Dun & Bradstreet - Q1 2022

Transcript

Speaker 0

Afternoon, and welcome to the Dun and Bradstreet's First Quarter 2022 Conference Call. As a reminder, today's call is being With that, I would like to turn the call over to Ed Yuen, Investor Relations at Penn and Bradstreet. You may proceed.

Speaker 1

Thank you. Good afternoon, everyone, and thank you for joining us for Dun and Bradstreet's financial results conference call for the Q1 of 2022. On the call today, we have Dun and Bradstreet's CEO, Anthony Jabbour and CFO, Brian Hipsher. Before we begin, allow me to provide a disclaimer regarding forward looking statements. This call, including The Q and 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 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 as supplemental slide presentation. This conference call will be available for replay via webcast through Dun and Bradstreet Investor Relations website at investor.

Dnb.com. With that, I'll now turn the call over to Anthony.

Speaker 2

Thanks, Ed. Good afternoon, everyone, and thank you for joining us for our call today. The Q1 of 2022 was another quarter of solid financial performance. Adjusted revenues for the total company grew 5.3% or 6.9% before the impact of foreign currency. And revenues on an organic constant currency basis grew 4.5%.

Balanced organic growth in both North America and International were driven by continued demand for our Finance and Risk Solutions as broader business and macro conditions continue to create a strong demand environment. For example, 3rd party and supply chain risk management continues to be a focus for companies throughout the world and our revenues in that sub segment grew over 20% versus the prior year quarter. Customers are increasingly looking to drive finance and risk underwriting decisions on both public and private entities in a more scalable, repeatable and data driven manner. Our end to end solution set, including fraud, Financial diligence, regulatory compliance, ESG scoring and cyber risk management continues to differentiate itself from our competitors to the breadth, depth and accuracy of our analytics. On the sales and marketing side, we understand our clients' biggest challenges include privacy, recorded through our master data management, digital marketing and sales acceleration suite of solutions, We provide an integrated intelligence backbone for modern revenue generating teams.

At DNB, we continue to innovate with urgency across our a case continuum and I'm very pleased with our performance this quarter and how things are setting up for the remainder of 2022 and beyond. As we continue to execute against our strategy, our guiding principles remain the same: innovate solutions and localize them throughout the world increase our wallet share with strategic clients through expanded datasets and complementary solutions approach and monetize the SMB channel in new and innovative ways and continue to grow international in both our owned and worldwide network markets. I'm pleased to report on the progress of some of our previously announced initiatives as well as new solutions we rolled out this quarter. Last quarter, we discussed our strategic partnership with Google to further enhance our cloud strategy and also to innovate new solutions through a blend of our data assets, by the end of the call. We discussed that our first initiative was to assist clients in better assessing and proactively managing recorded.

Google Cloud's supply chain twin will combine our unique DNB data and analytics with critical alerts, collaborative event management and AI driven optimization to have end to end visibility of global supply chains. While this joint effort was launched earlier this year, we already have our first client testing the solution. Also with Google Cloud, we are exploring new ways to enable the small business community by providing the right products and services at the right stage of their journey. Recorded. Business has come to DNB and Google for many reasons during the setup stage of their operations.

As we find different ways to connect with entities early on, We can leverage the power of the DUNS number and allow access to our growing suite of small business solutions ranging from tools to enhance credit inclusivity, to prospect creation and activation. Currently, we're adding around 25,000 new small businesses into our data cloud each working day. This significantly enhances our ability to grow and expand our data cloud and the number of SMB companies in our growing sales pipeline. Apart from some of the joint innovation underway with Google, the new set of fraud solutions we introduced last quarter has quickly gone from proof of concept recorded with significant client interest. In one example, we signed a new deal with a global B2B payments company who is experiencing heavy fraud instances resulting in significant financial losses.

Their prior fraud solution was causing 85% false positives, which ultimately required manual review, leading to increased costs and slower turnarounds. The newly appointed Chief Revenue Officer's first initiative was to decrease the fraud losses and false positives and chose EMB's Fraud Risk Insights API to achieve this. Recorded. To continue to update you on our progress around these initiatives and the many others we have in flight as we continue to innovate with urgency at DMP. Moving on to key sales wins in the Q1.

