Q1 2023 Dun & Bradstreet Holdings Inc Earnings Call
Participants
Anthony M. Jabbour; CEO & Director; Dun & Bradstreet Holdings, Inc.
Bryan T. Hipsher; CFO, Executive VP & Treasurer; Dun & Bradstreet Holdings, Inc.
Sean Anthony; VP Corporate FP&A; Dun & Bradstreet Holdings, Inc.
Andrew Charles Steinerman; MD; JPMorgan Chase & Co, Research Division
Ashish Sabadra; Analyst; RBC Capital Markets, Research Division
Faiza Alwy; Research Analyst; Deutsche Bank AG, Research Division
Gustavo Andre Gala; Research Analyst; Truist Securities, Inc., Research Division
Hans Peter Hoffman; Equity Associate; Jefferies LLC, Research Division
Heather Nicole Balsky; VP; BofA Securities, Research Division
Jonathan Rau; Associate Equity Analyst; Wells Fargo Securities, LLC, Research Division
Keen Fai Tong; Research Analyst; Goldman Sachs Group, Inc., Research Division
Kevin Damien McVeigh; MD; Crédit Suisse AG, Research Division
Kyle David Peterson; Senior Analyst; Needham & Company, LLC, Research Division
Presentation
Operator
Good morning, ladies and gentlemen, and welcome to the Dun & Bradstreet First Quarter 2023 Earnings Conference Call. (Operator Instructions) This call is being recorded on Thursday, May 4, 2023. I would now like to turn the conference over to Sean Anthony, VP, Corporate FP&A. Please go ahead.
Sean Anthony
Thank you. Good morning, everyone, and thank you for joining us for Dun & Bradstreet's financial results conference call for the first quarter of 2023. On the call today, we have Dun & Bradstreet's CEO, Anthony Jabbour; and CFO, Bryan Hipsher.
Before we begin, allow me to provide a disclaimer regarding forward-looking statements. This call, including the Q&A portion of the call, may include forward-looking statements related to the expected future results for our company and are therefore forward-looking statements. Our actual results may differ materially from the projections due to a number of risks and uncertainties. The risks and uncertainties that forward-looking statements are subject to are described in our earnings release and other SEC filings.
Today's remarks will also include references to non-GAAP financial measures. Additional information, including the reconciliation between non-GAAP financial information to the GAAP financial information is provided in the press release and supplemental slide presentation. This conference call will be available for replay via Dun & Bradstreet's Investor Relations website at investor.dnb.com.
With that, I'll now turn the call over to Anthony.
Anthony M. Jabbour
Thank you, Sean. Good morning, everyone, and thank you for joining us for our first quarter 2023 earnings call.
On today's call, I'll start with a brief overview of our first quarter results, followed by an update on our operational activities and progress towards our strategic initiatives. After that, I'll pass the call over to Bryan for an in-depth review of our results and to discuss our expectations for the remainder of 2023. We'll then open up the call for Q&A, and I'll finish up with a few closing comments. With that, let's get started.
Our first quarter results demonstrates a continued progress we are making and the strength and resiliency of our business model throughout the world. We exceeded our communicated expectations by delivering 3.2% revenue growth on an organic constant currency basis as customers and prospects continued to rely on D&B's mission-critical solutions to help them navigate this challenging business environment.
Beginning with North America. We grew just over 2% despite this being the final quarter that included the impact from 3 full months of the GSA contract expiration. Excluding the impact of the GSA, North America revenues grew 4% with solid performance in both our Finance & Risk and Sales & Marketing solutions.
On the Finance & Risk side, our risk solutions drove high-teens growth as companies continued to look at ways of driving a more real-time AI-driven approach to assessing and monitoring the third-party and supply chain exposure. As we continue to expand the magnitude of our existing data and add new and alternative datasets to further expand our offering into areas such as fraud, cybersecurity, climate and ESG, we're positioning ourselves to land and expand through a variety of use cases within clients' risk, compliance and underwriting departments.
For example, we recently expanded our ESG Rankings data coverage across public and private companies from 42 million to 74 million and 185 countries, reflecting the latest Sustainability Accounting Board Standards. This expansion further strengthens Dun & Bradstreet's position in the ESG space as organizations seek to make sustainable decisions with confidence.
We are also bringing in new real-time financial datasets into our data cloud. An example of this is payments transaction data that allows us to blend near-term transactional behavior with longer-term trends, creating a unique perspective on the financial profile of an entity in ways that have never been done before.
These new analytics are enhancing our proprietary data cloud. And through the use of our latest artificial intelligence-driven algorithms, we are further extending our leadership position in the decisioning of commercial credit and embedding ourselves even more deeply into the most mission-critical finance decisioning workflows.
Finance Solutions continued to have strong retention rates and is benefiting from the impact of price increases as we look to optimize our contracting and pricing structures. Overall, our Finance & Risk solutions in North America grew 2.5%, excluding the GSA impact, which is right in line with our expectations for the start of the year.
Within North America Sales & Marketing, we are seeing continued progress in our financial results from the ongoing transformation and investments in the solution set. We delivered over 5% organic growth in the quarter, driven by our Master Data Management and Digital Marketing solutions.
