DFIN - NYSE

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 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 would like to withdraw your question, press star one again. Relations. Please go ahead. Thank you.

Good morning, everyone, and thank you for joining Donnelley Financial Solutions fourth quarter and full year 2024 results conference call. This morning, we released our 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 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 consolidated adjusted EBITDA, consolidated 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, and other members of management I will now turn the call over to Dan.

Thank you, Mike. And good morning, everyone. Our fourth quarter results offered further validation of our strategy, including an improved sales mix, solid growth in software solutions net sales, driven by double-digit increases in our SaaS compliance offerings, and great progress in expanding the adoption of our offerings in the marketplace. Offsetting the growth in software solutions, our fourth quarter event-driven transactional revenue was down approximately $20 million or 33% compared to the fourth quarter of last year. In addition, as we previously communicated, we faced robust sales comparisons year over year in Venue. Dave will cover the fourth quarter results in more detail shortly. Reflecting on the full year of 2024, the disciplined execution of our strategy delivered strong financial and operational results, including software solutions organic net sales growth of 13.8%, growth in adjusted EBITDA, adjusted EBITDA margin expansion, and improvements in both operating cash flow and free cash flow compared to full year 2023. Despite a reduction in our event-driven transactional revenue for the third consecutive year, following declines in capital markets transactional revenue in 2022, and 2023, deal activity remained muted in 2024 resulting in a revenue reduction of approximately $9 million or 5%. Combined with lower event-driven transactional revenue in our investment company segment, our total event-driven revenue was down approximately $15 million or 8% compared to full year 2023. For perspective, the level of event-driven revenue we recorded in 2024, $186.5 million, was the lowest annual level and more than $100 million below the average annual event-driven revenue we've achieved in our history as a standalone company. While we have retained our strong share position, the level of overall transactional market activity remained depressed throughout 2024. Despite this prolonged headwind, our strong execution enabled us to deliver consolidated adjusted EBITDA of $217.3 million, an increase of $9.9 million or 4.8% year over year, and consolidated adjusted EBITDA margin of 27.8%, approximately 180 basis points higher compared to 2023. We remain on track to deliver our long-term goal of achieving adjusted EBITDA margin of 30% plus by 2028. Our continued strong performance through an extended weak transactions market is an important accomplishment that demonstrates the underlying strength of our business and is a proof point for our broader strategy. One of the fundamental drivers of our strong margin performance has been delivering higher value to clients through our higher margin software offerings. Our 2024 performance further demonstrated the progress of our strategy. For full year 2024, we delivered record software solutions net sales of approximately $330 million, an increase of 13.8% from 2023 on an organic basis, resulting in software solutions comprising approximately 42% of our total full year net sales. In addition to the strong growth, our software solutions performance in 2024 helped us reach two important milestones. First, in May of 2020, we introduced our 44 in 24 strategy, specifically targeting to double our sales mix derived from software solutions over five years, moving from 22% of net sales from software solutions in 2019 to 44% in 2024, and more importantly, benefiting from the resulting financial profile from such a business. Next, from the time we committed to that aspirational target, we focused our efforts to accelerate the development and go-to-market velocities of our software solutions, including launching new products such as new Active Disclosure, ARC Digital, Total Compliance Management, and the tailored shareholder reports module within ARC reporting. Increasing go-to-market investments, and expanding our partner ecosystem while divesting nonstrategic software assets that could not deliver an appropriate financial return. At the same time, we maintained a strong tech-enabled services offering and successfully managed the decline in print and distribution net sales, which was impacted by regulatory-driven reductions, the secular decline in the demand for printed materials, and our proactive decision to exit some lower margin work. We finished the year with software solutions net sales representing 42.2% of our total net sales, a bit short of the 44% goal in part due to the divestiture of nonstrategic software products. However, we are realizing the financial profile benefits associated with the significantly improved sales mix. This achievement is a significant proof point of our transformation and keeps us on the right path to achieve our long-term financial goals. Second, for the first time in the company's history, full year net sales from software solutions exceeded net sales from each of tech-enabled services and print and distribution, becoming the largest component of our overall net sales. This offers another proof point that DFIN is delivering excellent solutions to our clients, which in turn positions us to continue to deliver strong returns to our shareholders. Since becoming a standalone company in 2016, we've grown our annual software solutions net sales by nearly $200 million from $136 million to $330 million, representing an annualized growth rate of approximately 12% or approximately 13% on an organic basis. Let me share a few highlights that underpin the growth in our software solutions 2024 and the momentum we are carrying into 2025.

