I was going to be writing about yesterday’s #FlipMyFunnel conference keynote given by Terminus CEO Sangram Vajre this morning, but I woke up to news that Dun & Bradstreet is being taken private. So, I’ll recap Vajre’s discussion of humanizing B2B and the need for authenticity in a later post.
Dun & Bradstreet announced that it will be taken private by CC Capital, Cannae Holdings, and funds affiliated with Thomas H. Lee Partners LP, for $5.38 billion in cash. Shareholders will receive $145 per share, an 18% premium over its Wednesday close. The acquisition includes $1.5 billion in assumed debt.
The deal is subject to shareholder approval and is expected to close within six months.
Dun & Bradstreet has a venerable history going back 177 years. Employees include several future nineteenth century Presidents. The firm, however, has struggled in recent years to grow revenues, particularly in its Risk Management Solutions group. Sales & Marketing Solutions, which makes up a bit over 40% of the company, has posted slow but steady growth.
Dun & Bradstreet has some market leading assets:
The D-U-N-S number is the de facto global numbering system for companies. It is often required for loans and is necessary for bidding on US government contracts.
The WorldBase company file contains global linkages, Tradestyles, and credit scores for 300 million active, dormant, and defunct companies making it valuable for credit risk, supplier risk, master data management, research, client onboarding, marketing, and sales.
The Global Company Authority (FKA NetProspex) provides global directors, executives, and mid-level managers.
D&B Hoovers (FKA Avention) continues to improve with the addition of the WorldBase file, First Research industry overviews, and Global Company Authority file to the Sales Acceleration platform.
Digital delivery solutions include the D&B Direct API, connectors for CRM and Marketing Automation platforms, B2B programmatic marketing, and visitor ID (the mapping of anonymous website visitors to their firm).
The company has a strong data foundation and has been shifting delivery of its product line to the cloud, but its sales and marketing products have not had significant growth. Instead, Dun & Bradstreet has seen companies such as DiscoverOrg, LinkedIn (Sales Navigator), TechTarget, and Zoominfo enjoy most of the growth in the Sales and Marketing Intelligence space.
Funding will be a combination of debt and equity. The deal includes a 45-day “go-shop” period during which alternative offers will be welcome.
Thomas J. Manning will continue as the CEO through the closing of the transaction while James N. Fernandez, a director of the Company since 2004 and Lead Director since February 2018, will continue as the Chairman.
“Today’s announcement is the culmination of a thoughtful and comprehensive review of the value creation opportunities available to the Company as part of a full portfolio and business assessment and exploration of strategic alternatives with multiple financial sponsors. As a result of this process, the Dun & Bradstreet Board of Directors unanimously determined that this all-cash transaction with the Investor Group is in the best interest of our shareholders and our Company,” said Manning.
William P. Foley II, Chairman of Cannae Holdings, said, “In an increasingly data-driven world, Dun & Bradstreet’s insight-driven business model and interconnectivity across industries has positioned the Company for continued success. We are excited to grow the Company, increase operating efficiencies and improve the Dun & Bradstreet customer experience by providing enhanced business solutions.”
I am beginning a monthly series entitled What Is where I provide an overview of one of the underlying sales and marketing intelligence technologies or processes being deployed at B2B firms. I will begin with Intent Data.
Intent Data is one of the three informational elements of B2B Lead scoring (the other two are Fit and Opportunity). Intent data consists of both first and third-party elements and identifies when companies are actively researching specific product categories. First-party data is captured in your marketing automation systems and web logs. Typical first-party intent data includes
Trade Show Booth Visits
In short, if somebody is viewing your website, reading your collateral, meeting with you at a tradeshow booth, or attending your webinars, then he or she is displaying purchase intent. Of course, not everybody doing so is a potential purchaser, but a high percentage of individuals digitally interacting with your firm are somewhere in the buyer’s journey for your products and services.
Unfortunately, intent data is often anonymous. Unless the individual submits a webform, you are most likely limited to an IP address. As B2B visitors are usually accessing your platform from a corporate IP address, it is possible to tie the IP address to the company and at least associate the activity with a company. Companies such as DemandBase, Bombora, and Dun & Bradstreet offer Visitor Intelligence services to map IP addresses to companies. Along with the company name, they enrich the visitor intelligence with firmographics such as location, size, and industry.
External intent data is provided by vendors such as Bombora, The Big Willow, True Influence, and TechTarget. External intent data is gathered from B2B Media websites that evaluate topics of interest across their network and determine which topics are of interest to companies. Interest is gauged by articles viewed, white papers downloaded, searches performed, case studies read, etc. Generally, each company is baselined by topic with interest determined with respect to the baseline. A surge of interest takes place when short-term interest in a topic is well above the baseline for the company. Intent data is generally delivered as a numeric score by topic with companies licensing the topics of interest. As intent is determined at the corporate level, it works best in lead scoring. With the exception of TechTarget, you don’t know which individuals are researching specific topics.
