TransUnion

Good day and welcome to the TransUnion first quarter 2026 earnings conference call. All participants will be in a listen only mode. Should you need assistance, please signal a conference specialist by pressing the star 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 a touch tone phone. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Greg Barty, Senior Vice President, 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 8-K 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 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, Forms 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.

Thanks, Greg. And let me add my welcome and outline today's agenda. First, I will review our first quarter results and updated 2026 guidance. Second, I'll discuss how AI is accelerating innovation across TU and driving higher data usage among some clients. And then I'll pass to Todd, who will detail our first quarter results and provide second quarter and full year 2026 guidance. So we started the year very strong, exceeding our first quarter guidance for revenue, adjusted EBITDA, and adjusted diluted earnings per share. This is our ninth straight quarter of at least high single-digit organic constant currency revenue growth, with 11% growth versus our 8% to 9% guidance. Excluding FICO mortgage royalties, revenue grew 7%, which is also above our expectations. U.S. markets grew 14%. Financial services led the way, up 24%, or 14% excluding FICO mortgage royalties. We delivered broad-based strength across lending types, driven by modest volume growth, pricing actions, and sales momentum across both credit and non-credit solutions. Emerging verticals had another healthy quarter, growing more than 6%, led by insurance and public sector. International revenue was flat organically, as expected. Canada and the U.K. grew high single digits, and Africa grew 10%. India declined mid-single digit, slightly better than we'd expected, and we expect a gradual improvement throughout the course of the year. Now, strong revenue growth translated into 12% growth in adjusted diluted earnings per share. In line with our disciplined M&A approach, focused on highly strategic bolt-ons We recently completed two acquisitions. TransUnion to Mexico extends our global playbook into an attractive market where we now hold the leading position. The smaller acquisition of Real Network's mobile division adds complementary messaging capabilities to our leading trusted call solutions. And in addition to completing these acquisitions, we repurchased 25 million of shares year-to-date through April. We have ample capacity under our $1 billion repurchase authorization and expect to increase repurchases over the rest of the year. Our outperformance reflects consistent execution in a relatively stable operating environment. The strength of our diversified portfolio positions us to navigate potential changes in economic conditions. And as a reminder, our customers entered 2026 with cautious optimism. Lenders anticipated loan growth supported by their strong balance sheets, healthy consumer finances, and expectations for rate cuts throughout the year. In February, the conflict in Iran added uncertainty about inflation, interest rates, and the potential impact on consumers. The 10-year Treasury rate and the 30-year mortgage rate are currently 4.3% and 6.3% respectively. after briefly dipping below 4% and 6% in late February. We continue to monitor market dynamics and potential second-order impacts on consumers and customers. To date, we have not observed any change in customer behavior tied to these developments. Through mid-April, volume and revenue trends have remained at or ahead of our expectations. We saw a brief pickup in refi-driven mortgage activity during February's rate dip, followed by a March normalization to previous levels. U.S. non-mortgage lending remains healthy. Against this backdrop, we delivered another strong sales quarter, underscoring sustained demand and commercial momentum for our credit marketing and fraud solutions. An uncertain market underscores the importance of our durable growth strategy. we have the broadest, deepest, and most relevant solutions portfolio in our history. Our fastest growing products include trusted call solutions, true IQ, identity-based marketing, and next-gen fraud models, which address customer needs across economic cycles. Looking ahead, we expect our strongest ever cohort of new product launches and major enhancements in 2026. While our investments in and global AI-enabled platforms position us for cost efficiency and operating leverage. Against this backdrop, we are maintaining our full-year organic constant currency guidance, including revenue growth of 8% to 9%. We are balancing first quarter outperformance driven by healthy underlying trends against macro uncertainty and the need to maintain prudently conservative guidance. The increase to the high end of our guidance 154 million of revenue, 39 million of adjusted EBITDA, and 4 cents of adjusted diluted earnings per share primarily reflects the addition of TU to Mexico. Our guidance approach remains unchanged. If current trends continue, we expect to perform at or above the high end of our range. Alternatively, we expect that we could absorb a reasonable level of market softening within our guidance range. Todd will provide additional details on our guidance assumptions. At the high end of guidance, we expect to deliver our third consecutive year of high single-digit organic constant currency revenue growth and double-digit adjusted diluted EPS growth. Now, this consistently strong financial performance underscores the strength and durability of our growth strategy. And as we highlighted throughout our Investor Day last month, AI can enhance that strength and fuel a new generation of growth. Our proprietary and differentiated data assets anchor our competitive advantage as we move into an AI future. Our contributory credit databases are sourced from thousands of institutions operating under demanding regulatory frameworks. Our industry-leading identity graph combines our proprietary data with billions of dynamic, disparate signals in near real time creating a network effect that powers our marketing and fraud solutions. We power our customers' complex, mission-critical workflows with governable, explainable data and deep domain expertise, delivering effective and deterministic outcomes. And these solutions are priced economically relative to the significant value that they provide. Instead, we believe AI is a growth accelerant. enabling us to activate our data to serve our customers more effectively. Already, AI drives tangible growth for TransUnion in two ways. First, by increasing demand for our data, and second, by accelerating our pace of innovation. Now, let me provide additional context for what we highlighted at Investor Day to explain how these dynamics are converging. From a demand perspective, AI models are only as good as the data they learn from. and customers are prioritizing the freshest, highest-quality signals. Our powerful and flexible one-true platform enables customers to integrate our best-in-class data directly into their AI environments. As AI-driven workflows scale, we see customers expand their use of TU's data, shifting from episodic transactions toward more embedded partnerships. For these reasons, our most AI-enabled customers are already consuming more data and adopting innovations faster. While most of our customers are early in their AI journey, let me share two examples of how TransUnion facilitated AI adoption for two lenders and then how we scaled our relationship as a result. Now, one of our most sophisticated FinTech customers has embedded AI across underwriting, portfolio management, customer service, marketing, and fraud prevention. As these AI-enabled programs scaled, the customer expanded their use of our credit, identity, and fraud signals within their workflows. Their AI underwriting models also refresh data more frequently, driving higher credit volumes. Their spending with TransUnion increased by more than 60% from 2022, approaching $15 million in revenue in 2025, and outpacing 50% loan growth in volumetric unit pricing. Also, a top five credit card issuer has embedded TU's data across its AI-enabled governance, risk management, servicing, and engagement workflows for its 50 million-plus accounts. These workflows support daily customer engagement and risk triggers rather than periodic checks. As a result, our relationship has evolved from a point-in-time transactional data vendor to a mission-critical, enterprise-wide partner under a multi-year subscription-based contract. TransUnion's revenue with this customer increased by over 20% from 2022 to $20 million in 2025, despite a decline in new accounts during that period. We see opportunity to deepen this relationship further by cross-selling additional credit and non-credit solutions. Now, our next-generation AI-powered products reflect, and drive increased demand for our data. During Investor Day, we highlighted three of these solutions, all built on the one true platform. These solutions enhance fast-growing products operating at scale, including true IQ, marketing audiences, and fraud analytics to enable continued growth. They industrialize in-demand customized analytics into scalable solutions that drive higher data usage and monetization across our portfolio. So first, TrueIQ Analytics Orchestrator uses Google's Gemini models to streamline advanced credit modeling with natural language prompts. Analytics Orchestrator scales the expertise typically delivered in highly effective but ad hoc innovation labs into self-service solutions. This enables customers to build models faster and more frequently with less reliance on our data science teams. We expect Analytics Orchestrator to increase data usage, drive new revenue streams, and enable stickier customer relationships. In marketing, we are transforming our static audience segments into curated and outcome-driven audiences by TransUnion, built off our identity backbones. We're also providing self-service search and discovery tools that accelerate activation and improve campaign performance. We expect improved efficiency and speed to drive increased consumption of our marketing audiences. And in fraud, our AI model factory unifies our identity data and advances analytic capabilities to respond to evolving fraud threat vectors. We're launching new fraud models at two to three times faster than previously possible, with 10 new models launched in the last 12 months, including our credit washing and synthetic identity solutions. We generated tens of millions of dollars of incremental pipeline from these new fraud models. So in summary, AI will continue to accelerate our pace of innovation and expand the ways customers consume data, supporting durable growth across our solution suites. Now, with that, I'll hand it over to Todd. Thanks, Chris.

