Release Date: October 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- TransUnion (TRU, Financial) exceeded guidance across all key financial metrics for the third quarter of 2024.
- Revenue grew 12% on an organic constant currency basis, surpassing the 8% to 10% guidance range.
- The company raised its full-year 2024 guidance due to strong business momentum.
- TransUnion (TRU) achieved 14 consecutive quarters of double-digit growth in its international segment.
- The transformation program is driving material cost savings and innovation, with a focus on technology modernization and global capability centers.
Negative Points
- Consumer Interactive revenue, excluding breach benefits, declined mid-single digits, primarily due to challenges in the direct channel.
- The auto business grew only 1%, with the market remaining choppy due to consumer affordability challenges.
- The company is experiencing some deceleration in growth in India due to regulatory tightening by the Reserve Bank of India.
- Emerging verticals grew only 3% in the third quarter, slightly down from previous quarters.
- The adjusted tax rate was higher than expected due to an internal project to restructure legal entities.
Q & A Highlights
Q: Can you elaborate on the impact of the One True platform on TransUnion's business and its future revenue potential?
A: Chris Cartwright, President & CEO, explained that the One True platform is significantly enhancing TransUnion's competitive edge across various product lines and markets. The integration phase of acquisitions and tech transformation has led to strong innovation, particularly in analytics, marketing solutions, and fraud. This innovation is expected to support revenue growth and return to steady high single-digit revenue compounding over the intermediate term.
Q: How are the recent Federal Reserve interest rate cuts expected to impact TransUnion's financial services business?
A: Todd Cello, EVP & CFO, noted that while the recent rate cuts are not expected to have a material impact in 2024, they are anticipated to benefit TransUnion's financial services business in the medium term. Lower rates could improve funding models for fintechs and increase consumer demand for products like debt consolidation, particularly benefiting the consumer lending segment.
Q: What is driving the strong growth in TransUnion's mortgage revenue despite declining inquiry volumes?
A: Todd Cello highlighted that the 63% growth in mortgage revenue, despite an 8% decline in inquiry volumes, is due to positive mix and pricing of TransUnion's products, including prequalification and early-access programs. Additionally, TransUnion is helping mortgage lenders target and prospect consumers, which is expected to pick up meaningfully.
Q: How is TransUnion's India business performing amid regulatory changes by the Reserve Bank of India (RBI)?
A: Chris Cartwright stated that while the RBI's actions have slowed growth from the low 30s to low 20s, TransUnion's India business remains strong due to diversification into commercial credit, direct-to-consumer, fraud, and marketing solutions. The RBI's measures are seen as prudent steps to ensure stability in lending practices, and TransUnion expects continued strong growth in India.
Q: What are the expectations for TransUnion's capital expenditures and technology investments moving forward?
A: Chris Cartwright explained that TransUnion is achieving its technology transformation with lower capital expenditures, reducing CapEx guidance to 8% of revenue from 9%. By migrating applications to the cloud, TransUnion is eliminating the need for hardware and software purchases, allowing for a sustainable CapEx level of 6% of revenue by 2026, focusing primarily on innovation and internally developed software.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
