NYSE:TRU TransUnion Q3 2023 Earnings Report $72.88 -0.87 (-1.18%) Closing price 04/17/2025 03:59 PM EasternExtended Trading$73.00 +0.12 (+0.17%) As of 04/17/2025 05:45 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast TransUnion EPS ResultsActual EPS$0.91Consensus EPS $0.95Beat/MissMissed by -$0.04One Year Ago EPS$0.85TransUnion Revenue ResultsActual Revenue$968.70 millionExpected Revenue$982.95 millionBeat/MissMissed by -$14.25 millionYoY Revenue Growth+3.30%TransUnion Announcement DetailsQuarterQ3 2023Date10/24/2023TimeBefore Market OpensConference Call DateTuesday, October 24, 2023Conference Call Time9:30AM ETUpcoming EarningsTransUnion's Q1 2025 earnings is scheduled for Thursday, April 24, 2025, with a conference call scheduled at 9:30 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Q1 2025 Earnings ReportConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)SEC FilingEarnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by TransUnion Q3 2023 Earnings Call TranscriptProvided by QuartrOctober 24, 2023 ShareLink copied to clipboard.There are 10 speakers on the call. Operator00:00:00Good morning, and welcome to TransUnion's 2023 Third Quarter Earnings Conference Call. All participants will be in listen only mode. Please note this event is being recorded. I would now like to turn the conference over To Aaron Hoffman, Senior Vice President, please go ahead. Speaker 100:00:31Good morning, everyone, and thank you for attending today. Joining me on the call are Chris Cartwright, President and Chief Executive Officer Todd Cello, Executive Vice President and Chief Financial Officer. We Posted our earnings release and slides to accompany this call on the TransUnion Investor Relations website this morning. Our earnings release and the accompanying Closures and financial measures along with their corresponding reconciliations of these non GAAP financial measures to their most Today's call will be recorded and a replay will be available on our website. We will also be making statements during this call that are forward These statements are based on current expectations and assumptions and are subject to risks and uncertainties. Speaker 100:01:21Actual Results could differ materially from those described in the forward looking statements because of factors discussed in today's earnings release, in the comments made during this earnings call And in our most recent Form 10 ks, Forms 10 Q and other reports and filings with the SEC, we do not undertake any duty to update any forward With all that, let me turn it over to Chris. Speaker 200:01:45Thanks, Aaron. Let me add my welcome and share our agenda for the call this morning. First, I'll discuss the macroeconomic conditions we're facing and the impact that they had on our business in the Q3. Then I'll provide an overview of our Q3 financial performance. I'll also review the continued progress we're making with NuStar, accelerating revenue growth Achieving savings targets. Speaker 200:02:08I'll wrap up with a short discussion about our approach to managing through a more challenging and uncertain macro environment. Finally, Todd will detail our 3rd quarter results along with our 4th quarter and full year guidance. Economic conditions softened across several TransUnion markets in the Q3, most notably in the U. S. And the U. Speaker 200:02:31K. While U. S. Consumers continue to benefit from low unemployment and modest real wage growth, Lingering inflation and rising borrowing costs have taken a toll on household finances. Spending has slowed and consumers have largely through the excess savings accumulated during COVID. Speaker 200:02:50Although demand for credit remains strong despite elevated costs, Banks have tightened lending standards due to weakening consumer finances and increasing capital constraints. Recent commentary from lenders supports These observations, noting that cracks have appeared across consumer lending, especially in the lower credit tiers. Now TransUnion entered the 3rd quarter cautiously optimistic after exceeding guidance in the 1st two quarters, while maintaining our full year guidance as a cushion In U. S. Financial Services, year over year revenue grew 3% in July 1% in August, but declined 5% in September. Speaker 200:03:44Rising rates in the quarter had a negative impact as the 10 year treasury rate spiked 50 basis points after only increasing 20 basis points in the first half of the year. The decrease in loan demand Combined with tighter credit standards also fueled a pullback in marketing activity, which negatively affected our consumer audience and campaign management volumes. We experienced a similar slowdown in our insurance vertical, where carriers remain primarily focused on increasing and have reduced marketing to acquire new customers. Insurance revenue grew 5% in July, 4% in August, But declined 4% in September. Increasing policy renewal rates and carriers exiting unprofitable geographies Is fueling increased consumer shopping, which only partially offsets the decline in marketing volumes. Speaker 200:04:37And while policy attrition from large carriers is often Acquired by smaller and non standard carriers, TU typically realizes less revenue per transaction as smaller carriers usually do not utilize Financial Services and Insurance volumes have a high flow through to profits And their softening has weighed on our adjusted EBITDA dollars and margin. Our international segment continues to benefit from healthy conditions in India and Asia Pacific and strong market outperformance in Canada. Other parts of the portfolio such as the UK, Latin America And Africa slowed over the quarter, although segment revenues in total were up low double digits. In the 3rd quarter, TransUnion grew revenues 3% organically, driven by strength in international, NuStar and several verticals within U. S. Speaker 200:05:31Emerging Markets. U. S. Markets grew 2% with financial services flat and emerging verticals up 4% in total We continue to benefit from our portfolio diversification as we grew double digits in Public Sector and Media and high single digits in Tech Retail and E Commerce, all areas of recent organic and inorganic investment. Revenue in our international segment grew by 11% in constant currency in September for the 10th consecutive quarter of double digit growth. Speaker 200:06:14India led with 31% revenue growth, while Canada and APAC also grew revenues double digits. We continue to outperform our underlying markets because of solution innovation, share gains and expansion into new adjacencies. We prepaid another $75,000,000 of debt during the quarter, bringing our total for the 1st 9 months to $225,000,000 And we expect to make further prepayments in the Q4. We also settled 2 legal matters with the CFPB And the FTC with no admission of wrongdoing. We're pleased to have resolved these matters and to proceed with our work of providing important business services economic headwinds and is proving to be nicely accretive to our growth rates in our core U. Speaker 200:07:10S. Verticals, even in these challenging market conditions. While bookings and subscriptions continue their strong growth, NuStar's transactional revenues in marketing and risk solutions softened in the quarter. As a result, we're reducing our 4th quarter growth assumptions in line with volumes in September and lowering our full year guide to mid single digit growth instead of high single digits. We also expect a 31% EBITDA margin, up around 4.50 basis points Over 2022 as we complete integration and achieve our target cost synergies. Speaker 200:07:50In the quarter, we announced a number of new partnerships that further support our confidence in NuStar's growth prospects. In marketing, we signed Multi year identity deal with a large CPG company as well as new business with a large apparel company in a major personal care brand. We also announced that our Marketing Solutions business True Audience will integrate its identity product line With AWS entity resolution from Amazon Web Services, True Audience brings advanced identity resolution capabilities to improve their data hygiene and customer insights from within AWS' secure cloud environment. Communication solutions continue to grow on the strength of our suite of trusted of TrueContact Trusted Call Solutions or TCS, Which grew about 70% in the 3rd quarter across a range of verticals. We recently expanded our relationship with 1 of the 3 major wireless Branded Calling allows users to place their brand and call purpose on outbound calls to cut through the fog of anonymous robocalls And securely engage with clients and prospects. Speaker 200:09:11We also won a multi year multimillion dollar with a large federal government agency to provide branded call We're enjoying strong growth in our TCS solutions and broad interest across our verticals as clients value Speaker 300:09:30Now I Speaker 200:09:30want to wrap up my part of the call by reinforcing our long term approach to creating shareholder value even as macroeconomic and lending market conditions may cycle. We're focused on helping our customers address Their current market challenges by applying our complementary credit, marketing and fraud solutions through our insight led consultative approach. With tightening lending standards, declining loan volumes and rising delinquencies, our rich trended and alternative credit data And powerful analytic and modeling tools will help lenders maximize their portfolios and find attractive segments for growth. Our marketing solutions enable customers to optimize their spending and ensure positive outcomes, Which is even more important in challenging conditions. Our identity resolution, audience segmentation and predictive analytics help clients understand Which customers to contact, how best to reach them and what messages will most likely resonate. Speaker 200:10:32Planning and measuring the effectiveness of marketing spending by utilizing our rich history of pipeline conversion data ensures that the best results are achieved with the least Possible investment and our trusted call and fraud mitigation solutions also help clients reach consumers more efficiently and minimize their fraud losses. We continue to invest in the strategic initiatives that will position us for our next chapter of growth and profitability. These include innovations from combining the best of NuStar and TransUnion, launching our next generation fraud mitigation platform And scaling our new products across our thriving international footprint. And reducing our cost structurally by scaling our global capability centers, Refining our organization structure and standardizing and modernizing our core technologies and operations Remains key objectives for TransUnion. Through the series of initiatives, many of which have been in progress for some time now, We believe we can further reduce operating costs materially. Speaker 200:11:38Given the more challenging growth environment in which we find ourselves, we are accelerating these efforts And we'll share additional details when appropriate. We also remain laser focused on achieving the cost savings from our acquisition integrations And reducing our interest expense through prepayment of our debt. That concludes my comments this morning on our market conditions, our 3rd quarter performance And our approach to managing through these softer market conditions. Todd will now provide further details on our Q3 financial results and our Q4 And our full year 2023 outlook. Over to you, Todd. Speaker 100:12:17Thanks, Chris, and let me add my welcome to everyone. I'll start off with our consolidated financial results. 3rd quarter consolidated revenue increased 3% on a reported and constant currency basis. There was no impact from acquisitions and immaterial FX impact. Our business grew 2% on an organic constant currency basis, Excluding mortgage from both the Q3 of 20222023. Speaker 100:12:47Adjusted EBITDA increased 5% on a reported basis and 4% in constant currency. This result was negatively impacted by an incremental $7,000,000 charge for the recent legal settlements above the amount we previously reserved. We also benefited from a reversal of accruals for variable cash compensation to account for our current view of revenue and adjusted EBITDA for the full year. Our adjusted EBITDA margin was 36.8%, up 50 basis points compared to the year ago 3rd quarter and improved sequentially by 180 basis points from the Q2 of 2023. 