TransUnion (TRU) Q3 2026 Earnings Report, Transcript and Summary

Good morning, and welcome to the TransUnion 26 Third Quarter Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Gregory R. Bardi, Vice President of Investor Relations. Please go ahead.

Good morning and thank you for attending today. Joining me on the call are Christopher A. 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 TransUnion Investor Relations website this morning, and they can also be found in the current report on Form 8-K that we filed this morning. Our earnings release and the accompanying slides include various schedules, which contain more detailed information about revenue, operating expenses, other items, as well as certain non-GAAP disclosures and financial measures along with a corresponding reconciliation of these non-GAAP financial measures to their most directly comparable GAAP measures. Todd's call will be recorded and a replay will be available on our website. We will also be making statements during this call that are forward looking. These statements are based on current expectations and assumptions, 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, the comments made during this conference call, and in our most recent Form 10-Ks, Forms 10 Q and other reports and filings with the SEC. We do not undertake any duty to update any forward looking statement. With that, let me turn it over to Christopher.

Thank you, Gregory. And let me welcome everybody to the call this morning and outline our agenda. First, I am going to review our third quarter performance. And our progress against our strategic priorities. We are then going to have a deep dive into our insurance business. it is a case study that demonstrates how our strategy is driving innovation led and scalable growth. I will hand it over to Todd who will provide the details on the third quarter results, our fourth quarter guidance, and the guidance for the full year. So in the third quarter, we delivered broad based growth and exceeded the high end of guidance for revenue adjusted EBITDA and adjusted diluted earnings per share. Organic constant currency revenue growth was 8% or approximately 5.5% excluding FICO mortgage royalties. That performance translated into 14% growth in adjusted diluted earnings per share. U.S. Markets revenue increased 7% within that financial services grew 11% or 5% excluding our mortgage revenues with double digit growth in auto. Emerging verticals 6% led by another quarter of double digit growth in insurance and strength in public sector. And international had an excellent quarter. And returned to double digit organic constant currency revenue growth. India and Latin America led the quarter, each at 18%. In India, consumer and commercial credit volumes continue to improve and new wins began to convert to revenue. In Latin America, Colombia and Brazil both delivered strong growth. Our Mexico acquisition continued to track well ahead of our acquisition case for both revenue and adjusted EBITDA. Following the Mexico acquisition, India and Latin America are now 2 of our largest international regions. Both regions offer attractive economic and demographic characteristics, and we believe we have got a proven playbook to continue outgrowing them. We also repurchased $126 million of shares in the third quarter bringing our year to date total to $243 million. Our board recently increased our repurchase authorization by $1 billion, bringing the total to $2 billion. We expect to accelerate repurchases in the fourth quarter and plan to bring our full year total to about $500 million and we also reached key balance sheet milestone, reducing our leverage ratio to 2.5x within our long term target range. Now our results reflect consistent execution, despite the ongoing economic and geopolitical uncertainties. Conditions in U.S. consumer credit are largely unchanged from prior quarters. Consumers remain resilient in a labor market with high employment but moderating real wage growth. Credit demand remains healthy supported by strong spending. Credit performance is stable, though pressures persist in lower income and subprime segments. Lenders continue to expand their portfolios supported by strong balance sheets and margins, and delinquency rates remain within historical ranges and are broadly consistent across risk tiers. The most significant change has been the rise in inflation and interest rates. The 10-year treasury rate is now roughly 5%, up over 30 basis points since our July earnings call and roughly 80 basis points year to date. The 30 year mortgage rate is above 7% weighing on borrowing costs and home affordability in an already soft housing market. As a result, mortgage volumes have slowed incrementally in recent months. That said, with industry volumes over the last several years already near multi decade lows, we believe additional downside is limited. Other consumer lending categories are less sensitive to higher interest rates. And trends remain broadly consistent. We expect higher rates to moderately reduce auto affordability and lending activity. Consumer loans are less sensitive because of their shorter duration FinTechs and other consumer lenders have adequate diversified funding sources, though higher rates increase funding costs and could temper borrower demand. Credit cards are the least rate sensitive lending product given already high APRs and the product's revolving nature. And we delivered another strong sales quarter in financial services. Reflecting sustained demand and commercial momentum for solutions such as TrueIQ, trusted call solutions and identity based marketing. More broadly, our portfolio outside U.S. financial services offers multiple growth drivers that are less sensitive to the credit cycle. Now with that context, we are raising the low end and maintaining the high end of our full year guidance for revenue and adjusted EBITDA. We expect to deliver 8% to 9% organic constant currency revenue growth and 10% to 11% adjusted EBITDA growth. We expect portfolio diversification benefits including stronger international growth in the second half of the year to help offset the impact of higher rates and softer mortgage activity in The U. S. We are raising our adjusted diluted earnings per share guidance by 1 percentage point to 12% to 13% growth driven by lower net interest expense and the benefit of our share repurchases to date. This would mark our third consecutive year of high single digit revenue growth and double digit earnings growth. We believe our guidance appropriately balances our current momentum with ongoing market uncertainty. If current trends continue, we expect performance at the high end of our guidance