Dun & Bradstreet Holdings Inc

NYSE:DNB

Earnings Call Transcript 2021-Q3

[Operator]

Good morning, and welcome to the Dun & Bradstreet's Third Quarter 2021 Conference Call. As a reminder, today's call is being recorded and your participation implies consent to such a recording. At this time, all participants are in a listen-only mode. A brief question-and-answer will follow the formal presentation. [Operator Instructions]

With that I would like to turn the call over to Deb McCann, Treasurer and Senior Vice President of Investor Relations. You may proceed.

[Deb McCann]

Thank you. Good morning, everyone and thank you for joining us for Dun & Bradstreet's financial results conference call for the third quarter ending September 30, 2021. On the call, we have Dun & Bradstreet's, CEO, Anthony Jabbour; and CFO, Bryan Hipsher.

Before we begin, allow me to provide a disclaimer regarding forward-looking statements. This call and including the Q&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 & Bradstreet's Investor Relations website at investor.dnb.com.

With that I'll now turn the call over to Anthony.

[Anthony Jabbour, Chief Executive Officer]

Thank you, Deb. Good morning, everyone and thank you for joining us for our third quarter earnings call. We are pleased to report strong third quarter results, as revenues for the quarter grew 22% and EBITDA grew 12%. Progress in our core business continues to accelerate as reflected in our organic revenue growth of 4.1% or 3.7%, excluding the impact of foreign currency.

Increasing growth in North America complemented another solid quarter in our International segment, due to strong retention rates, increased pricing, a growing share of wallet with our strategic clients the addition of new logos and the lessening of previously communicated headwinds.

On top of that, the Bisnode acquisition is progressing very well with the integration going better than we originally expected. Both Finance and Risk and Sales and Marketing had solid growth in the quarter. Two bright spots in particular were our risk and our marketing solutions. Internal investments in our risk solutions over the past few years has strengthened our position and demand remains high while supply chain and third-party risk management continue to be a point of focus for businesses throughout the world.

On the marketing side, our online Audience Solutions business continues to see robust growth rates and we see a significant untapped opportunity in the online business-to-business marketing landscape. This led us to strengthen our position through the signing of definitive agreements to acquire Eyeota and NetWise.

I'll go into more detail as I expand upon our latest innovations but these two complementary companies will extend our position further in the B2B online marketing value chain and build upon a business that has grown over 40% year-to-date.

Overall, we continue to focus on expanding and enhancing our offering set through internal investments, strategic partnerships and focused acquisitions. We are pleased with our increasing organic growth rate throughout this year and with the momentum we have entering the fourth quarter. We expect to drive progressively stronger growth in the fourth quarter versus prior year to establish a solid foundation for further acceleration into 2022.

As we close out the year, our key priorities remain consistent: innovate solutions and localize them globally, increase our share of wallet with strategic clients, approach and monetize the SMB space in new and innovative ways and finally integrate and accelerate the Bisnode acquisition.

The team has made great progress towards executing on these priorities. And I'll now share some highlights of those accomplishments, before I turn the call over to Bryan for a more in-depth financial review. After that we'll finish up by taking your questions.

New product innovation continues to be our primary objective. I'm pleased with the focus and urgency with which our North American and international teams are operating. As we look to enhance existing solutions and add net new capabilities, we've been able to leverage our incredible client base.

We've established Finance and Risk and Sales and Marketing advisory boards to help guide our road map through direct input from senior decision makers or industry experts from leading enterprises throughout the world. For example, with our recent launch of ESG Intelligence we're able to focus our solution on individualized client scores as opposed to relative scores or indexes based on industry code or some other shared attribute.

Listening to the needs of our clients incurs the more supply chain-focused use case that is very complementary to the risk and compliance scoring and workflow we have in the market today. We believe that an end-to-end workflow that incorporates financial, regulatory, compliance and ESG underwriting through data and analytics is a powerful tool for the industry and are pleased with the feedback we've received from clients and prospects today.

On the Sales and Marketing side, we continue to focus on building upon our strength in master data management and online marketing, while simultaneously bolstering our sales solutions through expanded data, third-party integrations and a more seamless UI/UX experience.

While the master data management and online marketing solutions makeup the vast majority of our revenues in the segment, we believe there's a lot of potential for us to evolve our sales solution from a deep research tool to one that is more agile and able to deliver on our global context in a more simplistic and effective manner.

We continue to streamline our offerings, expand upon our growing contact data coverage and to integrate third-party data with our solutions to make campaign activation more efficient and effective. With limited downside and significant upside, I'm excited about where we are today and where our team is driving us as we make significant progress in capturing a piece of this growing market.

Turning to our marketing solutions, this morning we announced the signing of Eyeota a fast-growing provider of audience-targeting capability that enables the activation of online audience segments. Eyeota's products extend our Audience Solutions business from being dependent on others for execution to being online and participating more fully in the B2B MarTech and AdTech supply chain.

We also entered into a definitive agreement to acquire NetWise, an industry-leading B2B online identity graph. Combined with the D-U-N-S Number and our existing offline data this enriched offering will allow marketers to target B2B clients and prospects across every major online channel, individual device or a marketing platform.

Just as our clients rely on the D-U-N-S Number for precision in their offline data, we're looking to provide the same level of confidence and consistency online as well. For marketers, this means they will have assurance that their online audiences are targeting the right people and that they can reach them across every online channel.

We are solving for the current audience shrinkage these marketers face today with the low-match rates that plague this industry. This will enable clients to build upon the investments they've made into data management mastered on the D-U-N-S Number and more readily activate that data in social, search and display advertising campaigns.