As I mentioned earlier in my prepared remarks, 3rd party and supply chain risk management continues to be a focus of companies throughout the world. In North America, we signed new business with an existing client, one of the largest online retailers in the world to through less efficient legacy processes. By leveraging our data cloud, our client was able to automate the verifications and free of time and capital to continue to innovate and expand the rapidly growing enterprise. In our DB Europe market, we won new business with Volkswagen, who chose our risk and compliance API solution to better assess and monitor their vast supplier network. This multiyear deal will enable Volkswagen to standardize and automate their supplier risk assessments, helping to avoid supply chain disruption.

We look forward to working with Volkswagen to help them better manage the risk in these uncertain times. Another win in Europe is a reflection of our ability to bring a new solution to market to help businesses navigate the rapidly changing environment due to the conflict in Ukraine. We signed a deal with a large European based bank to provide them sanctionless screening and ultimate beneficial ownership of their supplier portfolio to ensure compliance with regulators and safeguard their brand and reputation on a global level. Turning to Asia, as a trusted partner to Alibaba, we've continuously grown our relationship with them. In addition to leveraging our data to verify worldwide buyers on their leading global e commerce platform.

They have extended their application to include sellers know your customer recorded on international buyers. Through DNB DataBlocks API solution, trusted data can be obtained in real time, facilitating improved efficiency and effectiveness of transactions between sellers and buyers. With the recent rollout of our finance analytics platform in the Nordics, we are pleased to support a Swedish buy now pay later company and their goal is to enhance their underwriting processes. The underwriting relies on local based financial scoring models and where in the past format, content and data quality were inconsistent between operative countries. DMP's finance solution will harmonize data for merchant onboarding and underwriting across multiple markets, creating a significant gains in efficiency and data consistency.

On the sales and marketing side, we won competitive new business with Daimler Truck North America, who chose our master data management solutions to improve their customer and supplier master data structures, which will enhance their direct and aftermarket integration process. And finally, a long standing visitor intelligence customer, DXC Technology, needed a one stop shop for data aggregation, recorded. We We took business from a competitor due to our ability to deliver site level insights within their largest commercial accounts rather than domain level insights provided by competition. While winning with large customers continues to fuel our accelerated organic growth, I'm also very pleased with the continued progress we are seeing in the SMB strategies we have put in place. This quarter, We recorded strong net new subscriptions to our SMB platforms with our average daily sign ups reaching 2,000, up 36% from Q1 2021.

E commerce sales increased almost 20% year over year And sales of our credit monitoring solution, which have been redesigned for the micro small business market, increased 24% year over year. With our latest foundational enhancements to our digital strategy, we're increasingly excited about the opportunity to capture a share of a massive and growing TAM. Overall, we are very pleased with the strong start to 2022 and I look forward to updating you on our progress in the coming quarters. With that, I'd now like to turn the call over to Brian to discuss our financial results for Q1 and the outlook for the remainder of 2022.

Speaker 3

Thank you, Anthony, and good afternoon, everyone. Today, I will discuss our Q1 2022 results. Turning to Slide 1. On a GAAP basis, 1st quarter revenues were $536,000,000 an increase of $32,000,000 recorded for 6% compared to the prior year quarter and 8% before the effect of foreign exchange. Net loss for the Q1 was $31,000,000 recorded or a diluted loss per share of $0.07 compared to a net loss of $25,000,000 for the prior year quarter for a diluted loss per share of $0.06 The increase in net loss of $6,000,000 for this quarter was primarily due to the debt early redemption premium for senior secured notes in January of 2022, partially offset by the improvement in operating income in the current year period.

Turning to Slide 2. I'll now discuss our adjusted results for the Q1. 1st quarter adjusted revenues for the total company were $536,000,000 an increase of 5.3% or 6.9% before the effect of foreign exchange versus the prior year quarter. Revenues on an organic constant currency basis were up 4.5%. 1st quarter adjusted EBITDA for the total company was $190,000,000 an increase of $4,500,000 or 2%.

