Q2 2021 Dun & Bradstreet Holdings Inc Earnings Call
Okay.
Thank you for standing by this is the conference operator, welcome to the Dun and Bradstreet of second quarter 2021earnings call.
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I would now like to turn the conference over to debt the Nic map Mccann Treasurer, and senior Vice President Investor Relations and corporate G&A. Please go ahead.
Thank you and good morning, everyone and thank you for joining us from Dun <unk> Bradstreet's financial results conference call for the second quarter ending June 30th 2021 on the call today, we have done on Bradstreet CEO, Anthony Jabbour, and CFO Bryan Hipsher before we begin allow me to provide a disclaimer regarding forward looking statements. This call on keeping the including the Q&A portion.
On the call May include forward looking statements related to the expected future results of our company and are therefore of forward looking statements. Our actual results may differ materially from our projections due to a 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.
The non-GAAP financial measures additional information, including reconciliation between non-GAAP financial information did of got financial information is provided in the press release and supplemental slide presentation. This conference call will be available for replay via webcast through Dun and Bradstreet, the Investor Relations website at Investor Day, 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 second quarter earnings call.
The second quarter was another quarter of solid progress as revenues grew 24, 4% and EBITA grew 12, 6%.
Organic revenue growth accelerated to 2.8% fueled by low double digit growth in international and low single digit growth in North America.
The sequential improvement in organic growth was driven by new logo wins increased cross sell continued strong retention and the lessening of the previously communicated headwinds.
We also saw strong sales in the building pipeline for our new solutions, both domestically and internationally as businesses look to leverage more of our solutions to support their post pandemic operating models.
We expect to see of continued ramp in the third and fourth quarters as we execute against our near term growth strategy and have continued to strengthen the business for the long term with new talent data assets partnerships and solutions that continue to bolster our offerings and provide our clients differentiated insights that help them grow revenues.
Lower operating costs and improve the risk and compliance profile.
Before we jump into a normal business and operations update I wanted to touch on the few announcements we made in the quarter.
Back in May we welcomed 2 new leaders Ginnie Gomez and Mike Mannose, who joined our team in key roles and already having a significant impact on the company.
I've done the Bradstreet's Chief product Officer, Ginny comes to us from Trans Union and has over 20 years of experience driving innovation and leading product organizations.
She manages the overall product strategy for our global portfolio and is focused on driving rapid innovation and developing solutions at scale that enable our client success.
Mike as our Chief Technology Officer, and brings more than 25 years of experience and deep technological insight to the Dun <unk> bradstreet.
Mike joined Us from Pfizer and brings with him of proven track record of modernizing and scaling existing platforms for companies such as the O L. Microsoft and first data.
We also established a new location in Jacksonville, Florida, which will serve as our global headquarters.
We look to leverage the strategic location to help us to continue to innovate and grow as well as benefit from substantial state and local financial incentives that made this move an easy 1.
And finally before I move on to the business update I wanted to share a very special milestone here at Dun <unk> Bradstreet.
On July 20th we celebrated our 118th year anniversary, which is a testament to the long standing value D&B has and continues to provide the businesses throughout the world.
Now, let's move on to our business update.
On our first quarter call, we discussed our key priorities for 2021, which are the continued to grow our share of wallet with our strategic customers to approach of monetize the SMB space and new and innovative ways.
The launch new products domestically to localize, new and existing products globally and.
And lastly to integrate the business the acquisition.
Throughout the second quarter. Our team has made great strides towards executing on these priorities and I'll now share highlights from the quarter before I turn the call over to Brian for a more in depth 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, which included renewal rates at near 100% and the addition of some exciting new logos.
In North America, we signed a multiyear deal with Ceridian, a global human capital management software company for analytics studio in various sales and marketing products, including the new ramp up AVX and digital targeting solutions.
So iridium was looking to support their growth strategies and in particular, the ability to connect and activate the offline view of customers and prospects through digital insights.
They're also focused on strategic global expansion, leveraging our world base filed to better understand addressable markets by region to support growth in target markets.
Leveraging the investments we've made of non traditional data and our sales and marketing solutions, we signed additional business with 1 of the largest online retailers, who will be using our data and analytics to support their efforts and growing of new business line that needed help targeting specific retailers and high foot traffic areas such as airports.
In the sports stadiums.
Deloitte Touche Tohmatsu also entered into a multi year agreement with us to assist with their client engagement customer relationship management and overall master data program there.
The global data management team was tasked with creating a global master data warehouse that could be used across all markets and will be the central hub for global applications as well as local markets. The team selected our D&B direct plus API to be the central point for company information hierarchies and connections, including our full family true.
<unk>.
Along with the Master data use case, they're also using our insights to inform their investment to drive a more diverse workforce pipeline and in particular underrepresented minorities to the public accounting profession.
We'll deliver on microsite with downloadable learning modules and coupled with the multichannel marketing campaign.