Said simply, Dun & Bradstreet has the offline B2B targeting data, NetWise enables marketers to translate that data into online audiences, and Eyeota syndicates it across the digital ecosystem. I'm excited about what we are doing both organically and through acquisition and believe we're on the right track to take advantage of these growing markets, relating to how sales and marketing professionals, our increasingly utilizing data and analytics in their business-to-business interactions.

Moving on to key sales won in the third quarter. We're pleased with the ongoing success we're having with our strategic clients which include renewal rates at nearly 100% and the addition of several new logos. As businesses face heightened pressure to meet regulatory requirements, prevent supply chain disruption and protect brand equity our risk and compliance capabilities are well positioned to assist our clients and prospects.

For example, we won competitive new business with one of the largest global investment bank and financial services companies in the world, who sought to expand automation opportunities for their onboarding and know-your-client processes. Our patented business verification process sets us apart from competitors. And our data provided the breadth and depth they required, particularly the beneficial ownership structures.

We also signed new third-party risk and compliance business with a current client, one of the three largest aerospace companies in the world to support their global trade compliance and corporate compliance efforts. Walmart renewed their multiyear agreement with us to support their supplier onboarding process and we look forward to continuing this important strategic client partnership.

We won new business with an existing client a top German multinational banking and financial services company to support their compliance verification and background checking needs. We are pleased with the ongoing growth of our third-party risk and compliance business across multiple industries and geographies.

We're very pleased to announce new business with one of the world's leading global microblogging and social media platforms. This multiyear deal supports their sales operation and client relationship management program, as they recognize the value of our patented matching capabilities, the ability to integrate and automate capabilities, our global coverage, and extensive hierarchy data and our sales and marketing data attributes.

We also continue to make inroads with innovative technology companies, such as DoorDash, as they look to reduce their risk through improved credit and accounts receivable prioritization. DoorDash chose D&B, for our comprehensive integrated portfolio monitoring and accounting compliance tools and the ability to manage financial risk and accounts of all sizes.

On the international front, we collaborated with Siemens on a two-day datathon event where over 180 of their colleagues from around the world, explored use cases in combination with the studio platform and AI technology to provide a tangible solution to the most impactful use cases, identified by business owners and analysts in the areas of risk, marketing, sales and procurement.

The event uncovered further Siemens business opportunities and as a result Siemens entered into an agreement leveraging Analytics Studio for sales and marketing. The access we acquired through our business deal to strategic European Global 500 clients such as the German bank mentioned earlier and Siemens is invaluable. And we continue to gain from these new clients to support their businesses with our global solutions.

Lastly in Asia, we successfully renewed another important strategic client, Alibaba who leverages our data to verify entities on its leading global e-commerce platform, data sourced through our Data Blocks solution delivered by our Direct+ API. Further as a trusted partner to Alibaba, we are progressing a number of innovative growth initiatives leveraging our global finance and risk solutions. This is an example of how Dun & Bradstreet is able to adapt and replicate our client success in North America to international markets and support the needs of some of the most sophisticated names in emerging markets.

While we continue to demonstrate success with our strategic clients, we're also making progress in the small and mid-sized markets. I'm excited to announce that we recently signed an agreement with TransUnion to launch a proof-of-concept for a blended commercial credit score that in part is powered by TransUnion data. This score is the integration of consumer data from up to two business principles with our commercial data and additional data assets to enrich and enhance the decisioning process for our clients. This score is expected to be available in approximately 90% of all inquiries and is particularly important to our clients who lend to small businesses including commercial banks, card issuers and small business lending institutions.

We believe our combined solution will increase our match rates, provide lift to our existing commercial scores and deliver superior small business score than any single stand-alone commercial or consumer credit score could not accomplish.

On the e-commerce front, we are seeing strong subscription numbers to our platforms such as Duns Manager and CreditSignal averaging over 1,100 new small business sign-ups per day. While still small, e-commerce sales in the third quarter are up nearly 50% from prior year quarter. We also completed implementation of a modern online shopping cart to include internationalization with additional payment options with the United Kingdom and an Ireland e-commerce product to launch shortly. These initiatives are all examples of our continued dedication to helping small businesses thrive.

In our International segment, we continue to roll out localized solutions across our own and partner markets. In the third quarter, we delivered 10 product launches across Europe, Greater China and the Worldwide Network partner markets. Data Blocks launched with partners in Europe, Asia and Africa and Finance Analytics launched in Latin America. These launches will be critical for driving product royalties in the future. We also launched Rev.Up and a beta version of ESG Intelligence in the UK along with our local language Hoovers offering in Greater China. These International solutions along with the many in North America we have discussed over the past few quarters are allowing us to create a significant amount of new product revenue.

For total company, the New Product Vitality Index or the percentage of revenues from new products was 8% in Q3 versus 2% in Q3 last year. We'll continue to drive more and more solutions into our markets around the world and look forward to updating you on our progress through the coming quarters.

Lastly, we continue with the successful integration of Bisnode with top line performance and synergy realization ahead of expectations. In the third quarter we launched localized D&B Hoovers solution in five markets. We also enhanced Bisnode's existing products including adding B2B credit decisioning on Bisnode's flagship Risk Guardian credit platform. These solutions will enable us to execute our strategy of migrating clients off legacy offerings on to modern digital platforms as well as attract new clients.

Regarding synergies, we are on track to achieve approximately $25 million in annualized net savings by year-end 2021. We remain on pace to achieve $40 million annualized of net savings by year-end 2022. Overall, I'm pleased with our continued progress in laying the foundation for accelerated sustainable growth throughout the remainder of 2021 and into 2022.

With that, I'll now turn the call over to Bryan to discuss our financial results and outlook for the remainder of 2021.

