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spk07: Thank you for standing by. This is the conference operator. Welcome to the Dunn and Bradstreet second quarter 2021 earnings call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and zero. I would now like to turn the conference over to Deb McCann, Treasurer and Senior Vice President, Investor Relations and Corporate FP&A. Please go ahead.
spk00: Thank you. Good morning, everyone, and thank you for joining us for Dun & Bradstreet's Financial Results Conference call for the second quarter ending June 30th, 2021. On the call today, we have Dun & Bradstreet CEO Anthony Jabbour and CFO Brian Hipscher. 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. The risks and uncertainties that forward-looking statements are subject to are described in our earnings release and other SEC filings. Today's remarks will also include references to non-GAAP financial measures. Additional information, including reconciliation between non-GAAP financial information 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.dnb.com. With that, I'll now turn the call over to Anthony.
spk06: Thank you, Deb. Good morning, everyone, and thank you for joining us for our second quarter earnings call. The second quarter was another quarter of solid progress, as revenues grew 24.4% and EBITDA grew 12.6%. Organic revenue growth accelerated to 2.8%, fueled by low double-digit growth in international and low single-digit growth in North America. The sequential improvement in organic growth was driven by new logo wins, increased cross-sell, continued strong retention, and the lessening of previously communicated headwinds. We also saw strong sales in the building pipeline for our new solutions, both domestically and internationally, as businesses look to leverage more of our solutions to support their post-pandemic operating models. We expect to see a continued ramp in the third and fourth quarters as we execute against our near-term growth strategy and have continued to strengthen the business for the long term with new talent, data assets, partnerships, and solutions that continue to bolster our offerings and provide our clients differentiated insights that help them grow revenues, lower operating costs, and improve the risk and compliance profile. Before we jump into our normal business and operations update, I wanted to touch on a few announcements we made in the quarter. Back in May, we welcomed two new leaders, Jenny Gomez and Mike Manos, who joined our team in key roles and are already having a significant impact on the company. As Dun & Bradstreet's Chief Product Officer, Ginny comes to us from TransUnion and has over 20 years of experience driving innovation and leading product organizations. She manages the overall product strategy for our global portfolio and is focused on driving rapid innovation and developing solutions at scale that enable our clients' success. Mike is our Chief Technology Officer and brings more than 25 years of experience and deep technological insight to Dun & Bradstreet. Mike joins us from Fiserv and brings with him a proven track record of modernizing and scaling existing platforms for companies such as AOL, Microsoft, and First Data. We also established a new location in Jacksonville, Florida, which will serve as our global headquarters. We look to leverage this strategic location to help us to continue to innovate and grow, as well as benefit from substantial state and local financial incentives that made this move an easy one. And finally, before I move on to the business update, I wanted to share a very special milestone here at Dun & Bradstreet. On July 20th, we celebrated our 180th year anniversary, which is a testament to the longstanding value D&B has and continues to provide to businesses throughout the world. Now let's move on to our business update. On our first quarter call, we discussed our key priorities for 2021 which are to continue to grow our share of wallet with our strategic customers, to approach and monetize the SMB space in new and innovative ways, to launch new products domestically, to localize new and existing products globally, and lastly, to integrate the BizNode acquisition. Throughout the second quarter, our team has made great strides towards executing on these priorities, and I'll now share highlights from the quarter before I turn the call over to Brian for a more in-depth financial review. After that, we'll finish up by taking your questions. We're pleased with the ongoing success we're having with our strategic clients, which included renewal rates at near 100% and the addition of some exciting new logos. In North America, we signed a multi-year deal with Ceridian, a global human capital management software company for Analytics Studio and various sales and marketing products, including the new RevUp ABX and digital targeting solutions. Ceridian was looking to support their growth strategies and in particular the ability to connect and activate the offline view of customers and prospects through digital insights. They're also focused on strategic global expansion and leveraging our world-based file to better understand addressable markets by region to support growth and target markets. Leveraging the investments we've made in non-traditional data and our sales and marketing solutions We signed additional business with one of the largest online retailers who will be using our data and analytics to support their efforts in growing a new business line that needed help targeting specific retailers and high foot traffic areas, such as airports and sports stadiums. Deloitte Touche Tomatsu also entered into a multi-year agreement with us to assist with their client engagement, customer relationship management, and overall master data program. Their global data management team was tasked with creating a global master data warehouse that could be used across all markets and would be the central hub for global applications as well as local markets. The team selected our D&B Direct Plus API to be the central point for company information, hierarchies, and connections, including our full family tree. Along with the master data use case, they're also using our insights to inform their investment to drive a more diverse workforce pipeline and in particular, underrepresented minorities to the public accounting profession. We will deliver a microsite with