Q3 2024 Earnings Summary
- TransUnion is well-positioned to grow above the market across the geographies they compete in, due to constant innovation and expansion of services that add value to clients.
- Consistent market share gains and innovation in the Canadian market have led to outsized growth rates over the past decade, and the team expects to continue this trend by focusing on making Canadian lenders more effective and profitable.
- Strong growth prospects in India despite recent RBI actions, as TransUnion is accelerating growth outside of core consumer lending, diversifying into commercial, direct-to-consumer, fraud, marketing solutions, and introducing new analytic products. The company expects this market to compound over the next 3 to 5 years at very attractive rates.
- Growth in India has slowed from the low 30% range to the low 20% range due to the Reserve Bank of India's actions to temper lending activity, and this slowdown may persist in coming quarters, potentially impacting TransUnion's international growth.
- TransUnion expects growth in Canada to decelerate from the high-teens to mid-teens as they begin to lap large growth rates in a mature market, which may reduce growth contributions from this segment.
- The Direct-to-Consumer business remains an area of intense focus with efforts to return it to growth, indicating potential challenges and ongoing issues in this segment.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | +12% | Driven by continued growth in U.S. mortgage, strong international performance, and expansion in emerging verticals, building on Q2 momentum where transformations and new product initiatives fueled top-line gains. |
Operating Income | $156.3 million vs. -$317.3 million in Q3 2023 | Primarily reflects significantly lower non-cash impairment charges compared to the prior period, coupled with cost discipline and improved operating leverage following the transformation and restructuring programs noted in earlier quarters. |
Net Income | $71.9 million vs. -$395.4 million in Q3 2023 | Benefited from higher operating income, reduced restructuring costs, and decreased non-operating expenses relative to last year’s large impairment charges, aligning with trends established in Q2 where efficiency measures and revenue growth supported margin expansion. |
EPS (Diluted) | $0.34 vs. -$2.07 in Q3 2023 | Improved due to stronger net income and the absence of major one-time charges from the prior year. This builds on Q2 progress where gains in profitability and lower interest costs enhanced per-share earnings. |
Cost of Goods Sold | +30% | Reflects increased volumes across U.S. and International markets and ongoing investments in data and technology. Consistent with prior quarters, higher revenue typically drives elevated direct costs, although the company continues to look for operating efficiencies. |
Interest Expense | -8% | Decreased mainly because of debt prepayments and refinancing activities carried over from late 2023 and early 2024. This is in line with prior quarters where lower principal balances and more favorable debt terms helped reduce interest costs. |
Canada Revenue | +7% | Driven by new business wins, share gains, and volume growth, continuing the upward trend observed in previous quarters, though slightly tempered by foreign currency fluctuations. |
U.K. Revenue | +16% | Reflects increased demand from financial services clients and batch services, building on prior gains where one-time contract lapses were outweighed by rising volumes in consumer lending and affordability solutions. |
India Revenue | +21% | Continues the strong growth trajectory from earlier quarters, driven by robust consumer and commercial credit activity, fraud solutions, and direct-to-consumer offerings, with minimal foreign exchange headwinds. |
International Total | +15% | Stemming from broad-based growth in key markets (India, Canada, Latin America, U.K., and Africa) following the pattern of double-digit constant-currency expansions highlighted in previous periods, supported by product innovation and favorable economic conditions in most regions. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Revenue | FY 2024 | Between $4.098B and $4.138B, up 7–8% | Between $4.161B and $4.181B, up ~9% | raised |
Adjusted EBITDA | FY 2024 | Between $1.455B and $1.485B, up 8–11% | Between $1.488B and $1.503B, up 11–12% | raised |
Adjusted Diluted EPS | FY 2024 | Between $3.78 and $3.90, up 12–16% | Between $3.87 and $3.93, up 15–17% | raised |
Adjusted Tax Rate | FY 2024 | 22.5% | 23.5% | raised |
Depreciation & Amortization | FY 2024 | Approximately $530M | Approximately $535M | raised |
Net Interest Expense | FY 2024 | About $250M | About $245M | lowered |
Capital Expenditures | FY 2024 | About 9% of revenue | About 8% of revenue | lowered |
Onetime Charges | FY 2024 | Approximately $200M | Approximately $200M | no change |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Revenue | Q3 2024 | $1.044 billion to $1.06 billion | $1.085 billion | Beat |
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CapEx Reduction
Q: Understand expected drop in CapEx from 8% to 6% in '26?
A: TransUnion is achieving its technology transformation with a lower level of spend, reducing CapEx guidance to 8% from 9% due to effectiveness. By migrating applications to the cloud, they eliminate the need for hardware and software purchases, shifting costs to operating expenses. Remaining CapEx in 2026 will primarily focus on innovation. -
Consumer Credit Outlook
Q: What are your assumptions around consumer credit activity through Q4 and next year?
A: TransUnion grew 4% in financial services in Q3, better than low single-digit expectations. Volumes are stable but muted; for Q4, they expect mid-single-digit growth as conditions persist and comparisons ease. They foresee medium-term benefits from lower interest rates in 2025, aiding sectors like consumer lending and auto. -
Mortgage Revenue vs Inquiries
Q: Explain the delta between mortgage revenue growth and inquiries.
A: Mortgage volumes declined 8% in Q3 as expected, but revenue grew 63%, resulting in a 71% delta due to positive mix and price from TransUnion's products. For Q4, they expect volumes to increase 10% and revenue to rise 80%. They also assist lenders in targeting consumers, contributing to revenue growth. -
India Market Impact
Q: How have RBI actions affected your India business and growth outlook?
A: The RBI's measures to lower the loan-to-deposit ratio are prudent steps. Growth has slowed from the low 30% to the low 20%, but the lending market remains strong, with delinquencies at three-year lows. TransUnion expects India to compound at attractive rates over the next 3–5 years. -
OneTru Revenue Benefit
Q: Is the $50 million OneTru pipeline incremental revenue, and what's the future benefit?
A: OneTru is significantly impacting the business, generating a cumulative $50 million in bookings from innovation. While not yet guiding for 2025, this supports their belief in returning to steady high single-digit revenue growth over the intermediate term. -
Consumer Interactive Improvement
Q: Did trends worsen in Consumer Interactive, and what will drive improvement?
A: The consumer business is a focus for innovation. They're broadening the value proposition with identity protection, breach remediation services, and launching an offers capability. These initiatives aim to return the business to growth. -
Emerging Verticals Momentum
Q: What's driving improvement in Emerging Verticals, and how's the momentum?
A: Emerging Verticals grew 3% in Q3, slightly down from 4%, but expected to return to mid-single-digit growth in Q4 and for the year. Insurance is showing low double-digit growth; technology, retail, and e-commerce remain solid. -
Canada Growth Outlook
Q: What's driving strong growth in Canada, and what growth can we expect?
A: Consistent innovation and first-mover advantages, like trended data, have led to outsized growth for a decade. While growth may decelerate from high teens due to large prior rates, they expect to continue performing well. -
Competitive Environment
Q: Will competition intensify as bureaus bundle more services?
A: Each bureau offers strong data and analytics with differentiated propositions. TransUnion doesn't see this as zero-sum but as expanding services in a growing market. They are well-positioned to grow with and above the market.