Dun & Bradstreet Holdings, Inc.

Good day and welcome to the Dunn and Bradstreet third quarter 2024 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Sean Anthony, Vice President of FP&A 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 third quarter of 2024. On the call today, we have Dun & Bradstreet CEO Anthony Jabbour and CFO Brian Hipcher. Anthony will begin with an overview of our third quarter results and then pass it over to Brian for an in-depth financial review. We will then finish up with Q&A and a few closing remarks. 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 risk 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 the reconciliation between non-GAAP financial information to the GAAP financial information, is provided in the press release and supplemental slide presentation. The 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. Thank you, Sean. Good morning, everyone, and thank you for joining us for our third quarter earnings call. Overall, we delivered another solid quarter on both the top and bottom lines. As we got it at the beginning of the year, there was some timing in North America between on delivery and radically recognized revenues in the third quarter. and I am pleased to report that we delivered organic revenue growth of 3.4% overall, which is slightly above expectations. While international continued its consistent delivery of mid- to high-single-digit organic revenue growth of 5% this quarter, North America came in at 3%, largely due to the timing I mentioned up front. On the profit side, we expanded margin 60 basis points and improved free cash flow conversion to nearly 50%. We also enacted our planned reduction in capitalized software development spend at the end of September, and through the actions taken, and as a result, expect to see lower capitalized software expenditures of around $15 million on an annualized basis. We are coming off an elevated investment period and expect to move towards our medium-term target spend of 6 to 7 percent of revenues on an annual basis. And finally, before moving on to some exciting things happening with new innovations, strategic partnerships, and client successes, I want to take a moment to update everyone on the inbound interest we received late this summer. We've been working with our advisor to evaluate inquiries from both strategic and financial acquirers. While we'll not comment on the status of any particular engagement, the team is spending a significant amount of time conducting in-person meetings, holding additional functional due diligence sessions, providing detailed responses to the interested parties, and will continue to be responsive and thoughtful in all of our interactions on behalf of our shareholders. Our D&B team continues to impress me, and I would like to thank them for their focus on delivering the quarter, executing the capital reduction, and being responsive to the interest we are currently receiving. And if all of that wasn't enough, We also continue to innovate for our clients. I'll start off with the release of ChatD&D, our patent-pending generative AI assistant. ChatD&D surfaces knowledge across the company's data blocks, delivering actionable insights to its users, ranging from prospecting to company due diligence. Users can ask questions in conversational language, and it has the intelligence to access and analyze the underlying data to deliver the most relevant and accurate output. ChatD&B is fueled by our Dun & Bradstreet Data Cloud, which is renowned for the breadth, depth, and quality of private company data it possesses. And it will also be able to incorporate additional client first-party data, creating the ability to accurately answer questions posed on both private and public companies within seconds. Our autonomous Gen AI agents show their work to data sources and lineage in ChatD&V, allowing users to have confidence in the quality and accuracy of the information presented. We launched ChatD&V internally with over 1,000 colleagues for testing and quality checks before releasing it to dozens of clients and partners in our early adopter program. These clients shared feedback and insights into how they are using ChatD&V and the benefits of this new assistant in their daily jobs. Results were encouraging and centered around the speed at which data can be accessed, the broad amount of information that is available to query, and the summarization of vast amounts of information in a format that is easy to use, track, and trust. ChatD&D is an exciting evolution for our company, and we look forward to discussing its progress and expansion in the quarters to come. We announced two exciting partnerships this quarter, the first with London Stock Exchange Group, or LSEG, and the second with Intercontinental Exchange, or ICE. With LSEG, we are forming a strategic collaboration to broaden access to private market information. The combination of LSEG's capital markets data, including deals, private equity, news, and research, With our trusted private market data providing visibility on officers and directors, ownership insights, and financial information for millions of companies globally, we'll enable investment in capital market firms to drive better data-driven financial assessments and decisions. Our DUNS number will now be available to LSEG's Workspace's large customer community and therefore increase its reach into the capital market as a new and expanding vertical. Using the DUNS number as the key to unlock data about a business, LSAG's workspace users will be able to easily search for private company data and download the data to