Proud to support the Lloyd and ensuring the success of this fantastic program.
We also signed the deal with ventral and online networking platform, who will be using a comprehensive BTB data as well as their insights and AI driven platforms to enable their clients to accelerate global opportunity and innovation in.
In addition to the direct sale. We're also partnering with the intro on the new platform to enhance the supply chain ecosystem through enhanced access to smbs.
Turning to our international segment, we're making strong progress on the global 500 account program, we rolled out in the first quarter demonstrated by several wins in the second quarter.
1 of these was the significant expansion of our long standing relationship with Barclays through a multi year enterprise wide agreement supporting the global Master client data and insight strategy.
Barclays will be using Dnb's comprehensive global data cloud for a multitude of the use cases.
Globally, consistent and identifiable by the Dun's number our data will enable a broader and deeper view of every customer and prospect from intent data the financial and regulatory information.
Barclays was looking for an end to end global solution and we stood alone in our ability to deliver such an outcome.
And the A&P Europe, our newly acquired business. The region, we signed several deals with global 500 companies as our strategy to become the provider of choice in Central Europe has begun to bear fruit.
Bayer of life Science company with more than 150 year history and core competencies in the areas of health care and agriculture signed a 3 year global contract for Dnb data by of multiple delivery platforms.
This deal will support Bayer and organizing and managing the third party records across the various software platforms.
Deutsche Bank signed a new contract to use our local German database to support their sales efforts after the various data and usability comparisons they chose the M. B over the previous provider a large international competitor.
We continue to build and grow relationships with global 500 companies.
At the end of the second quarter nearly 3 quarters of the global 500 companies are clients of ours.
Significant increase from year end 2019 that was closer to 2 thirds.
While we continue to deepen relationships with our strategic clients. We're also seeing positive trends in the small and mid sized markets.
As it relates to our second priority addressing the SMB market in new and innovative ways. We started with the build out of our D&B product and data marketplaces the day.
The NV product marketplace was created to provide a curated set of our solutions as well as partner solutions designed for small business.
And now has 20 partners the newest of which our bricks and Lendingtree along with other major brands, such as Microsoft Comcast business, AT&T business Mastercard and Symantec.
The dnb data marketplace, where users can now buy a broader range of pre matched independent dataset from alternative data providers now includes datasets, such as commercial real estate job postings shipping health care and U S agricultural data.
We currently have 36 partner dataset as of the end of the second quarter up from 22 at the end of the first quarter.
Now turning to our E Commerce strategy, we continue to see more and more attention in our digital assets in the second quarter. We saw of Dnb Dotcom site visits continue to grow with over 46 million visits in Q2.
And 84% increase over prior Q2.
Well the vast majority of the customers are coming for credit signal monitoring services. We're also beginning to see increased demand for our sales and marketing solutions.
Overall, we hit more than $2 million in E. Commerce sales in Q2 up 73% from prior year quarter, and our forecasting sales to double again by the end of the third quarter.
This combined with our D&B marketplaces are expected to drive nearly $10 million in incremental annual recurring revenues by year end and we look forward to updating you in the coming quarters on our progress.
Our third priority is launching new products and use cases.
Last quarter, we announced D&B wrap up a be ex a solution that simplifies and automates marketing and sales workflows for our clients.
Since its launch we closed 6 deals with the ACB of nearly $2 million and with the strong and growing pipeline as awareness spreads and further enhancements are added to the platform.
We're excited to now take the Rev up capabilities to the SMB marketplace with the launch of Dnb wrap up now.
Wrap up now brings enterprise digital marketing technology once only available to large sized businesses to smbs. So that they can find and engage their best customers without having the cost and complexity of an in house analytics Department.
We're also bolstering our sales and marketing solutions through our alliance with <unk>. The global we are bringing together trusted consumer and private business data into a single highly secured data cloud that contains profiles on over 220 million individuals in the United States.
The data cloud combined data business to consumer data, including individuals' intent behavioral transactional and location based signals with Dun <unk> bradstreet's business to business data, including employer of data such as company's titles and emails the power of new market sector, we referred to.
As a business the person or be the pea, which will enable businesses to unlock the buying power of decision makers through this uniquely combined dataset offering of true 360 degree view of an individual and the ability to reach them through both business and consumer based activation channels.
And last but not least I'm excited to announce the launch of Dnb, ESG intelligence, which delivers the standardized score and analytics built from the Dun <unk> Bradstreet data cloud and establish sustainability standards.
D&B ESG intelligence provides extensive coverage of 9 million U S private companies and all 6000 U S public companies are.
Our ESG rankings cover 12, ESG themes and 32 topics specific categories to help our clients best understand specific risks and opportunities.
We believe this is another great example of how we can leverage the power of our day to cloud and the dun's number to create consistent and comprehensive rankings for businesses of all sizes throughout the globe.
This deep coverage and break down the specific ESG topic rankings helps compliance of procurement teams track and report on specific ESG factors that increased growth and reduce risk.
