Jeffrey Meuler

Jeffrey Meuler asked about the Full Service segment's margin outlook, specifically how center closures contributing to a 200 basis point revenue headwind would impact margins, and whether these closed centers were typically operating at a loss. He also inquired about Bright Horizons' health and safety protocols, any changes being considered, and potential impacts on local market licensing risks or private-public partnerships for UPK opportunities.

Answer

Elizabeth Boland (CFO) stated that Full Service margins are expected to improve by 25-50 basis points in 2026, with most closed centers being loss-making, though some tail costs persist. Stephen Kramer (CEO) emphasized Bright Horizons' commitment to high-quality care, transparency, and strong communication regarding incidents, noting strong family retention and client stability. He expressed confidence in New York City UPK contracts, citing positive feedback from regulators and no significant business impact from recent events.

Jeffrey Meuler inquired about the full service margin outlook for 2026, specifically how the closure of centers contributing to a 200 basis point revenue headwind would impact margins and if these closed centers were typically operating at a loss. He also asked about health and safety protocols, any changes being considered, and potential impacts on local market or licensing risks, particularly concerning private-public partnerships for UPK opportunities.

Answer

CFO Elizabeth Boland stated that Bright Horizons expects 25-50 basis points of margin improvement in the full service business for 2026, noting that most closed centers were indeed loss-making, though some tail costs may persist. CEO Stephen Kramer emphasized that delivering high-quality care is the top priority, noting strong family retention and client stability despite incidents. He also confirmed a good relationship with New York City regulators for UPK, with contracts in the majority of centers.

Jeffrey Meuler of Robert W. Baird & Co. questioned how Bright Horizons plans to leverage its market leadership to amplify the message of the expanded 45F tax credit, particularly for backup care. He also asked about any changes in client behavior regarding backup care usage during the summer.

Answer

Chief Executive Officer Stephen Kramer confirmed the sales and marketing teams are actively educating prospects and clients via meetings and webinars. He noted the main challenge is the disconnect between HR (the buyer) and Finance (the tax beneficiary). Regarding summer usage, he stated that growth is driven by more users, not changes in program design like larger use banks, but clients have allowed earlier booking windows, which provides better visibility into summer demand.

Jeffrey Meuler asked if the enrollment slowdown was more pronounced at employer sponsors affected by specific economic risks and why the full-year EPS guidance was held despite a strong Q1 beat.

Answer

CEO Stephen Kramer responded that the slowdown is not concentrated in client-sponsored centers and is more broad-based. CFO Elizabeth Boland explained the decision to hold EPS guidance was due to lapping stronger U.K. performance from the prior year, meaning the rate of improvement will moderate. The hold also reflects a cautious stance given the seasonal ramp-up of the backup business and general macro uncertainty.

Jeffrey Meuler asked for more detail on the "intensifying efforts" to boost enrollment at underperforming centers and inquired about the nature of client budget discussions for the Backup Care segment heading into 2025.

Answer

CEO Stephen Kramer explained that intensified efforts include refining the prospective family experience with a more personal touch, improving center tours, and systematically converting backup care users into full-time enrollments. Regarding Backup Care, he reported positive renewal discussions where clients are focused on expanding the number of unique employees using the benefit, signaling continued investment and growth.

Jeffrey Meuler sought details on enrollment trends within the middle occupancy cohort (40-70%), asking if growth there has been slowing. He also asked about the impact of self-sourced backup care and any enrollment effects from the recent hurricanes.

Answer

CFO Elizabeth Boland noted the middle cohort's enrollment growth is in the mid-single digits and has remained relatively steady, with minor seasonal fluctuations. CEO Stephen Kramer addressed the other points, stating that the use of self-sourced backup care continues to decline, which is a positive shift to their network. He also confirmed the hurricanes had no discernible financial or enrollment impact.

Jeffrey Meuler inquired about the U.S. Emerging Verticals outlook, noting strong double-digit growth in Q4 2025 and asking for specific call-outs beyond general conservatism, considering benefits from product replatforming and tech transformation.