improve mapping, discoverability, and interoperability of content on a global public and private companies. The DUNS number provides linkage across business relationships, employees, and subsidiaries, enabling users of LSEG workspace to gain a better view of an enterprise's corporate structure, ownership, and financial health. The collaboration with LSEG marks a new era in providing technology power transparency to private company analysis. With the exponential growth of private markets, Dun & Bradstreet plays a critical role providing clarity and insights to help investors manage risk and discover new investment opportunities. We also partnered with ICE to launch a new climate risk data offering covering private and public companies globally. The new service will be designed to provide transition risk data, including greenhouse gas, scope one, two, and three, and physical risk data on tens of millions of companies. This will be one of the broadest climate data offerings available on the market. By combining our business intelligence, supply chain, and asset location data, With ICE's geospatial and climate capabilities, and then leveraging ICE's distribution channels, this new service will offer the broader investment community a single source of climate data. This new data solution will become part of ICE Climate, which provides data and analytics that help quantify investment impacts posed by transition and physical climate risks, such as extreme weather events. These are two great examples of how we are picking our spots and partnering with world-class organizations to bring incremental value to these markets. While each of our partnerships are limited in terms of the magnitude of data, scope, and specificity of use case, we continue to balance our time to market and longer-term opportunities to drive maximum value creation. Before turning the call over to Brian, I wanted to touch on a few updates on the commercial side. North America continued to deliver consistent revenue retention of 97% while driving a 32% vitality index. Clients and prospects buying behaviors were generally consistent with the first two quarters of the year, as businesses balanced mixed macroeconomic signals and an impending presidential election. And while business spending remains disciplined more broadly, and sales cycles have lengthened, there were some examples of exciting wins in the quarter. The first is with one of the largest banks in the world that expanded their relationship with us by double digits. The client leverages our data and analytics within their commercial card and business banking portfolio, two areas that are growing at a rapid clip for them. By leveraging our matching and SBFE attributes, The client is making more effective and efficient credit line decisioning, and we look forward to supporting them with their current efforts and their future strategies focused on the leveraging of generative AI solutions. We also had a strong multi-year win with one of the world's largest life insurance companies. The continued improvements in our data and solutions earned us the right to extend a four-year agreement and implement a mid-single-digit pricing increase. They use a bundled set of solutions that are heavily integrated into the customer's platforms and workflow, which allowed a new set of incoming stakeholders to realize the value we are providing across their organization. And before moving on to the international side, I wanted to mention our expanded relationship with Tamr. Our relationship with Tamr expanded through the leveraging of our newly launched consumer marketing data, to analytically improve match outcomes for customer-focused data management solutions. Ultimately, we are working together to improve data stewardship and act as a front end for cleaner consumer data sets that drive better business outcomes in sales and marketing use cases related to consumer-to-consumer and consumer-to-business matched records. Turning to international, The team continued on with their strategy of winning with the largest and most strategic players in the regions. With a retention rate of 93% and vitality index of 35%, the team is focused on completing our legacy solution migration efforts while balancing upsell and the addition of new client logos. Beginning with IKEA, they expanded our existing relationship with our data block supplier risk solution by adding more markets to master their data supply chain. IKEA is a great example of our ability to land and expand with the customer through the expansion of data elements, geographies, and number of businesses covered. In the United Kingdom, we had our largest ever sale of Hoovers in our international segment. The cross-sell was a five-year, multimillion-dollar expansion, adding to numerous other finance and risk products being utilized by the client. And finally, in Germany, we secured a contract with international distribution and service company Jetson & Jetson to provide data and analytics to support their financial risk, master data management, and compliance activities. These renewals, expansions, and new wins across our segments are just a handful of examples of how we continue to deliver increased value across our clients' most critical use cases. As I said earlier, I'm very proud of the team's execution this quarter and throughout 2024. We look forward to closing out the year and heading into 2025 with another year of significant progress under our belts. I'd now like to turn the call over to Brian to discuss our financials in more detail and give a quick update on our outlook for the remainder of the year.

