Q4 2024 Dun & Bradstreet Holdings Inc Earnings Call - Q&A
Speaker Change: Good day and thank you for standing by. Welcome to the Dan and Bradstreet fourth quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session.
Speaker Change: To ask a question during the session, you need to press star 1 when on your telephone. You will then hear an automated message device when your hand is raised.
Speaker Change: To withdraw your question, please press star 1 when again. Please be advised, today's conference is being recorded. I would now like to hand the conference over to your speaker today, Sean Anthony, Vice President of FP&A and Investor Relations. Please go ahead.
Speaker Change: 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, 2024.
Speaker Change: On the call today, we have Dun & Bradstreet CEO Anthony Jabbour and CFO Bryan Hipsher.
Speaker Change: Before we begin, allow me to provide a disclaimer regarding forward-looking statements.
Speaker Change: 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.
Speaker Change: Our actual results may differ materially from our projections due to a number of risks and uncertainties.
Speaker Change: These risk and uncertainties the forward-looking statements are subject to are described in our earnings release and other SEC filings.
Speaker Change: Today's remarks will also include references to non-GAAP financial measures. Additional information, including the 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 Dun & Bradstreet's Investor Relations website at investor.dnb.com.
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 2024 earnings call.
On today's call, I'll hit on four key topics.
But first, a brief update on the ongoing process.
Anthony Jabbour: The second, an update on our fourth quarter and full year results.
Anthony Jabbour: The third, a review of the significant accomplishments in 2024, and the fourth, our focus areas for 2025.
Anthony Jabbour: After that, I'll pass the call over to Bryan for an in-depth review of our results and to discuss our guidance expectations for 2025.
Anthony Jabbour: We'll then open up the call for Q&A and finish up with a few closing comments.
Anthony Jabbour: Let's get started with an update on the inbound interest we received in 2024 and the resulting process that ensued.
Anthony Jabbour: I'm going to keep my comments very brief, as you can imagine.
Anthony Jabbour: Activity ramped up in late November and has carried on through the beginning of 2025, and our team has done their best to balance managing their day-to-day responsibilities with being responsive to the inquiries from interested parties.
Anthony Jabbour: The team's dedication and hard work to both causes have been commendable, and based on the latest activities, we currently expect to share the outcome of the process in the first quarter.
Anthony Jabbour: With that being said, let's move on to an overview of our full year and fourth quarter results.
Anthony Jabbour: 2024 was another year of meaningful improvement. We achieved 3% organic revenue growth, expanded EBITDA margins by 30 basis points, and made substantial strides in our product, technology, and data transformations.
Anthony Jabbour: Additionally, we improved our capital structure by reducing net leverage to 3.6 times at year end.
Anthony Jabbour: As we headed into October, we had a year-to-date organic revenue growth rate of 4% and the path to deliver a similar growth rate in the fourth quarter, but we ultimately fell short due to three anomalies.
Anthony Jabbour: The first and most significant factor was the delay of certain deals expected to close in the quarter, impacted by distractions from our ongoing process.
Anthony Jabbour: These distractions intensified in November and December, shifting significant pipeline deals into early 2025 and impacting Q4 revenues by $9 million.
Anthony Jabbour: Secondly, we chose to exit two partnerships that were coming off multi-year agreements that were not mutually advantageous.
Anthony Jabbour: Our expectation was that we would come to a favorable agreement, but ultimately that was not the case.
Anthony Jabbour: This impacted revenues in the fourth quarter of 2024 by $6 million and full year 2025 by $14 million.
Anthony Jabbour: With offsetting expenses that will net a positive EBITDA outcome for our business.
Anthony Jabbour: And finally, we experienced timing-related delays in expected usage and deliveries of $3 million and $4 million, respectively.
Anthony Jabbour: of which the majority of these revenues are contractually obligated and are expected to flow into the first half of 2025.
Anthony Jabbour: As I've said before, this is a business that continues to grow through a significant amount of transformation, change, and improvements.
Anthony Jabbour: Looking back at the last 16 quarters, we have taken the business from essentially no growth to three to four percent growth, and we do not believe a quarter of slight growth is indicative of the significant improvements we've made to date and the upside potential we believe is to come.
Anthony Jabbour: And third, looking back at 2024, I'm proud to share the significant accomplishments we achieved and the amount of progress we've made in strengthening the foundational elements of DMV.
Anthony Jabbour: Going through a public transformation has been difficult, and I'm proud of our team's efforts.
Anthony Jabbour: The initial step for us was to stabilize our technology, then re-architect our technology, and then build modern solutions in the cloud.
Anthony Jabbour: Following these core foundational elements was the time-consuming and laborious efforts to migrate our clients to those new solutions, sunsetting legacy products, and optimizing our client contracts.
Anthony Jabbour: In 2024, we completed our migrations and optimized client contracts in North America finance and risk.
Anthony Jabbour: similarly to what we did with the international business earlier in the transformation.
Anthony Jabbour: We have seen the positive impact that these changes made on our international segment and we anticipate seeing a similar acceleration and growth in North America.
Anthony Jabbour: We pushed hard to complete the migration of our flagship platforms, Finance Analytics and DirectPlus API, and the sunsetting of our legacy solutions, which was our most significant initiative.
Sean Anthony: and Sean Anthony. Thanks for joining us. We'll be right back.
Anthony Jabbour: I'm happy to report that as of Q4 2024, we have successfully migrated tens of thousands of clients in North America.
Anthony Jabbour: The migration has taken a huge amount of client attention and sales effort, and as I've said many times, while the revenue benefit in the short term is minimal, we believe the long-term strategic value is substantial.
Anthony Jabbour: These moves create even more stickiness while providing our clients with greater flexibility and scalable solutions.
Anthony Jabbour: The second most significant migration was a shift of our clients to our risk analytics platform, which is now complete.
Anthony Jabbour: The move to risk analytics has enabled us to deliver risk assessment capabilities across our nearly 600 million DUNS entities in a single platform.
Anthony Jabbour: This solution is especially relevant considering the evolving economic and regulatory landscape, ensuring our clients have access to the insights necessary to make informed decisions.
We also continue to introduce new localized offerings.
meeting diverse regulatory requirements and market needs.
