Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Donnelley Financial Solutions Fourth Quarter Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Mike Zhao, Head of Investor Relations. Please go ahead.

Thank you. Good morning, everyone, and thank you for joining Donnelley Financial Solutions' Fourth Quarter and Full Year 2025 Results Conference Call. This morning, we released our earnings report, including a set of supplemental trending schedules of historical results. copies 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 risks and uncertainties. For a complete discussion, please refer to the cautionary statements included in our earnings release and further detailed in our most recent annual report on Form 10-K and other filings with the SEC. Further, we will discuss certain non-GAAP financial information, such as adjusted EBITDA and adjusted EBITDA margin. We believe the presentation of non-GAAP financial information 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 earnings release and related tables for GAAP financial information and reconciliations of GAAP to non-GAAP financial information. I am joined this morning by Dan Leib, Dave Gardella and other members of management. I will now turn the call over to Dan.

Thank you, Mike, and good morning, everyone. We finished 2025 by delivering strong fourth quarter results, highlighted by 10.4% consolidated net sales growth, year-over-year growth in adjusted EBITDA and strong adjusted EBITDA margin. Double-digit growth in both our software solutions and event-driven transactional offerings were key components of our strong top and bottom line performance. In addition, given our stock trading levels, strong balance sheet and perspective on long-term value, we accelerated our share buyback during the fourth quarter and repurchased approximately 1.3 million shares, bringing the 2025 total share repurchase to approximately 3.6 million shares or approximately 12% of the company's outstanding shares from the beginning of the year at an average price of $48.36 per share. As a result of focused execution, we grew consolidated adjusted EBITDA by $14.1 million or approximately 44% year-over-year and delivered an adjusted EBITDA margin of 26.6% in the quarter, an increase of approximately 630 basis points from last year's fourth quarter. Our fourth quarter performance is a further validation of our strategy. Reflecting on the full year of 2025 against the backdrop of continued economic volatility, we delivered strong full year results, including Software Solutions net sales growth of 8.7%, growth in adjusted EBITDA, record adjusted EBITDA margin and higher free cash flow compared to full year 2024. While 2025 marked another year of decline in our transactional revenue, the fourth consecutive year of decline, our strong execution enabled us to deliver consolidated adjusted EBITDA of $239.8 million, an increase of $22.5 million or 10.4% year-over-year and consolidated adjusted EBITDA margin of 31.3%, approximately 350 basis points higher than 2024. For context, our 2025 full year adjusted EBITDA margin exceeded the previous record, which was 29.7% despite this year's significantly lower overall and transactional revenues compared to that year. Our long-term focused…

Thank you, Dan, and good morning, everyone. As Dan noted, we delivered strong fourth quarter results in an uncertain operating environment, including double-digit consolidated year-over-year net sales growth, higher adjusted EBITDA, adjusted EBITDA margin expansion and an increase in both operating cash flow and free cash flow from last year's fourth quarter. We continue to deliver solid growth in our software solutions offering during the quarter, which grew 11.4% year-over-year. In addition, we experienced an increase in the level of capital markets transactions compared to last year's fourth quarter, which resulted in higher-than-expected event-driven revenue in the quarter. The fourth quarter capped off a solid full year performance, demonstrated by our evolution toward a more favorable sales mix, strong adjusted EBITDA margin expansion and disciplined capital allocation. On a consolidated basis, total net sales for the fourth quarter of 2025 were $172.5 million, an increase of $16.2 million or 10.4% from the fourth quarter of 2024. Net sales exceeded the high end of our guidance range, aided in part by higher capital markets transactional revenue. The 11.4% growth in Software Solutions net sales, combined with higher capital markets transactional revenue more than offset a year-over-year decrease in capital markets and investment companies traditional compliance revenue with the majority of the reduction related to the secular decline in print and distribution volume, consistent with recent trends. Fourth quarter adjusted non-GAAP gross margin was 63.5%, approximately 360 basis points higher than the fourth quarter of 2024, primarily driven by higher net sales and a favorable sales mix, the impact of cost control initiatives and price uplifts. Adjusted non-GAAP SG&A expense in the quarter was $63.8 million, a $1.7 million increase from the fourth quarter of 2024. As a percentage of net sales, adjusted non-GAAP SG&A was 37%, a decrease of approximately 270…