Thank you, Anthony, and good morning, everyone. Turning to slide one, on a GAAP basis, third quarter revenues were $609 million, an increase of 3.5% compared to the prior year quarter and an increase of 3.2% before the effect of foreign exchange. Net income for the third quarter was $3 million for a diluted earnings per share of one cent compared to net income of $4 million for the prior year quarter. The $1 million decrease in net earnings for the three months ended September 30, 2024, compared to the prior year quarter, was primarily due to a lower tax benefit and higher amortization loss related to the interest rate swap amendment completed in the third quarter of 2023. This was partially offset by higher operating income and lower miscellaneous non-operating expenses. primarily driven by lower fees related to our senior credit facility. Turning to slide two, I'll now discuss our adjusted results for the third quarter. Third quarter revenues for the total company were $609 million, an increase of 3.5% compared to the prior year quarter and an increase of 3.2% before the effect of foreign exchange. The increase was attributable to growth in the underlying business and the positive impact of foreign exchange, partially offset by the impact of the divestiture of a business-to-consumer business in Finland in the fourth quarter of 2023. Excluding the impact of the divestiture and the positive impact of foreign exchange, total organic revenue increased 3.4%, reflecting growth across both of our segments. Third quarter adjusted EBITDA for the total company was $247 million, an increase of $12 million, or 5%. This was primarily due to revenue growth, partially offset by associated personnel and data acquisition costs. Third quarter adjusted EBITDA margin was 41%, an increase of 60 basis points compared to the prior year quarter. Third quarter adjusted net income was $116 million, or adjusted earnings per share of 27 cents, compared to $116.2 million, or 27 cents per share, in the third quarter of 2023. The slight decrease in adjustment income was primarily attributable to higher tax expense and higher depreciation and amortization, partially offset by higher adjusted EBITDA and lower interest expense in the current year four. Turning now to slide three. I'll now discuss the results for our two segments, North America and international. In North America, revenues for the third quarter were $433 million, an increase of 2.6% from prior year quarter and 2.7% on an organic, constant currency basis. In finance and risk, revenues were $238 million, an increase of $3 million, or 1%. due to a net increase in revenue across our third-party risk and supply chain management, partially offset by decreased revenues from our finance solutions due in part to the timing of revenues shifting from on-delivery to routable. For sales and marketing, revenues were $195 million, an increase of $8 million, or 5% before the effect of foreign exchange. Sales and marketing growth was due to higher revenue from our master data management solutions, partially offset by decreased revenues from our digital marketing solutions. And while our digital marketing solutions declined in the quarter, they improved sequentially and, as expected, versus the first half of 2024. North America's third quarter adjusted EBITDA was $208 million, an increase of $12 million, or 6%, In North America, even a margin was 48%, an increase of 160 basis points from the prior year quarter. This was primarily due to revenue growth and lower net personnel costs, partially offset by higher cloud infrastructure costs and data acquisition costs. Turning to slide four. In our international segment, third quarter revenues increased 5.7% to $177 million, or an increase of 4.7% before the effect of foreign exchange. and an increase of 5.1% on an organic, constant currency basis. Finance and risk revenues were $122 million, an increase of 7%, or an increase of 6% before the effect of foreign exchange. All markets contributed to the growth, including strong contributions from newer API solutions across our own markets and third-party risk and compliance solutions in Europe. Our worldwide network alliances also had increased revenue due to higher product royalties. Sales and marketing revenues were $55 million, an increase of 3%, or an increase of 1% before the effect of foreign exchange. On an organic basis, revenues grew 2.4%, primarily due to higher product loyalty revenues from our worldwide network alliances and continued demand for our master data management solutions. International third quarter adjusted EBITDA was $59 million, an increase of $4 million, or 7%, and an international adjusted EBITDA margin was 34%, an increase of 30 basis points from the prior year quarter. The increase in adjusted EBITDA was primarily due to revenue growth from the underlying business, partially offset by higher personnel and data acquisition costs and foreign exchange law. Turning to slide five, Slide five contains the details of our capital structure as of quarter end. At the end of September 30, 2024, we had cash and cash equivalents of $289 million in total principal amount of debt of $3,681 million with a weighted average interest rate of 6.0%. Currently, 87% of our debt is either fixed or hedged, and as of September 30, 2024, we have $717 million available on our $850 million revolving credit facility. Our leverage ratio was 3.7 times on a net basis, and the credit facility senior secured net leverage ratio was 3.2 times. We continue to expect to be around 3.5 times on a net basis by the end of this year as we continue to migrate down towards our medium-term range of 3 to 3.25 times in 2025. To manage our floating rate exposure, ahead of the $1,250 million of swaps that's immature during the first quarter of 2025, we executed $600 million of forward-starting interest rate swaps. $350 million at 3.229%, and $250 million at 3.24%. These become effective at the end of March of 2025 and mature in March of 2028. Additionally, we terminated $1 billion in swaps with maturity in February of 2026 and entered into a new billion-dollar swap with a March 2028 maturity at a rate of 3.2463%. In regards to our share repurchase program, we did not execute any share repurchases in the third quarter due to the ongoing process related to the inbound interest we received earlier this year. Year-to-date, we repurchased 961,360 shares of Dun & Bradstreet Common Stock for $9.3 million, net of accrued excise tax at an average price of $9.71 per share. We currently have over 9 million shares remaining under our existing buyback authorization. And now turning to slide six. Our outlook for 2024 is as follows. Total revenues after the effect of foreign currency continue to be expected at the low end of our previously communicated range of $2,400 million to $2,440 million, or an increase of approximately 3.7% to 5.4%. This includes an assumption of a modest tailwind in the fourth quarter due to the effect of foreign currency related to the expected variances between the U.S. dollar, Euro, British pound, and Swedish krona. Revenues on an organic constant currency basis continue to be expected at the low end of our previously communicated range of 4.1% to 5.1% for the full year. Adjusted EBITDA continues to be expected in the range of $930 to $950 million. An adjusted EPS is expected to continue to be in the range of $1 to $1.04. Additional modeling details underlying our outlook are as follows. We now expect interest expense to be approximately $215 million. Depreciation and amortization expense is now expected to be in a range of $130 to $140 million. including incremental depreciation and amortization expense resulting from purchase accounting. Adjusted effective tax rate of approximately 22 to 23 percent. Weighted average diluted shares outstanding of approximately 436 million. And for CapEx, we continue to expect approximately 150 to 160 million of internally developed software and $45 million of property, plant, and equipment in purchase software as capitalized spend begins to moderate around the second half of the year. And finally, with the heightened level of investment beginning to evade, we continue to anticipate operating free cash flow conversion as a percentage of an adjusted net income, excluding the impact of the AR securitization to improve versus the prior year as previously discussed. The team is pushing hard to finish out the year as strong as possible and preparing for another year of improvement in 2025. With that, we're now happy to open the call for questions. Operator, will you please open up the line for Q&A?