Answer

Christopher Cartwright, President and CEO of TransUnion, and Todd Cello, Executive Vice President and Chief Financial Officer, explained the prudently conservative guidance approach for 2026, comparing it to 2025's outperformance. They highlighted the strong performance of Marketing and Fraud Solutions, which are now positioned for mid-single to low double-digit compounding growth.

Jeffrey Meuler of Robert W. Baird & Co. sought insights on the Consumer Interactive (CI) segment, asking about initial learnings from the freemium and marketplace rollout, the timeline for full integration, and the company's intermediate-term growth outlook for the business.

Answer

President and CEO Chris Cartwright reported that the CI segment grew in the low single digits, with the new freemium solution now out of beta and over 75% of the customer base converted. He stated the near-term goal is to stabilize low-single-digit growth while optimizing the new integrated platform. Over the intermediate term, the company targets mid-single-digit growth, with the potential to exceed that once all capabilities are fully operational.

Jeffrey Meuler asked for the basis of management's confidence in the reacceleration of growth in India, questioning if it stems from policy changes, easing comparisons, or observed business momentum.

Answer

President and CEO Christopher Cartwright confirmed that confidence is based on both strong new business sales and a more pro-growth stance from the Reserve Bank of India (RBI). He detailed that the RBI has cut rates and reauthorized lending for previously restricted non-bank finance companies, leading to observable improvements in market activity. He reiterated the full-year guidance of 10% growth for India, expecting to exit Q4 with high-teens growth.

Jeffrey Meuler questioned the consistency of TransUnion's 'prudent conservative' guidance methodology with its assumption of 'stable' market conditions, given that current markets are cyclically depressed and leading indicators are improving.

Answer

CEO Christopher Cartwright clarified that the guidance assumes a continuation of the muted but stable market conditions seen in Q4 2024 and early 2025, without factoring in potential improvements from interest rate cuts. He compared it to the conservative guidance at the start of 2024, which the company ultimately outperformed, suggesting a similar posture for 2025.

Jeffrey Meuler of Robert W. Baird & Co. asked how fully the Reserve Bank of India's lending restrictions have impacted TransUnion's India business and questioned the growth strength in its diversified, non-consumer credit solutions there.

Answer

President and CEO Christopher Cartwright characterized the RBI's actions as a prudent measure to ensure long-term market stability, not a reaction to a specific problem, as delinquencies remain low. He expressed confidence that TransUnion India can maintain outsized growth due to diversification into commercial credit, direct-to-consumer, fraud, and marketing solutions, despite a slowdown from low 30s to low 20s growth in the core business.

Jeffrey Meuler asked if the climate solution wins outside of P&C insurance indicated an inflection point for that business, and how the revenue from these sales is reported.

Answer

Rob Fauber, President and Chief Executive Officer of Moody's Corporation, confirmed that these wins align with the thesis of the RMS acquisition, demonstrating demand for physical risk understanding beyond insurance. He noted early but growing demand from banks, corporates, governments, and investors, requiring product development to package content for diverse customer segments. Noémie Heuland, CFO, added that this revenue is reported within the Insurance Solutions line of Decision Solutions, and Moody's is on track to achieve RMS acquisition revenue synergy targets.

Jeffrey Meuler asked if recent climate solution wins outside of P&C insurance indicate an inflection point for this business, and where the revenue from these sales is reported.

Answer

Rob Fauber, President and Chief Executive Officer, confirmed that these wins align with the RMS acquisition thesis, demonstrating demand for physical risk models and data beyond insurance, including from banks, corporates, and governments. He noted it's still early but demand is growing. Noémie Heuland, CFO, clarified that this revenue is reported within the Insurance Solutions line under Decision Solutions, and RMS revenue synergy targets are on track.

Jeffrey Meuler from Baird observed that the updated medium-term guidance mathematically implied lower growth in 2026-2027 compared to long-term structural trends and asked for a reconciliation, given management's positive commentary.

