Cannae : Second Quarter 2024 Letter to Shareholders (2024)

CANNAE HOLDINGS, INC. / SECOND QUARTER 2024 UPDATE

Forward-Looking Statements and Risk Factors

This communication contains forward-looking statements that involve a number of risks and uncertainties. Statements that are not historical facts, including statements regarding our expectations, hopes, intentions, or strategies regarding the future are forward-looking statements. Forward-looking statements are based on management's beliefs, as well as assumptions made by, and information currently available to, management. Because such statements are based on expectations as to future financial and operating results and are not statements of fact, actual results may differ materially from those projected. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. The risks and uncertainties which forward-looking statements are subject to include, but are not limited to: changes in general economic, business and political conditions, including changes in the financial markets and changes in macroeconomic conditions resulting from the outbreak of a pandemic or escalation of the current conflicts in Ukraine and the Middle East; risks associated with the Investment Company Act of 1940; our potential inability to find suitable acquisition candidates, acquisitions in lines of business that will not necessarily be limited to our traditional areas of focus, or difficulties in integrating acquisitions; significant competition that our operating subsidiaries face; risks related to the externalization of certain of our management functions to an external manager; and other risks.

This communication should be read in conjunction with the risks detailed in the "Statement Regarding Forward-Looking Information," "Risk Factors" and other sections of Cannae's Form 10-Q,10-K and other filings with the Securities and Exchange Commission (the "SEC").

CANNAE HOLDINGS, INC. / SECOND QUARTER 2024 UPDATE

Fellow Shareholders,

Following our decisive steps earlier in the year to simplify our management structure, partner with JANA and return additional capital to shareholders through a dividend, our focus has been on increasing the value of our portfolio of businesses and sourcing new investments. We are hard at work on both, and the following are select highlights from across our portfolio:

Capital Returned to Shareholders

• On June 28, 2024, Cannae paid an initial quarterly cash dividend of $0.12 per common share
• On July 30, 2024, our Board of Directors declared a quarterly cash dividend of $0.12 per common share, payable on September 30, 2024, to shareholders of record on September 16, 2024
• During the second quarter of 2024, we completed our previously announced tender offer and repurchased 9.7 Million shares of common stock for $222 Million, or $22.95 per share, while also repurchasing 0.3 Million shares through our share buyback authorization at $18.80 per share
• In the aggregate, we repurchased nearly 14% of our outstanding stock at the start of the 2024 second quarter, and were acquired at a deep discount to NAV
• Since March 31, 2021, Cannae has repurchased $739 Million, or ~35%, of its common stock
• Approximately 12 Million shares remain on our buyback authorization

Dun & Bradstreet

• On August 5, 2024, D&B issued a statement noting that it has received inbound interest from third parties and retained Bank of America to assist with those inquiries
• Reported second quarter 2024 total revenue of $576 Million with organic constant currency revenue growth of 4.3% over the second quarter 2023
• Adjusted EBITDA growth continued to exhibit strength, growing 5.8% to $218 Million in the second quarter of 2024, up from $206 Million in the prior year second quarter
• The company repurchased approximately 961,000 shares of D&B stock, nearly 10% of their 10 Million share authorization, while maintaining their net leverage ratio at 3.7 times

Alight

• Announced CEO succession plan. Dave Guilmette, an independent Director, appointed Vice Chair of the Board to ensure a smooth transition
• Closed on the sale of its Professional Services segment and its Payroll & HCM Outsourcing businesses for up to $1.2 Billion, subject to certain adjustments
• Used $740 Million of the proceeds to reduce debt, reducing leverage to 2.8 times
• Repurchased $80 Million of Alight shares and commenced a $75 Million accelerated share repurchase plan
• Second quarter 2024 revenue from continuing operations was $538 Million, down 4% from 2023
• Adjusted EBITDA from continuing operations was $105 Million in Q2 2024, compared to $119 Million in Q2 2023, down 12%
• The company has 97% of 2024 revenue under contract

