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DATE

Tuesday, May 5, 2026 at 9 a.m. ET

CALL PARTICIPANTS

  • Chief Executive Officer — Daniel N. Leib
  • Chief Financial Officer — David A. Gardella
  • President, Capital Markets — Craig D. Clay

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TAKEAWAYS

  • Total Net Sales -- $205.5 million, up 2.2%, driven by software expansion and partially offset by lower compliance revenue in print and distribution.
  • Adjusted EBITDA -- $70.6 million, an increase of $2.4 million or 3.5%, with margin expanding by 50 basis points to 34.4% due to higher Software Solutions sales and cost controls.
  • Software Solutions net sales grew 8.4% year over year, now representing 44.6% of total sales and expanding 250 basis points in mix.
  • ActiveDisclosure -- Reported 21% sales growth, marking its sixth straight quarter of double-digit increases, with recurring product momentum sustained by net client growth and higher average value per client.
  • Venue Net Sales -- Gained 7%, helped by demand for data rooms and rising adoption of the newly launched version, despite sequentially lower impact from large projects compared to fiscal Q4 2025 (ended Dec. 31, 2025).
  • ArcFlex Launch -- Signed the first contract with a private asset manager and expects scaled commercial activity and incremental revenue starting in 2027.
  • Capital Markets Software Solutions Segment -- Net sales reached $58.6 million, rising 12.9%, aided by 17% subscription growth and a 36% jump in service and support revenue tied to ActiveDisclosure adoption.
  • Capital Markets Compliance & Communications Segment -- Net sales declined 1.3% to $82.8 million, due to lower compliance volume that was partially offset by a 5% increase in transactional revenue.
  • Investment Company Software Segment -- Delivered $33.1 million in net sales, up 1.2%, with growth attributed to service revenue and flat subscription sales; ArcSuite’s growth rate has moderated versus prior year.
  • Investment Company Compliance & Communications Management -- Net sales fell 4.9% to $31 million, entirely due to declines in print and distribution revenue.
  • Free Cash Flow -- Negative $16 million, an improvement of $35 million year over year, driven by favorable working capital, reduced incentive payments, and lower capital expenditures.
  • Net Debt & Leverage -- Ended with $203.8 million in non-GAAP net debt and a non-GAAP net leverage ratio of 0.8x, including $121 million drawn on the revolver.
  • Share Repurchases -- 595,000 shares bought for $28.3 million at an average of $47.58 per share; a new $150 million repurchase program with a December 31, 2027 expiration replaces the prior plan.
  • Guidance for fiscal Q2 2026 (ending June 30, 2026) -- Projected consolidated net sales of $215 million to $225 million and adjusted EBITDA margin of 34%-36%, with expected Capital Markets transactional revenue of $40 million to $45 million and a modest year-over-year compliance sales decline in that segment.
  • Market Mix Shift -- Management continues to target 60% of sales from Software Solutions by 2028, up from 47.4% measured on a trailing four-quarter basis.

SUMMARY

Donnelley Financial Solutions (DFIN 15.45%) highlighted software-driven growth, operational discipline, and an evolving revenue mix as strategic priorities, positioning the business for margin expansion despite a volatile transactional environment. The launch and scaling of new AI-enabled products, particularly ActiveIntelligence within ActiveDisclosure and ArcFlex for private markets, indicate the company’s intent to capitalize on technology adoption within regulatory compliance workflows. Expanded capital returns, including the upsized share repurchase program, align with disciplined capital allocation while balancing organic investment and leverage objectives.

