Dun & Bradstreet Holdings, Inc.
Q2 2020 Earnings Call Transcript

Published: 9 Aug 2020

[Operator:]

Ladies and gentlemen, thank you for standing by and welcome to the Dun & Bradstreet Second Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] I would now like to hand the conference over to your speaker today, Deb McCann, Treasurer and Senior Vice President of Investor Relations. Thank you. Please go ahead.

[Deb McCann:]

Thank you. Good morning, everyone, and thank you for joining us for Dun & Bradstreet's financial results conference call for the second quarter ending June 30, 2020. On the call today 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, 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. Anthony will begin with an overview of Dun & Bradstreet followed by our second quarter highlights. Bryan will then take you through a review of the financials before we proceed to Q&A. With that I'll now call over to Anthony.

[Anthony Jabbour:]

Thank you, Deb. Good morning everyone, and thank you for joining us for our first earnings call as a public company, following our IPO in July. It was great to meet many of you during the course of our IPO road show, and we look forward to getting to know many more of you in the future. Our recent IPO was a significant milestone for our organization and we're excited to be a public company once again. As some of you may be new to our story, I would like to spend a few minutes to take you through a brief overview of who we are and what we do, the significant transformation we are undertaking, the market opportunity we see in front of us, and the growth strategy we have underway to continue our evolution of this great and storied company. Please note that this overview will make today's call longer than what will be typical going forward. I'll then provide an overview of our recent progress and performance in the second quarter and then turn the call over to Bryan for a financial review of the quarter, followed by our expectations for full-year 2020. Dun & Bradstreet is a global provider of mission-critical business decisioning data and analytics. Our strong and iconic brand has been relied upon for 179 years to help businesses grow and thrive through the power of data and analytics, through all phases of the business lifecycle and in any macroeconomic environment. We manage our business and report our financial results through two geographical segments

[Bryan Hipsher:]

