue was down $10.1 million primarily due to lower proxy statement and annual report volume and the related printing and distribution, consistent with our experience during last year's proxy and annual meeting season. Given the first half of the year is the peak for proxy-related activity, we expect the impact of the reductions to become less significant in the second half of the year. In addition, certain traditional compliance activities shifted to ActiveDisclosure during the second quarter. Specific to the shift of revenue from traditional services to software, as I noted previously, we expect this dynamic to produce favorable economics with slightly lower revenue but higher adjusted EBITDA margin, which has played out so far. Adjusted EBITDA margin for the segment was 41.9% an increase of approximately 250 basis points from the second quarter of 2025. The increase in adjusted EBITDA margin was primarily due to higher transactional sales and cost control initiatives, partially offset by higher bad debt expense. Net sales in our Investment Companies Software Solutions segment were $33.7 million, an increase of $0.6 million or 1.8% versus the second quarter of 2025, driven by an increase in subscription revenue. As expected, Arc Suite's second quarter growth remained more modest compared to the growth rate in last year's second quarter, during which net sales increased approximately 17% year-over-year, driven by the uplift from the tailored shareholder report solution. As Dan noted earlier, we are encouraged by the market opportunity presented by the continued growth of private investments and believe DFIN is well positioned to support increasing demand through our software solutions, including ArcFlex and our deep domain expertise and service capabilities. Adjusted EBITDA margin for the segment was 43.3%, an increase of approximately 40 basis points from the second quarter of 2025. The increase in adjusted EBITDA margin was primarily due to price uplifts and cost control initiatives, partially offset by higher service-related costs. Net sales in our Investment Companies Compliance and Communications Management segment were $28.9 million, a decrease of $3.5 million or 10.8% from the second quarter of 2025, primarily driven by lower print and distribution volume, which accounted for $2.6 million of the year-over-year decline. The reduction in print and distribution revenue is a result of the secular decline in the demand for printed materials, a trend we expect to continue going forward. Adjusted EBITDA margin for the segment was 41.2%, approximately 230 basis points higher than the second quarter of 2025. The increase in adjusted EBITDA margin was primarily due to a favorable sales mix and cost control initiatives, partially offset by the impact of lower sales volume. Non-GAAP unallocated corporate expenses were $8.1 million in the quarter, a decrease of $1.6 million from the second quarter of 2025, primarily driven by lower third-party expenses in the quarter. Free cash flow in the quarter was $61.2 million, an improvement of $9.5 million compared to the second quarter of 2025. The year-over-year improvement in free cash flow was primarily driven by an increase in adjusted EBITDA, lower cash tax payments and lower capital expenditures. We ended the quarter with $204 million of total debt and $178.7 million of non-GAAP net debt, including $96.5 million drawn on our revolver. As of June 30, 2026, our non-GAAP net leverage ratio was 0.7x. As a reminder, our cash flow is historically seasonal, though over time, that seasonality has become less pronounced as our sales mix has evolved towards software subscriptions. Regarding capital deployment, we repurchased approximately 763,000 shares of common stock during the second quarter for $34.7 million at an average price of $45.48 per share. Year-to-date through June 30, we've repurchased approximately 1.4 million shares for $63 million at an average price of $46.40 per share. As of June 30, 2026, we had $125.4 million remaining on our $150 million stock repurchase authorization. We continue to view share repurchases as an important component to drive value for shareholders and part of our balanced capital deployment plan, which also features organic investments to drive future growth. As it relates to our outlook for the third quarter of 2026, we expect consolidated net sales in the range of $175 million to $185 million and adjusted EBITDA margin in the range of 26% to 28%, compared to the third quarter of last year, the midpoint of our consolidated revenue guidance, $180 million, implies an increase of approximately $5 million or 3% year-over-year as growth in software solutions net sales, predominantly ActiveDisclosure and Venue, and higher Capital Markets transactional revenue are expected to more than offset a continued decline in print and distribution net sales. 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. With that, I'll now pass it back to Dan. Daniel Leib: Thanks, Dave. Our performance in the second quarter provides us with strong momentum as we continue to execute DFIN's strategic transformation. The combination of our market position, cost structure and strong balance sheet positions us well heading into the back half of the year. Finally, in October, DFIN will celebrate an important milestone as we mark our 10-year anniversary as an independent public company. As we look ahead to that milestone, we are proud of the transformation we have achieved. Over the past decade, we have successfully evolved our business, modernized and launched new software solutions offerings and strengthened our market position. With a proven strategy, deep client relationships and a talented team, we believe DFIN is very well positioned for its next chapter of growth and value creation. Before we open it up for Q&A, I'd like to thank the DFIN employees around the world. Now with that, operator, we're ready for questions. Operator: [Operator Instructions] Your first question comes from the line of Charlie Strauzer with CJS Securities. Charles Strauzer: Can we talk a little bit more about the E-Delivery news that just came out? How is this different from 30e-3? And what are the kind of the key pieces here that have to kind of fall into place to get this to move forward? Daniel Leib: Yes. Thank you, Charlie. This is -- and it's fairly new, as we mentioned, it was mid-July where the proposal came out. It is broader than 30e-3. And so we're still in the assessment phase. And if you remember, when 30e-3 and 498A came out, we were able to spin up a software offering and benefited on the software side in total -- our total compliance management offering. So we're still assessing both the breadth of it. 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. So a bit of lead time. We mentioned in the prepared remarks from a platform perspective -- we are highly variabilized. We do have one facility that we have a few digital printing assets in that's been really beneficial for us, but we have variabilized the vast majority of our print requirements at this point. Charles Strauzer: Got it. That's helpful. And looking at the capital markets environment, obviously, there's been some rebound here. And you mentioned that you're getting your fair share of work. Can you maybe elaborate on that a little bit more? David Gardella: Yes, Charlie, it's Dave. I'll start. So I think we did see a pretty nice rebound in the second quarter, as we mentioned, on the number of IPOs over $100 million, et cetera, and had right around 50% of those or so in the quarter. Like we said, overlapping a soft quarter from the second quarter of 2025, right, where we saw April really slow down last year and then start to pick up more in May and June. But still a soft quarter in the second quarter last year. Like we said in the prepared remarks, we've seen this momentum building over the last few quarters following Q2 of last year, and then we had the government shutdown late last year, et cetera. So this momentum is building. It was nice to start to see it come through in Q2 here. And as our guidance implies for Q3, our range at -- well, I guess, at the midpoint, capital markets transactional revenue up $5 million or $6 million relative to Q3 of last year. Daniel Leib: Yes. It does feel like -- and we're seeing volume of activity in-house has been strong. And to Dave's point, it's a question of when things come out into the market. Charles Strauzer: Got it. And then looking at kind of the post-IPO deal uptake, if you will, having someone take your software products after they've gone public, are you pleased with what you've seen there in terms of uptake? Daniel Leib: Yes. We've seen improvement in that over time. And now it's -- vast majority are continuing on as compliance clients post IPO, which is great to see. We've obviously -- it's an area we focus on as well. Charles Strauzer: Got it. And then, Dave, on guidance, just a little bit more color there, if you wouldn't mind maybe sharing with us your thoughts on kind of any abnormalities we should think about in the quarter versus comps from last year as well as free cash flow in the quarter expectations there? David Gardella: Yes. I would say, as I think about any comparables, nothing overly significant last year in terms of the top line. We did have some expense true-ups, et cetera. But I think when you look at our EBITDA margin guidance at the top end of the range, it's essentially flat to last year where we've been 28% EBITDA margin. I think when you look at overall top line growth, right, at the midpoint, roughly 3% growth implied in our guidance. And like I said, some of that coming from the continued momentum in the capital markets transactional area. And then I would say the rest of the business, probably more similar to what we've seen so far this year, right? And we talked a