And let me add my welcome to everyone. I'll build on that overview with first quarter results before providing guidance. Starting with the quarter, we exceeded the high end of our guidance across all key metrics by $41 million on revenue and $18 million on adjusted EBITDA, or $22 million and $8 million, respectively, excluding the Mexico acquisition. Total revenue increased 14% on a reported and 11% on an organic constant currency basis, led by U.S. Financial Services. Excluding FICO mortgage royalties, organic growth was 7%. Growth was broad-based and aligned with the innovation priorities outlined at Investor Day. Credit, excluding FICO mortgage royalties, and fraud both grew high single-digit, driven by continued traction in TrueIQ, alternative data, and trusted call solutions. Marketing solutions delivered mid-single digit growth with healthy identity performance. Consumer solutions grew low single digit, including another quarter of double digit growth internationally. Adjusted EBITDA increased 10%. Adjusted EBITDA margin was 35.2% down 100 basis points year over year. As anticipated, underlying margins contracted modestly in FICO mortgage royalties were a 120 basis point headwind. Our Mexico acquisition contributed 25 basis points in the quarter. Adjusted diluted earnings per share was $1.18, up 12% year over year, and $0.08 ahead at a high end of our guidance. In the first quarter, U.S. markets revenue grew 14% on an organic constant currency basis versus the prior year. Across all our B2B verticals, we delivered strong bookings and retention rates to start the year. Financial services revenue grew 24%, or 14%, excluding FICO mortgage royalties. The environment remains constructive, and we outperformed underlying volumes driven by true IQ, alternative data, and non-credit solutions. Within financial services, credit card and banking rose 5% on stable lending volumes and strength from trusted call solutions. Consumer lending grew 13%, supported by sustained consumer demand and strong fintech performance. Fintechs continue to perform well with increasingly diversified funding bases and delinquency trends within historical norms. Auto was up 11%. outpacing modest industry volume declines through pricing, share gains, and new wins across our solution suites. Mortgage revenue grew 50%. Excluding FICO royalties, revenue grew 24% compared to inquiries up 7%. Inquiries were slightly better than anticipated, with additional outperformance through pricing and increased adoption of non-tribural solutions. Emerging verticals grew 6%, led by another quarter of double-digit growth in insurance. Within insurance, credit-based marketing continues to recover as insurers pursue profitable growth. Consumer shopping also remains active. We drove new wins and growth across core credit, driving history, trusted call solutions, and marketing solutions. Across our other emerging verticals, public sector grew high single digits, and is positioned for a strong year. Tech, retail, and e-commerce and media grew mid-single digits. Communications grew modestly. Tenant and employment declined modestly, but is expected to return to growth over the rest of the year. Consumer Interactive was flat, driven by indirect channel growth and breach-related wins, offset by declines in the direct channel. In international, All revenue growth comparisons are on an organic constant currency basis. International revenue was flat in the quarter, reflecting varied results across our diversified portfolio. Our two most developed markets drove outperformance against subdued market conditions. The U.K. grew 7%, driven by healthy volumes from our largest banking and fintech customers, as well as new wins across verticals. Canada grew 9%. reflecting another quarter of innovation-led growth as well as strong performance from fintechs and insurance. Africa performed well, too, growing 10% with strength across banking, fintech, and retail. Across our other emerging markets, India, Latin America, and Asia Pacific, growth was softer, reflecting subdued conditions and timing dynamics. India declined 5%. slightly better than guided. We expect a gradual recovery in consumer lending, supporting mid-single-digit growth for India in 2026. We also continue to accelerate the pace of innovation in India. Most recently, we announced a strategic partnership with the leading Indian telco, Jio, to enable branded calling across its 500 million subscribers as we continue to expand the reach of our leading trusted call solutions globally. Latin America was flat organically, with growth in Brazil offset by modest declines in Colombia and other markets. TransUnion to Mexico, which was recorded as inorganic, grew well in the first quarter on the heels of double-digit growth in 2025. Asia Pacific declined 18%, primarily by lapping one-time contracts as well as softer volumes. Performance across India, Latin America, and Asia Pacific is expected to improve in the second quarter and as the year progresses. Turning to the balance sheet, we ended the first quarter with $5.6 billion of debt and $733 million of cash. During the quarter, we funded the approximately $660 million purchase for TransUnion de Mexico with $520 million drawn from our credit revolver as well as cash on hand. As a result, our leverage ratio at quarter end increased modestly to 2.8 times. For the remainder of 2026, we plan to continue to execute our balanced capital allocation framework, prioritizing debt, prepayment, and capital return to shareholders. We have repurchased $25 million so far this year and expect to increase the pace of