Q4 2023 Dun & Bradstreet Holdings Inc Earnings Call

Operator: Ladies and gentlemen, good morning and welcome to the Dun & Bradstreet 4th Quarter and Full Year 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode.

Ladies and gentlemen, good morning, and welcome to the Dun and Bradstreet fourth quarter and full year 2023 earnings conference call.

At this time all participants are in a listen only mode.

Operator: A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star and zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Sean Anthony, VP, Corporate, FP&A, and Investor Relations. Please go ahead, sir.

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.

As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host Mr. Shawn Anthony VP corporate F BNA and Investor Relations. Please go ahead Sir.

Yes.

Sean Anthony: Thank you. Good morning, everyone. And thank you for joining us for Dun & Bradstreet's Financial Results Conference call for the fourth quarter and full year ending December 31, 2023. On the call today, we have Dun & Bradstreet CEO Anthony Jabbour and CFO Brian Hipson. Before we begin, allow me to provide a disclaimer regarding forward-looking statements. This call, including the Q&A portion of the call, may include forward-looking statements related to the expected future results for our company and are therefore forward-looking statements. Our actual results may differ materially from our projections due to a number of risks and uncertainties.

Shawn Anthony: Thank you and good morning, everyone and thank you for joining us for Dun <unk> Bradstreet's financial results conference call for the fourth quarter and full year ending December 31 2023.

On the call today, we have done and Bradstreet CEO, Anthony Jabbour, and CFO Bryan Hipsher.

Speaker Change: Before we begin allow me to provide a disclaimer regarding forward looking statements this call, including the Q&A portion of the call May include forward looking statements related to the expected future results for our company and are therefore forward looking statements. Our actual results may differ materially from our projections due to a number of risk.

Speaker Change: And uncertainties the risks and uncertainties of forward looking statements are subject to are described in our earnings release and other SEC filings.

Sean Anthony: The risks and uncertainties that forward-looking statements are subject to are described in our earnings release and other SEC filings. Today's remarks will also include references to non-GAAP financial measures. Additional information, including reconciliation between non-GAAP financial information and GAAP financial information, is provided in the press release and supplemental slide presentation. This conference call will be available for replay via webcast through Dun & Bradstreet's Investor Relations website at investor.dnb.com. With that, I'll now turn the call over to Anthony.

Speaker Change: Today's remarks will also include references to non-GAAP financial 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.

Speaker Change: This conference call will be available for replay via webcast through denim Bradstreet's Investor Relations website at Investor <unk> Dnb dotcom.

With that I'll now turn the call over to Anthony.

Anthony Jabbour: Thank you, Sean. Good morning, everyone, and thank you for joining us for our fourth quarter and full year 2023 earnings call. On today's call, we'll start with a brief overview of our fourth quarter and full year results, followed by a look back at some of our most significant accomplishments in 2023 and a brief view into our plans for 2024. After that, I'll pass the call over to Brian for an in-depth review of our results and to discuss our guidance expectations for 2024. We'll then open up the call for Q&A and finish up with a few closing comments. With that, let's get started.

Anthony: Thank you Sean good morning, everyone and thank you for joining us for our fourth quarter and full year 2023 earnings call.

Anthony: On today's call I'll start with a brief overview of our fourth quarter and full year results.

Anthony: Followed by a look back at some of our most significant accomplishments in 2023 and a brief you into our plans for 2024 after.

Anthony: After that I'll pass call over to Brian for an in depth review of our results and to discuss our guidance expectations for 2024, well then open up the call for Q&A and finish up with a few closing comments.

With that let's get started.

Anthony Jabbour: We finished off 2023 with not only our strongest quarter of the year but our strongest quarter since going public. We had organic revenue growth of 5.1%, adjusted EBITDA of $261 million, and adjusted net earnings of $140 million, or $0.32 EPS. We beat our guidance in both revenues and earnings, and we're still able to balance continued investment in our new innovations and product enhancements that help support our 30% Vitality Index in the quarter. Compared to our original guidance back in February, revenue, organic growth, and earnings were all at the high end, and EBITDA came in the middle of our ranges. For the full year, we delivered total revenues of $2,314 million, organic growth of 4.3%, adjusted EBITDA of $892 million, and adjusted net earnings of $432 million, or $1 VPS. Our Vitality Index for the full year finished at 27%, up from 17.5% in 2022, as we continue to deliver new and innovative solutions to clients throughout the world. And weather was in North America growing 5% with a 29% vitality index.

Anthony: We finished off 2023 with not only our strongest quarter of the year, but our strongest quarter since going public we had organic revenue growth of five 1% adjusted EBITA of $261 million and adjusted net earnings of $140 million or 32 cents of EPS.

Anthony: We beat our guidance in both revenues and earnings and we're still able to balance continued investment in our new innovations and product enhancements that helps support a 30% vitality index in the quarter.

Anthony: Compared to our original guidance back in February revenue organic growth and earnings were all at the high end and EBITDA came in the middle of our ranges.

Anthony: For the full year, we delivered total revenues of 2000, and 314 million organic growth of 4.3% adjusted.

Anthony: Adjusted EBITDA of $892 million, and adjusted net earnings of $432 million or $1 of EPS.

Anthony: Our vitality index for the full year finished at 27% up from 17, 5% in 2022, as we continued to deliver new and innovative solutions to clients throughout the world.

Anthony: And whether it was in North America, growing 5% with a 29% vitality index or international growing five 3% with a 34% vitality index in the quarter our value proposition is resonating with businesses need a data analytics and workflow to more efficiently and effectively.

Anthony Jabbour: We're international, growing 5.3% with a 34% vitality index in the quarter. Our value proposition is responding with businesses in need of data, analytics, and workflow to more efficiently and effectively operate in these rapidly changing environments. Businesses throughout the world are coming to us to solve some of their biggest challenges. The three most common themes we are seeing right now play directly into the areas that we had prioritized for our investment. First and foremost, master data management has always been a foundational component of having a sound data strategy, and its importance is increasing significantly with the advent of Gen AI.

Anthony: We operate in these rapidly changing environments.

Anthony: Businesses throughout the world are coming to us to solve some of their biggest challenges.

Anthony: The three most common themes, we are seeing right now so you directly into the areas that we had prioritized for our investment.

Anthony: First and foremost master data management has always been a foundational component of having a sound data strategy.

Anthony: And its importance is increasing significantly with the advent of Jan AI.

Anthony Jabbour: We believe that we're in a privileged position because of the pervasiveness of the DUNS number, our unparalleled business entity resolution capabilities, and the largest and most robust commercial data cloud in the world to capitalize on these exciting trends. Master Data Management continues to be at the core of our growth strategy, and we are investing in new, expanded, and alternative data, and integrating our DUNS cloud into the most prolific data delivery platforms. In collaborating with the top cloud and next-gen AI companies in the world, we are making a full push throughout 2024 to take advantage of this coming wave of innovation. Secondly, with the launch of our own AI-powered solutions, we are enhancing our existing products with conversational search, generative insights, and improved predictive signals.

Anthony: We believe that we are in a privileged position because of the pervasiveness of the dun's number our unparalleled business entity resolution capabilities and the largest the most robust commercial data cloud in the world to capitalize on these exciting trends.

Anthony: Master data management continues to be at the core of our growth strategy and by investing in new expanded and alternative datasets.

Anthony: Integrating our dun's cloud into the most prolific data delivery platforms and.

Anthony: And collaborating with a top cloud and Jen AI companies in the World, We are making a full push throughout 2024 to take advantage of this coming wave of innovation.

Anthony: Secondly, with the launch of our own AI powered solutions, we are enhancing our existing products with conversational search generative insights and improved predictive signals and we're launching stand alone net new capabilities, such as Abe for Hoover's, where clients can utilize conversational search using natural language.

Anthony Jabbour: And we are launching standalone, net new capabilities, such as ABE for Hoovers, where clients can utilize conversational search using natural language processing to reduce the friction in helping our clients to more accurately research and target higher propensity prospective companies, or Ask Procurement, which will be in GA at the end of this quarter, where clients can automate multiple steps in the sourcing and procurement process, saving days of work and potentially millions of dollars.

Anthony: <unk> processing to reduce the friction and helping our clients to more accurately research and target higher propensity prospective companies.

Anthony: Or ask procurement, which would be in G. A at the end of this quarter, where clients can automate multiple steps in the sourcing and procurement process saving days of work potentially millions of dollars.

Anthony Jabbour: And while AI is front of mind in our product development prioritization, we aren't ignoring the continued demand for existing solutions. While we continue to have leading revenue retention rates at 96%, we're also seeing continued strong demand for faster growing solutions, such as those in our third party and supply chain risk management. We delivered another quarter of strong double-digit growth in that area, and it's no surprise that business leaders, boards, investors, and governments continue to raise the bar on companies' understanding of who they are truly doing business with and what the financial, regulatory, fiber, social, and climate risks associated with those third parties are. Our DUNS cloud now covers 558 million business entities, including UVO data on 352 million shareholders. 270 million businesses with climate risk insights and detailed data-driven ESG ratings on 80 million companies.

Anthony: And while AI is front of mind and our product development prioritization, we arent ignoring the continued demand for our existing solutions.

Anthony: While we continue to have leading revenue retention rates at 96%. We're also seeing a continued strong demand for our faster growing solutions such as those in our third party and supply chain risk management.

Anthony: We delivered another quarter of strong double digit growth in that area and it's no surprise as business leaders boards investors and governments continue to raise the bar on company's understanding of who they are truly doing business with and what the financial regulatory cyber social and climate risks.

Anthony: Shaded with those third parties are.

Anthony: Our dun's cloud now covers 558 million business entities, including U V O data on 352 million shareholders.

Anthony: 270 million businesses with climate risk insights and detailed data driven ESG ratings on 80 million tons.

Anthony Jabbour: And not only do we have unparalleled data on the company itself, but we have also been able to map nearly 35 billion relationships between Tier 1, Tier 2, and Tier 3 suppliers. We are creating more real-time predictive performance analytics that continue to create demand in the client verticals we have today and, even more importantly, in new verticals we are entering, like capital markets. Capital markets firms have consumed massive amounts of data over the years to create that last bit of alpha in their evaluation of potential company performance. Through the creation of a new set of capital markets-focused solutions, we have launched into the space with an immediate impact. With our ability to link and enrich a capital market's client data through the DUNS hierarchy, add deeply correlated performance insights from our alternative data sets on public companies, and deliver unparalleled insights into over 500 million private companies throughout the world, we have just begun to scratch the surface on what is possible in this space.

Anthony: And not only do we have unparalleled data on the company itself.

Anthony: We've also been able to math nearly 35 billion relationships between tier one tier two and tier three suppliers.

Anthony: We are creating a more real time predictive performance analytics that continue to create demand in the client verticals, we have today and even more importantly in new verticals, we are entering like capital markets.

Anthony: Capital markets firms have consumed massive amounts of data over the years to create that last bit of alpha in their evaluation of potential company performance.

