Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Dun & Bradstreet Holdings Inc (DNB, Financial) reported a 4.3% organic revenue growth, marking the fourth consecutive quarter of mid-single-digit growth.
- EBITDA grew by 6% in the quarter, leading to a 60 basis point margin expansion.
- Strong demand for third-party, supply chain, risk, and master data management solutions in both North America and International segments.
- Successful share repurchase program, buying back around 960,000 shares at an average price of $9.70 per share.
- Introduction of innovative products like Hoover Smart Mail and Chat D&B Gen AI assistant, with over 4,000 clients using new Gen AI capabilities.
Negative Points
- 10% of revenues, including credibility and digital marketing solutions, continue to be negatively impacted by broader macro conditions.
- Net loss for the second quarter was $16 million, compared to a net loss of $19 million in the prior year quarter.
- Digital Marketing solutions saw a decline, with revenues down $4.6 million or 14% in the second quarter.
- Credibility solutions experienced a 7% decline in the second quarter, largely due to the impact of the consent order.
- Sales and Marketing revenues in the International segment saw a slight decrease of 0.3%.
Q & A Highlights
Q: Anthony, I wanted to hear more about the D&B Credit Insights launch. How will this help revenue for the credibility section and how does it differ from existing products within the credibility suite?
A: We've significantly updated the product to make it easier for clients to navigate and have implemented new sales techniques. This has improved client retention. The money-back guarantee is a powerful addition, simplifying the value proposition. Early results post-launch on July 17 show improved sales. The product is priced consistently with legacy products but offers more value through additional data like credit card statements and bank accounts.
Q: Can you discuss what you and the team are doing internally to offset macro challenges affecting Digital Marketing Solutions?
A: We believe that as interest rate cuts come, spending will increase. Google's decision not to deprecate cookies will drive traditional volume. We're also expanding into new channels like connected TV, retail media, and social, which are growing rapidly. Additionally, we are leveraging our strong client relationships to bring more data and capabilities directly to them.
Q: There was a step down in Sales and Marketing revenues internationally. Can you explain the difference compared to North America?
A: Revenues don't always follow a consistent quarter-to-quarter pattern. The better approach is to look at a broader range. The international business is smaller and some migrations are still being worked through, causing some quarter-to-quarter movement. However, the overall growth remains consistent.
Q: Can you expand on the willingness to make changes to some of the challenged revenues?
A: Everything is on the table, including strategic partnerships and licensing agreements. We are focused on transforming the business and addressing the 10% of revenues that are challenged. We're open to various strategic options to improve these areas.
Q: How integrated are the challenged revenues into the business, and what is the ability to separate them?
A: Digital marketing is not as integrated, while SMB data enriches our strong data quality. If we pursue strategic options, ongoing licensing agreements would be necessary to maintain data quality.
Q: How do you balance investment in new technologies like AI with the rapid changes in the market?
A: We are seeing some projects roll off, which helps with efficiency. We continue to build confidence internally and make long-term decisions. Our AI initiatives are progressing faster and better than expected, and we feel confident in our investment levels.
Q: Are there any other legacy products that may be a drag on growth, and are there plans to divest or turn them around?
A: Our focus is on the 10% of revenues that are challenged. We've migrated many clients from legacy solutions to modern ones, which has helped with cross-sell capabilities and expense reductions. Our main focus remains on addressing the 10%.
Q: What is driving the robust growth in third-party risk management, and are there any macro or regulatory factors influencing this?
A: The industry has been consistent since Q4 of last year. Regulatory changes typically create more opportunities for us to help clients. We are cross-selling into our Finance Solutions base and finding new use cases to help clients grow. We believe budgets will grow as businesses feel more optimistic.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
