TransUnion

Good day and welcome to TransUnion's second quarter 2025 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. To withdraw it, please press star then two. Please note this event is being recorded. I would like now to turn the conference over to Mr. Greg Barty, Vice President 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 released in 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 their corresponding reconciliations 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, Forms 10-Q, and other reports and filings with SEC. We do not undertake any duty to update any forward-looking statement. With that, let me turn it over to Chris.

Thanks, Craig. Let me add my welcome and share our agenda for the call this morning. First, I'll provide the highlights of our second quarter 2025 results and an overview of market conditions. Second, I'll discuss progress toward our 2025 strategic priorities, including a spotlight on our fast-growing trusted call solutions business. Finally, Todd will detail our second quarter results and updated 2025 guidance. In the second quarter, TransUnion exceeded all key financial guidance metrics. For a sixth straight quarter, we delivered high single-digit organic revenue growth, highlighting our strong execution in a stable but still subdued market and the benefits of our accelerating pace of innovation. Revenue grew 9% on an organic constant currency basis, well above our 3% to 5% guidance. Excluding mortgage, our growth of 6.5% also exceeded expectations. U.S. market segment delivered 10% growth in the quarter. Financial services grew 17%, and growth excluding mortgage accelerated to 11%. Across all lending types, we continue to outperform overall market growth by driving new business wins across our solution suites. Consumer lending and auto grew double digits, and card and banking grew mid-single digits. We experienced robust activity from fintech lenders supported by healthy funding and heightened consumer demand for debt consolidation products. Mortgage was up 29% compared to flat inquiries, both modestly above expectations. Earlier this month, The FHFA announced it would allow lenders to use VantageScore 4.0 for conforming mortgages and that the tri-merge credit report requirement will remain in effect. We believe these policies will provide choice for lenders and enhance safety and certainty within mortgage markets, benefiting homebuyers, lenders, and taxpayers over the long term. Emerging verticals grew 5%. Insurance grew double digits, driven by a gradual recovery in marketing and healthy consumer shopping activity, in addition to new wins across our solutions. We also grew across our diversified verticals, led by communications and tech, retail and e-commerce. Consumer Interactive grew 2% organically, driven by the successful launch of our freemium solution, marking a key step in our turnaround strategy. International grew 6% on an organic constant currency basis. India's growth accelerated to 8% as anticipated. We experienced a modest pickup in consumer lending and delivered strong growth in our non-consumer businesses. Within the remainder of the international portfolio, Canada and Africa were standouts, each growing double digits. Supported by our strong financial results, our leverage ratio declined 2.8 times. We believe we're positioned to delever to 2.5 times before funding our planned Mexico acquisition, which we expect to close by the end of this year. We also opportunistically accelerated our share repurchases in the quarter. Through mid-July, we have repurchased $47 million in shares. We expect that our financial results will further support disciplined capital deployment throughout the year. Now, our second quarter results reflect a strong performance in stable but still muted market conditions. U.S. credit volumes in the second quarter were slightly above expectations, particularly in consumer lending. Activity in cards remained steady, while auto and mortgage activity is below historical trends. Based on our overperformance in the first half of the year, we're increasing our 2025 full-year revenue and adjusted diluted earnings per share guidance. Even with this increase, we believe our updated guidance remains prudently conservative to accommodate ongoing macro uncertainties, as we will detail later in the call. In the U.S., consumers and lenders remain sound and resilient, supporting stable lending activity. Consumers are benefiting from low unemployment, modest but positive real wage growth, and manageable inflation. Consumer sentiment in June improved from low levels earlier in the year, reflecting a better outlook for the economy, inflation, and personal finances. Major lenders reported solid second quarter earnings with strong profitability, adequate capital, and good credit performance. Now, in April, we noted that trade and fiscal policy proposals added uncertainty to employment levels, inflation, interest rates, and economic growth. The U.S. has reached trade agreements with several countries since then, and more are expected soon. However, the recently passed U.S. fiscal package extends the 2017 rate cuts, increases the deficit, and raises the debt limit. This has raised concerns about higher inflation and interest rates, which could negatively impact economic and lending conditions. The 10-year U.S. Treasury rate remains elevated, although below its mid-January peak. And we will continue to monitor the impact of these policy changes on rates, consumers, and our customers. In July, I attended the TransUnion Sybil Annual Credit Conference in India, celebrating Sybil's 25th anniversary. The event drew over 2,500 clients, including more than 100 CEOs from major Indian lenders and key Reserve Bank of India regulators. We discussed future innovations to increase financial