little bit about it in the prepared remarks, expecting that the growth on the software side, in particular, from ActiveDisclosure and Venue to continue. And like we said on the Arc Suite product, right, more modest growth similar to what we saw in Q2 here. Charles Strauzer: Got it. And one last one for me. Just looking at SG&A and expenses in the quarter, a little higher than I had modeled. Anything driving that? David Gardella: We hit some of it, Charlie, in the prepared remarks. It's, I'd say, bits and pieces, right? We talked about incentive compensation being a little bit higher in the quarter. We talked about -- there was a little bit of bad debt increase in the quarter. I think overall, when you look at the shift to software, right, we're driving higher gross margins, right? Gross margin was up a couple of hundred basis points. I think when you look at -- that typically comes with a little bit higher SG&A as well just on the overall mix of business from a sales comp perspective, and obviously yielded higher EBITDA margins. So kind of a balance between some of the discrete items in the quarter and then with this continued mix shift, right, the expanding EBITDA margin is really a function of more expansion at gross margin, partially offset by some of the higher SG&A that you noted. Charles Strauzer: Got it. Sorry, one more just on the housekeeping side on share count assumption for the quarter, Q3? David Gardella: Yes, we didn't give any specific guidance here. So we did repurchase 763,000 shares in the quarter. And like we said in the prepared remarks, we view ongoing share repurchase as an important part of our capital deployment. And I think as we've said in the past, we've been more aggressive at lower prices, less aggressive at higher prices and no change in direction from that perspective. Operator: [Operator Instructions] Your next question comes from the line of Ross Cole with Needham & Company. Ross Cole: Congratulations on the print. So my first question is around some of the cost-saving initiatives in place. But I see your EBITDA margins came in pretty well, it's impressive, and a lot of that's driven by the mix shift. I was wondering if you can maybe quantify the impact of those cost-saving initiatives and maybe elaborate a little more on what they are? David Gardella: Yes, Ross, thanks for the question. I think you've followed the company for a while now. I think that cost discipline is certainly part of the culture here. And it's everything from third-party spend to shifts in headcount and leveraging more recently, leveraging AI to drive productivity, et cetera. So long list of factors, I would say, probably the way to think about it is where I started initially that kind of this cost discipline is really part of our DNA at DFIN, and we'll continue to look for areas to drive productivity on top of -- and expand margin -- and on top of that margin expansion that I noted that's driven by the mix shift as well. Daniel Leib: Yes. And the only thing I would add is that a lot of the savings are coming from enhanced process and taking out process steps and delivering a superior client experience by simplifying some of our processes. We have put in over the past several years, much better tooling and measurements. And so that's been a component piece of it in addition to what Dave highlighted. Ross Cole: Great. So it sounds like it's really a continuation of the same good processes you've been doing for a while. And then I'm wondering as well about some of the transactional revenue. Thank you for providing some guidance for the third quarter. I was wondering what assumptions are baked into that guidance? And do you see the capital markets activity pretty much being stable going forward into the quarter? Or kind of like what's the difference between that low and high end of the $45 million to $50 million? And what assumptions are in there for like the overall capital markets count? David Gardella: Yes. It's a good question. I'd say if I start at the highest level, I would say a similar environment that we experienced in the second quarter. And I would say, so far, through the 1 month of the quarter in July, that assumption has held. I think, frankly, from the bottom end of the range to the top end of the range is really just mostly timing of revenue recognition and when some of these deals might go effective, et cetera. And so we generally have reasonable visibility to kind of this range. But I think picking a point in the range often comes down to the timing question and when deals go effective and therefore, impacting revenue recognition. I think overall, we feel pretty good about the market environment. And like I said, so far this quarter, only 1 month in, but so far playing out nicely. Ross Cole: Great. And then one last question on the share repurchases as well. Hopefully, I can get some color on that. I noticed you've done about $76.2 million in repurchases so far this year. You have $150 million share repurchase authorization. Do you think assuming it remains -- the shares you believe remain kind of undervalued and it's a good opportunity to repurchase, do you think you'd be buying at about the same level as you have the last 2 quarters? David Gardella: Yes. I think, as I mentioned, we've been historically more aggressive at the lower prices, less aggressive at higher prices. I think when you look at the numbers you referenced, right? And the one thing I might call out is on the $150 million share repurchase, we have about just over $125 million remaining as of the end of the quarter. Part of the year-to-date repurchases was done under the prior authorization. So there's still $125 million remaining. And I think similar to the question that Charlie asked, right, we continue -- like we mentioned in the prepared remarks, continue to view the share repurchases as an important part of our capital deployment. Operator: There are no further questions at this time. I will now turn the call back to Dan for closing remarks. Daniel Leib: Great. Thank you, and thank you, everyone, for joining us. We will look forward to speaking with you soon. Operator: This concludes today's call. Thank you for attending. You may now disconnect. Daniel Leib: Thank you very much. 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Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Achieved record software solutions net sales of nearly $100 million, driven by a 29% increase in ActiveDisclosure revenue and expanding AI-driven capabilities. Capitalized on a resilient capital markets environment, resulting in a 36% increase in transactional revenue compared to a soft prior-year period. Managed a 15% decline in print and distribution sales by proactively exiting lower-margin work and adapting to regulatory shifts that reduce physical document demand. Expanded adjusted EBITDA margins to a record 36.7% through a combination of favorable sales mix shift toward software and disciplined cost management. Strengthened the leadership team and board with new appointments to accelerate go-to-market execution and support the transition to a software-centric company. Leveraged a flexible operating model to variabilize the vast majority of print requirements, mitigating the impact of long-term secular declines in physical media. Anticipates Q3 2026 consolidated net sales between $175 million and $185 million, assuming continued momentum in software and transactional revenue. Expects the SEC's proposed Regulation E-Delivery to further accelerate the industry's migration away from print, with material impacts projected for 2028. Projects Capital Markets transactional revenue in the range of $45 million to $50 million for Q3, assuming market conditions remain similar to the second quarter. Forecasts more modest growth for Arc Suite in the near term during periods without major regulatory changes, while targeting long-term growth via private investment reporting needs. Maintains a balanced capital deployment strategy focusing on organic growth investments and opportunistic share repurchases under the remaining $125.4 million authorization. Identified the SEC's July 2026 Regulation E-Delivery proposal as a broader structural shift than previous rules, establishing electronic delivery as the default for investor communications. Noted that approximately one-third of ActiveDisclosure's growth was driven by a shift in traditional activities, such as S-1 filings, moving onto the software platform. Reported a 72% reduction in print and distribution sales since the company's spin-off, reflecting a successful strategic pivot away from legacy hardware-intensive services. Highlighted the #1 ranking on the 2026 Global 100 Most Loved Workplaces list as a key indicator of successful cultural transformation and talent retention. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management noted the proposal is broader than Rule 30e-3 and is currently in the assessment phase, with an expected industry-wide impact in 2028. The company plans to leverage its digital delivery capabilities and variabilized print model to support clients through this transition. DFIN maintained approximately 50% market share for IPOs over $100 million during the quarter. Management indicated that volume of activity in-house remains strong, though revenue timing depends on when deals officially go effective in the market. The increase was attributed to higher sales commissions linked to volume, increased incentive compensation, and a slight rise in bad debt expense. Management emphasized that higher SG&A is a typical byproduct of the shift to software, which simultaneously drives significantly higher gross margins. The vast majority of IPO clients are continuing as compliance clients post-offering, reflecting improved execution in transitioning transactional users to long-term software subscriptions.

