Dun & Bradstreet - Q3 2021
November 4, 2021
Transcript
Speaker 0
Good morning, and welcome to the Dun and Bradstreet's Third Quarter 2021 Conference Call. As a reminder, today's call is being recorded and your participation implies consent to such a recording. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. With that, I would like to turn the call over to Deb McCann, Treasurer and Senior Vice President of Investor Relations.
You may proceed.
Speaker 1
Thank you. Good morning, everyone, and thank you for joining us for Dun and Bradstreet's financial results conference call for the Q3 ending September 30, 2021. On the call, we have Dun and Bradstreet's CEO, Anthony Jabbour and CFO, Brian Huebscher. 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 actual results may differ materially from our projections due to a number of risks and uncertainties. The risks and uncertainties that forward looking statements are subject to are described in our earnings release and other SEC filings. Today's remarks will also include references to non GAAP financial measures. Additional information, including reconciliation between non GAAP financial information to the GAAP financial information is provided in the press release and supplemental slide presentation. This conference call will be available for replay via webcast through Dun and Bradstreet's Investor Relations website at investor.
Dmb.com. With that, I'll now turn the call over to Anthony.
Speaker 2
Thank you, Deb. Good morning, everyone, and thank you for joining us for our Q3 earnings call. We are pleased to report strong Q3 results as revenues for the quarter grew 22% and EBITDA grew 12%. Progress in our core business continues to accelerate as reflected in our organic revenue growth of 4.1% or 3.7% excluding the impact of foreign currency. Increasing growth in North America complemented another solid quarter in our International segment due to strong retention rates, increased pricing, a growing share of wallet with our strategic clients, the addition of new logos and the lessening of previously communicated headwinds.
On top of that, the Biznode acquisition is progressing very well with the integration going better than we originally expected. Both finance and risk and sales and marketing had solid growth in the quarter. 2 bright spots in particular were our risk and our marketing solutions. Internal investments in our risk solutions over the past few years have strengthened our position and demand reigns high as supply chain and third party risk management continue to be a point of focus for businesses throughout the world. On the marketing side, our online audience solutions business continues to see robust growth rates and we see a significant untapped opportunity in the online business to business marketing landscape.
This led us to strengthen our position through the signing of definitive agreements to acquire IOTA and NetWise. I'll go into more detail as I expand upon our latest innovations, but these 2 complementary companies will extend our position further in the B2B online marketing value chain and build upon the business that has grown over 40% year to date. Overall, we continue to focus on expanding and enhancing our offering set through internal investments, strategic partnerships and focused acquisitions. We are pleased with our increasing organic growth rate throughout this year and with the momentum we have entering the 4th quarter. We expect to drive progressively stronger growth in the 4th quarter versus prior year to establish a solid foundation for further acceleration into 2022.
As we close out the year, our key priorities remain consistent: innovate solutions and localize them globally increase our share of wallet with strategic clients, approach and monetize the SMB space in new and innovative ways, And finally, integrate and accelerate the Biznode acquisition. The team has made great progress towards executing on these priorities and I'll now share some highlights of those accomplishments before I turn the call over to Brian for more in-depth financial review. After that, we'll finish up by taking your questions. New product innovation continues to be our primary objective. I'm pleased with the focus and urgency with which our North American and international teams are operating.
As we look to enhance existing solutions and net net new capabilities, we've been able to leverage our incredible client base. We've established finance and risk in sales and marketing advisory boards to help guide our roadmap through direct input from senior decision makers or industry experts from leading enterprises throughout the world. For example, with our recent launch of ESG Intelligence, we're able to focus our solution on individualized client scores as opposed to relative scores or indexes based on industry code or some other shared attribute. Listening to the needs of our clients encourage the more supply chain focused use case that is very complementary to the risk and compliance scoring and workflow we have in the market today. We believe that an end to end workflow that incorporates financial, regulatory, compliance and ESG underwriting through data and analytics is a powerful tool for the industry and are pleased with the feedback we've received from clients and prospects today.
On the sales and marketing side, we continue to focus on building upon our strength in master data management and online marketing, while simultaneously bolstering our sales solutions through expanded data, third party integrations and a more seamless UI UX experience. While the master data management and online marketing solutions make up the vast majority of our revenues in the segment, we believe there's a lot of potential for us to evolve our sales solution from a deep research tool to one that is more agile and able to deliver on our global contacts in a more simplistic and effective manner. We continue to streamline our offerings, expand upon our growing contact data coverage and to integrate 3rd party data with our solutions to make campaign activation more efficient and effective. With limited downside and significant upside, I'm excited about where we are today and where our team is driving us as we make significant progress in capturing the pace of this growing market. Turning to our marketing solutions.
This morning we announced the signing of IOTA, a fast growing provider of audience targeting capability that enables the activation of online audience segments. IOTA's products extend our audience solutions business from being dependent on others for execution to being online and participating more fully in the B2B MarTech and AdTech supply chain. We also entered into a definitive agreement to acquire Netwise, an industry leading B2B online identity graph. Combined with the DUNS number and our existing offline data, this enriched offering will allow marketers to target B2B clients and prospects across every major online channel, individual device or marketing platform. Just as our clients rely on the DUNS number for precision in their offline data, we're looking to provide the same level of confidence and consistency online as well.