Thank you, Anthony and good morning everyone. Today, I’m going to discuss our second quarter 2020 results and then our full-year guidance. Turning to Slide 1, on a GAAP basis, second quarter revenues were $421 million, an increase of 5.4% or 5.6% on a constant currency basis compared to the prior year quarter. This includes the net impact of the lower purchase accounting deferred revenue adjustment of $36 million. We had a net loss of $207 million for the second quarter, or a diluted loss per share of $0.66, compared to a net loss of $94 million for the prior year quarter primarily driven by expenses related to the redemption of the preferred stock and partial pay down of the senior unsecured notes and higher equity-based compensation cost. This was partially offset by the net impact of the lower deferred revenue adjustment. Turning to Slide 2, I’ll now discuss our adjusted results for the second quarter. Second quarter adjusted revenues for the total company were $421 million, an increase of 5.4% or 5.6% on a constant currency basis. The increase was driven by the lower purchase accounting deferred revenue adjustment of $36 million. This increase was partially offset by known headwinds as previously communicated. These headwinds were driven by a decision we made in the second half of 2019 to make structural changes within the legacy credibility business, lower royalty revenues from the wind down of the data.com partnership, and non-recurring revenues in the worldwide network in our UKI businesses. The total impact of these known headwinds was $16 million. Additionally, we saw some impact from COVID-19 that contributed to lower usage-based revenues of approximately $6 million across the segment. However, excluding these unique items, revenues grew approximately 2%, primarily from growth in our subscription-based revenues. Adjusted EBITDA for the total Company was $176 million, an increase of 18.5%, primarily driven by the lower purchase accounting deferred revenue reflected in the corporate segment. This was partially offset by lower revenues I just discussed net of reduced net personnel and travel expenses due to ongoing cost management efforts. Adjusted EBITDA margin was 41.9%. We had an adjusted net income of $82 million or adjusted diluted earnings per share of $0.26. Turning now to Slide 3. I will now discuss the results of our two segments, North America and International. In North America revenues for the second quarter decreased 1.8% to $354 million. Finance and Risk revenues decreased $7 million or 3.6%, 3.5% on a constant currency basis to $194 million. The decrease was primarily driven by a decision we made in the second half of 2019 to make structural changes within the legacy credibility solutions, and this represented approximately $6 million of the decreased revenue. We also saw the impact of COVID-19, which contributed to lower usage revenues across our solutions of approximately $4 million. These declines were partially offset by an increase in our subscription based revenues of approximately $3 million. Sales and Marketing revenues increased less than 1% to $161 million. This increase was primarily due to revenues of $4.7 million from the acquisition of Lattice, which was acquired in the third quarter of 2019. This was partially offset by lower royalty revenues of approximately $4 million from the data.com legacy partnership. Adjusted EBITDA for North America decreased $5 million or 2.8% regularly do lower revenues. Adjusted EBITDA margin for North America was 48%. Turning to Slide 4. In our International segment, second quarter revenues decreased 9.9% or 8.9% on a constant currency basis to $68 million. Finance and Risk revenues declined $8 million to $56 million. Excluding the approximate $1 million impact for foreign exchange, the remaining decrease was driven primarily by nonrecurring revenues in the worldwide network in our UKI business of approximately $6 million and the impact of COVID-19 on usage volumes in our owned Asian markets of approximately $2 million. Sales and Marketing revenues increased $0.4 million to $13 million, driven primarily by increased product royalties from our worldwide network. International adjusted EBITDA of $20.2 million declined versus Q2 2019, primarily due to lower revenues with adjusted EBITDA margins of 29.5%. Adjusted EBITDA for the corporate segment increased $39.9 million, primarily due to the net impact of lower purchase accounting deferred revenue adjustment of $36 million. Turning to Slide 5, I’ll now walk through our capital structure. At the end of June 30, 2020 we had cash and cash equivalents of $99.8 million, which when combined with our $313 million available borrowing capacity under our $400 million revolving line of credit due 2024, represents total liquidity of more than $400 million. Total debt principal as of June 30 was $4.061 million and our leverage ratio was 5.6 times on a gross basis and 5.5 times on a net basis. On July 6, 2020, we completed the initial public offering and concurrent private placement, which raised net proceeds of $2.2 billion after deducting underwriting discounts and IPO-related expenses. We used the majority of these proceeds to redeem the full amount of preferred stock in 40% or $300 million of our senior unsecured notes. As of today, our current debt principal is $3.674 million consisting of $2.524 million of term loan, $700 million of secured notes and $450 million of unsecured notes. In addition, we have approximately $600 million of cash and cash equivalents. In conjunction with the IPO, we also had a 25 basis point step down to our term loan spread taking it from 400 basis points to 375 basis points. This step down will save us approximately $6 million of annualized interest. The revolver spread also reduced as a result of the step down from 350 basis points to 325 basis points. Turning now to Slide 6, I'll walk you through our updated outlook for full year 2020. For the year, revenue on a constant currency basis is expected to be in the range of $1.729 million to $1.759 million. Adjusted EBITDA is expected to be in the range of $704 million to $724 million. Revenue and adjusted EBITDA both include a negative $21 million impact from deferred revenue purchase accounting in both the low and high ends of the range. Adjusted EPS is expected to be in the range of $0.89 to $0.93. Again, adjusted EPS includes a negative $0.04 impact from deferred revenue purchase accounting in both the low and high ends of the range. Additional modeling details underlining our outlook are as follows. These estimates include an additional $2 million of public company cost per quarter with the largest component being corporate insurance. We expect interest expense of approximately $265; depreciation and amortization expense of approximately $60 million excluding incremental depreciation and amortization expense resulting from purchase accounting; adjusted effective tax rate of approximately 24%; weighted average shares outstanding of 367 million; and finally, CapEx of approximately $120 million. Although we do not provide quarterly guidance, I want to provide you with some color on how we expect to progress through the remainder of the year. We expect adjusted revenues year-over-year in the third quarter to be flat to slightly down and the fourth quarter return to growth. The third quarter includes a shift in timing of revenues for the fourth quarter related to a $4 million government contract that included some on-site deliverables that were delayed due to COVID-19 restrictions. From an EBITDA perspective, we would expect it to follow revenues in a similar pattern and therefore expect Q3 to be flat to slightly down and Q4 to be up. Overall, we are pleased with the progress we are making in our transformation and the core performance of the business. With that, we are now happy to open the call for questions. Operator, will you please open up the line for Q&A?

