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01/11 04:07
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call highlights solid financial performance with a strong increase in mortgage revenue and emerging verticals. Despite a decline in Consumer Interactive revenue due to a one-off event, other segments showed growth. The Q&A reveals confidence in market outperformance, strategic reinvestments, and robust shareholder returns. The raised guidance for 2025 and increased share repurchase authorization further support a positive sentiment. However, some concerns about India and vague AI timeline responses temper enthusiasm, leading to a positive but not strong positive outlook.
Organic Revenue Growth Revenue increased by 11% on an organic constant currency basis, excluding the significant breach remediation win from last year. This represents the strongest underlying performance since 2021. The growth was driven by diversified growth across solutions, verticals, and geographies.
U.S. Markets Revenue Delivered 13% organic constant currency revenue growth when excluding last year's breach win. Growth was driven by Financial Services (19% or 12% excluding mortgage) and Emerging Verticals (7.5%). Noncredit solutions grew 8%, reflecting innovation in credit, marketing, fraud, and communications.
International Revenue Grew by 6% on an organic constant currency basis. Canada, the U.K., and Africa achieved double-digit growth despite muted economic conditions. India grew 5%, slightly below outlook due to new tariffs impacting U.S. export-dependent small- and medium-sized businesses.
Adjusted EBITDA Increased 8% with a margin of 36.3%, above the guidance range of 35.6% to 36.2%. The increase was due to revenue flow-through.
Adjusted Diluted Earnings Per Share $1.10, which is $0.06 ahead of the high end of guidance and represents a 6% increase year-over-year. The increase was driven by strong revenue performance and operational efficiency.
Consumer Interactive Revenue Declined 18% on an organic constant currency basis due to last year's breach remediation win. Excluding this impact, Consumer Interactive grew mid-single digits.
India Revenue Grew 5%, slightly below expectations due to recent trade actions and U.S. tariffs impacting small- and medium-sized businesses. Positive factors include pro-growth actions from the RBI and the Indian government.
Share Repurchases $160 million in shares repurchased during the third quarter and October, bringing the year-to-date total to $200 million. The increase in share repurchase authorization to $1 billion reflects commitment to shareholder value.
Mortgage Revenue Grew 35% on flat inquiry volumes, benefiting from third-party scores pricing and non-tri-bureau revenue. Mortgage now represents 12% of trailing 12-month revenue.
Emerging Verticals Revenue Grew 7.5%, led by double-digit growth in insurance and other verticals like tech, retail, and e-commerce. Public sector declined due to revenue timing.
OneTru Platform: Successfully migrated first U.S. credit customers, enabling faster processing speeds and access to innovations like TruIQ analytics. Plan to complete all U.S. migrations by mid-2026.
TruIQ Data Enrichment: Launched on Snowflake with initial customers, expanding market opportunity and becoming one of the most successful recent product launches.
Synthetic Fraud Models and Credit Washing Solutions: Strong demand for these new tools built on OneTru, leveraging augmented identity graph for better fraud signals.
Trusted Call Solutions (TCS): Expected to deliver over $150 million in revenue in 2025, a 30%+ increase year-over-year, with global expansion opportunities.
International Revenue Growth: Achieved 6% organic constant currency growth, with double-digit growth in Canada, U.K., and Africa despite muted economic conditions.
India Market: Grew 5%, slightly below outlook due to new tariffs impacting U.S. export-dependent businesses. High single-digit growth expected in Q4.
Mexico Acquisition: On track for late 2025 or early 2026 completion, aiming to expand global portfolio.
Cost Savings and Efficiency: Identified incremental third-party spend and internal savings to deliver $35 million in operating expense savings by 2026, reducing capital expenditures to 6% of revenue.
AI Integration: Leveraging AI across enterprise for faster product development, enhanced customer experience, and improved operational efficiency.
Share Repurchase Program: Repurchased $160 million in shares in Q3 and October, increasing year-to-date total to $200 million. Authorization increased to $1 billion.
VantageScore Adoption: Promoting adoption of VantageScore 4.0 with competitive pricing and free offerings to mortgage customers, aiming to reshape mortgage credit market dynamics.
