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  Title	Q4 2024 Dun & Bradstreet Holdings Inc Earnings Call
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  Published Date	Feb. 21, 2025, 5:58 a.m.
  Summary	Unlock stock picks and a broker-level newsfeed that powers Wall Street. Upgrade Now Q4 2024 Dun & Bradstreet Holdings Inc Earnings Call Thomson Reuters StreetEvents Fri, Feb 21, 2025, 12:58 AM 47 min
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  Content	Unlock stock picks and a broker-level newsfeed that powers Wall Street. Upgrade Now Q4 2024 Dun & Bradstreet Holdings Inc Earnings Call Thomson Reuters StreetEvents Fri, Feb 21, 2025, 12:58 AM 47 min read In This Article: DNB -0.11% Presentation Operator Good day and thank you for standing by. Welcome to the Dun & Bradstreet fourth quarter 2024 earnings conference call. (Operator Instructions) Please be advised that today's conference is being recorded. I would now like to hand the comments over to your speaker today. Sean Anthony, Vice President of FPNA and Investor Relations, please go ahead. 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. On the call today, we have Dun & Bradstreet CEO, Anthony Jabbour and CFO, Bryan Hipsher. 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. These risk and uncertainties, the forward-looking statements are subject to are described in our earnings release and other SEC filings. Today's remarks will also include references to non-GAAP 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. This conference call will be available for replay via webcast through Dun & Bradstreet's investor relations website at investor.d&b.com. With that, I'll now turn the call over to Anthony. 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. The first, a brief update on the ongoing process. The second, an update on their fourth quarter and full year results. The third, a review of the significant accomplishments in 2024. And the fourth, our focus areas for 2025. 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 2025. We'll then open up the call for Q&A and finish up with a few closing comments. Let's get started with an update on the inbound interest we received in 2024 and the resulting process that ensued. I'm going to keep my comments very brief, as you can imagine. 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. 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. With that being said, let's move on to an overview of our full year and fourth quarter results. 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. Additionally, we improved our capital structure by reducing net leverage to 3.6 times at year end. 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. 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. These distractions intensified in November and December, shifting significant pipeline deals into early 2025 and impacting Q4 revenues by $9 million. Secondly, we chose to exit two partnerships that were coming off multi-year agreements that were not mutually advantageous. Our expectation was that we would come to a favorable agreement, but ultimately, that was not the case. This impacted revenues in the fourth quarter of 2024 by $6 million and full year '25 by $14 million. With offsetting expenses that will net a positive EBITDA outcome for our business. And finally, we experience timing related delays in expected usage and deliveries of $3 million and $4 million dollars respectively, of which the majority of these revenues are contractually obligated and are expected to flow into the first half of 2025. As I've said before, this is a business that continues to grow through a significant amount of transformation, change, and improvements. Looking back at the last 16 quarters, we have taken the business from essentially no growth to 3% to 4% 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. 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 D&B. Going through a public transformation has been difficult, and I'm proud of our team's efforts. The initial step for us was to stabilize our technology, then rearchitect our technology, and then build modern solutions in the cloud. 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. In 2024, we completed our migrations and optimized client contracts in North America, finance and risk. Similarly to what we did with the international business earlier in the transformation, 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. We pushed hard to complete the migration of our flagship platforms, finance analytics, and direct plus API and the sunsetting of our legacy solutions, which was our most significant initiative. I'm happy to report that as of Q4 2024 we have successfully migrated tens of thousands of clients in North America. 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. These moves create even more stickiness while providing our clients with greater flexibility and scalable solutions. The second most significant migration was a shift of our clients to our risk analytics platform, which is now complete. The move to risk analytics has enabled us to deliver risk assessment capabilities across our nearly 600 million [Dun's] entities in a single platform. 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. For example, our risk analytics compliance intelligence solution generated significant new sales with hundreds of customers and a strong pipeline for 2025. And while we've been moving our clients to our latest and greatest solutions, we've also been refining and optimizing our client contracts. The new contract structure more closely aligns our pricing with the value provided to our clients, ensuring a fair and transparent relationship, and protecting our cost structure to the creation of more clearly defined contractual usage rights. 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. In summary, I'm optimistic for the future given the progress of our transformation. 