Executive Summary

Q2 2025 delivered mixed results: Adjusted EPS of $1.49 beat Wall Street consensus by $0.07*, while revenue of $218.1M missed by ~$7.4M*; Adjusted EBITDA was $76.3M with a 35.0% margin, the second-highest quarterly EBITDA margin in company history .
Software momentum continued: record software solutions net sales of $92.2M (+7.7% YoY) with ActiveDisclosure and Arc Suite up ~15% in aggregate; software mix rose to 42.3% of net sales, supporting the software-centric strategy .
Transactional headwinds persisted: capital markets transactional revenue was $34.8M—the lowest quarterly level in company history—pressuring total net sales (-10.1% YoY) and segment volumes, while print & distribution declined ~26% due to secular and regulatory (TSR) impacts .
Cash generation and capital returns were strong: Q2 free cash flow was $51.7M, and DFIN repurchased 787,152 shares for $34.3M; net leverage remained low at 0.7x, supporting disciplined buybacks and investment .
Q3 2025 guidance embeds conservatism amid low visibility: revenue of $165–$175M, Adjusted EBITDA margin of 23–25%, and capital markets transactional revenue of $35–$40M; management noted intra-quarter improvement but maintained caution on deal timing .

What Went Well and What Went Wrong

What Went Well

Record software quarter: “Record quarterly software solutions net sales of $92.2 million…driven by…ActiveDisclosure and Arc Suite, which grew approximately 15% in aggregate” and software mix rose to 42.3% (vs. 35.3% LY), reinforcing the transformation .
Margin resilience: Adjusted EBITDA margin of 35.0% despite weak transactions, reflecting evolving mix and structural cost changes; trailing four-quarter EBITDA margin at 29.1% underscores durability .
Strong cash conversion and disciplined capital allocation: Q2 free cash flow of $51.7M (up $14.9M YoY) on improved working capital and lower capex; $34.3M in buybacks at ~$43.56 per share; net leverage 0.7x .

What Went Wrong

Top-line pressure: Total net sales fell 10.1% YoY to $218.1M on lower print/distribution and reduced capital markets transactional revenue, only partially offset by software growth .
Transactional trough: Capital markets transactional revenue was $34.8M, at the low end of expectations and the lowest quarterly level on record, as April volatility weighed on IPO/M&A, with improvement only as the quarter progressed .
Print headwinds intensified: Print & distribution net sales declined ~26% YoY and segment investment companies CCM fell 25% YoY, driven by TSR-related page count reductions and timing shifts, with management expecting ongoing secular declines .

Financial Results

Consolidated P&L vs. prior quarters and consensus

Metric	Q4 2024	Q1 2025	Q2 2025 (Actual)	Q2 2025 (Consensus)*
Total Net Sales ($M)	156.3	201.1	218.1	225.5*
GAAP Diluted EPS ($)	0.21	1.05	1.28	—
Non-GAAP Diluted EPS ($)	0.40	1.24	1.49	1.42*
Adjusted EBITDA ($M)	31.7	68.2	76.3	76.0*
Adjusted EBITDA Margin (%)	20.3%	33.9%	35.0%	—
Non-GAAP Gross Margin (%)	59.9%	63.7%	63.7%	—

Values marked with * are from S&P Global consensus via GetEstimates.

Notes:

YoY: revenue -10.1%, GAAP EPS $1.28 vs $1.47, non-GAAP EPS $1.49 vs $1.66, Adjusted EBITDA $76.3M vs $87.2M; declines driven by weaker capital markets transactions and lower print .

Segment Net Sales (Q2 2025 vs. Q2 2024)

Segment	Q2 2024 ($M)	Q2 2025 ($M)	YoY %
Capital Markets – Software Solutions	57.3	59.1	3.1%
Capital Markets – Compliance & Comms Mgmt	113.8	93.5	-17.8%
Investment Companies – Software Solutions	28.3	33.1	17.0%
Investment Companies – Compliance & Comms Mgmt	43.3	32.4	-25.2%
Total	242.7	218.1	-10.1%

Segment Adjusted EBITDA Margin

Segment	Q2 2024	Q2 2025
Capital Markets – Software Solutions	37.0%	37.9%
Capital Markets – Compliance & Comms Mgmt	40.2%	39.4%
Investment Companies – Software Solutions	39.2%	42.9%
Investment Companies – Compliance & Comms Mgmt	42.3%	38.9%
Consolidated	35.9%	35.0%

KPIs and Cash/Leverage

KPI	Q1 2025	Q2 2025
Software Solutions Net Sales ($M)	84.6	92.2
Software as % of Net Sales	42.1%	42.3%
Capital Markets Transactional Net Sales ($M)	48.6	34.8
Non-GAAP Gross Margin (%)	63.7%	63.7%
Free Cash Flow ($M)	(51.0)	51.7
Share Repurchases (shares/$M)	~861k / $41.8M	787,152 / $34.3M
Net Leverage (x)	0.8x	0.7x
Total Debt ($M)	189.5	190.1
Cash & Equivalents ($M)	16.2	33.8

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Total Net Sales	Q3 2025	—	$165M–$175M	New
Adjusted EBITDA Margin	Q3 2025	—	23%–25%	New
Capital Markets Transactional Net Sales	Q3 2025	—	$35M–$40M	New

Context: Management framed Q3 guidance as conservative given limited visibility on deal timing, but noted sequential improvement trends and potential upside if intra-quarter strength persists .

