Dun & Bradstreet Holdings, Inc.

Ladies and gentlemen, good morning and welcome to the Dunn and Bradstreet Fourth Quarter and Full Year 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star and zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Sean Anthony, VP, Corporate, FP&A, and Investor Relations. Please go ahead, sir.

Thank you. Good morning, everyone, and thank you for joining us for Dun & Bradstreet's Financial Results Conference call for the fourth quarter and full year ending December 31, 2023. On the call today, we have Dun & Bradstreet CEO, Anthony Jabbour, and CFO, Brian 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.dmb.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 2023 earnings call. On today's call, I'll start with a brief overview of our fourth quarter and full year results, followed by a look back at some of our most significant accomplishments in 2023 and a brief view into our plans for 2024. After that, I'll pass the call over to Brian for an in-depth review of our results. and to discuss our guidance expectations for 2024. We'll then open up the call for Q&A and finish up with a few closing comments. With that, let's get started. We finished off 2023 with not only our strongest quarter of the year, but our strongest quarter since going public. We had organic revenue growth of 5.1%, adjusted EBITDA of $261 million, and adjusted net earnings of $140 million, or $0.32 of EPS. We beat our guidance in both revenues and earnings, and we're still able to balance continued investment in our new innovations and product enhancements that help support our 30% vitality index in the quarter. Compared to our original guidance back in February, revenue, organic growth, and earnings were all at the high end, and EBITDA came in the middle of our ranges. For the full year, we delivered total revenues of $2,314 million, organic growth of 4.3%, adjusted EBITDA of $892 million, and adjusted net earnings of $432 million, or $1 VPS. Our vitality index for the full year finished at 27%, up from 17.5% in 2022, as we continue to deliver new and innovative solutions to clients throughout the world. And whether it was in North America growing 5% with a 29% vitality index or international growing 5.3% with a 34% vitality index in the quarter, our value proposition is resonating with businesses in need of data, analytics, and workflow to more efficiently and effectively operate in these rapidly changing environments. Businesses throughout the world are coming to us to solve some of their biggest challenges. The three most common themes we are seeing right now play directly into the areas that we had prioritized for our investment. First and foremost, master data management has always been a foundational component of having a sound data strategy, and its importance is increasing significantly with the advent of Gen AI. We believe that we're in a privileged position because of the pervasiveness of the DUNS number, our unparalleled business entity resolution capabilities, and the largest and most robust commercial data cloud in the world to capitalize on these exciting trends. Master Data Management continues to be at the core of our growth strategy, and by investing in new, expanded, and alternative data sets, integrating our DUNS cloud into the most prolific data delivery platforms, and collaborating with the top cloud and gen AI companies in the world, we are making a full push throughout 2024 to take advantage of this coming wave of innovation. Secondly, with the launch of our own AI-powered solutions, we are enhancing our existing products with conversational search, generative insights, and improved predictive signals. And we are launching standalone net new capabilities, such as ABE for Hoovers, where clients can utilize conversational search using natural language processing to reduce the friction in helping our clients to more accurately research and target higher propensity prospective companies. Or ask procurement, which will be in GA at the end of this quarter, where clients can automate multiple steps in the sourcing and procurement process, saving days of work and potentially millions of dollars. And while AI is front of mind in our product development prioritization, we aren't ignoring the continued demand for existing solutions. While we continue to have leading revenue retention rates at 96%, we're also seeing a continued strong demand for our faster-growing solutions, such as those in our third-party and supply chain risk management. We delivered another quarter of strong double-digit growth in that area, and it's no surprise as business leaders, boards, investors, and governments continue to raise the bar on companies' understanding of who they are truly doing business with and what the financial, regulatory, cyber, social, and climate risks associated with those third parties are. Our DUNS cloud now covers 558 million business entities, including UVO data on 352 million shareholders, 270 million businesses with climate risk insights, and detailed data-driven ESG ratings on 80 million DUNS. And not only do we have unparalleled data on the company itself, we have also been able to map nearly 35 billion relationships between Tier 1, Tier 2, and Tier 3 suppliers. We are creating a more real-time predictive performance analytics that continue to create demand in the client verticals we have today, and even more importantly, in new verticals we are entering, like capital markets. Capital markets firms have consumed massive amounts of data over the years to create that last bit of alpha in their evaluation of potential company performance. Through the creation of a new set of capital markets-focused solutions, we have launched into the space with an immediate impact. With our ability to link and enrich a capital market's client data through the DUNS hierarchy, add deeply correlated performance insights from our alternative data sets on public companies, and deliver unparalleled insights into over 500 million private companies throughout the world, we have just begun to scratch the surface on what is possible in this space. Underpinning these results and the ones to come is a significant progress