Q2 2024 TransUnion Earnings Call

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Good day and welcome to the Trans Union second quarter 2024 earnings Conference call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.

Operator: Good day, and welcome to the TransUnion second quarter 2024 earnings conference call. All participants will be in listen only mode.

Operator: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press the star key, then 1 on your touchtone phone.

After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your Touchtone phone.

Please note this event is being recorded.

Operator: Please note, this event is being recorded. I would now like to turn the conference over to Greg Bardi, VP of Investor Relations. Please go ahead.

I would now like to turn the conference over to Greg Pardy V. P of Investor Relations. Please go ahead.

Greg Bardi: Good morning, and thank you for attending today. Joining me on the call are Chris Cartwright, President and Chief Executive Officer, and 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, and they can also be found in the current report on Form 8K that we filed this morning. 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 Today's call will be recorded, and a replay will be available on our website.

Good morning, 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 and.

Greg Bardi: 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 in the forward-looking statements because of factors discussed in today's earnings release, in the comments made during this conference call, and in our most recent Form 10-K, Form 10-Q, and other reports and filings with the SEC. We do not undertake any duty to update any forward-looking statements. With that, I turn it over to Chris.

Speaker Change: We posted our earnings release and slides to accompany this call on the Transunion Investor Relations website. This morning. They can also be found in the current report on form 8-K that we filed this morning, our earnings release and the accompanying slide includes various schedules, which contain more detailed information about revenue operating expenses and other items as well as the <unk>.

Speaker Change: Certain non-GAAP disclosures and financial measures along with the corresponding reconciliation of these non-GAAP financial measure to their most directly comparable GAAP measure.

Speaker Change: This 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.

Speaker Change: Actual results could differ materially from those described in the forward looking statements because of factors discussed in today's earnings release and the comments made during this conference call and in our most recent Form 10-K Form 10-Q, and other reports and filings with the SEC.

Speaker Change: Undertake any duty to update any forward looking statements with that let me turn it over to Chris. Thank.

Christopher A. Cartwright: Thank you, Greg, and let me add my welcome and share our agenda for the call this morning. First, I'll provide the financial highlights for our second quarter 2024 results. Second, I'll discuss One True and how we're modernizing our technology and product platform. Finally, Todd will detail our second quarter results along with our third quarter and full year 2024 guidance. Now in the second quarter, TransUnion exceeded guidance across revenue, Adjusted EBITDA, and Adjusted Diluted EPS.

Christopher A. Cartwright: Thank you, Greg and let me add my welcome insurer agenda for the call. This morning first I will provide the financial highlights for our second quarter 2024 results.

Speaker Change: I'll discuss one true and how we're modernizing our technology and product platforms. Finally, Todd will detail, our second quarter results, along with our third quarter and full year 2020 for guidance.

Todd: On the second quarter cranes Union exceeded guidance across revenue adjusted EBITDA.

Todd: Adjusted diluted EPS.

Christopher A. Cartwright: Given the strength in the quarter and recent large breach remediation wins, we're raising our full year 2024 guidance, which Todd will detail later. We expect a strong year for both revenue and earnings growth. With that said, we are maintaining our conservative guidance posture due to ongoing macroeconomic and geopolitical uncertainty.

Todd: The strength in the quarter and recent large breach remediation wins, we're raising our full year 2024 guidance, which Todd will detail later.

Todd M. Cello: We expect a strong year for both revenue and earnings growth.

Speaker Change: That said, we are maintaining our conservative guidance posture due to ongoing macroeconomic and geopolitical uncertainties.

Christopher A. Cartwright: Revenue grew 8% on an organic, constant currency basis, above our 5% to 6% guide. Our organic constant currency growth, excluding mortgages, of 4% also exceeded our expectations. In the U.S., we experienced muted but stable lending volumes that were consistent with the first quarter and well below historical trends. Consumer finances in the U.S. remain broadly healthy due to continued low unemployment and some real wage growth, but pressures on lower-income consumers have led to waning spending activity. Inflation slowed in the quarter after a modest tick up at the start of the year.

Todd M. Cello: Revenue grew 8% on an organic constant currency basis above our 5% to 6% guidance, our organic constant currency growth, excluding mortgage up 4% also exceeded our expectations.

Todd: In the U S. We experienced muted, but stable lending volumes that were consistent with the first quarter and well below historical trends.

Todd: Consumer finances in the U S remain broadly healthy due to continued low unemployment and some real wage growth, but pressures on lower income consumers have led the waning spending activity.

Todd: Inflation slowed in the quarter after a modest tick up at the start of the year.

Christopher A. Cartwright: And market expectations are for the Fed to start lowering interest rates later in the year. Consumer delinquencies rose slightly for mortgages and auto loans but have begun to stabilize for credit cards and personal loans. Our U.S. market segments grew 6%, and financial services was up 11%, led by 50% plus growth in mortgages. Emerging verticals grew 4%, driven by strength across insurance, public sector, tech, retail, and e-commerce, and media. Within U.S. markets, New Star also delivered another solid quarter.

Todd: And market expectations are for the fed to start lowering interest rates later in the year.

Todd: Delinquencies rose slightly for mortgages and auto loans, but it began to stabilize for credit cards and personal loans.

Speaker Change: Our U S market segments grew 6% financial services was up 11% led by 50% plus growth in mortgage <unk>.

Todd: Emerging verticals grew 4% driven by strength across insurance public sector Tech retail and E Commerce and media.

Todd: In U S markets, New Star also delivered another solid quarter for us to call solutions continues to lead the way growing more than 40% with positive contribution across our verticals Neustar delivered mid single digit growth in the first two quarters of the year and it remains on track for mid single digit growth in 2024.

Christopher A. Cartwright: Trusted Call Solutions continues to lead the way, growing more than 40% with positive contribution across our verticals. New Start delivered mid-single-digit growth in the first two quarters of the year and remains on track for mid-single-digit growth in 2024. Consumer Interactive declined 1% as expected, and we believe we're closer to an inflection point to return consumer inactive to sustainable growth, supported by strong identity protection and breach wins and progress in stabilizing our consumer direct offering. Our international segment grew by 14% on a constant currency basis, the 13th consecutive quarter of double-digit growth. India led with 27% growth, while Asia Pacific, Latin America, Canada, and Africa all grew double digits.

Todd: Consumer interactive declined 1% as expected and we believe we're closer to an inflection point to return consumer interactive to sustainable growth supported by strong identity protection and breach wins and progress in stabilizing our consumer direct offering.

Speaker Change: Our international segment grew by 14% on a constant currency basis, the 13th consecutive quarter of double digit growth.

Speaker Change: India led with 27% growth, while Asia Pacific Latin America, Canada, and Africa, all grew double digits.

Christopher A. Cartwright: And finally, we prepaid $80 million in debt during the quarter and intend to make further prepayments in the second half of the year. We also completed a debt refinancing to extend our maturity profile and reduce our interest expense. We made strong progress with our technology modernization in the second quarter. Slide 5 illustrates how we're aligning TransUnion around new global technology platforms and solutions. By consolidating our powerful yet independent products into integrated suites on a next-generation technology foundation, we believe that we can accelerate innovation, reduce costs, and leverage our solutions across our regions to drive revenue. Now, to orient you on this visual from the bottom up.

Todd: And finally, we prepaid 80 million in debt during the quarter and intend to make further prepayments in the second half of the year.

Todd: We also completed a debt refinancing to extend our maturity profile and reduce our interest expense.

Todd: Made strong progress with our technology modernization in the second quarter.

Todd: Slide five illustrates how we're aligning transunion around a new global technology platforms and solutions.

Todd: By consolidating our powerful yet independent products into integrated suites on a next generation Technology Foundation, we believe that we can accelerate innovation reduce cost and leverage our solutions across our regions to drive revenue.

Todd: Now to Orient you on this visual from the bottom up.

Christopher A. Cartwright: OneDev is the internal name for our new technology infrastructure operating system. OneDev standardizes our infrastructure services and developer tools in a single foundation to reduce cost and increase engineering productivity. In fact, it's the primary driver of our technology modernization savings. Built on top of OneDev, OneTrue is our core solutions enablement platform, which centralizes our common product services of data management, identity resolution, analytics, and delivery.

Todd: One Deb is the internal name for our new technology infrastructure operating system.

Todd: One Deb Standardizes, our infrastructure services and developer tools and a single foundation to reduce cost and increase engineering productivity. In fact, it's the primary driver of our technology modernization savings.

Todd: Built off of one Dev one true as our core solutions enablement platform, which centralizes, our common product services of data management identity resolution analytics and delivery. One true is a key driver of innovation and revenue growth.

Christopher A. Cartwright: OneTrue is a key driver of innovation and revenue growth. Leveraging One True, our solutions are being integrated into end-to-end product suites under single brands, such as True Validate Fraud Prevention and True Audience Marketing Solutions. These integrated suites deliver dramatically better performance within a clear global brand family.

Todd: And leveraging one true our solutions are being integrated into end to end product suites under single brands, such as true validate fraud prevention and true audience marketing solutions.

Todd: These integrated suites deliver dramatically better performance within clear global brand families.

Christopher A. Cartwright: I'll now further explain how each technology layer creates value across the enterprise and share some examples of the benefits we've already delivered in our TrueValidate broad suite and Factor Trust alternative lending product. Now OneDev builds upon the success of Project RISE to create a global technology foundation common across our applications, reducing complexity, saving costs, and freeing engineering resources for innovation. OneDev creates a single-technology operating plane that is cloud-agnostic, preventing supplier lock-in.

Todd: I will now further explain how each technology layer creates value across the enterprise and share. Some examples of the benefits we've already delivered and our true validate broad suite.

Todd: And factor Trust alternative lending product.

Todd: Now one Dev builds upon the success of project rise do created global Technology Foundation common across our applications, reducing complexity saving costs and freeing engineering resources for innovation.

Todd: <unk> creates a single technology operating plane that is cloud agnostic preventing supplier lock in it also standardizes our developer utilities, creating a one train junior in way for managing security compliance capacity provisioning and software deployment.

Christopher A. Cartwright: It also standardizes our developer utilities, creating a one-translation-union way for managing security, compliance, capacity provisioning, and software deployment. In addition to improving our developer productivity, OneDev will help us rationalize third-party software and other legacy technology costs. We will continue to operate our own private cloud infrastructure for certain applications where the economics are more attractive. OneDev provides the foundation for OneTrue, which is our central data management, identity, and analytics hub.

Todd: In addition to improving our developer productivity, one Deb will help us rationalize third party software and other legacy technology costs, we will continue to operate our own private cloud infrastructure for certain applications, where the economics are more attractive.

Todd: <unk> provides the foundation for one true, which is our central data management identity and analytics hub the platform Standardizes the process of transforming raw data into actionable intelligence and deploying it within our product suites.

Christopher A. Cartwright: The platform standardizes the process of transforming raw data into actionable intelligence and deploying it within our product suite. This also allows our product specialists to focus on data and analytic customization and workflow functionality needed to create innovative products. So, let me detail the key processes that One True standardized.