[Operator:]

Thank you. [Operator Instructions] And our first question comes from the line of Manav Patnaik from Barclays. Your line is open.

[Manav Patnaik:]

Thank you. Good morning. My first question is just around how we should think about the new product pipeline have that you guys have, the consumer bureau stuff, 60 to 100 new products a year. I know it's a completely different business and so forth, but any internal targets or guiderails you guys use to talk about new product pipelines for the coming years?

[Anthony Jabbour:]

Sure, Manav. Good morning. Yes, it's actually a really important question you're asking and a real important initiative for us. We've got it on everyone's quarterly reviews in terms of having a constant flow of new innovative solutions that help our clients grow revenue, improve margins and stay compliant and it helps for a lot of reasons. Obviously, it helps in terms of growing our revenues, but it also helps in terms of creating stickiness of the relationships with our clients by selling more and doing more for them. And it also – that steady flow of innovation gives your frontline salespeople the energy and the passion to be in front of their clients more often, sitting up straighter in their chairs, sharing the excitement about what it is that we are doing that can help them. And we are off to a great start. We launched – as I mentioned in my prepared remarks, our Analytics Studio, which has a lot of growth tangents from it, our CoAction capability on cash flows on the collection side. We had numerous COVID offerings that we really went deep and quickly and – just doing a lot generally I'd say, and I could go on, but localizing our sales and marketing solutions in parts of Asia that hadn't been done before. So, having new products and capabilities – same product, sorry, but in a new market for us to sell and grow. And a very significant upgrade in our account based marketing solutions that we recently launched. So, it's a great question, very much top of mind for us and very focused on it.

[Manav Patnaik:]

Got it. And just the other one I had was around – similarly around the M&A pipeline, Bryan, can you just confirm if the $4.7 million you added was the only inorganic contribution this quarter? Just some thoughts on how important the M&A pipeline is to revitalizing the story here.

[Bryan Hipsher:]

Yes, so I'll answer that one quickly and then kick it over to Anthony for the M&A pipeline, but the only other acquisitions were really Orb and CoAction that were prior to. Manav, they were really de minimis from that perspective, so a few hundred thousand dollars. Ultimately the way we thought about it were they were really extensions of product offerings, so both early-stage from that perspective. And frankly, even those companies on a combined basis where a drag on EBITDA. But the way we thought of them was more of a buy versus build scenario and they helped us accelerate some solutions that are going to create longer-term recurring revenues especially in the Sales or Marketing space. So, Lattice was certainly the most material from that perspective and it actually lapsed [down] after this quarter.

[Anthony Jabbour:]

Yes, the only thing I would add to that would be the initial parts of these M&A transactions we did recently was getting the flywheel turning on innovation, while we are in the process of transforming our technology our data and analytics, having something in parallel for us to hit the ground running with. And like I said, they were more product functionality type acquisitions versus buying revenue and certainly not buying EBITDA.

[Manav Patnaik:]

Thank you.

[Anthony Jabbour:]

Thank you, Manav.

[Operator:]

Our next question comes from the line of Gary Bisbee from Bank of America. Your line is open. Gary Bisbee, your line is open. We will move on to the next question. Our next question comes from the line of Hamzah Mazari from Jefferies. Your line is open.

[Hamzah Mazari:]

Hey, good morning. Thank you. My first question is just on pricing and how you're thinking about your pricing model longer-term? And the reason I ask is, there's been a quick turnaround, you've cleaned up the product, you've invested a lot in CapEx, you spoke about new products a little earlier, and when we look at the credit bureaus, pricing there tends to be a little bit lower than when you look at the information services universe. And so, just curious how you stack up and whether you think that that's an opportunity longer-term. I realize you have to fix the product, fix the sales force, do the turnaround and then pricing comes later on, but just any thoughts around that.

