Q4 2023 Donnelley Financial Solutions Inc Earnings Call

Operator: Good morning, my name is Audra, and I will be your conference operator today. At this time, I would like to welcome everyone to the Donnelley Financial Solutions fourth quarter and full year 2023 earnings conference call. Today's conference is being recorded. All lines have been placed on mute to prevent any background noise.

Good morning, My name is Andre and I will be your conference operator today at this time I would like to welcome everyone to the Donnelley financial solutions fourth quarter and full year 2023 earnings conference call.

Today's conference is being recorded all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you'd like to ask a question. During this time simply press the star key followed by the number one on your telephone keypad if.

Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star key followed by the number one on your telephone keypad. If you would like to withdraw your question, press star 1 again. At this time, I would like to turn the conference over to Mike Dow, Head of Investor Relations. Please go ahead.

If you would like to withdraw your question Press Star one again.

At this time I would like to turn the conference over to Mike <unk> head of Investor Relations. Please go ahead.

Mike Dow: Thank you. Good morning, everyone. And thank you for joining Donnelley Financial Solutions' fourth quarter and full year 2023 results conference call this morning. We will release our earnings report, supplemental trending schedules of historical results, and the latest investor presentation, which includes our updated long-term projections, all of which can be found in the investor section of our website at definsolutions.com. During this call, we'll refer to forward-looking statements that are subject to risks and uncertainties.

Thank you good morning, everyone and thank you for joining Donnelley financial solutions fourth quarter and full year 2023 results conference call.

This morning.

We released our earnings report supplemental trending schedules of historical results.

<unk> Investor presentation, which includes our updated long term projections all of which can be found in the investors section of our website at defense solutions Dot com.

During this call we'll refer to forward looking statements that are subject to risks and uncertainties.

Mike Dow: For a complete discussion, please refer to the cautionary statements included in our earnings release and further detailed in our most recent annual report on Form 10-K and other filings with the SEC. In addition, we will discuss certain non-GAAP financial information, such as adjusted EBITDA, adjusted EBITDA margin, and organic net sales. We believe the presentation of non-GAF financial information provides you with useful supplementary information concerning the company's ongoing operation and is an appropriate way for you to evaluate the company's performance. They are, however, provided for informational purposes only.

For complete discussion please refer to the cautionary statements.

In our earnings release and further detailed in our most recent annual report on Form 10-K, and other filings with the SEC.

Further we will discuss certain non-GAAP financial information such as adjusted EBITDA.

Adjusted EBITDA margin and organic net sales.

We believe the presentation of non-GAAP financial information provides you with useful supplementary information.

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.

Mike Dow: Please refer to the earnings release and related tables for GAAP financial information and reconciliations of GAAP to non-GAAP financial information. I am joined this morning by Dan Leib, Dave Gardella, Craig Clay, Eric Johnson, Boyce Fridley, and Kami Turner. I will now turn the call over to Dan. Thank you, Mike. And good morning, everyone.

Please refer to the earnings release and related tables for GAAP financial information and reconciliations of GAAP to non-GAAP financial information.

I am joined this morning by Dan Leib.

Dave Gardella correctly, Eric Johnson voice friendly and can return.

I'll now turn the call over to Dan.

Thank you Mike and good morning, everyone. We finished 2023 by delivering strong fourth quarter results.

Daniel N. Leib: We finish 2023 by delivering strong fourth quarter results, highlighted by 5.4% organic consolidated net sales, year over year growth and adjusted EBITDA and strong adjusted EBITDA margin performance. I am encouraged by the reacceleration of sales growth in the fourth quarter, despite the continued headwinds in our event-driven capital markets transactional op. I am also pleased by the performance of our Venue Data Room product, which delivered net sales growth of approximately 26% in the quarter. As a result of focused execution, we grew consolidated adjusted EBITDA by $2 million, or 5.1%, year over year, and delivered an adjusted EBITDA margin of 23.4% in the quarter, in line with last year's fourth quarter, despite 9% lower event-driven revenue within capital markets. Our fourth-quarter results continue to demonstrate the resiliency of our operating model.

Lighted by five 4% organic consolidated net sales growth.

Year over year growth in adjusted EBITDA and strong adjusted EBITDA margin performance.

I am encouraged by the Reacceleration of sales growth in the fourth quarter. Despite the continued headwind in our event driven capital markets transactional offering.

I'm also pleased by the performance of our venue data room product, which delivered net sales growth of approximately 26% in the quarter.

As a result of focused execution, we grew consolidated adjusted EBITDA by $2 million or five 1% year over year and delivered an adjusted EBITDA margin of 23, 4% in the quarter in line with last year's fourth quarter.

Despite 9% lower event driven revenue within capital markets.

Our fourth quarter results continued to demonstrate the resiliency of our operating model.

Daniel N. Leib: Reflecting on the full year 2023 results, given the persistent market volatility, macroeconomic headwinds, and geopolitical uncertainty, we delivered strong full-year results. However, following significant declines in capital markets event-driven revenue in 2022, the market remained very weak throughout 2023, resulting in a further revenue reduction of approximately $52 million, or 22% year over year. Our total event-driven revenue, which also includes investment companies' transactions, was down 18% year-over-year.

Reflecting on the full year 2023 results given the persistent market volatility macroeconomic headwinds and geopolitical uncertainty we delivered strong full year results.

Following significant declines in capital markets event, driven revenue in 2022, the market remained very weak throughout 2023, resulting in a further revenue reduction of approximately $52 million or 22% year over year.

Our total event driven revenue, which also includes investment companies transactions was down.

Others or 18% year over year.

Daniel N. Leib: Despite this headwind, in 2023, we delivered $207.4 million of adjusted EBITDA, resulting in an adjusted EBITDA margin of 26%, both of which continue to be significantly higher than historical periods with similar overall and transactional revenue. Our long-term focused execution to improve our sales mix and both manage and variable lie our cost structure has resulted in DeFin becoming structurally more profitable across varying market conditions. Creating the financial flexibility to invest aggressively in our transformation while also repurchasing shares and reducing debt. In 2023, we made continued progress in increasing the consistency and stability of our performance. Specifically, we grew the stable and recurring parts of our business while the volatile event-driven parts of our business declined. I will illustrate this in more detail.

Despite this headwind in 2023, we delivered $207 $4 million of adjusted EBITDA, resulting in an adjusted EBITDA margin of 26%.

Both of which continue to be significantly higher than historical periods with similar overall and transactional revenues.

Our long term focused execution to improve our sales mix in both managing variable lies our cost structure.

It resulted in deepen becoming structurally more profitable across varying market conditions, creating a financial flexibility to invest aggressively in our transformation, while also repurchasing shares and reducing debt.

In 2023, we made continued progress in increasing the consistency and stability of our performance specifically, we grew the stable and recurring parts of our business, while the volatile event driven parts of our business declined illustrate this in more detail during the year, our recurring and reoccurring.

Daniel N. Leib: During the year, our recurring and recurring revenue, comprised of compliance-related software and services, as well as our venue data room product, increased by 2.4 percent from 2022 on an organic basis. However, our total event-driven revenue declined by approximately 18%. In 2023, we derived approximately 75% of our total revenue from recurring and repeating operations, with the remaining 25% of revenue being events. We expect the evolution of our revenue profile towards a higher mix of predictable revenue to continue going forward as we accelerate the growth in our recurring and repeating offerings while benefiting from but being less dependent on event-driven revenue. A key component of our recurring and recurring revenue is our software solutions portfolio. For the full year, we achieved record software solutions net sales of approximately $293 million, an increase of approximately 7% from 2022 on an organic basis, driven by double-digit growth in our venue data room, which has become our largest software product with nearly $110 million in revenue. In addition to its strong growth, Venu also exhibited a consistent level of performance in 2023 and significantly outperformed the market trend for its primary use case, M&A, owing to its broader application within the deal ecosystem, which creates more resilient, stable demand.

Revenue comprised of compliance related software and services as well as our venue data room product increased by two 4% from 2022 on an organic basis, while our total event driven revenue declined by approximately 18%.

In 2023, we derived approximately 75% of our total revenue from recurring and reoccurring offerings with the remaining 25% of revenue being event driven.

We expect the evolution of our revenue profile towards a higher mix of predictable revenue to continue going forward as we accelerate the growth in our recurring and reoccurring offerings, while benefiting but being less dependent on event driven revenues.

A key component of our recurring and reoccurring revenue is our software solutions portfolio.

For the full year, we achieved record software solutions net sales of approximately $293 million an increase of approximately 7% from 2022 on an organic basis, driven by double digit growth in our venue data room, offering which has become our largest software product with nearly 110.

And revenue.

In addition to its strong growth venue also exhibited a consistent level of performance in 2023 and significantly outperformed the market trend for its primary use case M&A owing to venue is broader application within the deal ecosystem that creates more resilient stable demand.

Daniel N. Leib: In 2023, software solutions net sales represented approximately 37% of our full-year net sales, up from approximately 34% in 2022. Through new product introductions such as new AD and total compliance management, increased go-to-market investments, and expansion of our partner ecosystem, we have more than doubled our software solutions revenue since our spin-off in 2016 to nearly $300 million in 2023, which translates into an annualized growth rate of approximately 13% on an organic basis. Our past investments position us well to capture opportunities from current and future regulations. Given the rapid pace of regulatory change, our clients depend on DFIN's technology, domain expertise, and service capabilities to guide them through an increasingly complex regulatory and compliance environment. In 2023, we developed solutions to assist our clients to comply with new SEC regulations, such as pay versus performance disclosure, and we are also near complete on the development and readiness for the tailored shareholder reports, which become effective in July 2024.