First, venue.

Our virtual data room offering, delivered outstanding results in 2024, growing approximately 26% year over year and reaching a record level of revenue of nearly $140 million. Performance was driven by our strong sales execution, which resulted in several large projects, pricing improvements, and increased room and page volume. Next, we are encouraged by the sales momentum in our recurring compliance active disclosure in ArcSuite. Having posted moderate growth during the first three quarters of the year, the growth in aggregate of active disclosure in ArcSuite accelerated in the fourth quarter and increased approximately 19% compared to last year's fourth quarter. The improvement in trend creates positive momentum heading into 2025. For active disclosure, 2024 represented the first full year of operating on the new AD platform, which was a new build released in the first quarter of 2021. Since completing the decommission of the former AD product, in the first half of 2023, we've realized improved operating performance including growth in net client count as well as higher subscription value per client. In addition, our sales execution, coupled with recent product enhancement, have also resulted in sequential improvements in revenue retention rates. The improvements we have made across the offering from technology, services, support, and sales, create a strong foundation for sustained future growth. We expect active disclosure to continue to deliver solid growth in 2025. As it relates to ArcSuite, we delivered solid full year net sales growth of approximately 9% in part from the tailored shareholder reports regulation, for which we generated approximately $6 million of software revenue in line with our expectations. We remain on track to achieve $11 million to $12 million of recurring soft revenue on a full year basis. In addition, during the fourth quarter, we closed on a large multiyear renewal of a software subscription contract with a strategic ArcSuite client, further improving the predictability of our future revenue. Before turning it over to Dave, I wanted to provide a quick update on our strategic priorities for this year. In 2025, we can expect our primary focus to remain on accelerating our business mix shift, by continuing to grow our recurring SaaS revenue base, while maintaining share in our core traditional businesses, including transactions. We are encouraged by the momentum and active disclosure in ArcSuite heading into the year, and expect Venue to continue to perform well in 2025, despite facing tougher year over year comparisons, particularly in the first half of the year. We will continue to invest in our regulatory and compliance software platform to ready ourselves to capture the demand from future new regulations and non-SEC use cases. In addition, we will continue to aggressively manage our costs and drive operational efficiencies, including taking additional actions to better align our cost structure with our current level of sales. Finally, we will maintain our disciplined approach to investments and capital allocation in our pursuit of profitable growth opportunities, to maximize financial return and create long-term value. I'm confident with our continued focus on executing our strategy, we will create increased value for our clients, employees, and shareholders. 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 and outlook for the first quarter of 2025. Dave?