[Bryan Hipsher, Chief Financial Officer]

Thank you Anthony, and good morning everyone. Today I will discuss our third quarter 2021 results and our outlook for the remainder of the year. Turning to slide 1. On a GAAP basis, third quarter revenues were $542 million, an increase of 22% both after and before the effect of foreign exchange compared to the prior year quarter. This includes the net impact of the lower purchase accounting deferred revenue adjustment of $1 million and the net impact of the Bisnode acquisition.

Net income for the third quarter on a GAAP basis was $17 million or diluted earnings per share of $0.04, compared to a net loss of $16 million for the prior year quarter. The improvement was primarily driven by higher prior year expenses related to the retirement of debt as part of the IPO, lower interest expense and improvements in operating income. This was partially offset by a favorable tax benefit adjustments related to the impact of the carryback recorded in the prior year period.

Turning to slide 2. I'll now discuss our adjusted results for the third quarter. Third quarter adjusted revenues for the total company were $542 million, an increase of 22% both after and before the effect of foreign exchange. This year-over-year increase included 18 percentage points from the Bisnode acquisition and 0.25 percentage point from the impact of lower deferred revenue purchase accounting adjustments.

Revenues on an organic constant currency basis were up 3.7%, driven by increased demand for our solutions in both our North America and International segments. Third quarter adjusted EBITDA for the total company was $220 million, an increase of $24 million or 12%. The increase in EBITDA was primarily driven by the impact of Bisnode and increased organic revenues, partially offset by the impact of higher data processing costs. Third quarter adjusted EBITDA margin was 40.7%. Third quarter adjusted net income was $123 million or adjusted diluted earnings per share of $0.29, an increase from $101 million or $0.24 in the third quarter of 2020.

Turning now to slide 3. I will now discuss the results for our two segments North America and International. In North America, revenues for the third quarter were $374 million, an increase of approximately 3% from prior year. Excluding the impact of foreign exchange and the Bisnode acquisition, North America organic revenue increased $12 million or 3%.

In Finance and Risk, revenues were $214 million, an increase of 4% or 3% before the effect of foreign exchange. Excluding the impact of foreign exchange and the Bisnode acquisition, organic revenues increased $8 million or 4%, primarily driven by strong double-digit growth in our risk solutions and solid single-digit growth in our finance solutions from new business and increased wallet share from existing customers.

For Sales and Marketing, revenues were $160 million, an increase of $4 million or 2%. While data sales in our marketing solutions had another solid quarter, the overall growth in Sales and Marketing was partially offset by $2 million from the data.com legacy partnership wind-down. North America third quarter adjusted EBITDA was $186 million, an increase of $2 million or 1% primarily due to revenue growth, partially offset by higher data processing costs. Adjusted EBITDA margin for North America was 49.6%.

Turning now to slide 4. In our international segment, third quarter revenues increased 104% to $168 million or 105% on a constant currency basis, primarily driven by the net impact from the acquisition of Bisnode and growth in both Finance and Risk and Sales and Marketing solutions. Excluding the net impact of Bisnode, international organic revenues before the effect of foreign exchange increased approximately 5%.

Finance and Risk revenues were $109 million, an increase of 61% both after and before the effect of foreign exchange, primarily due to the Bisnode acquisition. Organic revenue before the effect of foreign exchange grew 2% with growth across all markets including higher revenues from our Asian markets; localized offerings in India; and growth from D&B Credit in Greater China, partially offset by elevated cross-border data sales in the prior year period.

Sales and Marketing revenues were $59 million, an increase of 300% or 307% before the effect of foreign exchange, primarily attributable to the Bisnode acquisition. Organic revenues before the effect of foreign exchange grew 22% including higher revenues from our UK and Greater China markets, attributable to multiple recently launched products higher data sales as well as increased Worldwide Network product royalties. Third quarter international adjusted EBITDA of $54 million increased $26 million or 93% versus third quarter 2020, primarily due to the net impact of the Bisnode acquisition as well as organic revenue growth and lower data costs, partially offset by higher net personnel expenses. Adjusted EBITDA margin was 32.2%.

Turning to slide 5. I'll now walk through our capital structure. At the end of September 30, 2021, we had cash and cash equivalents of $234 million, which when combined with the full capacity of our $850 million revolving line of credit through 2025 represents total liquidity of approximately $1.1 billion. As of September 30, total debt principal was $3,660 million and our leverage ratio was 4.5 times on a gross basis and 4.2 times on a net basis. The credit facility senior secured net leverage was 3.5 times.

Turning now to slide 6. I'll now walk through our outlook for the remainder of 2021 in which we are maintaining our ranges for revenue and EBITDA and increasing our range for EPS. Adjusted revenues are expected to be in the range of $2,145 million to $2,175 million, an increase of approximately 23.5% to 25% compared to full year 2020 adjusted revenues of $1,739 million. Revenues on an organic constant currency basis and excluding the net impact of lower deferred revenues are expected to be in the range of 3% to 4.5% for the full year.

Adjusted EBITDA is expected to be in a range of $840 million to $855 million, an increase of 18% to 20%. And adjusted EPS is expected to be between $1.06 to $1.09 versus our prior guidance for the high-end of $1.02 to $1.06 primarily driven by improvements in our interest expense and depreciation outlooks. Additionally, modeling details underlying our outlook are as follows: we expect interest expense to be approximately $200 million versus our original $200 million to $210 million driven by lower LIBOR rates and less borrowing than anticipated; depreciation and amortization expense of approximately $80 million excluding incremental depreciation and amortization expense resulting from purchase accounting versus our original approximately $90 million, primarily driven by lower business depreciation than anticipated; adjusted effective tax rate of approximately 24%; weighted average shares outstanding of approximately 430 million.

And for CapEx we expect approximately $237 million which accounts for the $77 million purchase of our new global headquarters in Jacksonville Florida. And finally, with organic growth continue to accelerate each quarter we expect Q4 to be at or above the high end of our organic growth range versus at the high end of the range which we discussed on our second quarter call. We look forward to closing out 2021 on a high note and heading into 2022 with positive momentum.