[Anthony Jabbour:]

Absolutely. Hamzah ,it's a great question and it is one that we are focused on in terms of – we look at all of that and really increasing the revenue per client. Price is certainly a part of it, cross-selling and up-selling is a part of it as well. But from a pricing perspective, we do see that we have very unique data and can solve unique problems. And therefore it's not as commoditized as a solution. And so, it is something we are looking at long-term. We do think that, as you can imagine, across the whole universe we serve there are parts where, I'd say, we are probably pricing fairly and parts where we are probably not pricing fairly, in terms of we could and should get more for the value that we are helping our clients create. And were looking through that, like I said, holistically. What we want to do will always is grow the relationships with our clients and, from a pricing perspective, always want to make sure that we give up the last dollar of price, for example, to cross sell additional capabilities and broaden the relationship. And in terms of change in price, it takes a lot of things to occur. Customer service will benefit it, cross selling more and having sticky relationships will benefit, innovating new solutions, and our clients seeing us as a partner they have to be with will improve it. So, we're very focused on all of those in addition to just the specifics of pricing.

[Bryan Hipsher:]

One thing I would add just structurally there to is, as we enter into more of these multiyear contracts, which is a real specific strategy from our perspective, one of the things we're building in is a systematic pipe escalator. And so, again, rather than having these kind of one-year subscriptions that are renewing on an annual basis, we are building in more of the three to four year deals. And again, with a small price escalators we had in the kind of base functionality from that perspective. So again, making it more repeatable and consistent.

[Hamzah Mazari:]

That's very helpful. And my follow-up question, I'll turn it over, is just on the Sales and Marketing side. I think historically you've classified that business as more offense than defense versus the financial risk. Just if you could give any high-level thoughts how investors should think about how mission-critical that offering is. And how that offering is differing than – I think we have data and it was a different company back in 2009. That business in North America in 2009 fell 9% or so organically, 2009 is a long time ago, but maybe just help us understand how that business is mission-critical and any thoughts there? Thank you.

[Anthony Jabbour:]

Hamzah, another great question. And like you said, comparing it, the DNA of our business is very different than what it was in 2009, and we're seeing it in the results. But we're very focused on broadening out the capabilities for our clients so they can be more efficient in how they attract prospects and how they sell more to existing clients with a lower cost. So, if you look from a COVID perspective, we also feel that in a COVID and post-COVID world, there are going to be less conferences, less tradeshows, less ways of traditional selling taking place. And so, the importance of what we're doing and ways that we can help our clients we really think should be a tailwind for us. And certainly we are a very different company than we were in 2009 when we had basic print campaigning capabilities, and ours is much more sophisticated right now and much more valuable to our clients.

[Hamzah Mazari:]

Great. Thank you so much.

[Anthony Jabbour:]

Thank you, Hamzah.

[Operator:]

Our next question comes from the line of Gary Bisbee from Bank of America. Your line is open. Gary Bisbee, Bank of America. Your line is open.

[Gary Bisbee:]

Could you guys hear me?

[Anthony Jabbour:]

Hearing now, Gary.

[Bryan Hipsher:]

We can Gary.

[Gary Bisbee:]

Okay, alright. I’m working without power and immediately after these storms [indiscernible]. First of all, congratulations on the successful conclusion of the IPO, and following up on Manav's question around innovation, one of the things we've seen others have [Technical Difficulty] do well over time is come up with new use cases to drive new revenue streams off of the extensive data you've got. I know it's early, but where are you in the process of studying and trying to find new use cases and building those? Is there a [Technical Difficulty] of opportunity that you think about where your data can really improve decisioning in other end markets than like where you focus on today?

[Anthony Jabbour:]

