Q2 2025 Donnelley Financial Solutions Inc Earnings Call
In this conference call 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 would like to ask a question. During this time simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question Press Star. One again. Thank you I would now like to turn the conference over.
Her to Mike gel head of Investor Relations you may begin.
Thank you good morning, everyone and thank you for joining Donnelley financial solutions second quarter 2025 results conference call.
This morning, we were earnings report, including a set of supplemental trending schedules of historical results copies of which can be found in the investors section of our website at <unk>.
<unk> solutions Dot com. During this call we will refer to forward looking statements that are subject to risks and uncertainties.
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 quarterly report on Form 10-Q, and other filings with the SEC.
Further we will discuss certain non-GAAP financial information, such as adjusted EBITDA and adjusted EBITDA margin.
We believe the presentation of non-GAAP financial information provides you with useful supplementary information concerning the company's ongoing operations and is an appropriate way for you to evaluate the company's performance. They are however provided for informational purposes only.
Please refer to the earnings release and related tables for GAAP financial information and reconciliations of GAAP to non-GAAP financial information.
I'm joined this morning by Dan Leib, Dave Gardella, and other members of management I will now turn the call over to Dan.
Thank you, Mike and good morning, everyone. We delivered solid second quarter results highlighted by record quarterly software solutions net sales strong adjusted EBITDA margin and increases in both operating cash flow and free cash flow.
All in the context of a challenging yet improving environment.
We posted approximately 8% sales growth in our software solutions, including approximately 15% sales growth in our recurring compliance software offerings.
All while continuing to drive operating efficiencies and investing further in our transformation.
Our second quarter results once again demonstrated the resilience of our operating model and the sustainability of our performance as our business mix continues to evolve.
As we entered the second quarter difficult operating conditions persisted for much of April most acutely in our capital markets transactional offerings due to market uncertainty as the quarter progressed, we saw improving trends not only in market activity, but also with respect to our own results.
The stabilization supported a strong sequential rebound in transactional activity and related results from April to May as well as from May to June.
We're encouraged by the positive trajectory within the second quarter.
A key area that reflects the success of our execution in the second quarter was our strong adjusted EBITDA margin performance, while the second quarter is a continuation of a prolonged multiyear downturn in capital markets transactional activity, our business remains fundamentally and substantially more profitable than it had been historically.
Our second quarter adjusted EBITDA margin of 35% was the second highest quarterly EBITDA margin in our history and trailing four quarter EBITDA margin is 29, 1%. Despite the ongoing headwinds of a weak transactional market.
Another area I would like to highlight is continued momentum in our software offerings, where we delivered year over year net sales growth of approximately 8%. Despite a slight decline in our largest software offering venue, which faced a tough comparison, having grown 38% in last year's second quarter.
Software solutions made up 42, 3% of total second quarter net sales up approximately 700 basis points from last year's second quarter sales mix as a reminder, the second quarter largely due to the annual meeting and proxy season, historically represents our largest quarter overall yet.
Represents a seasonal low for software as a percentage of revenue.
On a trailing four quarter basis software solutions comprised 45, 1% of total net sales an increase of approximately 610 basis points from the second quarter 2024 trailing four quarter period.
Our second quarter software solutions net sales growth continues to be led by the performance of our recurring compliance and regulatory driven products active disclosure and <unk>, Sweden, which grew approximately 15% year over year in aggregate importantly, active disclosure in our suite each posted double digit sales growth for the third consecutive quarter.
For active disclosure this growth was driven by the momentum in services revenue as a result of the continued adoption of our service package offerings combined with the migration of certain traditional compliance activities to software a trend we expect to continue going forward in the case of arc suite. The improved growth rate was primarily driven.
Even by the tailored shareholder reports regulation.
Consistent with our expectation we have realized software solutions net sales of approximately $11 million related to the tsi a regulation that since the effective date of July 2024 as.
As we overlap the incremental year over year benefit from the tailored shareholder reports regulation in the third quarter, we expect our suite to exhibit a more normalized growth profile beginning in the third quarter.
As an end to end software solution for investment company financial and regulatory reporting arc suite is well positioned to capture additional growth as the industry increasingly looks to improve efficiency automate processes and comply with evolving regulatory requirements.
