Donnelley Financial Solutions, Inc. (DFIN)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

As used in this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), unless otherwise specified or the context otherwise requires, the “Company” or “DFIN” refer to Donnelley Financial Solutions, Inc. and its consolidated subsidiaries. MD&A should be read together with the Company’s Unaudited Condensed Consolidated Financial Statements and the related notes thereto, as well as the Company’s audited Consolidated Financial Statements and the related notes thereto within its Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on February 17, 2026 (the “Annual Report”).

Company Overview

DFIN is a leading global provider of compliance and regulatory software and services, supporting its clients’ complex capital markets transactions and essential financial reporting at every stage of the corporate lifecycle and fueling end-to-end investment company regulatory compliance needs. The Company provides regulatory filing and deal solutions via its software, technology-enabled services and print and distribution solutions to public and private companies, mutual funds and other regulated investment firms, to serve its clients’ regulatory and compliance needs. DFIN helps its clients comply with applicable regulations where and how they want to work in a digital world, providing numerous solutions tailored to each client’s business needs. The prevailing trend is toward clients choosing to utilize the Company’s software solutions, in conjunction with its tech-enabled services, to meet their document and filing needs, while at the same time shifting away from physical print and distribution of documents, except for when it is still regulatorily required or requested by clients.

The Company serves its clients’ regulatory and compliance needs throughout their respective life cycles. For its capital markets clients, the Company offers solutions that allow companies to comply with U.S. Securities and Exchange Commission (“SEC”) regulations and support their corporate financial transactions and regulatory/financial reporting through the use of digital document creation and online content management tools; filing agent services, where applicable; solutions to facilitate clients’ communications with their investors; and virtual data rooms and other deal management solutions. For investment companies clients, the Company provides solutions that allow investment companies to comply with SEC regulations and support financial and regulatory reporting through the use of content management and technology-enabled solutions for creating, compiling and filing regulatory communications as well as digital-driven solutions for distributing content to investors.

Technological advancements, regulatory changes, and evolving workflow preferences have led to the Company’s clients managing more of the financial disclosure process themselves, changing the marketplace for the Company’s services and products. DFIN’s strategy in its Software Solutions segments (CM-SS and IC-SS, as defined below) aligns with the changing marketplace by focusing the Company’s resources in its advanced software solutions, primarily ActiveDisclosure® (“ActiveDisclosure”), Arc Suite® software platform (“Arc Suite”) and Venue® Virtual Data Room (“Venue”), while making targeted investments to further enhance product features. In its Compliance and Communications Management segments (CM-CCM and IC-CCM, as defined below), the Company’s strategy focuses on maintaining its market-leading position by offering a high-touch, service-oriented experience, using its unique combination of tech-enabled services and print and distribution capabilities.

Market Volatility/Cyclicality and Seasonality

The Company’s Capital Markets segments (CM-SS and CM-CCM), in particular, are subject to market volatility, as the demand for the transactional and Venue offerings is largely dependent on the global market for initial public offerings (“IPOs”), secondary offerings, mergers and acquisitions (“M&A”), public and private debt offerings, leveraged buyouts, spinouts, special purpose acquisition company (“SPAC”) and de-SPAC transactions and other similar transactions. A variety of factors impact the global markets for transactions, including economic activity levels, interest rates, market volatility, the regulatory and political environment, tariffs and trade policy, geopolitical and civil unrest and global pandemics, among others. Due to the significant net sales and profitability derived from transactional and Venue offerings, market volatility can lead to uneven financial performance when comparing to previous periods. Recently, U.S. capital market transactions, especially IPO and M&A transactions, were disrupted by the U.S. federal government shutdowns that occurred during the fourth quarter of 2025. Future government shutdowns or other factors impacting the attractiveness of U.S. capital markets could result in additional volatility. The Company’s compliance offerings, supporting the quarterly and annual public company reporting processes through its filing services and ActiveDisclosure, as well as its Investment Companies segments (IC-SS and IC-CCM) regulatory and stockholder communications offerings, including Arc Suite, are less impacted by market volatility. The Company’s overall risk profile is balanced by offering services in higher demand during a down market, such as document management tools for the bankruptcy/restructuring process and by moving upstream in the transactional process with products like Venue.