3rd quarter adjusted diluted EPS declined 2% as a result of higher interest expense. Speaker 100:13:36Finally, we took a $495,000,000 impairment to our U. K. Business during the quarter. This remains an attractive market and business for TransUnion with a highly diversified portfolio, an array of successful product offerings like TruVizion and TruEmpower and an adjusted EBITDA margin over 40%. Leveraging our innovation, We've gained meaningful share across the lending ecosystem and delivered market leading growth under our ownership. Speaker 100:14:07However, The U. K. Has faced an unusually harsh confluence of macro events resulting in inflationary pressures and soaring interest rates, Which has slowed the underlying lending growth. Before I get into U. S. Speaker 100:14:22Markets results, a reminder that we are reporting NuStar revenue within vertical market structure and we will discontinue providing standalone Newstar reporting at the end of 2023. Now looking at segment financial performance for the Q3, U. S. Markets revenues were up 2% compared to the year ago quarter. Adjusted EBITDA for U. Speaker 100:14:45S. Markets increased 2% and adjusted EBITDA margin was flat at 35.2%. Financial Services revenue was flat. Consumer lending revenue declined 9% compared to high Single digit growth in the Q3 of 2022. Absolute lending volumes remain healthy as unsecured personal loans Have become a mainstream product for consumers. Speaker 100:15:11With that said, marketing activity remains depressed, Rising rates have weighed on consumer demand and capital funding continues to be highly selective. Credit card business was down 5% compared to low double digit growth in the year ago quarter with marketing down mid teens. Issuers continue to react to rising delinquencies by moderating marketing spend. With that said, like with consumer lending, Activity levels for card remain healthy on a historical basis. Our auto business delivered 6 Growth in the quarter on the strength of continued share gains, pricing, strong prequalification volumes, the impact of cross selling NuStar Marketing And call center solutions. Speaker 100:16:00We are seeing strong demand for new vehicles, somewhat offset by continued weakness in the used vehicle market And challenges around affordability. For mortgage, revenue was up 26% in the quarter despite inquiry volumes falling about 21%. As Chris pointed out, growth slowed considerably over the course of the quarter as mortgage rates jumped to 20 year highs in recent weeks. Existing home sales reached their lowest level since 2011 and applications in mid October fell to their lowest point since 1995. On a trailing 12 month basis, mortgage represented about 7% of total TransUnion revenue. Speaker 100:16:45For 2023, we now expect the inquiry market to be down roughly 30% and our revenue to increase roughly 15 Let me now turn to our emerging verticals, which grew 4% in the quarter. Insurance delivered low single digit growth Despite the challenges that Chris described, even in this environment, we continue to win new business for innovative products like TruVizion Driving History, Which has grown 5 fold over the past 5 years, penetration of newer markets like life and commercial auto And successful cross selling of NuStar and SonTek solutions. Tenant and employment screening was down As we've recalibrated our solutions to provide the most customer and consumer friendly approach possible. This has caused us some volume in the short term, but we believe it will ultimately be a long term competitive advantage. The Public Sector Media and Tech Retail and E Commerce Verticals all delivered strong growth, Highlighting the value of our diversified business and in particular, the benefits of integrating NuStar Solutions Into existing TransUnion end markets to enhance growth. Speaker 100:18:04The telco vertical was down slightly as declines in landline caller ID offset growth in other areas like Trusted Call Solutions. Consumer Interactive revenue declined 3% In line with our expectations, adjusted EBITDA margins were 50.4%, up about 80 basis points clients as we recalibrated our marketing approach to focus on higher value consumers. Thus far, we've seen good returns on the revamped tactics With better than expected customer acquisition stats at attractive cost to acquire. Our indirect business was flat as lenders have pulled back on utilizing offer aggregators and other channels for marketing Like the trends we're experiencing in our financial services vertical, our breach and identity protection offerings Built through our acquisition of SonTek, continued to deliver good growth. For my comments about All revenue growth comparisons will be in constant currency. Speaker 100:19:18For the total segment, revenue grew 11% with 3 of our 6 reported markets Growing by double digits. Adjusted EBITDA margin was 45.3%, up about 95 basis points. Now let's dig into the specifics for each region. In India, our largest international market, we grew 31%, reflecting strong market trends And generally healthy consumers. We saw meaningful growth in both consumer and commercial credit markets as well as from fraud, marketing and direct to consumer offerings. Speaker 100:19:54We continue to expect India to deliver another year Of over 30% growth. In the U. K, revenue declined 4%. Excluding revenue related to one time Contracts included with the U. K. Speaker 100:20:08Government, we would have declined 2%. While the U. K. FinTech market continues to be challenged, The rest of our business is growing despite the challenged macro environment with good growth in banking driven by share gains And traction with products like TruVison and CreditView as well as strong performance in insurance and gaming. Our Canadian business grew 17% in the 3rd quarter. Speaker 100:20:35While the market remains low growth, We have generated strong outperformance across our portfolio and continue to win new share in Financial Services, FinTech, Insurance and Direct to Consumer. In Latin America, revenue was up 3% with healthy online performance offset by a decline in batch marketing activity. Brazil was down in the quarter as we've seen some weakness in the FinTech market. While macro conditions softened across Latin America, Our teams continue to win new business in financial services, insurance, government and telcos. In Asia Pacific, we grew 12% from continued good performance in Hong Kong and very strong growth in Philippines, Where we continue to add new offerings and win new business. Speaker 100:21:28Finally, Africa increased 8% Based on a broadly strong performance across the portfolio and the region, despite a challenging macroeconomic and social environment in Several of our largest markets. We ended the quarter with roughly $5,400,000,000 of Debt after prepaying another $75,000,000 in the quarter. That left us with 420 $1,000,000 of cash on the balance sheet. We finished the quarter with a leverage ratio of 3.7 times. We have now prepaid $225,000,000 of debt in 2023. Speaker 100:22:07And at this point, we intend to prepay additional debt in the 4th quarter. Looking back, since we announced the acquisition of NuStar in September of 2021, we've prepaid about $1,500,000,000 of debt. We're in the midst of refinancing our revolving credit facility and Term Loan A that matures on December 10, 2024. Based on early indications, we expect a favorable outcome and we will update you when we complete this transaction. And to reiterate our previous comment, at this time, we have no intention to pursue any large scale acquisitions And even smaller bolt on acquisitions are not in our plans this year. Speaker 100:22:50We are focused on integrating and maximizing the growth potential of NuStar, Sontiq And Argus. That brings us to our outlook for the Q4. We expect FX to be insignificant to revenue And adjusted EBITDA. We expect revenue to come in between $917,000,000 $932,000,000 or up 2% to 3% on an as reported and organic constant currency basis. Our revenue guidance includes approximately 2 points of Tailwind from mortgage, meaning that we expect the remainder of our business will be flat to up 1% On an organic constant currency basis, we are reducing our revenue assumption considerably from that implied in our previous guidance. Speaker 100:23:39We have essentially extrapolated the difficult September results across the Q4 to better match the current trends in our business. We expect adjusted EBITDA to be between $303,000,000 $315,000,000 down 2% to 6 We expect adjusted EBITDA margin to be down 180 basis points to 260 basis points. I want to spend a minute on the sequential change quarter over quarter in our adjusted EBITDA expectations. The high end of our 4th quarter $41,000,000 lower than the actual result for the Q3. More than 3 quarters of that Change is a result of the reduced revenue outlook, which primarily came in Financial Services and carries a very high flow through to margin. Speaker 100:24:30The remainder is largely the result of the 2 items I mentioned earlier that the 3rd quarter benefited from cash compensation that was partially offset by the incremental reserve related to our settlement with the CFPB. We also expect adjusted diluted earnings per share to be between $0.67 $0.72 a range of down 8% to 14%. Turning to the full year, we expect approximately one point of headwind from FX on revenue and adjusted EBITDA, and we expect less than one point of impact from M and A. We expect revenue in between $3,794,000,000 $3,809,000,000 Or up 2% to 3% on an as reported and organic constant currency basis and up about 2% Excluding the impact of mortgage, the roughly $53,000,000 reduction at the midpoint of our full year revenue expectation Is comprised of $9,000,000 from weaker mortgage inquiries and $6,000,000 of FX headwinds, With the remainder largely as a result of the softening trends in consumer lending, insurance and NuStar. For our business segments, we expect U. Speaker 100:25:54S. Markets to grow low single digits and flat excluding mortgage. We anticipate Financial Services to be flat and down low single digits excluding mortgage. We expect emerging verticals to be up low single digits. We anticipate that international will grow low double digits in constant currency terms, driven by ongoing strength in emerging markets. Speaker 100:26:19And we continue to expect Consumer Interactive to decline low single digits. Turning back to total company outlook, we expect adjusted EBITDA to be between $1,320,000,000 and 1.33 $3,000,000,000 down 1% to 2%. That would result in adjusted EBITDA margin being down 130 to 1 50 basis points. We anticipate adjusted diluted EPS being down 9% to 11%. We continue to expect our adjusted tax rate to be approximately 23%. Speaker 100:26:56Depreciation and amortization is expected Approximately $520,000,000 and we expect the portion excluding step up amortization from our 20 12, change in control and subsequent acquisitions to be about $225,000,000 We anticipate net Interest expense will be about $270,000,000 for the full year, down slightly as a result of our continued debt prepayments. And we expect capital expenditures to come in at about 8% of revenue. Finally, given the current level of uncertainty about the global economy, we believe it is prudent to Draw the 2025 financial targets that we provided in mid March of 2022. Clearly, a lot has changed in the macro backdrop since our Investor Day in March of 2022. However, we remain As bullish as ever about our long term prospects, the value of our expanded product portfolio and our ability to outgrow our underlying markets. Speaker 100:28:02We intend to reestablish new targets when we have greater visibility into the trajectory of the global economy. I'll now turn the call back to Chris for some final comments. Speaker 200:28:14Thank you, Todd. And to wrap up, the Q3 proved to be more challenging than expected and Conditions deteriorated as it progressed. But despite these headwinds, we delivered growth from our diversified portfolio And we remain focused on delivering a good 2023. We continue to execute against our strategy And we're proactively driving new revenue opportunities, investing in our business, managing our cost structure And maintaining our capital discipline. We remain highly confident in the long term performance and potential of our business, And we're taking all the necessary steps to deliver the best possible results for shareholders. Speaker 200:28:55Now let me turn the time over to Aaron. Speaker 100:28:58Thanks, Chris, that concludes our prepared remarks today. For the Q and A, we would ask that you each ask only one question so that we can include more participants. Operator, we can begin the Q and A session now. Operator00:29:12We will now begin the question and answer session. And our first Question will come from Kelsey Xu of Autonomous. Please go ahead. Good morning. Thanks for taking my question. Operator00:29:52Chris, I was wondering if you can help us understand the NuStar revenue mix a little bit better in terms of what percentage of NuStar revenue Speaker 200:30:11Yes, sure. Aaron, you're going to Yes. Speaker 100:30:13So, Kelsey, so 80% roughly portion of NuStar is subscription based. Marketing is about 40% of the total. So 80% of 40% is about 32, so about a third of total NuStar is would be truly subscription based revenue. Speaker 200:30:34Yes. And look, let's take this opportunity to talk about NuStar's performance in the Q3. As you know, it was one of the leading growth areas 7% organic year over year, which we feel is especially strong given the overall difficult Macro conditions that we discussed in our prepared commentary. That said, we were Higher growth out of NuStar. We were expecting roughly 10% organic growth over the second half of the year. Speaker 200:31:08And what we experienced, well, just to break down the piece parts, when There's a macroeconomic pullback as we've seen in lending and in insurance. It's going to impact Various components of our business. It will reduce the number of batch prescreens. It will reduce the number of marketing Campaigns, which impacts our audience generation and segmentation and our campaign planning tools. And that's what we experienced. Speaker 200:31:41Now, the subscription piece of overall NuStar revenue has