Donnelley Financial Solutions, Inc. (DFIN) Q4 2018 Earnings Report, Transcript and Summary

Welcome to the Donnelley Financial Solutions Fourth Quarter 2018 Results Conference Call. My name is Silvia, and I will be your operator for today’s call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. [Operator Instructions] Please note that this conference is being recorded. I will now turn it over to Justin Ritchie. Justin, you may begin.

Thank you, Silvia. Good morning, everyone, and thank you for joining the Donnelley Financial Solutions fourth quarter 2018 results conference call. This morning we released our earnings report, a copy 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 uncertainty. For a complete discussion, please refer to the cautionary statements included in our earnings release and further details in our annual report on Form 10-K and other filings with the SEC. Further, we will discuss non-GAAP financial information. We believe the presentation of non-GAAP results 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 press release and related footnotes for GAAP information and a reconciliation of GAAP to non-GAAP information. I’m joined this morning by Dan Leib, Dave Gardella and Tom Juhase. I will now turn the call over to Dan.

Thank you, Justin, and good morning, everyone. 2018 was a year of continued transformation. We made significant progress against our strategic priorities, including maintaining strong market share in our core markets, while continuing to evolve our revenue mix. The sale of the Language Solutions business and the purchase of eBrevia furthered our revenue mix shift, while at the same time allowing us to strengthen our balance sheet and create additional financial flexibility. The increased investment in talent and in technology solutions to meet the needs of clients positions us for long-term success. Regarding our 2018 financial performance, we reported net sales of $963 million and non-GAAP adjusted EBITDA of $154.9 million. We also responsibly managed our balance sheet, reducing our total debt by $95.6 million from year-end 2017. Over the last two years, we've reduced our net debt by $235 million, representing a reduction in net leverage from 3.4 times to 2 times. Highlighting the year was the accelerated pace of our SaaS revenue growth, which grew at 15.4% in 2018. We saw a strong double-digit net sales growth in our SaaS offerings throughout 2018 and we expect this trend to continue in 2019. During the fourth quarter, positive trends within our SaaS offerings, which were up 19.3% company-wide as well as a rebound in our investment markets offerings, were overshadowed by a very challenging market for corporate transactions in the latter half of the fourth quarter. On a consolidated basis, organic net sales were down 1.4% year-over-year, driven by an 11.5% year-over-year decline in our fourth quarter global transactional net sales, which more than offset 4.2% growth in the remainder of our business. Despite stable market share performance, U.S. capital markets transaction activity was impacted negatively by the capital market volatility, primarily in the United States in November and December. This market volatility coupled with broader geopolitical uncertainties during the fourth quarter created a dampening effect on deal completion in the IPO, debt, and M&A markets with some companies opting to delay transactions into 2019. This was further exacerbated by the government shutdown beginning in late December as the SEC had limited ability to review filings, provide interpretive advice, issue no action letters, open new funds, and conduct their normal business activities. Specifically, global IPO activity was down significantly in the quarter and no high-yield debt deals completed in December. Wrapping up on transactions, while it's been a challenging environment over the last few months, the change of transaction markets can be swift and we are pleased to see a high level of activity returning to the pipeline since the government reopened on January 25 and look forward to completing more deals in the coming months. As I mentioned earlier, fourth quarter SaaS revenue grew by 19.3% year-over-year led by growth in our FundSuiteArc platform followed by Venue and ActiveDisclosure. A key driver of this growth was the implementation of our N-CEN and N-PORT solution within FundSuite Arc. We led the first successful submission of form N-CEN with the SEC and are currently preparing clients for the