Q4 2024 TransUnion Earnings Call
Speaker Change: Good morning, and welcome to the TransUnion 2024 4th Quarter Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star and zero on your telephone keypad.
Speaker Change: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on your telephone keypad.
Speaker Change: To withdraw your question, please press star then 2. Please note this event is being recorded. I would now like to turn the conference over to Greg Bardi, Vice President 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.
Greg Bardi: Our earnings released in the accompanying slides include various schedules, which contain more detailed information about revenue, operating expenses, and other items.
Greg Bardi: as well as certain non-GAAP disclosures and financial measures along with the corresponding reconciliation of these non-GAAP financial measures to their most directly comparable GAAP measures. Today's call will be recorded and a replay will be available on our website.
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.
Greg Bardi: 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, Forms 10-Q, and other reports and filings with the SEC.
Greg Bardi: We do not undertake any duty to update any forward-looking statement. With that, let me turn it over to Chris.
Chris Cartwright: Thanks, Greg. Let me add my welcome and share our agenda for the call this morning.
Chris Cartwright: First, I will provide the financial highlights of our fourth quarter 2024 results, and recap our progress against our strategic initiatives throughout the year.
Chris Cartwright: Second, I'll discuss how we're building upon that momentum with our 2025 strategic priorities.
Chris Cartwright: In the fourth quarter, TransUnion exceeded guidance on revenue and adjusted EBITDA for a fifth consecutive quarter. Revenue grew 9% on an organic, constant currency basis, above our 6-8% guidance. Excluding mortgage, our growth of 4% also exceeded expectations.
Chris Cartwright: Non-mortgage financial services accelerated to 7%. Credit volumes were broadly consistent with the prior quarter, supported by overall healthy U.S. household finances.
Chris Cartwright: Unemployment remains low and real wages grew, although lower-income consumers continue to face affordability pressures.
Chris Cartwright: Consumer delinquencies decreased in personal lending, remain stable in credit card and auto, and are well below historical trends in mortgage.
Chris Cartwright: While the Fed announced 100 basis points of interest rate reductions in September through December, they signaled a slowing pace of easing going forward.
Emerging verticals grew 4% led by double-digit growth in insurance.
Chris Cartwright: Consumer Interactive declined 11% as expected as we left a large breach win in the prior quarter.
Chris Cartwright: Asia-Pacific and Latin America also grew double digits and Canada and Africa were up high single digits.
Chris Cartwright: Notably, we achieved our near-term three-times leverage ratio target at year-end.
Chris Cartwright: Our fourth quarter concluded a productive 2024. For the year, we grew revenue by 9% on an organic constant currency basis, exceeding guidance each quarter, and grew adjusted diluted EPS by 16%.
Chris Cartwright: We delivered these strong financial results while achieving key milestones against the three pillars of our transformation.
optimizing our operating model, modernizing technology, and accelerating innovation.
Chris Cartwright: For our operating model optimization, we relocated over 1,000 roles from local markets to our global capability centers, enhancing workforce productivity and allowing us to provide more services from a greater variety of talent-rich geographies.
Chris Cartwright: We also completed key steps in our technology modernization, preparing us to replatform core U.S. credit and India analytics in 2025.
Chris Cartwright: Finally, we accelerated our pace of innovation. Over the course of 2024, we launched the first set of products built on One True, including TrueIQ Data Enrichment, TrueIQ Analytics Studio,
Chris Cartwright: to validate fraud mitigation, true audience native identity and true audience data collaboration. These products are driving strong pipeline and new business wins and we plan to continue that innovation momentum in 2025.
Gregory Bardi, Todd Cello, Gregory Bardi, Christopher Cartwright
Chris Cartwright: Now our 25 strategic priorities build on the same initiatives to deliver on our financial commitments while continuing to transform the business for the next horizon of growth.
Chris Cartwright: Our remaining priorities focus on the same three pillars of our continued transformation. In 2025, we plan to strengthen and refine our global operating model, complete the U.S. and India technology transformations, and accelerate innovation and growth across our solution suites.
Chris Cartwright: I'll provide high-level color on our 25 guidance before detailing these three transformation priorities, including a product-specific deep dive on our consumer business in light of today's freemium launch announcement.
Chris Cartwright: In 2025, we expect to deliver between 3.5% to 5% revenue growth, or 4.5% to 6% organic constant currency.
Chris Cartwright: We expect to deliver 3 to 6% adjusted EBITDA growth, which implies modest margin expansion at the high end of our range, with revenue flow-through and cost management supporting continued investments in growth and transformation.
Chris Cartwright: We anticipate 1-4% adjusted diluted earnings per share growth with strong operating performance partially offset by a 600 basis point headwind to growth from foreign exchange as well as a higher tax rate.
Chris Cartwright: due to changes in global tax law such as the global minimum tax rate. Todd will provide full details on these items shortly.
Chris Cartwright: We continue to apply the same prudently conservative guidance methodology we used throughout 2024. We are assuming muted but stable lending activity in the U.S., which reflects volumes well below historical trends.
Chris Cartwright: We are not assuming any credit volume improvements from further interest rate reductions in 2025.
Chris Cartwright: Now, excluding mortgage and breach, our underlying revenue guidance assumes similar growth to 2025.
Chris Cartwright: We expect mortgage to be a two percent point revenue benefit in 25 Less than the four percentage points of benefit experienced in 24. We also expect
Chris Cartwright: We anticipate growth in U.S. markets based on modest volume improvement in non-mortgage financial services, mortgage pricing, continued insurance strength, and new wins across our solutions.
Chris Cartwright: In our international markets, we expect solid growth across our geographies. We anticipate India growth will moderate in the first half of the year before re-accelerating in the second half.
Chris Cartwright: Let me take a moment to detail how current U.S. credit volumes compare to historical averages.
Chris Cartwright: As Slide 8 highlights, mortgage and auto lending volumes remain below historical trends, and credit cards and personal loans are below historically high 2022 levels.
Chris Cartwright: We're also well positioned for any improvement in credit volumes, which comes at high incremental margins and represents upside to our 2025 guidance.
Chris Cartwright: In mortgage, originations remain at low levels not seen since 1995. If interest rates come down, we see significant refinancing opportunity, as demonstrated by the brief pickup in activity in late September following the first Fed rate cut.
Chris Cartwright: Auto loan volume after multiple years of declines were flat in 2024. We expect modest volume growth in 2025, but used car activity remains soft.
Chris Cartwright: We anticipate recovery in the used car market in the coming years, supported by replenished inventory and the need for consumers to replace an aging vehicle fleet.
Chris Cartwright: Credit card originations are above pre-pandemic levels, but have declined from the peak in 2022.
Chris Cartwright: Small and medium-sized lenders pulled back substantially throughout 2023, and have since stabilized at lower origination levels. These customers are starting to explore growth opportunities supported by replenished deposit bases and stabilizing delinquencies.