The increase in EBITDA was primarily due to revenue growth from the underlying business in lower net personnel expenses, partially offset by investments leading to higher data and data processing costs. 1st quarter adjusted EBITDA margin was 35% compared to 36% for the prior year period, a decrease of 100 basis points. Excluding the impact of acquisitions, adjusted EBITDA margin was 36% or flat to prior year. 1st quarter adjusted net income was $103,000,000 or adjusted diluted earnings per share of $0.24 an increase from $98,000,000 or $0.23 per share in the prior year quarter. Turning now to Slide 3.

I'll now discuss the results for our 2 segments, North America and International. In North America, revenues for the Q1 were $367,000,000 recorded, an increase of 8%. Excluding the impact of foreign exchange and acquisitions, North America organic revenue increased 4.4%. In Finance and Risk, revenues were $202,000,000 an increase of 6%, driven by increased new business and higher upsell, particularly in our 3rd party and supply chain risk management solutions. In sales and marketing, revenues were $165,000,000 an increase of 11%.

Our marketing solutions had strong double digit growth, both organically and including the acquisitions of IOTA and NetWise. We also saw solid growth in Master Data Management and our sales solutions improved being flat versus prior year. North America first quarter adjusted EBITDA was $153,000,000 an increase of 2%, primarily due to revenue growth, partially offset by higher data and data processing fees. Adjusted EBITDA margin for North America was 42% recorded for 43% excluding the acquisitions. Turning to Slide 4.

In our International segment, 1st quarter revenues were $169,000,000 recorded. A decrease of $1,000,000 or 1% and an increase of 4% on a constant currency basis. Organic revenues on a constant currency basis increased 4.6%. Finance and risk revenues for the Q1 of 2022 were $109,000,000 an increase of $2,000,000 or just over 1% and 6% on a constant currency basis. Growth was driven across all markets, including higher revenues from worldwide network alliances due to higher cross border data fees and increased product royalties, along with increased revenues from our European market driven by higher API solution sales.

Sales and marketing revenues for the Q1 of 2022 were $60,000,000 a decrease of $3,000,000 or 5% and an increase of 2% on a constant currency basis. The increase was primarily driven by higher product royalties from our worldwide network alliances. 1st quarter international adjusted EBITDA was $55,000,000 for the 3 months ended March 31, 2022, an increase of $4,000,000 or 7% compared to the same period last year. The improvement in adjusted EBITDA was driven by the revenue growth on a constant currency basis, along with ongoing cost synergy actions. Adjusted EBITDA margin was 33%, at 230 basis point improvement versus the prior year period.

Turning to Slide 5. I'll now walk through our capital structure. As of March 31, 2022, we had cash and cash equivalents of $216,000,000 and total principal amount of debt of $3,796,000,000 We had $750,000,000 available on our $850,000,000 revolving credit facility as of the end of the quarter. Our leverage ratio was 4.2 times on a net basis and the credit facility Senior secured net leverage ratio was 3.7 times. As discussed last quarter, with efforts throughout 2021 and in early 2022, we have been able to significantly reduce the cost of our debt, which has provided us flexibility in a rising rate environment.

We have continued to look at ways to manage these increasing rates. During the Q1, we executed $250,000,000 of SOFR based interest rate swaps. And in April, we We further implemented $375,000,000 of cross currency swaps, both of which will help us partially offset the impact of this significantly rising rate environment. Turning now to Slide 8. I'll now walk through our outlook for 2022.

We continue to expect adjusted recorded. Revenues after the effect of foreign currency to be in the range of $2,270,000,000 to $2,315,000,000 or an increase of approximately 4.5% to 6.5%. This includes 0.5% of headwind to revenue growth after the effect of foreign currency due primarily to the strengthening of the U. S. Dollar versus the euro and Swedish krona.