Thank you. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then 2. The first question comes from Kyle Peterson with Needham. Please go ahead.

Great. Thanks, guys. Good morning. Appreciate you taking the question. Just wanted to start off on the digital marketing business. It does sound like there was some sequential improvement there, which is good to hear. I know there's typically some seasonal benefit as kind of the year goes, but I just wanted to see how that performed. both relative to expectations and, you know, any expectations for that business that you can share for the fourth quarter would be really helpful.

Sure. Thank you, Kyle, for the question. It's Anthony. Yeah, we saw the digital marketing was still a headwind in the quarter, but a much smaller headwind from the first two quarters of the year, kind of as we expected. But I'd say throughout the quarter we saw strength. It's strengthening throughout the quarter. So, We feel, you know, good in terms of the progress that we're making as it binds up to our expectations. And what I mentioned, you know, on the previous call, you know, we're very focused, obviously, on digital marketing and credibility and removing those segments from the business.

Yeah, Kyle, if you look at it, you know, this is a quarter that, you know, it had gone from, you know, double-digit declines really starting, you know, late last year and throughout the early part of this year. As we get through some of those costs, and especially as we head into Q4, Joe, I saw this quarter was in the low single digits, right, from a decline perspective.

Got it. That's very helpful. And I guess just kind of switching gears a little bit on the balance sheet, I know kind of third quarter in a row net leverage has been about flat. I know it's probably coming down, but decimals and rounding and stuff. But So I just wanted to see, I think you guys had mentioned earlier this year kind of expectations to get to three and a half turns on a net basis. But by your end, is that still within sight based on the current guide? Or how are you guys kind of thinking about deleveraging the balance sheet from here?