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. With a strong foundation, our focus in 2025 and the last step of any transformational journey is to go to market. As I mentioned previously, we are introducing a vertical approach to deepen client relationships and launch vertical specific solutions. 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. 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. They now leverage our latest sales and marketing solutions, including D&B Connect, Data Blocks API, and our new Gen AI solution, ChatD&B. These solutions allow them to leverage our data to power their territory structuring and go to market strategies for growth. Another global fintech leader in payments and banking turned to our trusted master data management capabilities, firmographic data, and linkage data to improve and enrich their company data. They are also leveraging our data to perform merchant onboarding and verification, as well as fraud detection capabilities. They will also use the firmographic data to create new derivative works. 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. Next, we expanded our relationship with the large insurance brokerage that has used our master data services for many years. This new multi-year renewal deal extended our master data services to all of its subsidiaries. This growth and long-term commitment highlight the value of our solutions and our ability to build and nurture client relationships. A top 3 management consulting firm expanded their relationship with us by adding 3 new use cases. [TAM] analysis, prioritization of high value opportunities, and to strengthen the identification of cross sell upsell opportunities, new logos, and reduced churn. 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. And another example of where our global coverage was instrumental in winning a seven figure 2-year deal with the multinational company specializing in workplace solutions and digital printing technologies. 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. And shifting to international, our team successfully executed its strategy throughout the year. One notable achievement was a 3-year renewal and upsale of data blocks, finance solutions with Db Schenker, a global logistics and supply chain management provider. We supported their finance transformation by leveraging our modern API platform for automated credit decisioning and risk assessments. Another key win was with one of the UK's largest banking and payment service providers. 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. Finally, we signed a five-year renewal and upsell with a leading Scandinavian payments provider to organize and master their data. This demonstrated our ability to create efficiencies across multiple use cases through our master data management capabilities. 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. Leveraging our unique financial, payment and trade data to access high growth areas such as capital market and private markets. And doubling down in high market demand solutions including supply chain, risk, and master data management. 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. 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. I'm proud of our team's efforts and the strong foundation we are building for sustainable growth and profitability. With that, I'd now like to turn the call over to Brian to discuss our financial results for 2024 and Outlook for 2025. Story Continues Thank you, Anthony, and good morning everyone. Today, I will discuss our fourth quarter in full year 2024 results and then our outlook for 2025. Turning to slide 1, on a GAAP 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. Net income for the fourth quarter was $8 million or a diluted earnings per share of $0.02 compared to a net income of $2 million for the prior year quarter. The $6 million dollar 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, revenues were $2,382 million, an increase of 3% both after and before the effect of foreign exchange. On a full year basis, net loss was $29 million or a diluted loss per share of $0.07, compared to a net loss of $47 million for the prior year. Turning the slide 2, I'll now discuss our adjuster results for the fourth quarter. Fourth quarter adjusted revenues for the total company were $632 million or less than 1% growth compared to the prior year quarter, both after and before the effect of foreign exchange. 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%. 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. Fourth quarter adjusted EBITDA margin was 41%, a decrease of 10 basis points compared to the prior year quarter. Fourth quarter adjustment to the income was $129 billion or adjusted earnings per share of $0.30 compared to $140 million or $0.32 in the prior year quarter. 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. 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. 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%. 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. Full year adjusted EBITDA margin was 39%, an increase of 30 basis points compared to the prior year. Full year adjusted net income was $429 million or adjusted diluted earnings per share of $0.98 compared to 2023 adjusted net income of $432 million or $1 per share. Turning now to slide 3. I will now discuss the results for our two segments, North America and international. 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. In finance and risk, revenues were $229 million a decrease of 5% due to decreased revenue from timing throughout 2024 and our finance solutions and risk solutions coupled with the deal and delivery timing Anthony mentioned earlier, partially also set by an increase in revenue from our credibility solutions. For sales and marketing, revenues were $219 million, an increase of 2% both after and before the effect of foreign exchange. 