held up quite well and consistent With the financial expectations that we outlined. So that's a positive. We've also booked Exactly what we expected to book at this point in the year and we're trending toward Achieving our full bookings targets, which will be a little bit above last year's bookings, which were a record year for NuStar. So The sale of NuStar products across the three lines is positive. Now the mix of what we're selling at NuStar Varied from our expectations in that, we're selling less data and audience services That are quicker to fulfill and recognize revenue than we expected, and we're selling more effectiveness measurement, Which are consulting type projects where the booking takes more time to realize. Speaker 200:32:46And so some of the revenue from the bookings pushed Out of the Q3 and even out of Q4 expectations. So that was one of the components in our guide down for NuStar. And then the 3rd component really rests on the volume of data sales of True audience, audience generation in the specific marketing campaign management. And again, that's going to correlate with Growth or decline in lending volume and insurance origination. So hopefully that gives you a sense of the dynamics That underpin Newstar performance. Operator00:33:26Super helpful. Thanks so much. The next question comes from Faiza Alwy of Deutsche Bank. Please go ahead. Yes. Operator00:33:38Hi. Thank you. Good morning. Speaker 400:33:40I wanted to touch On your comment regarding lending standards that tightened through the course of the quarter, I'm curious if it was across the board in terms of Lenders, whether it's regional banks, fintechs or big banks, I mean, if you can talk about any trends across various consumer sites, Whether it's a prime versus prime, so just a bit more color around what's happening with lenders lending standards. Speaker 200:34:08Yes, listen, absolutely. So happy to start with some overview on the macro conditions we see Cross Banking. So as the quarter progressed, I think well, first on the positive. Unemployment remains low and there is some real wage growth. Although, I think the consensus is that the employment market is deteriorating somewhat. Speaker 200:34:35That said, The metrics and measures of that, you've got pros and you've got cons. That said though, the Excess in savings that had accumulated on consumer balance sheets declined a lot. And recently, the Federal Reserve Bank of San Francisco suggested that those excess savings balances would be gone by the end of the third quarter and have been gone for some time for all segments of the population, except the most affluent quintile, right? And so over the course of the quarter, But really pronounced in September, we saw banks becoming more cautious about Originating new loans. Now over the past couple of weeks, the large banks, the large publicly traded banks have reported their results. Speaker 200:35:26And while they were down a bit, they were generally more positive than expectations. The one area though that underperformed expectations has been New lending volumes. Now if you tease that apart, the revolving component of new loans is fine. It's the incremental volume to consumers that was most impacted. Now the other dynamic to be aware of in the market, And this really goes back to the earlier part of the year where we had some stability concerns. Speaker 200:35:59There was a flight of deposits Upmarket to larger institutions that were perceived as more stable. And so in this recent round of earnings, you Those banks, while they're performing well, it's driven by net interest income growth, But the lending activity is down. When you look at the performance of mid market banks and smaller banks, The pinch on new credit origination is quite pronounced. And we see that in our numbers because, I mean, obviously, lending is big part of our portfolio and we serve banks, traditional banks of all sizes and FinTech, of course, as well Got the largest share there and we're just seeing a pullback in lending volumes. And when banks become more cautious, That's going to reduce the number of batch prescreens that we produce. Speaker 200:36:58It's going to reduce the credit pools that happen and it's going to reduce the marketing planning. And so it's really this macro retreat that we've seen in the lending that's impacting the business fundamentals. Speaker 400:37:11Thanks, guys. Operator00:37:16The next question comes from Jeff Meuler of Baird. Please go ahead. Speaker 500:37:22Yes. Thank you. So I know Chris had more details to come on accelerating structural expense and Efficiency programs, but just anything else you can talk to regarding how much There is to adjust the expense structure to a weaker volume environment. And I caught The decremental margins and incentive comp adjustment in Q3, but the Q4 Margins and implied decremental margins in Q4 still seem really weak. And I'm just trying to understand if that's more a function of time To implement the new programs or just how we can think through like incremental margins going forward volume environment remains weak for a while. Speaker 500:38:14Sorry for the long question. Thanks. Speaker 200:38:18Yes. No, listen, it's a good question. And there are several things to unpack in it. The first I would say is, and we purposely included our year over year revenue growth rates And each month in the quarter, so you can appreciate how materially volumes fell in September And lending origination and also insurance, right? So we've had a revenue drop Very recently, without much time to adjust the expense structure, right? Speaker 200:38:54And so Over the past 18 months, as our markets have progressively slowed, we've been proactively managing expenses. It starts with the easy things of reducing travel and of cutting external consulting, if you will, reducing marketing, and of course, being very judicious about headcount. So we decelerated new hires and then we've been in somewhat of a hiring freeze and not filling backfills. And all of that has allowed us To kind of proactively adjust the expense structure in a softening revenue environment and maintain Our strong margins. But again, there will be some work that we need to do to balance The cost structure against the current revenue environment and you can count on us to do What is necessary? Speaker 200:39:51But in my comments, I was really referring to The benefit of the global operating model that we implemented roughly 3 years ago, where we have been progressively Increasing the proportion of our employees that are in centers of excellence that are located in attractive talent markets That can reduce our cost structure over time. Now, we've moved to roughly 1 third of total TransUnion employees operating over those markets. That said, there's still more opportunity as we evolve toward what we'd say the ideal balance, Both in terms of total employees and the management structure, what functions are being led over that. And we're going to continue to push on that dimension because It will have a material impact on our structural profitability. Additionally, we've centralized all of the operating Support functions for our different credit businesses. Speaker 200:40:51We will be able to streamline and balance Our cost against our volumes more effectively by leveraging that. The other point I wanted to make though is in our technology journey. We've been investing to migrate to the cloud via Project RISE. We've taken a significant proportion of our applications. We've also digested All of the NuStar technology that came and we've begun leveraging the core NuStar platform, 1ID, which we now call When true, as a destination for our various data product platforms globally. Speaker 200:41:30What you'll see us do now is accelerate our efforts to consolidate the multiple and redundant platforms we have On this next generation and very technologically advanced platform, which is going to let us take a lot of technology costs out. So there will be a strong focus on that. And finally, we got to complete the work on acquisition integration. We continue to do Really well on that front. We're highly confident we're going to take $80,000,000 out of the NuStar cost structure. Speaker 200:42:02We'll get some benefit going forward from the full realization Those synergies and we're going to hit our integration takeouts for Argus and SonTic as well. So really think about cost management along those dimensions. Yes, there's been a drop in revenue. It takes some time Correct the cost structure, but there's also a lot of structural benefits in the pipeline that we're going to accelerate And there will be margin improvements as a result of acquisition integration. Operator00:42:41The next question comes from Andrew Steinerman of JPMorgan. Please go ahead. Speaker 600:42:47Hi. I think you talked Excuse me. You talked about bringing out a new fraud platform today. I just wanted to see within NuStar, Is fraud still about a quarter of the business? And then strategically, I want to know Again, this is on the fraud side, how you've done in integrating NuStar with iovation and TLO? Speaker 600:43:12Or is that really kind of part of the next reiteration of fraud? Speaker 200:43:17Yes. Good question, Andrew. So the NuStar risk or fraud business is roughly 20% of their Total revenue, communications would be the largest. It grew quite nicely, low double digits in the quarter. And marketing grew high single digits in the quarter. Speaker 200:43:36We just expected it to grow much faster. Risk didn't grow very much, Right. It grew low single digits, and it's really because of the impact we see on the risk volumes that are coming through call centers And look, our contracts are volume bounded. And when we budget or set expectations, we're assuming a certain degree of up charges because of volume excess, that just didn't happen this quarter. We believe it's tied to the softening macro conditions. Speaker 200:44:09In terms of platforms and the next generation of this, look, fraud is a substantial part of our business. We have multiple fraud products and platforms in the U. S. When we acquired Callcredit, we got another Set of attractive, although largely duplicative fraud solutions in the UK market. Then when we bought NuStar, well, we got A variety of risk point solutions, but we also got a great platform in 1ID upon which we can unify all of these different Fraud mitigation products on a common data repository with orchestration and advanced analytics in machine learning and AI. Speaker 200:44:53We have been working for really since the outset of the acquisition to accomplish all of that technical work. We launched that version of the product in the early part of next year. Now you can think of that as like an advanced beta launch with Speaker 100:45:09friendly customers, but it's going to allow us Speaker 200:45:09to do But it's going to allow us to do 2 things. 1, it is truly a platform of the future. It's Next Generation, it's a global consolidation of all of our point solutions and it can be leveraged across the globe, Right. So, we're very excited about that and it should allow us to accelerate growth in this important product category. It's also going to allow us to retire All of the legacy cost structures, whether it's the variety of solutions in the UK Or it's iovation or it's the legacy solutions here in TransUnion in Chicago. Speaker 600:45:53Excellent. Thanks for taking the time. Operator00:45:59The Next question comes from Heather Balsky of Bank of America. Please go ahead. Speaker 700:46:05Hi, thank you. I was hoping you could just Dive in a little bit more on your emerging vertical segment. Just given the changes that you made in the Screening part of the business and what you're seeing in insurance, can you just help us kind of think about what you need to see for those sales To accelerate and kind of visibility in the near term? Thanks. Speaker 200:46:35Sure. Right. So, I mean, look, from a first principles basis, we've talked about The diversification we've achieved in our portfolio because of our investments in recent times. And even though this is a difficult quarter In a challenging macro period, you can see some of those benefits coming to the fore. Old TransUnion Would it be reporting results based on U. Speaker 200:47:00S. Credit sales only and those would be negative. We've got 4% growth happening in the emerging markets, although not all cylinders are firing and emerging as you point to, right? But we are benefiting from some offset there. Now look, insurance typically in normal conditions is a high single digit grower And our sales have continued to be strong in insurance. Speaker 200:47:28The problem that we're seeing and it's what we've been discussing and the industry has been discussing is that Risk isn't priced appropriately right now and insurers are reluctant to ramp up their underwriting engines. And so, they're increasing their prices a lot upon renewal, and they're walking away from some consumer risk and some Jurisdiction or geographical risk. Now it takes some time for those unfulfilled policies, if you will, to trickle down in the ecosystem. Some go to smaller carriers, some go to non standard carriers, some go unfulfilled, right? And as I mentioned, The revenue dynamics is upstream, we've got greater penetration of the full suite of our products. Speaker 200:48:14So