Aug 6, 2015
Executives
Kathleen M. Guinnessey - Treasurer and Investor Relations Officer Robert P.
Carrigan - President, Chief Executive Officer & Director Richard H. Veldran - Chief Financial Officer & Senior Vice President Joshua L.
Peirez - Chief Operating Officer
Analysts
Jeff P. Meuler - Robert W.
Baird & Co., Inc. (Broker) Peter P.
Appert - Piper Jaffray & Co (Broker) Shlomo H. Rosenbaum - Stifel, Nicolaus & Co., Inc.
William Arthur Warmington - Wells Fargo Securities LLC Andre Benjamin - Goldman Sachs & Co. James Rutherford - Stephens, Inc.
Operator
Good morning, and welcome to Dun & Bradstreet's 2015 Second Quarter Teleconference. This conference is being recorded at the request of Dun & Bradstreet.
If you have any objections, you may disconnect at this time. All participants will be in a listen-only mode until the question-and-answer session of the call.
I would now like to turn over the call to Ms. Kathy Guinnessey, Treasurer and Investor Relations Officer.
Ms. Guinnessey, you may begin.
Kathleen M. Guinnessey - Treasurer and Investor Relations Officer
Thank you. Good morning, everyone, and thanks for joining us today.
With me on the call this morning are Bob Carrigan, our President and Chief Executive Officer; Rich Veldran, our Chief Financial Officer; and Josh Peirez, our Chief Operating Officer. Here's what you can expect today.
Following my brief remarks, Bob will provide an overview of our second quarter results and an update on the post-acquisition integration of NetProspex and Credibility Corp. Then, Rich will come on to take you through the highlights of the second quarter.
And after that, we'll open the call for your questions. One housekeeping item to share.
As you know, we sold our business in Australia on June 30 and converted to a partner model. The Australia business is classified in our financials as discontinued operations and as such, the results of Australia have been removed from our company's as-adjusted results for both the current period and all prior periods.
This will be reflected in the updated financial model that will be posted on our website later today. To help our analysts and investors understand how we view the business, our remarks this morning will include forward-looking statements.
Our Form 10-K and 10-Q filings, as well as the earnings release we issued yesterday, highlight a number of important risk factors that could cause our actual results to differ from these forward-looking statements. These documents are available on the Investor Relations section of our website and we encourage you to review the material.
We undertake no obligation to update any forward-looking statements. During our call today, we will be discussing a number of non-GAAP financial measures, which we call as-adjusted results, as that's how we manage the business.
For example, when we discuss revenue growth, we'll be referring to the non-GAAP measure revenue growth as adjusted, which is revenue adjusted to eliminate the effect on revenue due to purchase accounting fair-value adjustments to deferred revenue, and before the effect of foreign exchange. When we discuss operating income, operating margin, and EPS, these will all be on a non-GAAP basis, which we call as-adjusted.
Additionally, our as-adjusted results exclude the results of discontinued operations. When we discuss free cash flow, this will be on a non-GAAP basis, excluding the impact of legacy tax matters, potential regulatory fines associated with the ongoing China investigation, and potential payments for legal and other matters.
You can find the reconciliation between these and other non-GAAP financial measures and the most directly comparable GAAP measures in the schedules to our earnings release. They can also be found in the supplemental reconciliation schedule that we post on the Investor Relations section of our website.
We do not provide guidance on a GAAP basis because we're unable to predict with reasonable certainty the future movement of foreign exchange rates or the future impact of non-core gains and charges, acquisition and divestiture related fees, and purchase accounting fair-value adjustments to deferred revenue. These items are uncertain and will depend on several factors, including industry conditions, and could be material to D&B's results computed in accordance with GAAP.
Later today, you will also find a transcript of our prepared remarks on our Investor Relations website. With that, I'll now turn the call over to Bob Carrigan.
Bob?
Robert P. Carrigan - President, Chief Executive Officer & Director
Well, thank you, Kathy, and thank you, everyone, for joining us for today's call. It's good to talk to you today about Dun & Bradstreet's second quarter and how we've been executing against our strategy for growth.
We've had quite a lot going on in the second quarter to advance our strategy. We completed the acquisition of Credibility Corp., and formed our new division, Dun & Bradstreet Emerging Businesses, to bring new capabilities to the important small- and medium-business space.
We also converted our Australia business into a partner model, issued new bonds to finance our acquisitions, made great progress integrating both Credibility Corp. and NetProspex and held an Investor Day in June.
So, like I said, it's been a busy quarter. It was great to see and hear from so many of you directly at our Investor Day event.
I had the opportunity to speak with a lot of you both before and after our presentation, during which we updated you on our strategy for growth, and my team spoke specifically about how we will grow each of our sales channels. As I mentioned then, I feel good about where Dun & Bradstreet is today, but I feel great about where we're headed.
We see an ever-growing market for our data and solutions. Our addressable market has grown 20% in just the last year to $24 billion.
Dun & Bradstreet is positioned to grow beyond trade credit and traditional sales and marketing to where the market is growing in data services, digital marketing and new commercial risk categories. As I talked about during Investor Day, we have launched a strategy to take advantage of the enormous market available to Dun & Bradstreet.
I won't go into detail on each component of our strategy today because I know many of you were at Investor Day. And for those who weren't able to come, I urge you to go to the Investor Relations section of our website at dnb.com so you can watch the presentation or read the transcript.
You'll be able to see for yourself the path we've laid out to achieve sustainable growth with expanding margins over the next few years. Today, we're here to talk about the second quarter, and last night, we announced our second quarter earnings.
Total company revenue for the quarter was up 6%, largely due to the acquisitions of NetProspex and Credibility, whose revenues were slightly above our expectations. Organic revenue was up about 1% in the quarter.
Organic revenue growth has gotten off to a slower start than we would have liked in the first half of the year and we're about a point behind our expectations. Now, let me give you some insight into our results.