For marketers, this means they'll have assurance that their online audiences are targeting the right people and that they can reach them across every online channel. We are solving for the current audience shrinkage these marketers face today with the low match rates that plagued this industry. This will enable clients to build upon the investments they've made into data management mastered on the DUNS number and more readily activate that data in social, search and display advertising campaigns. Said simply, Dun and Bradstreet has the offline B2B targeting data, NetWise enables marketers to translate that data into online audiences and IOTA syndicates it across the digital ecosystem. I'm excited about what we're doing both organically and through acquisition and we've run the right track to take advantage of these growing markets relating to how sales and marketing professionals are increasingly utilizing data and analytics in their business to business interactions.
Moving up to key sales wins in the Q3, we're pleased with the ongoing success we're having with our strategic clients, which include renewal rates at nearly 100% and the addition of several new logos. As businesses face heightened pressure to meet regulatory requirements, prevent supply chain disruption and protect brand equity, our risk and compliance capabilities are well positioned to assist our clients and prospects. For example, we won competitive new business with 1 of the largest global investment bank and financial services companies in the world. Who sought to expand automation opportunities for their onboarding and know your client processes. Our patented business verification process sets us apart from competitors and our data provided the breadth and depth they required, particularly the beneficial ownership structures.
We also signed new third party risk and compliance business with the current client, one of the 3 largest aerospace companies in the world to support the global trade compliance and corporate compliance efforts. Walmart renewed their multi year agreement with us to support their supplier onboarding process and we look forward to continuing this important strategic client partnership. We won new business with an existing client, a top German multinational banking and financial services company to support this compliance verification and background checking needs. We are pleased with the ongoing growth of our 3rd party risk and compliance business across multiple industries and geographies. We're very pleased to announce new business with 1 of the world's leading global blogging and social media platforms.
This multiyear deal supports the sales operation and client relationship management program as they recognize the value of our patented matching capabilities, the ability to integrate and automate capabilities, our global coverage and extensive hierarchy data and our sales and marketing data attributes. We also continue to make inroads with innovative technology companies such as DoorDash as they look to reduce the risk through improved credit and accounts receivable prioritization. DoorDash chose BNB for a comprehensive integrated portfolio monitoring and accounting compliance tools and the ability to manage financial risk in accounts of all sizes. On the international front, we collaborated with Siemens on a 2 day Datathon event where over 180 of their colleagues from around the world explored use cases in combination with the studio platform and AI technology to write a tangible solution for the most impactful use cases identified by business owners and analysts in the areas of risk, marketing, sales and procurement. The event uncovered further Siemens business opportunities and as a result, Siemens entered into an agreement leveraging the Analytics Studio for sales and marketing.
The access we acquired through our Bizmo deal to strategic European Global 500 clients such as the German bank mentioned earlier and Siemens is invaluable and we continue to get in front of these new clients to support their businesses with our global solutions. Lastly, in Asia, we successfully renewed another important strategic client Alibaba, who leverages our data to verify entities on its leading global e commerce platform. Data is sourced through our data block solution delivered by our direct plus API. Further, at the trusted partners Alibaba, we're progressing a number of innovative growth initiatives leveraging our global finance and risk solutions. This is an example of how Dun and Bradstreet is able to adapt and replicate our client success in North America to international markets and support the needs of some of the most sophisticated names in emerging markets.
While we continue to demonstrate success with our strategic clients, we're also making progress in the small and mid sized markets. I'm excited to announce that we recently signed an agreement with TransUnion to launch a proof of concept for a blended commercial credit score that in part is powered by TransUnion data. This score is the integration of consumer data from up to 2 business principles with our commercial data and additional data assets to enrich and enhance the decisioning process for our clients. This score is expected to be available in approximately 90% of all inquiries and is particularly important for our clients who lend to small businesses including commercial banks, card issuers and small business lending institutions. We believe our combined solution will increase our match rates, provide lift to our existing commercial scores and deliver superior small business score that any single standalone commercial or consumer credit score could not accomplish.
On the e commerce front, we are seeing strong subscription numbers to our platforms such as DUNS Manager and Credit Sigma, averaging over 1100 new small business sign ups per day. While still small, e commerce sales in the 3rd quarter are up nearly 50% from prior year quarter. We also completed implementation of a modern online shopping cart to include internationalization with additional payment options with the United Kingdom and Ireland e commerce product to launch shortly. These initiatives are all examples of our continued dedication to helping small businesses thrive. In our International segment, we continue to rollout localized solutions across our own and partner markets.
In the Q3, we delivered 10 product launches across Europe, Greater China and the worldwide network partner markets. Datablock launched with partners in Europe, Asia and Africa and finance analytics launched in Latin America. These launches will be critical to driving product royalties in the future. We also launched RevUp and a beta version of ESG Intelligence in the UK along with our local language Hoosiers offering in Greater China. These new international solutions along with the many in North America we have discussed over the past few quarters allowing us to create a significant amount of new product revenue.
For a total company, the new product vitality index or the percentage of revenues from new products was 8% in Q3 versus 2% in Q3 last year. We'll continue to drive more and more solutions into our markets around the world and look forward to updating you on our progress through the coming quarters. Lastly, we continue with the successful integration of Biznode the top line performance and synergy realization ahead of expectations. In the Q3, we launched localized D and B Hoover solution in 5 markets. We also enhanced Biznode's existing products, including adding B2B credit decisioning on Biznode's flagship risk guarding credit platform.
