Q1 2021 Dun & Bradstreet Holdings Inc Earnings Call

Good morning, and welcome to Danon Bradstreet's first quarter 2021 conference call.

The reminder, today's call is being recorded and your participation implies consent to such recording.

At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation.

If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad with that I would like to turn the call over to Jim Mccann Treasurer, and senior Vice President and President of Investor Relations. You May proceed.

Good morning, everyone and thank you for joining us for Dun <unk> Bradstreet's financial results conference call for the first quarter ending March 31, 2021 on the call today, we have done in Bradshaw CEO, Anthony Jabbour, and CFO Bryan Hipsher before we begin allow me to provide the disclaimer regarding forward looking statements this call, including the Q&A portion of the call may include forward.

The statements related to the expected future results of our company and are there for forward looking statements. Our actual results may differ materially from our projections due to the number of risks and uncertainties. The risks and uncertainties. The 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.

Measures additional information, including 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.

And Brad Chief Investor Relations website at Investor got D&B Dot com with that I'll now turn the call over to Anthony.

Thank you Deb good morning, everyone and thank you for joining us for our first quarter earnings call.

Off to a strong start as we continue with our transformation and the execution of our near term and long term objectives.

We finished the first quarter with solid financial results and made significant progress with the integration of this node.

Overall, we were pleased to put the start of the year as adjusted revenues for the quarter increased 29% and adjusted EBITDA increased 37%.

Organic constant currency revenues increased one 3% of <unk>.

And international was partially offset by the final quarter of COVID-19 headwinds and day to Dot Com in North America.

Total company revenue retention was 96, 3% and we now have approximately 48% of our business under multi year contracts.

The enhancements, we've made to date of quality and our underlying technology are resulting in positive feedback and deeper customer relationships, allowing us to have more productive conversations about cross sell and price opportunities of both existing and new products.

As we reached the two year anniversary of our cost savings program. We finished the quarter with 246 million of annualized run rate cost savings.

Despite COVID-19, delaying some of our planned cost savings initiatives, we exceeded our original target by 23%, which ultimately contributed to the expansion of adjusted EBITDA margins by over 800 basis points from when we took the company private.

While this marks the completion of our formal cost savings program. We will continue to drive ongoing improvement in terms of operational efficiency through optimizing of geographic footprint modernizing back office technologies and further integrating our solutions to reduce cost and complexity.

It's important to note that the cost savings figure. We just discussed is a net number meaning that while we took a significant amount of cost out of the business. We also continued to invest a significant amount in the business, primarily by enhancing and expanding our data and technology assets.

While much of the heavy lifting was completed in 2019 and 2020, our transformation is ongoing as we look to leverage the foundational enhancements. We've made during that time to more rapidly and effectively deploy new and innovative solutions.

Our key priorities for 2021 are to continue to grow our share of wallet with our strategic customers.

Approach and monetize the SMB space and new and innovative ways.

Launched new products domestically localized new and existing products globally.

And lastly to integrate that Theres no the acquisition.

Throughout the first quarter. Our team has made great strides towards executing on these priorities and I'll now share some highlights from the quarter before I turn the call over to Brian for a more in depth of financial review.

After that we will finish up by taking your questions.

We're pleased with the ongoing success, we're having with our strategic clients as they renew near 100%, while continuing to expand the relationships with us.

In North America, we signed an expanded multi year renewal with the largest online retailer.

For the third party risk management strategy.

If the client continues to expand and enhance their controls around the global supply chain. We are pleased to continue to support their growing needs.

We also signed a multi year renewal with one of the largest multinational retail corporations.

Expanding the use of data across their business.

The client Leverages, our third party risk and compliance solutions to mitigate risks they are extremely large and complex supply chain and we're glad to extend and broaden this relationship with such a key customer.

We renewed business with another strategic client of global property and casualty insurance firm, who needed access to timely high quality data on their current client base to ensure proper underwriting methodology jeez ongoing monitoring as well as access to data for new customer acquisition.

The result was a multiyear deal for both core risk and marketing solutions.

In our international business Theres been significant focus on re Architected, our go to market efforts to better capture of the large global opportunity.

In the first quarter, we rolled out of global 500 account program simultaneously with the close of business would prioritizing the most strategic accounts.

I am pleased with the early traction we're seeing from these efforts demonstrated by several wins in the first quarter.

Our UK team is working with Generali, a global 500, global insurance and asset management provider with a leading position in Europe, and a growing presence in Asia, and Latin America to help them identify ways to improve consistency of screening across the global corporate and commercial businesses as well as reduce risk.

The result is a multiyear deal for the integration of Dnb data by direct plus and our third party risk solution into their CRM and underwriting system to provide of flexible end to end solution that was fully compliant with the global requirements.

Another global 500 company Lindy region Europe, North member of Lindsay plc is a leading global industrial gas and engineering company and wanted to improve their credit checks and risk monitoring of the <unk> customers and a more data driven way.

We're pleased they chose dnb finance of risk solutions, bringing us both new business and a multi year deal.

We are pleased with the momentum we have with our growing roster of clients and expanding existing client relationships worldwide, particularly with our strategic clients.

One segment that we continue to see immense opportunity in is the small and mid size business market and as I mentioned in my opening remarks. This is the key priority for us in 2021.