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The quarterly/annual public company reporting cycle subjects the Company to filing seasonality which peaks shortly after the end of each fiscal quarter. Additionally, investment companies clients’ financial and regulatory reporting requirements include filings for mutual funds on a semi-annual basis as well as annual prospectus filings, which peaks during the second fiscal quarter. The seasonality and associated operational implications include the need to increase staff during peak periods through a combined strategy of hiring temporary personnel, increasing the premium time of existing staff and outsourcing production for a number of services. ActiveDisclosure and Arc Suite provide clients and their financial advisors software solutions which allow them to autonomously file and distribute compliance documents with regulatory agencies reducing the need for additional service support during peak periods. The Company remains focused on driving annual recurring revenue to mitigate the impact of market volatility on its financial results.

Services and Products

The Company separately reports its net sales and related cost of sales for its software solutions, tech-enabled services and print and distribution offerings. The Company’s software solutions offerings include ActiveDisclosure, Arc Suite and Venue. The Company’s tech-enabled services offerings consist of document composition, compliance-related SEC Electronic Data Gathering, Analysis, and Retrieval (“EDGAR”) filing services and transactional solutions. The Company’s print and distribution offerings primarily consist of conventional and digital printed products and related shipping.

Government Regulations and Regulatory Impact

The SEC is adopting new as well as amending existing rules and forms to enhance the security and modernize the reporting and disclosure of information under the Securities Act of 1933, as amended (the “Securities Act”), the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the Investment Company Act of 1940, as amended (the “Investment Company Act”). As the regulatory environment continues to evolve, regulators are also demanding a greater use of structured, machine-readable data in companies’ disclosures, more summary documents and layered website disclosures. These actions are driving significant changes which impact the Company and its customers. The Company actively monitors proposals, through comment periods, adoption, implementation and legal challenges, as applicable. Regulatory changes have enabled the Company to offer new value-added functionality and services, leverage its domain expertise and accelerate its transition from print and distribution to software solutions.

Segments

The Company’s four operating and reportable segments are: Capital Markets – Software Solutions (“CM-SS”), Capital Markets – Compliance and Communications Management (“CM-CCM”), Investment Companies – Software Solutions (“IC-SS”) and Investment Companies – Compliance and Communications Management (“IC-CCM”). Corporate is not an operating segment and consists primarily of unallocated selling, general and administrative (“SG&A”) activities and associated expenses including, in part, executive, legal, finance and certain facility costs. In addition, certain expenses and income of employee benefits plans, such as net pension plan expense as well as share-based compensation expense, are included in Corporate and not allocated to the operating segments.

Capital Markets

The Company provides software solutions, tech-enabled services and print and distribution solutions to public and private companies for deal solutions and compliance to companies that are, or are preparing to become, subject to the filing and reporting requirements of the Securities Act and the Exchange Act. The Company’s operating segments associated with its capital markets services and product offerings are as follows:

Capital Markets – Software Solutions—The CM-SS segment provides Venue and ActiveDisclosure subscriptions and related services (including service packages and services the Company performs on behalf of its clients with customer-facing software) to public and private companies to help manage public and private transactional and compliance processes; collaborate; and tag, validate and file SEC documents.

Capital Markets – Compliance and Communications Management—The CM-CCM segment provides tech-enabled services and print and distribution solutions to public and private companies for deal solutions and SEC compliance requirements. The Company offers around-the-clock services to support the transaction process, production platform and service delivery model. The Company has seen clients utilizing the range of options available to them, including a hybrid approach with working group members participating both virtually and in-person during drafting sessions for their transactions or a fully-virtual experience.

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Investment Companies

The Company provides software solutions, tech-enabled services and print and distribution solutions to its investment companies clients, which are primarily mutual fund companies, alternative investment companies, insurance companies and third-party fund administrators, that are subject to the filing and reporting requirements of the Investment Company Act, as well as European and Canadian regulations. The Company’s operating segments associated with its investment companies services and product offerings are as follows:

Investment Companies – Software Solutions—The IC-SS segment provides clients with the Arc Suite platform that contains a comprehensive suite of cloud-based solutions, including subscriptions to ArcDigital, ArcPro, ArcRegulatory and ArcReporting as well as related services that enable storage and management of compliance and regulatory information in a self-service, central repository so that documents can be easily accessed, assembled, edited, tagged, translated, rendered and submitted to regulators and investors.