Slowing Labor Market and Consumer Stress: Emerging concerns about a slowing labor market and financial stress for lower-income consumers could impact U.S. lending trends and overall economic stability.
India's Economic Challenges: New U.S. tariffs on Indian imports have dampened commercial lending, particularly for small- and medium-sized businesses in export-oriented sectors, creating pressures on CapEx, employment, and credit demand.
Technology Modernization Risks: The ongoing migration of U.S. credit customers to the OneTru platform and planned international expansions carry risks of delays, cost overruns, and potential disruptions to customer operations.
Regulatory and Trade Actions in India: Recent trade actions and regulatory tightening by the Reserve Bank of India have slowed lending recovery, particularly for non-banking finance companies, impacting credit demand and economic activity.
Mortgage Market Volatility: The mortgage market remains at its lowest levels since the 1990s, with significant dependency on interest rate changes for recovery. This creates uncertainty in revenue and profitability.
Economic Conditions in International Markets: Muted economic conditions in regions like Latin America, Hong Kong, and parts of Asia-Pacific are impacting lending volumes and growth rates.
Transformation Program Costs: The company has incurred significant one-time charges related to its transformation program, with potential risks of exceeding the budgeted $355-$375 million by the end of 2025.
2025 Guidance Raise: TransUnion has raised its 2025 guidance across all metrics, reflecting strong Q3 performance, stable U.S. lending trends, and new business wins. The company expects 8% organic constant currency revenue growth (9% excluding last year's breach win), 9% adjusted EBITDA growth, and 9% adjusted diluted EPS growth. Excluding a 400-basis point tax rate impact, double-digit EPS growth is anticipated.
India Market Outlook: India is expected to achieve high single-digit revenue growth in Q4 2025, supported by pro-growth actions from the RBI and the Indian government. However, recent U.S. tariffs have dampened commercial lending, particularly for export-dependent SMEs.
Technology Modernization: TransUnion plans to complete U.S. credit migrations by mid-2026, delivering $35 million in operating expense savings and reducing capital expenditures to 6% of revenue. International technology modernization will begin in 2026, with plans to expand OneTru-enabled solutions to Canada, the U.K., and the Philippines.
Product Innovation and Growth: FactorTrust is expected to grow by 20% in 2025. Trusted Call Solutions is projected to deliver over $150 million in revenue in 2025, a 30%+ increase year-over-year. The company is also expanding its marketing suite and fraud analytics solutions, leveraging AI and the OneTru platform for innovation.
Mortgage Market Projections: TransUnion expects mortgage revenue to increase by nearly 30% in 2025, driven by pricing and innovation-led wins. A recovery in mortgage activity could significantly boost earnings, with every 10% increase in mortgage volumes adding $40 million in adjusted EBITDA.
Capital Returns and Share Repurchases: The company increased its share repurchase authorization to $1 billion and repurchased $200 million in shares year-to-date. This reflects a commitment to shareholder value and takes advantage of attractive valuation levels.
Free Cash Flow and Capital Expenditures: Free cash flow conversion is expected to improve to 90%+ in 2026, with capital expenditures reduced to 6% of revenue. Onetime transformation charges in 2025 are projected to be $100 million to $120 million.
AI and Data-Driven Growth: TransUnion is leveraging AI for product development, customer experience, and operational efficiency. AI-enabled solutions are expected to drive faster growth in credit, fraud, and marketing analytics.
Share Repurchase: During the third quarter and October, TransUnion repurchased $160 million in shares, bringing the year-to-date total to $200 million. The company increased its share repurchase authorization to $1 billion, emphasizing its commitment to delivering value to shareholders. The repurchases were accelerated to take advantage of highly attractive valuation levels.
The earnings call highlights solid financial performance with a strong increase in mortgage revenue and emerging verticals. Despite a decline in Consumer Interactive revenue due to a one-off event, other segments showed growth. The Q&A reveals confidence in market outperformance, strategic reinvestments, and robust shareholder returns. The raised guidance for 2025 and increased share repurchase authorization further support a positive sentiment. However, some concerns about India and vague AI timeline responses temper enthusiasm, leading to a positive but not strong positive outlook.
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