8-K: Cannae Holdings Announces Fourth Quarter and Full Year 2024 Financial Results

Cannae Holdings reports its Q4 and full year 2024 financial results, highlighting strategic actions to increase share price and narrow the discount to net asset value.

Summary

• Cannae Holdings released its fourth quarter and full year 2024 financial results on February 24, 2025.
• The company repurchased over $200 million of Cannae shares through a Dutch tender auction.
• A regular quarterly dividend was initiated.
• Cannae acquired a majority stake in the Watkins Company.
• $470 million was raised from portfolio company sales to fund share repurchases and new investments.
• Dun & Bradstreet reported Q4 2024 total revenue of $632 million with organic constant currency revenue growth of less than 1%.
• D&B's 2025 revenue guidance is $2.44 billion to $2.5 billion.
• Alight initiated a dividend and repurchased $12 million of shares in Q4 2024, totaling $167 million in buybacks for the year.
• Alight's Q4 2024 revenue from continuing operations was $680 million.
• Alight's 2025 revenue guidance is $2.32 billion to $2.39 billion.
• Paysafe's Q4 2024 revenue is estimated at $420 million, a 1% increase year-over-year.
• System1 reported Q3 2024 total revenue of $88.8 million.
• Cannae's Restaurant Group reported Q4 2024 total revenues of $103.4 million.
• A quarterly cash dividend of $0.12 per common share was declared, payable on March 31, 2025.
• As of February 21, 2025, Cannae had $108 million in corporate cash and short-term investments.
• Cannae holds 69 million shares of D&B common stock, representing approximately 16% of D&B's outstanding shares, valued at approximately $651 million as of February 21, 2025.
• Cannae holds 40.5 million shares of Alight Class A common stock, representing approximately 8% of Alight's outstanding shares, valued at approximately $276 million as of February 21, 2025.
• Cannae holds 2.5 million PSFE shares, or approximately 4% of Paysafe's outstanding shares, valued at approximately $47 million as of February 21, 2025.
• Cannae holds 27.0 million shares of SST, or approximately 29% of outstanding shares, valued at approximately $18 million as of February 21, 2025.
• As of February 21, 2025, Cannae has invested $214 million in Black Knight Football, representing an approximate 47% ownership interest.
• As of February 21, 2025, Cannae has invested $143 million in its Restaurant Group.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive. Cannae Holdings is actively managing its portfolio, making strategic acquisitions, and returning capital to shareholders through dividends and share repurchases. While some portfolio companies experienced mixed results, the overall outlook is optimistic.

Positives

• Cannae Holdings has taken decisive actions to increase its share price and close the discount to net asset value.
• The company successfully executed a Dutch tender auction, repurchasing over $200 million of shares.
• A regular quarterly dividend has been initiated, providing value to shareholders.
• The acquisition of a majority stake in the Watkins Company adds a company with strong growth prospects and consistent cash flow generation to the portfolio.
• Portfolio company sales generated $470 million, which was used to fund share repurchases and new investments.
• Dun & Bradstreet's revenue increased 2.9% to $2.38 Billion for the full year 2024.
• Alight initiated a quarterly dividend program and repurchased $12 million of its shares during the quarter.
• Alight's Board authorized the repurchase of an additional $200 Million of the Company's shares.
• Black Knight Football's AFC Bournemouth has had its strongest start in the Premier League in club history.
• Lorient currently sits in 1st place after 24 matches.

Negatives

• Dun & Bradstreet's Q4 2024 organic constant currency revenue growth was less than 1%.
• D&B generated $260.0 Million of Adjusted EBITDA in the fourth quarter 2024, down slightly to the fourth quarter 2023.
• Alight's Q4 2024 revenue from continuing operations was down 0.3% from the 2023 fourth quarter.
• Paysafe's Adjusted EBITDA for the fourth quarter of 2024 is estimated to be $103 million, a decrease of 16%.
• System1 reported a net loss of $31 Million for the third quarter 2024.
• The Restaurant Group reported lower revenues and adjusted EBITDA in the fourth quarter 2024 compared to the prior year.
• Cannae's Restaurant Group reported Q4 2024 total revenues of $103.4 million, down from $111.1 million in Q4 2023.

Risks

• The communication contains forward-looking statements that involve a number of risks and uncertainties.
• Changes in general economic, business and political conditions could impact results.
• Risks associated with the Investment Company Act of 1940 could affect operations.
• The potential inability to find suitable acquisition candidates poses a risk.
• Significant competition faced by operating subsidiaries could impact performance.
• Risks related to the externalization of certain management functions to an external manager exist.

Future Outlook

Cannae's management is confident in their strategy and execution, believing it will reward shareholders and narrow the share price discount to NAV. Dun & Bradstreet expects revenues to range from $2.44 Billion to $2.50 Billion in 2025. Alight expects revenue of $2.32 Billion to $2.39 Billion and Adjusted EBITDA in the range of $620 Million to $645 Million for 2025. Paysafe expects year-over-year revenue growth to be between 6.5% and 8.0% and adjusted EBITDA margin to be between 27.1% and 27.6% for 2025.

Management Comments

• I have taken decisive actions since being appointed Cannaes CEO in February 2024 focused on increasing Cannae's share price and closing the discount to net asset value (NAV), stated William P. Foley, II, Chairman and CEO.
• I am confident in our strategy and our execution, which, I believe, will reward our shareholders and narrow the share price discount to NAV, stated William P. Foley, II, Chairman and CEO.

Industry Context

Cannae Holdings operates in the financial services industry, with investments in various sectors including data and analytics (Dun & Bradstreet), human capital technology and services (Alight), payments (Paysafe), and digital marketing (System1). The company's strategy involves active management and long-term ownership of its portfolio companies to maximize value for shareholders.

Comparison to Industry Standards

• Dun & Bradstreet's organic revenue growth of 3.0% for the full year 2024 is comparable to other data and analytics companies such as Experian and Equifax, which have also reported similar growth rates in recent periods.
• Alight's Adjusted EBITDA margin of 31.9% for the fourth quarter 2024 is in line with other human capital technology and services providers such as Workday and ADP.
• Paysafe's expected revenue growth of 6.5% to 8.0% for 2025 is competitive with other payment processing companies such as PayPal and Square.
• Black Knight Football's multi-club model is similar to that of City Football Group, which owns Manchester City and other football clubs around the world.

Stakeholder Impact

• Shareholders will benefit from the share repurchase program and the initiation of a regular quarterly dividend.
• Employees of the acquired Watkins Company will become part of the Cannae Holdings ecosystem.
• Customers of Cannae's portfolio companies will continue to receive services and products from those companies.
• The performance of Cannae's portfolio companies will impact the value of Cannae's investments and its ability to generate returns for shareholders.

Next Steps

• Cannae will host a conference call on February 24, 2025, to discuss its fourth quarter and full year 2024 results.
• Paysafe expects to provide its full financial results on March 4, 2025.
• System1 is expected to announce their fourth quarter results on or about March 6, 2025.
• The Restaurant Group will continue to implement its strategy to provide value to guests and rationalize costs in 2025.

Key Dates

Keywords

Cannae Holdings, Financial Results, Share Repurchase, Dividend, Acquisition, Portfolio Companies, Dun & Bradstreet, Alight, Paysafe, System1, Black Knight Football, Restaurant Group