Improvements to solutions like Hoovers have driven retention rates from the 70s to nearly 90%, turning them from headwinds to tailwinds and are allowing the benefits of our transformation efforts to be realized in our financial results. As we continue to resolve a shrinking group of legacy underperforming assets in our portfolio, it allows us to show the true strength we have been building in our Sales & Marketing suite.
We also continue to innovate new solutions, which further support our now 20% vitality index in North America. In the first quarter, we launched a mid-market version of D&B Connect that includes a self-guided user interface, which brings most of the benefits of Master Data Management to medium- and smaller-sized companies with limited tech complexity; [D&B Compliance Intelligence Engine], which created smart workflow integration to seamlessly onboard and monitor third parties from cradle to grave; and we are launching our [SMB Navigate] portal, which builds upon the foundational improvements to our SMB ecosystem, such as the website consolidation and shopping cart enhancements we have made over the past few quarters.
We continue to move forward with supporting small business and their efforts to thrive during these tough times. Whether it be our partnership with Lendio, allowing SMBs access to capital in a quick and efficient manner; improve the visibility into the commercial credit profile through connectivity and to Plaid; or our latest partnership with Accelerate Tax that helps small business garner tax credits and incentives, we are committed to working hard to assist small businesses become big businesses.
On the North American sales front, we saw examples of our momentum in both Finance & Risk and Sales & Marketing. On the Finance & Risk side, we had a strong quarter of expanded renewals and new solutions up-sells. One of our largest and most tenured customers, an American-based multinational technology company, signed another multiyear renewal. This company is a great example of a sophisticated global firm that utilize our D-U-N-S and hierarchy and Master Data Management capabilities as a keystone for their finance and risk and sales and marketing solutions throughout their organization.
While other providers attempted to compete based solely on price, our differentiated solutions, data and analytics clearly won out. We saw a similar outcome with one of the largest automotive manufacturers in the world. Like many auto manufacturers, they faced the need to invest significant capital into the electronic vehicle market while simultaneously balancing the financial challenges arising from a global economic downturn.
With a mandate to reduce third-party spend, their procurement organization explored ways to reduce their spend with us just as they would with the rest of their vendor relationships. However, due to the criticality and value we deliver, they ultimately concluded that descoping services would have a direct negative impact on their operations and ultimately decided to maintain and expand the relationship. Through our Master Data Management capabilities powered by the D-U-N-S Number, we allow companies like them and tens of thousands of others to (inaudible) during all economic cycles.
Now turning to our International segment. We saw another quarter of solid 5.5% organic growth in the quarter. Our vitality index increased to 28% in the quarter and with all markets growing at or above our internal expectations. We saw the United Kingdom and Ireland produce just under 10% growth in the quarter as demand for our modern Finance & Risk solutions remained elevated.
We also saw continued steady improvement in Europe as the business grew 4% in the quarter with balanced growth across the region. Asia came in with low single-digit performance, which was expected as the market is dealing with some hangover from the lockdown impact in 2022 that affected 2022 sales and 2023 revenues.
As the year progresses and sales pick up, we expect to see the revenues flow through and acceleration in those regions to complement the strength in our UKI and Europe markets. Overall, the performance is on track. And we continue to see the benefits of the disciplined investments in our international markets.
On the sales front, the International segment continues to focus on landing and expanding more and more enterprise clients in the regions. Deutsche Bank, one of the largest financial institutions in Germany, added a compliance solution to their portfolio that is allowing them to better understand their third-party and supply chain risk. This is just one example of what we saw throughout the quarter in terms of strong demand for these solutions.
The Cabinet Office of England engaged us for our compliance Data Blocks APIs. Public sector entities, like the Cabinet Office, also have the need to understand who they're doing business with and how the linkage to certain individuals, entities or countries could impact the way they view potential risk with doing business with said companies.
We also saw another strategic win with a top 4 bank in China. This new data-driven win was a direct takeaway from a legacy provider and continues to show how our data, solutions and go-to-market improvements are driving expansion with the largest and most complex organizations in the region.
Along with the ongoing results and sales execution, we continue to focus on progressing against the strategic initiatives we laid out during our Investor Day earlier this year. On the technology side, we have made significant progress to start off the year.
For instance, on the infrastructure side, we migrated one of our largest and most complex Sales & Marketing applications to our Google Cloud infrastructure. This migration has been underway for months and culminated in a near-seamless transition that has resulted in significant improvements to the application's performance, throughput and stability.
We also made significant progress in terms of our ongoing modernization efforts by reducing our reliance on mainframe hardware by 50%. We have significantly reduced our use of mainframe applications and have a clear path to bringing that down to 0 over the next 2 years. These are just a few examples of the many ongoing initiatives we have underway, which reflect our continued discipline, commitment and execution to making the changes necessary to support the long-term and sustainable change at D&B.
We also made significant enhancements to our data supply chain through architectural enhancement as well as cloud migration efforts that led to a 50% reduction in processing latency. And while we are continuing to strengthen our foundation, we are also using cutting-edge advancements to extend and expand our analytics capabilities.
In terms of linkage and matching, we have the most advanced business-to-business capabilities in the world. And to further extend that lead, we're now leveraging GPT to drive enhancements in our global matching processes, which create efficiencies and, in some cases, incremental advancements in our match rates. We also have three proof of concepts in place related to new business discovery, new contact discovery and employment counts for private businesses throughout the globe.