Anthony Jabbour: For example, our Risk Analytics Compliance Intelligence solution generated significant new sales with hundreds of customers and a strong pipeline for 2025.
Anthony Jabbour: And while we've been moving our clients to our latest and greatest solutions, we have also been refining and optimizing our client contracts.
Anthony Jabbour: The new contract structure more closely aligns our pricing with the value provided to our clients, ensuring a fair and transparent relationship.
Anthony Jabbour: and protecting our cost structure through the creation of more clearly defined contractual usage rights.
Anthony Jabbour: These changes have benefited our clients with more comprehensive and richer datasets, more versatile user interfaces, and the addition of flexible modular functionality to enhance their overall experience.
Anthony Jabbour: In summary, I'm optimistic for the future given the progress of our transformation.
Anthony Jabbour: from modernizing our tech environment to delivering high-performance cloud-based solutions, and then to migrate our clients to these solutions through the optimization of our client contracts. We believe we are positioned for growth.
Anthony Jabbour: With this strong foundation, our focus in 2025, and the last step of any transformational journey, is the go-to-market.
Anthony Jabbour: As I mentioned previously, we are introducing a vertical approach to deepen client relationships and launch vertical specific solutions.
Anthony Jabbour: I will highlight some of those today, and we look forward to sharing more this year.
Now let's turn to some client wins in the quarter.
Anthony Jabbour: First up, in North America, we are excited to add one of the nation's leading sales and marketing software companies to our client portfolio.
Anthony Jabbour: They now leverage our latest sales and marketing solutions, including D&B Connect, DataBlocks API, and our new GenAI solution, ChatD&B. These solutions allow them to leverage our data to power their territory structuring and go-to-market strategies for growth.
Anthony Jabbour: Another global FinTech leader in payments and banking turned to our trusted master data management capabilities, thermographic data, and linkage data to improve and enrich their company data.
Anthony Jabbour: They are also leveraging our data to perform merchant onboarding and verification, as well as fraud detection capabilities.
Anthony Jabbour: They will also use the firmographic data to create new derivative works.
Anthony Jabbour: This is a win for our client and for us as we are becoming the repository for merchant data with a unique data asset in the industry.
Anthony Jabbour: Next, we expanded our relationship with the large insurance brokerage that has used our master data services for many years.
Anthony Jabbour: This new multi-year renewal deal extended our master data services to all of its subsidiaries.
Anthony Jabbour: This growth and long-term commitment highlight the value of our solutions and our ability to build and nurture client relationships.
Anthony Jabbour: A top three management consulting firm expanded their relationship with us by adding three new use cases.
TAM analysis
Prioritization of high-value opportunities
Anthony Jabbour: and to strengthen the identification of cross-cell, up-cell opportunities, new logos, and reduced churn.
Anthony Jabbour: One of the big differentiators was our global footprint. And as they tested our data, we're highly impressed with our match rate and coverage.
Anthony Jabbour: And another example of where our global coverage was instrumental in winning a seven-figure, two-year deal with a multinational company specializing in workplace solutions and digital printing technologies.
Anthony Jabbour: They chose Dun & Bradstreet for a risk analytics compliance intelligence solution, which allowed them to consolidate screening for the unique lines of business through multiple workspaces.
Anthony Jabbour: and Shifting to International, our team successfully executed its strategy throughout the year.
Anthony Jabbour: One notable achievement was a three-year renewal and upsell of DataBlock's finance solutions with D.B. Shanker, a global logistics and supply chain management provider.
Anthony Jabbour: We supported their finance transformation by leveraging our modern API platform for automated credit decisioning and risk assessments.
Anthony Jabbour: Another key win was with one of the UK's largest banking and payment service providers.
Anthony Jabbour: We executed a new multi-million dollar deal, expanding our data blocks to include supply chain and compliance packets, aiding their market expansion and navigating supply chain complexities.
Anthony Jabbour: Finally, we signed a five-year renewal and upsell with the leading Scandinavian payments provider to organize and master their data.
Anthony Jabbour: This demonstrated our ability to create efficiencies across multiple use cases through our master data management capabilities.
Anthony Jabbour: And lastly, as we focus on 2025, we'll be delivering a more verticalized go-to-market approach.
enabling our generative AI solutions through API and native integrations.
capitalizing on our modernized technology and platforms.
Anthony Jabbour: Leveraging our unique financial, payment, and trade data to access high-growth areas such as capital markets and private markets.
Anthony Jabbour: and doubling down in high market demand solutions including supply chain, risk and master data management.
Anthony Jabbour: We are more prepared than ever to meet a business's accelerated need for trusted global data and analytics, and we look forward to attacking these new opportunities with focus and determination.
Speaker Change: Sean Anthony, Bryan Hipsher, Sean Anthony, Bryan Hipsher, Sean Anthony, Bryan Hipsher,
Anthony Jabbour: So overall, we are excited about what's to come in 2025 and certainly believe that 2024 was a year of significant improvement for our company.
Anthony Jabbour: I'm proud of our team's efforts and the strong foundation we are building for sustainable growth and profitability.
Anthony Jabbour: With that, I'd now like to turn the call over to Bryan to discuss our financial results for 2024 and outlook for 2025.
Bryan Hipsher: Thank you, Anthony, and good morning, everyone. Today, I will discuss our fourth quarter and full year 2024 results and then our outlook for 2025.
Turning to slide one.
Bryan Hipsher: On a gap basis, fourth quarter revenues were $632 million, or less than 1% growth compared to the prior year quarter, both after and before the effect of foreign exchange.
Bryan Hipsher: The $6 million increase in net income compared to the prior year quarter was primarily driven by lower net personnel costs, partially offset by a higher tax rate provision in the current year quarter.
for full year 2024.
Bryan Hipsher: Revenues were $2,382 million, an increase of 3% both after and before the effect of foreign exchange. On a 4-year basis, net loss was $29 million, or a diluted loss per share of 7 cents, compared to a net loss of $47 million for the prior year.
Bryan Hipsher: Turning to slide two, I'll now discuss our adjusted results for the fourth quarter.