Anthony: Through the creation of a new set of capital markets focused solutions, we have launched into this space with an immediate impact.

Anthony: With our ability to link and enrich the capital markets client data through the dun's hierarchy and deeply correlated performance insights from our alternative data sets on public companies and deliver unparalleled insights into over 500 million private companies throughout the world. We have just begun to scratch the surface on what is <unk>.

Anthony: Costs on this space.

Anthony Jabbour: Underpinning these results and the ones to come is the significant progress we continue to make in our back office and cloud migration efforts. We have made significant progress in the completion of our modern Quote to Cash project, which will ultimately allow our go-to-market, delivery, and finance functions to operate at an even higher level of efficiency and effectiveness. Through the use of best-in-class processes, modern software platforms, and artificial intelligence, we will not only save operating expenses but expand revenues through more efficiently closing deals by shortening the time from quote to final signature.

Anthony: Underpinning these results and the ones to come is the significant progress we continue to make in our back office and cloud migration efforts.

Anthony: We have made significant progress in the completion of our modern quote to cash project, which will ultimately allow our go to market delivery and finance functions to operate at an even higher level of efficiency and effectiveness.

Anthony: Through the use of best in class processes, modern software platforms, and artificial intelligence will not only save operating expenses, but expand revenues through more efficiently closing deals through shortening the time from quote to final signature.

Anthony Jabbour: We also continue to make large strides in our cloud migration in 2023 and plan to complete even more in 2024. Overall, I'm very proud of our team's execution across the company in both the quarter and the full year. With organic growth approaching 5%, adjusted EBITDA of nearly $900 million, a strengthened balance sheet through improving operating free cash flow, and the refinancing of our secured debt layer last month, I'm very pleased with the progress we are making towards our medium-term targets of organic revenue growth acceleration, expanded profitability, deleveraging, and enhanced free cash flow conversion. In the quarter and throughout the year, we engaged our clients with urgency, delivered our data and analytics with precision, and created new and innovative solutions to satisfy prospects' growing needs. And by doing these three things, we were also able to finish off the year with some really exciting wins and renewals in the quarter.

Anthony: We also continued to make large strides in our cloud migration in 2023 and plan to complete even more in 2024.

Anthony: Overall, I'm very proud of our team's execution across the company in both the quarter and the full year.

Anthony: With organic growth approaching 5% adjusted EBITA of nearly 900 million a.

Anthony: Our strengthened balance sheet through improving operating free cash flow and the refinancing of our secured debt layer last month I'm very pleased with the progress we are making towards our medium term targets of organic revenue growth acceleration expanded profitability deleveraging and enhance free cash flow conversion.

In the quarter and throughout the year, we engaged our clients with urgency delivered our data and analytics with precision and created new and innovative solutions to satisfy prospects growing needs.

Anthony: And by doing these three things, we're also able to finish off the year with some really exciting wins and renewals in the quarter.

Anthony Jabbour: Beginning with North America, where we had a 95% revenue retention for the quarter and 97% retention for the year, I want to start off with the first one to come in the capital market space. It was with one of the world's largest multinational alternative asset management, private equity, and financial services companies. Through our structured data, corporate linkage, and business signals, we are supporting their efforts in merging and mastering their internal data cloud and also helping to predict viable acquisition targets for investors. These use cases, along with several others, such as private credit evaluation, are common for private equity firms throughout the globe, and we see this as a huge opportunity for us going forward. On the more traditional finance solutions use case, we are pleased to announce the expansion of our relationship with Johnson Controls. Johnson Controls is a world leader in smart buildings, creating safe, healthy, and sustainable spaces.

Anthony: Beginning with North America, where we had a 95% revenue retention for the quarter and 97% retention for the year I wanted to start off with the first one to come in the capital market space.

Anthony: It was with one of the world's largest multinational alternative asset management private equity and financial services companies.

Anthony: Through our structured data corporate linkage and business signals, we're supporting their efforts emerging and mastering their internal data cloud and also helping to predict a buyable acquisition targets for investment.

Anthony: These use cases, along with several others such as private credit evaluation are common for private equity firms throughout the globe and we see this as a huge opportunity for us going forward.

Anthony: On the more traditional finance solutions use case, we're pleased to announce the expansion of our relationship with Johnson controls Johnson controls are the world leader in smart buildings, creating safe healthy and sustainable spaces.

Anthony Jabbour: We expanded our relationship to include the addition of a global finance risk solution that was able to eliminate multiple vendors, ultimately demonstrating the scale and value of our integrated solution. Another great example of a retain and expand win was with a leading global aerospace company. This client was rolling off a multi-year agreement, and we worked closely with them to execute another multi-year agreement of the same tenure with an expanded set of solutions that includes supply chain risk management, master data management, and global trade controls, and we look forward to continuing to help them navigate the increasing global complexities around supply chain and third-party risk management. Speaking of supply chain and global risk management, our international segment, which had 94% revenue retention for the quarter and 9 Sage added RACI, or Risk Analytics Compliance Intelligence, that supports enhanced workflow in the managing and monitoring of supply chain risk and compliance.

Anthony: We expanded our relationship through the creation of a global finance risk solution that was able to eliminate multiple vendors ultimately demonstrating the scale and value of our integrated solutions.

Anthony: Another Great example of a retain and expand win was with a leading global Aerospace company.

Anthony: This client was rolling off a multiyear agreement and we work closely with them to execute another multi year agreement of the same tenure with an expanded set of solutions that includes supply chain risk management Master data management and global trade controls and we look forward to continuing to help them navigate the increasing global complexities.

Anthony: Around supply chain and third party risk management.

Anthony: Speaking of supply chain and global risk management, our international segment, which had 94% revenue retention for the quarter and 93% revenue retention for the year expanded our relationship with one of the leading ERP providers in the U K sage.

Anthony: Sage added racy or risk analytics compliance intelligence that supports enhanced workflow and the managing and monitoring of supply chain risk and compliance.

Anthony Jabbour: We also expanded our relationship with Siemens in Germany, a multinational technology conglomerate, who added our sales acceleration tools through Hoover's and a DirectPlus API integration. We have seen excellent wall and chair growth with Siemens over the past few years as we continue our strategy of landing and expanding the biggest and best companies globally. We signed another multi-year deal with Kion, a multinational manufacturer of materials handling equipment.

Anthony: We also expanded our relationship with Siemens in Germany, a multinational technology conglomerate, who added our sales acceleration tools through Hoover's and a direct plus API integration.

Anthony: We have seen excellent wallet share growth would Siemens over the past few years as we continue our strategy of landing and expanding the biggest and best companies globally.

Anthony: We signed another multi year deal with Kai on the multinational manufacturer of materials handling equipment. They were using our data blocks integrated directly through their ERP system to manage the global credit risk Decisioning.

Anthony Jabbour: They're using our data blocks integrated directly through their ERP system to manage their global credit risk decisions. And finally, S.E.B. A leading Swedish bank added our master data management solutions to support their overall data transformation efforts. SEB is a great example of how companies throughout the world are accelerating their transformation efforts and using DMV as the backbone of their data management strategy. As I said before, if you want to leverage the true power of AI, it starts with rich, reliable, trusted, and timely data.

Anthony: And finally S E b.

Anthony: A leading Swedish bank added our master data management solutions to support their overall data transformation efforts.

<unk> is a great example of how companies throughout the world are accelerating their transformation efforts and using D&B as the backbone of their data management strategy.

Anthony: As I said before if you want to leverage the true power of AI. It starts with rich reliable trusted and timely data.

Anthony Jabbour: And while we have what we believe to be the premier commercial data cloud in the world, we want to continue to strengthen our position through investments in data, cloud capabilities, and our most recent Gen AI initiative. Coming off a strong year of financial, sales, and operational performance. We are excited about 2024 and continuing the momentum we have been building. We will continue focusing on innovating with urgency, delighting our clients, expanding strategic relationships with key partners, driving a disciplined investment strategy, and turning the vast amounts of opportunities in front of us into enhanced results. We plan to build on our areas of strength, such as third-party and supply chain risk management and master data management, capitalize on new opportunities such as capital markets and Gen AI, and extract the appropriate amount of value from the investments and enhancements we have made to our existing solutions.

Anthony: And while we have what we believe to be the premier commercial data cloud in the world. We want to continue to strengthen our position to investments in data cloud capabilities and our most recent gen AI initiatives.

Anthony: Coming off a strong year of financial sales and operational performance. We are excited about 2024 and continuing the momentum we have been building.

Anthony: We will continue focusing on innovating with urgency delighting, our clients expanding strategic relationships with key partners driving a disciplined investment strategy and turning the vast amounts of opportunities in front of us and to enhance results.

Anthony: We plan to build on our areas of strength in third party supply chain risk management and Master data management.

Anthony: Capitalize on new opportunities, such as capital markets, and Jan AI and extract the appropriate amount of value from the investments and enhancements we have made to our existing solutions.

Anthony Jabbour: We expect another year of accelerated organic growth, increased earnings, and continued deleveraging through enhanced profitability and improved free cash flow, while balancing near-term financial performance with the proper level of investment and new solution development, enhancements to existing solutions, Back Office Upgrades, and the Gen AI Initiative. In summary, we are on track with achieving the medium-term guidance we set forth at our Investor Day, and we are excited about the opportunities ahead of us in 2024. With that, I'd now like to turn the call over to Brian to discuss our financial results for 2023 and outlook for 2024. Thank you, Anthony, and good morning, everyone.

We expect another year of accelerated organic growth increased.

Anthony: Increased earnings and continued deleveraging through enhanced profitability and improving free cash flow, while balancing near term financial performance with the proper level of investment and new solution development enhancements to existing solutions.

Anthony: Back office upgrades and Jan AI initiatives.

Anthony: In summary, we are on track with achieving the medium term guidance, we set forth at our Investor day, and we are excited about the opportunities ahead of us in 2024.

Anthony: With that I'd now like to turn the call over to Brian to discuss our financial results for 2023 and outlook for 2024.

Brian: Thank you Anthony and good morning, everyone today, I'll discuss our fourth quarter and full year 2023 results and then our outlook for 2024.

Brian Hipson: Today, I will discuss our fourth quarter and full year 2023 results and then our outlook for 2024. Turning to slide one, on a gap basis, fourth quarter revenues were $630 million, an increase of 6% compared to the prior year quarter and an increase of 5% before the effect of foreign exchange. Net income for the fourth quarter was $2 million, or a diluted earnings per share of less than one penny, compared to a net income of $23 million for the prior year of the quarter. The $21 million decrease in net income for the three months ended December 31, 2023, compared to the prior year of the quarter, was primarily due to a higher tax provision in the current year. For full year 2023, revenues were $2,314 million, an increase of 4% compared to the prior year and an increase of 4% before the effect of foreign exchange. On a four-year basis, the net loss was $47 million, or a diluted loss per share of 11 cents, compared to a net loss of $2 million for the prior year.