Revenues on an organic constant currency basis are still expected to be in the range of 3% to 5% for the full year. Adjusted EBITDA is still expected to be in a range of $865,000,000 to $905,000,000 And while we now expect interest expense to be in the range of $180,000,000 to $190,000,000 We continue to expect adjusted EPS to be in the range of $1.13 to 1 0.20 Additional modeling details underlying our outlook are as follows. Depreciation and amortization expense of approximately $85,000,000 excluding incremental depreciation and amortization expense resulting from purchase accounting. Adjusted effective tax rate of approximately 24.5 percent, weighted average diluted shares outstanding of approximately 430,000,000 and for CapEx, we still expect approximately $150,000,000 to 180,000,000 While the Q1 was stronger than anticipated, we continue to expect the remaining quarters to grow as previously communicated recorded. As the GSA contract has concluded and that will begin impacting our results in May going forward, we expect Q2 to be as previously guided and then growth will accelerate with on current and prior year sales, the impact of our pricing initiatives flowing through and continued progress in our retention efforts.

Similarly, we continue to expect adjusted EBITDA to be flat to prior year in the second quarter and then ramp up in the 3rd and 4th quarters as we annualize prior year investments in new alternative datasets and see the strong contribution margins flow through from accelerated revenue growth. As a quick recap, we started off the year strong with 1st quarter organic revenue growth of 4.5% and are well positioned to capture significant growth opportunities and continue to execute in 2022. We've made thoughtful and strategic decisions to invest in the a sustained acceleration of organic growth by investing more in data as well as our go to market strategies with a sharp focus on areas such as 3rd party risk management in digital marketing, while at the same time continuing to optimize our capital structure and execute a disciplined M and A strategy. With that, we're now happy to open the call for questions. Operator, will you please open the line for Q and A?

Speaker 4

Recorded.

Speaker 0

Recorded. Our first question goes to Kyle Peterson with Needham. Kyle, your line is open. Please proceed.

Speaker 5

Recorded. Great. Good afternoon. Thanks for taking the questions, guys. Just wanted to touch a little bit about how client conversations are recorded.

Going for you guys, just given that it seems to be that we're in a higher inflation environment. Is that impacting pricing at all in terms of being able to pass on some additional price increases to clients just given the cost pressure that It seems like everyone is going through.

Speaker 2

Yes. Hi, Kyle. Thanks for the question. Yes, we've been executing well on our pricing strategy and what we committed. Number 1, we've made significant improvements on every aspect of the business and have earned the right for price increase.

We've got multiyear contracts in place that have just a natural annual recorded. And certainly with the inflationary period, clients understand the increase in costs. So We're tracking well from that perspective.

Speaker 1

And then I guess just a quick follow-up on

Speaker 5

recorded. Any changes in priorities on capital allocation? I guess since you guys kind of recorded last. I mean, obviously, the macro environment has gotten a lot choppier and interest rates are quite a bit higher. It seems Seems like you guys are partially offsetting that with some swaps, which was great to see, but just wanted to get any updates on kind of your rank order and thoughts On capital allocation over the next over the rest of the year?

Speaker 2

Well, certainly that's an ongoing conversation we have, Kyle. And where Our focus has always been on growth and investing for growth. There certainly are recorded. Changes in the market and we're constantly looking at that in terms of deleveraging, recorded. So it's very much all on the table and being discussed at the Board level.

So It's a timely question and obviously there's a lot of uncertainty in the market. We're fortunate to have a very defensive company and we've proven that in very tough times. So we're just really looking at it to see what are the best moves for us to make right now and we'll tweak accordingly.

Speaker 5

All right. Makes sense. Thanks, guys.

Speaker 2

Thank you. Thanks,

Speaker 0

Kyle. Thank you, Kyle. Our next question goes to Kevin McVeigh with Credit Suisse. Kevin, your line is open. Please proceed.

Great.

Speaker 4

Thanks so much. Hey, Brian, I think you mentioned the GSA real quickly. I was cutting in and out. Can you just remind us how you're thinking about that, the impact of it, what it was in the Q1? And then just as we think about that over the course of the year from a contribution perspective.

Speaker 3

Yes. Sure, Kevin. What I mentioned was that the GSA contract concluded at the end of April. And so as we talked about, it was about an $18,000,000 $19,000,000 impact to the year. And so what you'll see is May June and it's ratable from that perspective.

So you'll start to see an impact May June little less than a point recorded. And then a little more than a point in Q3 and Q4, but that's built into our core guidance as we had planned on that moving into the year.

