All right, we will get going in this room. I'm Jeff Meuler, Baird's Information Solutions Analyst. Pleased to be hosting TransUnion, which is global consumer information solution company and one of the three global credit bureaus. With me on stage is Todd Cello, who's been CFO of the company since 2017. He's been with the company since 1997, leading most of the finance leadership roles. So lots of experience, been through lots of macro conditions. Also with us is Greg Bardi, the head of the IR team in the front row, as well as his teammate, Jason. So thanks for being here. This will be a fireside chat format. If anyone in the audience has questions, you can send them to sessionone@rbaird.com. Todd, maybe to just start out, growth has been good lately. It's been re-accelerating. So what's been driving that? And then the Q2 guidance and the 2024 guidance implies that growth is gonna decelerate from here, so anything that is unsustainable or anything that you're, you're seeing that leads you to imply deceleration in the guidance? Okay. Well, Jeff, thanks for having us today. I appreciate the opportunity to be able to speak to this group. I think that's a good place to start to talk about our guidance for 2024, and I think it's probably best to talk about that more from the perspective of the full year guidance and kinda how we think about that. So to dig in a little bit, in the first quarter, TransUnion delivered 8% growth. When you exclude mortgage from that, we grew 5%, and we had guided for 2%-3% growth. So ex-mortgage, you know, we exceeded by about 2%. And the primary drivers, you know, for that, again, excluding mortgage, you know, was we saw really good growth continue in our international segment. Geographies like India, as well as Canada, and other markets continued to perform well for us. So we were pleased with that performance. In addition, and back in the U.S., within our Consumer Interactive vertical, now that we've changed our reporting, we saw some good breach services revenues. And needless to say, those are hard to predict compared to kind of the run rate of, you know, the rest of our business. So we were pleased with, you know, that performance. But as we looked forward for the rest of the year, things still do remain uncertain, you know, for our customers. You know, the. I think there's a little bit more stability in that, compared to 2022 and 2023, that our customers now have a perspective of where interest rates are going. So we've definitely seen that happen in our core financial services vertical, where, you know, we obviously saw a deceleration in 2023, but we've seen stability in Q4 of last year and then into Q1, and we continue to see that, you know, today. So when we looked at the outlook, we did raise our guidance, you know, for the remainder of the year, but it was just for mortgage. And in particular, in mortgage, we benefited from better price realization from third-party scores, as well as just utilization, you know, of credit and our pricing, as well. So we beat in the quarter, we let that stick, and then we took up the guidance just for mortgage because of its price, you know, that we had visibility into. I would say primarily where that resides is in the second quarter. That's important because where I'm going to with this is, we're not getting too far ahead of ourselves. We're pleased with, you know, how we started the year, but things are uncertain. So from a macro perspective, as you said, 2020 or alluded to, 2022 and 2023 were challenging. It feels like a bit more certainty today for your end client base. Just what would you add to that? Like, have you seen any sort of, like, recent incremental weakening? Or what markets are you starting to see, like, the green shoots or the positive inflection following a couple of challenging years? Yeah, so I would say the inflection point, you know, what we're seeing is in our emerging verticals within US markets, in particular in our insurance vertical, which represents about 25% of the overall emerging verticals. Insurance, our vertical there, TransUnion provides services to auto, property, and casualty insurers. 2022 and 2023 were particularly hard years for that customer base because of the impact of high inflation and rising rates. The repair and replacement costs, you know, were very high. So our customers pulled back on new account acquisition in that space. We still grew, though, in 2022 and 2023. We continued in the insurance vertical to grow more in the low single digits, as opposed to the mid to high single digits that we've been accustomed to. So that really speaks to the resiliency of, you know, the capabilities that we've built and the importance that they have. But needless to say, what we're seeing now is the green shoots, you know, what you just referred to, Jeff. We're starting to see some of the larger insurers come back to marketing and to be more acquisitive and looking to acquire new business. And, you know, that means new policies. We serve the broader ecosystem, though, in insurance, so it's not as if we're seeing it across the board, but the larger players are definitely, you know, doing pretty well in that regard. Also, you