range. Our range is also designed to provide flexibility to absorb a reasonable degree of further market softening. And Todd will provide full details on our guidance assumptions later in the call. Now beyond the near term outlook, we continue to make significant progress on the strategic priorities that underpin our long term growth. As U.S. credit migration nears completion and our pace of innovation accelerates, we believe we are in position for stronger and more diversified growth. So in the quarter, we significantly accelerated U.S. credit customer migrations. The majority of U.S. credit online and batch activities now run on OneTru. We expect to substantially complete the migration by year end with a small tail extending into 2027. We have meaningfully reduced legacy system capacity and met our cost savings commitments. In 2027, we plan to focus on expanding 1 True into Canada, India and The UK. And 1 True is helping our teams develop and launch and scale products faster than ever. Across the enterprise, we have launched more than 40 new products in AI-powered, enhanced, expanding our pipeline and strengthening sales momentum. Recent highlights include TrueIQ real time offers for prescreen campaigns, curated audiences by TU marketing segments, and the expansion of Branded Call Display into India. We believe these recent launches represent approximately $350 million in revenue potential over the next 3 years. These efforts support growth across our solutions, verticals and geographies with some of our strongest momentum coming from differentiated capabilities beyond traditional credit volumes. Insurance is 1 of the clearest examples of this growth playbook in action. It was 1 of the first verticals we entered beyond traditional consumer lending. We built the business by combining deep industry expertise with our credit data and analytics to support personal auto underwriting. Since then, we have substantially expanded our customer base and the breadth of our solutions. Today, we are the market leading credit bureau serving the insurance life cycle with a comprehensive solution suite. Insurance is expected to generate more than $430 million in revenue in 2026, making it comparable in size to our mortgage business excluding FICO royalties. We support more than 80% of insurance carriers including all of the top 20 personal lines insurers and we also serve most of the leading life and commercial insurers. Our growth in insurance has materially outpaced underlying market trends. Over more than a decade, we have achieved a double digit compound annual growth rate. Now, 3 durable growth drivers support this performance. Recurring policy renewals wallet share gains and broader adoption of our solutions. Our diversified solutions enable us to grow across varying market conditions When insurers prioritize growth, higher marketing activity drives volume, and new wins across our marketing solutions. In more challenging environments, increased consumer shopping supports credit demand even as marketing spend and new policy origination slow. These counterbalancing demand drivers, together with a highly recurring revenue base have supported growth across multiple environments. Revenue grew in 2020 despite COVID-impacted conditions and we grew 5% in 2023 despite inflation driven profitability pressures across the insurance industry. We expect insurance to achieve a third consecutive year of double digit growth. Now today more than half of our insurance revenues are outside of core credit. This broader portfolio expands our addressable market creates new vectors of growth and reduces the verticals reliance on any single demand driver. Core credit laid the foundation for our business in many of our most important customer relationships. Our credit based solutions support customer acquisition, underwriting and portfolio review, helping personal auto insurers more accurately assess risk and set premiums. We have continued to gain market share. Building on those capabilities and customer relationships, we developed a broader suite of insurance specific solutions. Through our acquisitions of DriversHistory and Datalink, we develop our driver history solutions which offer insurers a cost effective alternative to traditional state motor vehicle reports. We have scaled these solutions from 13 million in 2015 to $125 million today. And most recently, we expanded our offering to include marketing and fraud solutions. Since 2022, marketing and fraud solutions have grown at a combined double digit compound annual rate. With trusted call solutions as a key contributor. A large addressable market and durable competitive advantages support continued momentum in insurance. We expect at least high single digit growth over the medium term driven by several initiatives. First, we have a significant base of contract wins that is not yet fully ramped. Many of our large insurer contracts roll out state by state creating a multi year ramp from signed wins to fully realized revenue. In core credit, we estimate approximately $125 million in annualized wins from new contracts compared to roughly $190 million in the 2026 revenue base. Now the $35 million difference is expected to ramp up over the next couple of years. In driving history, we estimate approximately $150 million in annualized revenue from contract wins, compared with roughly $125 million in the 2026 revenue base. Second, we see substantial runway to expand in life insurance and commercial auto and to further cross sell our marketing and fraud solutions to existing customers. And third, we are expanding our telematics capabilities with the industry's first consumer-owned driving score developed in partnership with Cambridge Mobile Telematics. We see strong interest among our largest customers and believe this can become another meaningful insurance specific growth driver. Beyond these medium term drivers, we are well positioned to benefit from longer term industry trends. Demand for differentiated data to improve insurers acquisition underwriting, segmentation, and retention is accelerating. Over time, agent-enabled shopping could make insurance comparison and switching easier, increasing consumer shopping activity and the associated demand for our data and solutions. Now taken together, insurance demonstrates our growth playbook in action. We have built a scaled market leader with recurring demand, strong sales momentum, a meaningful wallet share opportunity and a growing innovation pipeline. That combination gives us confidence that insurance can continue to outpace the underlying market. With that, let me turn it over to Todd to review third quarter results and provide guidance. Todd?

