Q3 2020 Dun & Bradstreet Holdings Inc Earnings Call
[music].
At this time I would like to welcome everyone to Dun <unk> Bradstreet third quarter 2020 conference call.
All lines have been placed on mute to prevent any background noise. After.
After the speakers remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad.
If you would like to withdraw your question press the pound key.
Thank you with that I would now like to turn the call over to Deb Mccann Treasurer, and senior Vice President of Investor Relations. You May proceed.
Thank you good morning, everyone and thank you for joining us for denim Bradstreet's financial results conference call for the third quarter ending September Thirtyth 2020.
Today, we have Dan Brad Hughes, CEO, Anthony before and CFO Bryan Hipsher before.
Before we begin allow me to provide a disclaimer regarding forward looking statements this call, including the Q and a portion of the call may include forward looking statements related to the expected future results for our company and are therefore forward looking statement.
Our actual results may differ materially from our projections due to a number of risks and uncertainties.
The risks and uncertainties that forward looking statements are subject to.
Are described in our earnings release and other SEC filings.
Today's remarks will also include references to non-GAAP financial measure.
Additional information, including a reconciliation between non-GAAP financial information to the GAAP financial information is provided in the press release and supplemental slide presentation. This conference call will be available for replay via webcast. Your denim Bradstreet's Investor Relations website at Investor that Dnbi Dotcom and.
Thank you, we'll begin with highlights from the third quarter, including the progress we are making with our growth strategies and transformation. Bryan will then take you through a review of the financial before we proceed to human <unk> with that I'll now turn the call over to Anthony.
Thank you Deb good.
Good morning, everyone and thank you for joining us for our third quarter earnings call.
This was another solid quarter that finished in line with our expectations, putting us on track to meet the full year 2020 outlook provided on the second quarter call.
Our company's financial results demonstrate that despite experiencing impacts of COVID-19, another near term headwinds the core fundamentals of our business are strong markets.
Our continued focus on efficiency as reflected in our improved EBITDA margins and annualized run rate cost savings to date of $225 million, which is up $5 million from the second quarter.
We continue to progress towards our revised target of $250 million and we'll continue to update you on future calls overall, our team continues to make great strides in executing on our strategy and we are building significant momentum.
During today's call I'll update you on some notable progress against both our growth strategy and ongoing transformation and then turn the call over to Brian for a financial review.
After that we will take your questions.
So let's start with some of the announcements and successes that occurred during the third quarter.
First is the announcement, we made last month that we entered into a definitive agreement to acquire business showed a longtime dun <unk> Bradstreet worldwide network member.
The acquisition represents a key investment and support our international growth strategy.
During our Prober A's call. We described how big is no that several strategic and financial benefits, including a significantly expanded footprint across the dock region, which is Germany, Australia and Switzerland.
Scandinavia, and central Europe, allowing us to better serve our clients operating in the region and globally.
We are busy with the integration planning in anticipation of the transaction close which is still expected in January 2021, and plan to share incremental financial and strategic details on business. During the next quarter's earnings call.
Now turning to our sales and operations execution in the third quarter, our year to date retention rate remains strong at 96% and 32% of our business was sold and multiyear deals.
One deal that exemplifies both of those metrics is the expansion of our strategic relationship with Microsoft to a multi year contract for enterprise data management with use cases spending both finance and risk and sales and marketing.
This is an important example of our ability to not just retain but expand the scope and duration of strategic relationships, which is a key element of our growth strategy.
Other third quarter renewals include a multiyear enterprise license deal with HSBC supporting their data and analytics strategy.
Our global 500 office supply retailer, who turn to Dun <unk> bradstreet to help them manage fraud risk.
And an expanded multi year relationship with a multibillion dollar private shipping supplies company.
We also renewed business with insurance solutions provider DNA.
And financial Technology solutions provider WEX.
Who both use our financial risk solutions.
Plus we expanded our relationship with Greensville, our British market, leading provider of working capital finance.
These renewals are examples of where we are able to build off of an existing set of use cases within the enterprise and cross sell enough cerus solutions to broaden our penetration into different parts of their global organizations.
Turning to new business.