As it relates to venue following a moderate decline in the first quarter sales accelerated in the second quarter and were nearly flat compared to last year's second quarter.
Zillions level of underlying activity, taking place on the platform, including activity from a large project combined with improved go to market execution enabled venue to mostly offset the impact of several large projects, which benefited last year's second quarter results. We remain encouraged by venue strong performance, which reflects strong sales execution across.
Venues broad application within the M&A ecosystem that serves both announced and unannounced deals across public and private companies. This results in more resilient stable demand than our transactional offerings, which primarily serve public company M&A IPO and debt transactions.
Our continued revenue mix shift towards software solutions was driven by a reduction in print and distribution net sales, which declined by approximately $14 million or 26% compared to the second quarter of 2024.
This reduction was mostly realized in the printing and distribution of corporate proxy statements and annual reports as well as lower print volumes as a result of the tailored shareholder reports regulation, which significantly reduced page counts for mutual fund reports.
On a trailing four quarter basis print and distribution revenue was $117 million and makes up approximately 16% of our trailing four quarter sales as we continue to execute our strategy to transform <unk> into the leading provider of compliance and regulatory solutions sort of predominantly via software and services.
We remain on target to deliver our latest five year plan, which was updated in February of last year.
Before I share a few closing remarks, I would like to turn the call over to Dave to provide more details on our second quarter results and our outlook for the third quarter Dave.
Thanks, Dan and good morning, everyone.
As Dan noted, we continue to experience positive momentum in the adoption of our software solutions for which sales increased approximately 8% year over year, including approximately 15% net sales growth in our recurring compliance software products.
Despite a very weak capital markets transactional environment, our software performance enabled us to deliver another quarter of improved sales mix strong adjusted EBITDA margin and year over year improvements in both operating cash flow and free cash flow.
Dan commented earlier following a very soft start to the quarter driven by heightened market volatility and economic uncertainty our results improved sequentially throughout the quarter as market conditions gradually stabilized in deal activity began to recover.
On a consolidated basis total net sales for the second quarter of 2025 were $218 $1 million, a decrease of $24 $6 million or 10, 1% from the second quarter of 2024.
The decrease in consolidated net sales was driven by lower volume in our compliance <unk> Communications management segment, which decreased by $31 $2 million in aggregate with compliance revenue across the capital markets and investment companies businesses.
Accounting for approximately $19 million of that decline.
The reduction in compliance revenue was mostly reflected in lower print and distribution volume related to both the ongoing decline in this area consistent with recent trends as well as the timing impact of certain investment companies print volume that shifted from the second quarter into the first quarter.
<unk> of this year.
In addition, total event driven transactional revenue declined approximately $13 million year over year, primarily a result of the depressed level of capital markets transactional activity during the quarter.
These declines were partially offset by growth in software solutions, net sales, which increased $6 $6 million or seven 7% compared to the second quarter of last year.
Second quarter adjusted non-GAAP gross margin was 63, 7% approximately 70 basis points lower than the second quarter of 2024.
Primarily driven by lower capital markets transactional volume, partially offset by higher software solutions net sales the impact of cost control initiatives and price uplifts.
Adjusted non-GAAP SG&A expense in the quarter was $62 6 million a $6 $4 million decrease from the second quarter of 2024.
As a percentage of net sales adjusted non-GAAP SG&A was 28, 7% an increase of approximately 30 basis points from the second quarter of 2020 for.
The decrease in adjusted non-GAAP SG&A expense was primarily driven by a reduction in selling expense related to lower sales in certain areas the impact of cost control initiatives and lower bad debt expense, which continued to normalize in the second quarter.
Our second quarter adjusted EBITDA was $76 3 million, a decrease of $10 $9 million or 12, 5% from the second quarter of 2020 for.
Second quarter adjusted EBITDA margin was 35% a decrease of approximately 90 basis points from the second quarter of 2024, primarily driven by lower capital markets transactional volume, partially offset by higher software solutions net sales cost control initiatives and lower selling expense.
As a result of the decrease in sales volume.
Turning now to our second quarter segment results net sales in our capital markets software solutions segment were $59 $1 million, an increase of $1 8 million or three 1% from the second quarter of last year, driven by active disclosure, which was up $2 $2 million.
Year over year, partially offset by a slight decline in venue.