I'm going to repeat the question in case others couldn't hear it. I hope you're doing well, Gary, with the impacts here. It's the new norm we are all living in as well day-to-day, but it was really more around are there, from an innovation perspective, new used cases and revenue streams that we can get from it, where are we in the journey? And what I'd say is, we have a lot of possibilities there and we've already started some of them. So, if you look from an alternate data source perspective, we are doing a lot of really exciting work there on say foot traffic. Or in our sales and marketing perspective getting digital signals such as buyers' intent, intent to purchase and bringing those in and integrating them to have another view of a situation for an underwriter, for example, to see the foot traffic and have that integrated with our existing data set. And the power that we have here and where we've got a lot of excitement, it's why we're implementing Project Ascent, for us to bring on more than 100 alternative data sources over the next couple years is really for us to create more use cases from it. And having the ability of being able to match and link to the D-U-N-S Number is incredibly powerful, much more powerful than I realized prior to coming to Dun & Bradstreet. But it's a very powerful tool in terms of being able to bring new and unstructured sources of data in and connecting it to a D-U-N-S Number to a specific client. And I think in this complex world we'll be able to be a good source of that for our clients because we can make it easy for them to buy from us. And so, it very much is an area we're looking at, we are excited about. And it's one, candidly, when we look from a competition perspective where people are asking us about competitors, we really look at our game plan and we have high confidence in our game plan. And that's what we're very focused on executing is our game plan, because we see lots of opportunities out here versus traditionally what we had been doing. And so, we've got a lot of energy behind that, Gary. And that's why you're seeing a lot of the investments and the infrastructure work that we've got going on and that we talked about leading up to the road show and the road show itself.

[Gary Bisbee:]

And then the follow-up, typically with these information data sources [Technical Difficulty] when we see investment in upgrading infrastructure and driving innovation, there's a period of significant investment followed by efficiency. I know you've delivered meaningful cost savings, but what's the risk [Technical Difficulty] evolve the strategy that you need to step-up spending to deliver the long-term performance that you're targeting? Thank you.

[Anthony Jabbour:]

Sure. I'll start then I'll pass it on to Bryan. We're not believers in doing one enormous project, some monolithic project. The track record across all of history and industry is not a positive one. Ours is always one of componentization and adding capability such as Product Ascent. We are coming out immediately with that in terms of ability that we're going to benefit from starting in Q4 this year. But at the same time, like I mentioned, over the next couple years bringing on over 100 alternative data sources and really speeding up our ability to ingest and curate unstructured data much, much faster than we can today. So, it's really breaking it down that way and we've got that filtered in. So, you will see our capital spend increase from what it was historically, but no major enormous steps that we've got to take. So, we'll probably finish this year about $120 million of CapEx. And so, we'll be, relatively speaking, on that type of run rate, focusing on bringing componentized capabilities across everything that is that we're focused on versus one giant, like I said, monolithic project that we are going to call out that is in the $1 billion range or anything like that. Bryan, do you want to add to that?

[Bryan Hipsher:]

Yes. Anthony, I think you said it right. We certainly stepped up the investment, especially investment in growth, and that's where you've seen the CapEx numbers step up from something that was in the $30 million to $40 million range. Last year we spent about $80 million and this year it's going to be in that, as Anthony said, around $100 million to $120 million. And so, very focused again on that growth initiative and certainly have made some significant progress. We are currently now about 70% in utilization from a cloud perspective. We think over time that will shift probably closer to something in the 80% to 85%. But as we always think about these savings, we do think about them on a net basis. And so, we have continued to make investment while simultaneously creating those efficiencies within the organization.

[Operator:]

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

[Kevin McVeigh:]

Thank you so much and congratulations on the IPO. I wonder, Anthony or Bryan, maybe help us frame where retention sits within the context of the 0% to 3% organic growth. And then ultimately as you get to that 3% to 6%, what should we expect in terms of retention in the business as we are working our way through those milestones?

[Anthony Jabbour:]

Sure Kevin. Thank you. Our retention is strong and I'll start and I'll pass it on to Bryan. It had been historically strong and we saw in the quarter that we increased it about another 0.5% from an already very high number. So, we are very pleased with the progress that we are making in terms of retention. And not just retaining clients as part of the renewal but increasing the relationship with them also at the same time. So, it's an area that, like I said, we've been very focused on. And again, of all the initiatives we have across this broad transformation are all impacting our ability to retain much stronger. Bryan, do you want to add anything to that?

[Bryan Hipsher:]

Yes, absolutely. Kevin, to Anthony's point, retention is now running around that 96% to 97% from that perspective. What we see is that the strategic account level, it's nearly 100%. Really on an annual basis where we're seeing the churn is at the [FNB spot]. Some of those businesses, especially on the micro side, may exist one year but don't the next. And clearly we are refilling that, right, with a number that approaches each and every year from that perspective. And so, it's a really strong base to operate off of. And as Anthony said, with the multiyear contracts and with some of the changes we've made in go-to-market, we've been able to actually increase that retention already up another 0.5 points in the second quarter this year.