Among others, we recently signed a fortune 500 manufacturer of coatings and paint who turned to our United Kingdom and the United States teams for cross border solution that provides an end to end view of their customers and suppliers master data using our latest CPI direct plus offerings.
Now, we also won back and industry, leading fortune 1000, global specialty chemicals and performance materials company, we turn back to Dun <unk> Bradstreet from a lower cost alternative to consolidate its credit processes.
As you can see client engagement is strong and we continue to see high demand across our existing portfolio of solutions, giving us confidence that we have listened to our clients and that our ongoing transformation of technology data coverage and analytics is delivering what they need.
In addition to our existing portfolio of solutions, we recently announced a new sales and marketing solution Dnbi connect a highly configurable plug and play self service data management platform Dnbi connect helps our clients assess clean and enrich their customer data against category, leading data in the downturn.
Three data cloud.
With Dnbi connect time spent on data management is reduced from days to hours. So that our clients can focus on what's most important growing their business. This.
This is particularly important for small and medium sized businesses, who do not have the resources of large enterprise and who need to quickly make sense of the data they have and gain additional insights to safeguard and grow their business.
Next I will update you on our technology transformation, starting with our progress on project ascent.
As we described on the second quarter call project to set will modernize their data supply chain, allowing us to rapidly expand our traditional and non traditional datasets simplify connectivity to the end user solutions and enhance our overall throughput.
In the quarter, we began adjusting global shipping manifest data, which is a new non traditional dataset that is complex to cure rate and in high demand for use in supply chain fraud and risk analytics.
We're already using the data to fulfill a finance and risk use case for our customer engagement and are pleased with the initial performance.
In the fourth quarter and beyond we plan to enhance the operational user interface reporting capabilities and most importantly add new non traditional datasets and convert our existing data sets over to new supply chain process.
Our ongoing enhancement to our HR technology allow us to expand our latest dnbi direct plus offerings globally, including the United Kingdom, and Ireland, China and to our worldwide network, which has been met with strong market reception.
Consolidating and progressing our HR solutions enables simplification scalability and the ability to deliver integrated data solutions with the speed at lower costs.
As we connect deeper and deeper within the core workflows of clients through our technology enhancements. It is clear to us that organizations are seeking more effective ways to grow revenue improved margins and mitigate the risks.
Our transformation also includes the expansion and enhancement of our data, which has led to significant growth of our data cloud, which today includes over 400 million public and private businesses worldwide.
This is 85 million or 27% more coverage of our businesses than we had when we took the company private in February of 2019.
We frequently hear from customers, who want more and better data coverage, especially in international markets, including Asia and Europe.
Since February 2019, we have increased our coverage of businesses in the Asia Pacific region by 57% fueled by our proprietary AI engine that addresses local language translation.
We also renewed focus on the expanding coverage of small and emerging businesses in the United States, The United Kingdom, and Ireland, increasing the pace of small business data accumulation growing from 56000 per month in the first half of the year to 174000 per month in the third quarter.
We are listening to our clients and delivering which is translating into sales and ultimately revenue and profit.
Another key element of our transformation is a strengthening of our analytics and insights.
Last quarter, we told you both dnbi analytic studio our cloud based analytics platform, which allows clients to combine their data with third party data and the scale diversity and accuracy of our constantly expanding data cloud to achieve broader insights that could not be achieved on their own.
It puts the power of analytics directly in the hands of the user and gives them a glimpse of the power of our data and could translate to future cross selling into different solutions.
For example, one of the largest global management consulting firms piloted our analytic studio using Dun <unk> Bradstreet data and insights combined with third data and insights to build derivative b to b analytics for improved customer engagement.
Being able to rapidly ingest third party internal and customer data is a key advantage for consulting engagements and we believe that the analytic studio gives our clients differentiated capabilities.
The studios, gaining fast momentum and we have 13 proof of concepts underway with clients.
We signed five deals in the quarter, including a global financial software company, who is studying it's total addressable market as well as to analyze its customers product purchasing behaviors.
And with the government client, who turned to Dnbi analytic studio to research and understand the impact of federal funding on small and medium businesses.
With continued strong interest from clients and a growing pipeline, we will continue to evolve the studio with alternative data sources services and commercial use solution set to make more use cases over.
