NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Tabular dollar amounts, except share data and per share data, in millions)
Note 1 --Basis of Presentation
The accompanying interim unaudited condensed consolidated financial statements of Dun & Bradstreet Holdings, Inc. and its subsidiaries ("we" or "us" or "our" or the "Company") were prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"). They should be read in conjunction with the consolidated financial statements and related notes, which appear in the consolidated financial statements for the year ended December 31, 2021, included in our Annual Report on Form 10-K and filed with the Securities and Exchange Commission ("SEC") on February 24, 2022. The unaudited condensed consolidated financial statements for interim periods do not include all disclosures required by GAAP for annual financial statements and are not necessarily indicative of results for the full year or any subsequent period. In the opinion of our management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement of the unaudited consolidated financial position, results of operations and cash flows at the dates and for the periods presented have been included.
We manage our business and report our financial results through the following two segments:
•North America offers Finance & Risk and Sales & Marketing data, analytics and business insights in the United States and Canada; and
•International offers Finance & Risk and Sales & Marketing data, analytics and business insights directly in the United Kingdom and Ireland ("U.K."), Nordics (Sweden, Norway, Denmark and Finland), DACH (Germany, Austria and Switzerland) and CEE (Central and Eastern Europe) countries ("Europe"), Greater China, India and indirectly through our Worldwide Network alliances ("WWN alliances").
All intercompany transactions and balances have been eliminated in consolidation.
Our unaudited condensed consolidated financial statements presented herein reflect the latest estimates and assumptions made by management that affect the reported amounts of assets and liabilities and related disclosures as of the date of the unaudited consolidated financial statements and reported amounts of revenue and expenses during the reporting periods presented. Since early 2020, the novel coronavirus ("COVID-19") and its variants have caused disruptions and continue to cause disruption in the economy and volatility in the global financial markets. While we continue to expect the impact of COVID-19 to global businesses to moderate, there still remains uncertainty regarding its duration and the speed and nature of recovery. In addition, the ongoing conflict between Russia and Ukraine, which started in February 2022, has further exacerbated uncertainty in the global economy resulting from disruptions in supply chains and government sanctions. The extent of the impact of the COVID-19 global pandemic and the current Russia/Ukraine conflict on our operations and financial performance will depend on, among many factors, the duration of the pandemic, the continuation of the Russia/Ukraine conflict, the government mandates or guidance regarding COVID-19 restrictions and their effects on our clients and vendors, which continue to be uncertain at this time and cannot be predicted. The ongoing uncertainty may affect management's estimates and assumptions of variable consideration in contracts with clients as well as other estimates and assumptions, in particular those that require a projection of our financial results, our cash flows or broader economic conditions.
Note 2 -- Recent Accounting Pronouncements
We consider the applicability and impact of all Accounting Standards Updates (“ASUs”) and applicable authoritative guidance. The ASUs not listed below were assessed and determined to be either not applicable or are expected to have an immaterial impact on our consolidated financial position, results of operations and/or cash flows.
Recently Adopted Accounting Pronouncements
In October 2021, the FASB issued ASU No. 2021-08, "Business Combinations (Topic 805) Accounting for Contract Assets and Contract Liabilities from Contracts with Customers." The amendments require an acquirer to recognize and measure contract assets and contract liabilities in a business combination based on the guidance of ASU No. 2014-09, "Revenue from Contracts with Customers (Topic 606)" rather than fair value. For public business entities, the amendments in this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. Early adoption of this ASU is permitted, including adoption in an interim period. If early adopted, the amendments are applied retrospectively to all business combinations for which the acquisition date occurred during the fiscal year of adoption. We early adopted this update during the fourth quarter of 2021. As a result of the adoption of this update, no fair value adjustments were made to the
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - Continued
(Tabular dollar amounts, except share data and per share data, in millions)
acquired deferred revenue balances for acquisitions completed in 2021. See Note 14 to the consolidated financial statements for further detail.
Recently Issued Accounting Pronouncements
In March 2020, the FASB issued ASU No. 2020-04 "Facilitation of the Effects of Reference Rate Reform on Financial Reporting" to provide temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate ("LIBOR") to alternative reference rates. In January 2021, the FASB issued ASU 2021-01, “Reference Rate Reform - Scope,” which clarified the scope and application of the original guidance in ASU No. 2020-04. Both ASU's were effective upon issuance, and the Company may elect to apply the amendments prospectively through December 31, 2022 as the transition from LIBOR is completed. On April 20, 2022, the FASB issued a proposed ASU that would extend the transition date to December 31, 2024.
Note 3 -- Revenue
The total amount of the transaction price for our revenue contracts allocated to performance obligations that are unsatisfied (or partially unsatisfied) as of March 31, 2022 is as follows:
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| Remainder of 2022 | | 2023 | | 2024 | | 2025 | | 2026 | | Thereafter | | Total |
Future revenue | $ | 1,047.7 | | | $ | 688.7 | | | $ | 398.6 | | | $ | 189.5 | | | $ | 136.6 | | | $ | 396.5 | | | $ | 2,857.6 | |
The table of future revenue does not include any amount of variable consideration that is a sales or usage-based royalty in exchange for distinct data licenses or that is allocated to a distinct service period within a single performance obligation that is a series of distinct service periods.
Timing of Revenue Recognition
| | | | | | | | | | | | | | | |
| Three months ended March 31, | | |
| 2022 | | 2021 | | | | |
Revenue recognized at a point in time | $ | 208.8 | | | $ | 205.0 | | | | | |
Revenue recognized over time | 327.2 | | | 299.5 | | | | | |
Total revenue recognized | $ | 536.0 | | | $ | 504.5 | | | | | |
Contract Balances
| | | | | | | | | | | | | | | | |
| At March 31, 2022 | | At December 31, 2021 | | | | | |
Accounts receivable, net | $ | 339.4 | | | $ | 401.7 | | | | | | |
Short-term contract assets (1) | $ | 4.0 | | | $ | 3.4 | | | | | | |
Long-term contract assets (2) | $ | 12.3 | | | $ | 9.1 | | | | | | |
Short-term deferred revenue | $ | 632.8 | | | $ | 569.4 | | | | | | |
Long-term deferred revenue (3) | $ | 17.3 | | | $ | 13.7 | | | | | | |
(1) Included within "Other current assets" in the condensed consolidated balance sheet.
(2) Included within "Other non-current assets" in the condensed consolidated balance sheet.
(3) Included within "Other non-current liabilities" in the condensed consolidated balance sheet.
The increase in deferred revenue of $67.0 million from December 31, 2021 to March 31, 2022 was primarily due to cash payments received or due in advance of satisfying our performance obligations, largely offset by $255.9 million of revenue recognized that were included in the deferred revenue balance at December 31, 2021.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - Continued
(Tabular dollar amounts, except share data and per share data, in millions)
The increase in contract assets of $3.8 million is primarily due to new contract assets recognized, net of new amounts reclassified to receivables during 2021, partially offset by $6.3 million of contract assets included in the balance at January 1, 2021 that were reclassified to receivables when they became unconditional.
See Note 16 for a schedule of disaggregation of revenue.
Assets Recognized for the Costs to Obtain a Contract
Commission assets, net of accumulated amortization included in deferred costs, were $116.7 million and $116.1 million as of March 31, 2022 and December 31, 2021, respectively.
The amortization of commission assets was $8.6 million and $6.0 million for the three months ended March 31, 2022 and 2021, respectively.
Note 4 -- Restructuring Charge
We incurred restructuring charges (which generally consist of employee severance and termination costs, and contract terminations). These charges were incurred as a result of eliminating, consolidating, standardizing and/or automating our business functions.
Three months ended March 31, 2022 vs. Three months ended March 31, 2021
We recorded a restructuring charge of $5.3 million for the three months ended March 31, 2022. This charge consists of:
•Severance costs of $2.5 million under ongoing benefit arrangements. Approximately 20 employees were impacted. Most of the employees impacted exited the Company by the end of the first quarter of 2022. The cash payments for these employees will be substantially completed by the end of the third quarter of 2022; and
•Contract termination, write down of right of use assets and other exit costs, including those to consolidate or close facilities of $2.8 million.
We recorded a restructuring charge of $5.8 million for the three months ended March 31, 2021. This charge consists of:
•Severance costs of $4.7 million under ongoing benefit arrangements. Approximately 35 employees were impacted. Most of the employees impacted exited the Company by the end of the first quarter of 2021. The cash payments for these employees were substantially completed by the end of the fourth quarter of 2021; and
•Contract termination, write down of right of use assets and other exit costs, including those to consolidate or close facilities of $1.1 million.
The following table sets forth the restructuring reserves and utilization for the three months ended March 31, 2022 and the three months ended March 31, 2021:
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - Continued
(Tabular dollar amounts, except share data and per share data, in millions)
| | | | | | | | | | | | | | | | | |
| Severance and termination | | Contract termination and other exit costs | | Total |
| | | | | |
2022: | | | | | |
Balance remaining as of December 31, 2021 | $ | 4.7 | | | $ | 3.3 | | | $ | 8.0 | |
Charge taken during first quarter 2022 (1) | 2.5 | | | 0.6 | | | 3.1 | |
Payments made during first quarter 2022 | (3.4) | | | (0.6) | | | (4.0) | |
Balance remaining as of March 31, 2022 | $ | 3.8 | | | $ | 3.3 | | | $ | 7.1 | |
| | | | | |
2021: | | | | | |
Balance remaining as of December 31, 2020 | $ | 2.6 | | | $ | 7.1 | | | $ | 9.7 | |
Charge taken during first quarter 2021 (1) | 4.7 | | | (0.3) | | | 4.4 | |
Payments made during first quarter 2021 | (2.4) | | | (0.9) | | | (3.3) | |
Balance remaining as of March 31, 2021 | $ | 4.9 | | | $ | 5.9 | | | $ | 10.8 | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
(1)Balance excludes charges accounted for under ASU No. 2016-02, "Leases (Topic 842)."