We've got two things going on that are impacting our numbers. First, underlying sales growth in the Americas accelerated in the second quarter and we're moving in the right direction.
Sales are growing faster than revenue because we're selling more products where revenue is recognized over time, like our newer products, D&B Direct and Optimizer for Contacts, which we created from the acquisition of NetProspex. And you could see the evidence of our progress in the growth in our Americas deferred revenue Americas deferred revenue, excluding the impact of acquisitions, was up slightly year-over-year, which was the first time we've been in positive territory in the last eight quarters, and a significant uplift over the first quarter where Americas deferred revenue was down a little more than a point.
So while organic revenue is a little behind at this point in the year, improving deferred revenue means we will see more revenue in the future. Our revenue growth continues to come from the areas we expect to drive our strategy, alliances and large strategic customers, both of which were up in the quarter.
Furthermore, we have seen additional evidence that DNBi is stabilizing with a revenue decline of 1% for the second consecutive quarter after being down 4% for all of 2014. Second, we are experiencing some weaknesses in Europe, which we are addressing through tightening our sales execution, increasing the discipline around pipeline management and introducing new products in areas like compliance.
Now I'm pleased to say, we've already closed some large deals in the third quarter in Europe. We are exactly where we thought we would be on profit and earnings at this point in the year.
Operating income was down 10% in the second quarter, while EPS was down 11%, both as expected. As we discussed in our first quarter earnings call, we anticipated that operating income will be down 10% to 12% in the first half of the year due to the timing of investments, and also due to timing of revenue growth, which is more back-end weighted.
So, we are on track to deliver all of our guidance metrics for the year, both organic and inorganic. Now, before I turn the call over to Rich to discuss the quarter in more detail, I wanted to give you a view of how our recent acquisitions are doing.
Sales in our new Emerging Businesses division, which is a combination of Credibility Corp. and our small-business sales channel, exceeded our expectations in the quarter.
Though early days, we are pleased with the results so far, particularly given all of the activity around merging these teams. Now, as I discussed in the last earnings call, to turn around our small- and medium-business sales, we faced a decision, build or buy.
We made the strategic decision to buy, but we didn't stop there. Under the leadership of the Credibility management team, which has a proven track record of generating growth in the SMB space, we've merged the Dun & Bradstreet inside sales team with the Credibility team to form the Emerging Businesses division.
And we now have a much more robust suite of solutions for the small and medium customer segments. And it's great to have the Credibility team on board and they're excited to have joined forces under one Dun & Bradstreet brand.
We're already working together to bring new value to our customers. We're identifying opportunities to leverage the Emerging Businesses platform in different geographies and to develop new products to further drive growth.
This will allow SMB sales to move from a drag on revenue growth, as it has been in the last few years, to a driver of revenue growth into the future. We've also made great progress in integrating NetProspex into Dun & Bradstreet.
This acquisition was about making a big play in the business contact space. Now, when it comes to information about businesses, Dun & Bradstreet has long been the world heavyweight champ.
And with the acquisition of NetProspex, we're now the heavyweight champ in the professional contact data space too. This helps our customers reach not just the businesses they are targeting but the decision-makers and influencers at those businesses.
And with NetProspex, we're able to provide our customers an actionable view of companies and the people who run them, putting quality relationship insight at the center of marketing data strategy, which is increasingly important in a world where companies are trying to engage with customers in new ways, leveraging data and technology. The acquisition is an example of our focus and commitment to modernizing delivery of data and analytics to our customers.
The NetProspex Optimizer for Contacts tool is a cloud-based solution that provides an easy and cost-effective way for B2B marketers to dramatically improve their contact data health, ensure they are targeting the best-fit prospects, and optimize their demand-generation efforts. I hope some of you had an opportunity to check out the Optimizer for Contacts demo at Investor Day.
Even since Investor Day, we've been making improvements to the NetProspex products. We've mapped all of the professional contacts at NetProspex to the companies in our database, through the D-U-N-S Number, to ensure that our products are comprehensive and complementary.
We're moving fast, because we see a big need in the market as companies strive for more and cleaner contact data. Our sales teams are focused on penetrating the existing Dun & Bradstreet customer base with Optimizer for Contacts, and we had a few big wins in the second quarter with large accounts.
So, by leveraging existing Dun & Bradstreet relationships, the average order size of the product is increasing significantly, by more than 20%. We've also seen improvement in our pipeline, driven by the identified upsell and cross-sell opportunities and sales through our Emerging Businesses division.
We have found some real business synergies in the integration of NetProspex. One of the things that attracted us to NetProspex was their process for curating and validating data to ensure it's not just the most accurate data in the market, but actionable.
They did for contact data what Dun & Bradstreet has historically done for company data, and now it's all under one roof. All the contact data we source as a company, including sources that NetProspex was not previously collecting, goes through NetProspex's data refinery, so all the data that we provide is of the highest quality.
Furthermore, we are realizing the cost synergies we expected when undertaking the acquisition. We are eliminating a couple of million dollars of spend with other third-party providers of contact data, and I believe there is opportunity to find additional savings down the road.
NetProspex is a great example of forward thinking at Dun & Bradstreet. And as I discussed during Investor Day, the world of data is changing and it's changing fast.
As businesses become digitized, as marketing becomes automated, and as customers continue to demand data where they need it, when they need it, Dun & Bradstreet is filling a gap to help make sure that our customers know there is no better place to go for the data they need most. I'm pleased to say that our strategy is working.
NetProspex contributed a point to total company revenue growth in the second quarter. And we plan to keep growing that business into the future.
So, with the integration of Credibility and NetProspex and with our strategy that we discussed with you during Investor Day, you can see that we have a lot going on. We are keenly focused on executing and taking advantage of the tremendous opportunities in front of us.
And with that, I will now turn the call over to Rich Veldran, who will discuss our second quarter results in further detail. Rich?