TechTarget Priority Engine provides technology specific intent at the individual level along with contact information, buying stage (early or late based upon content viewed and downloaded), and key influencers (companies of interest). TechTarget is focused on Technology topics across its 140 media sites.
Dun & Bradstreet rebranded D&B Workbench Data Optimizer as D&B Optimizer for Marketing and announced a set of enhancements to the platform. The Workbench name, now dropped, went back to the product’s origins as NetProspex Workbench, one of the first DaaS Hygiene / Enrichment / Prospecting platforms. The rebranded product includes a series of new features including an Analyze module, Salesforce Contact Optimization, custom email deliverability targets, and NAICS industry code support.
“This new name reflects Dun & Bradstreet’s commitment to deliver the very best in data optimization services,” the firm wrote its clients. The new name is also consistent with its other Optimizer solutions: D&B Optimizer for Salesforce and D&B Optimizer for Microsoft.
The new Analyze module delivers profiling and market opportunity analysis “utilizing D&B Master Data and proprietary machine-made analytics.” Features include dynamic dashboards which help marketers visualize their primary profile by revenue, employee size, and industry. The service also provides look-a-like opportunities to assist with ABM expansion and pipeline growth.
The new Salesforce Integration for Contact optimization supports contact cleansing and enrichment at a frequency determined by the customer. Dun & Bradstreet claims that the Salesforce integration may be setup in fewer than twenty minutes.
Custom Email Deliverability Levels allow marketers to dip deeper into Dun & Bradstreet’s pool of emails and select contacts with lower reliability scores. The default level is 90% deliverability, but highly targeted selects may require using contacts that are below the 90% deliverability threshold. Dun & Bradstreet called the 90% threshold “our recommended level for most email campaigns.”
Finally, D&B Optimizer for Marketing added NAICS industry code selects. The product already supports the older US SIC industry taxonomy.
Other D&B Optimizer for Marketing features include data validation and standardization (email, phone, address), duplicate flagging, data hygiene reports, lead prospecting, segmentation analysis, and data enrichment (firmographics, D-U-N-S Numbers, corporate linkages, technographics, biographics).
It was only a few years ago that Dun & Bradstreet’s WorldBase file reached 200 million records, but this week the file hit 300 million active and inactive company profiles. The dataset is used for sales, marketing, research, master data management, credit risk, and supplier risk products. It is also licensed to many other vendors (the majority of which are not allowed to publish the provenance of their data). While sales reps do not use inactive companies, they are important for risk products, master data management, compliance, and database cleansing.
Two key features of the WorldBase data set are the D-U-N-S Number, their de facto global numbering system, and global linkages which tie together global company family trees.
Salesforce told its Data.com Connect customers that the product will no longer be available as of May 4, 2019. As such, the firm will not renew any customers after May 3rd of this year, and users will not be able to license any points, contacts, or plans after May 3rd. However, users will be able to earn points through community updates through the expiration of the product. While Salesforce has not announced shutdown dates for the native Salesforce Data.com Clean and Prospector offerings, their shutdown is “currently targeted for some time in 2020.”
Data.com Connect contacts data will continue to “used in the maintenance of the Data.com Clean and Prospector products,” said the firm. “After the Data.com end-of-life is complete, the contact database may be archived by Salesforce.”
Data.com Connect is the successor to Jigsaw, which the firm acquired in 2010 for $142 million. Connect Members either purchased plans or earned points through adding and maintaining records within Connect. After acquiring the database, Salesforce realized that Jigsaw company data was too weak to be sold and partnered with D&B (now Dun & Bradstreet) to deliver the WorldBase company file alongside Jigsaw contacts. This partnership was in place until early 2017 when SFDC announced the end of the licensing relationship. Legacy customers continue to receive Data.com WorldBase account data, but the firm is encouraging clients to evaluate Lightning Data partnership offerings from Dun & Bradstreet, Bombora (intent), HG Data (technographics), DataFox, Clearbit, MCH (healthcare), and InsideView.
Future Lightning Data partners include Thomson Reuters, Aberdeen (technographics), Datanyze (technographics), Compass, and Equifax.
“We’ve built a powerful, flexible set of capabilities into the Salesforce platform we call the Lightning Data Engine. It uses sophisticated matching algorithms and machine learning to make it easy to implement and deliver strategic data and insights from trusted, third-party sources. Lightning Data apps give customers next-level data quality, enabling them to create more intelligent processes built on better, more targeted data, which improves CRM user adoption and ROI. Best of all, seamless integration requires minimal ongoing maintenance, and makes data readily available on any device without IT involvement.”