Note 5 -- Notes Payable and Indebtedness
Our borrowings are summarized in the following table:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | March 31, 2022 | | December 31, 2021 |
| Maturity | | Principal amount | | Debt issuance costs and discount* | | Carrying value | | Principal amount | | Debt issuance costs and discount* | | Carrying value |
Debt maturing within one year: | | | | | | | | | | | | | |
2026 Term loan (1) | February 8, 2026 | | $ | 28.1 | | | $ | — | | | $ | 28.1 | | | $ | 28.1 | | | $ | — | | | $ | 28.1 | |
2029 Term loan (1) | January 18, 2029 | | 4.6 | | | — | | | 4.6 | | | — | | | — | | | — | |
Total short-term debt | | | $ | 32.7 | | | $ | — | | | $ | 32.7 | | | $ | 28.1 | | | $ | — | | | $ | 28.1 | |
| | | | | | | | | | | | | |
Debt maturing after one year: | | | | | | | | | | | | | |
2026 Term loan (1) | February 8, 2026 | | $ | 2,747.8 | | | $ | 60.6 | | | $ | 2,687.2 | | | $ | 2,754.8 | | | $ | 64.5 | | | $ | 2,690.3 | |
2029 Term loan (1) | January 18, 2029 | | 455.4 | | | 7.2 | | | 448.2 | | | — | | | — | | | — | |
Revolving facility (1) (2) | September 11, 2025 | | 100.0 | | | — | | | 100.0 | | | 160.0 | | | — | | | 160.0 | |
5.000% Senior unsecured notes (1) | December 15, 2029 | | 460.0 | | | 6.7 | | | 453.3 | | | 460.0 | | | 6.8 | | | 453.2 | |
6.875% Senior secured notes (1) | Fully paid off in January 2022 | | — | | | — | | | — | | | 420.0 | | | 6.8 | | | 413.2 | |
Total long-term debt | | | $ | 3,763.2 | | | $ | 74.5 | | | $ | 3,688.7 | | | $ | 3,794.8 | | | $ | 78.1 | | | $ | 3,716.7 | |
Total debt | | | $ | 3,795.9 | | | $ | 74.5 | | | $ | 3,721.4 | | | $ | 3,822.9 | | | $ | 78.1 | | | $ | 3,744.8 | |
*Initial debt issuance costs were recorded as a reduction of the carrying amount of the debt and amortized over the contractual term of the debt. Balances represent the unamortized portion of debt issuance costs and discounts.
(1) The 5.000% Senior Unsecured Notes, the 6.875% Senior Secured Notes and the Senior Secured Credit Facilities contain certain covenants that limit our ability to incur additional indebtedness and guarantee indebtedness, create liens, engage in mergers or acquisitions, sell, transfer or otherwise dispose of assets, pay dividends and distributions or repurchase capital
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - Continued
(Tabular dollar amounts, except share data and per share data, in millions)
stock, prepay certain indebtedness and make investments, loans and advances. We were in compliance with these non-financial covenants at March 31, 2022 and December 31, 2021.
(2) The Revolving Facility contains a springing financial covenant requiring compliance with a maximum ratio of first lien net indebtedness to consolidated EBITDA of 6.75. The financial covenant applies only if the aggregate principal amount of borrowings under the Revolving Facility and certain outstanding letters of credit exceed 35% of the total amount of commitments under the Revolving Facility on the last day of any fiscal quarter. The financial covenant did not apply at March 31, 2022 and December 31, 2021.
On January 18, 2022, we amended our credit agreement dated February 8, 2019, specifically related to the Term Loan Facility, to establish Incremental Term Loans in an aggregate principal amount of $460 million with a maturity date of January 18, 2029 ("2029 Term Loan"). We used the proceeds from the 2029 Term Loans to redeem our then-outstanding $420 million in aggregate principal amount of the 6.875% Senior Secured Notes due 2026, inclusive of early redemption premium of $16.3 million, accrued interest and fees and expenses. As a result of the redemption, we recorded a loss on debt extinguishment of $23.0 million as the difference between the settlement payments of $436.3 million and the carrying amount of the debt of $413.3 million, including unamortized debt issuance costs of $6.7 million. The loss was recorded within "Non-operating income (expense)-net" for the three months ended March 31, 2022. Initial debt issuance costs of $7.4 million related to the 2029 Term Loan were recorded as a reduction of the carrying amount of the term loan and will be amortized over its contractual term.
Senior Secured Credit Facilities
Borrowings under the Senior Secured Credit Facilities bear interest at a rate per annum equal to an applicable margin over a LIBOR or Secured Overnight Financing Rate ("SOFR") for the interest period relevant to such borrowing, subject to interest rate floors, and they are secured by substantially all of the Company’s assets. Initial debt issuance costs related to the Term Loan facility were recorded as a reduction of the carrying amount of the Term Loan Facility and are being amortized over the term of the facility. Initial debt issuance costs related to the Revolving Facility were included in "Other non-current assets" on the consolidated balance sheet and amortized over the term of the Revolving Facility.
Other details of the Senior Secured Credit Facilities:
•For the 2029 Term Loan, beginning June 30, 2022, the principal amount is required to be paid down in equal quarterly installments in an aggregate annual amount equal to 1.00% of the original principal amount, with the balance being payable on January 18, 2029. The 2029 Incremental Term Loan bears interest at a rate per annum equal to 325 basis points over a SOFR rate for the interest period. The interest rate associated with the outstanding balance of the 2029 Term Loan at March 31, 2022 was 3.560%.
•For the term loans issued prior to January 18, 2022, beginning June 30, 2020, the principal amount is required to be paid down in equal quarterly installments in an aggregate annual amount equal to 1.00% of the original principal amount, with the balance being payable on February 8, 2026 ("2026 Term Loan"). The margin to LIBOR was 500 basis points initially. Several amendments were made subsequently to reduce the margin to LIBOR. As of March 31, 2022 and December 31, 2021, the spread was 325 basis points. The interest rate associated with the outstanding balances of the 2026 Term Loan at March 31, 2022 and December 31, 2021 were 3.697% and 3.352%, respectively.
•For borrowings under the Revolving Facility, the margin to LIBOR was 350 basis points initially. Subsequent to the IPO transaction, the spread was reduced by 25 basis points to 325 basis points, subject to a ratio-based pricing grid. The aggregate amount available under the Revolving Facility is $850 million. The available borrowings under the Revolving Facility at March 31, 2022 and December 31, 2021 were $750 million and $690 million, respectively. The interest rate associated with the outstanding balance of the Revolving Facility at March 31, 2022 and December 31, 2021 was 3.468% and 3.104%, respectively.
Other
We were contingently liable under open standby letters of credit and bank guarantees issued by our banks in favor of third parties totaling $13.1 million at March 31, 2022 and $13.5 million at December 31, 2021.
On March 2, 2022, the Company entered into three-year interest rate swaps with an aggregate notional amount of
$250 million, effective February 28, 2022 through February 27, 2025. For these swaps, the Company pays a fixed rate of 1.629% and receives the one-month Term SOFR rate.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - Continued
(Tabular dollar amounts, except share data and per share data, in millions)
On March 30, 2021, the Company entered into three-year interest rate swaps with an aggregate notional amount of $1 billion, effective March 29, 2021 through March 27, 2024. For these swaps, the Company pays a fixed rate of 0.467% and receives the one-month LIBOR rate.
The objective of the swaps is to mitigate the variation of future cash flows from changes in the floating interest rates on our existing debt. See further discussion in Note 12 to our condensed consolidated financial statements.
Note 6 -- Other Assets and Liabilities
Other Non-Current Assets
| | | | | | | | | | | | | | | |
| March 31, 2022 | | December 31, 2021 | | | | |
Right of use assets | $ | 62.7 | | | $ | 71.9 | | | | | |
Prepaid pension assets | 37.4 | | | 36.6 | | | | | |
Investments | 27.6 | | | 27.2 | | | | | |
Other various | 39.2 | | | 36.9 | | | | | |
Total | $ | 166.9 | | | $ | 172.6 | | | | | |
Other Accrued and Current Liabilities:
| | | | | | | | | | | |
| March 31, 2022 | | December 31, 2021 |
Accrued operating costs | $ | 95.1 | | | $ | 110.4 | |
Accrued interest expense | 8.0 | | | 12.6 | |
Short-term lease liability | 24.6 | | | 26.0 | |
Accrued income tax | 6.2 | | | 16.4 | |
Other various | 36.8 | | | 32.9 | |
Total | $ | 170.7 | | | $ | 198.3 | |
Other Non-Current Liabilities:
| | | | | | | | | | | |
| March 31, 2022 | | December 31, 2021 |
Deferred revenue - long term | $ | 17.3 | | | $ | 13.7 | |
U.S. tax liability associated with the 2017 Act | 44.6 | | | 44.6 | |
Long-term lease liability | 50.9 | | | 59.4 | |
Liabilities for unrecognized tax benefits | 18.9 | | | 19.2 | |
Other various | 7.4 | | | 7.8 | |
Total | $ | 139.1 | | | $ | 144.7 | |
Note 7 -- Contingencies
In the ordinary course of business, we are involved in various pending and threatened litigation and regulatory matters related to our operations, such as claims brought by our clients in connection with commercial disputes, defamation claims by subjects of our reporting, and employment claims made by our current or former employees, some of which include claims for punitive or exemplary damages. Our ordinary course litigation may also include class action lawsuits, which make allegations related to various aspects of our business. From time to time, we are also subject to regulatory investigations or other proceedings by state and federal regulatory authorities as well as authorities outside of the U.S., some of which take the form of civil investigative demands or subpoenas. Some of these regulatory inquiries may result in the assessment of fines for violations
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - Continued
(Tabular dollar amounts, except share data and per share data, in millions)
of regulations or settlements with such authorities requiring a variety of remedies. We believe that none of these actions depart from customary litigation or regulatory inquiries incidental to our business.