Yeah, Kyle, you're exactly right. You know, it's, you know, borderline, right, from a rounding perspective. But if you look for the whole year where we expect to be, we expect to be right around that three and a half times. And then as we head into next year, obviously, we'll get, you know, formal guidance and plans and all of that kind of shaped up for our February call. But, you know, the intention is to drive down towards that three, three and a quarter, you know, throughout 2025. And that's going to be a mix of, again, you know, increasing EBITDA, but also, you know, beginning to break down, you know, just the growth stat levels too.

Got it. Thanks for the color and for taking my questions. Nice results.

Thank you, Kyle.

The next question comes from with Deutsche Bank. Please go ahead.

Yes, hi, thank you. I wanted to ask about the strategic discussions that you've been having. I appreciated your commentary there. I'm curious if you're exploring, if you can give us any more color around the credibility business and sort of what are some of the factors around that and if you're considering you know, sort of splitting that business separately or, you know, any other color there would be helpful.

So if I could click on the larger process and specific credibility in terms of, you know, looking at how we would handle our divestment, I think is the question. I'll answer the second part first. From a credibility perspective, obviously we're focused on the larger conversations around the full company and those conversations and meetings that are taking place more so than a smaller divestiture. Like I said, it is something that we will do, but all of our energy is really going to the main transaction at the moment.

It applies to the point Anthony made on the last call. Certainly, we're getting further away from some of that direct impact from the consent order. This quarter, it actually incredibly shows some slight growth. So it's not out in the woods. It's not incremental to where we want to be from an organic perspective. Again, if you look at that trailing 12 months of the 90%, the revenue strength is still right around that 6%. And that includes, obviously, the third quarter where, you know, it was certainly lower because of some of the time that we discussed up front. So, I think we're in the same, you know, phase where we're continuing to monitor, you know, continue to look to improve the business. But again, you know, committed to, you know, evaluating and making some decisions, you know, later this year.

Okay, that's really helpful. And then just you mentioned the collaborations with ELSA. Again, it's around the capital markets business. I'm curious if there's any, you know, numbers that you'd be willing to put around that. When might you start to see some benefits accrue there? And maybe, you know, some color on how the partnership works, sort of is it usage-based? Is it a, you know, fixed fee-based? Again, more color there would be helpful.

Yeah, so I'll let Anthony talk a little bit about, you know, the partnership and how we think about, you know, capital markets and, you know, private, you know, company data in general. But if you think about these two, and Anthony mentioned it, we're very, I would say, mindful of, you know, selecting, you know, partners like in outside, like in ICE, doing a very specific use case and really, you know, starting to monetize off of both market capabilities. You know, we have, you know, longstanding commercial relationships, actually, with both of them. But in this case, if you think about, you know, the true power of this, it would be, you know, a red share between the two entities, you know, as we, you know, move forward from that recycling. So, you know, that's really, you know, the, you know, concept when we form into, like, an alliance, you know, in this case would be, you know, to really generate the incremental upside from, you know, the selling of the combined solution, really.

Yeah, and maybe what I'd add is, you know, it's serendipitous, you know, the amount of time, the money, effort that we spend enhancing, you know, the private company data assets for the traditional use cases here has really put us in an advantageous position. I think, you know, for the coming wave of private market activity, you know, same with generous AI. And as we look into, you know, capital markets or private markets, you know, we really don't have any amazing private market institutions. today are a large sales force focused on that space. We'll build them over time, but in the short term, we're picking select partners so we can really begin seeding the market with our guns number and our unique data. We're excited about these partnerships. They're great organizations and we're looking forward to a great product in these spaces.

Great. Thank you so much.

Thank you, Faisal.

The next question comes from Andrew Steinemann with JP Morgan. Please go ahead.

Hi, this is Alex Hess on for Andrew. Hope everybody's well today. I want to start with the finance solutions call out. And if you could give us some color on maybe how that business is trending from an underlying basis, that would be helpful. you know, the X fee contract transitions?

Yeah, Alex, thanks for the question. It's, you know, the core, you know, finance solutions, I would say, you know, it's a little bit split between North America and international. The international side really continues to fall well, you know, as we've gone through the transitions and migrations from some of those legacy applications on to, you know, our modern FAA and then our modern delivery mechanisms around, you know, our data block solutions. you see really, you know, nice kind of mid-single-digit, you know, growth within the international region on the, you know, finance side of the equation. In North America, you know, you know that it's a big, you know, chunk of the revenue stream, very embedded within organizations, you know, really sets the foundation for a lot of those relationships on the F&R side. And so we've used it as a springboard to really, you know, expand and upsell into those third-party risk clients. which has been growing double-digit. And so while the core finance solution in that low single-digit consistent growth on that side, it really acts as a platform to really land and then expand off of it from that perspective. That's been our strategy in North America.