I'm excited to update you on the progress we have been making to enhance our SMB strategy through a mix of digital marketing and delivery efforts as well as through innovative partnerships.

After a difficult 2020, the S&P market is beginning to reemerge.

As existing small businesses begin to recover from the effects of COVID-19, We're also seeing a significant rise in the formation of new businesses, especially gig economy startups that would benefit significantly from our self service finance risk and sales and marketing solutions, along with software and services offered from our partners.

What's the driving purpose behind the first quarter launch of our improved digital platform. This.

This includes personalized small business resources and offerings for each D&B dotcom user driven by the utilization of our visitor intelligence solution as well as the dnb marketplace, which makes it easier for small businesses to identify and purchase D&B solutions.

And those from our partners.

The marketplace has two primary sections of product section called D&B product marketplace and of datasets section called the Dnb data marketplace.

The D&B product marketplace includes of curated set of our solutions along with those of our partners that creates the combined set that allows the small business to operate in a much more sophisticated manner much earlier in their stage of maturation.

But we will continue to add new D&B solutions and partners in the coming quarters.

Mindful of keeping the number of partners limited as this is not a broad based marketplace, but one that has preferred solutions that we believe will drive the best outcomes for our SMB customers.

A few examples of solutions that are available in the marketplace today are tons manager integrated with Plaid.

Credit signal credit monitor.

The email IQ analytics studio Hoover's essentials and D&B connect.

We also have partner offerings, such as KPMG spark SAP.

P of Reba with the Dnb direct plus integration.

And Amazon business access with special rates.

Within the Dnb data marketplace, you just can buy a broad range of data sets from alternative data providers to help them identify opportunities and mitigate risks.

These datasets are already curated and matched to of dun's number to make it easy to append to of clients' existing D&B data too.

Today, we have 22 partner datasets, including health care reference data from IQ via and commercial fleet data from IHS, Markit, and we're adding more partners monthly.

User feedback has been overwhelmingly positive around the power of the dun's number and how it is the key the unlock the power of the data and it's something that meaningfully differentiate us competitively.

The Dnb customer portal also launched in the first quarter allows the existing clients to log in and access their already purchased products through a single sign on unified digital experience.

While inside the portal, we offer personalized offerings of our and our partner solutions, which has already resulted in a 60% increase in cross sales during the first quarter.

Now, while we continue to grow our solution set within D&B. We're also expanding our reach outside of our core ecosystem.

A great example of this is what we're doing with bank of America.

Bank of America became the first major financial institution Tau for millions of small businesses the ability to get ongoing insights into the dnb business credit score directly through their business advantage 360 banking platform.

This is exciting for D&B because it is driving net new paid subscriptions and increased engagement with our small business digital platform.

We also partnered with Plaid to bring their network to our solutions by integrating <unk> capabilities to our digital platform small businesses can securely permission access to their bank account information for authentication purposes.

This gives them instant access to update the dnb business credit profile.

In addition, small businesses can share their bank transaction details, enabling us to explore new ways to establish the business credit outside of traditional payment data, which many smaller businesses may lack we're really excited as this is the first of its kind in the business credit space.

In the first quarter subscriptions to our freemium products were up 43% from the prior year the <unk>.

Investments into our small business and digital go to market strategy products and groundbreaking partnerships are clear evidence of our determination to make the segment of priority and deliver more innovative solutions to our small business clients.

The third critical priority is launching new products and use cases yesterday, we announced the dnb wrap up a solution that simplifies and automates marketing and sales workflows by providing data targeting activation and measurement in a single platform that easily integrates to of customers exists.

<unk> martech or sales tech stacks through the use of open architecture integrations.

Vince can purchase the full breadth of dnb Rev up capabilities or even start with the specific channel and build up from there.

We have also collaborated with bombora and follows to further extend the insights and capabilities of the Dnb Rev up offerings by adding best in class of intent and personalized omni channel experiences to help increase demand generation.

In addition, we have entered into and accelerate the partnership with a leading data driven Martech company in support of this platform. This is a game changer in how we approach account based marketing through the integration of our solution sets along with complementary partnerships.

We look forward to providing more updates on Rev up as it progresses and its just a great example of how we're thinking more holistically about serving clients through an integrated platform.

This is the vision behind Rev up as well as the late 2020 launches of Dnb finance analytics, and integrated and powerful credit to cash platform and D&B risk analytics and integrated third party risk and compliance platform, both within our financing risk business unit.

In our international segment, we continue to focus on rolling out of localized solutions across our growing territories.

After 20, new product launches in 2020, we continued the momentum in the first quarter, introducing the finance analytics platform in the U K.

Day Division in greater China, and India, and data blocks and three additional worldwide network partner markets.

We're also launching multiple new products in D&B, Europe, which is the newly created region that describes our recently acquired business markets.

Leveraging our solutions in these markets is a key pillar of our playbook, which we are starting to execute.

Regarding the business transformation, we're leveraging the same playbook that led to the successful transformation of D&B. These past two years and we're off to a great start coming together as one D&B.

In Q1, we completed the first phase of synergy actions immediately following close principally senior leadership rationalization.

Overall, we have action of approximately $12 million of annualized run rate savings and continue to see significant efficiencies through the combination of our two companies.

We also established a new European operating model and expect this to be fully implemented during Q2, delivering a more streamlined and integrated business with corresponding operational synergies consistent with our business model.