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. 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%. Turning now to slide 4, I will now discuss the full year results for North America. 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. North America finance and risk for year revenues were $891 billion an increase of less than 1% both after and before the effect of foreign exchange. 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. North America sales and marketing full year revenues were $781 million, an increase of 3% both after and before the effect of foreign exchange. This was primarily driven by growth from our master data management solutions, partially offset by decreased revenue from our digital marketing solutions in the exit of non-strategic partnerships. 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. Full year adjusted EBITDA margin for North America was 45%, a decrease of 60 basis points to prior year. Turning to slide 5 in our international segment. Fourth quarter revenues were $183 million, an increase of 6% or 5% before the effect of foreign exchange. Organic revenues on a constant currency basis increased 5.8%. Finance 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. Higher revenue from Europe was primarily attributable to growth and third party risk and compliance solutions in modern API solutions. Increased revenue from worldwide network alliances was primarily attributable to higher product loyalties and growth from our Asian markets, driven by growth in API solutions and local market solutions. Sales and marketing revenues were $57 million are 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. 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 EBITDA margin was 32%. Now, turning to slide 6. In our international segment, full year 2024 revenues increased 6% to $709 million both after and before the effect of foreign exchange. Organic revenues on a constant currency basis came in at 6%. International finance and risk full year revenues of $484 million increased 8% both after and before the effect of foreign exchange. 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. International sales and marketing full year revenues of $225 million increased 2% both after and before the effect of foreign exchange. 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 royalties. Full year 2024 international EBITDA was $235 million an increase of $20 million or 9%. The increase in adjusted EBITDA was primarily due to revenue growth from the underlying business, partially offset by higher net personnel costs and higher costs related to data fees and cloud infrastructure. Adjusted EBITDA margin was 33%, an increase of 100 basis points. 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 EEA was primarily attributable to lower net personnel costs. Turn in slide 7. Slide 7 contains the details of our capital structure as of quarter end. At the end of December 31, 2024, we had cash and cash equivalents of $206 million in total principal amount of debt of $3550 million with a weighted average interest rate of 5.8%. Currently, 90% of our debt is either fixed or hedged, and as of December 31, 2024, we have $840 million available on our $850 million dollar revolving credit facility. Our leverage ratio was down to 3.6 times on a net basis, and the credit facility senior secured net leverage ratio was 3.1 times. Moving into 2025, we expect to continue to migrate towards a target of around 3.25 times by the end of 2025. As previously communicated, we executed various interest rate swap transactions during the 3rd 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. These transactions provide valuable savings and continued protection amidst the ongoing economic uncertainties. In regard to our share repurchase program, we did not execute any share repurchases in the fourth quarter due to ongoing interest. Year-to-date, we repurchase 961,360 shares of Dun and Bradstreet Commonto for $9.3 million. Net have accrued excise tax at an average of $9.71 per share. We currently have over 9 million shares remaining under our existing buyback authorization. And now turning to side 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%. 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 US dollar, EUR, British pound, and SEK. Revenues on an organic constant currency basis are expected to be in the range of 3% to 5% for the full year. Adjusted EBITDA is expected to be in the range of $955 to $985 million. An adjusted EPS is expected to be in the range of $1.01 to $1.07. Additional modeling details underlying our outlook are as follows. We expect adjusted interest expense to be around $200 million. Depreciation in the amortization expense is expected to be in the range of $160 to $170 million. An adjusted effective tax rate of approximately 22% to 23%. Weighted average diluted shares outstanding of approximately 438 million shares. And for CapEx, we expect approximately $145 million to $155 million of internally developed software and around 45 million of property plant equipment and purchase software. 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. 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 Q424 are offset by the 2025 revenue impact of the non-renewals of some of the non-strategic partnerships we discussed prior in the call. We expect free cash flow conversion as a percentage of adjusted net income. Excluding the impact of the arsecuritization to improve versus 2024, and a plan for capital expenditures and the cash impact of transition costs come down in 2025, allowing us to make progress towards our target of 80% conversion over the medium term. Overall, in 2025, we expect to deliver accelerated growth in organic revenues. EBITDA net earnings, free cash flow, and a net leverage metric of around 3.25 times by year end. 