In 2023 software solutions net sales represented approximately 37% of our full year net sales up from approximately 34% in 2022.

Through new product introductions, such as new a D and total compliance management increased go to market investments and expansion of our partner ecosystem, we have more than doubled our software solutions revenue since our spin in 2016 to nearly $300 million in 2023, which translates into.

Or an annualized growth rate of approximately 13% on an organic basis.

Our past investments position us well to capture opportunities from current and future regulations, given the rapid pace of regulatory change our clients depend on defense technology domain expertise and service capabilities to guide them through an increasingly complex regulatory and compliance.

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In 2023, we develop solutions to assist our clients to comply with new SEC regulations, such as the pay versus performance disclosure and are also near complete on the development in readiness for the tailored shareholder reports rule, which becomes effective in July 2024.

Daniel N. Leib: EFIN was first to market with an alpha release of our tailored shareholder report software solution in October of last year. Since then, we've been working diligently on product enhancements to enable clients to complete TSR workflows at scale. With tailored shareholder reports being a financial report, DFIN is ideally positioned to leverage our ARC reporting offering, the leading financial closed solution for investment companies, and our deep expertise in the areas of iSparrow tagging and compliance filing to create an end-to-end compliance solution for tailored shareholder reports. Importantly, our ARC reporting product offers clients the ability to execute financial calculations, report creation at the fund and share class level, Ixperial In addition, integrated data flow within ARC reporting eliminates the need for post-production reconciliation and guarantees consistency with the fund's financial results at the share class level.

<unk> was first to market with an alpha release of our tailored shareholder report software solution in October of last year. Since then we've been working diligently on product enhancements to enable clients to complete tsi workflows at scale.

With tailored shareholder reports being a financial report.

<unk> is ideally positioned to leverage our arc reporting offering the leading financial close solution for investment companies and our deep expertise in the areas of ice spiral tagging and compliance filings to create an end to end compliance solution for tailored shareholder reports.

Importantly, our arc reporting product offers clients the ability to execute the financial calculations report creation at the fund and share class level.

Spiro tagging reviewing and filing all through a single solution.

Further integrated data flow within arc reporting eliminates the need for post production reconciliation and guarantees consistency with the fund's financial results at the share class level.

Daniel N. Leib: Coupled with DFIN's service expertise and production capabilities, we have created an integrated compliance solution that eliminates handling. We expect Taylor-Charles reports will generate approximately $20 million to $25 million in revenue for the full year 2025, with approximately a half-year impact expected in 2024. Given our integrated approach, tailored shareholder reports will benefit each of our offices, including Software Solutions, Tech Enabled Services, and Distribution. We expect software solutions to account for nearly half of total tailored shareholder reports revenue. Before turning things over to Dave, let me provide some additional perspective on our updated long-term projections. Our focused strategic transformation over the past several years has enabled DFIN to become more profitable and resilient. With a solid foundation built, we are well positioned to continue to deliver increasing value to our three stakeholders, our clients, our employees, and our shareholders. Currently, we're in the final stages of chapter two, or the fundamental transformation chapter of our journey as an independent company. A phase that started in 2020 and has approximately 18 months remaining.

Coupled with deep in service expertise and production capabilities, we have created an integrated compliance solution that eliminates handoffs.

We expect tailored shareholder reports will generate approximately 20 million to $25 million in revenue for the full year 2025, with approximately a half year impact expected in 2024.

Given our integrated approach tailored shareholder reports will benefit each of our offerings software solutions Tech enabled services and distribution.

We expect software solutions to account for nearly half of total tailored shareholder reports revenue.

Before turning things over to Dave Let me provide some additional perspective on our updated long term projections are focused strategic transformation over the past several years has enabled <unk> to become more profitable and resilient with.

With a solid foundation created we are well positioned to continue to deliver increasing value to our three stakeholders, our clients our employees and our shareholders.

Currently we are in the final stages of chapter two or the fundamental transformation chapter of our journey as an independent company.

Is that started in 2020 and has approximately 18 months remaining specifically by the completion of chapter two we will have transformed all areas of the company simplifying and improving our business processes installing more robust tooling across the organization and completing development of our single compliance.

Daniel N. Leib: Specifically, by the completion of Chapter 2, we will have transformed all areas of the company, simplifying and improving our business processes, installing more robust tooling across the organization, and completing the development of our single-compliance SaaS platform, all aimed at creating a significantly improved and predictable experience for our clients, employees, and shareholders. While there is still work remaining in Chapter 2, within our projection period, we will move into Chapter 3 of our transformational journey.

<unk> platform.

All aimed to creating a significantly improved and predictable experience for our clients employees and shareholders.

While there is still work remaining in chapter two within our projection period, we will move into chapter three of our transformational journey in chapter three we will continue to realize benefits from our revenue mix shift and historical investments that have resulted in a strong foundation for continued innovation and growth.

Daniel N. Leib: In Chapter 3, we will continue to realize benefits from our revenue mix shift and historical investments that have resulted in a strong foundation for continued innovation and growth. These dynamics will result in sustained profitable revenue growth. We look forward to increasing value creation by delivering predictable, consistent, organic, top-line growth, continued strong profitability, and robust cash flow generation over the next five years. Let me highlight some of the growth drivers in our long-term plan. First, deep and strong market position or regulatory and compliance support a strategy of share of wallet expansion within our existing client. We believe our industry-leading technology and service capabilities, coupled with our deep domain expertise, provide unique value to our clients and provide DFIN with an advantage position across the competitive landscape.

These dynamics resulted in sustained profitable revenue growth, we look forward to increasing value creation by delivering predictable consistent organic top line growth continued strong profitability and robust cash flow generation over the next five years.

Let me highlight some of the growth drivers in our long term plan.

First deep and strong market position in regulatory and compliance support the strategy of share of wallet expansion within our existing client base, we believe our industry, leading technology and service capabilities, coupled with our deep domain expertise provide unique value to our clients and provide <unk> with an advert.

<unk> position across the competitive landscape.

New regulations are a tailwind in our plan our long term projections include opportunities from known SEC regulations, such as tailored shareholder reports given the rate of regulatory change, we expect our revenue will likely benefit from new regulations, yet to be enacted.

Daniel N. Leib: New regulations are a tailwind in our business. Our long-term projections include opportunities from known SEC regulators, such as tailored shareholder reports. Given the rate of regulatory change, we expect our revenue will likely benefit from new regulations yet to be announced. Those undefined future regulations will be upside to our projection, and given the typical proposal to adoption cycle, would possibly impact 2027 and 2028. Finally, we are developing capabilities to expand beyond our current core SEC compliance offerings into adjacent markets and use cases. By leveraging DFINN's foundational capabilities in the areas of document management, composition, tagging, and filing, we have the ability to expand into new use cases that call upon the same set of capabilities we already possess but which we do not serve today.

Those undefined future regulations will be upside to our projections and given the typical proposal to adoption cycle would positively impact 2027 and 2028.

Finally, we are developing capabilities to expand beyond our current core SEC compliance offerings into adjacent markets and use cases by leveraging deepens foundational capabilities in the areas of document management composition tagging and filing.

We have the ability to expand into new use cases, they call. Upon the same set of capabilities, we already possess but which we do not serve today.

In doing so we have significant opportunities to increase the size of our serviceable market, while staying close to our core competencies, allowing us to serve those new use cases productively we.

We expect non SEC related opportunities will benefit us later in our projection period.

David A. Gardella: In doing so, we have significant opportunities to increase the size of our serviceable market while staying close to our core competencies, allowing us to serve those new use cases productively. We expect non-SEC-related opportunities will benefit us later in our projection period. Our single compliance platform will serve as the foundational component of our future technology ecosystem and will allow scalable revenue growth and market expansion. Our recent development efforts, which have resulted in the brand new build of active disclosure and the newly launched tailored shareholder report software solution, demonstrate the capabilities we are adding to the platform and the potential to address new market opportunities. As I've said before, EFIN's opportunities ahead are greater than what we have accomplished thus far. Before I share a few closing remarks... I would like to turn the call over to Dave to provide more details on our fourth quarter financial results, outlook for the first quarter of 2024, and our updated long-term projections. Dave?

Our single compliance platform will serve as a foundational component of our future technology ecosystem and will allow scalable revenue growth and market expansion.

A recent development efforts, which have resulted in a brand new build of active disclosure and the newly launched tailored shareholder report software solution demonstrate the capabilities, we are adding to the platform and the potential to address new market opportunities.

As I've said before <unk> opportunities ahead are greater than what we have accomplished thus far before I share a few closing remarks, I would like to turn the call over to Dave to provide more details on our fourth quarter financial results outlook for the first quarter of 2024, and our updated long term.

<unk> Dave.

Thank you Dan and good morning, everyone.

Before I discuss our fourth quarter financial performance I'd like to recap a few housekeeping items in the quarter.

First during the fourth quarter, we completed the sale of IBRA via a software solution primarily used in contract analytics, which we acquired in 2018 and had net sales of approximately $3 $8 million in 2023.