repurchases over the remainder of the year. We also remain committed to pushing our leverage ratio towards our long-term target of under 2.5 times. Before getting into guidance details, I want to reiterate our approach. Even with first quarter outperformance and healthy underlying momentum, we are maintaining our full-year organic growth assumptions. This reflects our disciplined guidance philosophy and provides flexibility in an uncertain environment. In the second quarter, we are guiding revenue to be between $1.271 to $1.283 billion, up 12% to 13%. Acquisitions add 4%, and FX 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. We anticipate mortgage revenue growth growing over 30%, or 10% plus excluding FICO, compared to a mid-single-digit decline in inquiries. We are guiding adjusted EBITDA to $439 to $445 million, up 8% to 9%, implying a margin of 34.5% to 34.7%. Underlying margins expand by 20 to 40 basis points, offset by an 80-point margin 80 basis point drag from FICO royalties, and a 60 basis point impact from acquisitions. We expect our adjusted diluted earnings per share to be between $1.13 and $1.15, up 4% to 6%. For full year guidance, we expect revenue to be between 5.1 and $5.135 billion, up 11% to 12%. Acquisitions add 3.5%, and FX has an immaterial impact on our guidance. Our organic constant currency assumptions are unchanged at 8% to 9%, or 5% to 6%, excluding FICO mortgage royalties. Our segment-level assumptions are also unchanged. For mortgage, we continue to expect growth of 28% or 6%, excluding FICO, compared to mid-single-digit inquiry declines, unchanged since February. While the first quarter exceeded expectations, we modestly lowered volume assumptions for the remainder of the year to account for recent interest rate volatility. Full details on mortgage assumptions are provided in our appendix. We anticipate mid-single-digit international revenue growth for the year, driven by gradual recoveries in India Latin America, and Asia Pacific following a softer first quarter. We expect adjusted EBITDA to be 1.796 to 1.816 billion in 2026, up 9% to 10%. That results in a margin of 35.2% to 35.4%, down 60 to 80 basis points. Underlying margins are expected to expand by 50 to 70 basis points driven by revenue flow-through and remaining transformation savings. This strong underlying expansion is offset by a 90 basis point drag from FICO royalties and a 40 basis point impact from our acquisitions. We anticipate adjusted diluted earnings per share to be $4.68 to $4.75, up 9% to 11%. For other guidance items, Depreciation and amortization is now expected to be approximately $640 million or $320 million, excluding step-up amortization from our 2012 change in control and subsequent acquisitions. We anticipate net interest expense of $245 million, up $25 million from February, reflecting $20 million related to debt financing for the Mexico acquisition and and $5 million from higher SOFR on floating rate debt. Our adjusted tax rate is expected to be approximately 25.5%, modestly better than anticipated, driven by favorable geographic mix of earnings and changes in tax law that became effective in 2026. Capital expenditures are expected to be approximately 6% of revenue, we expect free cash flow conversion as a percentage of adjusted net income to be 90% or greater in 2026 and going forward. Slide 17 reconciles our updated full-year guidance relative to February. As shown, the increase is driven by our consolidation of TransUnion to Mexico, with non-operating items having a net neutral impact on adjusted diluted EPS. While TransUnion New Mexico is accretive to 2026 earnings, it is modestly dilutive to our adjusted EBITDA margins this year. Importantly, the Mexico business operates at margins above our company average. The 2026 margin impact is driven by accounting mechanics rather than ongoing economics. Historically, our 26% ownership was accounted for under the equity method. contributing approximately $17 million of adjusted EBITDA in 2025 with no associated revenue. Following the acquisition, Mexico's revenue is fully consolidated, while only the incremental adjusted EBITDA associated with increasing our ownership from 26% to 94% is additive versus prior reporting. As a result, Consolidated margins appear modestly lower due to revenue consolidation, despite the business's strong underlying profitability. In addition, during 2026, we will incur one-time integration expenses related to the Mexico and Mobile Division of Mural Networks acquisitions, which we are not adding back to adjusted EBITDA. Our 2026 guidance fits within the context of our medium-term financial framework, which we reintroduced at our March Investor Day. Over the medium term, we expect to deliver high single-digit organic revenue growth, 50 basis points of underlying margin expansion, and low to mid-teens adjusted diluted earnings per share growth. This guidance is anchored in our repeatable earnings model and the momentum we are delivering today, and not dependent on a recovery in US mortgage or other markets. Our medium-term financial framework reflects our value creation flywheel. Our multi-year transformation is now enabling faster innovation and improved commercial outcomes. We are scaling the business on a common technology and operating platform and deploying AI across the enterprise to drive further productivity. Our scalable growth drives compounding cash flow that we will deploy to fund our growth, optimize our balance sheet, and increasingly return capital shareholders. With that context, I will turn the call back to Chris for closing remarks.