These solutions will enable us to execute our strategy of migrating clients off legacy offerings onto modern digital platforms as well as attract new clients. Regarding synergies, we are on track to achieve approximately $25,000,000 in annualized net savings by year end 2021 and remain on pace to achieve $40,000,000 annualized of net savings by year end 2022. Overall, I'm pleased with our continued progress in laying the foundation for accelerated sustainable growth throughout the remainder of 2021 into 2022. With that, I'll now turn the call over to Brian to discuss our financial results and outlook for the remainder of 2021.
Speaker 3
Thank you, Anthony, and good morning, everyone. Today, I will discuss our Q3 2021 results and our outlook for the remainder of the year. Turning to Slide 1. On a GAAP basis, 3rd quarter revenues were $542,000,000 an increase of 22 percent both after and before the effect of foreign exchange compared to the prior year quarter. This includes the net impact of the lower purchase accounting deferred revenue adjustment of $1,000,000 and the net impact of the Biznode acquisition.
Net income for the Q3 on a GAAP basis was $17,000,000 or diluted earnings per share of $0.04 compared to a net loss of $16,000,000 for the prior year quarter. The improvement was primarily driven by higher prior year expenses related to the retirement of debt as part of the IPO, lower interest expense and improvements in operating income. This was partially offset by favorable tax benefit adjustments related to the impact of CARES Act recorded in the prior year period. Turning to Slide 2. I'll now discuss our adjusted results for the Q3.
3rd quarter adjusted revenues for the total company were $542,000,000 an increase of 22% both after and before the effect of foreign exchange. This year over year increase included 18 percentage points from the Biznode acquisition and a quarter of a percentage point from the impact of lower deferred revenue purchase accounting adjustments. Revenues on an organic constant currency basis were up 3.7% driven by increased demand for our solutions in both our North America and International segments. 3rd quarter adjusted EBITDA for the total company was $220,000,000 an increase of $24,000,000 or 12%. The increase in EBITDA was primarily driven by the impact of business and increased organic revenues, partially offset by the impact of higher data processing costs.
3rd quarter adjusted EBITDA margin was 40.7%. 3rd quarter adjusted net income was $123,000,000 or adjusted diluted earnings per share of $0.29 an increase from $101,000,000 or $0.24 in the Q3 of 2020. Turning now to Slide 3. I will now discuss the results for our 2 segments, North America and International. In North America, revenues for the Q3 were $374,000,000 an increase of approximately 3% from prior year.
Excluding the impact of foreign exchange and the Biznet acquisition, North America organic revenue increased $12,000,000 or 3%. In Finance and Risk, revenues were $214,000,000 an increase of 4% or 3% before the effect of foreign exchange. Excluding the impact of foreign exchange and the Bisnode acquisition, organic revenues increased $8,000,000 or 4%, primarily driven by strong double digit growth in our risk solutions and solid single digit growth in our finance solutions from new business and increased wallet share from existing customers. For sales and marketing, revenues were $160,000,000 an increase of $4,000,000 or 2%. While data sales and our marketing solutions had another solid quarter, the overall growth in sales and marketing was partially offset by $2,000,000 from the data.com legacy partnership wind out.
North America 3rd quarter adjusted EBITDA was $186,000,000 increase of $2,000,000 or 1%, primarily due to revenue growth, partially offset by higher data processing costs. Adjusted EBITDA margin for North America was 49.6%. Turning now to Slide 4. In our International segment, 3rd quarter revenues increased 104 percent to $168,000,000 or 105% on a constant currency basis, primarily driven by the net impact from the acquisition of Biznode and growth in both finance and risk and sales and marketing solutions. Excluding the net impact of BizNote, international organic revenues before the effect of foreign exchange increased approximately 5%.
Finance and risk revenues were $109,000,000 an increase of 61% both after and before the effect of foreign exchange, primarily due to the business acquisition. Organic revenue before the effect of foreign exchange grew 2% with growth across all markets, including higher revenues from our Asian markets, localized offerings in India and growth from D and D credit in Greater China, partially offset by elevated cross border data sales in the prior year period. Sales and marketing revenues were $59,000,000 an increase of 300% or 307% before the effect of foreign exchange, primarily attributable to the Bizmo acquisition. Organic revenues before the effect of foreign exchange grew 22%, including higher revenues from our UK and Greater China markets attributable to multiple recently launched products, higher data sales as well as increased worldwide network product royalties. 3rd quarter international adjusted EBITDA of $54,000,000 increased $26,000,000 or 93% versus Q3 2020, primarily due to the net impact of the Biznode acquisition, as well as organic revenue growth and lower data costs, partially offset by higher net personnel expense.
Adjusted EBITDA margin was 32.2%. Turning to Slide 5. I'll now walk through our capital structure. At the end of September 30, 2021, we had cash and cash equivalents of $234,000,000 which when combined with the full capacity of our $850,000,000 revolving line of credit through 2025 represents total liquidity of approximately $1,100,000,000 As of September 30, total debt principal was $3,660,000,000 and our leverage ratio was 4.5 times on a gross basis and 4.2 times on a net basis. The credit facility senior secured net leverage was 3.5 times.
Turning now to Slide 6. I'll now walk through our outlook for the remainder of 2021 in which we are maintaining our ranges for revenue and EBITDA and increasing our range for EPS. Adjusted revenues are expected to be in the range of 2,145,000,000 to $2,175,000,000 an increase of approximately 23.5% to 25% compared to full year 2020 adjusted revenues of $1739,000,000 Revenues on an organic constant currency basis and excluding the net impact of lower deferred revenues are expected to be in the range of 3% to 4.5% for the full year. Adjusted EBITDA is expected to be in the range of 840,000,000 to $855,000,000 an increase of 18% to 20%. And adjusted EPS is expected to be between $1.06 to $1.09 versus our prior guidance for the high end of 1 point $2 to $1.06 primarily driven by improvements in our interest expense and depreciation outlooks.
