Q4 2019 Earnings Call

February 26, 2020

Operator 3: Ladies and gentlemen, thank you for standing by, and welcome to the Donnelley Financial Solutions Q4 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you'll need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to Justin Ritchie, Head of Investor Relations. Thank you. Please go ahead.

Operator: Ladies and gentlemen, thank you for standing by, and welcome to the Donnelley Financial Solutions Q4 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you'll need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to Justin Ritchie, Head of Investor Relations. Thank you. Please go ahead.

The mode. After the speakers presentation, there will be a question answer session to ask a question. During this session you'll need to press star one on your telephone. Please be advised that today's conference is being recorded if you require any further assistance. Please press star zero I would know what they had a conference over to Justin Ritchie head of Investor relation.

Thank you. Please go ahead.

Justin Ritchie: Thank you, Denise. Good morning, everyone, and thank you for joining the Donnelley Financial Solutions Q4 and full year 2019 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 the call, we will 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 detailed 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 financial information provides you with useful supplemental 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.

Thank you Denise good morning, everyone and thank you for joining the Donnelley financial solutions fourth and full year 2019 results conference call. This.

This morning are released earnings report a copy of which can be found any investor section of our website defensively she's dot com.

During the call we will refer to forward looking statements that are subject to uncertainties for a complete discussion. Please refer to the cautionary statements included in our earnings release and further detailed in our annual report on form 10-K, and other funds with U.S. easy.

Further we will discuss non-GAAP financial information, we believe the presentation of non-GAAP financial information provides you with it useful supplementary information concerning the company's ongoing operation.

Inappropriate way for you to evaluate the company's performance.

They are however provided for informational purposes only.

Justin Ritchie: Please refer to the press release and related tables for GAAP financial information and reconciliations of GAAP to non-GAAP financial information. I'm joined this morning by Dan Leib, Dave Gardella, Cami Turner, and Tom Juhas. I will now turn the call over to Dan.

Please refer to the press release and related tables forget financial permission and reconciliations of GAAP to non-GAAP financial information.

During this morning by Dan Leever, Dave Gardella can be Turner, and Tommy Haas I'll now turn the call her to Dan.

Dan Leib: Thank you, Justin, and good morning, everyone. We finished 2019 by delivering solid Q4 results, including record quarterly SaaS sales, which made up 26.2% of total sales, as well as significant year-over-year increases in quarterly earnings per share, and free cash flow. By continuing to focus on operating efficiencies, our team managed to improve Q4 non-GAAP EBITDA margin by 400 basis points. Our Q4 performance allows us to enter 2020 with momentum as we continue to execute on our long-term strategy. For the full year, we reported net sales of $874.7 million and non-GAAP adjusted EBITDA of $137 million, holding non-GAAP EBITDA margin relatively flat year-over-year.

Daniel N. Leib: Thank you, Justin, and good morning, everyone. We finished 2019 by delivering solid Q4 results, including record quarterly SaaS sales, which made up 26.2% of total sales, as well as significant year-over-year increases in quarterly earnings per share, and free cash flow. By continuing to focus on operating efficiencies, our team managed to improve Q4 non-GAAP EBITDA margin by 400 basis points. Our Q4 performance allows us to enter 2020 with momentum as we continue to execute on our long-term strategy. For the full year, we reported net sales of $874.7 million and non-GAAP adjusted EBITDA of $137 million, holding non-GAAP EBITDA margin relatively flat year-over-year.

Thank you Justin and good morning, everyone.

Finished 2019 by delivering solid fourth quarter results, including a record quarterly SAS sales, which made up 26.2% of total sales.

Well the significant year over year increases in quarterly earnings earnings per share and free cash flow by continuing to focus on operating efficiencies. Our team managed to improve fourth quarter non-GAAP EBITDA margin by 400 basis points.

Our fourth quarter performance allows us to enter 2020 with momentum as we continue to execute on our long term strategy.

For the full year, we reported net sales of $874.7 million and non-GAAP adjusted EBITDA of $137 million holding non-GAAP EBITDA margin relatively flat year over year, we delivered solid results. Despite the significant headwinds that we faced over the course of the year in capital markets.

Dan Leib: We delivered solid results despite the significant headwinds that we faced over the course of the year in capital markets, transactions, and Venue, two of our most profitable offerings related to the Q1 SEC shutdown, uncertainties in Europe related to Brexit, civil unrest in Hong Kong, and an overall slowdown of global M&A activity. As the year progressed, our team stayed focused on closing our share of business available in the market while also driving efficiencies throughout the company. Our operating efficiency focus helped us to expand non-GAAP adjusted EBITDA margins in the final two quarters of the year, keeping us on solid footing heading into 2020. We also continued to responsibly manage our asset base during 2019, selling non-strategic assets to free up cash that was used to help reduce our total debt by $66.7 million.

Daniel N. Leib: We delivered solid results despite the significant headwinds that we faced over the course of the year in capital markets, transactions, and Venue, two of our most profitable offerings related to the Q1 SEC shutdown, uncertainties in Europe related to Brexit, civil unrest in Hong Kong, and an overall slowdown of global M&A activity. As the year progressed, our team stayed focused on closing our share of business available in the market while also driving efficiencies throughout the company. Our operating efficiency focus helped us to expand non-GAAP adjusted EBITDA margins in the final two quarters of the year, keeping us on solid footing heading into 2020. We also continued to responsibly manage our asset base during 2019, selling non-strategic assets to free up cash that was used to help reduce our total debt by $66.7 million.

Transactions and venue two of our most profitable offerings related to the first quarter FCC shutdown uncertainties in Europe related to Brexit civil unrest in Hong Kong and an overall slowdown of global M&A activity.

As the year progressed, our team stayed focused on closing our share of business available in the market. While also driving efficiencies throughout the company our operating efficiency focus helped us to expand non-GAAP adjusted EBITDA margins in the final two quarters of the year, keeping us on solid footing heading into 2020.

We also continued to responsibly manage our asset base during 2019.

Selling non strategic assets to free up cash that was used to help reduce our total debt by $66.7 million since becoming a standalone company in 2016, we've reduced our outstanding debt by $340 million, including fully paying off our term loan.

Dan Leib: Since becoming a standalone company in 2016, we've reduced our outstanding debt by $340 million, including fully paying off our term loan. We are also pleased to have ended the year at 2x net leverage below the low end of our targeted leverage range, giving us enhanced flexibility related to our capital deployment priorities. 2019 was another significant year for our continued digital transformation. We made steady progress against our strategic priorities, including maintaining strong market share in our core markets, improving our revenue mix, all while evolving the company.

Daniel N. Leib: Since becoming a standalone company in 2016, we've reduced our outstanding debt by $340 million, including fully paying off our term loan. We are also pleased to have ended the year at 2x net leverage below the low end of our targeted leverage range, giving us enhanced flexibility related to our capital deployment priorities. 2019 was another significant year for our continued digital transformation. We made steady progress against our strategic priorities, including maintaining strong market share in our core markets, improving our revenue mix, all while evolving the company.

We're also pleased to have ended the year at two times net leverage below the low end of our targeted leverage range, giving us enhanced flexibility related to our capital deployment priorities 2019 was another significant year for our continued digital transformation, we made steady progress against our strategic priorities, including.

Maintaining strong market share in our core markets, improving our revenue mix, all well evolving the company.

Focusing specifically on our market share performance in 2019 for a moment. We're pleased to have increased our market share in 10-K, 10-Q and notice in proxy filings for the first time in 10 years, partially by capturing the opportunity presented by the Fccs I EXPAREL and fast Act mandates moving next to the improvement.

Dan Leib: Focusing specifically on our market share performance in 2019 for a moment, we're pleased to have increased our market share in 10-K, 10-Q, and notice and proxy filings for the first time in 10 years, partially by capturing the opportunity presented by the SEC's iXBRL and FAST Act mandates. Moving next to the improvement of our revenue mix, continued success in selling Venue, ActiveDisclosure, and FundSuiteArc, along with a healthy contribution from eBrevia, led to total SaaS net sales approaching 22% of total net sales for the year. This represents a 290 basis points increase from 2018 and a 770 basis points increase from year-end 2016, demonstrating steady progress toward our previously stated revenue mix objectives.

Daniel N. Leib: Focusing specifically on our market share performance in 2019 for a moment, we're pleased to have increased our market share in 10-K, 10-Q, and notice and proxy filings for the first time in 10 years, partially by capturing the opportunity presented by the SEC's iXBRL and FAST Act mandates. Moving next to the improvement of our revenue mix, continued success in selling Venue, ActiveDisclosure, and FundSuiteArc, along with a healthy contribution from eBrevia, led to total SaaS net sales approaching 22% of total net sales for the year. This represents a 290 basis points increase from 2018 and a 770 basis points increase from year-end 2016, demonstrating steady progress toward our previously stated revenue mix objectives.

Our revenue mix continued success in selling venue active disclosure and funds, we dark along with a healthy contribution from you Bravia led the total SaaS net sales approaching 22% of total net sales for the year. This represents a 290 basis point increase from 2018 and a 700.

70 basis point increase from year end 2016, demonstrating steady progress toward our previously stated revenue mix objectives. We continue to place an emphasis on fostering innovation at defund, making key appointments within our product and technology organizations aimed at accelerating the pace of development.

Dan Leib: We continue to place an emphasis on fostering innovation at DFIN, making key appointments within our product and technology organizations aimed at accelerating the pace of development. This innovation focus led to several key enhancements across our various platforms, including iXBRL capabilities, key infrastructure improvements, as well as a new user interface and improved upload speeds in Venue. We also continue to make investments in our employees aimed at increasing productivity and job satisfaction, and are pleased to announce that we were recently named as a best place to work in Chicago by the technology community hub Built In. Moving now to Q4 operating highlights. In capital markets, ActiveDisclosure had a strong quarter, growing Q4 revenues by nearly 21% year-over-year, again adding dozens of new clients.