even more complex and data-intensive monthly N-PORT filings beginning in April 2019. In addition to an increase in N-CEN and N-PORT filings, we saw a strong global growth in the quarter driven by third-party administrator and mutual fund regulatory and reporting growth as well as strong growth in the EU related to the PRIIPs regulation. Specifically, content management accelerated as asset managers continued to streamline their operations reducing turnaround times and costs by moving away from traditional service to our SaaS solutions. Industry-leading mutual fund and insurance companies expanded their usage of our ArcPro platform, a dynamic content management software that allows our clients to cost efficiently, create consistent and accurate prospectuses and statements of additional information online. We also saw a strong growth in our ArcReporting solution with asset managers and third-party administrators moving away from manual workflows to our enterprise platform solution. We expect this trend to continue and see a solid pipeline ahead as the industry accelerates their need to increase efficiency and lower cost. Shifting to our data room software offering, we are proud that our Venue, Virtual Data Room product was named America's Data Room of the year by the Global M&A network. This recognition comes on the heels of Venue receiving the Global Data Room of the year award earlier in the year. Now, let's talk about ActiveDisclosure platform, where we are helping clients prepare for the SEC's new in-line XBRL reporting requirements taking effect this year. Our financial disclosure technology reduces review times by an average of 40% and leads the industry in accuracy. As we planned for the 2019 iXBRL mandate, which is a complex reporting requirement, we are delivering technology solutions and regulatory expertise to our clients that comes from being the largest filer with the SEC. Lastly, consistent with the comments we provided earlier in 2018 within our U.S. Investment Markets business, we saw a turnaround with net sales growth of 5.3% year-over-year supported by strong SaaS growth, increased fund growth and improved performance in our health care business, driven by increased digital print and distribution of pre-enrollment materials. Within our core investment market compliance business, there was increased proxy activity during the back half of the year. Focusing now on our operating priorities, we continued to execute on our long-term strategy and achieved several key milestones in the fourth quarter that sets us up for long-term success. Our commitment to invest responsibly in innovation and technology was exemplified in the purchase of the remainder of eBrevia in December. Our relationship with eBrevia began in 2015 with a minority investment in a commercial agreement. With the help of our sales team and diverse client base, eBrevia has managed to separate from the competition. eBrevia's platform integrates with DFIN's venue data room solution, providing intelligence on end-to-end deals. Clients are already benefiting from AI-backed data extraction, lightning-fast efficiency, plus the integration with end data security within Venue. Most importantly, the platform aligns with our commitment to providing clients with best-in-class secured data aggregation, due diligence, compliance, and risk-management solutions as well as additional applications for our a broader business. Together with eBrevia, we are excited to provide superior artificial intelligence-based solutions to our global clients. In November, we launched our go-to-market brand identity, DFIN which aligns to our vision and strategy in the global risk and compliance market and highlights the increasingly digital nature of our suite of global risk and compliance solutions. In our industry, we see technology evolve and regulation shift. We are committed to deploying technologies such as machine learning and data analytics to unlock the unique potential of clients' risk and compliance needs. Our fourth quarter and overall 2018 performance reflects our evolution and business mix shift to support our clients when, where, and how they want to work in a digital world. We're pleased with the steady pace of our evolving revenue mix towards SaaS and technology-enabled services and will remain diligent in managing the business effectively through this evolution. With that, I will turn it over to Dave to give more details on our financial performance and guidance for 2019. Dave?