All right. Thanks, Todd. So before closing, I want to provide our perspective on last week's announcement from the FHFA Director and the HUD Secretary. These developments are an important milestone in a 20-year journey to enable competition and modernization in mortgage credit scoring. So, as noted by Director Pulte, Fannie Mae and Freddie Mac have begun accepting VantageScore 4.0. Freddie Mac took delivery of VantageScore loans during an operational test and will soon securitize them. The FHFA is expanding this pilot with a group of lenders and the GSEs will communicate pricing guidelines. Additionally, HUD Secretary Scott Turner announced that the Vantage score will also be accepted for FHA mortgages starting later this year. The combination of Vantage 4.0 and TransUnion's comprehensive trended and alternative data will expand access to creditworthy consumers and promotes affordability while maintaining safety and soundness within the mortgage ecosystem. And we have taken several steps to foster industry adoption, most recently announcing the industry's first 99-cent Vantage Score 4.0 mortgage pricing. Adoption of Vantage Score can drive hundreds of millions of dollars of savings for lenders and consumers. Vantage Score also represents an incremental revenue opportunity over time, We plan to support continued score evaluation from our customers with free VantageScore offered to those customers who purchase the FICO score through the end of 2026. We are also offering customers multi-year pricing for credit reports and VantageScore 4.0, providing better pricing certainty to lenders. And more broadly, our actions reflect our belief that effective mortgage underwriting and responsible financial inclusion are ultimately driven by the quality and the depth of the data used. As stewards of data on over 295 million U.S. consumers, we continue to invest in datasets and analytics that support the fairest and most accurate credit decisions across economic cycles. So in summary, we started 2026 with a good first quarter, growing both our revenue and our earnings by double digits. We've raised our guidance based on our recent acquisitions and anticipate a strong year. We're guiding 8% to 9% organic constant currency revenue growth and 9% to 11% adjusted diluted earnings per share growth. And AI continues to accelerate to use growth. reinforced by the dynamics that we highlighted, expanding data demand and accelerating innovation. And we look forward to continuing this conversation in future quarters. Now with that, let me turn it back to Greg.