  • CFO David A. Gardella said, "First quarter adjusted non-GAAP gross margin was 64%, approximately 30 basis points higher than 2025," as cost controls and software sales lifted profitability despite higher print volumes.
  • The company emphasized a sales pipeline that remained "robust," particularly for IPO RFPs, with 12 large IPOs in April and DFIN claiming "67%" market share among these $100 million-plus deals, according to President, Capital Markets, Craig D. Clay.
  • The Board authorized a new share repurchase program for up to $150 million, commencing April 17, 2026, following the prior program which had $25.5 million unused.
  • Management said, "more than 75% of our revenue is based on recurring and reoccurring sources," linked to compliance and transactional workflows.
  • President, Capital Markets, Craig D. Clay said, "Only two times in history have filings declined sequentially from February. The first time was COVID 2020, and now the second is March 2026," underlining the atypical market volatility affecting transaction volumes.
  • Management stated that "ActiveIntelligence is in the market," and customer demand for AI-enabled solutions is "really high," but clients require strict controls over security and governance.
  • The company explained that the long-term secular decline in print demand of "5% to 6% annually" is expected to persist, but a short-term increase occurred due to a special proxy project.
  • ActiveDisclosure’s subscription model is cited by management as providing insulation from potential regulatory changes in reporting frequency.

INDUSTRY GLOSSARY

  • ActiveDisclosure: DFIN’s recurring compliance SaaS platform for SEC filings and disclosure management.
  • Venue: DFIN’s virtual data room solution supporting due diligence and M&A transaction workflows.
  • ArcSuite / ArcFlex: Cloud-based platforms offering regulatory and compliance document management for investment companies and private funds; ArcFlex targets private investment institutions.
  • ActiveIntelligence: AI-powered capabilities embedded within ActiveDisclosure, designed to automate and enhance compliance and peer analysis workflows.

Full Conference Call Transcript

Daniel N. Leib: And good morning, everyone. We started 2026 by building on the positive momentum in our performance from the fourth quarter of last year, delivering consolidated net sales growth, year-over-year growth in adjusted EBITDA, adjusted EBITDA margin expansion, and improvements in both operating cash flow and free cash flow. We delivered first quarter net sales of $205.5 million, which increased 2.2% compared to 2025. The combination of consolidated net sales growth and cost management yielded first quarter adjusted EBITDA of $70.6 million and adjusted EBITDA margin of 34.4%, both of which are significantly stronger than historical periods with similar revenue profiles.

Importantly, our strong operating performance was in the context of a volatile market environment during the first quarter, shaped by increased macroeconomic uncertainty and escalating geopolitical conflicts. Our first quarter results are further proof points to the progress of our transformation and demonstrate the resiliency of our operating model across various market conditions as our business mix continues to transform. I am encouraged by the continued growth in our software solutions offerings, where we delivered year-over-year net sales growth of 8.4%.

Software Solutions net sales represented 44.6% of total net sales in the first quarter, an increase of approximately 250 basis points from last year’s Software Solutions net sales mix, despite a moderate increase in print and distribution net sales in the first quarter related to a large special proxy project. Despite this deal-related increase in print and distribution sales in the first quarter, our view on the long-term secular decline in the demand for printed products remains consistent, which we expect to be in the range of 5% to 6% annually, with fluctuations based on transactional volumes.

On a trailing four-quarter basis, Software Solutions net sales made up 47.4% of total net sales, an increase of approximately 460 basis points from the first quarter 2025 trailing four-quarter period. This continued positive mix shift positions us well to achieve our long-term target of deriving approximately 60% of total net sales from Software Solutions by 2028. A major driver of the first quarter Software Solutions net sales growth was the performance of our recurring compliance software product ActiveDisclosure, which posted approximately 21% sales growth, marking the sixth consecutive quarter of double-digit sales growth.

This sustained momentum reflects the continued growth in net client count and increases in average value per client, both of which are positive outcomes of our transition from a legacy ActiveDisclosure platform to New AD as well as improved sales execution. In addition, we continued to experience the migration of certain traditional activities to ActiveDisclosure, including an increase in the number of transactional documents and proxy statements being completed on the platform compared to last year’s first quarter, a trend we expect to continue going forward.

Further, ActiveIntelligence, a suite of artificial intelligence capabilities we introduced to select ActiveDisclosure clients in the fourth quarter of last year, became available to all clients in April, representing a step forward in our mission to responsibly deploy AI to increase productivity and efficiency for our clients. ActiveDisclosure’s intelligent, fit-for-purpose capabilities, combined with the domain expertise and 24/7 support of our services organization, remains a strategic differentiator for Donnelley Financial Solutions, Inc. Venue delivered solid year-over-year sales growth of approximately 7% in the first quarter, driven by a resilient demand for data rooms.