Overall, we are pleased with the extraordinary effort of our team and are excited about the continued progress we're making in our transformation. We look forward to closing out the year strong with that ill now turn the call over to Brian to discuss our financial results for the quarter.
Thank you Anthony and good morning, everyone. Today, I will discuss our third quarter 20, Twond and results and our full year guidance.
Turning to slide one.
On a GAAP basis third quarter revenues were $442 million, an increase of 8% compared to the prior year quarter.
This includes the net impact of the lower purchase accounting deferred revenue adjustment of $38 million.
We had a net loss of $17 million for the third quarter or a diluted loss per share of four cents.
Compared to a net loss of $89 million for the prior year quarter, primarily driven by the lower purchase accounting deferred revenue adjustment.
Lower transition related cost preferred dividends included in the prior year period and lower interest expense.
Finally, I'll start the call premium related to the partial redemption of the senior secured notes.
Turning to slide two.
I will now discuss our adjusted results for the third quarter.
Third quarter adjusted revenue for the total company or $442 million, an increase of 8%.
The increase was driven by the net impact of the lower purchase accounting deferred revenue adjustment of $38 million. This increase was partially offset by known headwinds as previously communicated. These headwinds include lower usage revenues driven by the impact of COVID-19 of approximately $6 million lower royalty.
Revenues from the wind down of the data dotcom partnership of approximately $6 million a decision. We made in the second half of 2019 and make structural changes within the legacy credibility business of $3 million.
And the shift of a government contract from Q3 to Q4 of $4 million, but.
The total impact that we've known headwinds was approximately $19 million. Excluding these unique items revenues grew approximately 3% primarily from growth in our subscription based revenues in our finance and risk solutions.
Adjusted EBITDA for the total company was $197 million, an increase of 27% primarily driven by the lower purchase accounting deferred revenue adjustment reflected in the corporate segment, along with lower overall operating costs, driven primarily by lower net personnel expenses.
Due to ongoing cost management initiatives.
Adjusted EBITDA margin was 44.6% we had an adjusted net income of $101 million or adjusted diluted earnings per share of 24 cents.
Turning now to slide three I will now discuss the results for our two segments North America and international the North America revenues for the third quarter decreased 3% to $363.3 million financing risk revenues decreased $1.8 million or 1% to 206.
$6 million.
The decrease was primarily driven by lower usage volumes, the structural change and credibility and the shift of the government contract from Q3 to Q4, partially offset by an 8 million dollar increase in our subscription based revenue and our risk in government solutions.
Sales and marketing revenues decreased $9.6 million or 6% to $156.7 million. The decrease was primarily due to lower royalty revenue of approximately $6 million from the data dotcom legacy partnership along with lower usage revenues.
Adjusted EBITDA for North America decreased $5.4 million or 3%, primarily due to lower revenues, partially offset by lower operating cost primarily from ongoing cost management efforts.
Adjusted EBITDA margin for North America was 50.7%.
Turning to slide four in our international segment third quarter revenues increased 10% or 7% on a constant currency basis $79.8 million.
Finance and risk revenues increased $8 million to $66.3 million, excluding the positive impact of foreign exchange of approximately $1 million.
The $7 million increase was driven primarily by worldwide network alliances from higher cross border data sales of approximately $5 million and higher revenue from our UK market are approximately $2 million, partially offset by lower usage volume in our Asian market of zero point $6 million.
Sales and marketing revenue decreased $1.1 million to $13.5 million.
Excluding the positive impact of foreign exchange of zero point $4 million decrease revenue was primarily attributable to lower revenue from our UK market of approximately $2 million lower usage volume in our Asian market of zero point $5 million, partially offset by increased revenue from worldwide network alliances.
Of zero point $6 million, primarily a result of increased product royalties.
International adjusted EBITDA of $28.2 million increased $2.7 million or 10.6%, primarily due to higher revenues with adjusted EBITDA margin of 35.4%.
Adjusted EBITDA for the corporate segment increased $44.7 million, primarily due to the net impact of lower purchase accounting deferred revenue adjustment of $38 million.
Turning to slide five.
Ill now walk through our capital structure.
At the end of September Thirtyth, 2020, we had cash and cash equivalents of $311.3 million.