It's early stages now. But through taking a measured approach, we can leverage the power of our unrivaled proprietary business-to-business dataset, combined with GPT and other artificial intelligence advancements, to drive more and more value to our customers and prospects. I'll look to update you on all these advancements and the others on future calls. But in the meantime, know we are hard at work at driving innovation and acceleration each and every day at Dun & Bradstreet.
Overall, we're off to a great start to the year, and I'm very pleased with the progress we've made to date. Our ongoing transformational efforts have helped to offset a more difficult macroeconomic backdrop. We have capitalized on the strong demand for our solutions, drove strong sales traction, maintained excellent profitability and delivered another quarter of solid financial results.
With that, I'd now like to turn the call over to Bryan to discuss our financial results for the first quarter in more detail and the outlook for the remainder of 2023.
Bryan T. Hipsher
Thank you, Anthony, and good morning, everyone. Today, I will discuss our first quarter 2023 results and provide an update on our guidance for the remainder of the year.
Turning to Slide 1. On a GAAP basis, first quarter revenues were $540 million, an increase of $4 million or 1% compared to the prior year and 3% before the effect of foreign exchange. Net loss for the first quarter was $34 million or a diluted loss per share of $0.08 compared to a net loss of $31 million for the prior year quarter.
Turning to Slide 2. I'll now discuss our adjusted results for the first quarter. First quarter revenues for the total company were $540 million, an increase of 1%, or 3% before the effect of foreign exchange. Revenues on an organic constant currency basis were up 3.2%, driven primarily by increased demand in both our North America and International segments.
First quarter adjusted EBITDA for the total company was $190 million or flat to the prior year quarter. And adjusted EBITDA margin was 35%. Higher earnings from the increase in organic revenues was offset by the impact of foreign exchange, which resulted in a $4 million headwind to EBITDA for the quarter. First quarter adjusted net income was $81 million or adjusted diluted earnings per share of $0.19, down primarily from the prior year due to increased interest expense.
Turning now to Slide 3. I'll now discuss the results for our two segments: North America and International. In North America, revenues for the first quarter were $375 million, an increase of 2%, or 2.2% on an organic constant currency basis. In Finance & Risk, revenues were $201 million or flat as double-digit growth in our third-party and supply chain risk management solutions were offset by the impact of the GSA contract expiration in April of 2022 and lower revenues in our legacy credibility solutions.
In Sales & Marketing, revenues were $174 million, an increase of 5%. This was driven primarily by growth in our Master Data Management and Digital Marketing solutions. North America first quarter adjusted EBITDA was $151 million and adjusted EBITDA margin was 40%, a decrease of 150 bps from the prior year due primarily to the margin impact caused by the lower revenues from the expiration of the GSA contract.
Turning to Slide 4. In our International segment, first quarter revenues were $166 million, a decrease of $3 million or 2% and an increase of 5% before the effect of foreign exchange. Organic revenues on a constant currency basis increased 5.5%. Finance & Risk revenues for the first quarter of 2023 were $111 million, an increase of $2 million or approximately 2% and an increase of 7% before the effect of foreign exchange.
There was positive contribution from all markets. European growth was driven by Finance Analytics and API solutions. The Worldwide Network alliances was due to higher cross-border data fees. And growth from our United Kingdom markets came from third-party and supply chain risk management, along with compliance solutions as well as Finance Analytics.
Sales & Marketing revenues for the first quarter of 2023 were $55 million, a decrease of $5 million or 8% and a decrease of 1% before the effect of foreign exchange. Excluding the impact of the divestiture of our German business-to-consumer business in the second quarter of 2022, organic revenues increased 2%, primarily due to higher revenues from our U.K. market, driven by higher data sales.
International first quarter adjusted EBITDA was $56 million, an increase of $1 million or 1%, primarily due to revenue growth from the underlying business partially offset by higher foreign exchange losses resulting from a strengthening U.S. dollar. Adjusted EBITDA margin was 34%, an increase of 100 bps compared to the prior year.
Turning to Slide 5. I'll now walk through our capital structure. As of March 31, 2023, we had cash and cash equivalents of $204 million and total principal amount of debt of $3,643 million. The $3,643 million in principal is made up of $460 million of unsecured notes at 5%, which mature in 2029; term loans of $2,673 million, a LIBOR plus 325 that matures in 2026; $455 million at SOFR plus 325 that matures in 2029; and borrowings of $55 million under our revolver.
The LIBOR-based term loan has a $1 billion floating to fixed swap effective through March of 2024 at 0.467% and a $1.5 billion floating to fixed swap which expires February 2026 at 3.695%. The SOFR-based term loan has a $250 million swap for floating to fix through February 2025 at 1.629%. We also have 3 cross-currency swaps at $125 million each that settle in July of 2024, 2025 and 2026. We are currently either fixed or hedged at 88%.
We had $795 million available on our $850 million revolving credit facility as of March 31, 2023. Overall, our weighted average interest rate was 5.63% as of March 31, 2023. Our leverage ratio was 4.0x on a net basis and the credit facility senior secured net leverage ratio was 3.5x.