[Kevin McVeigh:]

That's super helpful. And then just in terms of one of the keys that you folks have executed well is the technology investments, are there any kind of milestones you would point us to as you increase the [indiscernible]? Because ultimately I think that probably helps boost the product innovation as you are able to leverage some of the technology investments across the enterprise.

[Anthony Jabbour:]

I'd say in terms of milestones, Kevin, there are a number of them throughout all the different initiatives that we have right now. So, I'd say one of the major ones we have with Project Ascent is Q4 will be one of the first in terms of us having some improved capabilities coming out of that project. And then we've got a very detailed project plans that will walk through the different milestones across many of the initiatives. But I don't think there's any – I don't know if, Bryan, you can think of one – like a milestone across the whole Company of technology initiatives. There are a number of projects that are being measured really with individual accountabilities and specific targets.

[Bryan Hipsher:]

Yes, Anthony I think that's right. And the way certainly we've approached it and the way that you, Steve, and I think about it is not a let's rip down everything and replace it one time. Those large kind of massive projects generally have a really high failure rate from that perspective. And so, we've taken, as Anthony said, a very componentized approach and one of the first pieces of Ascent is going live in the fourth quarter. But that's just the first of multiple phases where we'll continue to take out and optimize specifically around the data supply chain. So, that's really the way we are thinking about it.

[Kevin McVeigh:]

Thank you.

[Anthony Jabbour:]

Thank you, Kevin.

[Operator:]

[Operator Instructions] Our next question comes from the line of Seth Weber from RBC Capital Markets. Your line is open.

[Seth Weber:]

Hi guys, good morning. Thanks for taking the question. There's been a large turnover on your sales force. I think the number was something like 30%. Can you just talk to where you feel like the sales force is on a productivity level and relative to where you think it should get to? Thanks.

[Anthony Jabbour:]

Sure Seth, thank you for the question. Our sales, we went through a significant sales transformation starting with I'd say the senior-level leadership as well as individual sellers. And we've been very pleased with the change in the progress that we're making that way. We've increased the number of multiyear contracts, which was an area we were very focused on, and it's increased even since the road show. We are up to about approximately 30% of our revenues under multiyear contracts right now. So, the team is doing a great job in extending relationships with our clients and cross-selling more capability to them. And sales has – I'd say we're business as usual in sales right now in that we went through the massive transformation within it. And now we'll continue to tweak the dials on the dashboard as we want to see different results and we'll change – we'll tweak the org structure, tweak the incentive plans in a more steady-state manner they would expect. But we're very pleased with the progress that we are making in that regard.

[Seth Weber:]

Okay, thanks. And then just a follow-up question on the incremental cost cuts that you talked to here in the second quarter, any color as to where they occurred and just how we should think about the pathway to the $250 million? Is that a – do you think that's a fiscal 2020 number or will that lead into 2021? Thanks.

[Bryan Hipsher:]

Sure. So, the primary components of the $14 million in the quarter were around actually the technology side. And so, we had some legacy third-party arrangements with some outsourced providers that weren't really attractive from a pricing perspective and from a utilization perspective. And so, we did a lot of work on that side and were able to drive home some pretty significant savings from that perspective. The other components again were remaining around, again, some of the back office functions that we are still rationalizing as we implement new corporate software for all intents and purposes. And so, definitely heavier on the tech side for this quarter. As we think about the remainder of the last $30 million it's really two-pronged. And so, as we talked about previously, some of the large-scale infrastructure changes we've made in this evolution into the cloud has provided some pretty significant savings from that perspective. And so, by the end of this year we would expect the Phase 2 for that to be completed and we would start to recognize the savings from that in really 2021. The last component is where we look at our delivery and the automation of delivery along with, again, our right shoring and off shoring of certain functions throughout the organization. So, that's the only piece I would say that we have planned for later in Q4. Some of the areas that we're looking at geographically are still struggling from a COVID perspective, so that could spill over into early – the early part of 2021, but we will look to have a majority of the $250 million annualized run rate savings complete by the end of this year.