Speaker 4

Great. And then obviously, there's been a lot of peers that have had to reduce their guidance. Folks were able to reaffirm it and I know you don't have mortgage or but just can you remind us some of the puts and takes that gave you the confidence to reaffirm because it's really, really nice outcome, Obviously, given kind of the current environment we're in.

Speaker 3

Yes. Sure, Kevin. Thank you. And Anthony mentioned earlier recorded. The mission critical nature of our solutions and certainly the long term contracts with the price escalators that we've put in.

So Getting off to a start with 4.5 percent organic constant currency was a strong start to the year And we have high visibility, right? A lot of contracted revenues. We see the sales that we executed on last year and how they're flowing into this year. Recorded. And then our pipeline building, I think we're pretty excited about some of the things we're doing around fraud and ESG and blended score and what we're doing on the sales and marketing side with the combination of audience solutions, IOTA.

Recorded. It's that combination, I think, Anthony uses the term getting the flywheel spinning. And so we see that each of these components is contributing the way they recorded and that gives us high conviction, high visibility into the remainder of the year.

Speaker 4

Awesome. Thanks so much.

Speaker 6

Thanks, Kevin.

Speaker 0

Thank you, Kevin. Our next question goes to Hamzah Mazari with Jefferies. Hamzah, your line is open. Please proceed.

Speaker 7

Hi, this is Hans Hoffman filling in for Hamzah. So just a quick question on the competitive dynamic. Have you seen any potential new entrants in sales and marketing? And then maybe do you see any product gaps or holes that customers want

Speaker 2

No, I wouldn't say that we see any recorded. A number of discrete players in the space, the proliferation of Small players here all playing a small role, the largest degree in the space. And our approach really is recorded in the quarter, right? And it's something that I've done company to company. But more that the more that we can integrate into a suite of solutions, solve bigger problems for our clients.

It's a winning formula. And so in that landscape, you see us with what we did with the rev up suite, for example, Getting a bunch of point solutions, building them into an integrated marketing platform, how we've integrated Netflix and IOTA and are going to market. Recorded. I think it's a powerful combination in terms of meeting the needs of our clients. And We feel like we're in a pretty good position right now.

Product wise, I'd also say from a data perspective, we're increasingly confident with our capabilities in that space and matching up with anyone. So overall, I feel We're in a pretty good spot on the sales and marketing and the future looks good for us in terms of how we can grow into that space.

Speaker 7

Got it. Thank you. And then could you just walk us through your M and A pipeline? How big is it today versus a year ago? Which areas are you focused on and how our valuation is looking in the market right now.

Speaker 2

Well, certainly, there's a lot that's going on recorded in the market right now and we're seeing public valuations taking a few steps back. Private markets always a bit slower to adjust. But that being said, we think there are opportunities for assets to come to us recorded in HRO 'twenty two that can either help us accelerate growth or increase our distribution or add a new capability to our suite of solutions. So we're being thoughtful about that. Again, recorded.

The ideal thing for us is really as we bring on this capability, we're always thinking how can 1 +1equal3? How can we make the company we acquire better? How does it make us better? And we're pretty thoughtful. I'd say we've looked at recorded a lot.

We're being very disciplined as you know us to be. And like I said, we're still out there looking and there's a lot of opportunity. And I imagine, with the uncertainty that the environment is creating that there will be some good opportunities. And again, with our defensive growth recorded. It's easier for us to bet on the future, I'd say, than many of these other companies that are out there for sale.

Speaker 7

Okay. Thank you.

Speaker 0

Thank you, Hamzah. Recorded. Our next question goes to Ashish Sabadra with RBC Capital Markets. Recorded. Ashish, your line is open.

Please proceed.

Speaker 8

Good momentum there on the selling side. Could Can you maybe just walk us through the environment given the higher global uncertainty? Is it driving demand? Or just what are you seeing, especially with the outsized exposure to Europe? Thanks.

Speaker 3

I think there was a little bit of pause in there, but just to repeat the question, with the global macro environment, how is Sales demand and demand for our products that going, is that what was that?