we're realizing A higher data payload per origination, per policy origination. So, insurance is going to remain soft for a bit. Now, the carriers are working hard to correct that. They continue to push For approvals for higher rates, and I think that will be successful over time, but right now, They're cautious. Tenant employment screening is undergoing a bit of a reset because of regulatory scrutiny, Which led to the settlement that we announced with the CFPB around our renter screening business. Speaker 200:48:53And what happened there is the current leadership of the CFPB believes that certain categories of information Around evictions and even criminal records should not be used in tenant screening or should only be used in a certain way at a certain point in time. Now that is a differing interpretation of the FCRA And it differs materially from historic industry practices. But in working with the CFPB, we've had to adjust the data that we provide and when we provide it in accordance with their views and we've done that in our tenant employment screening business. And the CFPB and the FTC in particular have been very clear. They've said, with this change of practice and with this settlement, this TU reset, if you will, expresses the new standard for the industry. Speaker 200:49:50Now we expect The other rental screeners and their clients who will now have regulatory risk to begin adjusting their practices. So that's in large part why Kennen hasn't provided the growth that it typically would, But we expect it to stabilize and for the growth prospects to improve now that we've got this industry reset. Speaker 100:50:20Let me just add on to your question, Heather, because Chris definitely talked about the 2 verticals where we have the most Challenge, but I think it would be remiss to not point out that we have had some success as well in the emerging verticals. In particular, The media vertical grew double digits. As Chris already said, we expected something greater than that. But nevertheless, in this environment, We posted some pretty strong results in that business. And it was on the back of some significant wins With the NuStar marketing capabilities, and just to remind you, Chris talked about those in his prepared remarks. Speaker 100:51:04So that's a big deal for us as well. Our public sector vertical also grew a very strong double digits and we saw growth in what we refer to as services collections as well as tech commerce communications. In those areas, in particular, what we are seeing a really nice benefit from is our trusted call solutions, also from NuStar. The revenue is up significantly across those verticals. Operator00:51:46The next question comes from Toni Kaplan of Morgan Stanley, please go ahead. Speaker 300:51:51Thanks so much. You mentioned in the prepared remarks that September Trends had been getting got a lot worse. I wanted to ask about sort of the early October Trends, just given rates started to move quicker, did you see it getting worse or just continuing on sort of at the pace that you were seeing in September. Thanks. Speaker 100:52:15Thank you, Tony, for the question. And so I think to start And this one is where the best place to go is just the beginning of the Q3. I would say July August were months We're okay. They were tracking to the guidance that we had provided on our earnings call in late July. Unfortunately, we saw a sudden shift of lending volumes, as Chris has already articulated, In September and that impacted just to reiterate consumer lending, card, mortgage And insurance and media coming in a little bit lower than what we had expected. Speaker 100:52:56So as we looked out Into the Q4 to prepare our guide for the remainder of the year, we took that sudden reduction that we experienced In September, and we rolled that forward, we also looked at where we were at Up until last week in October where volumes were at. And what we feel like we have done is we've taken This rather weak environment and we have thoroughly derisked the Q4 guide With the numbers that we have put out today. Speaker 300:53:42Thank Operator00:53:46you. The next question comes from Ashish Subhadra of RBC Capital Markets, please go ahead. Speaker 800:53:55Thanks for taking my question. I just wanted to clarify Whether the CFPB settlement, whether that's included within the adjusted EBITDA and If you could quantify how much was it in Q3 or Q4? Because the question we are getting from investors is the revenue at the high or at the midpoint, the year 'twenty three revenue guidance was lowered by $54,000,000 but the EBITDA was lowered by $78,000,000 Why was the EBITDA so much like EBITDA guidance lowered significantly more than the revenue guidance. Is that due to CFPB settlement? Thanks. Speaker 100:54:31So Ashish, you got 2 questions there for us this morning. So let me take the first one as it pertains to the CFPB. We settled 2 matters with the TFPB and one pertains to the FTC. And that was our rental screening settlement that Chris has talked about. That was for $15,000,000 And then the security freeze matter we settled for $8,000,000 for a total of $23,000,000 All of those settlements have been reserved for within our adjusted EBITDA, Not as an add back, coming into the quarter with the exception of $7,000,000 So in my prepared remarks, I made reference to that. Speaker 100:55:19So there was an incremental aspect of $7,000,000 in the quarter that we did not have In our guidance, so the other amount was already accrued for and it had impacted adjusted EBITDA. So the second question is pertaining to our Q4 adjusted EBITDA outlook And why the change, if you look at revenue compared to our prior guide And why EBITDA is a little bit greater than that. I mean, it goes back to the question that Tony just asked about The trends in September and our Q4 guide, so it really starts with the revenue. And the revenue That we saw suddenly fall off in late September is more of our core credit Type of products that carry a higher margin. And so that is what we have taken down. Speaker 100:56:26What that's been offset by is growth that we've seen in products such as the Trusted Call Solutions, which I just referred to, That while still at a very attractive margin relative even to TransUnion's adjusted EBITDA margin is one that is at a Lower margin than the core credit products carry. So when you take that mix together, you end up with a situation where The profit expectation ends up being greater than what the revenue takedown is. Speaker 200:57:01Yes. Look, I think that's an important dynamic to appreciate. I mean, you'll see in our financial disclosure that our cost structure Remain the same. It's not a cost issue quarter to quarter. It's a revenue mix issue. Speaker 200:57:14And so when we confirmed our guide In July, based on the lending trends that we've seen, we simply expected to sell more credit products And we actually ended up selling and credit products have a very, very high flow through to profit. But as I've discussed, we had to retrieve volumes in lending, which reduced credit products. And the parts of the portfolio that performed best have a lower contribution margin, things like our mortgage credit because of the Score and Trusted Call Solutions because of license data costs. Speaker 800:57:57That's very helpful, Kara. Thank you. Thanks. Operator00:58:05The next question comes from Manav Panath of Barclays. Please go ahead. Speaker 800:58:11Thank you. I was just hoping we could talk through all your FinTech exposures, please. So just in the UK, like What was it, I suppose, as a percentage of revenues and exactly what led to the write down and then maybe what U. S. Exposures and if there's any kind of risk we should consider there as well? Speaker 200:58:34Well, let me just start FinTech generally. Manav, you and I talked about this before. We have a very large and leading share in FinTech, And that is true both in the U. S. And also in the U. Speaker 200:58:48K. And FinTech has been materially impacted In the downturn because of rising rates and also tightening lending standards. So that's already had an impact and that's already incorporated In our Q3 results, but also our thinking about the 4th quarter guide, which Todd just articulated. Now shifting to our UK business and the write down in goodwill, If you recall, we acquired the business in 2018. It was a low double digit grower then, but it was not particularly profitable. Speaker 200:59:29So, we took cost action, which slowed revenue growth for about 6 months. By the time we exited 2019, We posted 9% organic growth and the exit quarter was back to low double digit. And that was our expectation, high single, low double that underpinned the assessment of book value and the amount of goodwill that we put on the balance sheet. Well, from that point forward, the UK market has been buffeted by a series of macro issues. The first is that The regulators in the UK decided to put pressure on small dollar unsecured lenders. Speaker 201:00:14We would call them, in part, payday lenders here. Some of them were online. They call them the money lenders in the U. K. Well, Callcredit had a disproportionate share Of that marketplace, it was a foundational component of their business. Speaker 201:00:28So first, We had to adjust to that contraction, which we did, and we compensated for it by Pushing further upstream into the core and mainstream lending market and taking share, which we did. The next impact came from Brexit and then COVID. And then all of that together seems to have fueled some high rates of inflation And increasing unemployment in the UK, which has made it a very difficult lending environment, which continues to impact the Fintechs. So after digesting all of this and looking back at the growth rates that we expect, one that we've achieved, but also that we can expect in the intermediate Given the condition of that economy, we thought it was prudent to take the charge to goodwill that we did in the quarter. Operator01:01:30The next question comes from Andrew Nicholas William Blair, please go ahead. Speaker 901:01:35Hi, good morning. Thanks for taking my question. I heard quite a bit about Some of the strengths and weaknesses within core credit in the U. S. I just wanted to ask maybe more directly on market share there. Speaker 901:01:47It seems like Most of the rationale to this point is tied to end market weakness or end market dynamics. Is there anything that you can say about Competitive positioning or competitive successes in that market and how much conviction you have that you're still growing share there? Thank you. Speaker 201:02:06Yes. As we look at it, we don't believe it's a share issue. It's an issue more of business comparability at this point. Many of you have noted, the portfolios of the 3 bureaus have diverged over time. Some are more focused on direct to consumer, some are more focused on employment and income. Speaker 201:02:28And then TransUnion has Very large share, arguably leading market share in the U. S. Providing services to lenders and insurers that want to originate loans Speaker 501:02:39and policies. Speaker 201:02:41There's also a question of what's reported in the various segments and kind of the surgery you've got to do to get a true comparison. One example is that we report batch marketing services within our U. S. Vertical, not everybody does. We separate direct to consumer. Speaker 201:03:02Some people include that. We don't have commercial data. And given the size of our lending business overall, the benefits in mortgage of significant price increase from a 3rd party score provider gets diluted a bit over our larger market share and lending base than with other players in the space. And so as we compare and evaluate our own performance, you got to consider those Differences in what's included as well as the varying size of the respective positions. But no, we don't think share has Really anything to do with this, and we're not really pointing at anything to the positive or the negative. Speaker 101:03:53Great. And given the time is we're on a busy earnings day, we are going to end our call at this point. We thank you All for joining us this morning, and we look forward to speaking with you either later this week or over the course of the quarter. Thanks. Operator01:04:11The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallTransUnion Q3 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) TransUnion Earnings HeadlinesData & Business Process Services Stocks Q4 Results: Benchmarking TransUnion (NYSE:TRU)April 18 at 6:23 PM | finance.yahoo.comAnalysts Offer Insights on Industrial Goods Companies: Air New Zealand Limited (OtherANZFF) and TransUnion (TRU)April 17 at 8:16 AM | markets.businessinsider.comNow I look stupid. Real stupid... I thought what happened 25 years ago was a once- in-a-lifetime event… but how wrong I was. Because here we are, a quarter of a century later, almost to the exact day, and it’s happening again. April 19, 2025 | Porter & Company (Ad)K2 Cyber Partners with TransUnion to Deliver Cybersecurity Protection and ServicesApril 16 at 7:00 AM | businesswire.comWells Fargo & Company Issues Pessimistic Forecast for TransUnion (NYSE:TRU) Stock PriceApril 16 at 2:55 AM | americanbankingnews.comTransUnion price target lowered to $117 from $130 at Wells FargoApril 15, 2025 | markets.businessinsider.comSee More TransUnion Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like TransUnion? Sign up for Earnings360's daily newsletter to receive timely earnings updates on TransUnion and other key companies, straight to your email. Email Address About TransUnionTransUnion (NYSE:TRU) operates as a global consumer credit reporting agency that provides risk and information solutions. The company operates through U.S. Markets, International, and Consumer Interactive segments. The U.S. Markets segment provides consumer reports, actionable insights, and analytic services to businesses, which uses its services to acquire new customers; assess consumer ability to pay for services; identify cross-selling opportunities; measure and manage debt portfolio risk; collect debt; verify consumer identities; and mitigate fraud risk. This segment serves various industry vertical markets, including financial services, technology, commerce and communications, insurance, media, services and collections, tenant and employment, and public sectors. The International segment offers credit reports, analytics, technology solutions, and other value-added risk management services; consumer services, which help consumers to manage their personal finances; consumer credit reporting, insurance and auto information solutions, and commercial credit information services. It serves customers in financial services, retail credit, insurance, automotive, collections, public sector, and communications industries through direct and indirect channels. The company was formerly known as TransUnion Holding Company, Inc. and changed its name to TransUnion in March 2015. TransUnion was founded in 1968 and is headquartered in Chicago, Illinois.View TransUnion ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Archer Aviation Unveils NYC Network Ahead of Key Earnings Report3 Reasons to Like the Look of Amazon Ahead of EarningsTesla Stock Eyes Breakout With Earnings on DeckJohnson & Johnson Earnings Were More Good Than Bad—Time to Buy? 