Q4 2020 TransUnion Earnings Call
[music].
Good day, and welcome to the 'twenty and 'twenty fourth quarter, earning conference call.
All participants will be in a listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.
After today's presentation there'll be an opportunity to ask questions to ask a question you May Press Star then one on the Touchtone phone.
Draw. Your question. Please press Star then two.
Please note this event is being recorded.
I'd now like to turn the conference over to Aaron Hoffman. Please go ahead.
Good morning, everyone and thank you for joining us today I hope that all of you remain safe and healthy.
On the call today, we have Chris Cartwright, President and Chief Executive Officer, and Todd Cello Executive Vice President and Chief Financial Officer, We've posted our earnings release and slides to accompany this call on the Transunion Investor Relations website.
Our earnings release and the accompanying slides include various schedules, which contain more detailed information about revenue operating expenses and other items as well as certain non-GAAP disclosures and financial measures along with the corresponding reconciliation of these non-GAAP financial measures to their most directly comparable GAAP measures.
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. Looking these statements are based on current expectations and assumptions and are subject to risks and uncertainties actual results could differ materially from those described and the forward looking statements because of the factors discussed in today's earnings release and the comments made during this conference call and then on.
Recent form 10-K forms 10-Q, and other reports and filings with the SEC.
We do not undertake any duty to update update any forward looking statement with that let me turn the time over to Chris.
Thanks, Darren and let me add my welcome and my Best wishes that you and your families are healthy.
As we start a new year on one of them once again more than 8000, Transunion associates, who continue to work diligently from their homes throughout this pandemic and order to support the needs of our customers and consumers in these uncertain times, our client service hasn't missed the beat and it's all due to their amazing efforts.
And I also I also appreciate.
I'll leave supported Transunion to embrace of social Justice causes during this time of turmoil and transition in the us.
We continue to focus on diversity and inclusion among our associates and and the communities. We serve on our last call I discussed our total impact task force to more clearly convey the intention of the task force we renamed it racial equity task force.
While the names changed the mission remains the same to combine and connect to the ingenious efforts to support racial equity and social justice the.
Task Force will amplify our advocacy and outreach through consumer tools and support designed to improve access to economic opportunity.
For example, we partner with the credit builders Alliance, which helps underserved communities build credit.
Additionally, we will double our corporate giving and 2021 in Chicago and Philadelphia the locations of Green Juniors two largest offices.
We also have reallocated funds from sports partnerships to charities and our communities that support racial equity.
We see further opportunities to partner with local organizations that promote grassroots targeted support for underserved communities such as my block of my Hood, My City, and Chicago, and the Covenant House and Philadelphia.
The task Force will also reexamined the use of data and our analytics and solutions to ensure that all uses are consistent with our values and the goal of financial inclusion and the economies that we serve.
To that and we engaged a specialized consultancy and the fourth quarter of last year to objectively assess our data and models of element to identify opportunities to improve our practices.
And finally, the task force working with trade unions, Chief talent and diversity officer is formulating clear commitments for diversity and new hires and promotions we have.
<unk> also expanded racial bias training throughout the organization and it provided managers with the direction and tools to build of more inclusive workplace.
Actions support our public commitments, including the.
On the Chicago networks equity principles campaign.
And they pledged to work toward achieving gender equity and global leadership roles by 2030.
And the CEO action for diversity, and inclusion pledge to advance diversity and inclusion and our workplaces.
And in the short time the task force is made encouraging progress and I have no doubt, we will achieve our goal of making transunion a truly diverse and inclusive organization that plays a positive role and the communities that we serve.
Now I'd like to lay out the agenda for this morning's call first I will review the global organizational changes, we've made and the considerable investments, we are making and solutions operations and technology to ensure that we continue to deliver strong growth and margins in the years ahead.
Over the past 18 months, we established global centers of excellence and solutions operations and technology.
We also commenced project rise and multi year effort to streamline and standardize and migrate our technology stack two of hybrid public and private cloud model.
Less known or the considerable efforts and the investments we've self funded to improve our core solutions and to establish and effective and shared global operational spine.
Together these actions and strengthen our foundation for future success.
Yes.
Next I'll review the performance trends in the fourth quarter of across the various geographies we serve.
Throughout this presentation, you will hear of consistent story of Transunion and advancing our solutions services and go to market approach to respond. The current conditions. While also re architecture of our business to free resources to invest and future growth.
Finally, I'll pass the baton to Todd to discuss our fourth quarter results in detail, along with first quarter and full year 'twenty one guidance.
Now since taking over as CEO of Cree, and Jamie and my leadership and I have developed and ambitious set of initiatives to fundamentally strengthen transunion, while navigating the challenges created by the global pandemic and the need to address social justice issues.
Now clearly we began with the strong business with the history of success.
And we recognize the opportunity to raise our performance and create an even better version of the <unk> for our stakeholders.
Over the past year, you've heard me discuss the areas for improvement on which were focused.
Acknowledging the project rise global operations and global solutions.
Today I want to review the opportunities before us and our progress to date.
Various initiatives together form of transformational program to strengthen free and junior.
Internally, we refer to this program as our past the possible, meaning our path to building the best version possible upgrade and junior.
And to maintain high rates of revenue growth and increasing margins into the future.
So let's start with project Raws are accelerated initiative to make Transunion technology, more scalable secure and efficient and effective I began here as technology forms the bedrock of Transunion and in many ways. We are of technology company.
And right builds upon project spark a systems migration from costly complicated mainframe technology to a modern flexible distributed and hybrid cloud architecture.
And since Sparks completion, we've implemented new technologies and tools as they became available to improve system reliability and security.
Importantly, we also integrated acquisitions, such as call credit I ovation and E Bureau that utilize the public cloud gaming important experience in hybrid public and private cloud architectures.
This consistent investment and technology has laid the groundwork for project drives so.
So let me remind you of some of the expected benefits first like many technology enabled companies we have the opportunity to further streamline of application ecosystem. We've already worked through more than 1000 applications and determine their path forward, whether we re factor rehost per platform or retire of that allowing us.
US to simplify the delivery of IP on the global basis reduce cost and increase our speed the market.
Second we will implement of hybrid cloud infrastructure to create economies of scale around computing and the intellectual property distribution.
And our on premise infrastructure currently operates at high levels of efficiency and the additional use of public clouds helps us to optimize our computing capabilities.
This approach has already allowed us to power key international opportunities in countries, such as India, and Chile, as well as to provide the spine for our media vertical, which I'll talk about and more detail shortly.
Third we will leverage the growing arsenal of innovative cloud based tools to enable faster product development.
Examples include new compliance tools analytics stacks model training and machine learning and other cutting edge technologies.
We have delivered the first set of foundational cloud services to our development teams and expect the first deployments into production and the second half of the shear.
