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Dun & Bradstreet Holdings, Inc. (DNB)·Q2 2024 Earnings Summary

Executive Summary

  • Q2 2024 delivered mid-single-digit growth: revenue $576.2M (+3.9% YoY; +4.2% cc), organic revenue +4.3% cc, and adjusted EBITDA $217.9M (+5.7% YoY) with 60bps margin expansion to 37.8% .
  • Adjusted diluted EPS was $0.23 vs $0.22 last year; GAAP diluted EPS was a loss of $0.04; sequentially improved from Q1’s $0.20 adjusted EPS and GAAP loss of $0.05 .
  • Management narrowed FY24 outlook to the low end for total and organic revenue while maintaining adjusted EBITDA ($930–$950M) and adjusted EPS ($1.00–$1.04), citing weaker transactional volumes in Digital Marketing; buybacks were resumed (961K shares at $9.71) and net leverage stood at ~3.7x with path to ~3.5x by year-end .
  • Strategic optionality: Company disclosed inbound interest and retention of Bank of America to assist with inquiries, and is open to portfolio actions for challenged businesses (Credibility, Digital Marketing), a potential stock reaction catalyst alongside guidance tone .

What Went Well and What Went Wrong

What Went Well

  • “Fourth consecutive quarter of reported mid-single digit growth” with organic revenue +4.3% and adjusted EBITDA margin expansion of 60bps; 90% of revenues grew just over 6% in the quarter and ~6% YTD .
  • Finance & Risk momentum: Third Party Risk Management delivered “another stellar quarter of over 20% growth,” underpinned by strong demand for Risk Analytics and direct API data integrations; overall gross retention ~96% and vitality index ~36% .
  • International strength: Revenue +5.2% YoY (+6.2% cc), Finance & Risk +8.1% (+8.9% cc), and adjusted EBITDA +9.5% with 120bps margin expansion to 31.3% .

What Went Wrong

  • Digital Marketing headwinds: Transactional volumes remained depressed; down $4.6M (-14%) in Q2 and $7.7M (-12%) YTD; guidance lowered to low-end revenue ranges largely due to weaker macro and slower-than-expected recovery in this subsegment .
  • Credibility (SMB) softness: Q2 down $2.3M (-7% YoY); timing of consent order impacts and renewals weighed on growth, though remediation (money-back guarantee, product upgrades) is underway .
  • Minor reporting discrepancy: CFO remarks referenced International Finance & Risk revenues of ~$160M, while the press release tables show International F&R revenue of $116.5M; we rely on the 8-K/press release exhibits for segment detail consistency .

Financial Results

MetricQ4 2023Q1 2024Q2 2024
Revenue ($USD Millions)$630 $565 $576.2
GAAP Diluted EPS ($USD)<$0.01 $(0.05) $(0.04)
Adjusted Diluted EPS ($USD)$0.32 $0.20 $0.23
Adjusted EBITDA ($USD Millions)$261 $201 $217.9
Adjusted EBITDA Margin (%)41% 36% 37.8%
Organic Revenue Growth (%)5.1% 4.3% 4.3%

Segment Breakdown

SegmentQ2 2023 Revenue ($M)Q2 2024 Revenue ($M)
North America$391.6 $404.6
– Finance & Risk$210.6 $216.0
– Sales & Marketing$181.0 $188.6
International$163.1 $171.6
– Finance & Risk$107.8 $116.5
– Sales & Marketing$55.3 $55.1
SegmentQ2 2023 Adj. EBITDA ($M)Q2 2024 Adj. EBITDA ($M)Q2 2023 Margin (%)Q2 2024 Margin (%)
North America$173.5 $178.2 44.3% 44.0%
International$49.1 $53.8 30.1% 31.3%
Total$206.2 $217.9 37.2% 37.8%

KPIs and Balance Sheet

KPIQ4 2023Q1 2024Q2 2024
Gross Revenue Retention (%)NA 95; Intl 94 ~96 overall ~96 overall
Vitality Index (%)30 (quarter), 27 (FY) 32 ~36
Third Party Risk Mgmt GrowthStrong double-digit ~30% global >20%
Cash & Cash Equivalents ($M)$188.1 (FY-end) $216 (Q1-end) $263.2 (Q2-end)
Total Debt Principal ($M)$3,589 (FY-end) $3,564 (Q1-end) $3,675.8 (Q2-end)
Net Leverage (x)3.8 (FY-end) ~3.7 ~3.7; target ~3.5 by YE
Share Repurchases—Authorization up to 10M shares 961,360 shares; $9.3M; $9.71 avg

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total RevenueFY 2024$2,400M–$2,440M Low end of prior range Maintained range; expectation lowered to low end
Organic Revenue GrowthFY 20244.1%–5.1% Low end of prior range Maintained range; expectation lowered to low end
Adjusted EBITDAFY 2024$930M–$950M Unchanged Maintained
Adjusted EPSFY 2024$1.00–$1.04 Unchanged Maintained
Modeling ItemsFY 2024Interest ~$220M; D&A $125–$135M; tax 22–23%; diluted shares ~436M; capex $150–$160M software + $45M PP&E/purchased SW Unchanged Maintained
DividendQ3 2024—$0.05/share declared; payable Sep 19, 2024 Announced

