Q1 2024 Earnings Summary
- TransUnion's international segment is experiencing strong growth, particularly in India, where revenue grew 31% in Q1 2024. The company expects to exceed $300 million in revenue by 2025 in India and is on pace to achieve 20%+ growth over the medium term, aiming for $0.5 billion over the next several years. Other international markets like Canada, Africa, and Asia Pacific are also performing well, contributing to the company's confidence in delivering strong results this year.
- The successful integration of Neustar is yielding positive results, with solid growth across all three principal product lines. Communication is posting the highest growth rates, driven by the Trusted Call Solutions suite. The company is confident in achieving $80 million in integration savings and expects further benefits from the OneTru data management platform, enhancing product offerings in marketing and fraud.
- TransUnion's mortgage business significantly exceeded expectations, with revenue growth of 52% in Q1 2024 against inquiry volume declines of 8%, due to better-than-expected price realization on third-party scores and credit reports ,. The company is raising its full-year 2024 guidance for mortgage revenue growth to 50%, up from the previous 25%, while maintaining conservative volume assumptions, suggesting potential for further outperformance.
- TransUnion's insurance vertical is still facing challenges, as insurers continue to pull back from higher-risk regions due to increased frequency and severity of natural disasters, leading to reduced underwriting volumes and marketing activities. The space is not fully healed and may take another year to recover fully, potentially impacting TRU's revenues from the insurance sector.
- Regulatory actions, such as the consent order with the CFPB last year, have negatively impacted TransUnion's tenant and employment screening business. The company had to remove certain products and data that did not meet enhanced regulatory requirements, which is currently acting as a drag on growth in the emerging verticals segment.
- The significant outperformance in mortgage revenue is primarily due to better-than-expected price realization on third-party scores and credit reports rather than volume growth. Given the uncertainty in mortgage volumes due to rising interest rates and potential market headwinds, there is significant risk that this level of outperformance may not be sustained throughout the year, potentially impacting TransUnion's overall growth.
-
Mortgage Guidance Raise
Q: What drove the better-than-expected mortgage results?
A: Mortgage outperformed due to better price realization on third-party scores and reports. Prequalification volumes were higher than anticipated, enabling additional consumer shopping. We raised mortgage revenue growth guidance from 25% to 50% for the year. We remain cautious about volumes due to interest rate uncertainties. -
Interest Rate Impact
Q: How will rising rates affect business segments?
A: While higher rates present headwinds, our diversified portfolio shows resilience. Core U.S. financial services remain stable, and international markets exhibit strong momentum, increasing growth expectations from high single digits to low double digits. Emerging verticals less dependent on rates are improving. We believe rates may have peaked, providing more certainty. -
Emerging Verticals Growth
Q: What is the outlook for emerging verticals in 2024?
A: We expect higher growth in emerging verticals than in 2023. Insurance is solidifying, with improved marketing and wins in driver risk solutions. Media shows strong growth from last year's wins. Public sector benefits from our fraud products, and collections are rising with higher delinquencies. Trusted Call Solutions drive growth across segments. -
Neustar Performance
Q: Can you provide details on Neustar's trends and goals?
A: Neustar had a solid first quarter, consistent with our full-year guide, with positive growth across communications, marketing, and risk. Communications posted the highest growth driven by Trusted Call Solutions. We're confident in achieving integration savings of up to $80 million, aiming to outperform that number. Our best product offerings will emerge later this year.