Thank you, Christopher. And let me add my welcome to everyone. Starting with the quarter, revenue and adjusted EBITDA exceeded the high end of guidance by $3 million and $2 million respectively. Results reflected broad based growth in U.S. financial services and emerging verticals. Along with better than anticipated performance in international. Total revenue increased 12% as reported and 8% on an organic constant currency basis. Excluding FICO mortgage royalties, organic growth was approximately 5.5%. Adjusted EBITDA increased 9% Adjusted EBITDA margin was 35.4%, at the high end of guidance and down 90 basis points from the prior year. Underlying margins contracted 40 basis points as revenue flow through was offset by technology and solutions investments and higher legal and regulatory expenses. FICO mortgage royalties were a 60 basis point drag to consolidated margins Acquisitions had an immaterial impact reflecting strong adjusted EBITDA from Mexico. Adjusted diluted earnings per share was $1.25, up 14% year over year and $0.04 ahead of the high end of our guidance. Driven by adjusted EBITDA growth and the benefit of recent share repurchases. In the third quarter, U.S. Markets revenue grew 7% on an organic constant currency basis led by 11% growth in financial services, and continued double digit growth in insurance. In non mortgage financial services, revenue grew 5%. Growth reflected positive though moderated online and batch volumes in credit card and consumer lending, along with strong performance in auto. Credit card and banking grew 3%, supported by recent wins from trusted call solutions. Consumer lending grew 5% with continued FinTech growth and sustained consumer demand. Auto grew 13% driven by pricing and new wins across our solutions significantly outpacing declining industry volumes. In mortgage, revenue grew 21% Excluding FICO royalties, mortgage growth was 5% despite a 16% decline in inquiries with outperformance due to pricing actions and revenue beyond traditional Tri-Merge reports. The sequential slowdown in growth reflected the impact of rising interest rates on mortgage inquiries. Turning to emerging verticals, revenue grew 6%. Insurance led the way with its ninth straight quarter of double digit growth Within insurance demand remained strong across our solution suites. Credit based marketing continued to strengthen while elevated consumer shopping supported credit volumes. We also benefited from new wins across core credit, driving history and trusted call solutions. Across our other emerging verticals, we grew modestly Public sector returned to strong growth while tenant and employment and media volumes were softer than anticipated. Consumer Interactive declined 3% in line with expectations, with flattish growth in indirect and a decline in the direct channel. In international, all revenue growth comparisons are on an organic constant currency basis. International continued to reaccelerate with 10% growth in the third quarter. Overall results reflected high teens growth in India and Latin America together with continued healthy performance across our developed markets. Starting with India, revenue accelerated to 18% growth Volumes continued to improve during the quarter across both consumer and commercial lending. We also benefited from new wins converting into revenue. We expect similar growth in the fourth quarter as India is expected to return to a strong double digit growth trajectory. Latin America growth increased from 5% to 18% in the third quarter including double digit growth in Brazil, and Colombia. While some of the third quarter growth was the result of 1 time revenue in Brazil, we expect healthy double digit growth from Latin America in the fourth quarter. Additionally, our acquisition of Mexico which is included in our inorganic growth continues to perform ahead of our acquisition case. Canada and The UK grew 7% respectively both markets outpaced muted market volumes through wins across financial services, FinTech and insurance. Africa grew 6%, while Asia Pacific returned to growth with a 3% increase. Turning back to the enterprise, We ended the third quarter with $5.5 billion of debt and $883 million of cash. Our leverage ratio decreased to 2.5x, now within our long term target of 2.5x or less. Also through the first 3 quarters, total free cash flow was $687 million, or an approximately 97% conversion as a percentage of adjusted net income. Our operating performance and strong balance sheet position us for continued accretive capital deployment. During the third quarter, we repurchased $126 million in shares Year to date, we have repurchased 3.3 million shares at an average share price of about $74 for a total of $243 million We expect to accelerate repurchases in the fourth quarter bringing our expected full year total to roughly $500 million We view share repurchases as an attractive use of capital at current valuation levels. Our Board recently increased our repurchase authorization by $1 billion to a total of $2 billion with repurchases made to date we still have remaining authorization of roughly $1.5 billion We also today announced an increase in our quarterly dividend to $0.135 up from $0.125 effective in the third quarter and payable in November. The increase is consistent with our commitment to grow the dividend in line with earnings growth while maintaining a 10% to 15% payout ratio. During the quarter, we also prepaid the remaining $104 million of our Term Loan B-5 We expect adjusted EBITDA growth to support further natural deleveraging. Finally, we are currently replacing an expiring $1.5 billion notional swap and at an interest rate of 1.4%. With a new swap of a similar notional amount. We have executed more than half of the replacement swap at an average rate in the mid-4% range and expect to execute the remainder during the fourth quarter. The appendix includes additional details on our debt profile and a bridge to expected 2026 interest expense. Turning to fourth quarter guidance, our ranges reflect a similar level of prudence to the third quarter. If current business trends continue, we expect performance at the high end while the range retains flexibility to manage ongoing market uncertainty. In the fourth quarter, we are guiding revenue of $1.264 billion to $1.294 billion up 8% to 10%. Growth includes 3% to 6% organic constant currency growth. A 5 percentage point contribution from acquisitions, and a 0.5 percentage point headwind from foreign exchange. Excluding FICO mortgage royalties, we expect organic constant currency growth of 3% to 5% The sequential deceleration from the third quarter reflects declining mortgage inquiry volumes. Excluding mortgage, we expect revenue growth to remain similar to the approximately 5.5% that we delivered in the third quarter. We are guiding adjusted EBITDA of $450 million to $468 million, up 8% to 12% implying a margin of 35.6% to 36.2%. Underlying margins are expected to expand by 40 to 120 basis points partially offset by a 30-basis-point drag from FICO royalties and a 20-basis-point impact from acquisitions. The fourth quarter margin expansion is primarily driven by positive revenue mix including strong growth from international. We expect adjusted diluted earnings per share of $1.15 to $1.22, up 7% to 14%. For full year guidance, we modestly raised the low end of our guidance and now expect revenue of $5.131 billion to $5.162 billion up 12% to 13%. Acquisitions contribute 4 percentage points and foreign exchange has an immaterial impact on our guidance. We expect organic constant currency revenue growth of 8% to 9%, or 5% to 6% excluding FICO mortgage royalties. Our segment level assumptions are broadly unchanged. Our full year mortgage revenue growth guidance is 28%, or 9% excluding FICO royalties. Our conservative mortgage assumptions have provided flexibility to achieve our guidance despite higher interest rates. We now expect mortgage inquiries to decline roughly 10% for the full year and more than 20% in the fourth quarter. Pricing actions and revenue beyond traditional Tri-Merge reports continue to support growth above mortgage market volumes. We expect adjusted EBITDA to be $1.808 billion to $1.827 billion in 2026 up 10% to 11%. That results in a margin of 35.2% to 35.4%, down 60 to 80 basis points unchanged from prior guidance. Underlying margins are now expected to be flat to up 20 basis points. Compared with our prior expectation of 50 to 70 basis points of expansion, Revenue growth and transformation savings continue to drive strong flow through. However, we are intentionally reinvesting a portion of those benefits into technology and solution initiatives to continue accelerating innovation. Additionally, we have experienced higher legal and regulatory expenses primarily related to individual consumer cases. Our Mexico acquisition continues to outperform our revenue adjusted EBITDA and margin expectations. As a result, acquisitions are now expected to have an immaterial impact on consolidated margin. Compared with the 40-basis-point pressure assumed previously. Non-margin FICO royalties remain an 80-basis-point margin drag. We are raising our adjusted diluted earnings per share guidance due to lower net interest expense and the benefit of share repurchases. We now expect $4.81 to $4.88, up 12% to 13%. We now expect 2026 net interest expense of $235 million, down from $245 million reflecting higher interest income and the repayment of our term Loan B-5. For 2027, a higher SOFR forecast and the replacement of our expiring interest rate swap are expected to increase net interest expense by roughly $60 million All other guidance items including depreciation and amortization, adjusted tax rate and capital expenditures as a percent of revenue are unchanged. We continue to expect free cash flow conversion above 90% of adjusted net income. With that context, I will now turn the call back to Christopher for closing remarks.