Chris Cartwright: Unsecured personal loans experienced a modest recovery in 2024 following slowing activity in late 22 through 2023.
Chris Cartwright: Our fintech customers are starting to position themselves for growth after a few years of retrenchment.
Chris Cartwright: Funding is recovering and we see healthy consumer demand for debt consolidation products.
Chris Cartwright: Fintech revenue across credit cards and consumer lending totaled $130 million in 2024, down from $140 million in the prior year and $175 million in 2022.
Chris Cartwright: Together, these dynamics support our view that volumes will improve over the medium term to the benefit of our business.
Chris Cartwright: Our focus, however, is transforming the business to accelerate organic growth, independent of the credit cycle. I'll spend the rest of my time discussing priorities under our three transformation pillars in 2025.
Chris Cartwright: We are creating a world-class global operating model to build scale across the organization, standardize ways of operating, and support product, geographic, and vertical growth.
Chris Cartwright: 2024 was a step change forward. In addition to transitioning a thousand rolls to our GCCs, we strengthened our local GCC leadership by hiring senior managers within the regions.
Chris Cartwright: As we shift more work to the GCCs, we've implemented a rigorous playbook to mitigate knowledge transfer risk.
Chris Cartwright: Our centralized transition team systematically tracks and documents work processes, trains new associates, and develops a feedback loop for continuous process improvement.
2025 will be a year of continuous refinement and enhancement.
Chris Cartwright: Building off the successful transition of new roles to the GCCs, we're ensuring that we foster a best-in-class GCC network. We continue to train and develop and assess recent hires. We see positive indicators in terms of employee satisfaction as well as manager confidence in new hire proficiency.
Chris Cartwright: Across the organization, we're also examining our ways of operating to support future growth.
Chris Cartwright: We are enhancing collaboration across functional areas, streamlining decision making, empowering teams, and fostering stronger partnerships across the organization to unlock the full value of the business enabled by a global operating model.
Chris Cartwright: Now these actions are orienting the business toward accelerated innovation in high growth product areas.
Chris Cartwright: As an example, we're optimizing how we gather, analyze, and incorporate voice of customer across our product portfolio. We expect these actions will drive improved customer experiences and satisfaction, faster idea generation, and innovation and increased cross-sell opportunities.
Chris Cartwright: Our operating model optimization is highly complementary to the next pillar of our transformation, technology modernization.
Chris Cartwright: We are evolving our technology capabilities into modern, global, cloud-based data management and product platforms.
Chris Cartwright: Slide 10 visualizes our platform-based approach. To orient you on this visual from the bottom up,
Chris Cartwright: OneDev is the internal name of our technology infrastructure operating system. OneDev drives our technology modernization savings by standardizing our infrastructure services and developer tools onto a single foundation to reduce cost and increase engineering productivity.
Chris Cartwright: We are adopting and evolving the OneDev platform-based approach to drive enhanced security, productivity, and resiliency.
Chris Cartwright: We also continue to uncover cost savings opportunities around third-party cloud and vendor costs.
Chris Cartwright: Now built off of OneDev, OneTrue is our core solutions enablement platform and a key driver of innovation and revenue growth.
Chris Cartwright: It centralizes our common product services of data management, identity resolution, analytics, and delivery.
Chris Cartwright: We continue to augment OneTrue's underlying product services, including expanding identity attributes, enhanced matching and decisioning capabilities, and generative AI tools to support productivity improvements.
Chris Cartwright: These enhancements will benefit any application or product that's built on the platform.
Chris Cartwright: In leveraging One True, our seven global solutions families are being consolidated into integrated, end-to-end product suites. We are rejuvenating each product line to deliver better product quality and time to market. We're also accelerating the pace of new product innovation.
Chris Cartwright: We delivered on significant milestones toward completing the first phase of our technology modernization in 2025. Let me detail our progress and next steps in migrating key applications and platforms onto One True by the end of this year.
Chris Cartwright: First, we went live with Factor Trust Short-Term Lending Bureau on One True in 2024, enabling several enhanced capabilities.
Chris Cartwright: We've now migrated roughly half of Factor Trust's customers onto One True, and we'll migrate the remaining customers over the course of 2025.
Chris Cartwright: We activated 90% of all data science and analytics use cases by the end of 2024 and positioned ourselves to decommission the legacy platform over the course of this year.
Chris Cartwright: InCore U.S. Credit, we are now live with one of our largest U.S. credit customers for end-to-end batch and online capabilities.
Chris Cartwright: We are currently dual running on One True and our legacy platform. We are achieving a notable reduction in processing times compared to the legacy platform, which we expect to improve further.
Chris Cartwright: We plan to begin migrating our 50 largest U.S. credit customers later this quarter.
Chris Cartwright: In India, we moved five years of analytic datasets onto OneTrue with 60% of local data scientists and 35% of use cases on the platform. We plan to migrate all data and analytics works to OneTrue by the end of 2025, enabling us to launch our TrueIQ analytic suites and innovation labs in the region.
Chris Cartwright: And in consumer solutions, our freemium product launch represents a significant enhancement to our direct-to-consumer user experience. We continue to consolidate the underlying technology of our offerings, including those acquired through Sontex, onto a single global platform.
Chris Cartwright: As a reminder, each of these migrations are within the scope of our U.S. and India Modernization Program, which we expect to complete by the end of 2025 and to drive the remaining committed cost savings.
Chris Cartwright: With that said, we view One True as our destination platform globally. We selected the UK, Canada, Colombia, and the Philippines as the next targets for One True migration in 2026 and beyond.
Chris Cartwright: All future migrations will be funded within normal course of business with the goal of delivering structural cost savings and accelerating the pace of innovation globally.
Chris Cartwright: Migrating key platforms onto One True is an enabler of our final transformation pillar in 2025, accelerating innovation and growth across our solutions.
Chris Cartwright: Before detailing our efforts across our product suites, slide 12 provides...
Chris Cartwright: New Revenue Mix Disclosure, breaking down our U.S. markets and international segments by the largest solution families.
Chris Cartwright: Less than 50% of our U.S. revenue is now credit related, a substantial shift from what was a credit-centric business a decade ago.
Chris Cartwright: Our international business is earlier in the product extension journey with roughly 70% of revenue tied to credit. We see substantial opportunity to bring our scalable global solutions to international markets.
Chris Cartwright: Across each of our solution suites, we build comprehensive strategies to accelerate innovation and growth, supported by dedicated product leaders.
Chris Cartwright: In 2025, we expect all four core B2B product suites, credit, marketing, fraud, and communication to contribute to organic growth.
Chris Cartwright: Longer term, we aspire for the solution families to grow at high single digits or greater, raising our inherent growth rate independent of the credit cycle.