Thanks, Dave. Our performance in 2025 serves as a further proof point that our strategic transformation is enabling DFIN to become more profitable and resilient. We executed well in a challenging market environment, delivering strong financial results while also continuing to invest in and execute our strategic transformation. The combination of our market position, cost structure and financial flexibility create a solid foundation as we progress in Chapter 3 of our transformation journey. Before we open it up for Q&A, I'd like to thank the DFIN employees around the world. Now with that, operator, we're ready for questions.

[Operator Instructions] Our first question will come from the line of Charlie Strauzer with CJS Securities.

A couple of quick questions for you guys. sorry. How much of the outperformance in Q4 was kind of volume versus price? And any more color behind the outperformance that would be great.

Yes, Charlie, it's Dave. I'll take that one. I would say price was not significant. I'd say a modest driver. Really, when we think about the outperformance, much of it was on the capital markets transactional revenue and then I think both Venue and AD showed that 20% growth, which was a little bit better than we expected. So predominantly volume. And I would say, as it relates specifically to the capital markets transactional activity, we had the government shutdown for the first half of the quarter, mid-November. The recovery was quicker than we had expected. And then you combine that with the strong underlying activity level in transaction made for a nice quarter in terms of the top and bottom line relative to our guidance.

Great. And then your margins were very strong, obviously, in Q4 and for the year. Any more color on the drivers behind the outperformance on that side as well?

Yes. I would say more of the same of what we've seen over the long term. I think when you look at how the mix of sales is changing, what we're doing with the cost structure and then certainly the growth, especially on the software sales and then in particular, this quarter with a nice growth in transactional, that operating leverage, right? So the incremental margin on the sales growth has really pushed margin higher. And again, I'd say in line with what we've talked about in terms of going forward, certainly in line with the trajectory that we've seen. Our long-term guidance is for margins north of 30%. We're probably, frankly, ahead of what we had projected. And so feel really good about the direction where we're going with profitability.

Great. Dan, just a quick one for you. Just when you look at the -- or think about capital allocation, valuation multiples have contracted across a number of technology stocks. When you look at the potential opportunity in your kind of purview, are you seeing anything more interesting that you would have seen maybe a couple of months ago?

Yes, it's a great question. I think expectations probably haven't followed as quickly. And as we see the disruption even over the past week or 2, it will take a bit of time. Obviously, for public companies, everyone's had a bit of a re-rate. And -- but I think most folks are thinking or hoping it's not permanent. So I don't think the expectation side of it yet has adjusted. But if valuations persist at a lower level with the AI overhang, then I think they will. And folks are sitting on assets for a fairly long amount of time and looking for liquidity in some cases. So it will take longer, but something that we continue to watch.

Our next question will come from the line of Pete Heckmann with D.A. Davidson.

As regards to ArcFlex, the platform designed for alternative investment managers, is that -- can you talk a little bit about kind of how you think about the relative TAM for ArcFlex relative to Arc Suite? And are those 2 solutions designed to be sold together to investment managers that do both? Or is ArcFlex -- can ArcFlex be a stand-alone product sold to purely alternative managers?

Yes. Thank you, Pete. It can definitely be sold as stand-alone. We do see synergy with existing relationships, certainly on the TPA side. And it is a good example of an offering that we were able to build much more quickly, efficiently given the platform that we've been developing and talked about for a few years. But we see the market and we see the interest being really high as assets continue to grow in the private space, people need more robust solutions in the market. And so getting a lot of interest in discussions. There is not as much of a regulatory framework around that. But even without that, we are seeing some firms transact and purchase ArcFlex. And Eric, I don't know if you wanted to add to that.