I am encouraged by the momentum in the commercial adoption of our new Venue product, which was introduced in the third quarter of last year, as the upgraded product continues to resonate with both current and prospective clients for its speed and simplicity. The rebuilt product redefines efficiency in data room initiation and management, is easier to govern access and permissions, and is more intuitive for deal teams to use. The improvements we have delivered in new Venue, combined with our strong go-to-market execution, have allowed us to access a broader range of clients and increase the size of our serviceable market.

As the adoption of new Venue continues to ramp up, we expect the upgraded product to contribute to Venue’s growth in 2026. In addition, we remain excited by opportunities for ArcFlex, the newest module within ArcSuite, which was also launched in 2025. As momentum toward private investments increases and, with it, more robust reporting and disclosure management needs, we are seeing increased interest from private investment institutions, including hedge funds, private equity, and business development companies. As a financial and regulatory reporting solution purpose-built for private investment institutions, ArcFlex positions Donnelley Financial Solutions, Inc. well to capture incremental market demand in the private investment space.

In a demonstration of our progress in this area, during the first quarter, we signed our first ArcFlex contract with an alternative asset manager utilizing ArcFlex to modernize its financial and regulatory reporting workflows. We expect the commercial activities around ArcFlex to continue to scale through 2026, resulting in more meaningful incremental revenues starting in 2027. Before I turn the call over to Dave, I would like to provide some perspective on Donnelley Financial Solutions, Inc.’s operating characteristics as we navigate an evolving external environment. Over the past several months, global markets have been impacted by elevated volatility driven by a combination of AI-driven uncertainty and geopolitical tensions.

In that context, Donnelley Financial Solutions, Inc.’s operating model continues to be a point of strength and a source of differentiation. Let me highlight a few items behind our relatively stable performance amid the turmoil. First, we serve markets where demand is regulatory-driven and nondiscretionary, centered on mission-critical compliance and deal-related workflows for corporations and investment companies.

As a result, more than 75% of our revenue is based on recurring and reoccurring sources, the majority of which is related to ongoing SEC compliance for corporations and investment companies, with the remainder, specifically Venue, serving a wide market that encompasses both announced and unannounced deals across public and private companies, which is inherently more stable than the market for completed M&A transactions. Our strong mix of recurring and reoccurring offerings provides stability during times of market volatility. Next, our unique hybrid model features a combination of software solutions, tech-enabled services, and print-related output, underpinned by Donnelley Financial Solutions, Inc.’s deep regulatory knowledge and domain and service expertise.

The hybrid model differentiates from seat-based pricing models and domain expertise and execution, which contrasts with more narrowly focused point-solution and pure-play software providers. While we continue to invest in the growth of our software products, our traditional services and output-related offerings supplement Donnelley Financial Solutions, Inc.’s ability to work in ways our clients prefer, whether through software-led, service-enabled, or hybrid workflows backed by capabilities to produce outputs where needed, providing multiple ways to serve their needs as the regulatory landscape evolves. Finally, amid the AI-induced market volatility, Donnelley Financial Solutions, Inc.’s strong position as a leading regulatory and compliance provider and our hybrid offerings are important differentiators in the marketplace.

During times of market volatility and technological disruption, our clients increasingly recognize AI as a productivity enhancer within Donnelley Financial Solutions, Inc.’s workflows, not a substitute for the platform itself or the expertise behind it. Compliance and disclosure remain mission-critical, highly regulated activities that require accuracy and accountability, and AI is most effective when deployed within that framework. As we responsibly integrate AI across both our products and internal operations, our focus remains on improving efficiency, reducing risk, and enhancing productivity while maintaining rigorous standards around security, privacy, and data governance.