We review lawsuits and other legal and regulatory matters (collectively "legal proceedings") on an ongoing basis when making accrual and disclosure decisions. When assessing reasonably possible and probable outcomes, management bases its decision on its assessment of the ultimate outcome assuming all appeals have been exhausted. For legal proceedings where it has been determined that a loss is both probable and reasonably estimable, a liability based on known facts and which represents our best estimate has been recorded. Actual losses may materially differ from the amounts recorded and the ultimate outcome of our pending cases is generally not yet determinable.
While some of these matters could be material to our operating results or cash flows for any particular period if an unfavorable outcome results, at present we do not believe the ultimate resolution of currently pending legal proceedings, either individually or in the aggregate, will have a material adverse effect on our financial condition.
In addition, in the normal course of business, and including without limitation, our merger and acquisition activities, strategic relationships and financing transactions, the Company indemnifies other parties, including clients, lessors and parties to other transactions with the Company, with respect to certain matters. We have agreed to hold the other parties harmless against losses arising from a breach of representations or covenants, or arising out of other claims made against certain parties. These agreements may limit the time within which an indemnification claim can be made and the amount of the claim. The Company has also entered into indemnity obligations with its officers and directors.
Federal Trade Commission Investigation
On April 10, 2018, the Federal Trade Commission (the “FTC” or the "Commission") issued a Civil Investigative Demand (“CID”) to Dun & Bradstreet, Inc. (“D&B Inc.,” a wholly-owned subsidiary of the Company) related to an investigation by the FTC into potential violations of Section 5 of the Federal Trade Commission Act (the “FTC Act”), primarily concerning our credit managing and monitoring products such as CreditBuilder. D&B Inc. completed its response to the CID in November 2018. On May 28, 2019, the FTC staff informed D&B Inc. that it believes that certain of D&B's practices violated Section 5 of the FTC Act, and informed D&B Inc. that it had been given authority by the FTC’s Bureau of Consumer Protection to engage in consent negotiations. Following discussions between the Company and the FTC staff, on September 9, 2019, the FTC issued a second CID seeking additional information, data and documents. The Company completed its response to the second CID in April 2020. In a letter dated March 2, 2020, the FTC staff identified areas of interest related to the CIDs and we completed our responses to the letter on April 7, 2020. On April 20, 2020, the FTC and D&B Inc. entered a tolling agreement with respect to potential claims related to the subject matter of the investigation. On February 23, 2021, the FTC staff provided D&B Inc. with a draft complaint and consent order outlining its allegations and the forms of relief sought, and advised that it had been given authority to engage in consent negotiations. Following consent negotiations, on September 21, 2021, D&B Inc. agreed to enter into an Agreement Containing Consent Order ("Consent Agreement"). On January 13, 2022, the FTC informed the Company that the Commission had voted to accept the Consent Agreement. On January 19, 2022, the Consent Agreement was published in the Federal Register, triggering a 30-day public comment period that ended on February 18, 2022. On April 6, 2022, the Commission finalized approval of the Consent Agreement.
In accordance with ASC 450, as of March 31, 2022, an amount in respect of this matter was accrued in the consolidated income statement during the first quarter of 2021, and was included in the consolidated balance sheet as of March 31, 2022 and December 31, 2021. The amount of any loss has not been fully determined, and it is possible that the amount could exceed the amount accrued and that the amount of such additional loss could be material.
Right of Publicity Class Actions
DeBose v. Dun & Bradstreet Holdings, Inc., No. 2:22-cv-00209-ES-CLW (D.N.J.)
On January 17, 2022, Plaintiff Rashad DeBose filed a Class Action Complaint against the Company, alleging that the Company used the purported class members’ names and personas to promote paid subscriptions to the Company’s Hoovers product website without consent, in violation of the Ohio right of publicity statute and Ohio common law prohibiting misappropriation of a name or likeness. This matter was recently filed and the Company is in the very early stages of investigating this matter. On March 30, 2022, the Company filed a motion to dismiss the Complaint.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - Continued
(Tabular dollar amounts, except share data and per share data, in millions)
In accordance with ASC 450 Contingencies, as the Company is in the very early stage of investigating the claims, we therefore have no basis to determine that a loss in connection with this matter is probable, reasonably possible or estimable, and thus no reserve has been established nor has a range of loss been disclosed. While this matter is in a very early stage, as it is a potential class action, in an abundance of caution, we have included it in our public filings.
Batis v. Dun & Bradstreet Holdings, Inc., No. 4:22-cv-01924-AGT (N.D.Cal.)
On March 25, 2022, Plaintiff Odette R. Batis filed a Class Action Complaint against the Company, alleging that the Company used the purported class members’ names and personas to promote paid subscriptions to the Company’s Hoovers product website without consent, in violation of the California right of publicity statute, California common law prohibiting misappropriation of a name or likeness and California’s Unfair Competition Law. As this matter was recently filed and the Company is in the very early stages of investigating this matter, the Company has not yet completed its evaluation of the claims or its defenses.
In accordance with ASC 450 Contingencies, as the Company is in the very early stage of investigating the claims, we therefore have no basis to determine that a loss in connection with this matter is probable, reasonably possible or estimable, and thus no reserve has been established nor has a range of loss been disclosed. While this matter is in a very early stage, as it is a potential class action, in an abundance of caution, we have included it in our public filings.
Note 8 -- Income Taxes
The effective tax rate for the three months ended March 31, 2022 was 23.4%, reflecting a tax benefit of $9.3 million on pre-tax loss of $39.8 million, compared to 29.0% for the three months ended March 31, 2021, reflecting a tax benefit of $9.8 million on a pre-tax loss of $33.7 million. The reduced tax benefit for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 was primarily due to the global intangible low-tax income ("GILTI") inclusion and higher non-deductible executive compensation partially offset by the benefit from increased income in our foreign jurisdictions taxed at lower tax rates.
Note 9 -- Pension and Postretirement Benefits
Net Periodic Pension Cost
The following table sets forth the components of the net periodic cost (income) associated with our pension plans and our postretirement benefit obligations:
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| Pension plans | | Postretirement benefit obligations |
| Three months ended March 31, | | | | Three months ended March 31, | | |
| 2022 | | 2021 | | | | | | 2022 | | 2021 | | | | |
Components of net periodic cost (income): | | | | | | | | | | | | | | | |
Service cost | $ | 0.8 | | | $ | 1.3 | | | | | | | $ | — | | | $ | — | | | | | |
Interest cost | 8.8 | | | 6.8 | | | | | | | — | | | — | | | | | |
Expected return on plan assets | (20.0) | | | (20.8) | | | | | | | — | | | — | | | | | |
Amortization of prior service cost (credit) | — | | | — | | | | | | | (0.1) | | | (0.1) | | | | | |
Amortization of actuarial loss (gain) | — | | | 0.6 | | | | | | | — | | | — | | | | | |
Net periodic cost (income) | $ | (10.4) | | | $ | (12.1) | | | | | | | $ | (0.1) | | | $ | (0.1) | | | | | |
Note 10 -- Stock Based Compensation
The following table sets forth the components of our stock-based compensation and expected tax benefit for the three months ended March 31, 2022 and 2021 related to the plans in effect during the respective period:
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - Continued
(Tabular dollar amounts, except share data and per share data, in millions)
| | | | | | | | | | | | | | | |
| Three months ended March 31, | | |
Stock-based compensation expense: | 2022 | | 2021 | | | | |
Restricted stock and restricted stock units | $ | 7.4 | | | $ | 3.1 | | | | | |
Stock options | 1.0 | | | 1.5 | | | | | |
Incentive units | 2.3 | | | 3.0 | | | | | |
Total compensation expense | $ | 10.7 | | | $ | 7.6 | | | | | |
| | | | | | | |
Expected tax benefit: | | | | | | | |
Restricted stock and restricted stock units | $ | 1.1 | | | $ | 0.5 | | | | | |
Stock options | 0.1 | | | 0.4 | | | | | |
Total expected tax benefit | $ | 1.2 | | | $ | 0.9 | | | | | |
The following table summarizes the restricted stock and restricted stock units granted in 2022:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Date | | Number of shares granted | | Grant date fair value per share | | Vesting period (in years) | | Vesting criteria |
Restricted Stock & RSU's: (1) | | | | | | | | |
March 10, 2022 | | 96,509 | | | $16.58 | | 1.0 | | Service |
March 10, 2022 (2) | | 3,254,916 | | | $16.58 | | 3.0 | | Service & Performance |
March 31, 2022 | | 89,334 | | | $17.52 | | 3.0 | | Service |
(1)Employee awards generally vest ratably over three years and director awards vest 100% after one year.