During the second quarter active disclosure sales grew approximately 11% a continuation of the stronger growth trend we experienced over the last two quarters, primarily driven by the continued adoption of active disclosure services packages and the ongoing migration of certain activities historically performed on our traditional.
Services platform to active disclosure, we remain encouraged by active disclosure solid foundation for future revenue growth.
During the second quarter value posted 37 $3 million in revenue aided by a large project that partially offset last year. Several large projects and was down approximately 1% year over year against the robust performance from last year's second quarter.
<unk> Wen venue achieved record quarterly revenue and grew approximately 38%.
In addition venue delivered strong sequential improvement in revenue, increasing approximately 22% from the first quarter.
Adjusted EBITDA margin for the segment was 37, 9% an increase of approximately 90 basis points from the second quarter of 2024, primarily due to the increased sales and cost control initiatives.
Net sales in our capital markets components, and Communications management segment were $93 $5 million, a decrease of $23 million or 17, 8% from the second quarter of 2024, driven by lower transactional revenue as well as the reduction in compliance.
<unk> part of which was related to lower print and distribution consistent with recent trend in.
In the second quarter, we recorded $34 $8 million of capital markets transactional revenue, which was at the low end of our expectation and down 10 $4 million from last year's second quarter, resulting in the lowest level of quarterly transactional revenue in our history.
Following a modest rebound in the first quarter global equity deal volume declined sharply in April as a result of escalating market volatility and macroeconomic uncertainty.
Following the slow start to the quarter market conditions gradually improve with modest upticks in activity levels during may and June resulting in sequential improvement as the quarter progressed.
That said overall transactional activity in the second quarter remained well below historical norms with regular way IPO transactions that raised over $100 million and large public company M&A deals below last year's levels.
Capital markets compliance revenue decreased by $9 $9 million, primarily due to lower proxy statement and annual report volume and the related printing and distribution consistent with our experienced during last year's proxy and annual meeting season.
In addition, the weak transactional environment resulted in lower market demand for certain event driven filings such as the 8-K and special proxies associated with corporate transactions.
Finally, as I commented earlier certain traditional compliance activity shifted to active disclosure during the second quarter.
Adjusted EBITDA margin for the segment was 39, 4% a decrease of approximately 80 basis points from the second quarter of 2020 for the.
The decrease in adjusted EBITDA margin was primarily due to lower sales volume, partially offset by lower bad debt expense lower selling expense and cost control initiatives.
Net sales in our investment company software solutions segment were $33 $1 million, an increase of $4 8 million or 17% versus the second quarter of 2024, primarily driven by incremental revenue from our tailored shareholder report solution.
On a trailing four quarter basis total <unk> suite reached approximately $126 million in net sales and grew approximately 17% compared to the trailing four quarters as of last years second quarter, driven by growth in subscription revenue, including the impact of the tailored.
The report solution.
As Dan noted based on the mid year 2024 effective date, we will overlap the growth from this new regulation in the second half of the year and as such we expect a more normalized growth rate beginning in the third quarter.
Adjusted EBITDA margin for the segment was 42, 9% an increase of approximately 370 basis points from the second quarter of 2024.
The increase in adjusted EBITDA margin was primarily due to operating leverage on the increase in net sales and price uplifts, partially offset by higher service related costs associated with the tailored shareholder reports offering.
Net sales in our investment companies compliance <unk> Communications management segment were $32 $4 million, a decrease of $10 $9 million or 25, 2% from the second quarter of 2024, primarily driven by lower print and distribution volume.
Which accounted for $9 $6 million of the year over year decline.
Second quarter print and distribution revenue within this segment was impacted by the timing shift into this year's first quarter of certain volume related to tailored shareholder reports for the regulated insurance market as well as lower page counts related to tailored shareholder reports for the mutual fund industry.
As a reminder, the tailored shareholder reports regulation eliminated the demand for full length shareholder reports at the fund level and replace them with two to four page summary documents at the share class level, resulting in a net reduction in print.
With the second quarter being a peak period for mutual fund compliance the year over year reduction on the overall page count was significant in the second quarter as a result of the Tsi regulation.
We expect this dynamic will become less meaningful in the second half of the year as we overlap last year's second half impact of this regulation.
Going forward, we expect a broader secular decline in the demand for printed products will continue to result in lower print and distribution revenue within this segment.