Interested in Donnelley Financial Solutions? Here are five stocks we like better. Q2 performance improved: Net sales rose 2.8% year over year to $224.2 million, while adjusted EBITDA increased 7.9% to $82.3 million and margins reached a record 36.7%. Software solutions grew 7.8% to $99.4 million, representing 44.3% of revenue, led by ActiveDisclosure’s approximately 29% growth. Transaction activity offset ongoing print declines: Capital-markets transactional revenue jumped 36% to $47.3 million, helping counter lower compliance, print and distribution revenue. Print and distribution sales fell 15%, and DFIN warned that proposed SEC e-delivery rules could further reduce print demand beginning around 2028. DFIN maintains a solid financial position and expects continued growth: Free cash flow rose to $61.2 million, net leverage was 0.7 times, and the company repurchased $34.7 million of shares during the quarter. For Q3, DFIN projects sales of $175 million to $185 million and expects software and transaction growth to offset additional print declines. Donnelley Financial Solutions (NYSE:DFIN) reported second-quarter 2026 net sales of $224.2 million, up 2.8% from a year earlier, as growth in software solutions and capital-markets transaction activity more than offset continued declines in print and distribution revenue. The company also posted adjusted EBITDA of $82.3 million, up 7.9% year over year, while adjusted EBITDA margin expanded 170 basis points to a quarterly record of 36.7%. President and CEO Dan Leib said the results reflected continued momentum in the company’s strategic shift toward a more software-focused business. Software solutions generated record quarterly sales of nearly $100 million and represented 44.3% of total revenue, up about 200 basis points from the prior-year quarter. → Why SK hynix Could Be the Best AI Chip Stock to Buy Now Software solutions revenue rose 7.8% to $99.4 million during the quarter. Capital Markets Software Solutions revenue increased 11.2% to $65.7 million, driven largely by ActiveDisclosure, which grew approximately 29% year over year. The product has now recorded more than 20% growth for four consecutive quarters, according to Leib. Chief Financial Officer Dave Gardella said subscription revenue in the Capital Markets Software Solutions segment increased about 15%, supported by client-count growth and adoption of service subscription packages. Non-subscription revenue climbed approximately 69%, reflecting activity that is transitioning from traditional services to ActiveDisclosure, particularly transactional filings. → Microsoft Just Flipped the AI Spending Narrative Overnight Gardella said higher use of ActiveDisclosure for the creation and filing of S-1 documents tied to certain initial public offerings accounted for roughly one-third of the platform’s total second-quarter growth. He said the company expects that trend to continue as clients use a hybrid model combining software with DFIN’s services and domain expertise. Venue generated $37.5 million in revenue, up about 1% from the prior year, despite the comparison including a large project in the second quarter of 2025. Revenue at Venue rose approximately 14% sequentially from the first quarter. Arc Suite revenue growth was more modest, increasing roughly 2%, following a stronger year-earlier comparison that included demand associated with the Tailored Shareholder Reports solution. → Carrier Earnings Could Send the Stock to a New All-Time High Leib said DFIN sees an opportunity to support private investment institutions and administrators facing increased reporting, compliance and disclosure requirements through offerings including ArcFlex. Capital Markets Compliance and Communications Management revenue increased 2.6% to $95.9 million. The segment benefited from $47.3 million in capital-markets transactional revenue, which was $13 million, or 36%, above the prior-year quarter and exceeded the high end of the company’s expectations. Gardella said the quarter included an increase in the number of U.S. regular-way IPOs raising more than $100 million and completed public-company M&A transactions compared with the second quarter of 2025. He said DFIN maintained its historical market share for transactions completed during the period. Capital-markets compliance revenue declined $10.1 million, primarily due to lower proxy-statement and annual-report volume as well as related printing and distribution. Investment Companies Compliance and Communications Management revenue fell 10.8% to $28.9 million, with lower print and distribution volume accounting for $2.6 million of the decline. Overall print and distribution sales declined about $6 million, or 15%, from the prior-year quarter. Leib said print and distribution revenue has fallen from roughly $385 million at the company’s spinoff to approximately $108 million on a trailing four-quarter basis through the second quarter of 2026. The company also discussed the Securities and Exchange Commission’s July 16 proposal for Regulation E-Delivery, which would make electronic delivery the default method for a broad range of investor communications. Leib said the proposal is broader than prior SEC rules and could materially reduce print demand over time if enacted. Based on the customary rulemaking process, DFIN expects any industrywide impact to occur during 2028. Leib said DFIN is still assessing the proposal but noted that the company has a flexible operating model, digital-delivery capabilities and has variabilized most of its print requirements. Adjusted non-GAAP gross margin rose about 230 basis points to 66%, driven by software and capital-markets transactional revenue growth, price increases and cost-control initiatives. Adjusted non-GAAP selling, general and administrative expense increased $3.1 million to $65.7 million, reflecting higher selling costs, bad-debt expense and incentive compensation. Gardella said the company’s cost discipline includes management of third-party spending, headcount changes, productivity initiatives and the use of artificial intelligence. Leib added that process simplification and improved measurement tools have helped reduce costs while improving the customer experience. Free cash flow was $61.2 million, an increase of $9.5 million from the prior-year period, aided by higher adjusted EBITDA, lower cash tax payments and lower capital expenditures. DFIN ended the quarter with $204 million of total debt and $178.7 million of non-GAAP net debt, with a non-GAAP net leverage ratio of 0.7 times. During the quarter, the company repurchased approximately 763,000 shares for $34.7 million at an average price of $45.48 per share. Through June 30, DFIN had repurchased approximately 1.4 million shares for $63 million. The company had $125.4 million remaining under its $150 million repurchase authorization. For the third quarter, DFIN expects net sales of $175 million to $185 million and adjusted EBITDA margin of 26% to 28%. At the midpoint, the revenue outlook implies approximately 3% growth from the third quarter of 2025. The company expects software growth, led predominantly by ActiveDisclosure and Venue, along with higher capital-markets transactional revenue, to offset further print and distribution declines. DFIN projected capital-markets transactional revenue of $45 million to $50 million for the third quarter, with the midpoint about $6 million above the prior-year period. Gardella said the transaction outlook assumes a market environment similar to the second quarter, adding that conditions had remained consistent through July. He said the range largely reflects the timing of when deals become effective and revenue is recognized. Donnelley Financial Solutions (NYSE:DFIN) offers risk and compliance software and managed services designed to help corporations, financial institutions and legal firms meet regulatory and reporting requirements worldwide. Headquartered in Chicago, the company delivers a cloud-based platform for regulatory filings, content automation, virtual data rooms and board communications. Its solutions are tailored to support public companies with SEC, FCA and other global filing obligations, as well as banks, asset managers and credit unions seeking to streamline compliance workflows. Among DFIN's flagship products is ActiveDisclosure, a SaaS application that automates the creation, review and filing of disclosure documents. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Donnelley Financial Solutions Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for July 2026.

Image source: The Motley Fool. Thursday, July 30, 2026, at 9 a.m. ET Head of Investor Relations - Michael Zhao President and Chief Executive Officer - Daniel Leib Executive Vice President and Chief Financial Officer - David Gardella Operator: Hello, everyone. Thank you for joining us, and welcome to Donnelley Financial Solutions Second Quarter Earnings Conference Call. [Operator Instructions] I will now hand the conference over to Mike Zhao, Head of Investor Relations. Please go ahead. Michael Zhao: Thank you. Good morning, everyone, and thank you for joining Donnelley Financial Solutions Second Quarter 2026 Results Conference Call. This morning, we released our earnings report, including a set of supplemental trending schedules of historical results, copies of which can be found in the Investors section of our website at dfinsolutions.com. During this call, we'll refer to forward-looking statements that are subject to risks and uncertainties. For a complete discussion, please refer to the cautionary statements included in our earnings release and further detailed in our most recent annual report on Form 10-K, quarterly report on Form 10-Q and other filings with the SEC. Further, we will discuss certain non-GAAP financial information, such as adjusted EBITDA and adjusted EBITDA margin. We believe the presentation of non-GAAP financial information provides you with useful supplementary information concerning the company's ongoing operations and is an appropriate way for you to evaluate the company's performance. They are, however, provided for informational purposes only. Please refer to the earnings release and related tables for GAAP financial information and reconciliations of GAAP to non-GAAP financial information. I am joined this morning by Dan Leib and Dave Gardella. I will now turn the call over to Dan. Daniel Leib: Thank you, Mike, and good morning, everyone. We continue to build on the positive momentum in our operating performance during the second quarter, highlighted by consolidated net sales growth, year-over-year growth in adjusted EBITDA, adjusted EBITDA margin expansion