Yeah, that's super helpful. And then just a couple, you know, maintenance questions from us. When you say at – when you indicate full year revenues at the low single digits – sorry, at the low end of the guide, you know, there's a large variation for what that might imply for 4Q. You know, do you still expect 4Q performance to be above the – The range, you know, so I'm asking the exit year question, the exit rate question. And then, you know, can you tell us what the receivables draw on the facility was in 4Q as well? Excuse me.

Sure. So I'll start with the kind of range of the equation. So what we saw, Alex, was the third quarter obviously came in a little bit better than expected. The same way where sometimes we have a little bit of timing go against us, this time it actually was a little bit positive from that side, and so we were mindful into the fourth quarter. right, for the year. So I would say where originally, you know, we had laid out the cadence from that side of the equation to be a little bit above. If you're kind of doing the math with the lower end, you know, you're not necessarily above the high end of the range anymore. If we're looking at, you know, the AR securitization, we actually paid back. It was, you know, $9.6 million in the quarter. Thank you.

The next question comes from Manav Patnaik with Barclays. Please go ahead.

Good morning. This is Brendan on for Manav. I also want to follow up and touch on the North America finance solutions. And I just want to better understand the delivery timing impact. I mean, you called it out previously, but growth did seem to come in a little better than you expected. Given the fiscal year still at the low end, was it just that some of that revenue did end up shifting in the Q3 versus what you previously expected compared to Q4?

Yeah, so Brandon, thanks for the question. Again, we're really kind of split hairs a little bit from that perspective. But what I would say is if you think about that finance solution, when we expand it to a new customer, You know, there are times where, you know, the delivery portion of that happens a little bit more upfront, especially when you're laying the baseline, you know, for an underwriting model and you're laying the baseline for a new analytic from that perspective, especially when you're doing, you know, risk underwriting from that side. And that has evolved, again, as we said. You know, the annual revenues, you know, in some circumstances don't shift that much, but, you know, it's just how it gets recognized, you know, throughout the year. that perspective. Again, when we look at, you know, specifically into, you know, that F&R group, you know, a little bit, you know, better from that side, again, we continue to see, you know, very strong growth in our third-party risk compliance. So things like supply chain risk management, you know, know your third party. Those are very germane topics, I would say, both in North America and also, you know, And so, you know, those are the types of things that, you know, ended up maybe being a little bit better than what we had expected.

Okay. And then just a quick update on credibility, just how that did during the quarter and relative to your expectation.

Yeah. So, you know, we said that credibility would kind of improve, you know, from the back half of the year. We thought it would get, you know, close to breaking. And actually, yeah, grew, you know, very slightly this quarter. So, again, you know, a positive, I would say, trajectory from that perspective. So, in mind was, I think, where we thought it would be. And then, you know, maybe, Anthony, if you want to touch on some of the things we're doing, you know, that will continue to evolve that business and how we think about how to go forward.

Yeah, sure. So, we talked before about launching what we just call Money-Back Guarantee, where you As we work with clients, if you give us one of four pieces of information, bank account, credit card statement, taxes, permission to pull, consumer bureau, lend that score with our business bureau score, each of them has a significant increase in credit ratings based on the model that we've done in our labs. And so with that, we had launched that in mid-July. I think we talked about the previous call. And we're seeing significant growth in that space because from a client perspective, it's a money-back guarantee. If we don't prove your credit, you don't pay, or you get your money back, sorry. And also in a worst-case scenario where they didn't deserve to have their credit rating improved, we now have a lot more information and data about that private company. Again, it's just an example as we think about not only how to grow the business or how to take exhaust data and make it relevant to get more and more information on these private companies, which, you know, as you see, is really, you know, being, you know, lucky or serendipity, but building out the richness of this private company data is, you know, really beneficial for our future.

Thank you.

Thank you, Brendan.

The next question comes from Craig Huber with Huber Research Partners. Please go ahead.

