DUN & BRADSTREET HOLDINGS, INC. The statements contained in this report that are not purely historical are forward-looking statements, including statements regarding expectations, hopes, intentions or strategies regarding the future. Forward-looking statements are based onDun & Bradstreet's management's beliefs, as well as assumptions made by, and information currently available to, them. Forward-looking statements can be identified by words such as "anticipates," "intends," "plans," "seeks," "believes," "estimates," "expects" and similar references to future periods, or by the inclusion of forecasts or projections. Examples of forward-looking statements include, but are not limited to, statements we make regarding the outlook for our future business and financial performance, such as those contained in "Management's Discussion and Analysis of Financial Condition and Results of Operations" ("MD&A"). Because such statements are based on expectations as to future financial and operating results and are not statements of fact, actual results may differ materially from those projected. It is not possible to predict or identify all risk factors. Consequently, the risks and uncertainties listed below should not be considered a complete discussion of all of our potential trends, risks and uncertainties. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. The risks and uncertainties that forward-looking statements are subject to include, but are not limited to: (i) our ability to implement and execute our strategic plans to transform the business; (ii) our ability to develop or sell solutions in a timely manner or maintain client relationships; (iii) competition for our solutions; (iv) harm to our brand and reputation; (v) unfavorable global economic conditions; (vi) risks associated with operating and expanding internationally; (vii) failure to prevent cybersecurity incidents or the perception that confidential information is not secure; (viii) failure in the integrity of our data or systems; (ix) system failures and personnel disruptions, which could delay the delivery of our solutions to our clients; (x) loss of access to data sources or ability to transfer data across the data sources in markets we operate; (xi) failure of our software vendors and network and cloud providers to perform as expected or if our relationship is terminated; (xii) loss or diminution of one or more of our key clients, business partners or government contracts; (xiii) dependence on strategic alliances, joint ventures and acquisitions to grow our business; (xiv) our ability to protect our intellectual property adequately or cost-effectively; (xv) claims for intellectual property infringement; (xvi) interruptions, delays or outages to subscription or payment processing platforms; (xvii) risks related to acquiring and integrating businesses and divestitures of existing businesses; (xviii) our ability to retain members of the senior leadership team and attract and retain skilled employees; (xix) compliance with governmental laws and regulations; (xx) risks related to the voting letter agreement among and registration and other rights held by certain of our largest shareholders; (xxi) an outbreak of disease, global or localized health pandemic or epidemic, or the fear of such an event (such as the COVID-19 global pandemic), including the global economic uncertainty and measures taken in response; (xxii) the short- and long-term effects of the COVID-19 global pandemic, including the pace of recovery or any future resurgence; (xxiii) increased economic uncertainty related to the ongoing conflict betweenRussia andUkraine , and (xxiv) the other factors described under the headings "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations," and elsewhere in our consolidated financial statements for the year endedDecember 31, 2021 , included in our Annual Report on Form 10-K filed with theSecurities and Exchange Commission ("SEC") onFebruary 24, 2022 , our other Quarterly Reports and the Company's other reports or documents filed with theSEC . The following discussion and analysis ofDun & Bradstreet Holdings, Inc.'s financial condition and results of operations is provided as a supplement to the unaudited condensed consolidated financial statements for the three months endedMarch 31, 2022 , and should be read in conjunction with the audited consolidated financial statements for the year endedDecember 31, 2021 , our "Risk Factors," and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our Annual Report on Form 10-K filed with theSecurities and Exchange Commission onFebruary 24, 2022 . References in this discussion and analysis to "the Company," "Dun & Bradstreet ," "D&B," "we," "us" and "our" refer toDun & Bradstreet Holdings, Inc. and its subsidiaries.
Business Overview
Dun & Bradstreet is a leading global provider of business decisioning data and analytics. Our mission is to deliver a global network of trust, enabling clients to transform uncertainty into confidence, risk into opportunity and potential into prosperity. Clients embed our trusted, end-to-end solutions into their daily workflows to inform commercial credit decisions, confirm suppliers are financially viable and compliant with laws and regulations, enhance salesforce productivity and gain visibility into key markets. Our solutions support our clients' mission critical business operations by providing proprietary and curated data and analytics to help drive informed decisions and improved outcomes. Leveraging our category-defining commercial credit data and analytics, our Finance & Risk solutions are used in the critical decisioning processes of finance, risk, compliance and procurement departments worldwide. We are a market leader in commercial credit decisioning, with many of the top businesses in the world utilizing our solutions to make informed decisions when considering extending business loans and trade credit. We are also a leading provider of data and analytics to businesses 32 -------------------------------------------------------------------------------- Table of Contents looking to analyze supplier relationships and more effectively collect outstanding receivables. We believe our proprietary Paydex score, a numerical indicator based on promptness of a business's payments to its suppliers and vendors, is widely relied upon as an important measure of credit health for businesses. We are well positioned to provide accessible and actionable insights and analytics that mitigate risk and uncertainty, and ultimately protect and drive increased profitability for our clients. Our Sales & Marketing solutions combine firmographic, personal contact, intent and non-traditional, or "alternative," data to assist clients in optimizing their sales and marketing strategy by cleansing customer relationship management ("CRM") data and narrowing their focus and efforts on the highest probability prospects. As global competition continues to intensify, businesses need assistance with focusing their sales pipelines into a condensed list so that they can have their best sellers target the highest probability return accounts. We provide invaluable insights into businesses that can help our clients grow their businesses in a more efficient and effective manner. We leverage these differentiated capabilities to serve a broad set of clients across multiple industries and geographies. As ofDecember 31, 2021 , we had a global client base of more than 200,000, including some of the largest companies in the world. Covering nearly all industry verticals, including financial services, technology, communications, government, retail, transportation and manufacturing, our data and analytics support a wide range of use cases. In terms of our geographic footprint, we have an industry-leading presence inNorth America , a growing presence in theUnited Kingdom andIreland ("U.K."), Nordics (Sweden ,Norway ,Denmark andFinland ), DACH (Germany ,Austria andSwitzerland ) and CEE (Central andEastern Europe ) regions ("Europe"),Greater China andIndia through our majority or wholly-owned subsidiaries and a broader global presence through our Worldwide Network alliances ("WWN alliances"). OnJanuary 8, 2021 , we acquiredBisnode Business Information Group AB ("Bisnode") which expanded our presence in Northern andCentral Europe . The acquisition increases our client base, and expands and enhances our constantly expanding business database, known as our "Data Cloud". We believe that we have an attractive business model that is underpinned by highly recurring, diversified revenue, significant operating leverage, low capital requirements and strong free cash flow. The proprietary and embedded nature of our data and analytics solutions and the integral role that we play in our clients' decision-making processes have historically translated into high client retention and revenue visibility. We also benefit from strong operating leverage given our centralized database and solutions, which allow us to generate strong contribution margins and free cash flow.