Todd: This also allows our product specialists to focus on the data and analytic customization and workflow functionality needed to create innovative products. So.

Todd: So let me detail the key processes that one true standardizes.

Christopher A. Cartwright: OneTruth integrates our data assets in credit risk, marketing, and fraud prevention into a unified data management environment. We embed strong permission and compliance controls to separate our credit and non-credit data. Our data scientists have easy access to our full complement of proprietary and public data for rapid, cross-functional development of insights. One True Identity Graphs link our offline and online data together for a consistent view of consumer identity, helping customers to reliably resolve identities across product lines and use cases.

Todd: <unk> integrates our data assets in credit risk marketing and fraud prevention into a unified data management environment, we embed strong permission and compliance controls to separate our credit and non credit data our data scientists have easy access to our full complement of proprietary and public data for rapid.

Todd: Cross functional development of insights.

Todd: One true identity graph link our offline and online data together for a consistent view of consumer identity, helping customers to reliably resolve identities across product lines and use cases are.

Christopher A. Cartwright: By servicing clients across risk, marketing, and fraud services, we participate in a broad feedback loop that reinforces our identity capability. Ontario Analytics Services consolidates and standardizes our tools and models in a single interface for use by our internal teams and customers alike. As new capabilities emerge, such as artificial intelligence or machine learning as a service, we can deploy these capabilities rapidly and at scale.

Todd: Our servicing clients across risk marketing and fraud services, we participate in a broad feedback loop that reinforces our identity capabilities.

Todd: <unk> analytics services, consolidates and Standardizes, our tools and models in a single interface for use by our internal teams and customers alike.

Todd: As new capabilities emerge such as artificial intelligence or machine learning as a service we can deploy these capabilities rapidly and at scale and finally, one for his delivery layer leverages consistent and Configurable technology for seamless delivery of our data and intelligence to customers for easier product upgrades and cross selling.

Christopher A. Cartwright: And finally, OneTrue's delivery layer leverages consistent and configurable technology for the seamless delivery of our data and intelligence to customers for easier product upgrades and cross-selling. Now, I want to reinforce that One True already powers Heritage New Star Marketing and Fraud Products, as well as our new Enterprise Identity Graph, our innovation labs, and our internal analytics environment. We're also launching a number of new products on One True this quarter, including TrueValidate fraud prevention, TrueAudience marketing, and a number of enhancements to our advanced acquisition suite.

Todd: Now I want to reinforce that one true already powers heritage, new start marketing and fraud products.

Todd: As well as our new enterprise identity graph or.

Todd: Our innovation labs, and our internal analytics environments.

Todd: We're also launching a number of new products on one true this quarter, including true validate fraud prevention true audience marketing and a number of enhancements to our advanced acquisition suite.

Christopher A. Cartwright: We plan to continue this rapid pace of innovation and modernization over the next 18 months as we further refine and scale this platform. Now TransUnion products will be integrated into broader functional suites built upon the world-class capabilities of the One True platform, and then we will take the market using the True Portfolio brand.

Todd: We plan to continue this rapid pace of innovation and modernization over the next 18 months as we further refine and scale this platform.

Todd: Now changing and products will be integrated into broader functional suites built upon the world class capabilities of the <unk> platform.

Todd: And then taking the market using the <unk> portfolio of brands.

Christopher A. Cartwright: Over the last few years, we've organized our broad range of B2B products and our multitude of brands into several global product families. These global brand families clarify our offerings, they demonstrate the breadth of our capabilities, and make it easier for customers to find what they need. We continue to leverage our core competency in consumer identity to expand further beyond credit and risk into marketing and fraud prevention use cases. And we'll measure the success of our technology and product platform strategy in terms of driving better growth across credit, fraud, and marketing, as well as delivering on our cost savings target. In the interim, we are tracking progress toward improving our product quality, our time to market, and the pace of innovation. Let me briefly spotlight...

Todd: Over the last few years, we've organized our broad range of <unk> products and a multitude of brands into several global product families. These.

Todd: These global brand families clarify our offerings they demonstrate the breadth of our capabilities and make it easier for customers to find what they need.

Todd: We continue to leverage our core competency in consumer identity to expand further beyond credit and risk in the marketing and fraud prevention use cases.

Todd: And we will measure the success of our technology and product platform strategy in terms of driving better growth across credit.

Rod: Rod and marketing as well as delivering on our cost savings targets.

Rod: In the interim we are tracking progress toward improving our product quality, our time to market and the pace of innovation.

Speaker Change: Now, let me briefly spotlight.

Christopher A. Cartwright: The benefits that we're already seeing with TrueValidate and Factor Tribe. Our integrated TrueValidate suite, powered by OneTrue, combines our comprehensive identity data along with fraud signals from a range of New Star and TransUnion products. We aggregate the signals in our single platform, where we apply advanced analytics to extract deep insights. The predictive uplift from consolidating all of our fraud signals and analytics onto one platform has been notable. When we compare OneTrue to our current in-market offerings, we see a 30% plus increase in fraud detection along with a 75% decrease in false positives. This enhancement enables customers to better protect themselves while providing a frictionless experience for consumers.

Rod: The benefits that we're already seeing with true validate.

Rod: And factor Trust our.

Rod: Our integrated <unk> suite powered by one true.

Rod: <unk>, our comprehensive identity data along with fraud signals from a range of new star and <unk> new products.

Rod: We aggregate the signal and our single platform, where we apply advanced analytics to extract deep insights.

Rod: The predictive uplift from consolidating all of our fraud signals in analytics onto one true has been notable.

Rod: When we compare one through to our current end market offerings, we see a 30% plus increase in fraud detection, along with a 75% decrease in false positives. This.

Rod: This enhancement enables customers to better protect themselves, while providing a friction right experience for consumers.

Christopher A. Cartwright: Now we're nearing the end of our beta testing for our first release with select customers, and the initial results are extremely positive. We expect the first general release to be available later this quarter.

Rod: Now we're nearing the end of our beta testing.

Rod: For our first release with select customers.

Rod: The initial results are extremely positive we expect the first general lease to be available later this quarter.

Christopher A. Cartwright: Our Fraud Product Suite serves thousands of customers today around the world and represents roughly $300 million in revenues last year against a multi-billion dollar addressable market. We aspire to be the customer's first call for fraud mitigation, and we see a substantial opportunity to gain market share with our integrated suite, which we know performs much better than the patchwork of point solutions so many customers use today. We're also in the process of modernizing FactorTrust, our short-term lending bureau within our TruVizion suite, to One True over the course of 2024.

Rod: Our fraud products suite serves thousands of customers today around the world and represents roughly $300 billion in revenues last year against a multibillion dollar addressable market.

Rod: We aspire to be the customers' first call for fraud litigation and we see a substantial opportunity to gain market share with our integrated suite, which we know performs much better than the patchwork of point solutions. So many customers use today. We're also in the process of modernizing factor Trust, our short term lending Bureau within our true vision suite.

Rod: Two one true over the course of 2024.

Christopher A. Cartwright: The Factor Trust Modernization serves as proof of concept of how OneTrue can enhance our Credit Bureau capabilities across batch, online, and analytics. We're already taking foundational steps to migrate our core U.S. and Indian credit bureaus to OneTrue starting early in 2025. OneTrue is improving the speed and efficacy of factor trusts, which we believe will strengthen our competitive positioning in the short-term lending space. We're seeing substantial improvement in the speed of batch processing from 24 hours to one hour, allowing faster, on-demand, retrospective analysis. Additionally, OneTrue's modern delivery layer allows us to deliver enhanced data attributes and model upgrades seamlessly with improved model deployment, self-service analytics, and batch capability.

Rod: The factor Trust modernization serves as proof of concept of how <unk> can enhance our credit bureau capabilities across batch online and the analytics.

Rod: We're already taking foundational steps to migrate our core U S and Indian credit bureaus to one true starting early in 2025, one true is improving the speed and the efficacy of factor Trust, which we believe will strengthen our competitive positioning in the short term lending space, we're seeing substantial improvement in the speed of batch processing from.

Rod: 24 hours to one hour, allowing faster on demand retrospective analyses.

Rod: Additionally, <unk> modern delivery layer allows us to deliver enhanced data attributes and model upgrades.

Rod: Seamlessly with improved model deployment self service analytics and batch capabilities, we see.

Todd M. Cello: We see opportunity for a near-term upgrade cycle, followed by more frequent and ongoing upgrades, strengthening our position for more competitive wins in the future. We look forward to continuing to update you on how One True Platform is driving innovation across our product lines over the next several quarters. And now I'll hand it to Todd to provide further details on our second quarter financial results and our updated full year 2024 outlook. Okay, Todd?

Rod: <unk> for near term upgrade cycle, followed by more frequent and ongoing upgrades strengthening our position for more competitive wins in the future.

Rod: We look forward to continuing to update you on how one platform is driving innovation.

Rod: Across our product lines over the next several quarters.

Rod: And now I'll hand, it to Todd to provide further details on our second quarter financial results and our updated full year 2024 outlook Todd.

Todd M. Cello: Thanks, Chris, and let me add my welcome to everyone. As Chris mentioned, in the second quarter, we exceeded our guidance on all key financial metrics. Mortgage drove roughly half of our $15 million revenue outperformance. The other half of outperformance was broad-based, principally in emerging verticals and international. Second quarter consolidated revenue increased 8% on a reported basis and an organic constant currency basis. There was no impact from acquisitions and an immaterial impact from foreign currency.

Todd M. Cello: Thanks, Chris and let me add my welcome to everyone as Chris mentioned in the second quarter, we exceeded our guidance on all key financial metrics mortgage drove roughly half of our $15 million of revenue outperformance. The other half of outperformance was broad based principally in emerging verticals and international second.

Rod: Quarter consolidated revenue increased 8% on a reported basis and organic constant currency basis, there was no impact from acquisitions and an immaterial impact from foreign currency.

Todd M. Cello: Our business grew 4% on an organic, constant currency basis. Excluding mortgage debt from both the second quarter of 2023 and 2024, adjusted EBITDA increased 11% on a reported and constant currency basis. Our adjusted EBITDA margin was 36.2%, at the high end of our expectations and up 115 basis points compared to the year-ago quarter due to flow-through on revenue growth and realization of transformation cost savings. Adjusted diluted EPS was $0.99, an increase of 15%.

Rod: Our business grew 4% on an organic constant currency basis, excluding mortgage from both the second quarter of 2023 and 2024.

Rod: Adjusted EBIT increased 11% on a reported and constant currency basis.

Rod: Our adjusted EBITDA margin was 36, 2% at the high end of our expectations and up 115 basis points compared to the year ago quarter due to flow through on revenue growth and realization of transformation cost savings.

Rod: Adjusted diluted EPS was <unk> 99.

Rod: An increase of 15%.