Speaker 2

Correct. Yes, I think it's going recorded. Yes, I'd say to a large degree, it's helpful, right? You can't get into a taxi now or an Uber, where someone's not talking about supply chain risk and everyone's seeing and feeling how it's impacting them in their lives. And so from our perspective, what we offer and what we can and the problems we can help solve, recorded.

It's really fitting in nicely with the capabilities that we've been building out. So and if it's recorded. Supply chain or fears of heading to recession and therefore, businesses tending to get a little more conservative on their recorded, how we're positioned really with private company data and how that rolls up. It's really an environment where we're well suited to be selling into. So like I said, for the most part, I think Our capabilities very much line up with the needs of our clients in the market.

Speaker 8

Great. Thank you for recorded. And maybe just a quick one, the defensive nature of the business and any potential levers you can pull on a downturn.

Speaker 2

In terms of the defensive nature, like I said, I think recorded. I said with the visibility that we have, it's pretty clear. I think recorded. The services that we offer are very much in need at times like this. Recorded.

We always have levers to focus on the expense side, should there be unforeseen, unanticipated recorded, events, but like I said, we feel pretty good about how things are moving along throughout the year and more so about all the effort that we've been putting in over the last few years, putting us in this position with recorded new and improved capability that we can bring to market, new and improved data and analytics that can help solve Jack, problems that everyone is struggling with right now. So we have levers to play with. But like I said, I'm more excited and I'd say there's more focus on the problems out there that we can help solve for our clients.

Speaker 8

Very helpful. Thanks for the color.

Speaker 2

Thank you.

Speaker 0

Thank you, Ashish. Our next question goes to Andrew Jaffray with Truist. Andrew, your line is open. Please proceed.

Speaker 9

Recorded. Hi, good afternoon. I appreciate taking the question. Anthony, I'm pretty intrigued recorded to hear about some of the risk management and supply chain solutions. Sometimes it's recorded right place, right time in life.

Can you comment on that? I know you've been gearing up to roll out some of these enhanced solutions, but recorded. Do you think that some of this demand has maybe been pulled forward by what we're seeing, whether it's war in Europe or shutdowns in China? And I guess if you could comment on Sustainability of those solutions and in fact whether we could see them ramp as the year progresses here from a good Q1.

Speaker 2

Yes, sure. Thank you, Andrew. Yes, the investments that we've made in these areas is really exciting. We've launched So again, we you saw that we acquired new data sets in the space to be integrated with the other data that we had to help solve bigger and more different problems that existed. And to answer your question, I don't see much pull forward from the crisis that's going on right now.

But I do expect as the year goes on that The demand will continue to grow and we'll be able to fill in the void there for our clients. Recorded. But like I said, we really what we have as a company with recorded. All the private data, all the interconnectivity of these companies is so valuable as you're really trying to understand your supply chain risks. Recorded and even so like I said on the ESG side, as you get into scope 3 emissions and trying to understand all of those that you're connected to and those that impact you, It's exactly the type of data that we have, the insights that we can bring for our clients.

And even though that recorded as early days. It's my point in terms of expecting interest and need to arise for the rest of this year and next year. Recorded. We're excited about it. I mean, we've seen a lot of growth so far in this space.

And we really believe that we can help our clients in some very unique ways and we're excited about that. Okay.

Speaker 9

And then regarding SMB, it sounds like you have some pretty good momentum and that's I feel like long awaited. Recorded. Is there enough structural demand that we shouldn't worry about a potential recession hurting small businesses as they tend to be proportionately hit in economic downturns.

Speaker 3

Yes, Andrew, it's Brian. One of the exciting Keith is here, right. It's because we've laid a lot of the foundation in infrastructure from a digital strategy perspective, from the consolidation of the websites to really recorded. Starting to create that environment for customers to come in, when you look at our SMB base, we're talking about right now 120, 140,000 customers. Recorded.

There's 31,000,000 small businesses in the United States. And if we run kind of double ganger analysis, there's 8,000,000 to 9,000,000 recorded that look like the businesses that we have today. And so the point being is that even if there's a step back in like business formation or some of the business go out, Our share is relatively small right now and we really have the ability to grow, I would say, substantially as we deliver more and more

Speaker 2

recorded. And Andrew, I'll add to that. We're excited about the opportunity, especially on the digital the panel and the growth that we can drive from that. So making some investments in there and pressing harder to really grow that. We get lots of traffic Coming through and really turning the traffic into revenue is something that we increasingly are excited about and I'd point to that in the future as an area that we'll double down on.