Segments
Our segment disclosure is intended to provide the users of our consolidated financial statements with a view of the business that is consistent with management of the Company.
We manage our business and report our financial results through the following two segments:
•North America offers Finance & Risk and Sales & Marketing data, analytics and
business insights in
•International offers Finance & Risk and Sales & Marketing data, analytics and
business insights directly in the
Recent Developments Debt Refinancing OnJanuary 18, 2022 , we amended our credit agreement datedFebruary 8, 2019 , specifically related to the Term Loan Facility, to establish Incremental Term Loans in an aggregate principal amount of$460 million . We used the proceeds of such Incremental Term Loans to redeem our outstanding$420 million in aggregate principal amount of our 6.875% Senior Secured Notes due 2026 and pay related fees, costs, premiums and expenses. See Note 5 to the unaudited condensed consolidated financial statements for further discussion.
InFebruary 2022 ,Russia invadedUkraine . As a result,the United States . and certain other countries have imposed sanctions onRussia that could disrupt international commerce and the global economy. This has further exacerbated global economic uncertainty caused by COVID-19. We do not have operations or a material customer base in either country. Our exposure is primarily limited to our relationship with the WWN alliance in the region, which is immaterial. However, an 33 -------------------------------------------------------------------------------- Table of Contents escalation of the conflict or expansion of sanctions could further disrupt global supply chains, broaden inflationary costs, and have a material adverse effect on our customers, vendors and financial markets.
COVID-19 Impact
Since early 2020, the COVID-19 pandemic and its variants have caused and continue to cause disruptions in supply chains, affecting workforce, production and sales across the world, leading to disruptions and volatility in the global financial markets and economy. Given the continuously evolving and unpredictable nature of the coronavirus, particularly in light of variant strains of the virus, there remains considerable continuing uncertainty regarding the extent of the impact and the duration of the pandemic. In our continued response to the COVID-19 pandemic, we implemented operational changes to ensure the safety of our workforce and to ensure that we continue to serve our clients. We have adopted a distributed workforce model which has been successful and has not significantly affected our operations. We continue to carefully monitor the evolving situation related to COVID-19 and the ongoingRussia /Ukraine conflict, and their impact on our business. While our productivity and financial performance have not been impacted materially by the events, the ultimate impact will be difficult to predict and depends on, among many factors, the duration of the pandemic and the currentRussia /Ukraine conflict, the government mandates or guidance regarding COVID-19 restriction and their ultimate impact to our customers, vendors, and the financial markets. While uncertainty caused by the COVID-19 remains, particularly in light of variant strains of the virus, we expect to see improvements in market conditions generally as vaccines and treatments continue to become more widely available. However, we believe the pace of the recovery will vary by geography depending on vaccine distribution, availability of treatment and other macroeconomic factors. We will remain flexible so that we can adjust to events and uncertainties while we continue to move forward. Recent Accounting Pronouncements See Note 2 to the unaudited condensed consolidated financial statements for disclosure of the impact that recent accounting pronouncements may have on the unaudited condensed consolidated financial statements.
Key Components of Results of Operations
Revenue
We generate ourNorth America and International segment revenue primarily through subscription-based contractual arrangements that we enter into with clients to provide data, analytics and analytics-related services either individually, or as part of an integrated offering of multiple services. These arrangements occasionally include offerings from more than one business unit to the same client. • We provide Finance & Risk solutions that offer clients access to our most complete and up-to-date global information, comprehensive monitoring and portfolio analysis. We also provide various business information reports that are consumed in a transactional manner across multiple platforms. Clients also use our services to manage supply chain risks and comply with anti-money laundering and global anti-bribery and corruption regulations. • We generate our Sales & Marketing revenue by providing sophisticated analytics and solutions to help our clients increase revenue from new and existing businesses, enabling B2B sales and marketing professionals to accelerate sales, enhance go-to-market activity, engage clients in a meaningful way, close business faster and improve efficiency in advertising campaigns.
Expenses
Cost of Services (exclusive of depreciation and amortization)
Cost of services (exclusive of depreciation and amortization) primarily include data acquisition and royalty fees, costs related to our databases, service fulfillment costs, call center and technology support costs, hardware and software maintenance costs, telecommunication expenses, personnel-related costs associated with these functions and occupancy costs associated with the facilities where these functions are performed.
Selling and Administrative Expenses
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Selling and administrative expenses primarily include personnel-related costs
for sales, administrative and corporate management employees, costs for
professional and consulting services, advertising and occupancy and facilities
expense of these functions.
Depreciation and Amortization
Depreciation and amortization expenses consist of depreciation related to investments in property, plant and equipment, as well as amortization of purchased and developed software and other intangible assets, principally database and client relationships recognized in connection with the Take-Private Transaction and acquisitions, primarily theBisnode acquisition completed onJanuary 8, 2021 .