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. Question and Answer Session Operator (Operator Instructions) Kyle Peterson, Needham. Great, good morning guys, appreciate you, taking the questions and providing all the color. Wanted to start off on, I know you guys mentioned some of the distractions and, certain, 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 built into the guide based on, some of, with the pipeline uncertainties and and such given the ongoing process. Sure, thanks, Kyle. I'll I'll let Brian add on to it. In terms of the distractions, certainly, some of the deals I pushed out, we, we've signed some, so some, took longer. We have others wanting to see who could potentially acquire us. Could it be a competitor, for example, and so they're still hanging and waiting, to see. I think on, some of the delivery items which are more contractual, those were not as much tied at all to the process as they were, I think, to individual, client budgets, and they could take a delivery in Q4 or take it in Q1 and it affected, 2025 budget versus a 24 budget. So I think those, the majority of those will hit us, earlier in. In the quarter. And so, and the offsetting, obviously are the partnerships that we walked away from where there's revenue, impact, but obviously, EBITDA to benefit. Yeah, Kyle, I think that's right. And what I mentioned, in my prepared remarks was, as we expect to, come to conclusion with some of these. Concepts around the process in the first quarter we want to be mindful of that as we, built up the year and built the guide ranges, that we did from that perspective. And then, I guess just a follow up on, demand for, some of your current products. I know, when we had, supply chain issues and. Russia sanctions and stuff, you guys definitely had some good demand for, supply chain, one to pick your brain and see, have you guys seen any, uptick of, as people are trying to piece together things with, whether it's, tariffs and that type of stuff would, kind of think that you guys could be, kind of the quote-unquote antidote for, some tariff, moving pieces and such, but Yeah, how should we think about, demand and any solutions that you guys have come up with, in response to some of these, geopolitical shifts. It's a great question, Kyle, and I think the demand, environment is, strong for those. Certainly, the assets that we have are, very much in line to address a lot of those issues and if there's tariffs with the supplier going to alternative suppliers. We're very confident with the capabilities that we have in that regard and feel good about it. When you look at the actual numbers in the 4th quarter and you see, the finance and risk revenues down, it, it's not due to demand. There's other factors that drive it. So, we have, 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? There are more wired in secure, it's exactly what you want, but also the revenues become more radable. So where they'll push out from a 4th quarter into following years. Also we, had some enterprise clients that pulled forward some revenue from that segment into sales and marketing. So some are very large clients that had enterprise licenses shifted it. So that's what you're seeing in there. It's not a lack of demand, certainly in the in the risk analytics business for us. The team's excited. We've got our point of arrival products in place with finance analytics and risk analytics. Migration has done all the work with the clients on, contracts and the effort to get them onto these platforms is behind us. And so teams are very excited. I met with our sales team about really, pushing forward and meeting the demand. And Kyle I think some of those dynamics you talked about, right, the global situation, there is, a lot of uncertainty out there, and that's where, we're driving, our data and analytics from that perspective, our investments, as we think about, private markets, as we think about, capital markets, as we think about where we want to spend, that CapEx which is coming down on a year to year basis, but a lot of that is some of transformation effort, that Anthony talked about being completed so we're we're very bullish I would say in the third party risk compliance and in a lot of master data management both domestically and internationally and so you know definitely an area that we're focused on. Operator George Tong, Goldman Sachs. Yeah, just 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, 4th quarter should be close to the high end. Can you elaborate on some of the additional assumptions that went into that, in terms of giving the the shift of revenues from one year to the next and how customers may be watching D&B for any potential change of control or any other dynamics that that are underpinning these assumptions. Yeah, George, absolutely. When we thought about it and we spoke a little bit about it with Kyle there, as, the process is ongoing and we're thinking about, the timing of that, right now concluding in the first quarter. We want to be mindful of, that sale impact right in the timing of, those closed deals because as we continue to push, more and more of the radable, more and more to, 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 build up. Certainly as we head into the 4th quarter, you're going to 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. 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, most part, I mean, I'd say we're done with these partnerships. It's not say in the future if someone wanted something unreasonable, we wouldn't, have a similar conversation. Our focus here, like I say over and over, it's about making the right decisions, not the easy decisions, and certainly, not renewing, these partnerships. We try to get them to a spot that made financial sense. But again, one of the factors with the process hanging over us, 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 and consistent growth of it. So I, I'd say, 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, but again a positive EBITDA in 25. Operator Faiza Alwy, Deutsche Bank. 