Given our focus on talent and building continuity for the long term, we continue to embrace upskilling our workforce in this regard we've made considerable progress and training our internal teams with 80%, having completed or currently enrolled and cloud training <unk>.
The including hundreds of receiving full AWS certification and addition to the new hires that we brought on this past year.
And we believe developing our term of talent, we will make our company cloud native just like our technology. This will allow us to continuously evolve and staying nimble and the future.
Beyond these very attractive marketplace benefits.
We expect project rise to deliver between 20 and $30 million per year of operating expense reductions beginning in the year 'twenty three.
Project rise represents a critical evolution of our technology strategy and enables significant long term opportunities and efficiencies per train junior.
Global operations provides another way to deliver efficiencies and facilitate commercial success sort of <unk>.
<unk> process optimization, and automation and leading to a better customer experience as well as cost savings that we will reinvest and growth projects.
Our team has identified three areas of greatest potential impact and they've made significant progress thus far.
Yes.
We expanded our disciplined procurement processes to all of our purchasing we.
We've renegotiated our largest contracts and recently began to focus on the remaining opportunities we've reduced costs, while adding features and functionality.
We also have begun and implementing a lifecycle procure to pay system from Cooper, enabling complete spin visibility globally.
And we've already deployed the tool in the U S, Canada and the U K.
And we will add more of our major markets in 'twenty one.
We continue to expand on the success of our global capability center, or GCC, and Chennai, India, which now employs more than 900 associates.
We added another center in Pune, India, and the fourth quarter of last year focused on providing analytic services across our organization.
And this year, we opened the GCC and Johannesburg, South Africa to provide a range of business services and order to flex capacity and to create continuity safeguards.
Each GCC meets the growing needs of our customers, while refining our delivery and support capabilities and eliminating concentration risk there.
And they also allow us to cost effectively process more sophisticated and confidential work and we could using third parties.
And finally, we're.
And we're focused on business process refinement and automation to enhance customer experience.
Most significantly we are implementing a standardized global CRM system that when coupled with our gcc's forms and effective technology and operational fulfillment spine for transparent.
High quality customer support.
Said another way, we're creating a structure to efficiently process work. So we can focus on delivering the best experience for our customers.
Together, we are confident the global operations will deliver significant effectiveness and cost benefits and we will reinvest these and growth and enhanced margins and order to drive shareholder value.
Now moving the global solutions.
In the short time. This team has delivered some exciting successes along with an array of important partnerships and acquisitions.
And we've organized around key horizontal solutions, such as credit fraud analytics, and Decisioning and others and then staff. These teams of experienced leaders to develop into fuse configurable platform solutions across our various geographies and vertical markets.
First let me talk about our internally generated opportunities and then I'll turn to.
How we have leveraged our core capabilities into new areas through partnerships and acquisitions.
So, let's start with our refocused strategy and fraud, and the second largest solution offering of Transunion behind credit.
We have and outstanding starting point with our suite of fraud solutions and in fact in November of last year javelin strategy and research ranked Transunion and best in class among 26 providers on its identity proofing scorecard.
After hiring security.
And the industry veteran Shai Cohen.
We undertook an extensive review of our solutions and market position. The outcome of this work suggested and opportunity to rebrand standardized and integrate our various fraud mitigation products into a unified solution.
Which utilizes our best capabilities.
While this will require time and investment we have already begun to rebrand all of our cloud solutions globally under the umbrella of true validate.
We will also refocus our sales efforts on the most appropriate market segments and user profiles.
The strategic repositioning represents a starting point for creating a truly integrated and global fraud mitigation business within Transunion.
I also want to share and other recent success.
And solutions from our international markets.
As Covid led to an explosion of E commerce, many customers and emerging markets lack and the integrated data enabled solution for activating new accounts.
To meet this need we created a digital on boarding solution that bundles, our suite of data Prefill, I'd verification credit, scoring and origination decisioning tools through the.
Common orchestration layer.
We delivered this tool and a single API that customers can deploy as a mobile application.
The mobile website.
As the white label tool and.
And integrated into their own platforms.
The modular design allows them to buy the full solution or individual components based on their needs.
The digital on boarding solution suite represents a great example of our global diffusion strategy at work, we have rapidly launched and India, South Africa, Colombia, and the Philippines, creating a multimillion dollar business and under a year.
And we built a strong inventory of sales volumes and these markets that will ramp this year and we're also exploring applications and more developed markets.
In addition to these two efforts we brought to market several solutions the eight customers with the uncertainties created by the Covid pandemic, including our credit vision to acute relief attributes.
And which were adopted and rapidly to enhance portfolio risk assessment as well as new customer acquisition.
Now turning to how we leverage partnerships to create new growth vectors, let's talk about employment and income verification.
On our Triple our earnings call, we announced the partnership with Amex, which aggregates financial information on more than 45 billion consumers through consumer permission connectivity with the myriad of banks credit unions and Fintech players.
Through this partnership which covers the U S and Canada, Transunion will enable consumers to enrich the credit profiles, while helping lenders to make more informed decisions.
And I ask you to hold onto these thoughts about index for a moment, while I review of another highly complementary partnership with the largest payroll provider in the us.
Just a few days after our last earnings call, we announced the partnership and immediately and introduced the differentiated income and employment verification solution.
We understood that our customers one of these tools combined with their credit search and order to simplify their workflow with.
The solution, we launched in late October Tober did exactly that and customers have responded favorably.
Since the announcement, we received numerous incur in.
The inbound inquiries from a variety of industries and lenders and closed multiple contracts with clients who have begun to transact.
Now, let's talk about how these two partnerships that together fundamentally they provide a more complete view of consumers to better informed decisions about customer acquisition and risk.
And more tangibly, we will create of solutions that first piece of our payroll processing partner.
And if we don't get a hit there we can inquiry index to determine if they are checking account data that indicates employment and income by doing so we expand the universe of consumers that we can reliably verify.
We expect this tiered solution to launch and the second half of 'twenty one.
Verification solutions complement our credit based solutions, thus expanding our addressable market and providing another long term growth vector.
Before I move on I want to note that the solutions team also played an instrumental role and number of other recent investments.
We completed a minority equity investment and form of the commercial partnership with fin locker of secure online data store that enables consumers to gather their financial information on line and then grant permission to lenders initially and mortgage to access it for underwriting purposes.
We also partnered with socially determined the social health risk analytics company to create tools to assess.
And mitigate health risk by using a combination of social risks and clinical data.
This creates another growth path for our health care vertical.
On the last earnings call, we highlighted our growth plans and media, which focused primarily on digital marketing solutions. We built the vertical through a series of acquisitions true signal signal and true optic.
And that complement the array of data and world class linking and matching logic of Transunion.
Together these acquisitions and our in house capabilities allow us to compete for audience segmentation and identity resolution market share to growing categories within the larger digital marketing ecosystem.