Non-Operating Income and Expense
Non-operating income and expense includes interest expense, interest income, costs associated with early debt repayments, dividends from cost-method investments, gains and losses from divestitures, mark-to-market expense related to certain derivatives, and other non-operating income and expenses.
Provision for Income Tax Expense (Benefit)
Provision for income tax expenses (benefit) represents international,
Key Metrics
In addition to reporting GAAP results, we evaluate performance and report our
results on the non-GAAP financial measures discussed below. We believe that the
presentation of these non-GAAP measures provides useful information to investors
and rating agencies regarding our results, operating trends and performance
between periods. These non-GAAP financial measures include adjusted revenue,
organic revenue, adjusted earnings before interest, taxes, depreciation and
amortization ("adjusted EBITDA"), adjusted EBITDA margin, adjusted net income
and adjusted net earnings per diluted share. Adjusted results are non-GAAP
measures that adjust for the impact due to certain acquisition and divestiture
related revenue and expenses, such as costs for banker fees, legal fees, due
diligence, retention payments and contingent consideration adjustments,
restructuring charges, equity-based compensation, and other non-core gains and
charges that are not in the normal course of our business such as costs
associated with early debt redemptions, gains and losses on sales of businesses,
impairment charges, the effect of significant changes in tax laws and material
tax and legal settlements. We exclude amortization of recognized intangible
assets resulting from the application of purchase accounting because it is
non-cash and not indicative of our ongoing and underlying operating performance.
Recognized intangible assets arise from acquisitions, primarily the Take-Private
Transaction. See Note 15 to the consolidated financial statements included in
our Form 10K for the year ended December 31, 2021 . We believe that recognized
intangible assets by their nature are fundamentally different from other
depreciating assets that are replaced on a predictable operating cycle. Unlike
other depreciating assets, such as developed and purchased software licenses or
property and equipment, there is no replacement cost once these recognized
intangible assets expire and the assets are not replaced. Additionally, our
costs to operate, maintain and extend the life of acquired intangible assets and
purchased intellectual property are reflected in our operating costs as
personnel, data fee, facilities, overhead and similar items. Management believes
it is important for investors to understand that such intangible assets were
recorded as part of purchase accounting and contribute to revenue generation.
Amortization of recognized intangible assets will recur in future periods until
such assets have been fully amortized. In addition, we isolate the effects of
changes in foreign exchange rates on our revenue growth because we believe it is
useful for investors to be able to compare revenue from one period to another,
both after and before the effects of foreign exchange rate changes. The change
in revenue performance attributable to foreign currency rates is determined by
converting both our prior and current periods' foreign currency revenue by a
constant rate. As a result, we monitor our adjusted revenue growth both after
and before the effects of foreign exchange rate changes. We believe that these
supplemental non-GAAP financial measures provide management and other users with
additional meaningful financial information that should be considered when
assessing our ongoing performance and comparability of our operating results
from period to period. Our management regularly uses our supplemental non-GAAP
financial measures internally to understand, manage and evaluate our business
and make operating decisions. These non-GAAP measures are among the factors
management uses in planning for and forecasting future periods. Non-GAAP
financial measures should be viewed in addition to, and not as an alternative to
our reported results prepared in accordance with GAAP.
Our non-GAAP or adjusted financial measures reflect adjustments based on the following items, as well as the related income tax.
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Adjusted Revenue
We define adjusted revenue as revenue to include a revenue adjustment due to the timing of the completion of theBisnode acquisition. Management uses this measure to evaluate ongoing performance of the business period over period. In addition, we isolate the effects of changes in foreign exchange rates on our revenue growth because we believe it is useful for investors to be able to compare revenue from one period to another, both after and before the effects of foreign exchange rate changes. The change in revenue performance attributable to foreign currency rates is determined by converting both our prior and current periods' foreign currency revenue by a constant rate.
Organic Revenue
We define organic revenue as adjusted revenue before the effect of foreign exchange excluding revenue from acquired businesses for the first twelve months. In addition, organic revenue excludes current and prior year revenue associated with divested businesses. We believe the organic measure provides investors and analysts with useful supplemental information regarding the Company's underlying revenue trends by excluding the impact of acquisitions and divestitures. Revenue from acquired businesses is primarily related to the acquisitions ofEyeota Holdings Pte Ltd ("Eyeota") andNetWise Data, LLC ("NetWise") in the fourth quarter of 2021. See Note 14 to the unaudited condensed consolidated financial statements included within this Form 10-Q for the three months endedMarch 31, 2022 . Revenue from divested businesses is related to the business-to-consumer business inGermany that was classified as asset held for sale atMarch 31, 2022 .
Adjusted EBITDA and Adjusted EBITDA Margin
We define adjusted EBITDA as net income (loss) attributable to
•depreciation and amortization;
•interest expense and income;
•income tax benefit or provision;
•other non-operating expenses or income;
•equity in net income of affiliates;
•net income attributable to non-controlling interests;
•other incremental or reduced expenses and revenue from the application of purchase accounting (e.g. commission asset amortization);
•equity-based compensation;
•restructuring charges;
•merger, acquisition and divestiture-related operating costs;
•transition costs primarily consisting of non-recurring expenses associated with transformational and integration activities, as well as incentive expenses associated with our synergy program;
•legal expense associated with significant legal and regulatory matters; and
•asset impairment.
We calculate adjusted EBITDA margin by dividing adjusted EBITDA by adjusted revenue.
Adjusted Net Income
We define adjusted net income as net income (loss) attributable to
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•incremental amortization resulting from the application of purchase accounting.
We exclude amortization of recognized intangible assets resulting from the
application of purchase accounting because it is non-cash and is not indicative
of our ongoing and underlying operating performance. The Company believes that
recognized intangible assets by their nature are fundamentally different from
other depreciating assets that are replaced on a predictable operating cycle.