Adjusted EBITDA margin for the segment was 38, 9% approximately 340 basis points lower than the second quarter of 2020 for.
The decrease in adjusted EBITDA margin was primarily due to the impact of lower sales volume, partially offset by cost control initiatives.
non-GAAP unallocated corporate expenses were $9 $7 million in the quarter, an increase of zero point $5 million from the second quarter of 2024, primarily due to higher investments aimed at accelerating our transformation and higher health care expense, partially offset by cost.
<unk> initiatives.
Free cash flow in the quarter was $51 7 million $14 $9 million higher than the second quarter of 2024.
The year over year increase in free cash flow was primarily driven by favorable working capital and lower capital expenditures, partially offset by lower adjusted EBITDA.
On a year to date basis, the strong free cash flow generation during the second quarter enabled us to achieve positive free cash flow through the first half of the year.
For reference our cash flow is seasonal with the majority of it generated in the second half of the year.
We ended the quarter with $191 million of total debt and $156 $3 million of non-GAAP net debt, including $77 million drawn on our revolver.
As of June 32025, our non-GAAP net leverage ratio was 0.7 times.
Regarding capital deployment.
We repurchased approximately 787000 shares of our common stock during the second quarter for $34 $3 million at an average price of $43 56 per share.
Year to date through June 30, we've repurchased approximately one 6 million shares for $76 $1 million at an average price of $46 18 per share.
During the second quarter the board of directors authorized a new share repurchase program of up to $150 million with an expiration date of December 31 2026.
This repurchase authorization, which commenced on May 16, 2025 replaces the prior authorization, which was nearly fully utilized.
As of June 32025, we had the full $150 million remaining on the new authorization.
We continue to view organic investments to drive our transformation share repurchases and net debt reduction as key components of our capital deployment strategy and we will remain disciplined in this area.
As it relates to our outlook for the third quarter of 2025, we expect consolidated third quarter net sales in the range of $165 million to $175 million and adjusted EBITDA margin in the range of 23% to 25%.
At the midpoint is similar to last year's third quarter, where we posted adjusted EBITDA margin of approximately 24% comp.
Compared to the third quarter of last year, the midpoint of our consolidated revenue guidance $170 million implies a reduction of $9 $5 million or five 3% as lower print and distribution sales and lower capital markets transactional sales are expected.
To more than offset growth in software solutions.
We expect venue to be approximately flat to last year's third quarter similar to the year over year change we recorded in the second quarter.
Further our estimates assume capital markets transactional net sales in the range of $35 million to $40 million, which at the midpoint is down approximately $8 million from last year's third quarter and with that I'll pass it back to Dan.
Thanks, Dave.
Our performance in the second quarter offers a further proof point that deepen continues to become more durable and structurally resilience as we execute our strategy the stability of our revenue base driven by a high proportion of recurring and reoccurring compliance related offerings provides a solid foundation even in turbulent times.
Although capital markets transactions remained well below historical levels. We are encouraged by the recent uptick in activity levels with a strong balance sheet robust free cash flow and disciplined capital allocation. We are confident in our ability to execute our strategy and deliver long term value to all stakeholders.
Before we open it up for Q&A I'd like to thank the decent employees around the world.
Now with that operator, we're ready for questions.
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.
Pause for a moment to compile the Q&A roster.
Okay.
Your first question comes from the line of Charlie <unk> with CJS Securities Inc. You May go ahead.
Hi, good morning.
Good morning.
So if we look at the Q3 guidance.
Granularity of the transactional.
Okay.
That maybe you could shed a little bit more light on the assumptions behind that and kind of like with.
Dealer environment is looking like currently.
Ipos and M&A.
Especially M&A given the change of administration.
Yes, Thanks, Charlie it's Dave I'll start in.
Craig you may want to add a little bit of color here I think when you look at our guidance for transactional sales for Q3, right the range of $35 million to $40 million.
That's sequential growth over Q2.
And up to about 15% at the high end of that range.
As you know and we've talked about before this is the area where.
We have the least visibility in terms of timing of getting getting the deals done so while we feel good about the underlying trend in market activity I would say.
As it relates to the guidance.
Trying trying not to get too far over our skis here.
I think probably the most positive is.