Daniel N. Leib: We continue to place an emphasis on fostering innovation at DFIN, making key appointments within our product and technology organizations aimed at accelerating the pace of development. This innovation focus led to several key enhancements across our various platforms, including iXBRL capabilities, key infrastructure improvements, as well as a new user interface and improved upload speeds in Venue. We also continue to make investments in our employees aimed at increasing productivity and job satisfaction, and are pleased to announce that we were recently named as a best place to work in Chicago by the technology community hub Built In. Moving now to Q4 operating highlights. In capital markets, ActiveDisclosure had a strong quarter, growing Q4 revenues by nearly 21% year-over-year, again adding dozens of new clients.

This innovation focused led to several key enhancements across our various platforms, including.

Spiro capabilities key infrastructure improvements as well as a new user interface and improved upload speeds and venue.

We also continue to make investments in our employees aimed at increasing productivity and job satisfaction and are pleased to announce that we were recently named as a best place to work Chicago by the technology community hub built in.

Moving now to fourth quarter operating highlights in capital markets active disclosure had a strong quarter growing fourth quarter revenues by nearly 21% year over year again, adding dozens of new clients. In addition, a deeper integration with our venue offering you Bravia also announced an integration with I manage a leading software vendor.

Dan Leib: In addition to deeper integration with our Venue offering, eBrevia also announced an integration with iManage, a leading software vendor in the legal vertical. By pairing eBrevia with iManage's industry-leading document and email management system, clients can immediately benefit from a turnkey workflow solution while opening up a great opportunity for us to introduce eBrevia to iManage's large client base. Elsewhere in our capital markets transactional and Venue offerings, the M&A environment remained soft in Q4, with total closed M&A transactions as well as SEC merger filings both being down over 25% versus Q4 of 2018. However, IPO net sales again remained solid, with DFIN holding meaningful market share, especially in large complex deals, including supporting the largest IPO in history in Q4.

Daniel N. Leib: In addition to deeper integration with our Venue offering, eBrevia also announced an integration with iManage, a leading software vendor in the legal vertical. By pairing eBrevia with iManage's industry-leading document and email management system, clients can immediately benefit from a turnkey workflow solution while opening up a great opportunity for us to introduce eBrevia to iManage's large client base. Elsewhere in our capital markets transactional and Venue offerings, the M&A environment remained soft in Q4, with total closed M&A transactions as well as SEC merger filings both being down over 25% versus Q4 of 2018. However, IPO net sales again remained solid, with DFIN holding meaningful market share, especially in large complex deals, including supporting the largest IPO in history in Q4.

In the legal vertical by pairing E Bravia with I manages industry, leading document and email management system clients can immediately benefit from a turnkey workflow solution, while opening up a great opportunity for us to introduce the Brevini to I manages a large client base.

Elsewhere in our capital markets transactional and venue offerings. The M&A environment remained soft in the fourth quarter with total closed M&A transactions as well as FCC merger filings, both being down over 25% versus the fourth quarter of 2018.

However, IPO net sales again remained solid with defund holding meaningful market share, especially in large complex deals, including supporting the largest IPO in history in the fourth quarter.

Dan Leib: Arc Pro, which is part of our FundSuiteArc platform, continued its momentum in Q4 with two more marquee wins. The first, a large Kansas City-based asset manager will onboard their funds to Arc Pro in early 2020. The second, a large Midwest third-party fund administrator intends to use our software to manage their proprietary funds and ultimately to support the compliance needs of their administration clients. This one represents the seventh third-party administrator to choose Arc Pro to support their needs and those of their clients. In another Q4 highlight, a large investment insurance client adopted Arc Pro to help manage a considerable undertaking associated with their corporate rebranding. This effort will continue throughout 2020 as they leverage our software combined with our services team to complete the rebranding of their corporate documents.

Daniel N. Leib: Arc Pro, which is part of our FundSuiteArc platform, continued its momentum in Q4 with two more marquee wins. The first, a large Kansas City-based asset manager will onboard their funds to Arc Pro in early 2020. The second, a large Midwest third-party fund administrator intends to use our software to manage their proprietary funds and ultimately to support the compliance needs of their administration clients. This one represents the seventh third-party administrator to choose Arc Pro to support their needs and those of their clients. In another Q4 highlight, a large investment insurance client adopted Arc Pro to help manage a considerable undertaking associated with their corporate rebranding. This effort will continue throughout 2020 as they leverage our software combined with our services team to complete the rebranding of their corporate documents.

Our pro which is part of our funds suite. Our platform continued its momentum in the fourth quarter with two more marquee wins. The first a large Kansas city based asset manager will onboard their funds to our pro in early 2020, the second a large Midwest third party fund administrator intends to use our software to manage their proprietary.

Refunds and ultimately to support the compliance needs of their administration clients. This win represents the seventh third party administrator to choose our pro to support their needs and those of their clients.

In another fourth quarter highlight a large investment insurance client adopted our pro to help manage a considerable undertaking associated with their corporate rebranding. This effort will continue throughout 2020 as they leverage our software combined with our services team to complete the rebranding of their corporate documents. This is yet another proof point.

Dan Leib: This is yet another proof point of how our core software solutions solve our clients' company-wide challenges. Shifting gears, as we have discussed before, in our continuing efforts to generate long-term value for shareholders, our board of directors regularly evaluates all aspects of the company's strategy, including capital allocation. As such, the board recently approved a $25 million share repurchase program. This repurchase program demonstrates the board's confidence in our strategy and future prospects. Going forward, we will maintain our disciplined approach to capital allocation and plan to opportunistically repurchase our stock while maintaining ample liquidity and financial flexibility. Before turning things over to Dave, I wanted to provide a quick update on our strategic priorities going into next year. We remain committed to driving our strategy to support our clients when, where, and how they wanna work in a digital world.

Daniel N. Leib: This is yet another proof point of how our core software solutions solve our clients' company-wide challenges. Shifting gears, as we have discussed before, in our continuing efforts to generate long-term value for shareholders, our board of directors regularly evaluates all aspects of the company's strategy, including capital allocation. As such, the board recently approved a $25 million share repurchase program. This repurchase program demonstrates the board's confidence in our strategy and future prospects. Going forward, we will maintain our disciplined approach to capital allocation and plan to opportunistically repurchase our stock while maintaining ample liquidity and financial flexibility. Before turning things over to Dave, I wanted to provide a quick update on our strategic priorities going into next year. We remain committed to driving our strategy to support our clients when, where, and how they wanna work in a digital world.

Our core software solution solve our clients companywide challenges.

Shifting gears as we've discussed before in our continuing efforts to generate long term value for shareholders. Our board of directors regularly evaluates all aspects of the company's strategy, including capital allocation as such the board recently approved the $25 million share repurchase program.

This repurchase program demonstrates the boards confidence in our strategy and future prospects going forward, we will maintain our disciplined approach to capital allocation and plan to opportunistically repurchase our stock, while maintaining ample liquidity and financial flexibility before turning things over to Dave I wanted to provide a quick update on our strategic priorities going.

Into next year, we remain committed to driving our strategy to support our clients, when where and how they want to work in the digital world.

Dan Leib: In 2020, you can expect our primary focus to remain on executing our business mix shift by continuing to grow our recurring SaaS revenue base while maintaining share in our core traditional businesses, including transactions. In addition, similar to last year, we plan to continue to drive cost efficiencies to expand margins. Focusing on that point for a moment, as we plan for the upcoming SEC Rule 30e-3 regulatory change that will significantly reduce demand for printing, we plan to further optimize our manufacturing platform. As part of this platform optimization, we are also taking a broader look at client, product, and job profitability outside of 30e-3, likely reducing our 2020 print volume and other offerings as well.

Daniel N. Leib: In 2020, you can expect our primary focus to remain on executing our business mix shift by continuing to grow our recurring SaaS revenue base while maintaining share in our core traditional businesses, including transactions. In addition, similar to last year, we plan to continue to drive cost efficiencies to expand margins. Focusing on that point for a moment, as we plan for the upcoming SEC Rule 30e-3 regulatory change that will significantly reduce demand for printing, we plan to further optimize our manufacturing platform. As part of this platform optimization, we are also taking a broader look at client, product, and job profitability outside of 30e-3, likely reducing our 2020 print volume and other offerings as well.

In 2020.

You can expect our primary focus to remain on executing our business mix shift by continuing to grow our recurring SaaS revenue base, while maintaining share in our core traditional businesses, including transactions. In addition, similar to last year, we plan to continue to drive cost efficiencies to expand margins.

Focusing on that point for a moment.

As we plan for the upcoming FCC rule 33 regulatory change that will significantly reduced demand for printing we plan to further optimize our manufacturing platform as part of this platform optimization. We're also taking a broader look at client product and job profitability outside of 33.

Likely reducing our 2020 print volume and other offerings as well, we feel that be by proactively rightsizing. Our platform now we set ourselves up for future profit margin and cash flow improvement by adjusting our overall fixed costs.

Dan Leib: We feel that by proactively rightsizing our platform now, we set ourselves up for future profit margin and cash flow improvement by adjusting our overall fixed costs. With that, I'll turn it over to Dave to provide more details on our financial performance and guidance for 2020. Dave?

Daniel N. Leib: We feel that by proactively rightsizing our platform now, we set ourselves up for future profit margin and cash flow improvement by adjusting our overall fixed costs. With that, I'll turn it over to Dave to provide more details on our financial performance and guidance for 2020. Dave?

With that I'll turn it over to Dave to provide more details on our financial performance and guidance for 2020, Dave.

Thank you Dan good morning, everyone.

