Donnelley Financial Solutions, Inc.

Second-quarter 2026 net sales were $224.2 million, up $6.1 million or 2.8% from the second quarter of 2025. Adjusted EBITDA was $82.3 million, up $6.0 million or 7.9%, and adjusted EBITDA margin was 36.7%, up about 170 basis points year over year. Adjusted non-GAAP gross margin was 66%, up about 230 basis points, while adjusted non-GAAP SG&A was $65.7 million, or 29.3% of net sales. Free cash flow was $61.2 million, up $9.5 million year over year. Software solutions net sales were $99.4 million, up 7.8%; Capital Markets Software Solutions revenue was $65.7 million, up 11.2%; Capital Markets Compliance and Communications Management revenue was $95.9 million, up 2.6%; Investment Companies Software Solutions revenue was $33.7 million, up 1.8%; and Investment Companies Compliance and Communications Management revenue was $28.9 million, down 10.8%. Print and distribution net sales declined about $6 million, or 15%, year over year. For third quarter 2026, management guided to consolidated net sales of $175 million to $185 million and adjusted EBITDA margin of 26% to 28%. They also guided to capital markets transactional revenue of $45 million to $50 million.

Dan Leib emphasized that DFIN is continuing its strategic transformation toward a more software-centric business, with better mix, cost discipline, and a stronger balance sheet. He highlighted record software sales, the fourth straight quarter of 20%+ growth in ActiveDisclosure, and improving adoption of New Venue and ArcFlex opportunities tied to private investments. He also framed the SEC's proposed E-Delivery rule as a broader, longer-term catalyst that could further shift the industry away from print, though he said the company is still in the assessment phase.

Dave Gardella focused on the quarter's operating leverage and cash generation, citing 66% adjusted non-GAAP gross margin, 36.7% adjusted EBITDA margin, and $61.2 million of free cash flow. He said the EBITDA margin improvement came from higher overall sales, favorable mix, and cost control, partly offset by higher selling expense, bad debt, and incentive compensation. He also noted a strong balance sheet with $204 million of total debt, $178.7 million of non-GAAP net debt, $96.5 million drawn on the revolver, and a 0.7x non-GAAP net leverage ratio. On capital allocation, he said DFIN repurchased 763,000 shares for $34.7 million in the quarter and had $125.4 million remaining on the $150 million authorization.

Analysts focused on the new SEC Regulation E-Delivery proposal, capital markets momentum, post-IPO software uptake, and whether SG&A and share repurchases would trend from here. Management said E-Delivery is broader than prior rules like 30e-3, but it is still early and the company expects any industry impact to begin around 2028 after the comment and implementation process. On capital markets, management said the second-quarter rebound was real, that DFIN had roughly half of the IPOs over $100 million, and that Q3 guidance assumes a similar environment with timing of deal closings driving the range. They also said most post-IPO clients now continue on as compliance clients, and that repurchases remain a capital deployment priority, with activity historically more aggressive at lower share prices.