Which when combined with the bulk capacity of our recently Upsized $850 million revolving line of credit through 2025 represents total liquidity of approximately $1.2 billion.
On July six 2020, we completed the initial public offering and concurrent private placement, which raised net proceeds of $2.2 billion after deducting underwriting discounts and IPO related expenses.
We used the majority of these proceeds to redeem the full amount of preferred stock and 40% of our $300 million of our senior unsecured notes.
Shortly after the IPO, we paid down our revolving line of credit balance and on September 22nd, we partially redeem 40% or $280 million of our senior secured notes.
As of September Thirtyth total debt principal was 3380 $7 million and our leverage ratio was 4.7 times on a gross basis and 4.2 times on a net basis.
This compared to 5.6 times gross and 5.5 times net at the end of the second quarter.
As a result of our decrease leverage during the third quarter, our credit rating was upgraded to be applause from b minus by S&P global with a positive outlook.
Two a beat to from May be three by Moodys into a b plus and subsequently to a double b minus from a b by Fitch we.
We are happy with the progress we are making to deleverage our balance sheet and improve our credit ratings, allowing us more financial flexibility to further support our growth initiatives.
Regarding our recent announcement to acquire businesses for approximately 7.2 billion, Swedish krona or $818 million upon close 75% of the consideration for the equity value what we paid in cash and the remaining 25% will be paid in newly issued shares of common stock of the company.
We expect interest expense of approximately $255 million reduced from $265 million, primarily due to partial pay down of the secured notes.
And depreciation and amortization expense of approximately $60 million, excluding incremental depreciation and amortization expense, resulting from purchase accounting.
Adjusted effective tax rate of approximately 24% weighted average shares outstanding of $367 million and finally capex of approximately $120 million.
Overall, we are pleased with the progress we are making in our transformation in the core performance of the business with that we're now happy to open the call for questions. Operator will you. Please open up the line unit.
Thank you, ladies and gentlemen, as a reminder to ask a question. Please press Star then the number one on your telephone keypad well pause for just a moment to compile the Q1 day Ross Derek.
Your first question comes from the line of Gary Bisbee from Bank of America.
Hey, guys good morning.
Going here I guess the first question.
When you add new alternative data you mentioned, a few things going on the call and I know that's a focus how does that play out in your business model.
[laughter] immediate price or volume lift from adding new data sets or is this more a long term play to drive innovation and attract new customers.
Well sure Gary It's a great question and it's a bit of.
All of that obviously, you know number one the future is moving to looking at new alternative data sources, and so that is future proofing, our business and selling to our clients how innovative and forward thinking we are but it also has short term implications for us as well in terms of clients buying that data from us.
And.
And leveraging maybe an analytic studio as well as a combined their data with our data. In addition to this alternative data.
And.
Sure Gary so.
If we kind of start with the 442 right and as you said you added back excuse me that the million for for the foreign.
Foreign exchange and then the in essence, we're down to only a million a quarter from.
From the deferred revenue impact and so when you're thinking about that from the 444 and a half right.
What you saw is that it's it's generally relatively consistent in Q2 in Q3.
We still have a little bit of it and as we transform into the multi year contracts as Anthony mentioned.
And kind of smooths out as you said some of that.
Movement between quarters, we still have a fourth quarter that is.
From that perspective, and what happens a lot of times, we talked about this prior to is that we'll have committed amounts in some of these legacy contracts of the amount of usage.
That the customers leveraging throughout the year and there is some revenue recognition that ends up.
With a forfeiture amount at the end of the contract for any unused.
Any unused polls are unused datasets from that perspective and so.
That is the one thing that can cause a little bit of variance.
Between quarters.
We've gotten away from a lot of.
Kind of onetime data delivery deals.
And things like that so it's a it's a continued evolution it's definitely a lot more consistent as you heard we increased.
The subscription based revenues by $8 million again on a quarter over quarter basis.
So we'll continue to drive from that perspective, but I think this year, specifically just because of some of the impacts. The cobot. There was some movement of usage volumes from quarter to quarter, but that ends up catching up by the end of the year.
Okay. Thank you.
Your next question comes from the line of Jeff I'm, sorry from Jefferies.