Thanks, Todd. So before we close, I wanted to weigh in on the ongoing discussion about the mortgage Tri-Merge standard. TransUnion firmly believes that comprehensive data allows the responsible expansion of access to credit. It strengthens underwriting, it delivers substantial benefits to consumers, lenders, taxpayers, and MBS investors alike. The data and analysis that has been done on the topic show that it is clearly the right policy for the U.S. mortgage market. But I also want to emphasize that we have looked at this and believe that our financial exposure to an FHFA shift to a bi-merge standard for GSE conforming mortgages have a limited impact on our financial performance, and would likely play out over a couple of years at least. Over the past decade, TU has invested several hundred million dollars in data innovation to build a more complete view of consumers. We pioneered the use of trended credit data, We help power the expansion of fintech lending and we broadened our complementary alternative data assets to deliver a deeper consumer insights. As a founding shareholder in VantageScore, we also help foster competition in credit scoring by creating a modern score based on trended, credit and alternative data. And together, these innovations enable 33 million more consumers to be scored thereby increasing financial inclusion in mainstream consumer lending. So this innovation enables responsible credit expansion in the U.S., Particularly in the mortgage market benefiting both homebuyers and also lenders. For homebuyers, trended and alternative data along with the VantageScore expand the mortgage eligible population by approximately 5 million consumers. Representing an estimated $1 trillion in incremental mortgage lending opportunity. Our data and the Tri-Merge also support more equitable outcomes by enabling consumers to be evaluated based on a complete view of their borrowing history. And lenders benefit from this expanded addressable market. Along with more accurate risk assessment and loan pricing. Over the past decade, TransUnion data has supported 32 million mortgages, representing $9.2 trillion in loan value. That scale underscores the important role credit data plays in enabling access and sound underwriting across the U.S. mortgage market. Now TransUnion's credit data delivers meaningful underwriting value at a small fraction of mortgage closing costs. TransUnion charges approximately $11 for our credit data in the Tri-Merge. That fee reflects our innovation and the ongoing investments in innovation, cyber security, compliance and consumer dispute management. Our credit file accounts for less than 10% of the Tri-Merge cost. And the Tri-Merge itself accounts for less than 1% of overall mortgage closing costs. The relevant comparison is not merely the cost of 1 additional credit file, but the value of more complete information relative to the risks and cost of less informed lending decisions. In our view, potential negative costs of reaching fewer consumers and making lending decisions with less complete information outweigh the potential modest savings from purchasing 1 fewer credit file. Our analysis shows that under a bi-merge model an estimated 600 thousand new mortgage borrowers each year could pay more in interest with affected borrowers paying almost $7 thousand more over the life of their mortgage. Although credit data accounts for a small share of closing costs, we support efforts to reduce mortgage closing costs without compromising data completeness or underwriting quality. A key example of this is continued adoption of VantageScore. VantageScore was included in roughly 35% of mortgage credit pulls in the third quarter. We expect adoption to continue rising as the unified LLPA grid removes another source of friction. Now, we have extended our industry first $0.99 Vantage for mortgage pricing through 2028. At more than 90% below the current price of the legacy score. This offers potentially meaningful savings for lenders and consumers while preserving access to complete credit data. We also recently introduced First Look, which allows lenders to review credit report insights before purchasing a additional scores. Improving early stage underwriting efficiency. And finally, we believe our direct financial exposure to potential change in FHFA requirements is limited. Within our mortgage revenue, a substantial portion consists of no margin FICO royalties, pre qualification usage and other revenue that is not subject to a Tri-Merge requirement. The remaining Tri-Merge revenue spans FHFA regulated loans as well as other government and nonconforming loans. Only approximately $100 million in annual revenue is directly connected to the FHFA requirement. Now if all FHFA regulated loans move to bi-merge, and assuming the bureaus maintain the equal share, we expect the annual impact will be roughly $33 million in revenue excluding FICO royalties and $0.15 of adjusted diluted earnings per share. This equates to less than 1% of total revenue and less than 3% of adjusted diluted EPS. And we also believe that lender behavior and incentives would provide additional mitigation. Now there are several key commercial reasons for lenders to continue using Tri-Merge even in the absence of a regulatory requirement. First, broader market borrower coverage. Complete data expands the mortgage eligible population. And lenders often use Tri-Merge during prequalification despite the availability of single file options. Second, there is optionality in the type of loan to originate. For example, lenders at the beginning of the process often do not know whether they will be originating a-- or an FHA loan when they pull credit. The FHA, the VA, the USDA continue to support the Tri-Merge standard. And third, the ability to offer the most attractive mortgage rate to consumers is important. These consumers are actively shopping for mortgages. Using less complete data could lead lenders to place borrowers in a less favorable credit score tier than their competitors do. And fourth, consistent and comprehensive risk assessment is essential. For 35% of consumers, at least 1 individual bureau score differs from the Tri-Merge score by 10 points or more. Underwriting with less complete information could increase risk across the mortgage ecosystem and with that risk ultimately borne by lenders, investors or the GSEs. Now taken together, Tri-Merge delivers better outcomes across the mortgage ecosystem. At the same time, we believe our direct revenue exposure to potential regulatory change is limited and that TransUnion remains well positioned for a range of potential outcomes. Now the Tri-Merge discussion reinforces an important point that is evident in our third quarter results and that is our growth is increasingly diversified durable, and innovation led rather than dependent on any single product vertical, or geography. We continue to execute our strategic priorities to navigate an uncertain environment and deliver on our commitments. Now before I conclude, I also want to recognize Todd on his final earnings call as TransUnion's CFO. Todd joined the company as a staff accountant 29 years ago and has helped guide TransUnion through 2 leveraged buyouts and an initial public offering and most recently a transformative period of growth and innovation as our CFO. He has been an exceptional leader a keeper of our culture, and a tremendous partner to me personally. And I want to thank him. Todd and I are working closely to ensure a smooth transition Although this marks Todd's final call as CFO, we are grateful that he will remain in the role through the end of the year and serve as a full time adviser through March 1. We have begun and are well in process with a comprehensive search for our next CFO, and we will share updates as they become available. And with that, I will turn it back to Gregory.