As we scaled the business, we've added new high caliber talent, but Jessica hinterland, who recently joined us from Nielsen and where she served as SVP of product for advanced video advertising and identity.
And she will lead our vertical specific channel and our product partnerships.
We are also quickly realized meaningful commercial success, we have completed partnerships with comscore to enable precision targeting and a cookie free environment and wide orbit to bring enhanced audience targeting to their streaming radio and podcast advertising solutions.
And we have expanded and existing relationships.
And we'll now power connectivity for a leading retailers and AD marketplace.
Yes.
So this concludes my discussion of our significant investments I'll reiterate that there are immense opportunities that we've created through project rise.
Global operations and global solutions, and we've accomplished a lot and the short time, giving us even greater confidence and the long term impact from these initiatives.
Now I'd like to pivot to our fourth quarter results and walk you through some of the business and market trends.
I'll start with us markets.
And with a review of the online transaction volumes for financial services, our largest vertical market.
Volumes remained strong and mortgage improved and consumer lending, while auto and card held relatively stable quarter over quarter.
I would note that and card we continue to compare against strong volumes from the successful launch of the new card and the second half of 2019.
Now excluding that impact our volumes and card would better reflect the underlying market.
I also on what you know now that going forward, we do not intend to provide this level of volume detail we.
We introduced these slides and response to the severe impact of the pandemic on financial services.
Given the relative stability and the market and hopefully the early stages of a recovery, we will return to our normal disclosure practices beginning with the first quarter of 2021.
Now, let's spend some time on the key lending markets that comprise the vertical.
So beginning with consumer lending.
It continued to recover during the quarter as larger fintech lenders slowing returned to customer acquisition fueled by solid levels of investor commitment to funding loans.
Consumer demand remains tepid as low credit card balances cash out refinancings and stimulus payments have reduced the demand for certain of installment products like debt consolidation and short term loans on the other hand, we continue to see significant growth with point of sale lenders both from their own.
Success as well as share gains.
Auto lending was relatively stable quarter over quarter as new car sales picked up while the used car market tightened as inventory levels remained challenge.
And as digital auto retail and grows we continue to see demand for our Prequalification solutions, including auto payment shopper.
And positively we also have seen some early signs of lenders returning to marketing activities as the portfolio of stabilized.
And the credit card market remained fairly stable as the industry showed modest signs of recovery from the sharp declines in the second quarter.
We also continue to see a slow recovery and marketing and believe that there is considerable pent up consumer demand that should fuel this category and the future.
And I want to spend a minute, taking a slightly deeper dive on our mortgage business, which delivered outstanding growth in 2020 on the strength of both refinancing and home purchase activities as interest rates remain historically low.
On this chart you can see the incredible growth and the market App over these last two years, creating a very challenging stack of comparisons as we enter 2021.
As always we have spent considerable time with our customers and advisory Board will also incorporating an array of public data to develop our outlook for the market. This year.
Based on this rigorous work, we believe that the mortgage market will decline about 10% in 2021 more specifically, we anticipate continued strength in mortgage and the first half of the year, particularly the first quarter and.
And then weaker second half as volumes taper off and comparisons remained very challenging.
Now we will update you if our view changes as the year unfolds.
And I want to wrap up the with a quick view of our financial services sales pipeline. Despite the impact of the pandemic on our markets. Our sales team delivered exceptionally strong results our healthy pipeline reflects our effective customer engagement and highly relevant product offerings, including a substantial number of credit vision of wins.
And that demonstrates the long runway for the solution.
For the full year, we increased our new wins and dollars by almost 40% behind a win rate. That's just shy of 50%. We attribute the success to the nimble changes our sales teams made to conduct business virtually along with our thought leadership that provided tangible assistance to customers.
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And now shifting to our U S emerging verticals.
Most of them saw trends.
Generally improve or at least stabilized during the fourth quarter.
Beginning with healthcare performance played out largely as we expected during the quarter from.
And the volumes continued to slowly recover as provider saw outpatient volumes return to pre COVID-19 levels.
And patient visits remained depressed, but stable is patients showed caution about returning to the health care venues and.
Emergency Department visits continue to show weaker but stable trends.
The impact of reduced front and volumes negatively affects the backend of the business, resulting in a reduced number of potential coverage discovery opportunities.
Despite the headwinds that we faced the vertical only declined mid single digits for the full year, reflecting the importance of our offerings and even if the us healthcare system loss more than 320 billion in 2020.
We saw solid levels of new business wins last year.
As our business helps providers recover cash.
We remain well positioned to help health care providers protect the revenue and balance sheets and as we look forward, we see no structural change to this market such that we won't return to a more steady growth profile post pandemic.
Now shifting to insurance.
And this vertical declined slightly in the fourth quarter as we had a modestly more challenging comparison net and in the third quarter.
However, the vertical delivered growth for the full year as a result of our successful diversification into areas such as commercial auto life group life and other types of property and casualty insurance.
Notably, we realized significant growth and our sales pipeline with new business won in 2000 and exceeding our strong 2019 levels.
Many of the deals involved multi product wins, reflecting our attractive suite of products.
And our partnership with neuro and it began to generate revenue as a reminder, neuro I'd helps customers understand biometric behavior during the online application providing insight into potential fraud based on how consumers inter data the.
And the solution uses the same day to day explain why consumers abandon the applications so processes can be refined.
As online applications increase and insurance this partnership positions us to capitalize on that trend.
And public sector grew significantly as most government agencies operate as business as usual providing meeting.
Necessary support for their constituents.
We posted strong new sales and the quarter at the state and federal levels and also increased our opportunity pipeline.
And our media vertical grew both on a reported and organic basis as we continue to make meaningful progress against the strategy I highlighted earlier.
We also delivered growth and our screening business, which includes both tenant and employment screening.
And we saw solid performance and tenant screening as leasing companies remains active and our smart move screening product made additional inroads in the marketplace and.
Employment screening remains depressed as it mirrors employment trends.
And the telco market recovered largely as we expected with consumers returning to more normal device purchasing levels.
And finally, although collections is counter cyclical over time, we don't expect any uptick in the near future as loan forbearance programs and collections moratoriums delay demand further government payments during the pandemic of help many consumers stay current on their loans or.
Reduce their debt loads.
Now moving to consumer interactive, we delivered double digit revenue growth and our direct business due to increased advertising and higher conversion rates on our two our subscription products.
Consumers continue to value of our credit health and identity protection services.
Our indirect channel remains soft as financial products lead Aggregators has experienced diminished demand from the lenders they serve for new client acquisition.
Reduced acquisition levels has caused some of our clients to cut back on their own marketing, causing a decline and their subscribers and negatively impacting our revenues of portion of which are based on subscriber levels.
Although the stand on this dynamic has now stabilized and we are seeing some recovery.
Created of growth headwind for our business in 2020.