Answer

CEO Robert Fauber directly addressed this, stating, 'we're not downgrading our growth assumption for Ratings' and reiterated confidence in medium-term drivers. CFO Noemie Heuland added that the updated guidance reflects observed growth rates in Moody's Analytics (MA) and a heightened focus on expanding MA's profitability, which is a key factor in the increased adjusted diluted EPS growth target.

Jeffrey Meuler asked for the reason behind the deceleration in KYC ARR growth to 14% in the quarter, a rate lower than the business's historical performance.

Answer

CFO Noemie Heuland explained that the deceleration was primarily due to a difficult comparison with the prior-year quarter, which included large transactions with the federal government. She noted that some of these contracts renewed at a lower value this year, causing the lower growth rate, and characterized the situation as an 'air pocket' rather than a new trend.

Jeffrey Meuler followed up on a dropped question about AI risk, asking management to 'ring fence' the threat, and also inquired about the service tiers and rollout process for the new 'AskGartner' tool.

Answer

CEO & Chairman Eugene Hall pointed to robust double-digit pipeline growth as evidence of strong demand and explained that longer sales cycles are due to process friction, not a lack of interest. EVP & CFO Craig Safian emphasized Gartner's value in complex, multi-year journeys that public AI cannot address. Regarding 'AskGartner,' it is being rolled out to all named licensed users, with a target completion by year-end.

Jeffrey Meuler inquired about the percentage of contract value in directly impacted areas, specifically the U.S. federal government, and how Gartner is managing sales headcount and revenue recognition for these accounts.

Answer

CFO Craig Safian and CEO Gene Hall clarified that the U.S. federal government is the main impacted area. They are controlling headcount there by not backfilling positions but are reassigning strong salespeople where possible. Safian explained that approximately $30 million in termination notices are still included in contract value as revenue continues to be recognized on them.

Jeffrey Meuler questioned the 2025 Research subscription revenue growth guidance of nearly 8%, seeking to reconcile it with the Q4 CV exit rate, easier comps, and potential U.S. Federal Government risks. He also asked if the 2025 margin guidance is a new, fully rebased level for future expansion.

Answer

Executive Eugene Hall explained that while ending Contract Value (CV) is the primary driver of future revenue, the guidance also incorporates a prudent view on Net Contract Value Increase (NCVI) for Q1 and Q2, which are seasonally important. Regarding margins, Hall stated that while 2025 could be a new baseline if it's a 'normal year,' the dynamic environment makes it difficult to confirm. The guidance already factors in ~9% operating expense growth from 2024 and planned 2025 hiring.

Jeffrey Meuler asked about the pipeline for the Global Technology Sales (GTS) enterprise leader segment and whether 2024 is a good expense baseline for future EBITDA margin expansion, considering the reacceleration of sales headcount.

Answer

CEO Gene Hall confirmed the GTS enterprise leader pipeline is robust and on track with expectations, attributing quarterly variations to the mix of renewals. CFO Craig Safian described 2024 as a 'relatively good baseline' for expenses but noted that headcount growth was back-end loaded, with the full cost impact to be felt in 2025 as hiring continues.

Jeffrey Meuler asked about the company's monetization of private credit activity, seeking perspective on its 'hit rate' and identifying areas where monetization has been particularly strong or is still lagging.

Answer

President & CEO Martina Cheung stated it's difficult to provide a precise 'hit rate' but noted that adoption is broad across S&P Global Ratings, including transaction lines (structured finance, debt ratings) and non-transaction lines (surveillance, ICRs). Beyond ratings, she highlighted growing demand for related services like valuations and new index innovations, such as the recently launched Cambridge Associates index, indicating a multi-faceted investment and innovation strategy across the company.

Jeffrey Meuler asked for perspective on S&P Global's 'hit rate' in private credit, seeking to understand what percentage of the market's activity the company is monetizing and in which areas it has been most successful.

Answer

President & CEO Martina Cheung explained that while a precise 'hit rate' is difficult to calculate, the company is seeing broad-based adoption across its Ratings business, especially in structured finance, debt ratings, and infrastructure. Beyond ratings, she highlighted growing opportunities in related areas like valuations and new private market indices to serve the increasing 'democratization' of the asset class.