We developed the robust product plan for D&B Europe to accelerate sales of our modern global product solutions and support the Sun down of legacy business products.

Several product launches are slated for the second half, including finance analytics risk analytics, D&B, Hoover's and data blocks to name a few the.

The team is also accelerating rollouts of several solutions business had recently launched prior to the acquisition.

Overall, we are really excited about the progress, we're making and look to capitalize on the strong momentum we have built in our first quarter together.

Overall, I'm pleased with our start to 2021 and I'm excited about the progress we continue to make in terms of increasing share of wallet with strategic clients better serving smbs in innovative ways.

Eloping, new products domestically and localizing them internationally and integrating business the.

Along with many other projects. The teams are working on are laying the foundation for accelerated sustainable growth throughout the remainder of 2021 and into 2022.

With that I'll now turn the call over to Brian to discuss our financial results and outlook for the remainder of 2021.

Thank you Anthony and good morning, everyone. Today, I will discuss our first quarter 2021 results and our outlook for the remainder of the year.

Turning to slide one on a GAAP basis first quarter revenues for $505 million, an increase of 28% for 27% on a constant currency basis compared to the prior year quarter. This includes the net impact of the lower purchase accounting deferred revenue adjustment of $17 million.

Net loss for the first quarter on a GAAP basis was $25 million for a diluted loss per share of <unk> <unk> compared to the net income of $42 million for the prior year quarter.

This was primarily driven by a change in fair value of the make whole of derivative liabilities in connection with the series a preferred stock in the prior year quarter and a higher tax benefit recognized in the prior year period due to the care of that this was partially offset by lower interest expense for <unk>.

The dividends and the prior year period improvement in operating income largely due to lower net deferred revenue purchase accounting adjustment and the net impact of the business of acquisition, partially offset by higher costs related to ongoing regulatory matters.

Turning to slide two of them.

Now discuss our adjusted results for the first quarter.

The first quarter adjusted revenue for the total company for $509 million, an increase of 28, 6% for 27, 7% on a constant currency basis.

This year over year increase includes 22 percentage points from the <unk> acquisition and four four percentage points from the net impact of lower deferred revenue purchase accounting the adjusted.

Revenues on an organic constant currency basis were up one 3% driven by growth in our international segment, partially offset by the final quarter of headwind in North America from COVID-19, and the day to Dot Com wind down for.

For reference please see slide eight and the earnings presentation coronary organic revenue growth.

Excluding these headwinds the underlying business grew approximately 3%.

First quarter adjusted EBITDA for the total company was $186 million.

An increase of $50 million of 37%.

This increase includes the net impact of lower deferred revenue purchase accounting adjustment of 15 percentage point impact on year over year of growth.

Any of the improvement is due to the net impact of the pits out of acquisition as well as increased revenues in the international and lower net personnel expenses overall.

First quarter adjusted EBITDA margin was 36, 5%, excluding the impact of the deferred revenue adjustment and the net impact of business EBIT margin improved 220 basis points for.

First quarter, adjusted net income of $98 million or adjusted diluted earnings per share of <unk> and.

An increase from first quarter 2020, adjusted net income of $50 million.

Turning now to slide three.

Now I'll discuss the results for our two segments North America and in international.

In North America revenues for the first quarter for $339 million for approximate 1% decrease from prior year, excluding known headwinds North America grew approximately 2%.

Financing, we continue to see strength of our government solution and risk version of <unk>.

Both private and public sector enterprises continue to need solutions to deal with the rapidly evolving global supplier of landscape.

Both of these solutions was offset by approximately $3 million of lower revenues attributable to the wall to.

To COVID-19, 19, and $1 million of Revlon and the elimination from the business transaction.

For sales and marketing, we're excited to see double digit growth of our digital solutions as customers continue to leverage more and more of our modern tech enabled solutions and while data sales also had another solid quarter youll for a growth of the barrels of Martin was partially offset by $5 million from the day to dot com wind down.

North America first quarter, adjusted EBITDA was the $151 million, an increase of $7 million or 5%, primarily due to lower operating costs, resulting from ongoing cost management efforts.

Adjusted EBITDA margin for North America was 44, 5% of 220 basis points versus prior year.

Turning now to slide for our International segment first quarter revenues increased 137% for $170 million or 131% on a constant currency basis, primarily driven by the net impact from the acquisition of business and strong growth in our sales and marketing solutions.

So what is the impact of bit note international revenue increased approximately 9%.

Financing rates revenues were $107 million, an increase of eight 3% or an increase of 78% organic constant currency basis, primarily due to the <unk> acquisition.

Excluding the net impact of the business revenue grew 7% with growth across all markets, including higher worldwide network Cross border sales and higher revenues in greater China from a risk of the client solution and newly introduced API offerings.

Sales of marketing revenue of $63 million, an increase of 382% for an increase of 369% on a constant currency growth primarily attributable.

Attributable to the business of acquisition.

The net impact of business revenue grew 18% due to the new solution sales and our UK market and increased revenues from our worldwide network product loyalty.

First quarter International adjusted EBITDA of $52 million increased $28 million or 114% versus first quarter 2020, primarily due to the net impact of Theres no of acquisition as well as revenue growth across our international businesses, partially offset by higher net personnel costs.

Adjusted EBITDA margin was 33% for 37, 8%, excluding business, which is an increase of 430 basis points versus prior year.