Richard H. Veldran - Chief Financial Officer & Senior Vice President
Thanks, Bob, and good morning, everyone. For the second quarter, total company revenue was $381.6 million, up 6% with about 1% organic growth.
The Americas segment represented 81% of our revenue at $309.1 million in the quarter, and was up 8%, approximately 1% organic. Non-Americas represented 19% of total revenue, down from 25% of our reported revenue last quarter due to the sale of our Australia business.
Non-Americas revenue was $72.5 million, about flat to last year, and all organic. Let me go through each segment in more detail, beginning with the Americas.
Risk Management which makes up 58% of Americas revenue, was up 8%. Now, within Risk Management, Trade Credit was down 2%.
DNBi is 75% of Trade Credit and was down 1% during the quarter, similar to Q1. Price increases continued to be in the low-single digits and retention was in the low 90s.
As Bob mentioned, DNBi continues to stabilize and we expect its 2015 performance to be better than last year, although still down for the year. Other Enterprise Risk Management was up 53% in the second quarter, off a relatively small base.
The majority of the growth is inorganic as the Credibility Corp. Credit-on-Self revenue is in this category.
Sales and Marketing, representing 42% of Americas revenue, also increased 8% in the quarter. Traditional Prospecting, representing about a quarter of S&MS revenue, was up 3%.
This category was helped by some inorganic revenue from Credibility Corp. which offset declines in Hoover's.
Advanced Marketing Solutions, the remaining three-quarters of S&MS, was up 9%. Consistent with our results in the first quarter, about half of this growth was from NetProspex, which we acquired in early January.
The rest of the increase was due to continued strong growth in our DaaS/CRM alliances. Now, as Bob discussed, deferred revenue in the Americas was up slightly for the quarter before the effect of foreign exchange and acquisitions.
This does not reflect committed sales through alliances that would have added about 2 points to the total balance. In Non-Americas, revenue was flat for the quarter.
Revenue growth is expected to pick up in the second half of the year as we have a growing pipeline of large deals. Compliance products such as FATCA and other Know-Your-Customer solutions are resonating particularly well with European companies that want to get ahead of compliance with U.S.
regulations. We expect full-year revenue growth for Non-Americas to be in the low single digits.
Now, turning to the bottom line, operating income was down 10% in the quarter, which is where we expected to be due to the timing of both of our revenue ramp and investment spending. Our 2015 investment spending is on track and will step up slightly in the second half.
We've also gotten past the big negative comparison from the annualization of our 2014 investment that contributed to the minus 10% first half. Going forward, we expect operating income to flatten in the third quarter and grow in the fourth quarter when, as in prior years, we see most of our revenue growth.
EPS was down 11% in the second quarter, slightly more than operating income, due to increased interest expense, slightly offset by a lower tax rate. Now, earlier in the year, I said we expected our full-year 2015 tax rate to be up to 50 basis points below our 2014 rate.
That 50-basis-point improvement still applies, but with Australia out of the results, our tax rate for 2014 was 32.5%, so the improvement will be off a higher base. Turning to the balance sheet, during the second quarter, we issued new five-year senior notes to support our recent acquisitions.
The new debt issue was very well received with demand three times higher than the $300 million that we were raising. The coupon on the notes is 4%.
We also entered into a forward-starting five-year term loan with a syndicate of banks. This commitment allows us to draw down up to $400 million at any time between now and November of 2015.
We plan to use this term loan to re-finance $300 million of five-year notes that mature in November of this year. As we've said, we're committed to maintaining our investment grade credit rating, and in the near term, we plan to use free cash flow to reduce debt.
We're adding this term loan to our capital structure because it allows us to repay all or part of the loan at any time prior to maturity with no prepayment penalty. So, all in, we're on track to deliver our guidance for the year – revenue growth of 6% to 9% including about 5 points of contribution from acquisitions; operating income of flat to up 4%; EPS of minus 3% to plus 1%; and free cash flow of $255 million to $285 million.
Now, with that, we'll open up the call for questions. Operator?
Operator
Your first question comes from Jeff Meuler with R.W. Baird.
Your line is open.
Jeff P. Meuler - Robert W. Baird & Co., Inc. (Broker)
Yes. Thank you and good morning.
I guess just first on the slower start to organic growth in the first half relative to your expectations, I heard you on Europe. Any other particular factors to call out relative to why it's starting slower than you expected?
Robert P. Carrigan - President, Chief Executive Officer & Director
Well, like I said, there are really two factors. We had – our sales actually outpaced our revenue growth and that really gets to the mix issue that I discussed, where we're selling products, some of our newer products like D&B Direct and Optimizer for Contacts, where we don't earn as much revenue upfront.
They're either usage based or ratable over time. And so you saw the accelerated sales in North America, which is really a reflection of that.
That obviously puts some pressure on us on revenue in the short term but bodes well for us as we go forward. And then, yes, and then we talked about Europe.
Actually, I can be even more specific and say we had particular weakness in our Benelux market. And we've instituted some new processes including, as we said, some detailed pipeline management.
We've launched some new products, particularly in the compliance space, which is very relevant and much in demand in that market. And so we've already seen a few deals close in Q3, but definitely off to a slower start particularly in that Benelux market but we're – believe me, we're very focused on it.
Jeff P. Meuler - Robert W. Baird & Co., Inc. (Broker)
Okay. And then can you recap the factors that give you confidence in the acceleration as we get into the back half, and more importantly, the continued acceleration into 2016?
I know Q4 is seasonally strong and we have the sales, but anything else in terms of early-stage revenue that's ramping nicely or planned product releases? I didn't hear an update on the planned DNBi cloud rollout in terms of timing; anything like that?
Robert P. Carrigan - President, Chief Executive Officer & Director
Yes. So, we are still looking towards that sustainable mid-single-digit growth into next year and there's a lot that gives us confidence to that.