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There are 10 speakers on the call. Operator00:00:00Good morning, and welcome to TransUnion's 2023 Third Quarter Earnings Conference Call. All participants will be in listen only mode. Please note this event is being recorded. I would now like to turn the conference over To Aaron Hoffman, Senior Vice President, please go ahead. Speaker 100:00:31Good morning, everyone, and thank you for attending today. Joining me on the call are Chris Cartwright, President and Chief Executive Officer Todd Cello, Executive Vice President and Chief Financial Officer. We Posted our earnings release and slides to accompany this call on the TransUnion Investor Relations website this morning. Our earnings release and the accompanying Closures and financial measures along with their corresponding reconciliations of these non GAAP financial measures to their most Today's call will be recorded and a replay will be available on our website. We will also be making statements during this call that are forward These statements are based on current expectations and assumptions and are subject to risks and uncertainties. Speaker 100:01:21Actual Results could differ materially from those described in the forward looking statements because of factors discussed in today's earnings release, in the comments made during this earnings call And in our most recent Form 10 ks, Forms 10 Q and other reports and filings with the SEC, we do not undertake any duty to update any forward With all that, let me turn it over to Chris. Speaker 200:01:45Thanks, Aaron. Let me add my welcome and share our agenda for the call this morning. First, I'll discuss the macroeconomic conditions we're facing and the impact that they had on our business in the Q3. Then I'll provide an overview of our Q3 financial performance. I'll also review the continued progress we're making with NuStar, accelerating revenue growth Achieving savings targets. Speaker 200:02:08I'll wrap up with a short discussion about our approach to managing through a more challenging and uncertain macro environment. Finally, Todd will detail our 3rd quarter results along with our 4th quarter and full year guidance. Economic conditions softened across several TransUnion markets in the Q3, most notably in the U. S. And the U. Speaker 200:02:31K. While U. S. Consumers continue to benefit from low unemployment and modest real wage growth, Lingering inflation and rising borrowing costs have taken a toll on household finances. Spending has slowed and consumers have largely through the excess savings accumulated during COVID. Speaker 200:02:50Although demand for credit remains strong despite elevated costs, Banks have tightened lending standards due to weakening consumer finances and increasing capital constraints. Recent commentary from lenders supports These observations, noting that cracks have appeared across consumer lending, especially in the lower credit tiers. Now TransUnion entered the 3rd quarter cautiously optimistic after exceeding guidance in the 1st two quarters, while maintaining our full year guidance as a cushion In U. S. Financial Services, year over year revenue grew 3% in July 1% in August, but declined 5% in September. Speaker 200:03:44Rising rates in the quarter had a negative impact as the 10 year treasury rate spiked 50 basis points after only increasing 20 basis points in the first half of the year. The decrease in loan demand Combined with tighter credit standards also fueled a pullback in marketing activity, which negatively affected our consumer audience and campaign management volumes. We experienced a similar slowdown in our insurance vertical, where carriers remain primarily focused on increasing and have reduced marketing to acquire new customers. Insurance revenue grew 5% in July, 4% in August, But declined 4% in September. Increasing policy renewal rates and carriers exiting unprofitable geographies Is fueling increased consumer shopping, which only partially offsets the decline in marketing volumes. Speaker 200:04:37And while policy attrition from large carriers is often Acquired by smaller and non standard carriers, TU typically realizes less revenue per transaction as smaller carriers usually do not utilize Financial Services and Insurance volumes have a high flow through to profits And their softening has weighed on our adjusted EBITDA dollars and margin. Our international segment continues to benefit from healthy conditions in India and Asia Pacific and strong market outperformance in Canada. Other parts of the portfolio such as the UK, Latin America And Africa slowed over the quarter, although segment revenues in total were up low double digits. In the 3rd quarter, TransUnion grew revenues 3% organically, driven by strength in international, NuStar and several verticals within U. S. Speaker 200:05:31Emerging Markets. U. S. Markets grew 2% with financial services flat and emerging verticals up 4% in total We continue to benefit from our portfolio diversification as we grew double digits in Public Sector and Media and high single digits in Tech Retail and E Commerce, all areas of recent organic and inorganic investment. Revenue in our international segment grew by 11% in constant currency in September for the 10th consecutive quarter of double digit growth. Speaker 200:06:14India led with 31% revenue growth, while Canada and APAC also grew revenues double digits. We continue to outperform our underlying markets because of solution innovation, share gains and expansion into new adjacencies. We prepaid another $75,000,000 of debt during the quarter, bringing our total for the 1st 9 months to $225,000,000 And we expect to make further prepayments in the Q4. We also settled 2 legal matters with the CFPB And the FTC with no admission of wrongdoing. We're pleased to have resolved these matters and to proceed with our work of providing important business services economic headwinds and is proving to be nicely accretive to our growth rates in our core U. Speaker 200:07:10S. Verticals, even in these challenging market conditions. While bookings and subscriptions continue their strong growth, NuStar's transactional revenues in marketing and risk solutions softened in the quarter. As a result, we're reducing our 4th quarter growth assumptions in line with volumes in September and lowering our full year guide to mid single digit growth instead of high single digits. We also expect a 31% EBITDA margin, up around 4.50 basis points Over 2022 as we complete integration and achieve our target cost synergies. Speaker 200:07:50In the quarter, we announced a number of new partnerships that further support our confidence in NuStar's growth prospects. In marketing, we signed Multi year identity deal with a large CPG company as well as new business with a large apparel company in a major personal care brand. We also announced that our Marketing Solutions business True Audience will integrate its identity product line With AWS entity resolution from Amazon Web Services, True Audience brings advanced identity resolution capabilities to improve their data hygiene and customer insights from within AWS' secure cloud environment. Communication solutions continue to grow on the strength of our suite of trusted of TrueContact Trusted Call Solutions or TCS, Which grew about 70% in the 3rd quarter across a range of verticals. We recently expanded our relationship with 1 of the 3 major wireless Branded Calling allows users to place their brand and call purpose on outbound calls to cut through the fog of anonymous robocalls And securely engage with clients and prospects. Speaker 200:09:11We also won a multi year multimillion dollar with a large federal government agency to provide branded call We're enjoying strong growth in our TCS solutions and broad interest across our verticals as clients value Speaker 300:09:30Now I Speaker 200:09:30want to wrap up my part of the call by reinforcing our long term approach to creating shareholder value even as macroeconomic and lending market conditions may cycle. We're focused on helping our customers address Their current market challenges by applying our complementary credit, marketing and fraud solutions through our insight led consultative approach. With tightening lending standards, declining loan volumes and rising delinquencies, our rich trended and alternative credit data And powerful analytic and modeling tools will help lenders maximize their portfolios and find attractive segments for growth. Our marketing solutions enable customers to optimize their spending and ensure positive outcomes, Which is even more important in challenging conditions. Our identity resolution, audience segmentation and predictive analytics help clients understand Which customers to contact, how best to reach them and what messages will most likely resonate. Speaker 200:10:32Planning and measuring the effectiveness of marketing spending by utilizing our rich history of pipeline conversion data ensures that the best results are achieved with the least Possible investment and our trusted call and fraud mitigation solutions also help clients reach consumers more efficiently and minimize their fraud losses. We continue to invest in the strategic initiatives that will position us for our next chapter of growth and profitability. These include innovations from combining the best of NuStar and TransUnion, launching our next generation fraud mitigation platform And scaling our new products across our thriving international footprint. And reducing our cost structurally by scaling our global capability centers, Refining our organization structure and standardizing and modernizing our core technologies and operations Remains key objectives for TransUnion. Through the series of initiatives, many of which have been in progress for some time now, We believe we can further reduce operating costs materially. Speaker 200:11:38Given the more challenging growth environment in which we find ourselves, we are accelerating these efforts And we'll share additional details when appropriate. We also remain laser focused on achieving the cost savings from our acquisition integrations And reducing our interest expense through prepayment of our debt. That concludes my comments this morning on our market conditions, our 3rd quarter performance And our approach to managing through these softer market conditions. Todd will now provide further details on our Q3 financial results and our Q4 And our full year 2023 outlook. Over to you, Todd. Speaker 100:12:17Thanks, Chris, and let me add my welcome to everyone. I'll start off with our consolidated financial results. 3rd quarter consolidated revenue increased 3% on a reported and constant currency basis. There was no impact from acquisitions and immaterial FX impact. Our business grew 2% on an organic constant currency basis, Excluding mortgage from both the Q3 of 20222023. Speaker 100:12:47Adjusted EBITDA increased 5% on a reported basis and 4% in constant currency. This result was negatively impacted by an incremental $7,000,000 charge for the recent legal settlements above the amount we previously reserved. We also benefited from a reversal of accruals for variable cash compensation to account for our current view of revenue and adjusted EBITDA for the full year. Our adjusted EBITDA margin was 36.8%, up 50 basis points compared to the year ago 3rd quarter and improved sequentially by 180 basis points from the Q2 of 2023. 