Turning now to slide five.

I'll walk through all of the capital structure.

At the end of March 31, 2021, we had cash and cash equivalents of $173 million, which when combined with full capacity of our $850 million revolving line of credit through 2025 represents total liquidity of approximately $1 billion.

As of March 31, 2021, total debt principal was 3670 $4 million and.

Our leverage ratio was four eight on a gross basis for six on an epic the.

Credit facility of senior secured net leverage ratio of three six.

Finally on March 30, we executed a $1 billion floating to fixed swaps at an all in rate of $46 seven bps.

These are three year swaps, bringing our fixed floating debt ratio to approximately 50 50.

Turning now to slide six.

I'll now walk through our outlook for full year 2021.

Adjusted revenues are expected to remain in the range of 2140 $5 million to.

<unk> 2001, or the $75 million, an increase of approximately 20 352, 25% compared to full year 2020, adjusted revenues of 1730 $9 million.

Revenue on an organic constant currency basis, excluding the net impact of the lower deferred revenues are expected to increase between three to four and a half the size.

Adjusted EBITDA is expected to be in the range of 840 $855 million, an increase of 18% to 20%.

Adjusted EPS is expected to be in the range of $1 to $1 six of them.

Additional modeling details underlying our outlook are as follows.

We expect interest expense to be 200.

$210 million.

Appreciate the amortization expenses of approximately $90 million.

The incremental depreciation and amortization expense, resulting from purchase accounting.

The adjusted effective tax rate of approximately 24%.

Weighted average shares outstanding of approximately $430 million.

You can find the Capex, we anticipate of around 160 million dollar income.

The $7 million due to the small.

The progression we completed in the first quarter.

Overall, we continue to see of the year shaping up as previously discussed with revenue growth accelerating throughout the year as we transition from the middle of the range of Q2 for the high end of the range in the fourth quarter.

And finally as previously discussed we continue to expect adjusted EBITDA for the second and third quarters to be below the low end of the range due to timing of certain expenses in the fourth quarter to be above the high end of the range of our guidance.

Overall, we are pleased with the start of 2021 and look forward to continuing the strong momentum we are building in both North America.

Cash.

Turn back.

Now happy to open the call for your questions. Operator will you. Please open up the line for Q&A.

Great. Thank you at this time, if you would like to ask a question. Please press star followed by the number one on your touch on from.

To withdraw your question press, the pound or hash side.

Your first question here comes from Manav from Barclays. Please go ahead. Your line is now open.

Thank you good morning.

It's good to see and hear a lot of the new products and partnerships that you have put out some releases and also mentioned on the earnings call. I was just wondering if you could just.

Help us walk through kind of whether it's the sales cycle of the timing behind.

When these initiatives goodwill the Scott adding.

To revenue growth.

Some of it on thanks.

There's a number of things as we look overall at the.

The revenue bridge and we've talked about them previously.

Previously in terms of.

The effects of price and cross sell upsell et cetera.

<unk>.

And certainly as there of newer products they.

They'll come on more slowly versus one debt.

Heaven.

For the launch sooner, but we feel really good about the momentum that we're seeing.

In both of them already as you can imagine as we launch products for working with our advisory councils, and getting feedback and piloting with clients as well.

And starting the process, but on the.

The small business capabilities of the e-commerce capabilities, we're already starting to see some really exciting things happening there that we're seeing we talked on the last call about how we are.

The simplifying our digital.

Sure.

Web front, and having a narrow corridor for all of our clients and prospects to flow through and we've seen the site visits up about 375% from Q1 of last year, we've seen sign ups for our premium products of 60%.

Conversion rates high we've seen our growth sales from our E. Commerce site already up this Q1 over last Q1 of 120%. So we're already starting to see signs of this taking traction and working.

Okay got it and then.

With leverage at four six times can you just remind us on your pipeline and appetite I mean, do we need to delever.

Delever before doing anything else meaningful yes.

Yes, Manav I'll, maybe start with the leverage question then kick at the Anthony in terms of.

How about capital allocation as we move forward, but.

What we're dealing with and why we ended up at four six times in that right now is because as we did the business. The transaction for you remember we did a mix of a little bit of stock and then some of that.

That actually comes into the calculation of immediately but then we get the full annualized run rate of EBITDA from the business. The acquisition by the end of the year. So we will naturally delever back into the high threes without doing anything different by Q4.

But in the meantime that was just some of the mathematics that go into it you get in essence, a quarter of the EBITDA of the debt and that first calculation. So Anthony maybe from a capital allocation perspective, yes, what I'd say is obviously consistently we're going to invest first and foremost of an organic product development.

Talk about some of the things on the.

The call. This morning, but what were doing lately I'm excited about the the flywheel that we've got spinning here in terms of product innovation. So that's obviously, what we're going to focus but more so on the M&A side and where we go from the leverage perspective.

I think of it.

It's probably fair to say that.

The more passion, we have towards an acquisition of the more that we would stretch so.

Certainty and the excitement of.

Some great asset out there that we've got tremendous confidence.

Could do more with.

As part of Dun <unk> Bradstreet wheat stretch more of it like Brian said, we're going to naturally de lever.

The bears note by the end of the year just steady course.

For the high threes.

Alright, thank you.

Thanks Manav.

Your next question comes from the line of Hamzah <unk> from Jefferies. Please go ahead. Your line is now open.