downloadable learning modules and coupled with a multi-channel marketing campaign. We're proud to support Deloitte in ensuring the success of this fantastic program. We also signed a deal with Vintro, an online networking platform who will be using our comprehensive B2B data as well as our insights and AI-driven platforms to enable their clients to accelerate global opportunity and innovation. In addition to the direct sale, we're also partnering with Vintro on a new platform to enhance the supply chain ecosystem through enhanced access to SMDs. Turning to our international segment, we're making strong progress on the Global 500 account program we rolled out in the first quarter, demonstrated by several wins in the second quarter. One of these was a significant expansion of our longstanding relationship with Barclays through a multi-year enterprise-wide agreement supporting their global master client data and insight strategy. Barclays will be using D&B's comprehensive global data cloud for a multitude of use cases. Globally consistent and identifiable by the DUNS number, our data will enable a broader and deeper view of every customer and prospect from intent data to financial and regulatory information. Barclays was looking for an end-to-end global solution and we stood alone in our ability to deliver such an outcome. In D&B Europe, our newly acquired business region, we signed several deals with Global 500 companies as our strategy to become the provider of choice in Central Europe has begun to bear fruit. Bayer, a life science company with more than 150 year history and core competencies in the areas of healthcare and agriculture, signed a three-year global contract for D&B data via multiple delivery platforms. This deal will support Bayer in organizing and managing their third-party records across various software platforms. Deutsche Bank signed a new contract to use their local German database to support their sales efforts. After various data and usability comparisons, they chose D&B over their previous provider, a large international competitor. We continue to build and grow relationships with Global 500 companies. At the end of the second quarter, nearly three-quarters of the Global 500 companies are clients of ours. Significant increase from year-end 2019 that was closer to two-thirds. While we continue to deepen relationships with our strategic clients, we're also seeing positive trends in the small and mid-sized markets. As it relates to our second priority, addressing the SMB market in new and innovative ways, we started with the build-out of our D&B product and data marketplaces. The D&B product marketplace was created to provide a curated set of our solutions, as well as partner solutions designed for small business. It now has 20 partners, the newest of which are Brex and LendingTree, along with other major brands such as Microsoft, Comcast Business, AT&T Business, MasterCard, and Symantec. The D&B data marketplace, where users can now buy a broader range of pre-matched independent data sets from alternative data providers, now includes data sets such as commercial real estate, job postings, shipping, healthcare, and U.S. agricultural data. We currently have 36 partner data sets as of the end of the second quarter, up from 22 at the end of the first quarter. Now turning to our e-commerce strategy, we continue to see more and more attention in our digital assets. In the second quarter, we saw dnb.com site visits continue to grow with over 46 million visits in Q2, an 84% increase over prior Q2. While the vast majority of customers are coming for credit signal and monitoring services, we're also beginning to see increased demand for our sales and marketing solutions. Overall, we hit more than 2 million in e-commerce sales in Q2, up 73% from prior year quarter, and are forecasting sales to double again by the end of the third quarter. This, combined with our D&B marketplaces, are expected to drive nearly $10 million in incremental annual recurring revenues by year end, and we look forward to updating you in the coming quarters on our progress. Our third priority is launching new products and use cases. Last quarter, we announced D&B RevUp ABX, a solution that simplifies and automates marketing and sales workflows for our clients. Since its launch, we closed six deals with ACV of nearly $2 million and with a strong and growing pipeline as awareness spreads and further enhancements are added to the platform. We're excited to now take the RevUp capabilities to the SMB marketplace with the launch of D&B RevUp now. RevUp now brings enterprise digital marketing technology, once only available to large-sized businesses, to SMBs so that they can find and engage their best customers without having the cost and complexity of an in-house analytics department. We're also bolstering our sales and marketing solutions through our alliance with Zeta Global. We are bringing together trusted consumer and private business data into a single, highly secure data cloud that contains profiles on over 220 million individuals in the United States. The Data Cloud combines Zeta's business-to-consumer data, including individuals' intent, behavioral, transactional, and location-based signals, with Dun & Bradstreet's business-to-business data, including employer data such as companies, titles, and emails, to power a new market sector we refer to as business-to-person, or B2P. which will enable businesses to unlock the buying power of decision makers through this uniquely combined data set offering a true 360-degree view of an individual and the ability to reach them through both business and consumer-based activation channels. And last but not least, I'm excited to announce the launch of D&B ESG Intelligence, which delivers a standardized score and analytics built from the Dun & Bradstreet Data Cloud and establish sustainability standards. CMB ESG Intelligence provides extensive coverage of 9 million U.S. private companies and all 6,000 U.S. public companies. Our ESG rankings cover 12 ESG themes and 32 topic-specific categories to help our clients best understand specific risks and opportunities. We believe this is another great example of how we can leverage the power of our data cloud and the DUNS number to create consistent and comprehensive rankings for businesses of all sizes throughout the globe. This deep coverage and breakdown of specific ESG topic rankings