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DFIN Donnelley Financial Solutions

Participants
Justin Ritchie Head IR
Daniel Leib President & CEO
Dave Gardella EVP & CFO
Charles Strauzer CJS Securities, Inc.
Bill Warmington Wells Fargo
Michael Cho JP Morgan
Raj Sharma B. Riley FBR
Call transcript
Operator

Ladies and gentlemen, thank you for standing by and welcome to the Donnelly Financial Solutions Third Quarter Earnings Conference Call. [Operator Instructions] I would now like to hand your conference over to your host today, Justin Ritchie, Head of Investor Relations. Thank you. Please go ahead.

Justin Ritchie

Thank you, Rob. Good morning, everyone. And thank you for joining the Donnelly Financial Solutions third quarter 2019 results conference call. This morning we released our earnings report, a copy of which can be found in the Investor Section of our website at dfinsolutions.com.

During this call, refer to forward looking statements that are subject to uncertainty.

For a complete discussion, please refer to the cautionary statements included in our earnings release and further details on our annual report on form 10-K and other filings with the SEC.

Further, we'll discuss non-GAAP financial information. We believe the presentation of non-GAAP financial information provides you with useful supplementary information concerning the company's ongoing operations and in an appropriate way for you to evaluate the company's performance. They are however provided for informational purposes only.

Please refer to the press release and related footnotes for GAAP financial information and reconciliation of GAAP and non-GAAP financial information. I'm joined this morning by Daniel Leib, Dave Gardella, Candy Turner [ph] and Tom Juhase.

I will not turn the call over to Dan.

Daniel Leib

Thank you, Justin, and good morning everyone. On today's call, I will provide an update on our third quarter performance, as well as detailed various operating highlights from across the business.

Following my comments, Dave will provide additional detail on our third quarter financial results and update on guidance and some additional color on the fourth quarter.

We will then open it up for Q&A.

We recorded consolidated net sales at $195.9 million in the third quarter, down 8.2% on an organic basis and below our expectations, due largely to a weak transactional environment, where the market slowdown and M&A activity which we mentioned on the last earnings call continued.

Specifically, the third quarter global M&A market declined 21% for deal completions greater than $100 million. The weaker M&A activity also continued to be a headwind for venue. Despite soft revenue performance, our third quarter adjusted EBITDA margin increased by 150 basis points year-over-year. This was driven by tight cost control in a shifting business mix.

Lower margin print and distribution revenue was down 16.5% in the quarter. We saw modest growth of 2.5% in SaaS sales. SaaS revenue represented just over 23% of total revenue in the quarter. Operating cash flow for the quarter was consistent with the third quarter of 2018.

Looking deeper into our third quarter transactional performance, despite fewer quarterly IPO filings year-over-year, we recognized increased domestic IPO related net sales and the quarter. This increase was partially driven by a handful of large projects, including two large deals where the client ended up withdrawing their transactions, though the value of those deals, to us, was lower than if they had priced.

The increase in domestic IPO-related net sales was offset by slower M&A activity. The 21% decline in global M&A completions over $100 million, drove down total merger-related SEC filings by 16% in the third quarter with filings over $2 billion, a segment where DFIN maintains very strong market share being down significantly more.

Our international transactional net sales were also down year-over-year, specifically in Asia where geopolitical unrest led to a slowdown in transactional activity during quarter.

Focusing on SaaS net sales growth was 2.5% in the quarter and made up 23.4% of third quarter net sales up to 180 basis points year-over-year. SaaS net sales growth was led by active disclosure at 12.8% driven by continued strong customer adoption.

During the quarter, we increase the number of third quarter active disclosure direct competitive wins year-over-year as our value proposition including our strong services team continues to resonate with clients.

Sales of our venue data room, our largest SaaS offering in terms of sales were again below our longer term trend largely due to the more challenging M&A environment. Overall, we anticipate improved SaaS net sales growth in the fourth quarter driven by active disclosure funds and are looking to carry this improvement into next year.

Moving now to operating highlights in capital markets in addition to the continued growth of active disclosure, the quarter was also highlighted by strong domestic IPO net sales, with DFIN again maintaining its market share while supporting many of the higher profile transactions that came to market.

Our clients recognize DFIN's leadership and transactional filings, proven out by the thousands of IPOs and other registration statements that we have handled over the last several years. DFIN platforms, including venue [ph] disclosure, combined with the domain expertise provided by our services teams give us a competitive advantage and are the key to achieving our strategic imperative to protect our core markets.