and increases in both operating cash flow and free cash flow, all in the context of an unsettled environment. We delivered second quarter net sales of $224.2 million, which increased 2.8% compared to the second quarter of 2025 and included a 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%. Moving forward, we expect this dynamic to continue. With print and distribution representing a smaller component of overall sales, the long-term secular decline in this area will be more than offset by growth elsewhere in our portfolio, resulting in sustained consolidated revenue growth. The combination of our improved revenue profile, modest consolidated net sales growth and disciplined cost management yielded second quarter adjusted EBITDA of $82.3 million and adjusted EBITDA margin of 36.7%, both of which exceeded last year's second quarter and once again, were significantly stronger than historical periods with similar revenue profiles. One area I would like to highlight is the continued momentum in our software offerings, where we delivered record quarterly net sales of nearly $100 million, representing year-over-year net sales growth of approximately 8%. Software solutions accounted for 44.3% of total net sales in the second quarter, an increase of approximately 200 basis points from last year's software solutions net sales mix. As a reminder, the second quarter, largely due to the annual meeting and proxy season, historically represents our largest quarter overall, yet represents a seasonal low for software as a percentage of revenue. On a trailing 4-quarter basis, software solutions net sales comprised 47.9% of total net sales, an increase of approximately 280 basis points from the second quarter 2025 trailing 4-quarter period. Our second quarter software solutions net sales growth continues to be led by the performance of ActiveDisclosure, which grew approximately 29% year-over-year, marking the fourth consecutive quarter of 20% plus growth. ActiveDisclosure's strong growth continues to be driven by an increase in net client count and higher average value per client, combined with the migration of activities previously served by our traditional services offerings, including an increase in the number of transactional documents being completed on ActiveDisclosure compared to last year's second quarter, a trend we expect to continue going forward. With the most modern technology on the market, improved go-to-market execution and expanding AI-driven capabilities, including functions powered by Active Intelligence such as iXBRL tagging for SEC filings. We believe ActiveDisclosure is well positioned for future growth. Venue and Arc Suite each delivered modest sales growth in the second quarter. In the case of Venue, our strong sales execution, a resilient level of underlying activity and the continued customer adoption of New Venue combined to more than offset a large deal room that benefited Venue's robust second quarter 2025 performance. We remain encouraged by Venue's performance and expect the adoption of New Venue to continue to contribute to Venue's performance. As it relates to Arc Suite, we delivered approximately 2% sales growth, a continuation of the more modest growth rate from the first quarter this year. As I have stated previously, we expect the growth profile of Arc Suite to be more modest during periods outside of regulatory changes, while over the longer term, still exhibiting the strong growth we have delivered historically based in part on a dynamic and evolving regulatory environment. In addition to serving regulatory changes as they occur, we remain encouraged by the market opportunities associated with the expansion of private investments. As private investment institutions and administrators face expanding reporting, compliance and disclosure requirements, DFIN is well positioned to support their evolving needs through software solutions offerings, including ArcFlex. Coupled with our deep domain and service expertise, DFIN offers unparalleled end-to-end financial and regulatory reporting solutions, purpose-built to serve the growing private funds market. As we continue to evolve towards a higher sales mix of software solutions during the second quarter, that mix shift was accelerated by a reduction in print and distribution net sales, which declined by approximately $6 million or 15% compared to the second quarter of 2025. This decrease was driven primarily by a reduction in the printing and distribution of annual reports and proxy statements. Over a longer horizon, print and distribution net sales have declined from approximately $385 million at the time of our spin-off to approximately $108 million on a second quarter 2026 trailing 4-quarter basis, representing a reduction of 72%. While this reduction reflects long-term secular decline in demand and the proactive exit of certain lower-margin work, the pace of decline has also been accelerated by regulatory changes such as SEC Rules 30e-3 and 498A in 2021 as well as the recent Tailored Shareholder Reports regulation in 2024, all of which structurally reduced the market demand for printed products. Looking ahead, the industry is entering another regulatory-driven shift away from print. On July 16, the SEC proposed Regulation E-Delivery, a new rule that would establish electronic delivery as the default method for a broad range of investor communications materials, including prospectuses, mutual fund annual and semiannual shareholder reports, proxy statements and other required communications. This new regulation, if enacted, reinforces the long-term trend towards digital distribution of shareholder communication materials and will further accelerate the industry's migration away from print. Based on the SEC's customary rule-making process, which includes a public comment period, final rule adoption and subsequent implementation and transition periods, we expect the industry-wide impact to take place during 2028. While we continue to refine our estimates, we believe the proposal has the potential to materially reduce demand for printed products over time. Our flexible operating model and digital delivery capabilities position DFIN to both manage the impact of lower print volumes and support clients as they manage the complexity of content management and digital distribution in an electronic delivery environment. Before turning the call over to Dave, I'd like to highlight a few organizational updates. First, as we continue to evolve towards a software-centric company, we strengthened our leadership team with the appointment of Ken Napolitano as Chief Revenue Officer. In this newly created role, Ken is focusing on accelerating growth by enhancing our go-to-market capabilities and deepening our customer relationships to support our long-term growth strategy. We also strengthened our Board of Directors with the addition of Joe Binz, a finance leader in the technology industry. Joe brings valuable experience and perspective that will support our long-term strategy and continue to focus on creating value for our shareholders. Finally, our efforts to transform our culture and enhance employee experience are once again being recognized in the marketplace. During the second quarter, DFIN was recognized as the #1 Most Loved Workplace on the 2026 Global 100 Most Loved Workplaces list published in the Economist. This recognition is a further proof point of the progress we are making transforming DFIN into an employer of choice that attracts, develops and retains talented professionals who share our culture, which emphasizes accountability, collaboration and integrity, creating a strong culture in which the well-being of employees is a strategic priority has allowed us to transform our business and drive value for clients, employees and shareholders. Before I share a few closing remarks, I would like to turn the call over to Dave to provide more details on our second quarter results and our outlook for the third quarter. Dave? David Gardella: Thanks, Dan, and good morning, everyone. As Dan noted, we delivered strong results in the second quarter by continuing to build on the positive momentum in our operating performance, highlighted by the third consecutive quarter of consolidated net sales growth, higher adjusted EBITDA, adjusted EBITDA margin expansion and an increase in both operating cash flow and free cash flow from last year's second quarter. We continue to deliver solid growth in our software solutions offering during the quarter, which grew 7.8% year-over-year and reached record quarterly net sales of $99.4 million. In addition, we experienced a stronger-than-expected increase in the level of capital markets transactions compared to last year's second quarter. By continuing our shift toward a more profitable sales mix while also driving operating efficiencies, we expanded our second quarter adjusted EBITDA margin by approximately 170 basis points to 36.7%, also a quarterly record for DFIN. On a consolidated basis, total net sales for the second quarter of 2026 were $224.2 million, an increase of $6.1 million or 2.8% from the second quarter of 2025. The growth in software solutions net sales, which increased $7.2 million or 7.8% compared to the second quarter of last year, combined with the higher event-driven transactional revenue more than offset declines in capital markets and investment companies compliance revenue, part of which was related to a reduction in the demand for printed products consistent with recent trend. Excluding print and distribution, second quarter net sales increased by 6.9%. Second quarter adjusted non-GAAP gross margin was 66%, approximately 230 basis points higher than the second quarter of 2025, driven by the growth in Software Solutions and capital markets transactional net sales, the impact of cost control initiatives and price uplifts. Adjusted non-GAAP SG&A expense in the quarter was $65.7 million, a $3.1 million increase from the second quarter of 2025. As a percentage of net sales, adjusted non-GAAP SG&A was 29.3%, an increase of approximately 60 basis points from the second quarter of 2025. The increase in adjusted non-GAAP SG&A was primarily driven by an increase in selling expense related to higher sales volume, higher bad debt expense and higher incentive compensation expense, partially offset by the impact of cost control initiatives. Our second quarter adjusted EBITDA was $82.3 million, an increase of $6 million or 7.9% from the second quarter of 2025. Second quarter adjusted EBITDA margin was 36.7%, an increase of approximately 170 basis points from the second quarter of 2025. The increases in adjusted EBITDA and adjusted EBITDA