Yes, hi, good morning.

My question is around.

Organic growth could you maybe just rebase for us.

What is the new organic growth guidance I guess.

You talked about the 3% number in Q1, but then there's a 1% number as well and then your previous guide I think was three <unk>.

Change to foreign change.

So there's a lot of numbers being thrown out there I was just hoping if you could just where does the clean organic growth number in Q1, and then how does that build through the rest of the year in your guidance and I realize some of the new product growth may come later.

Sure Hamzah.

If we look at it the way.

We talked about in.

In the first quarter right from a guidance perspective was.

We laid out the total guidance included Theres node and then when you back out the net impact of <unk>.

It's that three to four 5%, which excludes write off of the impact of the.

Deferred revenue adjustment and so that's quite consistent in just in essence reiterating what we said in the first quarter.

The component in the first quarter of this year, we have the lap in essence quarter of headwinds from that perspective is where we're roughly at one 3%.

That when you back out that impact of COVID-19 in the background of the last kind of quarter of data Dot Com you are talking about roughly 3% from that perspective and that really is what the core engine is producing and so as we move into the second quarter third quarter and fourth quarter will be clean from that perspective without the headwinds.

Adjusting for right like we did in the first quarter.

Anthony it's side for the back of Manav question as we're selling these new products upfront, they're being sold primarily in a subscription based model and so as the sales are a leading indicator and Anthony mentioned some of the positive things, we're saying it's building up that revenue right.

The amortizing into the rest of the year, so organic again in that three to four 5% range.

Got it that's very very helpful.

The second question and I'll turn it over is just are you seeing any changes in the competitive environment out there new entrance or or the.

The competitors are also going for new new new use cases on certain broad ox.

And specifically around the SMB space I know you mentioned that as of creaky priority is the competitive set there are different than your other sort.

Sort of.

Vertical does the you're tackling just give us a sense of the competitive dynamic there. Thank you sure hamzah.

What I'd say is from the competitive dynamic perspective, we're gay.

Gaming strength versus losing strength.

The man.

And the great work that our team has done on improving the quality of the date of the technology the service of our clients.

The innovation that we're bringing.

I feel very much like we are the ones, making ground here and have momentum on our side, so coming up with some of the is very unique products.

As powerful so if you think on the small medium size.

The mid size business size.

With the bank of America announcement, so typically you're going to consumer account and you could see a FICO score now at Bofa you can see what you're paid X scores. If your business logging on so the brand is so strong with Dun <unk> bradstreet that it gives us the ability to to.

To really extend our ecosystem.

Because of the power of that brand and the innovations that we're bringing so I feel very good and I feel very much like.

Were the aggressors for change when it comes to new product innovation, how we're thinking about the market.

We're being aggressive with some of the capabilities that we have to really help enable our clients. So.

I'm actually very bullish on how we are positioned competitively.

That's great to hear thank you. So much. Thank you. Thank you Tom.

Your next question comes from the line of Kevin <unk> from Credit Suisse. Please go ahead. Your line is now open.

Great. Thanks, so much.

It is part of your Anthony.

Any thoughts as to kind.

Kind of the puts and takes for this recovery relative to the GSE.

In terms of business positioning and then just how are you thinking about stimulates because my sense was 2020, you didn't get a lot of benefit from it then but how should we think about that going forward, particularly.

Within the context of businesses reopening as the consumer starts to come back and maybe reconcile that to just how that's factored into the guidance.

Primarily start with for the guidance and then share so Kevin one of the things that we've talked about as we thought about this year was that we knew really COVID-19 started the impact.

Some of the small business lending and some of the components right.

Second quarter of last year, and so were really lapping the.

The final I would say three months of that in this first quarter.

As we think about the remainder of the year right now we're thinking about it from a it's no longer a headwind, but not necessarily of tailwind now as businesses reopen and small businesses start the form and start to grow I mean, certainly where we're thinking about that and how we're going to market with a lot of the F&B strategy of that Anthony talked about in his prepared remarks.

Yes.

And more specifically on the GSE.

Weighted on the call.

For Q4, we signed a net.

Even with the GSE with two add on terms.

As well so we're really pleased with the great work that our team is doing in the government space with the GSC and with the other government agencies and they are all interconnected.

The ways.

So.

Yeah.

Okay.

Great and then just a quick follow up it seems like the core margins in international really really strong and obviously the U S up as well.

But the international outpacing is there anything to call out there, whether it's investment incremental investment or just the better relative revenue growth anything in terms of just the mortgage trajectory of each one in the quarter.

Yes, so Kevin if you look at international and we had talked about.

Certainly with core revenue growth in that 9%. The contribution margins are strong from that perspective, and you saw that flow through to the increased.

EBITDA margin on year over year basis, North America, right, which already had very very strong margins I mean Anthony mentioned.

We ended up at $246 million I think by the end of this year, we're talking somewhere around like $300 million of increased EBITDA from where we started just call. It two two and a half years ago right. So.

From that side I think again as the business continues to grow we will continue to see contribution margins expand from from that perspective.

Awesome. Thank you.

Thanks, Brad.

Your next question comes from the line of Jeff <unk> from BMO Capital markets. Please go ahead. Your line is now open.

Thank you so much.