Hey, guys, it's actually running getting on per annum.
Just wondering if you could talk about your worldwide network similar to bid node and how those deals are structured in terms of royalties and then are there larger out there the buyback similar to what you did on that deal.
Sure Ryan.
We've got we're very proud of the worldwide network arrangement that we have to really get to the global capabilities.
From a.
Contractual perspective, we've got.
Royalties and place, whereas they used some of our products. There's a royalty fee that we would get we also had data sharing that goes back and forth where.
We received data from then they received data from us and obviously both sides compensate.
So I think it's fairly traditional NAS you'd expect in that regard.
In terms of others.
Other potential acquisitions.
In the space and with the business, we do think that Thats, a possibility and as we talked consistently.
Consistently about our growth strategy one of the the growth tenant was in international markets and we're.
We're excited with what we think we can do there we've got.
Okay.
In addition to the whole universe of acquisition potential that we have.
And some of the worldwide network partners. These are companies, we've worked with for a very long time understand them well using our products like the relative risk.
It is very low on doing anything there. So if there's an opportunity there we're certainly.
Going to look at it.
Great. Thanks, and then.
For my follow up.
Could you just comment on after the remaining cost takeout taken out just.
How to think about margin expansion annually like normal year.
How it should look like it with either a low or mid single digit organic growth revenue growth.
Yes sure. So if you look at it we run at about 60% to 70% all in contribution margin.
Certainly on a new individual deal right it could be much higher than that but when we think about inventing against investments et cetera from that perspective, you're looking at.
50 to 100 Bips of margin expansion in a normalized year now now that being said of course, we're always thinking about continuous improvement from that perspective.
And that's pretty much the standard.
Great. Thanks, guys.
Thank you.
Your next question comes from the line of Manav Patnaik from Barclays.
Good morning.
Hi, you mentioned four pieces.
Okay.
For this for you guys and I was just wondering the visibility you have into FY <unk>.
Obviously rising cases, uncertainties and just wondering if that can be respect in appliance pulled back on some of the summit.
Now he broke up just at the beginning we you asking on Cove, it with the rising cocoa basis, how that impacts.
Yes, specifically to the fourth quarter. So important you guys. If there's any risk of pulling back last.
Well I'll start and I'll pass on to Brian I'd say with coated.
There certainly is.
Uncertainty introduces all companies out there and we've shown our impact from it on the revenue side has been.
Relatively small for the size of company that we are but still I mean, we're well.
Were we hold ourselves accountable to.
To the last dollar and so we're very focused on what we commit to the street and how we execute upon it.
And what I'd say is we've seen.
On the great engagement with our clients we've seen strong.
And then you put the little boys beverage level, you know I know you're comfortable with that but I was just hoping you could talk to us like to see another besides the comes along like how much are you willing to extend yourself.
Just how easily keep on that.
Well.
I'd say the deal specific went off and based on the.
Average deal on average opportunity we wouldn't if we're very excited about what it can do in terms of.
Creating value for our shareholders then.
We would look to go after but.
But I agree with hits on a deal by diel basis, being very very thoughtful on our leverage.
And and at the same time.
Want to make sure if there's some really great opportunities for creating long term shareholder value that we go after it aggressively.
All right. Thank you guys.
Thank you ma'am and cute.
At this time I would like to remind everyone in order to ask a question. Please press star followed by the number one on your telephone keypads.
Your next question comes from the lineup Beth Weber from RBC capital markets.
Hey, guys. Good morning, I hope, you're doing well I wanted to ask about the international business, specifically I mean, the the margin was significantly better than what we were looking for.
Do you feel like and it was up considerably from the second quarter. So do you feel like that this sort of mid mid 30% range is is sort of the right level to be thinking about it going forward.
And then I guess.
There were some callouts in the press release about softness in Asia, Covid related and stuff like that have you seen any improvement there or is that continuing to be a headwind. Thanks.
Yeah sure. So so $2 one we can call down and our last call that we were laughing some of those worldwide network. One time revenues, which were clear on high margin from that perspective. So this is a relatively clean quarter for international and you saw again as the revenues increase from that perspective, there with that concert.
Abuse and margin and flow through which ultimately drove the margin expansion in so.