Speaker 9

Appreciate it. Thank you.

Speaker 3

Thank you. Thanks, Andrew.

Speaker 0

Thank you, Andrew. Our next question goes to George Tong with Goldman Sachs. George, your line is open. Please proceed.

Speaker 10

Hi, thanks. Good afternoon. You previously expected 1Q organic revenue growth to come in at around 3%, but you came above that recorded. What drove the upside versus your initial expectations? And should these upside drivers persist over the remainder of the year?

Speaker 3

Hey, George, thanks for the question. Yes, we as we're coming in for the year, obviously, we talked about being at that lower end of the range recorded about 3% to 5%. Certainly 4.5% was a nice start out of the gate. Really, Andrew mentioned and what we've seen on That drove some nice organic growth. I would say, outsized performance in North America, recorded in particular and certainly that supply chain business growing 20% versus prior year was a nice benefit.

Recorded. Overall, as we think about the remainder of the year again, we gave a range. We certainly maintain that range, But certainly feel good about the continued acceleration ex the GSA throughout the remainder of the year.

Speaker 10

Okay, got it. That's helpful. And then going back to the topic of inflation and pricing, could you recorded. Perhaps ballpark or quantify what kind of inflationary impact you're seeing in business either with wages or input data

Speaker 3

Sure. And so when we think about the inflation side of the equation on the cost side, it's less I would say on recorded. The data and data acquisitions that was more of investments and expansion of different alternative data sets that we were bringing in. We talked about some different UBO data, which by the way has become very, very relevant when you're searching to understand what kind of linkage and sanctions you have with Russian oligarchs, balanced this year and been able, I think, to perform a little bit better than others with our location strategy. And so we had opened up in a lower cost in the Southeast in Jacksonville.

And so as we've had some attrition in some of the natural churn that's occurred out in the market, recorded. We've been able to relocate some of those positions that made sense into our new headquarters down south. So been able to combat it with some geographical strategies from that side. In terms of on the pricing side, if you remember last year, recorded. We had talked about continuing to accelerate and get into closer to 2 points of growth coming from price throughout this year.

And so we were a little under that in the Q1 as the multiyear contracts flow through in the second, third and fourth quarters. Recorded. You'll continue to see that ramp up. So we'll actually exit a little bit above that, but solidly on track to meet recorded. What we expect this year, which is to be right around like 2%.

Speaker 10

Got it. Very helpful. Thank you.

Speaker 0

Thanks, George. Thank you, George. Our next question goes to Andrew Steinerman with JPMorgan. Andrew, your line is open. Please proceed.

Speaker 6

Hi. On the F and R side, what percentage of your F and R revenue is now recorded. And which kind of providers do you feel like you compete with in that area?

Speaker 3

Andrew, so on the 3rd party, for instance, in North America, it was about $25,000,000 in that risk size. And so when we think about competition, Anthony laid it out, we're in a pretty unique position when you think about The supply chain and supply chain risk. And so there are institutions out there that are doing kind of more on the KYC side. We do some KYC in terms of the UBO, but it's really the KY little x, I guess, know your vendor, know your supplier. And so from that side, I think we're the one of the key, if not the key provider in that space.

But when you think about the different niches here and there, I mean, RDC comes to mind and there are a handful of other players out there. But certainly a fast growing market, Andrew, and one that we feel like we have a real right to win.

Speaker 6

Okay. Thank you very much.

Speaker 0

Thank you. Thank you, Andrew. Recorded. Our next question goes to Heather Balsky with Bank of America. Heather, your line is open.

Please proceed.

Speaker 11

Hi. Thank you for taking my question. I'd love to get an update recorded on how the Biznode integration is going now that you're in sort of a year where you're lapping the integration recorded. And how things are right now? And then given that acquisition, how you think about recorded.