Turning now to Slide 6. I'll now walk through our outlook for 2023. We continue to expect total revenues after the effect of foreign currency to be in the range of $2,260 million to $2,300 million or an increase of approximately 1.6% to 3.4%. This includes an assumption of a headwind in the first 3 quarters of the year, partially offset by a tailwind in the fourth due to the effect of foreign currency related to the expected variances between the U.S. dollar, euro, British pound and Swedish krona.
Revenues on an organic constant currency basis are expected to be in the range of 3% to 4.5% for the full year. As previously discussed, it is important to note that the total inorganic growth ranges take into account the conclusion of the existing GSA contract at the end of April 2022. The net impact to organic growth for the full year is a headwind of 30 basis points with 110 basis points headwind realized in the first quarter.
Adjusted EBITDA is expected to be in the range of $870 million to $920 million. The adjusted EBITDA range also takes into account the conclusion of the GSA contract and a $5 million negative impact from the strengthening of the euro versus the U.S. dollar in comparison to the relative flatness of the British pound and Swedish krona. Adjusted EPS is expected to be in the range of $0.92 to $1.
Additional modeling details underlying our outlook are as follows. We continue to expect interest expense to be approximately $240 million; depreciation and amortization expense of approximately $100 million, excluding incremental depreciation and amortization expense resulting from purchase accounting; adjusted effective tax rate of approximately 24%; weighted average diluted shares outstanding of approximately $433 million; and for CapEx, we expect approximately $130 million to $150 million of internally developed software and about $30 million of property, plant and equipment and purchased software.
Overall, as we monitor the macro backdrop, it remains consistent with what we anticipated in our original guidance. And we expect -- and we continue to expect the remaining quarters to perform as previously communicated.
In conclusion, we are well positioned to capture the significant growth opportunities in front of us. And we expect to continue to accelerate revenue growth in 2023 despite a challenging overall environment and the conclusion of the GSA headwind at the end of April. With improving profitability and cash flows, we will also focus on deleveraging the balance sheet and focusing capital allocation strategies on driving increased shareholder returns.
With that, we're now happy to open up the call for questions. Operator, will you please open up the line for Q&A?
Question and Answer Session
Operator
(Operator Instructions) Your first question comes from Seth Weber, Wells Fargo.
Jonathan Rau
This is Jon filling in for Seth. Could you just maybe give us some more information on kind of the generative AI and what you're seeing in terms of GPT just in terms of how we could think about kind of a longer-term kind of realization of the database and the D-U-N-S Number just with the enhanced linking and matching capabilities as well as any other potential opportunities?
Anthony M. Jabbour
No, it's a great question, Jon. And there's obviously a lot of noise about that in the market right now. And there's a lot that we're doing with it currently with our linking and matching on a global basis. And we're seeing efficiencies with that as I shared in my opening comments. We're also doing a number of proof of concepts, like I talked about, and really leveraging this great technology.
But the part I want to really highlight for everyone, I think, that's really important, people asked me this before, the advantage that we have is we have a lot of proprietary data that we've had for many, many years and trended data and data that we manufacture insights that we have. And so for us, we have the ability to bring the GPT inside our firewalls, so to speak, and really leverage the technology around our proprietary data.
For companies out there that are just accessing public record databases, ChatGPT can do that as well. And there's not really a differentiation in the space that we have because of like the vast proprietary data lake that we have. So it's an exciting time certainly from a technology perspective, and our team is at it.
And I actually worked on the previous version of GPT in our contact titling segment within our Sales & Marketing business. So we've been at it for a while, as you'd imagine. We've got dozens and dozens of patents around linking and matching. It's an area that we're really, really strong at.
Jonathan Rau
That's great color. And maybe also just sticking on the topic of kind of leveraging the data itself, could you talk more about the supply chain as well as the durability of those revenues, given the partnership with ICE and kind of using the KYC, KYV and the chain within kind of a climate risk offering is unique? How much more runway is there kind of in the kind of overall system?
Anthony M. Jabbour
Yes. We continue to see really strong growth in our risk business, and we have for many quarters in a row. And we anticipate that we will continue to going forward. It's a very topical subject. And our capabilities are very deep and very broad in that space. And so we're constantly looking at additional insights that help drive the risk of supply chain.
I talked about our ESG coverage increasing dramatically. That's one of the most sought-after datasets in our Risk Analytics business. But as you can imagine, we're constantly looking to drive more and more ways that we can leverage data, acquire data, create new analytics that really helps lower the risk threshold for our clients out there.
Operator
Your next question comes from Kyle Peterson, Needham.
Kyle David Peterson
Just wanted to touch on -- I know in December, it seems like you guys had some kind of volume pressure, when there was kind of increased macro uncertainty. Have you guys seen any of that either anytime in March or in April kind of in response to some of the regional banking kind of crisis and volatility? Or has everything just kind of continued relatively unabated?
Anthony M. Jabbour
Yes. Kyle, the actual Master Data Management volume that we saw, the blip in December, it was a blip. Early in the ear, we saw it recovering. We continue to see it recovering. Our whole Sales & Marketing business grew organically over 5%. And that was one of the areas where it was a tailwind for our growth in that segment. So we feel really good about that.