margin were primarily driven by higher overall sales, a favorable sales mix and cost control initiatives, partially offset by higher selling expense related to higher sales volume and higher incentive compensation expense. Turning now to our second quarter segment results. Net sales in our Capital Markets Software Solutions segment were $65.7 million, an increase of $6.6 million or 11.2% from the second quarter of last year, primarily driven by growth in ActiveDisclosure, which grew approximately 29%. Total subscription revenue increased by approximately 15%, primarily driven by the continued growth in client count and the ongoing adoption of service subscription packages, while nonsubscription revenue increased approximately 69%, reflecting an increase in the volume of certain traditional activities transitioning to ActiveDisclosure, primarily related to the use case for transactional filings. During the second quarter, we experienced a higher usage of ActiveDisclosure in the creation and filing of S-1 documents for certain IPO transactions compared to last year and accounted for approximately 1/3 of ActiveDisclosure's total second quarter growth. We expect this trend to continue in the future, driven by the capabilities of our software platform, combined with the evolving client preference to work in a hybrid environment, leveraging both our software and unmatched service and domain expertise. We remain encouraged by ActiveDisclosure's solid foundation for future revenue growth, a part of which will be influenced by the pace of traditional activities transitioning on to the platform. During the second quarter, Venue posted $37.5 million in revenue, an increase of approximately 1% compared to the second quarter of last year, which benefited from a large project. In addition, Venue delivered strong sequential growth in revenue, increasing approximately 14% from the first quarter. A resilient level of underlying activity taking place on the platform, coupled with positive market reception of New Venue creates a strong foundation for continued sales growth. Adjusted EBITDA margin for the segment was 36.1%, a decrease of approximately 180 basis points from the second quarter of 2025, primarily due to higher selling expense and higher incentive compensation expense, partially offset by cost control initiatives. Net sales in our Capital Markets Compliance and Communications Management segment were $95.9 million, an increase of $2.4 million or 2.6% from the second quarter of 2025, driven by higher transactional revenue, partially offset by lower compliance volume. In the second quarter, we recorded $47.3 million of capital markets transactional revenue, which exceeded the high end of our expectations and was up approximately $13 million or 36% from the second quarter of 2025, overlapping record low transactional revenue in last year's second quarter, during which global equity deal volume declined sharply as a result of tariff-induced market volatility and macroeconomic uncertainty. Entering this year's second quarter, despite escalating geopolitical tensions, the capital markets transactional environment remained resilient. The positive momentum in the equity deal environment, which had been building over the last few quarters continued into the second quarter of 2026, resulting in increases in the number of regular way IPO transactions that raised over $100 million and completed public company M&A deals in the U.S. compared to the second quarter of 2025. For transactions that were completed in the second quarter, we maintained our historical market share, reflective of DFIN's strong market position. Capital Markets compliance revenue was down $10.1 million primarily due to lower proxy statement and annual report volume and the related printing and distribution, consistent with our experience during last year's proxy and annual meeting season. Given the first half of the year is the peak for proxy-related activity, we expect the impact of the reductions to become less significant in the second half of the year. In addition, certain traditional compliance activities shifted to ActiveDisclosure during the second quarter. Specific to the shift of revenue from traditional services to software, as I noted previously, we expect this dynamic to produce favorable economics with slightly lower revenue but higher adjusted EBITDA margin, which has played out so far. Adjusted EBITDA margin for the segment was 41.9% an increase of approximately 250 basis points from the second quarter of 2025. The increase in adjusted EBITDA margin was primarily due to higher transactional sales and cost control initiatives, partially offset by higher bad debt expense. Net sales in our Investment Companies Software Solutions segment were $33.7 million, an increase of $0.6 million or 1.8% versus the second quarter of 2025, driven by an increase in subscription revenue. As expected, Arc Suite's second quarter growth remained more modest compared to the growth rate in last year's second quarter, during which net sales increased approximately 17% year-over-year, driven by the uplift from the tailored shareholder report solution. As Dan noted earlier, we are encouraged by the market opportunity presented by the continued growth of private investments and believe DFIN is well positioned to support increasing demand through our software solutions, including ArcFlex and our deep domain expertise and service capabilities. Adjusted EBITDA margin for the segment was 43.3%, an increase of approximately 40 basis points from the second quarter of 2025. The increase in adjusted EBITDA margin was primarily due to price uplifts and cost control initiatives, partially offset by higher service-related costs. Net sales in our Investment Companies Compliance and Communications Management segment were $28.9 million, a decrease of $3.5 million or 10.8% from the second quarter of 2025, primarily driven by lower print and distribution volume, which accounted for $2.6 million of the year-over-year decline. The reduction in print and distribution revenue is a result of the secular decline in the demand for printed materials, a trend we expect to continue going forward. Adjusted EBITDA margin for the segment was 41.2%, approximately 230 basis points higher than the second quarter of 2025. The increase in adjusted EBITDA margin was primarily due to a favorable sales mix and cost control initiatives, partially offset by the impact of lower sales volume. Non-GAAP unallocated corporate expenses were $8.1 million in the quarter, a decrease of $1.6 million from the second quarter of 2025, primarily driven by lower third-party expenses in the quarter. Free cash flow in the quarter was $61.2 million, an improvement of $9.5 million compared to the second quarter of 2025. The year-over-year improvement in free cash flow was primarily driven by an increase in adjusted EBITDA, lower cash tax payments and lower capital expenditures. We ended the quarter with $204 million of total debt and $178.7 million of non-GAAP net debt, including $96.5 million drawn on our revolver. As of June 30, 2026, our non-GAAP net leverage ratio was 0.7x. As a reminder, our cash flow is historically seasonal, though over time, that seasonality has become less pronounced as our sales mix has evolved towards software subscriptions. Regarding capital deployment, we repurchased approximately 763,000 shares of common stock during the second quarter for $34.7 million at an average price of $45.48 per share. Year-to-date through June 30, we've repurchased approximately 1.4 million shares for $63 million at an average price of $46.40 per share. As of June 30, 2026, we had $125.4 million remaining on our $150 million stock repurchase authorization. We continue to view share repurchases as an important component to drive value for shareholders and part of our balanced capital deployment plan, which also features organic investments to drive future growth. As it relates to our outlook for the third quarter of 2026, we expect consolidated net sales in the range of $175 million to $185 million and adjusted EBITDA margin in the range of 26% to 28%, compared to the third quarter of last year, the midpoint of our consolidated revenue guidance, $180 million, implies an increase of approximately $5 million or 3% year-over-year as growth in software solutions net sales, predominantly ActiveDisclosure and Venue, and higher Capital Markets transactional revenue are expected to more than offset a continued decline in print and distribution net sales. 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. With that, I'll now pass it back to Dan. Daniel Leib: Thanks, Dave. Our performance in the second quarter provides us with strong momentum as we continue to execute DFIN's strategic transformation. The combination of our market position, cost structure and strong balance sheet positions us well heading into the back half of the year. Finally, in October, DFIN will celebrate an important milestone as we mark our 10-year anniversary as an independent public company. As we look ahead to that milestone, we are proud of the transformation we have achieved. Over the past decade, we have successfully evolved our business, modernized and launched new software solutions offerings and strengthened our market position. With a proven strategy, deep client relationships and a talented team, we believe DFIN is very well positioned for its next chapter of growth and value creation. Before we open it up for Q&A, I'd like to thank the DFIN employees around the world. Now with that, operator, we're ready for questions. Operator: [Operator Instructions] Your first question comes from the line of Charlie Strauzer with CJS Securities. Charles Strauzer: Can we talk a little bit more about the E-Delivery news that just came out? How is this different from 30e-3? And what are the kind of the key pieces here that have to kind of fall into place to get this to move forward? Daniel Leib: Yes. Thank you, Charlie. This is -- and it's fairly new, as we mentioned, it was mid-July where the proposal came out. It is broader than 30e-3. And so we're still in the assessment phase. And if you remember, when 30e-3 and 498A came out, we were able to spin up a software offering and benefited on the software side in total -- our total compliance management offering. So we're still assessing both the breadth of it. 