Chris Cartwright: This quarter, though, I want to spotlight our consumer business and, specifically, how the day's premium announcement fits within a comprehensive strategy to return consumer interactive to sustainable growth.
Chris Cartwright: Now earlier today, we announced the launch of our new direct-to-consumer experience in the U.S., enabled by our strategic collaboration with Credit Sesame.
Chris Cartwright: We will launch the new platform in phases throughout the first half of 2025.
Chris Cartwright: In the new experience, U.S. consumers can sign up for a suite of free credit education and management services, including a daily credit score, on TU's website and app.
Chris Cartwright: This initiative combines unique capabilities from both Credit Sesame and TU.
Chris Cartwright: Credit Sesame brings its expertise in developing and managing a highly intuitive credit education and management experience in an associated offer network.
Chris Cartwright: TransUnion provides our credit data, our well-known brand, organic consumer traffic, and our existing consumer base.
Chris Cartwright: We will manage marketing, consumer servicing, and ongoing operational and compliance controls. And going forward, TransUnion and Credit Sesame plan to innovate on the platform and expand the network of offer partners.
Chris Cartwright: We are excited to expand into the multi-billion dollar freemium credit management market. We believe we've got a right to win in this space given our brand recognition, our volume of consumer traffic, and deep relationships with lenders and insurers.
Chris Cartwright: By collaborating with Credit Sesame, we accelerate our speed to market and reduce our upfront technology investment when compared to building the platform ourselves.
Chris Cartwright: Our agreement also ensures continued access to Credit Sesame's pipeline of innovation.
Our freemium offering supports deeper relationships with consumers and customers.
Chris Cartwright: Only a fraction of the tens of millions of consumers who visit TU Digital Properties convert to our current premium services.
Chris Cartwright: In the new freemium experience, we will engage significantly more consumers and keep them in our ecosystem longer by offering a streamlined path to upgrade to premium services or downgrade back to free services, providing choice and flexibility as a consumer's needs evolve.
Chris Cartwright: Our larger engaged consumer audience also benefits our financial services and insurance customers, providing them with an additional acquisition channel. We have received positive feedback from customers during initial planning.
Chris Cartwright: We also continue to reinvigorate our consumer interactive business after the last few years of revenue pressure.
Chris Cartwright: We aligned the business within U.S. markets. We've added capabilities such as identity protection and breach remediation through the Sontag acquisition. And we continue to modernize the technology platform.
Chris Cartwright: Our direct-to-consumer freemium launch fills a significant gap in our product line.
Chris Cartwright: We can now expansively engage and empower consumers with the best-fit offerings to achieve their financial goals.
Chris Cartwright: Also, our planned acquisition of Monevo adds to our capabilities and is expected to close by the second quarter. Monevo's centralized decisioning infrastructure enables lenders and banks to deliver highly personalized credit offers to consumers through freemium players and other online brands.
Chris Cartwright: Moneva delivers benefits to publishers, customers, and consumers alike. Publishers can deliver more personalized engagement and successfully matched offers, driving higher conversion rates.
Chris Cartwright: We plan to eventually leverage Monevo's capabilities within our direct-to-consumer offerings as well.
Chris Cartwright: Now, we believe our expanded offering positions Consumer Interactive for sustainable mid-single-digit or greater revenue growth over the longer term.
Chris Cartwright: Let me detail the growth dynamics across each component of the business.
Chris Cartwright: In our direct channel, we have been stabilizing our premium subscriber base, resulting in dissipating declines throughout 2024.
Chris Cartwright: Our freemium offering expands our growth opportunity this year. 2025 will be a transition as we migrate subscribers and begin marketing with the expanded offering. We expect to build traction throughout the year.
Chris Cartwright: In our indirect channel, we expect to benefit from stabilization in lending activity, which will drive increased consumer engagement and expand utilization of our channel partners for marketing.
Chris Cartwright: We also aim to expand wallet share with customers, including with personalized offers enabled through the acquisition of Monevo.
Chris Cartwright: These revenues can be uneven, and they had an outsized benefit in 2024. But we are building momentum, credibility, and relevance in this growing market.
Chris Cartwright: And we look forward to updating you on our progress and reinvigorating our consumer business over the upcoming quarters. Now, Todd's going to provide further details on our fourth quarter financial results and our full year 2025 outlook. So, over to you, Todd.
Todd Cello: Thanks Chris and let me add my welcome to everyone. As Chris mentioned in the fourth quarter we exceeded our guidance for revenue and adjusted EBITDA driven by outperformance in non-mortgage financial services and international.
Todd Cello: Fourth quarter consolidated revenue increased 9% on a reported and organic constant currency basis.
Todd Cello: Comparison against high breach activity in the prior year quarter was a 1% revenue headwind.
Todd Cello: Adjusted EBITDA increased 16% on a reported and constant currency basis. Our adjusted EBITDA margin was 36.5% up 230 basis points and above the high end of our expectations.
Todd Cello: Adjusted diluted earnings per share was $0.97, an increase of 21%. Our adjusted tax rate for the quarter was 25.1%, slightly higher than expected due to the mix of foreign earnings.
Todd Cello: Finally, in the fourth quarter, we took $34 million of one-time charges related to our transformation program, $8 million for operating model optimization, and $26 million for technology transformation.
We incurred $179 million of one-time transformation expenses in 2024.
Adjusted EBITDA margin was 39.4% or up 300 basis points.
driven by revenue growth and transformation cost savings
Todd Cello: Financial services revenue grew 21%. Excluding mortgage, financial services revenue was up 7%. Trends remained consistent with year-over-year growth improving sequentially as we lapped slowdown in activity from late 2023.
Todd Cello: We continue to outperform modest volume growth driven by the successful cross-sell of our innovative solutions.
Todd Cello: Our credit card and banking business was up 6% against tempered online volumes.
Todd Cello: We delivered healthy new business wins for trusted call solutions, as well as data enrichment and the broader TrueIQ analytics suite.
Consumer lending revenue grew 3%.
Todd Cello: Fintech lenders slowly resumed marketing activity, with select lenders increasing originations.
Todd Cello: We also delivered healthy new logo wins from alternative lenders throughout the year. We believe consumer lending will grow well in 2025.
Todd Cello: Our auto business grew 7%. New car sales expanded, but used car sales remained tempered.
Todd Cello: Our team finished the year well with wins across fraud, alternative data, and marketing, as well as verification of income and employment solutions through our TrueWork partnership.
Todd Cello: In 2024, mortgage accounts for about 11% of total transunion revenue.
Todd Cello: Emerging verticals grew 4% in the quarter, led by double-digit growth in insurance.
Todd Cello: public sector media and tech retail and e-commerce all grew low single digits offset by low single digit declines in tenant and employment and telco
Todd Cello: Insurance grew double digits as market trends progressed as anticipated. Insurance shopping remains active and marketing activity continues to recover as rate adequacy steadily improves.