Before I share a few closing remarks, I would like to turn the call over to Dave to provide more details on our first quarter results and our outlook for the second quarter. Dave?

David A. Gardella: Thanks, Dan, and good morning, everyone. As Dan noted, we continued to demonstrate positive momentum in our performance during the first quarter, highlighted by year-over-year net sales growth, an increase in adjusted EBITDA, and adjusted EBITDA margin expansion. We posted 8.4% growth in our Software Solutions net sales, including approximately 21% growth in our recurring compliance product, ActiveDisclosure. By continuing to execute our software-centric strategy, while also driving operating efficiencies, we expanded our first quarter adjusted EBITDA margin by approximately 50 basis points to 34.4%. On a consolidated basis, total net sales for 2026 were $205.5 million, an increase of $4.4 million, or 2.2%, from 2025.

The growth in Software Solutions net sales, which increased $7.1 million, or 8.4%, compared to the first quarter of last year, combined with higher event-driven transaction revenue within Capital Markets, part of which was realized through an increase in print and distribution revenue related to a special proxy, more than offset the decline in Capital Markets and Investment Companies compliance revenue, the majority of which was related to a reduction in the demand for printed products consistent with recent trends.

First quarter adjusted non-GAAP gross margin was 64%, approximately 30 basis points higher than 2025, driven by the growth in Software Solutions net sales, the impact of cost control initiatives, and price uplifts, partially offset by higher print and distribution volume. Adjusted non-GAAP SG&A expense in the quarter was $61 million, a $1.1 million increase from 2025. As a percentage of net sales, adjusted non-GAAP SG&A was 29.7%, a decrease of approximately 10 basis points from 2025. The increase in adjusted non-GAAP SG&A was primarily driven by an increase in selling expense related to higher sales volume, partially offset by the impact of ongoing cost control initiatives.

Our first quarter adjusted EBITDA was $70.6 million, an increase of $2.4 million, or 3.5%, from 2025. First quarter adjusted EBITDA margin was 34.4%, an increase of approximately 50 basis points from 2025, primarily driven by higher Software Solutions net sales and cost control initiatives, partially offset by higher Capital Markets transactional print volume. Turning now to our first quarter segment results, net sales in our Capital Markets Software Solutions segment were $58.6 million, an increase of $6.7 million, or 12.9%, from the first quarter of last year, primarily driven by growth in ActiveDisclosure, which grew approximately 21%.

Total subscription revenue increased by approximately 17%, primarily driven by the continued growth in client count and the ongoing adoption of ActiveDisclosure services subscription packages, while service and support revenue increased approximately 36% as we benefit from the continued migration of certain traditional activities to ActiveDisclosure, including the use case for corporate proxy and transactional filings. During the first quarter, we experienced a higher volume of corporate proxy documents and S-1 filings related to IPO transactions completed on ActiveDisclosure compared to last year’s first quarter.

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, part of which will be influenced by the pace of traditional activities transitioning onto the platform. Net sales of Venue increased approximately $2 million, or 7%, compared to the first quarter of last year. On a sequential basis, the impact from large projects which aided Venue’s growth during the fourth quarter of last year was less significant during the first quarter.

A resilient level of underlying activity taking place on the platform, coupled with our recent launch of new Venue, creates a strong foundation for future sales growth. Adjusted EBITDA margin for the segment was 32.8%, an increase of approximately 600 basis points from 2025, primarily due to higher net sales and cost control initiatives, partially offset by higher bad debt expense. Net sales in our Capital Markets Compliance and Communications segment were $82.8 million, a decrease of $1.1 million, or 1.3%, from 2025, driven by lower compliance volume, partially offset by higher transactional revenue.

In the first quarter, we recorded $50.8 million of Capital Markets transactional revenue, which exceeded the high end of our expectations and was up approximately $2 million, or 5%, from 2025. The positive momentum in the equity deal environment, which had been building throughout 2025, continued to start the year, 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. during January 2026 compared to 2025. However, as the quarter progressed, increased market volatility and escalating geopolitical tensions dampened deal activity in March, resulting in a slowdown in the number of deal completions, especially large IPOs.