Thanks, Chris. That concludes our prepared remarks. For the Q&A, we ask that you each ask only one question so we can include more participants. Operator, we can begin the Q&A.

Thank you. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you'd like to withdraw your question, please press star, then 2. And at this time, we will pause momentarily to assemble our roster. And the first question will come from Tony Kaplan from Morgan Stanley. Please go ahead.

Thanks so much, and thanks for the comments at the end on the press conference from last week. I wanted to ask a question about that conference. There was a comment made about scrutinizing pricing in the credit bureau industry, and I was hoping you could just maybe talk about you've already sort of provided the 99 cents down from you know, a higher, like the $4 level you were originally talking about. And so I guess what, what are the areas and maybe in particular on pricing that, you know, investors should be thinking of are maybe under scrutiny. Thanks.

Well, good morning, Tony. And thank you for the question. Um, it's an important question. And, uh, Going back to that press conference from last week, first of all, we're just really excited to see the momentum at the FHFA and in the GSEs for accepting Vantage 4.0 and the progress in completing the LLPAs and the pricing guides generally. We see strong demand in the market, and so I think you'll begin to see some rapid adoption of that. Yeah, we're not entirely clear on what Director Pulte was referring to in his comments. We are following up to try to get clarity on those. I think there's a lot of speculation that it could be a reference to the tri-merge. And look, I think we've been pretty clear in recent years about the importance of the tri-merge in underpinning the safety and soundness of the mortgage market in the U.S., and ensuring that the potential pool of mortgage applicants that are scored accurately and qualify for mortgages is as substantial as it can be, while also accurately assessing the risk that lenders are undertaking that will eventually be passed on to the GSEs and to investors. I mean, in short, you know, the rationale for the tri-merge is that it drives the efficacy of underwriting and financial inclusion because you're getting full access to all of the data that's available for diligence. And I think sometimes discussions about changing from the tri-merge don't appreciate that credit bureau data is not a constant across the three bureaus. We have different furnishers. There have been, you know, new lending types that have emerged in recent periods like FinTech, financial innovation like BNPL. And now that bureaus are actively developing alternative data like rental and utility and others, our files have diverged even more. And so using data inconsistently or excluding a report means, you know, you'll either be mispricing risk or lowering access for credit-worthy borrowers or lowering the hurdles for potential mortgage fraudsters. So we firmly believe TriMerge is the gold standard. It's deeply embedded in mortgage underwriting processes. The industry is already digesting a good degree of change, whether it's the early assessment program, and most recently, score competition, which is terrific. And I think this would be an even more substantial change you know, at a time when stability is particularly important, as this administration contemplates the IPO of the GSEs. And I think we've got to remember that, you know, we charge $10 to $12 per report. That is a fraction of closing costs. It's less than 1%. And by pulling all three reports, you optimize across all the dimensions of the mortgage process. You can score the largest number of consumers and qualify the largest proportion for homeownership. You mitigate risk. You ensure accurate pricing. And you minimize the risk to taxpayers via the GSEs. And ultimately, you ensure that investors who are buying these assets, once securitized, fully understand the risk management process from which they were generated. So look, I know from my own discussion some last week, there's a lot of support in the industry for the tri-merge, whether it's legislators or regulators or investors. I think they understand the value of maximizing the diligence on this. So we'll just have to wait and see. And obviously, We look forward to further discussions with the director, with the FHFA. I think goodness always comes from that, and we would certainly welcome it.

Thank you. And the next question will come from Andrew Steinerman from JP Morgan. Please go ahead.

Hi. My question is on India. Looking back to the analyst day recently, TransUnion outlined a double-digit revenue growth, organic revenue growth profile longer term for TransUnion India. How long would it take to get to that cadence, and what needs to change to get there?

Well, thanks for the question, Andrew. India is a great part of the TransUnion story, and we're super pleased that we own that asset, and it's a wonderful market and a growing economy. But it's an economy that's had a variety of macroeconomics and also regulatory shock in recent years, some of which were exacerbated by the conflict with Iran in the Middle East and rising energy prices and the like. I think despite that, we have seen some stabilization for consumer lending volume and commercial lending volume, which is helpful. And we're also growing through some kind of one-time you know, exceptional and anomalous stuff. And so, you know, we did okay against our guidance in the first quarter. And we believe we now with this foundation of stability are going to pivot back toward growth. And overall, you know, we think India will deliver mid single digit growth over 2026. And hopefully, you know, and hopefully that gets us back to sustained you know, low double-digit growth and beyond as the economics and the political environment and such stabilize there. I mean, the regulatory environment, not the political environment.

Okay. Thank you. And the next question is from Andrew Nicholas from William Blair. Please go ahead.

Hi, thank you, and good morning. Chris, in your prepared remarks, I think you made the comment that most of your customers are still pretty early in their AI journey. And so I was hoping you could flesh that out a little bit more. What are you kind of seeing in terms of pace of adoption? What's a reasonable timeline for some of your customers to get a little bit more ready on that front? And any comments on what would be kind of slowing that or expectations for adoption there? Thank you.

