TransUnion Q4 FY2024 earnings call

• Financial highlights: Fourth quarter exceeded revenue and adjusted EBITDA guidance, grew revenue 9% organic constant currency for the year, adjusted diluted EPS up 16%.
• Strategic initiatives: Operating model optimization with 1,000+ roles moved to global capability centers; technology modernization with progress on re-platforming core U.S. credit and India analytics; innovation with new products launched in 2024.
• 2025 priorities: Deliver consistent results in stable market, strengthen global operating model, complete U.S. and India technology transformations, accelerate innovation. Freemium launch in consumer business with collaboration with Credit Sesame, and acquisition of Monevo in progress.
• Transformation pillars: Global operating model creation, technology modernization to cloud-based platforms, and innovation across solution suites.

In the fourth quarter, TransUnion's U.S. markets revenue, including Consumer Interactive, was up 8% compared to the year-ago quarter, with an adjusted EBITDA margin of 39.4%. Financial Services revenue grew 21%, excluding mortgage it was up 7%. Mortgage revenue grew 80% but was slightly below expectations. Emerging Verticals grew 4% led by double-digit growth in insurance. Consumer Interactive declined 11% as expected. International grew 12% on a constant currency basis, with India up 18%, Asia-Pacific and Latin America growing double-digits, and Canada and Africa up high-single-digits. U.S. markets revenue contribution: Financial Services was a significant part, with mortgage having a notable impact. International segments contributed with varying growth rates across regions.

• Revenue: Expect 3.5% to 5% growth or 4.5% to 6% organic constant currency in 2025.
• Adjusted EBITDA: 3% to 6% growth, implying modest margin expansion.
• Adjusted diluted EPS: 1% to 4% growth, with FX and tax rate headwinds.
• Muted lending activity assumed in U.S., no credit volume improvement from interest rate cuts. Mortgage expected to be 2% point revenue benefit, breach impact reverses to 1% point headwind.

• Interest rate changes: Fed signaled slowing pace of easing, impacting mortgage volumes.
• Regulatory environment: New administration could bring changes affecting operations.
• Market conditions: India credit growth uncertain, mortgage volumes moderated by interest rates.
• Foreign exchange: Impact on revenue and earnings due to currency fluctuations.

Q: Jeff Meuler asked about reconciling prudent conservative guidance with high end of range given cyclically depressed markets and leading indicators looking better.

A: Chris Cartwright said they're being prudently conservative, not assuming substantial market improvement, but expecting solid growth from bookings, customer retention, and innovation.

Q: Andrew Steinerman inquired about CI revenues 2025, indirect and direct fare.

A: Chris Cartwright said the freemium launch and product line improvements should lead to better growth in direct-to-consumer and indirect business over time due to refined user interface and multiple products for indirect customers.

Q: Toni Kaplan asked about India's 10% growth guidance.

A: Chris Cartwright explained RBI's policy shift, earlier efforts to decelerate lending, new governor's focus on growth, rate cuts, and expected reacceleration in India's growth later in 2025.

Q: Faiza Alwy asked about mortgage, inquiry decline, and pricing.

A: Todd Cello said they're assuming consistent trends, including prequalification volumes, and Chris Cartwright added it's unlikely a race to one bureau pull due to revenue opportunities from qualifying consumers.

Q: Manav Patnaik asked about quantifying trend return impact.

A: Chris Cartwright said he couldn't give an on-the-fly estimate but noted volume rebounds would benefit margin and revenue due to higher contribution from credit origination.

Q: Jason Haas asked about regulatory environment change.

A: Chris Cartwright said there's a pause in CFPB activities, new leadership expected, but they'll continue operating focusing on customers.

Q: Andrew Nicholas asked about Neustar outlook.

A: Chris Cartwright said Neustar is accretive, profitability improved, and they're accelerating pipelines in fraud, marketing, and trusted call with tech modernization benefits.

Q: Ashish Sabadra asked about balancing growth investments and operating leverage.

A: Todd Cello explained revenue growth has some lower margin components, but transformation savings and future cost savings, along with investment in innovation and international expansion, are considered in guidance.

Q: Surinder Thind asked about innovation impact on growth rate.

A: Chris Cartwright said innovation and replatforming are net positives, aiming for high-single-digit revenue growth long-term with improved product competitiveness.

Q: Kelsey Zhu asked about customer demand recovery.

A: Chris Cartwright discussed supply side replenishment, normalized delinquencies, consumer comfort with higher rates, and FinTechs' role in debt consolidation driving lending activity.