Wrapping up with our international segment, let's look at revenue trends, which illustrate the ongoing recovery across our geographic footprint.
Generally successful re openings have allowed economies to restart leading to increased overall economic activity.
And as we've all seen the duration and the durability of reopening of varies greatly market to market at.
And at the same time, our team's done an outstanding job partnering with customers to assist them and managing through the impacts of the pandemic.
You'll hear about new products, new business wins, and creative ways that we deliver thought leadership.
Now, let me turn to the specifics for each region.
And the U K, we've returned to growth excluding the impact of a divestment earlier and the year.
While lending markets remained depressed they did improve in the fourth quarter, particularly from mortgage as in previous quarters. The alternative lending market continues to see pressure, though the burgeoning buy now pay later space has provided the sort the source of growth as we hold a strong leadership position.
Our fraud and gaming and gambling positions also showed further improvement.
And setting the stage for future growth, we of ink contracts with one of the UK is the largest lenders to provide them the credit view platform and our open banking solution.
Yes.
Now our Canadian business grew again in the fourth quarter, despite generally weak lending market and continually escalating COVID-19 mitigation restrictions.
And our good performance reflects the meaningful portfolio diversification that we've intentionally developed including insurance and public sector expansion direct to consumer offerings and growth and the emerging fintech market.
And in India. The country has now fully reopen resulting and slowly improving transaction volumes, including the very strong volumes during the Vale, which typically drives the strongest.
The business of the year.
We continue to benefit from our diverse product portfolio as well as specific programs to address critical pandemic driven issues for.
For instance, we extended our string of significant business wins supporting the Indian government as they work with lenders small businesses and consumers to provide incremental oversight and stimulus during the pandemic.
We also engaged with our fintech customers by setting up our innovation lab on the cloud and.
And and venting inviting them to compete with our developers to see who can deliver the best performing models.
And through our TGIF for Transunion, great insights Fridays.
We've had interactions with more than 300 discrete lenders, bringing them important insights about the market consumers and their own businesses.
As we look ahead.
India remains a singularly vibrant and innovative market with significant growth potential for years to come.
As the lending market transitions from traditional products the high velocity short term low dollar loans, we expect hundreds of millions of Indians to end of the credit economy.
And in the case of small businesses only about $10 million of the $60 million currently have loans. These changes have meaningful implications for transunion is addressable market.
And we remain extremely well positioned to benefit from them.
Yes.
And Latin America, we serve a variety of markets.
And most remains somewhat stable, albeit of depressed levels compared to last year.
Notably slump.
So lumpy and delivered a solid quarter of growth on the strength of our Fintech insurance and telco businesses.
And as we've discussed previously we expect the slow and long linear recovery and many of these markets and Asia Pacific the.
The market and Hong Kong has stabilized so of generally depressed levels as the fallout from the pandemic and political unrest continues.
And we returned to growth on the strength.
Of our rig and launched direct to consumer offering we expected to provide a meaningful source of growth in 'twenty, one likely exceeding the previous revenue run rate over time.
Now rounding out APAC, the Philippines continues to face significant headwinds as the country has struggled and reopened impacting consumers and our customers.
Our team held its first lending summit to bring more sophisticated thought leadership to the market, even as we rollout credit vision, which provides a superior tool for our customers to assess lending risk, particularly in this current environment.
Longer term, we remain confident and optimistic that the Philippines will return to attractive growth.
The South African economy remains challenged, particularly with the second wave of Covid spread, causing further lockdowns recently.
And other markets. Our team has responded by prioritizing our customers needs like account management collections and E. Commerce day of successfully expanded uptake of key solutions such.
Such as credit vision true validate and digital onboarding to drive value for customers.
Now I've just taken you through how Transunion has managed effectively through the global pandemic, while also accelerating investments that setup our path to what is possible.
So I'll now turn it over to Todd the walk you through our.
Our financial results in detail and our first quarter and full year 2021 guidance.
So over to you Todd.
Thanks, Chris.
We delivered solid results at the high end of our guidance as we benefited from gradual improvement across almost all of our markets as well as the strength and diversity of our portfolio.
I'll start with our consolidated results and for the sake of simplicity all of the comparisons I discussed today will be against the fourth quarter of 2019 unless noted otherwise.
The starting with the income statement fourth quarter consolidated revenue increased 2% on a reported and constant currency basis.
The signal on true optic acquisition had just under one point of impact.
Adjusted EBIT decreased 2% and on.
Reported basis and constant currency basis.
Our adjusted EBITDA margin was 38, 5% down about 170 basis points compared with the year ago quarter.
Chris pointed out we are aggressively investing in our business and share and that had some impact on the margin along with the broader macro challenges of the pandemic.
Fourth quarter adjusted diluted EPS from <unk>.
7%.
Our adjusted EBITDA was down slightly we continue to benefit from reduced interest expense.
Two of our debt refinancing and lower LIBOR rates.
As well and think lower adjusted tax rate of 21, 9%.
The lower tax rate.
Reflects our tax planning initiatives.
And the reduction and the statutory rate and India.
Now looking at segment financial performance and.
Unless markets revenue was up 4% compared to the Arizona corner the.
The two media acquisition and about one five points of impact on revenue.
Our financial services vertical revenue grew seven per ton.
And Chris Scott, we saw improvement in consumer lending continued strength and mortgage as well and stability and card and auto.
And the address the significant impact of mortgage and the quarter.
Excluding the cyclical growth the.
And the vertical and a decline mid single digits.
Emerging verticals were flat on a reported basis and down 3%, excluding the revenue associated with the two media vertical acquisitions.
And public sector media and tenant and employment screening help moderate decline and the other vertical.
Adjusted EBITDA for us market decreased 2% as reported and 1% on an organic basis and.
Adjusted EBITDA margin declined largely as a result of the strategic and operational investment and Kristin Scott the <unk>.
Cost to integrate and scale, our recent media acquisitions as.
As well as the normal quarter over quarter seasonality from the third to the fourth quarter.
Consumer interactive revenue increased 3% driven by growth and the direct channel and.
Adjusted EBIT and for consumer interactive was down 2% and we continued to increase marketing behind the direct channel during the quarter and see solid returns on that investment.
From my comments about international all comparisons will be on constant currency from.
From the total segment revenue fell 2% as we saw trends improve and most of our regions and as Chris discussed in detail.
As we mentioned on our February 2020 call, we invested we divested a small business and the U K reciprocal.
Excluding that divestiture international would have been down only 1% and our UK business would have flipped from being down 1% to up 2%.
Adjusted EBITDA per international declined 4%.
One of the many strength of Transunion and as our balance sheet and our ability to rapidly generate cash this.
This provides us with consistent optionality to make the best decisions for the company and our shareholders.
We finished the quarter with $493 million of cash on the balance sheet after voluntarily prepaying $150 million of our term loans and.
And funding the first tranche of the true optic acquisition and several smaller investments.