helps compliance and procurement teams track and report on specific ESG factors that increase growth and reduce risk. Similar to how Paydex established the de facto commercial credit score, we see the opportunity to set a standardized commercial ESG score That will help underwriters, procurement organizations, investors, and many other areas quickly analyze and action new customers, vendors, suppliers, investments, and partners in an accurate and efficient manner. In our international segment, we continue to focus on rolling out localized solutions across our owned and partner markets. In the second quarter, we delivered 14 product launches across Europe. Greater China, and the worldwide network partner markets, including important new solutions, D&B finance analytics, D&B risk analytics, and data blocks. We also expanded distribution of D&B Onboard and Direct Plus across a slew of worldwide network partners. In D&B Europe, we continue to see good traction from existing D&B products like D&B Credit, Direct Plus, and D&B Onboard, while also introducing new products including DMV finance analytics and risk analytics in the Nordic markets, optimizer in the Nordics and Southeast Europe, and data blocks in Central Europe. These solutions will enable us to execute our strategy of migrating customers off legacy offerings onto modern digital platforms, as well as attract new customers. These solutions, along with the many we have discussed over the past few quarters, are allowing us to create a significant amount of new product revenue. For North America and international combined, the new product vitality index, or the percentage of revenues from new products, was 6% in Q2. For context, we began measuring this stat in Q1 of 2019, and it's up already from 0.2% in Q2 of 2019. We will continue to drive more and more new solutions into our markets around the world and look forward to updating you on our progress through the coming quarters. Turning to BizNode, I'm pleased to report that integration is going as planned with top line performance in line and synergy realization coming in slightly ahead of expectations. We've executed more than $25 million in annualized savings from actions taken through Q2. Savings are being driven by the consolidation of functions across our global team, as well as executing a broad real estate strategy, including vacating or reducing the footprint of 14 office locations. On the BizNode operation side, we implemented a new global data framework across D&B Europe markets to ensure consistent monitoring and enhancement of database breadth and quality. We have already made key data improvements, including the failure scores in Nordic markets and Germany, growing the database of non-registered companies in Central Europe, and increasing financial statement data in Switzerland. These initiatives are intended to improve retention, to enhance customer satisfaction, as well as demand for data from our global customers. Overall, I'm pleased with our continued transformation and I'm excited about the progress we continue to make, laying the foundation for accelerated sustainable growth throughout the remainder of 2021 and into 2022. With that, I'll now turn the call over to Brian to discuss our financial results and outlook for the remainder of 2021.
spk10: Thank you, Anthony, and good morning, everyone. Today I will discuss our second quarter 2021 results and our outlook for the remainder of the year. On a gap basis, second quarter revenues were $521 million, an increase of 24% or 23% on a constant currency basis compared to the prior year quarter. This includes the net impact of the lower purchase accounting deferred revenue adjustment of $2 million. Net loss for the second quarter on a gap basis was $52 million, or a diluted loss per share of 12 cents, compared to a net loss of $208 million for the prior year quarter. The improvement was primarily driven by higher prior year expenses related to the retirement of debt as part of the initial public offering, lower interest expense, Improvements in operating income driven by lower equity-based compensation related to stock options granted in the prior year quarter and the net impact of BizNode acquisition. This was partially offset by higher tax provision recognized in the current year largely driven by changes in state apportionment and the enactment of the UK tax rate increase. Turning to slide two, I'll now discuss our adjusted results for the second quarter. Second quarter adjusted revenues for the total company were $521 million, an increase of 24.4%, or 23.2% on a constant currency basis. This year-over-year increase included 19.9 percentage points from the BizNote acquisition and a half a point from the impact of lower deferred revenue purchase accounting adjustments. Revenues on an organic constant currency basis were up 2.8%, driven by double-digit growth in our international segment, as well as single-digit growth in North America. Second quarter adjusted EBITDA for the total company was $198 million, an increase of $22 million, or 13%. Excluding the then impact of the BizNote acquisition, EBITDA increased slightly due to revenue growth, partially offset by increased data and data processing costs, higher commissions, and higher public company costs. Second quarter adjusted EBITDA margin was 38.1%. Excluding the net impact of BizNode, EBITDA margin was 40.8%. Second quarter adjusted net income was $108 million, or adjusted diluting earnings per share of 25 cents, an increase from $81 million in the second quarter of 2020. Turning now to slide three, I will now discuss the results for our two segments, North America and International. In North America, revenues for the second quarter were $357 million, an increase of approximately 1% from the prior year. Excluding the positive impact of foreign exchange and the negative impact of the BizNote acquisition, North America organic revenue increased $3.2 million, or 1%. In finance and risk, we continue to see strength in our risk solutions and solid growth in our finance solutions attributable to new business and higher customer spend. the growth in these solutions was partially offset by $1 million of revenue elimination from the Bizno transaction. For sales and marketing, revenue was $158 million, a decrease of $3.1 million, or 2%. While data sales had another solid quarter, the overall growth in sales and marketing was