Unlike other depreciating assets, such as developed and purchased software
licenses or property and equipment, there is no replacement cost once these
recognized intangible assets expire and the assets are not replaced.
Additionally, the Company's costs to operate, maintain and extend the life of
acquired intangible assets and purchased intellectual property are reflected in
the Company's operating costs as personnel, data fee, facilities, overhead and
similar items;
•other incremental or reduced expenses and revenue from the application of purchase accounting (e.g. commission asset amortization);
•equity-based compensation;
•restructuring charges;
•merger, acquisition and divestiture-related operating costs;
•transition costs primarily consisting of non-recurring expenses associated with transformational and integration activities, as well as incentive expenses associated with our synergy program;
•legal expense associated with significant legal and regulatory matters;
•asset impairment;
•merger, acquisition and divestiture-related non-operating costs;
•debt refinancing and extinguishment costs; and
•tax effect of the non-GAAP adjustments and the impact resulting from the enactment of the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act").
Adjusted Net Earnings Per Diluted Share
We calculate adjusted net earnings per diluted share by dividing adjusted net income (loss) by the weighted average number of common shares outstanding for the period plus the dilutive effect of common shares potentially issuable in connection with awards outstanding under our stock incentive plan.
Results of Operations
GAAP Results (In millions except per share data):
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Three months ended
March 31,
2022 2021
Revenue $ 536.0 $ 504.5
Cost of services (exclusive of depreciation and amortization) 176.7 160.9
Selling and administrative expenses 188.2 179.8
Depreciation and amortization 149.4 149.7
Restructuring charges 5.3 5.8
Operating costs 519.6 496.2
Operating income (loss) 16.4 8.3
Interest income 0.3 0.1
Interest expense (47.2) (48.9)
Other income (expense) - net (9.3) 6.8
Non-operating income (expense) - net (56.2) (42.0)
Income (loss) before provision (benefit) for income taxes and equity in net income of affiliates
(39.8) (33.7)
Less: provision (benefit) for income taxes (9.3) (9.8)
Equity in net income of affiliates 0.7 0.6
Net income (loss) (29.8) (23.3)
Less: net (income) loss attributable to the non-controlling interest
(1.5) (1.7)
Net income (loss) attributable to
Basic earnings (loss) per share of common stock attributable to
$ (0.07) $ (0.06) Weighted average number of shares outstanding-basic 428.8 428.5 Weighted average number of shares outstanding-diluted 428.8 428.5 Net income (loss) margin (1) (5.8) % (5.0) %
(1)Net income (loss) margin is defined as Net income (loss) attributable to
The table below sets forth our key performance measures for the periods indicated (In millions, except per share data):
Three months ended
March 31,
2022 2021
Non - GAAP Financial Measures
Adjusted revenue (a) $ 536.0 $ 509.1
Organic revenue (a) $ 528.8 $ 505.8
Adjusted EBITDA (a) $ 190.1 $ 185.6
Adjusted EBITDA margin (a) 35.5 % 36.5 %
Adjusted net income (a) $ 102.5 $ 97.8
Adjusted earnings per share (a) $ 0.24 $ 0.23
(a) Including impact of deferred revenue purchase accounting
adjustments:
Impact to adjusted revenue, organic revenue and adjusted
EBITDA $ - $ (0.2)
Impact to adjusted EBITDA margin - % - %
Net impact to adjusted net income $ - $ (0.2)
Net impact to adjusted earnings per share $ - $ -
Reconciliations of the above non-GAAP financial measures to the most directly comparable GAAP financial measures are presented in the tables below (In millions, except per share amounts):
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Three months ended
March 31,
2022 2021
GAAP revenue $
536.0
- 4.6
Adjusted revenue (a) $ 536.0 $ 509.1
Foreign currency impact 7.3 (1.0)
Adjusted revenue before the effect of foreign currency (a) $
543.3
(14.5) (2.3)
Organic revenue - before the effect of foreign currency (a) $ 528.8 $ 505.8
North America $ 367.3 $ 339.4
International 168.7 169.9
Segment revenue $ 536.0 $ 509.3
Corporate and other (a) - (0.2)
Foreign currency impact 7.3 (1.0)
Adjusted revenue before the effect of foreign currency (a) $
543.3
(14.5) (2.3)
Organic revenue - before the effect of foreign currency (a) $
528.8
(a) Including impact of deferred revenue purchase accounting adjustments $ -$ (0.2) Three months ended March 31, 2022 2021
Net income (loss) attributable to
$ (31.3) $ (25.0) Depreciation and amortization 149.4 149.7 Interest expense - net 46.9 48.8 (Benefit) provision for income tax - net (9.3) (9.8) EBITDA 155.7 163.7 Other income (expense) - net 9.3 (6.8) Equity in net income of affiliates (0.7) (0.6) Net income (loss) attributable to non-controlling interest 1.5 1.7
Other incremental or reduced expenses and revenue from the application of purchase accounting
(3.9) (0.7)
Equity-based compensation 10.7 7.6
Restructuring charges 5.3 5.8
Merger, acquisition and divestiture-related operating costs 5.1 3.1
Transition costs 6.9 0.9
Legal expense associated with significant legal and regulatory
matters 0.2 9.9
Asset impairment - 1.0
Adjusted EBITDA $ 190.1 $ 185.6
North America $ 153.3 $ 151.0
International 55.1 51.5
Corporate and other (a) (18.3) (16.9)
Adjusted EBITDA (a) $ 190.1 $ 185.6
(a) Including impact of deferred revenue purchase accounting
adjustments:
Impact to adjusted EBITDA $ - $ (0.2)
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Three months ended
March 31,
2022 2021
Net income (loss) attributable to
127.0 132.1
Other incremental or reduced expenses and revenue from the application of purchase accounting
(3.9) (0.7)
Equity-based compensation 10.7 7.6
Restructuring charges 5.3 5.8