know, I would highlight, you know, that we're starting to see some good traction from our fraud and our marketing products, as well, which is, you know, underpinned by our OneTru platform. And those products and services really feed into, you know, verticals like tech, e-commerce, and retail, as well as in the public sector. So we're starting to see, you know, some good momentum there. And then outside of the U.S., and we highlighted this on our earnings call back in April, but the business in India, you know, continues to perform really well. We expect, you know, that business, you know, to continue to grow. What about the fintechs, both in the U.S. or the personal lenders, both in the U.S., as well as you have a fairly global business there as well? Yeah. So in the US, the fintech business, I would say has, you know, held on pretty well. You know, we had about $140 million of revenue in fintech in 2023, and I bring that up just to simply size it. If you think TransUnion did about $3.8 billion in revenue last year, fintechs was about $140 million. A couple of years before that, it was about $175 million in revenue. So it's a nice piece of our business, but we're not necessarily overexposed to it, as you know, the reason I think it's important, you know, to size that. What we've seen with that customer base, needless to say, you know, they don't have deposits to fund their lending, so they have to go to the capital markets for that. You know, we've seen them be a lot more selective on their underwriting criteria, not as acquisitive in getting new... You know, booking new business. Kind of to your earlier question, that you used the term green shoots, this is another area where, you know, we're starting to see them slowly return back to marketing. Our consumer lending business and financial services, which is where the fintechs reside, grew 2%. So you know, we're starting to see, you know, that, that turn around. So in the US, I'd say that the, the fintechs are healthier than what we're seeing in other parts of our business. In particular, in the UK, the fintech market definitely was more challenged. We saw a lot of the smaller fintechs exit the market, so that definitely had an impact on our business. Despite that, though, our business in the UK in the first quarter was flat. And what we are seeing from a more encouraging standpoint is underlying core banking volumes have been increasing. So I think that's a you know, a good sign for where the UK economy is heading. And other geographies where we have fintechs that are meaningful is in India, and I think that's... You know, we're seeing good growth there, not really facing the dynamics that I just talked about in the US and the UK. So good growth there, as well as in Canada. Our Canadian business grew 18% you know, in the first quarter. We had a pretty sizable win with a Big Five bank, that definitely drove that. That growth rate is significantly higher than, you know, what's going on in the macro, you know, in Canada. But, underpinning some of that also is fintech, where, you know, we've had a first-mover advantage, you know, in that market, and the fintechs seem to persevere pretty well there. So I understand not getting ahead of yourself on the guidance, and there's things like Breach that can be lumpy, or some markets that are fast growth that you don't want to assume they're going to grow at that rate forever. But I'm not hearing any markets that you're seeing, like, incremental weakening or leading indicator softening or anything like that, correct? I would say the way that we looked at it is it's kind of subdued in the core, you know, and just kind of, you know, that's probably the best way to characterize it, right? We're seeing a stability, is another way to describe it. Nothing that would suggest that there's a further weakening. But with that being said, it still is uncertain, and that's the reason why we felt it was the prudent thing to not adjust our guide, except for mortgage, which I spoke about earlier, just because of the level of the uncertainty that's there. And just gives us the opportunity to execute against the plan that we have running, the team running to internally. Outgrowing end markets on a three-cycle basis is one of the features of good information solutions companies, TransUnion included. It's been harder to see, I think, because of cyclical factors lately. Can you just talk about what gives you confidence that that's intact or anything you can say on, like, bookings or innovation sell-through trends? Yeah. So I would say that the, o ur sales team has been as successful as they have been over the last several years. So bookings continue to remain strong. So why that's a big deal is when the volumes do recover, TransUnion is positioned well to participate, you know, in that upside, you know, when that happens. That's just been the challenge, you know, for us, is just simply the, you know, the level of activity. But winning the new logos and, you know, being able to lead, you know, with our product innovation, has definitely been, you know, a positive for us. And, you know, I spoke earlier about, you know, what we're doing with fraud and