Todd M. Cello: The adjusted tax rate for the quarter was 23.4%. Finally, in the second quarter, we took $33 million of one-time charges related to the next phase of our transformation program. $15 million for operating model optimization, and $18 million for technology transformation. We incurred $76 million of one-time transformation expenses in the first half of the year and expect to incur approximately $200 million throughout 2024, driving at least $65 million of in-year operating expense savings. As part of our $355 to $375 million program, we expect the remaining $75 to $95 million of one-time expenses to be incurred in 2025.

Rod: Adjusted tax rate for the quarter was 23, 4%.

Rod: Finally in the second quarter, we took $33 million of one time charges related to the next phase of our transformation program $15 million for operating model optimization and $18 million for technology transformation.

Rod: We incurred $76 million of one time transformation expenses in the first half of the year.

Rod: And expect to incur approximately $200 million throughout 2024, driving at least $65 million of in year operating expense savings.

Rod: As part of our $355 million to $375 million program, we expect the remaining $75 million to $95 million of one time expenses to be incurred in 2025.

Todd M. Cello: Looking at segment financial performance for the second quarter, U.S. markets revenue, which includes consumer interactive, was up 6% compared to the year-ago quarter. Adjusted EBITDA for U.S. markets was up 9%, and adjusted EBITDA margin was up 120 basis points to 39%, a US market segment that benefited from a sequential increase in realized transformation cost savings. Financial Services revenue grew 11%. Excluding mortgage, financial services revenue was down 2%.

Rod: Looking at segment financial performance for the second quarter U S markets revenue, which includes consumer interactive was up 6% compared to the year ago quarter.

Rod: Adjusted EBITDA for U S markets was up 9% and adjusted EBITDA margin was up 120 basis points to 39%.

Rod: Our U S market segment benefited from a sequential increase in realize transformation cost savings.

Rod: Services revenue grew 11% excluding.

Rod: Excluding mortgage financial services revenue was down 2% trend.

Todd M. Cello: Trends were consistent with the levels seen in the first quarter. However, we continue to outperform softer volume activity driven by new business wins and successful cross-sell, including with New Star Solutions. In the third and fourth quarters, we expect improving financial services x mortgage growth rates as comparisons ease in the back half of the year. Our credit card and banking business was down 2%. Activity remains tempered as lenders balance improving deposit bases and stabilizing delinquency rates against mixed consumer confidence.

Rod: Trends were consistent with the levels seen in the first quarter we continue.

Rod: To outperform softer volume activity, driven by new win new business wins, and successful cross sell including with Neustar solutions and.

Rod: In the third and fourth quarter, we expect improving financial services ex mortgage growth rates as comparisons ease in the back half of the year.

Rod: Our credit card and banking business was down 2%.

Rod: Activity remains tempered as lenders balance improving deposit bases and stabilizing delinquency rates against mixed consumer confidence.

Todd M. Cello: We are enabling our customers to navigate the current environment and position themselves for future growth with highly relevant products such as trusted call solutions, TrueIQ's analytical suite, and our marketing solutions. Consumer lending revenue declined 3%. Fintech online activity remains muted but stable, with a modest uptick in batch marketing. The short-term lending space remains soft.

Speaker Change: We are enabling our customers to navigate the current environment and position themselves for future growth with highly relevant products such as trusted call solutions true Iqs analytical suite, and our marketing solutions and.

Speaker Change: Consumer lending revenue declined 3% fin.

Speaker Change: Fintech online activity remains muted but stable.

Rod: With a modest uptick in batch marketing.

Rod: The short term lending space remains soft.

Todd M. Cello: We continue to see wallet and new logo wins across both fintech and short-term lending as well as expanding new customer use cases. Our auto business grew 3% despite continued headwinds in the auto market, driven by our innovative credit solutions and new wins in trusted call solutions. New vehicle sales continue to grow modestly, but there remain affordability challenges across the market from higher interest rates and still high used car prices.

Rod: We continue to see wallet and new logo wins across both Fintech and short term lending as well as expanding new customer use cases.

Rod: Our auto business grew 3% despite continued headwinds in the auto market driven by our innovative credit solutions, and new wins and trusted call solutions new.

Rod: New vehicle sales continue to grow modestly, but there remained affordability challenges across the market from higher interest rates and still high used car prices.

Todd M. Cello: We expect similar trends to persist throughout the year. For mortgages, revenue grew 53% against inquiry volume declines of 11%, modestly better than our expectations. We saw good prequalification volumes supported by healthy shopping activity, while mortgage originations remained down and significantly below historical averages; on a trailing 12-month basis, mortgages represented about 9% of total TransUnion revenue. Emerging verticals grew 4% in the quarter, led by insurance, the public sector, tech retail and e-commerce, and media, offsetting modest declines in telco and tenant unemployment.

Rod: We expect similar trends to persist throughout the year.

Rod: For mortgage revenue grew 53% against inquiry volume declines of 11%.

Speaker Change: Modest lead better than our expectations we.

Speaker Change: We saw good prequalification volumes supported by healthy shopping activity.

Speaker Change: Mortgage originations remain down and significantly below historical averages.

Rod: On a trailing 12 month basis mortgage represented about 9% of total transunion revenue.

Rod: Emerging verticals grew 4% in the quarter led by insurance public sector Tech retail and E Commerce and media.

Rod: Offsetting modest declines in telco and tenant and employment.

Todd M. Cello: Insurance grew 6% as market trends progressed as anticipated, which we expect to support growth acceleration in the second half of the year, and ensures our gradually increasing marketing activity as rate adequacy improves, driving demand for our credit-based marketing solutions, as well as our suite of identity-based data hygiene, audience, and analytic solutions. Consumer shopping activity remains strong.

Rod: Insurance grew 6% as market trends progress as anticipated, which we expect to support growth acceleration in the second half of the year.

Rod: Insurers are gradually increasing marketing activity as rate adequacy improves driving demand for our credit based marketing solutions as well as our suite of identity based data hygiene audience and analytic solutions.

Rod: Consumer shopping activity remains strong we continue to have a robust new business pipeline, particularly across our true vision driving history suite as well as cross sell of new Star and <unk> solutions.

Todd M. Cello: We continue to have a robust new business pipeline, particularly across our TruVizion Driving History suite, as well as CrossSell of NuSTAR and Sontic Solutions. The public sector grew double digits with strength across credit, communications, and fraud solutions, as well as favorable project timing. Media and tech retail and e-commerce both grew mid-single digits. The overall marketing backdrop remains muted but stable, and we delivered good growth in trusted call solutions and our risk products.

Rod: The sector grew double digits with strength across credit communications and fraud solutions as well as favorable project timing.

Rod: Media and tech retail and E Commerce, both grew mid single digits.

Rod: The overall marketing backdrop remains muted, but stable and we delivered good growth in trusted call solutions and our risk products.

Todd M. Cello: Elections grew modestly, while telco and tenant unemployment declined to low single digits. Tenant employment year-over-year declines dissipated, and we expect growth in the second half of the year as we mitigate the impact of our product recalibration and ramp recent new business wins. Starting Consumer Interactive, revenue decreased 1%.

Rod: Collections grew modestly, while telco and tenant and employment declined low single digits.

Rod: Tenant unemployment year over year declines dissipated and we expect growth in the second half of the year as we lap the impact of our product Recalibration and ramp recent new business wins.

Rod: Turning to consumer interactive revenue decreased 1%.

Todd M. Cello: Our indirect channel grew, benefiting from continued breach wind. However, our direct business declined as expected as we worked through the impact of our recalibrated marketing strategy. For my comments about international growth, all revenue growth comparisons will be in constant currency. For the total segment, revenue grew 14%, with five of our six reported markets growing by double digits. Justin Ebert, the margin was 42.8%, up 120 basis points. Now, let's dig into the specifics for each region.

Rod: Our indirect channel grew benefiting from continued breach wins.

Rod: Our direct business declined as expected as we work through the impact of our Recalibrated marketing strategy.

Rod: My comments about international all revenue growth comparisons will be in constant currency.

Speaker Change: For the total segment revenue grew 14% with five of our six reported markets growing by double digits.

Speaker Change: Adjusted EBITDA margin was 42, 8% up 120 basis points now.

Speaker Change: Now, let's dig into the specifics for each region.

Todd M. Cello: In India, we grew 27% on top of 35% growth in the prior year's second quarter. We grew strongly in consumer credit, commercial credit, fraud, marketing, and direct-to-consumer, supported by Healthy Market Trends. Our UK business returned to growth, up 4% in the quarter. The UK market continues to stabilize with improving inflation figures and expectations for lower interest rates, supporting gradually improving banking and fintech activity.

Speaker Change: In India, we grew 27% on top of 35% growth in the prior year second quarter.

Speaker Change: We grew strongly in consumer credit and commercial credit fraud, marketing and direct to consumer.

Speaker Change: Supported by healthy market trends are.

Speaker Change: Our U K business returned to growth up 4% in the quarter.

Speaker Change: The UK market continues to stabilize with improving inflation figures and expectations for lower interest rates supporting gradually improving banking and fintech activity.

Todd M. Cello: Additionally, our consumer offerings, as well as our insurance and gaming verticals, drove strong performance. In Canada, we again delivered strong performance, growing 12% against flattish market volume. Growth was broad-based, benefiting from share gains and batch sales in financial services.

Speaker Change: Additionally, our consumer offerings as well as our insurance and gaming verticals.

Speaker Change: Rove strong performance.

Speaker Change: Canada, we again delivered strong performance growing 12% against flattish market volumes growth was broad based benefiting from share gains in batch sales and financial services strength in insurance and recent consumer indirect and breach wins.

Todd M. Cello: Strength in Insurance and recent Consumer Indirect and Breach Wins. Into the second half of the year, we anticipate some deceleration in our growth rate in Canada as we achieve sizable new business wins, but expect to deliver healthy and market-leading performance. In Latin America, revenue growth accelerated to 13% with broad-based growth across regions. Colombia grew double digits, and we're starting to see improving fintech growth after a period of retrenchment. Brazil also accelerated to double-digit growth, driven by improving new business win momentum.

Speaker Change: In the second half of the year, we anticipate some deceleration in our growth rate in Canada, as we lap sizable new business wins, but expect to deliver healthy and market leading performance in Latin America revenue growth accelerated to 13% with broad based growth across regions.

Speaker Change: <unk> grew double digits, and we're starting to see the improving fintech growth after a period of retrenchment.

Speaker Change: We'll also accelerated to double digit growth driven by improving new business win momentum and.

Todd M. Cello: In Asia-Pacific, we grew 14%, led by very strong growth in the Philippines and another solid quarter in Hong Kong. Finally, Africa increased 10%, with broad-based growth led by our retail vertical. Turning to the balance sheet, we ended the quarter with roughly $5.2 billion of debt and $543 million of cash on the balance sheet.

Rod: In Asia Pacific, We grew 14% led by very strong growth in the Philippines, and another solid quarter in Hong Kong.

Rod: Finally Africa increased 10% with broad based growth led by our retail vertical.

