TransUnion (TRU) Earnings & Analysis

Latest quarter

TransUnion reported third-quarter revenue of $1.3 billion, up 12.2% from $1.2 billion a year earlier and 0.31% above the consensus. Adjusted earnings per share were $1.25, above the $1.21 consensus; diluted earnings per share were $0.83, compared with $0.49 a year earlier.

The filing attributed revenue growth to both reporting segments and recent acquisitions. U.S. Markets revenue rose 7.0%, with mortgage pricing, including FICO royalties, contributing to Financial Services growth; Consumer Interactive revenue fell 3.0% as demand for paid credit products declined. International revenue rose 30.4% as reported, with acquisitions contributing to the increase.

TransUnion’s operating margin rose to 20.4% from 17.8%, while free cash flow increased to $362.6 million from $240.4 million. CFO Todd Cello said adjusted EBITDA margin fell 90 basis points year over year, citing investment and higher legal and regulatory expenses, as well as a margin drag from FICO mortgage royalties.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CEO Christopher Cartwright said U.S. consumer credit demand remained supported by spending, although pressures persisted among lower-income and subprime borrowers. He said higher rates had slowed mortgage volumes, while other consumer lending categories were less sensitive to rates.

CFO Todd Cello said third-quarter mortgage revenue grew 21%, or 5% excluding FICO royalties, despite a 16% decline in inquiries. He attributed the growth excluding royalties to pricing and revenue from services beyond traditional Tri-Merge reports. Cello said insurance benefited from new wins across credit, driving history and trusted call solutions, while tenant, employment and media volumes were softer than anticipated.

Cartwright said India and Latin America each grew 18% on an organic constant-currency basis. He said improving consumer and commercial credit volumes and new wins contributed in India, while the Mexico acquisition was performing ahead of the company’s acquisition case for revenue and adjusted EBITDA.

Asked about fourth-quarter guidance and technology investment, Cello said TransUnion had used an opportunity in the third quarter to invest more in technology and had also faced higher litigation expense. He said, “This is more related to individual small claims cases.” Cartwright said the company was spending to accelerate the global rollout of OneTru and product development, with U.S. credit migration expected to be substantially complete by year-end.

On mortgage competition, Cartwright said the company’s results suggested it had held or gained share. He said resellers could choose which bureaus to use in a bi-merge environment and pointed to TransUnion’s data and its position as a provider that does not compete in the tri-bureau market.

For the fourth quarter, Cello said he expected international growth to continue and that the guidance range could absorb potential disruption from mortgage activity and interest rates. Cartwright said Cello would remain CFO through year-end and then serve as a full-time adviser through March 1, while the company searches for his successor.

Guidance

TransUnion raised the low end of its full-year revenue and adjusted EBITDA guidance while maintaining the high end. Cello said the company now expects 2026 revenue of $5.131 billion to $5.162 billion and adjusted EBITDA of $1.808 billion to $1.827 billion.

Cello said underlying margins are expected to be flat to up 20 basis points, compared with the prior expectation of 50 to 70 basis points of expansion, citing reinvestment in technology and solutions and higher legal and regulatory expenses. TransUnion also raised its adjusted diluted EPS guidance to $4.81 to $4.88, citing lower net interest expense and share repurchases.