[Seth Weber:]

Okay, thank you very much guys. Appreciate it.

[Anthony Jabbour:]

Thanks Seth.

[Operator:]

Our next question comes from the line of Ashish Sabadra from Deutsche Bank. Your line is open.

[Ashish Sabadra:]

Thanks for taking my question. So, the question on the international market, can you just talk about, Anthony, the timeline for creating more localized products for the international market, as well as diffusion of IP from the U.S.? Like for example, the rollout of analytics studios in [indiscernible] and rest of the world?

[Anthony Jabbour:]

Thank you, Ashish. Yes, it's a really important part of our strategy in terms of internationalizing our products and the team has done a great job with that. We've launched more products internationally I'd say over this past year than we have probably in the last five years, loosely speaking. So, it's an important area because it's really the – it's just finding more shelf space for our existing products. And we've got the right type of technology talent and business leadership to really find which would be bigger wins for us in which markets and accelerating those plans. So, that absolutely is a top priority for us. I look forward to continuing to update you on our quarterly calls with the progress that we're making by region and by product.

[Ashish Sabadra:]

That's very helpful. And then, Anthony, as you called out Project Ascent, I think that definitely helped the breadth, depth and quality of your data. And so, my question here was specifically on the Sales and Marketing side, some of the missteps from the prior management team had put you in a maybe – or how does the Project Ascent help your competitive positioning in that particular market and helped regain some of the lost share in that market? Any color on that front? Thanks.

[Anthony Jabbour:]

Sure. When we look at, again, our ability here in terms of executing against our game plan, we see how we are positioned, we've got a very broad and deep capability in our sales and marketing solution set. And to the extent that we can continue to ingest and curate more and more data and match it, we are excited about the use cases that we can drive from it, such as the Buyer Intent which we just announced recently, or the account based marketing solution set that we've recently made a significant upgrade on. We kind of look at everything running in parallel. As you know, when we looked at the projects and the milestones we have, Steve has a very detailed run book across all the different initiatives. And really with everything we're trying to do is not have something dependent on something else. So, what are all the things we can do and sales and marketing in parallel while we’re working on Project Ascent that puts us in a position to leverage that scale of data ingestion and curation matching. So, it's one where – we are very excited about and we feel very good about our long-term prospects with what we can do in this space. And also cross-selling that into our existing client base. Like I said, we are single-digit percentage wise in terms of cross sell. So, when you look from I'll say a TAM perspective within our client base, there's a lot of opportunities for us to cross sell. And my belief from every company I've worked in, every industry, is clients – if you can make their life simpler, because everyone's busy, and you can bring in more capabilities and integrate it and make it easy to do business, everybody wants to do that. And we're doing business with a lot of companies that it's on us to be able to make easier and easier for them to expand the relationships with us, including sales and marketing.

[Ashish Sabadra:]

That’s very helpful. Thanks Anthony.

[Anthony Jabbour:]

Thank you, Ashish.

[Operator:]

And our final question today will come from the line of Andrew Jeffrey from Truist Securities. Your line is open.

[Andrew Jeffrey:]

Hey. Thank you. Good morning. Appreciate you squeezing me in here at the end. Anthony, you were just commenting on cross-sell efforts and some of those initiatives. I wonder if you could maybe frame up – maybe Bryan can weigh in too – just frame up the timing with which you think you're going to gain cross-sell benefits. There's a big spread in the number of solutions that your largest customers use versus even some of your larger strategic customers. Do you think there's a good cadence of cross-sell and uptake of your solutions this year or is it more of a 2021-2022 timeframe?

[Anthony Jabbour:]

Well, I think with anything, Andrew, it's going to grow over time. So, like I said, we're still transforming the company and our cross sells are up. And we feel confident with how we are progressing in that regard. And obviously it's tied to the previous question as well on product innovation. So, the more products the more opportunities you have to cross sell, so it all ties together. And what I'd say is, as time goes on in 2021-2022 we'll constantly be in a stronger and stronger position in terms of cross-selling, but we've got a lot of product right now that is not that had not been cross sold that we're focusing on. And as we continue to create more new innovative solutions we're excited about how that will strengthen our cross-sell ability. Bryan, do you want to add on to that?