offset by $4 million from the data.com legacy partnership wind down. North America, Second quarter adjusted EBITDA was $167 million, a decrease of $3 million, or 2%, primarily due to higher data processing costs and higher commissions, partially offset by revenue growth and ongoing cost management. Adjusted EBITDA margin for North America was 46.9%. Turning now to slide four. In our international segment, second quarter revenues increased 147% to $164 million. or 137% on a constant currency basis, primarily driven by the net impact from the acquisition of BizNote and strong growth in both finance and risk and sales and marketing solutions. Excluding the net impact of BizNote, international revenues increased approximately 13%. Finance and risk revenues were $104 million, an increase of 92%, or an increase of 85% on a constant currency basis. primarily due to the BizNode acquisition. Excluding the net impact of BizNode, revenue grew 10% with growth across all markets, including higher revenue from worldwide network alliances due to higher cross-border data fees and royalties, and higher revenues from our UK market attributable to growth in our finance solutions. Sales and marketing revenues were $60 million, an increase of 383% or an increase of 366% on a constant currency basis, primarily attributable to the BizNote acquisition. Excluding the impact of BizNote, revenue grew 22% due to higher revenues from API offerings across our UK and greater China markets, and increased revenues from our worldwide network partners, Product Royalties. Second quarter international adjusted EBITDA of $43 million increased $23 million, or 113%, versus second quarter 2020, primarily due to the net impact of the BizNote acquisition, as well as revenue growth across our international businesses, partially offset by higher data costs. Adjusted EBITDA margin was 26%, or 28.9%, excluding BizNote. Turning to slide five, I'll now walk through our capital structure. At the end of June 30, 2021, we had cash and cash equivalents of $178 million, which when combined with the full capacity of our $850 million revolving line of credit due 2025, represents total liquidity of approximately $1 billion. As of June 30, 2021, total debt principal was $3,667 million, and our leverage ratio was 4.7 on a gross basis and 4.4 on a net basis. The credit facility senior secured net leverage ratio was 3.6. Turning now to slide six. I'll now walk through our outlook for full year 2021. Adjusted revenues are expected to remain in the range of $2,145 million to $2,175 million, an increase of approximately 23.5% compared to full year 2020 adjusted revenues of $1,739 million. Revenues on an organic constant currency basis and excluding the net impact of lower deferred revenues are expected to increase between 3% to 4.5%. Adjusted EBITDA is expected to be in the range of $840 to $855 million, an increase of 18% to 20%. And adjusted EPS is expected to be at the high end of the range of $1.02 to $1.06. Additional modeling details underlying our outlook are as follows. We expect interest expense to be $200 million to $210 million. Depreciation and amortization expense of approximately $90 million, excluding incremental depreciation and amortization expense resulting from purchase accounting. Adjusted effective tax rate of approximately 24%. Weighted average shares outstanding of approximately $430 million. And finally, for CapEx, we are increasing our guidance from approximately $160 million to approximately $237 million, to account for the $77 million purchase of our new global headquarters building in Jacksonville. Overall, we continue to see the year shaping up as previously discussed, with organic revenue growth continuing to accelerate throughout the year, with Q3 expected to be a bit below the midpoint of our range, and Q4 to be at the high end of the range. And finally, as previously discussed, we continue to expect adjusted EBITDA for the third quarter to be below the low end of the guidance growth range. with a similar growth rate as Q2 due to timing of certain expenses related to data acquisition in sales and marketing initiatives. We expect the fourth quarter to be above the high end of the guidance growth range. Overall, we are pleased with our performance through the first half of 2021 and look forward to continuing the strong momentum we are building in both our North America and international segments. With that, we're now happy to open the call for questions. Operator. Will you please open up the line for Q&A?
spk07: Yes, yes. We will now begin the question and answer session. To join the question queue, you may press star then 1 on your telephone keypad. You will hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then 2. We will pause for a moment as callers join the queue. The first question is from Kevin McVeigh from Credit Suisse. Please go ahead.
spk05: Great. Thanks so much, and congratulations on the results. Hey, Brian or Anthony, I think the organic growth was pretty clear in terms of the guidance for Q3, Q4, but just to confirm, Brian, so it would be for Q3 a little bit below 3% and then Q4 a little bit above 4.5%. Is that the best way to think about it? And if it is, maybe... some of the puts and takes that get you there?
spk10: Yeah, Kevin, when we talked about it, the range is at 3% to 4.5%. So we'll be a little bit below the midpoint of that range. Oh, midpoint, I'm sorry. Yeah, exactly, above 3% from that perspective. A couple of things that feed into that, right, is we had $4 million of the data.com headwind in Q2. that goes through about two in the third quarter and then one in the fourth quarter. So the headwinds are really behind us that we've previously communicated. And then the other piece is that as previous sales, as the previous price increases, as the new product innovation starts to flow through, that's where you see those building blocks back into the third quarter, the fourth quarter, and really starts to run right you into 2022. Super helpful.
spk05: And then just real quick, just retention in the quarter and how we're thinking about that in the back half of the year?
spk06: Yeah, retention continues to be strong. And, you know, we see a pretty consistent, you know, towards the end of the year as well, Kevin.
spk03: Awesome. Thank you all. Thank you.
spk07: The next question is from Gary Bisbee from Bank of America Merrill Lynch. Please go ahead.
