Dun & Bradstreet - Q4 2020
February 8, 2021
Transcript
Speaker 0
Good morning. My name is Takao, and I will be your conference operator today. At this time, I would like to welcome everyone to Dun and Bradstreet's 4th Quarter and Full Year 2020 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.
Thank you. With that, I would now like to turn the call over to Beth Nakhon, Treasurer and Senior Vice President of Investor Relations and Corporate SP and E. You may proceed.
Speaker 1
Thank you. Good morning, everyone, and thank you for joining us for Genomegra's financial results conference call for the Q4 and full year ending December 31, 2020. On the call today, we have Dun and Bradstreet's CEO, Anthony Jabbour and CFO, Brian Dixcher. 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.
Dnv.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 Q4 earnings call. I would like to take some time today to discuss highlights from 2020 and our plans for 2021. 2020 was an incredible year for Dun and Bradstreet. In the midst of a challenging new environment, we're able to successfully complete our IPO, signed a definitive agreement to acquire Visnode and continue to transform our business with significant enhancements to our technology, data and analytics, which are ultimately laying the foundation for our ability to execute on our near and long term growth strategies.
Returning to the public markets last July was a major milestone for our company and allowed us to raise approximately $2,400,000,000 The net IPO proceeds allowed us to pay down our entire preferred equity and 40% of both our secured and unsecured notes. This significantly improved our financial profile and is saving us more than $175,000,000 of annual dividends and interest expense. With our lower leverage and increased cash flow, we now have significantly more financial flexibility to accelerate our growth strategy, both organically and inorganically. For example, we're able to execute a critical step in our international growth strategy, the acquisition of Dun and Bradstreet Worldwide Network Product Member, Biznode, which was signed in October 2020 and closed on January 8, 2021. The acquisition of Bismuth significantly expands our footprint to additional territories that make up 40% of the GDP of Europe and are home to 50 of the Global 500 Companies.
The combined business with nearly 250,000 clients collectively will now be able to provide mission critical solutions to an expanded European footprint with more local data, more local knowledge and more streamlined delivery channels. As a global company, having local expertise and knowledge helps us to engage with clients of all sizes in the region and across the globe to provide solutions and support necessary to meet their increasing demands. As we've now been operating the business for around a month, we're even more excited about the opportunity. The business came with a combination of Dun and Bradstreet products along with some legacy disparate solutions. We will sun down the legacy solutions and invest in the development of our market leading global platforms and localized solutions.
We also have identified approximately $40,000,000 in annualized run rate savings that we expect to have actioned by the end of 2022. Brian will provide incremental financial details, including our expectations for 2021 in his section. But overall, we already have strong momentum underway and look forward to updating you on our progress in the coming quarters. Now turning back to the Q4 and full year 2020. We delivered solid financial results in both the Q4 and full year 2020 despite known headwinds and a challenging macro environment.
4th quarter revenues were up 1.8%, excluding the net benefit of the lower deferred revenue purchase accounting impact. Adjusting for the previously communicated headwinds, normalized revenues on a constant currency basis were up 3.5% for the 4th quarter and 3% for the full year. Total company revenue retention for the year was 96%, an increase of 70 basis points versus prior year. And we now have 36% of our business under multiyear contracts. Revenue retention for our Strategic Account segment for the year is 99.8%, which once again reinforces our position as a mission critical provider to the largest businesses in the world.
2020 was certainly a challenging year in terms of businesses of all sizes navigating their way through a difficult environment. I'm proud of what we were able to accomplish in terms of retention and in some cases expansion, especially when you look at what we did with our strategic accounts. Building on the near 100% gross retention I just mentioned, we're able to grow our revenues with our strategic customers by 3% versus prior year. We also increased our multi year business in the strategic channel by 11 percentage points to 67.5%. These multiyear contracts not only have built in growth, they also create recurring revenue streams that allow us to continue to cross sell additional solutions.
A great example of this was with 1 of the top 3 wireless providers in the U. S. As they adopted a multiyear agreement with Master Data, Digital Marketing and Global Analytics Solutions. Next, I'll talk about the significant progress we made in our government channel, where we had a strong year with wins in the Department of Defense, the Federal Emergency Management Agency and the Small Business Administration. And in the Q4, we're able to secure a sole sourced 16 month contract with 2 6 month options to further support the General Services Administration or the GSA.
As governments both domestically and globally look to grapple with the rapidly evolving environment, we are pleased to be able to assist such critical work through our unique and differentiated offerings. Moving on to our field sales accounts. We saw customers including 1 of the leading hedge funds in the world and an online brand management technology company renew at or slightly above prior year levels, which was reflective of the overall customer segment. These businesses, which range from $100,000 to $1,000,000 of potential spend a year, were more impacted by the current adverse environment. However, they maintain consistent spend with us given the criticality of the solutions we provide despite their overall budget limitations.