Bryan Hipsher: Fourth quarter adjusted revenues for the total company were $632 million, a less than 1% growth compared to the prior year quarter, both after and before the effect of foreign exchange.
Bryan Hipsher: The increase in revenues were attributable to growth in the underlying business, partially offset by the impact of a divestiture of a business-to-consumer business in Finland in the fourth quarter of 2023. Revenues on an organic constant currency basis were up 0.3%.
Bryan Hipsher: Fourth quarter adjusted EBITDA for the total company was $260 million, a decrease of $600,000, or less than 1%, primarily due to the higher cloud infrastructure costs, partially upset by lower personnel costs.
Bryan Hipsher: Fourth quarter adjusted EBITDA margin was 41%, a decrease of 10 basis points compared to the prior year quarter.
Fourth quarter adjusted income was $129 million.
for just an earnings per share of $0.30.
Bryan Hipsher: compared to $140 million or $0.32 in the prior year quarter.
Bryan Hipsher: This was primarily due to higher tax expenses related to the impact of the introduction of Pillar 2 and higher depreciation and amortization expenses, partially offset by lower interest expense and lower foreign exchange losses in the current year quarter.
Bryan Hipsher: Full year revenues for the total company were $2,382 million, an increase of 3% both after and before the effect of foreign exchange compared to prior year.
Bryan Hipsher: This increase was attributable to growth in the underlying business partially offset by the impact of a divestiture of a business-to-consumer business in Finland in the fourth quarter of 2023. Revenues on an organic constant currency basis were up 3%.
Bryan Hipsher: Full-year adjusted EBITDA for the total company was $927 million, an increase of $34.4 million, or 4%. Higher adjusted EBITDA was primarily due to revenue growth, partially offset by higher costs driven by cloud infrastructure and net personnel costs.
Bryan Hipsher: Full year adjusted EBITDA margin was 39%, an increase of 30 basis points compared to the prior year.
Bryan Hipsher: Full year adjusted net income was $429 million, or adjusted diluted earnings per share of 98 cents, compared to 2023 adjusted net income of $432 million, or $1 per share.
Turning now to slide three.
Bryan Hipsher: I will now discuss the results for our two segments, North America and International.
Bryan Hipsher: In North America, revenues for the fourth quarter were $449 million, a decrease of 1.8% from prior year quarter, both after and before the effect of foreign exchange.
Bryan Hipsher: In finance and risk, revenues were $229 million, a decrease of 5% due to decreased revenue from timing throughout 2024 in our finance solutions and risk solutions.
Bryan Hipsher: Coupled with the deal and delivery timing Anthony mentioned earlier, partially offset by an increase in revenue from our credibility solutions.
Bryan Hipsher: For sales and marketing, revenues were $219 million, an increase of 2% both after and before the effective foreign exchange.
Bryan Hipsher: Sales and marketing growth was primarily due to higher revenue from our master data management solutions, offsetting the impact of the exit of non-strategic partnerships that Anthony also mentioned earlier.
Sean Anthony: North America fourth quarter adjusted EBITDA was $208 million, a decrease of $16 million, or 7%, primarily due to lower revenues and higher cloud infrastructure costs partially offset by lower selling and marketing expenses. Adjusted EBITDA margin for North America was 46%.
Sean Anthony: Turning now to slide four, I will now discuss the full year results for North America.
Sean Anthony: In North America, full year 2024 revenues were $1,672 million, or 2% higher from prior year, both after and before the effect of foreign exchange.
Sean Anthony: North America, finance and risk, full year revenues were $891 million, an increase of less than 1% both after and before the effective foreign exchange.
Sean Anthony: This was primarily due to an increase in revenue from our third-party risk solutions partially offset by a net decrease of approximately 1% in revenues from our finance, government, and credibility solutions combined.
Sean Anthony: North America sales and marketing full-year revenues were 781 million dollars, an increase of 3% both after and before the effect of foreign exchange.
Sean Anthony: This was primarily driven by growth from our master data management solutions, partially offset by decreased revenue from our digital marketing solutions, and the exit of non-strategic partnerships.
Sean Anthony: Full year adjusted EBITDA for North America increased $3 million, or less than 1% to $746 million. The increase is primarily due to revenue growth, partially offset by higher costs driven by cloud infrastructure and net personnel expenses.
Sean Anthony: Full year adjusted EBITDA margin for North America was 45%, a decrease of 60 basis points to prior year.
Sean Anthony: Turning to slide 5. In our international segment, fourth quarter revenues were 183 million dollars, an increase of 6% or 5% before the effect of foreign exchange. Organic revenues on a constant currency basis increased 5.8%.
Sean Anthony: Finance and risk revenues were $126 million, an increase of 9%, or an increase of 8% before the effect of foreign exchange. This was attributable to growth across all markets.
Sean Anthony: Higher revenue from Europe was primarily attributable to growth in third-party risk in compliance solutions and modern API solutions.
Sean Anthony: Increased revenue from worldwide network alliances was primarily attributable to higher product loyalties and growth from our Asia markets driven by growth in API solutions and local market solutions.
Sean Anthony: Sales and marketing revenues were $57 million, or flat both after and before the effect of foreign exchange. Organic revenues increased approximately 1% due to higher revenue from worldwide network alliances, driven by higher product royalties.
Sean Anthony: Fourth quarter international adjusted EBITDA of $58 million, increased $3 million, or 5%. The increase was primarily due to revenue growth from the underlying business, partially offset by higher costs driven by net personnel expenses.
adjusted even a margin, what's 32%?
Sean Anthony: Now turning to slide six. In our international segment, full year 2020 foreign revenues increased 6% to $709 million, both after and before the effective foreign exchange. Organic revenues on a constant currency basis came in at 6%.
Sean Anthony: International finance and risk full-year revenues of 484 million dollars increased 8% both after and before the effect of foreign exchange.
Sean Anthony: All markets contributed to growth with strong demand for API solutions and finance analytics across all regions, robust growth from third-party risk and compliance in Europe, and increased revenues from worldwide network alliances primarily through higher cross-border activity and product loyalties.
Sean Anthony: International sales and marketing full-year revenues of 225 million dollars increased 2% both after and before the effective foreign exchange.