Thank you, Dan, and good morning everyone. Before we discuss our fourth quarter financial performance, I'd like to recap a significant item in the quarter that impacts our year-over-year comparability. As we announced on the last earnings call, we completed the sale of our Language Solutions business in the third quarter of 2018. Our fourth quarter 2018 results exclude Language Solutions while the fourth quarter of 2017 includes Language Solutions for the entire quarter. As I mentioned on our third quarter call, the sale negatively impacted our reported revenue comparison by $21.2 million and negatively impacted our non-GAAP adjusted EBITDA comparison by approximately $3.9 million in the quarter, inclusive of net stranded cost. Keeping this in mind, let's review our fourth quarter financial results. On a consolidated basis, net sales for the fourth quarter of 2018 were $200.3 million, a decrease of $24.5 million or 10.9% from the fourth quarter of 2017, primarily due to sales of Language Solutions. After adjusting for the sale of Language Solutions changes and foreign exchange rates and the impact of the adoption of the new revenue recognition standard, organic net sales decreased 1.4%. Continued strong growth in our SaaS offerings, led by FundSuite Arc, combined with a rebound in activity within the balance of our Investment Markets business nearly offset the decline in U.S. capital markets transaction activity that Dan mentioned earlier. Adjusted for the sale of Language Solutions, services net sales in the fourth quarter decreased by $7.4 million or 5.3% as compared to the fourth quarter of 2017, driven by lower U.S. capital markets transactional activity, partially offset by continuing growth in our SaaS offerings. Products net sales increased by $4.1 million or 6.4% due to a rebound in investment markets, mutual fund and healthcare volumes in the quarter. Fourth quarter gross margin was 35.2% or 310 basis points lower than the fourth quarter of 2017, primarily driven by an unfavorable mix between higher-margin services including transactional revenue and lower margin products net sales. Non-GAAP SG&A expense in the quarter was $51.1 million, $2.9 million lower than the fourth quarter of 2017. As a percentage of revenue, non-GAAP SG&A was 25.5% or 150 basis points higher than the fourth quarter of 2017, primarily due to the sale of Language Solutions and the associated stranded costs as well as investments in our strategic priorities. Our fourth quarter non-GAAP adjusted EBITDA was $19.4 million, a decrease of $12.7 million from the fourth quarter of 2017, primarily driven by the weak U.S. capital markets transactional activity and the sale of Language Solutions which as I noted earlier negatively impacted the fourth quarter comparison by $3.9 million. Weakness in the U.S. capital markets transactional activity also negatively impacted our non-GAAP adjusted EBITDA margin in the quarter. Turning now to our segment results, net sales on our U.S. segment were $170.7 million in the fourth quarter of 2018, a decrease of 10% from last year's fourth quarter. On an organic basis, after adjusting for the sale of Language Solutions and the impact of the new revenue recognition standard, net sales were down 5.6%. Net sales in U.S. capital markets decreased 13.1% on an organic basis, primarily due to weak transactional activity, again driven by a significant reduction in IPOs and debt deals in the later part of the quarter. This was partially offset by net sales in U.S. investment markets, which increased 4.1% on organic basis, driven by growth in our SaaS offerings along with a rebound in mutual fund and healthcare volumes. Non-GAAP adjusted EBITDA margin for this segment of 14.2% decreased 490 basis points from the fourth quarter of 2017, primarily due to lower capital markets transactional activity. Net sales in our international segment were $29.6 million in the fourth quarter of 2018, a decrease of 15.7% from the fourth quarter of last year. On an organic basis, excluding the impact of the Language Solutions disposition and unfavorable impact of changes in foreign exchange rates and the new revenue recognition standard, net sales in the fourth quarter were up 21.7%, driven by growth in our SaaS offerings and continued strong transactional activity in Asia. Non-GAAP adjusted EBITDA margin for this segment of 6.8% decreased 60 basis points from the fourth quarter of 2017, due to increased technology expenses offset by more favorable mix of business due to the sale of Language Solutions. Our fourth quarter 2018, non-GAAP unallocated corporate expenses excluding depreciation and amortization were $6.8 million and were flat with the fourth quarter of 2017. Consolidated free cash flow in the quarter was $41.6 million, $8.3 million lower than the fourth quarter of 2017, primarily due to lower EBITDA, increased capital expenditures, primarily related to capitalized software development costs related to our growth initiatives, along with less cash generated by working capital. Our controllable working capital rate, which we define as accounts receivable plus inventory less accounts payable, as a percent of our trailing 3-month annualized net sales increased approximately 60 basis points from 13.4% at year end 2017 to just over 14% at year end 2018, primarily