I'd say on our -- on the regional bank side in terms of what's going on, that's an area that we have very, very low exposure to, I'd say low single-digit percentage of our revenue in that space. We're certainly calling on them with the crisis that's underway. And I'm really proud of our team, how they see a need or a crisis and run to it. And we're certainly running hard to regional banks and larger community banks.
That's a segment that typically is focused on commercial businesses and banking. If you think the largest banks in the world having the ability to reach consumers and credit unions with their tax advantage can reach consumer members there, that regional, larger community bank space tends to focus on commercial.
And so we've created a lot of new analytic insights that would help improve their underwriting and help identify the risk of what they currently have outstanding, whether it's our Blended Score, where we're taking our credit information on the business, coupled with the consumer scores and giving a unique perspective, or our work with Plaid that we talked about of integrating into the banking accounts and seeing it at a more detailed level and really help assessing the risk that these regional banks have out there right now. But we see it more as an opportunity versus a concern at this stage.
Kyle David Peterson
Got it. That's really helpful. And then maybe just a follow-up. So on the Sales & Marketing business internationally, has there been any macro pressure on demand in that business? Or are the headwinds purely from the divestiture of the business in Germany?
Anthony M. Jabbour
Well, certainly, the divestiture in Germany was the key -- is a headwind that it was in the space that was really commoditized, not at the heart of what we do and want to focus on as a company. And it's been a really good move for us, I think, from that perspective. But overall, we're excited as we create lots of new capabilities and bring them into our international markets at a faster rate than has ever been done here ever. We're excited about the opportunities in front of us.
Operator
Your next question comes from Andrew Jeffrey, Truist.
Gustavo Andre Gala
It's Gus stepping on for Andrew. Just want to talk a little bit on the changes in retention you're experiencing in Hoovers. How can we move that across the portfolio into other applications? And just talk a little bit on the cyclical impact you're seeing on MDM demand. It seems discretionary marketing is under pressure.
Anthony M. Jabbour
So the first question is on the improvements that we've made in Hoovers, how we see that across the other parts of our business. When we look -- and we had talked about Hoovers before as being something in need of improvement. And that's what we've been working on. Like we had shared previously, it was in the range of $90 million to $100 million in revenues. And again, with the broad transformation we had underway, this team has been very focused on the big rocks, small rocks, pebbles and sand as they're filling that proverbial jar.
And as we worked our way to it, I'm really pleased with the progress that we've been making there. Lots of our businesses, our Master Data Management is very strong. It's not in need of improvement. What we've been doing there is really adding more and more capabilities like the ones I've mentioned in terms of being able to take that capability more mid-market, down-market, where we can create a user interface, makes it easier to work with it.
When we think about our Digital Marketing, very strong. So you see what's going on in the broader market around ads and marketing, and this business has been growing very well for us. Because we're at the front end of -- with our programmatic advertising and our digital marketing, we're at the front end of really leveraging the great data we have to make the ads very, very targeted. And so that's an area that I believe we'll continue to do well at.
We do have, like we've talked about, some portfolio of $50 million to $75 million scattered of smaller assets that we'll look at transforming, and if the juice isn't worth the squeeze, divesting of. But like I said, as we've gone through the big parts of our transformation, it's really around now getting to the smaller ones and putting attention in addressing them. And like I said, we're excited because we'll either transform them and they will be tailwinds for us or we'll divest them and not have the headwinds affecting us.
Gustavo Andre Gala
Great. Appreciate all the great color. And then can you also talk a little bit on rest of world like pricing actions there? Can you talk a little bit how is the enterprise sales cycle is doing in the pipeline?
Bryan T. Hipsher
Yes. Gus, I would say, across the board, pricing is something that we continue to use as a lever of growth. On the International side, as you remember, when we took over the Bisnode acquisition, there were a lot of kind of legacy and disparate applications that Neeraj and the team spent a lot of time and effort last year migrating them.
As we migrate them on to the latest and greatest solutions, you get clearly a better level of customer engagement, customer satisfaction. And so as those are coming up for renewal, we're applying the same methodology of taking a price increase, expanding our multiyear contracts and really starting to see the benefits from that perspective, too.
So similar, I would say, playbook that we ran where, to Anthony's point earlier, a lot of the migration, a lot of the underlying foundational work we were doing may not have instantaneous impact. But where you see it is better retention rates. You see it in better ability to take price. And it's the same thing we're seeing in International right now.
Operator
Your next question comes from Heather Balsky, Bank of America.
Heather Nicole Balsky
I'm on a train right now, so hopefully, you can hear me. I'm just -- I'd like to touch on the AI question again. I'd love to hear from you about why you think an upstart can't just take AI, scrape the web and do what you do. What are your -- in that regard, what is your competitive moat?
Anthony M. Jabbour
Sure, Heather. The real big differentiator is that we have proprietary data that cannot be scraped. And we're not exposing it externally so that it can be scraped. So if anything, we have again more upside than downside because we're leveraging this technology ourselves to create more efficiency, identify new insights for our clients and owning it and driving it.
There are other low-cost providers out there that really scrape the web. They scrape public registries, for example, and scrape what's publicly available. And yes, a startup leveraging GPT could do that. And it could compete in that space. But for us, the big differentiator we have and why we've been so sticky is the proprietary data. And that is really the biggest differentiator.