Rod: Turning to the balance sheet, we ended the quarter with roughly $5.2 billion of debt and $543 million of cash on the balance sheet.

Todd M. Cello: We finished the quarter with a leverage ratio of 3.3 times. We made an $80 million debt prepayment in the second quarter and expect to make further prepayments over the course of 2024 with excess free cash flow after funding our transformation initiative. Remember that we expect roughly $280 million of accrued one-time transformation expenses from the fourth quarter of 2023 through the end of 2024, with the majority paid out this year. In the quarter, we also successfully completed debt refinancings to extend our maturity profile and reduce our interest expense.

Rod: We finished the quarter with a leverage ratio of three three times.

Rod: We made an $80 million debt prepayment in the second quarter and expect to make further prepayments over the course of 2024 with excess free cash flow after funding our transformation initiatives.

Rod: Remember that we expect roughly $280 million of accrued one time transformation expenses from the fourth quarter of 2023 through the end of 2024.

Rod: With the majority paid out this year.

Rod: In the quarter, we also successfully completed debt refinancing to extend our maturity profile.

Rod: And reduce our interest expense.

Todd M. Cello: We refinanced $1.5 billion of our $2.2 billion term loan B-5 into term loan B-8, as well as our entire term loan A and revolving credit facility. Additionally, we extended the maturity of the portion of our term loan B-5 from 2026. 2031, and our Term Loan A and Revolving Credit Facility from 2028 to 2029. Additionally, we successfully removed the credit spread adjustment for the portion of our term loan B-5. Term Loan A and Revolving Credit Facility.

Rod: We refinanced $1 $5 billion of our $2 $2 billion term loan b five into term loan b eight.

Rod: As well as our entire term loan a and revolving credit facility.

Rod: We extended the maturity of the portion of our term loan B five from 2026 to $2 31, and our term loan a and revolving credit facility from 2028 to 2029. Additionally.

Rod: Additionally, we successfully removed the credit spread adjustment for the portion of our term loan B five.

Rod: Term loan a and revolving credit facility.

Todd M. Cello: Since announcing our New Star acquisition, we have voluntarily prepaid $1.6 billion while executing on three refinancing transactions to lower our interest expense and extend our maturity profile. None of our swaps are all in, the average effective cost of debt at today's rate is roughly 4.9%, below the current SOFR rate. You can find two slides on our debt profile in the appendix of our presentation. Based on our expectation for adjusted EBITDA and cash generation, we expect our leverage ratio to be in the low three times range by the end of 2024. We continue to work towards our leverage ratio target of under three times. However, we do not view three times as an ending point for deleveraging and view debt prepayment as an attractive use of cash.

Rod: Since announcing our new Star acquisition, we have voluntarily prepaid $1 $6 billion, while executing on three refinancing transactions to lower our interest expense and extend our maturity profile.

Rod: Net of our swaps our all in average effective cost of debt at today's rates is roughly four 9%.

Speaker Change: Below the current sofa rate.

Rod: You can find two slides on our debt profile in the appendix of our presentation.

Rod: Based on our expectation for adjusted EBITDA and cash generation, we expect our leverage ratio to be in the low three times range by the end of 2024.

Rod: We continue to work towards our leverage ratio target of under three times.

Speaker Change: Do not view three times as an ending point for deleveraging and viewed debt prepayment as an attractive use of cash.

Todd M. Cello: Turning to guidance, we are pleased with our outperformance over the first six months of the year, but our approach remains unchanged. We continue to assume muted economic growth throughout 2024 with steady lending volumes and no benefit from interest rate cuts. That brings us to our outlook for the third quarter of 2024. We expect foreign exchange to have a less than half percent impact on revenue and an insignificant impact on adjusted EBIT. We expect revenue to be between $1.044 billion and $1.06 billion, or up 8-10% on an organic constant currency basis.

Speaker Change: Turning to guidance, we are pleased with our outperformance over the first six months of the year, but our approach remains unchanged. We continue to assume muted economic growth throughout 2024 with steady lending volumes and no benefit from interest rate cuts that.

Rod: That brings us to our outlook for the third quarter of 2024.

Rod: We expect foreign exchange to have a less than 5% impact on revenue and insignificant impact on adjusted EBITA we.

Rod: We expect revenue to be between 1.044 and $1.06 billion or.

Rod: Or up 8% to 10% on an organic constant currency basis.

Todd M. Cello: Our revenue guidance includes approximately two points of tailwind for mortgage, meaning that we expect the remainder of our business to grow six to eight percent on an organic constant currency basis. Also included in our guidance is a roughly 4.5% benefit from recent large breeze remediation winds that we expect will be realized in the third quarter. We expect adjusted EBITDA to be between $367 and $380 million, up 3% to 7%. We expect an adjusted EBITDA margin of 35.2 to 35.8%, or down 90 to 160 basis points.

Rod: Our revenue guidance includes approximately two points of tailwind for mortgage meaning that we expect the remainder of our business to grow 6% to 8% on an organic constant currency basis included.

Rod: Included in our guidance is a roughly.

Rod: Four 5% benefit.

Rod: Recent large breach remediation wins that we expect will be realized in the third quarter.

Rod: We expect adjusted EBITDA to be between 367, and $380 million up 3% to 7%.

Rod: We expect adjusted EBITDA margin of $35, two to 35, 8% or down 90 to 160 basis points.

Todd M. Cello: A few nuances on third-quarter margins. The impact of our lower margin large breach winds is a roughly 80 basis points drag on quarterly margins. Additionally, the impact of normalizing incentive compensation, when compared to last third quarter's low levels, when we had a reversal of variable compensation accrual, is a little over 100 basis points drag.

Rod: A few nuances on third quarter margin.

Rod: The impact of our lower margin large breach wins is a roughly 80 basis points drag on quarterly margins. Additionally.

Rod: Additionally, the impact of normalizing incentive compensation when compared to last third quarters low levels. When we had a reversal of variable compensation accrual is a little over 100 basis points drag.

Todd M. Cello: Excluding those items, we expect to deliver strong underlying margin expansion benefiting from revenue growth and the realization of our transformation savings. We also expect our adjusted diluted EPS to be between $0.97 and $1.02, up 6 to 12 percent.

Rod: Excluding those items, we expect to deliver strong underlying margin expansion.

Rod: Benefiting from revenue growth and the realization of our transformation savings.

Rod: We also expect our adjusted diluted EPS to be between 97 and $1 two up.

Rod: 6% to 12%.

Todd M. Cello: Turning to the full year, we now expect revenue to come in between $4.098 and $4.138 billion, or up 7-8% on an as-reported and organic constant currency basis. We expect our organic constant currency growth, excluding mortgage, to be up about 4 to 5 percent. For our business segments... We expect U.S. markets to grow mid-single digit or up low-single digit, excluding mortgage. We anticipate financial services to be up low double-digit or low single-digit growth, excluding mortgage revenue, which we expect to increase about 50% based on mortgage inquiries being down over 5%. We expect inquiries to be down roughly 5% in the second half of the year.

Rod: Turning to the full year.

Rod: We now expect revenue to come in between 4.098, and $4 $138 billion or up 7%, 8% on an as reported and organic constant currency basis. The.

Rod: We expect our organic constant currency growth excluding mortgage.

Rod: To be up about 4% to 5%.

Rod: For our business segments, we expect U S markets to grow mid single digit or up low single digit excluding mortgage.

Rod: We anticipate financial services to be up low double digit or low single digit growth excluding mortgage.

Rod: We expect mortgage revenues to increase about 50% based on mortgage inquiries being down over 5%.

Rod: We expect inquiries to be down roughly 5% in the second half of the year.

Todd M. Cello: We expect emerging verticals to be up below single digits. We now expect Consumer Interactive to increase low single-digit and increase from down low single-digit due to the breach wind. We continue to expect International to grow low-double-digit.

Rod: We expect emerging verticals to be up low single digit.

Rod: We now expect consumer interactive to increase low single digit and increase from down low single digits due to the breach wins.

Rod: We continue to expect international to grow low double digit.

Todd M. Cello: Turning back to the total company outlook, we expect adjusted EBITDA to be between $1.455 billion and $1.485 billion, up 8 to 11 percent. That would result in an adjusted EBITDA margin of 35.5 to 35.9 percent, or up 40 to 80 basis points. We anticipate adjusted diluted EPS to be $3.78 to $3.90, up 12 to 16 percent. We expect our adjusted tax rate to be approximately 22.5%, appreciation and amortization is expected to be approximately five hundred and thirty million dollars, and we expect the portion excluding step-up amortization from our 2012 change in control and subsequent acquisitions to be about $245 million. We anticipate net interest expense will be about $250 million for the full year.

Rod: Turning back to the total company outlook, we expect adjusted EBITDA to be between 1455, and $1 485 billion up 8% to 11% that would result in adjusted EBITDA margin being 35, 5% to 35, 9% or up 42.

Rod: 80 basis points.

Rod: We anticipate adjusted diluted EPS to be $3 78 to $3 90.

Rod: Up 12% to 16%.

Rod: We expect our adjusted tax rate to be approximately 22, 5%.

Rod: Depreciation and amortization is expected to be approximately $530 million.

Rod: We expect that the portion excluding step up amortization from our 2012 change in control and subsequent acquisitions to be about $245 million.

Rod: We anticipate net interest expense will be about $250 million for the full year.

Todd M. Cello: We expect capital expenditures to be about 9% of revenue. We continue to expect to incur approximately $200 million in one-time charges in 2024 related to our transformation program. Before wrapping up, I want to summarize the drivers of our guidance raised from what we guided in April. The increase in our revenue and adjusted EBITDA guidance is driven by two factors. Compared to our outperformance in the second quarter as we exceeded the high end of our revenue expectations by $15 million and adjusted EBITDA by $5 million.

Rod: We expect capital expenditures to be about 9% of revenue.

Rod: Continue to expect to incur approximately $200 million in one time charges in 2024 related to our transformation program.

Todd M. Cello: Second, we expect our large breach wins to contribute roughly $40 million of revenue and $5 million of adjusted EBITDA in the second half of the year, with the vast majority recognized in the third quarter. However, the margin profile of breaches can vary depending on the service's offer. With the acquisition of Santic, we are now able to play a meaningful role in the breach market with end-to-end services to meet the needs of a particular event. The large breach winds we are servicing now utilize all of our services, including print notification, which collectively are lower margin.

Rod: Before wrapping up I want to summarize the drivers of our guidance range from what we guided in April the.

Rod: The increase in our revenue and adjusted EBIT guidance is driven by two factors.

Rod: First is our outperformance in the second quarter as we exceeded the high end of our revenue expectations by $15 million and adjusted EBITDA by $5 million.

Rod: We expect our large breach wins to contribute roughly $40 million of revenue and $5 million of adjusted EBITDA in the second half of the year with the vast majority are recognized in the third quarter.

Rod: The margin profile of breaches can vary depending on the services offered.