Similar to how paid ex established the the fact of commercial credit score, we see the opportunity to set of standardized commercial ESG score that'll help underwriters procurement organizations investors and many other areas quickly analyze inaction, new customers vendors suppliers investment and partners and an.
Or at an efficient manner.
In our international segment, we continue to focus on rolling out localized solutions across our owned and partner markets.
In the second quarter, we delivered 14 product launches across Europe, greater China, and the worldwide network partner markets, including important new solutions, Dnb finance analytics, D&B risk analytics and data blocks. We also expanded distribution of Dnb on board and direct plus across the slew of worldwide.
Network partners and.
And Dnb Europe, we continue to see good traction from existing D&B products like Dnb credit.
Direct plus and D&B on board, while also introducing new products, including Dnb finance analytics and risk analytics and the Nordic markets opt.
Optimizer in the Nordics and southeast Europe, and data blocks and Central Europe. These.
These solutions will enable us to execute our strategy of migrating customers off of legacy offerings on to modern digital platforms as well as attract new customers.
These solutions along with the many we have discussed over the past few quarters are allowing us to create a significant amount of new product revenue.
For North America, and international combined the new product vitality index or the percentage of revenues from new products was 6% in Q2.
For context, we began measuring the stat in Q1 of 2019, and it's up already from 2% in Q2 of 2019.
We will continue to drive more and more new solutions into our markets around the world and look forward to updating you on our progress through the coming quarters.
Turning to business I'm pleased to report that integration is going as planned with top line performance in line and synergy realization coming in slightly ahead of expectations.
We've executed more than $25 million in annualized savings from actions taken through Q2.
Savings are being driven by the consolidation of functions across our global team as well as executing a broad real estate strategy, including vacating of reducing the footprint of 14 office locations.
On the business the operation side, we implemented a new global data framework across D&B Europe markets to ensure consistent monitoring and enhancement of database breadth and quality.
We have already made key data improvements, including the failure scores in the Nordic markets in Germany growing the database of non registered companies in central Europe, and increasing financial statement data in Switzerland. These initiatives are intended to improve retention to enhance customer satisfaction as well as demand for data from our global customers.
Overall I am pleased with our continued transformation and I'm excited about the progress we continue to make 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 second quarter, 2021 result, and our outlook for the remainder of the year.
On a GAAP basis second quarter revenues were $521 million, an increase of 24% or 23% 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 $2 million.
The net loss for the second quarter on a GAAP basis was $52 million or a diluted loss per share of 12% compared to a net loss of $208 million for the prior year quarter. The improvement was primarily driven by higher prior year expenses related to the retirement of debt as part of the initial public.
Lower interest expense.
Improvements in operating income driven by lower equity based compensation related the stock options granted in the prior year quarter and the net impact of bids node acquisition.
This was partially offset by higher tax provision recognized in the current year of largely driven by changes in the state apportionment and the enactment of the U K tax rate increase.
Turning to slide 2 I'll now discuss our adjusted results for the second quarter.
Second quarter adjusted revenues for the total company of where $521 million, an increase of 24, 4% or 23, 2% on a constant currency basis. This year over year increase included $19.9 percentage points from the business acquisition and a half of point.
From the impact of lower deferred revenue purchase accounting adjustments revenues on an organic constant currency basis were up 2.8% driven by double digit growth on our international segment as well as single digit growth in North America.
Second quarter adjusted EBITDA for the total company was $198 million.
An increase of $22 million or 13%, excluding the net impact of the <unk> acquisition EBITDA increased slightly due to revenue growth, partially offset by increased data and data processing costs higher commission and higher public company costs.
Second quarter adjusted EBITDA margin was 38, 1%, excluding the net impact of business EBITDA margin was 48%.
<unk> quarter adjusted net income was the $108 million or adjusted diluting earnings per share of <unk> 25 cents, an increase from $81 million in the second quarter of 2020.
Turning now to slide 3 I will.
Now I'll discuss the results for our 2 segments, North America, and International and North America revenues for the second quarter were $357 million, an increase of approximately 1% from the prior year, excluding the positive impact of foreign exchange and the negative impact of the <unk> acquisition North America organic revenue increased 3.
$2 million or 1%.
And financing risk, we've continued to see strength of our risk solutions and solid growth on our finance solutions attributable to new business and higher customer spend.
The growth in these solutions was partially offset by $1 million of revenue elimination from the <unk> transaction.
For sales and marketing revenue was $158 million, a decrease of $3.1 million or 2% while data sales had another solid quarter. The overall growth in sales and marketing was offset by $4 million from the data Dotcom legacy partnership wind down.
North America second quarter, adjusted EBITDA was $167 million, a decrease of $3 million or 2%, primarily due to higher data processing costs and higher commission, partially offset by revenue growth and ongoing cost management adjusted EBITDA margin for North America was 46, 9%.