Todd Cello: The business continues to deliver broad-based new wins, both in core credit and driving history, as well as trusted call solutions and our modern marketing products.
Todd Cello: Turning to Consumer Interactive, revenue decreased 11% as expected as the business lapped a sizable breach win from the prior year.
Todd Cello: Excluding the breach headwind, revenue declined due to the direct channel.
within U.S. markets.
Todd Cello: NuSTAR finished the year well. For the year, NuSTAR grew mid-single digits and expanded adjusted EBITDA margins to 35%.
up from 31% in 2023 and ahead of our expectations.
Todd Cello: We have now delivered $100 million of New Star cost synergies, exceeding our initial $70 million target.
Todd Cello: This is in addition to the enterprise-wide benefits of NewSTAR's underlying technology as the destination platform for our technology modernization.
Todd Cello: For my comments about international, all revenue growth comparisons will be in constant currency.
Todd Cello: For the total segment, revenue grew 12%, with three of our six reported markets growing by double digits.
India grew 18%.
Todd Cello: Online consumer credit volumes declined modestly with revenue growth driven by product and vertical diversification.
Todd Cello: commercial credit and direct-to-consumer solutions, as well as new products like our API marketplace, drove growth.
Todd Cello: We see signs for potential thawing in the consumer credit market throughout 2025.
Todd Cello: Loan-to-deposit ratios are approaching target ranges and a few impacted non-banking finance companies received approval to lend again.
Todd Cello: Additionally, the RBI cut interest rates by 25 basis points during its meeting last week and signaled further reductions in the first half of the year.
Todd Cello: This is in the context of slowing inflation and consumer delinquencies below long-term averages.
Todd Cello: With that said, we expect credit volumes to remain soft in the first half of the year. The first quarter also compares against robust activity in the prior year quarter when many customers exceeded their volume commitments.
Todd Cello: We expect India to grow modestly in the first quarter, improve in the second quarter, and return to faster growth in the second half.
Todd Cello: We believe our guidance captures a prudently conservative scenario for the Indian market.
Our UK business grew 3%.
against broadly consistent trends.
Todd Cello: We experience gradually improving banking and fintech conditions with new business wins across our vertical portfolio, setting the market up for a solid 2025.
Todd Cello: In Canada, we grew 8 percent, driven by new and expanded consumer indirect contracts, continued recovery and insurance, breach wins, and cross-selling new identity solutions.
Todd Cello: In Latin America, revenue grew 15%. Colombia grew high single-digit, led by FinTech and our fraud solutions. Brazil grew over 20%. And our other Latin American countries also grew in the high teens.
Todd Cello: In Asia-Pacific, we grew 20%, led by strength in the Philippines. Asia-Pacific crossed $100 million in annual revenue for the first time in 2024.
Todd Cello: Finally, Africa increased 8% with broad-based growth led by a retail vertical.
Todd Cello: On January 16th, we announced an exciting step in our proven international growth strategy with our agreement to acquire majority ownership of TransUnion de Mexico, the consumer credit business of the largest credit bureau in Mexico, Bureau de Credito.
Todd Cello: The deal is expected to close toward the end of 2025 and is not included in our 2025 guidance.
Todd Cello: Our investor presentation, which is available on our investor relations website, provides further details.
Todd Cello: We made a $45 million voluntary repayment in the fourth quarter for a total of $150 million in 2024.
Todd Cello: Since announcing our New Star acquisition, we voluntarily prepaid $1.6 billion in debt.
In December, we refinanced $2.3 billion of our term loans.
Todd Cello: At the end of 2024, we replaced an expiring swap which had $1.3 billion notional value and a rate of 4.3% with a new swap that has $1.1 billion notional value at a lower rate of 3.5%.
72% of our debt is now swapped to fixed rate.
Todd Cello: Net of swaps, our all-in average effective cost of debt at today's rates is 4.3%.
Todd Cello: In the appendix of our presentation, we provided a slide on our debt profile and a bridge to 2025 expected interest expense.
Todd Cello: Turning to guidance, at the high end of guidance we are assuming muted but stable lending volumes to persist throughout 2025. We are not anticipating any revenue benefit from interest rate reductions.
Todd Cello: We also took a conservative approach to our assumptions for U.S. mortgage volumes and Indian credit growth, two of the largest swing factors in 2025.
Todd Cello: That brings us to our outlook for the first quarter. We expect FX to be a 1% headwind to revenue and 2% headwind to adjusted EBITDA.
Todd Cello: We expect revenue to be between $1.06 and $1.074 billion, or up 5-6% on an organic constant currency basis.
Todd Cello: We expect to again benefit from the pricing actions of a third-party scores provider through 2025.
Todd Cello: In the first quarter, we expect mortgage inquiries to decline more than 10 percent.
Todd Cello: Excluding mortgage, we expect the business to grow 3-4% on an organic, constant currency basis.
Todd Cello: We expect adjusted EBITDA to be between $376 million and $384 million, up 5-7%.
Todd Cello: We expect adjusted EBITDA margin of 35.5% to 35.8% up 40 to 70 basis points, driven primarily by the annualization of transformation cost savings.
Todd Cello: We also expect our adjusted diluted earnings per share to be between $0.96 and $0.99, up 4-8%.
Todd Cello: Turning to the full year, our guidance does not include any impact from our announced acquisitions of Monevo nor TransUnion de Mexico, which have not yet closed. We anticipate FX to be a 1% headwind to revenue and adjusted EBITDA.
Todd Cello: We expect revenue to come in between $4.333 and $4.393 billion, or up 4.5% to 6% on an organic constant currency basis.
Todd Cello: We expect our organic constant currency growth excluding mortgage to be up 2.5 to 4 percent.
Todd Cello: These growth rates include a 1% headwind from lapping against last year's large breech wind.
Todd Cello: For our business segments, we expect U.S. markets to grow mid-single digit or up low-single digit, excluding mortgage.
Todd Cello: We anticipate financial services to be up low double-digit or mid-single-digit, excluding mortgage.
Todd Cello: We expect mortgage revenue to increase about 20% despite modest declines in mortgage inquiries.
We expect emerging verticals to be up mid-single digit.
Todd Cello: We anticipate Consumer Interactive decreasing low single-digit, but increase low single-digit when excluding the impact of last year's large breach win.
Todd Cello: This underlying improvement from 2024 provides a foundation for further acceleration in 2026 and beyond as we execute on the growth strategy that Chris laid out and gain traction with our freemium offering.
We anticipate international growing high single-digit.
Turning back to Total Company Outlook.
Todd Cello: We expect adjusted EBITDA to be between 1.549 and 1.590 billion dollars, up 3 to 6 percent.
Todd Cello: We anticipated adjusted diluted earnings per share to be $3.93 to $4.08, up 1-4%.
