TransUnion(TRU) - 2021 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - First quarter consolidated revenue increased by 8% on a reported and constant currency basis, with organic constant currency growth at 7% [57] - Adjusted EBITDA increased by 14% on a reported basis and 13% on a constant currency basis, with an adjusted EBITDA margin of 40.3%, up 200 basis points year-over-year [58] - Adjusted diluted EPS increased by 25%, driven by strong adjusted EBITDA growth and reduced interest expenses [59] Business Line Data and Key Metrics Changes - U.S. markets revenue was up 11% year-over-year, with adjusted EBITDA increasing by 16% [60] - Financial services revenue grew by 14%, with a 5% increase excluding mortgage [61] - Emerging verticals grew by 7% on a reported basis, with double-digit growth in public sector, tenant and employment screening, and media [65] Market Data and Key Metrics Changes - In the U.K., revenue declined by 5%, but trends improved significantly towards the end of the quarter [71] - Canadian business grew by 9%, nearing pre-pandemic activity levels [72] - India saw an 11% revenue growth, although the situation worsened recently due to rising COVID-19 cases [73] Company Strategy and Development Direction - The company aims for high single-digit revenue growth with expanding margins and double-digit EPS growth [17] - Focus on innovation and partnerships with FinTech lenders to capture growth in e-commerce and financial services [20][21] - Expansion into new markets such as online gaming and media, leveraging data and technology for competitive advantage [23][120] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about a sustained economic recovery in the U.S. and other key markets, supported by improving macro indicators [12][17] - Acknowledgment of the fragility of recovery due to potential lockdowns and market volatility [16] - Confidence in long-term growth strategy despite short-term challenges in specific sectors like mortgage [110] Other Important Information - The company has a strong balance sheet with $433 million in cash and a declining net leverage ratio of 2.7 times [77] - Continued investment in technology and data management to enhance operational efficiency and market position [44][120] - Commitment to diversity, equity, and inclusion initiatives, with a focus on improving representation within the company [50] Q&A Session Summary Question: Insights on FinTech vertical recovery - Management noted that consumer lending within financial services strengthened month over month, with increased interest in new customer acquisition from FinTech players [90][92] Question: U.K. revenue decline and TrueVision product performance - Management attributed U.K. revenue declines to lockdown impacts and noted encouraging interest in the TrueVision product, with a growing pipeline [95][96] Question: Prama product traction - Management confirmed that Prama remains a vital part of new product offerings and is expected to enhance customer engagement and revenue [101][102] Question: Mortgage market outlook - Management revised mortgage expectations to flat for the year, citing stronger-than-expected performance in Q1 and ongoing activity in refinancing and purchases [106][110] Question: Media and digital ad offering differentiation - Management highlighted the unique data quality and matching logic that TransUnion brings to the media and digital marketplaces, with plans for further scaling through M&A [118][121] Question: Non-mortgage financial services growth comparison - Management explained that the slower growth in non-mortgage financial services was due to tough comparisons from a strong Q1 2020 and noted recovery potential in the upcoming quarters [123][126]