Investment Companies – Compliance and Communications Management—The IC-CCM segment provides clients with tech-enabled services and print and distribution solutions for creating, filing and distributing regulatory communications and solutions for investor

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read together with the Company’s audited Consolidated Financial Statements and the related notes thereto, as well as Part I, Item 1. Business of this Annual Report.

MD&A contains a number of forward-looking statements, all of which are based on the Company’s current expectations and could be affected by the risks and uncertainties, as well as other factors, described throughout this Annual Report, particularly in “Special Note Regarding Forward-Looking Statements” and Part I, Item 1A. Risk Factors.

Business

For a description of the Company’s business and services and products offerings, refer to Part I, Item 1. Business of this Annual Report.

The Company separately reports its net sales and related cost of sales for its software solutions, tech-enabled services and print and distribution offerings. The Company’s software solutions consist of ActiveDisclosure, Arc Suite and Venue. The Company’s tech-enabled services offerings consist of document composition, compliance-related SEC EDGAR filing services and transactional solutions. The Company’s print and distribution offerings primarily consist of conventional and digital printed products and related shipping.

Segments

The Company operates its business through four operating and reportable segments: Capital Markets – Software Solutions, Capital Markets – Compliance and Communications Management, Investment Companies – Software Solutions and Investment Companies – Compliance and Communications Management. Corporate is not an operating segment and consists primarily of unallocated SG&A activities and associated expenses including, in part, executive, legal, finance and certain facility costs. In addition, certain expenses and income of employee benefits plans, such as pension plans expense (income) as well as share-based compensation expense, are included in Corporate and not allocated to the operating segments. For a description of the Company’s operating segments, refer to Part I, Item 1. Business of this Annual Report.

The Company’s operating segments are components of the business for which discrete financial information is available and reviewed regularly by the Company’s chief operating decision maker (“CODM”), the Company’s Chief Executive Officer. The CODM regularly reviews segment net sales and Segment Adjusted EBITDA to assess segment performance and to decide how to allocate resources. Segment Adjusted EBITDA is defined as earnings before interest expense, net, income tax expense, depreciation and amortization and adjusted to exclude the impact of certain costs, expenses, gains, losses and other items, as further described in Note 15, Segment Information, which management believes are not indicative of ongoing operations and segment performance. See Note 15, Segment Information, for a reconciliation of Segment Adjusted EBITDA to consolidated earnings before income taxes.

Executive Overview

Net sales for the year ended December 31, 2025 decreased by $14.9 million, or 1.9%, to $767.0 million from $781.9 million for the year ended December 31, 2024, including a $0.8 million, or 0.1%, increase due to changes in foreign currency exchange rates. Net sales decreased primarily due to lower tech-enabled services net sales of $22.5 million, primarily driven by lower capital markets compliance volumes, and lower print and distribution net sales of $21.1 million, primarily driven by lower investment companies and capital markets compliance volumes, partially offset by higher software solutions net sales of $28.7 million, primarily due to higher ActiveDisclosure net sales of $12.7 million and higher Arc Suite net sales of $12.3 million.

Income from operations for the year ended December 31, 2025 increased by $4.5 million, or 3.3%, to $141.1 million from $136.6 million for the year ended December 31, 2024. Income from operations increased primarily due to lower cost of sales of $17.5 million and lower SG&A expenses of $13.0 million, partially offset by lower net sales of $14.9 million, as described above, a net gain of $9.8 million on the sale of land during the year ended December 31, 2024 and higher restructuring, impairment and other charges, net of $3.8 million. The lower cost of sales is largely driven by lower sales volumes, cost control initiatives and lower overhead costs, whereas the lower SG&A expenses are primarily driven by cost control initiatives, lower bad debt expense of $6.5 million, lower overhead costs and lower incentive compensation expense, partially offset by higher share-based compensation expense of $6.2 million and higher healthcare expense of $2.3 million.

