TransUnion

Good day and welcome to the TransUnion Second Quarter 2024 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch-tone phone. Please note, this event is being recorded. I would now like to turn the conference over to Greg Barty, VP of Investor Relations. Please go ahead.

Good morning, and thank you for attending today. Joining me on the call are Chris Cartwright, President and Chief Executive Officer, and Todd Sello, Executive Vice President and Chief Financial Officer. We posted our earnings release and slides to accompany this call on the TransUnion Investor Relations website this morning, and they can also be found in the current report on Form 8K that we filed this morning. Our earnings release and the accompanying slides include various schedules, which contain more detailed information about revenue, operating expenses, and other items, as well as certain non-GAAP disclosures and financial measures, along with the corresponding reconciliation of these non-GAAP financial measures to their most directly comparable GAAP measures. Today's call will be recorded and a replay will be available on our website. We will also be making statements during this call that are forward-looking. These statements are based on current expectations and assumptions and are subject to risks and uncertainties. Actual results could differ materially from those described in the forward-looking statements because of factors discussed in today's earnings release, in the comments made during this conference call, and in our most recent Form 10-K, Form 10-Q, and other reports and filings with the SEC. We do not undertake any duty to update any forward-looking statements. With that, let me turn it over to Chris.

Thank you, Greg, and let me add my welcome and share our agenda for the call this morning. First, I'll provide the financial highlights for our second quarter 2024 results. Second, I'll discuss one true and how we're modernizing our technology and product platforms. Finally, Todd will detail our second quarter results along with our third quarter and full year 2024 guidance. Now, in the second quarter, TransUnion exceeded guidance across revenue, adjusted EBITDA, and adjusted diluted EPS. Given the strength in the quarter and recent large breach remediation wins, we're raising our full year 2024 guidance, which Todd will detail later. We expect a strong year for both revenue and earnings growth. With that said, we are maintaining our conservative guidance posture due to ongoing macroeconomic and geopolitical uncertainties. Revenue grew 8% on an organic constant currency basis, above our 5% to 6% guidance. Our organic constant currency growth, excluding mortgage, of 4% also exceeded our expectations. In the U.S., we experienced muted but stable lending volumes that were consistent with the first quarter and well below historical trends. Consumer finances in the U.S. remain broadly healthy due to continued low unemployment and some real wage growth. but pressures on lower-income consumers have led to waning spending activity. Inflation slowed in the quarter after a modest tick-up at the start of the year, and market expectations are for the Fed to start lowering interest rates later in the year. Consumer delinquencies rose slightly for mortgages and auto loans, but have begun to stabilize for credit cards and personal loans. Our U.S. market segments grew 6 percent. Financial services was up 11%, led by 50%-plus growth in mortgage. Emerging verticals grew 4%, driven by strength across insurance, public sector, tech, retail, and e-commerce, and media. Within U.S. markets, New Star also delivered another solid quarter. Trusted Call Solutions continues to lead the way, growing more than 40%, with positive contribution across our verticals. New Star delivered mid-single-digit growth, in the first two quarters of the year and remains on track for mid-single-digit growth in 2024. Consumer Interactive declined 1%, as expected, and we believe we're closer to an inflection point to return Consumer Interactive to sustainable growth, supported by strong identity protection and breach wins and progress in stabilizing our consumer direct offering. Our international segment grew by 14% on a constant currency basis, the 13th consecutive quarter of double-digit growth. India led with 27% growth, while Asia Pacific, Latin America, Canada, and Africa all grew double digits. And finally, we prepaid $80 million in debt during the quarter and intend to make further prepayments in the second half of the year. We also completed a debt refinancing to extend our maturity profile and reduce our interest expense. We made strong progress with our technology modernization in the second quarter. Slide 5 illustrates how we're aligning TransUnion around a new global technology platforms and solutions. By consolidating our powerful yet independent products into integrated suites on a next-generation technology foundation, we believe that we can accelerate innovation, reduce cost, and leverage our solutions across our regions to drive revenue. Now, to orient you on this visual from the bottom up, OneDev is the internal name for our new technology infrastructure operating system. OneDev standardizes our infrastructure services and developer tools in a single foundation to reduce cost and increase engineering productivity. In fact, it's the primary driver of our technology modernization savings. Built off of OneDev, OneTrue is our core solutions enablement platform. which centralizes our common product services of data management, identity resolution, analytics, and delivery. One True is a key driver of innovation and revenue growth. In leveraging One True, our solutions are being integrated into end-to-end product suites under single brands, such as True Validate Fraud Prevention and True Audience Marketing Solutions. These integrated suites deliver dramatically better performance within clear global brand families. I'll now further explain how each technology layer creates value across the enterprise and share some examples of the benefits we've already delivered in our TrueValidate fraud suite and Factor Trust alternative lending product. Now, OneDev builds upon the success of Project RISE to create a global technology foundation common across our applications, reducing complexity, saving costs, and freeing engineering resources for innovations. OneDev creates a single technology operating