Dan Leib: Yes, let me, this is Dan, I’ll start and then I think Dave and Eric may have a few comments. But we, with the new regulation, the Tailored Shareholder Reports is a financial report. And so, yes, we look at this on the software side and we have great position with funds with our ArcReporting, financial reporting offering within ArcSuite. And TSR is now a new module that’s integrated within ArcReporting. And so for those using ArcReporting, it builds upon the existing data flows, generates underlying TSR. The data model creates the TSR itself. And then we tag and assemble the TSR into the NCSR and then ultimately file with the SEC. So we’ve been in the process of onboarding, configuring clients to the TSR module. We’ve seen good progress.
We’re really not seeing any more of, we’re seeing a little, I guess, play out in the marketplace, but that’s pretty well set. On the distribution side, for now the requirement is the document’s printed and distributed. And some of the print continues to play out in the market. As we mentioned on the last call, we’re certainly seeing more price pressure on the printing side. And so, Dave, may want to comment on the print as well as Eric.
Eric Johnson: Yes, thanks, Dan. And thanks for the question, Pete. Just building on Dan’s comment, I would draw your attention to our two recent press releases where we’ve been able to successfully test file two full form NCSR and IXBRL tagged TSRs. I think this represents our ability to help our clients and serve our clients in the way they prefer to work. So via traditional services, as well as our SaaS solution ArcReporting. And our product team has done a tremendous job getting that type of test filing completed well in advance of the July deadline. So very pleased with the progress from that perspective. Our revenue mix seems to be trending toward software, which does reflect DFIN’s position as a leader in the investment company’s regulatory and reporting software.
So that’s been somewhat consistent. And as Dan mentioned, we’re consistent with our operating plan over the past few years. We continue to exit low margin print as it relates to TSR printing, we’re operating under that same discipline. And where we have projects that make sense and add value for our clients from a straight through processing perspective where we can, DFIN can provide end to end efficiency, we’ll certainly take that work. But we will stay true to our operating plan around low margin print and easing that where we need to.
Pete Heckmann: Okay. All right. That’s helpful.
Dave Gardella: And Pete, I would just jump in on there both Dan and Eric talked about our approach to print and how it ties into the bigger strategy and the discipline around pricing. I think if you look at our historical gross margins for print and distribution, there’s really a strong trend there. Going back to 2019, we had sales north of $300 million, $321 million, 20% gross margins, so $63 million in gross profit dollars. I think you contrast that with where we’re currently at on a trailing four quarter basis $158 million of sales, gross margin is 43%, gross profit dollars are $67 million, so we’ve cut our print revenue in half over the last four or five years or so, taking out more than $160 million of sales and actually increasing our gross profit dollars by a few million bucks, have done a great job with our operating model.
We’ve outsourced 100% of our offset printing, we’ve reduced our cost structure and made it more variable, and again, taking the disciplined approach to pricing have really driven this trend kind of the high level, right, we know all revenues are not created equally, and then I would say even within print and distribution, all revenue is not the same, and so we’ll continue to look at the underlying profitability, not only for print and distribution or at the offering level but also at the customer level to continue to drive the financial results we have here.
Pete Heckmann: Okay, thanks Dave for that, I mean, while I’ve got you, I can just sneak in one more, but I didn’t hear it, but in terms of just thinking about second quarter numbers, would you think that print would be down by about the same magnitude as the first quarter?
Dave Gardella: Yes, so print in the second quarter or the second quarter, I should say, is proportionately typically a heavy print quarter. And so roughly about the same as what we saw in Q1.
Operator: Your next question comes from the line of Kyle Peterson with Needham.
Kyle Peterson: Great, thanks guys, and good morning. We want to touch on Venue a little bit more. The growth was really impressive, appreciate some of the color on new clients and such, but just wanted to see if you could unpack a little bit outside of the new client wins. What you guys kind of the impact of whether it’s pricing versus just kind of usage or volume will be really helpful.
Craig Clay: Sure. This is Craig. Thanks for the question. I think as you saw and Dave reviewed, great growth, 43%, I’ll unpack that a little bit. It was up 10% sequentially from Q4, so record-high revenue driven by three factors. So we’re overlapping Q1’s lowest quarter of 2023. As Dave mentioned, we’ll have tougher comps as we move into the second half of 2024. The increase was driven by page count activity, so higher activity on existing rooms, new rooms, as well as higher pricing. And these rooms are staying open longer, again, reinforcing the stability of Venue. The underlying demand is a little less volatile versus M&A, so the demand we see is becoming reoccurring in nature for this sort of more stable revenue stream in what has been an event-driven transactional software product.
Dave mentioned the large projects, even when you strip those out, we have some nice growth. Our clients are telling us that dealmaking as well is looking up, and so we’re seeing that Venue as a precursor to dealmaking. I think companies are not waiting on the Fed anymore, so the current level of interest rates in and of itself has not been a barrier to dealmaking in the past. Before sort of a recent zero interest rate area, the prior U.S. M&A volume peaks came when the average fund rate was about 5%. So we keep seeing demand for high-quality assets. There are large amounts of capital that’s being looked to put to work. And we’re pleased with our pipeline. You’ve heard we’re executing well, and as Dan stated, Venue’s broad application in the ecosystem, whether it’s announced, unannounced, whether it’s public or private, as I mentioned in the IPO space, it’s just more resilient.