3rd quarter adjusted diluted EPS declined 2% as a result of higher interest expense. Speaker 100:13:36Finally, we took a $495,000,000 impairment to our U. K. Business during the quarter. This remains an attractive market and business for TransUnion with a highly diversified portfolio, an array of successful product offerings like TruVizion and TruEmpower and an adjusted EBITDA margin over 40%. Leveraging our innovation, We've gained meaningful share across the lending ecosystem and delivered market leading growth under our ownership. Speaker 100:14:07However, The U. K. Has faced an unusually harsh confluence of macro events resulting in inflationary pressures and soaring interest rates, Which has slowed the underlying lending growth. Before I get into U. S. Speaker 100:14:22Markets results, a reminder that we are reporting NuStar revenue within vertical market structure and we will discontinue providing standalone Newstar reporting at the end of 2023. Now looking at segment financial performance for the Q3, U. S. Markets revenues were up 2% compared to the year ago quarter. Adjusted EBITDA for U. Speaker 100:14:45S. Markets increased 2% and adjusted EBITDA margin was flat at 35.2%. Financial Services revenue was flat. Consumer lending revenue declined 9% compared to high Single digit growth in the Q3 of 2022. Absolute lending volumes remain healthy as unsecured personal loans Have become a mainstream product for consumers. Speaker 100:15:11With that said, marketing activity remains depressed, Rising rates have weighed on consumer demand and capital funding continues to be highly selective. Credit card business was down 5% compared to low double digit growth in the year ago quarter with marketing down mid teens. Issuers continue to react to rising delinquencies by moderating marketing spend. With that said, like with consumer lending, Activity levels for card remain healthy on a historical basis. Our auto business delivered 6 Growth in the quarter on the strength of continued share gains, pricing, strong prequalification volumes, the impact of cross selling NuStar Marketing And call center solutions. Speaker 100:16:00We are seeing strong demand for new vehicles, somewhat offset by continued weakness in the used vehicle market And challenges around affordability. For mortgage, revenue was up 26% in the quarter despite inquiry volumes falling about 21%. As Chris pointed out, growth slowed considerably over the course of the quarter as mortgage rates jumped to 20 year highs in recent weeks. Existing home sales reached their lowest level since 2011 and applications in mid October fell to their lowest point since 1995. On a trailing 12 month basis, mortgage represented about 7% of total TransUnion revenue. Speaker 100:16:45For 2023, we now expect the inquiry market to be down roughly 30% and our revenue to increase roughly 15 Let me now turn to our emerging verticals, which grew 4% in the quarter. Insurance delivered low single digit growth Despite the challenges that Chris described, even in this environment, we continue to win new business for innovative products like TruVizion Driving History, Which has grown 5 fold over the past 5 years, penetration of newer markets like life and commercial auto And successful cross selling of NuStar and SonTek solutions. Tenant and employment screening was down As we've recalibrated our solutions to provide the most customer and consumer friendly approach possible. This has caused us some volume in the short term, but we believe it will ultimately be a long term competitive advantage. The Public Sector Media and Tech Retail and E Commerce Verticals all delivered strong growth, Highlighting the value of our diversified business and in particular, the benefits of integrating NuStar Solutions Into existing TransUnion end markets to enhance growth. Speaker 100:18:04The telco vertical was down slightly as declines in landline caller ID offset growth in other areas like Trusted Call Solutions. Consumer Interactive revenue declined 3% In line with our expectations, adjusted EBITDA margins were 50.4%, up about 80 basis points clients as we recalibrated our marketing approach to focus on higher value consumers. Thus far, we've seen good returns on the revamped tactics With better than expected customer acquisition stats at attractive cost to acquire. Our indirect business was flat as lenders have pulled back on utilizing offer aggregators and other channels for marketing Like the trends we're experiencing in our financial services vertical, our breach and identity protection offerings Built through our acquisition of SonTek, continued to deliver good growth. For my comments about All revenue growth comparisons will be in constant currency. Speaker 100:19:18For the total segment, revenue grew 11% with 3 of our 6 reported markets Growing by double digits. Adjusted EBITDA margin was 45.3%, up about 95 basis points. Now let's dig into the specifics for each region. In India, our largest international market, we grew 31%, reflecting strong market trends And generally healthy consumers. We saw meaningful growth in both consumer and commercial credit markets as well as from fraud, marketing and direct to consumer offerings. Speaker 100:19:54We continue to expect India to deliver another year Of over 30% growth. In the U. K, revenue declined 4%. Excluding revenue related to one time Contracts included with the U. K. Speaker 100:20:08Government, we would have declined 2%. While the U. K. FinTech market continues to be challenged, The rest of our business is growing despite the challenged macro environment with good growth in banking driven by share gains And traction with products like TruVison and CreditView as well as strong performance in insurance and gaming. Our Canadian business grew 17% in the 3rd quarter. Speaker 100:20:35While the market remains low growth, We have generated strong outperformance across our portfolio and continue to win new share in Financial Services, FinTech, Insurance and Direct to Consumer. In Latin America, revenue was up 3% with healthy online performance offset by a decline in batch marketing activity. Brazil was down in the quarter as we've seen some weakness in the FinTech market. While macro conditions softened across Latin America, Our teams continue to win new business in financial services, insurance, government and telcos. In Asia Pacific, we grew 12% from continued good performance in Hong Kong and very strong growth in Philippines, Where we continue to add new offerings and win new business. Speaker 100:21:28Finally, Africa increased 8% Based on a broadly strong performance across the portfolio and the region, despite a challenging macroeconomic and social environment in Several of our largest markets. We ended the quarter with roughly $5,400,000,000 of Debt after prepaying another $75,000,000 in the quarter. That left us with 420 $1,000,000 of cash on the balance sheet. We finished the quarter with a leverage ratio of 3.7 times. We have now prepaid $225,000,000 of debt in 2023. Speaker 100:22:07And at this point, we intend to prepay additional debt in the 4th quarter. Looking back, since we announced the acquisition of NuStar in September of 2021, we've prepaid about $1,500,000,000 of debt. We're in the midst of refinancing our revolving credit facility and Term Loan A that matures on December 10, 2024. Based on early indications, we expect a favorable outcome and we will update you when we complete this transaction. And to reiterate our previous comment, at this time, we have no intention to pursue any large scale acquisitions And even smaller bolt on acquisitions are not in our plans this year. Speaker 100:22:50We are focused on integrating and maximizing the growth potential of NuStar, Sontiq And Argus. That brings us to our outlook for the Q4. We expect FX to be insignificant to revenue And adjusted EBITDA. We expect revenue to come in between $917,000,000 $932,000,000 or up 2% to 3% on an as reported and organic constant currency basis. Our revenue guidance includes approximately 2 points of Tailwind from mortgage, meaning that we expect the remainder of our business will be flat to up 1% On an organic constant currency basis, we are reducing our revenue assumption considerably from that implied in our previous guidance. Speaker 100:23:39We have essentially extrapolated the difficult September results across the Q4 to better match the current trends in our business. We expect adjusted EBITDA to be between $303,000,000 $315,000,000 down 2% to 6 We expect adjusted EBITDA margin to be down 180 basis points to 260 basis points. I want to spend a minute on the sequential change quarter over quarter in our adjusted EBITDA expectations. The high end of our 4th quarter $41,000,000 lower than the actual result for the Q3. More than 3 quarters of that Change is a result of the reduced revenue outlook, which primarily came in Financial Services and carries a very high flow through to margin. Speaker 100:24:30The remainder is largely the result of the 2 items I mentioned earlier that the 3rd quarter benefited from cash compensation that was partially offset by the incremental reserve related to our settlement with the CFPB. We also expect adjusted diluted earnings per share to be between $0.67 $0.72 a range of down 8% to 14%. Turning to the full year, we expect approximately one point of headwind from FX on revenue and adjusted EBITDA, and we expect less than one point of impact from M and A. We expect revenue in between $3,794,000,000 $3,809,000,000 Or up 2% to 3% on an as reported and organic constant currency basis and up about 2% Excluding the impact of mortgage, the roughly $53,000,000 reduction at the midpoint of our full year revenue expectation Is comprised of $9,000,000 from weaker mortgage inquiries and $6,000,000 of FX headwinds, With the remainder largely as a result of the softening trends in consumer lending, insurance and NuStar. For our business segments, we expect U. Speaker 100:25:54S. Markets to grow low single digits and flat excluding mortgage. We anticipate Financial Services to be flat and down low single digits excluding mortgage. We expect emerging verticals to be up low single digits. We anticipate that international will grow low double digits in constant currency terms, driven by ongoing strength in emerging markets. Speaker 100:26:19And we continue to expect Consumer Interactive to decline low single digits. Turning back to total company outlook, we expect adjusted EBITDA to be between $1,320,000,000 and 1.33 $3,000,000,000 down 1% to 2%. That would result in adjusted EBITDA margin being down 130 to 1 50 basis points. We anticipate adjusted diluted EPS being down 9% to 11%. We continue to expect our adjusted tax rate to be approximately 23%. Speaker 100:26:56Depreciation and amortization is expected Approximately $520,000,000 and we expect the portion excluding step up amortization from our 20 12, change in control and subsequent acquisitions to be about $225,000,000 We anticipate net Interest expense will be about $270,000,000 for the full year, down slightly as a result of our continued debt prepayments. And we expect capital expenditures to come in at about 8% of revenue. Finally, given the current level of uncertainty about the global economy, we believe it is prudent to Draw the 2025 financial targets that we provided in mid March of 2022. Clearly, a lot has changed in the macro backdrop since our Investor Day in March of 2022. However, we remain As bullish as ever about our long term prospects, the value of our expanded product portfolio and our ability to outgrow our underlying markets. Speaker 100:28:02We intend to reestablish new targets when we have greater visibility into the trajectory of the global economy. I'll now turn the call back to Chris for some final comments. Speaker 200:28:14Thank you, Todd. And to wrap up, the Q3 proved to be more challenging than expected and Conditions deteriorated as it progressed. But despite these headwinds, we delivered growth from our diversified portfolio And we remain focused on delivering a good 2023. We continue to execute against our strategy And we're proactively driving new revenue opportunities, investing in our business, managing our cost structure And maintaining our capital discipline. We remain highly confident in the long term performance and potential of our business, And we're taking all the necessary steps to deliver the best possible results for shareholders. Speaker 200:28:55Now let me turn the time over to Aaron. Speaker 100:28:58Thanks, Chris, that concludes our prepared remarks today. For the Q and A, we would ask that you each ask only one question so that we can include more participants. Operator, we can begin the Q and A session now. Operator00:29:12We will now begin the question and answer session. And our first Question will come from Kelsey Xu of Autonomous. Please go ahead. Good morning. Thanks for taking my question. Operator00:29:52Chris, I was wondering if you can help us understand the NuStar revenue mix a little bit better in terms of what percentage of NuStar revenue Speaker 200:30:11Yes, sure. Aaron, you're going to Yes. Speaker 100:30:13So, Kelsey, so 80% roughly portion of NuStar is subscription based. Marketing is about 40% of the total. So 80% of 40% is about 32, so about a third of total NuStar