Dayforce

• Continued its impressive growth story in the second quarter of 2024, again reporting double digit increases across all revenue metrics, adjusted EBITDA and cash flow from operations
• Announced $500 Million share repurchase program
• Raised full year 2024 guidance for revenue and adjusted EBITDA
• Since the end of the first quarter, Cannae has sold 1 Million DAY shares for combined proceeds of $57 Million, marking $2.43 Billion in gross proceeds from dispositions since DAY's IPO in 2018

CANNAE HOLDINGS, INC. / SECOND QUARTER 2024 UPDATE

Paysafe

• First quarter 2024 payment volume and total revenue both increased 8% while Adjusted EBITDA increased 4% year-over-year
• Management reaffirmed its 2024 revenue and adjusted EBITDA guidance forecasting revenue growth of 5.5% to 7.0% and Adjusted EBITDA margins of 28.0% to 28.5%
• Paysafe will report its second quarter results on Tuesday, August 13, 2024, before market open

System1

• Continued to reduce leverage, repaying $155 Million of debt since November 2023
• Reported first quarter 2024 total revenue of $85 Million, ahead of consensus analyst estimates
• Adjusted EBITDA was $0.4 Million for the first quarter 2024, exceeding the top end of the company's guidance
• System1 will report its second quarter results on Thursday, August 8, 2024, after market close

Black Knight Football

• AFC Bournemouth completed the Premier League season in 12th place (out of 20 teams). The club's 48 points is the most the Cherries have ever earned in the Premier League
• Driven by the Cherries success on the pitch, revenues increased 19% over the prior year to $203 Million in the year ended June 30, 2024
• The club resigned several key players and acquired several young and promising players, including Dean Huijsen from Juventus

Other

• In the second quarter 2024, Cannae made its first investment with Jana Partners, which announced an investment stake and engagement campaign around Rapid7 (Nasdaq: RPD), a cybersecurity company specializing in vulnerability management
• In light of negative operational cash flows, uncertainty in forecasts and a challenged liquidity position, Cannae impaired the value of its investment in Sightline Payments by $141 Million
• Minden Mill Distillery expects to launch rye, whiskey and single malt brands in the third quarter 2024, following the successful release of High Ground Vodka in the second quarter of 2024.
• Computer Services, Inc. announced a partnership with TruStage Compliance Solutions, a regulatory technology company whose warranted documents and compliance technology are used by more than 5,000 financial institutions nationwide
• Restaurant Group reported Adjusted EBITDA of $5.4 Million in the second quarter of 2024, more than double the $2.5 Million achieved in the second quarter of 2023
• As of August 7, 2024, Cannae had $30 Million in corporate cash and short-term investments and $150 Million of margin loan undrawn capacity, offset by $60 Million in outstanding revolver debt

Sincerely,

WILLIAM P. FOLEY, II

Chairman

CANNAE HOLDINGS, INC. / SECOND QUARTER 2024 UPDATE

Select Portfolio Updates

Dun and Bradstreet Holdings, Inc.

(NYSE: DNB)

Dun & Bradstreet, a leading global provider of business decisioning data and analytics, enables companies around the world to improve their business performance. Dun & Bradstreet's Data Cloud fuels solutions and delivers insights that empower customers to accelerate revenue, lower cost, mitigate risk, and transform their businesses. Since 1841, companies of every size have relied on Dun & Bradstreet to help them manage risk and reveal opportunity. For more information on Dun & Bradstreet, please visit www.dnb.com.

On August 5, 2024, D&B issued a statement noting that it has received inbound interest from third parties and has retained Bank of America to assist with those inquiries.

Last week, D&B reported results for the second quarter ended June 30, 2024, with total revenues of $576 Million in the current year quarter. Revenues before the effect of foreign exchange grew 4.2% in the quarter to $577 Million, and revenues on an organic constant currency basis grew 4.3% versus the prior year quarter. Second quarter growth was consistent with the first quarter and accelerated 40 basis points as compared to the second quarter of 2023. This was the fourth quarter in a row that D&B delivered mid-single digit organic revenue growth.