due to higher accounts receivable balances. We are targeting improvement in this area in 2019. We ended the quarter with $362.7 million of total debt, and $315.4 million of net debt with nothing drawn on our revolver, and we had net available liquidity of $302 million. As of December 31, 2018, our net leverage ratio was 2.0 times down 0.4 times from a year ago Lastly, at year end 2018, our pension and other post-retirement plans were $52.5 million under-funded, an improvement in funding levels of $2.2 million compared to year end 2017. Before I turn it back to Dan, I again want to mention the impact to our year-over-year comparability in 2019 related to the sale of Language Solutions which we sold in the third quarter of 2018. The Language Solutions -- the sale of Language Solutions negatively impacts over 2019 year-over-year comparisons by approximately $42 million in revenue and approximately $3 million in EBITDA over the first three quarters of the year. The year-over-year revenue impacts for Q1, Q2 and Q3 are $19 million, $20 million and $3 million, respectively. The corresponding year-over-year EBITDA impacts inclusive of stranded costs are $1 million in Q1, $1.5 million in Q2, and $0.5 million in Q3. With that covered, let me now provide some color on the full year 2019 guidance summarized in this morning's press release. We remain excited about the growth we're seeing in our SaaS solutions. However, given the state of this transactional market that Dan described earlier, we're taking a cautious approach to our initial guidance. We are seeing high levels of activity in our current transactional pipeline, but deal completion is ramping up as companies receive feedback from the SEC. As a reminder, we recognized revenue on transactions when our work on the deal is complete. We do expect these deals to ultimately come to market, but the way is effectively shortening our transactions year. This results in our expectation for less overall transactional net sales in 2019 with the first quarter being down year-over-year followed by growth in the last three quarters. To mitigate the expected decrease in transactional net sales and profits, we are making the necessary adjustments to our operating plan to achieve modest non-GAAP EBITDA margin growth for the year, while also continuing to invest in the SaaS solutions and technology enabled services that will drive the future organic growth outlined in our long-term financial model. Specifically, we expect 2019 total net sales to be in the range of $910 million to $940 million, representing organic growth of approximately 0.4% at the mid-point, as SaaS growth is projected to continue to grow in the mid-teens and more than offsets any year-over-year declines in transactional and print-related net sales. We expect our non-GAAP adjusted EBITDA to be in the range of $145 million to $155 million. Depreciation and amortization is expected to be approximately $48 million. We expect interest expense of approximately $35 million. Our full year non-GAAP tax rate is expected to be in the range of 29% to 31%. We project the full year fully diluted weighted average share count to be approximately 35 million shares. And lastly, we expect capital expenditures in the range of $40 million to $45 million, with free cash flow also in the range of $40 million to $45 million. Regarding timing and seasonality, we expect the first quarter to have a difficult year-over-year comparison due to the sale of Language Solutions, which as I mentioned negatively impact first quarter net sales and EBITDA comparisons by $19 million and $1.5 million respectively, along with the headwinds facing U.S. capital markets transaction. In total, we're expecting first quarter net sales to be in the range of $220 million to $230 million, down approximately 5% year-over-year when excluding the impact of Language Solutions as SaaS growth is expected to be strong and should partially offset the delays in completing transactions. While we expect to see the pace of transactional deals pickup starting in March, our assumption for the full year is that transactional net sales will be down approximately 4% versus full year 2018. We'll continue to keep you updated on how transactional activity levels and deal completions are progressing as the year goes on. Also from a seasonality perspective our normal timing of cash flow has us a net user of cash in the first half of the year generating more than all of our annual cash flow in the back half of the year driven by the peak proxy season in the second quarter. Given the transactional headwind that we will face certainly in the year, we expect our seasonality of cash flow in 2019 to be even more heavily weighted for the back half of the year compared to a more difficult year. In summary, we're pleased with the continued success we're seeing in SaaS and believe that the fourth quarter growth of 19.3% provides additional proof that our strategy to continue to invest in these offerings is sound. As we've seen transactions will continue to be variable. So we will closely monitor the relative strength of our end markets adjusting our plans as needed to drive long-term growth while also achieving improvements in our non-GAAP adjusted EBITDA margin and free cash flow. And with that, I'll turn it back to Dan.

