Dun & Bradstreet(US:DNB)2022-11-05 02:25Financial Data and Key Metrics Changes - Adjusted revenues for the total company grew 2.7% or 6.6% before the effects of foreign currency, with organic constant currency growth at 3.9% [6][44] - Third quarter revenues were $556 million, an increase of $14 million or 3% compared to the prior year quarter, with net income at $8 million [44][45] - Adjusted EBITDA for the total company was $223 million, an increase of $3 million or 1%, with an adjusted EBITDA margin of 40% [46][47] Business Line Data and Key Metrics Changes - In North America, revenues for the third quarter were $404 million, an increase of 8%, with organic revenues increasing 3.8% [48] - Finance and Risk revenues in North America were $224 million, an increase of 5%, driven by strong growth in third-party and supply chain risk management solutions [49] - Sales and Marketing revenues in North America were $180 million, an increase of 12%, primarily driven by marketing solutions [50] - International segment revenues were $153 million, a decrease of 9%, but an increase of 3% on a constant currency basis, with organic revenues increasing 4.3% [52] Market Data and Key Metrics Changes - North America segment grew 4% overall, while International markets had consistent growth of 4% on an organic constant currency basis [8][11] - European and Asian businesses are focusing on tightening credit and compliance standards due to current geopolitical and financial conditions [11] Company Strategy and Development Direction - The company aims to innovate solutions and localize throughout the world, increase wallet share with strategic clients, and monetize the small business channel [12] - The focus is on delivering long-term value through product innovation, with significant progress in the rollout of new solutions [13][14] - The company is expanding its data cloud to over 500 million DUNS, enhancing its capabilities in ESG data and risk analytics [18][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's resiliency amid deteriorating macroeconomic conditions, highlighting a defensible growth profile [7] - The company anticipates continued organic growth and margin expansion, with a focus on driving increased value to clients [62] - The outlook for 2022 includes expected total adjusted revenues to increase by 5.5% to 6.5% on a constant currency basis [58] Other Important Information - The company has a strong balance sheet with cash and cash equivalents of $204 million and total debt of $3,651 million [55] - The weighted average interest rate was 4.8% as of September 30, 2022, with a leverage ratio of 4.0 times on a net basis [57] Q&A Session Summary Question: Comments on sales cycle and pricing pushback - Management noted a slight elongation of the sales cycle by about 10 days for smaller clients, but overall sales cycles remain stable [65] - Pricing discussions have focused more on quality rather than pushback, with 51% of revenue under multiyear contracts with built-in price escalators [66][67] Question: Margin expansion expectations - Management expects EBITDA margins to expand in both North America and International segments in Q4, driven by organic growth and the full-year impact of new acquisitions [68] Question: Impact of foreign exchange on costs - The company has a natural hedge due to international operations, which helps offset the impact of a strengthening US dollar on revenue [71][72] Question: Capital return plans - The company is focused on organic growth and M&A opportunities but is open to share repurchases if liquidity allows [74][75] Question: New product introductions and cross-sell success - Management highlighted positive feedback from clients regarding new innovations and is focused on building pipeline rather than closing deals at this stage [78] Question: ESG data opportunity - ESG is becoming a significant focus for clients, with the company seeing early sales and a large pipeline in this area [87][88] Question: Guidance for Q4 and 2023 - Management is confident in maintaining growth expectations for Q4, with a focus on executing against the original roadmap for mid-single-digit growth [94][111]