Thank you, Dan, and good morning, everyone. As Dan noted, we continue to deliver solid growth in our software solutions offerings during the quarter, which grew 11.6% on an organic basis, the fourth consecutive quarter of double-digit organic software solutions net sales growth. The fourth quarter capped off outstanding full year 2024 performance during which Software Solutions net sales increased 13.8% on an organic basis, the highest year over year growth rate we've achieved in the last three years. We are encouraged by the accelerating growth of our compliance software offerings, active disclosure and ArcSuite, with each product generating double-digit growth during the quarter, an improvement compared to recent trend. Our software performance enabled us to deliver another quarter of improved and solid adjusted EBITDA margin performance despite lower than expected transactional revenue. On a consolidated basis, total net sales for the fourth quarter of 2024 were $156.3 million, a decrease of $20.2 million or 11.4% from the fourth quarter of 2023. The decrease in consolidated net sales was driven by lower volume in our compliance and communications management segments, which decreased by $28.1 million in aggregate with event-driven transactional revenue accounting for approximately $20 million of the year over year decline. Related to both lower revenue from capital markets transactions as well as lapping a large mutual fund special proxy project in investment companies from last year's fourth quarter. Partially offset by the growth in software solutions net sales which increased by $7.9 million or 11.6% on an organic basis. Fourth quarter adjusted non-GAAP gross margin was 59.9%, approximately 10 basis points higher than the fourth quarter of 2023 as the favorable impacts of higher software solutions net sales, ongoing cost control initiatives, and price uplifts were mostly offset by lower event-driven transactional activity. Adjusted non-GAAP SG&A expense in the quarter was $62.1 million, a $2.1 million decrease from the fourth quarter of 2023. As a percentage of net sales, adjusted non-GAAP SG&A was 39.7%, an increase of approximately 330 basis points from the fourth quarter of 2023. The decrease in adjusted non-GAAP SG&A was primarily driven by reduction in selling expense as a result of lower transactional sales and the impact of ongoing cost control initiatives, partially offset by higher bad debt expense. Our fourth quarter adjusted EBITDA was $31.7 million, a decrease of $9.6 million from the fourth quarter of 2023. Fourth quarter adjusted EBITDA margin was 20.3%, a decrease of approximately 310 basis points from the fourth quarter of 2023. The declines in adjusted EBITDA and adjusted EBITDA margin were primarily driven by lower transactional revenue, partially offset by higher software solutions net sales and the impact of ongoing cost control initiatives. Turning now to our fourth quarter segment results. Net sales in our capital markets software solutions segment were $50 million, an increase of 5.7% on an organic basis from the fourth quarter of last year, driven by the performance of our recurring compliance product Active Disclosure, which increased approximately 12% in the fourth quarter. Fourth quarter subscription revenue increased 6% year over year in line with the growth rate from the third quarter and once again stronger than the growth we recorded in the first half of 2024. In addition, we continue to make great progress to increase the adoption of active disclosure service packages, an offering that bundles commonly used services into tiered packages which previously were offered on an ad hoc basis. The contracted service packages create a more predictable experience for our clients and a more predictable mix of recurring revenue for DFIN. Venue sales were up $0.7 million or approximately 2% year over year. As expected, venue sales growth was more modest in the fourth quarter compared to recent trend as we lapped a very strong fourth quarter of 2023 during which venue grew approximately 26% year over year. In addition, the impact from large projects, which aided Venue's robust growth through the first three quarters of this year, was less significant during the fourth quarter. On a full year basis, Venue delivered approximately $138 million in net sales and grew approximately 26% versus full year 2023. Adjusted EBITDA margin for the segment was 26.6%, an increase of approximately 10 basis points from the fourth quarter of 2023, primarily due to higher net sales and cost control initiatives, partially offset by higher selling expenses as a result of increased net sales. Net sales in our capital markets compliance and communications management were $53.3 million, a decrease of $15 million or 22% from the fourth quarter of 2023, primarily driven by lower event-driven transactional revenue. During the fourth quarter, we recorded $37.7 million in transactional revenue, which was approximately $10 million below our expectations and down nearly $12 million or 24% from the fourth quarter of 2023. From a market perspective, the equity deal environment showed some signs of improvement in the fourth quarter, including increases in the number of priced IPOs and completed public company M&A deals in the US compared to the fourth quarter of 2023. Consistent with our historical track record, we continue to maintain high market share for large high-quality IPO and M&A transactions completed in the quarter. However, despite an increase in deal activity, we recorded lower revenue on a year over year basis primarily due to three factors. First, while our revenue for priced IPOs increased, market activity for secondary and other follow-on offerings declined. Second, we recorded lower revenue from de-SPAC transactions as we deprioritized certain lower quality deals, including de-SPACs with depleted trust due to redemptions and lack of financing, which can create future collections risk. Third, transactional revenue in the Asia Pacific region declined year over year, driven by limited market activity and a proactive decision not to pursue certain low margin work. As it relates to our approach on low quality and