In short, the global deal environment in the first quarter remained soft compared to historical averages. For transactions that were completed in the first quarter, we maintained our historical market share, reflective of Donnelley Financial Solutions, Inc.’s strong market position. Specific to M&A activity during the quarter, we benefited from a large merger-related special proxy that included an outsized print and distribution component—specifically, the printing and delivery of shareholder communication documents. Capital Markets compliance revenue was down $3.3 million, primarily due to our continued exit of certain low-margin activity and the related print and distribution. In addition, we continue to experience lower market demand for certain event-driven filings such as 8-Ks, given the softness in that market.

Finally, as I commented earlier, certain activities which were historically performed on our traditional services platform shifted to ActiveDisclosure. Adjusted EBITDA margin for the segment was 40.7%, a decrease of approximately 300 basis points from 2025. The decrease in adjusted EBITDA margin was primarily due to the higher mix of print and distribution sales, partially offset by cost control initiatives and lower bad debt expense. Net sales in our Investment Company Software segment were $33.1 million, an increase of $0.4 million, or 1.2%, versus 2025, driven by an increase in services revenue while subscription revenue was flat.

As expected, ArcSuite’s first quarter growth remained more modest compared to the growth rate from last year’s first quarter, during which net sales increased approximately 20% year-over-year driven by the uplift from the tailored shareholder report solution. We expect a similar dynamic to play out in the second quarter of this year. As Dan noted earlier, we are encouraged by the early positive market reception of ArcFlex and expect meaningful incremental revenue starting in 2027. Adjusted EBITDA margin for the segment was 39.6%, an increase of approximately 50 basis points from 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 $31 million, a decrease of $1.6 million, or 4.9%, from 2025, driven by lower print and distribution revenue, which accounted for more than all of the year-over-year decline. Adjusted EBITDA margin for the segment was 39%, approximately 160 basis points higher than 2025. The increase in adjusted EBITDA margin was primarily due to favorable sales mix and cost control initiatives, partially offset by the impact of lower sales volume. Non-GAAP unallocated corporate expenses were $7.5 million in the quarter, approximately flat to 2025. Free cash flow in the quarter was negative $16 million, an improvement of $35 million compared to 2025.

The year-over-year improvement in free cash flow was primarily driven by favorable working capital, part of which was a result of lower incentive-based payments related to 2025 incentive targets and lower capital expenditures. While our first quarter capital expenditures were lower on a run-rate basis compared to our annual guidance of $55 million to $60 million, we expect our spending to ramp up throughout the year, reaching the range stated in our 2026 guidance. We ended the quarter with $229.9 million of total debt and $203.8 million of non-GAAP net debt, including $121 million drawn on our revolver. As of 03/31/2026, our non-GAAP net leverage ratio was 0.8x.

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 595 thousand shares of common stock during the first quarter for $28.3 million at an average price of $47.58 per share. During the second quarter, the Board of Directors authorized a new share repurchase program of up to $150 million with an expiration date of 12/31/2027. This repurchase authorization, which commenced on 04/17/2026, replaced the prior authorization which had $25.5 million remaining as of 03/31/2026.

We continue to view share repurchases as an important component to drive value for shareholders and as part of our balanced capital deployment plan, which also features organic investments to drive future growth and net debt reduction. As it relates to our outlook for 2026, we expect the unsettled operating environment we experienced during the first quarter to continue, driven by market volatility and ongoing geopolitical uncertainty. Further, we expect the reduction in print and distribution revenue associated with our traditional compliance offerings we highlighted earlier to continue in the second quarter, which historically is comprised of a heavy mix of print and distribution sales driven by the annual proxy season.