inclusion and introduced new solutions and market insights. This event reinforced Sybil's strong reputation and the positive impact it has on the Indian economy. Our India strategy reflects our vision to foster trust in global commerce between consumers and businesses. We recognize significant opportunities in India supported by our scale, well-known brand, high-quality data, innovative products, and strong relationships with bankers and regulators alike. Our future innovation aims to expand credit access for underserved markets such as small and medium-sized businesses, new to credit consumers, and microfinance, all identified by India's government as vital economic drivers. After the event, I'm even more confident that India represents an enormous long-term growth opportunity for TransUnion, with the potential to grow over 20% annually over the medium term. In the near term, consumer lending in India is experiencing a gradual volume recovery due to manageable delinquency levels, lower interest rates, in the return to market of non-bank lenders who were sidelined by the Reserve Bank last year. The RBI has reduced interest rates by 100 basis points thus far in 2025 and is balancing lending safety with economic growth. We anticipate our growth in India will accelerate later this year as lending volumes continue to recover, resulting in nearly 10% organic constant currency revenue growth for the full year and with fourth quarter growth in the high teens. We also continue to transform the company by modernizing our technology, enhancing our global operating model, and accelerating innovation across our product suites. I'll detail our recent progress. In the quarter, we accelerated U.S. credit customer migrations and further enhanced the core capabilities of One True, our global, configurable, cloud-native platform. Our customer migrations are focused on minimizing conversion disruptions while delivering our targeted savings within the committed investment levels. To achieve this, we strengthen OneTrue's functionality to manage our most complex and customized batch and online workloads. We're achieving notable performance and innovation improvements on the new platform, including over 50% faster processing, robust cybersecurity and compliance controls, and rapid development of new scores, attributes, and models. We also migrated several key consumer indirect customers to our new global consumer technology platform. The scalable platform enables faster product releases, seamless multi-region deployment, and reduced operational complexity. To further enhance OneTrue's capabilities, We have augmented its underlying identity graph with our comprehensive public records database. This integration enhances data fidelity and introduces more robust attributes related to addresses, phone numbers, and emails. Our identity graph now encompasses a wide array of TU's proprietary data assets, including traditional credit header information, public records, communication and device identifiers, streaming data, and other unique data sources. Together, these elements enable industry-leading consumer identity resolution, improved data onboarding, more targeted marketing, and optimized fraud prevention and risk management. During the quarter, we successfully transitioned over 20,000 specialized risk clients to the enhanced One True Identity graph, resulting in significant performance gains for these customers. We also expanded adoption of our AI-driven developer tool, One True Assist, which employs advanced language models to automate repetitive coding tasks, facilitate code translations, and detect and address security vulnerabilities. One True Assist supports the entire One True software development lifecycle and has contributed to 20 to 50% productivity increases for developers. Additionally, We recently launched One True AI Studio, which provides low-code and no-code AI workflow solutions for broader non-engineering use cases. We're improving our global operating model as well by strengthening product development practices and our leadership. In Q2, Brian Silver joined us as head of marketing solutions under Mohamed Abdel-Sadak, bringing significant digital marketing experience. We continue to refine our approach to product management to better align resources, streamline decision-making, and accelerate new product iterations. These changes will improve commercial outcomes by integrating our geographic and vertical-led go-to-market strength with enhanced product development expertise. Our technology stack and operating model are contributing to faster innovation and growth across our six global solutions families. We've increased the pace of new product introductions while also completing foundational technology modernization. Factor Trust customers can now use OneTrue with its improved processing times, expanded scores and attributes, and more rapid model development. Factor Trust growth rates have reached double digits due to competitive wins and with a strong pipeline of new opportunities. In fraud, we launched new models using our materially enriched identity graphs and our analytics and machine learning capabilities. Additionally, we developed a solution to identify consumers who dispute credit trade lines by falsely claiming to be fraud victims. Early demand for this solution is strong, representing a cross-sell opportunity into credit customers. Marketing solutions reported stronger retention and increasing sales momentum, particularly within audience and identity products. Within U.S. Consumer Solutions, we rolled out a new freemium offering with updated web and app experiences, resulting in strong growth in the number of new free users. We plan to further expand these capabilities and our offer inventory. With Manevo, we integrated lenders' underwriting