low margin opportunities, we will maintain the same level of discipline going forward. Capital Markets compliance revenue was down $3.2 million or 17.1% year over year, driven by a lower volume of compliance work, including certain event-driven filings such as 8-K proxies associated with corporate transactions as well as the related printing and distribution, consistent with the trend from the first three quarters of the year. Adjusted EBITDA margin for the segment was 25.5%, a decrease of approximately 520 basis points from the fourth quarter of 2023. The decrease in adjusted EBITDA margin was primarily due to lower transactional revenue, partially offset by cost control initiatives. Net sales in our investment company software solutions segment were $31.6 million, an increase of $5.9 million or 23% versus the fourth quarter of 2023, driven in part by revenue from our tailored shareholder report solution. In addition, as Dan noted earlier, during the fourth quarter, we closed on a large multiyear renewal of a software subscription contract with a strategic ArcSuite client. The renewal became effective in the fourth quarter and will continue to facilitate improved economics over the renewal term. On a full year basis, total ArcSuite delivered approximately $116 million in revenue and grew 8.7% year over year, driven by growth in subscription revenue, including the impact of the tailored shareholder report solution. Based on the incremental revenue from tailored shareholder reports, we expect stronger ArcSuite revenue growth to continue in the first half of 2025. Adjusted EBITDA margin for the segment was 37%, an increase of approximately 550 basis points from the fourth quarter of 2023. 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 ramp-up of the tailored shareholder reports offering. Net sales in our investment companies compliance and communications management segment were $21.4 million, a decrease of $13.1 million or 38% from the fourth quarter of 2023, driven by lower print and distribution revenue, which accounted for substantially all of the year over year sales decline. The reduction in print and distribution revenue is a result of lapping a large mutual fund special proxy project in the fourth quarter of 2023 and the impact of the tailored shareholder reports regulation, which lowered the demand for printed materials, similar to what we experienced in the third quarter. Adjusted EBITDA margin for the segment was 22.4%, a decrease of approximately 770 basis points from the fourth quarter of 2023. The decrease in adjusted EBITDA margin was primarily due to lower sales and an unfavorable sales mix, partially offset by lower selling expenses, as a result of lower sales. Non-GAAP unallocated corporate expenses were $11.7 million in the quarter, an increase of $0.8 million from the fourth quarter of 2023, primarily driven by higher incentive compensation expenses, partially offset by lower third-party expenses. Free cash flow in the quarter was $41.3 million and full year free cash flow was $105.2 million, an increase of $43 million over full year 2023. The improvement in full year free cash flow was primarily due to the flow through of higher adjusted EBITDA and favorable working capital, partially offset by additional capital expenditures. We ended the year with $124.7 million of total debt and $67.4 million of non-GAAP net debt. At year-end 2024, we had no outstanding borrowings under our revolver and had $57.3 million of cash on hand. As of December 31, 2024, our non-GAAP net leverage ratio was 0.3 times. Regarding capital deployment, we repurchased approximately 282,000 shares of common stock during the fourth quarter, worth $17.4 million at an average price of $61.67 per share. For full year 2024, we repurchased approximately 947,000 shares for $58.7 million at an average price of $61.97 per share. Going forward, we will continue to take a balanced approach toward capital employment. 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 2025, we are encouraged by the improving transactional pipeline so far in the first quarter. The overall transactional activity remains well below the historical average. In the near term, we expect macroeconomic headwinds, market volatility, and geopolitical factors to continue to weigh on the return to a more normalized level of deal activity. In addition, we expect a continued decline in print and distribution sales, which will impact our traditional compliance offerings, consistent with the recent trend. We remain bullish on the growth trajectory of our recurring compliance software offerings, active disclosure and ArcSuite. Further, Venue is expected to face tough comparisons through the first half of the year, driven in part by lapping the large projects which benefited Venue sales last year. With that as the backdrop, we expect consolidated first quarter net sales in the range of $190 million to $200 million and consolidated adjusted EBITDA margin in the mid-twenty percent range. Compared to the first quarter of last year, the midpoint of our consolidated revenue guidance, $195 million, implies a decrease of approximately 4% as growth in software solutions is more than offset by the continued decline in print and distribution volume and lower capital markets transactional activity. I'll also provide a bit more color on our assumptions for the capital markets transactional sales. At the midpoint of our sales range, we assume transactional sales of approximately $45 million in the quarter, reflecting a decrease of approximately $3 million from the first quarter of 2024, and a sequential increase from the $37.7 million we recorded in the fourth quarter of 2024. As it relates to the full year, our 2025 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 in our software products and the underlying technology to support them, is projected to be between $65 million and $70 million. This CapEx supports the continued development of our regulatory and compliance software platform, including advancing toward our single compliance platform in addition to developing solutions targeted for new regulations, and incremental use cases. With that, I'll now pass it back to Dan.