Jeffrey Meuler asked for a summary of the most important capabilities gained from the IHS Markit acquisition now that the portfolio is stabilizing, and where they are most visible in the financials.

Answer

CEO Martina Cheung provided a detailed overview, highlighting the iBoxx fixed income franchise in Indices; private credit, maritime data, and enterprise solutions in Market Intelligence; and expanded capabilities in petrochemicals and renewables in Commodity Insights. She noted these acquisitions are key drivers of strategic growth areas like private markets and energy transition, and that the company is ~90% of the way to its revenue synergy target.

Jeffrey Meuler of Robert W. Baird & Co. Incorporated asked about the rationale for the high employee headcount growth in Market Intelligence and whether the division's intermediate-term margin target remains valid.

Answer

Interim CFO Chris Craig clarified that the 6% headcount increase was in line with revenue growth and was significantly impacted by the acquisition of Visible Alpha, which brought over ~700 employees. President and CEO Martina Cheung affirmed that the company maintains its focus on working towards all its Investor Day targets.

Jeffrey Meuler of Robert W. Baird & Co. Incorporated asked about the next steps required for the use of FICO 10T in the conforming mortgage market.

Answer

CEO Will Lansing explained that the next step is for the FHFA to decide to implement the already-approved score. He suggested that a staggered implementation of multiple scores would be complicated for the industry and that FICO is in conversation with the FHFA about making it happen sooner rather than later.

Jeffrey Meuler from Robert W. Baird & Co. Incorporated inquired about the sustainability of AccuLinks' strong growth, asking about its key drivers and market penetration.

Answer

CEO Lee Shavel highlighted AccuLinks' specialized focus on the roofing sector, estimating the total addressable market at approximately $2 billion, which provides significant room for growth from its current revenue base. President of Property Estimating Solutions, Aaron Brunko, added that industry consolidation and increasing technological needs in the roofing market support continued deep penetration.

Jeff Meuler from Baird inquired whether the revenue growth contribution from the Core Lines Reimagined initiative would be limited to a 2-3 year adoption period or extend further through ongoing innovation like AI.

Answer

CFO Elizabeth Mann asserted that the goal for Core Lines Reimagined is to be a platform for continuous, long-term value delivery, including future innovations with Gen AI. CEO Lee Shavel emphasized that the deeper integration of Verisk's data into client workflows inherently creates long-term, sticky value.

Jeffrey Meuler questioned why the 2025 guidance doesn't seem to reflect the strong momentum from 2024, where subscription OCC growth accelerated each quarter to exit at 11%.

Answer

CFO Elizabeth Mann acknowledged the strong performance but pointed to several 'technical helps' in Q4 that boosted the exit rate. These included a 60-basis-point benefit from a specific contract conversion, ongoing portfolio conversions, and a slightly easier year-over-year comparison. She affirmed the underlying business dynamics remain strong.

Jeffrey Meuler asked for insights into bookings trends or sales quota attainment, suggesting that the drivers of subscription growth appeared to be strong solution sales rather than just industry tailwinds.

Answer

CFO Elizabeth Mann confirmed that bookings are trending well and that subscription growth reflects strength in new customer acquisition, cross-selling, and upselling. President and CEO Lee Shavel added that sales results have been strong relative to internal expectations, attributing this to an improved go-to-market strategy, including territory and incentive changes, and higher-level client engagement that is creating more value-driven sales opportunities.

Jeffrey Meuler asked if the year-end target of 750 sales reps for Homes.com was a change from prior guidance and inquired about the size of the serviceable addressable market.

Answer

CEO Andy Florance confirmed the 750 headcount target has 'inched up' and is now the firm goal. He described the addressable market as massive, with 500,000 to 750,000 viable agent candidates. He emphasized that CoStar's 'your listing, your lead' model allows them to service a much larger portion of this market (60-80%) compared to competitors.