With that, we're now happy to open up the call for questions. Operator, will you please open the line for Q&A?

[Operator]

Thank you sir. [Operator Instructions] Your first question comes from the line of Hamzah Mazari of Jefferies.

[Mario Cortellacci, Jefferies]

Hi, this is Mario Cortellacci filling in for Hamzah. Could you just give us an update and can you talk about how many SKUs you guys have currently product-wise? And give us a sense for how your product has pricing power versus others.

And then maybe is there any rationalization that you can do within your SKU count that that could potentially give you even more pricing power going forward?

[Anthony Jabbour, Chief Executive Officer]

So, Mario in terms of number of SKUs I don't have that off the top of my head. And we've got a number by each of the core lines of business and with Finance Risk Sales and Marketing and then the International versions of them. But a decent number of products covering the entire space that we're focused on which is organizations globally covering the largest in the world to smaller SMB products.

So, tough one to answer but I'd say that we feel really good about the product inventory that we have and how we're going to market with it. And certainly with a number of our products we can truly have great pricing power with them.

And in areas like when we talked about this morning on the online marketing side we are adding capability to further increase some of the pricing power that we have. So, there are products that overlap. We talked about that in the Bisnode acquisition as an example and where we would be leveraging some of the products both ways and we'll continue to do that.

We'll do it in a client-focused manner so that our clients are receptive to continuing to partner with us and work with us. And we'll migrate them over time retaining the relationship retaining the revenue and on our side finding more efficiency by any overlapping products.

[Mario Cortellacci, Jefferies]

Got it. And then just my follow-up is around like this marketing space in some of these acquisitions. Just could you help us understand the competitive dynamics in the marketing space? And one of the credit bureaus is obviously getting all bigger in digital marketing.

But I guess just is this differentiated because it's more B2B, or is there anything else to call out versus somebody like a TransUnion or what they're doing? And then are there any other major competitors within this B2B marketing space?

[Anthony Jabbour, Chief Executive Officer]

Yes absolutely. Really what differentiates us from others who are in the space is that we are focused on B2B. And B2B is what's great in the B2B world in many regards is you can see the trend that have been successful in the B2C world and B2B tend to lag it.

And so for us we can see that the success here has been strong and there's a great opportunity in this space. And with everything that we have in terms of our D-U-N-S Number our data the number of brands that we work with directly today versus having those through an agency really sets us up with a great advantage in this space.

And also as you look at the -- just the value of an ad to a B2B marketer is much higher than it is to a B2C marketer. So, having a restaurant putting up an ad for a hamburger certainly on the value compared to a B2B ad reaching out to a known business contact of an organization selling an ERP system as an example. So, we see that the demand will be higher for B2B because the price of the B2B ad will be more valuable than the B2C ad.

[Mario Cortellacci, Jefferies]

Great. Thank you very much.

[Anthony Jabbour, Chief Executive Officer]

Thank you,.

[Operator]

Your next question comes from the line of Kevin McVeigh of Credit Suisse.

[Kevin McVeigh, Credit Suisse]

Great. Thanks so much. Could you unpack a little bit the improvements in the organic growth in Q3? And then it looks like you're going to see a really nice acceleration into Q4 as well. Maybe how much of that is just better retention versus pricing versus new product?

And then you talked about a vitality index of I think up to 8% versus 2% in Q3. How should we think about kind of a longer-term target for that? And is there any way to kind of triangulate that to what it can mean to organic growth? So, I know there's a lot there but really focused on kind of the organic growth improvement in Q3 to Q4 and then ultimately what the vitality index can mean for that?

[Bryan Hipsher, Chief Financial Officer]

Yes. Hey Kevin, thanks for the question. When we look at the organic acceleration throughout the year, you've seen it step up now sequentially from Q1 to Q2 and now into Q3 and we expect that to continue into Q4. Anthony mentioned earlier pricing is certainly one component of that. We talked about as the renewals fall through and we start to see the 12-month peel off and the 13-month multiyear contracts step-up we're seeing that acceleration into Q3 and Q4.

Retention we have a lot of focus and energy behind that. A lot of the improvements we're making from a data quality perspective, data consistency expanding the data set into new and alternative data components all of that is helping to drive a better customer experience from that side which plays into retention as you said.

And then on the new product side, we've had as Anthony talked about some really nice successes both in that marketing space, which is a subsegment of the overall sales and marketing. But really in that third-party risk and compliance side, we saw nice growth there where we're handling anything from the KYC of a large multinational investment bank to we extended with Walmart from that perspective. So that's a space in a market that is very germane and very much growing. And we see that we're very well-positioned to continue to drive acceleration in that area.

[Kevin McVeigh, Credit Suisse]

That's helpful. And then just on the two acquisitions it seems like the growth is pretty strong relative to the core business. How should we think about that? Is there any impact on kind of the 2021 guidance and then in terms of just numbers around that? And can you give us a sense of the size and just the growth rate overall?

[Bryan Hipsher, Chief Financial Officer]

Sure. Yes, Kevin, thank you. And we literally -- we're just signing those and they'll close here relatively shortly I would say one sooner in the next few weeks. Overall, we are paying about $165 million for one of them and about call it $69 million for the other. So that's kind of the purchase price from that perspective.

We talked about the size of that marketing business and where it's at today. I mean this will in essence a little bit more than double the size of that. And so when we look at those growth rates and we look at the -- as Anthony said the interconnectedness and what we can leverage from the DUNS Number we're pretty excited about the growth opportunity.

In terms of guidance because we signed them Kevin and we haven't closed them they are not included in the guidance ranges that we provided. And they certainly won't be included in any organic right just because of the acquisitive nature and the fact that we're backing those out generally for -- we're backing those out for the first 12 months.