Additionally, modeling details underlying our outlook are as follows. We expect interest expense to be approximately $200,000,000 versus our original $200,000,000 to $210,000,000 driven by lower LIBOR rates and less borrowing than anticipated. Depreciation and amortization expense of approximately $80,000,000 excluding incremental depreciation and amortization expense resulting from purchase accounting versus our original approximately $90,000,000 primarily driven by lower business depreciation than anticipated. Adjusted effective tax rate of approximately 24%, weighted average shares outstanding of approximately 430,000,000 and for CapEx, we expect approximately $237,000,000 which accounts for the $77,000,000 purchase of our new global headquarters in Jacksonville, Florida. And finally, with organic growth continuing to accelerate each quarter, we expect Q4 to be at or above the high end of our organic growth range versus at the high end of the range, which we discussed on our Q2 call.
We look forward to closing out 2021 on a high note and heading into 2022 with positive momentum. With that, we're now happy to open up the call for questions. Operator, will you please open the line for Q and A?
Speaker 0
Thank you, sir. Your first question comes from the line of Hamzah Mazari of Jefferies.
Speaker 4
Hi, this is Mario Cortellacci filling in for Hamzah. Could you just give us an update and talk about how many SKUs you guys have currently product wise and give us a sense for how your products have pricing power versus others?
Speaker 5
And then maybe is there any rationalization
Speaker 4
that you can do within your SKU count that could potentially give you even more pricing power going
Speaker 2
forward? So Mario, in terms of the number of SKUs, I don't have that off the top
Speaker 3
of my head and
Speaker 2
we've got a number by each of the core lines of business and finance, risk, sales and marketing and then the international versions of them. But a decent number of products covering the entire space that we're focused on, which is organizations globally covering the largest in the world to smaller SMB products. So tough one to answer, but I'd say that feel really good about the product inventory that we have and how we're going to market with it. And certainly with a number of our products, we feel we have great pricing power with them. And in areas like when we talked about this morning on the online marketing side, we are adding capability to further increase some of the pricing power that we have.
So there are products that overlap. We talked about that with Biznode acquisition as an example and where we would be leveraging some of the products both ways. And we'll continue to do that. We'll do in the client focused manner, so that our clients are receptive to continuing to partner with us and work with us and we'll migrate them over time, retaining the relationship, retaining the revenue and on our side finding more efficiency by any overlapping products.
Speaker 4
Got it. And then just my follow-up is around like this marketing space and some of these acquisitions. Could you
Speaker 2
help us understand the competitive dynamic
Speaker 4
in the marketing space and one of the credit bureaus obviously getting a lot bigger in digital marketing, But I guess is this differentiated because it's more B2B or is there anything else to call out versus somebody like a TransUnion or what they're doing? And then are there any other major competitors within this B2B marketing space?
Speaker 2
Yes, absolutely. Really what differentiates us from others who are in the space is that we are focused on B2B. And B2B is what's great in the B2B world in many regards is you can see the trends that have been successful in the B2C world and B2B tends to lag it. And so for us, we can see that the success here has been strong and there's a great opportunity in this space. And with everything that we have in terms of our DUNS number, our data, the number of brands that we work with directly today versus having to go through an agency really sets us up with a great advantage in this space.
And also as you look at the just the value of an ad to a B2B marketer is much higher than it is to a B2C marketer. So having a restaurant putting up an ad for a hamburger has a certain amount of value compared to a B2B ad, reaching out to a known business contact of an organization selling an ERP system as an example. So we see that the demand will be high for B2B because the price of the B2B ad will be more valuable than a B2C ad.
Speaker 4
Great. Thank you very much.
Speaker 2
Thank you.
Speaker 0
Your next question comes from the line of Kevin McVeigh of Credit Suisse.
Speaker 6
Great. Thanks so much. Hey, could you unpack a little bit the improvements in the organic growth Q3? And then it looks like you're going to see a real nice acceleration at Q4 as well. Maybe how much of that is just better retention versus pricing versus new product?
And then you talked about a vitality index of, I think, up to 8% versus 2% in Q3. How should we think about kind of a longer term target for that? And is there any way to kind of triangulate that to what it can mean to organic growth? So I know there's a lot there, but really focused on kind of organic growth improvement in Q3 to Q4 and then ultimately what the vitality index can mean for that?
Speaker 3
Yes. Hey, Kevin. Thanks for the question. When we look at the organic acceleration throughout the year, you've seen it step up now sequentially from Q1 to Q2, now into Q3, and we expect that to continue into Q4. Anthony mentioned earlier, pricing is certainly one component of that.
We talked about as the renewals flow through and we start to see the 12th month peel off and the 13 month of a multi year contract step up, we're seeing that acceleration into Q3 and Q4. Retention, we have a lot of focus and energy behind that. A lot of the improvements we're making from a data quality perspective, data consistency, expanding the data set into new and alternative data components, all of that is helping to drive a better customer experience from that side, which plays into retention, as you said. And then on the new product side, we've had, as Anthony talked about, some really nice successes both in that marketing space, which is a sub segment of the overall sales and marketing. But really in that 3rd party risk and compliance side, we saw nice growth there where we're handling anything from the KYC of a large multinational investment bank to we extended with Walmart from that perspective.