(2)These awards are also subject to an annual performance target. Vesting of these awards are dependent on the satisfaction of the annual performance target.
We accounted for stock-based compensation based on grant date fair value. For restricted stock, grant date fair value was based on the closing price of our stock on the date of grant.
The following tables summarize the restricted stock, restricted stock units, stock options and incentive units activity in 2022:
| | | | | | | | | | | | | | | | | | | | | | | |
| Restricted stock and Restricted stock units |
| Number of shares | | Weighted-average grant date fair value | | Weighted-average remaining contractual term (in years) | | Aggregate intrinsic value |
Balances, January 1, 2022 | 2,757,839 | | | $21.61 | | 1.2 | | $56.5 |
Granted | 3,440,759 | | | $16.60 | | | | |
Forfeited | (40,049) | | | $22.14 | | | | |
Vested | (733,055) | | | $22.47 | | | | |
Balances, March 31, 2022 | 5,425,494 | | | $18.32 | | 1.7 | | $95.1 |
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - Continued
(Tabular dollar amounts, except share data and per share data, in millions)
| | | | | | | | | | | | | | | | | | | | | | | |
| Stock options |
| Number of options | | Weighted-average exercise price | | Weighted-average remaining contractual term (in years) | | Aggregate intrinsic value |
Balances, January 1, 2022 | 6,380,000 | | | $22.00 | | 5.5 | | $— |
Granted | — | | | $— | | | | |
Forfeited | — | | | $— | | | | |
Vested | — | | | $— | | | | |
Balances, March 31, 2022 | 6,380,000 | | | $22.00 | | 5.3 | | $— |
| | | | | | | | | | | | | | | | | | | | | | | |
| Incentive units (1) |
| Number of incentive units | | Weighted-average grant date fair value | | Weighted-average remaining contractual term (in years) | | Aggregate intrinsic value |
Balances, January 1, 2022 | 3,826,569 | | | $2.95 | | 0.2 | | $78.4 |
Distributed | (3,397,254) | | | $2.96 | | | | |
Forfeited | — | | | $— | | | | |
Balances, March 31, 2022 | 429,315 | | | $2.86 | | 0.1 | | $7.5 |
(1)Incentive units were granted prior to the IPO under the Incentive Units Program.
The following table sets forth the unrecognized equity-based compensation cost as of March 31, 2022:
| | | | | | | | | | | |
Equity-based compensation: | Unrecognized compensation | | Weighted-average amortization period (in years) |
Restricted stock & Restricted stock units | $ | 92.6 | | | 2.6 |
Stock options | 4.8 | | | 1.2 |
Incentive units | 0.2 | | | 0.1 |
Total unrecognized compensation expense | $ | 97.6 | | | 2.2 |
Employee Stock Purchase Plan ("ESPP")
Effective December 2020, we adopted the Dun & Bradstreet Holdings, Inc. Employee Stock Purchase Plan that allows eligible employees to voluntarily make after-tax contributions ranging from 3% to 15% of eligible earnings. The Company contributes varying matching amounts to employees, as specified in the plan document, after a one year holding period. During the holding period, ESPP purchased shares are not eligible for sale or broker transfer. The first purchases for this program started in January 2021. We recorded the associated expense of approximately $1 million for both the three months ended March 31, 2022 and 2021.
Note 11 -- Earnings (Loss) Per Share
Basic earnings (loss) per share is computed by dividing net income (loss) for the period by the weighted-average number of common shares outstanding during the period.
In periods when we report net income, diluted earnings per share is calculated by dividing net income by the weighted average number of common shares outstanding during the period plus the dilutive effect of our outstanding stock incentive awards. For periods when we report a net loss, diluted earnings per share is equal to basic earnings per share, as the impact of our outstanding stock incentive awards is considered to be antidilutive.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - Continued
(Tabular dollar amounts, except share data and per share data, in millions)
The following table sets forth the computation of basic and diluted earnings (loss) per share:
| | | | | | | | | | | | | | | | | | |
| | | | Three months ended March 31, |
| | | | | | 2022 | | 2021 |
Net income (loss) attributable to Dun & Bradstreet Holdings, Inc. | | | | | | $ | (31.3) | | | $ | (25.0) | |
| | | | | | | | |
Weighted average number of shares outstanding-basic | | | | | | 428,779,816 | | | 428,503,820 | |
Weighted average number of shares outstanding-diluted | | | | | | 428,779,816 | | | 428,503,820 | |
| | | | | | | | |
Earnings (loss) per share of common stock: | | | | | | | | |
Basic | | | | | | $ | (0.07) | | | $ | (0.06) | |
Diluted | | | | | | $ | (0.07) | | | $ | (0.06) | |
Below is a reconciliation of our common stock issued and outstanding:
| | | | | | | | |
Common shares issued as of December 31, 2021 | | 432,070,999 | |
Less: treasury shares (1) | | 873,217 | |
Common shares outstanding as of December 31, 2021 | | 431,197,782 | |
| | |
Common shares issued as of December 31, 2021 | | 432,070,999 | |
Shares issued | | 3,172,434 | |
Shares forfeited | | (255,153) | |
Common shares issued as of March 31, 2022 | | 434,988,280 | |
Less: treasury shares | | 873,217 | |
Common shares outstanding as of March 31, 2022 | | 434,115,063 | |
(1)Primarily related to the forfeiture of unvested incentive units granted prior to the IPO under the Incentive Units Program of Star Parent, L.P.
Note 12 -- Financial Instruments
We employ established policies and procedures to manage our exposure to changes in interest rates and foreign currencies. We use foreign exchange forward and option contracts to hedge certain short-term foreign currency denominated loans and third-party and intercompany transactions. We may also use foreign exchange forward contracts to hedge our net investments in our foreign subsidiaries. In addition, we may use interest rate derivatives to hedge a portion of the interest rate exposure on our outstanding debt or in anticipation of a future debt issuance, as discussed under “Interest Rate Risk Management” below.
We do not use derivative financial instruments for trading or speculative purposes. If a hedging instrument is not designated as a hedge or ceases to qualify as a hedge in accordance with hedge accounting guidelines, any subsequent gains and losses are recognized currently in income. Collateral is generally not required for these types of instruments.
By their nature, all such instruments involve risk, including the credit risk of non-performance by counterparties. However, at March 31, 2022 and December 31, 2021, there was no significant risk of loss in the event of non-performance of the counterparties to these financial instruments. We control our exposure to credit risk through monitoring procedures and by selection of reputable counterparties.
Our trade receivables do not represent a significant concentration of credit risk at March 31, 2022 and December 31, 2021, because we sell to a large number of clients in different geographical locations and industries.
Interest Rate Risk Management
Our objective in managing our exposure to interest rates is to limit the impact of interest rate changes on our earnings, cash flows and financial position, and to lower our overall borrowing costs. To achieve these objectives, we maintain a practice that floating-rate debt be managed within a minimum and maximum range of our total debt exposure. To manage our exposure
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - Continued
(Tabular dollar amounts, except share data and per share data, in millions)
and limit volatility, we may use fixed-rate debt, floating-rate debt and/or interest rate swaps. We recognize all derivative instruments as either assets or liabilities at fair value in the consolidated balance sheet.
We use interest rate swaps to manage the impact of interest rate changes on our earnings. Under the swap agreements, we make monthly payments based on the fixed interest rate and receive monthly payments based on the floating rate. The objective of the swaps is to mitigate the variation of future cash flows from changes in the floating interest rates on our existing debt. The swaps are designated and accounted for as cash flow hedges. Changes in the fair value of the hedging instruments are recorded in other comprehensive income (loss) and reclassified to earnings in the same line item associated with the hedged item when the hedged item impacts earnings.
The notional amount of the interest rate swaps designated as cash flow hedging instruments was $1.25 billion and $1 billion at March 31, 2022 and December 31, 2021, respectively.
On March 2, 2022, the Company entered into three-year interest rate swaps with an aggregate notional amount of $250 million, effective February 28, 2022 through February 27, 2025. For these swaps, the Company pays a fixed rate of 1.629% and receives the one-month Term SOFR rate.
On March 30, 2021, the Company entered into three-year interest rate swaps with an aggregate notional amount of $1 billion, effective March 29, 2021 through March 27, 2024. For these swaps, the Company pays a fixed rate of 0.467% and receives the one-month LIBOR rate.
Foreign Exchange Risk Management
Our objective in managing exposure to foreign currency fluctuations is to reduce the volatility caused by foreign exchange rate changes on the earnings, cash flows and financial position of our international operations. From time to time, we follow a practice of hedging certain balance sheet positions denominated in currencies other than the functional currency applicable to each of our various subsidiaries. In addition, we are subject to foreign exchange risk associated with our international earnings and net investments in our foreign subsidiaries. We may use short-term, foreign exchange forward and, from time to time, option contracts or cross currency swaps, to execute our hedging strategies. These contracts are denominated primarily in the British pound sterling, the Euro, the Swedish Krona, and the Norwegian Krone. The gains and losses on the forward contracts associated with our balance sheet positions are recorded in “Other income (expense) – net” in the condensed consolidated statements of operations and comprehensive income (loss) and are essentially offset by the losses and gains on the underlying foreign currency transactions. Our foreign exchange forward contracts are not designated as hedging instruments under authoritative guidance and typically have maturities of 12 months or less.