Brian: Turning to slide one.

Brian: On a GAAP basis fourth quarter revenues were $630 million, an increase of 6% compared to the prior year quarter and an increase of 5% before the effect of foreign exchange.

Brian: Net income for the fourth quarter was $2 million four of diluted earnings per share of less than one penny compared to a net income of $23 million for the prior year quarter.

Brian: $21 million decrease in net income for the three months ended December 31, 2023 compared to the prior year quarter was primarily due to a higher tax provision in the current year quarter for full year, 2020 three revenue for 2000 and $314 million an increase of four person.

Brian: Compared to the prior year and an increase of 4% before the effect of foreign exchange.

Brian: On a four year basis, net loss was $47 million or a diluted loss per share of 11 cents compared to a net loss of $2 million for the prior year.

Brian Hipson: Turning to slide two, I'll now discuss our adjusted results for the fourth quarter. Adjusted revenues for the total company were $630 million, an increase of 6% or an increase of 5% before the effect of foreign exchange. The increase in adjusted revenues was attributable to balanced growth in our sector, along with the positive impact of foreign exchange; revenues on an organic constant currency basis were up 5.1%. Fourth quarter adjusted EBITDA for the total company was $261 million, an increase of $10 million, or 4%, primarily due to organic revenue growth, partially offset by associated data and data processing costs, and higher benefit expenses, as we returned to a more normalized run rate as employees began to Fourth quarter adjusted EBITDA margin was 41%, a decrease of 80 basis points compared to the prior year quarter, which included a 140 basis point negative impact from the increased health care costs I just mentioned.

Speaker Change: Turning to slide two I'll now discuss our adjusted results for the fourth quarter.

Speaker Change: Fourth quarter adjusted revenues for the total company or $630 million, an increase of 6% or an increase of 5% before the effect of foreign exchange.

Speaker Change: The increase in adjusted revenues was attributable to balanced growth and our segments along with the positive impact of foreign exchange.

Speaker Change: Revenues on an organic constant currency basis were up five 1% fourth quarter adjusted EBITDA for the total company was $261 million, an increase of $10 million or 4%, primarily due to organic revenue growth, partially offset by associated data and data processing costs and.

Speaker Change: Higher benefit expenses as we return to a more normalized run rate as employers begin to use their health care benefits more than in the prior years.

Speaker Change: Fourth quarter adjusted EBITDA margin was 41% a decrease of 80 basis points compared to the prior year quarter, which included 140 basis point negative impact from the increased health care costs I just mentioned.

Brian Hipson: Fourth quarter adjusted net income was $140 million, or adjusted earnings per share of $0.32, compared to $131 million, or $0.30, in the fourth quarter of 2022. This was primarily attributable to higher adjusted EBITDA and higher tax benefits in the current year quarter, partially offset by higher depreciation and amortization, higher interest expense, and higher non-operating expenses. Full-year adjusted revenues for the total company were $2,314 million, an increase of 4%, or 4% before the effect of foreign exchange compared to 2022. The increase was attributable to growth in the underlying business, partially offset by the negative impact of foreign exchange and the impact of the divestiture of our business consumer business in Germany in the second quarter of 2022. Revenues on an organic constant currency basis were up 4.3%. Full year adjusted EBITDA for the total company was $892 million, an increase of 3%. Higher adjusted EBITDA was primarily due to revenue growth and lower costs related to professional fees and facilities, partially offset by associated data and data processing costs, higher healthcare and management incentive plan expenses, as well as the negative impact of foreign exchange. Excluding the impact of foreign exchange, EBITDA increased by 4%.

Speaker Change: Fourth quarter, adjusted net income was $140 million or adjusted earnings per share up 32 cents compared to a $131 million or 30 cents in the fourth quarter of 2022. This was primarily attributable to higher adjusted EBITDA and higher tax benefits in the current year.

Speaker Change: Quarter, partially offset by higher depreciation and amortization higher interest expense and higher nonoperating expenses.

Speaker Change: Full year adjusted revenue for the total company for 2000, and $314 million, an increase of 4% or 4% before the effect of foreign exchange compared to 2022.

Speaker Change: The increase was attributable to growth in the underlying business, partially offset by the negative impact of foreign exchange and the impact of the divestiture of our business consumer business in Germany in the second quarter of 2022.

Speaker Change: Revenues on an organic constant currency basis were up four 3%.

Speaker Change: Full year adjusted EBITDA for the total company was $892 million, an increase of 3% higher adjusted EBITDA was primarily due to revenue growth and lower costs related to professional fees and facilities, partially offset by associated data and data processing costs higher health care and management inside of a plant.

Speaker Change: Sensors as well as the negative impact of foreign exchange, excluding the impact of foreign exchange EBIT increased 4%.

Brian Hipson: Full year adjusted EBITDA margin was 39%, a decrease of 20 basis points compared to the prior year, which included $16 million of increased health care and incentive compensation, or a negative impact of $30 base. Full year 2023 adjusted net income was $432 million, or adjusted diluted earnings per share of $1 compared to 2022 adjusted net income of $440 million or $1.02 per share. Turning now to slide three, I will now discuss the results for our two segments, North America and International. In North America, revenues for the fourth quarter were $457 million, an increase of approximately 5% from the prior year quarter and also 5% on an organic, constant currency basis. In finance and risk, revenues were $241 million, an increase of $10 million, or 4%, due to a net increase in revenue across our third-party supply chain risk management and finance solution.

Speaker Change: Full year adjusted EBITDA margin was 39% a decrease of 20 basis points compared to the prior year, which included $16 million of increased health care and incentive compensation.

Speaker Change: Or a negative impact of 30 basis points.

Speaker Change: Full year 2023, adjusted net income was $432 million or adjusted diluted earnings per share of $1 compared to 2022, adjusted net income of $440 million or $1.02 per share.

Speaker Change: Turning now to slide three I will now discuss the results for our two segments North America and international.

Speaker Change: In North America revenues for the fourth quarter were $457 million, an increase of approximately 5% from prior year quarter and also 5% on an organic constant currency basis.

Speaker Change: And finally, the risk revenues were $241 million, an increase of $10 million or 4%.

Speaker Change: Due to a net increase in revenue across our third party and supply chain risk management and finance solutions for.

Brian Hipson: For sales and marketing, revenues were $215 million, an increase of $12 million, or 6%. Sales and marketing growth was primarily driven by our master data management solution. North America fourth-quarter adjusted EBITDA was $224 million, an increase of $9 million, or 4%, primarily due to revenue growth and associated data and data processing costs. Adjusted EBITDA margin for North America was 49%, a decrease of 40 bits from the prior year quarter.

Speaker Change: For sales and marketing revenues were $215 million.

Speaker Change: An increase of $12 million or 6% sales and marketing growth was primarily driven by our master data management solutions.

Speaker Change: North America fourth quarter, adjusted EBITDA was $224 million, an increase of $9 million or 4%, primarily due to revenue growth and associated data and data processing costs. Adjusted EBITDA margin for North America was 49% a decrease of 40 bps from the prior year quarter.

Brian Hipson: Turning now to slide four, I will now discuss four-year results for North America. In North America, revenues for 2023 were $1,644 million, an increase of $57 million, or 4% from the prior year. North American revenues on an organic constant currency basis increased 3.7%.

Speaker Change: Turning now to slide four.

Speaker Change: I will now discuss full year results for North America.

Speaker Change: In North America revenues for 'twenty, and 'twenty, three or 1640 $4 million, an increase of $57 million or 4% from the prior year North America revenues on an organic constant currency basis increased three 7%.

Brian Hipson: North America financial risk full-year revenues were $888 million, an increase of $21 million, or 2%, primarily attributable to a net increase in revenues across our third party risk, supply chain management, and finance solutions, partially offset by decreased revenue from our credibility solutions and from the public sector, primarily as a result of the expiration of a government contract in April 2022. North America sales and marketing full year revenues increased $36 million, or 5%, to $756 million. This was primarily driven by growth from our master data management solution. Full-year adjusted EBITDA for North America increased $25 million, or 4%, to $743 million. The increase was primarily due to revenue growth and associated data and data processing costs, lower net personnel costs, and lower costs related to professional fees and facilities, partially offset by the negative impact of foreign exchange associated with our offshore technology. The full year adjusted EBITDA margin for North America was 45%, flat to the prior year.

Speaker Change: North America finance arrest full year revenues were $888 million, an increase of $21 million or 2% primarily attributable to a net increase in revenues across our third party risk supply chain management and finance solutions.

Speaker Change: Partially offset by decreased revenue from our credibility solutions and from the public sector, primarily as a result of the expiration of a government contract in April 2022.

Speaker Change: North America sales and marketing full year revenues increased $36 million or 5% to $756 million. This was primarily driven by growth from our master data management solutions.

Speaker Change: <unk> adjusted EBITDA for North America increased $25 million or 4% to $743 million. The increase was primarily due to revenue growth and associated data and data processing costs lowered that personnel costs and lower costs related to professional fees and facilities.

Speaker Change: Firstly offset by the negative impact of foreign exchange associated with our offshore technology team full year adjusted EBITDA margin for North America, with 45% flat to the prior year.

Brian Hipson: Turning to slide 5, in our international segment, fourth-quarter revenues increased 8% to $174 million, an increase of 5% before the effect of foreign exchange, and organic revenues increased 5.3%. Finance and risk revenues were $116 million, an increase of 10%, or an increase of 7% before the effect of foreign exchange. This was attributable to growth across all markets, including increased revenues from our UK market attributable to growth in our third-party risk and compliance solution, as well as Finance Analytics. Higher revenues from our world-wide network alliances related to increased cross-border data fees and higher revenues from Europe driven by growth in finance analytics and our latest API solution. Sales and marketing revenues were $57 million, an increase of 6% or an increase of 3% before the effect of foreign exchange.

Speaker Change: Turning to slide five and our international segment fourth quarter revenues increased 8% to $174 million, an increase of 5% before the effect of foreign exchange and organic revenues on a constant currency basis increased five 3%.

Speaker Change: Finally, as a risk revenues were $116 million, an increase of 10% or an increase of 7% before the effect of foreign exchange.

Speaker Change: This was attributable to growth across all markets, including increased revenues from our U K market attributable to grow and our third party risk and compliance solutions as well as finance analytics.

Speaker Change: Higher revenues for our worldwide network alliances related to increased cross border data fees and higher revenues from Europe, driven by growth in finance analytics, and our latest API solutions.

Speaker Change: Sales and marketing revenues were $57 million, an increase of 6% or an increase of 3% before the effect of foreign exchange.

Brian Hipson: This was primarily due to higher revenues from the United Kingdom and European markets driven by higher data sales delivered via our latest APIs. Fourth-order international adjusted EBITDA was $55 million, an increase of $6 million, or 13%. The increase was driven primarily due to revenue growth from the underlying business, partially offset by higher personnel and data processing costs. Adjusted even a margin was 32%, an increase of 120 basis points compared to the prior year quarter. Turning now to Slide 6.