Thank you. Anthony, I wanted to ask you, what's your opinion right now of the macro environment in North America? How are you feeling about that right now versus how you were feeling, say, a year ago? Thank you.

Thank you, Craig. I'd say that many of our peers have reported, and I think the landscape It's fairly similar across many of the peers. And we see that as well in terms of, and compared to a year ago, I think it's pretty consistent with what we saw last year. So quarter to quarter, we see a slight lengthening in the sales cycle right now. And candidly, as we look internally, is that because of just the market? Is it because we're in the middle of a process? You know, that certainly doesn't help on your sales cycle when you're in the middle of a process, as you can imagine. And again, I'm really proud of the team, you know, to push through that. But I'd say it's fairly consistent with what it's been. And I've always believed here we've got, you know, more ability to grow based on what we do and what we own versus what happens in the macro environment. So I think we've been able to, you know, to weather it. fairly well this past year, and I feel the same going forward.

Thank you for that. Brian, if I could just ask you, maybe I missed this, but what did you say how the revenues did with credibility? I think you said prior quarters it was down roughly 10%, but I missed what you said there on the current quarter. And also curious, how is your patience, the executives, yourselves, with that business and the marketing business right now given the problems you guys have been having for the last year plus here. I mean, what's your patience level right now? A question was asked about this earlier too, but I mean, just your patience here to keep that business as part of Dun & Bradstreet as opposed to selling it or shutting down that and or the marketing effort that you have.

I'll answer, Craig. Brian said it was low single-digit growth incredibly in this quarter, which was obviously positive. So the second part of your question in terms of what's our patience, you know, On the second quarter call, I talked about our patients. We've made a lot of changes in both businesses. We're going to monitor them through the year to see how they perform. We've seen significant uptake in the credibility. I talked about the money-back guarantee in our concierge service, the significant improvement there. On the digital marketing side, we're seeing that one is something that's more macro-focused. And we've seen a return of spend there in the market. And, you know, again, we're continuing to monitor it. Our focus so right now really is on the sale of the full company, right? Like those are all the conversations that we're in. And they're extremely time consuming. And they're very, like I said in my prepared remarks, you know, we went through a, an FTE reduction, you know, related to our capitalized software, right? And that's always difficult, no matter what organization you're in, you know, to do that. And then the inquiries that are coming in, you know, from, you know, a number of companies, at the lower level, you've got the risk of water cooler type conversation, which we don't see. And at the senior level, they're involved actually in the process, right? Helping answer all the questions, all the diligence. And so again, I'm very proud of the team in terms of how they're staying focused on the task at hand and not giving in to the distraction. So, you know, from our perspective, we have urgency in everything that we do here, and we have urgency around, you know, remediating both of those businesses. But the overwhelming, you know, I take priority right now because of the full process that we're in.

Great. Thank you.

Thank you, Craig.

The next question comes from Ashish Sabhadra with RBC. Please go ahead.

Hey, good morning, everyone. This is Will Chee on Ashish Sabhadra. Appreciate you taking our questions. Really great to hear kind of that early feedback on chat D&B, maybe a bit of a two-parter on that. How has the kind of early benefits been internally from kind of an operational efficiency standpoint that you guys are seeing? Then also externally, maybe if you could give some color, just the general pace of rollout that you're expecting for these types of initiatives. You know, is it relatively fast to market or more of a gradual kind of teaching slash a simulation type cadence? Thank you.

Yeah, that's a great question. I appreciate it. I'll chat with you. We're very excited about it. As I talked about, you know, for a lot of reasons, the feedback that we've been receiving was just really, you know, overwhelming to us. in one of my emails here from one of our clients. It's a fantastic tool. It saves a lot of time. It keeps checking me in my day-to-day tasks. The time it takes to summarize a small business goes from 10 to 15 minutes to seconds. There are other ones that just go on and on about something normally taking hours that's done in minutes. So it's a really big time saver. It's very positive. We're seeing the benefits of it internally as well as we do work So I'd say the response has been better than we expect from, I'd say, our pilot. And then there's other aspects of it which we really didn't see coming. And so many of the clients, like I said, we've been over a couple dozen clients in the project. Many of them are asking if they can give us their first-party client leaders. And so the power of that is we have, obviously, our data. We have their other first-party data that they add to it. And now, with us hosting that data, I think three things happen. One, we have a much secure relationship with that client. Two, we drive revenue, obviously. We drive more revenue from that relationship by hosting their data and working with them. And three, it drives more collaboration with that client. which we can create and innovate more and more new ideas. So it's really off to a great start, and like I said, we could be more excited about it. So we'll see how things pan out. What we started with is really enabling our clients to use it without a charge. And so really what we'll do is we'll drive up their usage of our data, which is where we get paid, Because what we want to do is really widen the tent and get everyone in it and really understand all the possible things we can do. And then we'll figure out how specifically we want to charge what's the most efficient way to do it, or do you want to improve it and have more price increases for the relationship in general. But it's been a winner for us so far out of the gates. And like I said, I'm really proud of the team. And they're really focused on this. So many other things are going on.

