Craig Clay - CEO DFIN

It's nice to be here. Thank you.

Sure. I joined that company, R.R. Donnelley, a long, long time ago — 25 years ago at least — and I joined in a business unit of the company that was called Donnelley Financial. So within this massive printing company that did catalogs and magazines and books — Harry Potter and Sears catalog, etc., which is what most people were familiar with — there was a small business unit that was doing financial printing. So at the time, we were supporting lawyers, investment bankers, and companies in their process of going public, going private, going through their life cycle, and a key part of that was print. So that's how the process started out of R.R. Donnelley. So over these years, I've seen the company, the business unit, take a number of twists and turns. We've made many technology acquisitions over the years, which have been very exciting to be a part of. And then what was really exciting is that five years ago, in 2016, R.R. Donnelley broke itself up. So they spun two companies out and then retained the R.R. Donnelley company. So R.R. Donnelley is now public or private? The other business unit is now gone, and you have DFIN, Donnelley Financial Solutions. So we were really excited to spin out of R.R. Donnelley to be a standalone company with no association back to the parent, and really to accelerate and double down our investment, which is helping again the same clients through their entire business life cycle. So it's from startup to initial fundraising to public listings to mergers and acquisitions. And all of the technology now that supports that — print is really a de minimis part. You know, it's an output, much like a PDF or a web file, or an EDGAR file at the SEC. It's really the technology that we're providing to make it easier for our clients, whether that's artificial intelligence, contract analytics, disclosure tools where you're able to create and iterate, all sorts of bank-like security that our clients require.

Sure. You know, it's an investment in a transformation, and we have an array of technologies from sort of the more traditional. So we have a lot of clients who want to work as they did 10, 20 years ago. We have a really powerful platform for that. So I would say it's the process of sort of moving documents back and forth, allowing clients to iterate on those. So we have that sort of traditional path. But where all of our growth and what we're really excited about is one product in particular. It's called ActiveDisclosure. It really allows companies to iterate and create an IPO, as an example, and bring in an amazing amount of detail and working groups. So you've got potentially multiple auditors, multiple law firms, underwriters, all of them converging in this document, and it's allowing them to assign permissions, have the iteration, have the accept and reject, it's connecting the financials, which is so critically important, to their ERP. So whether that's Oracle, you know, or SAP, those last mile of financials are pulled into ActiveDisclosure so that you're sure you have the very latest and are reporting the latest. So it's an amazing product that allows the presentation form to come out of it. So if I wanted to send you a formal version of that, I could choose a number of outputs. It certainly files with the SEC. And then that's connected to our virtual data room. So clients want to house data, they want to share that data with various folks and have a trail of who's accessed it, where it's watermarked, again all the bank-like security to make sure that their pre-market important information is safe.

You know, honestly, as a young person — I think it was my third job — no, the answer is no. It was a fantastic job opportunity. I started actually in our Los Angeles office, which was super exciting for somebody from Texas. It was when I arrived that you realize you're at the nexus of the most important sort of business-related highlights. So you mentioned Tesla — whether it's the IPO, whether it's their journey since, whether it's helping their CEO with all the activities that he has in the news — you're at the very crux of that. So as my first day in California, you realize the fast-paced nature of it, the clients that you're dealing with and working with are amazing leaders of business, smart bankers, lawyers. It was just a very exciting place to be. So after I was there, I did realize the amazing opportunity. And then over these years, the amazing opportunity to really transform that. So an industry that was slow to change, we're providing really the most advanced technology and then allowing our clients to work the way that they want to work.

Sure. So we're really excited about all you sort of mentioned post-merger integration. It's an artificial intelligence tool as well as a security data protect tool. So we're really bringing those things together to advantage our clients. So if you think about an integration of an acquisition, those documents are housed typically in our virtual data room. You used to have a physical room where people would go and review their paper. Now all that is done online. You then at the end of the acquisition have this amazing library that can be coupled with the company that acquired it or the institution that acquired it, and we provide these tools to analyze and help with integration. Whether that's HR, whether it's contracts, whether it's leases from a real estate perspective, our artificial intelligence is able to work through all of that data and provide you back with information. And because it's true AI, it learns. So if you're more interested in the employment side, if someone else is interested in the real estate side, if someone is doing financial work, it starts to learn what you're looking for. If you're needing to find all the references to LIBOR as that population has changed, you're able to use artificial intelligence to hone in on that. And then on top of it is this DataProtect, which is the data security and privacy. So you're also able to comply with GDPR and privacy acts and to redact and to ensure that the information that you're sharing has the protections that you need from a PII perspective. It's a really important tool, a very modern tool. We think it's really helping advantage clients and getting deals done more quickly. It certainly isn't replacing anybody. So I think years ago, the concern was, 'Oh, it's going to replace people.' No, it is replacing rote tasks. It is making people more efficient and effective. You know, if somebody was having to look for LIBOR, today it's cutting that in half. It's really allowing people to focus on the knowledge part of it first, just the administrative part of it.

Yes. We are launching a wonderful new trust section on our website where a lot of clients want to know just that. And what we found is, right now we talk a lot about our security — whether it's multi-factor authentication, whether it's the watermark, whether it's all of the pieces that are fortified as we go to market. Our SOC 2 Type 2 audits... you know, we have very modern technology, which is another advantage that DFIN has. A lot of companies have legacy technology that's 10 years old, which is okay. You know, we've got the most recent, sort of fit-for-purpose, born-in-the-cloud anti-malware, encryption, firewall. So really pushing all of that in our modern software and then promoting it so it's across all of our products — whether it's ActiveDisclosure, whether it's our Venue virtual data room. Security has become such an important part of what we do. And on our trust site, you're going to be able to see and look at all of that. You'll be able to sign an NDA and actually get the documents that would prove that, or that somebody, if a CISO may want to... we're really pushing security to the forefront, which we think is a competitive advantage. As our competitors talk about it, we're really going to put the proof out there and make it public.