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2023, Q1 2024)Current Period (Q2 2024)Trend
AI/Technology InitiativesLaunched AiBE/“Ask Procurement” with IBM; Hoovers conversational list builder via Google Vertex AI; MDM foundational for GenAI Introduced Hoovers SmartMail/SmartSearch GenAI; early chat D&B GenAI assistant; 4,000 clients using new GenAI features Expanding capabilities and adoption
Supply Chain & Third-Party RiskStrong double-digit growth; mapped 35B supplier relationships; TAM sizable Third Party Risk Mgmt >20% growth; Risk Analytics/Data Blocks momentum; large Nordic energy provider RACI win Sustained growth; deepening use cases
Macro/TariffsEurope mid-single-digit expected; macro headwinds manageable Macro spend cautious; potential Fed cuts expected to improve S&M spend; Google cookie deprecation reversal noted Near-term cautious; H2 tailwinds expected
Product Performance (MDM)Double-digit growth; foundational for AI; <10% client penetration → runway MDM offsetting Digital Marketing weakness; continued expansion Consistent strength
Regional TrendsIntl F&R growth (UK, Europe, China); Intl EBITDA margins rising Intl revenue +5.2% YoY; F&R +8.1%; EBITDA +9.5%; margin +120bps Positive trajectory
Regulatory/LegalPillar II tax impacts; consent order affects SMB Credibility Credibility declines tied to consent order; remediation underway (money-back guarantee, enhanced data) Remediation in progress
Capital AllocationRefi term loan; leverage ~3.7–3.8x; buyback authorization 961K shares repurchased; target ~3.5x net leverage; opportunistic buybacks Active buybacks; deleveraging

Management Commentary

  • CEO: “We delivered organic revenue growth of 4.3 percent… and Adjusted EBITDA margin expansion of 60 basis points… we are updating our full year 2024 outlook to reflect our expectations around the remaining 10 percent of revenues and… Digital Marketing solutions.”
  • CFO: “Second quarter adjusted EBITDA… was $218 million… margin was 38%, an increase of 60 basis points… we had cash and cash equivalents of $263 million and total principal amount of debt of $3,676 million… 87% of our debt is either fixed or hedged.”
  • Strategic options: “Everything is on the table… from strategic partnerships… licensing… to other strategic options” for challenged segments .
  • Product remediation: “Money-back guarantee” and broader data inputs (cards, bank accounts) showing “a 20% lift in credit” for SMBs within Credibility .

Q&A Highlights

  • Credibility turnaround: D&B Credit Insights relaunch and money-back guarantee aimed to reduce attrition and improve outcomes; pricing consistent with legacy; early data suggests ~20% credit lift with richer inputs .
  • Digital Marketing: Macro-driven weakness; expecting improvement in H2 on rate cuts, Google’s decision not to deprecate cookies, and growth in CTV/retail media/social; quarter down $4.6M (-14%) .
  • Portfolio actions: Willingness to pursue strategic partnerships/licensing and other options; Digital Marketing less integrated, SMB Credibility data valuable to core datasets (would require ongoing licensing if separated) .
  • Leverage and buybacks: Net leverage ~3.7x with visibility to ~3.5x by YE; opportunistic repurchases (961K shares, $9.71 avg) .
  • Modeling cadence: Q3 expected below low end, Q4 slightly above high end of revenue range; FY adjusted EBITDA and EPS maintained .

Estimates Context

  • S&P Global Wall Street consensus for Q2 2024 EPS and revenue was unavailable due to a CIQ mapping issue for DNB in our SPGI data connection. As a result, comparisons vs. consensus could not be performed. If you want, we can cross-verify with public aggregators, but we default to S&P Global for estimates and thus mark consensus as unavailable.

Key Takeaways for Investors

  • Durable core engine: 90% of revenues growing ~6% with improved margins and strong Intl execution; MDM and Third Party Risk remain secular growth pillars .
  • Near-term headwinds isolated: Digital Marketing transactional weakness and Credibility consent-order overhang are the primary drags; remediation underway and strategic options on the table .
  • FY24 guide prudence: Revenue and organic growth expectations trimmed to low end while profitability targets (adj EBITDA/EPS) maintained—supportive for cash flow and deleveraging narrative .
  • Capital allocation supports valuation: Opportunistic buybacks alongside leverage glidepath to ~3.5x by YE; with 87% debt fixed/hedged and WAI ~5.8%, interest burden is manageable .
  • AI/data moat developing: Rapid productization of GenAI atop proprietary data cloud (AiBE, Hoovers SmartMail/SmartSearch, IBM Ask Procurement) could catalyze medium-term growth and pricing power .
  • Watch catalysts: Any portfolio action (e.g., divestiture/partnership) in challenged segments, further clarity on inbound interest/strategic alternatives, and realized improvement in Digital Marketing volumes could move the stock .
  • Note discrepancy: Use 8-K/press release segment tables for International F&R revenue ($116.5M) vs transcript reference (~$160M); we anchor on filed exhibits for precision .

Appendix: Other Relevant Press Releases

  • Dividend: Declared $0.05 per share for Q3 2024 (payable Sep 19, 2024) .
  • GenAI capabilities: Launched Hoovers SmartMail AI and SmartSearch AI; ~4,000 customers using these capabilities .
  • Strategic interest: Company retained Bank of America to assist with inbound third-party interest; no assurance of a transaction .