Turning now to slide 4 in our international segment second quarter revenues increased 147% to $164 million or 137% on a constant currency basis, primarily driven by the net impact from the acquisition of business and strong growth in both finance and risk.
In sales and marketing solutions, excluding the net impact of business the international revenue increased approximately 13%.
Finance on risks revenues were $104 million, an increase of 92% or an increase of 85% on a constant currency basis.
Primarily due to the business the acquisition, excluding the net impact of the business revenue grew 10% with growth across all markets, including higher revenue from worldwide network of alliances due to higher cross border data fees and royalties and higher revenues from our U K market attributable to growth in our finance solutions.
Sales and marketing revenues were $60 million, an increase of 383% or an increase of 366% on a constant currency basis, primarily attributable to the business acquisition, excluding the net impact of business revenue grew 22% due to higher revenues from API offerings.
Our U K and greater China markets and increased revenue from our worldwide network partners product royalties.
Yeah.
Second quarter International adjusted EBITDA of $43 million increased $23 million or of 113% versus second quarter of 2020, primarily due to the net impact of the business acquisition as well as revenue growth across our international businesses, partially offset by higher data costs adjusted.
EBITDA margin was 26% or 28, 9% excluding business.
Turning to slide 5 I'll now walk through our capital structure at the end of June 32021, we had cash and cash equivalents of $178 million, which when combined with the bulk capacity of our $850 million revolving line of credit due 2025 represents total liquidity of approximately.
The $1 billion.
As of June 30 of 2021 total debt principal was $3660.7 million and our leverage ratio was $4.7 on a gross basis and 4.4 on a net basis. The credit facility of senior secured net leverage ratio of 3.6.
Turning now to slide 6 I'll now walk through our outlook for full year of 2021 adjusted revenues are expected to remain in the range of $2140.5 million to 2001 on the $75 million, an increase of approximately $23, 525% compared to full year 2020 adjusted <unk>.
As of $1730.9 million.
Revenue was on an organic constant currency basis, and excluding the net impact of lower deferred revenues are expected to increase between 3 to 4.5%.
Adjusted EBITDA is expected to be in the range of $840 to $855 million, an increase of 18% to 20% and adjusted EPS is expected to be at the high end of the range of $1.2 to $1.6.
Additional modeling details underlying our outlook are as follows we expect interest expense to be $200 million to $210 million depreciation and amortization expense of approximately $90 million, excluding incremental depreciation and amortization expense, resulting from purchase accounting adjusted.
The adjusted effective tax rate of approximately 24% weighted average shares outstanding of approximately $430 million and finally for Capex, we are increasing our guidance from approximately $160 million to approximately $237 million to account for the $77 million purchase of our new global headquarters building in <unk>.
Jackson loans.
Overall, we continue to see the year shaping up as previously discussed with organic revenue growth continued to accelerate throughout the year with Q3 expected to be a bit below the midpoint of our range in Q4 to be at the high end of the range.
And finally as previously discussed we continue to expect adjusted EBITDA for the third quarter to be below the low end of the guidance growth range with a similar growth rate as of Q2 due to timing of certain expenses related to data acquisition and sales and marketing initiatives. We expect the fourth quarter to be above the high end of the guidance growth range.
<unk>.
Overall, we are pleased with our performance through the first half of 2021 and look forward to continuing the strong momentum we are building in both our North America and international segments.
With that we're now happy to open the call for questions. Operator will you. Please open up the line for Q&A.
Yes, we will now begin the question and answer session to join the question queue. You May Press Star then 1 on your telephone keypad, you'll hear a tone of acknowledging your request if youre using a speakerphone. Please pick up your handset before pressing any keys to withdraw. Your question. Please press Star then channel, we will pause for a moment of Congress.
Thank you.
The first question is from Kevin Mcveigh from Credit Suisse. Please go ahead.
Great. Thanks, so much and congratulation as of results.
Hey, Brian or Anthony.
I. Thank you again it goes it was pretty clear in terms of the guidance for Q3 Q4, but just to confirm Brian is it sure would be for Q3, a little bit below 3% in Q4, a little bit above 4 and a half is that the the best way to think about it and if it is maybe some of the puts and takes the get get to there.
Yeah, Kevin if we when we talked about at the range of that 3 to 4.5%. So it will be a little bit below the midpoint of that range.
The fact that could be of yeah, exactly about 30% from that perspective.
A couple of things that feed into that right is we add $4 million of the data dotcom headwind in Q2 that go through about 2 in the third quarter and then 1 on the fourth quarter. So the headwinds of really behind us that we previously communicated and then the other piece is that you know as previous sales out of the previous price increases.
Yes.
As the new product innovation starts to flow through that's where you see those building blocks back into the third quarter of the fourth quarter and really starts to run rate into 2022.
Super Helpful. And then just real quick.
Just retention in the quarter on how we're thinking about that in the back half of the year.
Yes retention continues to be strong.
And we see a pretty consistent.
Towards the end of the year as well Kevin.