Yes, there's the cyclicality of our business, and the seasonality, I should say, and certainly, we see a natural stronger second half in terms of how the revenue ramps. But again that build-up of our deferred revenue, the progress we're making with alliances, and we're starting to see nice growth rates there that we see certainly sustaining, if not improving slightly, in the second half.
We're getting – these acquisitions are relatively new, and actually, the performance exceeded our expectations. Emerging Businesses did a little better than we even thought.
We only had six weeks in the quarter, but we're liking what we're seeing there and the potential to get that back on a growth path. And with DNBi, with – we're still down a point, but that's better than being down four points.
So, we're making progress there. And you mentioned the movement to the cloud.
What we're doing is leveraging the Credibility platform and technology. One of the great things in acquiring that business and bringing them in was not just the formation of Emerging Businesses, but they had a market-tested Amazon cloud-based offering upon which their business is really built.
And it's been in the market for years and has serviced hundreds of thousands of customers. And so, our plan is to launch, as we mentioned at Investor Day, to accelerate our plans in the U.S.
with DNBi. And we're targeting the end of this year to be able to bring DNBi into the U.S.
market and be able to cross-sell and upsell a lot of those Credibility customers. So, again, we're early days into Emerging Businesses.
But when I look at the different levers of our business, I'm feeling very confident about that mid-single-digit organic growth next year.
Jeff P. Meuler - Robert W. Baird & Co., Inc. (Broker)
Okay. Thank you, Bob.
Operator
Your next question comes from Peter Appert with Piper Jaffray. Your line is open.
Peter P. Appert - Piper Jaffray & Co (Broker)
Thanks. Good morning.
So, Bob...
Robert P. Carrigan - President, Chief Executive Officer & Director
Good morning.
Peter P. Appert - Piper Jaffray & Co (Broker)
You mentioned the partnership channel. Can you expand a little more on what you're seeing and any momentum in terms of new partner additions?
Joshua L. Peirez - Chief Operating Officer
Hey, Peter, it's Josh. So if you look at the growth rates that you're seeing, particularly in the Americas, most of our growth is still coming from Salesforce, but we are seeing some growth in the second quarter from other partnerships as well.
And as we discussed at Investor Day, we do see this as a portfolio play, and we have put in place, between the latter part of last year and the first half of this year, a great stable of blue-chip portfolio partners where we do see the growth from the future also coming from. And we should emphasize that in the case of Salesforce, it took us about three years to ramp it to something that would show up materially in the results.
We expect to be able to do that much faster now based on the learnings we've had from how to accelerate the growth from the Salesforce partnership. So, we expect that to start showing up late into this year and early next year.
And we have had a very accelerated pace of adding new partnerships which we expect to continue to do. So, we are seeing a little bit of the results today from that.
Salesforce is still driving the majority of the growth you're seeing there. But the rates for the first half are certainly something that are what we expected, and we expect that growth rate to accelerate through the year.
Peter P. Appert - Piper Jaffray & Co (Broker)
And I know that the dollar amounts are relatively small in the context of the total company, but I assume the profitability of the partnership channel is higher than traditional sales. So, the question is, number one, is that correct?
And number two, is it sufficient to drive some implications for overall margins in 2015 – or not so much 2015, in 2016 and beyond?
Richard H. Veldran - Chief Financial Officer & Senior Vice President
Hi, Peter. This is Rich.
Yeah, so generally, the newer alliances that we're structuring are for sure structured to be more profitable. I mean, as we think about margin expansion opportunities in the future, that is part of the calculus of how we thought about it.
Peter P. Appert - Piper Jaffray & Co (Broker)
Okay. And then lastly, in terms of – you already mentioned this to some extent, but in terms of the integration of DBCC, is the heavy lifting done, a lot more to go?
And I'm particularly interested in sales integration.
Joshua L. Peirez - Chief Operating Officer
Sure, Peter. It's Josh.
So, the heavy lifting in terms of organizational movements and getting the teams together is done, but we still have great opportunities to actually integrate to accelerate the revenue synergies that we think the channel can provide us, as well as to leverage some of the technology to launch new products across the channels. So we have just started, for example, being able to cross-sell and upsell among the couple teams that we put together there.
So you're not seeing that benefit in the results yet. That's an opportunity for us going forward.
We have not yet put all of our inside sales team members onto the sales technology that we acquired with the Emerging Businesses team now. So that should be happening this quarter.
And so we see great opportunities for the synergies to take hold and provide even better results. But the heavy lifting in terms of organizationally getting everyone on the same page and working together, that is largely done.
Peter P. Appert - Piper Jaffray & Co (Broker)
Got it. And, actually, one last thing.
The – just in terms of the competitive dynamic in the credit business, I mean, you've been struggling for a while obviously to get back to positive revenue growth. The macro environment I understand.
How significant do you view the competitive issues as an impediment to faster revenue growth?
Robert P. Carrigan - President, Chief Executive Officer & Director
Hey, it's Bob. Look, we're very aware of the competition.
It's really sharpening our focus on execution. That said, with respect to the traditional credit risk market, we're not really seeing a material change in the competitive landscape.
You can see in our results that we stabilized, or somewhat stabilized, the DNBi performance and feel pretty good about that. And again, we expect that the performance to continue to improve with the Emerging Business division.
We now have a lot of the key pieces in place. And as Josh was just talking about, we're excited about that.
And of course, rolling out DNBi in the cloud and accelerating that rollout in the U.S. will also help us.
Peter P. Appert - Piper Jaffray & Co (Broker)
Got it. Great.
Thanks, Bob.
Robert P. Carrigan - President, Chief Executive Officer & Director
Sure.
Operator
Your next question comes from Shlomo Rosenbaum with Stifel, Nicolaus. Your line is open.
Shlomo H. Rosenbaum - Stifel, Nicolaus & Co., Inc.
Hi. Good morning.
Thank you for taking my questions this morning.
Robert P. Carrigan - President, Chief Executive Officer & Director
Hi, Shlomo.