David A. Gardella: Thank you, Dan, and good morning, everyone. Before I discuss our fourth quarter financial performance, I'd like to recap a few housekeeping items. First, during the fourth quarter, we completed the sale of eBrevia, a software solution primarily used in contract analytics, which we acquired in 2018 and had net sales of approximately $3.8 million in 2023. As part of our technology development over the last several years, we have gradually integrated eBrevia's artificial intelligence and machine learning capabilities into our existing offerings, including client implementation. Going forward, eBravi as a standalone offering has limited value to defend.

As part of our technology development over the last several years, we've gradually integrated <unk> artificial intelligence and machine learning capabilities into our existing offerings, including client implementations.

Going forward <unk> as a standalone offering had limited value to defend and as such we sold the business.

We received de Minimis proceeds from the sale, resulting in a pretax loss of $6 $1 million, which is recorded within the capital markets software solutions operating segments.

Second during the fourth quarter.

Board of directors authorized a new share repurchase program of up to $150 million with an expiration date of December 31 2025.

This repurchase authorization, which commenced on January one 2024.

Place the prior authorization, which expired on December 31 2023.

David A. Gardella: And as such, we sold the, We received the minimum proceeds from the sale, resulting in a pre-tax loss of $6.1 million, which is recorded within the capital market software solutions operating. Second, during the fourth quarter, the Board of Directors authorized a new share repurchase program of up to $150 million with an expiration date of December 31st, 2025. This repurchase authorization, which commenced on January 1st, 2024, replaced the prior authorization, which expired on December 31st, 2023.

We continue to view share repurchases as an important component to drive value for shareholders and as part of our balanced capital deployment plan, which also features organic investments to drive future growth and debt reduction.

Finally, as part of our ongoing effort to enhance active disclosures functionality. Our section 16 filing capabilities, which were previously reported in the Standalone file 16 offering have been integrated into active disclosure.

<unk> is a software solution using the filing of beneficial ownership information mandated under SEC section 16, and had full year 2023 revenue of approximately $9 $4 million.

David A. Gardella: We continue to view share repurchases as an important component to drive value for shareholders and as part of our balanced capital deployment plan, which also features organic investments to drive future growth and that readout. Finally, as part of our ongoing effort to enhance Active Disclosure's functionality, our Section 16 filing capabilities, which were previously reported in the standalone File 16 offering, have been integrated into Active Disclosure. File 16 is a software solution used in the filing of beneficial ownership information mandated under SEC Section 16 and had full year 2023 revenue of approximately $9.4 million.

We have updated the reporting of product level revenue details to reflect this change.

Given the <unk> has been historically comprised of both the subscription and transactional driven component as.

As we transition to <unk> 16 to a subscription based model to align with active disclosures revenue model, we expect churn to be temporarily elevated as a result of this transition which will be more than offset by the benefits associated with the subscription based offering including long term predictability.

David A. Gardella: We have updated the reporting of product-level revenue details to reflect this change. Given File 16 has been historically comprised of both a subscription and a transactionally-driven component, as we transition File 16 to a subscription-based model to align with Active Disclosure's revenue model, we expect churn to be temporarily elevated as a result of this transition, which will be more than offset by the benefits associated with a subscription-based offering, including long-term Now turning to our fourth quarter results. As Dan noted, we delivered solid results in a challenging environment, including consolidated year-over-year net sales growth, higher adjusted EBITDA, and an increase in operating cash flow from last year's fourth quarter. We posted 8.2% organic growth in our software solutions net sales, led by record quarterly net sales in venue, all while continuing to invest in evolving to a more recurring sales model, aggressively managing our cost structure, and being disciplined stewards of capital.

<unk>.

Now turning to our fourth quarter results as Dan noted, we delivered solid results in a challenging environment, including consolidated year over year net sales growth higher adjusted EBITDA and an increase in operating cash flow from last year's fourth quarter.

We posted eight 2% organic growth in our software solutions net sales led by record quarterly net sales and venue all while continuing to invest in evolving to a more recurring sales mix aggressively managing our cost structure and being disciplined stewards of capital.

On a consolidated basis total net sales for the fourth quarter of 2023 were $176 5 million, an increase of $8 8 million or five 2% on a reported basis and five 4% on an organic basis from the <unk>.

Fourth quarter of 2022.

The increase in consolidated net sales was driven by higher investment companies compliance <unk> Communications management segment net sales.

David A. Gardella: On a consolidated basis, total net sales for the fourth quarter of 2023 were $176.5 million, an increase of $8.8 million or 5.2% on a reported basis and 5.4% on an organic basis from the fourth quarter of 2022. The increase in consolidated net sales was driven by higher investment companies, compliance, and communications management segment net sales, primarily as a result of higher mutual fund special proxy activity in the quarter as well as growth in total software solutions net sales, which combine to more than offset a modest year-over-year decline in event-driven capital markets transactional revenue and the impact of the eBrevia and Edgar Online disposition. Fourth quarter adjusted non-GAAP gross margin was 59.8%, approximately 470 basis points higher than the fourth quarter of 2022, primarily driven by growth and software solutions net sales and the impact of cost control initiatives, partially offset by incremental investments to accelerate our transformation and lower capital markets transactionally. Adjusted non-GAAP SG&A expense in the quarter was $64.2 million, an $11 million increase from the fourth quarter of 2022.

Primarily as a result of higher mutual fund special proxy activity in the quarter as well as growth in total software solutions net sales, which combined to more than offset a modest year over year decline in event driven capital markets transactional revenue and the impact of the IBRA Avia and <unk>.

<unk> online dispositions.

Fourth quarter adjusted non-GAAP gross margin was 59, 8% approximately 470 basis points higher than the fourth quarter of 2022, primarily driven by growth in software solutions net sales and the impact of cost control initiatives, partially offset by incremental investments.

To accelerate our transformation and lower capital markets transactional activity.

Adjusted non-GAAP SG&A expense in the quarter was $64 $2 million and $11 million increase from the fourth quarter of 2022.

As a percentage of net sales adjusted non-GAAP SG&A was 36, 4% an increase of approximately 470 basis points from the fourth quarter of 2020 to the.

The increase in adjusted non-GAAP SG&A was primarily driven by an increase in selling expenses as a result of higher sales volumes higher incentive compensation expense relative to last year's fourth quarter.

Full year incentive compensation expense remained flat to last year.

And incremental transformation related investments, partially offset by the impact of cost control initiatives.

David A. Gardella: As a percentage of net sales, adjusted non-GAAP SG&A was 36.4%, an increase of approximately 470 basis points from the fourth quarter of 2022. The increase in adjusted non-GAAP SG&A was primarily driven by an increase in selling expenses as a result of higher sales volumes, higher incentive compensation expense relative to last year's fourth quarter, though full-year incentive compensation expense remained flat compared to last year, and incremental transformation-related investments partially offset by the impact of cost control initiatives. Our fourth-quarter adjusted EBITDA was $41.3 million, an increase of $2 million, or 5.1%, from the fourth quarter of 2022. The fourth quarter adjusted EBITDA margin was 23.4%, flat compared to the fourth quarter of 2022.

Our fourth quarter, adjusted EBITDA was $41 $3 million, an increase of $2 million or five 1% from the fourth quarter of 2022.

Fourth quarter adjusted EBITDA margin was 23, 4%.

Flat compared to the fourth quarter of 2022 as.

As higher investment companies transactional and software solutions net sales volume and the impact of cost control initiatives were offset by lower capital markets transactional net sales and incremental investments to accelerate the company's transformation.

Turning now to our fourth quarter segment results net sales in our capital markets software solutions segment were $48 million, an increase of 12, 4% on an organic basis from the fourth quarter of last year, driven by the strong growth in our virtual data room offering venue, which was up.

$6 $3 million or 26% year over year and achieved record quarterly sales.

David A. Gardella: As higher investment companies, transactional and software solutions, net sales volume, and the impact of cost control initiatives were offset by lower capital markets, transactional net sales, and incremental investments to accelerate the company's transformation. Turning now to our fourth quarter segment results, net sales in our capital market software solution segment were $48 million, an increase of 12.4% on an organic basis from the fourth quarter of last year, driven by strong growth in our virtual data room offering venue, which was up $6.3 million, or 26% year-over-year, and achieved record quarterly sales. The venue's outstanding performance in the quarter was driven by a higher room count, an increase in volume within existing rooms, and higher prices.

Venues outstanding performance in the quarter was driven by a higher room, count and increase in volume within existing rooms and higher pricing.

On a full year basis, when you delivered approximately $110 million in net sales and grew nearly 11% versus full year 2022 and is the main contributor to the growth of our recurring and reoccurring offerings in 2023.

<unk> performance has been consistent primarily as a result of stable demand from both announced and unannounced deals as well as across public and private companies alike. Despite some volatility inherent in the broader M&A market in terms of completed deals.

Net sales of our recurring compliance product active disclosure, including final <unk> declined approximately 2% in the fourth quarter, driven primarily by lower section 16 filing activity, which was down nearly 16%.

In the quarter, we experienced lower demand for beneficial ownership filings as a result of a weak IPO market as well as elevated churn as we transition clients to a subscription based model.