[Bryan Hipsher:]

Yes, I would agree. If you look at the overall total number of clients, it's only around 5%-ish that are really kind of cross sell across Finance and Risk and Sales and Marketing. And so, where we see that deeper, Andrew, is in the strategic customers right now. Once you, kind of get into the medium and the larger size, and especially as you go down, it just wasn't a historical effort from that perspective. So, as Anthony said, the bar is relatively low, so we've already started to see some benefits from cross sell. But really we'll see that accelerate as the transformation continues to take hold and our underlying assets and our delivery mechanisms, etcetera become that much more accessible.

[Anthony Jabbour:]

And maybe I’ll add on a bit more. Some of the early cross sells have been with our API solution set that we've revitalized. And the beauty of that is when they are using APIs, as we continue to add more APIs, it makes for an easier and easier cross sell of using more of our capabilities. So, hopefully what you're seeing is with every one of these areas we are focused on the holistic approach to how to solve it versus a singular approach.

[Andrew Jeffrey:]

Thanks for the color.

[Operator:]

And we do have time for another question. Our next question will come from the line of Bill Warmington from Wells Fargo. Your line is open.

[Bill Warmington:]

Yes, under the wire, thank you very much.

[Bryan Hipsher:]

Hey Bill, we apologize with the opening as Anthony said, our prepared remarks were a little longer this time. So, we are happy to get you on.

[Bill Warmington:]

Well thank you very much. I wouldn’t want to get in the way of your opening remarks. So, a couple quick questions then for you. Maybe talk a little bit about how the momentum on the new selling side was in July? I would expect you guys probably saw some pretty – some improved momentum during the quarter, but I want to know how July was looking.

[Anthony Jabbour:]

Yeah. Bill, I think what we've seen is a bit of a return, I would say, to somewhat normalized levels from that perspective. And so, we are still seeing the overall, kind of broader impact of COVID, we expect that in the third and fourth quarters. We talked about the impact on our revenues. So, we think about it in a similar way for the time being, at least the remainder of this year.

[Bill Warmington:]

Got it. And then I wanted to ask about the plans for moving down market into the small and midsized business segment. New products, sales force changes, pricing, anything like that?

[Anthony Jabbour:]

Yes. There are significant changes that we've made there in terms of – from an inside sales force, we've moved that to our Center Valley location to be closer with a larger population of our company. And we've also had a major focus on our digital channels. So, historically what we had going on were SMB businesses were coming to us to get their credit builder score – over 1,000 a day are coming to us, but they're coming to us to get a D-U-N-S Number. Or they're coming because they want to be a supplier for a large organization and it needs to be vetted through us, or they were on the loan and they improved their credit. They were coming all across our company and we weren't really bringing it all together in an integrated way to then be able to cross sell and do more for them. And so, we're looking at ways from our digital channels how we can complement the selling that we've been doing with inside sales with a digital channel that will enable commerce and give many of these small/medium businesses, which are self-navigators, the ability for them to see what we have to offer, natural adjacencies for them to leverage from us. So, we've got a very strong focus on that. It won't be business as usual here for the SMB marketplace.

[Bill Warmington:]

Got it. Well thank you very much. And again, congratulations on making it out public.

[Anthony Jabbour:]

Thank you so much Bill.

[Bryan Hipsher:]

Thanks Bill.

[Operator:]

I would now like to turn the call over to Anthony Jabbour for closing remarks.

[Anthony Jabbour:]

Thank you, Lisa. In summary, we are pleased with our progress to transform Dun & Bradstreet. Our recent IPO is a significant milestone for the company and we recognize it as just another step forward as part of a longer journey. We have a great company and we'll continue to be focused on maximizing shareholder value as well as client value. As always, I'd like to thank my Dun & Bradstreet colleagues for their exceptional efforts and our clients for their strong partnerships. Thank you for your interest in Dun & Bradstreet and for joining us on the call today. Take care.

[Operator:]

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.