Awesome. Thank you all.
Thank you.
The next question is from Gary Bisbee from Bank of America Merrill Lynch. Please go ahead.
Hey, guys good morning, maybe.
Maybe if I could start on North America revenue I heard you of the $4 million from day to dot com, but even without that.
Not a lot of real acceleration, yet and yet your prepared remarks, it sounds like a lot of optimism around some of the new products. What is it just a matter of timing at this point on what are the keys to the.
Being better more consistent growth from.
The North America segment going forward.
Sure.
So when we look you know going back to the IPO and talked about what we saw we saw that you know in the international marketplace. There was a a faster ramp that was gonna com, taking our products localizing them.
In those markets and we're seeing that and in North America, we knew that there would be new product creation that would be.
The required to continue to have that growth follow.
And as you've seen in the prepared remarks I'm sure we'll talk about today as well there's been a lot of new product development that we're bringing to market.
Lots of initiatives and so we see that in our.
Expectation, obviously, the North America will continue to grow as the year progresses.
Okay, and then just on margin Brian I heard you say, if I counted 5 times higher data costs.
As of recent margin, even without the acquisition work.
We're down in the quarter can you just explain exactly what's going on there is that a change from what you've been seeing or is that something thats been happening.
And if we take a more medium term.
Look at margin any change in the prior commentary around around the expansion that you expect going forward. Thank you.
No Gary from that perspective, we don't expect to have any change from that.
Prior communication, we really knew in the second and third quarter. There was just from timing of some new assets that we have brought on that were flowing through from an expense standpoint, and then as you know once it flows into the data cloud the contribution margins right of as we sell are very very high and so we expect the expansion to continue the from.
And that from that perspective.
Outside of that you know again, it's really just continuing to accelerate the top line right and see that flow through and then we also have other kind of continuous improvement programs here that we're working through.
Looking at third party spend and shifting that the in the house, where we can pick up some arbitrage from that perspective, so nothing really changed from that perspective. Gary. This is really just kind of how the quarters laid out this year versus prior.
And just the last point was that we had about $4 million of public company cost in the second quarter. When we launched last year, we picked up an increase in D&O insurance and then the ESB pay match. So those are just the pieces that are in there of that kind of drove the.
That variance from.
Organic perspective.
Okay. Thank you.
The next question.
Jen is from Manav Patnaik from Barclays. Please go ahead.
Thank you.
My first question was you know I guess you get moving.
For the Doctor Jackson.
The left the company.
Perhaps you're taking the ball at day to day.
So I was just curious if anything changes because of those.
The change is bad.
Or we should think of that.
Yes sure.
So with the headquarter of change and I'll, certainly have more time to put towards Dun and bradstreet less time traveling.
So that was a bonus of in addition to the financial incentives that we've got in terms of moving our headquarters and giving us a great pool of talent to go after so that was a key.
A key part of it and also the reorganization that we have with our segment presidents who are very strong the new talent that we brought in.
The real good.
About how we're set up going forward.
Okay got it and then just on NPI metric you talked about 6%.
Can you just Uh huh.
Outside of what the definition there is that the new products released.
What timeframe the perhaps just.
Anecdotally.
The pipeline, there and how it could help.
2022 of acceleration.
Sure.
I'd say a couple of things of that if we talk about it.
The protest talking about before is it's important for us to be in.
Innovative to drive integration and to do it all with the urgency right and it's always the cow.
Of the Formula.
Our success and so we've created a lot of innovation that shows up in this product vitality index.
On.
We've also built in these products into our suites, so theyre not transactional we're not selling of 1 off.
But it's more of how do we build it into the suite integrated where it's easier for our clients to buy and consume from us and so that's been the key focus for us and obviously.
Doing it all with urgency and so as we look at some of the new products that we.
Both of it was in the SMB space, we had the e-commerce capability, our product marketplace, our data marketplace, a wrap up initiatives.
Our ESG intelligence capability, right and putting them within the suites of solutions. So ESG inside of our risk analytics suite cyber and the risk analytics suite receivable intelligence finance analytics.
Analytics et cetera.
Sales and marketing.
So for US it's not perspective, that's the engine and what I'd say right now is we've got a great.
The momentum going in the product creation of the integration creation, the flywheel spinning and we're all leaning on it spending it faster and faster.
And our clients have been very helpful. We've had great client advisory.
The boards.
We've leaned on really changed the dialogue with our clients, how we approach them, how we bring the men and and.
And it's proven to be very successful as we come out with these new capabilities. We have built in set of clients to evangelize, the new capabilities and help us grow them on the market.
Alright, thank you.
Thank you.
The next question is from Hamzah on Missouri from Jefferies. Please go ahead.
Hey, good morning, Thank you.
I was hoping maybe you could talk about the competitive dynamic on the sales and marketing side. You know specifically if you think that there's risk of the new entrants is there anything in your product portfolio there.
That's not there or that you can improve from a technology perspective.