To decrease earnings volatility, we currently hedge substantially all our intercompany balance positions denominated in a currency other than the functional currency applicable to each of our various subsidiaries with short-term, foreign exchange forward contracts. The underlying transactions and the corresponding foreign exchange forward contracts are marked to market at the end of each quarter and the fair value impacts are reflected within “Non-operating income (expense) – net” in the consolidated financial statements. In addition, in connection with the acquisition of Bisnode, we entered into a zero-cost foreign currency collar in October 2020, with a notional amount of SEK 4.8 billion to reduce our foreign currency exposure. Unrealized gain associated with the instrument was $23.5 million at December 31, 2020. We settled the collar on January 8, 2021 with a total realized gain of $21.0 million upon the close of the Bisnode transaction, resulting in a loss of $2.5 million for the three months ended March 31, 2021.
As of March 31, 2022 and December 31, 2021, the notional amounts of our foreign exchange contracts were $383.1 million and $448.5 million, respectively.
Fair Values of Derivative Instruments in the Condensed Consolidated Balance Sheets
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - Continued
(Tabular dollar amounts, except share data and per share data, in millions)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Asset derivatives | | Liability derivatives |
| March 31, 2022 | | December 31, 2021 | | March 31, 2022 | | December 31, 2021 |
| Balance sheet location | | Fair value | | Balance sheet location | | Fair value | | Balance sheet location | | Fair value | | Balance sheet location | | Fair value |
Derivatives designated as hedging instruments | | | | | | | | | | | | | | | |
Interest rate contracts | Interest rate swap asset | | $ | 42.4 | | | Interest rate swap asset | | $ | 10.1 | | | Other accrued & current liabilities | | $ | — | | | Other accrued & current liabilities | | $ | — | |
Total derivatives designated as hedging instruments | | | $ | 42.4 | | | | | $ | 10.1 | | | | | $ | — | | | | | $ | — | |
Derivatives not designated as hedging instruments | | | | | | | | | | | | | | | |
Foreign exchange forward contracts | Other current assets | | 0.7 | | | Other current assets | | 1.9 | | | Other accrued & current liabilities | | 1.0 | | | Other accrued & current liabilities | | 0.7 | |
| | | | | | | | | | | | | | | |
Total derivatives not designated as hedging instruments | | | $ | 0.7 | | | | | $ | 1.9 | | | | | $ | 1.0 | | | | | $ | 0.7 | |
Total derivatives | | | $ | 43.1 | | | | | $ | 12.0 | | | | | $ | 1.0 | | | | | $ | 0.7 | |
The Effect of Derivative Instruments on the Condensed Consolidated Statement of Operations and Comprehensive Income (Loss)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Amount of pre-tax gain or (loss) recognized in OCI on derivative | | | | Amount of gain or (loss) reclassified from accumulated OCI into income | | | | Amount of gain or (loss) recognized in income on derivative |
| | Three months ended March 31, | | | | Three months ended March 31, | | | | Three months ended March 31, |
Derivatives in cash flow hedging relationships | | 2022 | | 2021 | | Location of gain or (loss) reclassified from accumulated OCI into income | | 2022 | | 2021 | | Location of gain or (loss) recognized in income on derivative | | 2022 | | 2021 |
Interest rate contracts | | $ | 32.3 | | | $ | 1.8 | | | Interest expense | | $ | (1.1) | | | $ | (0.8) | | | Interest expense | | $ | (1.1) | | | $ | (0.8) | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Amount of gain (loss) recognized in income on derivatives |
| | | | Three months ended March 31, | | |
Derivatives not designated as hedging instruments | | Location of gain or (loss) recognized in income on derivatives | | 2022 | | 2021 | | | | |
Foreign exchange collar | | Non-operating income (expenses) – net | | $ | — | | | $ | (2.5) | | | | | |
Foreign exchange forward contracts | | Non-operating income (expenses) – net | | $ | (3.2) | | | $ | 2.9 | | | | | |
The net amount expected to be reclassified into earnings over the next 12 months is approximately $13 million.
Fair Value of Financial Instruments
Our financial assets and liabilities that are reflected in the consolidated financial statements include derivative financial instruments, cash and cash equivalents, accounts receivable, other receivables, accounts payable, short-term borrowings and long-term borrowings.
The following table summarizes fair value measurements by level at March 31, 2022 for assets and liabilities measured at fair value on a recurring basis:
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - Continued
(Tabular dollar amounts, except share data and per share data, in millions)
| | | | | | | | | | | | | | | | | | | | | | | |
| Quoted prices in active markets for identical assets (level I) | | Significant other observable inputs (level II) | | Significant unobservable inputs (level III) | | Balance at March 31, 2022 |
Assets: | | | | | | | |
Cash equivalents (1) | $ | 2.7 | | | $ | — | | | $ | — | | | $ | 2.7 | |
Other current assets: | | | | | | | |
Foreign exchange forwards (2) | $ | — | | | $ | 0.7 | | | $ | — | | | $ | 0.7 | |
Swap arrangements (3) | $ | — | | | $ | 42.4 | | | $ | — | | | $ | 42.4 | |
Liabilities: | | | | | | | |
Other accrued and current liabilities: | | | | | | | |
Foreign exchange forwards (2) | $ | — | | | $ | 1.0 | | | $ | — | | | $ | 1.0 | |
The following table summarizes fair value measurements by level at December 31, 2021 for assets and liabilities measured at fair value on a recurring basis:
| | | | | | | | | | | | | | | | | | | | | | | |
| Quoted prices in active markets for identical assets (level I) | | Significant other observable inputs (level II) | | Significant unobservable inputs (level III) | | Balance at December 31, 2021 |
Assets: | | | | | | | |
Cash equivalents (1) | $ | 1.7 | | | $ | — | | | $ | — | | | $ | 1.7 | |
Other current assets: | | | | | | | |
Foreign exchange forwards (2) | $ | — | | | $ | 1.9 | | | $ | — | | | $ | 1.9 | |
Swap arrangements (3) | $ | — | | | $ | 10.1 | | | $ | — | | | $ | 10.1 | |
Liabilities: | | | | | | | |
Other accrued and current liabilities: | | | | | | | |
Foreign exchange forwards (2) | $ | — | | | $ | 0.7 | | | $ | — | | | $ | 0.7 | |
(1)The carrying value of cash equivalents represents fair value as they consist of highly liquid investments with an initial term from the date of purchase by the Company to maturity of three months or less.
(2)Primarily represents foreign currency forward contracts. Fair value is determined based on observable market data and considers a factor for nonperformance in the valuation.
(3)Represents interest rate swap agreements. Fair value is determined based on observable market data.
There were no transfers between Levels I and II or transfers in or transfers out of Level III in the fair value hierarchy for both the three months ended March 31, 2022 and 2021.
At March 31, 2022 and December 31, 2021, the fair value of cash and cash equivalents, accounts receivable, other receivables and accounts payable approximated carrying value are due to the short-term nature of these instruments. The estimated fair values of other financial instruments subject to fair value disclosures, determined based on valuation models using discounted cash flow methodologies with market data inputs from globally recognized data providers and third-party quotes from major financial institutions (categorized as Level II in the fair value hierarchy), are as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Balance at |
| March 31, 2022 | | December 31, 2021 |
| Carrying amount | | Fair value | | Carrying amount | | Fair value |
| | | | | | | |
Long-term debt (1) | $ | 453.3 | | | $ | 431.1 | | | $ | 866.4 | | | $ | 924.5 | |
Revolving facility | $ | 100.0 | | | $ | 104.9 | | | $ | 160.0 | | | $ | 162.7 | |
Term loans (2) | $ | 3,168.1 | | | $ | 3,421.1 | | | $ | 2,718.4 | | | $ | 2,840.7 | |
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - Continued
(Tabular dollar amounts, except share data and per share data, in millions)
(1)Includes the 5.000% Senior Unsecured Notes at March 31, 2022, and the 5.000% Senior Unsecured Notes and 6.875% Senior Secured Notes at December 31, 2021.
(2)Includes short-term and long-term portions of the term loans.
Items Measured at Fair Value on a Nonrecurring Basis
In addition to assets and liabilities that are recorded at fair value on a recurring basis, we record assets and liabilities at fair value on a nonrecurring basis as required by GAAP. Generally, assets are recorded at fair value on a nonrecurring basis as a result of impairment charges and for acquisition accounting in accordance with the guidance in ASC 805 "Business Combinations."