Yeah, it's an important part of finding the great technology. So what we do is listen to our clients. They'll often talk about a tool they're using to solve a problem. That's how we've acquired several of our great technologies. Once you determine something's out there that's really adding advantage, when you start to test it, we typically partner, we'll co-sell, and then we would acquire it. Part of the integration that's so important is that you lift the people into the organization, you quickly integrate them, make them part of DFIN, and then from a technology perspective, you really make that technology easy for their clients to access. Whether it's a standalone or whether it's a feature, you quickly make sure that it's accessible to clients so that you can drive that value.

Sure. You know, there are a couple of things I'll probably touch on. One is ESG. So ESG has become certainly a very popular thing to talk about in the media. So our software and advisory services are really helping our clients understand what's going on. So you've got regulations in Europe, you've got proposed regulations at the SEC that potentially would be finalized in October to the first part of 2023. We're really helping those stakeholders understand the big picture, but more importantly, to comply, to talk about what they're doing. A lot of companies are doing things already. So we have a process of identifying their top five things, how they compare to their peers. We're helping them render that and creating a little fact sheet. Many of our clients have posted that on their website. A lot of clients are certainly touting their diversity initiatives, which are required to be filed in last year's 10-K. So we're really taking all of that and helping them be leading edge with ESG, as well as giving them confidence that whatever happens, we're going to help them. Then probably another piece that we're focused on is there's a lot of legislation out there. The Financial Transparency Act, which is just about good governance, it's about transparency. You and I pay taxes. How is that money spent? And there are bills and legislations that are in essence to expand, sort of like another version of the SEC, where companies in our government who's spending with companies would just report what that is, and we would all have access to it. Steve Ballmer's done a lot of great work in this area. He has something he calls America's 10-K, so he publishes what he thinks of as America's annual report, and he does that using our ActiveDisclosure software. You know, we do the collaboration for them and we publish the beautiful rendered version. So we're doing a lot of work with good governance and transparency.

You know, a person who had started with DFIN in Dallas referred me to the job, and then the rest is history. And I was only in L.A. — I loved L.A. — probably less than two years, and then I've been in the New York area ever since.

Yes. You know, I think given the history that we have, it's important to bring in a lot of diversity of thought, and as well then to integrate that with the legacy organization and create a culture where you're not disavowing the past but you are creating something that is transformative. I'm a huge fan of Adam Grant's book 'Think Again,' which is really about unlearning to then learn. So it's easy to make a mistake and think that that's the way that they really want to work, when in fact you don't want to fool yourself. You know, it's a danger to think that you know enough, or that even your client knows enough, because then you can provide them with something that's really great and really informative. So I'm a huge believer in pushing that envelope with educating our employees, challenging our employees, but as well educating our clients of new ways we can do things, still letting them provide the way that they want to work, but really again through technology and integration putting new ways in front of them, having them pop up with five insights that they're getting from artificial intelligence. Because before, if you go to them and say, 'Hey, if you log into this tool and use this tool, you'll be advantaged,' versus they're logging in and sort of seeing, 'Here are the top five change of control references,' and they're like, 'Wait a second, that's really interesting.' That's where they dive into that. So it's sort of allowing clients to work the way they want to work, but putting really great technologies in front of them to really advantage and make it easier for them to do the work that they do.

Yeah, it's a good question. We're a really unique industry, but we've found a lot of amazing people through other technology companies. So certainly that's a key part of our business. If you also think about the regulatory nature of our business, we've found some amazing analogous folks who are really challenging the norms within healthcare, within medical sales, where you're having to manage a really complex process that's moving very quickly. So we found a number of niches where we were able to pull those folks and bring a lot of diversity of experience to us. And then you really elevate that, and they challenge how we're doing things and how we can be doing things better.

Yeah, there have been a number of great... you sort of look back and you're like, 'Wow, I say it's not ostensibly the same company.' It's not. So at many junctures — and I'll spare you the twists and turns — it's a very, very different place. Post the spin, you know, we're working really hard to undo and sort of stand up a lot of systems and work. It was a pretty detailed process. So the most recent point to answer your question, 'Up and to the Right,' was really... so when you have this... we just had a global sales meeting in February of 2020, and the week before, we had to uninvite our APAC team. So the meeting went forward, but it's sort of like we had Purell on the tables, and it's sort of like, 'What's happening?' You know, and four weeks later, we're all at home here in my third-floor office. And it was really that moment in leading through that moment. Obviously, it was terrifying, right? I'm outside of New York. It was very upsetting. Here you have a huge employee base, you're serving clients, your business is dropping like... you're dealing with vendors. Those months from the shutdown of March through the summer... at the juncture of that, as you got into sort of August, September, October, I really realized we have delivered something that is extraordinary, and we have an opportunity to do even more. So to pivot even greater into the technology space, recurring revenue technology products... the transformation that we've been working on, you don't really realize it until these sort of crisis moments had worked. And you know, the work ahead is probably equal, but as you look back, you're like, 'This company really delivered.' And because of that, I'm so super excited about the future, about what we can do in the next few years.

Wonderful. Thank you, Karen.