spk14: Hey, guys. Good morning. Maybe if I could start on North America revenue. I heard you, the $4 million from data.com, but even without that, not a lot of real acceleration yet, and yet you're prepared to march. There sounds like a lot of optimism around some of the new products. Is it just a matter of timing at this point, or what are the keys to seeing better, more consistent growth from the North America segment going forward?
spk03: Sure.
spk06: So when we looked, you know, going back to the IPO and talked about what we saw, you know, we saw that, you know, in the international marketplace, there is a faster ramp that was going to come, taking our products, localizing them in those markets, and we're seeing that. And in North America, we knew that there would be new product creation that would be, you know, required to continue to have that growth follow. And as you've seen in the prepared remarks, I'm sure we'll talk about today as well, there's been a lot of new product development that we're bringing to market, lots of initiatives. And so we see that our expectation, obviously, is North America will continue to grow as the year progresses.
spk14: Okay. And then just on margins, Brian, I heard you say, if I counted right, five times higher data costs as reason margins, even without the acquisition, were higher. were down in the quarter. Can you just explain exactly what's going on there, and is that a change from what you've been seeing, or is that something that's been happening? And if we take a more medium-term look at margins, any change in the prior commentary around the expansion that you expect going forward? Thank you.
spk10: No, Gary, from that perspective, we don't expect to have any change from that prior communication. We really knew in the second and third quarter there was just some timing of some new assets that we had brought on that were flowing through from an expense standpoint. And then, as you know, once it flows into the data cloud, the contribution margins as we sell are very, very high. And so we expect the expansion to continue from that perspective. Outside of that, you know, again, it's really just continuing to accelerate the top line, right, and see that flow through. And then we also have, you know, other, you know, kind of continuous improvement programs, too, that we're working through, looking at, you know, third-party spend and shifting that to in-house where we can pick up some arbitrage from that perspective. So nothing really changed from that perspective, Gary. This is really just kind of how the quarters, you know, lay down this year versus prior. And just the last point was that we had about $4 million of public company costs in the second quarter. When we launched last year, we picked up an increase in D&O insurance and then the ESBP match. So those are just the pieces that are in there that kind of drove that variance from an organic perspective.
spk07: Okay. Thank you. The next question is from Manav Patnik from Barclays. Please go ahead.
spk11: Thank you. Anthony, my first question was, you know, I guess, you know, you've moved the headquarters down to Jacksonville and after Steve left the company, you know, perhaps you're taking a more day-to-day, you know, approach. I was just curious if anything changes because of those changes there and, you know, how we should think of that.
spk06: Yeah, sure. So, you know, with the headquarters change, you know, I'll certainly have more time to put towards Dun & Bradstreet, you know, less time traveling. So that was a bonus in addition to the financial incentives that we've got in terms of moving headquarters and giving us another great pool of talent to go after. So that was a key part of it. And also, the reorganization that we have with our segment presidents who are very strong, the new talent that we brought in, we feel real good about how we're set up going forward.
spk11: Okay, got it. And then, you know, just that NPI metric you talked about, 6%, you know, can you just help clarify what the definition there is, like the new products released over what time frame and perhaps just, you know, your anecdotal sense of, you know, the pipeline there and how it could help, you know, with 2022 acceleration?
spk06: Sure. You know, I'd say a couple things if we talk about it. The approach I've talked about before is it's important for us to be innovative, to drive integration, and to do it all with urgency. And it's always kind of been the formula for success. And so we've created a lot of innovation. That shows up in this product vitality index. We've also built in these products into our suites. So they're not transactional. We're not selling a one-off. But it's more how do we build it into the suite integrated where it's easier for our clients to buy and consume from us. And so that's been a key focus for us. And obviously, you know, doing it all with urgency. And so, you know, as we look at some of the new products that we talked about, it was in the SMB space. We had the e-commerce capability, our product marketplace, our data marketplace, our rev up initiatives, our ESG intelligence. capability, right, and putting them within the suites of solutions. So ESG inside of a risk analytics suite, cyber and a risk analytics suite, receivable intelligence and finance analytics, et cetera, you know, rev up sales and marketing. So, you know, so for us, from that perspective, that's the engine. And what I'd say right now is we've got a great, you know, momentum going in the product creation, the integration creation. the flywheel spinning, and we're all leaning on it, spinning it faster and faster. And our clients have been very helpful. We've had great client advisories, boards that we've leaned on, really changed the dialogue with our clients, how we approach them, how we bring them in. And it's proven to be very successful as we come out with these new capabilities. We have our built-in set of clients to evangelize the new capabilities and help us grow them in the market.
spk03: All right, thank you. Thank you.
spk07: The next question is from Hamza Mazari from Jefferies. Please go ahead.
spk01: Hey, good morning. Thank you. I was hoping maybe you could talk about the competitive dynamic on the sales and marketing side. You know, specifically if you think that there's risk of new entrants, is there anything in your product portfolio that's not there or that you can improve from a technology perspective? Just give us any sense of that would be helpful.