Focusing on the eBrevia, one of our audit and consulting clients is now delivering $800,000 in annual recurring revenue to DFIN after starting with a $5,000 initial pilot with eBrevia back in 2016. The adoption of eBrevia within this client is broad spanning several divisions, including advisory, audit and tax, and is yet another proof point of how DFIN solutions are helping to add value by eliminating time consuming and error-prone tasks. And in late October, [indiscernible] was awarded with its second consecutive America's data room of the Year Award from the global M&A network.

Switching to investment markets, we continue to drive new sales with our pro solution signing up nine marquee clients in the quarter. Firms choose our pros that allow their teams to automate the creation of regulatory and compliance-driven documents and forms incorporating workflow efficiencies with an easy to use interface, relying on familiar editing applications, Microsoft Word and Excel.

We are also proud to announce that in addition to DFIN winning the 2019 Nixa Nova award for innovation in product and marketing, our arc reporting software was recently awarded the Fund Intelligence Operations and Service Award for best regulatory reporting solution.

Before I turn it over to Dave, I'd like to highlight the opportunity we have ahead of us when the global transactional environment improves.

Over the last 12 months, we've experienced significant challenges from the turbulence in the capital markets environment, including the impact of the SEC shut down at the beginning of the year. Over that timeframe, our global transactional revenue has declined $44 million. Not only have we protected our market share, but we've also been aggressive in managing our cost structure and been prudent with capital allocation as we navigate through the cycle.

Our efforts in these areas keep us well-positioned to capture the benefits of an improved transactional environment when the cycle turns positive.

With that, I will turn it over to Dave.

Dave Gardella

Thank you, Dan and good morning, everyone.

Before I discuss our third quarter financial performance, I'd like to recap a few significant items in the quarter that impact our year-over-year comparability.

As we've discussed on the last few earnings calls, we completed the sale of our language solutions business in the third quarter of 2018.

Our third quarter 2019 results exclude language solutions, while the third quarter of 2018 includes language solutions through the disposition date of July 22 2018.

As indicated on our last call, the sale negatively impacted our third quarter reported net sales comparison by $3.2 million and negatively impacted our gross profit and non-GAAP adjusted even comparisons by approximately $1.2 million and $0.5 million respectively, inclusive of net stranded costs.

Next, we completed the sale leaseback of our Secaucus New Jersey printing facility in the third quarter, resulting in net proceeds of approximately $21 million, which were used to reduce outstanding debt in the fourth quarter. Please note that while the sale proceeds will not benefit free cash flow, taxes and fees related to the sale transaction will negatively impact for year 2019 free cash flow by approximately $10 million. I'll revisit this again later when I discuss our 2019 guidance.

Lastly, the effective income tax rate in the quarter was 38.8% compared to 29.1% for the three months ended September 30, 2018. The effective income tax rates for the three months ended September 30, 2019, reflects the recognition of evaluation allowance recorded in the international segment during the third quarter of 2019. Evaluation allowance increased our quarterly GAAP and non-GAAP tax expense by $1.9 million in the quarter or approximately $0.6 per share. This non-cash charge is related to certain legal entities within our national segment that have historical losses and for which we were historically recording a deferred tax asset related to such losses. I will discuss this impact that this adjustment has on our forecasts at tax rate later in my remarks.

Keeping these items in mind, let's review the third quarter financial results.

As Dan mentioned earlier on a consolidated basis, net sales for the third quarter were $195.9 million, a decrease of $21 million or 9.7% from the third quarter of 2018. After adjusting for the sale of language solutions, changes in foreign exchange rates and the acquisition of eBrevia organic net sales decreased 8.2%. The year-over-year decline was largely driven by a decrease in global capital markets transactional activity, as well as lower print and print-related services in investment markets.

Focusing on transactional activity as mentioned earlier, another strong domestic IPO quarter was offset by fewer M&A deals being completed when compared to the third quarter of 2018, resulting in transactional net sales being down from the third quarter of 2018 in total.

As I mentioned on last quarter’s call, this quarter would be a tough comparison as the third quarter of 2018 included a single very large M&A deal that totaled approximately $6 million in net sales.

The third quarter declines in our traditional capital markets and investment markets net sales that I just detailed were partially offset by continued growth in our SAAS offerings led by active disclosure, along with strong demand for [indiscernible] in Europe.