Clarity the true optic transaction entails and initial payment and the subsequent smaller earn out in 2021.
Based on the performance of the business.
At the same time, our net leverage ratio continued to decline from two nine times at the end of the third quarter of two eight times at the end of December.
With our strong balance sheet.
We remain on a good position to continue to be proactive and pursuit of additional attractive investments and an important part of our overall long term growth strategy.
So that brings us to our outlook for the first quarter and the full year, which is based on the current market conditions and doesn't incorporate the potential for a much stronger second half driven by the possibility of a more rapid economic recovery.
Come to expect from us.
And we won't hopefully build plans based on best case scenarios, rather we will take a balanced realistic approach.
We firmly believe that doing sellers and the best interest of our shareholders and avoid unnecessary risk.
Starting with first quarter revenue, we expect slightly less than one point of M&A contribution from signal and true optics as well as a similar tailwind to revenue from FX.
And we expect a 50 basis point benefit to adjusted EBITDA.
Revenue is expected to come in between 698, and $707 million or 2% to 3% increase.
This results and organic constant currency revenue growth being flat to up 1%.
Embedded in our revenue guidance is and approximately three point benefit from mortgage.
Which lines up with Chris's comments about our expectations for a strong first half followed by headwinds and the second half of the year.
Adjusted EBITDA is expected to be between 268, and $275 million and increase of 2% to 4%.
Adjusted diluted earnings per share are expected to be between 78 and.
And 81.
And increase of 6% to 10%.
And for the full year, we expect the 50 basis points of benefit from M&A and one point of tailwind to revenue from Us Act.
Revenue is expected to be between $2 817 to 2.8 $77 billion up 4% to 6%.
Based on the mortgage expectation, Chris shared our guidance includes about two points of headwind from our anticipation of the 10% decline and our mortgage revenue.
So on and organic constant currency basis, excluding mortgage and.
The remainder of the business is expected to grow 4% to 6%.
I would also like to point out that the cadence of.
We'll be filing the lumpy.
The first quarter should look somewhat similar to the third and fourth quarters of 2020.
The second quarter of 2021 should be the strong and on a year over year basis, given the relatively easy comps.
And on the back half, we would expect the benefits of ongoing economic recovery.
Offset by mortgage headwinds.
Through our business segments, we expect us markets to grow revenue mid single digits.
Financial services to be flat and.
And emerging verticals to be up high single digits.
Including the impact of the mortgage.
U S markets would be up high single digits.
And financial services would be up mid single digits.
We anticipate that international will grow high single digits on constant currency as we continue to see a very pace of recovery across our market.
And we expect consumer interactive and the up slightly as the lead Aggregators and slowly return the customer acquisition.
Adjusted EBITDA is expected to be between 1.0 E cream and one $1 billion to $1 billion.
4% to 7%.
We expect one point of benefit from FX.
Adjusted diluted earnings per share for the year are expected to be between $3 on 16 and.
$3 and 31 up 5% to 10%.
I want to wrap up with some thoughts about some of our other annual guidance items.
We expect our tax rate to be about 23%, which is fairly consistent with the 2020 rate of 22, 6%.
Second on.
Depreciation and amortization is expected to be about $375 million I'm on.
Modest increase from 2020.
Excluding the step up from our 2012 change and control and subsequent acquisition depreciation.
Depreciation and amortization should be approximately $190 million.
Net interest expense should be about $100 million down about $20 million from <unk>.
As a result of a lower forward LIBOR curve and our voluntary debt component.
Fourth capital expenditures will be around 8% of revenue.
And finally for the full year 2020, we spent about $19 million on project right and.
And that was added back for our non-GAAP metrics.
We expect this AD the AD back and nearly triple in 2021, a significant step up from the first and second of the project as we expected and.
As of we built significant momentum.
I'll now turn the call back to Chris.
And final comment.
Well, thank you Todd.
And the conclude this morning, you heard more about the meaningful progress, we've made and fundamentally improving transunion through project rise global operations and solutions each delivers immense value to transunion over the long term and and tandem they haven't even greater potential to help us sustain industry leader.
Top line growth and an attractive and growing margin.
At the same time, our business continues to perform well in the midst of some very challenging conditions.
And the end by reiterating what I hope that all of you and your families are safe and healthy and.
And thank you for joining us this morning, so with that I'll turn the time back to Aaron.
Great. Thanks, Chris that concludes our prepared remarks for the Q&A, we ask that you each ask only one question. So that we can include more participants.
And now lets jump into those questions.
We will now begin the question and answer session to us.
Ask a question you May press Star then one on your Touchtone phone and Youre using the speaker phone. Please pickup your handset before pressing the keys.
Anytime Youre question has been addressed and you would like to withdraw your question. Please press Star then two at this time, we will pause momentarily to assemble the roster.
The first question comes from Jeff Mueller with Baird. Please go ahead.
Yes, thank you on.
The mortgage what percentage of your consolidated revenue was U S mortgage and.
In 2020, and the reason I ask us I thought it was lower than 20%, but youre, saying of 10% market declines of about a two point headwind I Wouldnt think that there is share shifts given that it's mostly selling to the tri merge resell of this but if you could just clarify what the exposure and maybe helps SKU.
The minus 10, and two point headwind.
Yeah, Hey, Jeff Good morning, and thank you for the question. This is Todd I'll take that one so as far as the <unk>.
Mortgages and.
And historically transunion spoken about.
Our overall exposure to U S mortgage being roughly maybe seven eight per cent of revenue.
<unk> went up on the <unk>.
And last year.
<unk> about 13% on <unk>.
Which is a very obviously very significant.
But and Thats something that we anticipate.
We will stay at that level throughout 2021.
And as we both kind of alluded to and are from opening remarks, we do expect mortgage to.
Continue to be relatively stable to maybe slightly decline and the first half of the year.
But right out of the visibility.
We have with mortgage.
Suggest.
And that there would be.
The slowdown in the way of again that we've put it.
And 10% decline.
In our mortgage revenue bonds.
Specifically.
And for the full year and again that that low.
Primarily app and Amit.
In the in the second half of 'twenty and 'twenty.
Okay. Thank you.
The next question comes from Manav Patnaik with Barclays. Please go ahead.
Thank you.
Just a broad question and I.
2021 was always going be a lot of.
Moving pieces and then it sounds like us.
And then taking a relatively conservative approach to start the year correct me, if I'm wrong debt, but just looking out into 2022.
Do you see any.
Any notable moving pieces, perhaps media gaming from other categories.
And are you think.
The.
And a notable contributor to the growth to getting you back to kind of what the used to historically.
Yes, good morning Manav.
So.
<unk> commented before I think 'twenty, one will be a bit of a mixed bag the.
The first half.
And the second half will be different the first half of likely to be choppy or just given the the state of the public health situation.
But in markets like the US is vaccines are.