Just give us any sense of that would be helpful.
Sure.
That 1 is there.
There are more of is hey, you know discrete competitors in that space versus the finance and risk space.
But we've got a great strategy.
Place with our building out our marketing technology stack and in sales technology stack and are going to market continuing to look at ways that we can bring in more and more capability. So we're excited with what we've done.
Clearly with all of our Rev up initiatives.
Seeing great traction and excitement there we're excited with our partnership with the date of global where we're combining consumer data and business data really creating a business to person offering and finding ways.
To leverage that.
For our clients.
But also even in things such as the ESG example, that we talked about of new product offering.
That connects to it as well if you think about it.
Had 1 of our first clients as a large technology company.
We're looking at how they could use ESG data to target prospects, who maybe had low ESG scores and this would help them because they've got an environmentally friendly hardware that theyre selling or those that have high ESG scores and they see the importance of and they want to maintain that so what we're doing internally we're looking at every.
Capability, we have advantage, we have how to integrate it into our suite of solutions and go to market and so.
That's really what our approaches hamzah.
Gotcha.
And then just.
Well you know I know you talked about organic growth Q.
Q3, Q4 of them this year, but maybe if you could just touch on you know your your confidence level to do consistent mid single digit plus organic growth is at the heart of your ways that 2 years away just any sense of sort of timeframe and how achievable that is.
Now we do have confidence homes of like we've got the game plan that we set out that we shared.
With all of you a year ago, and we've been executing against it.
Of the commitments that we make we're working very hard to deliver on and we have confidence in our team confidence in our approach and we have confidence.
Before I get into next year's guidance, obviously, but as its building its building in a very solid.
Very solid foundation.
Great. Thank you so much.
Thank you Hamzah.
The next question is from Ashish <unk> from RBC capital markets. Please go ahead.
Thanks for taking my question.
I just wanted to focus more on the cross sell and an ability to get greater share of wallet with strategic customers. I was just wondering have you seen the lock more traction on the cross sell opportunity. Obviously this can compliance has been strong on finance side.
But also can you talk about opportunity to sell more sales and marketing product and do you have enough customer base. Thanks.
Yeah sure no we absolutely do see the opportunity.
The 2 cross sell more it's.
And part of the I think my answer too.
I think the last question.
On.
Doing it by integrate getting it more into the DNA of our company right. So having the capabilities built into the suites, making it easier for us to sell and deliver to our clients.
But these the actually the example, I just gave but that large technology company on the ESG side.
It's a it's a risk analytic capability that also has benefits in the sales and marketing side. So the conversations that we're having with our clients are really across the the use cases.
That will help them grow the revenue is lower their expenses and stay regulatory compliant.
We do have confidence that we will continue to cross sell continues to have success that way.
We've got the flywheel spinning we're going to keep spending at faster and faster, creating more products and what we're seeing is.
As we create more capability, we've got great client relationships.
And a great uniqueness in our data and our dun's number to bring it all together.
On a way that it's easy for our clients the consumer that's differentiating so long winded answer Ashish, but yes, we've got confidence that we'll continue to cross sell.
That's very helpful color and maybe just a quick question on <unk>. It looks like the integration is going on or ahead of plan and you've talked about some pretty good <unk>.
New products of new wins in that marketplace. My question was more on the sunsetting of $50 million of revenues end up leasing of <unk>.
<unk> products.
Just wondering any progress on that strength.
And do you foresee any challenges during the transition.
Yeah, I'll start that the maybe Brian can chime in and we're very pleased with the progress that we've been making there and I thinking of measuring and.
And our product vitality.
The score that we gave did not include business 1 of the worldwide network partners for clarity.
But I think as we look at Theres no that would increase the number of our product fatality mean theirs they.
They were starting down that.
Journey prior to us acquiring them and certainly as we bring our slew of capabilities to that client base, we will see a lot more but.
It's really been better than we had anticipated from.
On the sunsetting of.
And.
But I don't know if there's anything you'd want to add to that yeah Ashish.
Sure sure I mean, we started to sunset some of the products of migrate them over there was a few things that were a little bit lower hanging fruit from that perspective, the technology and product organizations are very focused on.
Filling on any kind of localized gaps that we would need to our current product set to continue rolling out, but as Anthony said not only are the integration and the synergy is going well, but revenue is coming in a little bit better than we had anticipated and that's an on net number including the wind down of those products and so it was always.
More of a transition from legacy product of D&B product versus kind of of sundown, where its going to zero.
That's really helpful color. Thank you very much.
The next question is from Kyle Peterson from Needham. Please go ahead.
Great. Good morning, guys. Thanks for taking the questions.
I wanted to start on the business I know you guys mentioned that the synergies and integration kind of going a little bit ahead of schedule wanted to see like how what how we should think about the timing on I think you can get the originally laid out about 40 million in synergies from that deal when should we see the rest of those starting the roll through and do you think there could be any of.