Our third quarter gross margin was 38.1% or 40 basis points lower than the third quarter of 2018 primarily driven by a drop in higher margin capital markets transactional net sales. Non-GAAP SG&A expense in the quarter was $43.5 million, $8.8 million lower than the third quarter of 2018.

As a percentage of revenue non-GAAP SG&A was 22.2% down 190 basis points compared to the third quarter of 2018. The decrease in expense was primarily driven by the impact of cost control initiatives and lower variable compensation expense.

Our third quarter non-GAAP adjusted EBITDA was $31.1 million, a decrease of $0.2 million from the third quarter of 2018 as decrease capital markets transactional activity and lower mutual fund print and print-related services and investment markets were largely offset by growth in our SAAS offerings, the impact of cost control initiatives and lower variable compensation expense.

As I noted earlier, the sale of language solutions negatively impacted the third quarter EBITDA comparison by approximately $0.5 million.

Turning now to our segment results, net sales in our U.S. segment were $173.7 million in the third quarter of 2019, a decrease of 6.4% from last year's third quarter. On an organic basis after adjusting for the sale of language solutions, and the purchase of the eBrevia net sales declined 6%. Net sales in U.S. capital markets decrease 5.9% on an organic basis due primarily to lower transactional activity offset by continued growth in our SAAS offerings, primarily inactive disclosure. Net sales in U.S. investment markets decreased 6.4% on an organic basis primarily driven by lower mutual fund print volumes and print-related services. Non-GAAP adjusted EBITDA margin for the segment of 18.5% was flat when compared to the third quarter of 2018, as the margin impact of reduced volume was offset by cost control initiatives and lower variable compensation expense.

Net sales in our international segment were $22.2 million in the third quarter of 2019, a decrease of 29.3% from the third quarter of 2018. On an organic basis, excluding the impact of the sale of the language solutions business and changes in foreign exchange rates, net sales in the third quarter were down 21% due primarily to a decrease in transactional activity, primarily in Asia and lower mutual fund print and print-related services. These declines were partially offset by the growth in our SAAS offerings, which continues to be driven by demand for [indiscernible] in Europe.

Non-GAAP adjusted EBITDA margin for the segment was 5% down 330 basis points due to the decrease level of transactional activity partially offset by the impact of cost savings initiatives and lower variable compensation expense.

Our third quarter 2019 non-GAAP unallocated corporate expenses excluding depreciation and amortization were $2.2 million, a decrease of $3.4 million from the third quarter of 2018. The decrease was primarily driven by the impact of cost savings initiatives and lower variable compensation expense. Consolidated free cash flow in the quarter was $52.2 million, $1.2 million unfavorable to the third quarter of 2018 as decreased interest payments and improved working capital were offset by higher cash taxes and restructuring payments associated with our cost control efforts.

Our controllable working capital rate which we define as accounts receivable plus inventory less accounts payable as a percentage -- as a percent of our trailing 3 months annualized net sales was 21% of 160 basis points from the third quarter of 2018 due primarily to increased vendor payments made in the quarter when compared to the third quarter of 2018.

We continue to actively focus on improving our management of working capital and expect the year-over-year trend in this ratio to improve ending the year at approximately 17.5%. We ended the quarter with $364.1 million of total debt and $332 million of net debt with nothing drawn on our revolver and we had net available liquidity of $155.4 million.

As of September 30, 2019, our non-GAAP net leverage ratio was 2.5x up 0.5x from September 30, 2018.

We continue to target a leverage ratio in the range of 2.25x to 2.75x and expect to be below the low end of that range by the end of this year.

With that covered, let me provide some color on our guidance.

As highlighted in this morning's press release, we are updating our full year 2019 guidance to reflect the continuing impacts of a weaker than expected transactional environment as well as the negative impact on free cash flow related to the sale-leaseback of our Secaucus print facility.

Specifically, we expect 2019 total net sales to be in the range of $870 million to $890 million, representing organic growth of approximately negative 5% at the midpoint due primarily to lower year-over-year transactional net sales.

We expect our non-GAAP adjusted EBITDA to be approximately $135 million as lower profits from transactional activity are expected to be offset by benefits of our continued cost control efforts. Depreciation and amortization is expected to be approximately $50 million.

We expect interest expense of approximately $34 million.

Our full year non-GAAP effective tax rate is expected to be approximately 32% up from our previous expectations due to the valuation allowance I noted earlier. We project a full year fully diluted weighted average share count to be approximately 35 million shares. And lastly, we expect capital expenditures to be approximately $45 million with free cash flow in the range of $20 million to $25 million down from our previous guidance due to the impacts of decreased transactional activity, as well as the $10 million of taxes and fees related to the sale-leaseback of our Secaucus facility.