Todd Cello: FX is a 2% point headwind to adjusted diluted earnings per share growth and higher adjusted tax rate is an additional 4% point headwind.
Todd Cello: Depreciation and amortization is expected to be approximately 570 million dollars.
Todd Cello: to be about $285 million as technology modernization initiatives go into production and start to depreciate.
Todd Cello: We anticipate net interest expense will be about $195 million for the full year, roughly $40 million lower than last year due to our prepayments and refinancing, as well as lower SOFR.
Todd Cello: Like many large multinational companies, we are impacted by global tax reform driven by the OECD, such as the Global Minimum Tax, and changes to international tax treaties.
Todd Cello: Over the last six months, we have taken actions to restructure our legal entities to respond to the changing global tax environment.
Todd Cello: We remain focused on maintaining the most efficient tax structure, but expect our adjusted tax rate for 2025 and going forward to be higher than our recent historical rate given the current international tax landscape.
Capital expenditures are expected to be about 8% of revenue.
Todd Cello: We expect to incur $100 to $120 million in one-time charges in 2025 related to the last year of our transformation program.
Todd Cello: Slide 26 provides additional details on the drivers of adjusted EBITDA growth in 2025 based on the high end of our guidance. We broke the drivers down into three components.
Todd Cello: First, is the incremental revenue flow through less normal course people and cost inflation?
Todd Cello: Based on the high-end of guidance, we expect $209 million of revenue growth to drive $104 million of incremental adjusted EBITDA.
Todd Cello: This represents healthy incremental margins even with significant revenue growth derived from trusted call solutions and mortgage scores pricing to areas with high royalty costs.
Todd Cello: We also expect a $10 million benefit from annualizing transformation savings based on actions taken in early 2024. We have now achieved $95 million of run rate transformation savings.
Todd Cello: Partially offsetting these positives are thirty million dollars of targeted growth investments.
Chris Cartwright: This year, we allocated growth investments in support of the strategic initiatives that Chris discussed, including technology and platform enhancements, new product innovation, incremental sales specialists, and international expansion.
Chris Cartwright: We have incorporated an appropriate level of growth investment in addition to normal course cost inflation into our guidance, so we would expect any revenue growth upside to come at strong incremental margins.
Chris Cartwright: Before turning it back to Chris, I want to provide a refreshed perspective on capital allocation priorities.
Chris Cartwright: and how we define our high bar for M&A going forward.
Chris Cartwright: Starting with our free cash flow profile, our free cash flow conversion, as defined as cash flow from operations, less capital expenditures, as a percentage of adjusted net income,
Chris Cartwright: has been lower over the last three years due to higher one-time expenses related to our operating model optimization, technology modernization, and NuSTAR integration.
Chris Cartwright: We expect free cash flow conversion in 2025 to improve to about 70% as we execute on the last year of our transformation program.
Chris Cartwright: Starting in 2026 and beyond, we expect to return to 90% plus free cash flow conversion.
Chris Cartwright: We do not anticipate further accelerated technology investment add-backs upon completion of our current program.
Chris Cartwright: We also expect to structurally lower our capital intensity to 6% of revenue in 2026 and beyond, with an increasing tilt to more product and growth-related capital investment.
Chris Cartwright: Healthy earnings growth and stronger free cash flow conversion is expected to create significant capital capacity over the next few years. We plan to take a balanced capital allocation approach.
Chris Cartwright: Our priority remains to invest to grow the business. We expect to expand margins while funding organic investments supported by revenue growth and ongoing business optimization.
Chris Cartwright: I will discuss our M&A strategy shortly, but we will explore bolt-on opportunities aligned to our growth strategy and currently do not anticipate large-scale acquisitions.
Chris Cartwright: Turning the leverage in liquidity, we are updating our leverage ratio target to under 2.5 times.
Chris Cartwright: We believe this is an appropriate target for a company of our size and maturity. We expect natural deleveraging from adjusted EBITDA growth in 2025. Additionally, we will look for opportunities to optimize our debt structure and evaluate voluntary prepayments.
Chris Cartwright: Our stronger free cash flow and optimized leverage will enable us to deploy more cash to shareholder returns than has previously been our practice as a public company.
Chris Cartwright: We remain committed to growing our dividend alongside adjusted net income at a 10 to 15 percent payout ratio. And today, we announced that we are raising our quarterly cash dividend from 10.5 cents to 11.5 cents.
Chris Cartwright: We also expect an increased bias toward share repurchases going forward, which we view as an attractive use of capital at our current valuation.
Chris Cartwright: We balance continued de-levering and managing capital ahead of our TransUnion to Mexico acquisition.
Finally, I want to detail our disciplined approach to M&A.
Chris Cartwright: We view M&A as an important strategic tool, but the strength of our portfolio, as well as our focus on ongoing business transformation, creates a high bar.
Chris Cartwright: Our recently announced smaller acquisition of Monevo, and particularly our acquisition of Mexico, represent acquisitions that pass our criteria.
Chris Cartwright: These are two businesses in which we already had minority investments and high strategic interest.
We do not anticipate further sizable M&A in 2025.
Chris Cartwright: Bolt-on M&A will be compared to all alternatives, organic investment, debt prepayments, and share repurchases.
Chris Cartwright: In addition to looking for acquisitions with attractive cash-on-cash returns and unlevered internal rates of return in excess of their cost of capital, we have several financial guideposts.
Chris Cartwright: We are looking for businesses that are additive to our revenue growth rate.
Chris Cartwright: have a path to scale profitability to company-level margins and can be accretive to adjusted diluted earnings per share by year two.
Chris Cartwright: If an acquisition takes us above our leverage ratio target, we want clear line of sight to be able to return to our leverage ratio range within a year.
Chris Cartwright: In closing, our refreshed capital allocation framework reflects TransUnion entering a new era. Our current portfolio and transformation strategy positions us for a generation of growth.
Chris Cartwright: We expect to accelerate free cash flow growth to support this balanced capital allocation strategy.
Chris Cartwright: I will now turn the call back to Chris for final comments.
Chris Cartwright: To wrap up, we finished the year strong, exceeding fourth quarter guidance for revenue and adjusted EBITDA.
Chris Cartwright: We expect to deliver 4.5% to 6% organic constant currency revenue growth in 2025, assuming a muted but stable market backdrop.
Chris Cartwright: with material future revenue and margin upside when U.S. credit market conditions improve.
Greg Bardi: And we're executing well against our business transformation to create a world-class operating model to modernize our technology capabilities and accelerate innovation. And with that, I 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.
Speaker Change: Thank you. We'll begin the Q&A, and just as a reminder, to ask a question, you may press star, then 1, on your telephone keypad, and if you're using a speakerphone, please pick up your handset before pressing the keys.
Speaker Change: If at any time your question has been addressed and you would like to withdraw your question, please press star, then 2. And again, we also ask that you please limit yourself to one question. And at this time, we will wait momentarily to assemble our roster.