Shlomo H. Rosenbaum - Stifel, Nicolaus & Co., Inc.
Hey. The improvement in DNBi is in the right direction.
Do you have an idea of the sustainability of keeping it at this level and kind of the efforts to move it forward and maybe even get it to break even or grow a little bit?
Joshua L. Peirez - Chief Operating Officer
Hey Shlomo, it's Josh. So, look, we feel good about the first-half performance of minus 1% in each of the first two quarters, given the relative comparison to the minus 4% that we experienced last year.
It's also a ratable product. So, based on the sales we've had, we feel confident that we should be able to sustain performance better than what we had last year, though we'll still be slightly down for the year.
But we do expect better performance over time. We did put in place some enhancements to the product, which we think are helping, some selling techniques that we think are helping today, and we'll continue to do that as we get to the rollout of DNBi in the cloud.
Now also, we've just started having our Emerging Businesses division sell DNBi to the existing base that we acquired with the Credibility acquisition. So again, it's ratable, so you'll see those sales improvements show up over time on the revenue line.
And we also expect the cloud version, which, as we've said, we've targeted the end of this year, could be early into the first quarter, but we expect that to help us next year to even accelerate that sales growth more.
Shlomo H. Rosenbaum - Stifel, Nicolaus & Co., Inc.
So, would you be surprised if instead of negative 1%, we saw a negative 2% or negative 3% in the second half of the year?
Joshua L. Peirez - Chief Operating Officer
I'd be very surprised at negative 3%, Shlomo. I think the minus 1% to minus 2% is probably a good estimate.
Certainly, the minus 1% is in our scopes.
Shlomo H. Rosenbaum - Stifel, Nicolaus & Co., Inc.
Okay. And Hoovers, is there any early indications that the Credibility platform and unit prospects is kind of slowing down the decline in Hoovers?
Or what kind of comments you already have on that?
Joshua L. Peirez - Chief Operating Officer
So, Shlomo, first on Hoovers, we actually have had some enhancements to the product that Jeff and his team have already put in place, like a concierge service, which hasn't existed before and some basic usability enhancements that we expect to continue to roll out through the year. We do expect some continued improvement.
It has improved versus the first quarter and is down a lot less than it was in the first quarter. So, those are good signs.
We also think that tightening up the quality of the data from putting in our prospects data into the product will help. But this is a product where we really do expect to see the major trajectory shifts occur next year.
Robert P. Carrigan - President, Chief Executive Officer & Director
The only thing I'll add is it's also a ratable product, so as we get those improvements, you'll see that flow in over time.
Robert P. Carrigan - President, Chief Executive Officer & Director
Yeah. And if you can – the strategy for Emerging Businesses Division is to be able to offer a more integrated suite of applications to the customers.
So, everything from credit-on-self to credit-on-others products to helping them to find the right prospects and grow their businesses. So, over time, we'll move Hoover's to the – we'll get better and better about integrating that and moving that to the platform that Credibility has been so successful with, layering in new value-added services like the concierge service that Josh mentioned, which they have done in the Credibility space for all those reasons.
And then just the way that they are very focused on selling to SMB customers, that makes us feel pretty optimistic about Hoover's.
Shlomo H. Rosenbaum - Stifel, Nicolaus & Co., Inc.
Yeah. And then, Bob, I want to just go back to what you talked about initially in terms of the sales versus the revenue.
I mean, one aspect of – the reason why organic growth was a little bit slower than you expected in the quarter of that in Europe, the sales versus revenue is a mix issue. I understand the part where sales is doing better, but what part of the type of sales where you would have expected upfront revenue?
What part of that is doing worse than expected?
Richard H. Veldran - Chief Financial Officer & Senior Vice President
Yeah. Let me – this is Rich, Shlomo.
Let me give you an example to kind of put it into perspective. In this quarter, sales of D&B Direct were pretty strong, which is more of a usage-based product.
On the other hand, Optimizer was only up 1%. And last year, Optimizer was up 18% in the second quarter.
That's our, as you know, our main up front product. That can be lumpy.
So, some strong quarters are strong, some quarters are less strong. In this particular quarter, less Optimizer, a little bit more of the usage-type products like Direct.
Kathleen M. Guinnessey - Treasurer and Investor Relations Officer
Shlomo, it's Kath. I would just add, it's not a zero sum game.
The underlying sales were actually up. So the gains that we got weren't offsetting necessarily a decline.
Shlomo H. Rosenbaum - Stifel, Nicolaus & Co., Inc.
Okay. And then a comment on alliances, where you had growth of 28%.
I think, first half of the year is like 12% to 13%. Is this based on all the efforts in the partnerships and everything you put in?
Should we think about this as a double-digit grower in aggregate for the year? I know there's changes between quarters, but is that the way we should be thinking about this, now that you put a lot of those alliances into place?
Joshua L. Peirez - Chief Operating Officer
Yes, Shlomo, you should be thinking about it as a double-digit grower, and the 12% to 13% is probably a little lower than what you should think of for the year.
Shlomo H. Rosenbaum - Stifel, Nicolaus & Co., Inc.
Okay. Great.
And this is the last one I'm going to sneak in here. Did the original guidance of the growth rates contemplate selling Australia/New Zealand?
Robert P. Carrigan - President, Chief Executive Officer & Director
Yes, so we, although we always consider it in portfolio, it wasn't explicitly in there. The interesting thing, though, Shlomo, is our actual plan for Australia was it for to grow on the top line about 6% this year, and the bottom line to grow 4%.
So it actually hurts us, from a standpoint of having pulled it out. That said, we're easily able to cover that within the guidance range that we gave.
Shlomo H. Rosenbaum - Stifel, Nicolaus & Co., Inc.
All right. Thank you.
Operator
Your next question comes from Bill Warmington with Wells Fargo. Your line is open.
William Arthur Warmington - Wells Fargo Securities LLC
Good morning, everyone.