Are rolled out and.
And I think the population of returns to health Youll see.
The material strengthening across the different verticals and which we compete.
And that leads to a stronger second half and also.
I expect that we will roll with some good momentum into 2022.
And start the compound the top line.
In EMEA and are consistent with.
What we have done previously.
Certainly the aspiration of at this point.
I would say the mortgage remains the critical wildcard here over the course of 'twenty one.
And as Todd just said, we are modeling and about a 10% decline in the category.
And and it has 12% to 13% of our revenue so it's more material than previous.
With that said.
Nobody's Crystal ball is perfect.
And it is quite material to the financial results that we've outlined in our guidance. This morning. So the best I can I can tell us when we provided more detail into how we arrived at the number that we.
And we typically would and will ongoing.
And two if we see a material change and our assumptions, we'll certainly communicate with the market quickly because we will have.
And direct bearing on the on the results.
And then the last thing I would say us look as.
As our economy heals from the pandemic and we start to get back to normal.
And I take more of a global perspective here. There are key components of our portfolio that will return to health and growth that have been somewhat uniquely impacted and the pandemic. The first comes and our consumer direct business where.
60% of the revenues are focused on.
Providing reports and the analytics to indirect players the marketing lead Aggregators for financial services and as lenders.
And the pulled out of the market in terms of client acquisition.
Their businesses were materially impacted and that became quite a headwind for us. Additionally, as you know we have a strong and disproportionate market share.
And the Fintech space and in consumer lending and that was also in the area that I think was the hardest hit of the different.
Many of our services verticals of the us.
And then finally, our international portfolio, which is over 60 600 million now.
Was a consistent double digit compound grower and the.
Three things have been.
Muted somewhat because of the pandemic.
They are all stable now and Theyre all resuming growth.
But again as the global health situation improves independent receives youre going to see acceleration and those three components as.
And as well as the other piece parts of our portfolio.
And I think we're well positioned for recovery.
And again I guess, just won't concluding remark if you look at.
The guidance that we have provided where we've broken out.
The financial services performance and.
And then attempted to isolate the mortgage component within that but then also highlighted the growth rates across our.
And the emerging verticals portfolio and the US you can see that we're really expecting quite a bit of strengthening across the vast majority of our portfolio and 'twenty, one and some very attractive high single digits organic growth rates, but again somewhat muted by the mortgage headwind and the general uncertainty that category.
So I'll pause there.
Todd if you want to add anything.
Yes because of.
And I think that was a very comprehensive I would just highlight a couple of couple of more things and I think it just comes again out of our opening remarks.
And.
Deliberately made up of a significant effort into the media vertical.
So we are expecting and leased up.
And about 22.
The media will be.
Meaningful start to the a meaningful contributor for us as.
As well as our fraud business and as Chris again spoke about and his opening.
Comments on.
On a significant amount of work to get that on a common platform rebranded it the true validates our expected on some really good growth.
There as.
And as well as let's not lose sight of the fact that from our Fintech customers have been hit particularly hard by.
The by the pandemic and I think our expectation is they will get more of a breath of as we go through 'twenty and one with their.
With their marketing campaigns I think the key point, there and let us now.
State of the strong relationships that we have already <unk> and <unk> and the leading position.
And there and that we fully backed debt market.
To rebound so that'll be another really nice growth driver for us.
<unk> two and then.
And our insurance and healthcare verticals as well too I.
I think are poised to continue the cover this year, but continuing to grow nicely.
Okay.
Yes.
And.
And we look Manav you touched on the really good question. So the way I think about how we have resumed the growth of the market has come to expect from us It really breaks down into four buckets, the first and the debt.
The pandemic recede and the underlying geographies and verticals that we serve are going to heal.
And there is nothing structural that's changed there too we will also resume the momentum from R. R.
Our product portfolio of that risk that represents all of the investment and innovation that we had accumulated right. We've got a strong.
And we have.
Many generations of product development that are still and the early to mid stages of adoption.
And as the market heals youre going to see those driving growth on top of it and again referencing the point Todd just made we've got other vintages of growth that we're layering on.
One is the repositioning of our crop business, which we'll talk we've talked about and some detail where we're bringing together of the multiple fraud assets that we've acquired and creating a single global fraud growth platform focused on the most global segments for our business.
We've also invested a lot and.
The data analytics and modeling tools the of promo.
We're launching the.
Employment verification and income back.
Vector, we continue to add new data types.
And look Theres, a multitude of growth categories. In addition to what we've done with media that represents the third component and again as always we remain active looking for complementary M&A internationally. We're always hopeful we can fund the geographies that we could enter.
And typically we can really improve the operations of the credit Bureau.
And in the U S and.
Really to fuel our global product development, and we're looking to add capabilities that complement the needs that we're servicing.
And our clients.
So manav potentially more of than your bargain for but that's the.
That's our thorough answer.
No I appreciate that thank you very much.
The next question comes from Toni Kaplan with Morgan Stanley. Please go ahead.
Thank you and why.
To ask about verification.
How quickly can you ramp up that business I know you mentioned, some wins already and the tiered launch and second half with your Amex partnership and.
Can you just talk about your go to market strategy and the differentiation versus competition and then in terms of records growth I guess have you added more records since that initial payroll provider and what kind of pace do you expect to grow records going forward I imagine it and maybe tougher.
After that sort of the initial really large.
The number that you got from that partnership.
Yes, sure Tony I mean, obviously this is the really exciting extension to our product portfolio.
And we think we can differentiate by.
And really streamlining access to the credit and the employment and income verification.
Through a common digital connection right and really leveraging the pathways that was the established already.
But as you know from my comments, the last time around and I've tried to.
And I've tried to caution the market debt this is not.
On a category that we're going to achieve parity with the market leader and one quarter.
This is a entry into an area that is strategically important and complementary that we're going to put the full weight of our of on.
And our product resources and innovation behind developing on.
A product that really can compete but that will take time.
And the interim.
We're in a phase where we are product timing.
The data.
And the pipeline relationships that we've established the the large.
Payroll processor and index technologies.
And Youre right Tony over time, our focus is going to be on broader and broader market coverage, which means you've got to establish more relationships and the market coverage would be both of the payroll processors.
Essentially other types of data providers and the financial Aggregators that will.
Allow us to Cascade broad market coverage across the bank centex and credit providers.
We're in this through of long haul.
We're just I'm, just not able right now to <unk>.
And give you like financial precision on dollar or growth rates Butler.
But look as you know this is.
The really big market.
I love of the competitive dynamics I love. The fact that we can pull together and offering and we can start attacking and learning and gaining share and thats our intention.
Thanks, a lot.
The next question comes from Andrew Steinman with Jpmorgan. Please go ahead.
Hi, it's Andrew I'd like to look back at Slide 11, and 12 for the US financial markets assist the consumer credit activity, which really is broadly up and not just mortgage but what I'll call on consumer lending just the orange line of of Blue or yellow line and.