David Gardella: Thank you, Dan. Good morning, everyone. Before I discuss our Q4 financial performance, I'd like to recap a few housekeeping items, some of which impact our year-over-year comparability. First, as part of our ongoing effort to actively manage our asset base, we sold 50% of our investment in AuditBoard, receiving proceeds of $12.8 million in Q4 2019. This transaction resulted in a combined realized and unrealized gain of $13.6 million, freeing up cash for other uses, including debt repayment. Next, certain pension plan participants elected to receive lump sum pension payments in Q4, which resulted in a non-cash settlement charge of $3.9 million in Q4. We also paid off the remaining balance of our term loan credit facility of $72.5 million in Q4.

David A. Gardella: Thank you, Dan. Good morning, everyone. Before I discuss our Q4 financial performance, I'd like to recap a few housekeeping items, some of which impact our year-over-year comparability. First, as part of our ongoing effort to actively manage our asset base, we sold 50% of our investment in AuditBoard, receiving proceeds of $12.8 million in Q4 2019. This transaction resulted in a combined realized and unrealized gain of $13.6 million, freeing up cash for other uses, including debt repayment. Next, certain pension plan participants elected to receive lump sum pension payments in Q4, which resulted in a non-cash settlement charge of $3.9 million in Q4. We also paid off the remaining balance of our term loan credit facility of $72.5 million in Q4.

Before I discuss our fourth quarter financial performance I'd like to recap a few housekeeping items, some of which impact our year over year comparability.

First as part of our ongoing efforts to actively manage our asset base, we sold 50% of our investment in audit board receiving proceeds of $12.8 million in the fourth quarter of 2019.

This transaction resulted in a combined realized and unrealized gain of $13.6 million freeing up cash for other uses including debt repayment.

Next certain pension plan participants elected to receive lump sum pension payments in the fourth quarter, which resulted in a noncash settlement charge of $3.9 million in the fourth quarter.

We also paid off the remaining balance of our term loan credit facility of $72.5 million in the fourth quarter. As a result, we recognized a pretax loss on extinguishment of debt of $4.1 million related to unamortized debt issuance cost in the original issuance.

David Gardella: As a result, we recognized a pre-tax loss on extinguishment of debt of $4.1 million related to unamortized debt issuance cost and the original issuance discount. This loss is included in our Q4 2019 interest expense. All three of these items are excluded from our non-GAAP results. GAAP income tax expense for the Q4 2019 was a benefit of $2 million due to favorable return to provision adjustments, primarily related to our foreign-derived intangible income deduction, state and local income taxes, and our research and development credits. Finally, as we have discussed on the last several calls, we completed the sale of our Language Solutions business in the Q3 2018.

David A. Gardella: As a result, we recognized a pre-tax loss on extinguishment of debt of $4.1 million related to unamortized debt issuance cost and the original issuance discount. This loss is included in our Q4 2019 interest expense. All three of these items are excluded from our non-GAAP results. GAAP income tax expense for the Q4 2019 was a benefit of $2 million due to favorable return to provision adjustments, primarily related to our foreign-derived intangible income deduction, state and local income taxes, and our research and development credits. Finally, as we have discussed on the last several calls, we completed the sale of our Language Solutions business in the Q3 2018.

Discount.

This loss is included in our fourth quarter 2019 interest expense.

All three of these items are excluded from our non-GAAP results.

GAAP income tax expense for the fourth quarter of 2019 was a benefit of $2 million due to favorable return to provision adjustments primarily related to our foreign derived intangible income deduction state and local income taxes, and our research and development credits.

Finally, as we've discussed in the last several calls we completed the sale of our language solutions business in the third quarter of 2018.

David Gardella: For the year, the sale negatively impacts the year-over-year net sales comparison by -$41.8 million and negatively impacted our gross profit and non-GAAP adjusted EBITDA comparisons by approximately $12 million and $3 million respectively, inclusive of net stranded costs. The sale did not impact the year-over-year comparisons in Q4 2019. Keeping these items in mind, let's review our fourth quarter financial results. On a consolidated basis, net sales for Q4 2019 were $190.3 million, a decrease of $10 million or 5% from Q4 2018.

David A. Gardella: For the year, the sale negatively impacts the year-over-year net sales comparison by -$41.8 million and negatively impacted our gross profit and non-GAAP adjusted EBITDA comparisons by approximately $12 million and $3 million respectively, inclusive of net stranded costs. The sale did not impact the year-over-year comparisons in Q4 2019. Keeping these items in mind, let's review our fourth quarter financial results. On a consolidated basis, net sales for Q4 2019 were $190.3 million, a decrease of $10 million or 5% from Q4 2018.

For the year, the sale negatively impacts the year over year net sales comparison by $41.8 million and negatively impacted our gross profit and non-GAAP adjusted EBITDA comparisons.

Approximately $12 million and $3 million, respectively inclusive of net stranded costs.

The sale did not impact the year over year comparisons in the fourth quarter of 2019.

Keeping these items in mind, let's review, our fourth quarter financial results on a consolidated basis net sales for the fourth quarter of 2019 were $190.3 million, a decrease of $10 million or 5% from the fourth quarter of 2018.

David Gardella: After adjusting for the 2018 acquisition of eBrevia and the impact of foreign exchange rates, organic net sales decreased 5.2% as a re-acceleration in growth in our SaaS solutions, led by ActiveDisclosure and FundSuiteArc, was more than offset by lower capital markets, transactional, and compliance print volume, as well as lower investment markets, mutual fund, and healthcare print volume. Services net sales in Q4 increased by $2.4 million, or 1.8%, compared to Q4 2018, primarily driven by growth in our SaaS solutions. Products net sales decreased by $12.4 million, or 18.2%, due primarily to lower investment markets, mutual fund, and healthcare print volume, as well as lower capital markets, transactional, and compliance print volume.

David A. Gardella: After adjusting for the 2018 acquisition of eBrevia and the impact of foreign exchange rates, organic net sales decreased 5.2% as a re-acceleration in growth in our SaaS solutions, led by ActiveDisclosure and FundSuiteArc, was more than offset by lower capital markets, transactional, and compliance print volume, as well as lower investment markets, mutual fund, and healthcare print volume. Services net sales in Q4 increased by $2.4 million, or 1.8%, compared to Q4 2018, primarily driven by growth in our SaaS solutions. Products net sales decreased by $12.4 million, or 18.2%, due primarily to lower investment markets, mutual fund, and healthcare print volume, as well as lower capital markets, transactional, and compliance print volume.

After adjusting for the 2018 acquisition of E Bravia and the impact of foreign exchange rates organic net sales decreased 5.2% as a reacceleration in growth in our SaaS solutions led by active disclosure and fund sweetheart was more than offset by lower capital markets.

General and compliance print volume as well as lower investment markets Mutual fund and healthcare print volume.

Services net sales in the fourth quarter increased by $2.4 million were 1.8% compared to the fourth quarter of 2018, primarily driven by growth in our SaaS solutions.

Products net sales decreased by $12.4 million or 18.2% due primarily to lower investment markets Mutual fund and health care print volume as well as lower capital markets transactional and compliance print volume.

Fourth quarter gross margin was 37.9% or 270 basis points higher than the fourth quarter of 2018.

David Gardella: Q4 gross margin was 37.9%, or 270 basis points higher than Q4 2018, primarily driven by a favorable mix featuring higher margin SaaS services net sales combined with lower overall print volume. Non-GAAP SG&A expense in the quarter was $46 million, $5.1 million lower than Q4 2018. As a percentage of revenue, non-GAAP SG&A was 24.2%, a decrease of 130 basis points from Q4 2018. The decrease in non-GAAP SG&A expense is primarily due to the impact of ongoing cost savings initiatives. Our Q4 non-GAAP adjusted EBITDA was $26.1 million, an increase of $6.7 million from Q4 2018.

David A. Gardella: Q4 gross margin was 37.9%, or 270 basis points higher than Q4 2018, primarily driven by a favorable mix featuring higher margin SaaS services net sales combined with lower overall print volume. Non-GAAP SG&A expense in the quarter was $46 million, $5.1 million lower than Q4 2018. As a percentage of revenue, non-GAAP SG&A was 24.2%, a decrease of 130 basis points from Q4 2018. The decrease in non-GAAP SG&A expense is primarily due to the impact of ongoing cost savings initiatives. Our Q4 non-GAAP adjusted EBITDA was $26.1 million, an increase of $6.7 million from Q4 2018.

Similarly, driven by a favorable mix featuring higher margin SaaS.

Services net sales combined with lower overall print volume.

Non-GAAP SG they expense in the quarter was $46 million $5.1 million lower than the fourth quarter of 2018.

As a percentage of revenue non-GAAP SGN, a was 24.2% a decrease of 130 basis points from the fourth quarter of 2018.

The decrease in non-GAAP SGN, a expense is primarily due to the impact of ongoing cost savings initiatives.

Our fourth quarter non-GAAP, adjusted EBITDA was $26.1 million, an increase of $6.7 million from the fourth quarter of 2018, our fourth quarter non-GAAP. Adjusted EBITDA margin was 13.7% increase of 400 basis points from the fourth quarter of 2018.

David Gardella: Our Q4 non-GAAP adjusted EBITDA margin was 13.7%, an increase of 400 basis points from Q4 2018, again, primarily driven by the impact of ongoing cost savings initiatives and a more favorable revenue mix. Turning now to our segment results. Net sales in our US segment were $161.7 million in Q4 2019, a decrease of 5.3% from last year's Q4. On an organic basis, net sales were down 5.7%. Net sales in US capital markets decreased 6.8% on an organic basis due primarily to lower transactional and compliance activity, partially offset by growth in our SaaS solutions, primarily in ActiveDisclosure.

David A. Gardella: Our Q4 non-GAAP adjusted EBITDA margin was 13.7%, an increase of 400 basis points from Q4 2018, again, primarily driven by the impact of ongoing cost savings initiatives and a more favorable revenue mix. Turning now to our segment results. Net sales in our US segment were $161.7 million in Q4 2019, a decrease of 5.3% from last year's Q4. On an organic basis, net sales were down 5.7%. Net sales in US capital markets decreased 6.8% on an organic basis due primarily to lower transactional and compliance activity, partially offset by growth in our SaaS solutions, primarily in ActiveDisclosure.