We continue to have dialogue in terms of the adoption of incremental solutions as things begin to return to a more normalized environment and look forward to deepening our relationships going forward. Finally, our small and medium business accounts were an area that went through a significant evolution. We spent the later part of 2019 beginning to execute a digital strategy that shifts our reliance on direct mail campaigns and telephonic interactions to a more e commerce centric interaction. While revenues from direct mail and telesales were down significantly versus prior year, we're able to partially offset those declines with digital sales up 53% over the prior year. We carried this momentum through the back half of twenty twenty and are excited about our progress in expanding upon our SMB digitization efforts, which I will discuss further in my 2021 operations section.
From an international lens, as we continue to expand and improve our beneficial ownership data, we're able to secure a new contract with 1 of China's top 4 banks. This solution will help the bank manage and screen their client shareholders in order to meet anti money laundering requirements and the Know Your Customer compliance process. In the U. K, we expanded our business with a Fortune 500 online payments provider whose platforms are available in more than 200 markets around the world. They will be using our modern API and cloud based software as a service solutions globally to provide entity verification screening and monitor potential fraud.
We also continue to grow our sales and marketing solutions internationally. Our British multinational enterprise software firm, Sage Global Services, a market leader for integrated accounting, payroll and payment systems, will be using our global data to assist with their sales and marketing efforts through cleansing and updating data within their CRM systems and assisting in account based marketing efforts. As you can see, client engagement is strong and we believe this momentum is a direct outcome of the substantial progress we've made in terms of our ongoing transformation that is producing higher quality, more modern and scalable global solutions. In 2020, we invested approximately $115,000,000 in capitalized software development, focused on enhancing and expanding our data supply chain, innovating new solutions and modernizing our existing platforms by integration, enhanced user interfaces and decreased latency. As we've discussed before, Project DSN has been an important piece of our technology transformation as we continue to enhance and expand our ability to ingest and curate data, diversify our coverage of existing data and expand access to a variety of alternative datasets.
We also made significant progress in simplifying and scaling our infrastructure for further growth. Converging multiple existing legacy environments onto a common platform, primarily in the cloud, improves our stability and operating costs and enables automation, continuous integration and on demand provisioning, so our developers can deploy it more rapidly into production, ultimately allowing us to scale quickly and efficiently. An example of taking an existing set of solutions, focusing on the modern offering and connecting it to enhanced data supply chain is what we're doing with our Direct plus API. All alternative datasets that come to Dun and Bradstreet are now ingested through Ascent and delivered by Direct Plus, providing our customers with the freshest, most complete and accurate results, which allows our customers to access the most up to date data and analytics available in our ecosystem. Over the next year, we will continue to load new data and begin migrating existing data sets to be curated through Ascent.
These particular investments along with all the new product innovations we rolled out in 2020 are creating the foundation for our future growth. And finally, as we invest in the business, we also continue to focus on efficiency, reflected in our improved EBITDA margins and annualized run rate cost savings to date of $241,000,000 which is up $16,000,000 from the 3rd quarter. This was achieved through a rationalization of our real estate footprint, a net reduction from external providers as we expand our global capabilities and continued rationalization of our back office support structure. As I said, 2020 was an incredible year. Our team continues to make great strides in executing on our strategy and we are well positioned for 2021 and beyond.
Now turning to 2021, we will continue to focus on our transformation efforts as we look to leverage the work we did in 2020. One area I'd like to highlight is our new SMB digital platform, which will provide small medium sized businesses a one stop shop and help to deepen our relationships with cross sell opportunities, extend our reach to new customers, particularly small businesses and increase our revenue from new channels including self-service e commerce. We have thousands of small businesses coming to our website each day for a whole host of reasons, including registering for a DUNS number, looking to improve their credit profile or becoming a qualified supplier to a major corporation. We took multiple digital entry points and established a unified site that provides a single corridor for these businesses to not just access our products, but to gain access to a more expansive environment, including partner products designed specifically for small business. This helps us to grow our small medium business sales, increase stickiness with current clients and create partnership opportunities with our largest enterprise clients to bring new solutions and services to small business.
As we look to our finance and risk and sales and marketing portfolios, we'll continue to launch new innovative capabilities throughout the year. And internationally, we'll continue to focus on launching new products in our respective markets through globalizing existing new North America solutions, introducing new offerings concurrently with North America and launching specific local offerings. These solutions will largely leverage existing technology platforms and data supply chains, but be tailored for market users with local language, data and future requirements. 2020 was another year of remarkable transformation and we are poised to accelerate growth in 2021. Our key priorities are to continue the transformation of our technology to scale for growth, deliver more to our clients digitally, expand our data and analytics capabilities, integrate this node and grow both organically and inorganically as we look for new and better ways to serve our clients.
We are excited for what's to come. And with that, I'll now turn the call over to Brian to discuss our financial results and outlook for 2021.
Speaker 3
Thank you, Anthony, and good morning, everyone. Today, I will discuss our Q4 and full year 2020 results and our outlook for 2021. Turning to Slide 1. On a GAAP basis, 4th quarter revenues were $480,000,000 an increase of 11% or 10.5% on a constant currency basis compared to the prior year quarter. This includes the net impact of the lower purchase accounting deferred revenue adjustment of $39,000,000 Net income for the Q4 on a GAAP basis was $7,000,000 or a diluted income per share of $0.02 compared to a net loss of $263,000,000 for the prior year quarter.