Merger, acquisition and divestiture-related operating costs 5.1 3.1
Transition costs 6.9 0.9
Legal expense associated with significant legal and regulatory matters
0.2 9.9
Asset impairment - 1.0
Merger, acquisition and divestiture-related non-operating costs 2.5 2.3
Debt refinancing and extinguishment costs 23.0 1.1
Tax impact of the CARES Act (0.1) (0.4)
Tax effect of the non-GAAP adjustments (42.9) (39.9)
Adjusted net income (loss) attributable to
$ 102.5 $ 97.8 Adjusted diluted earnings (loss) per share of common stock$ 0.24 $ 0.23 Weighted average number of shares outstanding - diluted 429.5 429.0 (a) Including impact of deferred revenue purchase accounting adjustments: Pre-tax impact $ -$ (0.2) Tax impact - -
Net impact to adjusted net income (loss) attributable to
$ - $ (0.2)
Net impact to adjusted diluted earnings (loss) per share of common
stock $ - $ -
Revenue
Three months ended
Total revenue was$536.0 million for the three months endedMarch 31, 2022 , compared to$504.5 million for the three months endedMarch 31, 2021 , an increase of$31.5 million , or 6.2% (7.9% before the effect of foreign exchange). Adjusted revenue increased$26.9 million , or 5.3% (6.9% before the effect of foreign exchange) for the three months endedMarch 31, 2022 , compared to the prior year period, attributable to growth in the underlying business and the impact of acquisitions and divestiture, partially offset by the negative impact of foreign exchange. In the fourth quarter of 2021, we completed the acquisitions of Eyeota and NetWise. As ofMarch 31, 2022 , our business-to-consumer business inGermany was classified as assets held for sale. Excluding the impact of acquisitions and divestiture of$12.2 million and the negative impact of foreign exchange of$8.3 million , total organic revenue increased$23.0 million , or 4.5%, primarily reflecting growth across both of our segments. The changes in revenue are discussed further in the segment level discussion below.
Revenue by segment was as follows (In millions):
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Three months ended March 31,
$ %
2022 2021 Increase (decrease) Increase (decrease)
North America :
Finance & Risk $ 202.2 $ 190.5 $ 11.7 6.2 %
Sales & Marketing 165.1 148.9 16.2 10.9 %
Total North America $ 367.3 $ 339.4 $ 27.9 8.2 %
International:
Finance & Risk $ 109.0 $ 107.4 $ 1.6 1.5 %
Sales & Marketing 59.7 62.5 (2.8) (4.5) %
Total International $ 168.7 $ 169.9 $ (1.2) (0.7) %
Corporate and other:
Finance & Risk $ - $ (2.3) $ 2.3 **
Sales & Marketing - (2.5) 2.5 **
Total Corporate and other (1) $ - $ (4.8) $ 4.8 **
Total Revenue:
Finance & Risk $ 311.2 $ 295.6 $ 15.6 5.3 %
Sales & Marketing 224.8 208.9 15.9 7.6 %
Total Revenue $ 536.0 $ 504.5 $ 31.5 6.2 %
** Not meaningful
(1) Revenue for Corporate and other for the three months ended
North America Segment
For the three months endedMarch 31, 2022 ,North America revenue increased$27.9 million , or 8.2% (both after and before the effect of foreign exchange) compared to the three months endedMarch 31, 2021 . Excluding the impact of acquisitions of$12.8 million ,North America organic revenue increased$15.1 million , or 4.4%. See further discussion below on revenue by solutions.
Finance & Risk
For the three months endedMarch 31, 2022 , North America Finance & Risk revenue increased$11.7 million , or 6.2% (both after and before the effect of foreign exchange) compared to the three months endedMarch 31, 2021 , primarily due to a net increase in revenue across our Finance solutions and Risk solutions of approximately$14 million , principally attributable to new business and higher customer spend in our Third Party Risk and SupplyChain Risk management solutions, partially offset by lower revenue from the government sector of approximately$2 million .
Sales & Marketing
For the three months endedMarch 31, 2022 , North America Sales & Marketing revenue increased$16.2 million , or 10.9% (both after and before the effect of foreign exchange) compared to the three months endedMarch 31, 2021 , primarily driven by the impact of the acquisitions of Eyeota and NetWise, which contributed revenue of approximately$12 million , and growth across our data management solutions of approximately$4 million largely attributable to higher data sales. International Segment For the three months endedMarch 31, 2022 , International revenue decreased$1.2 million , or 0.7% (4.2% increase before the effect of foreign exchange) compared to the three months endedMarch 31, 2021 . Excluding the negative impact of foreign exchange of$8.3 million and the impact of divestiture of$0.6 million , International organic revenue increased$7.7 million , or 4.6%. See further discussion below on revenue by solutions. 41 -------------------------------------------------------------------------------- Table of Contents Finance & Risk For the three months endedMarch 31, 2022 , International Finance & Risk revenue increased$1.6 million , or 1.5% (5.7% before the effect of foreign exchange) compared to the three months endedMarch 31, 2021 . Excluding the negative impact of foreign exchange of$4.5 million , revenue increased$6.1 million , or 5.7%, attributable to growth across all markets, including higher revenue of approximately$3 million from WWN alliances due to higher cross border data fees and product royalties, and higher revenue of approximately$2 million fromEurope driven by greater API solution sales.
Sales and Marketing
For the three months endedMarch 31, 2022 ,International Sales & Marketing revenue decreased$2.8 million , or 4.5% (1.6% increase before the effect of foreign exchange) compared to the three months endedMarch 31, 2021 . Excluding the negative impact of foreign exchange of$3.8 million , revenue increased$1.0 million , or 1.6%, primarily as a result of higher product royalties of approximately$1 million from WWN alliances.