Yeah, thanks, Andrew. Well, look, I would just, stepping back, I would say, you know, societally and economically, we're still in the very early endings of AI adoption. I think you've got, you know, certain sectors of the economy where the adoption is fairly deep, like software development, if you will. Those are the guys that created it, so it's not surprising that they are deeply applying it to their work first. And then I think you've got kind of mass experimentation going on just about everywhere else. I think you're going to see that accelerate as people understand the technology more deeply and its potential across all types of business processes and functions. And even here at TransUnion, I mean, our developers have been using it for a while. They are dramatically more productive. It's not order of magnitude productivity increases yet, but it's, you know, solid. 30% plus productivity, kind of ranging depending on the nature of the development activity. And frankly, you know, it really helped us accelerate the delivery of the One True platform and the migration of our products and our legacy technology onto that platform. At our recent investor day, which you attended, you would have seen the true analytics orchestrator. That is one of the most potent applications of AI that we have here at TransUnion. We're using it across our data and analytics organization. We're seeing two to three times productivity improvements. That's allowing us to build more models more frequently with greater accuracy than we could previously. And all of the internal usage designed to ready the application, the agent for licensing and usage independently by our clients, which is what I was referring to in my prepared remarks. So look, we're very much in the early innings, but I don't think there's really anything that's gonna slow this down. I think the productivity potential and the potential to lower the cost of things that today are very difficult but can become substantially more cost effective and thus can be consumed in greater quantities, that's what I see happening going forward.

Thank you. The next question will come from Jeff Mueller from Baird. Please go ahead.

Yeah, thank you. Good morning. On the updated pricing guidelines and dedicated Vantage LLPA grid, I guess just have they been communicated to the 21 initially approved lenders? Have you seen them? If so, any perspective you can provide on what they look like? If not, just when do you expect them, given that it sounds like they're finalized and how important do you think they are to the share ship that you expect?

Yeah, now I'll remind you that for our guidance purposes this year, we didn't assume any share shift. We viewed this year as one of learning, experimentation, and transition. And, you know, we're not clear on exactly which lenders are in the initial cohort of 21, and we're not clear on whether the FHFA has communicated the LLPAs to all of them. We know from discussions with the FHFA staff and also from the CEO of VantageScore that the guides are complete and that they're in dialogue with the firms that are in this initial cohort, but I'm not sure about the timeframe for public release. I mean, some of these questions are You know, they just simply have to be answered by the FHFA. But I think the director was, you know, very clear and forceful and enthusiastic that they're ready to go. They're ready to scale. And he's really excited to push that forward and get competition going.

Thank you. And the next question will come from Faiza Alwi from Deutsche Bank. Please go ahead.

Yes, hi, thank you. Good morning. I wanted to ask about the contribution of non-credit products to your growth in financial services, particularly outside of mortgage and sort of what the traction has been there. And relatedly, if you could touch on, you know, you alluded to some macro uncertainty likely related to the conflict and that you could absorb a reasonable level of you know, market softening within the guidance range. So I was hoping you could double click on that because I'm assuming to the extent there is softening, it would impact more of your credit growth.

Yeah. So let me pull back the lens a little bit and just kind of characterize this first quarter. I mean, obviously we're off to a good start. We're nicely ahead of expectations and we're well positioned to deliver a a third straight year of high single-digit revenue growth, low double-digit profit flow-through, and low to mid-double-digit EPS. The strength is really coming out of the U.S. right now. A lot of strength in mortgage, which I know Todd will double-click on in the call. Consumer lending also very strong in auto and card, off to very solid starts as well. So we're very pleased with that. On the emerging market side, We're right on our plan. This is how we modeled revenue growth for the course of the year. This is a solid start at 6%, and it does position us to achieve our plan of high single-digit, you know, for the full year. Now, obviously, with the conflict in Iran, there are, you know, new uncertainties and new pressures on the cost of energy and thus inflation and thus potentially interest rates as well. In February, the 10-year got down to about four. The 30-year mortgage was around six. We got a little disproportionate volume bump because refi was reactivated. That was fairly short-lived, and then we kind of reverted back to the previous levels of volume, which I'll remind you are almost represent a floor now for ongoing mortgage, you know, natural purchase activity in the U.S., But we like to have a conservative guide, particularly in the early part of the year. We point investors to the high end of the guide. Our goal is to hit the high end and exceed the high end. We have a reasonable level of contingency to achieve that, which we will hopefully release throughout performance over the course of the year. And given this heightened geopolitical risk, we just thought it prudent not to flow through the revenue and the profit at this point. Another thing to be very clear on, though, is that through really the beginning of this week, our volumes across all of our credit categories are steady. So we're not seeing really any negative impact on any type of loan volumes at this point. And if we maintain this level of stability and kind of volumes, we would fully expect to deliver at or above the high end of the guidance over the course of the year. This kind of stability and performance is also there on the subprime side, drilling into consumer lending, which had a very strong 13% growth rate in the quarter. We've been looking at the level of delinquencies there amongst subprime borrowers. They're holding up exactly as you would expect, solid underwriting practices, small loan amounts, good controls, FinTech players accelerating their use of alternative data to fully understand risk. And so while all the players in this space expanded their credit box a bit last year and again in the first quarter, the delinquencies are solid, and so we're not really seeing anything problematic at this point.