That business in of itself.
Lower right and the overall companies, but the good thing is we don't have a lot of mix issues from that perspective, and the contribution margins are overall accretive.
When we talk about.
The headwinds from Asia again, Joseph subsided I would say.
Paired to where they were especially in the first and second quarter and so after $6 million you are talking about maybe a million dollars right in those.
In that segment, so very limited overall.
Okay. That's helpful. Thanks, and then just as a follow up you continue to add more multiyear contracts can you just talk to.
The type of price escalators that you're putting in those contracts and how we should think about pricing going forward relative towards Ben. Thanks.
Yeah absolutely.
On the multiyear contracts.
Way, we really think about it is two fold right. We think about the first base that goes in there is in essence, a cost of living adjustment and so think about that I've I've kind of a low single digit card three ish percent from that perspective.
When we look about the broader portfolio in his renewals come up we're certainly doing.
Further elasticity studies further studies from a market compatibility perspective, and really applying what I would describe as a strategic price increase.
Where it's necessary so in essence, a customer that may be out of line from that perspective, and so that's what ultimately is driving the overall price increase where again, we've talked about it being quite limited before.
Starting to grow up to something to be more like 2% to 5% over the next year or two.
Traveling with you. Thank you very much.
So I, just with our standard or new standard contract language, even if we don't have multi or if it's an annual contract. The auto renewal provision in there will have for an increase as well so we're being thoughtful in all areas. In addition to it.
Brian has just mentioned.
Terrific I appreciate you guys. Thank you very much.
Thank you.
Your next question comes from the line of Kevin Mcnee, Some credit Suisse.
Great. Thanks, Hey.
And can you talked about what I thought was really sizable step up and clients I think the numbers like $400 million worldwide up from $85 million.
Any thoughts on just the aggregation process because it seems like you're doing that in a more efficient manner, given we're kind of the costs leverages coming in.
Just to any thoughts on that.
Yeah, No. We're really excited about it was one of the areas that we knew we needed to really.
Really improve for us to to.
To fulfill.
Our ambitions and.
And so it started with what we have talked about with you before in terms of.
Executive changes in protest and technology and and as you constantly see with the work that we're doing around improving just our technology.
Stacks enable enabling us to do more and go faster project descent. As an example, all that is really put in place to enable us to be able to do more at a cheaper price and.
And specifically as we think about alternative data sources. There is a tremendous amount of data there that you need to churn through to get Nuggets are signals of information and so the efficiency of the technology initiatives are under a really important to us because ultimately they'll keep costs.
Down and say, we'll for really driving value added. These alternative data sources than they will for the other more traditional data approaches that we've been taking in terms of business coverage et cetera.
That's helpful. And then just some of the client wins like HSBC Microsoft.
First question is the conversations you are having with your client.
The sales seem to be coming in pretty well I know some of the usages down just because of the virus and things like that but can you characterize the conversations you're having with the clients what is the.
One of the drivers and what they're buying even in the face of a difficult business environment, and what's kind of getting them over the hump.
Well I'd say the key thing.
It is.
Every business is trying to.
To improve right and then they could trying to leverage data in some way their operations in some way to improve right and.
I think everyone realizes where.
Where things are at especially the pandemic is.
Is on but.
They are looking for ways and creative ideas and partners, who will come to them with suggestions on how they can improve their business, but also with the solutions that they can install for clients and be held accountable to the results and that's the approach that we're taking were.
Collaborating a lot with our clients.
We're creating new capabilities for them.
This countless once I could.
Walk you through here, but.
But really what I would say.
We are street fighters and.
We're we're bringing our best to the fight we've made lots of improvements I'd say, specifically in both those areas estimates as well as the SMB in terms of bringing additional data and Fortunately for us.
It's not.
We don't have a tremendous market share of the Snb's based on what we look at that as having more opportunity versus risk trust from a competitive perspective.
Safe from an SMS perspective, there's a number of things that we're doing.
One is we've made a shift to account based marketing, where instead of just being transactional bringing in more of our solutions.
To our clients in an integrated manner to show them, how it all works with the data that could help them achieve what they want.
We are improving our contact data significantly we recently launched.