Adjusted EBITDA margin in the second quarter expanded 60 basis points to 37.8%, and adjusted net earnings increased 4.2% with $0.23 of adjusted EPS.

D&B continues to see strong demand for its master data management, third party and supply chain risk management and finance solutions both domestically and internationally. With 90% of the portfolio growing approximately 6% in the quarter and year to date, the company continues to see strong demand for their third-party supply chain risk and Master Data Management solutions. The remaining 10% comprised of credibility and digital marketing solutions has been impacted by a variety of factors including broader macro conditions. The team has work underway to improve the performance of their digital marketing solutions business and is looking towards the latter part of the year to see the impact of those efforts.

Retention rates remain at 96% and the Vitality Index climbed to a high of 36% as D&B continues to retain customers at an industry leading rate while also upselling their most modern offering to clients and prospects both domestically and internationally.

D&B continues to focus their capital allocation on accelerating organic growth, deleveraging the balance sheet, maintaining their dividend, and being opportunistic in both M&A and share buybacks. While D&B continues to execute, their share price provided a very attractive valuation throughout the quarter, and they began to utilize their share repurchase authorization, acquiring approximately 960,000 shares at an average price per share of ~$9.71 and accomplished this while maintaining their net leverage ratio at 3.7 times, with visibility to 3.5 times by year end.

In July 2024, D&B announced another quarterly cash dividend of $0.05 per share, to be paid on September 19, 2024, to shareholders of record as of September 5, 2024.

Cannae holds 69 Million shares of D&B common stock, representing approximately 16% of D&B's outstanding shares. As of August 7, 2024, the aggregate gross value of these shares was approximately $801 Million.

CANNAE HOLDINGS, INC. / SECOND QUARTER 2024 UPDATE

Alight, Inc.

(NYSE: ALIT)

Alight is a leading cloud-based human capital technology and services provider for many of the world's largest organizations. Through the administration of employee benefits, Alight powers confident health, wealth, leaves and wellbeing decisions for 35 million people and dependents. Our Alight Worklife® platform empowers employers to gain a deeper understanding of their workforce and engage them throughout life's most important moments with personalized benefits management and data-driven insights, leading to increased employee wellbeing, engagement and productivity. Learn how Alight unlocks growth for organizations of all sizes at alight.com.

Earlier this week, Alight announced that Stephan Scholl will step down as CEO and member of the Board, effective after the Board names a successor. Scholl will continue as CEO and Director during the search process. In addition, the Board has appointed Dave Guilmette, an independent Director, as Vice Chair of the Board. In this role, he will work closely with Scholl to ensure a smooth transition.

Subsequent to quarter-end, Alight announced that it completed the sale of its Professional Services segment and its Payroll & HCM Outsourcing businesses within the Employer Solutions segment (the "Payroll & Professional Services business") to an affiliate of H.I.G. Capital for up to $1.2 Billion, subject to certain adjustments. Shortly after closing, the company used $740 Million of the proceeds to repay debt, bringing net leverage down to 2.8 times.

The company noted that additional proceeds and future cash flow will be targeted for share repurchases and general corporate purposes. Along those lines, Alight repurchased $80 Million of shares in the second quarter and commenced a $75 Million accelerated share repurchase program in mid-July, reflecting its plans to be more aggressive and consistent in its return of capital to shareholders.

Alight reported its results for the second quarter 2024, with the Payroll & Professional Services business as a discontinued operation. The continuing operations business posted sequential improvement in its growth rate from the first quarter as guided. Adjusted EBITDA from continuing operations was $105 Million and represented a 19.5% margin.

Recurring revenue for the continuing operations on a management adjusted basis were 92% of total revenue, consistent with the prior year. BPaaS revenue increased nearly 13% to $115 Million and represented 21.4% of total revenue, compared to $102 Million and 18.2% of revenue in the prior year.