David A. Gardella: On a full year basis, Venue delivered approximately $110 million in net sales and grew nearly 11% versus full year 2022 and is a main contributor to the growth of our recurring and reoccurring offerings in 2023. Venue's performance has been consistent, primarily as a result of stable demand from both announced and unannounced deals, as well as across public and private companies alike, despite some volatility inherent in the broader M&A market in terms of completed deals. Net sales of our recurring compliance product, Active Disclosure, including File 16, declined approximately 2% in the fourth quarter, driven primarily by lower Section 16 filing activity, which was down nearly 16%. In the quarter, we experienced lower demand for beneficial ownership filings as a result of a weak IPO market, as well as elevated churn as we transitioned clients to a subscription-based model. In addition, following the decommissioning of the legacy AD3 platform, we had fewer clients on the new AD platform as a result of the expected elevated customer churn rate during the transition.

In addition, following the decommissioning of the legacy <unk> three platform, we had fewer clients on the new <unk> platform as a result of the expected elevated customer churn rate during the transition.

Lower customer count in conjunction with the impact of spec liquidations normal customer churn and the ongoing weakness in IPO activity resulted in a modest decline in subscription revenue in the quarter.

The decline in subscription revenue was partially offset by price increases.

Higher service revenue and new customer wins.

During the fourth quarter, we made continued progress to expand the adoption of active disclosure.

Following a sequential increase in net client count during the third quarter.

We realized the sequential increase in client count again during the fourth quarter.

The momentum in client count growth, coupled with product enhancements, we have released.

<unk>, a strong foundation for sales growth in 2024 and beyond.

We expect the ethic disclosures growth rate in the second half of 2024 to be stronger than the first half as some of the headwinds we experienced in 2023 continue to play out in the first part of 2024.

David A. Gardella: A lower customer count, in conjunction with the impact of SPAC liquidations, normal customer returns, and the ongoing weakness in IPO activity, resulted in a modest decline in subscription revenue in the quarter. However, the decline in subscription revenue was partially offset by price increases, higher service revenue, and new customer wins. During the fourth quarter, we may continue progress to expand the adoption of active disclosure. Following a sequential increase in net client count during the third quarter, we realize a sequential increase in client count again during the fourth quarter. The momentum and client count growth, coupled with product enhancements we have released, create a strong foundation for sales growth in 2024 and beyond. We expect AFTIC Disclosure's growth rate in the second half of 2024 to be stronger than in the first half, as some of the headwinds we experienced in 2023 continue to play out in the first part of 2024.

Adjusted EBITDA margin for the segment was 26, 5% an increase of approximately 530 basis points from the fourth quarter of 2022, primarily due to higher net sales volumes and cost control initiatives, partially offset by higher selling expenses as a result of increase.

Net sales and higher incentive compensation expense.

Net sales in our capital markets compliance <unk> Communications management segment were $68 3 million, a decrease of $5 1 million or six 9% from the fourth quarter of 2022, primarily driven by lower event, driven or transactional net sales.

We recorded approximately $60 million in fourth quarter transactional revenue in line with our expectations.

Similar to the trends we experienced during the first nine months of the year the demand environment for equity transactions remained soft in the fourth quarter, though the rate of decline continued to moderate as we overlap periods of weak demand in 2022.

David A. Gardella: Adjusted EBITDA margin for the segment was 26.5 percent, an increase of approximately 530 basis points from the fourth quarter of 2022, primarily due to higher net sales volumes and cost control initiatives, partially offset by higher selling expenses as a result of increased net sales and higher incentive compensation. Net sales in our capital markets compliance and communications management segment were $68.3 million, a decrease of $5.1 million, or 6.9%, from the fourth quarter of 2022, primarily driven by lower event-driven or transactional net sales. We recorded approximately $50 million in fourth-quarter transactional revenue, in line with our expectations. Similar to the trends we experienced during the first nine months of the year, the demand environment for equity transactions remained soft in the fourth quarter, though the rate of decline continued to moderate as we overlapped periods of weak demand in 2022. The adjusted EBITDA margin for the segment was 30.7%, a decrease of approximately 120 basis points from the fourth quarter of 2022. The decrease in adjusted EBITDA margin was primarily due to lower transactional sales volume, partially offset by cost control.

Adjusted EBITDA margin for the segment was 37% a decrease of approximately 120 basis points from the fourth quarter of 2020 to.

The decrease in adjusted EBITDA margin was primarily due to lower transactional sales volumes, partially offset by cost control initiatives.

Net sales in our investment company software solutions segment were $25 $7 million, an increase of one 6% versus the fourth quarter of 2022, primarily driven by growth in the art digital and arc regulatory modules within arc suite.

As expected the growth rate in the fourth quarter was slower compared to the third quarter of this year, which was aided by higher one time services and support revenue.

On a full year basis total arc suite delivered approximately $107 million in revenue and grew seven 4% year over year driven by growth in subscription revenue.

As a result of the continued strong adoption of our suite within investment companies.

Based on the incremental revenue from tailored shareholder reports.

We expect stronger our suite revenue growth starting in the second half of 2024.

Adjusted EBITDA margin for the segment was 31, 5%.

A decrease of approximately 530 basis points from the fourth quarter of 2022.

The decrease in adjusted EBITDA margin was primarily due to higher product development and technology investments in support of growth opportunities such as tailored shareholder reports and higher incentive compensation expense, partially offset by cost control initiatives.

David A. Gardella: Net sales in our investment company software solution segment were $25.7 million, an increase of 1.6% versus the fourth quarter of 2022, primarily driven by growth in the ARC digital and ARC regulatory modules within ARC Suite. As expected, the growth rate in the fourth quarter was slower compared to the third quarter of this year, which was aided by higher one-time services and support revenue. On a full year basis, total ARC Suite delivered approximately $107 million in revenue and grew 7.4% year over year, driven by growth in subscription revenue as a result of the continued strong adoption of ARC Suite within investment companies, based on the incremental revenue from Taylor shareholder reports. We expect stronger ARCSuite revenue growth starting in the second half of 2024. The adjusted EBITDA margin for the segment was 31.5%, a decrease of approximately 530 basis points from the fourth quarter of 2022.

Net sales in our investment companies compliance and communications management segment.

Were $34 $5 million, an increase of $8 $9 million for 34, 8% from the fourth quarter of 2022, primarily driven by higher event driven revenue from a large mutual fund special proxy project.

Adjusted EBITDA margin for the segment was 13, 1% an increase of approximately 860 basis points from the fourth quarter of 2022.

The increase in adjusted EBITDA margin was primarily due to higher net sales volumes and the impact of cost control initiatives, including continued synergies from our print platform consolidation, partially offset by higher incentive compensation expense.

non-GAAP unallocated corporate expenses were $10 $9 million in the quarter, an increase of $2 $8 million from the fourth quarter of 2022, primarily driven by an increase in expenses aimed at accelerating our transformation and higher incentive compensation expense partially.

<unk> offset by the impact of cost control initiatives.

David A. Gardella: The decrease in adjusted EBITDA margin was primarily due to higher product development and technology investments in support of growth opportunities, such as tailored shareholder reports and higher incentive compensation expense, partially offset by cost control initiatives. Net sales in our investment company's compliance and communications management segment were $34.5 million, an increase of $8.9 million, or 34.8% from the fourth quarter of 2022, primarily driven by higher event-driven revenue from a large mutual fund special proxy project. The adjusted EBITDA margin for the segment was 30.1%, an increase of approximately 860 basis points from the fourth quarter of 2022. The increase in adjusted EBITDA margin was primarily due to higher net sales volumes and the impact of cost control initiatives, including continued synergies from our print platform consolidation, partially offset by higher incentive compensation.

Free cash flow in the quarter was $56 million, a decrease of $2 $5 million compared to the fourth quarter of 2022.

Year over year decline in free cash flow was primarily driven by higher capital expenditures related to investments in our software products and the underlying technology to support them.

Partially offset by an increase in adjusted EBITDA.

We ended the quarter with $124 $5 million of total debt and 101 $4 million of non-GAAP net debt, a reduction of $44 $7 million and $33 $6 million, respectively versus year end 2022.

<unk>.

At year end 2023, we had no outstanding borrowings under our revolver and had $23 $1 million of cash on hand.

As of December 31, 2023, our non-GAAP net leverage ratio was 0.5 times.

Regarding capital deployment, we repurchased approximately 82000 shares of common stock during the fourth quarter for $4 $6 million at an average price of $56 seven per share.

David A. Gardella: Non-GAAP unallocated corporate expenses were $10.9 million in the quarter, an increase of $2.8 million from the fourth quarter of 2022, primarily driven by an increase in expenses aimed at accelerating our transformation and higher incentive compensation expense, partially offset by the impact of cost control initiatives. Free cash flow in the quarter was $56 million, a decrease of $2.5 million compared to the fourth quarter of 2022.

For the full year 2023, we repurchased approximately 469000 shares for $22 6 million at an average price of $48 20 per.

<unk> per share.

Going forward, we will continue to take a balanced approach towards capital deployment.

We continue to view organic investments to drive our transformation.

Share repurchases and net debt reduction each as key components of our capital deployment strategy and we will remain disciplined in this area.

As it relates to our outlook for the first quarter of 2024, we are encouraged by improving level of transactional activity. So far in the first quarter, especially in the number of priced and publicly filed ipos. So overall transactional activity remains well below the historic.

David A. Gardella: The year-over-year decline in free cash flow is primarily driven by higher capital expenditures related to investments in our software products and the underlying technology to support them, partially offset by an increase in adjusted EBIT. We ended the quarter with $124.5 million of total debt and $101.4 million of non-GAAP net debt, a reduction of $44.7 million and $33.6 million, respectively, versus year-end 2022. At year-end 2023, we had no outstanding borrowings under our revolver and had $23.1 million of cash on hand.