Speaker Change: And the first question will come from Jeff Moeller with Baird. Please go ahead.
Jeff Moeller: Yeah, thank you. Good morning. So I hear you on fifth consecutive quarter above consensus and you're saying prudent conservative guidance methodology and the numbers appear conservative, but I'm trying to reconcile that with
Speaker Change: I guess, are you viewing stable markets as a prudent or conservative assumption given that you're showing the markets are cyclically depressed and leading indicators are looking better or just any help reconciling those thoughts? Thank you.
Um, yeah, sure. Good morning, Jeff. Let me start off.
Speaker Change: You know, what we're trying to convey here in the guide...
Speaker Change: is that the business conditions that we experienced in the fourth quarter and in roughly the first six weeks of the year are fairly consistent. We appreciate the stability that we experienced over the course of 24 and in Q4 and year to date.
Speaker Change: But it's important to point out that those market conditions, while stable, are still muted relative to longer-term origination patterns.
So
Speaker Change: In this first call of the year where we're establishing the guidance framework for 25, you know, we want to be prudently conservative in establishing the guardrails.
Speaker Change: We're not assuming lowering of interest rates or anything like that.
Speaker Change: We're just saying the macro conditions, which are, you know, pretty good, but not great, will continue to be so.
and we'll continue to...
and Post.
Speaker Change: solid growth over the course of the year. Now, if you look back just a year when we guided at the beginning of 2024, you know, we had a very similar view of market conditions. We guided three to five percent at that point in time. We said it was prudent and it was conservative.
Speaker Change: and it wasn't assuming any macro upsides over the course of the year. And we were fortunate, we were able to materially outperform those numbers.
Speaker Change: So hopefully that gives you some context to how to think about the guide For 25 Todd. Is there anything I know Todd's good. Okay. Okay. Thanks Chris
Speaker Change: Our next question will come from Andrew Steinerman with J.P. Morgan. Please go ahead.
Andrew Steinerman: Hi. I wanted to ask about the CI revenues for 2025, looking up low-signal digits, excluding the breach revenues from 24. How do you think Indirect and Direct will each fare in 25, and might the new branded freemium offer affect TRU's revenues from other Indirect partners?
Speaker Change: Yeah, I mean, let's step back just for a second, Andrew, from the specific growth rates of those two components of the business.
Speaker Change: and just recognize that today's announcement is a big step forward in TransUnion's innovation and also kind of rehabilitating the consumer business. For some time we've said that we needed to have a broader range of products to fully monetize the consumer traffic.
Speaker Change: that we were naturally generating from our brand and also our advertising efforts.
single and tri-bureau monitoring, but we needed
Speaker Change: Identity Protection and Breach Remediation. We got it with Sontag and we've grown that business dramatically.
Speaker Change: In this partnership with Sesame, and again Sesame has been a strategic partner of ours for some time now,
Speaker Change: And again, as we mentioned in our commentary, with the acquisition of Monevo, which we feel is a world-class offers engine, you know, we've got a path to integrating that product into the revised GUI.
Speaker Change: So, we have accomplished all of the strategic improvements in the product line that we set out to do.
Speaker Change: That should translate into better growth in our direct-to-consumer business, but also better growth in our indirect business over time because we're now bringing multiple products with a refined user interface and API to our indirect customers.
Speaker Change: So, it's a strategic reset in the business, and I think it's a real positive.
Okay.
Tony Kaplan: Our next question will come from Tony Kaplan with Morgan Stanley. Please go ahead.
Thanks so much.
Tony Kaplan: I wanted to ask about India. I know that your guidance does typically try to be conservative.
Tony Kaplan: 10% just does seem like a really big slowdown, but I know that there's a lot that's going on in that market.
Tony Kaplan: I guess how much visibility do you have into sort of the growth there and, you know, what could drive upside or downside to the 10 percent? Thanks.
Speaker Change: Yeah, let me start at a high level here, you know, because we've been talking about the slowdown in the Indian market as orchestrated by the RBI for about four quarters now.
Speaker Change: And there have been a number of policy as well as leadership changes within the RBI that are important to understand.
Speaker Change: You know, the previous governor of the RBI, whose term ended late last year after five years, has been replaced by a different governor. There's also been a shift in the stated policy toward the lending markets by the RBI, and you can
Speaker Change: They were concerned by some of the practices they saw in the market, and they asked certain lenders to pause their lending operations, right? And they also...
Speaker Change: were trying to get banks the loan-to-deposit ratios to improve. They felt like they'd become a little bit stretched. As a consequence of that, GDP in India slowed.
And so the RBI has now stated
Speaker Change: a bit of a policy modification where they're going to emphasize, of course, safety and soundness, as the prior leadership did, but also the efficiency of the economy, right? So they're signaling that they are rebalancing toward growth and driving India GDP growth overall.
And to support that, they recently cut rates by 25-fifths.
Speaker Change: and they've announced that they have achieved their goals on loan deposit ratios and those few lenders that have been sidelined now have permission to begin origination.
So...
Speaker Change: We think that's a sea change in policy. That said, you know, the conflict in the policies has led to some bumpiness in the performance of the consumer lending side of our India business, which again is about 60 percent.
Speaker Change: So it's been slowing down over 24, quarter over quarter, against very high comps I might add, and we would expect in 25, quarter over quarter, re-acceleration as this shift in policy permeates through the market.
Thank you.
Speaker Change: All right, and our next question will come from Faisal Alai with Deutsche Bank. Please go ahead.
Faisal Alai: Yes, hi, thank you. I wanted to ask about mortgage. So, a couple of related questions. So, the down 10 percent,
Speaker Change: inquiry decline in the first quarter and then modest declines for the year.
Speaker Change: I'm assuming that is related to what you're seeing with softballs or prequels, so maybe give us some perspective there.
Speaker Change: and whether you think we're done with the shift towards, you know, these one bureau soft goals and any perspective on on pricing that you're taking broadly in mortgage.
Thank you.
Speaker Change: As you said, first quarter, we're seeing down 10% and then down modestly for a full year of 2025.
Speaker Change: Consistent with how Chris just talked about the guide for the full year, we are assuming consistent trends with the fourth quarter and what we've been able to see in the first quarter of 2025 to date.
Speaker Change: So what that means is we don't have any assumption of a benefit from interest rate reductions, you know, in our numbers.
Speaker Change: If you're looking to, you know, compare, you know, our volume number to other numbers that you see from other players in the market space.
Speaker Change: So, as far as, you know, what we see is that, you know, we're taking a consistent approach as it pertains to pricing as well.
Speaker Change: We do have a material increase in mortgage from a third-party score provider that we're taking the same approach that we did last year on the pass-through of that.
Speaker Change: It also does assume normal course type of pricing on our credit file, which is exclusive of the score, which we also took some opportunistic pricing actions on as well.