I also want to add a quick reminder regarding the impact of the Language Solutions sale. On a full year basis, the sale negatively impacts the year-over-year net sales comparison by $41.8 million and negatively impacts the gross profit and non-GAAP adjusted EBITDA comparisons for approximately $12 million and $3 million respectively, inclusive of net stranded costs. These impacts are all reflected in our full year guidance.

As you also know that all of these year over year impacts occurred during the first three quarters of the year, so our fourth quarter comparison is not affected by the sale.

Regarding our outlooks for the balance of the year, we are expecting fourth quarter net sales to be down approximately 3% year over year at the midpoint of our guidance, due largely to anticipated year-over-year declines in both international, transactional and worldwide print related net sales.

Regarding profitability, we expect our non-GAAP adjusted EBITDA margin to improve compared to the fourth quarter of 2018 as the impacts of lower transactional sales are expected to be more than offset by the benefits of our continued cost savings efforts.

With that, I'll turn it back to Dan.

Daniel Leib

Thank you, Dave.

Our third quarter results will be impacted by a week transactional market environment included several proof points indicating that our digital focus strategy is working.

While, also showing that we continue to protect our core markets and at the same time demonstrating our ability to improve margins. We remain nimble focused on our long term strategy, continuing to explore ways to accelerate our ability to more quickly evolve our revenue mix, diligently managing costs while keeping our clients, employees and shareholders at the center of what we do.

And with that, let's open up the line for Q&A.

Operator

[Operator Instructions] Your first question comes from line of Charlie Strauzer from CJS.

Your line is open.

Charles Strauzer

Hi, good morning. If I look at the guidance this little bit here obviously not a big surprise that transactional still hasn't recovered yet but just a little bit more color on the assumptions you're making into the new guidance on specially on the top line, if you could?

Daniel Leib

So let me -- I'll start off and then Tom or Dave can weigh in.

So couple of thoughts.

Our last two calls, we've talked about the healthy deal pipeline. And as we've seen, with the tail into Q2, and certainly in Q3, the deals just haven't closed at the pace that we envisioned.

So as we think about Q4, we're comfortable with the pipeline we have today. But with two months left, we're thinking that or our guidance incorporates the transactions market looking consistent with what we saw in Q3. We've talked about this inherent uncertainty given the product mix that we have, and so as we think about managing costs and how we deploy capital, that’s what sits at the disciplined approach that we've taken and as I mentioned, in my prepared remarks, we continue to see the mix shift that we talked about previously including at our May, Investor Day.

And so with software now at, 23.5% of revenue, we would expect this transition to continue to take place.

Charles Strauzer

And if you look at, I know Asia had pretty big drop off in the quarter two in transactional year, what is the Asia's kind of a percentage of revenue these days?

Dave Gardella

Yes, Charlie, let me, let me take that off, I'll come back.

Charles Strauzer

And then just lastly, and maybe talk a little bit more about the efforts you mentioned about kind of transitioning more towards digital assets and growth avenues. What are some of the things that you have on the plate that you can share with us?

Daniel Leib

So, when we think about our core products and the platform.

So after disclosure, we've continued to see good progress in terms of just the count wins. And our service organization does a great job behind the product, we don't see that changing, certainly a healthy IPO market would help that accelerate. When we look at revenue, clearly the biggest driver there and the biggest headwind that we've had thus far, has been the soft M&A environment. We've seen very good uptake of the product given the new improvements we've made with the product around the new UI, and some of the added features and functionality that we've added to venue.

So feel very good about the product. We just need an accommodative market right now. And for funds, we pointed to some of the winds that we had in our Pro, which is a module of funds we are, our reporting has also won industry awards and continues to have a pretty nice position in the overall market.

So we think there is good organic opportunity within all three of those products, markets accommodating, and then we've continued to look at some added features and some added ways of serving the existing customer base, both within corporations and the finance and legal suite, including eBrevia which has its own use case.

On the legal side, we've seen good uptake, we mentioned it in our prepared remarks and then also as a part of venue and through deeper integration with venue which is now complete and in the market.

Dave Gardella

And Charlie, with respect to your question on Asia, last year was about 6% of our total revenue, and within Asia, roughly 80% of that is transactional. This year, we saw a pretty substantial drop in the transactional revenue in Asia. And that was really driving all the decline.

So this year Asia was about is about 4% of our total revenue in the quarter.