Rod: The acquisition of Fantastic, we are now able to play a meaningful role in the breach market with end to end services to meet the needs of a particular event.

Rod: Large breach wins, we are servicing now utilized all of our services, including print notification, which collectively are lower margin.

Rod: By comparison, the numerous small breaches we continue to win typically utilize the higher margin services. These large breach wins build our momentum credibility and relevance in the growing space.

Todd M. Cello: By comparison, the numerous small breaches we continue to win typically utilize the higher-margin service. These large breach wins build our momentum, credibility, and relevance in the growing state. Importantly, excluding the breach benefit, our expectations for the second half of the year are unchanged from April as we maintain our prudent guidance approach. We continue to expect healthy revenue growth and strong underlying margin expansion in the second half of the year. We are pleased with the progress on our transformation programs and remain well on track to deliver at least $65 million of savings throughout 2024. I'll now turn the call back to Chris for some final comments. Thanks, Todd.

Rod: Importantly, excluding the breach benefit.

Rod: Our expectations for the second half of the year are unchanged from April as we maintain our prudent guidance approach we continue.

Rod: To expect healthy revenue growth and strong underlying margin expansion in the back half of the year.

Rod: We are pleased with the progress on our transformation programs and remain well on track to deliver at least $65 million of savings throughout 2024.

Rod: I'll now turn the call back to Chris for some final comments, thanks, Todd and to wrap up we exceeded second quarter expectations, driven by mortgage growth and broad based outperformance in emerging verticals and international.

Christopher A. Cartwright: And to wrap up, we exceeded second quarter expectations driven by mortgage growth and broad-based outperformance in emerging verticals and international. We achieved key milestones against our transformation and technology modernization programs, reinforcing our confidence in delivering against our financial... And we're raising our 2024 guidance behind the strong second quarter results in our recent breach win. We remain focused and confident in delivering strong results in the current low-growth market environment. Now, let me turn it back over to Greg.

Speaker Change: We achieved key milestones against our transformation and technology modernization programs reinforcing our confidence in delivering against our financial commitments and.

Rod: We are raising our 2024 guidance behind the strong second quarter results and our recent breach wins.

Rod: We remain focused and confident in delivering strong results in the current low growth market environment now.

Rod: Now, let me turn it back over to Greg.

Greg Bardi: 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. Operator, we can begin the Q&A. Thank you. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone.

Greg Bardi: That concludes our prepared remarks, and the Q&A, we ask that you each ask only one question. So that we can include more participants operator, we can begin the Q&A.

Speaker Change: Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.

Greg Bardi: To withdraw your question. Please press Star then two.

Operator: To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. And the first question will be from Jeff Meuler from Baird. Please go ahead. Yeah, thank you. Good morning. So I want to ask about card and banking and consumer lending, I guess, both in the quarter and going forward, from the standpoint that it sounds like market conditions are stable, but your numbers got a little bit worse in the quarter on a year-over-year basis. So what drove that?

Greg Bardi: At this time, we will pause momentarily to assemble our roster.

Rod: Yeah.

Rod: Okay.

Speaker Change: And the first question will be from Jeff Mueller from Baird. Please go ahead.

Jeffrey P. Meuler: Yes, Thank you and good morning.

Jeffrey P. Meuler: So I wanted to ask about card and banking and consumer lending I guess, both in the quarter and going forward.

Speaker Change: From the standpoint that.

Speaker Change: It sounds like market conditions are stable, but your numbers got a little bit worse in the quarter on a year over year basis. So.

Speaker Change: What drove that and then going forward I hear you on the benefit from the easier comp but.

Speaker Change: At what point do we see greater.

Speaker Change: I guess underlying improvement beyond the easing comp benefit, especially now that <unk> are starting to level off given that they are further along in the normalization process. Thank you.

Jeffrey P. Meuler: And then going forward, I hear you on the benefit from the easier comp, but at what point do we see greater, I guess, underlying improvement beyond the easing of the comp benefit, especially now that DQs are starting to level off, given that they're further along in the normalization process? Thank you.

Rod: Yes.

Todd M. Cello: Thanks for the question. So yeah, as it pertains to finance, let's talk about financial services just in total, excluding mortgages. I know your questions about cards and banking and consumer lending.

Rod: Hey, Good morning, Jeff This is Todd.

Rod: Todd Thanks for the question so as it pertains to financial let's talk about financial services just in total excluding mortgage I know you have questions about card and banking and consumer lending.

Todd M. Cello: But in the first quarter, you know, we did grow 1%, and we just reported a decline of 2% in the second quarter. What we think is a more instructive way to look at it is to look at what actually happened in the first half of the year. And when we look at it on that basis, everything was pretty much flat.

Speaker Change: In the first quarter, we did grow 1% and we just reported decline of 2% in the in the second quarter.

Speaker Change: What we think is more a more instructive way to look at it is to look at what actually happened in the first half of the year and when you look at it on that basis.

Speaker Change: It was pretty much flat and what we see there is simply a continuation of the trends that.

Todd M. Cello: And what we see there is simply a continuation of the trends that we saw exiting 2020-30. And needless to say, in Q3 of 2023, we saw a step down. And we've been pleased with what we characterized in our prepared remarks as a stabilization in our volumes. So when you look at the second half of the year, to your point, the volume comparisons will definitely get easier, where we're expecting in the third quarter a low single-digit growth rate for financial services x mortgage.

Speaker Change: That we saw exiting two.

Speaker Change: 2023, and needless to say in Q3 of 2023 weeks, we saw a step down and we've been pleased.

Speaker Change: With what we characterized in our prepared remarks census stabilization.

Speaker Change: In our in our volumes.

Rod: So.

Speaker Change: When you look at the second half of the year is here to your point the volume comparisons will definitely.

Speaker Change: It easier more we're expecting in the third quarter of low single digit growth rate for financial services ex mortgage.

Todd M. Cello: But when you get into the fourth quarter, because remember the step down that we saw in 2023 really started in September, so you saw the full run rate of that happen in the fourth quarter of 2023.

Rod: But when you get into the fourth quarter, because remember that the step down that we saw in 2023 was started really in September. So you saw the full run rate of that happened in the fourth quarter of 2023, so the comparable there.

Todd M. Cello: So the comparable there is about a mid-single-digit growth in the fourth quarter that we're expecting. A lot of the focus, and rightfully so, is on how our volumes are performing. But it is also important to note that we do continue to win meaningful new logos and business, as well as that we've been successful within financial services and cross-selling new star capabilities. So the point is it's important to look at this a little bit wider than just the volumes, because there are other places that we have had some success.

Rod: Look is about a mid mid single digit grower in the fourth in the fourth quarter that were expecting.

Rod: A lot of the focus and rightfully. So is on how our volumes are performing but it is also important to note that we do continue to.

Rod: To win meaningful new logos and business.

Rod: As well as we've been successful within financial services and cross selling new star capabilities to the point and that is it's important to look at this a little bit more broader than just the volumes because there are other places.

Rod: We have had some success.

Todd M. Cello: Yeah, I would just reinforce a couple of points. We view this as stable market conditions, even though technically, we are a bit negative in the two categories that you pointed out. I mean, naturally, you're gonna expect some variations in and around the floor.

Speaker Change: Yes, I would just reinforce a couple of points. We view this as stable market conditions, even though technically we are a bit negative in the two categories that you pointed out.

Rod: I mean naturally you're going to expect some variations in the around the floor and so we think these fluctuations are within a stable, but muted lending environment I think the more important takeaway is that.

Christopher A. Cartwright: And so we think these fluctuations are within a stable but muted lending environment. I think the more important takeaway is that we are demonstrating that through our diversification and overall business model strength, we can grow even when conditions are muted. So we've got nice top-line growth, good fall-through, margin improvement, and the ability to de-lever despite the fact that we're still in kind of a stable but depressed market condition. Now, looking forward, when do you think we're going to actually start to see growth beyond just steady conditions against easing comps?

Rod: We are demonstrating that through our diversification and overall business model strength, we can grow even when the conditions are muted until we've got nice topline growth good fall through margin improvement and the ability to delever. Despite the fact that we're still in kind of a stable market arena kind of a stable but.

Rod: The market conditions now looking forward when do you think when do we think we're going to actually start to see growth beyond just steady conditions against easing comps.

Speaker Change: Look it's tough to predict but.

Christopher A. Cartwright: You know, look, it's tough to predict, but consumers are holding up pretty well because they're employed and they're enjoying some real wage growth. There has been increasing distress among subprime and lower-income consumers, but we think some of that is moderating, and, as you point out, delinquencies are easing.

Speaker Change: The consumers are holding up pretty well because theyre employed and they are enjoying some real wage growth.

Speaker Change: There has been increasing distress amongst subprime and lower income consumers, but we think some of that is moderating and as you pointed out delinquencies are easing.

Christopher A. Cartwright: The deposit bases within the banks are stabilizing, and I think that means we're getting closer to market conditions where marketing activity and customer acquisition are going to improve. And, of course, if the Fed does come through with any rate reductions in the second half of the year, that would be additive to our forecasts at this point. Thank you. And the next question will be from Andrew Steinerman from J.P. Morgan. Please go ahead.

Speaker Change: The deposit basis within the banks are stabilizing and ni.

Speaker Change: And I think that means we're getting closer to market conditions, where marketing activity and the customer acquisition is going to improve and of course, if the fed does come through with any rate reductions in the second half of the year that would be additive to our forecasts at this point.

Speaker Change: Thank you and the next question will be from Andrew Steinman from J P. Morgan. Please go ahead.

Andrew Charles Steinerman: Hi, glad to hear that Newstar's revenue growth was solid in the quarter and on track for the year. Could you just give some more color on what's driving Newstar's revenues within the marketing and fraud solutions? And how is joint product development going, and the traction on joint product development products that have been introduced? And lastly, is Newstar still expecting to have EBITDA margins of around 32% this year? Well, first, quickly on the margin question, because that's probably faster to address.

Andrew Charles Steinerman: Glad to hear that new store revenue growth was solid in the quarter and on track for the year could you just give us some more color on what's driving new strives revenues within the marketing and fraud solution and how is joint product development going traction and joint product development products that have been introduced and laugh.

Speaker Change: If new starts still expecting to have EBITDA margins around 32% this year.

Speaker Change: We will first quickly on the margin question, because thats, probably faster to address yes, 32%.

Christopher A. Cartwright: Yes, 32% is our guide for the year, and we do believe that there's upside to those margins as we complete the realization of the acquisition synergies, and as we complete the technology modernization that we outlined in the third and fourth quarter environments last year. And also, as we return to more normalized marketing conditions, you know, marketing has been in retreat for about 12 months now. And our marketing products tend to be higher-margin than the communication products because there's a lower cost of goods sold associated with them. So we also have some mixed headwinds that are keeping New Star margins a little bit lower than we expect in more normalized conditions.

Speaker Change: As our guide for the year and we do believe that there is upside to those margins as we complete the realization of the acquisition synergies as we complete the technology modernization that we outlined in the.

