Financial regulatory software provider Donnelley Financial Solutions (NYSE: DFIN) reported revenue ahead of Wall Street’s expectations in Q2 CY2026, with sales up 2.8% year on year to $224.2 million. The company expects next quarter’s revenue to be around $180 million, close to analysts’ estimates. Its non-GAAP profit of $1.76 per share was 7.8% above analysts’ consensus estimates.

Is now the time to buy DFIN? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

Donnelley Financial Solutions’ second quarter results were shaped by sustained growth in its software solutions, particularly ActiveDisclosure, and a continued decline in print and distribution revenue. Management attributed the outperformance in software to higher client adoption and the migration of compliance activities to digital platforms. While cost control efforts and a favorable sales mix supported margins, CEO Daniel Leib noted that the secular decline in print, accelerated by regulatory changes, weighed on overall performance. Management acknowledged the mixed impact of these trends, stating, “We delivered record quarterly net sales of nearly $100 million in software, but print and distribution declined 15%.” The market’s negative reaction suggests concerns about the pace of print declines and the sustainability of software-led growth.

Looking ahead, management expects growth in software offerings like ActiveDisclosure and Venue to offset continued print declines, with new regulatory developments such as the SEC’s proposed Regulation E-Delivery likely to further accelerate the industry’s shift to digital communications. CFO Dave Gardella indicated that capital markets transactional activity remains resilient and is expected to support future growth, while software adoption and process simplification initiatives are projected to sustain margins. Still, management cautioned that the ultimate impact of regulatory changes and the timing of transactional revenue recognition introduce uncertainty to future results, stating that guidance “assumes a similar environment” for capital markets, but timing of deals may affect quarterly performance.

Key Insights from Management’s Remarks

Management attributed the second quarter’s performance to strong software adoption, ongoing cost discipline, and the accelerating decline in print due to regulatory changes.

• Software adoption drives growth: ActiveDisclosure saw over 29% year-over-year sales growth, fueled by increased client count, higher average value per client, and migration of transactional activities from traditional services to the digital platform. This marked the fourth consecutive quarter of 20%+ growth, positioning software as a larger proportion of revenue.

• Print and distribution headwinds: Print and distribution revenue declined 15% as regulatory changes, such as SEC Rules 30e-3 and 498A and the new Tailored Shareholder Reports, further reduced demand for printed materials. Management expects this secular trend to continue and be reinforced by the proposed Regulation E-Delivery, which could make electronic delivery the default for investor communications.

• Cost discipline supports margins: Enhanced processes, AI-driven productivity initiatives, and reduction of legacy print capacity helped expand non-GAAP gross margin by 230 basis points. Management has embedded ongoing cost discipline in the company’s operating culture, leveraging automation and process simplification to streamline operations.

• Capital markets rebound: Transactional revenue in capital markets grew significantly, overlapping a weak prior-year quarter. Management highlighted increased IPO activity and a resilient deal environment, with Donnelley Financial Solutions maintaining market share in large transactions.

• Leadership and board updates: The company appointed Ken Napolitano as Chief Revenue Officer to accelerate go-to-market execution and added Joe Binz, a technology finance leader, to the Board of Directors. These changes support the company’s evolving strategy toward a software-centric business model.

Drivers of Future Performance

Donnelley Financial Solutions’ guidance is shaped by the continued mix shift to software, regulatory-driven print declines, and ongoing cost control initiatives.

• Digital shift accelerates: Management expects regulatory proposals like SEC Regulation E-Delivery to further reduce print demand and accelerate digital adoption. They are positioning the company’s software suite to capture the resulting growth in electronic compliance and reporting needs, but acknowledge that the full impact will phase in over several years, with implementation likely around 2028.

• Capital markets activity stabilizes: Guidance for the next quarter assumes capital markets transactional activity will remain consistent with recent trends, but management notes that the timing of deal completions may swing quarterly results. Ongoing adoption of ActiveDisclosure and Venue are expected to support growth even if market volatility persists.

• Margin management remains a focus: Management plans to sustain non-GAAP margin levels through process optimization, automation, and selective investment in go-to-market capabilities. However, they flagged potential headwinds from higher sales-related expenses and incentive compensation tied to increased software sales.

Catalysts in Upcoming Quarters

In future quarters, the StockStory team will be monitoring (1) the continued pace of software adoption, especially for ActiveDisclosure and Venue, (2) the impact of regulatory developments like SEC Regulation E-Delivery on print and digital revenue mix, and (3) the resilience of capital markets activity and transactional revenue streams. Execution on cost initiatives and leadership integration will also be important factors to watch.

Donnelley Financial Solutions currently trades at $47.01, down from $51.39 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free).

Our Favorite Stocks Right Now

ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.

Our AI system flagged Palantir before it ran 1,662% between October 2022 and February 2026. AppLovin before it ran 753% between February 2024 and February 2026. Nvidia before it ran 1,178% between January 2023 and February 2026. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.

Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.