Upside to those original targets.
Yeah. So what we've talked about for this year of right was youre going to see a lot of the execution of occurring but we also have some things that with any kind of acquisition that you shore up in terms of infrastructure cyber security et cetera from that perspective, and so those are more kind of 1 time investments that occur.
In year, 1 and so we expect to see most of the flow through of the synergies.
Coming through the P&L in 2022.
In terms of executing against the 40.
And so again, the same kind of playbook that we've applied multiple times.
The kind of back office and bureaucracy of redundant functions are first to go and then as we continue to progress the that'll be hand in hand in hand with the.
Revenue of that Ashish, just mentioned Dolby products, and technology stacks, and datasets et cetera that wind down from that perspective, and so 40 of something that certainly is a good chunk of of expenses and a solid number of but we'll look to continue to progress beyond that as well.
We get deeper and deeper into the organization.
Great. That's helpful. And then just a quick follow up on on the balance sheet and kind of use of of <unk>.
Capital.
Just wanted to see what your priorities were obviously in.
The leverage has been kind of walking down here in recent quarters.
And I know you have some higher cost debt on the balance sheet would you look at ways to potentially kind of keep walking down that leverage and maybe reduce the interest burden moving forward.
Yeah, So I'll start with the interest burden and maybe the debt stack and then turn it the Anthony first of all on capital allocation components.
Certainly so both of the secured and unsecured right have the non call that runs through February of 2022 and look those are at 6 out of 7.5 and 10 in the quarter, so pretty expensive piece of the paper.
The timing and kind of what the annualized interest expense start to converge at that point. So certainly we would look to reduce the interest expense burden just.
Just naturally through refinancing those especially with the.
You said the strength that we've created the momentum that we've created really post IPO from that perspective, and so we will certainly look to.
To continue the deleverage continue to lower the interest expense burden and the.
Maybe Anthony a few comments on just overall allocation, yes, I mean at the high level of the allocation strategies of the same that we're going to focus on internal development, we see a lot of opportunity there low risk great opportunity in that but also in the M&A space and looking for opportunities for us to acquire a high quality companies and we've been.
I would say.
The active looking at a number and and walking away from them.
So we've got a.
I'd say, great ability terms of.
Analyzing companies out there on seeing if they'd be ultimately good fits for us and for our clients and we're going to continue looking to see if there are some good fits that way, but that's really the.
The focus on the priority for us from the capital perspective.
Alright, that's all really helpful. Thanks, guys.
Thank you.
The next question is from Samir <unk> from Deutsche Bank. Please go ahead.
Hi, Thanks for taking my question, So I had the I.
I was just curious about the ESG opportunity you you've talked about is.
Is it possible to break out the current contribution from that and the second is what kind of Tam you're targeting and probably a follow up to that how do you differentiate against the larger players in the space say like the S&P's and the MSCI is of the world.
Sure.
So in terms of revenue, we just launched the product in Q2 and.
I'd say, we're getting are bearing with it so I'm not comfortable giving.
Yes.
On the rest of your kind of revenue contribution from it.
And we're conservative by nature, I guess that way, but there's a very large tam and again <unk>, our I always find them subjective, but but I'd say the Tam is large enough that it won't limit what our growth could be in the space.
If this catches like wildfire.
We think we've got a again, we've talked often about the power of the dun's number the the power of our rich proprietary company level data assets.
And what we're doing here and so what we are.
I would say, how we're different than some of our competitors is.
We've got very specific company data so we're not looking at a macroeconomic.
Trends in regions and sizes of companies and.
And running models against what the ESG scores might be but having a more specific.
The focus on it.
The specific companies data, what we have from like set of proprietary data of public information about them.
The matched against the Dun's number from other data we require.
In the ESG space, but bringing it altogether and getting a very analytical specific score for our clients and again working with them to see how can we help them improve their ESG ratings through that and there are a lot of great competitors in the space I think everyone's kind of comes at it in a different way in terms of maybe the building market into.
<unk> for example.
Which is which has good traction underway as well ours is.
A little different in terms of working with our corporates and financial institutions, we're seeing a lot of different use cases right now.
And we've got the ability to really deliver it in a number of different ways through back through API through the integration into our analytics suites of solutions. So.
I hope that gives you.
Enough color in terms of where we see we have an advantage.
With the data and our analytic capability and where some of the competitors are with the traction they already have underway on the approach that they're taking.
Certainly.
Look forward to the future, where we've got a great paid ex score.
That's established as the industry leader.
Aspire to have an ESG score that's got similar.
Similar.
The capabilities and.
And has looked at in the same way in the market.
Got it thank you.
And just the just a quick 1 of the Serbian.
Partnership is it the.
Is it more like a vertical lives.
Payroll oriented.
The relationship you have there or is it more of a horizontal I'm just curious if there are other other players you can go after with the debt.
With that offering other the other software space.
Yeah no there absolutely are other players that we can go after in the space and what we're doing for Ceridian.