Operator
Your next question comes from Stephanie Moore, Jefferies.
Hans Peter Hoffman
This is Hans on for Stephanie. On the 3.2% organic growth number, could you just break out what the split was between pricing, cross-sell and new logo wins and how you kind of expect that split to kind of play out for the balance of the year?
Bryan T. Hipsher
Yes, Hans, thanks for the question. We've talked about this year, for instance, with retention rates holding in the high 90s, right? So we talked about the 96%, 97%. They were very strong and consistent within the first quarter. So it really starts there. I think Anthony uses the terminology closing the back door. And you heard what we did with Hoovers, what we continue to do with the solution set is really strong from that perspective.
So when we think about price this year, it moving from -- starting to approach roughly 2%, right, is the expectation, right, for 2023. And again, that's kind of blending in some of these new pricing initiatives that we're dropping in, right? And as the renewals come up throughout the year, you'll see that 12-month flip over into the price increase. And that will continue to contribute more and more throughout the back half.
On the cross-sell, up-sell, a lot of the deals that we were doing last year in the third quarter, fourth quarter, et cetera, those are flowing through. And so as we build up each and every year, it's really a waterfall from that perspective. So overall, again a nice driver from price, continued expansion from a net revenue perspective with the cross-sell and up-sell. And then it's been really continuing to close that back door and allowing the new innovations and the new solutions to shine through that's been driving the growth.
I think we mentioned we had $5.5 million, the -- almost $6 million in the first quarter from the GSA. That drops to $2 million, right, in April of the second quarter. And then we've lapped that and are kind of moving on from that perspective. So again, really good start to the year and look to continue to progress as the year progresses.
Hans Peter Hoffman
Got it. That's helpful. And then I guess, what percent of revenues are under long-term contracts? I know you guys have seen some good improvement there over the years. But just for the quarter, if you could remind us what that was (inaudible)
Bryan T. Hipsher
Yes. So multiyear contracts that we talked about are now over 50%. So I think it's -- this quarter, it's exactly about 53%.
Anthony M. Jabbour
Yes. And what we're seeing, Hans, is clients wanting to sign up for longer term. So our 4-year contracts that we've been signing right now are even up significant. I think they are up strong double digits. So really, it's a great indicator for us that our clients really see us as a strategic partner, who want to stay with us, do more with us over a longer period of time. And so again, the great thing is over that 4-year longer period now, we have more time to cross-sell and up-sell new capabilities and help them versus constantly revisiting the renewal conversation, all while having the pricing escalators.
Operator
Your next question comes from Andrew Steinerman, JPMorgan. I apologize your next question is actually from Faiza Alwy, Deutsche Bank.
Faiza Alwy
So I wanted to follow up on a couple of things. One is the divestitures that you sort of alluded to. I know you made one divestiture in Germany. Talk to us more about what we should expect from here. How are you approaching these divestiture decisions? What's the timing of this? And maybe dimensionalize maybe what percentage of your business is -- I don't know if on notice is the right phrase. But a bit more color would be helpful there.
Bryan T. Hipsher
Faiza, sure. As Anthony said, we kind of look at all these things as boulders, rocks, pebbles and sand, right? And so we're now moved through a lot of the boulders and rocks. And there's probably around kind of $50 million, $75 million of these assets that are headwinds, for all intents and purposes. And so what we're looking at, similar to what we looked at Hoovers is, okay, first and foremost, the best outcome for us is to transform it, right? Take it from a headwind to a tailwind through some investment, through some modernization, et cetera.
But if we look at something and it's not strategic or we said the juice is not worth the squeeze, then that's where a divestiture would come into play. We're always mindful in terms of divestiture and certainly sundowning or shutting off an application is that we do run a quite leveraged data cloud, a very leveraged infrastructure. And we want to make sure that the cost and the EBITDA impact and the revenue impact is going to be commensurate with what we will do from the revenue side.
So again, these are products that maybe are in the range of $10 million, $15 million, the largest being maybe $25 million, $30 million. But it's a very kind of small contained set from that perspective that we're just evaluating in terms of is it worth the investment to and attention to transform? Or is it something that we could kind of easily offload, take the cash from that perspective and then use it to deleverage or allocate capital otherwise appropriately?
Faiza Alwy
Great. That's very helpful. And then as a follow-up, I wanted to get a sense of what you're seeing from your small business customers, I know you have large exposure to those types of customers and a pretty big penetration opportunity. But curious how things are trending with your current customers that maybe fit that bucket.
Anthony M. Jabbour
Well, certainly in the small business area, that's a group and a segment that is -- you hear many companies mostly concerned about that segment, how they'll perform in this macro environment that we're in and that we're arguably heading into. And for us, the growing majority of our revenues are around enterprise clients versus small.
But what I'd say with the SMB base and what I'd say broadly for all of Dun & Bradstreet is there's headwind that's out there. And there's a tailwind that we have with our transformation that we have underway. And the force from our transformation is helping significantly with the macro forces that are out there. And again, on a company basis, you've seen lots of companies struggle in this environment. And we continue to grow and accelerate our growth year-over-year. And a lot of it is our transformation.