So that's a space in a market that is very germane and very much growing. And we see that we're very well positioned to continue to drive acceleration in that area.
Speaker 6
That's helpful. And then just on the 2 acquisitions, it seems like the growth is pretty strong relative to the core business. How should we think about that? Is there any impact on kind of the 'twenty one guidance? And then in terms of just numbers around that and can you give us a sense of the size and just the growth rate overall?
Speaker 3
Sure. Yes, Kevin, thank you. And we literally we're just signing those and they'll close here relatively short, I would say, one sooner in the next few weeks. Overall, we are paying about $165,000,000 for one of them and about, call it $69,000,000 for the other. So that's kind of the purchase price from that perspective.
We talked about the size of that marketing business and where it's at today. I mean, this will in essence a little bit more than double the size of that. And so when we look at those growth rates and we look at the, as Anthony said, the interconnectedness and what we can leverage in the DUNS number, we're pretty excited about the growth opportunity. In terms of guidance, because we signed them, Kevin, and we haven't closed them, they are not included in the guidance ranges that we provided. And they certainly won't be included in the organic, right, just because of the acquisitive nature and the fact that we're backing those out generally we're backing those out for the 1st 12 months.
Speaker 6
Super helpful. Thanks again.
Speaker 2
Thanks Kevin.
Speaker 0
Your next question comes from the line of Ashish Sabadra of RBC Capital Markets.
Speaker 7
Thanks for taking my question. So it looks like pretty strong progress pretty solid progress on the Bisnode integration. I was wondering as you've owned Bisnode for almost 10 months now, do you believe that there could be potential upside to the cost synergies? And also from a revenue perspective, I was wondering if you could talk about the cross selling success that you've had there? Thanks.
Speaker 2
Sure. On the progress, like I said in my prepared remarks, we're already at $25,000,000 annualized savings. Next year, we'll get to $40,000,000 of annualized savings. And first of all, I would say, I'm extremely proud of the team and the great work that they're doing from an operational execution perspective. During COVID, overseas, lots going on, lots of reasons for there to be operational headquarter.
The team has done a phenomenal job on the synergy side, on our client side and driving value there. So at this stage, we feel pretty good about the synergies that we're going to get from it and our focus into second part of your question Ashish is on the growth. And that's where we'll look to continue to drive our products into that client base. We continue to see really nice momentum and receptivity from those clients. And I think in parts, it's how teams are taking care of them through the transition.
But it's exciting to see, I think, our sales and marketing products were 12.5% increase year over year into that base. So there's some really good momentum that we have overall with that acquisition and we've been proud of the team executing it.
Speaker 7
That's great. And maybe I was wondering if you could drill down further on the TransUnion partnership that you talked in your prepared remarks. How do you plan to go to market? How do you think about the addressable market there? And how do you think about the opportunity over the next 3 to 5 years?
Thanks.
Speaker 2
Sure. No, it's a really exciting opportunity for us, I think for TransUnion as well, candidly. I won't speak for them. But in the SMB space, we're focused on we've talked about this before where the difference between a consumer credit bureau report and our commercial at that end, given the same gap as it is for larger businesses, but there's a difference in price between them. And so it has been an area where we've been not as strong.
And so what I'm excited about this deal with what we're doing is we're again, we talked about a commitment that we're going to make at the very beginning. And what I hope you see is us continuing to do what we say we're going to do and focus on it. And we've not wavered on the SMB space in terms of the number of products that we're bringing to that space. And especially with this capability on the blended score, how it can help in that space by increasing match rates, how it can help increase our commercial score that we had and how it can help get list over just the consumer credit bureau score as well. So from that perspective, it really has the making of a winner and I'm excited about and excited how we can help our larger enterprise clients as well that focus on the space.
Because what I'd say is, from a again, we're thoughtful here in terms of how we're describing it. It's a proof of concept. We've been doing analytics for a number of months right now. We feel good about the momentum. Otherwise, obviously, we wouldn't have introduced it on the call.
But it's still early stages and we want to be transparent with you in terms of what's coming, right, and where are we headed. So you see in the product vitality index score how we've increased new revenue contributions to the company 8% versus 2% last year. So part of this is just continue to give you headlights into what we see coming next. And this certainly is one which is exciting for us and exciting for our clients. And as I mentioned again in the prepared remarks, we talked about our we've got phenomenal clients.
We're very, very fortunate to have them. They're fortunate they participate in advisory boards. They're experts. We've had a great opportunity to listen and partner with them. And what I'll say is the interest level is very high from those that we've talked about with this opportunity.
Speaker 7
Thanks, Anthony. That was very helpful color. Thank you.
Speaker 2
Thank you,
Speaker 0
Your next question comes from the line of Andrew Jeffrey of Truist Securities.
Speaker 8
Hi, good morning. Appreciate you taking the questions. Anthony, I wanted to just spend a minute on sales and marketing and it sounds like these acquisitions are clear commitment to that space and enhancing your capabilities there. Can't help but note the relative outperformance rest of world. And I wonder if you could just contrast perhaps some of the success you're having internationally with the relatively slower growth and maybe what is a more competitive market in the U.
S. And how you think some of the success you've had rest of world, do you think maybe perhaps in conjunction with recent M and A can accelerate the U. S. Growth, whether there are some learnings you can bring to domestic markets?