Earnings Call Themes & Trends

Topic	Q4 2024 (Prev)	Q1 2025 (Prev)	Q2 2025 (Current)	Trend
AI/Technology & Automation	Investing in software platform; Venue growth; AD/Arc momentum	Continued investment in automation and AI-driven tools, including internal agentic AI, to streamline workflows	Emphasis on software-led model; recurring products driving growth and margin resilience	Positive, steady investment
Capital Markets Transactions	2024 event-driven revenue at multi-year lows; disciplined on low-quality SPACs	Modest rebound early Q1 but volatility; guidance embeds soft environment	Q2 transactional revenue $34.8M, lowest quarterly level; improved sequentially from April to June	Stabilizing off trough late in quarter
Print & Distribution	Ongoing secular decline; Q4 2024 down sharply YoY	Anticipated Q2 print decline from TSR timing and secular headwinds	Q2 print down ~26% YoY; TSR reduced page counts significantly in peak season	Structural decline continues
Regulatory Tailwinds (TSR)	TSR catalyzed Arc Suite growth; $6M 2024 software rev; $11–$12M full-year run-rate expected	TSR continues to lift H1 2025, overlap in H2; Arc Suite growth double-digit	Q2 Arc Suite strength; note normalization as TSR overlaps in Q3	Tailwind moderating into H2
Cash/Capital Allocation	Strong FCF; buybacks; low leverage	Aggressive repurchases at lower prices; leverage ~0.8x	FCF $51.7M; $34.3M buybacks; net leverage 0.7x; new $150M authorization	Continued discipline
Pension	Plan to terminate pension in 2025	—	Process underway; expect annuitization in Q3; cash outlay update forthcoming	De-risking progressing

Management Commentary

Strategy and mix: “We continue to see proof points that support the success of our software-focused strategy… Software solutions net sales made up 42.3% of second-quarter 2025 total net sales… positioning us well to achieve our long-term target of deriving 60% of revenue from software by 2028.” – CEO Dan Leib .
Market backdrop and margins: “We delivered Adjusted EBITDA margin of 35.0% in the quarter… reflecting our evolving sales mix and permanent changes to our cost structure… improved working capital management combined with lower capital expenditures resulted in year-over-year increases in both operating cash flow and free cash flow.” – CEO Dan Leib .
Transactional dynamics: “In the second quarter, we recorded $34.8 million of capital markets transactional revenue… the lowest level of quarterly transactional revenue in our history,” with sequential improvement through the quarter .
Software drivers: “ActiveDisclosure sales grew approximately 11%… Venue posted $37.3 million in revenue… down ~1% YoY against a 38% growth comp last year, with ~22% sequential increase from Q1.” – CFO Dave Gardella .

Q&A Highlights

Outlook conservatism on transactions: Management guided Q3 capital markets transactional revenue to $35–$40M, noting limited visibility and aiming not to “get too far over our skis,” while indicating high-end or above if intra-quarter improvement persists .
IPO/M&A color: July IPO activity improved YoY in count but at lower valuations; pipeline is building but still below historical norms; summer seasonality is a headwind .
Segment expectations: ActiveDisclosure to continue double-digit growth; Arc Suite growth to normalize as TSR overlaps in H2; Venue roughly flat YoY in Q3; print demand to continue secular decline .
Capital allocation: Share repurchases remain a key lever, executed more aggressively at lower prices; discipline on leverage maintained .
Pension de-risking: Pension plan annuitization expected in Q3 with cash impact update forthcoming .

Estimates Context

Q2 2025 vs. consensus (S&P Global):
- Non-GAAP/Adjusted EPS: $1.49 vs. $1.42* → Beat by $0.07 .
- Revenue: $218.1M vs. $225.5M* → Miss; driven by weaker transactional and print volumes despite software growth .
- Adjusted/EBITDA: $76.3M vs. $76.0M* → Approximately in line .

Values marked with * are S&P Global consensus from GetEstimates.

Implications: Modest EPS beat on mix and cost discipline despite revenue miss; estimate revisions may edge down for revenue in near term while EPS holds firmer given margin durability and cash conversion.

Other Q2 2025 Press Releases

DFIN to announce second-quarter results and host call on July 31, 2025 (scheduling press release) .
No additional Q2-operational press releases materially impacted the quarter’s financial narrative based on available filings reviewed.

Key Takeaways for Investors

Software-led transition is working: software net sales grew 7.7% with mix up to 42.3%, supporting resilient 35% margin despite cyclical transaction lows .
Revenue miss tied to transactions/print likely transitory; sequential transaction improvement into May/June and conservative Q3 guide set a lower bar for upside if activity builds .
Strong FCF and low leverage enable continued buybacks and investment; new $150M authorization provides capacity for accretive repurchases .
TSR tailwind moderates in H2; model Arc Suite growth normalizing while ActiveDisclosure continues double-digit momentum; Venue guided ~flat in Q3 .
Watch intra-quarter deal flow: management indicated potential to exceed Q3 transactional guidance if sequential strength continues; summer seasonality is a risk .
Medium-term: mix shift toward recurring software plus structural cost changes position DFIN for higher through-cycle margins and cash conversion as transactions normalize .

Guidance Changes (Detail)

See table above: Q3 2025 revenue $165–$175M, Adjusted EBITDA margin 23–25%, capital markets transactional $35–$40M . Management highlighted cautious stance due to limited timing visibility, though month-over-month improvement in Q2 suggests potential upside if trends persist .

Citations to company filings and transcripts are included after each data point. Values marked with * are retrieved from S&P Global consensus via GetEstimates.

Donnelley Financial Solutions, Inc. (DFIN)·Q2 2025 Earnings Summary