Sean Anthony: On an organic basis, revenues grew 2.7%, primarily due to higher revenues from the UK, driven by growth in API solutions, and higher revenue from worldwide network alliances, driven by higher product loyalties.
Sean Anthony: The increase in adjusted EVA was primarily due to revenue growth from the underlying business.
Sean Anthony: partially offset by higher net personnel costs and higher costs related to data fees and cloud infrastructure. Adjacency minimum margin was 33%, an increase of a hundred basis points.
Sean Anthony: Adjusted EBITDA for the corporate segment in the fourth quarter was a loss of $5.9 million, an improvement of $12.4 million. The improvement in adjusted EBITDA was primarily attributable to lower net personnel costs.
Sean Anthony: Turning to slide 7. Slide 7 contains the details of our capital structure as of quarter end.
Sean Anthony: At the end of December 31, 2024, we had cash and cash equivalents of $206 million and total principal amount of debt of $3,550 million, with a weighted average interest rate of 5.8%.
Sean Anthony: Currently, 90% of our debt is either fixed or hedged, and as of December 31st, 2024, we have $840 million available on our $850 million revolving credit facility.
Sean Anthony: Our leverage ratio was down to 3.6 times on a net basis and the credit facility senior secure net leverage ratio was 3.1 times.
Sean Anthony: Moving into 2025, we expect to continue to migrate towards a target of around 3.25 times by the end of 2025.
Sean Anthony: As previously communicated, we executed various interest rate swap transactions during the third quarter to manage our floating rate exposure. In the fourth quarter, we reduced the interest rate on our term loan by 50 basis points with the successful repricing.
Sean Anthony: These transactions provide valuable savings and continued protection amidst the ongoing economic uncertainties.
Sean Anthony: In regard to our share repurchase program, we did not execute any share repurchases in the fourth quarter due to ongoing interest.
Sean Anthony: Year-to-date, we repurchased 961,360 shares of Dun & Bradstreet Common Stock for $9.3 million, net of accrued excise tax at an average of $9.71 per share.
Sean Anthony: We currently have over 9 million shares remaining under our existing buyback authorization.
Sean Anthony: And now, turning to slide 8, our outlook for 2025 is as follows. Total revenues after the effect of foreign currency are expected to be in the range of $2,440 million to $2,500 million, or an increase of approximately 2.5% to 5%.
Sean Anthony: This includes an assumption of a modest headwind in the first half of the year due to the effect of foreign currency related to the expected variances between the U.S. dollar, euro, British pound, and Swedish krona.
Sean Anthony: Revenues on an organic constant currency basis are expected to be in the range of 3% to 5% for the full year.
Sean Anthony: Adjusted EBITDA is expected to be in the range of $955 to $985 million. And adjusted EPS is expected to be in the range of $1.01 to $1.07.
Additional modeling details underlying our outlook are as follows.
Sean Anthony: We expect adjusted interest expense to be around 200 million dollars.
Sean Anthony: Depreciation and amortization expense is expected to be in the range of $160 to $170 million, an adjusted effective tax rate of approximately 22 to 23 percent, weighted average diluted shares outstanding of approximately 438 million shares.
Sean Anthony: And for CAFX, we expect approximately $145 to $155 million of internally developed software and around $45 million of property, plant and equipment and purchase software.
Anthony Jabbour: And while we don't give quarterly guidance, I did want to provide some color on how we expect the year to progress. As Anthony mentioned earlier, we anticipate the ongoing process to conclude in the first quarter, and while that is ongoing, expect the first quarter to be closer to the low end of our range.
Anthony Jabbour: second and third quarter to be around the midpoint and fourth to be around the higher end of the range. We are also anticipating the deal and delivery timing shifts for Q4-24 are offset by the 2025 revenue impact of the non-renewals of some of the non-strategic partnerships we discussed prior in the call.
Anthony Jabbour: We expect free cash flow conversion as a percentage of adjusted net income.
Anthony Jabbour: Overall, in 2025, we expect to deliver accelerated growth in organic revenues.
Anthony Jabbour: EBITDA, Net Earnings, Free Cash Flow, and a Net Leverage Metric of around 3.25x by year-end.
Anthony Jabbour: 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. With that, we're now happy to open the call for questions. Operator, will you please open up the line for Q&A?
Speaker Change: Thank you. Ladies and gentlemen, if you have a question or a comment at this time, please press star 11 on your telephone. If your question has been answered and you wish to remove yourself from the queue, please press star 11 again. We will pause for a moment while we compile our Q&A roster.
Speaker Change: Our first question comes from Kyle Peterson with Needham. Your line is open.
Kyle Peterson: Great, guys, appreciate you taking the questions and providing all the color.
Kyle Peterson: I wanted to start off on, I know you guys mentioned some of the, you know, the distractions and, and, you know, certain
Kyle Peterson: kind of revenue pushouts due to the ongoing strategic review. How should we think about, obviously some, seems like some of that's going to come in early 25, but I guess in so far, have some of these distractions continued? And I guess like, what have you guys...
Kyle Peterson: built into the guide based on, you know, some of, you know, the pipeline uncertainties and such given the ongoing process.
Speaker Change: Sure. Thanks, Kyle. Also, I'll let Bryan add on to it. In terms of the distractions, you know, you know, certainly, you know, some of the deals I pushed out, we've signed some, so some, you know, took longer, we have others wanting to see who could potentially acquire us, could it be a competitor, for example. And so they're, they're still hanging and waiting, you know, to see.
Speaker Change: I think on some of the delivery items which are more contractual,
Speaker Change: at all to the process, as it were, I think, to individual, you know, you know, client budgets, and they could take a delivery in Q4 or take it in Q1, and it affected a 2025 budget versus a 24 budget.
Speaker Change: So, I think the majority of those will hit us earlier in the quarter, and the offsetting obviously are the partnerships that we walked away from where there's revenue impact, but obviously EBITDA benefit.
Speaker Change: Yeah, I think that's right. And when I mentioned, you know, in my prepared remarks was, you know, as, as we expect to, you know, come to conclusion with some of these, you know,
Speaker Change: concepts around the process in the first quarter. We wanted to be mindful of that as we, you know, built up the year and built the guide ranges, you know, that we did from that perspective.