This was primarily driven by prior year's expense of $172,000,000 related to the make whole provision associated with the Series A preferred stock, which was redeemed as a result of the IPO. Also, the net impact of the lower deferred revenue adjustment of $39,000,000 as well as a higher non operating gain of approximately $24,000,000 related to the fair value adjustment of a foreign currency policy. Before I get to the full year results, let me clarify that comparisons to full year 2019 are being compared to the combined pro form a results, which include the predecessor period prior to the privatization, the successor period post privatization and pro form a adjustments that give effect to the take private transaction as if that had occurred on January 1, 2019. For revenue and adjusted EBITDA, the only pro form a adjustment was a $16,000,000 reduction due to additional deferred revenues. Net income contains several pro form a adjustments, the details of which can be found in the schedules within the press release.
On a GAAP basis, full year 2020 revenues were $1738,000,000 an increase of 10% compared to 2019. This concludes the net impact of the lower purchase accounting deferred revenue adjustment of $134,000,000 and an international lag adjustment of $26,000,000 which had a combined 10 percentage point impact on year over year growth. We had a full year net loss of $176,000,000 for a diluted loss per share of $0.48 compared to a net loss of $599,000,000 for the prior year. Turning to Slide 2. I'll now discuss our adjusted results for the 4th quarter and full year.
4th quarter adjusted revenues for the total company were $480,000,000 an increase of 11% or 10.5% on a constant currency basis. This increase includes the $39,000,000 net impact of lower deferred revenue purchase accounting adjustments, a 9 percentage point impact on year over year growth. This increase was partially offset by known headwinds as previously communicated. These headwinds include lower usage revenues, primarily driven by the impact of COVID-nineteen of approximately $8,000,000 lower royalty revenues from the wind down of the data.com partnership of approximately $6,000,000 a decision we made in the second half of twenty nineteen to make structural changes within legacy credibility solution of $1,000,000 partially offset by the shift of $4,000,000 of government revenues from the 3rd quarter. The total net impact of these known headwinds is approximately $11,000,000 Excluding these unique transitory items and the impact of currency, the underlying revenues for the total company grew approximately 3.5%.
4th quarter adjusted EBITDA for the total company was $209,000,000 an increase of $51,000,000 or 32%. This increase includes the $39,000,000 net impact of lower deferred revenue purchase accounting adjustments, a 26 percentage point impact on year over year growth. The remainder of the improvement is primarily due to lower overall operating costs, driven by ongoing cost management initiatives, including lower net personnel expenses, partially offset by increased public company costs. 4th quarter adjusted EBITDA margin was 43.5%. 4th quarter adjusted net income was $118,000,000 or adjusted diluted earnings per share of $0.28 an increase from 4th quarter's 20 nineteen adjusted net income of $51,500,000 Full year adjusted revenues for the total company were $1738,000,000 an increase of 8% compared to 20 19 adjusted revenues combined pro form a.
This increase includes the net impact of lower deferred revenues, purchase accounting adjustment of $134,000,000 an 8 percentage point impact and known headwinds as previously communicated. These headwinds include lower usage revenues, primarily driven by the impact of COVID-nineteen of approximately $20,000,000 lower royalty revenues from the wind down of the data.com partnership of approximately $20,000,000 a decision we made in the second half of twenty nineteen to make structural changes within legacy credibility solutions of $11,000,000 and worldwide network and non recurring revenues of $6,000,000 The total impact of these known headwinds was approximately $57,000,000 Excluding these unique transitory items, along with the deferred revenue adjustment, revenues on a constant currency basis grew approximately 3%, primarily from growth in our subscription based revenues in our finance and risk solutions. Full year adjusted EBITDA for the total company was $715,000,000 an increase of 30%, primarily driven by $134,000,000 of lower purchase accounting deferred revenue adjustments reflected in the corporate segment, which has a 25 percentage point impact on the year over year growth, along with lower net personnel, travel and marketing costs of approximately $55,000,000 in the current year period, primarily resulting from ongoing cost management methods, partially offset by increased technology costs of approximately $42,000,000 related to data processing and data acquisition costs.
Full year adjusted EBITDA margin was 41.2%, an increase of 6 70 basis points. The net impact from deferred revenue had an impact of 5 percentage points on the year over year margin improvement. Full year 2020 adjusted net income was $350,000,000 or adjusted diluted earnings per share of $0.95 compared to 20 19 adjusted net income of $175,000,000 The increase was primarily driven by the net impact of lower deferred revenue adjustment in the current year, lower personnel and travel costs primarily driven by ongoing cost management and lower interest expense, partially offset by higher technology costs primarily related to data processing and acquisition costs. Turning now to Slide 3. I will now discuss the results of our 2 segments, North America and International.