Dun & Bradstreet said that it expects Data.com revenues to decline 30% in 2018. The announcement that the Data.com Prospector and Clean products will be shuttered in 2020 is likely to expedite the revenue wind down.
Dun & Bradstreet continues to invest in their D&B Hoovers platform with a set of content and functionality enhancements. Since the beginning of the year, Dun & Bradstreet expanded its prospecting selects, added deeper technology and company coverage, tightened its Microsoft Dynamics integration, and increased the number of fields available for export to connectors.
Dun & Bradstreet added a series of new display and screening variables including Employees 1-Year Growth, Area Code Exclusions, and Employee Counts at the company or site level. D&B Hoovers now supports over 175 prospecting variables.
Three additional domestic location filters were also added. The Domestic Ultimate D-U-N-S Number identifies the top location within a country, helping with territory expansion and cross-selling. Related variables include Is Domestic Ultimate (Select for the top national offices) and Domestic Ultimate Company (all children of the Domestic Ultimate Company).
The new selects are generally not available in competitor products.
Avention (now D&B Hoovers) platforms have long supported variables for screening by ultimate parent country and ultimate parent. The new Domestic Ultimate D-U-N-S Number selects expand the options for sales and marketing to target accounts at the country level. Thus, if a company is looking to enter a new market, they can evaluate their ABM account presence within that market and focus sales and marketing campaigns around those prospects.
The Technologies premium offering was also enhanced with coverage expanded to 195 countries, 2.7 million companies, and over 20 million tracked technologies. Technologies are screenable at the vendor and product level and viewable as part of the Technologies in Use report. Dun & Bradstreet did not indicate whether they gathered the data or licensed it from a third-party.
Microsoft Dynamics admins can now set D&B Hoovers to automatically use D-U-N-S Numbers populated by the D&B Optimizer for Microsoft enrichment service.
“This feature eliminates the need for the manual match and selection step that is used to populate records in D&B Hoovers. Once D-U-N-S Numbers are attached, the records become automatically eligible for de-duplication when sending to CRM.”
Phil McWade, Dun & Bradstreet Director of Product Management
D&B Hoovers added 15 additional CRM and MAP export fields including D&B Prescreen score, Franchise Status, Import/Export Status, Manufacturing Status, Owns/Rents, 8 Digit SIC and Description, Latitude and Longitude, Tradestyle, and Square Footage. Most of these variables were added to D&B Hoovers over the past year and are also available for display, screening, and download.
In March, D&B Hoovers added over seven million companies including 6.8 million from Brazil, 360,000 from Argentina, 210,000 from India, and 78,000 from Australia. The Russian Federation and Vietnam also added over 50,000 company profiles. D&B Hoovers now covers 21 million active companies in South America and nearly 129 million global entities.
Last week, Dun & Bradstreet CEO Robert Carrigan resigned as CEO, board member, and Chairman. In his absence, Thomas Manning has been appointed Chairman and interim CEO. Manning has been a board member since 2013 and Lead Director since 2016. He previously served as the CEO of Cerberus Asia Operations & Advisory Limited, CEO of Capgemini Asia, and CEO of Ernst & Young Consulting Asia. He was also a senior partner with corporate strategy firm Bain & Company where he led the global IT practice in Silicon Valley and Asia.
No reason was given for Carrigan’s departure beyond that it was a mutual decision.
“Over the last four years we have made progress transforming this company. We’ve improved our data and analytics, developed solutions and capabilities to serve new customer use cases, and modernized our products and platforms. The Board is confident in the strategic direction of the Company, and fully believes that this business can deliver sustainable mid-single digit revenue growth and expanding margins. Our number one priority is accelerating value creation for shareholders.”
Dun & Bradstreet Chairman and interim CEO Thomas Manning
However, the company is not growing revenue and profits quickly enough. To address the slow growth, the firm engaged McKinsey & Company two months ago in a strategic and operational review “to help us find ways to speed up the time to realize value,” said Manning. “The first phase of their work validated our strategy and identified barriers to growth and cost opportunities. The next phase of their work will include a full portfolio and business assessment and we are open to considering all options for value creation that may be identified.”
McKinsey validated the basic DaaS strategy around premium company, contact, and risk data. McKinsey’s primary concern was the “breadth of our offerings and distribution channels” which increased the level of operational complexity. The updated strategy will look to “simplify and streamline the business.”
Dun & Bradstreet is also looking to “apply more specialization to our selling activities as we go deeper into the sales and marketing space,” said Manning. “As we expand our sales and marketing value proposition from being primarily a static data supplier to becoming a dynamic player in the digital sales, marketing and advertising space, we are working to make sure that our organization, go-to-market strategy and processes are aligned with that goal.”
The firm hired David Godfrey, who previously ran Global Sales at Gartner, to oversee go-to-market strategy and execution. He will be reporting into Manning.