I'm going to go back, this is Todd, to the beginning of your question as it pertained to contribution of non-credit to financial services. So Chris just gave you all the details about what we saw in financial services and excluding mortgage, we continue to see stable volumes. But the diversification of our products, we had a couple of three what I would consider to be outperformers. First, the TrueIQ Analytics platform continues to perform well within financial services, as well as alternative data. And then our trusted call solutions has been a winner with our financial services customers as well.

Thank you. And our next question will be from Manav Patnaik from Barclays. Please go ahead.

Thank you. Yeah, I guess I just want to follow up on the second part of that. You know, Chris, you talked about absorb a reasonable level of market softening within the guidance range. I was just hoping you could put some parameters on that, like what is the low end of the range, I guess, you know, imply from some of the volume trends you're seeing today?

So, Manav, I'll take that one. So, good morning. Thanks for the question. So, I think what, you know, if you listen back to the prepared remarks, we just continue to see stability in you know, within, you know, our volumes. And we were happy to print a very solid Q1 where organic constant currency excluding the FICO mortgage royalty was 7%. But for all the reasons that Chris just went through, geopolitically, we just felt it was the right move to not raise the guidance for the beat that we had in Q1. So, In essence, what happens then is just math. When we look at the growth rates for the rest of the year by us printing a 7 and then maintaining the organic constant currency growth rates, we end up for the full year at a 6% rate. And then when you look at it for the second quarter in the guide, it's also 6% at the high end, which is implying the second half is 5%. So if you believe, which we do, that volumes continue to be stable, we orient you towards the high end of our guidance. That should mean if things stay stable, we should beat in the subsequent quarters. In the event that we don't, I think you'd see that we've built some cushion here based on keeping the organic constant currency rates. So there's some cushion there. but then the range itself at the low end would provide some cover for us. So we're very comfortable with the guidance that we're providing this morning.

Yeah, and Manav, as you know, these past three years we've really prioritized stable and consistent delivery at the high end or above in our guidance. That was certainly our posture going into 2026. And just given the uncertainty, And given the performance, we thought it would be prudent to add a bit more contingency on the revenue and the profit side. And we did it, again, out of an abundance of caution, not because we're seeing any negativity in our volumes at this point.

And the next question will be from Ashish Sabhadra from RBC. Please go ahead.

Thanks for taking my question. I just wanted to better understand if the Iran conflict is having any impact on the international markets. I was just wondering if you could provide some any color on your conversations with customers or if you've seen any trends softening in those international markets. Thanks.

Yeah, so I think we've definitely covered, you know, our views on the U.S. market, and we'll leave that. You know, on the international side, yes, there is more exposure to rising energy prices in the international market. There's been some exposure into India, but, you know, early on the Trump administration is allowing India to purchase Russian oil, which is helping offset some of those inflationary pressures. In the Philippines, which is a great part of our business but a small part of our business, I think things are particularly difficult. They're highly dependent on imported energy, and there's been, you know, considerable run-up in the prices, and the government there is almost running a COVID-like playbook with, you know, with energy subsidies going out to consumers and the like, and that was part of the reason why we had a difficult quarter in Asia Pacific, although, frankly, the primary drivers is just of the end of the one-time analytics work that we were doing in Hong Kong to prepare for this transition to the MCRA. We think that's kind of finished and out of the system now, and so the comps improve and the performance is already, you know, stabilizing there. But I think that's some flavor for where, you know, we're seeing some energy impact elsewhere in our portfolio. Obviously, the U.K. and Europe has more exposure We've got a great business in the UK. We think we're performing really well there competitively, and again, it was another quarter of high single-digit growth.

And our next question will come from Kelsey Zhu from Autonomous. Please go ahead. Hi.

Good morning. Thanks for taking my question. Could you maybe talk a little bit more about your expectation around Vantage Score market share gains and future pricing policy in the mortgage vertical over the medium term? More specifically, FICO 10T's latest pricing model is $0.99 upfront and then $65 at closing. I was wondering if Vantage Score pricing could adopt a similar framework of lower cost upfront and then a success fee at closing, or is that not something that you're considering? Thanks a lot.

Yeah, so thanks for the question. Obviously, in terms of the pricing model and the pricing levels, there's a lot of options in the medium term. I think TransUnion's position, and I see this reflected in the behavior of our competitors as well, is we just need to get this started, right? We've been talking about price competition since 2006 when the bureaus came together to form, you know, the Vantage score. Finally, we've got, you know, a regulator that was willing to push this and make it happen. And, you know, we have, you know, very attractive pricing at roughly a dollar per score with no, you know, with no tail, no success fee attached to it, which is, you which is important to note. And I think in terms of pricing and model, it depends on your perspective and what you're trying to accomplish. The goal of the administration, the goal of the FHFA is to reduce borrowing costs and therefore help home affordability. And charging $65 for the score as opposed to just buying it one time for a buck, that's a material price difference, right? And so we're just focused on the introduction, we're focused on the transition, and we're focused on share gain. But, you know, we acknowledge that downstream we have a lot of optionality. But in the meantime, let's just, you know, continue to plow forward here. It's a more modern score, Vantage 4.0. It rests upon a broader foundation of trending credit information as well as alternative data. It's been two decades in the making, and we're just excited that, you know, competition is here and the playing field is leveled, and we're excited to get after it.