That concludes our prepared remarks. The Q&A, we ask that you each ask only 1 question so that we can include more participants. Operator, we can begin the Q and A.

We will now begin the question and answer session. Before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question. And our first question will come from Toni Kaplan of Morgan Stanley. Please go ahead.

Thank you so much. And for the extra clarity on the bi-merge impact at the end of the slides there. When you think about market share across the bureaus, I guess, how do you differentiate your credit report from the others? Is it certain data that you can provide that others cannot? And maybe in the prequal part of the market, if you could just update us on how much share you have there and how the shares trending? Thank you.

Yes. Good morning, Toni, and thank you for the questions. This is Chris. Well, I guess I would first point to our revenue performance in mortgage in recent years and certainly recent quarters where the growth and the performance relative to you know, our estimates of mortgage inquiries and the like, you know, really suggest that we have held or increased our market share. Particularly during this period when the early assessment program from the GSEs has the market's been digesting it over the past few years. And, deciding, you know, how many credit pulls make sense at the origination or the early part of the mortgage origination process. And as we said, the market is not settling at 1, it is settling at over 2. And there are still are you know, lenders that are pulling 3 credit reports for their reasons that I explained. In the mortgage slides and the commentary that we ended the presentation on. So in short, I think our financial results in mortgage show that we have continued to perform well. Now look, in our case, and I would say each of the bureaus will have an argument as to why their bundle of data is attractive. In our case, know, we lead the industry in core trended credit data. We were the first mover in the space. We go back. We provide 2.5 years of trended data. As I mentioned in my slides, we have seen a 60% increase in the number of consumers that we have traded data going back 2.5. Years on. We also have market leading coverage in fintech which has been for, you know, well over a decade, a significant portion of the loan origination marketplace. We have leading coverage down the risk spectrum because of an attractive acquisition of a payday lending oriented credit bureau. And we have significantly expanded our alternative data. And so all of that we have found makes us extremely competitive in terms of the value proposition of our credit data. And, you know, we are also kind of a neutral player providing that bundle of information to the resellers who ultimately serve the mortgage lenders. What that means is, we do not compete in the tri-bureau market. And, you know, in a bi-merge environment, those resellers are going to be able to choose which 2 bureaus that they want to do business with And I think our neutrality as well as the value add from our data bundle positions us well. Thank you.

The next question comes from Andrew Steinerman of JPMorgan. Please go ahead.

Hi. I am focused on Slide 13. And particularly looking at The U. S. Financials ex mortgage growth in the quarter of 5% and the sub segments that decelerated was card and banking and consumer lending. And then auto actually accelerated. Could you just tell us why the first 2 sub segments decelerated? And I was a little surprised to see auto accelerate. Christopher, you mentioned about affordability and rates, maybe that was a perspective comment. And just help us bring that together.

Hey, good morning, Andrew. I am going to take that 1, and then Christopher can add on. So in financial services, I am going to answer this big picture first to start. When you look at it on a quarter over quarter basis throughout 2026, you definitely do see a deceleration from 10% growth in Q1 to 8% to 5%? These numbers I am giving you all exclude mortgage. So, yes, we did see some moderated, you know, growth, throughout the third quarter. But as we said in our prepared remarks, the underlying conditions in the market still remain healthy. And we have not really seen any signal of a downward shift, in conditions. And in fact, when we look at, our volumes, up until yesterday, we really do not see an acceleration of any deterioration in these markets. Where we saw some modest slowing, in the quarter was particularly in auto and consumer lending categories. I think to really provide context on this specific question, really important to remember, you have to go back to 2025 as the year that we saw a recovery in these end markets. So we think it is more instructive when you look at things, on a 2-year basis And what we see when you do that is you know, relatively consistent, you know, performance. So to that point, to give you some numbers around that, if you were to look at a 2-year CAGR for financial services excluding mortgage, Q1, Q2, Q3 the growth rate is 10%, 10%, 9% respectively, in each of those quarters. So yes, we are dealing with the comparable and that is where you are seeing the deceleration. But when you look at it in that way, you still see a very healthy you know, market. And I would say that was all, in essence, backed up by the recent bank earnings reports, where there was a consistent theme across large lenders as well as medium and small sized lenders that lending conditions remain stable, you know, and delinquency levels also, you know, remain kind of consistent. You did not see, a big increase in loan loss reserves said. Another way. And just as a reminder, when we think about the financial services business, clearly, mortgage is the most rate sensitive part of the business. So everybody knows that. But when you think about the other lines of business, on a continuum downward, auto would be the next rate sensitive but then consumer lending and card not as much rate sensitivity, to those lines of business.

Yeah. Look, I would just. I agree with that. there is no change in our perspective on how these different consumer lending verticals are impacted in rising rates, Like Todd said, mortgage is the most sensitive because it is the largest loan over the longest duration. Auto is probably the next largest loan. And again, as rates have risen over the past couple of years, you have seen the duration of auto loans increasing so that the consumer monthly payment remains affordable. Consumer lending not as rate sensitive, because, you know, the spread the APR is higher and the duration is lower and, of course, card has the highest spread and, as balances revolve, rates can adjust. Now look, the numbers in this particular quarter may deviate a little bit from that kind of hierarchy or those dynamics, if you will. I would not read too much into it. Right? There can be a variety of puts and takes in any of these categories in a given quarter. So I think the way Todd framed it looking at the trajectory over the past couple of years, and considering that we have had some pretty heavy growth in consumer lending, as it is resurged. I think that kind of explains what you are seeing in the current quarter. It does not necessarily reflect what we expect to happen in the fourth quarter. So I think that is-- that probably covers the waterfront of perspective on that issue. Thank you. Very thoughtful.

The next question comes from Jeffrey Meuler of Baird. Please go ahead.

Thank you and Todd congratulations and best wishes to you. My question is on India. I know you have talked about kind of the recovery starting to set in, in recent quarters where expecting acceleration. But it seems to be accelerating more and faster than expected. So help us with what is driving that or how you kind of think about the growth potential looking out over the next 12 months forward? Thank you.