Regardless, where transactional revenue comes in.
We're very happy with the margins and cash flow that we are delivering obviously you can see that in in the Q2 results the year to date results as well as our guidance for Q3.
With respect to the market activity M&A IPO Craig.
I'll, let you comment there yes.
Yes, Charlie Thank you for the question.
I'll provide some context on Q2, and then talk about what we're seeing in July in relation to the guidance.
Transactional offerings are always subject to uncertainty in the market backdrop very materially over the course of the quarter as you heard us discuss.
The tariff announcement added significant short term impact.
Followed by the sequential improvement.
This bears out in the flow of Ipos in the quarter.
Of the 14 total ipos greater than a $100 million. There was one in April there were five in May there were eight in June.
This was the same number of 14 of Ipos in Q1, So there was no growth quarter to quarter.
<unk> was happy to support circle, which was the largest IPO over $1 billion.
Huge part of our largest increase ever for $1 billion of IPO.
And it was the largest certainly.
The first half year.
We supported many others for the first half of 2025 through 30, Ipos compared to 35 in the first half of the prior 2024, so a decrease of 14%.
Defense supported four of the five largest in the first half, but then to your point you see the resurgence. So the IPO index Renaissance's IPO index was up 16%. So there is a renewed investor appetite, Tom So I'll talk about July for Ipos, assuming sigma and shoulder price today there'll be.
27, ipos pricing in the quarter.
<unk> to 14 in July of 'twenty, four, but if you exclude small international deals Theres 10.
So this compares to seven.
And if you cut that to $100 million ipos and above.
Both this year and last July seven.
So July will have fewer ipos in the prior month of June and one theme. We're seeing is that the IPO market rebounding because at lower valuations. So companies are accepting down rounds.
<unk> Health is an example of that.
On a final note on shoulder again pricing today below their range.
Dollars.
Another metric we watch is the number of companies that are publicly filed so that stands at 19. So these are on file and communicated publicly with the SEC. This is not a robust number by historical standards.
And then as well defend has a robust pipeline of companies who have filed confidentially.
But not publicly.
Well as a pipeline of Rfps so.
The market is continuing to build if I think about Emma.
M&A certainly it was building kind of same thing without with throughout Q2.
So you had fewer deals larger deals on a year over year basis, Theres, a lot of optimism and M&A as well whether that spans consolidation.
With companies, who are looking to cut costs, such as Union Pacific Norfolk, whether it's AI.
We're certainly seeing that from an opportunity perspective.
So I think if you wrap it altogether, it's building momentum but risks remain.
We have rate pressures, we had trade policy chefs headline risks we've seen.
Pete can change things very quickly and then as well Q3 is a headwind because of the calendar for the summer months of August and Labor day have not historically been favorable to deals. So we're planning on a modest increase.
To continue to see the stabilization that we think we saw in May and June and our guidance balances the enthusiasm for the second half with the realities of building a pipeline and revenue recognition.
As Dave said, we've demonstrated we're ready for any market.
We're going to deliver no matter what.
Market means for us.
Great. That's very helpful. Thank you.
Just looking at the.
Non transactional segments.
As you think about guidance in general.
What assumption should we be using.
<unk> model.
Quarter.
Yes, Charlie we didn't give.
Too much detail here, but I think when you know.
When you look at.
Some of the <unk>.
Software products, right, which is where we've seen the growth.
In the first two quarters right.
The disclosure has posted 11% year to date growth.
And so that.
That's been.
A really strong area for us.
And we expect that to continue to grow going forward as we mentioned in the prepared remarks.
The growth in arc suite has been outsized in the first part of the year.
In part because of the timing of the launch of the tailored shareholder reports regulation right. So that started in Q3 of last year.
We will be overlapping.
Some of the growth we achieved last year in our suite, so that'll be tempered a bit.
And then venues got pretty tough comps.
Throughout the year right. We saw some outsized growth as we mentioned, even Q2 was down down a bit but that's coming off a quarter that grew at 38% last year.
And so I think when you look at.
The venue being flattish in Q2.
Sorry in Q3 relative to last year.
It's probably a reasonable assumption there and then on the.
The traditional compliance right, so the compliance and communications management.
Non transactional piece.
That'll continue to be.
The challenge from a from a print count perspective.