Operator

Your next question comes from line of Peter Heckmann from D.A Davidson & company, your line is open.

Unidentified Analyst

Hey, guys. This is Alexis [ph] on for Pete.

So firstly, could you go into a little bit more detail on the revenue decline and investment markets and also venue? How much of that was the lower print and M&A volumes respectively versus any change in competitive dynamics or market share?

Dave Gardella

Sure, yes.

So I think on investment markets really driven by lower print volumes. Across the board really there were some timing shifts, but generally lower volume drove investment markets down. And then with respective venue, I don't think we're seeing, any anything in terms of market share losses, in fact, based on some of the data that we can gather looks like we're doing pretty well, from a share perspective. But our data room offering is closely tied to the M&A environment and so we think that's what's driving the softness there. We don't have from a market perspective on venue great insights, either because the major competitors are private and or parts of large organizations that don't break out their respective products separately. But we've certainly seen some upheaval in some of those organizations.

And so as we get market information, we feel like we are likely gaining share even in a relatively flat or slightly declining performance and or, certainly holding share.

Daniel Leib

The only thing I'd add on the venue because of what you're seeing with the transactional business affecting venue revenue, as well as the capital markets transactions. We're pivoting the venue product, with the help of eBrevia to more of a corporate repository.

So as we have the access to the corporations, and as they're using venue with eBrevia, they're using it on a more recurring revenue basis throughout the year. The documents are in the data room and then when transactional work comes up or compliance work comes up, they can pull the documents more recently, so it keeps us stickier and more embedded with the clients.

Unidentified Analyst

Okay, thanks. And then the cost control initiatives that have been driving the EBITDA margin improvement. I know that's baked into 2019 guidance, but what are your expectations for those to continue beyond 2019?

Daniel Leib

Yes, so there's a couple pieces of it, I think, you know, certainly, we've done some headcount reductions and exited certain leases, things like that.

I think when you look at specifically in the third quarter, we also mentioned.

Sorry, so if I stick with those, we review those as permanent reductions.

I think we, in the third quarter, we also mentioned the lower variable comp expense, so bonus tied to financial performance targets, and things like that. We would expect that those get reset going into 2020.

You know, back to normalize levels, obviously subject to internal targets that we said here.

Dave Gardella

Yes and the only thing I would add to that is some of this is a business mix shift.

And so supporting our clients in the way they want to work, right drives a different mix of our revenue. And then we're being very deliberate in terms of how we build our platform and digitize the operations within our business. And that also results in additional efficiency.

So we will talk about cost savings in a given period.

You know we've been squeezing out costs, digitizing the business becoming more efficient, certainly, since we've been out on our own as a public company, and we would expect those to continue, for sure.

Unidentified Analyst

Okay, got it. And then just one last one, are there any pending regulatory changes that you're paying attention to that we should be monitoring?

Unidentified Company Representative

It's Tom, the big one for us is 33 -- comes into effect in 2021.

And sort of the answers to the last questions is the same as we've been watching our variable and fixed costs in terms of composition and print and buying distribution.

So when that 33 come into effect, we have to right size or reset the platform are fixed a variable to address that. And it's mainly it's just to be clear, it's in the GIM business so that regulation will affect that that side of the house.

Operator

Your next question comes from a line of Bill Warmington from Wells Fargo.

Your line is open.

Bill Warmington

Good morning, everyone.

Given that you are on track to hit the low end of your leverage range by the end of the year, can we expect an updated capital allocation or should we continue expected to be balanced moving forward?

Daniel Leib

Yes, I think, we haven't changed our perspective.

I think when you look back, over the last three years now since the spin and the priorities that we've laid out at investor day, it's been around managing the leverage, obviously through debt repayment, we monetize the language solutions business.

I think when you look at the leverage and our seasonality of cash flows and the unpredictability, this year being a great example of the transactional market, not planning on updating anything from a capital deployment perspective, I think that range is still appropriate through the cycle and through the seasonality of our cash flows, puts us at different places during the year and so we will continue to be disciplined about all capital deployment, whether it be the internal organic growth around CapEx M&A, etcetera.

Bill Warmington

That is very helpful. And it's the ongoing decline in print revenue. Is that benefiting working capital by freeing up any print inventory or is that not particularly large?

Daniel Leib

Yes, we don't so we don't carry a whole lot of inventory certainly from an AR perspective, there's a little bit of health there is a natural health as revenue comes down, but not significantly on the inventory line.