This component of our sales profile becoming less significant over time continues to improve our overall sales mix and facilitates our long-term margin expansion. With those factors as the backdrop, we expect consolidated second quarter net sales in the range of $215 million to $225 million and adjusted EBITDA margin in the range of 34% to 36%. Compared to the second quarter of last year, the midpoint of our consolidated revenue guidance, $220 million, implies a modest increase of approximately $2 million, or 1% 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 $40 million to $45 million, which at the midpoint is up approximately $8 million from last year’s second quarter. As a reminder, last year’s second quarter transactional revenue of $34.8 million represented an all-time low in quarterly transactional revenue. In addition, and related to my earlier comments regarding the impact of the transactional environment on certain compliance filings, most notably 8-Ks, our second quarter estimate assumes a modest year-over-year decline in our compliance-based sales within this segment, part of which is related to print and distribution. With that, I will now pass it back to Dan.

Daniel N. Leib: Thanks, Dave. Our strong performance in the first quarter was the result of the historical and current disciplined execution of our strategy, which again demonstrated Donnelley Financial Solutions, Inc.’s ability to perform across varying market conditions. Our focus remains on accelerating our business mix shift by continuing to grow our SaaS revenue base while maintaining share in our core traditional businesses. We will continue to invest to drive growth and support clients. In addition, we will continue to aggressively manage our costs and drive operational efficiencies while maintaining our historical discipline in the allocation of capital.

While uncertainty continues to exist within our broader operating environment, the combination of our strong market position, portfolio of mission-critical regulatory and compliance offerings backed by our deep domain expertise, and financial flexibility position us well. Before we open it up for Q&A, I would like to thank the Donnelley Financial Solutions, Inc. employees around the world. Now with that, we are ready for questions.

Operator: We will now open the call for questions. If you would like to ask a question, please press 1 on your telephone keypad. To withdraw your question, press 1 again. Please pick up your handset when asking a question. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Charles S. Strauzer with CJS Securities. Your line is open. Please go ahead.

Charles S. Strauzer: Hi. Good morning. Thanks for taking my questions. A couple of questions. First, on guidance—if you could maybe expand a little more on the underlying assumptions for Q2, and what you are seeing in the external markets?

David A. Gardella: Yeah. Charlie, it is Dave. Thanks for the question. So, look, I think from a transactional perspective, we said the guidance includes somewhere in the range of $40 million to $45 million, up significantly from last year’s second quarter. I think when you look at what we saw in the first quarter this year—just over $50 million—that started to soften, as we mentioned in the prepared remarks. January and February started out pretty nicely, and then March was much softer with some of the broader geopolitical uncertainty. So far, we have seen that continue throughout April and into May here. And so I think we are just taking a cautious approach on when that might come back.

I do not know. Craig, do you have anything to add to that?

Craig D. Clay: Yeah, Dave, maybe just to put an exclamation point on March: It was a real turning point. Only two times in history have filings declined sequentially from February. The first time was COVID 2020, and now the second is March 2026. So it just underscores how quickly volatility can change issuer behavior. As you turn to April and May, as Dave said, we are cautiously optimistic. It is building back. There have been 12 large IPOs that have priced in April, which is a nice number of $100 million-plus IPOs. Our share of that was 67%, so it highlights both the market share gain as well as the improved conversion as these issuances are accelerating again.

I think another important note: Most of those issuers have adopted ActiveDisclosure as their platform post-IPO, so it reinforces the durability of these relationships beyond the transaction itself and the contracted recurring revenue. There are two IPOs in April that I think are giving the market some foundation. Madison Air, the largest IPO of the year, used ActiveDisclosure for their IPO, as Dave and Dan mentioned in their remarks. This transaction has really anchored April and hopefully gives the market some confidence. The next one is ArcSys, a defense contractor—an approximately $1.1 billion IPO in April—again furthering the investor appetite.

Donnelley Financial Solutions, Inc. is proud to have supported three of the four $1 billion-plus IPOs this year: Madison, Forgem, and ARC. And their aftermarket performance has been pretty good. This week’s and next week’s calendar of IPOs that have said they expect to price is continuing to build. If all of this moves forward, it will equal Q1 for deals over $100 million. Donnelley Financial Solutions, Inc. has a robust pipeline of companies that have confidentially filed that are working through the process. We have a nice pipeline of IPO RFPs, so it suggests a normalized calendar as we move into likely the back half of 2026.

