Dun & Bradstreet Holdings, Inc. (DNB)

Executive Summary / Key Takeaways

• Dun & Bradstreet has successfully completed a multi-year technological and operational transformation, migrating clients to modern cloud-based platforms and sunsetting legacy systems, laying a strong foundation for future growth.
• The company's core business, representing approximately 90% of revenue (primarily Finance Risk and Sales Marketing solutions like Third-Party Risk/Supply Chain Management and Master Data Management), is demonstrating robust growth, often exceeding 6% organically.
• Significant investment in generative AI and strategic partnerships (IBM (IBM), Google (GOOGL), LSEG (LSEG), ICE (ICE)) are leveraging D&B's unique data assets to create new solutions and market opportunities in high-growth areas like capital markets, private markets, and enhanced risk/procurement analytics.
• Despite facing headwinds in smaller segments (Credibility, Digital Marketing) and macro uncertainties, management expects accelerated organic revenue growth of 3-5% in 2025, alongside EBITDA and EPS expansion, and anticipates further acceleration towards the 5-7% midterm target.
• The pending acquisition by Clearlake Capital Group, while causing some short-term distraction, values the company at $9.15 per share in cash and is expected to close in Q3 2025, offering immediate liquidity to shareholders.

A Foundation Forged in Data: Dun & Bradstreet's Evolution and Strategic Positioning

Dun & Bradstreet, a venerable institution with roots tracing back to 1841, stands today as a leading global provider of business decisioning data and analytics. Its mission to deliver a global network of trust is more relevant than ever in an increasingly complex and interconnected world. Clients across diverse industries, from financial services and technology to government and manufacturing, embed D&B's solutions into their daily workflows to inform critical decisions around commercial credit, supplier evaluation, sales productivity, and market visibility. This deeply embedded nature of D&B's offerings, coupled with its proprietary and curated data assets, forms the bedrock of its attractive business model, characterized by highly recurring revenue and strong client retention rates, historically around 96%.

The company has undergone a significant transformation journey in recent years, particularly since its IPO in 2019. This period has been marked by a deliberate, multi-phase effort: first, stabilizing and rearchitecting its technology infrastructure; second, building modern, cloud-based solutions; and finally, migrating clients to these new platforms, sunsetting legacy products, and optimizing client contracts. This foundational work, largely completed in 2024, including the migration of flagship platforms like Finance Analytics, Direct+ API, and Risk Analytics in North America, is seen by management as the critical prerequisite for entering the next phase of growth.

In the competitive landscape of business data and analytics, D&B operates alongside formidable players such as Equifax (EFX), Experian (EXPGY), Moody's Corporation (MCO), and S&P Global (SPGI). While precise, directly comparable market share figures for all niche competitors are not publicly detailed, D&B holds an estimated 15-20% aggregate share in its primary segments. Compared to peers like Equifax and Experian, who also offer risk and finance analytics, DNB differentiates through its expansive Data Cloud, covering over 500 million businesses globally. This scale and diversity enable D&B to offer more comprehensive business coverage, leading to faster processing speeds and deeper insights in areas like KYC/AML compliance, although sometimes at a higher upfront cost compared to competitors with more streamlined, specialized infrastructures. DNB's unique value proposition is further bolstered by its integrated sales and marketing tools, a segment where it holds a distinct offering compared to credit-focused peers like Equifax.

Against financial analytics giants like Moody's and S&P Global, D&B's strength lies in its broader B2B focus, extending beyond financial ratings to encompass supply chain, compliance, and sales intelligence. D&B's tools can offer faster ESG assessments due to its data breadth, but may trail in the operational efficiency and profitability margins that specialized ratings businesses enjoy. D&B's financial metrics, such as TTM Gross Profit Margin of 50.38%, Operating Profit Margin of 9.71%, and EBITDA Margin of 34.42%, while solid, generally lag behind the higher margins reported by some peers like Moody's (TTM Gross Margin ~73%, Operating Margin ~41%, EBITDA Margin ~41%) and S&P Global (TTM Gross Margin ~69%, Operating Margin ~39%, EBITDA Margin ~45%). D&B's TTM Return on Capital Employed of 0.01% and Return on Equity of -0.0087% also indicate areas for improvement compared to peers with higher capital efficiency. However, D&B's lower TTM Debt/Equity ratio of 1.09 compared to Moody's 2.17 and S&P Global's 0.36 (Experian 0.92, Equifax 1.04) suggests a relatively healthy balance sheet position.

