Cannae(CNNE) - 2025 Q2 - Quarterly Results

Report Overview This section provides an overview of forward-looking statements, associated risks, and important additional information regarding participant disclosures Forward-Looking Statements and Risk Factors This report contains forward-looking statements, with actual results potentially differing significantly from expectations due to uncertainties like transaction completion, debt repayment, capital allocation, macroeconomic conditions, and competition - Forward-looking statements are based on management's beliefs and assumptions, and actual results may differ materially from projections[3] - Risks and uncertainties include the termination or inability to complete D&B and JANA transactions, debt repayment, capital allocation strategies, changes in macroeconomic conditions, competition, and proxy contests[4] Important Additional Information and Participants in Solicitation Cannae plans to file a proxy statement for its 2025 Annual Meeting of Shareholders, encouraging careful review, with director and officer holdings disclosed in SEC filings as solicitation participants - Cannae will file a Schedule 14A proxy statement, encouraging shareholders to read it carefully for important information, available on the SEC website and company's official website[6] - Company directors and officers are considered 'participants' in the 2025 Annual Meeting proxy solicitation, with their interests in Cannae disclosed in 2024 proxy statements, Form 10-K/A, and Form 10-K SEC filings[7] Shareholder Letter and Strategic Highlights This section highlights Cannae's shareholder returns, strategic updates on key investments like Dun & Bradstreet, Black Knight Football, Alight, and JANA Partners Cannae Holdings, Inc. (General Highlights) Cannae returned $149 million to shareholders through buybacks and increased dividends by 25% in Q2 and through August 8, 2025, narrowing its stock discount to NAV and appointing new independent directors Cannae Holdings, Inc. Shareholder Returns and Market Performance | Metric | Q2 2025 & YTD August 8 | Change/Status | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Shares Repurchased | 7.6 million shares | Approx. 11.9% of outstanding shares | | Repurchase Amount | $149 million | | | Dividend Growth | 25% | $0.15 per share (payable Sep 30, 2025) | | Total Shareholder Returns Since May 2021 | $887 million | Repurchased 43% of outstanding shares, paid $38 million in quarterly dividends | | Stock Discount to NAV (August 8, 2025) | 26.6% | Near three-year low, significantly down from nearly 40% at start of 2025 | - Cannae appointed two independent directors with extensive investment and governance experience[13] - To fund share repurchases, Cannae borrowed an additional $40 million on its margin loan, expected to be repaid upon completion of the Dun & Bradstreet transaction[13] Dun & Bradstreet (D&B) Update The sale of Dun & Bradstreet, Cannae's largest asset, is expected to close in Q3 2025, generating $630 million in cash proceeds primarily for share repurchases, margin loan repayment, and future quarterly dividends - The sale of Dun & Bradstreet, Cannae's largest asset, is expected to close in the third quarter of 2025[13] D&B Transaction Proceeds and Allocation | Item | Amount | | :-------------------------------- | :-------------------------------- | | Total Cash Proceeds | $630 million | | Pre-transaction sale of 10 million DNB shares | $90 million | | Cash at Closing | $540 million | | Expected Use of Proceeds ($501 million): | | | Share Repurchases | At least $300 million | | Repayment of Existing Margin Loan | $141 million | | Reserved for Future Quarterly Dividends | $60 million | Black Knight Football (BKFC) Update Black Knight Football completed $130 million in financing, with AFC Bournemouth achieving a record Premier League finish, double-digit revenue growth, and significant player transfer profits, while FC Lorient was promoted to Ligue 1 and Hibernian FC qualified for European competition - BKFC completed $130 million in financing, with Cannae investing $50 million[13] - AFC Bournemouth (AFCB) achieved a club-record 9th place finish in the 2024-25 Premier League season with 56 points, and double-digit revenue growth in fiscal year 2025[13] - AFCB generated nearly $120 million in transfer fees from the sales of Dean Huijsen and Milos Kerkez, realizing $81 million in profit after initial purchase prices[13] - FC Lorient successfully promoted back to Ligue 1, finishing first in Ligue 2 with 71 points[13] - Hibernian FC finished third in the 2024/2025 Scottish Premiership, their best result since the 2020/21 season, qualifying for European competition[13] - Black Knight Football acquired a majority stake in Moreirense FC, a Portuguese Primeira Liga club known for developing world-class players and attracting South American