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. So a bit of lead time. We mentioned in the prepared remarks from a platform perspective -- we are highly variabilized. We do have one facility that we have a few digital printing assets in that's been really beneficial for us, but we have variabilized the vast majority of our print requirements at this point. Charles Strauzer: Got it. That's helpful. And looking at the capital markets environment, obviously, there's been some rebound here. And you mentioned that you're getting your fair share of work. Can you maybe elaborate on that a little bit more? David Gardella: Yes, Charlie, it's Dave. I'll start. So I think we did see a pretty nice rebound in the second quarter, as we mentioned, on the number of IPOs over $100 million, et cetera, and had right around 50% of those or so in the quarter. Like we said, overlapping a soft quarter from the second quarter of 2025, right, where we saw April really slow down last year and then start to pick up more in May and June. But still a soft quarter in the second quarter last year. Like we said in the prepared remarks, we've seen this momentum building over the last few quarters following Q2 of last year, and then we had the government shutdown late last year, et cetera. So this momentum is building. It was nice to start to see it come through in Q2 here. And as our guidance implies for Q3, our range at -- well, I guess, at the midpoint, capital markets transactional revenue up $5 million or $6 million relative to Q3 of last year. Daniel Leib: Yes. It does feel like -- and we're seeing volume of activity in-house has been strong. And to Dave's point, it's a question of when things come out into the market. Charles Strauzer: Got it. And then looking at kind of the post-IPO deal uptake, if you will, having someone take your software products after they've gone public, are you pleased with what you've seen there in terms of uptake? Daniel Leib: Yes. We've seen improvement in that over time. And now it's -- vast majority are continuing on as compliance clients post IPO, which is great to see. We've obviously -- it's an area we focus on as well. Charles Strauzer: Got it. And then, Dave, on guidance, just a little bit more color there, if you wouldn't mind maybe sharing with us your thoughts on kind of any abnormalities we should think about in the quarter versus comps from last year as well as free cash flow in the quarter expectations there? David Gardella: Yes. I would say, as I think about any comparables, nothing overly significant last year in terms of the top line. We did have some expense true-ups, et cetera. But I think when you look at our EBITDA margin guidance at the top end of the range, it's essentially flat to last year where we've been 28% EBITDA margin. I think when you look at overall top line growth, right, at the midpoint, roughly 3% growth implied in our guidance. And like I said, some of that coming from the continued momentum in the capital markets transactional area. And then I would say the rest of the business, probably more similar to what we've seen so far this year, right? And we talked a little bit about it in the prepared remarks, expecting that the growth on the software side, in particular, from ActiveDisclosure and Venue to continue. And like we said on the Arc Suite product, right, more modest growth similar to what we saw in Q2 here. Charles Strauzer: Got it. And one last one for me. Just looking at SG&A and expenses in the quarter, a little higher than I had modeled. Anything driving that? David Gardella: We hit some of it, Charlie, in the prepared remarks. It's, I'd say, bits and pieces, right? We talked about incentive compensation being a little bit higher in the quarter. We talked about -- there was a little bit of bad debt increase in the quarter. I think overall, when you look at the shift to software, right, we're driving higher gross margins, right? Gross margin was up a couple of hundred basis points. I think when you look at -- that typically comes with a little bit higher SG&A as well just on the overall mix of business from a sales comp perspective, and obviously yielded higher EBITDA margins. So kind of a balance between some of the discrete items in the quarter and then with this continued mix shift, right, the expanding EBITDA margin is really a function of more expansion at gross margin, partially offset by some of the higher SG&A that you noted. Charles Strauzer: Got it. Sorry, one more just on the housekeeping side on share count assumption for the quarter, Q3? David Gardella: Yes, we didn't give any specific guidance here. So we did repurchase 763,000 shares in the quarter. And like we said in the prepared remarks, we view ongoing share repurchase as an important part of our capital deployment. And I think as we've said in the past, we've been more aggressive at lower prices, less aggressive at higher prices and no change in direction from that perspective. Operator: [Operator Instructions] Your next question comes from the line of Ross Cole with Needham & Company. Ross Cole: Congratulations on the print. So my first question is around some of the cost-saving initiatives in place. But I see your EBITDA margins came in pretty well, it's impressive, and a lot of that's driven by the mix shift. I was wondering if you can maybe quantify the impact of those cost-saving initiatives and maybe elaborate a little more on what they are? David Gardella: Yes, Ross, thanks for the question. I think you've followed the company for a while now. I think that cost discipline is certainly part of the culture here. And it's everything from third-party spend to shifts in headcount and leveraging more recently, leveraging AI to drive productivity, et cetera. So long list of factors, I would say, probably the way to think about it is where I started initially that kind of this cost discipline is really part of our DNA at DFIN, and we'll continue to look for areas to drive productivity on top of -- and expand margin -- and on top of that margin expansion that I noted that's driven by the mix shift as well. Daniel Leib: Yes. And the only thing I would add is that a lot of the savings are coming from enhanced process and taking out process steps and delivering a superior client experience by simplifying some of our processes. We have put in over the past several years, much better tooling and measurements. And so that's been a component piece of it in addition to what Dave highlighted. Ross Cole: Great. So it sounds like it's really a continuation of the same good processes you've been doing for a while. And then I'm wondering as well about some of the transactional revenue. Thank you for providing some guidance for the third quarter. I was wondering what assumptions are baked into that guidance? And do you see the capital markets activity pretty much being stable going forward into the quarter? Or kind of like what's the difference between that low and high end of the $45 million to $50 million? And what assumptions are in there for like the overall capital markets count? David Gardella: Yes. It's a good question. I'd say if I start at the highest level, I would say a similar environment that we experienced in the second quarter. And I would say, so far, through the 1 month of the quarter in July, that assumption has held. I think, frankly, from the bottom end of the range to the top end of the range is really just mostly timing of revenue recognition and when some of these deals might go effective, et cetera. And so we generally have reasonable visibility to kind of this range. But I think picking a point in the range often comes down to the timing question and when deals go effective and therefore, impacting revenue recognition. I think overall, we feel pretty good about the market environment. And like I said, so far this quarter, only 1 month in, but so far playing out nicely. Ross Cole: Great. And then one last question on the share repurchases as well. Hopefully, I can get some color on that. I noticed you've done about $76.2 million in repurchases so far this year. You have $150 million share repurchase authorization. Do you think assuming it remains -- the shares you believe remain kind of undervalued and it's a good opportunity to repurchase, do you think you'd be buying at about the same level as you have the last 2 quarters? David Gardella: Yes. I think, as I mentioned, we've been historically more aggressive at the lower prices, less aggressive at higher prices. I think when you look at the numbers you referenced, right? And the one thing I might call out is on the $150 million share repurchase, we have about just over $125 million remaining as of the end of the quarter. Part of the year-to-date repurchases was done under the prior authorization. So there's still $125 million remaining. And I think similar to the question that Charlie asked, right, we continue -- like we mentioned in the prepared remarks, continue to view the share repurchases as an important part of our capital deployment. Operator: There are no further questions at this time. I will now turn the call back to Dan for closing remarks. Daniel Leib: Great. Thank you, and thank you, everyone, for joining us. We will look forward to speaking with you soon. Operator: This concludes today's call. Thank you for attending. You may now disconnect. Daniel Leib: Thank you very much. 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This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has positions in and recommends Donnelley Financial Solutions. The Motley Fool has a disclosure policy. Donnelley Financial (DFIN) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