Speaker Change: and specifically to the the point on pre-qualification, what we're seeing today is that the majority of the mortgage revenue is still tri-bureau.
Speaker Change: But, however, we have in the prequal space seen some shift from three to one to maybe two polls for prequalification throughout 2024.
We've contemplated further shifts.
Speaker Change: within our 2025 guide where we have visibility. But I think what's most important and instructive is our sales team continues to win our fair share in the pre-qualification market.
Speaker Change: So what I mean by that is, if you're a mortgage provider and a consumer shows up at your door, you've got a revenue opportunity if that consumer qualifies.
Speaker Change: Now, if you pull one bureau, the consumer may not qualify, but bureaus have different data and different scores. If you pull more than one, the odds of qualifying that consumer and thus recognizing revenue improve.
Speaker Change: And so you may see some efficiency here in terms of a reduction in the number of reports polled. It's not going to be a race to one.
Great, thank you.
Speaker Change: And the next question will come from Manav Patnaik with Barclays. Please go ahead.
Speaker Change: Thank you. I just wanted to touch on slide 8 where you talked about, you know, the below trend levels, you know,
Manav Patnaik: Broadly, I mean, are you able to quantify, like, if those, you know, kind of return to trend, you know, what, how that might impact your business? And, and just as a quick follow up, I mean, it looks like cards and T loans, you know, might be above trend if you're thinking of it, you know, as pre-COVID trends. So just curious how you think about that one.
Speaker Change: Well, Manav, I can't offer you, you know, an on-the-fly estimate of, you know, value to be captured when we return to normal trend lines. But as you know,
Speaker Change: volumes have been depressed for a couple of years now plus.
Speaker Change: because of inflation, because of the aggressive rate hikes by the Fed. Now that is normalized and eased, you know, we're in a more stable condition which is allowing us to post growth. That said,
Speaker Change: You know, this administration has said that they're about reducing regulations to enable further growth. They want to adopt various, you know, fiscal and fiscal policies and others to accelerate growth.
Speaker Change: and, over time, managed down interest rates. If successful, you know, you would expect that
Speaker Change: consumers and banks themselves will continue to strengthen and we can expect higher lending activity across these various categories.
Speaker Change: The way we're positioned currently is, you know, the upside on a product mix that shifts more toward credit origination, not only does it drive revenue, but it's substantially more profitable because the fall through is so high.
Speaker Change: And, you know, in recent years, we have been posting higher growth in areas that have a lower contribution margin because they come with a licensing cost or just a higher cost of goods sold.
Speaker Change: than the credit products that we originate. As the cycle shifts and as the mix shifts more toward credit, you're gonna see margin profit revenue upside that is material across our enterprise.
So I think I'll leave it at that.
Speaker Change: All right. Our next question comes from Jason Haas with Wells Fargo. Please go ahead.
Jason Haas: Hey, good morning and thanks for taking my question. I'm curious if you could provide an update on how you're thinking about the regulatory environment if you've seen any changes or expecting any changes with the new administration coming in either on your customers or you directly. Thank you.
Jason Haas: Well, Jason, you win the award for most understated question of the call thus far. Yeah, we've seen a few changes at the CFPB and elsewhere. I mean, obviously, this administration has radically different views about regulation and regulation in the financial services industry.
Jason Haas: and I expect the impact of that is going to be quite material.
Jason Haas: Well, I guess to effect really substantial changes in the regulatory environment, and I think we're just going to have to
Jason Haas: Wait and see how that plays out. But right now It's it's a pause, you know, it's a limbo if you will It really has not affected how we operate though
Jason Haas: We just have to keep focused on doing the right things for customers, trying to serve them as best we can, minimize the errors that we make, and when we do make a mistake, do what we always do, which is work hard to make the customer whole.
Jason Haas: and to fix whatever problem has happened operationally that led to the error. So we're going to keep doing that and we're going to wait for the regulatory landscape to calm down a bit, and then we'll move forward.
Very helpful. Thank you.
Speaker Change: The next question will come from Andrew Nicholas with William Blair. Please go ahead.
Andrew Nicholas: Hi, good morning. Thanks for taking my question. I wanted to ask on
New Star.
Andrew Nicholas: specifically and kind of the outlook for next year. Maybe not quantitatively, but trying to understand the kind of state of the advertising and marketing business in particular, whether or not there appears to be any acceleration in appetite or demand from your end clients outside of Trusted Call. Thank you.
Andrew Nicholas: during what has been, you know, a soft market on both the credit side and our various other
Andrew Nicholas: product offerings. The New Star story we believe is strongly positive in a variety of ways. First, it has been accretive to our average earnings over this period. Although I do acknowledge it's certainly below what we had expected when we first guided the revenue.
Andrew Nicholas: We've also done a great job at driving profitability at Newstar. We committed to 70 million in savings. We've
Andrew Nicholas: delivered 100 million of integration synergies and we've entirely reconstituted the product portfolio on our new One True platform and are accelerating our pipelines and our bookings in fraud and marketing and of course trusted call.
Andrew Nicholas: So, over the intermediate and longer term, I expect New Star growth is going to increase and increase.
Andrew Nicholas: over time to what we guided initially mainly because we're done digesting the asset and we have realized much of the innovation benefits of pulling together all of the great marketing solutions that we own with all of their great marketing solutions.
Andrew Nicholas: And, again, the hidden value in this deal was the underlying technology, which has now seeded a complete modernization of our tech stack in the U.S. and, eventually, globally, starting in 2026.
Andrew Nicholas: As I indicated in my remarks, we've already identified the countries that we're going to migrate onto this platform. And look, I think it's really powerful.
Andrew Nicholas: said as part of our Next-gen program that we're going to save two hundred million dollars in free cash flow Once we fully realize the benefits of our tech modernization in our global operating model
Andrew Nicholas: That $200 million in savings, hard savings from our tech modernization, first,
Andrew Nicholas: It's unique in our industry, right? And I think it reflects how profound the tech benefits are. And secondly, it's also accelerating our innovation, as you can see, with a long list of next generation products that we brought to market next year.
Speaker Change: Now, in terms of the next quarter or over the course of this year, do we see a material improvement in the market?
Speaker Change: You know, perhaps, but we don't see any worsening, and we're highly confident that we're positioned to compete much, much better in both fraud and marketing over the course of 25.
Speaker Change: Our next question will come from Ashish Sabhadra with RBC Capital Markets. Please go ahead.
Ashish Sabhadra: I'm taking my question. Just wanted to focus on the margins. Obviously, the growth investments are almost like a 70 basis point of headwind to margins this year. But as we think about over the midterm, how do you balance the growth investments with the operating leverage and continue to drive much more robust margin expansion? Thanks.