And so and I'm, just a little bit puzzled by the first quarter organic revenue guide of zero to one year over year, which is a bit of of deceleration total company from the 1% you guys just reported and so given the credit activity I'm, asking and do you see organic revenue.
Growth acceleration and financial services and the in the first quarter and if not why.
And why and maybe puzzle together of the other segments to help us understand the zero to one better and total.
Hey, Good morning, Andrew This is Todd let me, let me take that question from you and I think it's an important one.
The talk through and some more detail on me.
So starting first when you do look at slides 11 and 12 of.
It is important to remember that this represents online credit report volumes for our U S markets financial services vertical only and just to give you kind of the perspective on that in 2020, our financial services.
Services vertical did about $939, so roughly about 35%.
All of our revenues. So just that's important to keep in mind and given up the ninth of 39 the volumes represent on a certain percentage of that probably high higher go online, but we also do a significant amount of batch work as you know already right. That's also part of that number.
I think the way that with that set us content. So I think the thing that's important also.
Keep in mind, and just simply the comparable debt we're up against in Q1 of 'twenty, one compared to last year.
On a consolidated basis, if you were to look at Q4 2019.
The Q1, 'twenty and 'twenty our growth rate on the consolidated basis went from nine nine times. The 10, eight which was about one point of growth and.
And for our U S markets financial services vertical and the growth rate went from $16 five up to 21, <unk> and Q1 2000, and so that's about five points of growth and think about the comparable.
Of that that we're up against.
When you look at that then and go okay.
But now go sequentially from Q4, 'twenty the quarter that we just exited where on a percentage we grew at one 5% and now youre looking at our guidance, but we're calling for flat to up one and.
In Q1 of 'twenty one when.
And when you get into the decimals on this that that one might actually be maybe one five.
On potentially at the high end and so for all intents and purposes.
We achieved the high we could be at the same growth rate that we experienced in Q4 of 2000, and so the comp and the growth rates important now to the point about just the overall mix.
And of what we're looking at on slides 11 and 12.
Do keep in mind the international business.
And has had a different recovery than what we've experienced.
On the in the U S.
So.
When we look at 'twenty, one we would expect our international business the experience the softest quarter in Q1.
Relative to the rest of the year and as you saw the comp for the full year to be a pipe and units for international.
Hello, and hopefully answers your question and Andrew sure. Thank you.
The next question comes from Gary Bisbee with Bank of America. Please go ahead.
Hey, guys good morning.
This is and the second quarter and either in a row or and the last couple of where you've given given some numbers around new business wins in the U S financial services and <unk>.
Yes, I'll ask a question that was asked last time.
And if we can help us understand and anymore, but how does that 40% increase and dollar value flow through the revenue is there anything about that that would.
Hey, good flow through more slowly like higher mix of multi year versus one year or anything like that because it yeah, that's a big number and and maybe the other part of it too that's just new wins, what about losses of what about customers, leaving and stuff like that.
And just help frame how to think about that as the driver of revenue and the next year. Thank you.
Yes.
Good question, Gary The first thing I would say is that in terms of.
Attrition for whatever reasons, there's no change.
And that we're aware of right and so there's nothing to really counteract that increase and the estimated annual contract value of the deals that we closed and pointed now revenue of arrival is a different animal than.
And then.
Contracted sales.
And it varies based on a variety of factors.
One is the <unk>.
It's going to take to integrate to the clients.
And establish those relationships and.
And certain cases of how long it takes them to incorporate their data or rather our data into their their models be the marketing or origination or collection of et cetera.
So there can be a lag time.
The related to that there can also be some time until clients' ramp to their full volume potential.
On.
I would be remiss, if I did mentioned that sometimes salespeople can be overly enthusiastic with the potential deal size of the deal.
Although I can't give you any evidence that their enthusiasm the hurt doozy hasn't changed.
Over the course of the pandemic.
So look of 40% increase and a $1 closed doesn't lead to a 40% increase.
And the new portion of our revenues in the coming year.
But it is.
It really tremendous.
Indication of the health of our product line our sales efforts.
And our clients health as well and the other thing I would just mentioned and debt.
The new wins represent a new layer.
The revenue that we're laying upon.
The deep and established foundation and it's really the the.
The volume movements in the foundation of a much more material impact on our revenue in the coming year on the current period than does the incremental right.
Alright.
So I'll just pause there.
That's helpful. Thank you.
The next question comes from Andrew Jeffrey with Chewy Securities. Please go ahead.
Hi, Good morning, gentlemen, I appreciate the.
The question and all of the comments and color on either of lot of moving pieces here.
Chris.
Got a question specifically about your media initiatives.
Transunion has terrific differentiated data and you've done a great job of commercializing in the past.
It strikes me media is one of these spaces that.
It's very competitive.
And there have been some companies we have.
Scene and around in and around <unk> and <unk>.
Tried to crack the code and it may be even less successful and they would've expected or anticipated can you just elaborate on why you think <unk> has the ability to outperform in that vertical.
Yes sure.
Well look to your point, the media market or the market for digital advertising services is enormous and varied.
We have chosen kind.
Of the surgical entry into a portion of that market, where I feel that our matching logic and some differentiated data provides us.
With an advantage with an opportunity to introduce the best in class solution.
No.
Before we had the media vertical we were.
Supporting.
The various AD tech companies.
In matching online and offline data because.
Transunion and the bureaus of general are just really good at that and we know that our matching logic is superior to the standard that prevails and that marketplace.
And so.
With that experience and net insight, we decided to formalize the offering and into specific vertical offerings.
As we started to gain more experience we realized debt.
We needed to deliver our data.
All of our.
Customer identifying data.
The demographic and.
And the segmentation type of data on.
On a different platform with a user friendly access and so our media clients can come in and slice and dice and free the audiences that they were interested in.
And then we can append.
The digital identity and other offline.
Characterizing information that they can use to drive their advertising campaigns.
When we brought bought true optic the we gained a differentiated data set because they are one of the.
Early leaders and the market to provide insight as to which homes are consuming content via which streaming devices video.
Or audio right and so now we have a differentiated data set that we can add to our universe of data and our segmentation tool and then also combine that with our matching.
Practical example of it is.
And advertiser can find out now of that.
A particular home address minor yours as Apple TV has.
Netflix uses Hulu et cetera, but they don't know much about the household.
The transunion.
And do that matching and say that the occupants of the household of certain characteristics of a.
The demographic.
Just a whole range of kind of marketing.
And I'm characterizing and segmenting variables.
So again, it's our narrow and surgical focus into a portion of this market, where I think we're upping the game.
That's our value proposition.
And that's why we're confident we can achieve growth.
Thank you.
The next question is from George Me Halos the Cowen. Please go ahead.