Speaker 2
Great question, Andrew. What I'd say overall when you think of sales and marketing and again in the pure sales side where I know there's been some great growth announced in the quarter and in the space. There's our focus more traditionally is on APIs for our master data management around our DUNS number. That's historically, I'd say the nature of our business versus selling to salespeople to enable sales success. And so when we look at what we're doing in this space and just the natural success we're having in our audience targeting business, marketing business, the growth of 40%.
We're leveraging the strength that we have with the data of all these businesses global, the DUNS number, etcetera. And on the sales side, again, selling more not to the end seller in many cases, but to researchers of the company. So it's done gradually want to target someone and do a lot of in-depth research on them versus just identifying who the CTO is of the company to call on them. That's where we've been focusing. So as we look at sales and marketing more holistically, and again, as you look at the relative size of our client internationally, we have more larger clients SKU versus in the U.
S. We also have smaller clients. And so there's a difference there in terms of how the integration of our marketing and sales solutions would benefit a large enterprise client versus a smaller midsized client. And what we're doing is focusing on the marketing efforts, having a we've got a very thoughtful approach about marketing, owning the online data space, growing into account based marketing, expanding into engagement and trigger events of keeping the relationship and then having that lead into sales versus truly being just in sales. And that's what we're doing with the relative size of our sales business like we talked about is a smaller part of SMS.
Like the true sales selling to sales executives, like you said, is a probably $90,000,000 to $100,000,000 in revenue of our wholesale and marketing business. And but it's an area where we're excited about because we see opportunity there and we see more upside than downside in terms of how we can continue to enhance it with additional contacts, simplified user experience and interface, etcetera. And so that's why I think we're seeing the differences internationally versus domestically, what our core strength is here around the DUNS, around the data, how we're building muscle upon muscle with these acquisitions that really honing in on where we're really strong and great at. And then from that basis moving more definitively into the sales pure sales side.
Speaker 8
So at the risk of over generalizing,
Speaker 2
is it
Speaker 8
safe to say that D and B sales and marketing initiatives are more data intensive as opposed to being sort of more CRM oriented? I just want to make sure I can kind of wrap my head around it a little to go to market a little bit.
Speaker 2
Well, I think it's going to target some of the data feeds the CRM. So it's the lines more of it there. But what I'd certainly say is from an audience targeting solution, we are our foundation is data and marketing moving into sales. And like I said, if you take sales and you break it down, there's larger enterprise sales where again there's a lot more research and thought going into building campaign versus you want to sell to every hospital and you want the CIO of every hospital. And it's that simple.
We're going to continue to move more and more in that direction. Really what our focus Andrew is really solidifying the foundation of where we're strong and also continuing to create the DUNS number in a more and more meaningful way in the online world. So you see obviously the strength that we have with it in the offline world. And as we go online, really being able to take that DUNS, like there are a number of online IDs that have to get created along the process. This will enable us and our customers that have DUNS numbers and making it more relevant to be able to more easily market online.
So that's what we're excited about. And that's why I said the focus is on that right now. Well, in the meantime, we continue to focus on the contacts, on all the things that we've talked about before from a pure selling perspective. We've got a significant we talked about having 30,000,000 high quality contacts by the end of this year, we're over that, we're at 31,000,000 at the end of Q3. So the focus that we have of contacts and things that will benefit as general selling, we're absolutely continuing to move in that direction.
And like I said, improving the UI, improving the integration of our marketing efforts. Really what we're doing with these acquisitions is really hardening the great capability and the leadership space that we have in the B2B world.
Speaker 8
All right. Look forward to following your progress. That's really helpful.
Speaker 2
I appreciate. Thank you, Ed.
Speaker 0
Your next question comes from the line of Gary Bixby of Bank of America Securities.
Speaker 9
Hey, guys. Good morning. Nice to see the organic revenue growth progress you made here. So I wanted to ask about the portfolio in regards to growth. You need to talk about risk.
I know it's small within F and R, but remains robust, this online B2B marketing growing rapidly. But is there a base of revenue there or some pockets of revenue that are declining and sort of drags on growth that these smaller parts of portfolio really having to outgrow? Or would it be more reasonable to say there's big pockets of legacy revenue within the company that just aren't growing? And it strikes me the growth rates would be faster given all the optimism around new products and customer wins that you've talked about in some of these areas that are growing really well if everything else was growing as well? And maybe if you could just sort of size what part of the revenue base is really growing?
What part, if any, is declining? And what part is stable at this point? Thank you.
Speaker 3
Yes, Gary, it's to your point how we think about an attack, right, our operational plans from that perspective. And so when you look at the overall finance and risk, right, this quarter grew about 4% in North America, where you saw the primary growth and we've talked about it, call it being roughly in the $100,000,000 range, that 3rd party risk and compliance business. And so that's certainly been accelerating at like strong double digits. And when you kind of blend the finance solutions and then the lower end of the market, which was the legacy credibility business, that was one of the businesses, Gary, that we made a lot of strategic changes to in terms of sales practices, in terms of how we went to market there. And so that had been a bit of a headwind for us as we were kind of leading through late last year and into this year.
And so what's good is as we continue to progress through a lot of those changes, you know, are now under place. And so we're picking up from a place where the backdoor, as Anthony calls it, is being closed more and more from that perspective. On the sales and marketing side, if you build on to that again, you have the master data management business, which is the largest component of that, very strong, very sticky, I would say, grows similar to what, for instance, the finance business grows from that side of the equation, because it really kind of sits as that middle anchor layer in larger companies, data lake strategies, etcetera. When you start to peel back the 2 components, what Anthony was mentioning is that the sales business has been something that we've had to really improve since we've got here. And so it's getting better, but certainly has been something that has been a bit of a headwind as we've progressed through since the privatization.