Thank you, Dave. We've started to see encouraging activity in the market and have a strong pipeline. While the transactional side of our business is market-sensitive we are confident that an open government, normalize valuations and a return of constructive investor sentiment will provide the foundation for solid 2019 despite an effectively shorter year on which we transact. Looking ahead, our long-term strategic plan remains unchanged. We are focused on driving our strategy we're a growth company in the digital world while enabling our clients to navigate a complex risk and compliance environment. In 2019, you can expect continued progress on the initiatives outlined in our strategic plan with a specific focus on our operating priorities including change in the mix of business, protecting our current market position and reshaping our culture. As we execute our strategy we will continue to explore the M&A market looking for opportunities to accelerate our strategic evolution. As we have proven we will also continue to be disciplined around all capital deployment. We feel very good about what we've invested back into the business and the pace at which we're proceeding. And with that, let's open the line for Q&A.

Thank you. We’ll now be conducting a question-and-answer session. [Operator Instructions] And our first question comes from Peter Heckmann from D.A. Davidson.

Good morning, gentlemen. Thanks for taking my questions. On the N-CEN/N-PORT opportunity, did starting to generate some revenue in the fourth quarter did that pull forward that benefit? And can you talk about have you been able to fine-tune your forecast at all about the revenue benefit from both of those new rule changes?

Yeah, Pete this is Dave. So thanks for the question. We did start to see some of the benefits from some of those filings. I think more to come in 2019. As you know, the more significant impacts start to hit us in April of 2019, and we should see some incremental growth year-over-year there.

Okay. And then eBrevia, should we assume fairly small revenue contribution, couple of million maybe?

Yes, I think a fair assumption. As we look at its integration with Venue and we have robust plans with Venue, we see opportunity as a stand-alone and then opportunity as an integrated offering with Venue. So, I think relative to its impact overall, I think your comment of not being a huge number makes sense. So, I think at some point it gets hard to know how much Venue sales are driven because of the integrated offering. So as we think about it, we think of it in those two lanes, independent and then as part of Venue. But I think as the independent piece, I think that's a fair way to think about it.

Yes. Pete, its Tom Juhase. So, it clicks a couple of box eBrevia. So the first one you'll see is the leveraging the sales channel and the Venue product as a repository. So where the documents go into Venue and then eBrevia can analyze those same documents for clients. So it's going to be in the Venue revenue stream. And then it clicks the box on risk and compliance solutions and then using AI technology. So on a broader scale, the eBrevia will start to stand on its own as its own product in terms of our solution set for risk and compliance efficiency [ph]. So that's how we're thinking of it the first ramp inside the Venue product and then the second ramp on their own.

Got it. Got it. And then just last question, I'll get back in the queue. But it appears your total shares outstanding guidance does not contemplate any material level of share repurchases. Can you talk about any updated thoughts from the board on -- in that regard?

Yes, sure. So it's correct, our guidance assumes status quo. And as a board, we evaluate all potential avenues of capital deployment. In the context of overall leverage, as we've said, we've been active in the M&A market valuations, have been richer than we would like, and so we've been very disciplined around how we deploy capital and we've been paying down debt aggressively. But certainly, as a Board, consider all the various avenues.

Got it. Thank you.

Thank you.

Our following question comes from Charles Strauzer from CJS Securities.

Hi, good morning.

Good morning.

A couple of questions. First on the revenue guidance. I know you kind of gave up the transactional down 4%, but maybe you can give us some thoughts on the other segments and the growth rate assumptions underlying the revenue guidance? Thanks. I'll follow up in a second.

Yes, sure. It's only a couple of comments and then maybe Dave can weigh in a bit on seasonality as well. So our guidance -- we shared at the Investor Day back in May regarding the mix of business shift and specifically on the SaaS offerings and are embedded within our guidance is a continuation of success we've had on the SaaS side. So I think of that in the mid-teens level range of continued growth in the SaaS offerings. Transactions as Dave mentioned was down 4%, and then I don't know if you want to go into anything on seasonality or anything in -- on GIM?

Yes, so Charlie, the only thing I would say is -- Dan noted the SaaS revenue, our expectations is still in the mid-teens. I think when you look at the products based net sales, the print side, which is predominantly in Investment Markets, we would continue to expect to see that decline at kind of the mid-single digit rates. So, Investment Markets on a year-over-year basis probably down a little bit and again all print-related. I think when you roll up the year, the decline in transactional and then obviously not having Language Solutions in the numbers you know, really accounts for all of the delta on a year-over-year basis.