The company announced that it completed its cloud migration on time and has fully decommissioned its data center. The outcome is a simplified and more efficient Alight Worklife® platform with an enhanced end-user experience. The program is expected to drive $75 Million of annualized cost savings, with the full run-rate being achieved in 2025.

Management noted Alight has 97% of 2024 revenue under contract, and looking ahead, it is seeing strong commercial momentum, with ARR bookings up 9% in the first half, including wins this quarter from UPS, Wayfair, American Honda Motor Company, and the Adecco Group. Revenue under contract at quarter end was $1.2 Billion for the second half of 2024, $1.7 Billion for the full year 2025, and $1.3 Billion for the full year 2026.

Cannae holds 52.5 Million shares of Alight Class A common stock (including 40 Million shares pledged as collateral for Cannae's margin loan), representing approximately 10% of Alight's outstanding shares. As of August 7, 2024, the aggregate gross value of these shares was approximately $356 Million.

CANNAE HOLDINGS, INC. / SECOND QUARTER 2024 UPDATE

Dayforce, Inc., formerly known as Ceridian HCM Holdings, Inc. (NYSE: DAY)

Cannae accounts for its investment under the fair value method, and accordingly our consolidated statements of operations reflect the change in the stock price of Dayforce during the periods on a non-cash basis within Recognized gains (losses), net.

Dayforce is a global human capital management technology company focused on improving work for thousands of customers and millions of employees around the world. Its single, global people platform for HR, payroll, talent, workforce management, and benefits equips Dayforce customers to unlock their full workforce potential and operate with confidence. To learn how Dayforce helps create quantifiable value for organizations of all sizes and industries, visit dayforce.com.

Dayforce's impressive growth momentum continued in the second quarter of 2024 with the company reporting a 16% increase in revenue and an 18% growth in adjusted EBITDA. Recurring revenue was up 20% and Dayforce's 2024 year-to-date cash flows from operations are up 16% over 2023. Recurring revenue was $321.6 Million and $277.7 Million excluding float revenue and on a constant currency basis in the second quarter of 2024.

Dayforce's continued strong results on all metrics and significant cash flow generation led to its board of directors approving a $500 Million share repurchase program. The new repurchase program demonstrates Dayforce's conviction that the price of its shares is undervalued and the ability of the company to return value to shareholders.

Dayforce's wallet product, Dayforce Wallet, surpassed the milestone of delivering $4 Billion of payroll to users across the U.S., Canada and the U.K. through July 2024. As an extension of Dayforce Payroll, Dayforce Wallet addresses the critical need of employers to provide flexible compensation to employees through scalable, on-demand pay. The solution gives employees greater control over their finances, while helping employers attract talent and boost retention. Uniquely built directly into the Dayforce platform's single-data architecture, its continuous calculation engine offers real-time accuracy and compliance with local market regulations.

In the aggregate, 6,657 customers were live on the Dayforce platform as of June 30, 2024, an increase of 6.1% year- over-year. 1,270 customers were live on the Dayforce Wallet. Recurring revenue per customer was $154,998 for the trailing twelve months ended June 30, 2024, an increase of 18% over the prior year.

In light of its successful second quarter results, Dayforce increased its guidance for its fiscal year 2024 revenue and adjusted EBITDA. Dayforce now expects full year revenue of $1,736 Million to $1,746 Million and adjusted EBITDA of $490 Million to $505 Million.

Cannae sold 0.5 Million DAY shares in the second quarter of 2024 and 0.5 Million shares in July 2024. Since November 2018, Cannae has sold 36.6 Million shares of Dayforce for gross proceeds of approximately $2.4 Billion. Cannae now holds 0.5 Million shares of Dayforce, which had an aggregate gross value of $26 Million as of August 7, 2024.

CANNAE HOLDINGS, INC. / SECOND QUARTER 2024 UPDATE

Paysafe, Ltd.