And the next question will come from Jason Hass from Wells Fargo. Please go ahead.

Hey, Jason. Thanks for taking the question. I just wanted to follow up on the strength in mortgage. Can you just talk about what drove the strength there outside of mortgage, or outside of the FICO score? Thank you.

Sure. Hey, good morning, Jason. It's Todd. I'll take that one. So, as you probably recall, in the first quarter, we guided for a modest increase in inquiries and 35% growth for mortgage revenues. And we ended up posting 7% increase in inquiries and 50% growth. So the outperformance that we saw primarily pertained to volumes. And Chris spoke to that earlier. In particular, in late February, when the 30-year mortgage rate dipped below 6%, we saw a pretty significant increase in volumes But as I'm sure you're aware, with the conflict in Iran, we saw an increase pretty immediately in early March of the 10-year Treasury, and thus the 30-year mortgage went back up, and those volumes dropped back to previous levels. So the outperformance is primarily just related to that dynamic that I articulated. I would say that the pricing... assumptions that we had assumed pretty much held. So there's not much noise there. Another thing I'd highlight as well is that when you think about these moves in interest rates, you see how a drop in interest rate had such a significant increase in a short period of time. If rates were to go up, let's argue the opposite way. it would be a modest negative because we're already near the floor of activity when we're talking about volumes that we haven't seen since the mid-90s. But when you go the other way and you see a 25 basis point drop, it's pretty significant what the opportunities would be from a volume perspective, in particular the re-buy population. And we included some slides in the appendix of today's materials, and you can get a sense on one of those slides as to just the population of consumers that would be eligible to refi. So the opportunity there is pretty significant. However, we're not there yet, right? So when you look at the guidance for the rest of the year, for the second quarter and for 2026, for the full year, we're calling for inquiries to be down mid-single digits. And, again, upside would come if we just see that little bit of move on the interest rates.

Yeah, and I think another element of the mortgage outperformance is that on the pre-qualification side and on the early assessment side, the volumes that we're experiencing have been favorable to our guidance assumptions. And look, we are solidly into the third year of the early assessment program from the GSEs and just changes in mortgage pre-qualification practices. And I think it's worth noting that, I mean, look, when you think about, you know, tri-merge and potential changes to the system, our data gets consumed primarily because the market participants want to fully understand risk and they want to optimize price. And that particularly matters if you're a lender and you're going to sell on certain mortgages to the GSEs because variances in credit scores are per the LPAs, can have a material variation in what you can realize for those loans. And so even though, in theory, you only have to pull one credit report during the prequalification process, we see the industry settling into somewhere between two and three. There are still a lot of players that are pulling three, and there's a number of players that are increasing the number of pulls they do per mortgage because Really understanding the risk and optimizing around price matters a lot to their economics, and the relative cost of a credit report is small.

Thank you. Our final question today will come from Scott Wursel from Wolf Research. Please go ahead.

Hey, good morning, guys. Thanks for squeezing me in. Just wanted to ask on TCS, I'm wondering if you can unpack some of the drivers of the growth that you saw during the quarter, and just as a kind of related follow-up, I know there's sort of the trusted messaging opportunity as well down the line, if you can talk about sort of your expectations for a timeline in terms of productizing that and when we can see that start to contribute to growth. Thanks.

Yeah, great, Scott. So another really strong quarter for trusted call solutions you know kind of a marquee component of our our fraud mitigation services and we think we're positioned for another really strong year there it is a unique and differentiated offering it's very durable offering and I mean I think you just you know it underscores that even though we have been in this era of digital commerce you know analog commerce over the phone It's still really important to ensuring the authentication and the safety of various transactions. And we want to extend that to the text side of things. You know, increasingly there's fraud in the SMS channel and the text channels generally. And that's why we bought the mobile division of Real Networks. They've got some great underlying technology. We think it'll take us about a year to complete the integration and the productization of that technology. But then it is the perfect complement to all of the business that we've generated and all the market penetration that we've got there. And I think going forward, just the combination of authentication over the phone and over the text combined with all of our digital device behavioral and reputational assets is kind of an unbeatable combination in the fraud space.

And I just want to add some numbers and remind you what we presented in Investor Day pertaining to Trusted Call Solutions. So this was a $27 million product for us in 2021. At the time of the New Star acquisition, this year we are expecting it to be a $200 million product at the end of 2026. And in 2028, we expect that to be a $300 million product.

All right. Chris Todd, I think that's a good place to end. Everyone, thanks for the time today, and have a great rest of your day. Thank you.

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