Note 13 -- Accumulated Other Comprehensive Income (Loss)
The following table summarizes the changes in the accumulated balances for each component of accumulated other comprehensive income (loss) ("AOCI"):
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Foreign currency translation adjustments | | Defined benefit pension plans | | Derivative financial instruments | | Total |
Balance, January 1, 2021 | | $ | 26.2 | | | $ | (120.3) | | | $ | (0.4) | | | $ | (94.5) | |
Other comprehensive income (loss) before reclassifications | | (50.0) | | | — | | | 1.0 | | | (49.0) | |
Amounts reclassified from accumulated other comprehensive income (loss), net of tax | | — | | | 0.4 | | | 0.8 | | | 1.2 | |
Balance, March 31, 2021 | | $ | (23.8) | | | $ | (119.9) | | | $ | 1.4 | | | $ | (142.3) | |
| | | | | | | | |
Balance, January 1, 2022 | | $ | (52.6) | | | $ | (11.9) | | | $ | 7.4 | | | $ | (57.1) | |
Other comprehensive income (loss) before reclassifications | | (36.3) | | | — | | | 22.8 | | | (13.5) | |
Amounts reclassified from accumulated other comprehensive income (loss), net of tax | | — | | | (0.1) | | | 0.8 | | | 0.7 | |
Balance, March 31, 2022 | | $ | (88.9) | | | $ | (12.0) | | | $ | 31.0 | | | $ | (69.9) | |
The following table summarizes the reclassifications out of AOCI:
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Amount reclassified from accumulated other comprehensive income (loss) |
| | | | Three months ended March 31, | | |
Details about accumulated other comprehensive income (loss) components | | Affected line item in the statement where net income (loss) is presented | | 2022 | | 2021 | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
Defined Benefit Pension Plans: | | | | | | | | | | |
Amortization of prior service costs | | Other income (expense) - net | | $ | (0.1) | | | $ | — | | | | | |
Amortization of actuarial gain/loss | | Other income (expense) - net | | — | | | 0.4 | | | | | |
Derivative Financial Instruments: | | | | | | | | | | |
Interest contracts | | Interest expense | | 1.1 | | | 0.8 | | | | | |
Total before tax | | | | 1.0 | | | 1.2 | | | | | |
Tax benefit (expense) | | | | (0.3) | | | — | | | | | |
Total reclassifications for the period, net of tax | | | | $ | 0.7 | | | $ | 1.2 | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - Continued
(Tabular dollar amounts, except share data and per share data, in millions)
Note 14 -- Acquisitions
2021 Acquisitions
Eyeota Holdings Pte Ltd ("Eyeota")
On November 5, 2021, we acquired 100% of the outstanding ownership interests in Eyeota, a global online and offline data onboarding and transformation company, for a purchase price of $172.4 million in cash, inclusive of $0.1 million of net working capital adjustment. The acquisition was funded by borrowing from our revolving facility.
The acquisition was accounted for in accordance with ASC 805, as a purchase transaction, and accordingly, the assets and liabilities of the entity were recorded at their estimated fair values at the date of the acquisition. We have included the financial results of Eyeota in our consolidated financial statements since the acquisition date. Transaction costs of $3.0 million were included in selling and administrative expenses for the year ended December 31, 2021. We allocated goodwill and intangible assets to our North America segment.
The table below reflects the aggregate purchase price related to the acquisition and the resulting purchase allocation:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Weighted average amortization period (years) | | Initial purchase price allocation | | Measurement Period Adjustments | | Preliminary Purchase Price Allocation at March 31, 2022 |
Cash | | | | $ | 7.1 | | | $ | — | | | $ | 7.1 | |
Accounts receivable | | | | 9.3 | | | — | | | 9.3 | |
Other | | | | 0.5 | | | — | | | 0.5 | |
Total current assets | | | | 16.9 | | | — | | | 16.9 | |
Intangible assets: | | | | | | | | |
Customer relationships | | 14 | | 20.0 | | | — | | | 20.0 | |
Technology | | 5 | | 14.0 | | | — | | | 14.0 | |
Trademark | | 2 | | 1.0 | | | | | 1.0 | |
Goodwill | | Indefinite | | 138.3 | | | 0.1 | | | 138.4 | |
| | | | | | | | |
Total assets acquired | | | | $ | 190.2 | | | $ | 0.1 | | | $ | 190.3 | |
Deferred tax liability | | | | 5.9 | | | — | | | 5.9 | |
Other liabilities | | | | 12.0 | | | — | | | 12.0 | |
Total liabilities assumed | | | | 17.9 | | | — | | | 17.9 | |
Total purchase price | | | | $ | 172.3 | | | $ | 0.1 | | | $ | 172.4 | |
The fair value of the customer relationships intangible asset was determined by applying the income approach through a discounted cash flow analysis, specifically a multi-period excess earnings method. The valuation was based on the present value of the net earnings attributable to the measured assets.
The technology intangible asset represents Eyeota's data supply and service platform to deliver customer services and solutions. We applied the income approach to value technology intangible assets, specifically, a relief from royalty method. The valuation was based on the present value of the net earnings attributable to the measured assets.
The intangible assets, with useful lives from two years to 14 years, are being amortized over a weighted-average useful life of 10.1 years. Intangible assets are amortized using a straight-line method. The amortization methods reflect the timing of the benefits derived from each of the intangible assets.
The value of the goodwill is primarily related to the expected growth opportunity in the target marketing business from the combined business. We do not expect goodwill to be deductible for tax purposes.
Although we believe that the information gathered to date provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed, the initial purchase price allocations for Eyeota are preliminary and are subject to revision as permitted by ASC 805. The primary areas of the purchase price allocation that are not yet finalized are related to certain liabilities, contingencies and deferred taxes. We will adjust the associated fair values if facts and circumstances arise
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - Continued
(Tabular dollar amounts, except share data and per share data, in millions)
that necessitate change. We expect to complete the purchase accounting process as soon as practicable but no later than one year from the acquisition date.
NetWise Data, LLC ("NetWise")
On November 15, 2021, we acquired 100% of the outstanding ownership interests in NetWise, a provider of business to business and business to consumer identity graph and audience targeting data, for a purchase price of $69.8 million of which $62.9 million was paid upon the close of the transaction and the remaining $6.9 million will be paid no later than 19 months after the transaction closing date, subject to net working capital adjustment. The transaction was funded by cash on hand. During the first quarter of 2022, we made a net working capital adjustment of $0.4 million.
The acquisition was accounted for in accordance with ASC 805, as a purchase transaction, and accordingly, the assets and liabilities of the entity were recorded at their estimated fair values at the date of the acquisition. We have included the financial results of NetWise in our consolidated financial statements since the acquisition date. Transaction costs of $0.4 million were included in selling and administrative expenses for the year ended December 31, 2021. We allocated goodwill and intangible assets to our North America segment.
The table below reflects the aggregate purchase price related to the acquisition and the resulting purchase allocation:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Weighted average amortization period (years) | | Initial purchase price allocation at December 31, 2021 | | Measurement Period Adjustments | | Preliminary Purchase Price Allocation at March 31, 2022 |
Cash | | | | $ | 2.6 | | | $ | — | | | $ | 2.6 | |
Accounts receivable | | | | 2.6 | | | — | | | 2.6 | |
Other | | | | 0.4 | | | — | | | 0.4 | |
Total current assets | | | | 5.6 | | | — | | | 5.6 | |
Intangible assets: | | | | | | | | |
Customer relationships | | 15 | | 19.8 | | | — | | | 19.8 | |
Technology | | 5 | | 1.3 | | | — | | | 1.3 | |
Trademark | | 2 | | 0.2 | | | — | | | 0.2 | |
Database | | 3 | | 2.2 | | | — | | | 2.2 | |
Goodwill | | Indefinite | | 41.9 | | | 2.9 | | | 44.8 | |
| | | | | | | | |
| | | | | | | | |
Total assets acquired | | | | $ | 71.0 | | | $ | 2.9 | | | $ | 73.9 | |
Total liabilities assumed | | | | 1.2 | | | 2.5 | | | 3.7 | |
Total purchase price | | | | $ | 69.8 | | | $ | 0.4 | | | $ | 70.2 | |
The fair value of the customer relationships intangible asset was determined by applying the income approach through a discounted cash flow analysis, specifically a multi-period excess earnings method. The valuation was based on the present value of the net earnings attributable to the measured assets.
The database intangible asset represents business and consumer data collected and managed by NetWise. The technology intangible asset represents NetWise's data supply and service platform to deliver customer services and solutions. We applied the income approach to value database and technology intangible assets, specifically, a relief from royalty method. The valuation was based on the present value of the net earnings attributable to the measured assets.
The intangible assets, with useful lives from two years to 15 years, are being amortized over a weighted-average useful life of 13.2 years. Intangible assets are amortized using a straight-line method. The amortization methods reflect the timing of the benefits derived from each of the intangible assets.
The value of goodwill is primarily related to the expected growth opportunity to expand our products and services offerings in marketing business from the combined business. The goodwill recognized is deductible for tax purposes.
Although we believe that the information gathered to date provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed, the initial purchase price allocations for NetWise are preliminary and are subject to
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - Continued
(Tabular dollar amounts, except share data and per share data, in millions)
revision as permitted by ASC 805. The primary areas of the purchase price allocation that are not yet finalized are related to certain liabilities and contingencies. We will adjust the associated fair values if facts and circumstances arise that necessitate change. We expect to complete the purchase accounting process as soon as practicable but no later than one year from the acquisition date.
Bisnode Business Information Group AB ("Bisnode")
On January 8, 2021, we acquired 100% ownership of Bisnode, a leading European data and analytics firm and long-standing member of the Dun & Bradstreet WWN alliances, for a total purchase price of $805.8 million. The transaction closed with a combination of cash of $646.9 million and 6,237,087 newly issued shares of common stock of the Company in a private placement valued at $158.9 million based on the stock closing price on January 8, 2021. The transaction was partially funded by the proceeds from the $300 million borrowing from the Incremental Term Loan.