Again, primarily driven by the impact of ongoing cost savings initiatives and a more favorable revenue mix.

Turning now to our segment results net sales in our U.S segment were $161.7 million in the fourth quarter of 2019, a decrease of 5.3% from last year's fourth quarter.

On an organic basis net sales were down 5.7%.

Net sales in us capital markets decreased 6.8% on an organic basis, due primarily to lower transactional and compliance activity, partially offset by growth in our SaaS solutions, primarily in active disclosure.

David Gardella: Net sales in U.S. investment markets decreased 4.4% on an organic basis, driven by lower mutual fund and healthcare print volume, partially offset by solid growth in FundSuiteArc. Non-GAAP adjusted EBITDA margin for the segment of 16.7% increased 250 basis points from Q4 2018, primarily due to the impact of ongoing cost savings initiatives. Net sales in our International segment were $28.6 million in Q4 2019, a decrease of 3.4% from Q4 2018. On an organic basis, excluding the impact of changes in foreign exchange rates, net sales in Q4 were down 3%.

David A. Gardella: Net sales in U.S. investment markets decreased 4.4% on an organic basis, driven by lower mutual fund and healthcare print volume, partially offset by solid growth in FundSuiteArc. Non-GAAP adjusted EBITDA margin for the segment of 16.7% increased 250 basis points from Q4 2018, primarily due to the impact of ongoing cost savings initiatives. Net sales in our International segment were $28.6 million in Q4 2019, a decrease of 3.4% from Q4 2018. On an organic basis, excluding the impact of changes in foreign exchange rates, net sales in Q4 were down 3%.

Sales in us investment markets decreased 4.4% on an organic basis, driven by lower mutual fund and health care print volume, partially offset by solid growth in funds we dark.

Non-GAAP adjusted EBITDA margin for the segment of 16.7% increased 250 basis points from the fourth quarter of 2018, primarily due to the impact them ongoing cost savings initiatives.

Net sales in our international segment were $28.6 million in the fourth quarter of 2019.

A decrease of 3.4% from the fourth quarter of 2018.

On an organic basis, excluding the impact of changes in foreign exchange rates net sales in the fourth quarter were down 3%.

David Gardella: Non-GAAP adjusted EBITDA margin for the segment was 11.9%, an increase of 510 basis points from Q4 2018. The increase in non-GAAP adjusted EBITDA margin was primarily due to the impact of ongoing cost savings initiatives. Our Q4 2019 non-GAAP unallocated corporate expenses, excluding depreciation and amortization, were $4.3 million, a decrease of $2.5 million from Q4 last year. The decline in unallocated corporate cost was primarily driven by cost savings initiatives. Consolidated free cash flow in the quarter was $49 million, $7.4 million higher than Q4 2018, primarily due to higher EBITDA, lower interest payments, and lower capital expenditures.

David A. Gardella: Non-GAAP adjusted EBITDA margin for the segment was 11.9%, an increase of 510 basis points from Q4 2018. The increase in non-GAAP adjusted EBITDA margin was primarily due to the impact of ongoing cost savings initiatives. Our Q4 2019 non-GAAP unallocated corporate expenses, excluding depreciation and amortization, were $4.3 million, a decrease of $2.5 million from Q4 last year. The decline in unallocated corporate cost was primarily driven by cost savings initiatives. Consolidated free cash flow in the quarter was $49 million, $7.4 million higher than Q4 2018, primarily due to higher EBITDA, lower interest payments, and lower capital expenditures.

Non-GAAP adjusted EBITDA margin for the segment was 11.9% increase of 510 basis points from the fourth quarter of 2018, the increase in non-GAAP. Adjusted EBITDA margin was primarily due to the impact of ongoing cost savings initiatives.

Our fourth quarter 2019, non-GAAP unallocated corporate expenses, excluding depreciation and amortization were $4.3 million a decrease of $2.5 million from the fourth quarter of last year.

The decline in unallocated corporate costs was primarily driven by cost savings initiatives.

Consolidated free cash flow in the quarter was $49 million $7.4 million higher than the fourth quarter of 2018, primarily due to higher EBITDA lower interest payments and lower capital expenditures as we've discussed on the last few calls we are actively engaged in an initiative to.

David Gardella: As we have discussed on the last few calls, we are actively engaged in an initiative to improve our quote-to-cash processes with the goal of driving better cash conversion. We are already starting to see results in Q1 2020 with improvement in our year-over-year cash flow through the first several weeks of the year, and are targeting ongoing improvement in this area throughout the year. We paid off our term loan in Q4 2019, ending the year with $296 million of total debt and $278.8 million of net debt, with nothing drawn on our revolver and net available liquidity of $248.8 million. As of 31 December 2019, our net leverage ratio was 2.0x, flat from a year ago.

David A. Gardella: As we have discussed on the last few calls, we are actively engaged in an initiative to improve our quote-to-cash processes with the goal of driving better cash conversion. We are already starting to see results in Q1 2020 with improvement in our year-over-year cash flow through the first several weeks of the year, and are targeting ongoing improvement in this area throughout the year. We paid off our term loan in Q4 2019, ending the year with $296 million of total debt and $278.8 million of net debt, with nothing drawn on our revolver and net available liquidity of $248.8 million. As of 31 December 2019, our net leverage ratio was 2.0x, flat from a year ago.

Improve our quote to cash processes with a goal of driving better cash conversion.

We're already starting to see results in the first quarter of 2020 with improvement in our year over year cash flow through the first several weeks of the year and are targeting ongoing improvement in this area throughout the year.

We paid off our term loan in the fourth quarter of 2019, ending the year with $296 million of total debt and $278.8 million of net debt with nothing drawn on our revolver and net available liquidity of $248.8 million.

As of December 30, Onest 2019, our net leverage ratio was 2.0 times flat from a year ago.

David Gardella: Lastly, at year-end 2019, our pension and other post-retirement plans were $60.2 million underfunded, a decline in funding levels of $7.7 million compared to year-end 2018. With that covered, let me now provide some color on the full year 2020 guidance summarized in this morning's press release. Specifically, we expect 2020 total consolidated net sales to be in the range of $860 to 880 million, staying essentially flat year over year at the midpoint as SaaS net sales growth of low double digits is offset by the proactive reductions in less profitable sales that Dan mentioned earlier, as well as any potential unfavorable election year impacts to our transactional business, which we are assuming to be flat to slightly down for the year.

David A. Gardella: Lastly, at year-end 2019, our pension and other post-retirement plans were $60.2 million underfunded, a decline in funding levels of $7.7 million compared to year-end 2018. With that covered, let me now provide some color on the full year 2020 guidance summarized in this morning's press release. Specifically, we expect 2020 total consolidated net sales to be in the range of $860 to 880 million, staying essentially flat year over year at the midpoint as SaaS net sales growth of low double digits is offset by the proactive reductions in less profitable sales that Daniel mentioned earlier, as well as any potential unfavorable election year impacts to our transactional business, which we are assuming to be flat to slightly down for the year.

Lastly at year end 2019, our pension and other post retirement plans.

We're $60.2 million underfunded, a decline in funding levels of $7.7 million compared to year end 2018.

With that covered let me now provide some color on the full year 2020 guidance summarized in this mornings press release.

Specifically, we expect 2028 total consolidated net sales to be in the range of $860 million to $880 million, saying essentially flat year over year at the midpoint as SaaS net sales growth of low double digits is offset by the proactive reductions in less profitable sales that Dan mentioned earlier.

We are as well as any potential unfavorable election year impacts to our transactional business, which we are assuming to be flat to slightly down for the year.

We expect our non-GAAP adjusted EBITDA to be in the range of $140 million to $145 million up approximately 4% as we continue to see the benefits our of our improved revenue mix as well as the continued run rate impact of our ongoing cost saving savings initiatives.

David Gardella: We expect our non-GAAP adjusted EBITDA to be in the range of $140 to 145 million, up approximately 4%. As we continue to see the benefits of our improved revenue mix, as well as the continued run rate impact of our ongoing cost savings initiatives. Depreciation and amortization is expected to be approximately $55 million. We expect interest expense of approximately $30 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, not including any potential impact of the share repurchase program that Dan mentioned earlier.

David A. Gardella: We expect our non-GAAP adjusted EBITDA to be in the range of $140 to 145 million, up approximately 4%. As we continue to see the benefits of our improved revenue mix, as well as the continued run rate impact of our ongoing cost savings initiatives. Depreciation and amortization is expected to be approximately $55 million. We expect interest expense of approximately $30 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, not including any potential impact of the share repurchase program that Daniel mentioned earlier.

Depreciation and amortization is expected to be approximately $55 million, we expect interest expense of approximately $30 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 not including any potential impact of the share repurchase program that Dan mentioned earlier.

We expect capital expenditures to be approximately $35 million down nearly $10 million from 2019, primarily related to the onetime investment in digital print equipment in 2019.

David Gardella: We expect capital expenditures to be approximately $35 million, down nearly $10 million from 2019, primarily related to the one-time investment in digital print equipment in 2019. Lastly, we expect free cash flow in the range of $35 million to $40 million. Regarding our outlook for Q1, we're expecting net sales to be in the range of $220 million to $230 million, down approximately 2% year over year at the midpoint, due largely to a $4 million non-recurring special proxy project in US investment markets in Q1 of 2019 as well as the expected unfavorable impacts to our business related to the coronavirus outbreak, specifically in our international segment.

David A. Gardella: We expect capital expenditures to be approximately $35 million, down nearly $10 million from 2019, primarily related to the one-time investment in digital print equipment in 2019. Lastly, we expect free cash flow in the range of $35 million to $40 million. Regarding our outlook for Q1, we're expecting net sales to be in the range of $220 million to $230 million, down approximately 2% year over year at the midpoint, due largely to a $4 million non-recurring special proxy project in US investment markets in Q1 of 2019 as well as the expected unfavorable impacts to our business related to the coronavirus outbreak, specifically in our international segment.