Speaker Change: This was primarily due to higher revenues from the United Kingdom, and European markets, driven by higher data sales delivered via our latest API solutions.

Speaker Change: Fourth quarter International adjusted EBITDA was $55 million, an increase of $6 million or 13%. The increase was driven primarily due to revenue growth from the underlying business, partially offset by higher personnel and data processing costs adjusted EBITDA margin was 32% and.

Speaker Change: Increase of 120 basis points compared to the prior year quarter.

Speaker Change: Yeah.

Speaker Change: Turning now to slide six and our international segment full year, 2023 revenues increased 5% to $670 million or an increase of 5% before the effect of foreign exchange and organic revenues on a constant currency basis increased five 8%.

Brian Hipson: In our international segment, full year 2023 revenues increased 5% to $670 million, or an increase of 5% before the effect of foreign exchange, and organic revenues increased 5.8%. International finance and risk full year revenues of $449 million increased 7% both after and before the effect of foreign exchange. All markets contributed to growth, with strong demand for finance analytics and API solutions in the United Kingdom and Europe and higher revenues from worldwide network alliances related to increased cross-border data. International sales and marketing for your revenues of $221 million increased 1%, or an increase of 2% before the effective foreign exchange. Excluding the negative impact of foreign exchange at $2 million and the impact of the divestiture in 2022 of our business-to-consumer business in Germany, of $1.8 million, organic revenues increased 3%.

Speaker Change: Our Nashville financial risks full year revenues of $449 million increased 7%, both after and before the effect foreign exchange.

Speaker Change: All markets contributed to grow with strong demand for finance analytics, and API solutions in the United Kingdom, and Europe, and higher revenues from worldwide network alliances related to increased cross border data fees.

Speaker Change: International sales and marketing full year revenues of $221 million increased 1% or an increase of 2% before the effect of foreign exchange.

Speaker Change: Excluding the negative impact of foreign exchange of $2 million and the impact of the divestiture in 2022 of our business the consumer business in Germany of $1 $8 million organic revenues increased 3%.

Brian Hipson: Growth was primarily driven by higher revenues from the UK and Europe, driven by new-to-market and localized solutions such as Hoovers, as well as higher data sales delivered via our latest API solution. For full year 2023, International Adjusted EBITDA was $215 million, an increase of $13 million, or 7%. The improvement in adjusted EBITDA was primarily due to revenue growth from the underlying business, partially offset by higher costs related to personnel and data processing. The adjusted EBITDA margin was 32%, an increase of 50 basis points. Adjusted EBITDA for the corporate segment was a loss of $66 million.

Speaker Change: Growth was primarily driven by higher revenues from the U K and Europe, driven by new to market and localized solutions, such as Hoover's as well as higher data sales delivered via our latest API solutions.

Speaker Change: Full year 2023 international adjusted EBITDA was $215 million, an increase of $13 million or 7%.

Speaker Change: Improvement in adjusted EBITDA was primarily due to revenue growth from the underlying business, partially offset by higher costs related to personnel and data processing costs.

Speaker Change: Adjusted EBITDA margin was 32% an increase of 50 basis points adjusted EBITDA for the corporate segment was a loss of $66 million, an additional loss of $10 million, primarily attributable to higher health care and performance based incentive plan costs.

Brian Hipson: An additional loss of $10 million, primarily attributable to higher health care and performance-based incentive plans. Turning to slide 7, I'll now walk through our capital structure as of year end, and then we'll discuss on a pro forma basis, taking into account the debt transactions we recently executed. At the end of December 31, 2023, we had cash and cash equivalents of $188 million, and a total principal amount of debt of $3,589 million. The $3,589 million in principle was made up of $460 million of unsecured notes at 5%, which mature in 2029, term loans of $2,652 million at SOFR plus CSA plus 275 that matured in 2026, $452 million at SOFR plus 300 that matures in 2029, and borrowings of $25 million under our revolver. Turn to slide 8.

Speaker Change: Turning to slide seven I'll now walk through our capital structure as of year end and then we will discuss on a pro forma basis, taking into effect the debt transactions, we recently executed.

Speaker Change: At the end of December 31, 2023, we had cash and cash equivalents of $188 million and total principal amount of debt of 3580 $9 million.

Speaker Change: The 3580 $9 million in principle was made up of $460 million of unsecured notes at 5%, which mature in 2029.

Speaker Change: Term loans of 2000, and $652 million and so plus CSA plus $2 75 that matured in 2026 $452 million at so for plus 300 that matures in 2029 and borrowings of $25 million under our <unk>.

Speaker Change: Ballpark.

Speaker Change: Turning to slide eight.

Brian Hipson: On January 29, 2024, we successfully refinanced our term loan and revolving credit facilities in a leverage-neutral transaction, which repriced and extended maturities on the entire secure layer of our capital, on a pro forma basis. The $3,589 million in principle is made up of $460 million of unsecured notes at 5%, which mature in 2029. A single-term loan tranche of $3,104 million repriced at SOFR plus 275 that matures in 2029, and borrowings of $25 million under our revolver repriced at SOFR plus 250 and subject to a leverage-based pricing grid. The revolver maturity was also extended to February 2029.

Speaker Change: On January 29, 2024, we successfully refinanced our term loan and revolving credit facilities, and a leverage neutral transaction, which re priced and extended maturities on the entire secured layer of our capital structure.

Speaker Change: On a pro forma basis.

The 3580 $9 million in principle is made up of $460 million of unsecured notes at 5%, which mature in 2029.

Speaker Change: A single term loan tranche of 3000 $104 million repriced that sofa, plus 275, and matures in 2029 and borrowings of $25 million under our revolver Reprised fed sober, plus 250 and subject to a leverage based pricing grid.

Speaker Change: The revolver maturity was also extended to February 2029.

Brian Hipson: We have a total of $2,750 million floating to fix interest rate swaps. $250 million effective to February 2025 at 1.629%, $1 billion effective to March 2025 at 3.214%, and $1.5 billion to February 2026 at 3.695%. We also have three cross-currency swaps at $125 million each that settle in July of 2024, 2025, and 2026. Currently, 89% of our debt is either fixed or hedged. As of December 31, 2023, we had $825 million available on our $850 million revolving credit facility, and our weighted average interest rate was 6.3%. Our leverage ratio was 3.8 times on a net basis, and the credit facility's senior secured net leverage ratio was 3.3 times.

Speaker Change: We have a total of 2000 and $750 million floating to fixed interest rate swaps.

Speaker Change: $250 million effective February 2025 at 1.6% to 9%.

Speaker Change: 1 billion effective March 2025 at three to one 4% and $1 5 billion to February 20th 26 at $3, 695%.

Speaker Change: We also have three cross currency swaps on $125 million each that settle in July of 2024, 2025, and 26 currently 89% of our debt is either fixed or hedged.

Speaker Change: As of December 31, 2023, we had $825 million available on our $850 million revolving credit facility and our weighted average interest rate was six 3%.

Speaker Change: Leverage ratio was three eight times on a net basis and the credit facility senior secured net leverage ratio was three three times.

Brian Hipson: We are pleased with our efforts throughout 2023 and in early 2024 to take advantage of favorable market opportunities to proactively address our capital structure's maturities and reduce the cost of our debt. Turning the slide now. I'll now walk through our outlook for 2024. Total revenues after the effect of foreign currency are expected to be in the range of $2,400 million to $2,440 million, or an increase of approximately 3.7 to 5.4 percent. This includes an assumption of a modest headwind in the first three quarters of the year, partially offset by a modest tailwind in the fourth quarter due to the effect of foreign currency related to the expected variances between the U.S. dollar, euro, British pound, and Swedish krona. Revenues on an organic constant currency basis are expected to be in the range of 4.1% to 5.1% for the full year. Adjusted EBITDA is expected to be in the range of $930 to $950 million.

Speaker Change: We are pleased with our efforts throughout 2023 and in early 2024 to take advantage of favorable market opportunities to proactively address our capital structures maturity and reduce the cost of our debt.

Speaker Change: Turning to slide nine.

Speaker Change: I'll now walk through our outlook for 2024.

Speaker Change: Total revenues after the effect of foreign currency are expected to be in the range of 2000 and $400 million to 2000 $440 million or an increase of approximately $3 seven to five 4%.

Speaker Change: This includes an assumption of a modest headwind in the first three quarters of the year, partially offset by a modest tailwind in the fourth quarter due to the effect of foreign currency related to the expected variances between the U S dollar Euro British pound and Swedish krona.

Speaker Change: Revenues on an organic constant currency basis are expected to be in the range of $4 one to five 1% for the full year.

Speaker Change: Adjusted EBITDA is expected to be in the range of $930 million to $950 million. Adjusted EPS is expected to be in the range of a dollar to a dollar for.

Brian Hipson: Adjusted EPS is expected to be in the range of $1 to $1.40. Additional modeling details under Lionar Outlook are as follows. We expect interest expense to be approximately $220 million.

Speaker Change: Additional modeling details underlying our outlook are as follows we expect interest expense to be approximately $220 million.

Brian Hipson: Depreciation and amortization expense to be in the range of $125 to $135 million, excluding incremental depreciation and amortization expense resulting from the purchase. An adjusted effective tax rate of approximately 22 to 23%. Our effective tax rate takes into account the introduction of the Pillar 2 minimum tax rate throughout Europe, and most significantly in Ireland, where our prior rate was approximately 9%. Weighted average diluted shares outstanding of approximately $433 million.

Speaker Change: Depreciation and amortization expense to be in the range of $125 million to $135 million, excluding the incremental depreciation and amortization expense, resulting from purchase accounting, an adjusted effective tax rate of approximately 22% to 23%.

Speaker Change: Our effective tax rate takes into account the introduction of the pillar two minimum tax rate throughout Europe, and most significantly in Ireland, where our prior rate was approximately 9%.

Speaker Change: Weighted average diluted shares outstanding of approximately $433 million.

Brian Hipson: And for CapEx, we expect approximately $150 to $160 million of internally developed software and $45 million of property, plant, and equipment and purchase software. While we don't give quarterly guidance, I did want to provide some color on how we expect the year to progress. We expect the first quarter to be closer to the midpoint of our range, the second quarter to be around the high end, the third quarter to be below the low end, and the fourth quarter to be around the high end of our range.

Speaker Change: And for Capex, we expect approximately $150 million to $160 million of internally developed software and.

Speaker Change: And $45 million of property plant and equipment and purchased software.

Speaker Change: While we don't give quarterly guidance I did want to provide some color on how we expect the year to progress we expect the first quarter to be closer to the midpoint of our range second quarter to be around the high end.

Speaker Change: Third to be below the low end and for it to be around the high end of our range the lower growth in the third quarter is due to some of our revenue is shifting from on delivery to more ratable recognition throughout the year.