As you know we've seen that trend for a while and would expect that trend to continue but there again, even as it relates to tailored shareholder reports, where we saw.
A drop in overall print demand related to that regulation.
That impact started in the back half of last year offsetting the growth on the software side.
Great. Thanks on that.
Looking at your long term goals.
Out there can you just remind us some of the assumptions behind that.
Goals.
Yes, so it's really I think at the highest level, it's continuing to execute the change in mix right growing the.
Recurring and reoccurring software offerings.
Continuing to expand margin in large part due to the operating leverage on that growth and then from a capital markets transactional perspective.
At the at.
At the time, we made the assumption that there would be not much of a change.
In the overall level of capital markets.
Transactional revenue, obviously, that's come down come down quite a bit actually.
Since last February and so.
That scenario that it is cyclical.
We do a good job in terms of maintaining or growing our market share, but can't really impact the overall demand there.
And then I would say the last thing.
In terms of the revenue mix, we do assume and we talked a little bit about it today.
<unk>.
Some of the.
The sales that are currently in the compliance <unk> communications management segments transitioning the software and we've seen that.
It happened over the last several quarters, whether it be some of the structured forms of proxy work etcetera continuing to migrate toward.
I'd say in the near term a hybrid model that would be leveraging the software and then also the tech enabled.
Services behind that.
But but eventually migrating to software.
Continuing to expand margins and then probably.
From a cash flow perspective converting.
EBITDA to free cash flow at about 45% or greater.
Got it and just.
Cash flow when you look at the strong performance of cash flow in the quarter.
And then look at the full year.
Towards.
Are you expecting full year free cash flow to be up year over year.
We would say in the near term a hybrid model that would be leveraging the software and then also the tech enabled.
Yeah.
So we're obviously ahead of where we were on a year to year to date basis.
Services behind that.
But but eventually migrating to software.
I think when you look at we've talked about over the last several years really as the topline.
Continuing to expand margins and then probably.
Lee.
Our cash flow.
Is proportionately more software solution sales more long term contracts more.
Perspective converting.
Yeah.
Pay in advance that our cash flow would become less seasonal than it has been historically and so I think I think what we're starting to see is.
Our performance with cash.
For the quarter.
The cash flow being less less seasonal which is giving us a bit of a head start.
And then look at that.
The full year.
Are you.
At the highest level.
If I had to say what would cash flow look like.
He says.
On a full year basis, I'd say pretty similar pretty similar to last year.
I think when you look at we've talked about over the last several years really as the top line.
Got it and then just lastly, just coming back to the deal environment.
Is proportionately more software solution sales more long term contracts more.
Are you.
Maintaining a good share of the deals that are out there and.
Dubuque Lucy.
You know paid in advance that our cash flow would become less seasonal than it has been historically and so I think I think what we're starting to see is.
Deal too.
Another competitor.
What.
What are the reasons behind that.
Maybe you're working with them the companies with the issuers.
Yes.
The cash flow.
Two.
Yes.
Yes.
Well being less less season.
They use a different vendor for the print and distribution and formation of documents.
And then the backend you pick up the software side of D C.
On a full year basis at a pretty similar pretty similar to last year.
Got it.
Situations like that.
Yeah, I'll start and then Craig if you want to jump in I think.
Got it and then just lastly, just going back to the deal environment.
I would describe it is we're happy with our overall.
I use.
Maintaining a good share of the deals that are out there and.
Share performance I think and correct you get into some of the nuances here as Craig commented on even with the <unk>.
Lucy.
Deal to another.
Another competitor.
Overall, improving market backdrop.
What's the.
What are the reasons.
In terms of the number of deals I think when you start to look at some of the characteristics of the deals that have been in the market.
Hey, Matt.
Maybe you.
Working with them the companies.
Smaller foreign deals or even smaller domestic deals.
But are the issuers.
And on the backend you pick up the software side of D C any kind of.
Spacs et cetera.
Our market share in some of the lower end deals isn't typically as high as it is for the larger high profile deals.
Situations like that.
Yeah, I'll I'll start and then Craig if you want to jump in I think I would I would describe it is we're happy with our overall.
And so I think when you look at overall share.
Share performance, I think and correct me get into some of the nuances here as Craig commented on even with the <unk>.
It's about what we would expect but we're really happy with how we're performing.