Speaker Change: Okay um okay that's super helpful and then I guess just a follow-up on you know demand for you know some of your your current products I know you know when we had you know supply chain issues and
Speaker Change: Russia sanctions and stuff, you know, you guys definitely had some some good demand for a supply chain You know one to pick your brain and see have you guys seen any you know uptick of you know As people are trying to piece together things with
Speaker Change: You know, whether it's tariffs and that type of stuff would, you know, kind of think that you guys could be, you know, kind of the quote-unquote antidote for, you know, some tariff, you know, moving pieces and such.
Speaker Change: How should we think about demand and any solutions that you guys have come up with in response to some of these geopolitical shifts?
Kyle Peterson: That's a great question, Kyle, and I think the demand environment is strong for those.
Speaker Change: you know, certainly, you know, the assets that we have are
Speaker Change: you know, very much in line to address a lot of those issues. And if there's tariffs with the supplier going to alternative suppliers, you know, we're very confident with the capabilities that we have.
You know, we have
Speaker Change: shifts from our clients. So as we've done a lot of this migration, clients have migrated to our modern products and many times to our APIs, which is outstanding for us, right? They're, you know, more wired in, secure. It's exactly what you want, but also the revenues become more ratable.
Speaker Change: So, where they'll push out from, you know, fourth quarter into following years.
Speaker Change: Also, we had some enterprise clients that pulled forward some revenue from that segment into sales and marketing. So some are, you know, very large clients that that enterprise license has shifted it. So that's what you're seeing in there. It's not a lack of demand, you know, certainly in the
in the risk analytics business for us.
Speaker Change: The team's excited. We've got our point-of-arrival products in place with finance analytics and risk analytics.
Speaker Change: has done all the work with the clients on, you know, contracts and the effort to get them onto these platforms is behind us. And so, team's very excited, I met with our sales team about really, you know, pushing forward and meeting the demand.
Speaker Change: And Kyle, I think some of those dynamics you talked about, right, you know, the global situation, there is, you know, a lot of uncertainty out there and that's where
Speaker Change: you know, we're driving, you know, our data and analytics from that perspective, our investments, you know, as we think about.
Speaker Change: you know, private markets as we think about, you know, capital markets, as we think about where we want to spend, you know, that CapEx, which is coming down on a year-over-year basis.
Sean Anthony: But a lot of that is some of the, you know, transformation effort, you know, that Anthony talks about being completed.
Speaker Change: We're very bullish, I would say, in the third-party risk compliance in a lot of...
Sean Anthony: master data management, both domestically and internationally. And so, you know, definitely an area that we're focused on.
Alright, appreciate the color. Thank you guys.
Thank you Kyle. One moment for our next question.
Speaker Change: Our next question comes from George Tong with Goldman Sachs, your line is open.
Hi, thanks. Good morning
Thanks for joining us.
Speaker Change: To dive further into the timing of revenue growth, you mentioned growth in the first quarter should be closer to the low end of the range, fourth quarter should be closer to the high end. Can you elaborate on some of the additional assumptions that went into that?
Kyle Peterson: Yeah, George, absolutely. You know, when we thought about it and we spoke a little bit about it with Kyle there, you know, as
Speaker Change: you know, the process is ongoing and we're thinking about, you know, the timing of that, you know, right now concluding in the first quarter.
Kyle Peterson: We want to be mindful of that sale impact, right, and the timing of those closed deals because, as you know,
Kyle Peterson: We continue to push more and more to routable, more and more to...
Kyle Peterson: that durable consistent growth from that side. And so when we think about the flow through of sale to revenue, that's how we thought about the buildup. Certainly as we head into the fourth quarter, you're gonna have a comp because of some of that shift. And so that was really how we were balancing out the year right from a quarterly cadence perspective.
Kyle Peterson: Got it. That's helpful. And you mentioned the exit of certain non-strategic partnerships. At this point, are the exits pretty much done and behind you, or are there additional exits you contemplate making? And can you remind me what the financial impact of these exits are, and what the phasing or timing would look like over the next couple quarters?
Yeah, George, for the...
Kyle Peterson: Most part, I mean, I'd say we're done with these partnerships. It's not saying in the future if someone wanted something unreasonable, we wouldn't...
Kyle Peterson: have a similar conversation. Our focus here, like I say over and over, it's about making the right decisions.
Kyle Peterson: not the easy decisions and certainly you know not renewing you know these partnerships. We tried to get them to a spot that made financial sense.
Kyle Peterson: But again, one of the factors with the process hanging over us, you know, others know that as well and they thought by pressing and holding the line that it would change. But like I said, we're committed to doing the right things for this business for the long term.
Kyle Peterson: and consistent growth of it. So I'd say, you know, to answer your question specifically, we don't see other partnerships we're looking to exit. And the revenue impact was 6 million in the fourth quarter and 14 million in 2025.
with, again, a positive EBITDA in 25.
Got it. That's helpful. Thank you.
Thank you, George. One moment for our next question.
Speaker Change: Our next question comes from Faiza Alway with Deutsche Bank. Your line is open.
Faiza Alway: Yes, hi, thank you so much. I wanted to follow up on the partnership exits. Can you give us a bit more color around what type of partnerships?
Speaker Change: These were, you know, sort of specific to what type of products were being used and, you know, maybe like was there a competitive dynamic here, sort of just what led to the exit?
Speaker Change: Yeah, you know, Faiza, that's right, you know, as we went into, you know, the partnership, you know, we looked at, you know, the overall, you know, royalties, right, and the opportunity from that perspective.
Speaker Change: obviously, you know, the potential for, you know, what we could be doing, you know, from that side, too.
really, you know, as we thought about the original intent.
Speaker Change: We were building out almost like a Client Zero to go after more and more going forward. And so again, didn't.
Speaker Change: play out from the relationship perspective, but certainly think that there's an opportunity to continue to pursue it from our perspective, a go-forward basis. But with the bespoke costs and just the overall cost of servicing, that's where we evaluated from that perspective and ultimately came to the conclusion that.