The marketing business, as Anthony said, and to Andrew's point, smaller part of that business, we talked about it being roughly $30,000,000 but it is growing quite rapidly from that perspective. And so having more focus, more attention, adding the assets of NetWise and IOTA, we're trying to build again muscle on muscle and really take advantage of an accelerating market. And one that traditionally has been focused on larger kind of B2C side. This is very focused business to business. And when you think about approaching a Dun and Bradstreet, right, with our DUNS number and tying that to a digital ID and then getting to Brian Hipsher or Anthony Jabbour, CFO, CEO within that organization, the advertisement for a multimillion dollar ERP or HRIS system is very different than the sofa that I mentioned last week and then shut up as an app from that perspective.
So again, that's kind of how we see the growth opportunities in certainly 2 hot places are in that 3rd party risk and compliance and in online marketing.
Speaker 9
Great. Thanks. And then the follow-up, the new innovation or obviously it sounds like a lot of good things going on. Just at a high level, how much of the new products and innovation you've been doing is sort of replacing stuff that when you got there wasn't of the quality it should be to win in the market versus new innovation that expands your capabilities and thus expands revenue opportunity, market opportunity. Is there still some of that we're fixing stuff that wasn't good enough?
Or is the pivot towards, hey, this is really largely incremental and additive to our growth potential, are you far along on that? I just haven't heard you really discuss that since maybe around the IPO or you were still fixing a lot of stuff that wasn't done right? Thank you.
Speaker 2
I think that's a great question, Gary. Certainly we have examples in both buckets and even products which were good, the markets continue to move and need to continue to move with them and ideally move ahead of them, so your clients are ready. Brian, do you have any quantification on that?
Speaker 3
Yes. So, Gary, from your perspective, what I would say, when I look at the components that are in that new product vitality index, many of those things like for instance on the analytics studio, right, or what we're doing in that digital marketing space are really net new opportunities, net new TAM. Anthony mentioned on the early side of what we're doing with ESG, right? Again, that's a new in essence kind of vertical that we're going into, so net new opportunity from that side. In terms of some of the work we're doing from continuing to upgrade platforms, whether it's UI, UX and some of the sales spaces, whether that's in terms of just converting off of and really upgrading, right, the underlying structures
Speaker 2
of some
Speaker 3
of the platforms on the finance and risk side. That work is still ongoing. But the majority of those revenues from a new product perspective are net new versus in essence replacing, if that makes sense.
Speaker 0
Your next question comes from the line of Manav Patnaik of Barclays.
Speaker 5
Thank you. Good morning. Just on the TransUnion partnership, I just wanted to confirm, I did remember seeing some press release figures focused mostly on South Africa. So I just want to confirm this was something different and bigger. And also if this was the first time DNB has partnered with a consumer credit bureau to do anything like this?
Speaker 2
Sure. Thank you, Manav. Yes, no, this is something larger. That was in a previous deal that we've done with them together in South Africa. This one is domestically focused.
And to my knowledge, I know I don't believe anything had ever been done with a consumer credit bureau before and certainly not in recent history. So going back far enough, it might have been something, but certainly not in recent history. So that's what we're excited about. It's new capability in the market. Again, as we're looking at where we're strong, where we're average, where we've got vulnerabilities, what are the things that we can do.
This is something which helps in an area where we're vulnerable that talked with all of you about before from a competitive perspective. And it really puts us in a position to strength here. So we're excited about it.
Speaker 5
Got it. Thank you. That's helpful. And then just broadly, historically at least and probably still to a certain extent, the Q4 is always the heavy loaded quarter for Dun and Bradstreet. I know you guys decided to change things up for the better.
So I'm just trying to understand or get some help on how we should extrapolate, let's just say, the 4.5 plus percent organic growth you end that in the Q4 and how we should think about that into 2022?
Speaker 3
Yes. Manav, I think Anthony said it the right way, right? It sets a really nice foundation for us to continue to accelerate organic growth into 2022. And so obviously, as we finish out the year and we get into the Q4 earnings call, we'll provide formal guidance at that time. But certainly, we're really pleased with the continued acceleration and the continued momentum we're building into that recurring organic revenue stream.
Speaker 5
Got it. Thank you.
Speaker 0
Your next question comes from the line of Kyle Peterson of Needham.
Speaker 10
Hey, Just wanted to touch on the M and A outlook and pipeline. Obviously, you announced these 2 deals this morning, it seemed like good fits. Are you guys ready and still looking for more deals? Or we expect some sort of a digestion and integration period for these 2?
Speaker 2
Kyle, what I'd say is we're always looking for M and A that will help us and drive shareholder value. And the way we're organized, our team can digest these ones. If we saw a great one pop up tomorrow, we go after it with vigor. And we've been active in the space we've looked at a number of companies as you can imagine. And oftentimes the best strategic move you make is when you don't do something.
And so we're pleased with the decisions we've made walking away from some deals. But we've been very thoughtful about what are the right types of acquisitions for us that would really benefit our clients and help accelerate our growth. And that will continue. So we're we'll have conversations today on other M and A opportunities.
Speaker 10
Got it. That's helpful. And then guess just a quick follow-up on the outlook of security and the interest expense. I guess like the guidance implies that there's a little bit of a step up in 4Q compared to where we've been at over the 1st 9 months of the year. Is there anything going on related to like pre funding some of this M and A that we should keep in mind or is there just an element of conservative or conservatism or anything that we need to kind of keep in mind for our models?
