Donnelley Financial Solutions, Inc. (DFIN) is a global provider of innovative software and technology-enabled financial regulatory and compliance solutions. The company focuses on delivering domain expertise, enterprise software, and data analytics throughout the business and investment lifecycle for its clients.

Donnelley Financial Solutions reported a decline in net sales for the first quarter of 2025. Total net sales were $201.1 million, a decrease of $2.3 million, or 1.1%, from $203.4 million in the same period a year prior. On an organic basis, net sales declined by 0.8%. This decline was primarily driven by reduced capital market compliance activity, particularly in Venue sales, which fell as the company faced tough year-over-year comparisons from large projects.

In contrast, the software solutions segment showed positive growth. Net sales for software solutions reached $84.6 million, reflecting an increase of 5.4%, or 5.8% on an organic basis, compared with the previous year’s first quarter. Within this segment, recurring compliance software products, specifically ActiveDisclosure and Arc Suite, generated approximately 16% growth and achieved double-digit growth rates for the second consecutive quarter. As a result, software solutions represented 42.1% of total net sales, up from 39.5% in the first quarter of 2024.

Donnelley Financial Solutions’ adjusted EBITDA for the first quarter was $68.2 million, demonstrating a year-over-year increase of $13 million, or 23.6%. The adjusted EBITDA margin increased to 33.9%, up approximately 680 basis points from 27.1% in the previous year’s comparable quarter. The improvement in the adjusted EBITDA margin was attributed to a favorable sales mix and effective cost control measures, including a decrease in bad debt expenses.

In terms of profitability, net earnings for the quarter were $31.0 million, or $1.05 per diluted share, compared to net earnings of $33.3 million, or $1.09 per diluted share, in the first quarter of 2024. Non-GAAP net earnings increased to $36.6 million, or $1.24 per diluted share, compared to $27.8 million, or $0.91 per diluted share, from the previous year.

On the balance sheet side, the company ended the quarter with total debt of $189.5 million and a non-GAAP net leverage ratio of 0.8x, stable compared to the prior year’s ratio. DFIN also amended its credit facility to include a $115 million term loan and a $300 million revolving credit facility, both maturing on March 13, 2030. During the quarter, the company repurchased approximately 861,000 shares for $41.8 million at an average price of $48.57 per share.

Looking ahead, DFIN provided guidance for the second quarter with anticipated consolidated net sales in the range of $215 million to $235 million, and an adjusted EBITDA margin in the mid-30% range. This forecast reflects expected challenges related to market volatility and reduced print and distribution revenue, alongside the continued growth dynamics in its software offerings.

Free cash flow for the quarter was negative $51 million, primarily due to unfavorable working capital timing and elevated performance-based payments; this represented a decline from negative $40.2 million in the first quarter of 2024. The year-over-year decrease in free cash flow aligns with the company’s ongoing investment towards transforming its business while managing costs.