Brian Hipson: The lower growth in the third quarter is due to some of our revenues shifting from on delivery to more routable recognition throughout the year. We expect margins to be flat in the first quarter and then to move relative to revenue growth for the remaining quarters. We are also anticipating operating free cash flow conversion as a percentage of adjusted net income, excluding the impact of the AR securitization, to improve versus the 51% we had in 2023 and make progress towards our target of 80% over the medium term. Overall, we expect 2024 to be another year of stronger financial results with accelerated growth in organic revenues, EBITDA, net earnings, free cash flow, and a net leverage metric of around 3.5 times by year-end.

Speaker Change: We expect margins to be flat in the first quarter, and then move relative to the revenue growth for the remaining quarters.

Speaker Change: We are also anticipating operating free cash flow conversion as a percentage of adjusted net income excluding the impact of the a our securitization to improve versus the 51%.

Speaker Change: We had in 2023.

Speaker Change: And made progress towards our target of 80% over the medium term.

Speaker Change: Overall, we expect 2024 will be another year of stronger financial results with accelerated growth in organic revenues EBITDA net earnings free cash flow and debt leverage metric of around three and a half times by yearend.

Brian Hipson: The team is focused on delivering against our operational and financial objectives, and we look forward to updating you on all the progress in our upcoming fall. With that, we're now happy to open the call to your questions. Operator, will you please open up the line for Q&A? Thank you. Ladies and gentlemen, we will now be conducting a question and answer session. If you would like to ask a question, please press star and one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and 2 if you would like to remove your question from the queue.

Speaker Change: The team is focused on delivering against our operational and financial objectives, and we look forward to updating you on all the progress in our upcoming calls.

Speaker Change: With that we're now happy to open the call for your questions. Operator will you. Please open up the line for Q&A.

Thank you.

Speaker Change: Ladies and gentlemen, even in I'll be conducting a question and answer session.

Speaker Change: If you would like to ask a question. Please press star and one on your telephone keypad.

Operator: A confirmation tone will indicate your line is in the question queue.

Operator: You May press star two if you'd like to remove your question from the queue.

Operator: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start button. Ladies and gentlemen, we will wait for a moment while we poll for questions. Our first question is from the line of Kyle Peterson with Nehrum & Co. Please go ahead.

Operator: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the stock east.

Speaker Change: Ladies and gentlemen, we will wait for a moment wildly poll for questions.

Speaker Change: Our first question is from the line of Kyle Peterson with Needham and company. Please go ahead.

Kyle Peterson: Great. Thanks, guys, for taking the questions, and good morning. I just wanted to touch a little bit on the building blocks for organic growth here.

Kyle Peterson: Great. Thanks.

Kyle Peterson: Thanks, guys for taking the questions and good morning, and I just wanted to touch a little bit on the building blocks for organic growth here I'm not going to see that kind of 4% to 5% range, but maybe if you could break down a little bit between you know, whether it's pricing upsell cross sell and new logos.

Anthony Jabbour: Good to see that kind of 4 to 5 percent range. But maybe if you could break it down a little bit between whether it's pricing, upsell, cross-sell, and new logos, that'd be really helpful. Sure. Good morning, Kyle.

Speaker Change: That'd be really helpful.

Speaker Change: Sure.

Anthony Jabbour: And thanks for the question. You know, as we've said, we see about 2% of our growth coming from pricing and incrementally from new logos, upselling of, you know, existing solutions, and cross-selling of existing solutions to clients. And, you know, as we see, you know, what incrementally has increased, I'd say on the MDM side, the master data management side, and the third-party risk and, you know, supply chain management side. As I said in my prepared remarks on the MDM side, it's the precursor to AI, and I think more clients are seeing that, and there's more of a focus on that. And we have a right to win in that market and are in a privileged position.

Speaker Change: Morning, Kyle and thanks for the question.

Speaker Change: As we said you know, we see about 2% of our growth coming from pricing and incrementally from new logos Upselling of.

Speaker Change: Existing solution cross selling of existing solutions to clients.

Speaker Change: And you know as we see you know what incrementally has increased I'd say on the M. D M side, the master data management side.

Speaker Change: And the third party risk.

Speaker Change: And you know supply chain management side has been.

Speaker Change: More current.

Speaker Change:

Speaker Change: As I said in my prepared remarks on the Nvme side, it's the precursor to AI and I think more clients are seeing that and there's more of a focus on that and yeah. We have a right to win in that market and are in a privileged position.

Anthony Jabbour: And similarly, on the supply chain side, we've been doing a lot of great work mapping that out. As I said, we have mapped out 35 billion relationships. So for example, work we're doing with one of the big three automotive companies, we've mapped 40% of their entire supply chain. That's what we currently have. And I just don't know if there's anyone that's close to that in this space.

Speaker Change: And some of them the supply chain side, we've been doing a lot of great work mapping that out tweets as I said, the NAFTA 35 billion relationships. So for example, our work we're doing with one of the big three automotive companies, we've mapped 40% of their entire supply chain.

Speaker Change: Is what we currently have and I just don't know if there's anyone that's you know close to that.

Speaker Change: In the space. So in these areas in which you hear a lot about.

Anthony Jabbour: So in these areas which you hear a lot about, we've been investing in some pretty impressive capabilities. And in the case of master data management, that's one where we've always been focused on, and now the market is coming to us because of the, you know, generative AI movement. And Anthony, if I could add on to, you know, as you said, price rises traditionally have been in that 2% range, raising up, you know, something north of that kind of, you know, in that two and a half percent range this year as a contribution to revenue, and then on the new logo side, you know, I know you mentioned the capital markets win that we had in the fourth quarter. Kyle, those are certainly, I think, And we've seen an impact, I would say, almost immediately as we brought those solutions in the fourth quarter and how the pipeline's building throughout the early first quarter of this year. I got it.

Speaker Change: You know we've been investing in some pretty impressive capabilities and.

Speaker Change: And in the case of Master data management, that's one where we've always been focused on and now the market is coming to us because of our generative AI not movement.

Speaker Change: And Anthony if I could add on to you know as you said price rides traditionally been in that 2% range, you know raising up to something north of that kind of you know the best way to ask is that right, especially as the contribution of revenue and then on the new logo side I know you mentioned.

Speaker Change: The capital markets when we got in the fourth quarter, you know Colorado's a certain way.

Speaker Change: That's a big pool.

Speaker Change: Potential new logos for us to go after.

Speaker Change: We believe the new solutions around our capital markets and continued impact I would say almost immediately as we brought those solutions.

Speaker Change: In the fourth quarter and how the pipeline is building for all of the early first quarter of this year.

Speaker Change: Got it yeah, that's that's really helpful and then.

Anthony Jabbour: That's really helpful. And then I think you guys touched a bit on improving cash flow conversion and kind of working to maybe have some more shareholder-friendly capital return policies. But maybe if you guys could just kind of rank order and remind us what some of the priorities for some of the cash flow as that continues to improve here. Yeah, so the first Kyle is investing in the business, you know, and driving organic growth.

Speaker Change: And I think it gets touched a bit on kind of a proven cash flow conversion and kind of working to maybe have some some more kind of shareholder friendly capital return policies, but maybe if you guys could just kind of you know.

Speaker Change: Rank order and remind us what would be some of the priorities are for some of the cash flow.

Speaker Change: As that continues to improve here.

Speaker Change: Yeah. So so the first Kyle is investing in the business, you know and and driving organic growth.

Anthony Jabbour: We're committed to, you know, the dividend, obviously, and really debt pay down. So when we think about M&A, You know, I'll tell you, the bar, you can see we haven't done anything in the M&A space, relied more on partnerships over this last year. The bar is very high for us to do something in the M&A space. We'd have to have extreme conviction on that, you know; the team knows that.

Speaker Change: We're committed to.

Speaker Change: As to the dividend, obviously and and really debt pay down so.

Speaker Change: So when we think about M&A.

Speaker Change: You know I'll tell you. The bar you can see we haven't done anything in the M&A space relied more on partnerships over this last year.

Speaker Change: Bar is very high for us to do something in the M&A space, we would have to have extreme conviction on that and as you know.

Speaker Change: The team knows that so it really is like I said are focusing on.

Anthony Jabbour: So, it really is, like I said, focusing on our accelerated organic growth and being very thoughtful about that. So, where we are increasing it, we've also pulled back in some areas where, you know, products where we don't have a lot of growth, we don't see the immediate need for them. So, it's not all added; we're being very thoughtful about where we invest that way. And also, obviously, being very focused, as you see from our continuous reduction in our leverage ratio. Great, that's very helpful.

Speaker Change: Our accelerated organic growth.

Speaker Change: And and being very thoughtful about that so where we are increasing it.

Speaker Change: We've also pulled back in some areas, where you know products, where we don't have a lot of growth of them see the immediate need for it. So it's not all added it we're being very thoughtful about.

Speaker Change: Where we invest that way.

Speaker Change: And also obviously being very focused as you see our continuous reduction in our leverage ratio.

Speaker Change: Great. That's helpful. Thanks, guys.

Kyle Peterson: Thanks, guys. Thank you, Kyle. Thank you. Our next question is from Seth Weber with Wells Fargo. Please go ahead. Hey, you guys, good morning.

Speaker Change: Thank you Colin.

Speaker Change: Thank you our next.

Speaker Change: Next question is from Seth Weber with Wells Fargo. Please go ahead.

Speaker Change: Yeah.

Seth Weber: Oh, Hey, guys. Good morning, Thanks for taking my question.

Seth Weber: Thanks for taking the time to answer the question. I wanted to just try to drill in a little bit on the EBITDA margin forecast for 2024 and just if it's possible for you to maybe disaggregate the guide a little bit, how much of that is more of this health care, you know, pressure that we saw in the fourth quarter that's going to continue versus how much of it is spending on new programs or just more broadly, just kind of typical cost inflation, you know, labor, If you could give us any help, just think about how to think about a lack of expansion in 2024. Thanks.

Seth Weber: I wanted to just try to drill in a little bit on the the EBITA margin forecast for 2024, and just if it's possible for you to maybe just.

Seth Weber: Disaggregate the guide a little bit how much of that is there's more of it is health care.

Seth Weber:

Seth Weber: Pressure that we saw in the fourth quarter or that's going to continue versus how much of it is spending on new programs.

Seth Weber: Or just more broadly just kind of typical cost inflation.

Seth Weber: Labor et cetera.

Seth Weber: You called out data.

Seth Weber: Data processing costs and things like that if you could give us any help just to how to think about a lack of expansion in 2024.

Brian Hipson: Yes, and so, you know, when you look at our organic growth and what we expect to call the midpoint of a guide, it's roughly 30 bits of expansion from that perspective. I think we're balancing, you know, obviously being mindful and continuing to invest in data and in Gen AI and continuing to accelerate our organic growth rate. If you look at a couple of those puts and takes, as you said, in 2023, and especially in the fourth quarter, the healthcare benefits, right, were increased $6 million for the year. And our incentive compensation, which we paid out about 80% across the company in 2022, was up closer to target in 2023. So those things are really starting to run right into 2024, where they certainly impacted 2023 more.