Wondering if you can give us any color between U S and international I'm just curious if the vaccine rollout has had any impact are you seeing more customers coming to you in areas, where we've made ahead of quicker vaccine rollout relative to slower. Thanks.

Sure, Jeff what I would say the biggest difference between international and North America with International obviously, we've had faster growth Thats, what we had predicted that it would grow faster when we implemented some of the changes that we had talked about previously but over there the headwind subsided sooner than they did in North America and like.

We launched 20 products last year and are continuing the momentum now and Thats really.

The relationship between the amount of new capability the launch in the market and the revenue growth is the bigger factor for US then.

Then the impacts of COVID-19 and the rollout of the vaccine so I think the bigger.

Difference that we see is really tied to product and now with North America. Obviously, we're excited with getting towards the end of the headwinds the data dot com and since last relatively large headwind in this quarter.

And as Brian said, we grow.

The grow over the COVID-19 impacts in Q2 so.

That coupled with just seeing the flywheel of starting to spin faster in North America. We've got a couple of like I said really exciting new product launches that we shared with our SMB space and wrap up.

In addition to some of the new products that we launched at the end of last year. So we feel.

We're more.

I would say directly in control of the growth.

Then we are seeing in the.

I'll say the macro environment okay.

Okay, great segue any of that in terms of something that might be under direct control of pricing I'm. Just wondering if you can talk about the pricing environment of your ability to raise prices in both of your major markets. Thanks.

Sure Yes.

As we mentioned.

There are a couple of facets the pricing.

One was just the scientifics.

Analysis of it and where should we shouldn't lead to really creates.

A fair exchange of cost for value that we provide and the other way around the multiyear contracts that we have in place in terms of having built in pricing escalators, along the way what I'll share with you is.

We had talked I am not sure of is the last call the one before.

Looking at clients, who are auto renewing or having the one year renewals and raising the price and from when we implemented the change we saw the majority of our clients not having any change in price and then after the effect of the change the majority 70% of the contracts going up in price. So.

So what we are.

The interplay of net fee is that our pricing strategies are working we're being very thoughtful about them and they are being accepted by the clients and like we said for we're not rushing into this headlong moving in a very thoughtful and deliberate we're talking about.

Just having over a point of growth this year coming from price, we feel we're on track for that.

Okay fantastic. Thanks, so much.

Yes.

Your next question comes from the line of George <unk> from Goldman Sachs. Please go ahead. Your line is now open.

Hi, Thanks, Good morning, it's George Tong in the quarter organic constant currency growth was one 3% could you elaborate on the factors that caused the organic growth the step back a bit from one 5% in <unk> and perhaps how you envision organic growth progressing over the remaining quarters of this year than the words would you expect to the organic growth the start off.

At the 3% or higher given those COVID-19. Indeed, the dotcom headwinds are over and then should that growth move up into the right in each subsequent quarter.

Yes, so George just on one point too.

We talked about and we put the bridge.

The appendix of the.

Investors slide presentation.

We had another change in there, which was just that lag elimination and so when we talked about being similar to Q4 at that one 5%. They ended up on the same price, but whether it's one 3% of one 5%. It's right in that same range that we had in the in the fourth quarter, So I won't call it out.

The fell from that perspective that being said again, when we look at the step through into the second quarter third quarter and beyond.

And Anthony.

I've talked about this and he can elaborate too we.

Look back to the succession of the quarters that we've had since we took the business over and if you look at it we start off with the minus one one that went up to eight 5% to 6% rights of 3% and COVID-19 hit along with the known headwinds right, which kind of backed it down to minus 3% minus one again now.

Plus one five call it plus one three right.

We've been very consistent even in those quarters of eight and a half and 6% growth at the core engine. When you kind of remove the noise is producing at around 3% from that perspective, and so as we're accelerating off of that kind of low single digits debt roughly 3% into more of the mid single digits by the end of the.

Year, it's really the the new products that are bridging on the new pricing that's bridging on right. That's bridging that gap of really call. It two points of growth from 3% call it 5% versus going from kind of where spot is at one 3% because again the KOB it's true.

The inventory write that down.

The data Dot com right.

Literally at the tail end of that so.

Start to get of clean.

Trajectory and so thats, what really gives us confidence about the direction, we're heading not just for the remainder of this year, but into next year.

Got it that's helpful. And then just a follow up you mentioned formerly of completing your cost savings program. At this point can you discuss where you see opportunity for additional cost take out and where our medium term EBITDA margins can go from here.

Yes sure. So if you look at it one of the things Anthony mentioned was.

The flip side of COVID-19, where certainly the impact on the employee of in.

That span of.

Different I would say situation.

Different countries right one of the places that we certainly if the opportunity and we've talked about it as our geographic dispersion right from.

From where we are doing different functions from.

We already have presence in Ireland, we have some nice presence is in the southern markets of Europe, certainly India is the place that we've leveraged from that perspective, and unfortunately with the impact that they've seen.

That's been an area, where we've had to kind of I would say scale back in the short term to make sure one that employee safety and wellbeing is first and foremost.

And then second as we do make that evolution that there is that ability to recruit and ramp from that side. So there is still some I think.

Right shoring from that perspective.

And then certainly as we continue to automate.

<unk> from the back office, whether Thats some of the things we're doing on the finance side. Some of the things that we're doing all of our operation side from the delivery perspective, those will continue to generate I would say ongoing efficiencies.