marketing, underpinned by our OneTru, you know, platform. There's a lot of momentum building, you know, in around those products, because of the capabilities that we have in that platform. Go into more detail there, or maybe take a step back- Sure [crosstalk] ... because you've been in fraud and ID for a long time, but you've recently combined capabilities from either several different acquisitions, legacy True. So, talk about, like, when you launched the new product and market and how it's differentiated. Yeah. So OneTru, in essence, is, you know, technology that we acquired from Neustar, you know, and that goes back. We closed on that acquisition in December of 2021. When we were doing our due diligence on Neustar, we were, you know, quite honestly, just blown away by the technology, you know, that they had. But TransUnion had better data. So our premise was, you know, to bring, you know, their technology together, you know, with our data. So that's what we've been doing, and on the surface, that sounds intuitive. Like, why do you guys not already have all this data, you know, on one platform? When you just think about all the breadth of the data that TransUnion has, from credit to, you know, public record, to telecommunications, to other forms of alternative data, device data, putting that all on one platform is, you know, it's a big initiative to do. One of the reasons for it is TransUnion's entrusted with data that has a lot of regulatory as well as privacy considerations that we need to take into consideration when we're building products. So what OneTru is enabling us to do is to put all that data in one place and to tag it for its appropriate use cases. So knowing where, you know where we can use it, where we can't use it. And why that's a big deal is our developers are no longer going to have to go to multiple environments. They're gonna go to one platform and be able to, you know, work on product innovation, you know, within, you know, within that platform. So we think that not only the depth of the data, but the efficiencies that we bring, you know, for our internal team, is going to be a differentiator for us. The best case that you know, case point that case study we have right now would be with our fraud product. And TransUnion has played in fraud, to your question, for pretty much forever, right? I mean, and we used the credit report to do knowledge-based type questions. So how many times have you been asked, you know, "Is your mortgage within this range?" You know, "Who is your auto loan with?" You know, we've always had those types of products. But over the years, we've acquired capabilities like iovation, which has device-based fraud. There were capabilities we acquired from the UK with Callcredit, and then recently with Neustar. So what we've done with OneTru is all that fraud signal, all those products are on one platform now. So as opposed to selling them as point solutions, we're now able to sell it as a product which gives better signal. So the way to think about it is, you know, when you're opening up a new account, in our world, our lives are so digital now, you wanna introduce some friction into the transaction, but you don't wanna introduce so much friction that the transaction gets abandoned. So, what we've seen in our beta testing so far is very encouraging, that our TruValidate platform is gonna provide that right balance. We're testing with some select customers right now, and we'll have a full launch of the product in the second half of 2024. I talked about kind of the market, end market outgrowth. That's been, like, a feature of TransUnion's history. Another one is, you've done a good job of getting into some more adjacent or maybe nascent markets at a good stage or winning those markets: Fintech, India, where you're by far the leading bureau- Yeah [crosstalk] ... the Credit Karma partnership. What more nascent markets have you gotten into more recently that you're particularly excited about? You know, one that I would highlight is, you know, just the business that we have with the public sector or, you know, the government. I think we've, you know, made some good inroads there. Again, going back to the fraud capabilities that I just talked about, that's really a lot of what the use cases are in public sector. Think of, like, welfare recipients, making sure, you know, that money's going where it's supposed to go. So we're able to, you know, provide those services. Insider threat's another good example, you know, in public sector, as well. I alluded to this earlier, but also, you know, technology, e-commerce are other emerging areas. Not as much credit, but again, more use cases for our marketing and our fraud capabilities. So that's another area of particular focus for us, as well. And one of your markets where end market outgrowth has been more apparent recently is in the U.S. mortgage market. I guess your revenue grew last quarter 52%, your inquiries were down 8%. The spread for you was greater than it was for the other bureaus, who also have a positive spread right now. Part of that is FICO pricing and your reseller position, but just help us understand why the spread lately has been wider