In our sweet spot right.
Overall, improving market backdrop.
To build on that.
And in terms of the number of deals I think when you start to look at some of the characteristics of the deals that have been in the market.
Transfer is going to fluctuate quarter to quarter, our strength is in one $2 billion M&A deals large ipos raising over $100 million.
Smaller foreign deals or secure or even smaller domestic deals.
Even these facts.
Upgraded to have a substantive acquisition and the upgrade includes an upgraded deal team.
Spacs et cetera.
Our market share in some of the lower end deals isn't typically as high as it is for the the larger high profile deals.
So where we really win is when these deal teams that are familiar with <unk> our service our technology, whether that's traditional or software come into play on these deals we're really doing well.
And so you know I think when you look at overall share.
It's about what we would expect but we're really happy with how we're performing.
You saw that play out in the first half of the year. If you look at priced Ipos as a barometer.
You know in our sweet spot.
To build on that.
170, 163 were stacks.
Transfer is going to fluctuate quarter to.
So of the 108 total.
Quarter our stream.
Total priced excluding Spacs there were only 30 that were over $100 million. So there were still a lot of.
It is in one 2 million.
Fundraise light deals and there are share of those over 100 was our historic average which is around 60%.
And the <unk>.
Agree it includes an upgraded deal team.
So where we really win is when these deal teams that are familiar with defend our service our technology, whether that's traditional or software come into play on these deals we're really doing well.
Can you unpack what's happened in the first half of the year and even in Q2. It is comprised of a lot of nano company International smaller places that we don't play.
Yeah.
Great. Thank you very much.
You saw that play out in the first half of the year. If you look at priced Ipos as a barometer.
As Shannon comes from the line of Kyle Peterson with Needham You May go ahead.
171 six.
Steve three where spacs.
Great.
So of the $100.
Thanks, guys good morning.
A.
Yes, I just wanted to I guess follow up a little bit on the outlook with.
Total price sticks.
Excluding bags on their own.
Capital Markets Guide I guess it was.
Only 30 that were over on.
A little softer than we were expecting.
60%.
Given that there does seem to be an improving pipeline.
So are you unpack.
I know you mentioned that the confidential filings seem like there.
What's happened in the first half of the year and even in Q2. It is comprised of a lot of nano company International smaller places that we don't play.
They do seem to be picking up is.
Some of that activity converting and closing.
Is some of that in the outlook for <unk> or are you guys, taking a more conservative.
Okay.
Great. Thank you very much.
Outlook and in the guide for cap markets.
As John comes from the line of Kyle Peterson with Needham You May go ahead.
Yes, Carl as I said earlier I think when you look at that $35 million to $40 million range.
Great.
Thanks, guys.
Yeah, just wanted to I guess follow up a little bit on the outlook with.
At $40 million Thats up roughly 15% relative to.
The Q2 number.
Capital markets got answers.
I guess I would describe it this way without without getting into the details of any particular deal.
A little softer than we were expecting.
Given that there does seem to be an improving pipeline.
I know you mentioned that the.
Would be to say that if the trend that we saw.
Confidential filings seem like there.
In Q2 in terms of the intra quarter improvement from month to month.
The outlook.
For three Q or or you guys think.
That trend continues.
I'd say, we would be.
We're more conservative.
At the high end of the guidance potentially above if that trend continues.
Our outlook in.
And the guide for cap markets.
So.
We're just taking a.
Yes.
Our call is as I said earlier I think.
Yeah.
A look at the improvement again, given that the lack of visibility in terms of the exact timing.
When you look at that 35 to.
The $40 million range.
At 40 million that job.
As I said, the Charlie just trying I'm trying not to get too far over our skis there.
Roughly 15%.
Okay.
Okay that is helpful and then.
The trend that we saw.
In Q2 in terms of the intra quarter improvement from month to month.
I guess.
Follow up on capital allocation from it sounds based on the.
If that trend continues I would say we would be at the high end of the guidance potentially above if that trend continues.
The authorization it sounds like itself full after as authorized like halfway through the quarter. So it seems like you guys kind of Frontloaded buybacks this quarter.
So we're just taking a.
Do you still think that that'll be an important part of the toolkit moving forward or are you guys being <unk>.
Yeah.