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Pension Plan Termination and Settlement

In August 2024, the Company executed an amendment to commence the process of terminating the Company’s primary defined benefit plan (the “Plan”). During the year ended December 31, 2025, the Company settled the Plan obligations through a combination of lump sum payments to certain Plan participants and the purchase of a non-participating irrevocable group annuity contract (the “Plan Settlement”). In connection with the Plan Settlement, the Company made an $11.3 million, net cash contribution to fully fund the Plan.

As a result of the Plan Settlement, the Company remeasured the Plan’s assets and obligations and recognized a non-cash settlement charge of $82.8 million during the year ended December 31, 2025, due to the recognition of unrealized accumulated Plan losses previously reported within accumulated other comprehensive loss on the audited Consolidated Balance Sheets. The Plan Settlement was recorded within Corporate.

Financial Review

In the financial review that follows, the Company discusses its consolidated results of operations, segment net sales, Segment Adjusted EBITDA, financial position, cash flows and certain other information. The Company’s cost of sales as a percentage of net sales, consolidated income from operations, Segment Adjusted EBITDA and Segment Adjusted EBITDA margin may be affected by sales mix (i.e., a higher proportion of sales of higher or lower margin services or products relative to total sales). Sales mix can vary period to period and is impacted by regulatory filing seasonality and global capital markets volatility. This discussion and analysis should be read in conjunction with the Company’s audited Consolidated Financial Statements and related notes thereto.

A discussion of the Company’s financial condition, changes in financial condition and results of operations for the year ended December 31, 2024 as compared to the year ended December 31, 2023, can be found in Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of DFIN’s Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 18, 2025.

Results of Operations for the Year Ended December 31, 2025 as Compared to the Year Ended December 31, 2024

The following table shows the results of operations for the years ended December 31, 2025 and 2024:

nm – Not meaningful

(a)
Exclusive of depreciation and amortization

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Consolidated

Net sales of software solutions of $358.4 million for the year ended December 31, 2025 increased $28.7 million, or 8.7%, as compared to the year ended December 31, 2024. Net sales of software solutions increased due to $12.7 million of higher ActiveDisclosure net sales, $6.5 million of increases in non-TSR-related Arc Suite net sales, $5.8 million of higher net sales from the Company’s TSR offering and $3.7 million of higher Venue net sales.

Net sales of tech-enabled services of $298.3 million for the year ended December 31, 2025 decreased $22.5 million, or 7.0%, as compared to the year ended December 31, 2024. Net sales of tech-enabled services decreased due to lower capital markets net sales of $18.4 million, driven by a decline in both compliance and transactional volumes, as well as lower investment companies net sales of $4.1 million, largely driven by a decline in compliance volumes.

Net sales of print and distribution of $110.3 million for the year ended December 31, 2025 decreased $21.1 million, or 16.1%, as compared to the year ended December 31, 2024. Net sales of print and distribution decreased due to lower investment companies net sales of $14.0 million and lower capital markets net sales of $7.1 million, both largely driven by a decline in compliance volumes.

Software solutions cost of sales of $111.4 million for the year ended December 31, 2025 increased $4.0 million, or 3.7%, as compared to the year ended December 31, 2024. Software solutions cost of sales increased primarily due to higher product development costs of $1.4 million and a lower allocation of overhead costs. As a percentage of software solutions net sales, software solutions costs of sales decreased 1.5%, primarily driven by $12.7 million of higher ActiveDisclosure net sales and Arc Suite price increases, partially offset by higher product development costs and a lower allocation of overhead costs.

Tech-enabled services cost of sales of $112.8 million for the year ended December 31, 2025 decreased $7.8 million, or 6.5%, as compared to the year ended December 31, 2024. Tech-enabled services cost of sales decreased primarily due to lower sales volumes of $22.5 million, a lower allocation of overhead costs and cost control initiatives. As a percentage of tech-enabled services net sales, tech-enabled services cost of sales increased 0.2%.

Print and distribution cost of sales of $56.2 million for the year ended December 31, 2025 decreased $13.7 million, or 19.6%, as compared to the year ended December 31, 2024. Print and distribution cost of sales decreased primarily due t

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