Will average.

In the near term, we expect macroeconomic headwinds and geopolitical factors will continue to weigh on the return to a more normalized deal activity level.

We expect consolidated first quarter net sales in the range of $210 million to $220 million and adjusted EBITDA margin in the mid 20% range.

Compared to the first quarter of last year, the midpoint of our consolidated revenue guidance $215 million implies growth of approximately 8%.

David A. Gardella: As of December 31st, 2023, our non-GAAP net leverage ratio was 0.5%. Regarding capital deployment, we repurchased approximately 82,000 shares of common stock during the fourth quarter for $4.6 million at an average price of $56.07 per share. For the full year 2023, we repurchased approximately 469,000 shares for $22.6 million at an average price of $48.20 per share.

Our margin guidance also implies a higher adjusted EBITDA margin from the first quarter of 2023, which was 21, 3%.

I'll also provide a bit more color on our assumptions for the capital markets compliance <unk> Communications management segment.

At the midpoint of our sales range, we assumed transactional sales of approximately $50 million in the first quarter, reflecting an increase of approximately $9 million from the first quarter of 2023.

David A. Gardella: Going forward, we will continue to take a balanced approach toward capital deployment. We continue to view organic investments to drive our transformation, share repurchases, and net debt reduction each as key components of our capital deployment strategy and will remain disciplined in this area. As it relates to our outlook for the first quarter of 2024, we are encouraged by the improving level of transactional activity so far in the first quarter, especially in the number of priced and publicly filed IPOs, though overall transactional activity remains well below the historical average. In the near term, we expect macroeconomic headwinds and geopolitical factors will continue to weigh on the return to a more normalized deal activity level. We expect consolidated first quarter net sales in the range of $210 million to $220 million and an adjusted EBITDA margin in the mid-20 percent. Compared to the first quarter of last year, the midpoint of our consolidated revenue guidance, $215 million, implies growth of approximately 8 percent. Our margin guidance also implies a higher adjusted EBITDA margin from the first quarter of 2023, which was 21.3%.

As it relates to the full year. Our 2024 operating plan reflects the continued execution of our strategy and associated investments aimed toward accelerating our transformation.

Our capital spending which is predominantly related to development and our software products and the underlying technology to support them is projected to be between $65 million $70 million, an increase from the $61 $8 million that we spent in 2023.

The additional Capex is aimed at supporting the continued development of our tailored shareholder report solution and advancing toward our single compliance platform vision as part of our future product roadmap.

From a margin perspective due to increased investment levels in 2024 to support software product development and sales and marketing initiatives associated with tailored shareholder reports, we expect the tailored shareholder reports solution to have a slightly dilutive impact to defend.

Consolidated adjusted EBITDA in 2024, given its half year impact in 2024, and becoming accretive to consolidated adjusted EBITDA in 2025.

Additionally, in 2024, we will continue to make investments to accelerate our transformation. These.

These investments in both software development and associated business processes will support our continued modernization innovation and growth.

David A. Gardella: I'll also provide a bit more color on our assumptions for the capital markets compliance and communications management segment. At the midpoint of our sales range, we assume transactional sales of approximately $50 million in the first quarter, reflecting an increase of approximately $9 million from the first quarter of 2023. As it relates to the full year, our 2024 operating plan reflects the continued execution of our strategy and associated investments aimed toward accelerating our transformation. Our capital spending, which is predominantly related to development for our software products and the underlying technology to support them, is projected to be between $65 million and $70 million, an increase from the $61.8 million that we spent in 2023.

The combined impact of the ramp up of tailored shareholder reports and transformation related investments are expected to be offset by higher revenue continued mix shift into higher margin software offerings and further operating efficiencies.

As a result, we expect our full year 2024, adjusted EBITDA margin to approximate the level, we achieved in 2023, which was 26%.

Finally, let me share a few key takeaways from our updated long term projections.

As a reminder.

The detailed guidance can be found in our investor presentation posted on our Investor Relations website.

David A. Gardella: The additional CapEx is aimed at supporting the continued development of our tailored shareholder report solution and advancing toward our single compliance platform vision as part of our future product roadmap. From a margin perspective, due to increased investment levels in 2024 to support software product development and sales and marketing initiatives associated with tailored shareholder reports, we expect the tailored shareholder reports solution to have a slightly dilutive impact on consolidated adjusted EBITDA in 2024, given its half-year impact in 2024 and to become accretive to consolidated adjusted EBITDA in 2025. Additionally, in 2024, we will continue to make investments to accelerate our transformation. These investments in both software development and associated business processes will support our continued modernization, innovation, and growth. The combined impact of the ramp-up of tailored shareholder reports and transformation-related investments is expected to be offset by higher revenue, continued mixed shift into higher-margin software offerings, and further operating efficiency. As a result, we expect our full-year 2024 adjusted EBITDA margin to approximate the level we achieved in 2023, which was 26%.

First having historically prioritized business stability, while protecting our margins our focus shifts to driving sustained revenue growth and margin expansion in chapter three.

Our updated five year projections deliver sustainable and profitable revenue growth spur.

Specifically, we expect the growth in software solutions to more than offset the declines in tech enabled services and printing distribution sales, enabling us to deliver consistent low single digit consolidated net sales growth annually starting in 2024.

Next based on the revenue growth profile, we expect to continue to evolve toward a heavier mix of software solutions net sales and our five year plan.

With focused efforts and targeted investments we project software solutions net sales will represent approximately 60% of our total net sales by 2028.

Up from approximately 37% of total net sales at the end of 2023.

In addition to the organic growth we are targeting for our software offerings.

We expect to increasingly serve our clients via software, which entails a shift of revenue from traditional services to software overtime.

Based on our experience in other areas, where this has occurred the shift from traditional services to software produces favorable economics with slightly lower revenue, but higher adjusted EBITDA.

David A. Gardella: Finally, let me share a few key takeaways from our updated long-term project. As a reminder, detailed guidance can be found in our investor presentation posted on our investor relations website. First, having historically prioritized business stability while protecting our margins, our focus shifts to driving sustained revenue growth and margin expansion in Chapter 3. Our updated five-year projections deliver sustainable and profitable revenue. Specifically, we expect the growth in software solutions to more than offset the declines in tech-enabled services and print and distribution sales, enabling us to deliver consistent, low-single-digit, consolidated net sales growth annually, starting in 2024. Next, based on the revenue growth profile, we expect to continue to evolve toward a heavier mix of software solutions net sales in our five-year plan.

We expect tech enabled services net sales to decline moderately moving forward due to the shift to our software solutions.

Consistent with the long term trend Britain distribution net sales will continue to be impacted by secular decline and by 2028 are expected to represent approximately 15% of our net sales.

More importantly, with the growth in software solutions, our revenue composition will also become more stable and predictable.

By 2028, we expect 80% of our revenue will be derived from recurring and reoccurring use cases with the remaining 20% being event driven comprised primarily of capital markets transactional revenue.

For modeling purposes, we assumed total transactional revenue to be flat to the 2023 levels in our five year projections with portions of transactions revenue historically.

David A. Gardella: With focused efforts and targeted investments, we project Software Solutions Net Sales will represent approximately 60% of our total net sales by 2028, up from approximately 37% of total net sales at the end of 2023. This is in addition to the organic growth we are targeting for our software offerings. We expect to increasingly serve our clients via software, which entails a shift of revenue from traditional services to software over time. Based on our experience in other areas where this has occurred, the shift from traditional services to software produces favorable economics, with slightly lower revenue, but higher adjusted even. We expect tech-enabled services net sales to decline moderately moving forward due to the shift to our software solution. Consistent with the long-term trend, print and distribution net sales will continue to be impacted by secular decline and, by 2028, are expected to represent approximately 15% of our net sales.

Accorded within tech enabled services shifting to software solutions over our projection period.

The combination of an evolving revenue mix, specifically growing our high margin software offerings.

Along with pricing opportunities and improvements in operating efficiencies creates the basis for our long term adjusted EBITDA margin expansion.

By 2028, we expect adjusted EBITDA margin to exceed 30% with a ramp up in margin expansion beginning in 2025.

The growth in adjusted EBITDA.

A moderate level of Capex and declining interest expense are expected to result in strong free cash flow generation across the projection period.

We expect the cumulative adjusted EBITDA to free cash flow conversion of approximately 45% between 2024, and 2028 and expect to generate more than $500 million in free cash flow over this period.

David A. Gardella: More importantly, with the growth in software solutions, our revenue composition will also become more stable and predictable. By 2028, we expect 80% of our revenue will be derived from recurring and repeating use cases, with the remaining 20% being event-driven, comprised primarily of capital markets transactional revenue. For modeling purposes, we assume total transactional revenue to be flat to 2023 levels in our five-year projections, with portions of transactional revenue historically recorded within tech-enabled services shifting to software solutions over our projection period.

Finally, our long term capital allocation priorities remain the same.

Our approach to the use of capital will remain disciplined and thoughtful allocating dollars to areas that best advance our strategy and maximize shareholder value.

Based on the significant value creation opportunities embedded in our plan.

Best and highest use of cash remains investing in the long term organic growth for <unk>.