But I think to Anthonys comment of post two years, we were originally out of $200 million target. We're at $2 46, right. It doesn't mean, we'll stop it just means that that big kind of chunky step function change in the recurring base.

Of that work has been completed.

Very helpful. Thank you.

Sure.

Once again, if you would like to ask a question. Please press star followed by the number one on your touched on from your next question comes from the line of Tom from True Securities. Please go ahead. Your line is now open.

<unk>.

Hi, Anthony and Brian This is Tom Blakey operators there for you here truest.

Can you hear me.

Ken Tom Yes, Thank you for joining okay, great sorry.

I'll answer on the.

Couple of questions are around sales and marketing was impressed with the organic growth internationally in <unk>.

I was wondering if you could just maybe comment on any specifics there understanding of course this is off of small base.

But more specifically dovetailing that into wondering what the dynamics there are that could make the spillover into North America.

And get that.

Sales and marketing division growing, especially in the context of robust growth at some of the of the sales and marketing.

Service peers.

And just asking them in order here.

The question would be about SME.

F&B initiatives really exciting there.

Any guy.

Any talk around <unk>, or where or who could go same thing with margins.

I know again, it's a bit premature as well, but assuming.

Youre repackaging of existing data out of this is all self service and digital go to market I'd be curious again about what the ultimate at scale margin for that business could be and again just kind of current frame, where you think <unk> is and where it can go from that March.

Opportunity would be helpful. Thank you for sure Tom Thanks for those questions. So internationally, what we're seeing on the sales and marketing side is really.

Similar to I mentioned previously it's about the number of new products that for launching in the market, that's driving that growth and so looking backwards to the U S. It's the same domestically as we launch more product capability to see the revenue line growing as well on the SMB side.

We're really not.

Looking at <unk> at this stage right now and that that fine amount of detail. This is the bigger broader initiative for us and what we're looking at is can we move the industry in this direction.

Can we drive the traffic can we drive the conversion rate.

And we're really I'd say earlier stages of this versus being a little more scientific on while we expect the <unk> to be what we'll do is we'll see it will pivot will react just like we do with our development.

Very focused on it from that perspective, but but we're pleased with what we're seeing right now.

And these major.

The new product launches and <unk>.

Excited what Rev up will bring here in the U S right now and with our SMB like I said, we're already starting to see some really positive signs from that so.

We'll make it will make its way to <unk> and more specifics but.

Sure.

Focused on the big Boulder, right, now and moving it and getting more detailed.

As we get more reaction from our clients in the market.

From a margin perspective, I'll just tack on you've got it's one of the really powerful things that we have is leveraging off of the data cloud now leveraging through a more digital experience versus and complementary complementing our inside sales approach, it's very very higher contribution margin and so as these things come along there'll be very accretive.

To what we're doing as an overall company from that perspective, yes, maybe I'll add one more thing as well.

With the SMB initiatives, it's not that we're changing what we used to do and now it's on the E. Commerce, it's additive to what we had always done in terms of inside sales and I'd say the month of March had the best sales months that we've seen since we've been here for the last couple of years. So really excited about the day to day and how Thats progressing.

And excited about these new innovations and how they are coming to market and how we think the resonate with our clients.

Helpful. Thanks, guys.

Thank you Tom.

Your next question comes from the line of Gary from Bank of America. Please go ahead. Your line is now open.

Hey, guys. Good morning, good morning morning Garik.

First question. So obviously, there's a lot of focus as there should be on innovation new products, even even even you mentioned things like a more modern API, it's driving more clients.

The action and interest I guess.

Think longer term some of your information services competitors use the concept of of vitality index what percent of revenue. They think they can drive from offerings launched in the last couple of years or is there anything like that any color you can give us on how you think over the medium term.

About all of the new initiatives you have on the product side and how they will contribute to growth of the business.

Yes, I've seen that as well Gary.

Having something as I tell the score.

And we're not measuring it that way right now candidly.

We've looked at our revenue bridge and where we're at and what are the layers of the things for us to focus on to achieve the growth and so I'd say that is in a lot of ways. What we're doing so when we talked about say finance analytics and risk analytics.

The.

In some ways upgraded versions of previous capabilities that are built into some of those so just more holistic and integrated and solving a bigger and broader client problem or opportunity. So we're focusing on it by knowing what initiatives to go and what we have.

Two of them, but we aren't measuring vitality score.

Okay fair enough the.

I guess, you said just sticking on that point for a second.

Brian earlier, you said basically the bridge from the 3%.

Adjusted sort of trend growth now to higher at year end is largely products and pricing.

Is it is it safe to say that is really the key to delivering over the next couple of years to those medium term targets you said as well.

Yeah, I think Gary.

Continue to show the cross sell and I'll start with what we've got on the kind of the wagon right and that's got us to kind of.

Single digits, whereas we're accelerating it will be the the.

The clear continued acceleration, writing and growth on the international side, right, which as Anthony mentioned as we do introduce new product right, even if its existing product thats been localized right. It's been taken right and its being absorbed and its been purchased from that perspective the <unk>.

Same thing here right. So one as you know.

We've really made a lot of fundamental groundwork improvements in terms of data quality data consistency expanding right the data and technology.

We're now in the position as Anthony mentioned, where we are starting to have.

And take more price from that perspective, so as that layers in certainly got the.

