TransUnion Q3 FY2025 earnings call

Key Highlights

• Exceeded all key guidance metrics with seventh consecutive quarter of high single-digit organic revenue growth.
• Raised 2025 guidance across all metrics due to strong third-quarter performance, stable U.S. lending trends, and new business wins.
• Advanced technology modernization with successful migration of first U.S. credit customers and One True accelerating innovation.
• Accelerated share repurchases, repurchasing $160M in Q3 and October, year-to-date total $200M, with authorization raised to $1B.

Segment Details

• U.S. Markets: 13% organic constant currency revenue growth excluding breach win. Financial services up 19%, Emerging Verticals up 7.5%, Consumer Interactive down 8% organic constant currency.
• International: 6% organic constant currency revenue growth. Canada, UK, Africa double-digit growth; India expects high single-digit in Q4.

In the third quarter, TransUnion's U.S. Markets delivered 13% organic constant currency revenue growth excluding last year's breach win. Financial services grew 19% (12% excluding mortgage). Emerging Verticals grew 7.5%. Consumer Interactive declined 8% on an organic constant currency basis due to last year's breach remediation win. Internationally, revenue grew 6% on an organic constant currency basis. Canada, the UK, and Africa achieved double-digit growth, while India grew 5% but expects high single-digit revenue growth in the fourth quarter.

• Raised 2025 outlook: 8% organic constant currency revenue growth, 9% adjusted EBITDA growth, 9% adjusted diluted EPS growth.
• Q4 revenue guidance: $1.119B - $1.139B (up 7%-9% organic constant currency), adjusted EBITDA $393M - $407M.
• Full-year revenue: $4.524B - $4.544B, organic constant currency growth 8%, adjusted EBITDA $1.622B - $1.637B (up 8%-9%).

• Emerging concerns about slowing labor market and stress for lower-income consumers.
• Impact of U.S. tariffs on India's export-dependent small and medium-sized businesses tempering lending recovery.
• Market share competition in mortgage scoring with FICO's pricing and model changes.

Q: How much of U.S. Market growth is from FICO pricing pass-through and volume growth?

A: Todd M. Cello said a good portion of 5% growth relates to mortgage pricing, with volumes in credit showing growth, and non-credit growth from Trusted Call Solutions, marketing, etc.

Q: Sustainability of emerging verticals growth?

A: Christopher A. Cartwright said no one-time factors, with insurance, Trusted Call Solutions, marketing, and fraud driving growth, expecting low double-digit growth in intermediate future.

Q: AI impact on revenue and margins?

A: Christopher A. Cartwright said AI will lead to new wins, retentions, and pricing power, with internal AI use improving service productivity and positively impacting margins over time.

Q: Mortgage pricing and VantageScore market share?

A: Christopher A. Cartwright discussed VantageScore's potential to gain share due to better data and industry frustration with FICO pricing, noting VantageScore has 5% market share in some areas but potential to grow.

Q: India growth trajectory?

A: Christopher A. Cartwright said India hit a speed bump with U.S. tariffs affecting export-dependent businesses but expects recovery as trade negotiations stabilize, with India representing ~7% of total revenues but long-term growth potential.