Okay. Thanks, Jeffrey. And look, let's just pause for a moment and enjoy the good news that the third quarter brought in India it is exciting to see it get back to this level of growth. And, you know, we think that is indicative of the level of growth that we can get out of India in the coming years. It is a combination of some market improvements, both on the consumer lending in the commercial side with better volumes. The RBI is more comfortable with the lending practices in the unsecured consumer lending market And so some of the pressures there that were dampening volumes have been lifted. And we are seeing the big banks post some good loan growth. And that is even with a recent rate hike. Right? Economy in India continues to grow. it is 7%+ and inflation is manageable. But I think what I am most excited about is the way we are competing in India. We have had a couple of years of challenging macros, which we have discussed many times in these quarterly calls. But the business today is materially stronger than it was a couple of years ago, in a very foundational way. We have improved our core credit data asset by broadening the number of banks that are furnishing to us and increasing the breadth of data that they are furnishing. that is 1. 2, we have redeveloped all of our consumer and commercial credit scores. And so they are performing better relative to the competition, that is helping us win more And then finally, we have got tremendous momentum around TrueIQ, our analytics platform. In India. I mean, we have recently had client events there that were just really successful. We are building a great pipeline. We have also already achieved multimillion dollar bookings from multiple banks and I think this gives us a new vector for growth in India. So as we think about the next 3 years, we think it is, you know, teens top line organic plus. And, you know, hopefully, it will be plus because India is still an enormously attractive market. As I said, 7% real GDP growth, manageable inflation, great demographics, 840 million people under 35, and our share is very stable. And as I mentioned, competitive position never better. And we are introducing into the Indian market some of our new global products. First is TrueIQ. Also made great progress with the telcos in establishing the relationships for trusted call solutions and then our fraud product will be the next to launch in India. And we are even taking part of the marketing portfolio India is less developed from a marketing data perspective, but we are bringing our media mix modeling services to India, and we are starting to gain traction. There. So a lot to feel good about, with the India business. Thank you.

The next question comes from Andrew Nicholas of William Blair. Please go ahead.

Hi, good morning. I appreciate you taking my question and congrats. Todd. I had a quick question for you, Todd, on the you made about reinvesting some of the margin in the fourth quarter. Could you flush that out a little bit? I think you mentioned it being focused on technology and potentially some legal costs Is that a fourth quarter item only? Or is that something that we should think about from a reinvestment perspective looking ahead to next year? Thank you.

Good morning, Andrew, and thanks for the question. And I think good opportunity for us to, you know, kinda unpack you know, the fourth quarter, you know, guidance. And, you know, I can talk specifically to start just about us being opportunistic in the third quarter with making certain investments you know, back into the business from, more of a technology perspective. To enable, the solutions growth that we talked about at during our investor day in March of this year. So not we are going to do that when we see the opportunity on a go forward basis. I do not think it is something that you necessarily, you know, need to, you know, be overly concerned about There was just a good opportunity for us to expand on that spend. So we did that. We also, you know, did talk about, you know, higher litigation, you know, expense in the quarter. This is more related to individual small claims cases. It is an industry wide issue pertaining to FCRA litigation. So not just a TransUnion specific dynamic, Most recently, Law 63 ran an article last week, you know, you articulating, you know, this you know, in the marketplace. So it is a. We are focused, as we always are on a proactive litigation strategy, but you know, most importantly, you know, implementing internal process enhancements you know, to make the process as smooth as possible, for the consumer when they interact. With TransUnion Now diving into the fourth quarter itself and the guidance that we have. When we look at things excluding the FICO mortgage, royalty, you know, in essence, the revenues for Q3 and then for. If you compare that to Q4 high end guidance, in essence that revenue is pretty much exactly the same. So, you know, as far as drivers are concerned, when you look at things from Q3 to Q4, We have. You obviously saw a strong international performance, and that trajectory we expect to continue into the fourth quarter. But when you look at things from the third quarter to the fourth quarter in U. S. Markets, there are some seasonal aspects. Pertaining to credit card marketing activity as well as consumer lending. That we would normally see a seasonal uptick. So revenue is about revenues as a repeat performance, you know, in essence, on an absolute dollar, basis. When we look at the expenses, which go to the initial part of your question, the expense base also when we exclude the FICO mortgage royalty is roughly flat on a quarter to quarter basis. So, you know, no big expectation that we have to manage costs down. I mean, in essence, we, you know, let the run rate of the business, you know, continue onward. And that all shakes out to an adjusted EBITDA of, about the same as well. From $4.65 that we achieved in the third quarter and high end of our guidance for the fourth quarter is at $468 million So know, that gives us the conviction, that, you know, another repeat you know, performance is out there, you know, for us just simply doing what we just did you know, in the, know, in the third quarter. And I would point you to the fact that, again, we look at the high end of the guidance as something that we look to achieve. So you know, we are we are guiding you again to the high end of the guidance. The noise here, though, will continue to be, mortgage. And whatever happens, you know, with, you know, with interest rates, But we feel comfortable that the range that we have put together for the fourth quarter should be able to absorb any potential disruption that could be potentially on the horizon. So we feel very strong about what we have laid out for the fourth quarter.

And Andrew, since you asked about the technology journey, and the technology investment, you know, I will take this chance to jump on the OneTru. So, obviously, we have been investing heavily over the past several years to build our next generation tech platform that is OneTru. And we are approaching the end of the migration in The US of The US credit customers to the 1 True platform. We feel comfortable that we are going to get that done by the end of this year, largely done If there are a couple of customers that require a bit more time, we have provisioned the capacity for them to run on the legacy platform. For a period of time. And we have greatly consolidated the cost of running the platform so that we have achieved the full savings and beyond. But, you know, as we stressed before, the real goal is to roll this platform out across our markets globally. And so the next focus is on the next 4 largest markets plus The Philippines which if we can migrate them all to the 1 true platform will mean about 94% of our revenue globally will be running on the common platform. that is going to enable a step change function in both our revenue performance and our cost structure. And so when we say we are spending a bit more in the third quarter, and we have an eye toward it is because we are trying to accelerate that. We are trying to get the global rollout to compress the time it is gonna take to get that so we can get the step function benefits. In the technology operating environment. it is also worth mentioning that, you know, after several years of building a new platform and then migrating legacy to the new platform, this is an opportunity for us to accelerate the feature functionality and robustness of the various products that run on the platform be it credit analytics, marketing, fraud, etcetera and so we had. We put more of our resources against accelerating innovation in those categories because that can help us achieve higher top line growth sooner. And again, that is a real priority for our business. So hopefully that gives you the color you are looking for. Very helpful. Thank you.

The next question comes from Faiza Alwy of Deutsche Bank. Please go ahead.

Yes. Hi, thank you and congratulations from me as well to Todd. I wanted to ask about the emerging verticals businesses and some of the puts and takes there. I think you mentioned softer than expected revenues in Media and Tenant employment screening. So just wanted to talk about that because I know you have a tougher comp in Q4 and some related revenue in the media business. So just wanted to understand if this is more timing or just any additional color? You can provide.