Speaker Change: In the third and fourth quarter environment last year and also as we return to more normalized marketing conditions.

Speaker Change: Marketing has been in retreat for about 12 months, plus now and our marketing products tend to be higher margin than the communication products. Because there is a lower cost of goods sold associated with them. So we also have some mix headwinds that are keeping new store margins, a little bit lower than we expect in <unk>.

Andrew Charles Steinerman: Normalized conditions now if you look across the board, we're having a pretty good year in fraud, with new star, where having a softer year in marketing relative to our guidance and it's because of the pressures on businesses to find efficiencies in marketing and a more difficult environment, and we're doing pretty well and communication.

Christopher A. Cartwright: Now, if you look across the board, we're having a pretty good year in fraud with New Star. We're having a softer year in marketing relative to our guidance, and that's because of the pressures on businesses to find efficiencies in marketing in a more difficult environment.

Christopher A. Cartwright: And we're doing pretty well in communication solutions, in particular, the subcomponent of communications, which is trusted call solutions, where we're getting really outsized growth because we've got a product that's getting great market acceptance, and we're going to continue to ride that. On the innovation front, we are very close to launching the next generation of our integrated marketing products, a unified marketing solution that combines the best of Heritage, TransUnion, and NuSTAR on a single integrated platform.

Andrew Charles Steinerman: In particular, the sub component of communications, which is trusted call solutions, where we're getting really outsized growth.

Andrew Charles Steinerman: We've got a product that's getting great market acceptance and we're going to continue to ride that.

Andrew Charles Steinerman: On the innovation front.

Andrew Charles Steinerman: We are very close to launching the next generation of our integrated marketing products are unified marketing solution that combines the best of heritage Transunion and new store on a single integrated platform and that's one of the reasons why we took the time in this earnings call to focus on the many components.

Christopher A. Cartwright: And that's one of the reasons why we took the time in this earnings call to focus on the many components of One True in the tech transformation, because this next-generation solution is built upon One True and also on OneDev, the underlying foundation, and it's going to bring together all of the data, the marketing audience data, all of the identity data, and resolution capabilities in the range of identity, hygiene, audience planning, activation, and media measurement services in So we expect that to launch late in the third quarter, and rolling in the next year, we think we're gonna see material acceleration and growth there, regardless of market conditions. We're also excited because we've achieved the same kind of product innovation milestone in the fraud world. We are launching the next generation TrueValidate fraud solution.

Andrew Charles Steinerman: One through in the tech transformation because.

Andrew Charles Steinerman: This next generation solution is built upon one true and also on one Dev the underlying foundation and it's going to bring together all of the data the marketing audience data all of the identity data and resolution capabilities in the range of identity.

Speaker Change: Hi, gene audience planning activation and media measurement services in a single integrated system. So we expect that to launch late third quarter.

Speaker Change: And rolling into next year, we think we're going to see material acceleration in growth there regardless of market conditions. We're also excited because we've achieved the same kind of product innovation milestone and the fraud World. We are launching the next generation free validate fraud solution.

Christopher A. Cartwright: We highlighted it in my section of the earnings. You can see it performs dramatically better, and it's been a point of integration and consolidation of the various fraud solutions that we have either acquired or built in different geographies through the year on the Common New Star platform. And by aggregating all of that signal and bringing advanced analytics against it, we're able to identify fraud far more effectively but also reduce false positives, which saves our customers a lot of needless labor. So, I think the broad, Andrew.

Speaker Change: Highlighted it in my section of the earnings you can see it performs dramatically better and it's been a point of integration and consolidation of the various.

Speaker Change: Fraud solutions that we have either acquired or built in different geographies through the year on the common new star platform and by aggregating all of that signal and bringing advanced analytics again it against it we're able to identify fraud far more effectively but also reduce false positives, which saves are.

Andrew Charles Steinerman: Customers a lot of needless labor, so I'd say the broad Andrew.

Christopher A. Cartwright: We're kind of moving from the acquisition integration phase, and we're kind of deep now in the acquisition innovation phase. And the next question will be from Faiza Alwy from Deutsche Bank. Please go ahead. Yes, hi, thank you so much.

Andrew Charles Steinerman: We're kind of moving from the acquisition integration phase and we're kind of deeply now in the acquisition innovation phase.

Faiza Alwy: And the next question will be from Faisal <unk> from Deutsche Bank. Please go ahead.

Speaker Change: Yes, hi, thank you so much so wanted to talk more about emerging vertical beyond star you've done well in the first half you highlight that 4% growth and but you're still keeping that low single digit growth outlook for the year. So just curious from from footprint puts and takes there.

Faiza Alwy: So I wanted to talk more about emerging verticals beyond New Star. So you've done well in the first half. You highlighted 4% growth, but you're still keeping the low single-digit growth outlook for the year. So just curious about some puts and takes there and how we should be thinking about the back half. Good morning, Faiza.

Speaker Change: We should be thinking about the back half.

Todd M. Cello: I'll take that question. Yeah, we are pleased with the performance that we've had thus far with the emerging verticals, in particular, growing, you know, 4% in the latest quarter. But there are several moving pieces that I do feel are important, you know, to walk through. You know, in our prepared remarks, we did speak about, you know, some good growth that we are seeing in insurance; the insurance vertical grew 6% in the quarter, as we think forward about that, about that business.

Andrew Charles Steinerman: Good morning, Faiza I'll take that question and we are pleased with the performance that we've had thus far with the emerging verticals.

Andrew Charles Steinerman: Particular growing four.

Speaker Change: <unk>, 4% in the in the latest quarter.

Speaker Change: But there are several moving pieces that I do feel are important to walk through.

Speaker Change: In our prepared remarks, we did speak about some good growth that we are seeing on insurance the insurance vertical grew 6% in the quarter as we think forward about that about that business.

Todd M. Cello: Marketing continues its recovery, which is a positive thing for the industry overall because, you know, rate adequacy is improved. And we're also seeing, you know, some strong shopping activity, you know, by consumers. So we expect that, you know, to continue on. But nevertheless, it was a meaningful contributor, you know, to the growth rate.

Speaker Change: Marketing continues the recovery, which is a positive thing for the industry overall as rate adequacy has improved.

Speaker Change: And we're also seeing some strong shopping activity by consumers. So we expect that.

Andrew Charles Steinerman: To continue on.

Andrew Charles Steinerman: Within the emerging verticals, it's almost like I would I would think about segmenting, where the growth came from so insurances clearly.

Andrew Charles Steinerman: Handout because of its because of its size and the growth that we're seeing but also in the quarter. We saw good growth in public sector, which was a double digit grower.

Andrew Charles Steinerman: Broad based but the public sector business does have some project work in it so that can be uneven from quarter to quarter.

Todd M. Cello: Also, our tech retail and e-commerce, and our media vertical grew greater than the 4% for emerging verticals overall, which we view as a very solid result. So when you look at insurance, public sector, tech retail, e-commerce, and media, that's where the vast majority of the growth is coming from. Offsetting that, you know, we are seeing our collections business, you know, still growing but lower, you know, than the overall growth rate for emerging verticals. And as we said in our prepared remarks, the tenant employment business declined, but we expect that those declines will have dissipated.

Andrew Charles Steinerman: But nevertheless was a meaningful contributor.

Andrew Charles Steinerman: The growth rate.

Andrew Charles Steinerman: Also our tech retail and e-commerce.

Andrew Charles Steinerman: And our media.

Andrew Charles Steinerman: Vertical grew greater than the 4% for emerging verticals overall, which we view as a very solid result, because much of the marketing.

Andrew Charles Steinerman: Revenue that we just spoke about from new star in the joint capabilities that Transunion has created they reside in these two verticals. So when you look at insurance public sector Tech retail ecommerce media, that's where the vast majority of the growth is coming from offsetting that.

Andrew Charles Steinerman: We are seeing our collections business.

Andrew Charles Steinerman: Still growing but lower than the overall growth rate for emerging verticals.

Andrew Charles Steinerman: As we said in our prepared remarks, the tenant and employment business.

Andrew Charles Steinerman: Declined, but we expect that those declines.

Andrew Charles Steinerman: Have dissipated we know they have and we're going to see this business return back to growth with our Recalibrated product offering and then you'll finally, something I always keep in mind, Chris just talked about our communications.

Todd M. Cello: We know they have, and we're going to see this business return to growth with our recalibrated product offering. And then, you know, finally, something to always keep in mind. Chris just talked about our communications product suite, which TCS is part of, but our communications vertical houses many of the legacy New Star products that are, you know, slow, sladdish to slow or declining growth, and they're going to be a drag.

Christopher A. Cartwright: Product suite, which tcs as part of our communications vertical houses many of the legacy New star products that are slow flattish to slow or declining growth and they are going to be a drag so that the net net.

Todd M. Cello: So the net-net is, you know, you see some good growth from the vast majority, you know, of these verticals, and then, you know, there's some offsets, you know, that are there. Thinking about this just relative to our guide, you know, for the second half of the year, as we said, you know, we didn't change the guide.

Christopher A. Cartwright: As you see some good growth from the vast majority.

Christopher A. Cartwright: All of these verticals.

Andrew Charles Steinerman: And then there are some offsets there.

Speaker Change: Are there.

Speaker Change: Thinking about this just relative to our guide.

Andrew Charles Steinerman: For the second half of the year and as we said we didn't change the guide.

Christopher A. Cartwright: So with that being said, you know, I think that, you know, we look at this and say that the risk in the emerging vertical skews more to the upside than to the downside for all the reasons that I just went through for each of the emerging verticals. Yeah, and I think that's just kind of an important philosophical point to emphasize to all of the analysts and investors on the call that, you know, we're maintaining our guidance posture of beat and hold, as opposed to beat and raise, right.

Speaker Change: So with that being said I think that we look at this and say that the risk and the emerging.

Speaker Change: <unk> vertical skews more to the upside.

Andrew Charles Steinerman: Then to the downside.

Andrew Charles Steinerman: The reason that I.

Andrew Charles Steinerman: I just went through for each of the emerging verticals, yeah, and I think thats, just a kind of an important.

Christopher A. Cartwright: And so we're letting the beats flow through, but we're maintaining the same conservative expectations for future quarters in the second half of the year that we did at the outset of the year. And we think that's more prudent, given the gyrations in the macro market over the past couple of years and some of the difficulty in forecasting the business.

Andrew Charles Steinerman: Point philosophically to emphasize really to all of the analysts and investors on the call is that we are maintaining our guidance posture of a beat in hold as opposed to beat and raise right and so.

Andrew Charles Steinerman: We're letting the beads flow through but we're maintaining the same conservative.

Andrew Charles Steinerman: Expectations in the future quarters in the second half of the year that we did at the outset of the year and we think thats more prudent given the gyrations in the macro market over the past couple of years and some of the difficulty in forecasting the business and we feel like we're well positioned to deliver against.

Andrew Charles Steinerman: The guidance that we are reinforcing in this call.