Thanks, Dave. Our performance in 2024 serves as further proof point that our strategic transformation is enabling DFIN to become more profitable, focused, and resilient. We executed well in a very challenging market environment, delivering solid financial results, while also continuing to invest in and execute our strategic transformation. Before we open it up for Q&A, I'd like to thank the DFIN employees around the world who ensure our clients continue to receive the highest quality solutions. Now with that, we're ready for questions.

Thank you. We will now begin the question and answer session. We'll take our first question from Charles Strauzer at CJS Securities.

Hi. Good morning. Just a couple of questions. If we could talk about kind of more maybe get some more color on results versus guidance and kinda what were some of the key drivers behind the differential.

Yeah. Charlie, it's Dave. I'll take that one. Thanks for the question. So from a revenue perspective, the biggest variance as we talked about was the capital markets transactional revenue, which was off $10 million from what we had assumed for guidance. You know, I think from an EBITDA margin perspective as well, you know, we came in at just north of 20%. Our guidance was for the low twenties. I think when you look at the variance in that transactional revenue, right, so $10 million, we typically think about incremental margins on that work in the 50% to 60% range. So, you know, you add another $5 million to $6 million of EBITDA and it puts us in the, you know, kinda call it 22.5% to 23% range, which would have been right in line with our guidance of low twenties. So effectively, it's really just that the capital markets transactional volume, which explains the variance.

Well, great. Thank you on that. And then just shifting gears a little bit to regulations. You know, can you comment on, basically, you know, how you think about how you will address kind of future regulations and whether or not you expect a negative impact from the reduction in regulations specifically on kinda ESG in the US and the EU.

Thank you, Charlie. It's Dan. I'll start and then I'll ask Craig and Eric to make a couple comments. So, you know, relative to just broadly speaking, our teams are working to assess proposed regulations and if and how they fit with our offerings and, you know, certainly if we're best suited to build on our own or to partner. From a timing perspective, typically a long lead time between a regulation's proposal, the comment period, and then the effectiveness period. And so one of the benefits of the platform that we've talked about and have built is our ability to get to market quicker, and more economically as we share our common platform services. This also lowers our investment required to serve core regulations. So relative, you know, if we pivot over to your specific question on US, EU, ESG related and the impact de minimis impact to us. Our plan was to leverage our existing platform entering the market as the last mile, to the SEC for tagging and filing. So, you know, with that, I'd ask Craig if you wanna add a little more detail.

Yeah. Thanks, Dan. The global ESG regulations are certainly changing to reflect the current political climate. So here in the US, our clients are telling us to ultimately the court is gonna vacate the ESG rule in its entirety. If you move to the EU, the EU president has said that their upcoming omnibus bill, which is expected on February 26th, is to, quote, take a huge approach to reducing in one step all three ESG requirements that have previously been passed. So that includes their taxonomy, the CSRD, and the CS3D. And as Dan stated, there's very little impact to DFIN as a result of this, but I think it's worth noting that without an ESG mandate, our clients are talking about their ESG efforts within their documents today. And DFIN has met that moment with a one-stop shop. So we're delivering through our compliance platform, active disclosure, the last mile with the SEC, as well as to our client's shareholders and investors. In addition to the general disclosure, DFIN, for years, has been providing an ESG fact sheet solution which uses SASB guidelines. It's a really easy way for companies to take what they're doing and visualize that via design. So it's a presentation layer, again, integrated with an active disclosure. I think at the highest level, whether it's ESG or any new disclosure required, it highlights our value proposition. We have great software and client trust to make it happen.