Seth Weber: Yes.

Speaker Change: So when you look at our organic growth and what we expect the call at the midpoint of our guide it's roughly 30 bps of expansion from Apple stock.

Speaker Change: I think we're balancing you know obviously being mindful in Union back then and data and then James AI and continuing to accelerate our organic growth rate.

Speaker Change: If you look at a couple of those puts and takes that you said you know in 2023, and especially even in the fourth quarter. The health care benefits right, where increased <unk> 6 million for the year in our incentive compensation, which we have paid out about 88% across the company in 2022 was up closer to target.

Speaker Change: In 2023, so those things are really starting to run rate into 2024, where they certainly impacted 2023 more.

Brian Hipson: But outside of that, you know, again, as I said, when we talked about kind of more in that, you know, getting towards 50 to 100 bits of margin expansion, 30 bits is kind of on the edge there, you know, another $5 or $10 million. It's something that we're just, again, trying to be mindful around, you know, making sure that we're investing and continuing to accelerate the business because, you know, I know we're excited about MDM, I know we're excited about third-party risk compliance, our opportunities, you know, on the GNI side, maybe Anthony can talk a little bit more from that perspective. We have a lot of that that's in front of And so, you know, trying to be that kind of, you know, not penny wise and pound foolish, is the approach we took this year.

Speaker Change: But outside of that.

Speaker Change: And as I said, when we talked about kind of more in that you know getting towards 50 to 100 beds or margin expansion 30 bps is kind of on the edge there another five or $10 million.

Speaker Change: It's something that we're just again trying to be mindful around you know, making sure that we're investing and continuing to accelerate the business because you know.

Speaker Change: I know, we're excited about MDI and I always thought about third party ability to fly our opportunity on the Jennie O five maybe Anthony can talk a little bit more from that perspective, you know we have a lot of that.

Anthony: That's in front of us and so you know trying to be.

Anthony: Is that kind of you know about penny wise and pound foolish.

It was the approach we took this year.

Brian Hipson: Yeah, so just that on, you know, to Brian's point, our typical margin expansion, probably another 5-10 million, which is a relatively small number when you're doing, you know, about 950 million of EBITDA. And in particular, in the moment that we're in, where we see a lot of this opportunity in front of us, the biggest regret would be if we didn't achieve as much as possible in this growing wave of innovation with generative AI. So, again, we're being very thoughtful about it. We're expanding margins by 30 basis points in 24. We've got a great growth guide that way, which will continue to build into 2025. I feel really good about what that looks like.

Anthony: So I'll just add on to Brian's point typical margin expansion, probably another $5 million to $10 million.

Anthony: Which is a relatively small number when you're doing now about 950 million of EBITA.

Anthony: And in particular in the moment that we're in where we see a lot of this opportunity in front of us.

Anthony:

Anthony: You know the the biggest regret would be if.

If we didn't achieve as much as possible in this growing wave of innovation regenerative AI. So again, we're being very thoughtful about it we're expanding margins 30 basis points in 24, we've got a great growth.

Anthony: You know guide that way.

Anthony: Which again will continue to build into 2025 and feel really good about.

Anthony: What that looks like so again these are the things that.

Anthony Jabbour: So, again, these are the things that we think are really important in balancing our short-term immediate results but also our medium to long-term full opportunities here. And Seth, just one more piece as they're, you know, bridging items here in 2024. We continue to look at the portfolio, and there was a small finish. We call it Voice to the customer. Solutions said that it was about $2.5 million in revenue and $2.5 million in expenses, and we ended up finishing the sale of that from that perspective, too.

Anthony: We think are really important.

Anthony: <unk> you know our short term immediate results, but also.

Our medium to long term.

Anthony: Full opportunities here.

Anthony: And if there's one more piece out there you know bridging items go in 'twenty 'twenty. Four you know we continue to look at the portfolio and that was a small finished without a voice of the customer.

Anthony:

Anthony: Solutions side that was about two and a half million of revenue someone else doing it and we ended up with.

Anthony: We're finishing the sale of that from that perspective. So again, that's just something from a modeling perspective, but I think not overly material, but just something to consider that as we see these opportunities to get low margin no margin businesses, such as those we want to get them out of the portfolio. So you can kind of see what that true.

Brian Hipson: So, again, that's just something from a modeling perspective, but I think not overly material, but just something to consider that as we see these opportunities to get low-margin, no-margin businesses such as those, we want to get them out of the portfolio so we can kind of see what the true results are really provided. Yep, makes sense. Thanks for that.

Anthony: True.

Anthony: Also they would provide it.

Speaker Change: Yeah makes sense. Thanks for that and then just a follow up just on.

Seth Weber: And then just a follow-up just on international growth continuing to be, I think, you know, better than we would have thought. Can you, you know, there's some growing concerns around Europe lately. I mean, can you just kind of catch us up on what you're seeing?

Speaker Change: The international growth continues to be I think better than what we would've thought can you.

Speaker Change: There is some growing concerns around Europe lately I mean can you just kind of catch us up on what Youre seeing.

Anthony Jabbour: In some of the international markets and how comfortable you are with the outlook for international business in 2024. Sure. Yeah, we've got a lot of confidence in our international franchise overall and, you know, the momentum that we've built there. So there's been a lot of great work taking DMV products and localizing them for the markets. It's been a great tailwind for us.

Speaker Change: And some of the international markets and how comfortable you are with the outlook for international business in 2024.

Speaker Change: Sure Yes.

Speaker Change: We've got a lot of confidence in our international franchise overall and the momentum that we built there. So there's been a lot of great work taking.

Speaker Change: Dnb products localizing from the markets, it's been a great tailwind for US there has been the creation of new capabilities. The ones I mentioned in my prepared remarks, a racy.

Anthony Jabbour: There's been the creation of new capabilities. The one I mentioned in my prepared remarks, RACI, which is, you know, added workflow monitoring to risk and compliance intelligence. And that's one where we started it internationally, and we're bringing that one back, you know, to the U.S. But overall, like I said, with Europe specifically, to your question, we see that in, you know, mid-single-digit growth in 2024. And so again, as you look at, you know, I'm very proud of our team and of the caliber, the performance, how hard everyone works and is committed. You know, with Biznode, when we acquired it, it was a decliner. We got it back to neutral from there.

Speaker Change: Which is you know added workflow monitoring to so risk and compliance intelligence.

Speaker Change: And that's one where we started it internationally and we're bringing that one back to the U S. But overall like I said, you know with Europe specific to your question, we see that and you know mid single digit growth in 'twenty.

Speaker Change: 'twenty 'twenty four and so again as you look at you know I'm very proud of our team and have fun.

Speaker Change: The caliber of the performance how hard everyone works and as committed.

Speaker Change: You know with with business when we acquired it it was a decline or we got it back to neutral from there. We've got it growing a few percent and I think it'll be about mid single digits this year and so.

Anthony Jabbour: We've got it growing by a few percent, and I think we'll be able to meet single digits this year. And so by having more direct control of the client, like we do in Europe right now, by owning BizNote, we're able to get to these large companies. We've had a real nice growth of penetrating larger enterprise clients, you know, that are based in Europe. So, again, I'm really proud of the team there. They're very focused, and, you know, we do have confidence in 2024. I appreciate the call, everybody.

Speaker Change: Bye.

Speaker Change: By having more direct control of the client like we do in Europe right now.

Speaker Change: By owning Theres no we're able to get to these large companies we've had a real nice growth.

Speaker Change: Trading larger enterprise clients that are based in Europe. So again, I'm really proud of the team, they're there, they're very focused and and and we do have confidence.

Speaker Change: And in 2024.

Speaker Change: I appreciate the color guys. Thank you.

Seth Weber: Thank you. Thanks, Seth. Thank you. Our next question is from Andrew Jeffrey with Truist Securities. Please go ahead.

Speaker Change: Thanks Seth.

Speaker Change: Thank you.

Speaker Change: Our next question is from Andrew Jeffrey with <unk> Securities. Please go ahead.

Andrew Jeffrey: Hi, good morning; I appreciate you taking the questions. Anthony, definitely, you know, I've been hearing a lot about MDM and supply chain management, and that seems to be driving a lot of the growth. And Brian, you mentioned portfolio review, just a high level. If you step back, are there products or solutions or areas of the market perhaps that are sort of consuming resources without generating comparable returns to some of your growth areas? And would D&B, or has D&B, or will D&B think about reviewing the portfolio in a more holistic way and maybe getting a little more targeted and focused? How do you think about the portfolio overall? I guess? Yeah, great question, Andrew.

Andrew Jeffrey: Hi, Good morning, appreciate you taking the questions.

Andrew Jeffrey: Hey, Anthony.

Andrew Jeffrey: Definitely hearing a lot and it had been about M. D M and in supply chain management and that seems to be driving a lot of the growth went in and Brian you mentioned portfolio review just high level, if you step back.

Andrew Jeffrey: Are there products or solutions or areas of the market perhaps debt.

Andrew Jeffrey: Or sort of utilizing resources without generating comparable returns to some of your growth areas and wood wood D&B or has D&B are well D&B think about reviewing the portfolio in a more holistic way and maybe getting a little more targeted and focused you know how do you how do you think about the portfolio.

Andrew Jeffrey: The overall I guess.

Andrew Jeffrey: Yeah.

Anthony Jabbour: It's something that we focus on all the time. Brian mentioned just the Finnish business that we're going to invest in. And we did a small B2C business in Europe last year as well.

Speaker Change: Yeah, Great question, Andrew it's something that we focus on all the time, Brian mentioned just to finish up business that were going to.

Speaker Change: The divest of and we we did.

Speaker Change: A small D to C business in Europe last year as well.

Anthony Jabbour: So we're constantly looking at that. But we're also looking at it because there are certainly parts of where we are investing, I'd say in the business, not getting the return that we would in other parts. But those parts are really critical to us.

Speaker Change: So we're constantly looking at that but we're also we're looking at it because there are certainly parts of where we are investing I'd say and that is not getting the return that we would in other parts, but those parts are really critical to us. So if we think of that.

Anthony Jabbour: So if we think of the credibility business, which, you know, has been a headwind and a decliner for us in previous years, we think this year that it will not decline; we'll get it to even or low single-digit growth. The value of the data that we get from that business is really valuable for other parts of our business, which are growing well and driving insights for us, which help us in other parts of our business. And overall, when I look at the return that we're getting by line of business, we certainly are, I'd say, consolidating a number of products, right? So that's going to be a key area where we continue to drive efficiencies.

Speaker Change: The credibility business, which you know has been a headwind.

Speaker Change: And the decline for us in previous years, we think this year.

Speaker Change: It will it will not decline, we'll get it to.

Speaker Change: To even or low single digit growth.

Speaker Change: The value of the data that we get from that business is really valuable for other parts of our business, which are growing well and driving insights force, which help us in other parts of our business and to an overall when I look at you know they're there.