Andrew Charles Steinerman: And our next question will be from Toni Kaplan from Morgan Stanley. Please go ahead.

Christopher A. Cartwright: And we feel like we're well positioned to deliver on the guidance that we're reinforcing in this call. And our next question will be from Toni Kaplan from Morgan Stanley. Please go ahead. Thanks so much.

Toni Michele Kaplan: Thanks, So much I think this was touched on a little bit, but just wanted to really nail that down.

Toni Michele Kaplan: I think this was touched on a little bit, but I just wanted to really nail it down. You mentioned that you didn't change your guidance expectations, so I definitely appreciate that. But backing out the breach wins, your 3Q Organic Growth Guide implies a bit of a deceleration in organic growth. And so maybe just talk about what the slowdown implied would be from, and maybe it's just conservatism, but are there specific headwinds to call out, or really is it just you wanting to really be able to show good numbers? Thanks.

Toni Michele Kaplan: You mentioned that you didn't change your guidance expectation. So I definitely appreciate that but backing out the breach wins, you're at three <unk> organic growth guide implies a bit of a deceleration in organic growth.

Speaker Change: So maybe just talk about what the slowdown.

Andrew Charles Steinerman: Implied.

Speaker Change: It would be from and maybe it's just conservatism, but are there specific headwinds to call out or or really is it just you know.

Speaker Change: Are you wanting to to really be able to show good numbers and be conservative. Thanks.

Speaker Change: Tony I'm glad you asked the question because it's an important point and it really just kind of reinforces the point that Chris just made.

Todd M. Cello: Tony, I'm glad you asked the question because it's an important point and it really just kind of reinforces the point that Chris just made, in that when you look at our performance, and let's do this for TransUnion in total, excluding mortgage. In the first quarter, we grew 5%, second quarter we grew 4%, and now the growth rate at the high end, we're saying, excluding the breach, because the breach wins that we've had are one-time only, we'd be at about 3.5% in the third quarter, and then you can do the math, and the implied growth rate is going to be about 3% for the fourth quarter. So, clearly, a step down from what we've seen.

Speaker Change: In that.

Speaker Change: When you look at.

Speaker Change: Our performance in let's do this for Transunion in total excluding mortgage in the first quarter. We grew five second quarter, we grew 4% and now the growth rate.

Speaker Change: At the high end, we're saying excluding the breach because that is the breach wins that we've had a one time nature.

Speaker Change: We'd be at about three 5% in that in the third quarter and then you can do the math and the implied is going to be about 3%.

Speaker Change: For the for the fourth quarter.

Speaker Change: So clearly.

Speaker Change: Stepped down from what we've seen.

Todd M. Cello: But simply put, as Chris just said, we just feel it's the prudent thing right now to not get in a situation where we're raising expectations because the business and core financial services, as I answered previously, continue to be stable. We haven't seen that uptick yet happen. So as a result, we think it's best for us to stick with the numbers that we put out going back to February for the second half of the year because things do still remain uncertain for us, so that second half guide is unchanged, and again, reinforcing no assumption of a lending recovery or any type of marketing recovery benefit from a Fed rate cut.

Speaker Change: Just simply simply put.

Christian: As Christian said.

Christian: We just feel it's the prudent thing right now to not get in a situation, where we are raising expectations because.

Christian: The business.

Christian: Core financial services I answered previously it continues to be stable, we haven't seen that uptick yet happen.

Christian: So as a result, we think.

Christian: What's best is for us too.

Christian: Stick with the numbers that we put out going back to February.

Speaker Change: For the second half of the year, because things do still remain uncertain for us.

Speaker Change: So that second half guide is unchanged.

Speaker Change: Again, reinforcing knowing no assumption of a lending recovery or any type of marketing recovery benefit from the fed.

Speaker Change: Rate cut and I'll, just leave you with Q1 and Q2.

Todd M. Cello: As with Q1 and Q2, we guided 2% to 3%, and we were fortunate to be able to outperform that. And I can tell you that that is what the team is working towards, to do that in the second half of the year. Thank you. And the next question will be from Kelsey Zhu from Autonomous. Please go ahead.

Speaker Change: We guided 2% to 3% and we were fortunate to be able to outperform that.

Speaker Change: And I can tell you that that is what the team is working towards to do that in the second half of the year.

Speaker Change: Thank you and the next question will be from Kelsey Xu from Autonomous. Please go ahead.

Kelsey Zhu: Hi, Good morning, Thanks for taking my question so on gross revenue.

Kelsey Zhu: Thanks for taking my question. So, on breach revenues, I think you mentioned large breach wins in the quarter. I was wondering if you could give us a little bit more details on that. I think breach revenues are generally hard to forecast and can be lumpy. So, what's a sustainable level of growth in your view? And then, on top of that, if you could tell us a little bit more about the competitive landscape there, that would be great because experience also highlights that there is strong growth there. Yeah, Kelsey.

Kelsey Zhu: So large groups schwinn within a quarter I was wondering.

Speaker Change: All of that might be on that green.

Speaker Change: Green travel generally hartzell forecasts and can be lumpy, so what's the vulnerable levels crowd.

Speaker Change: And then on top of that.

Speaker Change: Oh, that's more about the competitive landscape there that would be great because experience also highlight strong growth there.

Speaker Change: Yes healthy.

Christopher A. Cartwright: Well, breach is a large and growing market. And you only have to follow the news for a few weeks, and you're going to see major companies suffering breaches. With the acquisition of New Star, I'm sorry, with the acquisition of Sontic and the investments that we've made, we feel like we have emerged as a significant player in breach now. And our brand is such that we are kind of in the deal flow.

Speaker Change: Breaches, a large and growing market.

Speaker Change: And again, we have to.

Speaker Change: Following the news for a few weeks and Youre going to see major companies sustaining breaches of with the acquisition of Neustar Im sorry, with the acquisition of <unk> and the investments that we've made we feel like we have emerged as a significant player in breach now.

Speaker Change: And our brand is such that we are kind of in the deal flow and we've got the broad set of capabilities to service small and large needs alike.

Christopher A. Cartwright: And we've got the broad set of capabilities to serve small and large needs alike, breach needs that skew to the physical or the digital. We've got a comprehensive range of services, and we're going to compete more effectively, win share, and have a higher sustainable level of breach revenues. Now that said, you are correct.

Speaker Change: Rich need that skewed through the physical or the digital we've got the comprehensive range of services and we're going to compete more effectively win share and have a higher sustainable.

Speaker Change: Level of breach revenues now that said you are correct. These deals are episodic sometimes have been a big ones. Sometimes we may not have the big one in the quarter and that's why we've taken pains to really call out.

Christopher A. Cartwright: These deals are episodic. Sometimes we're gonna have big ones; sometimes we may not have the big one in the quarter. And that's why we've taken pains to really call out this higher-than-usual level of breach wins in the third quarter. I think it's also important to understand that these breach wins come with attractive margins. They may not be quite as high as our enterprise margins in total, but they're not dramatically different

Speaker Change: This.

Speaker Change: Higher than usual level of breach wins.

Speaker Change: In the third quarter I think it's also important to understand that these breach wins come with attractive margins.

Speaker Change: May not be quite as high as our enterprise margins in total, but they are not dramatically different right. So I would hate for an analyst to look at what we're reporting in the third quarter and conclude that thats. The typical margin of the breach business that third quarter financial performance really is just about the timing of revenue.

Christopher A. Cartwright: So I would hate for an analyst to look at what we're reporting in the third quarter and conclude that that's the typical margin of the breach business. The third quarter financial performance really is just about the timing of revenue arrival against the expenses.

Speaker Change: Rival against the expenses and on these particular breaches were doing broad physical notifications through the mail and we're just paying a lot of postage what it doesn't include is the much higher payroll of revenue that's going to continue for the next year or two related to the digital services associated with these wins so we.

Christopher A. Cartwright: And on these particular breaches, we're doing broad physical notification through the mail, and we're just paying for a lot of postage. But what it doesn't include is the much higher tail of revenue that's going to continue for the next year or two related to the digital services associated with these wins. So we look at the breaches on a deal-by-deal basis. They are attractive at margin.

Speaker Change: Look at the breaches on a deal by deal basis, they are attractive and margin, it's fast growing and we think we're much better positioned to compete for them go forward.

Manav Shiv Patnaik: It's fast-growing, and we think we're in a much better position to compete for them going forward. And the next question will be from Manav Patnaik from Barclays. Please go ahead.

Speaker Change: And the next question will be from Manav Patnaik from Barclays. Please go ahead.

Manav Shiv Patnaik: Thank you I just wanted to ask on the seven product suite that you showed at times. They can you grouped all the offerings into that but is that internally I suppose is the leadership aligned by each of those or is it more by the segmentation you provide just wondering how interconnected these things rois they will.

Christopher A. Cartwright: Thank you. I just wanted to ask about the seven product suites that you showed. It sounds like, you know, you've grouped all the offerings into that, but is that, internally, I suppose, is the leadership aligned with each of those, or is it more by the segmentation you provide? Just, you know, wondering how, you know, interconnected these things are, or are they really being separated into these seven product offerings or brands? Yeah, Manav, I love the question.

Speaker Change: <unk> being separated into these seven product offerings of bands rather.

Manav: Yeah Manav.

Christopher A. Cartwright: So let's talk about our global operating model. Certainly, we have countries, and we have vertical leadership within those countries that focus on the specific wants, the needs, and the use cases for our products that are most relevant within those verticals. But we also have a parallel product organization, our solutions organization, and we have defined leadership and product management teams that align directly to the product families that you see. So, if you were here, I could introduce you to our marketing lead, our fraud lead, our consumer lead, et cetera.

Manav: Love the question.

Speaker Change: So let's talk about our global operating model.

Speaker Change: Certainly we've got countries and we have vertical leadership within those countries that focus on this specific wants and the needs in the use cases for our products that are most relevant within those verticals, but we also have a parallel pre.

Speaker Change: Product organization, our solutions organization, and we have defined leadership and product management teams that align directly to the product families that you see so if you were here I could introduce you to our marketing lead our fraud lead our consumer lead et cetera, and so.

Christopher A. Cartwright: And so, you know, it is much like a large global software company that's going to have a product leader overseeing a particular category of software or a consumer packaged goods company that's going to have a category manager.

Speaker Change: It is it is much like a large global software company, that's going to have a product leader overseeing a particular category of software or consumer packaged goods company, that's going to have a category manager, but then they are interfacing with the folks that lead.

Christopher A. Cartwright: But then they are interfacing with the folks that lead the go-to-market in the countries or the specific verticals. Thank you. And the next question will be from Heather Balsky from Bank of America. Please go ahead.

Speaker Change: The go to market in the countries or the specific verticals.

Heather Nicole Balsky: Thank you and the next question will be from Heather <unk> from Bank of America. Please go ahead.

Heather Nicole Balsky: Hi, good morning. Thank you for taking my question. I wanted to ask a question on consumer interactive outside the breach.