Great. Thank you, Nitro.

Troy, if I could just add to that from investment companies' perspective, I think it's important to note, and Dan and David mentioned this, the tailored shareholder report rule is really just passing the midway point and 2025 will be our first full year impact. So we're still working through that process within our clients, which will roll out through the balance of the year. And then as Dan mentioned around the benefits of our platform, the Arc Suite is also very well positioned to help our clients meet the financial reporting requirements related to emerging new investment trends. And I'm sure you're tracking and many have been watching what's happening in the market relative to broadening access to private markets for retail investors. So this is gonna drive new products, different product structures, and as Dan mentioned, the benefits of our platform is the ability to be nimble and handle these requests. Financial reporting requirements, which are really based on, you know, historical regulations and reporting requirements. So, you know, we see some very nice positives in that area as well. And I'll just close out by saying, you know, the Arc Suite is our clients tell us they use it to drive cost efficiencies. They also use it to streamline processes via workflow and robust content management tools. So the utilization of the Arc Suite goes well beyond, you know, this regulatory horizon. So we've got a lot of work to do this year relative to TSR. And certainly some exciting things with new products being created with this private market shift to retail investors.

Thanks. That was insightful. Thank you very much.

You got it.

Thanks.

We'll go next to Kyle Peterson at Needham.

Great. Thank you. And good morning. I appreciate you guys taking my questions. I want to start off, you know, the de-SPAC headwind that you guys kind of mentioned in the prepared remarks. I guess it seems like, I guess, how long should we think about this continuing to remain a headwind? Is this the last year, or how long is the tail on some of this activity?

Yeah. Thank you for the question. This is Craig. I think you can expect that we're certainly at the tail end of this de-SPAC SPAC market certainly took off in 2020 through 2021. And where we changed our strategy is, again, we had lower revenue in the quarter from de-SPAC transactions because we deprioritized these low-quality deals. So the market has shifted. When we look at a deal, it includes looking at de-SPACs that are gonna happen with depleted trust due to redemptions, de-SPACs with poor financing. If you unpack what happened in Q4, there were 12 completed de-SPACs. Ten of them had done their IPO over three years ago and had almost nothing left in the trust due to the redemptions. Of them had previously terminated deals. Half of the targets they were acquiring were foreign, and almost all are now nano micro-cap stocks. And many of them are at risk of delist due to not meeting the NASDAQ or New York Stock Exchange listing requirements. So the market is coming to an end. Are there a few quality ones left? Yes. We will compete for those. The new SEC chairman that's coming in has said he'll look at the rules that are passed but we'll be very prescriptive about what we take, and I think we'll see that moving forward into the 2025 and 2026 market.

Okay. Yeah. And Kyle, I would just add to it. You know, a lot of that strategy, over the last few years, we've talked about the increase that we've seen, you know, in the SG&A lines specifically as it relates to bad debt. And so, you know, we look back and say, you know, when the SPAC market was at its peak, from an economic perspective, it made sense to capture as much of that share as we could, knowing that there were gonna be some winners and some losers in that arena. But as we go forward here and evaluate the quality, we're just being much more discerning on that as Craig outlined.

Okay. Appreciate the call color on that. Want to switch over to the distribution revenue. I think, historically, you know, how you guys have kind of messaged it is, you know, we should think about kind of a single-digit runoff. Obviously, it was quite a bit larger in 2024. How should we think about the pace of print and distribution in 2025? Should it kind of revert back to that, you know, mid-single-digit declines after the bigger reset in 2024? Or how are you guys kind of budgeting for the print revenue for the coming year?

Yeah. And, Kyle, thanks for the question. I should clarify when we talk about print revenue, the declining in the, you know, call it 4% to 5% range, that's how we view just the overall secular trend. Right? So the overall market all else being equal, I think when you look at specific to our results, in addition to any that underlying secular decline, we'll see variances both positive and negative relative to that baseline. You know, the best example, probably was the special proxy in the fourth quarter of 2023, right, that really drives print revenue. Certainly on transactional revenue to the extent that market activity reverts back to a more normalized level, there will be, you know, increased print demand with that as well. So you almost have to bifurcate the underlying print secular decline from market activity or event-driven activity, you know, such as special proxies, etcetera.