spk06: Sure, Hamza. You know, that one is, you know, they're more, say, you know, discrete competitors in that space versus the finance and risk space. But we've got a great strategy in place with our, you know, building out our marketing technology stack and sales technology stack and are going to market, you know, continuing to look at, ways that we can bring in more and more capability. So we're excited with what we've done, you know, clearly with our RevUp initiatives. We're seeing, you know, great traction and excitement there. We're excited with our partnership with Zeta Global, you know, where we're combining consumer data and business data, really creating a business-to-person offering and finding ways, you know, to leverage that for our clients. But also, even in things such as, you know, the ESG example that we talked about, a new product offering, that connects to it as well, if you think about it. You know, we had one of our first clients was a large technology company that were looking at how they could use ESG data to target prospects who maybe had low ESG scores, and this would help them because they've got environmentally friendly hardware that they're selling. or those that have high ESG scores and they see the importance of it and they want to maintain that. So what we're doing internally is we're looking at every, you know, capability we have, advantage we have, how to integrate it into our suite of solutions and go to market. And so, you know, that's really what our approach is, Hamza.
spk01: Gotcha. And then just, you know, I know you talked about organic growth Q3, Q4, and this year, but, you know, I could just touch on your confidence level to do consistent mid-single-digit plus organic growth. Is that a year away? Is that two years away? Just any sense of sort of timeframe and how achievable that is.
spk06: No, we do have confidence, Hamza. We've got a game plan that we set out that we shared with all of you a year ago, and we've been executing against it. In the commitments that we make, we're working very hard to deliver on, and we have confidence in our team, confidence in our approach, and we have confidence. I don't want to get into next year's guidance, obviously, but as it's building, it's building on top of a very solid foundation.
spk01: Great. Thank you so much. Thank you, Hamza.
spk07: The next question is from Ashish Sabhadra from RBC Capital Markets. Please go ahead.
spk12: Thanks for taking my question. I just wanted to focus more on the cross-sell and ability to get greater share of wallet with strategic customers. I was just wondering where have you lately seen a lot more traction on the cross-sell opportunity? Obviously, risk and compliance has been strong on finance side, but also can you talk about opportunity to sell more sales and marketing product into your F&R customer base? Thanks.
spk06: Yeah, sure. No, we absolutely do see the opportunity to cross-sell more. And part of it, I think my answer to Manav's question, doing it by integrating, getting it more into the DNA of our company, right? So having the capabilities built into suites, making it easier for us to sell and deliver to our clients. But these, actually the example I just gave about that large technology company on the ESG side, it's a risk analytic capability that also has benefits in the sales and marketing side. So the conversations that we're having with our clients are really across the use cases that will help them grow their revenues, lower their expenses, and stay regulatory compliant. So we do have confidence that we'll continue to cross-sell, continue to have success that way. Like I said, we've got the flywheel spinning. We're going to keep spinning it faster and faster, creating more products. And what we're seeing is, you know, as we create more capability, we've got great client relationships and a great uniqueness in our data, in our DUNS number to bring it all together in a way that it's easy for our clients to consume and it's differentiating. So long-winded answer, Ashish, but yes, we've got confidence and we'll continue to cross up.
spk12: That's very helpful, Keller. And maybe just a quick question on BizNord. Looks like the integration is going out of plan and you talked about some pretty good new products and new events in that marketplace. My question was more on the sunsetting of $50 million of revenues and replacing it with D&B products. I was just wondering any progress on that front and do you foresee any challenges during the transition? Thanks.
spk06: I'll start that, then maybe Brian can chime in. We're very pleased with the progress that we've been making there. And I think measuring in our product vitality score that we gave did not include BizNode or the worldwide network partners for clarity. But I think as we look at BizNode, that would increase the number of our product vitality. I mean, they were starting down that journey prior to us acquiring them. And certainly as we bring our slew of capabilities to that client base, we'll see a lot more. But it's really been better than we had anticipated from the sunsetting. And I don't know if there's anything you want to add to that.
spk10: Yeah, Ashish, I mean, we started to sunset some of the products and migrate them over. There was a few things that were a little bit lower hanging fruit from that perspective. The technology and product organizations are very focused on you know, filling in any kind of localized gaps that we would need to our current product set to continue rolling that. But, you know, as Anthony said, not only are the integration and the synergies going well, but, you know, revenue is coming in, you know, a little bit, you know, better than we had anticipated. And that's a net number, including, you know, the wind down of those products. And so it was always more of a transition from legacy product to DMV product versus, you know, kind of a sundown where it's going to zero up.
spk12: That's very helpful, Colette. Thank you very much.
spk07: The next question is from Kyle Peterson from Needham. Please go ahead.
spk09: Great. Good morning, guys. Thanks for taking the questions. Just wanted to start on BizNode. I know you guys mentioned that the synergies and integrations kind of going a little bit ahead of schedule. I wanted to see how we should think about the timing. I think you originally laid out about 40 million in synergies from that deal. When should we see the rest of those starting to roll through, and do you think there could be any upside to those original targets?
