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Donnelley Financial Solutions (NYSE:DFIN) reported first-quarter 2026 results that management said extended the “positive momentum” seen late last year, delivering year-over-year net sales growth, higher Adjusted EBITDA, margin expansion, and improved cash flow despite what executives described as a volatile market backdrop.
President and CEO Dan Leib said the company posted first-quarter net sales of $205.5 million, up 2.2% from the first quarter of 2025. Adjusted EBITDA rose to $70.6 million, with an Adjusted EBITDA margin of 34.4%. Leib said both profitability measures were “significantly stronger than historical periods with similar revenue profiles,” attributing the performance to net sales growth and cost management.
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Leib highlighted continued progress in shifting the business toward software, with software solutions net sales rising 8.4% year over year. Software represented 44.6% of total net sales in the quarter, about 250 basis points higher than a year ago. On a trailing four-quarter basis, software solutions made up 47.4% of sales, roughly 460 basis points higher than the comparable trailing period, which Leib said supports the company’s target of getting to about 60% of total net sales from software solutions by 2028.
While print and distribution net sales increased moderately in the quarter due to a large special proxy project, Leib said the company’s long-term view on print demand remains unchanged. DFIN continues to expect secular decline in printed products in the range of 5% to 6% annually, with fluctuations based on transactional volumes.
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A key driver of software growth was ActiveDisclosure, the company’s recurring compliance software product. Leib said ActiveDisclosure delivered approximately 21% sales growth, marking its sixth consecutive quarter of double-digit sales growth, supported by growth in client count and higher average value per client. He tied that momentum to the company’s transition from the legacy platform to “new AD,” as well as improved sales execution.
Leib also noted that certain traditional activities are migrating onto ActiveDisclosure, including a higher number of transactional documents and proxy statements completed on the platform compared to the prior-year quarter, a trend he expects to continue.
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In April, DFIN made its Active Intelligence AI capabilities available to all ActiveDisclosure clients after initially rolling them out to select customers in the fourth quarter of 2025. Leib said the release advances the company’s effort to “responsibly deploy AI” to improve client productivity and efficiency, while maintaining standards around security, privacy, and data governance.
Venue, DFIN’s virtual data room offering, delivered roughly 7% year-over-year sales growth in the quarter, which Leib attributed to resilient demand for data rooms and momentum in adoption of “new Venue,” introduced in the third quarter of 2025. Leib said the rebuilt product is designed to improve speed and simplicity, governance of access and permissions, and usability for deal teams. He added that the company expects the upgraded product to contribute to Venue’s growth in 2026 as adoption ramps.
Leib also discussed ArcFlex, a newer module within ArcSuite launched in the third quarter of 2025 and aimed at private investment institutions. He said DFIN signed its first ArcFlex contract in the first quarter with an alternative asset manager using the product to modernize financial and regulatory reporting workflows. Leib said the company expects ArcFlex commercial activity to scale through 2026, with “more meaningful incremental revenue starting in 2027.”
CFO Dave Gardella said total net sales rose $4.4 million year over year, driven by software solutions growth and higher event-driven transactional revenue in capital markets, including an increase in print and distribution revenue tied to the special proxy. Those gains more than offset declines in capital markets and investment companies compliance revenue, which Gardella said was largely tied to reduced demand for printed products.
First-quarter adjusted non-GAAP gross margin was 64%, about 30 basis points higher than a year ago, driven by software growth, cost control initiatives, and price uplifts, partially offset by higher print and distribution volume. Adjusted non-GAAP SG&A expense was $61 million, up $1.1 million year over year, primarily due to higher selling expense associated with higher sales volume, partially offset by cost controls. As a percentage of net sales, adjusted non-GAAP SG&A fell about 10 basis points to 29.7%.
Capital Markets – Software Solutions: Net sales of $58.6 million, up 12.9%, driven primarily by ActiveDisclosure growth of about 21%. Subscription revenue increased about 17% and service and support revenue increased about 36%, which Gardella tied to migration of traditional activities onto ActiveDisclosure, including corporate proxy and transactional filings.
Venue: Net sales increased about $2 million, or 7%. Gardella said large projects that helped the fourth quarter of 2025 were less significant in the first quarter, but underlying activity remained resilient. Segment Adjusted EBITDA margin was 32.8%, up about 600 basis points, primarily due to higher net sales and cost controls, partially offset by higher bad debt expense.
Capital Markets – Compliance & Communications Management: Net sales of $82.8 million, down 1.3%, driven by lower compliance volume, partially offset by higher transactional revenue. Gardella said transactional revenue was $50.8 million, above the high end of expectations and up about 5% year over year. Segment Adjusted EBITDA margin was 40.7%, down about 300 basis points, primarily due to higher mix of print and distribution sales.