Great. And then just looking at the Q1 discussion you had there about the revenue kind of being to $220 million, $230 million I think you said. What kind of EBITDA margin assumption should we use on that? And I think, in the last quarter in Q4, you had about 10% EBITDA margin given the headwinds in transactional. Is that kind of a good number to use for EBITDA?

Yeah. So, good question. So, first of all, Language Solutions, on a year-over-year basis, right, there is about $1.5 million coming out of Q1 from an EBITDA perspective. And then, when you look at where we expect to see the decline in capital markets transaction as you know and as we saw in Q4, that tends to carry a pretty high incremental or in this case decremental margin. So, we would expect margins to come down kind of in line with what we've seen historically on the changes in transactional revenue.

Got it. And then just last one just a housekeeping on the guidance for interest expense of about $35 million, and it seems a little higher than I would have thought, given the debt paydown that you guys have done over the years. Any thoughts there?

Yeah, so -- and one of the things I mentioned just from a timing of cash flow perspective, we've seen rates come up a little bit throughout 2018. So the year-over-year delta there and then from a cash flow timing perspective, I mentioned we'll be a user of cash at the beginning of the year, and then you -- or typically a user of cash in the beginning of the year. You couple that with the weak transactional activity, and you know, the comments on EBITDA in Q1. That's going to be exacerbated. We'll be more of a user of cash in Q1. All of our cash flow will be more heavily weighted in the back half of the year. So, on an overall basis, we think that $35 million is in the ballpark.

Thank you very much.

Thank you.

Our following question comes from Bill Warmington from Wells Fargo.

Good morning, everyone.

Good morning, Bill.

Good morning, Bill.

So, I just wanted to ask for some help on the 2019 revenue guidance, just to understand the constant currency organic revenue growth adjusted that's embedded there. I know there are a bunch of puts and takes, and I don't -- I just want to make sure I get them right in terms of eBrevia coming in FX, Language Solutions going away and the revenue recognition. I just want to make sure I know kind of like what's the underlying constant currency organic revenue growth in that $910 million to $940 million range?

Yes it's a -- just under 0.5% at the mid-point.

Got it. And then with eBrevia, I wanted to double check, does that go into the SaaS revenue total or not?

Yes, it will. Yeah, so when we talk about the growth rate, we're talking an organic growth rate in the mid-teens, and then to your question eBrevia will be on top of that.

Got it. And then if you could talk a little bit about how the cross-selling has been going with eBrevia? It seemed like there were a lot of applications that would pull long -- it would open doors and pull along potentially business for other parts of the organization. Has that actually been happening? And are you starting to actually see it in the results?

Yes, this is Tom. So we had a -- we had the partnership. So we were ceding those relationships early on. We're seeing definitely an uptick coming in at the beginning of this year with some larger contract opportunities. So the sales channel targets the public corporations right in terms of the number of contracts that are sitting inside there regulatory events like the GDPR or Brexit they can go in and see where they need to amend their contracts, looking or pinpointing contracts are non-standard terms with corporations to characterize risk or exposure in a contract. So all these things are being brought to the corporate risk and compliance side as well as the legal side and then another sales channel for us is the legal -- the firms themselves, the law firms themselves. And the fact that they can scale they can do large-scale contract analytics. So the sales channels definitely conceded well. And now with the news that we own the corporation rather than -- we have a stake in, I think our customers look to us to sort of have a skin in the game and when we own the solution ourselves we see an uptick and confidence that we can standby the product. So it's been good -- good out of the gate obviously.

And one more just kind of housekeeping item. The guidance on CapEx $40 million to $45 million versus $37 million last year is that increase going mostly into act of disclosure? Does it start to trail off? I'm trying to get a sense for going forward what we should think about as the -- an ongoing level of CapEx?

Yes, sure. So Dave will go in a little more specifics. We do have a couple projects that are driving that a little bit higher in 2019. Overall, we do expect, excuse me -- to go down in 2020. The vast majority of our capital is for technology development. But -- and as we've mentioned on prior calls and I think our guidance heading into 2018 rather was in that same range and then we're coming in a little below that. And that is a function of as we go through our processes around required return on projects. If the project doesn't have the required return, we don't approve it and the spending isn't done. So very disciplined around capital allocation. It is a bit of an increase least embedded in the guidance and we do expect it to go down in 2020.