Okay. That's good color. And then if I could just squeeze one last one in, particularly on, you know, capital allocation. You guys made a lot of progress and have the debt in a really, you know, good spot. You're continuing to buy back stock. How are you guys kind of thinking about this in 2025 and then is there any update? I think you guys were planning on, you know, annuitizing your pension. So just any update or on timing or expected cash impact there would be very helpful.

Yeah. So a lot there. Let me unpack it. From a capital deployment perspective, I think you should expect business as usual as we outlined in our prepared remarks. You know, investing in the business, repurchasing shares, and net debt reduction are the priorities for capital deployment. So more of the same going forward. Specifically, as it relates to the pension termination, we are still on track to have that done by the end of this year. We don't yet have an estimate that we're ready to share on the cash contribution, you know, I would say similar to the balance of our capital deployment. Right? We took a pretty disciplined look at this and had waited for a while to do this transaction. And we're very confident that now is the right time to get this behind us.

Okay. Appreciate all the color, and thank you guys for taking my question.

Thank you.

We'll now take follow-up from Charles Strauzer at CJS Securities.

Hi. Just a quick follow-up. We're looking at Q1 guidance. If you wouldn't mind providing a little bit more insight, color really in the confidence level you have behind the guidance and some of the assumptions you're baking into that.

Yeah. Charlie. So from an overall account, confidence perspective, obviously, we had a look at January at this point. And, you know, factor in February activity. I think when you look at, you know, some of the variables, obviously, the biggest one will be the assumption around capital markets transactional activity. As we noted in the prepared remarks, right, the $45 million that we're assuming, for capital markets transactions, is down slightly from the first quarter of 2024, down about $3 million. But also, it's the $45 million is a pretty significant increase from roughly $38 million that we did in the fourth quarter. Again, that's with, you know, kind of the insight on what how January came in and what we're seeing so far in February. I would say that still remains the biggest area of variability if we were to, you know, fast forward and look back similar to what we saw in Q4. You know, where we were off $10 million. That's the area where, you know, we do have some visibility, but from a timing perspective, you know, tough to really understand when these deals will hit.

Great. Too, Alan.

To add maybe to a little bit of that, this is Craig, as stated or, you know, we're always subject to the uncertainty, and we are a little bit pleased with what we see early on. January was the busiest January for IPOs, which is good news since 2021. As of today, Deepgram's IPO count is eleven. So we've done 80% of the IPOs this year. It's worth noting that in full quarter of 2024, there were only fourteen. So we're hopeful for that market. But it's still trying to find its direction. SailPoint, which was a decent client, priced last week. It's exciting. They only had three years of private equity ownership. And they had a lot of positives. So they priced at the high end. They had ten million more shares than anticipated. But the headline after it was in TechCrunch, SailPoint's Dole debut did little to unstick the IPO window. So we just don't know how these things are going to impact the market. As Dave said, we're planning for any market. We plan for continued volatility. We're off to a solid start. It only takes a few deals to make it happen. And then as you think about the M&A market, where we're really focused is some of the euphoria in that space has depleted a little bit. So you have the Wall Street Journal this past week which had an article that the CEOs and bankers say that Trump Euphoria is fading fast, and that deal market has been curtailed by the uncertain earlier in the year. January had a decade low announced deals, just nine hundred. Which were compared to twelve hundred in the prior year and fifteen hundred in 2023. So, again, a lot of optimism. You know, the partner Paul Weiss, in the article stated the tsunami of M&A is coming. It's just ripe to arrive later. We have no idea when that's gonna come, but given the nature of it, we're certainly focused from an M&A transaction perspective. And then as it relates to Venue, that space as well. Thank you.

And that concludes our Q&A session. We will now turn the conference back over to Dan Leib for closing remarks.

Thank you, and thank you everyone for joining us. We look forward to speaking in a couple months.