Yes. Thanks, Dan. Pete, it's Eric Johnson. The -- just the data that we have from the SEC shows that the private fund numbers, so number of private funds, so early 2025 was over 54,000, up 15% from the prior period 2023 for same time frame. So there's a significant increase in the number of funds. But what's really happening is this retail access is driving an expansion in the number of investors, which is really pushing the industry to meet efficient production at scale. And with the introduction of ArcFlex, we can handle the alternative investment reporting requirements. At the same time, with the horsepower of Arc reporting, we can help these clients manage the scale that's required to manage this influx of reporting activity due to the increased demand and especially driven from the retail side of the market.

Okay. That's really helpful. And then just in terms of the IPO activity in the quarter, it looked like DFIN's share of traditional IPOs was very, very strong. And I guess, would you characterize that as anything beyond just a good mix towards the kind of the larger and more complex IPOs versus smaller deals?

It's Craig Clay. Thank you for the question. I think as you saw in Q4, there were 41 companies that price, 17 raised over $100 million. Our share of that over $100 million was 65%, which is certainly on the higher side. I think what's awesome is Q4's volume was up 70% year-over-year in the $100 million category. So these 17 companies raised a total of $13 billion. Health care dominated across a number of deals. Medline raised $6 billion, and that was a DFIN supported deal. There was one other $1 billion-plus deal, Beta Technologies that we also supported. I think to your question, we certainly play to the larger deals in the full year 2025, there were 10 offerings greater than $1 billion, and we had 70% share of that. So certainly, we are prepared and ready to work the way that our clients want to work. You saw in the prepared remarks how we are supporting IPOs on ActiveDisclosure, which is really a terrific opportunity for us to move into that space. We look at that hybrid solution as a way for our companies to work across the boundaries of having access to our customer service and having access to our regulatory experts. And I think just an opportunity to touch on Active Intelligence. It demonstrates, as Dan said, we're delivering a higher value to our clients across this. So our success with implementing that into ActiveDisclosure, which has Ks, Qs, proxies, IPOs also validates us as a core member of our clients' team, which is embedded at the moment they need accuracy and speed and regulatory confidence. So thank you for the question.

And our next question comes from the line of Ross Cole with Needham & Company.

Congratulations on a strong quarter. I was wondering If you could dive in a little deeper in terms of the double-digit software growth you're seeing for 2026? And maybe how do you see that broken up between product or maybe between capital markets versus investment companies, especially given the dynamic of fewer regulatory changes in the year and possibly a slower IPO market?

Yes. Ross, just to be clear, on 2026, I think what we said was we expect continued strong growth from ActiveDisclosure and Venue heading into '26 and certainly have that momentum coming out of Q4 here. And then exactly to your point, as it relates to Arc Suite, we've seen the growth in Arc Suite really be more lumpy, I guess, over the course of time. And a lot of that tied to new regulation, whether it be tailored shareholder reports and the total compliance management solution that we launched a few years ago and then more recently with -- sorry, the prior one was 30e-3 with total compliance management and then more recently, tailored shareholder reports those regulations. And so we would say that it will continue to be lumpy going forward, the outsized growth the coming years with new regulatory changes. And then to the earlier question as it relates to private markets, continue to view that as an opportunity and more to come as it relates to ArcFlex and serving the private market side.

Yes. And just to build on that to the 2026 specifically to Dave's point and then on ArcFlex, our comments where we expect benefit in '27, it's possible it's tail end or some benefit in '26, but it will be very tail end or -- but definitely more predominant in 2027.

[Operator Instructions] And that will conclude our question-and-answer session. I'll turn the call back over to Dan Leib for closing comments.

Thank you very much, and thank you, everyone, for joining us, and we will look forward to seeing you very soon. Thank you.

This concludes today's call. Thank you all for joining. You may now disconnect.