Similarly, with small business, that's what's going on. There are headwinds out there with them, certainly. But we've launched a lot of new capabilities in the space. We've talked about some of the partnerships that we had in my prepared remarks for us to help small businesses become stronger. We've seen significant growth in our e-commerce side, which is really tailored towards this SMB segment, right?
We have 2.5 million subscribers to our D-U-N-S Manager, our credit products, a 21% increase over last year and over 25% 5-year CAGR. So there's a lot of good work that we have going on as part of our transformation and how we're focused on that segment and growing it to help offset the macro environment. So it's an area, obviously, that we've got close attention to, like I said, in this macro environment. But again, we've got a lot of conviction in how we can help in that space. And that's where we're putting a lot of effort.
Operator
Your next question comes from Andrew Steinerman, JPMorgan.
Andrew Charles Steinerman
Anthony, I heard your encouraging comments earlier on Hoovers. I was hoping you could just talk a little bit more about it. Specifically, how quickly is Hoovers growing revenues this year? That's one. And my second question is how does Hoovers' U.S. professional contact database coverage compared to its top competitor?
Anthony M. Jabbour
Sure, Andrew. Thank you. What I'd say is -- on the Hoovers perspective, I'll take the first part, Bryan. You could discuss the revenue growth. But lots of great improvement in a couple of areas. One is in terms of our capability. And we've created different versions of Hoovers. We've created a Hoovers Essentials, for example, to be a smaller targeted approach to hit that SMB segment size that we're just talking about is another example there.
But our -- the quality of our data has improved significantly. We've talked on calls about dramatic increases in coverage and quality. And it's an area that, like I said, we're very focused on. But also a very focused approach in our go-to-market, so having dedicated sellers really focusing on that and also tying in our other capabilities that we have, such as our credit and risk, right?
So like we said, especially heading into -- again, if you're always cognizant of the environment that you're in or heading into, in this one, there will be businesses that will struggle. Do you want to spend a lot of sales resources selling into a company like that or not? That's an area where we can help, obviously, with our clients being even more focused with their time that they spend here.
And I'd say on the coverage side, that's always a moving target, Andrew, and how we compare it to others in the industry and everyone always talks about that. What I'd say is with particular decision-makers at companies, our coverage is outstanding. So no one compares to us on a business coverage, so identifying if there's a business out there that meets the need of what you're selling and then working down from there to say we have contacts in this business.
We've got a lot of confidence in our -- in the quality of our data, business coverage, key contacts, direct dials, e-mails, et cetera. And like I said, it's a hard one to compare. You get lots of different data points. But what I feel is this significant improvement that we're seeing clearly is a direct result for the improvements and the strength that we have in our data.
Bryan T. Hipsher
And Andrew, in terms of growth right now, this is a, as you know, quite well a solution set that was actually declining for years. And so for us, part of the story is it's now turning to, I would say, low singles growth at this point but with some really nice momentum as we see the sales build up and the ARR building faster than that, that we expect for it to continue to accelerate throughout the year. And so again, really great progress.
And another component for us strategically as we came into the organization was we had some really nice assets in here. And if we can just get some of these ones that are underperforming, turn them around or even just to get them to neutral, right, it allows the rest of the components to really shine through, whether that's third-party risk or Master Data Management, et cetera. And then the opportunity for Hoovers to continue to grow and expand and really take off over the next few years is certainly there. So again, really, really positive momentum and a lot of great work done by the team.
Operator
Your next question comes from Ashish Sabadra, RBC Capital Markets.
Ashish Sabadra
I just wanted to focus on the North America F&R business. That business grew 5% in fourth quarter, excluding the government solution. So my question there was is the 2.5% in the first quarter comparable to 5%? Or are there some more headwinds on the government solution, which are weighing on the F&R business? And if it's possible to provide that growth profile for F&R excluding the government solution?
Bryan T. Hipsher
Yes. Ashish, sure. If you look at the two components, one, the GSA is about, I said, $5.5 million, $6 million in the first quarter. That in and of itself is going to weigh heavier on a percentage basis because the first quarter for us is always the lowest from a magnitude perspective. And then the other component is, if you remember, we're lapping some of the headwinds from the legacy credibility business. And so that was another kind of a couple of million dollars that was in the quarter also.
And so those two components were really offsetting the growth that we were seeing, as Anthony said, teens growth in the risk business and then kind of low singles on the Finance Solutions side. So when we look at that overall, you're talking closer to being more in the 4-ish percent range, right, than you were the flat when you think about the two pieces that were driving that, which were mainly the GSA side but also a little bit of that credibility, which was impacted by the consent order from last April.
Ashish Sabadra
That's very helpful color. And maybe just a quick question on the European business or the legacy Bisnode, I was just wondering if you can comment on the progress of migrating all the legacy applications to the D&B. And then obviously, there was a reference to the large financial institution win in Germany. Was that also on the new applications that you've introduced in the European market?
Anthony M. Jabbour
Sure. Yes, thanks, Ashish. Really, really proud of the great work our team there is doing with the European markets and lots of migration work underway there. They migrated thousands and thousands of clients. And you see it in the vitality index, right? It's just almost 28%. And as you know, with vitality index, they don't keep creeping up to get to 100% eventually because it's the last 4 years of new solutions. And so having a score of that range is really exciting.