You talked about M and A earlier in the Q and A. I guess, how you think of potentially acquiring some of your worldwide network partners versus buying a data asset recorded.

Speaker 2

Yes, sure, Heather. Thanks. The integration is going exceptionally well. Very recorded. Please, we know with my colleagues who are leading it every day and doing the right things.

Like I said, that was an acquisition recorded that post synergies was just over 7 times EBITDA. So one very accretive to us we're excited about. But we've annualized recorded, dollars 40,000,000 of savings by the end of 2022. So we're excited about that. We're consolidating recorded.

We've combined recorded. We've got a lot of great work going on right now in terms of upgrading to our point of arrival products of Dun and Bradstreet. So bringing that into those markets And even beyond just that, what we're excited about with Bisnode was the regions of Europe that would be in would be very strategic for us, we thought. Recorded. We talked about Volkswagen.

Many of the global enterprise clients who are important to us and wanting to have more touch points with them to do more for them on a global basis. We see the value from that. So as we look at other worldwide network partners to potentially acquire, it is again, They're on the list, the M and A list, as you'd imagine, and at the right opportunity. Again, like I said, we're going to be very disciplined about our M and A. Recorded.

We're very open to that, but we're certainly pleased with Biznode where it's at and really what the future looks like now that Biznode is recorded in DNB Europe and part of the DNB family.

Speaker 12

Thank you.

Speaker 3

Recorded. Thanks, Heather.

Speaker 0

Thank you, Heather. Our final question goes to Faiza Alwy with by Deutsche Bank. Aiza, your line is open. Please proceed.

Speaker 12

Great. Thank you. Hi, everyone. So I was hoping to get a little bit more color around margins by segment. I thought North America was a little bit weaker than recorded.

At least I was thinking about it and international was a little bit better. So could you just give us some color as to how we should think about those recorded as we go into the rest of the year.

Speaker 3

One of the things in North America Take into consideration and that's where the majority, if not, it's actually all of the acquisitions were. And so NetWise and Oda, while growing rapidly, it started at clearly subscale margins, and we're invested in them to really accelerate that growth in the integration with our audience solution. So that's one of the primary, I would say drivers that's pushing North America down on a year over year basis. When you look at the international side, it's relatively clean from that side And then it's gaining the benefit also of clearly the accelerated organic revenue growth, but also the synergies as Anthony mentioned. Recorded.

We've executed now through this quarter about $30,000,000 of annualized run rate synergies. And so you're seeing that flow through, which is boosting up

Speaker 12

positioned around supply chain, but I'm definitely intrigued by the growth that you're seeing there. And curious how you think about So long term prospects of that business, is there a number that you're thinking where sales might be in that business, recorded, I don't know, a couple of years down the road or how do you think about the growth trajectory of that business?

Speaker 3

Recorded. Look, this is a business that is a it was a natural extension of what we were doing on the finance side. And so when you think about the underwriting of supply chains, it's not going away anytime soon. If anything, recorded. That demand over the last 2 or 3 years has just increased.

So first we had COVID, right? And then it was what's my supply chain and who are my providers that are recorded and the impact that it has. You're seeing legislation come out in Europe. You're seeing legislation come out in potential guidance out of the SEC in terms of Scope 1, Scope 2 and now even most importantly, Scope 3 emissions on an ESG side. So when you're bringing a third party into your organization, recorded.

That underwriting process is doing nothing but becoming more stringent and growing from that perspective. So this is something that we think about not as a over the next few quarters, but this is certainly something that's going to be over the next few years, a very relevant and growing piece of the business for us.

Speaker 12

Got it. Thank you.

Speaker 0

Thank you. There are no further questions registered at this time. So I'll turn the conference back over to Anthony for closing remarks.

Speaker 2

Thank you. As always, I'd like to thank my Dun and Bradstreet colleagues for their exceptional efforts to sustainably grow our business for the years to come and to our great clients for their partnership and guidance. Thank you for your interest in Dun and Bradstreet and joining us for the call. Hope you have a wonderful evening.

Speaker 0

That concludes today's Dun and Bradstreet First Quarter 2022 Earnings Call. Thank you for your participation. You can now disconnect your live