The acquisition was accounted for in accordance with ASC 805 “Business Combinations,” as a purchase transaction, and accordingly, the assets and liabilities of the entity were recorded at their estimated fair values at the date of the acquisition. We have included the financial results of Bisnode in our consolidated financial statements since the acquisition date. We have finalized purchase accounting as of December 31, 2021. See detailed discussion in Note 16 to the consolidated financial statements for the year ended December 31, 2021, included in our Annual Report on Form 10-K.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - Continued
(Tabular dollar amounts, except share data and per share data, in millions)
The table below summarizes the fair value of the assets acquired and liabilities assumed as of the acquisition date:
| | | | | | | | | | | | | | | | | | |
| | Weighted average amortization period (years) | | | | | | Final purchase price allocation at December 31, 2021 |
Cash | | | | | | | | $ | 29.9 | |
Accounts receivable | | | | | | | | 61.0 | |
Other current assets | | | | | | | | 13.1 | |
Total current assets | | | | | | | | 104.0 | |
Property, plant & equipment | | | | | | | | 3.5 | |
Intangible assets: | | | | | | | | |
Reacquired right | | 15 | | | | | | 270.0 | |
Database | | 12 | | | | | | 111.0 | |
Customer relationships | | 10 | | | | | | 108.0 | |
Technology | | 14 | | | | | | 64.0 | |
Goodwill | | Indefinite | | | | | | 495.4 | |
Right of use assets | | | | | | | | 27.4 | |
Other | | | | | | | | 2.9 | |
Total assets acquired | | | | | | | | $ | 1,186.2 | |
| | | | | | | | |
Accounts payable | | | | | | | | $ | 17.5 | |
Deferred revenue (1) | | | | | | | | 80.6 | |
Accrued payroll | | | | | | | | 20.7 | |
Accrued income tax and other tax liabilities | | | | | | | | 17.1 | |
Short-term lease liability | | | | | | | | 8.6 | |
Other current liabilities | | | | | | | | 23.7 | |
Total current liabilities | | | | | | | | 168.2 | |
Long-term pension and postretirement obligations | | | | | | | | 65.4 | |
Deferred tax liability | | | | | | | | 127.8 | |
Long-term lease liability | | | | | | | | 18.2 | |
Other liabilities | | | | | | | | 0.8 | |
Total liabilities assumed | | | | | | | | $ | 380.4 | |
Total purchase price | | | | | | | | $ | 805.8 | |
(1)In the fourth quarter of 2021, we early adopted ASU No. 2021-08, "Business Combinations (Topic 805) Accounting for Contract Assets and Contract Liabilities from Contracts with Customers," retrospectively to all business combinations during 2021. As a result, acquired deferred revenue balances were measured based on the guidance of ASC 606.
Unaudited Pro Forma Financial Information
The following pro forma statements of operations data presents the combined results of the Company and the acquired businesses, assuming that the acquisition had occurred on January 1, 2020.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - Continued
(Tabular dollar amounts, except share data and per share data, in millions)
| | | | | | | | | |
| | | Three months ended March 31, |
| | | | | 2021 |
Reported revenue | | | | | $ | 504.5 | |
Pro forma adjustments: | | | | | |
Pre-acquisition revenue: | | | | | |
Bisnode | | | | | 4.6 | |
Eyeota | | | | | 7.3 | |
NetWise | | | | | 2.0 | |
Total pro forma revenue | | | | | $ | 518.4 | |
| | | | | |
Reported net income (loss) attributable to Dun & Bradstreet Holdings, Inc. | | | | | $ | (25.0) | |
Pro forma adjustments - net of tax effect: | | | | | |
Pre-acquisition net income: | | | | | |
Bisnode | | | | | 0.8 | |
Eyeota | | | | | (0.7) | |
NetWise | | | | | 0.4 | |
Intangible amortization - net of tax benefits | | | | | (1.4) | |
Write off related to pre-existing relationship - net of tax benefits | | | | | 2.3 | |
Transaction costs - net of tax benefits | | | | | 0.3 | |
Pro forma net income (loss) attributable to Dun & Bradstreet Holdings, Inc. | | | | | $ | (23.3) | |
Note 15 -- Goodwill and Intangible Assets
Computer Software and Goodwill:
| | | | | | | | | | | | | | |
| | Computer software | | Goodwill |
January 1, 2021 | | $ | 437.0 | | | $ | 2,857.9 | |
Acquisition (1) | | 65.0 | | | 488.4 | |
Additions at cost (2) | | 42.2 | | | — | |
Amortization | | (24.5) | | | — | |
Write-off | | (3.1) | | | — | |
Other (3) | | (8.5) | | | (28.1) | |
March 31, 2021 | | $ | 508.1 | | | $ | 3,318.2 | |
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January 1, 2022 | | $ | 557.4 | | | $ | 3,493.3 | |
Acquisition (4) | | — | | | 0.5 | |
Additions at cost (2) | | 43.4 | | | — | |
Amortization | | (30.3) | | | — | |
Other (3) | | (7.1) | | | (18.4) | |
March 31, 2022 | | $ | 563.4 | | | $ | 3,475.4 | |
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - Continued
(Tabular dollar amounts, except share data and per share data, in millions)
Other Intangibles:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Customer relationships | | Reacquired rights | | Database | | Other indefinite-lived intangibles | | Other intangibles | | Total |
January 1, 2021 | | $ | 1,912.9 | | | $ | — | | | $ | 1,369.4 | | | $ | 1,275.8 | | | $ | 256.7 | | | $ | 4,814.8 | |
Acquisition (1) | | 106.0 | | | 271.0 | | | 116.0 | | | — | | | — | | | 493.0 | |
Additions at cost | | — | | | — | | | — | | | — | | | 0.2 | | | 0.2 | |
Amortization | | (65.6) | | | (5.0) | | | (47.8) | | | — | | | (4.0) | | | (122.4) | |
WWN relationship transfer (5) | | — | | | 64.7 | | | — | | | — | | | (64.7) | | | — | |
Other (3) | | (5.4) | | | (14.3) | | | (6.3) | | | — | | | (1.9) | | | (27.9) | |
March 31, 2021 | | $ | 1,947.9 | | | $ | 316.4 | | | $ | 1,431.3 | | | $ | 1,275.8 | | | $ | 186.3 | | | $ | 5,157.7 | |
| | | | | | | | | | | | |
January 1, 2022 | | $ | 1,793.3 | | | $ | 284.7 | | | $ | 1,285.1 | | | $ | 1,280.0 | | | $ | 181.4 | | | $ | 4,824.5 | |
Additions at cost | | — | | | — | | | — | | | — | | | 0.2 | | | 0.2 | |
Amortization | | (61.9) | | | (5.1) | | | (44.6) | | | — | | | (4.2) | | | (115.8) | |
Other (3) | | (4.7) | | | (7.9) | | | (4.6) | | | — | | | (2.0) | | | (19.2) | |
March 31, 2022 | | $ | 1,726.7 | | | $ | 271.7 | | | $ | 1,235.9 | | | $ | 1,280.0 | | | $ | 175.4 | | | $ | 4,689.7 | |
(1)Related to the acquisition of Bisnode.
(2)Primarily related to software-related enhancements on products.
(3)Primarily due to the impact of foreign currency fluctuations.
(4)Related to the acquisitions of Eyeota and NetWise.
(5)Reclassification of the net book value of previously recognized WWN relationships intangible asset related to the Bisnode relationship to reacquired rights as a result of the Bisnode acquisition.
Note 16 -- Segment Information
Our segment disclosure is intended to provide the users of our consolidated financial statements with a view of the business that is consistent with management of the Company.
We manage our business and report our financial results through the following two segments:
•North America offers Finance & Risk and Sales & Marketing data, analytics and business insights in the United States and Canada; and
•International offers Finance & Risk and Sales & Marketing data, analytics and business insights directly in the U.K., Europe, Greater China and India and indirectly through our WWN alliances.
On January 8, 2021, we acquired 100% ownership of Bisnode and in November 2021, we acquired 100% ownership of both Eyeota and NetWise. See Note 14 for further discussion. Financial results of Bisnode, Eyeota and NetWise have been included in our International segment and North America segment, respectively, since the respective acquisition dates.