Robert P. Carrigan - President, Chief Executive Officer & Director
Hey, Bill.
William Arthur Warmington - Wells Fargo Securities LLC
So one of the things I was hoping to get, just a housekeeping item was to ask, what would the rough revenue and EPS for Q2 have been, if Australia and New Zealand had still been reported?
Richard H. Veldran - Chief Financial Officer & Senior Vice President
Yes. Okay.
This is Rich. So, the revenue growth would have been the same actually.
We had about 2% growth is what we saw, so would have still rounded to about the same. It was about $22 million of revenue in the quarter.
William Arthur Warmington - Wells Fargo Securities LLC
Okay.
Richard H. Veldran - Chief Financial Officer & Senior Vice President
From an Op income standpoint, in the quarter we only had about $1 million of actual income in that quarter, so the $10 million would have gone to a minus $12 million. For the year, it had the opposite impact; it actually would have hurt us.
But in the quarter, it actually would have helped.
William Arthur Warmington - Wells Fargo Securities LLC
So, okay. So, because just kind of going off of some of the historical results, it looked like it was running around $20 million to $23 million in revenue, and about a $0.04 to $0.06 loss.
Am I thinking about that the right way, so that if you...?
Richard H. Veldran - Chief Financial Officer & Senior Vice President
Yeah. It ended up being just about $0.01 in the quarter, so from an EPS standpoint, it wasn't material.
If you go to the historical, say, last year for the full year, it was about $97 million of revenue and about $10 million of op income. But it does bounce around a little bit quarter-to-quarter.
William Arthur Warmington - Wells Fargo Securities LLC
Got it. Okay.
Richard H. Veldran - Chief Financial Officer & Senior Vice President
So, really, the bottom line, I'd say it's immaterial to all rates in the quarter and certainly for the year as well.
William Arthur Warmington - Wells Fargo Securities LLC
Okay. And then the – I wanted to ask in terms of Europe, whether you're seeing some pickup in demand?
People will sometimes talk about your business on the credit side as being counter cyclical, meaning that as you head into a crisis, you see difficulties, use the business more. Want to see if maybe you're seeing some pickup in the European business from that?
Robert P. Carrigan - President, Chief Executive Officer & Director
Well, we're seeing some – I'll just speak generally. Outside of – I don't want to attribute anything to any of the economic conditions.
I'll just say there are pockets of real opportunity there that we're seeing, particularly as we mentioned earlier in the compliance area, a number of European companies we're seeing is they want to get ahead of the compliance regulations in the U.S. And as we've mentioned before, within risk management that's one of the use cases where we've seen some growth and we've had some new solutions.
And we're seeing a nice – we're seeing a lot of interest in those products in Europe.
William Arthur Warmington - Wells Fargo Securities LLC
Okay. And then on the sales side, you've been – you talked about how you were building out the global account teams and hiring a number of global business directors.
How is that process going? Is everybody now feet on the ground and starting to contribute or how much longer do you think that that will take to get to that point?
Robert P. Carrigan - President, Chief Executive Officer & Director
Yeah. So as we talked about at Investor Day, this is a key part of our strategy.
And given the global data footprint that we have, we feel that we're uniquely positioned to serve multinational companies. And we've designated about 40 of our largest accounts for this program, roughly about a $200 million book of business.
And the pipeline is growing, we're starting to get some real traction. The sales cycle is a bit longer on these much larger accounts, and we're getting all of our global business directors, the sales folks in the role, and getting them up to speed.
So it's a bit of a process. But we're very much engaged in it, and making some really good progress, and see this as a key to our strategy going forward.
William Arthur Warmington - Wells Fargo Securities LLC
Okay. Thank you very much.
Robert P. Carrigan - President, Chief Executive Officer & Director
Sure.
Operator
Your next question comes from Andrew Steinerman with JPMorgan. Your line is open.
Andrew Steinerman, your line is open. Your next question comes from Manav Patnaik with Barclays Capital.
Your line is open.
Unknown Speaker
Hi, this is actually Greg (38:48) calling on for Manav. I just wanted to confirm the contribution from Credibility Corp.
I think it was about a 4% contribution for the quarter. And then I think you had talked about how you hadn't layered on the cross-sell or upsell opportunities there.
So do you think there is some upside to that 4% contribution that you've talked about for the year?
Richard H. Veldran - Chief Financial Officer & Senior Vice President
Yes, so the 4% is about right. Yes, so we do expect the combination of moving some of their product into the rest of the sales force and vice versa well will obviously help the overall business going forward.
So that is correct.
Unknown Speaker
Okay. And then on...
Richard H. Veldran - Chief Financial Officer & Senior Vice President
But the one thing I will add, though, as we go forward, it is going to become increasingly hard to try to separate organic from inorganic. As you will recall, we took our existing small business sales force, combined it into the Credibility sales force.
So going forward, it's going to be very difficult for us to break those kind of things out. So we'll end up reporting generally speaking on a total basis, and we'll do our best to give you some indication of what organic could look like within that.
Unknown Speaker
Fair enough. On the partnership side, I think you've talked about driving new partnerships and bringing those partnerships on more quickly.
I know we've talked about Salesforce a lot in the past, and maybe this is a bit simplistic, but if we were to focus on one or two of the other partnerships that you think could really start to drive growth going forward, which are the one to two that you're most excited about?
Robert P. Carrigan - President, Chief Executive Officer & Director
Well, look, it is a portfolio, and what I'm excited about, and this is Bob, what I'm excited about is that we've introduced some new alliance relationships in different use case areas. So we introduced our first ERP and the cloud deal with NetSuite.
We introduced an alliance in the cap market space with 1010. We're pursuing the whole digital marketing arena with Adobe.
So I don't want to make a call as to which one will be better than the other. But I could tell you, we're working with leading providers, some of the most innovative companies in those spaces, and these are great places to leverage our content in new ways.