Speaker Change: Return that we're getting you know by line of business, we certainly are.

Speaker Change: I I'd say.

Speaker Change: Consolidating a number of products right. So that's going to be a key area, where we're going to continue to drive efficiencies.

Anthony Jabbour: So, I think in, you know, we shut down seven product lines last year alone, where we've migrated, we've had a lot of success migrating our clients to our more modern solutions, and we talked about the importance of that, but in the meantime, we've also been able to shut down the legacy systems there, and there's a lot of work that way where I'd say we have probably the most focused, Andrew, is there's opportunities we continue to completely migrate off the system to shut it down, then it requires no investment, and while some of the legacy systems exist, they still do require investment, obviously, right, and it could be a low level of investment, obviously, right, from a security perspective, for example, but they still require investment, and that's really where we're focusing our attention on, in addition, like I said, to the portfolio with you. Okay, I appreciate that.

Speaker Change: So.

Speaker Change: I think in.

Speaker Change: Shut down seven product lines last year alone, where we've migrated and had a lot of success migrating our clients towards more modern solution that we talked about the importance of that.

Speaker Change: But in the meantime, we've also been able to shut down the legacy systems, there and Theres a lot of work that way, where I'd say, we have probably the most focused Andrew is there's opportunity as we continue to completely migrate fun office system to shut it down then it requires no investment.

Speaker Change: And while some of the legacy systems exist. They still do require investment, obviously right and it could be a low level of investment obviously right from a security perspective for example, but they still require investment and that's really where we're focusing our attention.

Speaker Change: In addition, like I said to the portfolio with you.

Speaker Change: Okay, I appreciate that and.

Anthony Jabbour: I guess my other question is, from a data ingestion or data cost standpoint, can you talk a little bit about sort of the timeline for when you're acquiring new data sets, and that's part of the cost structure, and maybe one of the things that's limiting what otherwise would have been stronger margin expansion? Can you talk about the path from data ingestion to new product introduction or revenue generation?

Yeah, I guess my other question is as a from a data ingestion of data cost standpoint can you talk a little bit about sort of timeline to the extent, you're acquiring new datasets and that's part of the cost structure and maybe one of the things that's limiting what otherwise would have been stronger margin expansion can you talk about the path.

Speaker Change: From sort of data ingestion too.

Speaker Change: <unk> new product introduction of revenue generation.

Brian Hipson: Yeah, I'll start then, Brian, and you could tack on from a margin perspective. You know, it's certainly an area where, as we look at the lead that we have in master data management, and we've talked about, we've got the Dunn's number, which is pervasive everywhere, right? And it's a privileged position.

Speaker Change: Yeah, I'll start and Brian you did tack on from a margin perspective, you know I'd say, it's certainly an area where as.

Speaker Change: As we look at the lead that we have in master data management and.

Speaker Change: We've talked about we've got the dun's number which is pervasive everywhere right and it's a privilege position our entity resolution is best in class and obviously the commercial data that we have in the database. We believe is the best in the world and have a lot of proof points around that so the idea with bringing on additional.

Anthony Jabbour: Our entity resolution is best in class, and obviously, the commercial data that we have in the database is the best in the world, and we have a lot of proof points around that. So, the idea of bringing on additional data is, how do we continue to drive, you know, enhanced value in that space? And so, if we think of, you know, some alternative data sources, we're finding real value from them in combination with what we already have and in combination with working with our clients. So, with the capital markets win that we discussed in the fourth quarter, again, a very, very large player in the space, you know, the Through this new alternative data that we're having, some of it is really driving the most incremental value, right, on top of all the other data and insights that we have.

Data is how do we continue to drive them.

Speaker Change: Enhance value.

Speaker Change: In that space and so if we think of you know some alternative data sources.

Speaker Change: We are finding real value from them in combination with what we already have and in combination with working with our clients.

Speaker Change: With the capital markets when that we discussed in the fourth quarter again, a very very large player in the space.

Speaker Change: Yeah.

Speaker Change:

Speaker Change: Through this new alternative data that we're having you know some of it is really driving the most incremental value right on top of all the other.

Speaker Change: Data and insights that we have so.

Anthony Jabbour: So, that's why it continues to be a really important driver for us and a momentum builder, I'd say. And similarly, from an ingestion perspective, the team's doing a great job, obviously, in shrinking the timeline of when we ingest data, when it's available for clients, and really simplifying the data supply chain on a steady basis. Yeah, and Andrew, what I would say is, like, one of the things that we've done a good job of is we continue to invest in data, and we're going to have data processing. That's pretty, you know, normal, right, to support the business. This year, in 2023, really, you know, the component that was kind of abnormal was the, you know, $10 million of incentive compensation as we reset from, you know, roughly 80% payout in 2022, as I said earlier, to 2023. And then the health care benefits were up about $6 million on a year-over-year basis.

Speaker Change: So that's why it continues to be a really important driver for us and them and the momentum builder I'd say and assembly from an ingestion perspective. The team is doing a great job, obviously and you know shrinking the timeline of when we ingest it when it's available for our clients and really simplifying the data supply chain on a steady basis.

Speaker Change: Oh yeah.

Speaker Change: And Andrew what I would say, it's like you know one of the things that we've done a good job of as we continue to invest in data and we're gonna have data processing that that's pretty normal for the business. This year in 2023 really you know the.

Speaker Change: That was kind of abnormal was was the $10 million in <unk>.

Speaker Change: Kind of compensation as we reset.

Speaker Change: You know roughly 80% payout you know in 2020 two as I said earlier. It took 2023 and then the health care benefits were up about $6 million on a year over year basis, and that's it frankly people going back more to the doctor or people you know increasing from our UK job of their overall benefits were.

Brian Hipson: And, you know, frankly, people going back, you know, more to the doctor, people, you know, increasing, you know, from a usage of their overall benefits where that had been a little bit, I think, you know, lower, certainly coming out of the pandemic and initially from work from home. So, you know, those are two things that are back towards a higher run rate, but certainly, you add another $16 million onto the 892, and you see the expansion from that perspective. All right.

Speaker Change: Got it back a little bit I think lower certainly coming out of the pandemic and in initiatives. Initially from the work from home. So those are two things that are back towards more run rate.

Speaker Change: Certainly you add another $60 million onto the eight I need to win and you see you know the the.

Speaker Change: Expansion from that perspective.

Alright, thank you.

Andrew Jeffrey: Thank you. Our next question comes from the line of Andrew Steinerman with JP Morgan. Please go ahead.

Speaker Change: Thank you. Our next question comes from the line of Andrew Steinman with JP Morgan. Please go ahead.

Andrew Charles Steinerman: Hi Brian, just a little bit more on the data processing cost. You call it, I think you call it data processing, but is it third-party data purchasing or also third-party processing purchasing? And do you feel like we're gonna have to continue to talk about this subject from a margin perspective, or do you feel like you'll be able to realize enough value with the customers that it's not gonna be an ongoing conversation? Yeah. So, Andrew, again, I think we're always going to have our data and data processing, right? So, this is the, you know, for instance, cloud charges, right?

Andrew Steinman: Hi, Brian just a little bit more on the data processing costs.

Andrew Steinman: Cause I think you call it data processing third party data purchasing or also the third party processing.

Andrew Steinman: Purchasing and do you feel like we're going to have to continue to talk about this subject.

Andrew Steinman: From a margin perspective, or do you feel like you'll be able to realize value.

Andrew Steinman: Value with the customers that it's not going to be.

Andrew Steinman: The subject.

Speaker Change: Yeah. So Andrew again, I think we're always going to have obviously, our data and data processing right. So this is the.

Speaker Change: For instance, cloud charges right.

Brian Hipson: This is the processing charges that we have to support, you know, our overall revenue streams. And so, it's not necessarily that these things are, you know, incrementally or over and above where they should be, right? You're going to have, you know, that level of cost embedded within, you know, the overall margin structure. And so, like I said, really, when we think about, you know, the typical data, you know, costs and processing costs, a lot of those costs are internal in our data supply chain, in our, you know, cloud infrastructure.

Speaker Change: Processing charges that we have to support you know our overall revenue streams.

Andrew: And so it's not necessarily that'd be things are incrementally are over and above where they where they should be right.

Andrew: You're going to have that level of cost embedded within the overall margin structure.

Andrew: Like I said, you know really when we think about you know the typical data you know caused that process involves a lot of those costs are our internal and our data supply chain in our cloud infrastructure.

Brian Hipson: But again, that's normal, right, in terms of us driving the contribution margins that we would expect. Really, as I said, again, in 23, for instance, the abnormal piece was more around, you know, some of these kind of resetting of incentive-based compensation across the company and some of the elevated healthcare benefits. As we're heading into 24, again, we'll expect, you know, normal data and data processing fees, right, that run through.

Andrew: But again, that's normal right in terms of.

Andrew: Driving the contribution margin that we would expect.

Andrew: Really as I said again in 'twenty three for instance.

Andrew: The abnormal piece was more around some of these are kind of resetting of incentive based compensation across the company and some of the elevated health care benefits as we're heading into 24.

Andrew: Again, we'll expect you know normal data and data processing fees right that run through.

Brian Hipson: But, you know, it's more along the lines of us continuing to drive organic revenue growth. And then it's just being mindful of, you know, the environment and where we want to make the investments and push forward with, you know, some of the Gen AI investments, some of the investments we're making around capital markets, which is, you know, where we're expanding margins, but just not, you know, pushing them towards the higher end of our expansion ranges. Okay.

Andrew: But you know it's it's more you know a long lived up you know continue to drive organic revenue growth and then it's just being mindful of the environment and where we want to make the investments to push forward and some of the jet AI investment in some of the investments, we're making around capital markets.

Andrew: Which is where we're expanding margins.

Andrew: But just not pushing them towards the higher end of our expansion ranges.

Andrew Charles Steinerman: Thanks, Brian. Thank you. Our next question is from Manav Patnaik with Barclays. Please go ahead.

Okay. Thanks, Brian.

Speaker Change: Thank you.

Speaker Change: Question is from Manav Patnaik with Barclays. Please go ahead.

Manav Patnaik: Thank you. I just wanted to touch on, you know, I think you said it was 27% of the vitality index. Just hoping for a little bit more color on, you know, just some more quantification around, you know, how you calculate that, maybe the base, and how is that going to contribute to 24 guidance? Sure.

Manav Patnaik: Thank you I just wanted to touch on you know I think he said it was 27% with the vitality index Ah just help me a little bit more color on just some more quantification around how you calculate that needed the beef and how is that going to contribute.

Manav Patnaik: 220 core guidance.

Anthony Jabbour: The way we calculate the vitality index is revenues from newer products that we have, and really, what we're trying to measure with that is, do we have a lot of our clients on older products, older solutions? So if you think about that at renewal time, you know, do you have your best foot forward with the clients? Are they on an older solution?

Manav Patnaik: Sure.