Anthony Jabbour: It wasn't going to work without adjusting renewal time, and while we believed that we could get that renewal done and adjusted, again, to Anthony's point, it did not come to that conclusion, and so we walked away from the deal.
Anthony Jabbour: Okay, okay. And then, you know, you mentioned the vertical approach to deepening client relationships, and you talked about launching sort of vertical specific solutions. Maybe talk a bit more about that, and, you know, just bring to light for us sort of how things are changing.
Anthony Jabbour: Sure, it's, you know, like I said, the last step in any transformation is the go-to-market, right? So, and I talked, you know, coming in had to stabilize the business, re-architect it, build modern solutions, migrate clients, and optimize their contracts.
Anthony Jabbour: a lot of hard work to get to the spot, right? Now, we've got a number of clients who, you know, we're on, like,
Anthony Jabbour: If I think of finance analytics, that replaced 1, 2, 3, 4 other products that we had, you know, built in 1999, 2007, 2016, 2004 as well, right? So, you know, classically...
Anthony Jabbour: I'd say what the old EMB did is have a product, it launched another product, but not completely be able to sunset the previous one, and then launch another, not be able to sunset the previous two. What I'm really, really proud of our team is that, you know, we finish things.
and, you know, with these other products are being sunset.
Anthony Jabbour: and our clients are now on these modern go-forward platforms. You know, I know that wasn't the essence of your question, but it's so important for us, like, from an account management perspective, a client perspective, to get them into these spots.
Anthony Jabbour: where they're now on our point-of-arrival systems, more hardwired into our APIs, which is really great for the future. The verticalization is really around...
Anthony Jabbour: our ability to talk to our clients in their own language.
for us to bring in experts by industry so that
Speaker Change: Where we had been selling before, I'd say, was more around just the quality of our data. So, if I exaggerated the point, I'd say, you know, let me show up and just test my data against anyone else's data. And, you know, it's the best data. Use it however you want to use it.
Speaker Change: versus us walking into a bank saying, hey, I know I can lower your risk. If I lower your risk, you can lower your capital reserves and there's real savings for you. And talking at that level of expertise and then repeating it over and over again to other financial institution banks.
Speaker Change: insurance companies, manufacturers, TMT, etc. So that's we're really excited about it. In the fourth quarter in terms of specific solutions
Speaker Change: our sales force. It's really around doing that, to be more expert and to face off better with our clients around all the ways that we can help them.
All right, thank you so much.
Thank you. One moment for our next question.
Our next question comes from Ashish Sabra
Ashish Sabra: Thanks for taking my question. I was just wondering if you could provide any color on the strategic review process. What options are on the table? Would you also consider divesting individual businesses, or is it mostly around taking it private? And also, if possible, to comment on a recent Bloomberg article.
Sean Anthony, Bryan Hipsher
Thanks.
Thank you, Ashish.
Ashish Sabra: Obviously, you know, I need to keep my comments limited here. What I will share with you is.
Ashish Sabra: that we're not pigeonholed into one structure or idea in this process. You know, we've met with a number of different organizations.
Ashish Sabra: I'd say consistently impressed with the dramatic improvements that we've made in the business, the quality of the assets here, I'd say the consistency of the delivery, the strength of the team.
Ashish Sabra: and of the decision making. So I feel, you know, those would be some of the more general comments I can think of off the top of my head from, you know, the companies that we've met with. But it's not, you know, obviously, I can't comment on the Bloomberg article.
Ashish Sabra: But what I'd say is there are, you know, our board is open to, you know, creating the most shareholder value and, you know, whatever that looks like is certainly on the table.
Speaker Change: And Ashish, while, you know, some of the businesses that we spoke about before, sorry to interrupt you there, you know, Credibility actually had, you know, a good quarter.
Ashish Sabra: where it continues to monitor that asset. And the same with digital marketing, you start to see it turn around and turn.
Anthony Jabbour: have been slightly positive in the quarter, too. That being said, we're looking at the portfolio. And obviously, you have a bigger process, as Anthony mentioned, ongoing. But we have been engaged in dialogue, looking at and continuing to have the strategic discussion around which assets fit in and which ones would be good divestiture candidates.
Anthony Jabbour: from that perspective. That's just always how we think about the business and continue to operate from that side, Ashish.
Speaker Change: That's very, very, very helpful, Kallur. Maybe just on the business itself, I was just wondering if you could discuss the pipeline and the demand environment. How is the sales pipeline compared to last year? And any comment on the sales cycle? Have you seen any changes in the sales cycle process? Thanks.
Speaker Change: I'd say, you know, from a pipeline perspective and demand perspective,
Speaker Change: I'd say it's been consistent, but I, like I said, you know, really what we saw in Q4, and we still see some in Q1, is, you know, is some impact from the process.
All right and just some
Speaker Change: client hesitation, and look, candidly, I'd say employee concern as well, right?
Speaker Change: Imagine that, you know, all the employees in our company are just, you know, 100% at work every day. What I would say is they are probably more than average of other companies in this place. It's a remarkable, you know, talented group of colleagues I have here.
Speaker Change: I'd say some distraction from it, but make no mistake about it. The assets that we have, the capabilities that we have resonate in the market. And like I said, we hope to get
Speaker Change: you know, to announce in Q1 the output from the process.
and get on to running the business.
Speaker Change: But I'd also say, on the AI side, you know, even more specifically, that's something...
Speaker Change: Like I think of two tailwinds, being over the hump of this tremendous transformational effort, the client impacting side, which is very difficult for anyone that's been through these before and been through a number of them.
Speaker Change: It's a tailwind to have that behind us and just have to go forward. The other big tailwind, I think, is AI. You know, we've sold around 25 of our chat D&B already. The team's just launched it. There's excitement from our clients on it. The demand is.
Speaker Change: very strong. Clients want to, like I said, you know, deliver their first-party data to us to combine it with ours and, you know, for our ChatDB to leverage, you know, the combination of it.
But again, for anyone that really, really understands the space.
Speaker Change: the quality and the accuracy of the data matters a significant amount for the types of outcomes that you're looking for from these AI models. And that's where we have extreme confidence in terms of, you know, what we've built here and how we're positioned for that world.
That's great. Thanks, Anthony. Thanks, Bryan. Thank you.