In North America, revenues for the 4th quarter increased 0.3% to $401,000,000
Speaker 4
The
Speaker 3
4th quarter net headwinds of $11,000,000 mentioned earlier, all related to North America. Excluding these revenues, underlying growth was approximately 3% driven by increased subscription based revenues. Finance and risk 4th quarter revenues were $218,000,000 an increase of 0.4% driven by the shift of a $4,000,000 government contract from Q3, higher subscription based revenues, partially offset by known transient headwinds of $1,000,000 from structural changes in credibility solutions and $8,000,000 in lower usage compared to an elevated Q4 2019 along with the impact of COVID-nineteen. North America sales and marketing 4th quarter revenues were $183,000,000 an increase of 0.2%. The increase was primarily driven by higher revenues of approximately $8,000,000 from our BNB Direct API solutions, partially offset by lower royalty revenues of approximately $6,000,000 from the data.com legacy partnership.
North America 4th quarter adjusted EBITDA was $198,300,000 and adjusted EBITDA margin for North America was 49 0.5%. Turning now to Slide 4. I will now discuss full year results for North America. In North America, revenues for 2020 were $1460,000,000 Excluding the net impact of $48,000,000 of headwinds communicated, dollars 20,000,000 related to data.com, dollars 11,000,000 related to the structural changes we made within our legacy credibility solutions and $17,000,000 of lower usage primarily related to COVID-nineteen. North America Underlying Revenues increased 3%.
North America Finance and Risk full year revenues were $811,000,000 an increase of $2,500,000 or less than 1%. The increase was primarily driven by higher subscription based revenues of approximately $30,000,000 partially offset by lower revenues of approximately $17,000,000 of lower usage, primarily attributable to the impact of COVID-nineteen and lower revenues of approximately $11,000,000 primarily due to structural changes we made within our legacy credibility solutions. Total net debt sales and marketing full year revenues decreased $7,300,000 or 1 percent to $649,000,000 The decrease was primarily due to lower loyalty revenues of approximately $20,000,000 from the data.com legacy partnership, along with lower usage revenues across our sales and marketing solutions, partially due to the impact of COVID-nineteen. These transitory headwinds were offset by a net increase in revenue across our sales and marketing solutions of approximately $6,000,000 largely attributable to our DNB Direct API solution. In addition, revenue increased by $6,500,000 from the acquisition of Lattice, which was acquired at the beginning of the Q3 of 2019.
Full year adjusted EBITDA for North America increased to $696,000,000 primarily due to lower operating costs resulting from ongoing cost management efforts that drove lower net personnel expenses. Full year adjusted EBITDA margin for North America was 47.7%, an increase of 60 basis points. Turning to Slide 5. In our International segment, 4th quarter revenues increased 10% or 8% on a constant currency basis to $80,000,000 primarily driven by growth in the worldwide network and the United Kingdom. Finance and Risk 4th quarter revenues were $64,000,000 an increase of 11% and an increase of 8% on a constant currency basis, primarily due to higher revenue of approximately $4,000,000 from worldwide network alliances due to higher cost border data sales and higher revenue from risk solutions in our UK market were approximately $1,000,000 Sales and marketing 4th quarter revenues were $60,000,000 an increase of 6% and an increase of 4% on a constant currency basis, primarily attributable to higher revenue from API solutions in our UK market of approximately $1,000,000 4th quarter international adjusted EBITDA $23,000,000 increased 4% versus 4th quarter 2019, primarily due to higher revenues.
The adjusted EBITDA margin was 29%. Turning to Slide 6. In our International segment, full year 2020 revenues were $299,000,000 an increase of $6,600,000 or 2% or 1% on a constant currency basis. Excluding $9,000,000 of transitory headwinds, dollars 6,000,000 from the worldwide network in our UK business, dollars 3,000,000 from COVID-nineteen. International revenues grew approximately 5% on a constant currency basis.
International Finance and Risk full year revenue of $244,000,000 increased $9,000,000 or 4%, 3% on a constant currency basis, primarily driven by higher revenue of approximately $10,000,000 from worldwide network due to higher cross border data sales, higher revenues of approximately $1,000,000 from increased sales of risk solutions in the United Kingdom and $2,000,000 from our Greater China market driven by solutions targeted at small businesses, partially offset by lower usage volumes in our Asian markets of approximately $2,000,000 primarily due to the impact of COVID-nineteen and trend story headwinds in the worldwide network in the UK of $6,000,000 International sales and marketing full year revenues of $56,000,000 decreased $2,000,000 or 4% and 5% on a constant currency basis. Excluding the positive impact from foreign exchange of $400,000 the decrease in revenue was driven primarily by lower product royalties from our worldwide network alliances of approximately $1,000,000 and lower usage volume in our Asia market of approximately $1,000,000 primarily due to the impact of COVID-nineteen. Full year 2020 international adjusted EBITDA of $95,000,000 decreased $4,000,000 or 4% versus 2019 due to net revenue increases from solutions with incremental costs, including increased worldwide network data expenses. Adjusted EBITDA margin was 31.7%.
4th quarter adjusted EBITDA for the Corporate segment increased $50,000,000 primarily due to the net impact of lower purchase accounting deferred revenue adjustments of $39,000,000 Adjusted EBITDA for the Corporate segment for the full year 2020 improved by $160,000,000 or 68% compared to prior year on a combined pro form a basis. The improvement was primarily due to the net impact deferred revenue adjustments of $134,000,000 and lower net personnel expenses due to lower incentive based compensation. Turning to Slide 7. I'll walk through our capital structure.