[Kevin McVeigh, Credit Suisse]

Super helpful. Thanks again.

[Bryan Hipsher, Chief Financial Officer]

Thanks, Kevin.

[Operator]

Your next question comes from the line of Ashish Sabadra of RBC Capital Markets.

[Ashish Sabadra, RBC Capital Markets]

Thanks for taking my question. So look like pretty strong pretty solid progress on the Bisnode integration. I was wondering as you've owned Bisnode for almost 10 months now. Do you believe that there could be potential upside to the cost synergies? And also from a revenue perspective, I was wondering if you could talk about the cross-selling success that you've had there. Thanks.

[Anthony Jabbour, Chief Executive Officer]

Sure. On the progress like I said in my prepared remarks we already had $25 million in annualized savings. Next year we'll get to $40 million of annualized savings. And first of all I could say we're extremely proud of the team and the great work that they're doing. From an operational execution perspective during COVID overseas, lots going on lots of reasons for there to be operational. The team has done a phenomenal job on the synergy side, on our client side and driving value there. So at this stage we feel pretty good about the synergies that we're willing to get from it.

And our focus into the second part of your question Ashish is on the growth. And that's where we'll look to continue to drive our products into that client base. We continue to see a really nice momentum and receptivity from those clients and I think in part to how our teams are taking care of them through the transition. But it's exciting to see I think that Sales and Marketing products are at 12.5% increase year-over-year into that base. So there's some really good momentum that we have overall with that acquisition and an excellent product and a team executing it.

[Ashish Sabadra, RBC Capital Markets]

That's great. And maybe I was wondering if you could drill down further on the TransUnion partnership that you talked in your prepared remarks. How do you plan to go to market? How do you think about the addressable market there? And how do you think about the opportunity over the next three years to five years? Thanks.

[Anthony Jabbour, Chief Executive Officer]

As you know it's a really exciting opportunity for us and I think for TransUnion as well candidly. And I won't speak for them. But in the SDD space where we focused on -- we've talked about this before where the difference between a consumer credit report and our commercial at that end isn't the same gap as you -- as it is for larger businesses, but there's a difference in price between them. And so it's been an area where we've been not as strong. And so what I'm excited about this deal with what we're doing is we're -- again we talked about our commitment that we're going to make at the very beginning. And what I hope you see is, us continuing to do what we say we're going to do and focus on it. And we've not wavered on the SMB space in terms of the number of products that we're bringing to that space.

And especially, with this capability on the blended score, how it can help in that space by increasing match rates, how it can help increase our commercial score that we had and how it can help get lift over just the consumer credit bureau score as well.

So from that perspective, it really has the makings of a winner. And I'm excited about and excited how we can help our larger and enterprise clients as well that focus on this space. Because, what I'd say is, from a -- again we're thoughtful here in terms of how we're describing it. And it's a proof of concept.

We've been doing analytics for a number of months right now. We feel good about the momentum. Otherwise, obviously, we wouldn't have introduced it on the call. But it's still early stages and we want to be transparent with you in terms of what's coming, right, and where are we headed.

So you see in the Product Vitality Index score that we've increased new revenue contributions to the company, 8% versus 2% last year. So part of this is just continuing to give you headlights into what we see coming next. And this certainly is one which is exciting for us and exciting for our clients.

And as I mentioned, again, in the prepared remarks, when we talked about our -- we've got phenomenal clients. We're very, very fortunate to have them. We're fortunate they participate in advisory boards. They're experts. We've had a great opportunity to listen and partner with them. And what I'll say is, the interest level is very high from those that we've talked about with this opportunity.

[Ashish Sabadra, RBC Capital Markets]

Thanks, Anthony. That is very helpful color. Thank you.

[Anthony Jabbour, Chief Executive Officer]

Thank you, Ashish.

[Operator]

[Operator Instructions] Your next question comes from the line of Andrew Jeffrey of Truist Securities.

[Andrew Jeffrey, Truist Securities]

Hi. Good morning. Appreciate you taking the questions. Anthony, I wanted to just spend a minute on sales and marketing and it sounds like these acquisitions are a clear commitment to that space and enhancing your capabilities there.

I can't help but note the relative outperformance rest of world. And I wonder if you could just contrast perhaps some of the success you're having internationally with the relatively slower growth and maybe what is a more competitive market in the U.S.

And how do you think some of the success you've had, rest of the world, do you think maybe perhaps, in conjunction with recent M&A, can accelerate the U.S. growth, whether there are some learnings you can bring to domestic markets?

[Anthony Jabbour, Chief Executive Officer]

Great question, Andrew. What I'd say, overall, when you think of sales and marketing and again in the pure sales side where -- and I know there have been some great growth announced in the quarter and in the space. There's -- our focus more traditionally is on the marketing side, the data side, the APIs for our master data management around our D-U-N-S Number.

That's historically, I'd say, the nature of our business versus selling to salespeople to enable sales success. And so, when we look at what we're doing in this space and just the natural success we're having in our audience-targeting business, marketing business, the growth of 40%, we're leveraging the strength that we have with the data of all these businesses, global, the D-U-N-S Number, et cetera.

And on the sales side, again, selling more not to the end seller in many cases, but to researchers of the company. So if, Andrew, you actually wanted to target someone and do a lot of in-depth research on them, versus just identifying who the CTO is of a company to call on them, that's where we've been focusing.

So as we look at sales and marketing more holistically -- and again, as you look at the relative size of our clients, internationally we have more larger client SKU versus in the U.S., we also have smaller clients. And so there's a difference there in terms of how the integration of our marketing and sales solutions would benefit a large enterprise client versus a small or mid-sized client.