One moment for our next question.
Speaker Change: Our next question comes from Patrick Grissanesi with Raymond James. Your line is open.
Patrick Grissanesi: Hey, good morning. What percentage of your revenue comes from contract structures tied to deliveries and usage and can you quantify how you're progressing and moving away from that model?
Patrick Grissanesi: Yeah, Patrick, it's a good question. So if you think about just the daily ratable revenues, they've traditionally been about 75% of the business.
Patrick Grissanesi: Some of it is more variable, as we've discussed, right around the digital marketing side.
Patrick Grissanesi: And so as we, you know, progress right through these migrations, as we're getting more onto FAA, onto RA, what you're also seeing is more uptake on, you know, the direct plus and the API side of that equation. So
Patrick Grissanesi: We had a customer, for instance, in the fourth quarter that shifted right from what was a, I think, either a semi-annual or annual delivery to an API that literally, you know, pushed.
their entire agreement into, you know, the 2025, right?
Patrick Grissanesi: And so, you know, from that side, I think what we're seeing is more, you know, that delivery side, that usage side, where it's, you know, roughly 25%. Again, while it's guaranteed, it causes a lot of choppiness, you know, quarter to quarter, because every contract doesn't start January 1st and end December 31st.
Patrick Grissanesi: So, you know, as we're migrating, you know, more through, I think you'll start to see, you know, that shift more from, call it 25-75, you know, initially, maybe end up more, you know, 80-20, and over time, we'll look to push that even further up.
Patrick Grissanesi: to obviously a target would be more in the 85% to 90% range.
Speaker Change: Got it, that's helpful, thank you. And then your North America adjusted EBITDA margin 44.6% in 2024, down 60 basis points year-over-year, and down about 300 basis points from the peak in 2021. How are you thinking about margins in North America going forward?
Speaker Change: Yeah, Patrick, this is always an interesting one, because I think we've discussed it too. When we invest in data, when we're investing in the data supply chain and some of the cloud efforts we're making from that perspective, when we're innovating new solutions, a lot of that comes out of North America and is burned into that North America P&L.
Speaker Change: So, you know, from our overall management, right, of the expense phase.
Speaker Change: We first look at, you know, holistic, you know, Dun & Bradstreet, and then, of course, you know, look at the direct costs into each of North America and international, and then, you know, try to allocate from that side.
So, you know, as we think about North America...
Anthony Jabbour: you know, the migrations are, you know, largely complete, you know, as Anthony discussed.
were through a lot of, you know, cloud migration efforts.
Anthony Jabbour: And so now it's really scaling up and continuing to drive sales off the back of that. So I think overall, for the company you see this year, 30 to 50 base points of margin expansion from that side, potentially a little bit north of there.
Anthony Jabbour: And, you know, we've made, I think, the right level of investment into North America, into the business overall, where, you know, we can start to see, you know, the scale and the flow through of those revenues on a go forward basis.
Thank you.
Thanks Patrick. Thanks Patrick. One moment for our next question.
Speaker Change: Our next question comes from Andrew Steiderman with JP Morgan. Your line is open.
Andrew Steiderman: Hi, going back to a prior error, the Software Alliance is...
were important channels for D&B sales and marketing data.
Andrew Steiderman: After these two partnership exits, which software partnerships remain kind of priority channels for DNB software, I mean, for sales and marketing solutions?
Andrew Steiderman: Because it does seem to me, maybe you'll let me know, if DMV is really just taking a much more go-to-direct client approach and not as reliant on software partners.
Andrew Steiderman: you know, if you think about, you know, stepping back from it all, you know, we
Andrew Steiderman: , and they had this worldwide network concept as well and relying on them. Well, we acquired the largest, one of the largest with BizNode and doing more ourselves. And obviously, in every aspect of what we do, we're seeing the ability for us to do more ourselves.
are, you know, we're, we're an alliance works.
Andrew Steiderman: and is complimentary and helpful. Look, we want to get help from everybody, right? And where it makes financial sense, obviously, it's in our best interest to do that.
Andrew Steiderman: But certainly, our own capability to go to market is strong. We've seen master data management continue to perform well as we've engaged with clients directly.
Andrew Steiderman: I've seen the quarter, you know, our sales acceleration was up, you know, as high as it's been in, you know, many quarters, just over 3%. So...
So yes, I'd say...
Andrew Steiderman: We're very open to alliances, the ones that are very complimentary and make financial sense.
Andrew Steiderman: But also, we're seeing more and more of a capability for us to go direct and to leverage our direct relationships that we have. Yeah, Andrew, I think that's been important, right, is the investments that we've made, right, and making sure that, you know, we're taking advantage, you know, of our full capabilities and opportunities.
and then garnering those economics more to D&D than otherwise.
Okay, thank you
Thank you. One moment for our next question.
and Sean Anthony. Thank you.
Manapat Nayak: Our next question comes from Manapat Nayak with Barclaysh. Line is open.
Speaker Change: Hey, this is a Brendan on Fremont. I just want to ask just to clarify the distraction point you were talking about Is that and how much of it was just clients who you know, they won't sign or start new contracts So the process is done versus how much is the internal dynamic you were talking about?
Manapat Nayak: and then just any thoughts on any incremental potential risk there in Q1.
Bryan Hipsher: Yeah Bryan, the $9 million that we called out was really big. Clients are in that new
Bryan Hipsher: net new prospects we're looking to sign on that are holding off waiting to
Bye.
Bryan Hipsher: to either get more information and wait and see. Like I said, we've signed some in the first quarter already, some that just needed a lot more hand-holding.
Bryan Hipsher: and confirmation and others that you know really do want to see you know who could potential competitors own us and obviously they want to wait and see that I don't have the breakdown of you know how to describe that
Bryan Hipsher: but also in the first quarters, your question, you know, that's kind of what we factored into the guidance that we provided. There is some risk still. You know, for those that have been, you know, through something like this, it there's a lot that's going on. It's not, the reason I put my prepared remarks, obviously,
Bryan Hipsher: You know, since our full years of being public, you know, our quarters have all been three to four percent, even with the inherited headwinds that we took on, it was always like three to four percent. And it had been the first three quarters of this year. This fourth quarter was disruptive.