we continue to make in our back office and cloud migration efforts. We have made significant progress in the completion of our modern quote-to-cash project, which will ultimately allow our go-to-market delivery and finance functions to operate at an even higher level of efficiency and effectiveness. Through the use of best-in-class processes, modern software platforms, and artificial intelligence, we will not only save operating expenses, but expand revenues through more efficiently closing deals through shortening the time from quote to final signature. We also continue to make large strides in our cloud migration in 2023 and plan to complete even more in 2024. Overall, I'm very proud of our team's execution across the company in both the quarter and the full year. With organic growth approaching 5%, adjusted EBITDA of nearly $900 million, a strengthened balance sheet through improving operating free cash flow, and the refinancing of our secured debt layer last month, I'm very pleased with the progress we are making towards our medium-term targets of organic revenue growth acceleration, expanded profitability, deleveraging, and enhanced free cash flow conversion. In the quarter and throughout the year, we engaged our clients with urgency, delivered our data and analytics with precision, and created new and innovative solutions to satisfy prospects' growing needs. And by doing these three things, we're also able to finish off the year with some really exciting wins and renewals in the quarter. Beginning with North America, where we had a 95% revenue retention for the quarter and 97% retention for the year, I want to start off with the first one to come in the capital market space. It was with one of the world's largest multinational alternative asset management, private equity, and financial services companies. Through our structured data, corporate linkage, and business signals, we are supporting their efforts in merging and mastering their internal data cloud and also helping to predict viable acquisition targets for investment. These use cases, along with several others, such as private credit evaluation, are common for private equity firms throughout the globe, and we see this as a huge opportunity for us going forward. On the more traditional finance solutions use case, we are pleased to announce the expansion of our relationship with Johnson Controls. Johnson Controls is a world leader in smart buildings creating safe, healthy, and sustainable spaces. We expanded our relationship through the addition of a global finance risk solution that was able to eliminate multiple vendors, ultimately demonstrating the scale and value of our integrated solutions. Another great example of a retain and expand win was with a leading global aerospace company. This client was rolling off a multi-year agreement and we worked closely with them to execute another multi-year agreement of the same tenure with an expanded set of solutions that includes supply chain risk management, master data management, and global trade controls. And we look forward to continuing to help them navigate the increasing global complexities around supply chain and third-party risk management. Speaking of supply chain and global risk management, Our international segment, which had 94% revenue retention for the quarter and 93% revenue retention for the year, expanded a relationship with one of the leading ERP providers in the UK, Sage. Sage added RACI, or Risk Analytics Compliance and Intelligence, that supports enhanced workflow in the managing and monitoring of supply chain risk and compliance. We also expanded our relationship with Siemens in Germany, a multinational technology conglomerate who added our sales acceleration tools through Hoovers and a direct plus API integration. We have seen excellent wall and share growth with Siemens over the past few years as we continue our strategy of landing and expanding the biggest and best companies globally. We signed another multi-year deal with Kion, a multinational manufacturer of materials handling equipment. They are using our data blocks integrated directly through their ERP system to manage their global credit risk decisioning. And finally, SEB, a leading Swedish bank, added our master data management solutions to support their overall data transformation efforts. SEB is a great example of how companies throughout the world are accelerating their transformation efforts and using DMV as the backbone of their data management strategy. As I said before, if you want to leverage the true power of AI, it starts with rich, reliable, trusted, and timely data. And while we have what we believe to be the premier commercial data cloud in the world, we want to continue to strengthen our position through investments in data, cloud capabilities, and our most recent GenAI initiatives. Coming off a strong year of financial, sales, and operational performance, we are excited about 2024 and continuing the momentum we have been building. We will continue focusing on innovating with urgency, delighting our clients, expanding strategic relationships with key partners, driving a disciplined investment strategy, and turning the vast amounts of opportunities in front of us into enhanced results. We plan to build on our areas of strength in third-party and supply chain risk management and master data management, capitalize on new opportunities such as capital markets and gen AI, and extract the appropriate amount of value from the investments and enhancements we have made to our existing solutions. We expect another year of accelerated organic growth, increased earnings, and continued deleveraging through enhanced profitability and improving free cash flow, while balancing near-term financial performance with the proper level of investment and new solution development enhancements to existing solutions, back office upgrades, and gen AI initiatives. In summary, we're on track with achieving the medium-term guidance we set forth at our investor day, and we are excited about the opportunities ahead of us in 2024. With that, I'd now like to turn the call over to Brian to discuss our financial results for 2023 and outlook for 2024.