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 these were, sort of specific to what type of products were being used, and, maybe like was there a competitive dynamic here sort of just what led to the to to the exit. Yeah, FISA, that's right, as we went into, the partnership, we looked at, the overall, royalties right and the op opportunity from that perspective, obviously, the potential for, what we could be doing. From that side too, really, as we thought about the original intent, we were building out almost like a client ze right to go after, more and more going forward and so again, it didn't. 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 evaluate it from that perspective and ultimately. Came to the conclusion that, 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. 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 life for us sort of how how things are changing. Sure, it's, like I said, the last step in any transformation is to go to market, right? So, and I talked, coming in had to stabilize the business rearchitect to build modern solutions, migrate clients and optimize their contracts, a lot of hard work to get to the spot, right? Now, we've got a number of clients who, we're on like. If if I think of finance analytics that replaced 1,234 other products that we had, built in 1,999, 2007, 2016, 2004 as well, right? So, classically, I'd say what the old EMB did it 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 proud of our team is that we finish things and, with these other products are being sunset and our clients are now on these modern go forward platforms. I know that was 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 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. Our ability to talk to our clients in their own language for us to bring in experts by industry so that, 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, let me show up and just test my data against anyone else's data, and, it's the best data you use it however you want to use it. 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 institutions, banks, insurance companies, manufacturers, TMT, etc. So that's where we're really excited about it, in the 4th quarter in terms of specific solutions. We worked at a national healthcare company in terms of getting more data for us to have a healthcare vertical for us to go after, in the sales and marketing space as well. So those are the types of things where as we continue to shift 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. Operator Our next question comes from a Copra with RBC. I was just wondering if you could provide any color on the strategic review process, with their, 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, thanks. Obviously, I need to keep my comments limited here. What I will share with you is, that there, there's, we, we're not pigeonholed into one, structure or idea, in this process. There are a number, we've met with a number of different, organizations. 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 and of the decision making. So I feel, those would be some of the more general comments I can think of off the top of my head from, the companies that we've met with, but it's not, and, obviously I can't comment on the Bloomberg article. But what I'd say is there are, our board is open to, creating the most shareholder value and, whatever that looks like is, it is certainly on the table. And she, while, some of the businesses that we spoke about before, sorry to interrupt you there, credibility actually had, a good quarter we continues to monitor, that asset and the same with digital marketing start to see it, turn around and turn, slightly positive in the quarter too, that being said, we're looking at the portfolio and you know. So you have a bigger process as Anthony mentioned, ongoing, but you know we have been, engaged in dialogue looking at and and continuing to have, the strategic discussion around, which assets, fit in and and which ones would be good to best your candidates from that perspective. That's just always, how we think about the business and continue to operate from that side of she. That that's very helpful color, maybe just on the business itself, I was just wondering if you could discuss the pipeline and the and the demand environment. How was, 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. Sure. I'd say from a pipeline perspective and demand perspective, I'd say it's been consistent. But I, like I said, really what we saw, in Q4, and we still see something in Q1 is some impact from the process, right? And just some, client hesitation, and look, candidly, I, I'd say employee concern as well, right? The, let's not, imagine that, all the employees in our company are, just, 100% at work every day. I, what I would say is they are probably more than average of other companies in this place. It's a remarkable, talented group of colleagues I have here. But there is an impact and there is, some hesitation. There is, 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, to announce in Q1, the output from the process and get on to running the business. But I'd also say on the AI side, even more specifically, that's something. 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. It's a tailwind to have that behind us and just have to go forward. The other big tailwind, I think, is AI, 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 very strong. Clients want to, like I said, deliver their first party data to us to combine it with ours and, for our chat to be to leverage, the combination of it. But again, for anyone that really understands the space, 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, what we've built here and how we're positioned for that world. Operator Patrick O'Shaughnessy, Raymond James. 