And what we're doing is, focusing on the marketing efforts, having a better thoughtful approach about marketing only online data space, growing into account-based marketing, expanding into engagement and trigger events that's keeping the relationship and then cutting that lead into sales versus purely being on an adjusting sales.

And that's what we're doing with the relative size of our sales business that we talked about, is a smaller part of that. So the true sales, selling to the sales executive, like you said, is a probably $90 million to $100 million in revenue of our whole sales and marketing business.

And that is an area where we're excited about, because we see an opportunity there and we see more upside than downside in terms of how we can continue to enhance it with additional contacts, simplified user experience and interface, et cetera.

And so that's why, I think, we're seeing the differences internationally versus domestically. What our core strength is here around D-U-N-S around the data how we're building muscle upon muscle with these acquisitions and really honing in on where we're really strong and great on. And then from that basis moving more definitively into the sales -- pure sales side.

[Andrew Jeffrey, Truist Securities]

So at the risk of over-generalizing, is it safe to say that the D&B Sales and Marketing initiatives are more data-intensive as opposed to being sort of more CRM-oriented? I just want to make sure I can kind of wrap my head around it a little -- to go-to-market a little bit.

[Anthony Jabbour, Chief Executive Officer]

Well, I think it's going to -- it's hard to see the data feeds the CRMs. So it's -- the line's blurred a bit there. But what I'd certainly say is from an audience-targeting solution, we are -- our foundation is data and marketing moving into sales. And like I said if you take sales and break it down, there's larger enterprise sales where again there's a lot more research and thought going into building campaign versus we want to sell to every hospital and we want the CIO of every hospital. And it's that simple.

We're going to continue to move more and more in that direction. But really what our focus Andrew is really solidifying the foundations where we're strong and also continuing to create the D-U-N-S Number in a more and more meaningful way in the online world. So you see obviously the strength that we have with it in the offline world. And as we go online really being able to take that D-U-N-S -- like there are a number of online IDs that have to get created along the process.

This will enable us and our customers that have D-U-N-S Numbers and making it more relevant to be able to more easily market online. So that's what we're excited about. And that's why I said the focus is on that right now. While in the meantime, we continue to focus on the contacts on all the things that we've talked about before from a pure selling perspective, we've got a significant -- we talked about having 30 million high-quality contacts by the end of this year. We're over that. We're 31 million at the end of Q3.

So, the focus that we have of contacts and people a bunch of just general selling we're absolutely continuing to move in that direction. And like, I said, improving the UI improving the integration of our marketing efforts. Really what we're doing with these acquisitions is really hardening the great capability in the leadership space that we have in the B2B world.

[Andrew Jeffrey, Truist Securities]

All right. Before define your progress, that’s really helpful.

[Anthony Jabbour, Chief Executive Officer]

Appreciate. Thanks Andrew.

[Operator]

Your next question comes from the line of Gary Bisbee of Bank of America Securities.

[Gary Bisbee, Bank of America Securities]

Hey, guys. Good morning. Nice to see the organic growth -- revenue growth progress you made here. So, I wanted to ask about the portfolio in regards to growth and you talked about risk. I know it's small within F&R but remains robust, this online B2B marketing growing rapidly. But is there a base of revenue there or some pockets of revenue that are declining and sort of drags on growth at these smaller parts of the portfolio they are really having to outgrow?

Or would it be more reasonable to say there's big pockets of legacy revenue within the company that just aren't growing? And it strikes me the growth rate should be faster given all the optimism around new products and customer wins that you've talked about in some of these areas that are growing really well, if everything else was growing as well. And maybe if you could just sort of size what part of the revenue base is really growing? What part if any is declining? And what part is stable at this point? Thank you.

[Bryan Hipsher, Chief Financial Officer]

Yeah. Gary, it's a -- its to your point how we think about and attack right our operational plans from that perspective. And so, when you look at the overall Finance and Risk right this quarter grew about 4% in North America. Where you saw the primary growth and we've talked about it, call it, it being roughly in the $100 million range that third-party risk and compliance business. And so, that's certainly been accelerating at like strong double-digits.

And when you kind of blend the finance solutions and then the lower end of the market, which was the legacy credibility business that was one of the businesses, Gary that we made a lot of strategic changes to in terms of sales practices in terms of how we went to market there.

And so that has been a bit of a headwind for us as we were kind of leading through late last year and into this year. And so, what's good is as we continue to progress through a lot of those changes are now under place. And so we're picking up from a place where the back door, as Anthony calls it, is being closed more and more from that perspective.

On the Sales and Marketing side and if you thought onto that again, you have the master data management business which is the largest component of that, very strong, very sticky. I would say, it grows similar to what -- for instance, the finance business grows from that side of the equation, because it really kind of fits as that middle intra-layer in larger companies, data lake strategies, et cetera.

When you start to peel back a few components, what Anthony was mentioning is that, the sales business has been something that we've had to really improve since we've got here. And so, it's getting better, but certainly has been something that has been a bit of a headwind, as we progressed through since the privatization. The marketing business as Anthony said, and to Andrew's point, smaller part of that business we talked about it being roughly $30 million, but it is growing quite rapidly from that perspective. And so having even more focus, more attention, adding the assets of NetWise and Eyeota, we're trying to build again muscle on muscle, and really take advantage of an accelerating market.

And one that traditionally, has been focused on larger kind of B2C side, this is very focused business to business. And when you think about, approaching what Dun & Bradstreet right with our D-U-N-S Number and tying that to a digital ID, and then getting to Bryan Hipsher or Anthony Jabbour, the CFO and CEO within that organization the advertisement for a multimillion-dollar ERP or HRS system is very different than the so far, that I mentioned last week and then shot up as an app from that perspective. So again, that's kind of how we see the growth opportunities and certainly two hot places are in that third-party risk and compliance and then online marketing.