A look at the improvement again, given that the lack of visibility in terms of the exact timing.
Sensitive around valuation and where the stock's at like how should we think about.
As I said that Charlie just try and try not to get too far over our skis there.
The buyback, especially given that.
Okay. Okay that is helpful and then.
Staff the postal operations silos.
Yes, so I think as we said in the prepared remarks that we view share repurchases as a key component of capital allocation.
I guess.
Okay.
Follow up on capital allocation.
To your point.
And from the sounds of based on that.
Also consistent with what we've done historically and said that our path would be forward right is that.
Do you still think that that'll be an important part of the toolkit moving forward or are you guys being.
At the higher prices were less aggressive at the lower prices were more aggressive and.
That will continue to be the path forward.
Sensitive around value.
Shannon and where the stock's at like how should we think about.
Okay.
It's one thing to add there as we've said before.
The buyback, especially given that.
Oh, yes, yes.
The highest and best use of capital is for us to execute and or where possible accelerate the transformation.
Our Sofia the postal operations.
Pillows.
Yes.
So I think as we said.
That said the business generates quite a bit of cash.
To your point.
And also consistent with what we've done historically and said that our path would be forward right is that.
And so to Dave's point, we consider the organic investment into.
Growth in the transformation as well.
At the higher prices were less aggressive at the lower prices were more aggressive.
The highest use and then we look at.
The buybacks given the stock price with employing a grid.
And.
That will continue to be the path forward.
So even I think the Q Q2 is a great example, where we were extremely aggressive early on.
Okay.
It's one thing to add there as we've said before with the.
At much lower prices.
The highest.
And then the third is debt pay down and in that context, making sure that we're not getting out.
Sin and best use.
Of capital is for us too.
And levering up too much on the buyback side.
Execute and.
As we see.
Performance over time, and so the program over time, and we'll go back to when we initiated this several years ago.
Or where possible accelerate.
Growth.
We bought obviously much more aggressively at significantly lower prices than where we are today.
Then the transformation as.
The.
The highest.
How we think about it going forward.
And then we look at the.
Okay.
That's that's helpful. And then last one for me I guess just.
The buybacks given stock price.
Price with the employing a group.
Do you have any update on Penn.
Grid.
Pension I think you guys were planning on doing kind of.
So.
Annuity relation and kind of converting that.
Even I think the Q Q2s are great.
Over just to clean up the balance sheet a little bit.
And out.
Any update on either the expected timing or cash impact or anything that we should be mindful of.
And let me bring up too much on the buybacks.
As we see.
As that process continues.
You.
Our performance over time.
Yes, so the update on timing that process is underway.
I am and so the program over time and we'll go back.
Act too when we initiated.
Things are coming out I would say generally in line with.
This several years ago.
The assumptions, we made going going into it.
We bought.
We still haven't gone out to.
Obviously much more aggressively at.
Significantly lower prices than where we are.
<unk> is the plan and work with the insurers to take that over.
For planning on.
Doing kind of <unk>.
That will happen during the third quarter and so.
It would escalation and kind of converting that.
Yeah on the Q3 call potentially.
Over just a.
Clean up the balance sheet a little bit.
Any update on either.
Before then we will have additional news to share in terms of.
Or do you expected timing or.
The cash outlay and what that looks like.
The cash impact you're right.
Okay.
Thanks for taking the questions.
And we should be mindful of.
Thanks Scott.
As that process continues.
Again, if you would like to ask a question press star one on your telephone keypad.
Yes.
Yes.
Okay.
Still haven't gone out to.
Newer ties the plan and work with the the insurers to take that over.
We have no more questions. This concludes our Q&A session I would now like to turn the conference over to Dan Lee for closing remarks.
That will happen during the third quarter and so.
Thank you Lucy and thank you everyone for joining we look forward to talking to you in a few months and seeing in the interim.
E on the Q3 call potentially.
Before then we will have additional news to share in terms of.
The cash out.
That concludes today's call you may disconnect.
And what that looks like.
Okay.
Thanks for taking the questions.
Okay.
We have no more questions. This concludes our Q&A session I would now like to turn the conference over to Dan Lee for closing remarks, great. Thank you Lacy and thank you everyone for joining we look forward to.
Talking to you in a few months and seeing in the interim.
That concludes today's call you may disconnect.