Consolidated Operating Costs
Consolidated operating costs were as follows (In millions):
Three months ended March 31,
$
Increase %
2022 2021 (decrease) Increase (decrease)
Cost of services (exclusive of depreciation
and amortization) $ 176.7 $ 160.9 $ 15.8 9.9 %
Selling and administrative expenses 188.2 179.8 8.4 4.6 %
Depreciation and amortization 149.4 149.7 (0.3) (0.2) %
Restructuring charges 5.3 5.8 (0.5) (8.8) %
Operating costs $ 519.6 $ 496.2 $ 23.4 4.7 %
Operating income (loss) $ 16.4 $ 8.3 $ 8.1 97.7 %
Cost of Services (exclusive of depreciation and amortization)
Cost of services (exclusive of depreciation and amortization) were$176.7 million for the three months endedMarch 31, 2022 , an increase of$15.8 million , or 9.9%, compared to the three months endedMarch 31, 2021 , primarily due to increased costs of$8.1 million from acquisitions of Eyeota and NetWise which closed in the fourth quarter of 2021. Excluding the impact of acquisitions, operating expenses increased$7.7 million , or 4.8% for the three months endedMarch 31, 2022 , compared to the prior year period, primarily due to higher data and data processing costs of approximately$14 million , partially offset by lower net personnel costs of approximately$5 million .
Selling and Administrative Expenses
Selling and administrative expenses were$188.2 million for the three months endedMarch 31, 2022 , an increase of$8.4 million , or 4.6%, compared to the three months endedMarch 31, 2021 , primarily due to increased costs of$3.8 million from acquisitions of Eyeota and NetWise. Excluding the impact of acquisitions, selling and administrative expenses increased$4.6 million , or 2.6% due to higher net personnel costs of approximately$10 million driven by retention costs and equity-based compensation, and higher data processing fees of approximately$6 million . The above-mentioned higher costs were partially offset by lower legal costs of approximately$12 million related to an accrual for an ongoing legal matter in the prior year.
Depreciation and Amortization
Depreciation and amortization expenses were$149.4 million for the three months endedMarch 31, 2022 , a decrease of$0.3 million , or 0.2%, compared to the three months endedMarch 31, 2021 . 42 -------------------------------------------------------------------------------- Table of Contents Restructuring Charges Restructuring charges were$5.3 million for the three months endedMarch 31, 2022 , a decrease of$0.5 million , or 8.8%, compared to the three months endedMarch 31, 2021 . Lower restructuring charges in the three months endedMarch 31, 2022 were primarily driven by higher exit costs in the prior year period related to initiatives in our International businesses to improve operational performance and profitability.
Operating Income (Loss)
Consolidated operating income was$16.4 million for the three months endedMarch 31, 2022 , an improvement of$8.1 million , or 97.7%, compared to the three months endedMarch 31, 2021 . Excluding the impact of acquisitions, operating income was$17.8 million , an improvement of$9.5 million , or 115.2%. The improvement in operating income was primarily driven by higher revenue from underlying business of$23.0 million and lower legal costs of approximately$12 million , partially offset by higher data and data processing cost of approximately$20 million and higher net personnel costs of approximately$5 million primarily related to retention costs and equity-based compensation. Adjusted EBITDA and adjusted EBITDA margin by segment was as follows (In millions): Three months ended March 31, $ % 2022 2021 Increase (decrease) Increase (decrease)North America : Adjusted EBITDA$ 153.3 $ 151.0 $ 2.3 1.5 % Adjusted EBITDA margin 41.7 % 44.5 % N/A (280) bps International: Adjusted EBITDA$ 55.1 $ 51.5 $ 3.6 7.0 % Adjusted EBITDA margin 32.6 % 30.3 % N/A 230 bps Corporate and other: Adjusted EBITDA$ (18.3) $ (16.9) $ (1.4) (8.2) % Consolidated total: Adjusted EBITDA$ 190.1 $ 185.6 $ 4.5 2.4 % Adjusted EBITDA margin 35.5 % 36.5 % N/A (100) bps Consolidated Consolidated net loss margin on a GAAP basis was 5.8% for the three months endedMarch 31, 2022 , compared to a net loss margin of 5.0% for the three months endedMarch 31, 2021 , an increase in net loss margin of 80 basis points. Consolidated adjusted EBITDA was$190.1 million for the three months endedMarch 31, 2022 , compared to$185.6 million for the three months endedMarch 31, 2021 , an improvement of$4.5 million , or 2.4%, primarily due to revenue growth from the underlying business and lower net personnel costs, partially offset by investments leading to higher data and data processing costs. Consolidated adjusted EBITDA margin was 35.5% for the three months endedMarch 31, 2022 , compared to 36.5% for the prior year period, a decrease of 100 basis points. Excluding the impact of acquisitions, consolidated adjusted EBITDA margin was 36.3% for the three months endedMarch 31, 2022 .
North America Segment
North America adjusted EBITDA was$153.3 million for the three months endedMarch 31, 2022 , an improvement of$2.3 million , or 1.5% compared to the three months endedMarch 31, 2021 . The improvement in adjusted EBITDA was primarily due to higher revenue from the underlying business, partially offset by investments leading to higher data and data processing fees. Adjusted EBITDA margin was 41.7% for the three months endedMarch 31, 2022 , compared to 44.5% for the prior year period, a decrease of 280 basis points. Excluding the impact of acquisitions, adjusted EBITDA margin was 43.1% for the three months endedMarch 31, 2022 . 43 -------------------------------------------------------------------------------- Table of Contents International Segment
International adjusted EBITDA was
Corporate and Other
Corporate adjusted EBITDA was a loss of$18.3 million for the three months endedMarch 31, 2022 , an increase of loss of$1.4 million , or 8.2%, compared to the three months endedMarch 31, 2021 . Higher loss was primarily attributable to higher personnel costs.