James Fernandez, new Lead Director of the Board, said, “As Dun & Bradstreet continues its work to drive sustainable growth, the Board believes now is the right time to transition the Company’s leadership. We are pleased to have a leader of Tom’s caliber and experience to step in as interim CEO. The Board will continue to support the Company, and lend our expertise to the organization and Tom during this transition period as we conduct our search for a permanent successor.”
Q4 earnings increased 3%, but only 1% organically, to $527 million. Total revenue hit $1.75 billion in 2017 with 83% in the Americas. The firm maintained expense discipline resulting in a ten-basis point improvement in margins while investing $40 million on initiatives which “transform our technology platforms in order to meet our customers’ modern-day needs,” said CFO Richard Veldran. “Modernizing delivery of our solutions is a critical component of our strategy.”
Data-as-a-service delivery continues to increase. Nearly 30% of Americas revenue came via as-a-service solutions “which makes our data stickier and more useful for our customers and drives higher-value revenue.”
Amongst the 2017 initiatives were upgrades to D&B Credit and new D&B Optimizer solutions for Salesforce and Microsoft.
Deferred revenue was up 3% year over year before M&A activity and currency adjustments. Growth was attributed to D&B Credit, D&B Hoovers Q4, and the D&B Direct API. President and COO Josh Peirez noted that the D&B Credit Suite revenues were no longer declining and that the company is well-positioned in D&B Credit, D&B Hoovers, and D&B Direct.
“We think we’re well-positioned to address the competitive challenges. We’re also pleased that McKinsey has validated that opportunity and that strategy and helping us to make sure that we are packaging and bundling these things properly.”
Dun & Bradstreet President & COO Josh Peirez
Taxes, which were 31.4% in 2017, are expected to drop to the mid-20s due to the US corporate tax reforms. The reforms will also allow the firm to repatriate $265 million to reduce debt levels.
No guidance was provided as the firm is beginning their operational review. Veldran promised more details on the Q1 call.
Dun & Bradstreet raised its quarterly dividend by two cents to $0.5225 per share.
The market reacted very positively to the announcements, driving Dun & Bradstreet’s stock price up nearly 8% after the earnings call.
Sales & Marketing Solutions (S&MS) rose 4% in the Americas to $240.1 million in Q4. Growth was led by Sales Acceleration products which rose 9% to $84.3 million. For the full year, Sales Acceleration grew 10% to $288.4 million in the Americas with the Avention acquisition contributing twelve points of growth. Legacy Hoover’s drove down organic Sales Acceleration revenue with traditional Hoovers revenue declining by mid-single digits.
Revenue for the new D&B Hoovers service (Dun & Bradstreet content delivered through the Avention platform) increased in 2017. However, the decline in revenue from the Data.com partnership will result in a decline in 2018 Sales Acceleration revenue. Data.com generated around $50 million in revenue in 2017 with the firm continuing to sell through August 2017, resulting in a flat year. Veldran projects a $15 million decline in Data.com revenue. Dun & Bradstreet is looking to recapture some of that decline as new D&B Hoovers and D&B Optimizer for Salesforce contracts.
Peirez is quite pleased with the trajectory of the D&B Hoovers business. “We think our products are far better than anything else in market. We continue to see the overwhelming majority of customers that are buying our D&B Hoovers product buying the higher level of the product with the integrations to CRM, so that’s extremely encouraging for us.”
The firm is also moving to migrate its Hoover’s customer base over to D&B Hoovers. In Q4, more than ten percent of the legacy base moved to the new platform as Dun & Bradstreet “started to move very aggressively in getting the customers upgraded,” said Peirez. While the D&B Hoovers Suite grew low-single digits in its first year, Peirez expects growth to accelerate in year two. The company has told users that the legacy platform will be phased out at the end of the year.
Advanced Marketing Solutions grew 2% in Q4 to $155.8 million in the Americas. For the full year, growth was 2% to $383.9 million. While revenue was up mid-single digits in H2, the product line was weighed down by H1 weakness.
Outside the Americas, S&MS grew 17% to $16.9 million in Q4. For the year, S&MS non-Americas revenue rose 18% to $60.4 million. Growth was driven by Sales Acceleration products, including the acquired Avention product line. Sales Acceleration products jumped up 24% to $7.5 million in the quarter and 39% to $27.7 million for the year.
The D&B Hoovers Suite rose 26% to $42.6 million in the Americas in Q4 and 22% to $166.5 million. Outside of the Americas, D&B Hoovers Suite rose from $0.6 million to $5.3 million in Q4 and $3.1 million to $16 million. While the classic Hoover’s product line had little overseas sales, the new D&B Hoovers product line, built on the Avention platform, benefited from a longstanding presence in the UK, Singapore, Australia, and India.