Yeah. Fine. So happy to happy to provide that. So emerging verticals, as you know, is almost half of the revenue coming out of The U. S. And as you can see from the slides we provided, insurance is the anchor tenant, to speak. it is about a third of those revenues, and it is been compounding double digit over the last 5 years. I mean, in the recent couple of years, it is performed, you know, exceptionally well. And the reason we wanted to showcase it because wanted to illustrate the way in which our broader mix of products have enabled us to accelerate growth in that particular vertical over the fullness of time. So not only have we innovated on the quality of credit data, and scores and analytics, but we were able to acquire some unique insurance data assets like driving history and motor vehicle record access that, broadened our value proposition, diversified our revenues, and allowed us to step up in growth. And then the final incremental growth component has been, you know, the marketing and fraud suites that we acquired and built. In recent years, which are just starting to really contribute meaningfully to the overall revenue mix in insurance. And look, I frame this up because that is what we are gonna do across all the various verticals in emerging and, in particular, in the diversified markets. Now as you pointed out, we achieved 6% growth in the quarter That is solid. But we had some puts and takes on performance. I would say starting on the positive side of things, we had a good quarter of growth for our public sector business. Public sector was challenged in recent years, because of cost focused efforts at the federal level. that is really Doge. DOGE had some moderate impact on our existing revenues, but it certainly chilled new business acquisition. Right? Now we have seen an improvement in the environment, an improvement in closes and also pipeline, particularly for our fraud suite The fraud suite again, we have made a lot of investments in recent years. We have got some great assets we have brought together. On the Worm True platform, and we recently achieved FedRAMP certification which is a certification that is required for us to sell the fraud solution up across the federal government. And it is also kind of a foundation enabler for selling at the state level as well. In short, because of this certification and the strength of the fraud solution, we think we are gonna get better growth out of public sector going forward, and we think there is you know, a lot of upside for us. Now, there were some weaknesses As we mentioned, start with tenant and employment. Even though we have seen improving growth rates in recent quarters, you know, the volume of moves has been under pressure because the housing market in general in the U.S. is under pressure. And so what happens is typically you would have homeowners typically, you would have renters you know, leaving rental units to purchase their first homes. Creating capacity, that capacity gets filled, and our tenant and employment, revenues benefit as a result. But because of higher rates, and really lower availability, both of new homes but also of new apartment units you really are not seeing the volume of movement. Or the velocity of movement. And so tenant employment had a difficult quarter and is, I think probably resetting to you know, a more modest level of volume in the coming quarters. We also had some challenges in media, which you asked about Now what I would say about media is, even though the vertical is down, there are definitely some, you know, marketing growth highlights within that. First, we have 3 core marketing products identity audiences and measurement. As you might recall, the identity products are growing exceptionally well. As we have said many times, we have got a tremendous foundation of credit marketing, fraud, and public records information in The US. That gives us a leading identity graph and that is being recognized. And we have got great bookings, revenue, and pipeline there. Our media spend planning and measurement services is also doing well. To your question, we got a big fourth quarter that we are comping against but our guide contemplates that and, you know, we have been looking at the inventory of measurement performance jobs that we have got and we feel pretty well positioned for the fourth quarter. So you should feel comfortable about that and again thank you for your question. The challenge has been on the audience side. Now we have created a next generation marketing audience and activation product on 1 True. it is called true audience. But today, the revenue lives on a series of legacy platforms. We are in the process of migrating customers from the legacy platforms to the more functional and attractive 1 true audience and activation platform. This is the 1 area of our product migration where we actually have to, you know, engage with our clients and hand-hold them as they move from the legacy to the next generation. And in this intermediate transition, what we have seen is a reduction in the usage volume. So that took us negative and we might have a few bumps over the next couple of quarters as we complete the migration. Good news is, you know, we are really confident in the new TruAudience product. We get great feedback from the clients who have migrated to it from the legacy and we do not see any reason why over the medium term we will not get back to growthfulness in audiences. that is kind of the range, for emerging verticals in this quarter. Great. Thank you. Very helpful.

The next question comes from Simon Klintch of Rothschild and Co. Please go ahead.

Hi, thanks for taking my question. Todd, echo everyone's comments here and just say congrats and wish you all the best. I was wondering if you could just talk about the international opportunity more broadly. We have had some strong growth in India, strong growth in LatAm. We have also got quite a lot of volatility happening in certain parts of Brazil, for example, more recently. I am just wondering, there anything on the horizon that you see that gives you some cause of sort of concern that, you know, unpredictability or anything like that is worth sort of calling out? And how you think about sort of navigating any of those kind of issues? Thanks.

Yeah. Thanks for the question, Simon. Look, clearly, geopolitical risks abound in this environment as we all know. That said, I think I am pretty optimistic about international. Think for the past couple of years, they have been working through some challenges in India, but also in the Asia Pac region. Some you know, bumps and difficult revenue comps in Hong Kong related to a surge of 1 time revenues consulting revenues preparing for a bureau competition the MCRA change in Hong Kong, which we have talked about previously. But then the most growthful part of Asia Pac, The Philippines has really been hit hard by rising oil prices. And so there is been contraction there. And the slowing of our growth. And so international has been working through all of that. When we think about international, we think about it as at least a 10% organic compounder in okay conditions around the world. But it can certainly grow above that. And we saw that in the COVID time and the COVID era, you know, plus where it was growing near 15% for 2 to 3 years. Right? So I think the international business gives us great growth potential and also really helpful diversification as we experienced this quarter when rising rates over the course of the year, 80 bps year to date has put some pressure on U.S. financial services volumes. When I think about the various countries, obviously Canada has done terrific job and continues to compound above market rates. I think the same thing is true with our UK business. And we are positioned to strengthen that business through introducing you know, 1 True and some of the new global products. India is getting back online. Asia Pac is pivoting from shrinking to growing. And then Brazil, yes, there is been some volatility, but there is been a huge step forward in Brazil. Because we are successfully seeding the market and launching trusted call solutions in Brazil. Right? And so that will give us a whole new product and a whole new growth factor. So net, I am optimistic about international and I think it is additive to the growth profile overall and really helpful diversification.

The next question comes from Ashish Sabrata of RBC Capital Markets. Please go ahead.

Thanks for taking my question. As we think about some of the headwinds going into next year, you have called out the interest expense headwind there. Is roughly 5 points to the earnings growth. But and potentially some headwinds from mortgage volume as well. But as we think about some of the tailwinds, can you highlight some of the payments which can continue to help you deliver on your midterm guidance? Thank you.