Speaker 4
At the
Speaker 3
end of December 31, 2020, we had cash and cash equivalents of $354,000,000 which when combined with full capacity of our recently upsized $850,000,000 revolving line of credit to 2025 represents total liquidity of approximately $1,200,000,000 As of December 31, total debt principal was $3,381,000,000 and our leverage ratio was 4.6x on a gross basis and 4.1 times on a net basis. The credit facility senior secured net leverage ratio was 3.4 times. On January 27, 2021, we repriced our term loan with a 50 basis point lower spread, now at 3 25 basis points. This will save us approximately $14,000,000 of annual interest. We are happy with the progress we are making to deleverage our balance sheet and improve our credit ratings, allowing us more flexibility to further support our growth both organically and inorganically.
Regarding our January 8, 2021 closing on the acquisition of Bismarck, the transaction closed with a combination of approximately 6,200,000 newly issued shares of common stock of the company in a private placement and approximately $625,000,000 of net cash. The cash portion was funded with $300,000,000 of incremental term loan and cash on the balance sheet and a small amount from the revolving credit facility, which has since been paid down. Turning now to Slide 8. I'll now walk through our outlook for full year 2021. 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 percent to 25% compared to full year 2020 adjusted revenues of 1738,000,000 dollars Adjusted EBITDA is expected to be in the range of $840,000,000 to $855,000,000 an increase of approximately 17.5 percent to 19.5 percent compared to full year 2020 adjusted EBITDA
Speaker 4
of $715,000,000
Speaker 3
Adjusted EPS is expected to be in the range of $1.02 to 1 $0.06 These estimates include the impact of business. With the combination of the 2 entities, certain revenues and costs became internal transfers and are now being eliminated. We are currently estimating $65,000,000 of eliminations that will be EBITDA neutral, but does impact comparability to the prior revenues and expenses reported by BizNOV through Raphos. Subsequent to the application of these eliminations, the incremental adjusted revenues will have a 19 point impact on the total full year growth, which includes the sundality of approximately $50,000,000 in legacy solutions revenues that we expect to have fully run off by the end of 2022. Additional modeling details underlying our outlook are as follows: interest expense of $200,000,000 to $210,000,000 depreciation and amortization expense of approximately $90,000,000 excluding incremental depreciation and amortization expense resulting from purchase accounting adjusted effective tax rate of approximately 24%, weighted average shares outstanding of approximately $430,000,000 and finally, CapEx of approximately $160,000,000 Although we do not provide quarterly guidance, I want to provide you with some color as to how we expect to progress throughout the year.
Excluding the deferred revenue adjustment of $17,400,000 in Q1 2020, we are projecting adjusted revenue growth in the Q1 of 2021 to be at the low end of our guidance range as we work through the end of the data.com wind down in the impact of COVID-nineteen. As we enter the 2nd quarter, we expect to be towards the middle end of our guidance range, with growth accelerating to the high end of our range into the 4th quarter due to the lack of prior year transitory headwinds, the impact of contractual revenue increases and the ramp up of new solutions revenues. For adjusted EBITDA, excluding the deferred revenue adjustment of $17,400,000 in Q1 of 2020, we are projecting adjusted EBITDA growth in the Q1 to be at the low end of our range as the annualization of cost savings for 2020 are partially offset with increased public company costs of approximately $4,000,000 per quarter in the first half and $1,500,000 per quarter in the second half. We expect the 2nd and third quarters to be below the low end of the range and the 4th quarter to be above the high end of the range of our guidance. Overall, we are very pleased with the progress we made in 2020 related to our transformation and the underlying performance of the business, and we are excited about our momentum headed into 2021.
With that, we're now happy to take the call for questions. Operator, will you please open up the line for Q and A?
Speaker 0
Thank you. At this time, Your first question comes from Hamzah Mazuri of Jefferies. Your line is open.
Speaker 5
Hey, good morning. Thank you. My first question is largely around the transactional piece of your business. I guess subscription component is maybe 85%. Could you maybe talk about how you're thinking about the impact of a successful vaccine rollout on the transactional side of the business and whether that's sort of baked into your 2021 guidance?
Speaker 3
Yes. Sure, Hamza. Thanks for the question. You hit it right. It's 85% -plus and growing as we continue to drive the increase in multiyear contracts.
And we saw nice growth in the overall subscription base this year. When we think about 2021 and the rollout starting to moderate from a COVID perspective, Q1, we're expecting to still see a little bit of volume pressure similar to what we saw in Q2 and Q3. As the year progresses and we start to lap those comps in Q2, Q3 and Q4, we thought about that and considered it no longer as a headwind in the 2021 plan.
Speaker 5
Got it. And just my follow-up question is just on pricing. Could you maybe talk about when you expect to see pricing ramp in the business? Is it more of a 2022 event or do we begin to see that later this year? I know you've invested a lot on cleaning up the product, the infrastructure as well.
And then you're moving to multiyear contracts as well. So maybe you can layer that into the pricing discussion too. Thank you.