Hey, guys. Thanks, Thanks for taking my questions just wanted to ask on the on.
On the.
The consumer interactive vertical and specifically the guidance of up slightly for revenue.
Should we be thinking about the direct versus indirect throughout the course of 2021 and is there is there any reason why the indirect shouldn't return to growth by the back half of the year.
Hey, George Good morning, and this is Todd I'll take that question for you. So.
I think what we're anticipating in our consumer interactive business.
Obviously specific to us and also first.
And the direct channel.
2020.
Did the experience heightened level of consumer interest and monitoring by.
Friday.
And we took it back that by doing some marketing to attract.
Consumers to our web page and offer the.
On services and then Conversely in the.
The indirect channel.
And about.
We've definitely some headwinds with the aggregate.
As many of the.
Services customers pulled back on.
On the remarks active.
Activity, but as you get into 'twenty, one we are expecting.
Probably a more normalized growth level and the direct channel and.
And so on that.
And as high and <unk>.
In 'twenty.
And then in the indirect channel.
We're still expecting some softness in the lead aggregator space the softness that we've seen over the last couple of quarters persist.
Going on.
Going forward with the potential for and recovery.
Probably in the later on.
The.
Okay. Thank you.
The next question comes from Shlomo Rosenbaum with Stifel. Please go ahead.
Hi, Good morning. Thank you for taking my question, Hey, Chris can you talk a little bit more about the reorientation of the fraud business.
Strategically.
What's involved in debt besides pulling it together under one platform on brand like what.
I guess on the ground what are you going to be doing differently really and the business from what I understand us is actually a pretty per particularly strong business and so what's going to change now.
Yes.
Thanks for the question Shlomo.
Yes. It is a strong business that continues to deliver the need of nice growth across all of our markets. As you know from my prior commentary the business Thats composed of and a variety of piece parts.
Some of which are overlapping and redundant as you look at the different geographies that we serve and so part of what we're trying to do is and what we have done as we look across our portfolio and we said what are the best in class within Transunion.
The product components that we have and how do we integrate those on top of the single from plateau.
With orchestration with case management with.
All of the different.
Reporting and measurement and control that you would like and.
And look the ultimate integration.
Around and enterprise architecture.
And a single product platform, that's going to happen over a period of time, because thats heavy lifting engineering type of work right.
And the need to do the work is just a function of the fact that the business developed in the US the developed internationally, we acquired on ovation, we acquired a really nice and fast growing.
And business.
And call of credit.
And.
And frankly, when you talk about the integration, there's multiple levels from the kind of more surface to the.
The deep and foundational and we're committed to doing all of it.
Excuse me.
The next thing is really just.
A function of the market segments that.
We're prioritizing so different types of customers kind.
Of different fraud needs and we have of particular strength, serving those market segments, where they are initiating a relationship of financial relationship of some nature, where the the magnitude of the transactions.
And the risk associated with transactions over the term of the relationship and it's gonna be somewhat significant and.
And therefore the upfront.
The customer identification device verification and just the general authentication process, and we will take a little bit of time.
And.
We will be triangulated from multiple different points.
Because it's really important to note, who you're dealing with the counterpart of you're dealing with and have confidence in debt.
And so we're focused on that part of the market and again and this is an enormous and multifaceted market because we have a great constellation of products that comes together the serve it most effectively and so that will get most of the focus for our product development.
That said we also.
We successfully compete for business and other segments, where you really need is a super fast.
But more superficial level of off the indication based on.
<unk> history, perhaps geolocation and on site behavior right.
And that could be.
And E Commerce based retail transaction, where were you got really material share of et cetera.
Think of those transactions at the differ from.
Establishing a relationship with a lender or onside gaming or gambling, where theres just a lot of dollars flowing.
So we look to be successful and we got to concentrate our resources of in.
And of particular segment as we've pulled together of these different assets.
Come to appreciate.
The segment of the segmentation landscape, if you will at a more granular level.
We will continue to serve the market and its entirety. It's just the product development focus will be more around the segments I described and those customers that are really looking for.
Broad of for Kate of solutions, which we possessed but also assistance from their provider and implementing and configuring the solutions to get the best resolved.
Great. Thank you so much.
The next question comes from Hamzah <unk> with Jefferies. Please go ahead.
Hey, good morning, Thank you.
You touched a little of on sort of project rise contributing 20% to $30 million of savings in 2023.
Maybe if you could just touch on.
How to think about global operations and global solutions, what inning are we and in terms of seeing those benefits roll through the P&L is that more of a 'twenty and 'twenty three event too.
Yes, it's a good question.
Yes, I think the global operations and global solutions and the ladder solutions and you can really think of us like the product management layer with entry and juniors.
They are delivering benefits already.
However, as I've mentioned.
We're aggressively investing and new product development.
And entering new markets and also.
And operational streamlining and automation and all of those things. So we're using some of the early benefits that we're getting from those initiatives to self fund and accelerate the.
The implementations of full global programs that are going to free up.
A lot of resources that we will then invest in both product development to accelerate and really secure.
High single digit or top line compounding that we aspire to but also delivering more.
Margin improvements to the business on.
And collectively.
Right.
The technology retooling the operations and the solutions. They are they're going to have a really material impact on how effectively we operate and the market and having spent the year strategizing and implementing.
Which was 20 and now going into 'twenty, one and really accelerating the implementation.
Im really excited and increasingly confident of the positive impact of the house.
Got it thank you.
Our final question comes from Kevin Mcveigh with Credit Suisse. Please go ahead.
Great. Thanks, so much a question Todd I wonder given the.
The investments, you're making particularly around spark and things like that channel and to think about how that impacted you and new product innovation and I guess my coffee and hot.
And as a more effectively and ultimately what the estimates of the organic growth of the business and the first.
Products coming from market.
Yeah. Good so I think we addressed and Kevin as you know how is the current wave of Tech innovation.
Coming after products project spark.
Which and Gulf of project rise and the migration of the cloud and the standardization around on the enterprise architecture all of that and the.
The short answer is that.
It will most definitely.
Speed to market new product ideas right.
Because one will be leveraging.
The globally.
And two.
By utilizing the public cloud, there's a lot of utility functionality.
Around the acquisition and the care and the maintenance of underlying hardware and connectivity and even the security infrastructure and we.
And we'll purchases of service and.
And there's also components of the software development. So that we can acquire directly from our cloud service providers.
Services and so the technology, new product development for Transunion becomes more focused on those areas of unique IP and value add debt we brain.
As.
The diversified information services provider anchored and credit.
And all of the unique insights we have around vertical market needs.
Thank you all.
Yeah.
Excellent.
And so that brings us to the end of the call today. Thank you everyone for joining US we hope again that you are all well doing well and your <unk> and St.
Stay safe and healthy and we'll look forward to seeing you and talking with you and the new year kind of a great rest of the day.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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