David A. Gardella: The combination of an evolving revenue mix, specifically growing our high-margin software offering, along with pricing opportunities and improvements in operating efficiencies, creates the basis for a long-term adjusted EBITDA margin expansion. By 2028, we expect adjusted EBITDA margin to exceed 30%, with a ramp-up in margin expansion beginning in 2025. The growth in adjusted EBITDA, a moderate level of CapEx, and declining interest expense are expected to result in strong free cash flow generation across the projection period. We expect a cumulative adjusted EBITDA to free cash flow conversion of approximately 45% between 2024 and 2028 and expect to generate more than $500 million in free cash flow over this period. Finally, our long-term capital allocation priorities remain the same.

We are targeting average annual capex of approximately $60 million from 2024 through 2028 with the near term expected to require more investment, which will then moderate over time as we gain increased scale and efficiencies.

Next share repurchases and net debt reduction will each continue to occupy the next highest priority for use of cash.

Regarding M&A, we do not have any transactions assumed in our plants.

While we will continue to evaluate opportunities that could accelerate our strategy. We will maintain the same discipline that we have exhibited historically.

And lastly, we view dividends as the lowest priority for our use of cash at this time and as such do not anticipate any dividend payments.

We are committed to executing against our long term plan and continue to find opportunities to create value for all our stakeholders. We look forward to sharing our progress against our updated projections going forward.

David A. Gardella: Our approach to the use of capital will remain disciplined and thoughtful, allocating dollars to areas that best advance our strategy and maximize shareholder value. Based on the significant value creation opportunities embedded in our plan, the best and highest use of cash remains investing in long-term organic growth or defense. We are targeting average annual CapEx of approximately $60 million from 2024 through 2028, with the near term expected to require more investment, which will then moderate over time as we gain increased scale and efficiency. Next, share repurchases and net debt reduction will each continue to occupy the next highest priority for the use of cash. Regarding M&A, we do not have any transactions assumed in our plan. While we will continue to evaluate opportunities that could accelerate our strategy, we will maintain the same discipline that we have exhibited historically. And lastly, we view dividends as the lowest priority for the use of cash at this time, and as such, do not anticipate any dividend payments.

With that I'll now pass it back to Dan.

Thanks, Dave in 2023, we executed well in a very challenging market environment, delivering solid financial results, while continuing to invest to become the leading provider of compliance and regulatory solutions. In 2024, you can expect our primary focus remains on accelerating.

Our business mix shift by continuing to grow our recurring revenue base, while maintaining share in our core traditional businesses, including transactions. We will continue to invest in our regulatory and compliance software platform to ready ourselves to capitalize on the demand from future new regulations and non SEC.

Cases.

In addition, we will continue to aggressively manage our costs and drive operational efficiencies.

Finally, we will remain disciplined in the allocation of capital in order to maintain our financial flexibility to execute our strategy I am confident that if we do these things well, we will continue to create increased value for our stakeholders.

Daniel N. Leib: We are committed to executing against our long-term plan and continuing to find opportunities to create value for all our stakeholders. We look forward to sharing our progress against our updated projections going forward.

<unk> employees and shareholders in 2024 and beyond.

Before we open it up for Q&A.

Daniel N. Leib: Thanks, Dave. In 2023, we executed well in a very challenging market environment, delivering solid financial results while continuing to invest to become the leading provider of compliance and regulatory solutions. In 2024, you can expect our primary focus to remain on accelerating our business mix shift by continuing to grow our recurring revenue while maintaining share in our core traditional businesses, including transactions. We will continue to invest in our regulatory and compliance software platform to ready ourselves to capitalize on the demand for future new regulations and non-SEC use cases. In addition, we will continue to aggressively manage our costs and drive operational efficiency. Finally, we will remain disciplined in the allocation of capital in order to maintain our financial flexibility to execute our strategy.

Like to thank the <unk> employees around the world, who ensure our clients continue to receive the highest quality solutions now with that operator, we're ready for questions.

Thank you at this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad.

We'll go first to Charles Strausser at CJS Securities.

Hi, good morning.

Morning, Charlie.

Okay.

Given the volatility in the M&A market and the.

Nice growth.

Venue, how sustainable is the growth there.

One of the things you're seeing in the M&A market.

If you could share with us.

Yes.

Okay.

Yes, Charlie Thanks for the question.

One of the things that we've looked at in terms of venue.

It's not it's not as nearly as volatile as the broader M&A market in terms of completed deals.

Operator: I am confident that if we do these things well, we will continue to create increased value for our stakeholders, clients, employees, and shareholders in 2024 and beyond. Before we open it up for Q&A, I'd like to thank the DFID employees around the world who ensure our clients continue to receive the highest quality solutions. Now, with that, operator, we're ready for questions. Thank you. At this time, I would like to remind everyone that in order to ask a question, press star then the number one on your telephone keypad. We'll go first to Charles Strauzer at CJS Security. Hi, good morning. Morning, Charlie. Given the volatility in the M&A market, Ben.

I think certainly when you see.

The number of transactions.

Completed relative to our performance in venue.

A bit of a disconnect there, even though deals arent getting done it doesn't mean, they're not getting worked on et cetera, and the <unk>.

26% growth that we saw in the quarter, obviously much much stronger than the number of deals getting completed.

We look at venue again as being more certainly not recurring like active disclosure some of the other.

Are the compliance products et cetera.

But certainly reoccurring.

And more stable than the balance of the transactional business.

Daniel N. Leib: How sustainable is the growth there? Yeah, Charlie, thanks for the question. You know, one of the things that we've looked at in terms of venue, it's not it's not nearly as volatile as the broader M&A market in terms of completed deals. I think certainly when you see the number of transactions completed relative to our performance in venue, there is a bit of a disconnect there. Even though deals aren't getting done, that doesn't mean they're not getting worked on, et cetera.

That makes sense great.

Following up there too if you could give us a little bit more color into the assumptions.

But kind of baked into your near term guidance.

Yes.

How should we think about.

The range was.

Kind of basis, each high low there.

Yes, I think.

I assume youre talking about.

The first quarter guide.

Specifically you talked about.

In our prepared remarks, the transactional revenue being up pretty significantly.

Daniel N. Leib: And, you know, the 26% growth that we saw in the quarter, obviously much, much stronger than the number of deals getting completed. We look at venue, again, as being more, you know, certainly not recurring like active disclosure or some of the other, you know, arc the compliance products, et cetera, but certainly recurring and more stable than the balance of the transactional business. That sounds great.

Relative to last year's first quarter now that said last year's first quarter was.

The low watermark.

And <unk>.

Recent history, and so while we're seeing a pretty substantial or anticipating a pretty substantial percentage increase I would say on an absolute dollar amount.

Transactional revenue for the quarter is still expected to be well below historical averages.

David A. Gardella: And just following up there, too, can you give us a little bit more color on the assumption, which is kind of baked in. Yeah, I think I assume you're talking about the first quarter guide, which specifically talked about, you know, in our prepared remarks, the transactional revenue, you know, being up pretty significantly relative to last year's first quarter. Now, you know, that said, last year's first quarter was, you know, the low watermark in recent history.

Great and just lastly.

When you look at the EBITDA.

Contribution from <unk> in 2025.

How should we think about the margin on that is it similar to <unk>.

Yes.

The historical print margin or is it do you think it's.

Above that.

Yes.

I would say above that when you look at I think again, it's a combination.

Our <unk> solution is a combination of software service and print.

David A. Gardella: And so while we're seeing a pretty substantial or anticipating a pretty substantial percentage increase, I would say, on an absolute dollar amount, you know, the transactional revenue for the quarter is still expected to be well below historical averages. Grant, just lastly, when you... Yep. When you look at the EBITDA contribution from TSRs in 2025, how should we think about the margin? Similarity, historical print margin.

And.

Roughly half of it will be software the balance.

Fred across.

Traditional services are.

And print as well I think when you think about it on an incremental margin basis somewhere in the 40% to 50% range is probably.

Probably reasonable.

Great. Thank you very much.

Thank you.

David A. Gardella: Yeah, I would say above that when you look at, you know, I think it again, it's a combination. The RTSR solution is a combination of software services and print, and, you know, roughly half of it will be software, the balance, you know, spread across traditional services or, and print as well. I think when you think about it on an incremental margin basis, you know, somewhere in the 40 to 50% range is probably, probably reasonable. Great, thank you very much. Thank you. We'll move next to Pete Heckman at D.A. Davidson

We'll move next to Pete Heckmann at D. A davidson.

Great. Thank you for taking the question and I apologize I missed that last question forgive me, if im repeating it but on the <unk>.

Total shareholder I am sort of tailored shareholder reports and your thought process there around it.

Total revenue opportunity for <unk>, and I guess, how how does that compare to what you consider to be there.

Overall.

Potential from that market I guess in terms of like.

Did you get that are you getting the share or do you believe you'll get this year that you thought youre going to get or are there other competitive solutions that are proven to be a little bit more.

Competitively what are your thoughts.

Hi, yes, thanks Pete.

Daniel N. Leib: Great, thank you for taking the question. And I apologize; I missed that last question. Forgive me if I'm repeating it, but I'm, Total shareholder, I'm sorry, tailored shareholder reports and your thought process there around. Total Revenue Opportunity, And I guess, how does that compare to... www.charlesstrauzer.com, The overall potential of that market, I guess, in terms of... Please see the complete disclaimer at https://sites.google.com or at www.charlesstrauzer.com. Hi, yeah, thanks, Pete. We did well in the market, it continues to play out, you know, I think the big differentiator for us. A couple of things.

We we did well in the market. It continues to play out I think the big differentiator for us.