D&B's competitive advantages, or moats, are primarily built upon its proprietary Data Cloud and the resulting network effects, which contribute to high customer loyalty and recurring revenue. Its long-standing brand and regulatory expertise also provide a degree of pricing power. However, the company faces vulnerabilities, including lower overall profitability and efficiency compared to some peers, and a degree of market share dependency on the North America segment. Barriers to entry in the industry, such as the immense cost and complexity of aggregating comprehensive business data and navigating stringent regulatory compliance, favor established players like D&B and its large competitors.

Technological Edge and Innovation Driving Future Growth

At the heart of Dun & Bradstreet's strategic evolution is its differentiated technology and relentless pursuit of innovation. The company's core technological asset is its vast Data Cloud, which serves as the foundation for its modern platforms and API integrations. This technology enables the processing and delivery of data and analytics with enhanced speed, scalability, and stickiness for clients. The migration to these modern systems, including the completion of flagship platform transitions in North America in 2024, is expected to yield long-term strategic value by providing clients with greater flexibility and more scalable solutions.

Recent innovation efforts are heavily focused on leveraging this modernized infrastructure and the Data Cloud, particularly in the realm of generative AI. D&B has introduced several AI-powered solutions, including Hoover Smart Mail and Smart Search, which saw rapid adoption with over 4,000 clients using these capabilities by Q2 2024. A key development is the patent-pending Chat D&B, a generative AI assistant designed to surface knowledge across D&B's Data Blocks, delivering actionable insights for tasks ranging from prospecting to due diligence. This assistant allows users to query data in conversational language and is fueled by the breadth, depth, and quality of D&B's private company data. Crucially, Chat D&B is designed to incorporate client first-party data and shows its work, providing data sources and lineage to build user confidence and address concerns about AI hallucination. Early feedback from pilot programs has been encouraging, highlighting significant time savings and the potential for deeper client engagement as they seek to combine their proprietary data with D&B's. The company has already seen early sales traction with Chat D&B and is initially offering it without an incremental charge to encourage adoption and increased data usage.

Strategic partnerships are also amplifying D&B's technological reach. The codevelopment of the Ask Procurement Assistant with IBM leverages D&B's Data Cloud and analytics alongside IBM's technology to simplify and accelerate procurement decisions, particularly for enterprise clients. A partnership with Google Vertex AI is enabling the D&B Hoovers conversational list builder, utilizing natural language processing to make data querying more intuitive. Furthermore, D&B is expanding its data graphs from the offline to the online world with its Business-to-Person (B2P) service, aiming to create a uniquely blended offering by combining consumer marketing characteristics with its B2B identity graph. While in early stages, this is seen as a potential game changer for effectively marketing to key business audiences.

These technological advancements are not merely product features; they are integral to D&B's competitive strategy. Management emphasizes that the quality and accuracy of data are paramount for effective AI models, positioning D&B's trusted data as a critical fuel source. The focus on API integrations is driving a shift towards more ratable revenue streams, improving revenue visibility and predictability. The investments in the data supply chain and cloud upgrades have already led to significant improvements in data and analytic offerings, reflected in the company's vitality index (32% in Q1 2024), which tracks client adoption of modern solutions. The success in areas like Third-Party Risk/Supply Chain Management (growing nearly 30% globally in Q1 2024) and Master Data Management (growing double digits globally in Q1 2024) is directly linked to the capabilities enabled by these technological advancements and the underlying Data Cloud. Management sees these areas, with large addressable markets ($10B+ for Third-Party Risk, $15B+ for MDM) and low penetration within D&B's existing client base (<10% for both), as significant runways for future growth.

Recent Performance and Outlook: Building Momentum

Dun & Bradstreet has demonstrated consistent operational improvement, particularly in its core business segments. In the first quarter of 2025, total revenue increased by 2.7% (3.6% before foreign exchange) compared to the prior year, with organic revenue growing by 3.6%. This growth was reflected in both segments, with North America revenue increasing by 2.9% (3.1% organic constant currency) and International revenue increasing by 2.2% (4.7% organic constant currency).

Operational efficiency gains contributed to profitability expansion. Q1 2025 operating income saw a significant increase to $35.3 million from $16.6 million in Q1 2024, driven by higher revenue and lower costs related to cloud infrastructure and net personnel, partially offset by higher data acquisition costs. Adjusted EBITDA increased by 4.8% to $210.9 million, resulting in a 70 basis point expansion in adjusted EBITDA margin to 36.4%. North America adjusted EBITDA grew by a robust 9.3% to $166.2 million, expanding its margin by 250 basis points to 41.8%, primarily due to revenue growth and cost management. International adjusted EBITDA, however, decreased by 5.8% to $60.5 million, with margin declining by 280 basis points to 33.3%, primarily due to higher costs despite revenue growth.