And the team there is focusing on larger enterprise clients, growing with the winners. And our penetration into the large FIs is with our newest offerings that we're bringing to market. And it just gives us, like I said, number one, a more modern solution for us to sell into, which helps us with our renewals. It helps us -- it's modularized. So it's easy to sell components within those suites, the Finance Analytics or Risk Analytics, for example, adding a component to it to make it more easy for our clients to buy and digest and integrate and implement the solution.
So couldn't be more proud of really -- and our vitality index in North America was over 20% as well. So a lot of great work, like I said on previous calls, I'll say unsung work in some ways, where you do a lot of effort migrating to a new solution, where there's not an immediate bump in revenue, but you put yourself in a great position to grow. And we're seeing, obviously, lots of green shoots from that growth from having longer relationships with our clients, et cetera.
Operator
Your next question comes from George Tong, Goldman Sachs.
Keen Fai Tong
You maintained your 2023 organic revenue growth guide of 3% to 4.5%, which is a relatively wide range. You now have 1 quarter of performance under your belt. Where in the range do you think you're currently tracking towards, given current momentum in the business?
Bryan T. Hipsher
George, I think we talked about really being consistent in terms of our expectations since really the earnings call back in February. We had anticipated, I think, a pretty challenging macro backdrop from that perspective when we gave the range. And so as you think about the 3% to 4.5%, that kind of 1.5% spread, that was something that again had already taken into account largely what we thought the macro conditions would be. So very consistent from that perspective and look forward to continuing to execute against our plans.
Keen Fai Tong
Okay, got it. Related to that prior question, can you elaborate on the overall selling environment that you're seeing, including the state of client budgets and sales cycles as well as how the selling environment changed over the course of the quarter?
Anthony M. Jabbour
Sure, George. It's interesting. Overall, I'd say it's pretty common, pretty stable. We had talked about lengthening of sales cycle, shrinking. In Q1, we saw it shrinking a little actually and then later in the quarter, lengthening a bit, but overall, about the same. So it's one we really wouldn't highlight any of the small nuances.
And again, I feel the transformation force that we have is very different. So of all the companies out there that have been running perfectly, there's a macro force that hits them and it slows it down. And for us, we hadn't been running perfectly, right? We had an imperfect company that we're focused on making perfect. And the force that we see from our transformation, it helps us to offset a lot of the headwinds that are out there in terms of budgets and sales cycles.
But having more solutions, having structure in our contracts that helps from a growth perspective, new capabilities that can help our clients. As I shared in our prepared remarks, we had clients that came and said, "Hey, I need to cut my budget." And as they work through it with us, descoping or taking away any of the services would have hurt them more than if they didn't do it.
And so we've just got some really great mission-critical capabilities that we're really partnering well with our clients. We're servicing our clients better than we've ever serviced them, adding more value capability. And that's where I've asked our team just to stay focused on is not the macro environment, what can we do every day to help our clients be better? And it's resulting in positive growth, where I think, otherwise, it'd be more challenged.
Operator
Your next question comes from Kevin McVeigh, Credit Suisse.
Kevin Damien McVeigh
Great. Maybe taking another shot at that, for Bryan, are you seeing anything in terms of incremental demand from the infrastructure stimulus that's starting to surface in terms of maybe client activity that you'd call out?
Bryan T. Hipsher
Yes. So Kevin, I think -- well, what we're seeing is it's just a continued focus on the things that we thought it would be, right? So on the Finance & Risk side, I mean, that large European entity went into a supply chain and third-party risk product, right, seeing strong demand for Master Data Management, right, really understanding what the risk exposure is, really taking this time that sometimes when things are flying 100 miles down the highway that actually start to think about, "Okay, what's your longer-term data strategy?"
Because look, that is a critical thing as we move forward, right? A lot of these advancements in technology, a lot of these advancements in AI, et cetera, they're all great. But like if you don't have the proper data, right, in the proper proprietary data especially that feed into it, those are just kind of empty shelves. And so for us, we're definitely seeing businesses get savvy and smart in terms of wanting to have strong MDM tools, wanting to have strong analytics on both the Finance & Risk and Sales & Marketing side.
The Sales & Marketing side, Kevin, what we're seeing is that, that kind of -- I guess, they call it spray and pray, right, is not necessarily an advantageous strategy during the time period, where they have to be more focused, they have to have higher returns. So things like our audiences, our datasets upfront that feed into these online and other digital means from an advertising perspective, we're quite strong from that perspective.
And you see that in the high single-digit growth that we talked about in those solutions. So yes, I think overall, it's one of those things that we're kind of balancing, as Anthony would say, some of these macro challenges with our ongoing transformation. And that's what's leading us to continue to be able to progress and accelerate our growth in '23.
Kevin Damien McVeigh
It seems like it's coming together at the right time, for sure.
Operator
There are no further questions at this time. I would now like to turn the call over to Anthony Jabbour for closing remarks.
Anthony M. Jabbour
Thank you. As always, I'd like to thank my Dun & Bradstreet colleagues for their exceptional efforts and helping us be stronger and stronger every day. And I'd like to thank our great clients for the partnership and guidance. Thank you for your interest in Dun & Bradstreet, and have a wonderful rest of your day.
Operator
Thank you. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and ask that you please disconnect your lines.