Couple of things one is coming off of a this is a financial report and so having the.

Premier financial reporting system in the market.

Clearly not the only one but we believe it's the largest one.

Makes it an easy easier sell to our clients in terms of.

Seamless process no need to reconcile back to our system, because it's coming from the source data.

For those that operate on our financial reporting tool.

And so where we've seen more price pressure.

Daniel N. Leib: One is coming off of a, this is a financial report, and so having the premier financial reporting system in the market, clearly not the only one, but we believe it's the largest one, makes it an easier sell to our clients in terms of, you know, a seamless process, no need to reconcile back to a system because it's coming from the source data for those that operate on our financial reporting tool. And so, you know, where we've seen more price pressure and, you know, more fragmentation is really in the back end, the distribution. You know, right now, under current regulation, there is a print requirement. And so we've seen more aggressive pricing just on the print side. But let me also ask, I don't know if Eric, if you have anything else to add to that.

And more fragmentation is really in the back end the distribution right now under current regulation there is a print requirement.

So we've seen more aggressive pricing just on the print side.

But let me also ask I don't know, Eric if you have anything else to add to that.

Hey, Thanks, Dan Pete Thanks for the question.

Thanks, Dan.

Certainly the highlights I would just say that deepens.

Offering clearly, it's an end to end solution from our perspective, we can cover the full spectrum of services. So from software to services the distribution yes.

We have that opportunity to provide an integrated compliant solution.

Eric Johnson: Hey, thanks, Dan. And Pete, thanks for the question. Yeah, I think Dan covered most of the highlights.

The same time cover the entire spectrum so.

Based on that we have software opportunities.

Eric Johnson: I would just say that, you know, Deepin's offering, you know, clearly, it's an end-to-end solution from our perspective; we can cover the full spectrum of services. So from software to services to distribution, you know, we have that opportunity to provide an integrated compliant solution, at the same time, covering the entire spectrum. So, you know, based on that, we have software opportunities in a competitive environment, as well as print distribution and the tech-enabled services side of things. So, you know, given our spectrum of services and our total complete end-to-end offering, we're positioned well to achieve the market results that we were targeting. That's helpful. And then just, I appreciate all the additional longer-term, http://TheBusinessProfessor.com when you. It seems like software.

And competitive.

Environment as well as print distribution in the tech enabled services side of things so given our spectrum of services and our total complete end to end offering.

We're positioned well.

To achieve the market.

Results that we were targeting.

Okay. That's helpful. And then just I appreciate all the additional longer term guidance framework. That's helpful in thinking about the company when you.

It seems like software.

Hi, I'm inferring something in the mid teens in terms of total software revenue growth.

Over the period 2004 to 28.

Number one is that correct and number two is I guess, how much of that growth do you think comes from existing solutions versus versus new solutions in.

Would you say that Youre based upon some of your development.

Daniel N. Leib: The Bulletproof Executive 2013, total software revenue growth over the period 2024-2028. And number one, is that correct? And number two is, I guess, how much of that growth do you think comes from new solutions? and www.charlesstrauzer.com of new solutions. The Bulletproof Executive 2013, Yeah, thanks. A couple dynamics in the model.

Our new solutions.

Would there be some years that you would expect to be higher than that.

Sure.

Average rate in the mid teens.

Yes, Thanks, a couple of dynamics in the <unk>.

Model, we put the slides out this morning so.

The first being that what's included in the plan.

Our known regulatory change what's not included are things yet to come. So we didn't make an estimate of those so we believe that based on trajectory of regulatory change as well as time to phase in that.

Daniel N. Leib: We put the slides out this morning. The first being that what's included in the plan are known regulatory changes. What's not included are things yet to come. So we didn't make an estimate of those.

Daniel N. Leib: So, you know, we believe that based on the trajectory of regulatory change, as well as time to phase in, that anything that gets, there will be things passed during the planning period that will positively impact 27 and 28 that are not currently being projected. In terms of the question on the growth rates, the growth rate looks similar in the low to mid-teens on our compliance offerings. And then in venue, we've actually, we're a little bit lower than that, you know; always a little tougher to call.

Anything that gets there will be things past during the planning period that will positively impact, 2007% and 28 that are not currently being projected.

In terms of the question on.

The growth rates the growth rates look similar in the.

Low to mid teens on our compliance offerings.

And then in venue, we've actually we're a little bit lower than that.

He is a little tougher to call we've seen a great amount of stability.

Daniel N. Leib: We've seen a great amount of stability in venue and upside in venue based on Dave's comment on its broader application within the deal ecosystem. But, you know, we also think that we'll get benefits from the compliance platform that we're building based on our ability to address new regulatory requirements more efficiently. And then our ability, now that we have these things, now that we have the compliance platform established within the next 18 months or so, to start to target use cases outside of the SEC mandate. And so all of those things channel into what, you know, looks a lot like what we've achieved thus far and continuing that, but then also with the upside of being able to move into new use cases as well as additional regulatory change. Okay. Thank you. Sorry, Pete, this is Dave.

In venue and upside in venue to Dave's comment on it's broader.

Broader application within the ecosystem.

But we also.

I think that we will get benefit from the compliance platform that we're building from our ability to address.

New regulatory requirements more efficiently and then our ability now that we have these things now that we have the compliance.

Appliance platform.

Establishing <unk> within the next 18 months or so that.

We can also start to target.

Use cases outside of the FCC mandate and so all of those things.

Panel into what looks looks a lot like what we've achieved thus far.

And continuing that but then also with the upside of being able to move into new use cases as well as additional regulatory change.

Okay great.

Yes, sorry.

I'm sorry, Pete this is Dave I would just add.

David A. Gardella: I would just add one of the comments that Dan made, that the way we get to the mid-teen growth that we projected for software also includes, you know, an assumption that over time, a lot of the work that's done traditionally migrates to more of what we call a hybrid model, right? There is an aspect of clients using some of the existing software products but also still relying on that full service. So that's just a shift in the mix.

One of the comments that Dan made the way we get to.

The mid teen growth that we projected for software also includes.

And assumption that over time.

The work that's done traditionally migrates to a more.

What we call a hybrid model right, where there is an aspect of clients using.

Some of the existing software products, but also still relying that full service.

David A. Gardella: And, you know, we go through that in some detail in the presentation. Okay, all right. I appreciate it. We'll move next to Raj Sharma at B. Riley Securities. Hi, thank you for taking my questions, but my first question was just around the software dispositions of eBrevier and Edgar Online. Are those being disposed of because their functionality is already included in the new Active Disclosure WorkSuite? This is Greg.

So that's just a shift in the mix and we go through that in some detail in the presentation.

Okay, Alright, I appreciate it.

Yeah.

We'll move next to Raj Sharma at B Riley Securities.

Hi, Thank you for taking my questions.

But my first question was just around the software disposition zebra.

Online.

Is that are those being disposed of.

<unk> functionality functionality is already included in the new active disclosure broke suite.

Craig Clay: Go ahead, Dave. Yeah, go ahead, Greg. I'll start and then turn it back to Dave.

Yes.

Right.

Go ahead, Dave.

No go ahead Greg.

I'll start and then turn it back to Dave.

Craig Clay: You know, if we look back at the reason we purchased eBREVIA, it was to drive venue revenue to create product differentiation through using AI for document review. And with that drive to increase venue revenue, those features from an eBREVIA perspective have been incorporated and are complete. So eBREVIA as a standalone offering had limited value to us.

If we look back at the reason we purchased <unk>.

It was to drive venue revenue to create product differentiation through using AI for document review.

And with that drive to increase in the revenue. This features permanent revenue perspective, it's been incorporated in our complete.

So we've ready as a stand alone offering had limited value to us.

Craig Clay: We weren't going to create yet another episodic M&A business, so since our focus is on recurring financial regulatory software, we made a strategic and operational decision to dispose of it. Edgar Online, you know, similarly, we have those services that are incorporated within our products. And Dave, I'll turn it over to you to expand. You covered it all, correct? Thanks. Great, great. And then, just briefly on venues again, clearly, there's a substantial pickup in venues that is indicative of a capital markets pickup forthcoming, but guidance for the Transactional Businesses is, sort of along a similar vein as last year. And also, is the venue taking a share?

We weren't going to create yet another episodic.

M&A business. So since our focus is on recurring financial regulatory software.

We made a strategic and operational decision to.

Dispose of it.

Edgar online similarly, we have the services that are incorporated.

Within our products and Dave I'll turn it to you to expand.

You covered it all correct. Thanks.

Yeah.

Great Great and then and then just briefly on venue again clearly there is a substantial pickup in venue is that indicative of capital markets pick up forthcoming but guidance.

For the transactional business is.

Sort of.

Along the similar vein.

Last year.

Also is is venue taking share.

Craig Clay: And what can you expect in near-term growth? So, thank you, Craig, again. Venue growth was obviously very strong in the quarter, 26%, despite a sluggish M&A market.

And what can you expect.

In the near term growth.

Therefore venue.

So thank you Craig again.

Venue growth was obviously very strong in the quarter, 26%, despite a sluggish M&A market.

Craig Clay: So, up 9% sequentially from Q3, a record revenue quarter for us. So, Venue continued to perform in a much more predictable manner than its primary use case, which is M&A. Obviously, we all suffered through the market last year. M&A was down 18% in Q4.

So up 9% sequentially from Q3.

A record revenue quarter for us.