Speaker 2
Sure, Hamzah. It's Anthony. I said, we're focused obviously on creating a structure that provides fair exchange of value with our customers, obviously, for the service that we're offering them. And there's a number of things that we're doing. So tremendous work all areas of our business from a transformation perspective, improving the service, which gives us the right, obviously, to increase price.
We signed multiyear contracts with built in escalators, which helps provide that as well. And so there's a lot of great work that's been going on in addition to some detailed analysis. But to get to the heart of your question, we're expecting over 1% of growth this year from pricing. So it is something that the work that we've been putting in last year is getting traction and we're excited about where we're at with it.
Speaker 0
Your next question comes from Manav Patnaik of Barclays. Your line is open.
Speaker 4
Thank you. In terms of the core performance, I think 3% seems like the number that was consistent in 4Q and full year for the Georgia Company and North America. I just wanted to confirm that those are organic numbers and also perhaps what that organic number is embedded in your assumption for 2021?
Speaker 3
Sure. Yes. Manav, that's correct. We lapped the Lattice acquisition really in Q2 of 2020. And so in Q3 and Q4, those were clean organic numbers from that perspective.
As we're rolling into 2021, what we called out was that of the growth range that we provided, about 19 points is coming from Bizno from that perspective. And so as Bizno flows through each quarter, we'll lay out their results from that perspective.
Speaker 4
Okay. Got it. And just from a CapEx perspective, the 160,000,000 dollars felt a little bit high, but perhaps, did Bismode add a chunk to that? I was just hoping you could break that number down.
Speaker 3
Yes. That's exactly right. So Biznode was included in that, Manav. The core business is still going to be around, call it, $120,000,000 $130,000,000 And clearly, we're continuing to do the bottom slip analysis that we have in the past. Bizno then adds that next roughly $30,000,000 as we continue to work through their run rate along with the transition we're making from kind of the new modern product offerings that we're rolling out.
Speaker 4
Okay. And if I could just follow-up there. Is that could you is that most of that growth CapEx or maintenance CapEx? How do you think of that?
Speaker 3
Yes. A majority of this is the vast majority of it is growth CapEx. And so from a maintenance perspective, there's actually very little. And we now have very little, what I would call, PP and E, because of our shift to the cloud. So again, most of that is internally developed software predicated on either major enhancements to existing products or net new solutions.
Speaker 4
Okay. Thank you.
Speaker 0
Your next question comes from Gary Bisbee of Bank of America. Your line is
Speaker 6
open. Hey, guys. Good morning. A couple of questions on just Biznode and the financial impact. Brian, you mentioned there was the $65,000,000 of revenue.
I'm trying to remember what you called that. It's just elimination due to the business. Can you provide a little more color on that? And also, is there a deferred revenue write down or purchase accounting adjustment related to this acquisition? Or is that the only difference between the number you mentioned when you announced the acquisition and what's implied in the guidance here?
Speaker 3
Yes. Gary, that's right. So starting with the second one, there are not deferred revenue write downs from that perspective. So I know we have that concept coming out of the privatization, but with this note and some of the interpretation of some recent pronouncement, there's not going to be a deferred revenue differential between the adjusted revenues that we show from that perspective. When we talk about the eliminations, Gary, these are expenses and revenues on both sides of the equation, D and D and DISNODE.
And so because they were a worldwide network partner, in essence, we were selling some data to them. They were selling data back to us. There were royalty arrangements, right, that were flowing through where they would sell products and then we would have a royalty coming back. So that would be an expense to them, but revenue to us. And so when you combine the 2 entities, what we ended up what you end up doing is you eliminate both the revenue and the expense on each side of the ledger.
And so that reduced revenue, but it also reduced expenses. And so the EBITDA contribution that we had discussed didn't change. It was just the magnitude of the reported revenue.
Speaker 2
So can you give us
Speaker 6
a sense what margin then is built in for the biz node, that 19% revenue? Like what how much profit is that or what margin?
Speaker 3
Yes. So if you think about it, Gary, it's now kind of in the low 20s.
Speaker 6
Okay. And then the follow-up, if I could. Just I think Manav sort of got at this, but if you take that 19% out and the 1.5% impact from comping the deferred revenue write down a year ago, it looks like, I don't know, call it 3.5% percent to 4% sort of underlying revenue. Am I doing that math right? And I think with the dollar weakness, FX is probably a benefit to the business in 2021.
So is it right to think the organic constant currency maybe more like, I don't know, 3% or something? Is that right? Or is there something else that's going on there? Thank you.
Speaker 3
Yes. So, Gary, if you take it, it is you start with the 19 points, as you said, and then it's about a point from there in consideration of the deferred revenue adjustment primarily in the Q1 of last year. And so as you're doing the math, you're right, it's coming out to right around that kind of, call it, 3%, 3.5% to 4%, 4.5%.
Speaker 0
Your next question comes from Brett Huff of Stifel Inc. Your line is open.
Speaker 2
Thank you. Good morning, everybody. Hope everyone is still safe. Thank you, Brett. And you too.