B E Mail, IQ, which allows clients to get some free day.
Data from us.
<unk> data contacts per month.
Again.
Give to get model that we're so used to using if they give us some data and so again, there's a lot of work great work I'd say that we're doing in that regard and so we feel really good about how we're positioned.
On a long term basis here and both of those statements.
That's great I appreciate the color.
Thank you Brett.
Your next question comes from the lineup Intrude Caffrey I'm curious securities.
They weren't vetted as a supplier.
From one of our clients and we are going to help them being approved supplier for whatever reason. There's many reasons are coming to us we have the the great benefit of not trying to attract.
Traffic to our websites, but to redirect the traffic that's already coming in directing into our solutions and so that is an area, where we will continue to.
We've been able to.
Package and price more appropriately.
To address the lower end of the market.
And you see that Tom learning something new products that cynara D&B connect product as an example.
Where before it would take it teams from our large clients to work and combined data et cetera, whereas now it's really simple to use I could use it myself great user interface highly configurable. So we're being thoughtful about going more down market as we build this capability and that's something.
An internal it team is not needed to benefit from the data through D&B connect.
All right and.
And then maybe the follow up more towards the.
Mega and more strategic clients.
Just directly on analytic studio I know, it's early days, but exciting product and I was just curious about how this will be placed.
Longer term contract.
One on your telephone keypad.
Your next question comes from the line of George George Tong from Goldman Sachs.
Hi, Thanks, good morning on the sales and marketing front, you indicated that 32% of business. That's now sold in multi year deals can you talk about how pricing and economics change for multi year deals versus annual deals and what your target it mixes for multi year deals.
Yeah sure.
I'll start by saying and so.
So.
So the beauty with this multi year deals is.
Obviously, we have annual price escalators in there we have a multiyear deal and so that helps drive revenue growth.
And.
In where that may be now.
And up selling them the quarter can you provide some ballpark metrics that track this progress such as percentage of customers that are buying multiple products or average number of products sold for customer and how that's expected the trend overtime.
Yeah, George So so we continue to kind of.
Dig into the separation from that perspective, I think a great example of that Anthony walk through earlier was Microsoft right.
That was a business.
Renewed into this that was leveraging.
In essence pretty heavily on the sales and marketing side and.
We saw the step up from that perspective.
Okay. I was a great example, you heard about green, so and HSBC.
Both are customers that I think Anthony can extend upon.
But again saw the relationships all the opportunity to take a much broader view of finance and risk in sales and marketing from that perspective. So that's.
Definitely we are seeing some some strong momentum in those regions and certainly.
As a positive into.
Into business right in maybe Anthony if you talk about bids node and how we've seen the their ability to sell our dun <unk> bradstreet products.
And the successes I.
I think that they've reported would be great.
And have localized a lot of solutions.
Localized a lot of the SMS solutions, and our Asia Pacific region.
Our API solutions.
<unk>.
The UK, China, India. So it really is a priority for us because again as we look at what's low hanging fruit, what's a birthright for us. Some of these things are there out there just waiting to.
We've done a great job in terms of smoothing out the seasonality.
Really getting it across the four quarters, rather than being a large fourth quarter outside impact from optimizer, but I know you could still get a boost from a strong optimizer and some years. So after a weaker third quarter for sales and marketing how do you think optimizer will do in the fourth quarter, given that that's a quarter that customers often commit to optimize or more thanks.
Yes, judo, so from that perspective, I would say less optimizer this year more about the timing of some of the usage that Jim.
Flowing through right and so from that perspective, that's where part of the sales and marketing backup has been throughout the year that being said, we do continue to look for.
Sales right.
In in the fourth quarter from that perspective, and so the master data has certainly been a continued growth area along with what we call audience solutions, which is our digital offerings from that perspective, and so that's a business. That's continued to have strong double digit growth on a year over year basis, and we'll continue to expand from that perspective.
But.
Like kind of the old days Judah from that perspective, we still see a lot of demand for optimizing and we're still going to see continued demand for what's now dnbi connect.
The next step right from a data management solution perspective.
But really some of that timing that will flow through into the fourth quarter will just be more of a.
Release of some of those pent up usage.
Values that built through the year.
Okay. Thank you.
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