And lastly, we expect free cash flow in the range of $35 million to $40 million.

Regarding our outlook for the first quarter, we're expecting net sales to be in the range of $220 million to $230 million down approximately 2% year over year at the midpoint due largely to a $4 million nonrecurring special proxy project in us investment markets in the first quarter of 2019.

As well as the expected unfavorable impacts to our business related to the Corona virus outbreak specifically in our international segment.

David Gardella: Regarding profitability, we expect our non-GAAP adjusted EBITDA margin to improve compared to Q1 2019 as we continue to see the run rate impact of our ongoing cost savings initiatives show up in the results. Regarding seasonality of our cash flow, our normal cash flow pattern has us as a net user of cash in H1 of the year, generating most of our cash in H2 of the year. We do, however, expect to see improvements in cash flow related to the quote-to-cash initiative I mentioned earlier, some of which we expect to see in H1 of the year. Finally, we're planning to make changes to certain disclosures in Q1 2020 aimed at providing additional clarity around the performance of our traditional and SaaS offerings.

David A. Gardella: Regarding profitability, we expect our non-GAAP adjusted EBITDA margin to improve compared to Q1 2019 as we continue to see the run rate impact of our ongoing cost savings initiatives show up in the results. Regarding seasonality of our cash flow, our normal cash flow pattern has us as a net user of cash in H1 of the year, generating most of our cash in H2 of the year. We do, however, expect to see improvements in cash flow related to the quote-to-cash initiative I mentioned earlier, some of which we expect to see in H1 of the year. Finally, we're planning to make changes to certain disclosures in Q1 2020 aimed at providing additional clarity around the performance of our traditional and SaaS offerings.

Regarding profitability.

We expect our non-GAAP adjusted EBITDA margin to improve compared to the first quarter of 2019 as we continue continue to see the run rate impact of our ongoing cost savings initiatives show up in the results.

Regarding seasonality of our cash flow.

Normal cash flow pattern has us as a net user of cash in the first half of the year generating most of our cash.

In the back half of the year, we do however expect to see improvements in cash flow related to the quote to cash initiative I mentioned earlier, some of which we expect to see in the first half of the year.

Finally, we're planning to make changes to certain disclosures in the first quarter of 2020 aimed at providing additional clarity around the performance of our traditional and SaaS offerings. We look forward to sharing these changes with you beginning with our first quarter 2020 results.

David Gardella: We look forward to sharing these changes with you beginning with our Q1 2020 results. With that, I'll turn it back to Dan.

David A. Gardella: We look forward to sharing these changes with you beginning with our Q1 2020 results. With that, I'll turn it back to Daniel.

And with that I'll turn it back to Dan.

Dan Leib: Thank you, Dave. Before we open it up for Q&A, I wanted to share a few additional thoughts. Over the three years, I'm proud that our team has established DFIN as a profitable standalone company, made significant progress against our strategic priorities to improve our mix of business, protected our core markets, and evolved our company, all while significantly de-leveraging the business. Moving into 2020, we are entering a new chapter of our digital transformation, one that will feature an enhanced focus on accelerating our software growth and continuing to improve our overall business performance. We firmly believe in our strategy and remain focused on delivering value to our shareholders. With that, let's open the line for Q&A.

Daniel N. Leib: Thank you, David. Before we open it up for Q&A, I wanted to share a few additional thoughts. Over the three years, I'm proud that our team has established DFIN as a profitable standalone company, made significant progress against our strategic priorities to improve our mix of business, protected our core markets, and evolved our company, all while significantly de-leveraging the business. Moving into 2020, we are entering a new chapter of our digital transformation, one that will feature an enhanced focus on accelerating our software growth and continuing to improve our overall business performance. We firmly believe in our strategy and remain focused on delivering value to our shareholders. With that, let's open the line for Q&A.

Thank you Dave before we open it up for Q in a I wanted to share a few additional thoughts over the three years I'm proud that our team has established defund as a profitable Standalone company made significant progress against our strategic priorities to improve our mix of business protected our core markets and evolve their company all while significantly.

The deleveraging the business moving into 2020, we are entering a new chapter of our digital transformation, one that will feature and enhance focused on accelerating our software growth and continuing to improve our overall business performance. We firmly believe in our strategy and remain focused on delivering value to our shareholders and with that let's hope.

In the line for Cumin a.

Ladies and gentlemen to ask a question. Please press star and the number one on your telephone keypad.

Operator 3: Ladies and gentlemen, to ask a question, please press star, then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question comes from Michael Zhao with JP Morgan. Your line is open.

Operator: Ladies and gentlemen, to ask a question, please press star, then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question comes from Michael Zhao with JPMorgan. Your line is open.

We'll pause for just a moment kotalik you any roster.

Your first question comes from Michael Carroll with Jpmorgan. Your line is open.

Hi, good morning, Thanks for thanks for taking my question I just wanted to.

Michael Zhao: Hi. Good morning. Thanks for taking my question. I just wanted to.

Michael 'Mike' Zhao: Hi. Good morning. Thanks for taking my question. I just wanted to.

Dan Leib: Good morning, Mike.

Daniel N. Leib: Good morning, Michael.

Michael Zhao: Hi, good morning. You mentioned some comments around right sizing the platform and taking proactive, I guess, reductions in unprofitable business. Can you just give a little bit more flavor on what that kind of looks like, what that means to you from a, one, from a physical operating perspective, and then two, from a financial perspective?

Hi, Good morning on you mentioned some comments around right sizing the form and taking all that.

Michael 'Mike' Zhao: Hi, good morning. You mentioned some comments around right sizing the platform and taking proactive, I guess, reductions in unprofitable business. Can you just give a little bit more flavor on what that kind of looks like, what that means to you from a, one, from a physical operating perspective, and then two, from a financial perspective?

I guess reductions nonprofit purposes can you just give a little more flavor on what's that.

Looking back with you from a one for physical operating perspective than financial perspective.

Yes sure so.

David Gardella: Yeah, sure. We own several facilities in which we print our own products, and, you know, that represents roughly 50% of our own. We use our own capacity for 50% of our production work, and we outsource the rest, etc. We think through that, and we know what's coming in terms of regulatory change, you know, the fixed cost nature of a platform, taking into consideration what we can also offshore. We want to look at all of the work that gets produced. It's both within our physical platform as well as what we're doing on the software side.

David A. Gardella: Yeah, sure. We own several facilities in which we print our own products, and, you know, that represents roughly 50% of our own. We use our own capacity for 50% of our production work, and we outsource the rest, etc. We think through that, and we know what's coming in terms of regulatory change, you know, the fixed cost nature of a platform, taking into consideration what we can also offshore. We want to look at all of the work that gets produced. It's both within our physical platform as well as what we're doing on the software side.

We we own several.

Facilities in which we.

Since our own products and.

That represents work that.

Or of our total work that represents roughly 50% of our own.

We use our own capacity for 50% of our production work and we outsource the rest et cetera, and so as we think through that and we know what's coming in terms of regulatory change the fixed cost nature of of a platform taking into consideration what we can also.

Offshore we want to look at all of the work that gets produced.

And it's both within our.

Within our physical platform as well as what we're doing on the software side, we're looking at all Klein profitability and pride product profitability and job profitability.

David Gardella: We're looking at all client profitability, product profitability, and job profitability. In this regard, it's, you know, looking at how we optimize our physical assets in order to drive a higher level of profit and cash, recognizing that we know there's a reduction, regulatory-driven, in print volume. In terms of sizing it for you, we'll plan to do that later this year. You know, that's our thinking and I think we made good progress against it and well on the way to being finalized with that analysis.

David A. Gardella: We're looking at all client profitability, product profitability, and job profitability. In this regard, it's, you know, looking at how we optimize our physical assets in order to drive a higher level of profit and cash, recognizing that we know there's a reduction, regulatory-driven, in print volume. In terms of sizing it for you, we'll plan to do that later this year. You know, that's our thinking and I think we made good progress against it and well on the way to being finalized with that analysis.

But in this regard its.

Looking at how we optimize our physical assets in order to drive a higher level of.

Profit and cash recognizing that we know there's a reduction.

Regulatory driven in print volume.

Terms of sizing it for you we'll plan to do that.

Later this year.

But that's our thinking and I think.

We made good progress against it and well on the way to being finalized with that analysis.

Okay, great and if I could just ask one follow up on the on the software business I mean, just given the strength and the quarter around software since its maybe just remind us how big.

Michael Zhao: Okay, great. If I could just ask one follow-up on the software business. I mean, just given the strength in the quarter around the software business, maybe can you just remind us how big some of the components are that you mentioned, whether it's ActiveDisclosure or Venue or Arc Pro?

Michael 'Mike' Zhao: Okay, great. If I could just ask one follow-up on the software business. I mean, just given the strength in the quarter around the software business, maybe can you just remind us how big some of the components are that you mentioned, whether it's ActiveDisclosure or Venue or Arc Pro?

Components are that you mentioned weather exposure than yours.

Yes.

Yes, sure so weve and we've broken those out before so.

David Gardella: Yeah, sure. We've broken these out before. Venue is the largest, followed by FundSuiteArc and then ActiveDisclosure. You know, ActiveDisclosure has had the nicest growth this quarter as well as through the balance of the year. You know, that's consistent with what we've seen going in starting probably midyear last year.

David A. Gardella: Yeah, sure. We've broken these out before. Venue is the largest, followed by FundSuiteArc and then ActiveDisclosure. You know, ActiveDisclosure has had the nicest growth this quarter as well as through the balance of the year. You know, that's consistent with what we've seen going in starting probably midyear last year.

Venue is the largest.

Followed by.