Yeah.
Would be very applicable for others in the space.
Got it thank you.
Thank you.
The next question is from Pete Christiansen from Citibank. Please go ahead.
Good morning, Thank you for the question.
I know, Brian called out earlier, some benefits from from new business formation and some of the stats at least in the U S have been quite extraordinary.
In recent months up to 50 on a percent of normal growth rates I was just wondering how do you think about your SMB positioning the the go to market positioning.
2.2 to capture this opportunity in and perhaps if you see any opportunities to to drive <unk> sales.
Sales cycle improvements in this area. Thank you.
Yeah. It's good question Pete on the SMB space. So it gets a broad 1 it's 1 where we shared we've got.
The most competition as we look at.
Our company scores versus consumer Credit Bureau report on.
1 of of.
Proprietary of a business small business.
But it's 1 where.
We feel we are definitely on the right track in terms of attacking that market leveraging.
The e-commerce digital channels, leveraging all of the assets that we have that can really make a difference and we're not done there's other initiatives. We've got in the hopper in that space. So.
What I hope you see from US is we're not taking the same old same old and hoping for a different outcome, we're being very aggressive and the rollout of capabilities.
On that we're creating we're working with our clients understanding what hits, the sweet spot and and going after it so.
Probably the best way to describe where we are with our F&B is a very exciting inflection point I think in that business.
Some innovative things that are coming to us like we said many times before the.
The come to get the dun's number coming to improve their credit coming because of large vendor needs to be vetted as a supplier through us.
And so we're taking the advantages that we have.
And leveraging them and and Theres more to come in that space as well.
That's great thanks, great great color.
Thank you Pete.
The next question is from Andrew Steinman from Jpmorgan. Please go ahead Pat.
Hi, Thanks, It's Andrew could you talk about change of the CTO with my.
Should we expect any changes on D&B backend technology kind of transformation pathway and specifically what percentage of D&B is computing is John over the public cloud already.
So Andrew in terms of Chief product officer from of change perspective, the only change I would highlight is speed right that we're going to go faster and faster and so as we think kind of the initial phases of our transformation was putting us in the position.
We talked about acquiring more data improving the quality of the data on the technology.
And our analytics and so right now from a product perspective, it's really building on those improvements in the earlier part of the transformation.
2 to launch more capabilities to have the more integrated et cetera, and in similar obviously you know the technology plays a key role in the creation of that as well.
From a.
From a cloud perspective.
We've.
Virtualized a lot of our environment, we're at we're pretty close to where we think we'll ultimately.
Land it was never to be 100%.
In the cloud, but to have a majority of strong majority of our systems.
Virtualized them on where there right now.
Okay. Thank you.
Thank you.
The next question is from George Tong from Goldman Sachs. Please go ahead.
Hi, Thanks, good morning.
The organic constant currency revenue growth stepped up to 3.3% in the quarter. What actions do you have the team and the remainder of the year to continue the upward trajectory in organic constant currency revenue growth.
Yeah, George I think it's the things that we've really been kind of action from that perspective, So certainly getting these.
Transient headwinds behind US is helpful right.
Our continued focus on increasing retention right Anthony likes to call on closing the back door is really important from that perspective, because again, we want to continue to take steps forward in those steps forward are the price increases right and so as we've brought in more and more multiyear contracts as as the renewals come up from.
That perspective.
We've done a lot of the elasticity studies and so certainly from that perspective, we're starting to see the contribution from price.
On the cross sell of that Anthony talked about.
Earlier from that perspective again is another leg and then these new products that we're rolling out and starting to see that vitality index.
Continued to expand from that perspective, that's really what is.
Taking us from that kind of 3 ish percent right and into the back half of the year accelerating into that more of kind of.
Higher end of our growth range and starting to push into of Tom's asked earlier that mid single digits. So again, it's a lot of water falling in the stacking because again with sales.
In essence, starting to increase from that perspective, and a lot of our sales are predicated on subscription.
The sales turning into revenue right and then the revenue starts to the fact that on top of the each other so.
That's really what we have to keep doing.
Okay got it very helpful. And then just quickly on <unk>, how quickly is theres no growing currently and how much of business revenue of your currently including the in your full year guide.
So from from a business perspective, Georgia grew about 3% OCC in the second quarter.
And then if you look at the overall guide I think we've talked about the.
The difference between the OCC and the total right is really the fill on from that perspective. So if you kind of look at the low and high on the range. We had talked about roughly like I think 19 percentage points.
Got it thank you.
Okay.
As a reminder of the star 1 to ask the question.
Yeah.
Yeah.
This concludes the question answer session I would like to turn the conference back over to Anthony Jabbour for any closing remarks.
Thank you in closing I'd like to thank my Dnb colleagues for their commitment and especially they are part of our 180 years in business.
Also like to thank our great clients for their partnership and their guidance. Thank you for your time today Hope you have a great rest of your day.
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