criteria to personalize pre-qualified offers through online publishers and improve consumer experience and ad conversions. We will continue to build this marketplace by adding new publishers and top-tier lenders to the platform. Now, I'll conclude my remarks with a deeper dive into the innovation and growth of our communication solutions, particularly trusted call solutions, or TCS. We entered the communication solutions market through our NewStar acquisition, which leveraged its relationships with telco companies to build a suite of data-driven authentication solutions. Our communication solutions help make trust possible in the phone experience by authenticating and clarifying the purpose of phone calls. Our customers report better answer rates and higher consumer satisfaction when using the service. The use cases typically combine fraud mitigation and brand identification to improve consumer engagement. Now, communication solutions overall has grown 10% plus per annum since 2022 and and should achieve $320 million in revenue in 2025. Trusted Call Solutions has grown from $50 million in revenue in 2022 to an expected $150 million this year. Financial Services accounts for almost 30% of TCS revenues, with the remaining 70% spread across our emerging verticals. The remainder of communication solutions includes legacy products such as landline caller ID and listings management. These products embed us with telco companies and provide the data necessary for new products such as TCS and are very profitable, although their revenue growth is flat to declining slightly. In sum, we believe communication solutions can deliver at least high single-digit growth driven by the sizable market for trusted calls. Now, I'll detail how TCS works, why we're the market leader, and how we will build on our momentum. Trusted Call Solutions enhances the phone channel, closing the user experience gap of digital channels. As most businesses rely on phone calls for important communications and consumers prefer them for urgent matters, unanswered calls and robocalls remain major issues. Over 80% of outbound calls go unanswered, and consumers receive 55 billion robocalls annually, leading to $12 billion in fraud. Our solution adds caller name, logo, and call context to outbound calls. It authenticates inbound calls to block fraudsters and leads to better engagement, brand protection, and financial results. Customers across industries report improved contact and conversion rates. Now, TCS integrates TransUnion into the mobile call ecosystem, establishing an essential framework that benefits telecommunications carriers, enterprises, and end users. Enterprises serve as our primary clients. We authenticate and onboard their phone numbers and enrich call data into our comprehensive data management platform. Telecommunications carriers are our strategic partners. When a call is initiated via a mobile network, the carriers access verified rich call data, such as name, logo, and contextual information from TransUnion to present on the recipient's device. Enterprises compensate TransUnion for displaying authenticated information, and we in turn provide royalties to the carriers. Consumers benefit from an enhanced and trustworthy calling experience. enabling them to make informed decisions when responding to calls. Now, TCS is positioned at the forefront of the industry, addressing an estimated opportunity exceeding one billion in the U.S. alone. We've identified several sustainable competitive advantages that underpin our success in this market. First, TCS covers 94% of U.S. wireless consumers through our exclusive relationship with AT&T and strategic partnerships with First Orion and T&S. This collaboration enabled the delivery of 5 billion authenticated branded calls across the top three carriers in 2024. Leveraging our broad phone coverage and scale, we partnered with AT&T this year to introduce branded call displays featuring call reasons and providing context to phone calls and improving consumer engagement. Our innovation roadmap includes upcoming releases such as omni-channel capabilities and advanced fraud detection signals. Second, we steward expansive and authoritative data sets to rigorously verify enterprises and telephone details, which enable us to authenticate and enrich calls. Our robust industry relationships and integration with over 800 carriers enabled us to develop TCS. Third, we possess extensive distribution channels through TransUnion that allow us to deploy TCS in numerous vertical markets. We see significant interest and strong sales across all sectors we cover, including financial services, insurance, healthcare, and the public sector. And finally, TCS integrates seamlessly with our market-leading fraud solutions to safeguard against data breaches, account takeover attempts, phishing, and other impersonation-related threats. Collectively, TCS enhances TU's long-term growth prospects, providing a pathway toward near $250 million in revenue by 2028. As the market leader, we maintain robust integration with telecom companies and businesses, positioning us to capitalize on a large market opportunity in the U.S., Our strategy includes deeper penetration of our core verticals, scaling existing solutions, and broadening the product portfolio. Furthermore, we believe that we can take this solution to many of our markets globally in the coming years. Recently, we launched a branded call display in Canada, developed in collaboration with Telus, a leading Canadian telecommunications provider. And we have introduced initial solutions in Brazil and France, and are evaluating additional opportunities in markets such as India. We will continue to provide updates on our progress as we scale TCS in the coming quarters. And with that, I'll hand it over to Todd.