is would be truly subscription based revenue. Speaker 200:30:34Yes. And look, let's take this opportunity to talk about NuStar's performance in the Q3. As you know, it was one of the leading growth areas 7% organic year over year, which we feel is especially strong given the overall difficult Macro conditions that we discussed in our prepared commentary. That said, we were Higher growth out of NuStar. We were expecting roughly 10% organic growth over the second half of the year. Speaker 200:31:08And what we experienced, well, just to break down the piece parts, when There's a macroeconomic pullback as we've seen in lending and in insurance. It's going to impact Various components of our business. It will reduce the number of batch prescreens. It will reduce the number of marketing Campaigns, which impacts our audience generation and segmentation and our campaign planning tools. And that's what we experienced. Speaker 200:31:41Now, the subscription piece of overall NuStar revenue has held up quite well and consistent With the financial expectations that we outlined. So that's a positive. We've also booked Exactly what we expected to book at this point in the year and we're trending toward Achieving our full bookings targets, which will be a little bit above last year's bookings, which were a record year for NuStar. So The sale of NuStar products across the three lines is positive. Now the mix of what we're selling at NuStar Varied from our expectations in that, we're selling less data and audience services That are quicker to fulfill and recognize revenue than we expected, and we're selling more effectiveness measurement, Which are consulting type projects where the booking takes more time to realize. Speaker 200:32:46And so some of the revenue from the bookings pushed Out of the Q3 and even out of Q4 expectations. So that was one of the components in our guide down for NuStar. And then the 3rd component really rests on the volume of data sales of True audience, audience generation in the specific marketing campaign management. And again, that's going to correlate with Growth or decline in lending volume and insurance origination. So hopefully that gives you a sense of the dynamics That underpin Newstar performance. Operator00:33:26Super helpful. Thanks so much. The next question comes from Faiza Alwy of Deutsche Bank. Please go ahead. Yes. Operator00:33:38Hi. Thank you. Good morning. Speaker 400:33:40I wanted to touch On your comment regarding lending standards that tightened through the course of the quarter, I'm curious if it was across the board in terms of Lenders, whether it's regional banks, fintechs or big banks, I mean, if you can talk about any trends across various consumer sites, Whether it's a prime versus prime, so just a bit more color around what's happening with lenders lending standards. Speaker 200:34:08Yes, listen, absolutely. So happy to start with some overview on the macro conditions we see Cross Banking. So as the quarter progressed, I think well, first on the positive. Unemployment remains low and there is some real wage growth. Although, I think the consensus is that the employment market is deteriorating somewhat. Speaker 200:34:35That said, The metrics and measures of that, you've got pros and you've got cons. That said though, the Excess in savings that had accumulated on consumer balance sheets declined a lot. And recently, the Federal Reserve Bank of San Francisco suggested that those excess savings balances would be gone by the end of the third quarter and have been gone for some time for all segments of the population, except the most affluent quintile, right? And so over the course of the quarter, But really pronounced in September, we saw banks becoming more cautious about Originating new loans. Now over the past couple of weeks, the large banks, the large publicly traded banks have reported their results. Speaker 200:35:26And while they were down a bit, they were generally more positive than expectations. The one area though that underperformed expectations has been New lending volumes. Now if you tease that apart, the revolving component of new loans is fine. It's the incremental volume to consumers that was most impacted. Now the other dynamic to be aware of in the market, And this really goes back to the earlier part of the year where we had some stability concerns. Speaker 200:35:59There was a flight of deposits Upmarket to larger institutions that were perceived as more stable. And so in this recent round of earnings, you Those banks, while they're performing well, it's driven by net interest income growth, But the lending activity is down. When you look at the performance of mid market banks and smaller banks, The pinch on new credit origination is quite pronounced. And we see that in our numbers because, I mean, obviously, lending is big part of our portfolio and we serve banks, traditional banks of all sizes and FinTech, of course, as well Got the largest share there and we're just seeing a pullback in lending volumes. And when banks become more cautious, That's going to reduce the number of batch prescreens that we produce. Speaker 200:36:58It's going to reduce the credit pools that happen and it's going to reduce the marketing planning. And so it's really this macro retreat that we've seen in the lending that's impacting the business fundamentals. Speaker 400:37:11Thanks, guys. Operator00:37:16The next question comes from Jeff Meuler of Baird. Please go ahead. Speaker 500:37:22Yes. Thank you. So I know Chris had more details to come on accelerating structural expense and Efficiency programs, but just anything else you can talk to regarding how much There is to adjust the expense structure to a weaker volume environment. And I caught The decremental margins and incentive comp adjustment in Q3, but the Q4 Margins and implied decremental margins in Q4 still seem really weak. And I'm just trying to understand if that's more a function of time To implement the new programs or just how we can think through like incremental margins going forward volume environment remains weak for a while. Speaker 500:38:14Sorry for the long question. Thanks. Speaker 200:38:18Yes. No, listen, it's a good question. And there are several things to unpack in it. The first I would say is, and we purposely included our year over year revenue growth rates And each month in the quarter, so you can appreciate how materially volumes fell in September And lending origination and also insurance, right? So we've had a revenue drop Very recently, without much time to adjust the expense structure, right? Speaker 200:38:54And so Over the past 18 months, as our markets have progressively slowed, we've been proactively managing expenses. It starts with the easy things of reducing travel and of cutting external consulting, if you will, reducing marketing, and of course, being very judicious about headcount. So we decelerated new hires and then we've been in somewhat of a hiring freeze and not filling backfills. And all of that has allowed us To kind of proactively adjust the expense structure in a softening revenue environment and maintain Our strong margins. But again, there will be some work that we need to do to balance The cost structure against the current revenue environment and you can count on us to do What is necessary? Speaker 200:39:51But in my comments, I was really referring to The benefit of the global operating model that we implemented roughly 3 years ago, where we have been progressively Increasing the proportion of our employees that are in centers of excellence that are located in attractive talent markets That can reduce our cost structure over time. Now, we've moved to roughly 1 third of total TransUnion employees operating over those markets. That said, there's still more opportunity as we evolve toward what we'd say the ideal balance, Both in terms of total employees and the management structure, what functions are being led over that. And we're going to continue to push on that dimension because It will have a material impact on our structural profitability. Additionally, we've centralized all of the operating Support functions for our different credit businesses. Speaker 200:40:51We will be able to streamline and balance Our cost against our volumes more effectively by leveraging that. The other point I wanted to make though is in our technology journey. We've been investing to migrate to the cloud via Project RISE. We've taken a significant proportion of our applications. We've also digested All of the NuStar technology that came and we've begun leveraging the core NuStar platform, 1ID, which we now call When true, as a destination for our various data product platforms globally. Speaker 200:41:30What you'll see us do now is accelerate our efforts to consolidate the multiple and redundant platforms we have On this next generation and very technologically advanced platform, which is going to let us take a lot of technology costs out. So there will be a strong focus on that. And finally, we got to complete the work on acquisition integration. We continue to do Really well on that front. We're highly confident we're going to take $80,000,000 out of the NuStar cost structure. Speaker 200:42:02We'll get some benefit going forward from the full realization Those synergies and we're going to hit our integration takeouts for Argus and SonTic as well. So really think about cost management along those dimensions. Yes, there's been a drop in revenue. It takes some time Correct the cost structure, but there's also a lot of structural benefits in the pipeline that we're going to accelerate And there will be margin improvements as a result of acquisition integration. Operator00:42:41The next question comes from Andrew Steinerman of JPMorgan. Please go ahead. Speaker 600:42:47Hi. I think you talked Excuse me. You talked about bringing out a new fraud platform today. I just wanted to see within NuStar, Is fraud still about a quarter of the business? And then strategically, I want to know Again, this is on the fraud side, how you've done in integrating NuStar with iovation and TLO? Speaker 600:43:12Or is that really kind of part of the next reiteration of fraud? Speaker 200:43:17Yes. Good question, Andrew. So the NuStar risk or fraud business is roughly 20% of their Total revenue, communications would be the largest. It grew quite nicely, low double digits in the quarter. And marketing grew high single digits in the quarter. Speaker 200:43:36We just expected it to grow much faster. Risk didn't grow very much, Right. It grew low single digits, and it's really because of the impact we see on the risk volumes that are coming through call centers And look, our contracts are volume bounded. And when we budget or set expectations, we're assuming a certain degree of up charges because of volume excess, that just didn't happen this quarter. We believe it's tied to the softening macro conditions. Speaker 200:44:09In terms of platforms and the next generation of this, look, fraud is a substantial part of our business. We have multiple fraud products and platforms in the U. S. When we acquired Callcredit, we got another Set of attractive, although largely duplicative fraud solutions in the UK market. Then when we bought NuStar, well, we got A variety of risk point solutions, but we also got a great platform in 1ID upon which we can unify all of these different Fraud mitigation products on a common data repository with orchestration and advanced analytics in machine learning and AI. Speaker 200:44:53We have been working for really since the outset of the acquisition to accomplish all of that technical work. We launched that version of the product in the early part of next year. Now you can think of that as like an advanced beta launch with Speaker 100:45:09friendly customers, but it's going to allow us Speaker 200:45:09to do But it's going to allow us to do 2 things. 