Two questions from me on 2 different product lines. One is the business information, the Hoovers product. I know there's lots of competition out there, and I know we're 2020 And then the same question on the SMB credit bureau here in the U. S, you talked
Speaker 3
a little bit about that, but wonder if you could kind
Speaker 4
of give us growth in 2020 and kind of what we expect in 2021? Thank you.
Speaker 2
Sure. I'll start on both of them and Brian, feel free to chime in. On the Hoover side, we continue to make great progress on our contact data. Obviously, we've got a great richness in our firmographic data, our parent child relationships that are really unmatched. And from a contact data perspective, we're very pleased with we continue to work very hard at building that out.
We've on the contact side had almost 5 times as many high quality contacts as we had at the time of the privatization. So maybe some other color I'd share as we've done some analysis at some of the DUNS numbers that were probably the most active and we're really, really excited with the work that we're doing in the high hit rates and the high quality that we had for those. So we're excited obviously in that space. And with the SMB space as well, the portal that we're putting together is just really exciting for us. And we think it's going to have us approaching the SMB marketplace differently than has been historically, right?
And therefore, we have different expectations than we've had historically. It's really creating a corridor for all these small and medium businesses that are constantly coming to us on a daily basis. As I said in my prepared remarks, for a whole host of reasons, DUN number, improving credit profiles or wanting to be a supplier, etcetera. But by having more solutions that we're tailoring, at the last call, I talked about our D and D Connects product, which again, it's a sign of creating more capabilities for this space. So it's salable to this market segment.
We're just excited with the partners that we're bringing on to the portal as well with our SMB product type capabilities as well. So it'd be a richness of offering that we have for that segment. And the side benefit obviously is we're also deepening our relationships with our enterprise clients who are putting products on to the portal. So, we're just really excited really about the efforts that we have in both of those areas, Brad. Great.
Thank you.
Speaker 0
Your next question comes from Jeff Silber of BMO Capital Markets. Your line is open.
Speaker 7
Thank you so much. I think you mentioned that about 36% of your contracts are now multiyear. Are most of your future deals multi year contracts? And then just curious when clients are renewing, are you moving in that mode as well? Thanks.
Speaker 2
Sure. Our direction from a sales perspective, our go to market shift really has been on multiyear. And so the short answer is yes, we're going to continue our push in that space. It's not something that we would get to most companies don't get to 100% of all contracts being multi year. There's a series of contracts that are more short term in nature, But we're focused on getting to 40% 50% and continuing our efforts that way, both domestically and internationally.
It makes sense, obviously, for us from a business perspective, but it makes sense as well if you connect to the dots in terms of what we're offering our clients as they transform their business, as they leverage more of our API solution set, they're now getting programmatically connected to us, right, which takes effort on their card, it creates a stickier relationship. So it also makes sense for them to want a multiyear contract. And so for all those reasons, we're pursuing that.
Speaker 7
Okay, great. And my follow-up is actually for Brian. Looking at your guidance, it looks like you're implying adjusted EBITDA margins to decline in 2021. You mentioned earlier that this node acquisition is a little bit of a lower margin business. I know this is tough to do.
But if you would take that out, would we have seen margin expansion this year and roughly how much would have that been? Thanks.
Speaker 3
Yes. Jeff, that's exactly right. So you have the lower margin bizmo and EBITDA coming through. But from our perspective, we have talked about 50 to 100 bps of margin expansion from that perspective. And with this, this sort of put us around, call it, 70 ish, right, plus within the range from that perspective.
So still expanding towards the higher end of the kind of prior range we put out there.
Speaker 7
Okay, great. That's very helpful. Thanks so much.
Speaker 0
Your next question comes from George Tong of Goldman Sachs. Your line is open.
Speaker 8
Hi, thanks. Good morning. I wanted to dive deeper into drivers of organic growth for 2021. If you focus on the North America segment, can you perhaps talk
Speaker 3
a little bit about trends that
Speaker 8
you're seeing with new sales, retention rates and cross selling within F and R and then within sales and marketing?
Speaker 2
Sure, George. Yes, what we're seeing there is a build up. So first of all, we're seeing continued improvement in our retention rates, which is positive from an organic growth perspective. And we're also seeing a traction developing with the new capabilities that we're bringing to market. So as we talked about, we're very focused on creating new innovations that will drive growth.
And we've got a number of new products that we had launched last year, our risk analytics product, our analytics studio, D and B Connect, our co action, etcetera. And so as those get traction with our clients and as we sell more, we're excited about that. And in 2021,
Speaker 8
there are
Speaker 2
a number of things that we've got going on there as well. But the one probably most excited about is the SMB portal that we talked about and the possibilities of what that can do for us in the segment that has not been our strongest segment compared to obviously our larger client segment.
Speaker 8
Got it. That's helpful. And then just like to follow-up, can you talk about some of the top initiatives that you have around data analytics as well as go to market that you have planned for 2021, just perhaps the top 1 or 2 that you expect to have the most contribution for top line growth? I know you talked a
Speaker 4
little bit about the products just
Speaker 8
now, just data and then sales and marketing.