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? Yeah, Patrick, it's a good question. So if you think about just the daily radical revenues, they've traditionally been about 75% of the business, about 15% of the businesses on delivery, and then really that last 10% is more, I would say usage-based. Some of that usage based Patrick, as Anthony mentioned, is still guaranteed within a 12 month period. Some of it is more variable as we've discussed right around the digital marketing side. And so as we, progress right through these migrations as we're getting more on to FA on to RA, we're also seeing is more uptake on, the direct plus and in the API side of that equation. So we had a customer, for instance, in the 4th quarter, that shifted right from what was a I think either a semiannual or annual delivery to an API that literally you know pushed their entire agreement into, the 2025, right? And so you know from from that side. I think what we're seeing is more that delivery side, that usage side where it's you know roughly 25%. Again, while it's guaranteed, it causes a lot of choppiness, quarter to quarter, because every contract doesn't start January 1st and ends December 31st. So, as we're migrating, more through, I think you'll start to see. That shifts more from call it 2,575, initially maybe in the more, 8,020 and and over time we'll look to push that even further up, to obviously a target would be, more in the 85 to 90% range. And then your North America adjusted EBITDA margin 44.6% in 2024, down 60 basis points year every year and down about 300 basis points from the peak in 2021. How are you thinking about margins in North America going forward? Yeah, Patrick, this is always a, 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. I burdened, into that North America P&L. So you know from from our overall management right of the expense space, we first looked at, holistic, Dun and Bradstreet, and then of course, look at the direct costs into each of North America in international and then you know TRY to allocate from from that side. So you know as we think about North America. The migrations are, largely complete, as Anthony discussed, we're through a lot of the, cloud migration effort. And so, now it's really scaling up and continuing to drive sales off the back of that. So I think overall, for the for the company you see this year, 30 to 50, basis points of margin expansion from that side, potentially a little bit north of there. And you know we've made, I think the right level of investment into North America into the business overall, where, we can start to see, the scale in the flow through those revenues on a go forward basis. Operator Andrew Steinerman, J.P. Morgan. Going back to a prior error, the software alliances were important challenges for D&B sales and marketing data. After these two partnership exits.which software partnerships remain kind of priority channels for D&B software, I mean for sales and marketing solutions, because it does seem to me, maybe you'll let me know if DNB is really just taking a much more go to direct clients approach and not as reliant on software partners. Yeah, thank you, Andrew. We are in fact doing that and if you think about, stepping back from it all, we, had this worldwide network, concept as well and relying on them. Well, we acquired, the largest one of the largest with Biz Node and doing more ourselves and obviously in every aspect of what we do, we're seeing the ability for us to do more ourselves. Our where an alliance works and is complementary and helpful, we're, look, we're, we want to get help from everybody, right? And where it makes financial sense, obviously, it's in our best interest to do that. 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. We've seen the quarter, our sales acceleration was up, with the highest it's been in, many quarters, just over 3%. So yes, I, I'd say we're very open to alliances with the ones that are very complimentary and make financial sense, 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, in making sure that, we're taking advantage, of our full capabilities and opportunities and then garnering those economics more to DMV than than otherwise. Operator Manav Patnaik, Barclays. Hey, this is, Brendon on from on of. I just want to ask just to clarify the distraction point you were talking about, is that how much of it was just clients who, they won't sign or start new contracts until the process is done versus how much is the internal dynamic you were talking about and then just any thoughts on any incremental potential risk there and in 1. Yeah, Brian, I the the the 9 million that we called out was really big clients are net new net new, prospects were we're looking to sign on, that are holding off waiting 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 handholding. And confirmation, and others that, really do want to see, who could the potential competitors own us and obviously they want to wait and see that. I don't have the breakdown of, how to describe that, but also in the first quarter of your question, that's kind of what we factored into the guidance that we've provided. There is some risks still, for those that have been through something like this, there's a lot that's going on. It's not the reason I put my prepared remarks, obviously, since we are full years of being public, our quarters have all been 3 to 4%. Even with the inherited headwinds that we took on, it was always like 3 or 4%, and it had been the first three quarters of this year. This 4th quarter was was disruptive. And I imagine you'd understand that the disruption that causes client base causes with us, obviously, and our colleagues here, but we factored to what we thought the accurate distraction factor would be in the 1. Operator Craig Huber, Huber Research Partners. I got a series of very short questions that I could ask maybe go through them one by one, but I don't want to miss an answer here if I could please. You've said in the past you think you can get this business to 5 to 7% organic growth. I think more recently earlier last year before this process started, you thought eventually you could get it to 7 over 7% and stuff. Do you still think that's the case and and how long do you think it might take? I do believe, that we can do that, and I say our team believes that we can, grow in the 5 to 7% range, ourselves, so. 