Charles S. Strauzer: Great. And then just on the M&A side—clearly seeing some pickup there. With a kind of benign DOJ/FTC eye on things, are you seeing things percolating behind the scenes on that front as well?

Craig D. Clay: Yes. Donnelley Financial Solutions, Inc.’s M&A business is a great opportunity. We deliver end-to-end support from deal ideation through announced public or private disclosure. Our virtual data room and M&A offering highlight how we support our clients from that early diligence through execution. Q1 was certainly dominated by a few mega deals—same issues with March that we talked about with IPOs. As you look at April and May, M&A momentum remains real, but I think narrow. We are seeing pitch activity and opportunity creation trending positively. So some of the same things you mentioned—we are excited about the future impact of that. Buyers are certainly prioritizing certainty right now, and the Venue forecast is to grow modestly.

We had a large deal in 2025, and as Dan noted earlier, we are encouraged by the end-market performance of our new Venue. We believe we are positioned to capture this incremental demand going forward. When we say we have the newest Venue, it means we are acting as the disruptor. It has been built from the ground up. We are a strong number three in that marketplace, and we are positioned to take share as clients modernize their disclosure. So we are cautiously optimistic in the same way about M&A building throughout 2026.

Charles S. Strauzer: Great. Thank you very much.

Operator: Your next question comes from the line of Kyle David Peterson with Needham. Your line is open. Please go ahead.

Kyle David Peterson: Great. Thank you, and good morning. I wanted to ask a little bit specifically on some of the SEC proposals on annual reporting. I know there are a lot of different puts and takes, and it seems like you have some insulation there. But any color you could give or thoughts on the impact if this does go through and gains a fair amount of adoption with U.S. issuers would be really helpful.

Craig D. Clay: Yeah. This is Craig. We are closely monitoring, obviously, that development—moving from quarterly to semiannual. The SEC proposal is sitting with the Office of Management and Budget. That will be returned to the SEC. We expect that any day now, and soon after that, the proposed rule is expected to be posted for public comment. The Chair has commented several times on semiannual reporting—considering doing this for smaller companies, where perhaps semiannual might be more appropriate for them. So it is unknown what the proposed rule will be. At this stage, whether it is semiannual or not, we likely will see as much or equal or more disclosure.

Whether the SEC continues to require quarterly earnings 8-Ks for large accelerated filers remains to be seen. You also have to weigh how the public debt obligation will factor into this. If a company has public debt, they have to report quarterly. Likely it is just easier to continue that process. You can look to Europe—companies there are given a choice. Half are doing semiannual. If they do that, they often are doing quarterly calls and quarterly disclosures that are as large or comprehensive as before. So what the actual adoption is going to be and what the proposal is—we do not know.

But what is important is the vast majority of our 10-Qs are prepared in ActiveDisclosure, which operates on a subscription model, long-term contracts, and that subscription model helps insulate us from changes in filing frequency. So, again, closely monitoring it. We think any regulatory change is a positive for us.

Kyle David Peterson: Okay. Appreciate all the color there. That is really helpful. And then maybe I wanted to switch over into the softness that you talked about on the 8-K filings. I apologize if I missed this, but could you give any more color on what is driving the softness? Is there actually less activity, or is there more competition? What is the delta there?

David A. Gardella: Yeah, Kyle, I was just going to say it is really tied to the 8-Ks associated with Capital Markets transactions—so the ancillary filings as the transactions progress. We characterize the 8-K as a compliance filing, separate from the transactional activity, but there is some carry-on effect of the lower transactional activity in the market down to some of these 8-Ks and the like.

Kyle David Peterson: Okay. Thank you for the color. And then just last one for me. The SG&A did run a little high this quarter. I know it sounds like there was some additional selling expense. Looking at the implied expense guide for the second quarter, it looks like you get some efficiency back. I know you mentioned some other cost savings. Was there any timing effect on that extra selling expense, or is that the benefit of the cost savings that are already starting to kick in? Any more insight or context into what is driving the operating leverage would be very helpful.