Funds, we dark and then active disclosure.

Active disclosure has had the nicest growth.

This quarter as well as.

Through the balance of the year.

And that's consistent with with what we've seen.

Going in.

Starting probably mid year last year.

Yeah.

Okay, great. Thank you.

Michael Zhao: Okay, great. Thank you.

Michael 'Mike' Zhao: Okay, great. Thank you.

David Gardella: Thank you.

David A. Gardella: Thank you.

Thank you.

Operator 3: Your next question comes from Peter Heckmann with Davidson. Your line is open.

Operator: Your next question comes from Peter Heckmann with D.A Davidson. Your line is open.

Your next question comes from Peter Heckmann with Davidson Your line is open.

Good morning gentleman. Thanks for taking the question looks like capital might be for the year on a global basis maybe.

Peter Heckmann: Good morning, gentlemen. Thanks for taking the question. Looks like capital markets-

David Gardella: Hey, Pete.

Peter Heckmann: ... for the year on a global basis is maybe between 55% and 60% of revenue. Can you talk about how much the transactional business made up of that? If possible, maybe some rough quantification of IPOs and M&A.

David A. Gardella: Hey, Peter.

Between 55, and 60% of revenue can you talk about.

How much the transactional business made up of that and and it Bob maybe some rough quantification of IPO that M&A.

Yes.

David Gardella: Yeah, Pete, on a global basis, transactional was roughly $250 million of total revenue, about $190 million of that in the US and $60 million internationally.

David A. Gardella: Yeah, Peter, on a global basis, transactional was roughly $250 million of total revenue, about $190 million of that in the US and $60 million internationally.

Yes, so Pete on a.

Global basis transactional was roughly $250 million of total revenue about one nine to you that in the us and six the internationally.

Okay.

Peter Heckmann: Okay.

And then as you look at.

David Gardella: As you look at, you know, within transactions on a full year basis, the biggest decline as we've talked about all year long, the biggest challenge was in M&A activity, and that volume was certainly down on a year-over-year basis. IPOs, I'm looking for the detail here. Hang on a second. The S-1 activity was up for the year about $6 million in revenue. When we look at total S-4 revenue was down about $27 million.

David A. Gardella: As you look at, you know, within transactions on a full year basis, the biggest decline as we've talked about all year long, the biggest challenge was in M&A activity, and that volume was certainly down on a year-over-year basis. IPOs, I'm looking for the detail here. Hang on a second. The S-1 activity was up for the year about $6 million in revenue. When we look at total S-4 revenue was down about $27 million.

Within transactions on a on a full year basis.

The biggest decline as we've talked about all year long.

The biggest challenge was in M&A activity.

Thats off that volume.

Which was certainly down on a year over year basis.

Those and I'm looking for the the detail here hang on a second.

The S. One activity was up for the year about $6 million in revenue and when we look at total last for revenue was down about 27 million.

Got it got it Okay and then.

Peter Heckmann: Got it. Okay. In terms of what you're seeing right now, you know, the IPO activity year to date looks okay. You know, some questions, as you said, about the election, coronavirus. I guess, how do you feel about the pipeline, which you're seeing today? Still relatively solid and reflecting solid market share?

In terms of what you're seeing right now.

The.

Pivoting year to date looks okay.

Some questions that you said about the election buyer as I guess, how do you feel about the pipeline what youre seeing today.

Bill relatively solid and reflecting felt market share.

David Gardella: Yeah. Certainly, the pipeline's good. We are certainly internationally seeing the impact of the virus. You know, that will, you know, in the region, you know, most of our offices, not all, but most of the offices have people working from home. We've seen a standstill there. Early in the year, as I mentioned, pipeline's good. Share seems strong or and M&A is still not where, still not fully picked up, but seeing a little bit of firming up there.

David A. Gardella: Yeah. Certainly, the pipeline's good. We are certainly internationally seeing the impact of the virus. You know, that will, you know, in the region, you know, most of our offices, not all, but most of the offices have people working from home. We've seen a standstill there. Early in the year, as I mentioned, pipeline's good. Share seems strong or and M&A is still not where, still not fully picked up, but seeing a little bit of firming up there.

Yes, certainly.

The pipeline is good we are certainly internationally seeing the impact of of the virus.

And that will.

In in the region.

Most of our office is not all but most of the offices have people working from home and.

I've seen a.

Standstill there early in the year.

Mentioned pipelines pipelines good share seems seems stronger.

M&A is still not where.

Still not fully picked up but seeing a little bit of firming up there.

Got it got it thank you will get back in the queue.

Peter Heckmann: Got it. Thank you. I'll get back in the queue.

David Gardella: Thank you.

David A. Gardella: Thank you.

Thank you.

Your next question comes from Charlie Strauzer with C.G.S. Your line is open.

Operator 3: Your next question comes from Charles Strauzer with CJS. Your line is open.

Operator: Your next question comes from Charles Strauzer with CJS Securities. Your line is open.

Hi, good morning.

Charles Strauzer: Hi, good morning.

Charlie.

David Gardella: Hey, Charlie.

David A. Gardella: Hey, Charlie.

Charles Strauzer: Hey, if we could talk a little bit more about 33, and I assume we're still on the same start date there for next year.

Hey, if we could talk a little bit more about 33 and I assume we're still on the seems seems start date there for next year.

David Gardella: Yes. Yeah. It's Q1 2021.

David A. Gardella: Yes. Yeah. It's Q1 2021.

Yes, yes first quarter of 2021.

Got it and any changes to your thoughts on the potential revenue impact there.

Charles Strauzer: Got it. Any changes to your thoughts on, you know, the potential revenue impact there?

We're doing more work there. There's there are certainly the fund side Theres, the variable annuity side of it as well and.

David Gardella: You know, we're doing more work there. There's certainly the fund side. There's the variable annuity side of it as well. You know, as we layer in some of the work that I mentioned on the profitability side, we'll come back with an overall estimate of what we think that looks like. You know, making good progress there on the profit side. Think we're pretty well covered in terms of our ability to mitigate the impact on the bottom line.

David A. Gardella: You know, we're doing more work there. There's certainly the fund side. There's the variable annuity side of it as well. You know, as we layer in some of the work that I mentioned on the profitability side, we'll come back with an overall estimate of what we think that looks like. You know, making good progress there on the profit side. Think we're pretty well covered in terms of our ability to mitigate the impact on the bottom line.

As we layer in.

Some of the work that I I mentioned on the profitability side.

We will come back with an overall estimate of what we think that looks like.

But.

Making good progress there on the profit side.

I think we're we're pretty well covered if in terms of our ability.

To mitigate the impact on the bottom line.

Excellent and on Q1, you talked about.

Charles Strauzer: Excellent. On Q1, you talked about improvement year-over-year on EBITDA margins, and maybe a little bit more color there and a little more quantification if you could. Thanks.

Improvement year over year on EBITDA margins, and maybe a little bit more color there.

Okay, and if you could thanks.

Yes, Charlie So I think.

David Gardella: Yeah, Charlie. I think, you know, we talked about the cost savings rolling through. You know, lot of the margin improvement's gonna depend on the level of transactional activity that we see and then the impact internationally as we talked about of the coronavirus and how that impacts international transactional activity. But, you know, I think we're expecting that to be obviously softer. But all in all, still expecting overall EBITDA margin improvement, again, largely driven by the cost savings. We haven't specifically quantified it, only because of the variability that, as you know, transactional could have.

David A. Gardella: Yeah, Charlie. I think, you know, we talked about the cost savings rolling through. You know, lot of the margin improvement's gonna depend on the level of transactional activity that we see and then the impact internationally as we talked about of the coronavirus and how that impacts international transactional activity. But, you know, I think we're expecting that to be obviously softer. But all in all, still expecting overall EBITDA margin improvement, again, largely driven by the cost savings. We haven't specifically quantified it, only because of the variability that, as you know, transactional could have.

You talked about the cost savings rolling through.

Lot of the margin improvements going to depend on the level of transactional activity that we see and then the impact internationally as we talked about of.

The current virus and how that impacts international transactional activity.

But I think we're expecting that to be obviously softer.

But but all in off still expecting overall EBITDA margin improvement again, largely driven by the cost savings.

We haven't specifically quantified it only because of the variability that that as you know transactional could have.

Okay, great. Thank you very much.

Charles Strauzer: Understood. Okay, great. Thank you very much.

David Gardella: Thank you.

David A. Gardella: Thank you.

Thank you.

Your next question comes from Bill Warmington with Wells Fargo. Your line is open.

Operator 3: Your next question comes from Bill Warmington with Wells Fargo. Your line is open.

Operator: Your next question comes from Bill Warmington with Wells Fargo Securities. Your line is open.

Good morning, everyone.

Bill Warmington: Good morning, everyone.

David Gardella: Morning, Bill.

David A. Gardella: Morning, Bill.

So.

Bill Warmington: To follow up on that question, what's the incremental margin running on the transactional business these days?

So.

Of the follow up on that question.

Bill Warmington: To follow up on that question, what's the incremental margin running on the transactional business these days?

What's the incremental margin running on the transactional business. These days.

Yes, so bill in the we would call it probably in the 50% to 60% range now.

David Gardella: Yeah. It's still, Bill, in the, we would call it probably in the 50% to 60% range. Now, you know, a lot of it depends on the mix of transactions, right? You know, there's variance between debt deals, IPO, M&A, and then within those transactions, the size and complexity could also drive variance in the incremental margins on each. But I think if you looked at it overall, we would say in the, you know, 50+% percent range.

David A. Gardella: Yeah. It's still, Bill, in the, we would call it probably in the 50% to 60% range. Now, you know, a lot of it depends on the mix of transactions, right? You know, there's variance between debt deals, IPO, M&A, and then within those transactions, the size and complexity could also drive variance in the incremental margins on each. But I think if you looked at it overall, we would say in the, you know, 50+% percent range.