Speaker 2
Sure. From a data perspective, just a constant stream of work going on there as part of our transformation, I know we don't spend enough time kind of talking about each of these things. But we've covered another 21,000,000 businesses in the quarter. We're now 421 businesses covered. Our contact data, like I said, is around 23,000,000 high quality customer contacts.
We've onboarded, we talked with Project Ascent that we're going to bring on additional alternative data sources. We have already 16 of them that are fueling new analytics for our clients. And also, typically working with them in their analytics studio and co collaborating with them has been a very positive, I'll say, as far as our relationship and building on our business development. And then the other one I'd probably highlight in the data side is expanding our global universe of beneficial owners. And so there we had significant increases as well.
So we've got a lot of great work that's going on in the space. It's like I said, every time we check back on where we're at, we're seeing meaningful progress. So it gives us confidence that all the actions that we're taking, the work that we're putting in is paying off.
Speaker 3
Very helpful. Thank you.
Speaker 4
Thank you.
Speaker 0
Your next question comes from Kevin McVeigh of Credit Suisse. Your line is open.
Speaker 4
Great. Thanks so much. Hey, congrats on the 70 basis points retention improvement. Can you help us understand kind of what drove that? Was it just more client satisfaction with the curated data or just changes in sales force, systemic effects around that?
And again, very, very good number. I wonder what we can expect going forward on that.
Speaker 2
Thank you, Kevin. Yes, I'd say a large part of it, and we've talked about this on previous calls, certainly is that doing all the right things by a client is going to translate to improve retention. And we've, like I said, transformed every part of our business and we're constantly transforming it more and more, leveraging AI with our client services in terms of improving the quality of it and lowering the cost. We talked about improvements in our data, improvements in our technology, our uptime has improved, our latency has improved. All the things that you'd look operationally across a business that you would see, I mean, nobody runs, obviously, perfectly.
And so as we looked at everything, we track it, we've had a real rigid process in terms of coming back and continuing to measure the progress that we're making. But I see the improvements in our data quality, the amounts of data that we're bringing in the different types of data, the new launches with our products, right? I think all these things contribute to retention because everyone out there is looking for who can they partner with, who can help them transform their business. And I think all these things really lend to a confidence that our clients are getting and seeing from us. And we're excited about that and want to continue to build on them, Kevin.
Speaker 4
That makes sense. And then I don't know, Brian or Anthony, you talked about, I think, sub setting some revenue within this node. Is there any way to maybe quantify that? And then what the margin impact would be on that? I would imagine probably lower margin relative to what the core business was overall.
Speaker 2
Yes. I'll certainly pass it to Brian. Yes, we are going to start. But they had as you can imagine, there are some revenue in the business that wasn't high quality revenue, revenue we're interested in that wasn't strategic. It clearly made sense to do the acquisition, especially from a post synergy perspective when you look at all the things that we are getting from the acquisition.
But there are parts of it that honestly would be a distraction and would impact our growth and our margins. And so we're sunsetting them probably over the next couple of years and looking to move to more modern solutions. But Brian, from a margin impact, do you want to?
Speaker 3
Yes. Kevin, in my prepared remarks, we mentioned about $50,000,000 of the legacy solutions we'd be winding down, as Anthony said, over the next, call it, 2 years. That, in essence, is going to be replaced by some of the Dun and Bradstreet products, right? And so as you can imagine, when we're thinking about the overall synergy number being about $40,000,000 some of that is going to come from the elimination of these legacy solutions. And so the overall portfolio, right, has a lot of opportunity to be consolidated under our finance and risk products along with our sales and marketing products.
And so certainly, we'll look to get that to be a contributing factor to that $40,000,000 in synergies we're expecting.
Speaker 0
Your next question comes from Andrew Steinerman of JPMorgan. Your line is open.
Speaker 9
Thank you. Good morning, Brian. You said that Q1 revenue cadence would be at the low end of the full year revenue range, if I heard it correctly. So I just wanted to make sure that you're saying that Q1 organic constant currency revenue will be about 3%, including the drags from COVID, data.com and credibility? And if you could just also mention how much those residual drags will be in the Q1?
Speaker 3
Sure, Andrew. So if we look at kind of backing out, Bismond, as you said, this quarter, we grew, call it, 1.5 percent constant currency, about 1.8%, right, AFX. And so we would expect our Q1 to look a little bit better than that, right, in that similar pattern. From the two impacts that are really remaining in the Q1 are the last portion of the data.com roll down and then a COVID impact that we would expect to be not as high as in Q4 but more similar to Q2 or Q3. So call each of those $5,000,000 $6,000,000 apiece.
Speaker 8
Thank you.
Speaker 0
Due to time constraints, I would now like to turn the call back over to Anthony Jabot closing remarks.
Speaker 2
Thank you. In summary, we're pleased with the progress to continue to transform Dun and Bradstreet. We've made we have a great company and we'll continue to be focused on maximizing shareholder value. As always, I'd like to thank my Dun and Bradstreet colleagues for their exceptional efforts and our clients for their strong relationships and partnerships. Thank you for your interest in Dun and Bradstreet and for joining us on the call
Speaker 0
today. This concludes today's conference call. You may now disconnect.