A piece of that growth that's over and above where we are today and then on the new.

The new product side, right and so as we as the sales cycle rolls through and we ramp up the combination of things like the analytics studio things like D&B connect what we're doing with more and more with direct plus from an API perspective, now addressing the F&B side really going after the sales and marketing side of the different way with.

Wrap up which I know Anthony and I are really excited about from that perspective. Those are the things that will take us from kind of that low single digits into the mid and then as we continue to press forward.

And then just one follow up obviously the U S economy is looking a lot stronger I know, it's maybe a more mixed picture overseas, but one of the prospects for the $20 million or so of transactional revenue that went away because of COVID-19 coming back I mean, if I look at NFIB small business confidence surveys business spending is picking up obviously.

The projected U S GDP growth is robust.

That's the lever that brings that back is it just is it the businesses investing businesses is it really more lending so the banks need to be making business loans. What can we look forward to see that come back in one of the prospects for some some of that coming back. This year I know that's not in your guidance. Thanks.

That's right Gary So if you think about it right on the F&B side clearly the more business formation of the more businesses are active for the more business as one of the suppliers to Walmart et cetera, right, that's going to drive more and more traction more and more volume right for the F&B.

Price in the SMB customer portal right. When you think about the the larger customers from the strategics more from the usage side, which was.

More impacted right, that's where when you talk about his business lending is starting to pick back up right and as the business blending that has not been impacted by government programs like.

More PPP loans and things like that and so as those kind of things get behind us and bank start to open up and do more I would say kind of quote unquote normal lending from that perspective. Those are the types of things that start to kick up more and more usage of our of our products.

Thank you.

Thanks, Karen.

Your next question comes from the line of Samir from Deutsche Bank. Please go ahead. Your line is kind of thing.

Yes.

Hi, Good morning, Thank you for taking my question the.

Something.

Something I wanted to get a bit more color on the the share of wallet. You you mentioned the the share of what is increasing just wanted to get a sense of where it is and.

Especially in the enterprise customers and how high the number could go just to get some color on that please.

Sure.

Okay.

I was going to start with maybe we're clearly north of call. It 90% of the Fortune 500, right, which is the majority of our strategic customers from that perspective.

When we start to look globally.

That's certainly from where we used to talk about being in the 60%.

The global 500, when we did the business of transaction that actually brought us into the direct contact right with another 50 of those global 500 providers.

And then as you heard on our last call and we continue to make progress and expand for instance in greater China with one of the top for banks, there and so when we talk about expanding share from that perspective, thats kind of the the base. We've talked about I don't know if you have any additional color again ill just say were very strong when you look at our.

The strength the larger the client the stronger our position is with them and the more we can do with them. So we want to obviously help them in more ways and grow alongside them and so if you look at the new wrap up product that we launched it starting with the enterprise accounts right.

Calling it wrap up AVX for account based experience and it's a broader more holistic.

It is thoughtful in terms of how.

It enables our clients who are already using some tools like marketing automation or sales tools et cetera to to integrate into wrap up for for us to integrate into their environment more so but its geared towards the larger enterprise.

Clients in our first phase of ramp up so it's really more just creating more capability of that way, where we can serve those clients, where we've got really trusted relationships.

And we're doing more as well right.

The early stages of looking at all of the data we have in running analytics against it such as.

ESG and what capabilities can we have look.

We're early days, but we're really pleasantly surprised with the amount of information, we have and the analytics, we have and the collaboration with our clients and our advisory Board of just general ways that we can help and so as you can imagine we're talking about these products that we're launching but theres a lot more in the lines. There is a lot more of like I said with this flywheel spa.

<unk>.

Where we're collaborating with clients who've got a phenomenal client roster right for collaborating with them we've got experts internally.

Collaborating with and really what we're doing is constantly looking at ways that we can help and help them grow the revenue help them improve their margin help them stay compliant.

As with every.

Business leader wants to do so we're looking at ways, we can drive new capabilities and increase our share of wallet in those accounts.

Thanks.

The second question I had was more along the more of them technology lines.

As most of your most of it.

Data is at the hosted on Prem or is it in public cloud.

Who are the public cloud partners, you're working with just to get of just to give them the idea.

What I would say in Q1, we reached about 80% of cloud virtualization of combination public private and.

Predominantly.

One cloud provider.

More than another but.

Obviously, you don't want to.

Share at this stage, but.

But more so.

It's an architecture that we feel we are now within the strike zone of where we wanted to the so we are much lower on the cloud virtualization side, and we worked aggressively to get to the spot now, we're plus or minus a few percent, 5% of where we ultimately want to be but it's putting us in a position now.

Where we can do some other things so we're moving more work to our.

Other datacenters are physical ones. In addition to the public cloud ones.

Able to close one of our data centers because of the shift of the workload. So we're starting to see the real benefits from cloud, which is obviously I know why you're asking the question. So hopefully that gives you the color you're looking for Samir.

Got it thank you for lunch. Thank you.

Yeah.

And there are no further questions I will now turn the call back over to Anthony Jabbour for closing comments.

As always I'd like to thank my Dun <unk> bradstreet colleagues for their exceptional efforts and for our clients for the strong relationships and trust. Thank you for joining us.

On the call today and I Hope you have a wonderful rest of your day take care.

And this concludes today's conference call. Thank you for participating you may now disconnect.

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