8 Most Profitable Small-Cap Stocks To Invest In

3. Donnelley Financial Solutions Inc. (NYSE:DFIN)

Market Cap: $1.92 billion 

5-year Net Income Growth: 11.02%

TTM Net Income: $106.1 million

Number of Hedge Fund Holders as of Q2 2024: 24

Donnelley Financial Solutions Inc. (NYSE:DFIN) provides software and technology-enabled financial regulatory and compliance solutions. It offers regulatory filing and deal solutions through its technology-enabled services, software, and print and distribution solutions.

Donnelley Financial Solutions (NYSE:DFIN) showed improved revenue performance in its Q2 2024 results, with record adjusted EBITDA margin and quarterly adjusted EBITDA and increases in both free cash flow and operating cash flow. This improved performance highlights the company’s continued progress in its transformation, positioning it to achieve its long-term financial targets.

The company is continually making progress against its long-term objectives. It is transforming DFIN into a solution-centric company often delivered by software, with software solutions net sales increasing 14.4% on an organic basis year over year. This shows a continuation of the strong growth rate it attained in Q1 of 2024. The Q2 software solutions net sales growth continues to be driven by the performance of Venue, its virtual data room product. It posted approximately 38% sales growth, reflecting a strong sales execution across Venue’s broad application within the M&A ecosystem serving both private and public companies.

The growth rates of ActiveDisclosure and Arc Suite, which are Donnelley Financial Solutions’ (NYSE:DFIN) recurring compliance software products, also showed positive signs in Q2 and are set to improve in the second half of 2024. Improvement for ActiveDisclosure is driven by recent wins along with overlapping 2023’s platform transition. The improved growth rate for Arc Suite is primarily driven by the tailwind from the Tailored Shareholder Reports regulation. Donnelley Financial Solutions (NYSE:DFIN) ranks third on our list of the 8 most profitable small-cap stocks to invest in.