talent, crucial for BKFC's player development pathway[14] Alight Update Alight's Q2 2025 revenue decreased by 1.9% year-over-year, but adjusted EBITDA grew 21% with a 460 basis point margin expansion, while free cash flow significantly improved despite a large net loss due to goodwill impairment Alight Q2 2025 Financial Highlights (Year-over-Year) | Metric | Q2 2025 | Q2 2024 | Change | Change Rate | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Revenue | $528 million | $538 million | -$10 million | -1.9% | | Net Loss from Continuing Operations | $1.073 billion | | | | | Includes Goodwill Impairment | $983 million | | | | | Adjusted EBITDA | $127 million | $105 million | +$22 million | +21% | | Adjusted EBITDA Margin | 24.1% | 19.5% | +460 basis points | | | Free Cash Flow (H1 2025) | $102 million | $26 million | +$76 million | +292% | - Alight repurchased $20 million of common stock this quarter, with $241 million remaining under its share repurchase authorization[19] JANA Partners Update Cannae expects to complete the acquisition of JANA's remaining equity in Q3 2025, involving a $67.5 million cash payment, increasing its total stake to 50%, and a $30 million capital injection into JANA funds - The acquisition of the remaining equity in JANA is expected to close in the third quarter of 2025[19] - Upon closing, Cannae will pay $67.5 million in cash, acquire an additional 30% ownership (totaling 50%), and inject $30 million into JANA funds[19] Detailed Portfolio Updates This section provides in-depth updates on Cannae's key portfolio companies, including Alight and Black Knight Football, detailing their financial performance, strategic initiatives, and market positions Alight, Inc. (Detailed) Alight, a leading cloud-based human capital technology provider, saw Q2 revenue slightly decline but adjusted EBITDA and free cash flow significantly improve, despite a net loss from goodwill impairment, while securing new clients and reaffirming its adjusted EBITDA and free cash flow guidance - Alight is a global leader in cloud-based human capital technology and services, serving numerous large organizations and 35 million people[20] Alight Q2 2025 Financial Performance (Unaudited, in millions USD) | Metric | June 30, 2025 | June 30, 2024 | Change | Change Rate | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Total Revenue | 528.0 | 538.0 | -10.0 | -1.9% | | Net Loss from Continuing Operations | (1,073.0) | (4.0) | (1,069.0) | -26725% | | Goodwill Impairment | 983.0 | | | | | Adjusted EBITDA from Continuing Operations | 127.0 | 105.0 | +22.0 | +21.0% | | Adjusted EBITDA Margin | 24.1% | 19.5% | +460 basis points | | | Free Cash Flow (H1 2025) | 102.0 | 26.0 | +76.0 | +292.3% | - New or expanded client relationships were secured this quarter with Thermo Fisher Scientific, Highmark Health, Reinsurance Group of America, and Trinity Industries[24] Alight Contracted Revenue | Year | Amount (billions USD) | Percentage of Projected Revenue | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | 2025 | 2.2 | 95% | | 2026 | 1.7 | | | 2027 | 1.2 | | - A new partnership with Goldman Sachs Asset Management was announced to enhance Alight's wealth solutions offerings[25] - Alight repurchased $20 million in stock this quarter, with $241 million remaining under its repurchase authorization as of quarter-end; in July 2025, Alight's Board declared a $0.04 per share quarterly dividend[26] Alight 2025 Guidance Update | Metric | New Guidance | Status | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Revenue | $2.28 billion to $2.33 billion | Lowered | | Adjusted EBITDA | $620 million to $645 million | Reaffirmed | | Free Cash Flow | $250 million to $285 million | Reaffirmed | - Cannae holds 40.5 million shares of Alight Class A common stock, representing approximately 8% of Alight's outstanding shares, with a total value of approximately $154 million as of August 8, 2025[27] Black Knight Football (Detailed) Black Knight Football (BKFC) is building a global network of football clubs to achieve operational synergies, accelerate player development, and enhance financial performance, expanding its global footprint with the acquisition of a majority stake in Moreirense FC - Black Knight Football Club (BKFC) is dedicated to building a global network of world-class football clubs, players, and real estate assets to achieve operational synergies, accelerate player development, and enhance financial performance[28] - As of August 8, 2025, Cannae has invested or committed to invest $249 million in Black Knight Football, representing approximately a 44% ownership interest[36] Black Knight Football Club (Overall) BKFC acquired a majority stake in Moreirense FC, entering Portugal's top league to leverage its talent development, and also purchased AFC Bournemouth's Vitality Stadium for future expansion and fan experience improvements - BKFC acquired a majority stake in Moreirense FC, a Portuguese Primeira Liga club, entering Europe's seventh-largest league known for developing elite talent and world-class players[29] - Portugal is an ideal destination for South American players, especially Brazilians, to adapt to European play due to language advantages and no restrictions on non-EU players[29] - BKFC acquired AFC Bournemouth's home ground, Vitality Stadium, creating conditions for future stadium expansion and enhanced fan experience[30] AFC Bournemouth AFC Bournemouth achieved a club-record 9th place finish in the 2024/25 Premier League, with a $630 million valuation, double-digit revenue growth, and $81 million profit from player transfers - AFC Bournemouth achieved a club-record 9th place finish in the 2024/25 Premier League with 56 points, and matched its best FA Cup performance by reaching the quarter-finals[31] - The club debuted on Sportico's list of the 50 most valuable football clubs globally, ranking 48th with a $630 million valuation and $203 million in revenue for fiscal year 2023/24[32] - Total revenue for the 2024/25 season achieved double-digit growth for the second consecutive year[32] - Generated nearly $120 million in transfer fees from the sales of Dean Huijsen and Milos Kerkez, realizing $81 million in profit after initial purchase prices[33] FC Lorient FC Lorient secured promotion back to Ligue 1, finishing first in Ligue 2 with 71 points after a strong performance in the latter half of the season - FC Lorient successfully promoted back to Ligue 1, finishing first in Ligue 2 with 71 points[34] Hibernian FC (Hibs) Hibernian FC achieved its best Scottish Premiership finish since 2020/21, securing third place in the 2024/25 season and qualifying for the Europa League qualifiers - Hibernian FC finished third in the 2024/25 Scottish Premiership, their best result since the 2020/21 season, qualifying for the Europa League qualifiers[35] - From mid-December to season-end, the club lost only 3 of 25 matches across all competitions, winning 16 and remaining unbeaten in 22[35] Financial Statements This section presents Cannae's financial performance through its Second Quarter and Year-to-Date Statements of Operations and Balance Sheets, detailing net losses, expenses, assets, and liabilities Second Quarter Statements of Operations For the three months ended June 30, 2025, Cannae's net loss attributable to common stockholders significantly widened to $238.8 million from $155 million year-over-year, driven by increased personnel costs, other operating expenses, and a substantial rise in losses from unconsolidated affiliates Second Quarter Statements of Operations (in millions USD, except per share data) | Metric | Q2 2025 | Q2 2024 | Change | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Total Operating Revenue | 110.2 | 118.0 | (7.8) | | Total Operating Expenses | 171.1 | 141.0 | 30.1 | | Operating Loss | (60.9) | (23.0) | (37.9) | | Net Loss Recognized | (76.2) | (145.9) | 69.7 | | Equity in (Losses) Earnings of Unconsolidated Affiliates | (95.7) | (14.6) | (81.1) | | Net Loss from Continuing Operations | (229.5) | (148.9) | (80.6) | | Net Loss Attributable to Cannae Holdings, Inc. Common Stockholders | (238.8) | (155.0) | (83.8) | | Net Loss Per Share (Basic) | (3.93) | (2.49) | (1.44) | | Weighted Average Shares Outstanding (Basic) | 60.8 | 62.2 | (1.4) | Year-to-Date Statements of Operations For the six months ended June 30, 2025, Cannae's net loss attributable to common stockholders expanded to $351.8 million from $244.9 million year-over-year, primarily due to increased personnel costs, wider operating losses, and a shift from earnings to losses in unconsolidated affiliates Year-to-Date Statements of Operations (in millions USD, except per share data) | Metric | H1 2025 | H1 2024 | Change | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Total Operating Revenue | 213.4 | 228.7 | (15.3) | | Total Operating Expenses | 295.7 | 292.3 | 3.4 | | Operating Loss | (82.3) | (63.6) | (18.7) | | Net Loss Recognized | (69.0) | (141.0) | 72.0 | | Equity in (Losses) Earnings of Unconsolidated Affiliates | (97.6) | 3.0 | (100.6) | | Net Loss from Continuing Operations | (268.2) | (224.0) | (44.2) | | Net Loss from Discontinued Operations (Net of Tax) | (87.3) | (22.8) | (64.5) | | Net Loss Attributable to Cannae Holdings, Inc. Common Stockholders | (351.8) | (244.9) | (106.9) | | Net Loss Per Share (Basic) | (5.72) | (3.68) | (2.04) | | Weighted Average Shares Outstanding (Basic) | 61.5 | 66.5 | (5.0) | Balance Sheets As of June 30, 2025, total assets decreased to $1.7858 billion from $2.2289 billion at December 31, 2024, primarily due to reduced cash, investments in unconsolidated affiliates, and reclassification of assets held for sale, while total liabilities slightly increased and total equity significantly