Jeffrey Meuler of Robert W. Baird & Co. asked if the new year-end target of 750 sales reps for Homes.com was an increase from prior guidance and inquired about the size of the serviceable addressable market for agents.

Answer

Founder & CEO Andy Florance confirmed the sales force target has 'inched up' and is now set at 750. He defined the serviceable addressable market as 500,000 to 750,000 viable agents. He stressed that CoStar's 'your listing, your lead' model allows them to target a much larger portion of this market (60-80%) compared to competitors.

Jeff Meuler of Robert W. Baird & Co. asked for data on Homes.com renewal rates for clients who signed up in the fall on 6-month contracts, after the initial value proposition was better understood.

Answer

CEO Andrew Florance did not provide specific cohort data but noted that the in-period cancellation rate has fallen dramatically to as low as 0.25%, a significant improvement from initial highs. He attributed this to agents now understanding the value proposition and a surge in the Net Promoter Score to 43. CFO Christian Lown added that since most contracts are for 12 months, renewal data will be more telling in the coming quarters.

Jeffrey Meuler questioned the performance of Apartments.com, asking for indicators that its moderating growth is a sales capacity issue rather than a deteriorating competitive win rate.

Answer

CFO Christian Lown provided context on the scale of Apartments.com, highlighting its $1.1 billion revenue base and $153 million in 2024 revenue growth, which is significantly larger than competitors. He acknowledged that the temporary distraction of the sales force in early 2024 will have a lingering impact in 2025 but expressed confidence in the massive TAM opportunity and the plan to expand the sales force to penetrate it more deeply.

Jeffrey Meuler asked for more detail on the recent sales upturn and questioned why the Homes.com sales distraction was greater than anticipated, despite compensation plans designed to protect core bookings.

Answer

CEO Andy Florance explained that the recent uptick in CoStar sales is directly attributable to salespeople refocusing on their core products. He stated that pivoting the entire sales force to a new product effectively made them 'rookies,' which lowered overall productivity. He described this as a necessary, though painful, price for launching a major new product line with long-term potential.

Jeffrey Meuler inquired about the specific drivers of the headwinds in the Twin state agency business and asked for details on the new mortgage pre-qualification products that are boosting market share and USIS vitality.

Answer

CEO Mark Begor explained that the state agency headwinds stem from ongoing challenges with changes in federal data reimbursement policies, which complicates state-level budgeting. He noted that while new mortgage solutions with the Twin Indicator are still ramping up, the innovation is helping Equifax win share in the pre-approval stage. CFO John Gamble added that USIS is seeing broader traction with multi-data solutions and advanced marketing analytics through its Ignite platform.

Jeffrey Meuler asked about the outlook for Equifax's federal government business, including opportunities and risks following the amended SSA contract, and questioned the assumptions behind the resilience of 'recession-impacted' businesses in the company's recession framework.

Answer

CEO Mark Begor described the current administration's focus on improper payments as a significant tailwind, citing the SSA amendment as a proof point and highlighting growth opportunities at the state level. For the recession framework, Begor explained it's based on historical performance ('08-'09, COVID) and the current, more resilient business mix with higher subscription revenue. CFO John Gamble clarified the 'recession-impacted' business decline of 3-5% is a substantial reduction from its 7-10% long-term growth framework, not an absolute small decline.

Jeffrey Meuler asked for a reconciliation of the forecasted 2025 EWS margin contraction, questioning the impact of partner onboarding costs and any changes to payout ratios for TWN record contributors.

Answer

CEO Mark Begor and CFO John Gamble explained the margin pressure is due to lower high-margin revenue from the weak mortgage and hiring markets, a mix shift to lower-margin products, and higher one-time costs for onboarding a record number of new partners. Begor explicitly stated there has been "no change" in partner payout ratios.

Jeffrey Meuler of Baird pressed for more detail on the Q4 guidance reduction, noting it seemed sizable given the better mortgage market assumption, and asked if a client loss was a factor. He also asked for the specific time period being used for the mortgage run-rate forecast due to recent volatility.