So <unk> continued to perform in a much more predictable manner than its primary use case.

Which is M&A.

So obviously, we all suffered through the market last year M&A was down 18% in Q4. So what we're seeing is increased room activity.

Craig Clay: So, what we're seeing is increased room activity, higher activity on existing rooms, and higher prices in Q4. Therefore, these rooms are staying open longer, again, reinforcing the stability of Venue. And the underlying demand that we're seeing is less volatile than M&A. So, it's reoccurring in nature.

Higher activity on existing rooms, and higher pricing in Q4. So these were understand open longer again, reinforcing the stability of venue.

The underlying demand that we're seeing is less volatile than M&A.

So it's reoccurring in nature, so we're generating a more stable revenue stream with what has been an event driven transactional product.

Craig Clay: So, we're generating a more stable revenue stream with what has been an event-driven transactional product, and we're certainly encouraged by the resilience underneath that. We're hearing from our dealmakers that after years of decline, they're finding opportunities despite value adjustments. So, the demand for high-quality assets is high, and our pipeline is good. And to your point, it's our belief that we're taking share and executing in our primary markets, most notably in New York. And we're also continuing to grow Venue outside of M&A into recurring use cases, such as our subscription business. Again, stable, recurring venue growth, and we're seeing adoption in franchise and technology, energy, and healthcare. So, we're executing on our plan to take share in any market. And I think our unique position on the deal team from our traditional CNCM business means that we'll continue to drive software revenue through our Venue virtual data room. So, an ecosystem that's certainly working for us.

We're certainly encouraged by the resilience underneath that we're hearing from our dealmakers that after years of decline, they're finding opportunities despite value adjustments.

So the demand for high quality assets is high and.

And our pipeline is good and to your point, it's our belief that we're taking share in executing in our primary markets, most notably in New York.

And we're also continuing to grow venue outside of M&A.

And the recurring use cases, such as our subscription business again stable recurring venue growth and we're seeing adoption and franchise and technology and energy and health care.

So we're executing on our plan to take share in any market.

Our unique position on the deal team.

From our traditional <unk> business means that we will continue to drive software.

Revenue through our venue virtual data room.

So ecosystem, that's certainly working for us.

Craig Clay: So thank you for your question. Yeah, great. Thank you. So just lastly, the total, the Taylor shareholder reports, the revenue, and you know, the accretive dilutive guide, does that include pay versus performance as well? Are all the new regulatory report requirements, sort of product lines, included in that guide? So I'll start and then turn it to the team. Pay for performance was a 34-act regulatory requirement that we completed in 23 months for the first year.

So thank you for your tuition.

Yeah, great. Thank you so just lastly.

The total the.

Taylor's shareholder reports.

The revenue and the accretive dilutive.

So does that include the pay versus performance as well.

Are all the new regulatory reporting requirements.

Product lines included in that guidance.

So I'll start and then turn it to the team.

Pay for performance was our 34 Act.

Regulatory.

Requirement that we completed in 23 for the first year. So that was included in the proxy statement.

Daniel N. Leib: So that was included in the proxy statement. So from there, I'll turn it to the TSR team for comment. Yeah, thanks. Yeah, thanks. Yeah, the commentary around TSR was specific to TSR, and just to elaborate a bit on that.

So from their alternative yes.

TSMC comments, yeah. Thanks, yeah. Thanks.

Yes.

The commentary around CSR was specific to <unk> and just the.

Elaborate a bit on that so the regulation goes into effect in July. So we expect of 'twenty four we expect the half year.

Daniel N. Leib: So the regulation goes into effect in July, so we expect, of 24, we expect a half year of impact in 24. Certainly, it was dilutive to 23 as we had investment to build the offering. And, you know, similarly, we'll have a full year of investment in 24 to build, finish the build of the offering, and then get a half year of revenue, etc. And so moving to 25, we get the like for like, and Dave's comment that a full year of impact is a really attractive financial return, just in 23 and 24 as the investment pays off. Got it. Thank you for answering my questions and taking it offline. Great, thank you. Congratulations. Thank you. We'll go next to Kyle Peterson at Needham.

<unk>.

<unk> impact in 'twenty four certainly it was dilutive to 'twenty three as we had investment to build the offering.

And similarly, we will have a full year of investment in 2004 to.

To build finished the buildup the offering and then get a half year of revenue et cetera, and so moving to 25, we get the like for like and to Dave's comment of a full year of impact as a really attractive financial return.

Just in 'twenty three 'twenty four is in the investment phase.

Got it thank you for asking the questions and take it offline.

Great. Thank you installations.

Yes.

We will go next to Kyle Peterson at Needham.

David A. Gardella: Hey, good morning, guys. Thanks for taking the questions. I wanted to start out on software growth, obviously, the 2028 targets with the mid-teens. Growth is great to see, but given that it's a pretty big step up from where we are now on an organic basis, how should we think about the path to get where we are now in that mid- to high-single-digit range up to the mid-teens range, both in timing and how scaled the ramp is? Transcribed by https://otter.ai Yeah, totally.

Hey, good morning, guys. Thanks for taking the questions I wanted to start out on software growth.

Let me say that 2020 targets at the kind of mid teens growth is great to see but.

Given that's a pretty big step up kind of from where we are now on organic basis.

How should we think about the path to get kind of where we are now in that mid to high single digit range up to the mid teens range and both in timing and kind of how scaled the ramp is.

Yeah.

Yes sure.

Good day.

Thanks. Thanks for the question. So I think when you look at.

David A. Gardella: So, go ahead, Dave. Thanks for the question. So I think when you look at, you know, the overall software growth at mid-teens, there's a portion of it, you know, based on existing products, etc., that when you look relative to our historical performance on that growth, it is, you know, very much in line. And I think when you look at total software sales growth from 2019 through 2023, it was about 11.5%. And that's just on the core, you know, existing products.

The overall.

Software growth at mid teens.

There is there is a portion of it.

Based on the existing products et cetera that when you look relative to our historical performance.

That growth is.

No very much in line I think when you look at.

Our total software sales growth from 2019 through 2023 was about 11, 5%.

And that's just on the core.

Existing products.

Daniel N. Leib: My comments earlier, I think it was Charlie's question around the incremental growth come from, you know, what we're expecting a shift out of some of the traditional services into more of a hybrid model, right? So, leveraging the software products, but also leveraging a lot of the traditional services. And that is what we think, you know, kind of the delta between the projections relative to our historical performance, which was about 11 and a half. Yeah, and just to add to that, you know, we've seen that over time, in terms of the shift and Dave's comments in the prepared remarks. You know, the shift is generally, you know, less or slightly less revenue, a similar amount of profitability, so a much improved margin profile when that shift occurs.

My comments earlier I think it was Charlie's question around the.

The incremental growth.

It comes from what we're expecting a shift out of some of the traditional services into.

More of a hybrid model right. So leveraging the software products, but also leveraging a lot of the traditional services and that that is what we think.

Kind of the delta between the projections relative to our historical performance, which was about 11, 5%.

Yeah, and just to add to that we've seen that over time.

In terms of the shift in to Dave's comments in the prepared remarks.

Shift is generally.

Less or slightly less revenue a similar amount of profitability. So a.

Much improved margin profile when that shift occurs.

Daniel N. Leib: Calling the timing exactly of that shift is a little tougher, but we've found a good ability to be able to transition clients and take them, you know, support them in the way in which they want to work as they move from the traditional side over to the software side. And I would just add, Kyle, sorry, the last thing there, you know, the Taylor Chairholder Reports are probably a great example, you know, where the initial hypothesis was that it was going to be much more heavily weighted towards software. Then we get to see the details of the regulation and how the market wants to be served. And it's really through a combination of software services and, you know, in the case of TSR Print.

Calling the timing exactly of Av.

That shift is a little tougher, but we've found.

<unk> ability to be able to transition clients and take them support them in the way in which they want to work as they move from.

The traditional side over to.

The software side.

And I'm, sorry, I would just add.

Sorry, the last thing there.

Tailored shareholder reports is probably a great example.

Where it is.

Kind of the initial hypothesis was that it was going to be much more heavily weighted towards software.

Then we get to see the details of the regulation and how how the market wants to be served and.

And it's really through a combination of software.

Services and in the case of <unk> print.

Daniel N. Leib: And so one of the advantages we have in the competitive landscape is being able to serve clients on all three of those fronts. And so, you know, again, we're going to combine our offerings the way the market wants to work and, you know, how best to serve our clients. Got it. That's a good color.

And so one of the one of the advantages we have.

In the competitive landscape is being able to serve clients on all three of those fronts.

And so.

We're going to we're going to combine our offerings the way the market wants to work in.

How best to serve our clients.

Got it.

Kyle Peterson: I'll leave it there. Thanks, guys. Thank you. And there are no further questions at this time. I would like to turn the conference over to Dan Leib for closing remarks. All right. Thank you, Audra. And thank you, everyone, for attending. We'll look forward to being in touch soon. Thank you. And this concludes today's conference call. Thank you for your participation. You may now disconnect. www.charlesstrauzer.com

The color I'll leave it there thanks guys.

Thank you.

Yes.

And there are no further questions at this time I would like to turn the conference over to Dan Lee for closing remarks, great.

Great. Thank you Adrienne and thank you everyone for attending we look forward to being in touch soon thank you.

And this concludes today's conference call. Thank you for your participation you may now disconnect.

Okay.

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Okay.