We give an interpretation of the holographic correspondence between two-dimensional BF theory on the punctured disk with gauge group PSL(2, ℝ) and Schwarzian quantum mechanics in terms of a Drinfeld-Sokolov reduction. The latter, in turn, is equivalent to the presence of certain edge states imposing a first class constraint on the model. The constrained path integral localizes over exceptional Virasoro coadjoint orbits. The reduced theory is governed by the Schwarzian action functional generating a Hamiltonian S$^{1}$-action on the orbits. The partition function is given by a sum over topological sectors (corresponding to the exceptional orbits), each of which is computed by a formal Duistermaat-Heckman integral.