You know a lot a lot of it depends on the mix of transactions right. So.

Something.

There is variance between.

That deals IPO M&A and then within those transactions the size and complexity could also drive variants in the incremental margins on each but I think if you looked at added overall, we would say in the 50 plus percent range.

Got it and then the.

Bill Warmington: Got it. Then the, you know, the operating cash flow guidance improvement. I just wanna know if you could talk a little bit about the drivers there. I know you had mentioned, you know, in a cash flow improvement program that you had, but I wasn't sure if that was driving all of it or some of it.

The operating.

Cash flow guidance and.

Improvement.

No if you could talk a little bit about the drivers there I know you had mentioned.

And then.

Cash flow improvement program that you had but I wasn't sure if that was driving all of it or some of it.

David Gardella: Yeah. It's some of it. I think when you look at the cash flow in 2019, we were just under $10 million in free cash. There's about $25 million or so of either unusual items or incremental investment. We noted in the press release this morning that there was just over $18 million associated with some taxes related to the gain on Language Solutions in 2019 as well as the sale of the Secaucus facility. In addition, in the free cash flow number, there was about $7 million of CapEx related to the digitization of the print platform in 2019 that we don't expect to recur in 2020.

David A. Gardella: Yeah. It's some of it. I think when you look at the cash flow in 2019, we were just under $10 million in free cash. There's about $25 million or so of either unusual items or incremental investment. We noted in the press release this morning that there was just over $18 million associated with some taxes related to the gain on Language Solutions in 2019 as well as the sale of the Secaucus facility. In addition, in the free cash flow number, there was about $7 million of CapEx related to the digitization of the print platform in 2019 that we don't expect to recur in 2020.

Yes, so at some of it I think when you look at when you look at the cash flow in 2019, we were just under 10 million in free cash, but there is about $25 million or so of.

Either unusual items or incremental investment.

As we noted in the press release. This morning that there was just over $18 million associated with.

Some taxes related to in 2019 to the gain on language solutions as well as the sale of the Secaucus facility and then in addition in the free cash flow number there was about $7 million of Capex related to.

The digitization of the print platform in 2019 that we don't expect.

To recur in 2020.

David Gardella: As I mentioned in the prepared remarks, you know, so far, you know, 7 or 8 weeks into the year, we're already starting to see some of the benefits of the initiatives.

David A. Gardella: As I mentioned in the prepared remarks, you know, so far, you know, 7 or 8 weeks into the year, we're already starting to see some of the benefits of the initiatives.

And as I mentioned in the prepared remarks.

So far seven or eight weeks into the into the year. We're starting we're already starting to see some of the benefits of the initiatives.

Got it and then I was always going to ask about the you named a number of new business wins and I just wanted to ask for some color there.

Bill Warmington: Got it. Then I was also gonna ask about the. You named a number of new business wins, and I just wanted to ask for some color there. Is that, are those typically net new clients or are they existing clients buying new products? Some color there would help.

Is that.

Those typically net new clients or the existing clients by new products. Some color there would help sure yes, it's a little bit of both.

David Gardella: Sure. Yeah. It's a little bit of both. You know, in the example I gave, on using Arc Pro, that's actually an existing client finding a new use case for our software to solve a firm-wide challenge that they had. Given our strong share in all of our core offerings, you know, typically, we find a lot of opportunity to expand share of wallet with existing clients. In some of the more transactional offerings, you'll also find new clients there. Specific to these, it's a little bit of both.

David A. Gardella: Sure. Yeah. It's a little bit of both. You know, in the example I gave, on using Arc Pro, that's actually an existing client finding a new use case for our software to solve a firm-wide challenge that they had. Given our strong share in all of our core offerings, you know, typically, we find a lot of opportunity to expand share of wallet with existing clients. In some of the more transactional offerings, you'll also find new clients there. Specific to these, it's a little bit of both.

In the example, I gave.

On using our pro Thats actually an existing client.

Finding a new use case for our software to solve.

A firm wide challenge that they had.

And so given our our strong share in in all of our core offerings.

Typically we find a lot of opportunity to expand share of wallet with existing clients.

In some of the more transactional offerings, you'll also find.

New clients their specific to these.

It's a little bit of both.

Alright, Thank you very much thank you.

Bill Warmington: All right. Thank you very much.

David Gardella: Thank you.

David A. Gardella: Thank you.

Your next question comes from Bill Mastoris with Baird. Your line is open.

Operator 3: Your next question comes from Bill Mastoris with Baird. Your line is open.

Operator: Your next question comes from Bill Mastoris with Robert W. Baird & Co. Your line is open.

Bill Mastoris: Okay. Thank you, Dan. You talked about you're entering a new chapter of digital transformation. You also highlighted the regulatory change, which is gonna reduce print volume. I'm just kind of wondering right now what is kind of the breakdown between maybe print transactions and digital transactions, and then anything that you could comment on just in terms of trends that you would expect. You know, obviously, with the new regulatory requirement, I would expect them to drop off. But any additional color that you could provide would be greatly appreciated.

Bill Mastoris: Okay. Thank you, Daniel. You talked about you're entering a new chapter of digital transformation. You also highlighted the regulatory change, which is gonna reduce print volume. I'm just kind of wondering right now what is kind of the breakdown between maybe print transactions and digital transactions, and then anything that you could comment on just in terms of trends that you would expect. You know, obviously, with the new regulatory requirement, I would expect them to drop off. But any additional color that you could provide would be greatly appreciated.

Thank you Dan talked about the you're entering a new chapter digital transformation. You also highlighted the regulatory change, we're just going to reduce print volume I'm just kind of wondering right now what's kind of break down between maybe print transactions and digital transactions and then anything that you could comment on just in terms of trend.

That you would expect obviously with the new regulatory requirement I would expect into drop off but any color that you any additional color that you could provide would be greatly appreciate it.

David Gardella: Yeah, sure. Thanks, Bill. So we stated our software revenue was roughly 22% for the full year. Print would be in that, you know, 35% to 37% range, and the balance would be services. To your point, as Rule 30e-3 takes hold and, you know, there's obviously those, as I mentioned, the mutual fund piece, there's a variable annuity piece, which may come in over different times. But that will take print down in aggregate for sure. Then, you know, what we've seen, you know, as we model it out and, as Dave mentioned, some additional disclosures coming next quarter, and you'll be able to see it more clearly.

Daniel N. Leib: Yeah, sure. Thanks, Bill. So we stated our software revenue was roughly 22% for the full year. Print would be in that, you know, 35% to 37% range, and the balance would be services. To your point, as Rule 30e-3 takes hold and, you know, there's obviously those, as I mentioned, the mutual fund piece, there's a variable annuity piece, which may come in over different times. But that will take print down in aggregate for sure. Then, you know, what we've seen, you know, as we model it out and, as Dave mentioned, some additional disclosures coming next quarter, and you'll be able to see it more clearly.

Yeah sure. Thanks, Phil So we stated our software revenue was roughly 22% for the full year.

Print would would be in that 35 to 30.

7% range and the balance would be services and.

To your point as 33 takes hold and Theres. Obviously, there is as I mentioned the mutual fund piece there is a variable annuity piece.

Which may come in over different times, but that will take.

Print down in in aggregate for sure and then what we've seen as we model it out and as Dave mentioned, some additional disclosures coming next quarter and you'll be able to see it more more clearly but the.

David Gardella: As we model it out, you see good growth in software this year, you know, low double digits. When you remix this, you continue to see the shift that we've seen, which is quite positive from our perspective, you know, generates higher incremental margin, generates good free cash flow. That's the shift we're talking about, Bill.

As we model it out you see good growth in software this year.

Daniel N. Leib: As we model it out, you see good growth in software this year, you know, low double digits. When you remix this, you continue to see the shift that we've seen, which is quite positive from our perspective, you know, generates higher incremental margin, generates good free cash flow. That's the shift we're talking about, Bill.

Low double digits and so when you read mix. This you continue to see the shift.

That we've seen which is quite positive from our perspective generates higher incremental margin generates good free cash flow and so that's the shift we're talking about bill.

Okay, Great and Dave question for you on kind of the cadence of the change in leverage ratios.

Bill Mastoris: Okay, great. Dave, question for you on kind of the cadence of the change in leverage ratios. As you mentioned, you're a cash user for the H1 of the year, and during the H2 of the year, you generate considerable cash. Would we see a similar fluctuation to, let's say, 2019 in leverage ratios, where we're gonna have an increase of maybe a half turn to maybe a full turn in the H1 of the year, and then we get back down to near 2x at the tail end of the year? How's that gonna work out, that cadence? I do acknowledge, of course, you know, the international division is gonna have an impact depending upon how long the coronavirus actually plays out.

Bill Mastoris: Okay, great. David, question for you on kind of the cadence of the change in leverage ratios. As you mentioned, you're a cash user for the H1 of the year, and during the H2 of the year, you generate considerable cash. Would we see a similar fluctuation to, let's say, 2019 in leverage ratios, where we're gonna have an increase of maybe a half turn to maybe a full turn in the H1 of the year, and then we get back down to near 2x at the tail end of the year? How's that gonna work out, that cadence? I do acknowledge, of course, you know, the international division is gonna have an impact depending upon how long the coronavirus actually plays out.

As you mentioned your cash user for the first half of the year and during the back half of the are you generate considerable cash when we see a similar fluctuation.

Let's say 2019 and leverage ratios, where we're going to have an increase of maybe a half in turn to maybe a full turn in the first half of the year and then we get back down to near two times at the tail end of the year.

How's that going to work out that cadence and I do acknowledge of course that the international Division is going to have an impact depending upon how long the corona virus actually plays out.

David Gardella: Yeah, Bill. I think, you know, generally similar pattern. I think it will be based on what we're seeing so far this year and some of the initiatives in place. It'll be less pronounced in terms of the cash usage, you know, specifically in the Q1 and Q2 of the year, and then that we start to overlap some of the benefits. You know, I think generally that pattern of being a user in the H1 will hold this year, but again, less dramatic than what we've seen in, certainly in 2019 and in all previous years.