And certainly, we've learned a lot from past alliances, and as we do more and more of these we hope to get better and better. And so, that's why we're pretty optimistic about where we're going with this, and we're going after – we'll continue to go after high growth partners in segments where we think we can add tremendous value to the end customer.
Unknown Speaker
Okay. And then – and just one quick modeling one from me.
When you talk about the negative 3% to 1% EPS growth in 2015, now that we have Australia out of there, what is the adjusted EPS number for 2014 that would be for that comparable?
Richard H. Veldran - Chief Financial Officer & Senior Vice President
Okay. Let's see.
So, for the – I'm going to go to the full year, right, it would be $7.18. But what we can do.
So, it was actually basically the same.
Unknown Speaker
Okay. Thank you.
Richard H. Veldran - Chief Financial Officer & Senior Vice President
What we can do is we'll walk you through all the Australia stuff later.
Unknown Speaker
All right. Sounds good.
Thanks.
Operator
Your next question comes from Andre Benjamin with Goldman Sachs. Your line is open.
Andre Benjamin - Goldman Sachs & Co.
Thank you. Good morning.
Robert P. Carrigan - President, Chief Executive Officer & Director
Hey, Andre.
Andre Benjamin - Goldman Sachs & Co.
My first question, I know at the Analyst day you discussed efforts to better incentivize the Salesforce to prioritize the new sales and upsell. I was just wondering if you can provide any update on how the selling strategy is evolving?
I know you partly touched on that with your answer about the global accounts focus, but anything else regarding Salesforce?
Robert P. Carrigan - President, Chief Executive Officer & Director
Well, look, in general, we're very focused on upping our execution with the Salesforce. You know that's a critical focus for us.
We're happy to see some accelerated sales momentum, at least in North America. We do have pockets of challenges, like we mentioned in our Benelux area.
Just generally speaking though, as we look at incentives and compensation, we've – to be consistent with our desire to attract more new business, we've created plans that give much more incentive and higher hurdles around accomplishing more new business sales. That's very much in the market right now.
And for our sales folks to be able to hit their goals, they need to bring in more new business. So we've raised the bar there.
That's all part of upping our game, and increasing the performance of our direct sales execution.
Andre Benjamin - Goldman Sachs & Co.
And in terms of the alliances, I know you're probably working on a number of them. You've emphasized a portfolio approach.
On the back of the KPMG alliance, which was the first outside of the sales and marketing channel, are there any other areas that you can talk of that make sense for us to be thinking about, big picture, where you think that your data can add value that may not be on our – at the forefront of our minds today?
Joshua L. Peirez - Chief Operating Officer
Hey, Andre, it's Josh. Just to emphasize in connection with KPMG, that's our first partnership in the compliance space.
We do actually envision other partnerships in the alliance space as well. And then, we have partnerships in the audience solutions space.
You could think of it as ad tech, which we've recently launched with BlueKai and Adobe. So while those are in sales and marketing, it's in a space where we haven't had partnerships traditionally.
And then, I would also emphasize that we've launched in the capital markets space. So again, not really what you would think of as our traditional risk or sales and marketing space.
So a space to help people to actually figure out how to price bonds and equities, based on data that we're seeing that would be for public companies who would be disclosing cash flow, for example, and would cover private companies that you wouldn't actually have that visibility into. So you're seeing us really enter into spaces like this.
Again, in our reporting they will show up as either sales and marketing or risk, simply because that's how we bucket our reporting, but these are all new spaces for us. And when we talk about the portfolio play, it's both a portfolio of blue chip companies, but also a portfolio of opportunity areas, where we think the growth outpaces our current growth rates.
So that there is actually growth in the segments like compliance, like capital markets, like the ad tech space, with the companies who are the number one, two, three players in that space and growing rapidly.
Andre Benjamin - Goldman Sachs & Co.
But is there anything that you would call out on the floor that you're not currently doing, where you see an opportunity?
Robert P. Carrigan - President, Chief Executive Officer & Director
Well, this is Bob, Andre. So Josh mentioned the ad tech arena.
That's a – I just saw a report by the IAB and PwC that showed that about half of all display advertising is moving to programmatic, and that is a market that is going from B2C to B2B pretty rapidly. So a lot of B2B marketers are looking to find ways to leverage data, to find and target the right buyers on the web.
And so, we're leveraging our data now, and surfacing it for the ad tech ecosystem, being available on some of the most popular data management platforms like BlueKai. We've got some relationships with some of the larger trading desks, and so that our – again, our data can be used to target.
And with the NetProspex data, we're bringing in – so we have so many more contacts and names, and we associate them with the D-U-N-S number, and use that data to be able to target. That's very different from how a lot of companies use data, where it's largely web behavioral or intent data.
We have very deterministic, foundational data from our database. And that's a whole – that's just an example of a sales and marketing use case where we hadn't played before.
It's an area with some natural wind to our back. We've already gotten some early sales from this and we see this as an area that we've just jumped into.
But it's an area that, again big market with lots of momentum, just again another example of how to leverage data across in a use case, and we're excited about that one.
Andre Benjamin - Goldman Sachs & Co.
Thank you.
Operator
Your next question comes from Brett Huff with Stephens, Inc. Your line is open.
James Rutherford - Stephens, Inc.
Yeah. Thanks for taking the question.
This is James Rutherford, in for Brett. Just a couple of quick ones.
One is on international, you talked about this a little bit already. On the trade credit piece specifically, it's not the compliance piece, just give me more color specifically on what drove that 4% constant currency decline in the international trade credit?
And then to clarify, did you expect the entire international to return to kind of low single-digit growth in the second half?
Richard H. Veldran - Chief Financial Officer & Senior Vice President
Yeah. I can take that.
So this is Rich. If you disaggregate it, what you'll see is DNBi outside the U.S.
actually was up a nice 10%. We did have some legacy older trade credit business declines that did hurt us in the quarter.