While the core business, representing approximately 90% of revenues, has shown strong momentum, growing slightly over 6% organically on a trailing twelve-month basis as of Q2 2024, two smaller segments, Credibility and Digital Marketing (comprising the remaining 10%), have faced headwinds. The Credibility business has been impacted by a consent order, leading to declines (down 7% in Q2 2024). Remediation efforts, including the launch of a money-back guarantee offer in July 2024 and product enhancements, are showing early positive signs, with the business showing slight growth in Q3 2024 and expected to pivot to low single-digit growth by midway through 2025. Digital Marketing has faced challenges from broader macro conditions and lower transactional volumes (down 14% in Q2 2024). Management anticipates improvement in the second half of 2024 due to expected interest rate reductions, changes in cookie policies, and expansion into new channels like connected TV and retail media.

Financially, the company maintains a solid liquidity position. As of March 31, 2025, cash and cash equivalents stood at $241.3 million. The debt structure includes a total principal amount of $3,547.6 million as of March 31, 2025. The company actively manages interest rate risk through swaps, mitigating the impact of rate changes. Net leverage was 3.6x at the end of 2024, with a target to reduce this to around 3.25x by the end of 2025.

Cash flow generation remains a focus, with net cash provided by operating activities at $136.9 million in Q1 2025. The company utilizes an accounts receivable securitization facility to manage working capital, which impacts cash flow presentation but provides liquidity. Capital expenditures, particularly for internally developed software, are expected to moderate in 2025 ($145M-$155M) compared to prior elevated investment periods, contributing to an expected improvement in free cash flow conversion towards a medium-term target of 80% of adjusted net income.

Looking ahead, Dun & Bradstreet's outlook for 2025 reflects confidence in its ability to deliver accelerated growth following the completed transformation. Management guided for full-year 2025 total revenues of $2,440 million to $2,500 million (2.5% to 5% growth) and organic constant currency revenue growth of 3% to 5%. Adjusted EBITDA is expected to be between $955 million and $985 million, with adjusted EPS projected in the range of $1.01 to $1.07. This guidance anticipates a back-half weighted revenue cadence, with Q1 closer to the low end due to lingering impacts from the strategic review process, and Q4 closer to the high end. The outlook assumes a modest foreign currency headwind in the first half of the year. Management explicitly stated the expectation to deliver accelerated growth in organic revenues, EBITDA, net earnings, and free cash flow in 2025.

Risks and Challenges

Despite the positive momentum and strategic initiatives, Dun & Bradstreet faces several risks. Macroeconomic conditions, including volatility in interest rates, foreign exchange rates, inflation, and geopolitical conflicts, can impact client spending and demand for solutions, particularly in more cyclical areas like Digital Marketing. The company's significant international presence (approximately 30% of revenue) exposes it to foreign currency fluctuations.

Legal and regulatory risks are inherent in the data and analytics industry. The company is involved in ongoing litigation, including class actions, and is subject to a long-term FTC Consent Order. While management currently believes the ultimate resolution of pending matters will not have a material adverse effect, unfavorable outcomes could impact financial results or require changes to business practices. The FTC has recently raised concerns about alleged violations of the Consent Order, which could lead to further enforcement action.

Operational risks include maintaining the integrity and security of its vast data assets, preventing cybersecurity incidents, and ensuring the reliability of its systems and data sources. The ongoing cloud migration, while strategic, carries execution risk.

Finally, the recently announced definitive agreement to be acquired by Clearlake Capital Group introduces specific risks related to the transaction process itself. While expected to close in Q3 2025, the transaction is subject to shareholder approval and customary closing conditions, and there is no guarantee it will be completed. The process has already caused some distraction and deal delays, impacting recent performance, and could continue to affect employee morale and client relationships until its conclusion.

Conclusion

Dun & Bradstreet has emerged from a critical period of transformation with a modernized technology stack, streamlined operations, and a clear strategic focus. The core of the business is demonstrating solid organic growth, fueled by strong demand for solutions in high-growth areas like Third-Party Risk/Supply Chain Management and Master Data Management. Significant investments in generative AI and strategic partnerships are positioning the company to capitalize on emerging opportunities and enhance the value proposition of its unique data assets.

While challenges remain in turning around smaller, underperforming segments and navigating a sometimes uncertain macroeconomic environment, management's 2025 outlook signals an expectation for accelerated growth across key financial metrics. The successful completion of the transformation provides a strong foundation for achieving the stated midterm organic revenue growth target of 5-7%. The pending acquisition by Clearlake offers a potential near-term liquidity event for shareholders at a specified cash value. For investors, the story is one of a foundational data provider leveraging technology and strategic execution to unlock new growth vectors, aiming to translate its core strengths into improved financial performance and shareholder value, regardless of its future ownership structure.