Dun & Bradstreet Earnings Call Insights: Portfolio Risk Manager and Small Business Segment of RMS

Dun & Bradstreet Corporation (NYSE:DNB) recently reported its fourth quarter earnings and discussed the following topics in its earnings conference call.

Portfolio Risk Manager

Shlomo Rosenbaum – Stifel Nicolaus: Sara, can you just give us a little bit more explanation as to what was going on with portfolio risk manager, that was kind of the premier model you guys came out with, could you just talk about just more detail on the original go-to market strategy, what you found is working better?

Sara Mathew – Chairman and CEO: Sure. I’ll have Manny cover it.

Emanuele A. Conti – President, North America: Yeah. So, PRM sales did ramp slower than anticipated mainly due to a flawed go-to market approach. We did make a quick pivot in the second half of 2012 with our go-to market and what we did as we took PRM and bundled it into our core DNBi solutions and in addition we’ve made additional investments into our underlying data and scores which powers the DNBi product. While it’s still early, our new focus is gaining traction in the market and we expect the performance ranks in over the course of 2013.

Shlomo Rosenbaum – Stifel Nicolaus: So are you focusing — I mean are you guys including that as part of the core DNBi product now or does it cost more or just I’m trying to understand when I went to separate module it wasn’t selling, when you bundled it, then the whole product is selling better?

Emanuele A. Conti – President, North America: Yes, yes. So you can think of it as version. So, we’re bundling it into the core platforms and then obviously pricing it appropriately for those new features and functions.

Sara Mathew – Chairman and CEO: So just to build on what Manny said Shlomo, we’re trying to excel PRM as an independent module and what we found is that customers view that as a very discretionary purchase and so off take was not that good. So, there was a very quick pivot in the market largely driven by bundling it into the core DNBi offering. So, it made it much easier because we were actually putting more value on the table, as Manny said, when you all the data and analytics this is going to gain traction throughout the year. But we should acknowledge we had a misstep in 2012.

Shlomo Rosenbaum – Stifel Nicolaus: Could you talk a little bit about how just for somebody who is not a techie somebody who doesn’t understand these things to the great detail. How the impact of MaxCV here kind of hampers the growth efforts in terms of innovation and other things that you needed to do in order to drive the top line on where we’re now versus where we were in 2012.

Sara Mathew – Chairman and CEO: So Sure. Let me kick that off and then I’ll ask Josh to add a bit more perspective on MaxCV. I’d just be candid in saying MaxCV was actually a much bigger transformational effort and it costs more than I originally anticipated. I own that. But now that we have a global data supply chain completed, we can fuel it with all sorts of new types of data sources and we are also able to look into the data we have and we are generating very, very interesting insights, we call this big insight because big data is just interesting everybody has it, it’s hard to generate insight out of the data we have. That is what MaxCV is creating for us, so when we talked about custom analytics for the large financial services slide that is just one example. I believe the opportunity with our large client is fairly significant and that’s going to be a growth engine for us going into 2013. To talk a little bit more about MaxCV itself and the innovation that is going to come off of it, let me turn it over to Josh to talk about the web service layer and how the two play together to essentially return us back to growth. Josh?

Josh Peirez – President, Global Product, Marketing, and Innovation: So, if you think about what we have built with our new data supply chain, there is really two components to the MaxCV. First is the underlying data supply chain which allows us to add more and new types of data and also allows us to generate new analytics and insights very quickly and bring those markets in a much more cost effective way than we have been able to in the past. You are going to start to see us bringing out these new analytics in Q2 of this year on DNBi as well as in our broader risk product suite, so we are very excited to get those into market. The second piece of the investment was focused on a service layer which allows us to innovate on product more quickly. And we’ve had that out in market earlier in the investment cycle of MaxCV and have been able to create products like D&B Direct and D&B 360 which are performing well in the market off of our new services layer. Those products have not yet received the benefit of the new types of data and new analytics which we anticipate receiving during this year. And now we are also able to take all of our development resources internally in our team and focus them solely on growing the North American business rather than on the underlying infrastructure build that they’ve been focused on for the last couple of months.

Shlomo Rosenbaum – Stifel Nicolaus: So is that complete now? I mean are we at the point that you could take the people – a lot of the effort that is working on the MaxCV and really focus them on growth. I mean you still – it seems like there is $25 million to $30 million of investment required still this year?

Josh Peirez – President, Global Product, Marketing, and Innovation: Shlomo, the investment for this year is focused on deploying the data supply chain through the customers in the United States so that they receive the benefits of the investments we’ve made. So, yes, those resources are now focused on delivering to the North American customer base, the products as well as the data and analytics that we’re able to provide with our new capabilities.

Small Business Segment of RMS

Andrew Steinerman – JPMorgan: I want to focus on the small business segment of RMS in particularly DNBi Pro which I know was launched a couple of years ago. I wanted to know if there is much difference between the performance of your smaller customers and your larger customers and particularly how you’re offering is working in the smaller businesses.

Sara Mathew – Chairman and CEO: Sure. Let me have Manny talk about that. Manny?

Emanuele A. Conti – President, North America: Yeah sure. So, as we did launch DNBi Pro and we do offer DNBi across all of our customers segments and when we are experiencing a retention and uplift rates in the DNBi platform pretty much held up throughout this year. Certainly, we understand that our competition does come at us with lower priced offers, while we compete on value and we’re directly addressing that by through the investments that we’re making through the foundational data investments, which is also generating new scores. We’re also able now begin to bundle some of the modules that we talked about and adding value into the new core platforms. So, we’ve pretty much seen DNBi performed pretty consistently throughout the year.

Andrew Steinerman – JPMorgan: Right. I was asking it was the performance amongst small business is much different than your larger customers?

Emanuele A. Conti – President, North America: No, we don’t really see a big difference between the two sets. If you were to look at DNBi, it’s serving small to mid-size customers. When you get into the really large sets or the really large companies they tend to use end consumer data and analytics rather than need a platform.

Sara Mathew – Chairman and CEO: And to the large customers clearly grew in 2012. We feel very good about our performance there and that’s where most of the innovation went in 2012, even if we have to take back to the lower end in 2013 to improve that part of the business which clearly could get better.

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