(NYSE: PSFE)

Cannae accounts for its investment under the fair value method, and accordingly our consolidated statements of operations reflect the change in fair value of Paysafe during the periods on a non-cash basis within Recognized gains (losses), net. Paysafe will report earnings for the period ended June 30, 2024 later in August 2024. Therefore, we present its results for the quarter ended March 31, 2024 herein.

Paysafe is a leading payments platform with an extensive track record of serving merchants and consumers in the global entertainment sectors. Its core purpose is to enable businesses and consumers to connect and transact seamlessly through industry leading capabilities in payment processing, digital wallet, and online cash solutions. With over 25 years of online payment experience, an annualized transactional volume of $140 billion in 2023, and approximately 3,200 employees located in 12+ countries, Paysafe connects businesses and consumers across 260 payment types in over 40 currencies around the world. Delivered through an integrated platform, Paysafe solutions are geared toward mobile-initiated transactions, real-time analytics and the convergence between brick-and- mortar and online payments. Further information is available at www.paysafe.com.

Paysafe released its first quarter 2024 results in May, delivering its seventh consecutive quarter of year-over-year quarterly revenue growth. The company increased first quarter revenues and payment volume by 8% year-over-year and adjusted EBITDA by 4%. Total payment volume was over $36 Billion in the first quarter of 2024, which translated into total revenue of $418 Million.

Net income was $3 Million in the first quarter, an improvement over the $4 Million loss in the prior year quarter. Adjusted EBITDA of $112 Million in the first quarter of 2024 increased 4% from the 2023 comparable period. The company provided an update on its investment in its sales team, noting they expect to spend $25 Million in 2024 to build its direct sales team and reduce its reliance on third-party sales organizations. The investment in its internal sales team depressed margins slightly in the first quarter of 2024, as expected, however the investment is expected to bear fruit in the form of increased higher-margin revenue from a lower cost sales structure.

The company showed continued progress on its capital structure and shareholder returns in the first quarter of 2024, maintaining net leverage of 4.9x Adjusted EBITDA at quarter-end and returning $14 Million to shareholders through stock buybacks in the quarter.

Paysafe reiterated its full year 2024 guidance and continues to project total revenue between $1,688 Million to $1,712 Million, an increase over 2023 of 5.5% to 7% and Adjusted EBITDA of $473 Million to $488 Million, an increase of 3% to 6.3% over 2023.

The company is expected to release its results for the second quarter 2024, on August 13, 2024.

Cannae holds 3.4 Million PSFE shares, or approximately 5.5% of Paysafe's outstanding shares. As of August 7, 2024, the aggregate gross value of these securities was approximately $63 Million.

CANNAE HOLDINGS, INC. / SECOND QUARTER 2024 UPDATE

System1, Inc.

(NYSE: SST)

Cannae reports its equity in earnings or loss of System1 on a one-quarter lag from their public filings, and accordingly, the table above presents the results for the quarters ended March 31, 2024, and 2023.

System1, Inc. (System1) combines best-in-class technology and data science to operate its advanced Responsive Acquisition Marketing Platform (RAMP). System1's RAMP is omni-channel and omni-vertical and built for a privacy-centric world. RAMP enables the building of powerful brands across multiple consumer verticals, and the delivery of high-intent customers to advertising partners. For more information, visit system1.com.

For its first quarter of 2024, System1 reported revenue of $85 Million, net loss from continuing operations of $14 Million and adjusted EBITDA of $0.4 Million, exceeding the top end of its guidance for revenue and adjusted EBITDA.

System1 significantly deleveraged in the first quarter of 2024, completing the previously announced tender offer to repurchase a significant portion of its outstanding senior secured term loan. Since November 2023 System1 has repaid $155 Million of debt and continues to focus on increasing its equity value and reducing its overall leverage.

The company is expected to release its results for the second quarter 2024 on August 8, 2024.

Cannae holds 27.0 Million shares of SST, or approximately 31% of outstanding shares. As of August 7, 2024, the aggregate gross value of these shares was approximately $29 Million.

CANNAE HOLDINGS, INC. / SECOND QUARTER 2024 UPDATE

Black Knight Football

(Private)

Black Knight Football Club, LP ("Black Knight Football" or "BKFC"), a partnership led by our Chairman William P. Foley, II, is focused on building a global network of world-class football clubs, players, and real estate assets that will produce operational synergies, accelerate player development, and enable efficient player migration across Black Knight Football's network of owned and operated clubs, while driving both strong on-field performance and financial results. BKFC owns 100% of AFC Bournemouth ("AFCB" or the "Cherries"), a football club competing in the highest level of the men's English football league system, the Premier League, and minority interests in FC Lorient (French Ligue 2) and Hibernian FC (Scottish Premiership).

AFC Bournemouth. The Cherries finished the 2023/2024 season in 12th place out of 20 clubs in the Premier League following a 15th place finish in the prior campaign, and are guaranteed to play in the Premier League for the 2024/2025 season. AFC Bournemouth finished with 48 points this season, the most points the Cherries have ever earned in the Premier League. We are thrilled with the success of the Cherries on the pitch and are hard at work ensuring that the club is in the best position possible to build on their success in the 2024/2025 season.

The Cherries 'Bourne in the USA' pre-season training camp was held in July in Los Angeles, California giving the players an opportunity to train with top class clubs while helping grow the game of football in the US. The tour saw the Cherries compete in their first two friendly matches of the pre-season against Wrexham AFC and Arsenal FC. The tour also saw the Cherries release new special edition kits, their first product range in collaboration with actor and BKFC investor Michael B. Jordan.

After the success of the last two seasons, the Cherries playing squad is well established. During the summer transfer window, the club has focused on identifying young talent at prudent prices, resigning key players and loaning or selling select players. The club resigned and extended contracts of key players including Illia Zabarnyi, Lewis Cook and Antoine sem*nyo, and acquired goalkeeper Alex Paulsen and striker Daniel Jebbison, both young players with significant upside potential, for small fees. Additionally, the Cherries acquired defender Dean Huijsen from Juventus, signing the 19-year-old to a long term deal. Kieffer Moore was sold to Sheffield United for an undisclosed fee and Joe Rothwell was loaned to Leeds United following his stint at Southampton in the second half of the 2023/2024 season. The transfer window closes August 30, 2024.

The on-field success of the Cherries has translated to revenue growth for Black Knight Football as revenues for the twelve months ended June 30, 2024, grew to ~$203 Million, a 19% increase from the ~$170 Million in the corresponding period ended June 30, 2023. The increase was driven by improvements of more than 40% in both sponsorship and hospitality revenue as well as higher Premier League income from Bournemouth's higher placement in the table, and matchday revenues. Looking forward, AFCB have already renewed several sponsorship agreements at increased rates and signed agreements with new partners after the 2023/2024 season.

Group Updates. In June, Black Knight Football named Tim Bezbatchenko as its first President. Bezbatchenko has enjoyed tremendous success in leadership roles in Major League Soccer, including the last six seasons as President and General Manager of the Columbus Crew where he led the Crew to two MLS Cups, the 2021 Campeones Cup and runner-up in the 2024 CONCACAF Champions Cup. Tim will work with BKFC's portfolio of clubs to improve and better coordinate player development and recruiting, enhance player pathways and optimize commercial opportunities across the group to deliver on-field success and strong financial performance.

FC Lorient finished the 2023/2024 season in 17th place in Ligue 1, unable to avoid relegation. While we are disappointed to see FC Lorient relegated, we look forward to working with the club to achieve promotion in 2024/2025.

Hibernian FC finished the 2023/2024 season in 8th place out of 12 clubs in the Scottish Premiership. We look forward to Hibernian FC improving their position this season with a goal of playing in European competition.

As of August 7, 2024, Cannae has invested $176 Million, representing an approximate 46% ownership interest in Black Knight Football.