spk10: Yeah, so what we talked about for this year, right, was you're going to see a lot of the execution occurring, but we also have some things that with any kind of acquisition that you shore up in terms of infrastructure, cybersecurity, et cetera, from that perspective. And so those are more kind of one-time investments that occur, you know, in year one. And so we expect to see most of the flow through of the synergies coming through the P&L in 2022. In terms of, you know, executing against the 40, and so, again, same kind of, you know, playbook that we've applied, you know, multiple times, kind of back office and bureaucracy redundant functions are first to go. And then as we continue to progress, that'll be hand in hand with the revenue that Ashish had just mentioned. There'll be products and technology stacks and data sets, et cetera, that wind down from that perspective. And so 40 is something that certainly is a good chunk of expenses in a solid number, but we'll always look to continue to progress beyond that as we get deeper and deeper into the organization.
spk09: Great, that's helpful. And then just a quick follow up on the balance sheet and kind of use of capital. Just wanted to see what your priorities were. Obviously, I know the leverage has been kind of walking down here in recent quarters. And I know you have some higher cost debt on the balance sheet. Would you look at ways to potentially kind of keep walking down that leverage and maybe reduce the interest burden moving forward?
spk10: Yeah, so I'll start with the interest burden and maybe the debt stack and then, you know, turn it to Anthony for some, you know, capital allocation, you know, components. Yeah, certainly. So both the secured and unsecureds, right, have the non-call that runs through February of 2022. And look, those are at 6.875 and 10 and a quarter. So pretty expensive, you know, pieces of paper. You know, that timing and kind of what the annualized interest expense, you know, starts to converge at that point. So certainly, We would look to reduce the interest expense burden just naturally through refinancing those, especially with, as you said, the strength that we've created, the momentum that we've created really post IPO from that perspective. And so we'll certainly look to continue to deleverage, continue to lower the interest expense burden. And then maybe, Anthony, if you comment on just overall allocation.
spk06: Yeah, I mean, at the high level, the allocation strategy is the same. We're going to focus on internal development. We see a lot of opportunity there, low risk, great opportunity in that, but also in the M&A space and looking for opportunities for us to acquire high quality companies. We've been, I'd say, fairly active looking at a number and walking away from them. So we've got a I'd say a great ability in terms of analyzing companies out there and seeing if they'd be ultimately good fits for us and for our clients. And we're going to continue looking to see if there are some good fits that way. But that's really the focus and the priority for us from a capital perspective.
spk03: All right. That's really helpful. Thanks, guys. Thank you.
spk07: The next question is from Samir Kalucha from Deutsche Bank. Please go ahead.
spk04: Hi, thanks for taking my question. I was just curious about the ESG opportunity you talked about. Is it possible to break out the current contribution from that? And the second is, what kind of TAM you're targeting? And probably a follow-up to that is, how do you differentiate against the larger players in this space, say, like the S&Ps and MSCI's of the world?
spk06: Sure. So in terms of revenues, we just launched the product in Q2. And I'd say we're getting our bearing with it. So I'm not comfortable giving the rest of your revenue contribution from it. We're conservative by nature, I guess, that way. But there's a very large TAM. And again, TAMs, I always find them subjective. But I'd say the TAM is large enough that it won't limit what our growth could be in this space. if this catches like wildfire. You know, we think we've got a, again, we've talked often about, you know, the power of the DUNS number, the power of our, you know, rich proprietary, you know, company level data assets and what we're doing here. And so what we're, I'd say how we're different than, you know, We've got very specific company data, so we're not looking at a macroeconomic trends and regions and just sizes of companies and running models against what the ESG scores might be, but having a more specific focus on that specific company's data. What we have from, like I said, our proprietary data or public information about them, matched against the DUNS number from other data we require in the ESG space, but bringing it all together and getting a very analytical, specific score for our clients. And again, then working with them to see how can we help them improve their ESG ratings through that. And there are a lot of great competitors in this space. I think everyone kind of comes at it in a different way in terms of maybe building a market index, for example. which has good traction underway as well. Ours is a little different in terms of working with our corporates and financial institutions. We're seeing a lot of different use cases right now, and we've got the ability to really deliver it in a number of different ways, through batch, through API, through integration into our analytics suites of solutions. So I hope that gives you enough color in terms of where we see we have an advantage, you know, with the data and our analytic capability and where some of the competitors are, you know, with the traction they already have underway and the approach that they're taking. You know, certainly, if you look, you know, far to the future where we've got a great, you know, Paydex score that's established as the industry leader, we, you know, aspire to have an ESG score that's got, you know, similar performance you know, capabilities and is looked at in the same way in the market.
spk04: Got it. Thank you. And just a quick one. The Serbian partnership, is it more like a verticalized, payroll-oriented relationship you have there, or is it more horizontal? I'm just curious if there are other players you can go after with that relationship. with that offering, other software players in the space?
spk06: Yeah. No, there actually are other players that we can go after in the space. And what we're doing for Ceridian would be very applicable for others in the space.
spk03: Got it. Thank you. Thank you.
spk07: The next question is from Pete Christensen from Citibank. Please go ahead.