plane that is cloud agnostic, preventing supplier lock-in. It also standardizes our developer utilities, creating a one-trained union way for managing security, compliance, capacity provisioning, and software deployment. In addition to improving our developer productivity, OneDev will help us rationalize third-party software and other legacy technology costs. We will continue to operate our own private cloud infrastructure for certain applications where the economics are more attractive. One Dev provides the foundation for One True, which is our central data management, identity, and analytics hub. The platform standardizes the process of transforming raw data into actionable intelligence and deploying it within our product suites. This also allows our product specialists to focus on the data and analytic customization and workflow functionality needed to create innovative products. Let me detail the key processes that OneTrue standardizes. OneTrue integrates our data assets in credit risk, marketing, and fraud prevention into a unified data management environment. We embed strong permission and compliance controls to separate our credit and non-credit data. Our data scientists have easy access to our full complement of proprietary and public data for rapid, cross-functional development of insights. One true identity graphs link our offline and online data together for a consistent view of consumer identity, helping customers to reliably resolve identities across product lines and use cases. By servicing clients across risk, marketing, and fraud services, we participate in a broad feedback loop that reinforces our identity capabilities. OneTrue Analytics Services consolidates and standardizes our tools and models in a single interface for use by our internal teams and customers alike. As new capabilities emerge, such as artificial intelligence or machine learning as a service, we can deploy these capabilities rapidly and at scale. And finally, OneTrue's delivery layer leverages consistent and configurable technology for seamless delivery of our data and intelligence to customers for easier product upgrades and cross-selling. I want to reinforce that One True already powers Heritage Neustar marketing and fraud products, as well as our new enterprise identity graphs, our innovation labs, and our internal analytics environments. We're also launching a number of new products on One True this quarter, including True Validate Fraud Prevention, True Audience Marketing, and a number of enhancements to our advanced acquisition suite. We plan to continue this rapid pace of innovation and modernization over the next 18 months as we further refine and scale this platform. Now, TransUnion products will be integrated into broader functional suites built upon the world-class capabilities of the One True platform and then taken to market using the True portfolio brands. Over the last few years, we've organized our broad range of B2B products and our multitude of brands into several global product families. These global brand families clarify our offerings, they demonstrate the breadth of our capabilities, and make it easier for customers to find what they need. We continue to leverage our core competency in consumer identity to expand further beyond credit and risk into marketing and fraud prevention use cases. And we'll measure the success of our technology and product platform strategy in terms of driving better growth across credit, fraud, and marketing, as well as delivering on our cost savings targets. In the interim, we are tracking progress toward improving our product quality, our time to market, and the pace of innovation. Let me briefly spotlight the benefits that we're already seeing with TrueValidate and FactorTrust. Our integrated TrueValidate suite, powered by OneTrue, combines our comprehensive identity data along with fraud signals from a range of NuStar and TransUnion products. We aggregate the signal in our single platform where we apply advanced analytics to extract deep insights. The predictive uplift from consolidating all of our fraud signals and analytics onto OneTrue has been notable. When we compare OneTrue to our current in-market offerings, we see a 30% plus increase in fraud detection, along with a 75% decrease in false positives. This enhancement enables customers to better protect themselves while providing a friction-right experience for consumers. Now we're nearing the end of our beta testing for our first release with select customers. The initial results are extremely positive. We expect the first general release to be available later this quarter. Our fraud product suite serves thousands of customers today around the world and represents roughly $300 million in revenues last year against a multi-billion dollar addressable market. We aspire to be the customer's first call for fraud mitigation, and we see a substantial opportunity to gain market share with our integrated suite, which we know performs much better than the patchwork of point solutions so many customers use today. We're also in the process of modernizing Factor Trust, our short-term lending bureau within our TruVizion suite, to OneTrue over the course of 2024. The Factor Trust modernization serves as proof of concept of how OneTrue can enhance our credit bureau capabilities across batch, online, and analytics. We're already taking foundational steps to migrate our core U.S. and Indian credit bureaus to OneTrue starting early in 2025. OneTrue is improving the speed and efficacy of factor trusts, which we believe will strengthen our competitive positioning in the short-term lending space. We're seeing substantial improvement in the speed of batch processing from 24 hours to one hour, allowing faster on-demand retrospective analyses. Additionally, OneTrue's modern delivery layer allows us to deliver enhanced data attributes and model upgrades seamlessly with improved model deployment, self-service analytics, and batch capabilities. We see opportunity for a near-term upgrade cycle, followed by more frequent and ongoing upgrades, strengthening our position for more competitive wins in the future. We look forward to continuing to update you on how One True Platform is driving innovation across our product lines over the next several quarters. And now I'll hand it to Todd to provide further details on our second quarter financial results and our updated full year 2024 outlook.