Operator

[Operator Instructions] Your next question comes from line and Michael Cho from JP Morgan.

Your line is open.

Michael Cho

Hi, good morning. Thanks for taking my question.

Just want to follow up on the capital allocation you provided, just more specifically on CapEx, I guess in the past you talked about 2020 CapEx coming down from 2019 levels, I guess, one, is that still the case? Until maybe you can give some color on the IMPs on the current priorities of reinvestment and looking ahead?

Daniel Leib

So, yes, that that is the case, as we mentioned, on the prior call, we have about $7 million that we spent in capital this year, which was one time digitization of our print assets.

So, we would take that off the top in terms of the balance of CapEx. A lot of it is capitalized technology development and we expect obviously, that's a priority for the company as we shift and evolve but we are looking at efficiency options, relative to the overall CapEx that we spend in the business. Clearly, we've been very disciplined around capital allocation both as we've looked at M&A in the market and you know, given assets being an inflated prices and we have grown via in the technology area by spending more on technology development, but as we're in the middle of our budget cycle right now, our intent would be to give you an update when we're back on the phone in February.

Michael Cho

Okay, great if maybe I can just ask one on the software, the SAAS revenues. Is there, certainly appreciate the volatility you're not in the venue transactional piece. Can you give sense of how much of the SAAS revenues are transactional versus more recurring and I guess is there a way to think about a more normalized mix, as kind of different approaches that bigger piece of SAAS revenues ahead?

Daniel Leib

Yes, Mike great question.

So I think, when we look at venue to your point, obviously tied to the transactional activity, and then the two other major SAAS offerings, active disclosure, which is recurring and fund, sweet, our kind, the investment market side is recurring.

And so, you know, from time to time we'll add some implementation and other service revenue in there.

So it won't be, you know, kind of a linear growth, there's some lumpiness there. But you know, broadly if you look at those two offerings we would we would generally say those are recurring.

Now venue is the biggest piece, roughly, just under half of our total SAAS revenue, and then the other two makeup the difference

Operator

Your next question comes from line of Raj Sharma from B. Riley FBR.

Your line is open

Raj Sharma

Hi Good morning guys. I wanted to follow up on the Saas revenue growth was up 12.8% is that so while the venue, if I understand this correctly while the venue sales were behind, so is that because active disclosure was a higher fund sweet Ark was higher seems like the growth rate is higher than the first half growth rate in SAAS.

Daniel Leib

So the growth rate and in, I think the 12.8% that you reference was specifically for active disclosure. Venue was down slightly and the front suite arc, it was 11% range on a worldwide basis.

Raj Sharma

Could you comment on the overall SAAS growth rate then and also the non-softer -- non-software/print growth rate? Do you break it down? And could you comment on the year-to-date sort of what growth rate SAAS is showing and also relative to the transactional piece of the business?

Daniel Leib

So, I think it's in the -- I don't have it broken out component by component but roughly 6% or so on a year-to-day basis. And then transactional revenue in total on a [indiscernible] trailing 12-month basis is about $250 million and that's worldwide. That's down about $44 million from a year ago on a trailing 12-month.

Raj Sharma

That's really helpful. And then any comment on the mix -- the services and the product mix? Is print declining at a faster pace in the second half than you expected?

Daniel Leib

Yes, sure. Absolutely.

So print in the third quarter was down 16.5% print and distribution. That is a faster pace than would be envisioned.

Some of that's driven out of transactional decreases and a big piece of that as Dave mentioned, in his comments, is driven out of the mutual fund side and healthcare side.

Raj Sharma

So you don't necessarily expect that to change if transactional activity was to pick up the print piece would pick up as well?

Daniel Leib

Yes.

So just if we take a step back, print has historically been down in the 6% range or so. Relatively consistent. There's obviously some anomalies to that, this quarter being one of them.

So in a more normalized environment, we would expect print to be down in that 6% range or so. And then as we've talked in the past, the 30E3 regulation that Tom referenced comes into effect in 2021.

So that will be more of an event that will take a chunk of print out at that time. And we'll provide some additional details on that when we all connect in February.

Raj Sharma

Great, thank you.

Daniel Leib

And then Raj, I gave you a bad number on the [indiscernible], it was flat in the quarter.

Raj Sharma

Okay, thank you.

Operator

And we have no further questions at this time. I will now turn the call back to Daniel Leib for closing remarks.

Daniel Leib

Great, thank you and thank you, everyone, for joining and we look forward to speaking with you soon.