David A. Gardella: Yeah, I will take that one, Kyle. When you look at SG&A, certainly, like you said, up modestly year-over-year. When you look at it as a percent of sales—down modestly. So it is a lot driven by the mix of revenue coming through. With the higher software sales, you tend to have higher gross margin, which we saw in the quarter—up about 40 basis points. Then when you look at the SG&A line, some additional SG&A comes in, but all in, the 50 basis points of EBITDA margin expansion obviously contemplates all that and is really driven by the mix. From a timing perspective, I would say nothing abnormal.

There are always some small puts and takes, but nothing outsized in the quarter. Based on the guidance that we gave for Q2, probably a fairly similar trend in terms of SG&A dollars—year-over-year, a modest increase—and SG&A as a percent of sales pretty close to the comps since last year.

Kyle David Peterson: Okay. Great. Thank you very much.

Operator: Your next question comes from the line of Charles S. Strauzer with CJS Securities. Your line is open. Please go ahead.

Charles S. Strauzer: Hi. Just a quick follow-up. On the conversation you were having about AI earlier, what is the general appetite from your client base in terms of inquiries about AI offerings that you may have or are planning to have? It seems that AI tools could be a highly complementary fit for the underlying software programs that you have as well as the transactional side. Any thoughts there?

Daniel N. Leib: Yeah, Charlie, I can start off. I think it is multifaceted, and it is something we are experimenting with. Specific to the question on client interest, I would say the interest is really high—as it is across all industries. As we have rolled out ActiveIntelligence and been able to get insights from our clients as well, clients want to be absolutely sure from a security, governance, and data perspective that everything is secured. There will be no leakage. Obviously, the work we do from a compliance standpoint needs to be 100% correct. That is also a consideration. But like elsewhere in corporate America, the interest is extremely high.

We are looking at it both on the internal side and breaking it into three buckets. On the internal side, we rely a lot on our vendors who have incorporated artificial intelligence within their offerings. For things that are proprietary for Donnelley Financial Solutions, Inc. on the internal side, we are looking at our own opportunities to build and drive efficiencies and serve clients better. On the product side, we view it as not a feature, but a core part of the offerings—again, with all my comments around the needs for governance, security, etc. It is certainly not going away. We think there will continue to be advancements that will be helpful to us.

We have talked about vertical software and the service that wraps around it that is helpful and can thrive in an artificial intelligence environment. I will see if anyone else on the team wants to weigh in further.

Craig D. Clay: Dan, I will add some context on ActiveIntelligence. ActiveIntelligence is in the market. Clients are not relying on Donnelley Financial Solutions, Inc. simply for a tool, but for an outcome. We really see that playing out with ActiveIntelligence—our AI capability embedded in ActiveDisclosure. It is streamlining client research, comparison, and analysis of SEC filings. A client recently said to us that they used ActiveIntelligence for their 10-K and quickly proved its value. The peer analysis surfaced disclosure that the client had not traditionally included, and having this visibility across peers built confidence in their decision to trust in that disclosure. So artificial intelligence at Donnelley Financial Solutions, Inc. and in ActiveDisclosure is really a force multiplier.

Embedding it into our mission-critical compliance workflows is strengthening client trust, increasing switching costs, and reinforcing our position at the center of that. ActiveDisclosure is a system of record embedded in this high-consequence workflow. It is an excellent opportunity for us to be at the center of this, where accuracy and trust are nonnegotiable, and we think that we are positioned to become even more essential.

Charles S. Strauzer: Great. That is helpful. Thank you.

Operator: There are no further questions at this time. I will now turn the call back to Daniel N. Leib for closing remarks.

Operator: Dan, over to you.

Daniel N. Leib: Thank you, Kara, and thanks everyone for joining. We look forward to connecting in the near term. I will pass it back to Kara to close it out.

Operator: Thank you. This concludes today’s call. Thank you for attending, and you may now disconnect.

Unknown Speaker: Thank you.