Bryan Hipsher: And I imagine you'd understand that the disruption that causes client base causes with us, you know, obviously, and you know, and our colleagues here, but we factored what we thought the accurate, you know, distraction factor would be in the Q1.
All right. Thank you.
Thank you, Brandon.
One moment for our next question.
Speaker Change: Our next question comes from Craig Huber with Huber Research Partners. Your line is open. Thank you very much.
Craig Huber: I've got a series of very short questions that I could ask. Maybe we should go through them one by one, so I don't want to miss an answer here, if I could please.
Craig Huber: You've said in the past you think you can get this business to 5-7% organic growth. I think more recently, earlier last year before this process started, you thought eventually you could get it to over 7% and stuff.
Craig Huber: Do you still think that's the case and how long do you think it might take?
Craig Huber: I do believe that we can do that and and I say our team believes that we can you know grow in the five to seven percent range ourselves you know so
Craig Huber: And what I'd say is, let us live in that range for a while before we talk about going above that range. But certainly, if you can imagine the amount of
Craig Huber: transformative work that was done here and work with our clients getting to a spot where
Craig Huber: you know, we had four products, now we have one. So imagine as you get a new data set and the work to put that into four different products versus putting it into one, right?
Craig Huber: The effort's been significant, and so now, with that effort that we can put towards just moving things forward, do we think we can get to 5-7%? Yeah, we absolutely do.
from issues that we've seen in the business.
Craig Huber: Right. We talked about credibility, talked about digital marketing. The market, you know, has come back with digital marketing, which is great. The team's done a great job on the credibility side, had a great quarter. You know, the work that they're doing, you know, with the money-back guarantee offer that we had mentioned before is really resonating. The team's
Craig Huber: got a lot of momentum selling hard. So we're on a nice journey. Like I said, the process, you know, stuck a stick in our wheels and, you know, impacted us a bit here, right? And
Craig Huber: So, long-term, yeah, we have to, you know, do believe that and, you know, it's obviously, you know, not going to be this year, you know, where we guide it, right, unless, you know, we get to the high end of the range, which would be the low end of this range you're asking about, you know, but certainly that's what our expectation is.
I mean, on that front, though...
I know it's been a long, long turnaround.
Craig Huber: For many years and you guys have done a very admirable job here
Craig Huber: done here since 2019, but don't think it's gonna happen this upcoming year here. You do think eventually we get to the five to seven and we could potentially talk about higher than seven.
Craig Huber: down the road now, but how long more do you think it has it is going to take here? I mean how much more effort do you need to change as you have to make it the company, the go-to-market strategy, etc.? How many more years you honestly think it's going to take here? Are we talking three plus years from now?
Craig Huber: Yes, 2026 guidance here, but it's certainly we certainly don't believe it will take three years Craig.
Craig Huber: <unk>.
Craig Huber: And from a.
Craig Huber: Mount of effort in transformation, but what we saw in our international markets was we started their first with the migrations.
Craig Huber: <unk> had the team.
Craig Huber: All focused on those client getting the products ready.
Craig Huber: Great and the clients to it and and we picked international first with move with business, where we had migrations to do regardless.
Craig Huber: Sure.
Craig Huber: We focused on that first got it working from there moved the FAA migrations to North America, and what we saw was as we move them as they are all on our next gen products the growth rate accelerated internationally and Thats, what we expect to happen in North America with finance.
Craig Huber: Analytics.
While we are migrating internationally finance analytics, we're doing North America with risk analytics, we saw we move them off of supplier risk manager to risk analytics, we saw an acceleration of growth in the risk business. So so naturally we do believe that.
Craig Huber: We will get to the 5% to 7% range.
Craig Huber: It won't be three and it won't take three years.
Craig Huber: Obviously your stock.
Craig Huber: <unk> sector and other sectors as well organic growth in the data to drive the stock.
Craig Huber: Fox and so forth.
Craig Huber: If you really do truly believe you're going to get 5% to 7% it would be less than three years from now.
Speaker Change: Are you entertaining selling the company now why is it taking so long rather than just conclude this.
Craig Huber: Months ago, and just go forward here.
Craig Huber: Where you think you're going to get 5% to 7% is the stock will take care of itself in theory. If you can get the five to seven would want to get higher than that particularly for multiple years and so forth. Why are you entertaining. This process now why didn't you just.
Craig Huber: And wasn't agreeable.
Craig Huber: <unk> Board of directors fault right upfront in the first month or two and I realize this press release came out August 15th I don't know how much volume you guys are dealing with this before that and so why is this going on for so long.
Craig Huber: While geopolitical one for so long you and your board and rather than just if you want that you can get the 5%. There's a disconnect here I know you have some major shareholders, perhaps that wanted to move on with their lives and stuff. Maybe you guys do as well, but I'm just trying to figure out here I don't want a public.
Craig Huber: Domain here, but I'd be remiss if I didn't ask you. These questions right now so thank you.
Craig Huber: Yes, no of course, correct and I'll share with you what I can.
Speaker Change: We never put a for sale sign on.
Craig Huber: Sure.
Craig Huber: Other companies approached us and again, our board held its fiduciary responsibility to listen to those conversations.
Craig Huber: And as we did others have come forward and there are some interesting ones and interesting combinations.
Craig Huber: And that's why like I said, we've been entertaining and.
Craig Huber: So.
Craig Huber: Obviously Ed.
Craig Huber: I cant speak much more on the subject but.
Craig Huber: But what I would say is.
Craig Huber: This began as us responding.
Craig Huber: Two inquiries.
Craig Huber: And we've had a number of very interesting conversations with a lot of different.
Craig Huber: Organizations and types of organizations.
Craig Huber: Okay why don't we leave it there. Thank you both very much I appreciate it. Thank you.
Speaker Change: Thank you Craig.
Ed: And I'm not showing any further questions at this time I turn the call back over to Ed picture more for closing comments.
Ed: Alright, Thank you as always I'd like to thank my Dun <unk> Bradstreet colleagues for their exceptional efforts and to our great clients for their partnership and guidance. Thank you for your interest in <unk> Hope you have a great day.
Ed: Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.
Ed: Okay.