spk13: Good morning. Thank you for the question. I know Brian called out earlier some benefits from new business formation, and some of the stats, at least in the U.S., have been quite extraordinary in recent months, up 50%, up 100% off normal growth rates. I was just wondering, how do you think about your S&B positioning, the go-to-market positioning, you know, to capture this opportunity? And and perhaps if you see any opportunities to drive sales cycle improvements in this area. Thank you.
spk06: That's a good question, Pete, on the SMB space. Look, it's a broad one. It's one where we've shared, you know, we've got the most competition as we look at, you know, our company scores versus, you know, a Consumer Credit Bureau report on the owner of a proprietary of a business. small business. But it's one where we feel we're definitely on the right track in terms of attacking that market, leveraging the e-commerce digital channels, leveraging all the assets that we have that can really make a difference. And we're not done. There's other initiatives we've got in the hopper in that space. So what I hope you see from us is we're not taking the same old, same old and hoping for a different outcome. We're being very aggressive in the rollout capabilities that we're creating. We're working with our clients, understanding what hits the sweet spot and going after it. So probably the best way to describe where we are with our SMB is we're in a very exciting inflection point, I think, in that business. doing some innovative things. They're coming to us, like we said many times before. They're coming to get a DUNS number, coming to improve their credit, coming because a large vendor needs them to be vetted as a supplier through us. And so we're taking the advantages that we have and leveraging them. And there's more to come in that space as well.
spk13: That's great. Thanks. Great call. Thank you, Pete.
spk07: The next question is from Andrew Steinerman from J.P. Morgan. Please go ahead.
spk08: Hi. Thanks. This is Andrew. Could you talk about the change of the CTO with my, you know, should we expect any changes on D&B's back-end technology kind of transformation pathway? And specifically, you know, what percentage of D&B's computing is done over the public cloud already?
spk06: So, Andrew, in terms of, you know, Chief Product Officer, from a change perspective, the only, you know, change I'd highlight is speed, right? That, you know, we're going to go, you know, faster and faster. And so as we think, you know, the initial phases of our transformation was putting us in a position, you know, we talked about acquiring more data, improving the quality of the data and the technology and our analytics. And so right now, from a product perspective, it's really building on those improvements in the earlier part of the transformation to launch more capabilities, to have them more integrated, et cetera. And similar, obviously, the technology plays a key role in the creation of that as well. From a cloud perspective, You know, we've, you know, virtualized a lot of our environment. We're at, you know, we're pretty close to, you know, where we think we'll ultimately land. You know, it was never to be 100% in the cloud, but to have a majority, a strong majority of our systems virtualized, and we're there right now.
spk03: Okay. Thank you. Thank you.
spk07: The next question is from George Tong from Goldman Sachs. Please go ahead.
spk02: Hi, thanks, good morning. Your organic constant currency revenue growth stepped up to 3.3% in the quarter. What actions do you have to take in the remainder of the year to continue the upward trajectory in organic constant currency revenue growth?
spk10: Yeah, George, I think it's the things that we've really been kind of actioning from that perspective. So certainly getting these transient headwinds behind us is helpful, right? Our continued focus on increasing retention, right, Anthony likes to call it closing the back door, is really important from that perspective because, again, we want to continue to take steps forward. And those steps forward are the price increases, right? And so as we've brought in more and more multi-year contracts, as the renewals come up from that perspective, we've done a lot of the elasticity studies. And so certainly from that perspective, we're starting to see the contribution from pricing. you know, the cross-sell that Anthony talked about, you know, earlier from that perspective, again, is another leg. And then, you know, these new products that we're rolling out and starting to see that vitality index continue to expand from that perspective, you know, that's really what, you know, is taking us, you know, from that kind of, you know, three-ish percent, right, and into the back half of the year, you know, accelerating into, you know, that more kind of, you higher end of our growth range and starting to, you know, push into, as Hans asked earlier, that mid-single digits. So, again, it's a lot of waterfalling and stacking because, again, with sales, you know, in essence, you know, starting to increase from that perspective, and a lot of our sales are predicated on subscription, it's, you know, the sale turning into revenue, right, and then the revenue starts to stack in on top of each other. So that's really what we have to keep doing. Okay, got it.
spk02: Very helpful. And then just quickly on BizNote, how quickly is BizNote growing currently and how much of BizNote revenue are you currently including in your full year guide?
spk10: So from a BizNote perspective, George, it grew about 3% OCC in the second quarter. And then, you know, if you look at the overall guide, I think we talked about, you know, the difference between the OCC and the total, right, is really the fill-in from that perspective. So, if you kind of look at the low and high in the range, we had talked about, you know, roughly like, I think, 19 percentage points.
spk03: Got it. Thank you. As a reminder, it is star one to ask a question.
spk07: This concludes the question and answer session. I would like to turn the conference back over to Anthony Jabbour for any closing remarks.
spk06: Thank you. In closing, I'd like to thank my D&B colleagues for their commitment and especially their part of our 180 years in business. And I'd also like to thank our great clients for their partnership and their guidance. Thank you for your time today. I hope you have a great rest of your day.
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