declined Balance Sheet Highlights (in millions USD) | Metric | June 30, 2025 | December 31, 2024 | Change | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Cash and Cash Equivalents | 66.7 | 131.5 | (64.8) | | Assets of Discontinued Operations Held for Sale | 528.0 | — | 528.0 | | Investments in Unconsolidated Affiliates | 629.9 | 764.9 | (135.0) | | Total Assets | 1,785.8 | 2,228.9 | (443.1) | | Total Current Liabilities | 224.5 | 146.5 | 78.0 | | Notes Payable (Current) | 106.7 | 61.0 | 45.7 | | Total Liabilities | 429.1 | 413.6 | 15.5 | | Retained Earnings | 200.1 | 567.1 | (367.0) | | Treasury Stock | (838.6) | (724.7) | (113.9) | | Total Equity | 1,356.7 | 1,815.3 | (458.6) | Non-GAAP Financial Information and Reconciliations This section explains the use of non-GAAP financial measures and provides detailed reconciliations for Alight's adjusted EBITDA and free cash flow, offering supplementary insights into core operational performance Use of Non-GAAP Financial Information Cannae provides non-GAAP financial metrics like adjusted EBITDA, contracted revenue, and free cash flow to offer investors and rating agencies supplementary information for comparing period-over-period performance and evaluating core operational results - The company provides non-GAAP financial measures such as adjusted EBITDA, contracted revenue, and free cash flow to offer useful supplementary information, assisting investors and rating agencies in evaluating affiliate performance, operational trends, and period-over-period results[40][41][42][43] Alight Non-GAAP Reconciliations This section defines and reconciles Alight's key non-GAAP metrics, including adjusted EBITDA, which excludes non-cash and non-recurring operational impacts, and free cash flow, which measures cash generated from operations less capital expenditures - Cannae accounts for its investment in Alight using the equity method, recognizing its proportionate share of Alight's net earnings or losses in its consolidated operating results[44] Adjusted EBITDA Reconciliation Alight's adjusted EBITDA from continuing operations significantly improved to $127 million in Q2 2025 from $105 million in Q2 2024, despite a net loss of $1.073 billion from continuing operations, including $983 million in goodwill impairment Alight Net Loss from Continuing Operations to Adjusted EBITDA Reconciliation (in millions USD) | Metric | Q2 2025 | Q2 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net Loss from Continuing Operations | (1,073.0) | (4.0) | | EBITDA from Continuing Operations | (954.0) | 130.0 | | Adjusted EBITDA from Continuing Operations | 127.0 | 105.0 | | Revenue | 528.0 | 538.0 | | Adjusted EBITDA Margin from Continuing Operations | 24.1% | 19.5% | - The Q2 2025 net loss included a $983 million non-cash goodwill impairment charge related to the company's Health Solutions reporting unit[47] Free Cash Flow Reconciliation Alight's free cash flow from continuing operations significantly increased to $102 million for the six months ended June 30, 2025, compared to $26 million in the prior year period, primarily driven by a substantial rise in cash provided by operating activities Alight Cash Flow from Continuing Operations to Free Cash Flow Reconciliation (in millions USD) | Metric | H1 2025 | H1 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Cash Provided by Operating Activities from Continuing Operations | 159.0 | 93.0 | | Capital Expenditures | (57.0) | (67.0) | | Free Cash Flow | 102.0 | 26.0 | Corporate Information This section provides essential corporate details for Cannae Holdings, Inc., including its management team, board of directors, earnings call information, auditors, transfer agent, investor relations contacts, and NYSE listing Corporate Information Details This section provides key corporate information for Cannae Holdings, Inc., including its management team, board members, Q2 2025 earnings call details, independent auditor, transfer agent, investor relations contacts, and NYSE stock listing - Management team members include Ryan R. Caswell (Chief Executive Officer), Bryan D. Coy (Chief Financial Officer), Peter T. Sadowski (Chief Legal Officer), Michael L. Gravelle (General Counsel and Corporate Secretary), and Brett A. Correia (Chief Accounting Officer)[50] - The Q2 2025 earnings conference call is scheduled for August 11, 2025, at 5:00 PM ET, with domestic and international dial-in numbers and a webcast replay available[50][51] - Board of Directors members include Douglas K. Ammerman (Chairman) and William P. Foley, II (Vice Chairman)[52][53] - The company's common stock is listed on the New York Stock Exchange under the ticker symbol CNNE[53] - Independent auditor is Grant Thornton LLP, and the transfer agent is Continental Stock Transfer & Trust[54] - Investor Relations contact is Jamie Lillis of Solebury Strategic Communications[56]