David A. Gardella: Yeah, Bill. I think, you know, generally similar pattern. I think it will be based on what we're seeing so far this year and some of the initiatives in place. It'll be less pronounced in terms of the cash usage, you know, specifically in the Q1 and Q2 of the year, and then that we start to overlap some of the benefits. You know, I think generally that pattern of being a user in the H1 will hold this year, but again, less dramatic than what we've seen in, certainly in 2019 and in all previous years.

Yes, Bill and I think.

Generally similar pattern I think it will be based on what we're seeing so far this year in some of the initiatives in place.

It will be less pronounced in terms of the cash usage.

Specifically in the in the first and second quarters of the year.

And then that we start to overlap some of the benefits but.

I think generally.

That pattern of being a user in the first half will hold this year, but again less dramatic than what we've seen in certainly in 19 and in all previous years.

Okay. Thank you very much.

Bill Mastoris: Okay. Thank you very much.

David Gardella: Welcome. Thank you.

David A. Gardella: Welcome. Thank you.

Welcome. Thank you.

Operator 3: Again, to ask a question, please press star one on your telephone keypad. Your next question comes from Michael Zhao with JP Morgan. Your line is open.

Operator: Again, to ask a question, please press star one on your telephone keypad. Your next question comes from Michael Zhao with JP Morgan. Your line is open.

Hi, good to ask a question. Please press star one on your telephone Keypad. Your next question comes from Michael Carroll with Jpmorgan. Your line is open.

Michael Zhao: Hey, guys. Thanks for squeezing me back in. You made a quick comment in your intro comments around

Michael 'Mike' Zhao: Hey, guys. Thanks for squeezing me back in. You made a quick comment in your intro comments around

Okay. Thanks for thanks for squeezing it back then.

You made a quick comment on than years intro comments Ron.

Michael Zhao: Winning market share for the first time in a long time. I assume that has to do with ActiveDisclosure, but I was trying to get a little bit more color behind that comment. I mean, you're winning share in the 10-K, 10-Q compliance solutions area. I mean, is it just ActiveDisclosure winning more RFPs or displacing a competitor, or is there something else in the competitive backdrop? Thanks.

Michael 'Mike' Zhao: Winning market share for the first time in a long time. I assume that has to do with ActiveDisclosure, but I was trying to get a little bit more color behind that comment. I mean, you're winning share in the 10-K, 10-Q compliance solutions area. I mean, is it just ActiveDisclosure winning more RFPs or displacing a competitor, or is there something else in the competitive backdrop? Thanks.

Winning market share for the first time in a long time. So I was just and I assume that that has to do it back that disclosure, but I was trying to get a little bit more color behind that comment I mean, you're winning share in the 10-K compliance solutions area. I mean, just at disclosures just winning more seats are displacing a competitor or was there something.

Ill.

Competitive backdrop. Thanks.

Sure, yes, so so when we.

David Gardella: Sure. Yeah. When we look at the overall compliance side, there is some impact from transactional offerings that have compliance type filings. Which is why we were pretty specific on the 10-K, 10-Q notice and proxy. But as you characterized it is driven by success of ActiveDisclosure and, you know, winning more in the marketplace. The 21% growth is a strong quarter for us. We have won, you know, dozens of new clients consistent with prior quarters, and that's, you know, on a net basis. That's the biggest driver.

David A. Gardella: Sure. Yeah. When we look at the overall compliance side, there is some impact from transactional offerings that have compliance type filings. Which is why we were pretty specific on the 10-K, 10-Q notice and proxy. But as you characterized it is driven by success of ActiveDisclosure and, you know, winning more in the marketplace. The 21% growth is a strong quarter for us. We have won, you know, dozens of new clients consistent with prior quarters, and that's, you know, on a net basis. That's the biggest driver.

Look at at the overall compliance side. There are are there is some impact from.

Transactional offerings.

That have compliance types filings, which which is why we were pretty specific on the 10-K 10-Q notice in proxy.

But as you characterize that it is driven by success of of active disclosure and.

Winning more in the marketplace, the the 21% growth.

Is a strong quarter for us we have one.

Dozens of new clients consistent with.

Prior quarters and Thats.

And on a net basis.

And so that's the biggest driver.

Okay, great. Thank you.

Michael Zhao: Okay, great. Thank you.

Michael 'Mike' Zhao: Okay, great. Thank you.

David Gardella: Thank you.

David A. Gardella: Thank you.

Thank you.

Your next question comes from Raj Sharma with B. Riley FBR. Your line is open.

Operator 3: Your next question comes from Raj Sharma with B. Riley FBR. Your line is open.

Operator: Your next question comes from Raj Sharma with B. Riley FBR. Your line is open.

Hi, good morning, guys.

Raj Sharma: Hi. Good morning, guys. I was wondering.

Rajiv 'Raj' Sharma: Hi. Good morning, guys. I was wondering.

I was wondering if you could.

David Gardella: Hi.

David A. Gardella: Hi.

Raj Sharma: If you could provide some more color on what you're assuming in your Q1 guidance is, you know, the transactions. Is it in line with sort of what level of transactional business are you assuming for the Q1 and for the rest of the year?

Rajiv 'Raj' Sharma: If you could provide some more color on what you're assuming in your Q1 guidance is, you know, the transactions. Is it in line with sort of what level of transactional business are you assuming for the Q1 and for the rest of the year?

Provide some more color on what would you assuming you first quarter guidance is.

Transactions.

Is it in line with sort of what level of transactional business are you assuming for the first quarter and for the rest of the year.

Yes, so as we said as we said for the full year transactional expected to be flat to slightly down.

David Gardella: Yeah. As we said, for the full year, transactional expected to be flat to slightly down. You know, for Q1, and again, largely depending on what we see in international, you know, flattish is probably the right way to think about it.

David A. Gardella: Yeah. As we said, for the full year, transactional expected to be flat to slightly down. You know, for Q1, and again, largely depending on what we see in international, you know, flattish is probably the right way to think about it.

For the first quarter and again largely depending on what we see an international.

Flattish is probably the right way to think about it.

Right and then what before 2020, what's sort of print slash services break down are you assuming on the 60 to the 80 million number.

Raj Sharma: Right. What for 2020, what sort of print/services breakdown are you assuming on the $860 to 880 million number?

Rajiv 'Raj' Sharma: Right. What for 2020, what sort of print/services breakdown are you assuming on the $860 to 880 million number?

So we the print versus software and service within 2019 was 37%.

David Gardella: The print versus software and services within 2019 was 37% print and 63% service.

David A. Gardella: The print versus software and services within 2019 was 37% print and 63% service.

Print and 63% service.

Raj Sharma: Right.

Rajiv 'Raj' Sharma: Right.

The print probably comes down.

David Gardella: The print probably comes down, you know, a few hundred basis points to closer to 35. Probably 35, 65. In the 65, you know, we would expect the SaaS number, as Dan mentioned, was approaching 22% in 2019. We would expect that to increase a few hundred basis points.

David A. Gardella: The print probably comes down, you know, a few hundred basis points to closer to 35. Probably 35, 65. In the 65, you know, we would expect the SaaS number, as Dan mentioned, was approaching 22% in 2019. We would expect that to increase a few hundred basis points.

Few hundred basis points to closer to 35, so probably 35 65 and in the 65.

We would expect the SaaS number.

As Dan mentioned was approaching 22% in 2019, we would expect that increase a few hundred basis points.

Right up 200 basis points and then.

Raj Sharma: Right, up to 100 basis points. What sort of margins? I heard that you said transactions was around 50% margins in transactions-related business.

Rajiv 'Raj' Sharma: Right, up to 100 basis points. What sort of margins? I heard that you said transactions was around 50% margins in transactions-related business.

What sort of margins I am I hear I heard that you said transactions is around 50% margins.

And transactions related was down and that's on an incremental basis rush.

David Gardella: Yeah. That's on an incremental basis, Raj.

David A. Gardella: Yeah. That's on an incremental basis, Raj.

So.

Raj Sharma: What sort of margins are you getting on the overall SaaS business?

What sort of margins are you getting on the overall SaaS business.

Rajiv 'Raj' Sharma: What sort of margins are you getting on the overall SaaS business?

More more to come on that the as we go throughout the year here in part of our comments on the.

David Gardella: More to come on that. You know, as we go throughout the year here and part of our comments on the additional disclosures regarding traditional and SaaS, and the expectation is that, you know, throughout 2020, you'll start to see more of that.

David A. Gardella: More to come on that. You know, as we go throughout the year here and part of our comments on the additional disclosures regarding traditional and SaaS, and the expectation is that, you know, throughout 2020, you'll start to see more of that.

Additional disclosures regarding traditional in SaaS.

Expectation is that.

Throughout 2020.

You'll start to see more of that.

Got it thank you.

Raj Sharma: Got it. Thank you.

Rajiv 'Raj' Sharma: Got it. Thank you.

Okay.

Operator 3: There are no further questions queued up at this time. I turn the call back over to Dan Leib for closing remarks.

Operator: There are no further questions queued up at this time. I turn the call back over to Daniel N. Leib for closing remarks.

There are no further questions Kevin just how much in the call back over to Dan Lee for closing remarks.

Thank you and thank you everyone for joining we'll look forward to speaking with you again in may thanks Bye.

Dan Leib: Thank you. Thank you everyone for joining. We'll look forward to speaking with you again in May. Thanks. Bye.

Daniel N. Leib: Thank you. Thank you everyone for joining. We'll look forward to speaking with you again in May. Thanks. Bye.

This concludes today's conference call you may now disconnect.

Operator 3: This concludes today's conference call. You may now disconnect.

Operator: This concludes today's conference call. You may now disconnect.

Yeah.

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