Interest Income (Expense) - Net
Interest income (expense) - net was as follows (In millions):
Three months ended March 31,
$ %
2022 2021 Change Change
Interest income $ 0.3 $ 0.1 $ 0.2 200.0 %
Interest expense (47.2) (48.9) 1.7 3.5 %
Interest income (expense) - net $ (46.9) $ (48.8) $ 1.9 3.9 %
Interest expense decreased $1.7 million for the three months ended March 31,
2022 compared to the three months ended March 31, 2021 , primarily due to lower
interest rates as a result of debt refinancing, partially offset by the write
off of debt issuance costs and discount in the three months ended March 31, 2022
in connection with the early redemption of the 6.875% Senior Secured Notes. See
Note 5 to the unaudited condensed consolidated financial statements for further
discussion.
Other Income (Expense) - Net
Other income (expense) - net was as follows (In millions):
Three months ended March 31,
$ %
2022 2021 Change Change
Non-operating pension income (expense) $ 11.3 $ 13.5 $ (2.2) (16) %
Early debt redemption premium (16.3) - $ (16.3) NA
Miscellaneous other income (expense) - Net (4.3) (6.7) 2.4 36 %
Other income (expense) - net $ (9.3) $ 6.8 $ (16.1) (237) %
Non-operating pension income (expense) was income of $11.3 million for the three
months ended March 31, 2022 compared to income of $13.5 million for the three
months ended March 31, 2021 , a decrease of $2.2 million , primarily due to higher
interest costs in the current year period.
Early debt redemption premium of
The change in miscellaneous other income (expense) - net of$2.4 million for the three months endedMarch 31, 2022 , compared to the three months endedMarch 31, 2021 , was primarily driven by lower foreign exchange losses in the current year period. 44 -------------------------------------------------------------------------------- Table of Contents Provision for Income Taxes The effective tax rate for the three months endedMarch 31, 2022 was 23.4%, reflecting a tax benefit of$9.3 million on pre-tax loss of$39.8 million , compared to 29.0% for the three months endedMarch 31, 2021 , reflecting a tax benefit of$9.8 million on a pre-tax loss of$33.7 million . The reduced tax benefit for the three months endedMarch 31, 2022 compared to the three months endedMarch 31, 2021 was primarily due to the global intangible low-tax income ("GILTI") inclusion and higher non-deductible executive compensation partially offset by the benefit from increased income in our foreign jurisdictions taxed at lower tax rates. Net Income (Loss) Net income (loss) attributable toDun & Bradstreet Holdings, Inc. was a net loss of$31.3 million , or a diluted loss per share of$0.07 , for the three months endedMarch 31, 2022 , compared to a net loss of$25.0 million , or a diluted loss per share of$0.06 , for the three months endedMarch 31, 2021 . The$6.3 million increase in net loss for the three months endedMarch 31, 2022 compared to the prior year period was primarily due to the debt early redemption premium of$16.3 million related to the early redemption of the 6.875% Senior Secured Notes inJanuary 2022 , partially offset by the improvement in operating income (loss) of$8.1 million in the current year period, largely driven by revenue growth. See further detail discussed within the operating income (loss) section of the MD&A.
Adjusted Net Income and Adjusted Diluted Earnings Per Share
Adjusted net income was$102.5 for the three months endedMarch 31, 2022 compared to$97.8 million for the prior year period, an increase of$4.7 million , or 4.9%. Adjusted net earnings per share was$0.24 for the three months endedMarch 31, 2022 compared to$0.23 for the prior year period, an increase of$0.01 per share, or 4.3%. The increase of adjusted net income and adjusted diluted earnings per share was primarily driven by revenue growth from the underlying business, lower net personnel costs and lower interest expense due to lower interest rates, partially offset by higher data and data processing costs.
Liquidity and Capital Resources
Overview
Our primary sources of liquidity consist of cash flows provided by operating activities, cash and cash equivalents on hand and our short-term borrowings under our senior secured credit facility. Our principal uses of liquidity are working capital, capital investments (including computer software), debt service, business acquisitions and other general corporate purposes. We believe that cash provided by operating activities, supplemented as needed with available financing arrangements, is sufficient to meet our short-term needs for at least the next twelve months, including interest payments, contractual obligations, capital expenditures, tax liabilities and restructuring charges. We continue to generate substantial cash from ongoing operating activities and manage our capital structure to meet short- and long-term objectives including investing in existing businesses and strategic acquisitions. In addition, we have the ability to use the short-term borrowings from the Revolving Facility to supplement the seasonality in the timing of receipts in order to fund our working capital needs. Our future capital requirements will depend on many factors that are difficult to predict, including the size, timing and structure of any future acquisitions, future capital investments and future results of operations. Our access to the capital markets can be impacted by factors outside of our control, including the impact of COVID-19 which is exacerbated by the ongoingRussia /Ukraine conflict. Currently, while we do not expect the impact of COVID-19 and theRussia /Ukraine conflict to affect our ability to fund our operating needs for the foreseeable future, the ultimate impact will be difficult to predict, and depends on, among many factors, the duration of the pandemic and the currentRussia /Ukraine conflict, government mandates or guidance regarding COVID-19 restrictions, the expansion of sanctions and their effects to our clients, vendors, and the financial markets.