Ashish Sabhadra: Good morning, Ashish. Thanks for the question. So, yeah, if you're referring to the, you know, the bridge that we provided for our adjusted EBITDA,
Speaker Change: Gregory Bardi, Todd Cello, Gregory Bardi, Gregory Bardi, Todd Cello, Gregory Bardi,
Ashish Sabhadra: When you look at the first column, you know, we're basically, you know, if you look at the high end of guidance, it's about $209 million of revenue incremental, and EBITDA is about $104 million, which would suggest about a 50% margin flow-through.
Ashish Sabhadra: What's important to call out here is that that bar doesn't just capture our revenue, less our variable product costs.
Ashish Sabhadra: We also put a lot of our other normal course, you know, expenses, you know, in there, such as, you know, merit increases, as well as, you know, the cost for our, you know, technology and the replatforming, the software expense, the cloud expense.
Ashish Sabhadra: The revenue growth, as Chris just said in a prior response.
are trusted call solutions as well as third party scores.
Speaker Change: and it was pertaining to the question that Manav had asked, you know, if...
Speaker Change: there's a material impact in positive impact and credit volume throughout 2025. You'll see a really good flow through in this bar, you know, will look significantly better.
Speaker Change: If you look at the second bar, you know, that is, you know, the $10 million.
Speaker Change: That's on top of the $85 million that we realized in 2024, so we get another $10 million.
benefit.
Speaker Change: And as you know, we're not done with the Transformation Program. It's always our intention that our Transformation Program would take through the end of 2025.
Speaker Change: And that we were going to enjoy a significant amount of margin increase in 24, which was 90 basis points.
Speaker Change: you know related to that 85 million plus the other you know business performance. So there's more cost savings that will come in 2026 at the conclusion you know of the of the tech modernization.
The final bar that you see
Speaker Change: It's our attempt to be transparent with you. We're showing you intentionally where we are putting investment dollars. So everything that's not in that first bucket...
Speaker Change: we put into this last category. And you can see what's included in there are further enhancements for the technology.
Speaker Change: product innovation you know so to the question about new star that Chris just answered you know a lot a lot of cost still going in to you know enable our new platforms like true audience
in 2024.
Speaker Change: But we also need incremental specialists, whether that's on the product side or the sales side. So that's contemplated in this number.
Speaker Change: And the last piece of it, as it's noted on the slide, and it's just worth a second to for, you know,
Speaker Change: talk about it is the international expansion. Our international portfolio continues.
Speaker Change: You know to perform really well. We've seen some softening, you know in India We don't believe that that's a structural issue. It's more of a cyclical impact to the business
We're super excited about the favorable demographics in that market.
The government's supporting financial inclusion.
and just the overall how we've diversified the portfolio.
and the benefit, you know, that we get there.
Speaker Change: So what that means is we need to continue to invest, you know, in areas like India. So that's what you're, you know, you're seeing here. So we're taking a very long-term approach, you know, towards how we build, you know, this guidance for EBITDA, thinking about the future and making certain we're making the necessary investments.
Thank you. Bye.
Thank you. Chris, did you think about...
Speaker Change: innovation in terms of your product roadmap and everything that's coming out.
Speaker Change: And so we're a lot of products accelerate. What does that mean for your growth rate? Is that should we be when we look in the outer years perhaps entering a period of above trend growth all else equal or Is that intended to kind of support what would be a normalized growth rate?
Speaker Change: Well, you know, during the turbulence of the prior years, we withdrew our long-term growth guide. But I think we have said that we continue to believe that this business can and will compound at high single-digit revenue growth.
Speaker Change: Now, that said, this is the beginning of the year, and we've been prudent and conservative in issuing that guide. And look, last year, then I'll say it again this year, you know, we orient ourselves more towards the high end of these things. That's what we're trying to achieve over the course of the year.
I think this innovation and the improvement.
Speaker Change: in our product competitiveness in all these categories is only a net positive to our ability to win and retain and to grow over time. That's the point of it. And look, the re-engineering, the re-platforming, the innovation
is enormously profound. I'll give one quick example.
Speaker Change: Post the New Star Acquisition in the marketing category, if you looked at all of the products that we had built, they had built, or had been acquired, we had 87 different marketing point solutions across TransUnion. Those solutions were built on six different technology platforms.
Speaker Change: We have since integrated all 87 down into one integrated end-to-end market solution called True Audience.
Speaker Change: And that solution is now a destination workspace for marketers and it's built on the same platform that has all the credit data and all the fraud-related signal.
Speaker Change: It's a very powerful step forward in terms of our product capabilities, and it's representative of what we're doing in every product category.
Speaker Change: And our last question will come from Kelsey Zhu with Autonomous. Kelsey, please go ahead.
Hi, good morning. Thanks for taking my question.
Speaker Change: So 2024 saw pretty tight credit supply, and I think many investors hold the view that supply side will see improvement in 2025, particularly in the second half of the year.
Speaker Change: How should we think about customer demand for more credits? What's going to drive the recovery in customer demand, particularly in a higher, prolonged rate environment?
Speaker Change: Yeah, good question and a good place I think to finish on.
Speaker Change: The lending industry, the supply side, clamped down on deposits, seeking stability, and since that point, they have been consistently replenishing their deposit bases.
Speaker Change: And so if you look at the mid-tier, if you look at community investment, banks, etc., they've all replenished the supply side.
Speaker Change: greater availability. Now you had to contrast that with some concerns about consumer health, right? We had some rising delinquencies in categories that gave some lenders pause.
Speaker Change: caused credit scores to drift up, which led to more origination offers under the presumption of stronger consumers. It turned out that that inflation was
Speaker Change: temporal, if you will, and that led to higher delinquencies. Now that delinquencies are normalizing, if you will, in terms of rates of change,
You know you're positioned to see
Some improvement in lending activity.
Speaker Change: The current rates, while a lot higher during the era of quantitative easing, are not high by historical standards.
Speaker Change: And so you're seeing some, you know, more comfort and therefore...
you know, more transaction activity.
Speaker Change: And then the last thing I would point out is that a lot of consumers who got loans, particularly subprime consumers, during the COVID era, they levered up their card balances pretty quickly. Now they need, you know, debt consolidation loans.
Speaker Change: And you're seeing more funding flow back into the fintechs who are really overweight on debt consolidation, and many of them are starting to post material increases in their origination volume.
Speaker Change: So look, those are the dynamics we're looking at. It seems stable to solid. Clearly, things are a bit bumpy right now. Part of that's the change in administration. But some of the underlying dynamics, the macro conditions, the health of the supply side of the industry, and consumer fortunes,
Speaker Change: seem pretty solid. So hopefully, you know, that discussion of puts and takes gives you some context.
Thanks a lot.
Speaker Change: Perfect. I think that's a great place to end the call. Thanks for your time and have a great rest of the day.
Speaker Change: Conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
Have a Incredible Christmas