Heather: Hi, Good morning. Thank you for taking my question I wanted to ask a question on consumer interactive outside the freight you talked about nearing an inflection in that business I'm curious if you can talk a bit more about that what youre seeing and what gives you confidence.

Christopher A. Cartwright: You talked about nearing an inflection point in that business. I'm curious if you can talk a little bit more about that, what you're seeing, and what gives you confidence in the business accelerating. Yeah, good question, Heather. So we talked a lot about consumers on recent calls and the three portions of consumers. And the most challenging one has been the direct-to-consumer subscription business that we have through TransUnion.com and other properties.

Speaker Change: The business accelerating.

Heather: Yes, good question Heather.

Speaker Change: So we've talked a lot about our consumer in recent calls and the three portions of consumer and look the most the most challenged one has been the direct to consumer subscription business that we have through changing in dot com and other properties.

Christopher A. Cartwright: And what we're seeing now is that the rate of decline is slowing and slowed in the second quarter. We expect it to slow further in the third and, you know, reach kind of an equilibrium point or kind of low single-digit declines by the fourth quarter of this year.

Speaker Change: And what we're seeing now is that the rate of decline is slowing and slowed in the second quarter, we expect it to slow further in the third.

Speaker Change: <unk> reached kind of an equilibrium point or kind of low single digit declines by the fourth quarter of this year.

Christopher A. Cartwright: And that will really reduce the drag on earnings from this piece of the business. In the larger indirect piece, where there has been really a mix of success for the freemium players and revenue pressure from the subscription players, and just more kind of competition for share in that, we're seeing stabilization, and we're getting growth out of that segment. And then what's really helping our results the most is the multi-year mid-double-digit compounding that we're getting out of Sontag. So Sontag grew 20% last year.

Speaker Change: And that will really.

Speaker Change: Reduce the drag on earnings from this piece of the business in the larger indirect piece, where there has been really a mix of success for the freemium players and in revenue pressure.

Speaker Change: From the subscription players.

Speaker Change: And just more kind of competition for sure and that we're seeing stabilization and we're getting growth out of that segment and then what's really helping our results. The most is the multi year.

Speaker Change: Mid mid double digit compounding that we're getting out of.

Speaker Change: Out of <unk>. So <unk> grew 20% last year was a great year driven in part by success in breach, but also an underlying identity subscription.

Christopher A. Cartwright: It was a great year, driven in part by success in Breach but also in underlying identity subscription sales. And this year, we're positioning ourselves for another year of really strong growth. Now, stepping back a bit, we still firmly believe that we're going to return the consumer business in total to consistent revenue growth, and we're going to pursue each of the monetization options to make that happen.

Speaker Change: Sales and this year, we're positioning ourselves for another year of really strong growth now stepping back a bit.

Heather: We still firmly believe that we're going to return the consumer business in total.

Heather: Consistent revenue growth to consistent compounding.

Heather: And we're going to pursue each of the monetization options to make that happen. So we're going to continue to do well on the subscription front.

Christopher A. Cartwright: So we're going to continue to do well on the subscription front. We're going to improve our capabilities in terms of offering, supporting offers directly to consumers, both through our web properties and also enabling other players to do so in the marketplace. And we're going to build upon the momentum in identity and breach remediation. Thank you. And the next question will be from Shlomo Rosenbaum from Stiefel. Please go ahead.

Speaker Change: We're going to improve our capabilities in terms of.

Speaker Change: Offering.

Speaker Change: Supporting offers directly to consumers both through our web properties, but also enabling other players to do so in the marketplace and we're going to build upon the momentum and identity and breach remediation.

Speaker Change: Yes.

Speaker Change: Yeah.

Speaker Change: Thank you and the next question will be from Shlomo Rosenbaum from Stifel. Please go ahead.

Shlomo H. Rosenbaum: Hi. Thank you very much for taking my question. Just-I want to clarify one thing and then jump on to one other item. Just-was there any unusual breach activity in the current quarter in 2Q24, just because the bottom of slide 12 says, Consumer Interactive Indirect Growth Led by Breach? I want to know if some of the unusual activity you talked about that's heading into 3Q, did any of it kind of pop up in 2Q?

Shlomo H. Rosenbaum: Hi, Thank you very much for taking my question just I want to just one clarification thing and then to jump onto.

Shlomo H. Rosenbaum: And one other item just was there any unusual breach activity in the current quarter and the <unk> 24, just because the bottom of slide 12, there's consumer interactive indirect growth led by breach we want to do that is with some of the unusual activity you talked about that's heading in <unk> did any of that kind of pop into <unk> and then the more.

Shlomo H. Rosenbaum: And then the more important question is, you know, Chris, where do you guys stand in terms of the transformation project? Are you, you know, tracking in line ahead? I'm not just talking about, you know, the cost.

Speaker Change: Question is.

Speaker Change: Chris where do you guys stand in terms of the transformation product projects are you.

Christopher A. Cartwright: Tracking in line ahead, I'm not just talking about.

Christopher A. Cartwright: I'm talking about what you expect to get out of it, the timing of the project, and your optimism about its success. Okay, well, thanks for both your questions there. And look, there was nothing unusual in the breach activity. I mean, the only, I guess, unusual or new thing is our ability to compete and win these big breach jobs. And we won several of them, and we're getting the benefit of that in the third quarter. But in the second quarter, it's not really, it's not really a factor.

Speaker Change: The costs I'm talking about what you expect to get out of it the timing of the project and in your optimism about the success.

Speaker Change: Okay, well thanks for both of your questions there and if there was nothing unusual in the breach activity.

Speaker Change: I mean, the only I guess unusual or new thing is our ability to compete and win these big bridge jobs and we won several of them and we're getting the benefit of that in the third quarter, but the second quarter. It's not really it's not really a factor we have it on the slide right. So that's what he is responding as what he's asking.

Speaker Change: So we do we did have.

Speaker Change: Our indirect channel.

Christopher A. Cartwright: All we're doing is just characterizing, you know, where the growth is coming from in that channel. And indirect, remember, it represents breach but also, you know, our business with the freemium players, the offer aggregators as well. So the point there is just that, you know, breach was the driver of the growth. Right, in the indirect? Other people's breaches, as opposed to our own.

Speaker Change: All in all we're doing is characterizing where the growth is coming from in that channel and indirect remember it represents breach, but also our business with a freemium players the offer aggregators as well. So the point there is that breach was the driver of the growth.

Christopher A. Cartwright: So, but then moving on to your question about the technology, you know, transformation, which we spotlighted in this quarter, I feel like we are making great progress. We are well on track to achieve the technology transformation benefits, certainly the ones that we outlined in the third quarter call from last year. And you're going to see, you know, a good deal of savings in 2024 because of those activities. And then, you know, the longer pole in the tent is the technology-specific savings that are largely enabled by One True. That will come a little bit later, but we're definitely tracking to that.

Speaker Change: Right and the indirect.

Speaker Change: Other people's breaches as opposed to our own so.

Speaker Change: But then moving on to your question about the technology transformation, which again, we spot lighted in this quarter.

Speaker Change: I feel like we are making great progress.

Speaker Change: We are well at pace.

Speaker Change: To achieve the technology transformation benefits.

Speaker Change: Certainly the ones that we outlined in the third.

Speaker Change: In the third quarter call from last year.

Speaker Change: And youre going to see a good deal of savings in.

Speaker Change: In 2024, because of those activities and then the longer pole in the tent was the technology specific savings.

Speaker Change: That are largely enabled by one true that will come a little bit later.

Speaker Change: But were definitely tracking to that.

Speaker Change: But there's something I said earlier.

Speaker Change: We focused in the early days after their acquisitions on achieving integration savings and those are well in hand, the $80 million plus that we guided.

Christopher A. Cartwright: But you know something I said earlier. We focused in the early days, after the acquisitions, on achieving integration savings, and those are well in hand, you know, the $80 million plus that we guided for NuSTAR and all the acquisitions for both Argus and Fantech.

Speaker Change: For new Star and <unk>.

Speaker Change: All the acquisitions for both Argus and Sandvik.

Christopher A. Cartwright: You know, we're very confident about delivering that. But what we've really been focused on now is reengineering our products into these integrated product suites in the seven families, leveraging what we think are best-in-class underlying platforms. One true platform, certainly, which includes the guts and the intelligence of all information products, be it data management, identity, and analytics, and the ability to flexibly deliver that to the upstream product

Speaker Change: We're very confident about delivering that but what we've really been focused on now is reengineering our products into these integrated product suites in the seven families. Leveraging what we think are best in class underlying platforms. One true certainly which includes the guts and the intelligence.

Speaker Change: All information products via data management identity analytics, and the ability to flexibly deliver that to the upstream product families and of course, this underlying infrastructure utility layer, which we can now standardized.

Christopher A. Cartwright: And, of course, this underlying infrastructure utility layer, which we can now standardize across TransUnion, across all the products that reside on the suite, which is going to simplify a lot, take a lot of cost out, and free up engineering sites. Thank you. And ladies and gentlemen, our final question today will be from Andrew Nicholas of William Blair. Please go ahead. Hi, good morning. This is Tom Roshon speaking for Andrew.

Speaker Change: Across transunion across all the products that reside on the suite, which is going to simplify a lot take a lot of cost out and free up engineering cycles.

Speaker Change: Thank you and ladies and gentlemen, our final question today will be from Andrew Nicholas from William Blair. Please go ahead.

Tom Rush: Hi, Good morning. This is Tom rush on for Andrew.

Andrew Owen Nicholas: I want to touch on auto and ask if you saw any disruptions in the quarter from the CDK outage, and if there were any disruptions, are you kind of expecting a delayed impact on auto sales for about July and third quarter volumes? Thank you. As far as, you know, go back to our prepared remarks, you know, auto, we were pleased with the performance. You know, we grew 3%. We saw a little bit of impact, you know, from that situation, and as we look forward into the second half of the year, again, kind of small impact. You know, if it was something of significance, we would have flagged it for you, so we feel that it's been managed.

Tom Rush: Wanted to touch on auto and ask if you saw any disruptions in the quarter from the CDK outage and if there wasn't any disruptions or you're kind of expecting.

Speaker Change: The way to impacting auto sales.

Tom Rush: July in third quarter volumes. Thank you.

Speaker Change: As far as that you can go back to our prepared remarks auto we were pleased with the performance. We grew 3% we saw a little bit of impact.

Speaker Change: From that situation and as we look forward into the second half of the year again kind of small impact.

Speaker Change: If it was if it was something of significance, we would have flagged. It for you. So we feel that it's it's managed.

Speaker Change: Perfect that brings us to the end of today's call. Thank you for your time and have a great rest of the day.

Todd M. Cello: Perfect. That brings us to the end of today's call. Thank you for your time and have a great rest of the day. Thanks. This conference has now concluded. Thank you for attending today's presentation. BF-WATCH TV 2021

Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Speaker Change: Yeah.

Speaker Change: [music].