Donnelley Financial Solutions Inc

and on your telephone keypad. 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 Zhao, Head of Investor Relations. Please go ahead.

Thank you. Good morning, everyone, and thank you for joining Not Only Financial Solutions' fourth quarter and full year 2023 results conference call. This morning, we released 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 DFINSolutions.com. During this call, we'll refer to forward-looking statements that are subject to risks and uncertainties. For a complete discussion, please refer to the cautionary statements included in our earnings release and further details 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 concerning the company's ongoing operations and is an appropriate way for you to evaluate the company's performance. They are, however, provided for informational purposes only. Please refer to the earnings release and related tables for GAAP financial information and reconciliations of GAAP to non-GAAP financial information. I am joined this morning by Dan Leib, Dave Gardella, Craig Clay, Eric Johnson, Boyd Strimling, and Kami Turner. I will now turn the call over to Dan.

Thank you, Mike, and good morning, everyone. We finished 2023 by delivering strong fourth quarter results, highlighted by 5.4% 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 offerings. 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. 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 or 18% year over year. 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 and both manage and variabilize our cost structure have resulted in DFIN 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. To illustrate this in more detail, during the year, our recurring and reoccurring revenue comprised of compliance-related software and services, as well as our venue data room product, increased by 2.4% 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 Venu data room offering, 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 Venu's broader application within the deal ecosystem that creates more resilient, stable demand. 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 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 the pay versus performance disclosure, and are also near complete on the development and readiness for the tailored shareholder reports rule, which becomes effective in July 2024. DFIN 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 iXPRRL 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, iXPRRL 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. Coupled with DFIN's 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. Our focused strategic transformation over the past several years has enabled DFIN to become more profitable and resilient. 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're in the final stages of Chapter 2. or the fundamental transformation chapter of our journey as an independent company, a phase that started in 2020 and has approximately 18 months remaining. 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 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. 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 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 in regulatory and compliance supports a 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 DFIN with an advantage 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. those undefined future regulations will be upside to our projections. 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 DFIN'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. 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 Reports 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.