Speaker 3
Yes. So clearly, we came out of the range of what our original guidance was, right. And so we step that up. Certainly, we think that we'll continue to perform well against expectations on that side. And certainly, as we head into the end of this year, you're right, we'll use a little bit of cash in some of the revolver, right, to fund the 2 acquisitions.
But really, as we lead into next year, obviously, the other thing we have our eyes on is the both secured and unsecured notes that have the February 22 non call period coming up. And so those are at $420,000,000 at 6.875 and $450,000,000 at $10,000,000 Obviously, the market is in a very different place than it was almost 2 years ago when we put those in place. So all of those types of things we have our eyes on and we'll look to drive, obviously, 1st and foremost, the operational results, but continue to see good opportunity in terms of some of the non op items to enhance our overall earnings.
Speaker 0
Your next question comes from the line of Andrew Steinerman of JPMorgan.
Speaker 11
Hi. I wanted to talk a little bit about Biznode revenues. Of course, I see on Slide 6 in the footnote that biznode revenues are on track for 19% to 2021%. So if you could just help us focus in on Q3 biznode revenues. I know you're going to say that there's some like for like type situation.
But my question is, is Biznode's revenues growing yet? And when do you think kind of the pace of the Biznode revenue growth could pick up?
Speaker 3
Hey, Andrew. Thank you. Yes, as Anthony said, this is a large scale transaction, obviously, really complex in a pretty tough period and the team has done a really nice job. And so when we look at kind of comparables, last year that business was declining, call it about 1.5. This year it's growing call it somewhere around 2%.
And so it is turn the corner, Andrew, from that perspective. The Nordics are having a good year from that perspective. And what we're seeing and what our original thesis was that the Dun and Bradstreet products are growing faster than the overall bid note. So they're certainly driving the majority of that growth. And Anthony even dropped as we brought some new products to bear in the sales and marketing relatively quickly, those are growing almost 12.5%.
So small base, but of course showing good momentum from that perspective.
Speaker 0
Your next question comes from the line of George Tong of Goldman Sachs.
Speaker 12
Hi, thanks. Good morning. You originally expected organic growth to be in the lower half of the 3% to 4.5% range in the Q3 and you outperformed that target. Can you elaborate on what drove the upside and if there was any pull forward from future quarters that impacted the growth?
Speaker 3
Yes, George. So no pull forward from that perspective. When we talked about on the prior call, we said that we were looking at kind of the middle or a little bit below the middle of the guidance range. And so we came in at the 3.7%. Certainly had good sales activities.
We've certainly seen not like a swing right on the usage side, but again relatively in line with expectations. And really it was just a general, I would say, straightforward performance from that perspective. So pricing is flowing through, sales are continuing to flow through and outpace overall revenue growth. And our retention has continued to improve. And so Anthony said it, our client engagement and the sentiment with our clients continues to improve and enhance.
And those are all, I would say, positive indicators that we're doing the right things and I think the results are reflecting that.
Speaker 12
Got it. That's helpful. And then as it relates to retention, how much of the improvement is coming from your SMB segment versus enterprise customers? And as it relates to SMBs, can you provide examples of traction that you're seeing with SMB focused new products, your new SMB portal and just provide a little bit extra detail there? Thanks.
Speaker 3
Sure. So maybe I'll open up with the retention numbers part and then Anthony can talk a little bit about what we're doing with the product side. And so again, we continue to we always focus on we call muscle on muscle, right? So the strategic accounts have been nearly 100%, George, from that perspective. And so it's a large portion of our revenue and the retention rates have been great.
What we've seen is both improvements in the middle market customers, but also starting to see some improvements on that small side. So shifting from some more transactional to longer term, our multi year contracts continue to be in that roughly 50% range, a little bit below that. And then we're also, again, really seeing and focusing on multiple products per rather than that kind of single product per that we were accustomed to on the small side. So maybe Anthony, you can talk about what we're doing.
Speaker 2
Yes. On the SME side, on the e commerce side, we're excited about what we're doing. Again, that's a long play in terms of there is an article that I read in a garden and talked about 43% of all B2B buyers preferred not speaking to a live person. So what that highlights is market more to them and give them e commerce capabilities for them to actually make the purchases themselves. And this e commerce initiative is one that that's the long game for us in terms of building up more and more capability there and starting obviously with the SMB space.
So we're excited with the number of additional subscribers that we have. It's almost 40 percent over last year. We've created a lot of new product capability in that space as well in addition to data sets etcetera that they can buy. But we've also launched our premium to premium working model. So our clients being able to take our SMB client, take our product, test it, play with it, like it, then buy it.
And that's worked out well. But really across the business, even in the all I said online marketing side, we have a rev up now capability that we launched on the e commerce site where SMBs can sign up inexpensively, try it out, give reports on what type of hits that they've been getting with the online marketing, food product on what ads, etcetera. So we're going to continue to deliver more and more new capabilities and think about that space. And I hope what you're seeing is we're fulfilling that and we continue to add more capabilities in that space to build it out further and further.
Speaker 12
At
Speaker 0
this time, I'm showing no other questions. I will now turn the call back over to Anthony Jabbour 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 for their guidance. Thank you for your interest in Dun and Bradstreet for joining us on the call this morning. Hope you have a wonderful rest of the day.
Speaker 0
This concludes today's conference call. Thank you for participating. You may now disconnect.