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 Transformative work that was done here and work with our clients getting to a spot where you know we had 4 products now we have 1. So imagine as you get a new data set and the work to put that into 4 different products versus putting it into one, right? . The the effort's been, significant and so just moving things forward, do we think we can get to 5 to 7%? Yeah, we absolutely do. And from, issues that we've seen in the business, right, we talked about credibility, talked about digital marketing, the market you know. Come back with digital marketing, which is great. The team's done a great job on the credibility side. They had a great quarter, the work that they're doing, with the money back guarantee offer that we had mentioned before is really resonating. The team's got a lot of momentum selling hard, so, we're on a nice journey, like I said, the process, stuck a stick in our wheels and, impacted us a bit here, right? And, So, long term, yeah, we have, do believe that and, it's obviously, not going to be this year, where we guided, right, unless, we get to the high end of the range, which would be the low end of this range you're asking about, but certainly that's what our expectation is. I mean, on that front though how I know it's been a long turnaround. For many years and you guys have done a very admirable job here what you've done here since 2019, but you don't think it's going to happen this upcoming year here. You do think eventually we get to the 5 to 7 and then we potentially talk about higher than 7 down the road there, but how long more do you think it has it's 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. And how many more years do you H1stly think it could take you? We're talking 3+ years from now? I mean just some follow up questions as well. Yeah, I, obviously, not looking to, the 2026 guidance here, but, it, it's certainly, we certainly don't believe it'll take 3 years, Craig, and from a, the amount of effort and transformation, but what we saw in our international markets was we started there first with the migrations and, had the team, all focused, on, those clients, getting the products ready. Migrating the clients to it. And we picked international first with with Bizo where we had migrations to do regardless, where, we focused on that first, got it working from there, moved the FA migrations to North America. And what we saw was, as we moved them, as they're all on our nextgen products, the growth rate accelerated internationally, and that's what we expect to happen in North America with finance, analytics. We, while we were migrating internationally to finance analytics, we're doing North America with risk analytics. We saw we moved them off of, supplier risk manager to risk analytics. We saw an acceleration of growth in the risk business. So, naturally, we do believe that, we will get to the 5 to 7% range, it won't be 3, and it won't take 3 years. Obviously your stock and other stocks in the sector and other sectors as well. I mean organic growth in the day to just drives the stock and stocks and so forth. If you really do truly believe you're going to get get the 5 to 7%, it be less than 3 years from now, why are you entertaining selling the company now? Why is it taking so long rather than just conclude this. Months ago and just go forward here to get where you think you're going to get 5 to 7% because the stock will take care of itself. In theory, if you can get the 5 to 7, let alone if you get higher than that, so particularly for multiple years and so forth, why are you entertaining this process now? Why didn't you just, if the price wasn't agreeable to from your perspective that your board of directors thought right up front the 1st month or two, and I realized this press release came out August 5th. I don't know how long you guys were dealing with this before that. And so forth, but why is this going on for so long? Why did you let it go on for so long, you and your board, rather than just if you want anything you get the 5 to 7 there's the disconnect here. I know you have 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 know we're in a public domain here, but I'd be remiss if I didn't ask you these questions right now. So thank you. Yeah, no, of course, Craig, and I'll share with you what I can. We never put a for sale sign on. Other companies approached us and again our board felt its fiduciary responsibility to listen to those conversations and, as we did, others have come forward and there's some interesting ones and interesting combinations and that's why, like I said, we've been entertaining them and. So obviously, I can't speak much more on the subject, but what I would say is, this began as us responding, to inquiries, and we've had obviously a number of very interesting conversations with a lot of different, organizations and types of organizations. Operator And I'm not showing any further questions at this time. I turn on the call back over to Anthony Jabo for closing comments. All right, thank you. As always, I'd like to thank my Dun & Bradstreet colleagues for their exceptional efforts and to our great clients for their partnership and guidance. Thank you for your interest in Dun & Bradstreet. Hope you have a great day. Operator Ladies and gentlemen, that conclude today's presentation. You may now disconnect and have a wonderful day. View Comments Terms and Privacy Policy Privacy Dashboard More Info Recommended Stories
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