1, it is truly a platform of the future. It's Next Generation, it's a global consolidation of all of our point solutions and it can be leveraged across the globe, Right. So, we're very excited about that and it should allow us to accelerate growth in this important product category. It's also going to allow us to retire All of the legacy cost structures, whether it's the variety of solutions in the UK Or it's iovation or it's the legacy solutions here in TransUnion in Chicago. Speaker 600:45:53Excellent. Thanks for taking the time. Operator00:45:59The Next question comes from Heather Balsky of Bank of America. Please go ahead. Speaker 700:46:05Hi, thank you. I was hoping you could just Dive in a little bit more on your emerging vertical segment. Just given the changes that you made in the Screening part of the business and what you're seeing in insurance, can you just help us kind of think about what you need to see for those sales To accelerate and kind of visibility in the near term? Thanks. Speaker 200:46:35Sure. Right. So, I mean, look, from a first principles basis, we've talked about The diversification we've achieved in our portfolio because of our investments in recent times. And even though this is a difficult quarter In a challenging macro period, you can see some of those benefits coming to the fore. Old TransUnion Would it be reporting results based on U. Speaker 200:47:00S. Credit sales only and those would be negative. We've got 4% growth happening in the emerging markets, although not all cylinders are firing and emerging as you point to, right? But we are benefiting from some offset there. Now look, insurance typically in normal conditions is a high single digit grower And our sales have continued to be strong in insurance. Speaker 200:47:28The problem that we're seeing and it's what we've been discussing and the industry has been discussing is that Risk isn't priced appropriately right now and insurers are reluctant to ramp up their underwriting engines. And so, they're increasing their prices a lot upon renewal, and they're walking away from some consumer risk and some Jurisdiction or geographical risk. Now it takes some time for those unfulfilled policies, if you will, to trickle down in the ecosystem. Some go to smaller carriers, some go to non standard carriers, some go unfulfilled, right? And as I mentioned, The revenue dynamics is upstream, we've got greater penetration of the full suite of our products. Speaker 200:48:14So we're realizing A higher data payload per origination, per policy origination. So, insurance is going to remain soft for a bit. Now, the carriers are working hard to correct that. They continue to push For approvals for higher rates, and I think that will be successful over time, but right now, They're cautious. Tenant employment screening is undergoing a bit of a reset because of regulatory scrutiny, Which led to the settlement that we announced with the CFPB around our renter screening business. Speaker 200:48:53And what happened there is the current leadership of the CFPB believes that certain categories of information Around evictions and even criminal records should not be used in tenant screening or should only be used in a certain way at a certain point in time. Now that is a differing interpretation of the FCRA And it differs materially from historic industry practices. But in working with the CFPB, we've had to adjust the data that we provide and when we provide it in accordance with their views and we've done that in our tenant employment screening business. And the CFPB and the FTC in particular have been very clear. They've said, with this change of practice and with this settlement, this TU reset, if you will, expresses the new standard for the industry. Speaker 200:49:50Now we expect The other rental screeners and their clients who will now have regulatory risk to begin adjusting their practices. So that's in large part why Kennen hasn't provided the growth that it typically would, But we expect it to stabilize and for the growth prospects to improve now that we've got this industry reset. Speaker 100:50:20Let me just add on to your question, Heather, because Chris definitely talked about the 2 verticals where we have the most Challenge, but I think it would be remiss to not point out that we have had some success as well in the emerging verticals. In particular, The media vertical grew double digits. As Chris already said, we expected something greater than that. But nevertheless, in this environment, We posted some pretty strong results in that business. And it was on the back of some significant wins With the NuStar marketing capabilities, and just to remind you, Chris talked about those in his prepared remarks. Speaker 100:51:04So that's a big deal for us as well. Our public sector vertical also grew a very strong double digits and we saw growth in what we refer to as services collections as well as tech commerce communications. In those areas, in particular, what we are seeing a really nice benefit from is our trusted call solutions, also from NuStar. The revenue is up significantly across those verticals. Operator00:51:46The next question comes from Toni Kaplan of Morgan Stanley, please go ahead. Speaker 300:51:51Thanks so much. You mentioned in the prepared remarks that September Trends had been getting got a lot worse. I wanted to ask about sort of the early October Trends, just given rates started to move quicker, did you see it getting worse or just continuing on sort of at the pace that you were seeing in September. Thanks. Speaker 100:52:15Thank you, Tony, for the question. And so I think to start And this one is where the best place to go is just the beginning of the Q3. I would say July August were months We're okay. They were tracking to the guidance that we had provided on our earnings call in late July. Unfortunately, we saw a sudden shift of lending volumes, as Chris has already articulated, In September and that impacted just to reiterate consumer lending, card, mortgage And insurance and media coming in a little bit lower than what we had expected. Speaker 100:52:56So as we looked out Into the Q4 to prepare our guide for the remainder of the year, we took that sudden reduction that we experienced In September, and we rolled that forward, we also looked at where we were at Up until last week in October where volumes were at. And what we feel like we have done is we've taken This rather weak environment and we have thoroughly derisked the Q4 guide With the numbers that we have put out today. Speaker 300:53:42Thank Operator00:53:46you. The next question comes from Ashish Subhadra of RBC Capital Markets, please go ahead. Speaker 800:53:55Thanks for taking my question. I just wanted to clarify Whether the CFPB settlement, whether that's included within the adjusted EBITDA and If you could quantify how much was it in Q3 or Q4? Because the question we are getting from investors is the revenue at the high or at the midpoint, the year 'twenty three revenue guidance was lowered by $54,000,000 but the EBITDA was lowered by $78,000,000 Why was the EBITDA so much like EBITDA guidance lowered significantly more than the revenue guidance. Is that due to CFPB settlement? Thanks. Speaker 100:54:31So Ashish, you got 2 questions there for us this morning. So let me take the first one as it pertains to the CFPB. We settled 2 matters with the TFPB and one pertains to the FTC. And that was our rental screening settlement that Chris has talked about. That was for $15,000,000 And then the security freeze matter we settled for $8,000,000 for a total of $23,000,000 All of those settlements have been reserved for within our adjusted EBITDA, Not as an add back, coming into the quarter with the exception of $7,000,000 So in my prepared remarks, I made reference to that. Speaker 100:55:19So there was an incremental aspect of $7,000,000 in the quarter that we did not have In our guidance, so the other amount was already accrued for and it had impacted adjusted EBITDA. So the second question is pertaining to our Q4 adjusted EBITDA outlook And why the change, if you look at revenue compared to our prior guide And why EBITDA is a little bit greater than that. I mean, it goes back to the question that Tony just asked about The trends in September and our Q4 guide, so it really starts with the revenue. And the revenue That we saw suddenly fall off in late September is more of our core credit Type of products that carry a higher margin. And so that is what we have taken down. Speaker 100:56:26What that's been offset by is growth that we've seen in products such as the Trusted Call Solutions, which I just referred to, That while still at a very attractive margin relative even to TransUnion's adjusted EBITDA margin is one that is at a Lower margin than the core credit products carry. So when you take that mix together, you end up with a situation where The profit expectation ends up being greater than what the revenue takedown is. Speaker 200:57:01Yes. Look, I think that's an important dynamic to appreciate. I mean, you'll see in our financial disclosure that our cost structure Remain the same. It's not a cost issue quarter to quarter. It's a revenue mix issue. Speaker 200:57:14And so when we confirmed our guide In July, based on the lending trends that we've seen, we simply expected to sell more credit products And we actually ended up selling and credit products have a very, very high flow through to profit. But as I've discussed, we had to retrieve volumes in lending, which reduced credit products. And the parts of the portfolio that performed best have a lower contribution margin, things like our mortgage credit because of the Score and Trusted Call Solutions because of license data costs. Speaker 800:57:57That's very helpful, Kara. Thank you. Thanks. Operator00:58:05The next question comes from Manav Panath of Barclays. Please go ahead. Speaker 800:58:11Thank you. I was just hoping we could talk through all your FinTech exposures, please. So just in the UK, like What was it, I suppose, as a percentage of revenues and exactly what led to the write down and then maybe what U. S. Exposures and if there's any kind of risk we should consider there as well? Speaker 200:58:34Well, let me just start FinTech generally. Manav, you and I talked about this before. We have a very large and leading share in FinTech, And that is true both in the U. S. And also in the U. Speaker 200:58:48K. And FinTech has been materially impacted In the downturn because of rising rates and also tightening lending standards. So that's already had an impact and that's already incorporated In our Q3 results, but also our thinking about the 4th quarter guide, which Todd just articulated. Now shifting to our UK business and the write down in goodwill, If you recall, we acquired the business in 2018. It was a low double digit grower then, but it was not particularly profitable. Speaker 200:59:29So, we took cost action, which slowed revenue growth for about 6 months. By the time we exited 2019, We posted 9% organic growth and the exit quarter was back to low double digit. And that was our expectation, high single, low double that underpinned the assessment of book value and the amount of goodwill that we put on the balance sheet. Well, from that point forward, the UK market has been buffeted by a series of macro issues. The first is that The regulators in the UK decided to put pressure on small dollar unsecured lenders. Speaker 201:00:14We would call them, in part, payday lenders here. Some of them were online. They call them the money lenders in the U. K. Well, Callcredit had a disproportionate share Of that marketplace, it was a foundational component of their business. Speaker 201:00:28So first, We had to adjust to that contraction, which we did, and we compensated for it by Pushing further upstream into the core and mainstream lending market and taking share, which we did. The next impact came from Brexit and then COVID. And then all of that together seems to have fueled some high rates of inflation And increasing unemployment in the UK, which has made it a very difficult lending environment, which continues to impact the Fintechs. So after digesting all of this and looking back at the growth rates that we expect, one that we've achieved, but also that we can expect in the intermediate Given the condition of that economy, we thought it was prudent to take the charge to goodwill that we did in the quarter. Operator01:01:30The next question comes from Andrew Nicholas William Blair, please go ahead. Speaker 901:01:35Hi, good morning. Thanks for taking my question. I heard quite a bit about Some of the strengths and weaknesses within core credit in the U. S. I just wanted to ask maybe more directly on market share there. Speaker 901:01:47It seems like Most of the rationale to this point is tied to end market weakness or end market dynamics. Is there anything that you can say about Competitive positioning or competitive successes in that market and how much conviction you have that you're still growing share there? Thank you. Speaker 201:02:06Yes. As we look at it, we don't believe it's a share issue. It's an issue more of business comparability at this point. Many of you have noted, the portfolios of the 3 bureaus have diverged over time. Some are more focused on direct to consumer, some are more focused on employment and income. Speaker 201:02:28And then TransUnion has Very large share, arguably leading market share in the U. S. Providing services to lenders and insurers that want to originate loans Speaker 501:02:39and policies. Speaker 201:02:41There's also a question of what's reported in the various segments and kind of the surgery you've got to do to get a true comparison. One example is that we report batch marketing services within our U. S. Vertical, not everybody does. We separate direct to consumer. Speaker 201:03:02Some people include that. We don't have commercial data. And given the size of our lending business overall, the benefits in mortgage of significant price increase from a 3rd party score provider gets diluted a bit over our larger market share and lending base than with other players in the space. And so as we compare and evaluate our own performance, you got to consider those Differences in what's included as well as the varying size of the respective positions. But no, we don't think share has Really anything to do with this, and we're not really pointing at anything to the positive or the negative. Speaker 101:03:53Great. And given the time is we're on a busy earnings day, we are going to end our call at this point. We thank you All for joining us this morning, and we look forward to speaking with you either later this week or over the course of the quarter. Thanks. Operator01:04:11The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.Read morePowered by