Investment Company – Software Solutions: Net sales of $33.1 million, up 1.2%, driven by higher services revenue while subscription revenue was flat. Gardella said ArcSuite growth was expected to be more modest versus the prior-year quarter, which benefited from a tailored shareholder report uplift. Segment Adjusted EBITDA margin was 39.6%, up about 50 basis points.
Investment Company – Compliance & Communications Management: Net sales of $31 million, down 4.9%, driven by lower print and distribution revenue. Segment Adjusted EBITDA margin was 39%, up about 160 basis points due to favorable mix and cost controls, partially offset by lower volume.
Free cash flow in the first quarter was negative $16 million, an improvement of $35 million compared with the first quarter of 2025. Gardella attributed the year-over-year improvement to favorable working capital, including lower incentive-based payments tied to 2025 targets, and lower capital expenditures. He said capital spending was below the annual guidance run rate but is expected to ramp through the year, consistent with 2026 capex guidance of $55 million to $60 million.
DFIN ended the quarter with $229.9 million of total debt and $203.8 million of non-GAAP net debt, including $121 million drawn on its revolver. As of March 31, 2026, non-GAAP net leverage was 0.8x, Gardella said.
The company repurchased about 595,000 shares in the first quarter for $28.3 million at an average price of $47.58 per share. Gardella also said the board authorized a new share repurchase program of up to $150 million, expiring Dec. 31, 2027, commencing April 17, 2026, replacing the prior authorization that had $25.5 million remaining at quarter end.
For the second quarter of 2026, Gardella said DFIN expects consolidated net sales of $215 million to $225 million and an Adjusted EBITDA margin of 34% to 36%. At the midpoint, revenue implies an increase of about $2 million, or 1%, year over year, as growth in software solutions—“predominantly ActiveDisclosure and Venue”—and higher capital markets transactional revenue are expected to more than offset continued declines in print and distribution.
Guidance assumes capital markets transactional revenue of $40 million to $45 million, which Gardella noted would be up versus the prior-year second quarter, when transactional revenue of $34.8 million was “an all-time low.” He added that the company expects continued declines in print and distribution tied to traditional compliance offerings, even as that mix shift supports long-term margin expansion.
In the Q&A, Craig Clay, President of Global Capital Market, said March 2026 marked a sharp change in filing activity, calling it a “real turning point.” Clay said only two times in history have filings declined sequentially from February—during COVID-19 in 2020 and in March 2026—underscoring how quickly volatility can affect issuer behavior.
Clay said April showed signs of improvement, pointing to “12 large IPOs” priced in April and stating DFIN’s share of those deals was 67%. He also said many of those issuers adopted ActiveDisclosure post-IPO, supporting recurring revenue durability beyond the transaction itself. Clay cited Madison Air as “the largest IPO of the year” and Arxis, a defense contractor, as a $1.1 billion IPO in April, and said the company has a “robust pipeline” of confidential filings and IPO RFPs that could support a more normalized calendar in the second half of 2026.
On M&A, Clay said momentum “remains real, but…narrow,” with pitch activity and opportunity creation trending positively, while buyers prioritize certainty. He also described new Venue as a rebuilt product and said DFIN is “a strong number three in that marketplace” and positioned to take share as clients modernize disclosure workflows.
Asked about potential SEC changes to reporting frequency, Clay said DFIN is monitoring developments around moving from quarterly to semi-annual reporting. He said the proposed rule is expected to be posted for public comment after the Office of Management and Budget returns it to the SEC, and that details remain uncertain, including potential applicability to smaller companies and ongoing requirements for quarterly earnings disclosures or 8-Ks. Clay added that companies with public debt may still need to report quarterly and that in Europe, where companies have a choice, many still provide quarterly calls and disclosures. He said a key factor for DFIN is that “the vast majority of our 10-Qs are prepared in ActiveDisclosure,” which is subscription-based and helps insulate the company from filing frequency changes, adding that “any regulatory change is a positive for us.”
Management also addressed softness in Form 8-K filing demand. Gardella said it is tied to lower capital markets transaction activity and the related “ancillary filings” that occur as transactions progress.
On AI, Leib said customer interest is “really high,” but clients emphasize security, governance, and data protection, alongside accuracy requirements for compliance work. Clay said Active Intelligence is embedded within ActiveDisclosure to streamline research and analysis of SEC filings, describing it as a “force multiplier” within “mission-critical compliance workflows” where “accuracy and trust are non-negotiable.”
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.
The article "Donnelley Financial Solutions Q1 Earnings Call Highlights" was originally published by MarketBeat.