Yes, for sure. I mean, look, so we have had some discussion of the headwinds. And we would just characterize the headwinds as higher rates leading to lower volumes in mortgage in particular and then some cooling and other product categories. But I think we have been clear on our perspective there. And then again, we are going to have some comps in the first half of next year. That could create some pressures depending on the volumes and depending on the rates in U.S. financial services. To the upside, again, would point to international I am not gonna elaborate because we just had. I just provided some lengthy context of that in the prior question. But international will definitely, you know, buttress and kind of fortify our growth rates going into next year. And then on top of that in the emerging markets, I mean, we still have products like our fraud solutions and our marketing solutions that can reach another year of growth and sustain it. that is part of the reason why we are investing more in advancing the value props for fraud and marketing, as I mentioned previously. And then we have spent a good deal of this year rolling out the TrueIQ analytics solution to India, The UK and Canada. We will probably push it to more markets next year. That gives us another product to monetize. And so I would view that as some of the positives supporting our growth next year and Yeah.

And I. Christopher, I just would want to add on to that and just think about the performance that we just delivered in the third quarter, and what we anticipate in the fourth quarter to me, that is a display of us being able to deliver strong results despite a challenging interest rate environment in The U. S. And that really speaks to the portfolio diversification, you know, that, you know, we have intentionally built at TransUnion. And, you know, hand in hand with that, strong free cash flows. That we are also generating in the most recent quarter and what we expect you know, going forward From a capital allocation perspective, as the business is able to absorb these challenges, still gonna enable TransUnion to be in a position to focus on, you know, shareholder returns.

A good point. I mean, we have not talked about our capital allocation in the third quarter. On the call yet and what we expect. But I mean, the fact that you know, EBITDA is growing, free cash flow conversion is high, it is in the low 90s. The debt level is now within our long term target range. We are gonna buy back a lot of shares. We have got an increased authorization by a billion that brings it to $2 billion. And Todd and team will be putting that to good use in the fourth quarter and beyond. that is very helpful color. And, Todd, let me add my congrats as well. And best wishes.

Our last question will come from Kelsey Xu of Autonomous. Please go ahead.

Hey, good morning. Thanks for squeezing me in. Christopher, what is your expectation around the adoption rate for FICO preferred? Obviously, we know you are selling FICO scores at 0% margin. The FICO preferred will lead to zero revenues for lenders enrolled in that program as well. And I also just want to get your updated expectations for VantageScore adoption rate in 2027 and 2028? And just to double confirm the first look for mortgage program Is that going to be available through resellers? Because if it is not, does that mean that lenders were pulling both bi-phone VantageScore will incur double the credit inquiry fee? Under the FICO preferred program. Thanks a lot.

Okay. So we got preferred. We have got Vantage adoption. And FirstLook. Okay. Probably a good question because, you know, we are all curious about the dynamics in mortgage market, both scoring and credit. Start with the preferred program. You know, we read with interest the launch of this program on you know, via press release on Thursday and Friday night. What I will say is, as is typically the case, there is still work to do to translate between the press release and contractual terms and operational requirements to make the program, a reality. And we are working with FICO on that as you would expect. there is also an additional portion of it. I mean, the preferred program is only, you know, 1 part of how FICO intends to monetize their score in 2027. And the other parts, they have not publicly announced, they are working through with us and the other bureaus in real time as we renew our annual pricing in terms and conditions. And look, all of that at this point is confidential between TransUnion and FICO. And our customers, the resellers and some lenders directly. So more news to come on that. I would say generally, with the preferred program and other efforts, I mean, look, what is clear is that the market has an enormous appetite for, score competition. And I think the rate of adoption across the mortgage market has been stronger than most people anticipated and even stronger than we anticipated. And again, you know, many sell side analysts and other sources are kind of providing the weekly reports on the rate of adoption. And that is just what is happened in the current period. We have got greater insights into all of the preparations that are taking place with various lenders across the mortgage ecosystem to adopt the VantageScore. I think what you will see is various efforts to try to slow the migration by changing the monetization path if you will, And, again, give us a bit more time to work things out as an industry, and I think all the various approaches to score monetization, you know, will become clear. But stepping back, I would make 2 points. The first is that you know, regardless of a preferred program, or any other way of monetization that may be put forward What is clear is that the VantageScore performs extremely well, better than the incumbent, and it only costs 1-tenth of the incumbent. And in our experience working around the globe, it is that price is more reflective of what scores sell for. They do not sell for $10 elsewhere. So regardless of changes in monetization approach, while that may slow migration in the near term, it will not stop the overall movement of the market to highly performing score that costs 90% less than the current score. Right? And we are gonna continue to support the efforts of lenders and resellers across the spectrum by providing them with free credit reports in the analytic and evaluation phase and $0.99 credit reports through the end of 2028. Right? So I think that is, you know, our thoughts on preferred in the Vantage adoption and look. First look, is, again, it is another innovation from us. To try to address for lenders the cost of evaluating and originating mortgages and what will continue to be a challenging environment. And so with this, they are able you know, to pull Vantage and to pull a credit report and get a perspective on the attractiveness of the loan and where they might sell it before they have to pull a more expensive product. And then again, within a narrow time window, we will allow them to pull an additional credit score and apply to the same report that they pulled from TransUnion, If they are if they are looking for additional information that might provide additional you know, insights or alpha for them. And again, this is, our effort to address the cost of evaluating and originating mortgages in a very mortgage challenged market. The second point that I want to make clear and it just bears reiteration is at the end of last year or end of last year, we changed our pricing structure at TransUnion and also our competing bureaus did as well. And our industry has essentially decoupled our revenue from the FICO score. And you know, we charge what we charge for the data, They can charge what they want for the score. They can direct license if they choose We are happy to support almost all of the you know, options that they have articulated at this point. But we chart our own course on revenue, and we offer a score that is tremendously valuable and it is at 1 tenth of the price. And that is just additive revenue to everything that we do and we are going to maintain this attractive level of pricing and promote market share, adopt market shift and share adoption in the coming years. Perfect. Thank you, Christopher.

I think that is a good place to end. Thank you all for your time today, and have a great rest of your day.

Thanks. The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.