We use adjusted EBITDA as the primary profitability measure for making decisions regarding ongoing operations. We define adjusted EBITDA as net income (loss) attributable to Dun & Bradstreet Holdings, Inc. excluding the following items: (i) depreciation and amortization; (ii) interest expense and income; (iii) income tax benefit or provision; (iv) other non-operating expenses or income; (v) equity in net income of affiliates; (vi) net income attributable to non-controlling interests; (vii) other incremental or reduced expenses and revenue from the application of purchase accounting (e.g. commission asset amortization and acquisitions); (viii) equity-based compensation; (ix) restructuring charges; (x) merger, acquisition and divestiture-related operating costs; (xi) transition costs primarily consisting of non-recurring expenses associated with transformational and integration activities, as well as incentive expenses associated with our synergy program; (xii) legal expense associated with significant legal and regulatory matters; and (xiii) asset impairment. Our client solution sets are Finance & Risk and Sales & Marketing. Inter-segment sales are immaterial, and no single client accounted for 10% or more of our total revenue.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - Continued
(Tabular dollar amounts, except share data and per share data, in millions)
| | | | | | | | | | | | | | | |
| Three months ended March 31, | | |
| 2022 | | 2021 | | | | |
Revenue: | | | | | | | |
North America | $ | 367.3 | | | $ | 339.4 | | | | | |
International | 168.7 | | | 169.9 | | | | | |
Corporate and other (1) | — | | | (4.8) | | | | | |
Consolidated total | $ | 536.0 | | | $ | 504.5 | | | | | |
(1)Revenue for Corporate and other for the three months ended March 31, 2021 primarily represents adjustments recorded in accordance with GAAP to the International segment due to the timing of the completion of the Bisnode acquisition.
| | | | | | | | | | | | | | | |
| Three months ended March 31, | | |
| 2022 | | 2021 | | | | |
Adjusted EBITDA: | | | | | | | |
North America | $ | 153.3 | | | $ | 151.0 | | | | | |
International | 55.1 | | | 51.5 | | | | | |
Corporate and other | (18.3) | | | (16.9) | | | | | |
Consolidated total | $ | 190.1 | | | $ | 185.6 | | | | | |
Depreciation and amortization | (149.4) | | | (149.7) | | | | | |
Interest expense - net | (46.9) | | | (48.8) | | | | | |
Benefit (provision) for income taxes | 9.3 | | | 9.8 | | | | | |
Other income (expense) - net | (9.3) | | | 6.8 | | | | | |
Equity in net income of affiliates | 0.7 | | | 0.6 | | | | | |
Net income (loss) attributable to non-controlling interest | (1.5) | | | (1.7) | | | | | |
Other incremental or reduced expenses and revenue from the application of purchase accounting | 3.9 | | | 0.7 | | | | | |
Equity-based compensation | (10.7) | | | (7.6) | | | | | |
Restructuring charges | (5.3) | | | (5.8) | | | | | |
Merger, acquisition and divestiture-related operating costs | (5.1) | | | (3.1) | | | | | |
Transition costs | (6.9) | | | (0.9) | | | | | |
Legal expense associated with significant legal and regulatory matters | (0.2) | | | (9.9) | | | | | |
Asset impairment | — | | | (1.0) | | | | | |
Net income (loss) attributable to Dun & Bradstreet Holdings, Inc. | $ | (31.3) | | | $ | (25.0) | | | | | |
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - Continued
(Tabular dollar amounts, except share data and per share data, in millions)
| | | | | | | | | | | | | | | |
| Three months ended March 31, | | |
| 2022 | | 2021 | | | | |
Depreciation and amortization: | | | | | | | |
North America | $ | 17.2 | | | $ | 12.6 | | | | | |
International | 3.3 | | | 2.8 | | | | | |
Total segments | 20.5 | | | 15.4 | | | | | |
Corporate and other (1) | 128.9 | | | 134.3 | | | | | |
Consolidated total | $ | 149.4 | | | $ | 149.7 | | | | | |
Capital expenditures: | | | | | | | |
North America | $ | 3.3 | | | $ | 0.6 | | | | | |
International | 0.8 | | | 0.6 | | | | | |
Total segments | 4.1 | | | 1.2 | | | | | |
Corporate and other | — | | | — | | | | | |
Consolidated total | $ | 4.1 | | | $ | 1.2 | | | | | |
Additions to computer software and other intangibles: | | | | | | | |
North America | $ | 35.6 | | | $ | 34.9 | | | | | |
International | 6.5 | | | 7.3 | | | | | |
Total segments | 42.1 | | | 42.2 | | | | | |
Corporate and other | 1.5 | | | 0.2 | | | | | |
Consolidated total | $ | 43.6 | | | $ | 42.4 | | | | | |
(1)Depreciation and amortization for Corporate and other includes incremental amortization resulting from the Take-Private Transaction and recent acquisitions.
Supplemental Geographic and Customer Solution Set Information:
| | | | | | | | | | | |
| March 31, 2022 | | December 31, 2021 |
Assets: | | | |
North America | $ | 8,117.9 | | | $ | 8,232.2 | |
International | 1,739.3 | | | 1,765.0 | |
Consolidated total | $ | 9,857.2 | | | $ | 9,997.2 | |
| | | |
Goodwill: | | | |
North America | $ | 2,928.9 | | | $ | 2,928.4 | |
International | 546.5 | | | 564.9 | |
Consolidated total | $ | 3,475.4 | | | $ | 3,493.3 | |
| | | |
Other intangibles: | | | |
North America | $ | 4,089.2 | | | $ | 4,186.2 | |
International | 600.5 | | | 638.3 | |
Consolidated total | $ | 4,689.7 | | | $ | 4,824.5 | |
| | | |
Other long-lived assets (excluding deferred income tax): | | | |
North America | $ | 714.6 | | | $ | 713.4 | |
International | 228.0 | | | 229.5 | |
Consolidated total | $ | 942.6 | | | $ | 942.9 | |
Total long-lived assets | $ | 9,107.7 | | | $ | 9,260.7 | |
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - Continued
(Tabular dollar amounts, except share data and per share data, in millions)
| | | | | | | | | | | | | | | |
| Three months ended March 31, | | |
Customer Solution Set Revenue: | 2022 | | 2021 | | | | |
| | | | | | | |
North America (1): | | | | | | | |
Finance & Risk | $ | 202.2 | | | $ | 190.5 | | | | | |
Sales & Marketing | 165.1 | | | 148.9 | | | | | |
Total North America | $ | 367.3 | | | $ | 339.4 | | | | | |
International: | | | | | | | |
Finance & Risk | $ | 109.0 | | | $ | 107.4 | | | | | |
Sales & Marketing | 59.7 | | | 62.5 | | | | | |
Total International | $ | 168.7 | | | $ | 169.9 | | | | | |
Corporate and other: | | | | | | | |
Finance & Risk | $ | — | | | $ | (2.3) | | | | | |
Sales & Marketing | — | | | (2.5) | | | | | |
Total Corporate and other | $ | — | | | $ | (4.8) | | | | | |
Total Revenue: | | | | | | | |
Finance & Risk | $ | 311.2 | | | $ | 295.6 | | | | | |
Sales & Marketing | 224.8 | | | 208.9 | | | | | |
Total Revenue | $ | 536.0 | | | $ | 504.5 | | | | | |
(1)Substantially all of the North America revenue is attributable to the United States.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - Continued
(Tabular dollar amounts, except share data and per share data, in millions)
Note 17 -- Related Parties
The following sets forth certain transactions and agreements in which the Company and our affiliates, executive officers and certain directors are involved.
After the completion of the Take-Private Transaction on February 8, 2019, our parent entity was collectively controlled by entities affiliated with Bilcar, LLC ("Bilcar"), Thomas H. Lee Partners, L.P. ("THL"), Cannae Holdings, Inc. ("Cannae Holdings"), Black Knight, Inc. ("Black Knight") and CC Capital Partners LLC ("CC Capital"), collectively the "Investor Consortium." Subsequent to the close of the IPO and the concurrent private placement on July 6, 2020, the Investor Consortium continues to be able to exercise significant voting influence over fundamental and significant corporate matters and transactions by their ability to designate five members of our board of directors.
Our Chief Executive Officer Anthony Jabbour also serves as the Chairman and Chief Executive Officer of Black Knight and a member of the board of directors of Paysafe Limited ("Paysafe"). On February 15, 2022, Black Knight announced that Mr. Jabbour would transition to Executive Chairman and no longer serve as Black Knight’s Chief Executive Officer effective as of May 16, 2022. Additionally, William P. Foley II, our Chairman of the board, also serves as Chairman of Cannae Holdings and formerly served as Chairman of Black Knight. Richard N. Massey, a member of the Company’s board of directors, serves as Chief Executive Officer and as a director of Cannae Holdings. Certain of our key employees have dual responsibilities among the Investor Consortium.
In June 2021, we entered into a five-year agreement with Black Knight. Pursuant to the agreement, D&B will receive total data license fees of approximately $24 million over a five-year period. Also over the five-year period, Black Knight is engaged to provide certain products and data, as well as professional services for an aggregate fee of approximately $34 million. In addition, D&B and Black Knight will jointly market certain solutions and data. The agreement was approved by our Audit Committee. We incurred operating expenses of $0.5 million for the three months ended March 31, 2022. As of March 31, 2022, we included a receivable from Black Knight of $0.3 million within "Accounts receivable" and a liability to Black Knight of $3.4 million, of which $0.9 million was within "Other accrued and current liabilities" and $2.5 million was within "Other non-current liabilities."
In September 2021, we entered into a 10-year agreement with Paysafe. Pursuant to the agreement, D&B provides data license and risk management solution services to Paysafe. The agreement is cancellable by either party without penalty at each annual anniversary of the contract effective date by providing written notice not less than 90 days prior to the anniversary date. The agreement was approved by our Audit Committee. In connection with the agreements associated with Paysafe, we recognized revenue of $0.9 million for the three months ended March 31, 2022. As of March 31, 2022, we included a receivable from Paysafe of $3.8 million within "Accounts receivable."
In November 2020, we entered into a consulting service agreement with Black Knight. The agreement is cancellable upon mutual agreement. Pursuant to the agreement, Black Knight provides the Company consulting services, in exchange for fees in an amount equal to Black Knight's cost plus 10 percent markup. We recorded $0.1 million consulting fees to Black Knight for the three months ended March 31, 2021.
In the normal course of business, we reimburse affiliates for certain travel costs incurred by Dun & Bradstreet Holdings, Inc. executives and board members.