for TransUnion and any other factors that go into the spread. Yeah, I think a lot of it has to do with where each of us reports certain parts of the mortgage revenue. So, you know, I'm here to talk about TransUnion, obviously. So, you know, from our vantage point, you know, we look at mortgage as including prequalification volumes as well as the Tri-merge, you know, credit report, so that we include all of those inquiries, you know, in our. In your volume and your revenue. Correct. How much control do you have on how much you mark up third-party analytics in your reseller position? And how much control do you have over pricing for mortgage that goes into Tri-merge? So it's really twofold. So as far as you know, pricing that TransUnion puts in place through the partners that we have in mortgage. And as you know, you know, TransUnion doesn't create a Tri-merge report. You know, we work through a reseller network, you know, to create that. So the pricing there, think of that as more CPI-based, you know, type pricing. So you know, we're increasing the price with our partners, but more in line with what's you know going on you know with prices overall in the market. From a third-party score perspective, the pricing that, you know, we take there is we obviously get, you know, the notification as to what pricing will be in effect from our third-party partners, and then we will put a markup, you know, on that to deliver the third party's score. So clearly, in the last two years, we've seen some significant increases from the third parties on scoring. And we're taking a margin on that that's greater than TransUnion's overall margin. But, you know, appropriately balanced would probably be the best way- Okay [crosstalk] ... to say that. Just any reaction for TransUnion on the CFPB recently opened a public comment period, and it relates to a number of kind of elements that go into mortgage underwriting or closing costs, not just credit reports, but just any sort of reaction in terms of how you think that through or what the impact could be on TransUnion? Yeah. So like I just said, you know, our focus as it pertains to pricing is to, you know, have an approach where, you know, we're looking at what you know market pricing would be. And I think what's more important is when we're looking to get entrenched with our customers, we're doing that by driving product innovation and looking, you know, to sell our customers more, to be more relevant, you know, to their overall you know their overall workflows and the transactions that they process. So that's our approach, you know to that. You know, as far as what the CFPB you know said you know last week, I mean, I think, you know, that, that would be our, our response to that, is, you know, the price increases that we have on, on credit you know is more CPI based. We're passing along a significant price increase that we've received from third parties, but our preference is to lead through innovation. The FHFA also has pending rule changes for conforming mortgage loan underwriting. One of the pieces of that is going to start to require VantageScore, which I guess is a joint venture intellectual property, where you're a participant in it. How do you think about how you're going to price VantageScore for mortgage, given that the other player in the market has raised the ceiling, seemingly? Yeah, I, Jeff, I think it's too early, you know, to have any specificity on, you know, what we would do from a pricing perspective in mortgage. You know, the FHFA has looked at this for a couple of years now and, you know, looked at the tri-merge report, talked about making it a bi-merge. Unfortunately, I think, you know, that ultimately hurts consumers because, you know, there's an underlying assumption that the three credit report files from TransUnion and our two competitors are at parity. They're not necessarily at parity. So unfortunately, consumers that are more, you know, on the fringes, you know, would be hurt by this. So I think that that's, you know, an important consideration. They, you know, also have talked about including the VantageScore as part of the, part of the transaction. But what I can tell you is, you know, the VantageScore has been around for a number of years. It's used pretty heavily by many of our customers, but there's a particular focus with mortgage, and that's where we typically get this question from. But it—I just, you know, look at, you know, TransUnion.com as an example. And, you know, when we sell, you know, credit offerings to consumers, it's the VantageScore, you know, that we're selling. We believe it's highly predictive. So it's, yeah, it's just too early because, you know, the FHFA kicked the rule out, the potential rule change out to the fourth quarter of 2025. So you touched on the Neustar acquisition and said, I think your words were, "blown away by the technology." Just now a couple of years under your belt, Neustar, you know, kind of fell short of the original revenue targets, but revenue's grown. You've exceeded the expense synergy targets. But maybe what about Neustar? Where have the positive surprises been? Where have the negative surprises or challenges been? