TransUnion(TRU) - 2025 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - TransUnion exceeded all key financial guidance metrics for the sixth consecutive quarter, achieving high single-digit organic revenue growth of 9% on an organic constant currency basis, surpassing the 3% to 5% guidance [5][35] - Adjusted EBITDA increased by 8%, with an adjusted EBITDA margin of 35.7%, exceeding the guidance of 34.8% to 35.3% [36] - Adjusted diluted earnings per share rose to $1.08, a 9% increase and above the high end of guidance [36] Business Line Data and Key Metrics Changes - U.S. Market segment revenue grew by 10%, with Financial Services up 17% and 11% growth excluding mortgage [38] - Consumer lending and auto segments experienced double-digit growth, while card and banking grew in mid-single digits [6][38] - Emerging verticals grew by 5%, with insurance showing double-digit growth driven by recovery in marketing and consumer shopping activity [8][40] Market Data and Key Metrics Changes - The U.S. market segment delivered 10% growth, with robust activity from FinTech lenders and a 29% increase in mortgage revenue despite flat inquiries [6][39] - International revenue grew by 6% on an organic constant currency basis, with India showing an acceleration to 8% growth [8][42] - Canada and Africa also reported double-digit growth, while Asia Pacific declined by 8% due to lapping one-time consulting revenue [44] Company Strategy and Development Direction - The company is focused on execution and value creation, with an emphasis on product innovation and expanding its suite of solutions [57] - TransUnion aims to deepen penetration in core verticals, scale existing solutions, and broaden its product portfolio, particularly in Trusted Call Solutions [33][32] - The company is positioned to capitalize on significant growth opportunities in India, targeting over 20% annual growth in the medium term [15][109] Management's Comments on Operating Environment and Future Outlook - Management noted that the U.S. lending environment remains stable but muted, with consumer lending showing signs of recovery [12][82] - The company raised its full-year revenue and adjusted diluted earnings per share guidance, reflecting strong first-half results and continued business momentum [11][57] - Concerns about inflation and interest rates were acknowledged, but management remains optimistic about the resilience of consumers and lenders [12][13] Other Important Information - The leverage ratio declined to 2.8 times, with plans to deleverage to 2.5 times before the anticipated acquisition in Mexico [9][46] - The company has repurchased $47 million in shares year-to-date, aligning with its balanced approach to capital deployment [10][46] - One-time charges related to the transformation program totaled $29 million in the quarter, with a total of $315 million incurred to date [37] Q&A Session Summary Question: What is driving the outperformance across lending types? - Management indicated that a combination of customer mix and new technology/product innovation is driving the outperformance, particularly in consumer lending and FinTech [61][62] Question: What is the momentum for alternative data bureaus? - The momentum is attributed to re-platforming and innovation at Factor Trust, leading to increased business wins and a robust pipeline [67][70] Question: How is the Mexico acquisition performing? - The asset is performing well and is on plan, with the acquisition expected to close by the end of the year after clearing regulatory hurdles [72] Question: What are the initial learnings from the CI freemium rollout? - The rollout is progressing well, with expectations for mid-single-digit growth in the Consumer Interactive business as new offerings are integrated [74][78] Question: How is the consumer lending environment evolving? - The environment is stable but showing improvement, with consumer lending recovering and card activity becoming more optimistic [80][82] Question: What is the outlook for the mortgage market? - The mortgage market is at a bottom, with inquiries flat but revenue increasing due to pricing and pre-qualification traction [97][99] Question: What is the growth outlook for India? - India is expected to achieve a 10% growth rate for the full year, with potential for high teens growth in the fourth quarter as lending volumes recover [104][109]