[Gary Bisbee, Bank of America Securities]

Great. And then a follow-up, the new innovation or the – obviously, it sounds like a lot of good things going on. Just at a high level, how much of the new products and innovation you've been doing is sort of replacing stuff that when you got there wasn't of the quality it should be, to win in the market versus new innovation that expands your capabilities and thus expands revenue opportunity market opportunity? Is there still some of that or fixing stuff that wasn't good enough, or is the pivot towards, hey this is really largely incremental and additive to our growth potential? Are you far along on that? I just haven't heard you really discuss that, since maybe around the IPO. Or you were still fixing a lot of stuff that wasn't done right? Thank you.

[Anthony Jabbour, Chief Executive Officer]

Yeah, I think that's a great question, Gary. And certainly, we have examples in both buckets and even products, which were good. The markets continue to move and we need to continue to move with them and ideally move ahead of them, when certain clients are ready. Bryan, any quantification on that?

[Bryan Hipsher, Chief Financial Officer]

Yeah. So Gary, from your perspective what I would say, when I look at the components that are in that New Product Vitality Index, many of those things like for instance on the Analytics Studio right or what we're doing in that digital marketing space are really net new opportunities net new TAM. Anthony mentioned on the early side of what we're doing with ESG, right? Again, that's a new in essence kind of vertical that, we're going into so net new opportunity from that side.

In terms of some of the work, we're doing from continuing to upgrade platforms whether it's UI/UX and some of the sales spaces whether that's in terms of just converting off of and really upgrading right the underlying structures of some of the platforms on the Finance and Risk side that work is still ongoing. But the majority of those revenues from a new product perspective are net new versus in essence replacing, if that makes sense.

[Gary Bisbee, Bank of America Securities]

That's really helpful. Thank you.

[Anthony Jabbour, Chief Executive Officer]

Thanks, Gary.

[Operator]

Your next question comes from the line of Manav Patnaik of Barclays.

[Manav Patnaik, Barclays]

Thank you. Good morning. Just on the TransUnion partnership, I just want to confirm, I didn't remember seeing some press release that is focused mostly in South Africa. So I just want to confirm, this was something different and bigger. And also, this was the first time D&B has partnered with a consumer credit bureau to do anything like this?

[Anthony Jabbour, Chief Executive Officer]

Sure. Thank you, Manav. Yeah. No, this is something larger. That was in a previous deal that we've done with them together in South Africa. This one is domestically focused. And to my knowledge, I know, I don't believe anything had ever been done with a consumer credit bureau before, and certainly not in recent history. So going back nothing like that, in something, but certainly not in recent history. So that's why we're excited about it. It's a new capability in the market. Again, as we're looking at, where we're strong, where we're average, where we've got vulnerabilities, what are the things that we can do? This is something which helps in the area, where we're vulnerable that, we've talked with all of you about before from a competitive perspective, and really puts us in a position of strength here. So we're excited about it.

[Manav Patnaik, Barclays]

Got it. Thank you. That's helpful. And then just broadly, historically, you've seen probably just to a certain extent the fourth quarter is always the heavily loaded quarter for Dun & Bradstreet. I know you guys have tried to change things up for the better. So I'm just trying to understand, or get some help on how we should extrapolate, let's just say, the 4.5-plus percent organic growth you ended in the fourth quarter and how we should think about that into 2022?

[Bryan Hipsher, Chief Financial Officer]

Yeah, Manav, I think Anthony said, it's the right way, right? It sets a really nice foundation for us to continue to accelerate organic growth into 2022. And so obviously, as we finish out the year, and we get into the Q4 earnings call, we'll provide formal guidance at that time. But certainly, we're really pleased with the continued acceleration and the continued momentum we're building into that recurring organic revenue stream.

[Manav Patnaik, Barclays]

Got it. Thank you.

[Operator]

Your next question comes from the line of Kyle Peterson of Needham.

[Kyle Peterson, Needham]

Hey, good morning guys. Thanks for taking the questions. Just wanted to touch on the M&A outlook and pipeline. Obviously, you announced these two deals this morning. They seem like good fits. Are you guys ready and still looking for more deals, or should we expect some sort of a digestion and integration period for these two?

[Anthony Jabbour, Chief Executive Officer]

No, Kyle, what I'd say is, we're always looking for M&A that will help us and drive shareholder value. And the way we're organized our team can digest these ones. If we saw a great one pop up tomorrow we'd go after it. We're bigger. And we've been active in the space. We've looked at a number of companies as you can imagine. And oftentimes the best strategic move you make is when you don't do something.

And so we're pleased with the decisions we've made walking away from some deals. But we'll be very thoughtful about what are the right types of acquisitions for us that would really benefit our clients and help accelerate our growth. And that will continue where we have conversations today on other M&A opportunities.

[Kyle Peterson, Needham]

Got it. That's helpful. And then I guess just a quick follow-up on the outlook just curious on the interest expense. I guess like the guidance implies that there's a little bit of a step-up in 4Q compared to where we've been at over the first nine months of the year. Is there anything going on related to like pre-funding some of these M&A that we should keep in mind, or has there just been an element of conservative -- or conservatism or anything that we need to kind of keep in mind for our models?

[Bryan Hipsher, Chief Financial Officer]

Yes. So clearly we came out of the range of what our original guidance was, right? And so we've stepped that up. Certainly, we think that we'll continue to perform well against expectations on that side. And certainly, as we head into the end of this year, you're right, we'll use a little bit of cash and some of the revolver, right, to fund the two acquisitions. But really as we lead into next year, obviously, the other thing we have our eyes on is the -- both the secured and unsecured notes that have the February 2022 non-call period coming up. And so those are at $420 million at 6.875 and $450 million at 10.25. Obviously, the market is in a very different place than it was almost two years ago when we put those in place.