Yes, just one addition there. Some of the increase Dan alluded to we're making some investments to digitize a portion of our print platform and there is a nice productivity play for us there. And then also as Dan noted in 2020 we would expect that to come back probably in the call it mid to high $30 million range.

So, it's not going to be a build-out of Just and Rich's new offices right?

No no. That was covered within this year's.

Okay. All right. Excellent. All right, listen. Thank you very much for the update.

Thank you.

Our following question comes from David Ridley-Lane from Bank of America Merrill Lynch.

Sure. Wanted to give you an opportunity end of the year is a good time to recap how DFIN is doing against the competition in the SaaS space. How do you think on the Virtual Data Rooms you're doing? Did you pick up share in 2018 versus the competition? And then on sort of the ActiveDisclosure side, have you seen win loss rates continued a trend in your favor? On a volume basis, did you pick up more cooperates publicly traded companies? Thank you.

Yes sure. So let me start there. So relative to the software product in the three main products and defining the overall market and that progress in that market, we feel good in terms of being a share taker really in all three of our products. And if we look at the year that we had and depending upon the market information you can get start with Venue. So we mentioned the awards in terms of Data Room of the year et cetera. Having double-digit growth in that market, there's couple different publications out there, projecting out what the market has grown at and if you look at those two, you're probably in the high single-digit range for the market and we're above that. Similarly, when you go to ActiveDisclosure, we feel good about the progress there. I think for the year, we were in the low 20s or approximately 20% or so of growth. And when we look at to your question on net account wins and this is -- we're looking at a couple of different ways. One is net wins and losses taking into account all factors including delistings and bankruptcies and mergers, so the reason is that the total numbers of companies might decrease, yet aren't really due to competition. But on a net win basis including some of those noncompetitive factors, we were over 100 new logos coming on to the platform, so very happy with that. When we take into account, obvious -- just the competitive side of it it's higher than that. So feel good about the progress we've made. It's certainly trending in the right way on ActiveDisclosure as well. And then on the FundSuite Arc side, they had a very good year growth was over 20% coming in FundSuite Arc on the tech side and feel really good about what they've accomplished both domestically with our Arc Reporting ArcPro and N-CEN/N-PORT as we've talked about before. And then encouraging in what we've seen in the European market and we do think there is a continued growth opportunity available to us there. So the 15.4% aggregate which includes a small piece of EDGAR Online, we're pretty happy with. And then obviously we want to drive that higher. And to the earlier question both organically, we want to drive it higher and then the addition of eBrevia will add that to the mix. So I think in the fourth quarter alone, the technology as a percentage of the total was 22% or so. So we're seeing the mix shift take place. It's obviously favorable from a margin perspective as products get the scale. So we feel pretty good about it.

Thank you. And then just a quick one for Dave, just so that I understand, when you -- giving these Language Solution adjusted EBITDA contribution, are you saying that basically that was the EBITDA contribution in the quarters of 2018 that just won't show up because of the divestiture or are you trying to say that there will be a continued drag from stranded cost in the first quarters of 2019, 2020, second quarter of 2019, third quarter of 2019?

Yes, it's really the combined the lost EBITDA in addition to the net stranded cost. So really think about it as a year-over-year delta.

Got it. And then have you worked down the stranded costs already or is there still work to do for you around that in 2019?

Yes, we've actually done I think a pretty good job on that. I think when we initially looked at the overall EBITDA impact to relate it to the sale, we had estimated that on a run-rate basis, it would negatively impact consolidated EBITDA by about $8 million. After the sale last year, we took our guidance down by $5 million related to the sale and then the $3 million this year. So we've executed pretty well on shedding some of the -- those stranded costs.

Okay. Thank you very much.

Yeah. Thank you.

We have no further questions at this time.

Great. So thank you and we will look forward to reconnecting after Q1 in May. Thank you very much.

Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.