I'm expecting over time though, as DNBi takes bigger hold and certainly as we bring the cloud application to bear outside the U.S., that you'll start to see trade credit pick up as well.
James Rutherford - Stephens, Inc.
Okay. The other question I have is on the Emerging Businesses.
You said it did better than expectations. It sounds like that was mostly on the Credibility, the credit-on-self side, and then some in Hoovers, but probably still early stages in the SMB DNBi piece and the reacceleration there.
Is that a fair way to kind of characterize that in terms of the strength being mostly in the credit-on-self piece?
Robert P. Carrigan - President, Chief Executive Officer & Director
Look, there's two things. First of all, it was only six weeks, so it was early.
James Rutherford - Stephens, Inc.
Sure.
Robert P. Carrigan - President, Chief Executive Officer & Director
So we – actually beyond just the Credibility business that came in, we saw our small business group perform much better in this quarter than they had. Then just for perspective, that business was down about 5% in the first quarter, and was down 2% this quarter.
So we're seeing that move in the right direction. Again, I'll emphasize that, as we've now combined, it's going to be hard to disaggregate the two pieces.
But for this first six week period, it was real easy to do so.
James Rutherford - Stephens, Inc.
Okay. Thanks so much.
Operator
Your final question comes from Shlomo Rosenbaum from Stifel, Nicolaus. Your line is open.
Robert P. Carrigan - President, Chief Executive Officer & Director
Hi, Shlomo.
Shlomo H. Rosenbaum - Stifel, Nicolaus & Co., Inc.
Hi, thank you for letting me back in. What's the baseline for operating income excluding Australia?
Because we're all going to be building models, looking at what the baseline is. And we just want to get, the same questions you had for EPS, if we could get that for Australia for revenue and all that?
Robert P. Carrigan - President, Chief Executive Officer & Director
Yeah. What we'll do is we can actually walk you guys through it because we've got – we're putting the model out there so we can actually walk you guys through every piece of it.
So, it's probably just best to – we'll put the model up and just walk you guys through it.
Kathleen M. Guinnessey - Treasurer and Investor Relations Officer
Yeah. And what we'll do is we can actually walk you guys through it, because we're putting the model out there.
We can actually walk you guys through every piece of it. So it's probably just best to – we'll put the model up, and just walk you guys through it.
Kathleen M. Guinnessey - Treasurer and Investor Relations Officer
Yes, Shlomo, that five year model we have on the website, will be posted this afternoon. So it's going to have all the history going back.
Robert P. Carrigan - President, Chief Executive Officer & Director
And we'll do it by quarter, so it'll be...
Kathleen M. Guinnessey - Treasurer and Investor Relations Officer
By quarter for a couple of years.
Shlomo H. Rosenbaum - Stifel, Nicolaus & Co., Inc.
Okay. And just as I look through the tables in the press release, the last table in the press release shows Australia with negative $0.5 million operating income.
But when you have the discontinued operations in the P&L, looks like it's contributing $700,000. So what's going on there?
How do I understand what's going on?
Robert P. Carrigan - President, Chief Executive Officer & Director
It was some tax held.
Kathleen M. Guinnessey - Treasurer and Investor Relations Officer
Tax held.
Richard H. Veldran - Chief Financial Officer & Senior Vice President
Yeah. There was some tax held.
We have some tax structures from Australia that helped as well. So, that was the other piece of and we can walk you through as well.
Shlomo H. Rosenbaum - Stifel, Nicolaus & Co., Inc.
What I am trying to understand, is that a – did you sell a money losing business or a money making business?
Richard H. Veldran - Chief Financial Officer & Senior Vice President
No. No.
It made $0.5 million. So, those negatives are subtractions.
So, before we discontinued, it was $80.7 million. We actually made $0.5 million.
So, it's positive.
Shlomo H. Rosenbaum - Stifel, Nicolaus & Co., Inc.
I see.
Richard H. Veldran - Chief Financial Officer & Senior Vice President
And the region that's the – yeah. It's a funny display, but that's a subtraction from before we divested, right?
So, by divesting it, you lose $0.5 million.
Shlomo H. Rosenbaum - Stifel, Nicolaus & Co., Inc.
Got it, no, I get that. And then just one last thing, just in terms of thinking about how we should be layering in the acquisitions, can you give us a little bit more specificity for the last two quarters of the year, in terms of how we should think about both NetProspex and DBCC?
Kathleen M. Guinnessey - Treasurer and Investor Relations Officer
Yes, Shlomo, what we said in the beginning of the year, and they're probably pretty well spread, spread evenly, we said that we expected NetProspex to contribute about 1 point of revenue for the full year, and that Credibility would contribute about 4 points. So overall, about 5 points for the full year.
It's a full year of NetProspex in that 1 point, and it's 7.5 months of Credibility.
Shlomo H. Rosenbaum - Stifel, Nicolaus & Co., Inc.
And just to assume, it's ratable?
Kathleen M. Guinnessey - Treasurer and Investor Relations Officer
I'm just saying, assume that...
Shlomo H. Rosenbaum - Stifel, Nicolaus & Co., Inc.
Yeah. It's mostly ratable.
Kathleen M. Guinnessey - Treasurer and Investor Relations Officer
...you can spread it pretty evenly across the year, yes.
Shlomo H. Rosenbaum - Stifel, Nicolaus & Co., Inc.
Okay. Thank you so much.
Kathleen M. Guinnessey - Treasurer and Investor Relations Officer
No problem.
Operator
There are no further questions at this time. I turn the call back over to the presenters.
Kathleen M. Guinnessey - Treasurer and Investor Relations Officer
Okay. Great.
Well, thank you very much for your interest...
Robert P. Carrigan - President, Chief Executive Officer & Director
Thank you, guys.
Kathleen M. Guinnessey - Treasurer and Investor Relations Officer
...and we'll talk to you next quarter. Bye.
Operator
This concludes today's conference call. You may now disconnect.