Great. Thank you very much. Thank you.

Once again, if you have a question, please press star, then one. The next question comes from George Tom with Goldman Sachs. Please go ahead.

Hi, thanks. Good morning. You mentioned that client spending remains disciplined and sales cycles have lengthened in the quarter. Can you discuss what internal initiatives or external market conditions you would need to see for these trends to begin to improve?

Sure, George. I'd say a couple things. And there could be different buckets. Like I said, one bucket I think is the process that we're in. And, you know, some of the additional questions from clients, some wait and see as to what happens in this process. I'd say internally what we can do is really continue to drive our – so if we think about ChatDB as an example, there's real efficiency gain there. So at times of having a tighter budget, this is exactly the thing that you need and exactly – I'd say we've priced it – without an incremental charge initially, where our clients can adopt it and do more and engage more with us. The other is, as we look at clients that have many data providers, we're approaching them about consolidating all their vendors into one, one being us, and saving money and having the best data that's available. So there's a number of things that... we're focused on doing here to help with the macro environment. And like I said, what I'm proud of the team is that they don't look at the macro as, you know, as an excuse. They're always looking at ways to push through it. And so those would be the things I think that I'd focus on. Brian, do you have anything?

Yeah, and George, I think certainly, you know, we talked about what the, you know, that was the place I was, the fact, you know, took the first step right in the rate cut, right? So that was definitely, you know, on the opposite side, a positive move, right, from that perspective. So, look, we're going to get through a presidential election, right? We're going to continue to see economic data come out, but that's going to continue to, you know, move towards, I think, a longer-term terminal, you know, that mostly is between 2005 and 3. You know, and all those things, as you get a little bit more clarity and less ambiguity, you know, they help

Got it. That's helpful. And then you're expecting organic revenue growth in 4Q to accelerate toward the high end of the four-year guidance range, maybe not above the range, but toward the higher end. Can you talk about whether that 4Q growth rate is a reasonable starting point for organic growth in 2025, or whether there are other factors that could perhaps alter growth rates next year? that might cause it to deviate from what you're going to expect in Q4.

Yeah, so, George, if you look at it, you know, clearly we'll get through the end of the year. Q4 is always, you know, a time for us to close out, right, a lot of sales, a lot of renewals, et cetera, from that perspective. And so we'll clearly issue formal guidance. as we go to put our intel in that perspective. You know, we've said it before, like the quarter is not always a perfect, you know, no quarter in the year is a perfect kind of jumping off point. But if you think about, you know, how we've talked about, you know, our progression right into our medium-term guidance branches, you know, we've talked about, you know, getting things resolved around, you know, some of the 10% of the business that, you know, hasn't been necessarily performing well. you know, relative to the other 90%. I mean, those are all the things that, you know, as we think about, you know, transitioning from 24 into 25, you know, and continuing to improve the business, right? You know, that's how we think about it versus any given quarter kind of being, you know, the jumping off point from that perspective.

Got it. Very helpful. Thank you.

Thanks, George.

This concludes the question and answer session. I would like to turn the conference back over to Anthony Jabbour for any closing remarks. Please go ahead.

Thank you. As always, I'd like to thank my Dun & Bradstreet colleagues for all their efforts in growing this great business, our great clients who help us with their partnership and guidance, and for all of you who are interested in Dun & Bradstreet. I hope you have a wonderful rest of your day.

This concludes today's conference call. Thank you for attending today's presentation. You may now disconnect.