Answer

CEO Mark Begor and CFO John Gamble explicitly denied any sizable client loss. Gamble explained that the stronger mortgage outlook was mainly in credit inquiries (shopping), which doesn't fully translate to EWS revenue, making the net impact on guidance small. The primary drivers of the reduction were the EWS employer business and some weakness in talent. They confirmed their guidance methodology is unchanged, using the most current run-rates from mid-October and analyzing trends over the last one to four weeks.

Jeffrey Meuler asked for a go-forward revenue breakdown by end market, sought more detail on the drivers behind the significant H2 2025 revenue ramp, and inquired about an intermediate-term framework for incremental margin expansion.

Answer

CEO Theresa Condor declined to provide a revenue breakdown by business line but noted all are important growth areas. CFO Ali Engel attributed the confident H2 outlook to revenue from recently launched satellites, upcoming launches for Space Services customers, and contributions from the Canadian wildfire contract. Engel confirmed margin expansion is a focus, driven by both revenue growth and cost reductions, but did not provide a specific intermediate-term framework.

Jeffrey Meuler asked for clarification on the weak Q4 outlook despite strong year-to-date results, questioning ARR growth, bookings trends, and the potential impact of the new U.S. presidential administration.

Answer

CFO Leo Basola attributed the Q4 weakness to delayed bookings, including a major Canadian Space Agency deal that slipped into Q1, and lower-than-expected revenue from a NOAA contract and a specific Space Services payload performance issue. Chairman Peter Platzer added that Q4 and Q1 will have significant 'noise' and that the company's prior multi-year trajectory is a better indicator of future performance. Platzer also noted the new administration's support for the private sector is expected to boost demand for satellite weather and RF geo-location services.

Jeffrey Meuler questioned the reasons behind the full-year revenue guidance reduction being more significant than the Q1 miss, asked for an update on demand drivers, and inquired about specific expense reductions being made to maintain the path to profitability.

Answer

CFO Leo Basola attributed the guidance change to the lingering effects of Q1 issues, such as delayed government orders and persistent data latency from solar cycle impacts. CEO Peter Platzer affirmed that long-term demand remains strong, evidenced by a nearly 30% YoY increase in ARR per customer. Both executives clarified that expense management involves slowing discretionary spending aligned with shifted growth timelines, not drastic cuts.

Jeffrey Meuler questioned the significant revenue step-up implied for the latter half of 2025, the cost-effectiveness of Radio Occultation (RO) data versus weather balloons, and whether the 2026 growth target requires reinvestment of divestiture proceeds.

Answer

Interim CFO Thomas Krywe attributed the revenue ramp to a temporary 'air pocket' in Space Services revenue recognition, which will resolve as 20 recently launched satellites begin generating revenue in the second half. CEO Theresa Condor described RO data as a very cost-effective solution for governments that contributes to the broader demand for commercial weather data. She also clarified that the 20% growth target for 2026 reflects normal business operations and does not depend on extraordinary new investments.

Jeffrey Meuler sought more concrete evidence for the 'delayed enrollment' thesis versus lost demand and asked if the 2025 guidance, which projects flat occupancy after a Q1 decline, assumes an improved conversion rate from inquiries.

Answer

CFO Tony Amandi clarified that the evidence for delayed enrollment is qualitative, based on seeing more communication touchpoints required to convert strong inquiry and tour volumes. He confirmed the guidance assumes a slight improvement in conversion rates, supported by strong family retention and positive trends expected in the second half of the year.

Jeffrey Meuler questioned the rationale for guiding to flat occupancy in 2025, given the strong improvement momentum in lower-quintile centers. He also sought confirmation on whether the guidance includes revenue from future tuck-in acquisitions.

Answer

CEO Paul Thompson responded that the flat occupancy guidance reflects current trends and allows for time for new operational tools to gain full adoption, while emphasizing that the company has multiple levers for growth. CFO Tony Amandi explicitly confirmed that the revenue guidance does include an assumption for future tuck-in acquisitions, consistent with the 1-2% contribution outlined in their long-term growth algorithm.