Speaker Change: Well the way we calculate the vitality index is revenues from newer products that we have.

Speaker Change: And really what we're trying to measure you know with that is do we have.

Speaker Change: A lot of our clients on our.

Speaker Change: Older products older solutions. So if you think about that.

Speaker Change: At renewal time.

Speaker Change: Do you have your best foot forward with declines or are they on an older solution. So so for us.

Anthony Jabbour: So, for us, with our vitality index being so high, and it won't always be this high because, like I said, it's cycles. It will probably be in the 20% range, I imagine, which again is, I think, exceptionally high. But what it'll do is it'll allow us to be in a position of strength on renewals with our clients, number one. Number two, the way they're architected enables us to sell add-on capability because it's built into that infrastructure on our more modern platforms versus what's possible today with some of the legacy ones.

Speaker Change: With our vitality index being so hot and it won't always be this high because like I said it cycles. It's.

Speaker Change: And it will probably be in the 20% range I imagine, which again is I think exceptionally high.

Speaker Change: <unk>.

Speaker Change: But what it'll do is it'll allow us.

Speaker Change: And to be in a position of strength on renewals with our clients number one.

Speaker Change: To get all the way, they're architected facilitates us too.

Speaker Change: To sell add on capability.

Speaker Change: Because it's built into that infrastructure on a more modern platforms versus whats possible today with some of the legacy ones. So from that perspective Manav. That's why it's important to us we're driving higher client satisfaction. We are seeing a lot of great operational results.

Anthony Jabbour: So from that perspective, Manav, that's why it's important to us. We're driving hired client satisfaction. We're seeing a lot of great operational results from that and from our renewal rate. But it also puts us in a great position from a cross-sell and up-sell perspective as we can innovate small bundles, analytics, et cetera, that we can plug in easily and clients can buy easily, and they can implement easily. Yeah, Manav, I think, you know, to Anthony's point, one thing we want to make sure is that one of the vintages from early on is falling off, right, you know, as we head into 2024. So don't be surprised when that Vitality Index number starts to migrate down this year.

Speaker Change: So from that and you know from our renewal.

Speaker Change: Renewal rates, but it also puts us in a great position from a cross sell upsell perspective.

Speaker Change: As we continue to innovate.

Speaker Change: A small bundle analytics et cetera, we can plug in.

Speaker Change: Easily and clients can buy easily and they can implement easterly.

Speaker Change: Yeah.

Speaker Change: Pink to Anthonys 0.1, we want to make sure you know.

Speaker Change: Like one of the vintages from early August falling off right you know as we head into 2044, so don't be surprised about.

Speaker Change: Any of that number starts to migrate down this year.

Brian Hipson: But I think, you know, when you think about how that impacts guidance, right? It's helping us from a pricing perspective, right? It's helping us, obviously, from a cross-sell, you know, an up-sell perspective, and our retention rates, right, you know, continue to be, you know, industry highs from that perspective. So it was really important for us to not only invest in and upgrade the material solutions that we have, but as we bring on, you know, capital markets, right, as we do, you know, things like, you know, Anthony mentioned, mass procurement and aid for Hoovers. These are all things that, you know, ultimately fall into supporting the Vitality Index as we go forward. Got it. Thank you. And Brian, maybe just a quick follow-up. Relative to EPS, anything to keep in mind in terms of conversion for free cash flow and stuff? Yeah, so Manav, this year in particular on EPS, you know, I think the President of Ireland signed Pillar 2 into effect on December 18, so late last year.

Speaker Change: But I think when you think about how does that impact guidance right, what's helping us from a pricing perspective, right, it's helping us obviously from a R.

Speaker Change: Ross I'll, you know an upsell perspective, our retention rates right.

Speaker Change: To be industry high from that perspective, so it was really important to not only invest in upgrades you know materially solutions that we have but as we bring on capital markets right. As we do things like you know Anthony mentioned adds procurement in April who but these are all things that ultimately fall into supporting.

Speaker Change: The vitality of buybacks as we go forward.

Speaker Change: Got it thank you and Brian maybe just a quick follow up is relative to E. P. S anything to keep in mind in terms of conversion or free cash flow and stuff.

Brian: Yeah. So so what else this year in particular.

Brian: On EPS, you know I think the president of Ireland signed into a fact pillar two on the summer 2018. So late last year, so that had a pretty big obviously impact on a year over year basis from that perspective, you know the tax rate's gone from roughly 18% that's 23%. So we're talking probably in the <unk>.

Brian Hipson: So that had a pretty big, obviously, impact on a year-over-year basis. From that perspective, you know, the tax rates going from roughly 18% to 23%, so you're talking probably in the range of, you know, six cents from that side. When we think about the conversion component, you know, free cash flow going into adjusted income, there are a couple things that are driving that improvement. One, you know, DNA and CapEx are starting to converge. You know, CapEx has come down off of its peak, you know, back in that 21-22 timeframe. And so, you know, those two start to converge. That was always a big, you know, component of the gap.

Brian: <unk> six cents from from that side when do we think about the conversion compadre free cashflow going into adjusted anything in kind of a couple of things that are driving that improvement one D&A and capex are starting to converge you know capex.

Brian: Capex has come down off of its peak back in and that's 'twenty, one 'twenty two time, Brian and so as you know.

Brian: Those two start to converge last that was always the big component of a gap.

Brian Hipson: And then, you know, while we have some of these cloud, you know, migrations going on, some of the back office work, as those wind down and some of those duplicative costs come off, that also helps the two converge from that perspective. Thank you very much. Thank you. Ladies and gentlemen, in the interest of time, we will take the last question from Heather Burson, with Bank of America, please go ahead. Hi, thank you for taking my question. I appreciate it. I wanted to go back to the question earlier with regard to investment spend and margin and how you think about it philosophically going forward. I appreciate that right now, Gen AI is a meaningful opportunity, but given that we kind of operate in a world where there's a lot of innovation going on and technology seems to be advancing very fast, how do you think about balancing your margin target, your midterm margin target with the opportunities that you see today and the potential for additional opportunities in the future?

Brian: And then you know while we have some of these cloud migrations going on some of the back office work as those wind down and some of those duplicative costs come off that also helps the tubes converts from that perspective.

Speaker Change: Alright, Thank you very much.

Speaker Change: Thank you.

Speaker Change: Ladies and gentlemen in the interest of time, we take the last question from headcount Passkey, but bank of America. Please go ahead.

Headcount Passkey: Hi, Thank you for taking my question I appreciate it.

Headcount Passkey: I wanted to go back to the question earlier with regards to investment spend and margin and how you think about it philosophically going forward I appreciate that that right now Jenny is.

Speaker Change: Meaningful opportunity, but like given that we kind of operate in a world, where there's a lot of innovation and.

Speaker Change: And technology seems too.

Speaker Change: It would be advancing very fast have how do you think about balancing your margin target.

Speaker Change: Midterm margin target with the Opex and all that.

Speaker Change: Today, and the potential for additional opportunities in the future.

Heather Burson: Thank you. Thank you, Heather. No, it's a good question.

Speaker Change: Well, thank you and I didn't know it's good question looking at.

Anthony Jabbour: Look, we're very focused operationally. I mean, what I'd say, again, looking back at 23, we had the core margin expansion that you'd expect with this type of business when you adjust for the, you know, unusual healthcare and the incentive benefit comps, right? So, in terms of the core engine, how it's producing revenues, and how the margins are expanding, you know, we see that we have confidence in it. And when we look to 2024 and have a margin expansion of, you know, 30%, you know, we guided 50 to 100. And like we said, there's about a $5 to $10 million difference in investment, where I think the number would be much greater, typically, you know, with the opportunity that's in front of us in front of many in this market, with the advent of generative AI. But it's a testament to where we have pulled back and where and how efficiently I say we are spending it, and where we are investing. So, this isn't something that I'd look at on any given year and look at 2024, 2025 as any given year.

Speaker Change: We're very focused operationally I mean.

Speaker Change: What I would say again looking back at 'twenty three we had the core margin expansion that you would expect with this type of business.

Speaker Change: When you when.

Speaker Change: When you adjust for the you know the unusual health care and the incentive benefit comps right. So in terms of the core engine, how it's producing revenues and how the margins are expanding and we see that we have confidence in it and when we look to 'twenty 'twenty, four and having margin expansion of 30% and we guided.

Speaker Change: 50 to 100 and like we said, there's about a $5 million to $10 million difference there if investment where I think the number would be much greater typically with the opportunity that's in front of us in front of many in this market.

Speaker Change: With the advent of generative AI, but it's a testament to where we have pull back spend.

Speaker Change: And where and.

Speaker Change: And how efficiently they say we are spending it and where we are investing so this.

Speaker Change: This isn't something that I'd look at an.

Speaker Change: On any given year and look at 2020 for 2025 is any given year I really look at them as inflection points in this industry I'll say in the data and analytics industry.

Anthony Jabbour: I really look at them as inflection points in this industry. I'll say in the data and analytics industry, there's potential here. And those that really understand that, I think are really doubling down their investments to take advantage of that space, and it would be foolish for us not to do that. And like I said, it's a relatively small investment that we're making that precludes us from being in the typical margin range that we would be.

Speaker Change: There's potential here and those that really understand that I think are really doubling down their investments to take advantage of that space. It would be foolish for us not to do that.

Speaker Change: And like I said, it's a relatively small investment that we're making that precludes us from being in the typical margin range that we would be.

Heather Burson: But like I said, we feel really good and that the juice is worth the squeeze. Thank you. I appreciate it. Thank you, Heather. Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to Anthony Jaffar for his closing comments. Thank you, Ryan. As always, I'd like to thank my Dun & Bradstreet colleagues for their exceptional efforts to sustainably grow our business for the years to come, and to our great clients for their partnership and guidance. I'd like to thank you for your interest in Dun & Bradstreet. I hope you have a wonderful rest of your day. Thank you. The conference of Dun & Brad Hldg has now concluded. Thank you for your participation. You may now disconnect your line.

Speaker Change: But like I said, we feel really good and that the juice is worth the squeeze.

Speaker Change: Okay.

Speaker Change: Thank you I appreciate it.

Speaker Change: Thank you Heather.

Speaker Change: Thank you.

Anthony Egfr: Ladies and gentlemen that was the last question I now hand, the conference Silver Anthony Egfr for his closing comments.

Speaker Change: Thank you Ryan as always I'd like to thank my Dun and Bradstreet colleagues for their exceptional efforts to sustainably grow our business for the years to come and to our great clients for their partnership in guidance.

Anthony Egfr: I'd like to thank you for your interest in denim Breastfeed Hope you have a wonderful rest of your day.

Speaker Change: Thank you the conference of Dun and Bradstreet has now concluded. Thank you for your participation you may now disconnect your lines.

Speaker Change: Okay.

Speaker Change: Hum.

Speaker Change: Hum.

Speaker Change: Hum.

Speaker Change: [music].

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: [music].