CHICAGO, July 30, 2026 /PRNewswire/ -- Donnelley Financial Solutions, Inc. (NYSE: DFIN) (the "Company" or "DFIN") today reported financial results for the second quarter of 2026. Highlights for the second quarter of 2026: Total net sales of $224.2 million, an increase of $6.1 million, or 2.8%, from the second quarter of 2025. Total net sales were comprised of: Software solutions net sales accounted for 44.3% of total net sales, up from 42.3% in the second quarter of 2025. Net earnings of $36.4 million, or $1.44 per diluted share, as compared to $36.1 million, or $1.28 per diluted share, in the second quarter of 2025. Adjusted EBITDA(a) of $82.3 million, up $6.0 million, or 7.9%, from the second quarter of 2025; Adjusted EBITDA margin(a) of 36.7%, up approximately 170 basis points from the second quarter of 2025. Gross leverage(a) of 0.8x and net leverage(a) of 0.7x as of June 30, 2026. The Company repurchased 763,451 shares for approximately $34.7 million at an average price of $45.48 per share. As of June 30, 2026, there was $125.4 million remaining on our current $150 million share repurchase authorization. Appointed Ken Napolitano as Chief Revenue Officer to advance the Company's sales transformation and support its long-term growth strategy. "We are pleased with our strong second-quarter results, which reflect continued momentum in our operating performance, as we delivered the third consecutive quarter of consolidated net sales growth, an increase in Adjusted EBITDA, and Adjusted EBITDA margin expansion. Total net sales increased by 2.8% from the second quarter of 2025, primarily driven by a rebound in capital markets transactional activity as well as continued growth of our software solutions, despite a moderate decline in traditional compliance revenue, part of which was related to lower print and distribution revenue. The growth in higher-margin capital markets transactional and software solutions net sales, along with the impact of permanent changes to our cost structure and ongoing operating efficiencies, expanded second-quarter Adjusted EBITDA margin to 36.7%, an increase of approximately 170 basis points year-over-year. Additionally, improved profitability combined with lower capital expenditures resulted in strong improvements in both operating cash flow and free cash flow," said Daniel N. Leib, DFIN's President and Chief Executive Officer. Leib continued, "During the second quarter, we continued to execute our strategy to expand the adoption of our software solutions offerings. We delivered record quarterly software solutions net sales of $99.4 million, an increase of 7.8% compared to the second quarter of 2025, driven by the continued momentum in ActiveDisclosure, a component of our compliance offerings, which grew approximately 29%. Venue delivered strong sequential net sales improvement, which resulted in modest year-over-year growth despite overlapping a large project which benefited last year's second-quarter sales. Software solutions net sales made up 44.3% of second-quarter 2026 total net sales, an increase from 42.3% of last year's second-quarter sales mix. In addition, the capital markets transactional environment remained active during the second quarter, despite heightened geopolitical uncertainty and market volatility, resulting in better-than-expected transactional revenue." "Our second-quarter performance, including the momentum of our top- and bottom-line results, highlights the progress we are making in our transformation. Our strategy and focus have resulted in DFIN being fundamentally and sustainably more profitable, as we continue to invest to achieve a more recurring sales mix, while aggressively managing our cost structure and being disciplined stewards of capital. While the macroeconomic outlook remains uncertain, the combination of our market position, cost structure, and strong balance sheet positions us well heading into the back half of the year," Leib concluded. Net Sales Net sales in the second quarter of 2026 were $224.2 million, an increase of $6.1 million, or 2.8%, from the second quarter of 2025. Net sales increased primarily due to higher capital markets transactional volumes and growth in software solutions net sales, primarily driven by ActiveDisclosure, partially offset by lower capital markets and investment companies traditional compliance revenue, part of which is related to lower print and distribution volumes. Net Earnings For the second quarter of 2026, net earnings were $36.4 million, or $1.44 per diluted share, as compared to $36.1 million, or $1.28 per diluted share, in the second quarter of 2025. Net earnings in the second quarter of 2026 included after-tax charges of $8.1 million, or $0.32 per diluted share, primarily related to share-based compensation expense and restructuring, impairment and other charges, net. Net earnings in the second quarter of 2025 included after-tax charges of $6.0 million, or $0.21 per diluted share, primarily related to share-based compensation expense and restructuring, impairment and other charges, net. Adjusted EBITDA and Adjusted Non-GAAP Net Earnings For the second quarter of 2026, Adjusted EBITDA was $82.3 million, an increase of $6.0 million as compared to the second quarter of 2025. Adjusted EBITDA margin was 36.7%, up approximately 170 basis points from the second quarter of 2025. The increase in Adjusted EBITDA and Adjusted EBITDA margin was primarily due to higher net sales, a favorable sales mix driven by the growth in higher-margin software solutions and tech-enabled services net sales, and cost control initiatives, partially offset by higher selling expense as a result of the increase in sales volumes. For the second quarter of 2026, adjusted non-GAAP net earnings were $44.5 million, or $1.76 per diluted share, as compared to $42.1 million, or $1.49 per diluted share, in the second quarter of 2025. Reconciliations of reported net sales to organic net sales and consolidated net earnings (loss) to Adjusted EBITDA, Adjusted EBITDA margin and adjusted non-GAAP net earnings are presented in the tables. Guidance The Company provides the following guidance for the third quarter of 2026. The guidance provided above constitutes forward-looking statements and actual results may differ materially. Refer to the "Use of Forward-Looking Statements" section below for information on the factors that could cause actual results to differ materially from these forward-looking statements. Adjusted EBITDA margin guidance presented above is provided on a non-GAAP basis only, without providing a reconciliation to guidance provided on a GAAP basis because the preparation of such a reconciliation could not be accomplished without "unreasonable efforts." The Company does not have access to certain information that would be necessary to provide such a reconciliation, including non-recurring items that are not indicative of the Company's ongoing operations. Such items include, but are not limited to, certain costs, expenses, gains and losses and other specified items that management believes are not indicative of our ongoing operations. Company Results and Conference Call DFIN's earnings press release for the second quarter of 2026, which is included as Exhibit 99.1 to the Company's Current Report on Form 8-K that has been furnished to the SEC on July 30, 2026, is available on the Company's investor relations website at investor.dfinsolutions.com. A supplemental trending schedule of historical results, including additional breakouts of segment-level net sales, is also available on the Company's investor relations website. DFIN will hold a conference call and webcast on July 30, 2026, at 9:00 a.m. Eastern time to discuss financial results for the second quarter of 2026, provide a general business update and respond to analyst questions. A live webcast of the call will also be available on the Company's investor relations website. Please visit investor.dfinsolutions.com at least fifteen minutes prior to the start of the event to register, download and install any necessary audio software. If you are unable to participate live, a replay of the webcast will be available following the conference call on the Company's investor relations website, along with the earnings press release and related financial tables. About DFIN DFIN is the leading global provider of compliance and regulatory software and services, fueling end-to-end investment company regulatory compliance needs, complex capital markets transactions, and essential financial reporting at every stage of the corporate lifecycle. Our mission is simple: to empower clients with the software and support they need to stay ahead of public company filings, investment company filings, private reporting, and beneficial owner reporting, while enhancing workflow efficiency. We bring deep expertise to every engagement, driving transparency and collaboration built on confidence and reliability. Learn more at DFINsolutions.com or follow us on LinkedIn. Use of Non-GAAP Information This news release contains certain non-GAAP financial measures, including non-GAAP gross profit, adjusted non-GAAP gross profit, non-GAAP gross margin, adjusted non-GAAP selling, general and administrative expenses ("SG&A"), adjusted non- GAAP income from operations, adjusted non-GAAP operating margin, Adjusted EBITDA, Adjusted EBITDA margin, adjusted non-GAAP net earnings, adjusted non-GAAP earnings per diluted share, Free Cash Flow and organic net sales. The Company believes that these non-GAAP financial measures, when presented in conjunction with comparable GAAP measures, provide useful information about the Company's operating results and liquidity and enhance the overall ability to assess the Company's financial performance. The Company uses these measures, together with other measures of performance under GAAP, to compare the relative performance of operations in planning, budgeting and reviewing the performance of its business. The Company's non-GAAP statement of operations measures, which include non-GAAP gross profit, adjusted non-GAAP gross profit, non-GAAP gross margin, adjusted non-GAAP SG&A, adjusted non-GAAP income from operations, adjusted non- GAAP operating margin, Adjusted EBITDA, Adjusted EBITDA margin, adjusted non-GAAP net earnings and adjusted non-GAAP net earnings per diluted share, are adjusted to exclude the impact of certain costs, expenses, gains and losses and other specified items that management believes are not indicative of our ongoing operations. These adjusted measures exclude the impact of expenses associated with the Company's pension plan settlement charge, non-income tax, net, accelerated rent (benefit) expense, share-based compensation expense and eliminate potential differences in results of operations between periods caused by factors such as historic cost and age of assets, financing and capital structures, taxation positions or regimes, restructuring, impairment and other charges, net and gain or loss on certain investments, business sales and asset sales. Free Cash Flow is a non-GAAP financial measure and is defined by the Company as net cash flow provided by operating activities less capital expenditures. By adjusting for the level of capital investment in operations, the Company believes that free cash flow can provide useful additional basis for understanding the Company's ability to generate cash after capital investment and provides a comparison to peers with differing capital intensity. Organic net sales is a non-GAAP financial measure and is defined by the Company as reported net sales adjusted for the changes in foreign currency exchange rates and the impact of dispositions. These non-GAAP financial measures should be considered in addition to, not a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. In addition, these measures are defined differently by different companies in our industry and, accordingly, such measures may not be comparable to similarly-titled measures of other companies. Use of Forward-Looking Statements This news release includes certain "forward-looking statements" within the meaning of, and subject to the safe harbor created by, Section 21E of the Securities Exchange Act of 1934, as amended, with respect to the business, strategy and plans of DFIN and its expectations relating to future financial condition and performance. Statements that are not historical facts, including statements about DFIN management's beliefs and expectations, are forward-looking statements. Words such as "believes," "anticipates," "estimates," "expects," "intends," "aims," "potential," "will," "would," "could," "considered," "likely," "estimate" and variations of these words and similar future or conditional expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. While DFIN believes these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond DFIN's control. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend upon future circumstances that may or may not occur. Actual results may differ materially from DFIN's current expectations depending upon a number of factors affecting the business and risks associated with the performance of the business. These factors include such risks and uncertainties detailed in DFIN periodic public filings with the SEC, including but not limited to those discussed under "Special Note Regarding Forward-Looking Statements" and in Part I, Item 1A. Risk Factors of DFIN's Annual Report on Form 10-K for the fiscal year ended December 31, 2025, those discussed under "Special Note Regarding Forward-Looking Statements" in DFIN's Quarterly Reports on Form 10-Q and in other investor communications of DFIN's from time to time. DFIN does not undertake to and specifically declines any obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect future events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events. Total Non-GAAP adjustments (b) —(9.0)11.35.0%8.10.32Adjusted Non-GAAP measures (b)$148.0$65.7$67.330.0%$44.5$1.76Adjusted Non-GAAP % of total net sales66.0%29.3%For the Six Months Ended June 30, 2026Gross profitSG&A (a)Income (loss)fromoperationsOperatingmarginNetearnings (loss)Net earnings (loss)per dilutedshareGAAP basis measures$251.0$142.1$104.524.3%$69.9$2.72Exclude: Depreciation and amortization28.6Non-GAAP measures279.6Non-GAAP % of total net sales65.1%Non-GAAP adjustments:Restructuring, impairment and other charges, net——3.00.7%2.10.08Share-based compensation expense—(15.7)15.73.7%11.00.43Non-income tax, net—0.3(0.3)(0.1)%(0.2)(0.01)Gain on investment in an equity security (c)————(0.1)—Total Non-GAAP adjustments (b)—(15.4)18.44.3%12.80.50Adjusted Non-GAAP measures (b)$279.6$126.7$122.928.6%$82.7$3.22Adjusted Non-GAAP % of total net sales65.1%29.5% View original content:https://www.prnewswire.com/news-releases/dfin-reports-second-quarter-2026-results-302838101.html

Donnelley Financial Solutions (DFIN) came out with quarterly earnings of $1.76 per share, beating the Zacks Consensus Estimate of $1.65 per share. This compares to earnings of $1.49 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +6.67%. A quarter ago, it was expected that this financial communications and data services provider would post earnings of $1.28 per share when it actually produced earnings of $1.45, delivering a surprise of +13.28%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. Donnelley Financial, which belongs to the Zacks Internet - Software and Services industry, posted revenues of $224.2 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 1.68%. This compares to year-ago revenues of $218.1 million. The company has topped consensus revenue estimates two times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Donnelley Financial shares have added about 10.1% since the beginning of the year versus the S&P 500's gain of 6.9%. While Donnelley Financial has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Donnelley Financial was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.94 on $180.4 million in revenues for the coming quarter and $4.95 on $784.1 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Internet - Software and Services is currently in the top 23% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Red Violet, Inc. (RDVT), another stock in the same industry, has yet to report results for the quarter ended June 2026. The results are expected to be released on August 10. This company is expected to post quarterly earnings of $0.34 per share in its upcoming report, which represents a year-over-year change of +21.4%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Red Violet, Inc.'s revenues are expected to be $25.88 million, up 18.9% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Donnelley Financial Solutions (DFIN) : Free Stock Analysis Report Red Violet, Inc. (RDVT) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

As the craze of earnings season draws to a close, here’s a look back at some of the most exciting (and some less so) results from Q1. Today, we are looking at diversified financial services stocks, starting with Donnelley Financial Solutions (NYSE:DFIN). Diversified financial services encompass specialized offerings outside traditional categories. These firms benefit from identifying niche market opportunities, developing tailored financial products, and often facing less direct competition. Challenges include scale limitations, regulatory classification uncertainties, and the need to continuously innovate to maintain market differentiation against larger competitors expanding their offerings. The 10 diversified financial services stocks we track reported a strong Q1. As a group, revenues beat analysts’ consensus estimates by 3% while next quarter’s revenue guidance was in line. Thankfully, share prices of the companies have been resilient as they are up 6.1% on average since the latest earnings results. Born from the need to navigate increasingly complex financial regulations in the digital age, Donnelley Financial Solutions (NYSE:DFIN) provides software and technology-enabled services that help companies comply with SEC regulations and manage financial transactions and reporting requirements. Donnelley Financial Solutions reported revenues of $205.5 million, up 2.2% year on year. This print was in line with analysts’ expectations, and overall, it was a strong quarter for the company with a beat of analysts’ EPS estimates. Donnelley Financial Solutions delivered the weakest guidance update in the group. Investor expectations, however, were likely higher than Wall Street’s published projections, leaving some wishing for even better results (analysts’ consensus estimates are those published by big banks and advisory firms, not the investors who make buy and sell decisions). The stock is down 1.2% since reporting and currently trades at $50. Is now the time to buy Donnelley Financial Solutions? Access our full analysis of the earnings results here, it’s free. Founded in 2004 to simplify the complex world of bill payments, Paymentus (NYSE:PAY) provides a cloud-based platform that helps utilities, municipalities, and service providers automate billing and payment processes. Paymentus reported revenues of $358.4 million, up 30.2% year on year, outperforming analysts’ expectations by 6.4%. The business had an exceptional quarter with a solid beat of analysts’ EBITDA and EPS estimates. Paymentus achieved the highest guidance raise, fastest revenue growth, and highest full-year guidance raise of the whole group. The market seems content with the results as the stock is up 3.9% since reporting. It currently trades at $29.75. Is now the time to buy Paymentus? Access our full analysis of the earnings results here, it’s free. Spun off from NCR Voyix in 2023 to focus exclusively on self-service banking technology, NCR Atleos (NYSE:NATL) provides self-directed banking solutions including ATM and interactive teller machine technology, software, services, and a surcharge-free ATM network for financial institutions and retailers. NCR Atleos reported revenues of $1.04 billion, up 6.4% year on year, exceeding analysts’ expectations by 0.9%. Still, it was a softer quarter as it posted a significant miss of analysts’ EBITDA and EPS estimates. Interestingly, the stock is up 5.9% since the results and currently trades at $47.44. Read our full analysis of NCR Atleos’s results here. Founded during the early days of global e-commerce in 2005 to solve international payment challenges, Payoneer (NASDAQ:PAYO) provides financial technology services that enable small and medium-sized businesses to send and receive payments globally across borders. Payoneer reported revenues of $261.6 million, up 6.1% year on year. This print surpassed analysts’ expectations by 2.6%. Overall, it was a very strong quarter as it also recorded a beat of analysts’ EPS estimates and a solid beat of analysts’ EBITDA estimates. The stock is up 45.8% since reporting and currently trades at $7.09. Read our full, actionable report on Payoneer here, it’s free. Originally founded in 1983 as Wright Express to serve the fleet card market, WEX (NYSE:WEX) provides payment processing and business solutions across fleet management, employee benefits, and corporate payments sectors. WEX reported revenues of $673.8 million, up 5.8% year on year. This number was in line with analysts’ expectations. It was a strong quarter as it also put up full-year EPS guidance exceeding analysts’ expectations and an impressive beat of analysts’ EBITDA estimates. WEX had the weakest performance against analyst estimates among its peers. The stock is down 11.1% since reporting and currently trades at $164.32. Read our full, actionable report on WEX here, it’s free. Over the past year, investors have been forced to repeatedly answer the same question: what is the market’s biggest risk? The answer has changed several times, and each shift has reshaped market leadership. Late in 2025 and early 2026, artificial intelligence became the market’s primary uncertainty. Investors questioned whether AI would erode software pricing power and weaken competitive moats as AI made it easier to replicate once-differentiated products. By the spring, technology took a back seat to geopolitics. The U.S. conflict with Iran briefly became the market’s dominant narrative, raising concerns about oil prices, inflation, and global growth. But as energy markets remained orderly and fears of a prolonged supply disruption faded, investors quickly turned their focus back to fundamentals. Want to invest in winners with rock-solid fundamentals? Check out our Strong Momentum Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.