Cash Flow Overview
As ofMarch 31, 2022 , we had cash and cash equivalents of$215.8 million , of which$206.4 million was held by our foreign operations. We utilize a variety of planning strategies in an effort to ensure that our worldwide cash is available when and where it is needed. Subsequent to the enactment of the Tax Cuts and Jobs Act ("2017 Act"), we expect a significant portion of the cash and cash equivalents held by our foreign subsidiaries will no longer be subject toU.S. income tax upon repatriation tothe United States , after a one-time mandatoryU.S. tax on accumulated undistributed foreign earnings throughDecember 31, 2017 . However, a portion of our cash held by our foreign operations is still subject to foreign income tax or withholding tax upon repatriation. As a result, we intend to reinvest indefinitely all earnings post 2017 from ourChina andIndia subsidiaries. Cash held in ourChina andIndia operations totaled$70.5 million as ofMarch 31, 2022 . As ofMarch 31, 2022 , our total tax 45 -------------------------------------------------------------------------------- Table of Contents liability associated with the 2017 Act was$49.8 million , of which$5.2 million was included in "Accrued income tax" and$44.6 million was included in "Other non-current liabilities." Information about our cash flows, by category, is presented in the Consolidated Statements of Cash Flows. The following table summarizes our cash flows for the periods presented (In millions): Three months ended March 31, 2022 2021 Net cash provided by (used in) operating activities$ 138.8 $ 168.2 Net cash provided by (used in) investing activities (49.4) (637.9) Net cash provided by (used in) financing activities (51.0) 290.1 Total cash provided during the period before the effect of exchange rate changes $ 38.4$ (179.6)
Cash Provided by (Used in) Operating Activities
Lower operating cash flows in the three months endedMarch 31, 2022 , compared to the three months endedMarch 31, 2021 , was primarily driven by higher net tax payment of approximately$88 million in the current year period due to non-recurring cash benefit of$66.2 million received in the prior year period related to the application of the CARES Act, partially offset by higher net cash from various operating activities in the current year period of approximately$34 million primarily attributable to better collections from customer receivables and lower interest payment of approximately$22 million in the current year period attributable to lower interest rates and a change in the timing of interest payments resulting from debt refinancing. The CARES Act, which was signed into law onMarch 27, 2020 by theU.S. government, was designed to provide relief to businesses during the COVID-19 pandemic, including allowing the amendment of prior tax returns to obtain tax refunds through the modification of rules related to the net operating losses and interest expense deductions. We utilized the relief opportunities provided by the Act. The application of the CARES Act resulted in a net cash benefit of$98.4 million . OnJanuary 22, 2021 , we received$66.2 million of the$98.4 million due to us. We expect operating cash requirements in 2022 to be primarily related to payments for interest, contractual obligations, tax liability and other working capital needs. We typically have various contractual obligations in our normal course of business, including those recorded as liabilities in our consolidated balance sheet, and certain purchase commitments that are not recognized, but are disclosed in the notes to our consolidated financial statements. A significant portion of these contractual obligations are related to payments for enterprise-wide information-technology services. See below "Contractual Obligations" for information on expected payments. We expect to continue to generate substantial cash from ongoing operating activities.
Cash Provided by (Used in) Investing Activities
Lower net cash used in investing activities for the three months endedMarch 31, 2022 , compared to the three months endedMarch 31, 2021 , was primarily due to higher payment of$617.0 million in the prior year period for theBisnode acquisition, partially offset by higher cash settlements payment of$25.0 million for foreign currency contracts. During the first quarter of 2021, we acquiredBisnode for a total purchase price of$805.8 million , inclusive of cash acquired of$29.9 million . The transaction closed with a combination of cash of$646.9 million and 6,237,087 newly issued shares of common stock of the Company in a private placement valued at$158.9 million based on the stock closing price onJanuary 8, 2021 . The transaction was partially funded by the proceeds from the$300 million borrowing from the Incremental Term Loan.
Cash Provided by (Used in) Financing Activities
The increase in net cash used in financing activities during the three months endedMarch 31, 2022 , compared to net cash provided by financing activities in the three months endedMarch 31, 2021 , was primarily related to payments of$436.3 million in the current year period for debt redemption activities (inclusive of early payment premium) related to the repayment of the 6.875% Senior Secured Notes, higher net repayments of$60 million for credit facility borrowing, partially offset by higher proceeds of$160 million in the current year period from the issuance of incremental term loan. 46
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Table of Contents Capital Resources and Debt
In addition to cash generated from our operating activities, we also borrow from time to time from our credit facility and issue long-term debt.
Below is a summary of our borrowings as ofMarch 31, 2022 andDecember 31, 2021 (In millions): March 31, 2022 December 31, 2021 Debt issuance Debt issuance Principal costs and Principal costs and Maturity amount discount Carrying value amount discount Carrying value Debt maturing within one year: 2026 Term loan February 8, 2026$ 28.1 $ - $ 28.1$ 28.1 $ - $ 28.1 2029 Term loan January 18, 2029 4.6 - 4.6 - - - Total short-term debt$ 32.7 $
- $ 32.7
- $ 28.1
Debt maturing after one year: 2026 Term loan February 8, 2026$ 2,747.8 $ 60.6 $ 2,687.2 $ 2,754.8 $ 64.5 $ 2,690.3 2029 Term loan January 18, 2029 455.4 7.2 448.2 - - - Revolving facility September 11, 2025 100.0 - 100.0 160.0 - 160.0 5.000% Senior unsecured notes December 15, 2029 460.0 6.7 453.3 460.0 6.8 453.2 Fully paid off in 6.875% Senior secured notes January 2022 - - - 420.0 6.8 413.2 Total long-term debt$ 3,763.2 $ 74.5 $ 3,688.7 $ 3,794.8 $ 78.1 $ 3,716.7 Total debt$ 3,795.9 $ 74.5 $ 3,721.4 $ 3,822.9 $ 78.1 $ 3,744.8
See Note 5 to the unaudited condensed consolidated financial statements for
detailed discussion related to our debt as of
Contractual Obligations
See Notes 7, 10 and 20 to the consolidated financial statements for the year
ended
Off-Balance Sheet Arrangements
We do not have any transactions, obligations or relationships that could be considered off-balance sheet arrangements, other than our foreign exchange forward contracts and interest rate swaps discussed in Note 12 to the unaudited condensed consolidated financial statements.
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