So all of those types of things we have our eyes on. And we'll look to drive, obviously, first and foremost, the operational results, but continue to see good opportunity in terms of some of the non-op items to enhance our overall earnings.

[Kyle Peterson, Needham]

Great. That's helpful. Thanks guys. Nice quarter.

[Anthony Jabbour, Chief Executive Officer]

Thanks Kyle.

[Bryan Hipsher, Chief Financial Officer]

Thank you.

[Operator]

Your next question comes from the line of Andrew Steinerman of JPMorgan.

[Andrew Steinerman, JPMorgan]

Hi. I wanted to talk a little bit about Bisnode revenues. Of course, I see on slide 6 in the footnote that Bisnode's revenues are on track for 19% to 21%. So if you could just help us focus in on third quarter Bisnode revenues. I know you're going to say that there's some like-for-like type situation. But my question is, is Bisnode's revenues growing yet? And when do you think kind of the pace of the Bisnode revenue growth could pick up?

[Bryan Hipsher, Chief Financial Officer]

Andrew, thank you. Yes, as Anthony said, this is a large-scale transaction, obviously, really complex in a pretty tough period. And the team has done a really nice job. And so when we look at kind of comparable last year the business was declining call it about 1.5 points. This year, it's growing call it somewhere around 2%. And so it has turned the corner Andrew from that perspective.

The Nordics are having a good year from that perspective. And what we're seeing in what our original thesis was, was that the Dun & Bradstreet parts are growing faster than the overall Bisnode. So they're certainly driving the majority of that growth. And Anthony even dropped as we brought some new products to bear in the Sales and Marketing relatively quickly those are growing almost 12.5%. So, small base, but of course, showing good momentum from that perspective.

[Andrew Steinerman, JPMorgan]

Okay. Thank you.

[Bryan Hipsher, Chief Financial Officer]

Thanks. Andrew.

[Operator]

Your next question comes from the line of George Tong of Goldman Sachs.

[George Tong, Goldman Sachs]

Hi. Thanks. Good morning. You originally expected organic growth to be in the lower half of the 3% to 4.5% range in the third quarter and you outperformed that target. Can you elaborate on what drove the upside and if there was any pull forward from future quarters that impacted the growth?

[Bryan Hipsher, Chief Financial Officer]

Yes, George, so no pull forward from that perspective. When we talked about on the prior call, we said that we were looking at kind of the middle or a little bit below the middle of the guidance range. And so we came in at the 3.7% certainly had good sales activities. We've certainly seen not like a swing right on the usage side but again relatively in line with expectations. And really it was just a general, I would say straightforward performance from that perspective. So pricing is flowing through. Sales are continuing to flow through and outpace overall revenue growth. And our retention has continued to improve. And so Anthony said, it our client engagement and the sentiment with our clients continues to improve and enhance. And those are all the, I would say positive indicators that we're doing the right things and I think the results are reflecting that.

[George Tong, Goldman Sachs]

Got it. That's helpful. And then as it relates to retention how much of the improvement is coming from your SMB segment versus enterprise customers? And as it relates to SMB, can you provide examples of traction that you're seeing with SMB-focused new products your new SMB portal? And just provide a little bit extra detail there.

[Bryan Hipsher, Chief Financial Officer]

Sure. So maybe I'll open it up with the retention numbers part and then Anthony, can talk a little bit about what we're doing with the product side. And so again we continue to -- we always focus on we call muscle on muscle right? So the strategic accounts have been nearly 100% George, from that perspective. And so it's a large portion of our revenue and the retention rates have been great.

What we've seen is both improvements in the middle market customers but also starting to see some improvements on that small side, so shifting from some more transactional to longer term. Our multiyear contracts continue to be in that roughly 50% range a little bit below that. And then we're also again really seeing and focusing on multiple products, per rather than that kind of single product per that we were accustomed to on the small side. So maybe Anthony, you could talk about what we're doing on the SMB side?

[Anthony Jabbour, Chief Executive Officer]

Yes on the SMB side on the e-commerce side, we're excited about what we're doing. And that's a long play in terms of there's an article by Gartner talking about 43% of all B2B buyers preferred not speaking to a live person. So what that highlights is, market more to them and give them e-commerce capabilities for them to actually make the purchases themselves. And this e-commerce initiative is one that -- that's the long game for us in terms of building up more and more capability there and starting obviously, with the SMB space.

So we're excited with the number of additional subscribers that we have. It's almost 40% over last year. We've created a lot of new product capability in that space as well in addition to, data sets et cetera that they can buy. But we've also launched our freemium-to-premium working model. So our clients being able to take our SMB front -- take our product test it play with it like it then buy it. And well that's worked out well.

But really across the business in the -- I would say, online marketing side we have the revup Now capability that we've launched on the e-commerce site where SMBs can sign up inexpensively try it out get reports on, what type of hits that they've been getting with the online marketing, who clicked on what ads, et cetera. So we're going to continue to deliver more and more new capabilities when you think about that space. And I hope what you're seeing is, we're fulfilling that and we'll continue to add more capabilities in that space to build it out further and further.

[George Tong, Goldman Sachs]

Got it. Very helpful. Thank you.

[Operator]

At this time, I'm showing no other questions. I will now turn the call back over to Anthony Jabbour, for closing remarks.

[Anthony Jabbour, Chief Executive Officer]

Thank you. As always I'd like to thank my Dun & Bradstreet colleagues for their exceptional efforts to sustainably grow our business for the years to come and to our great clients for their partnership and for the guidance. Thank you for your interest, in Dun & Bradstreet for joining us on the call this morning. Hope you have a wonderful rest of the day.

[Operator]

This concludes today's conference call. Thank you for participating. You may now disconnect.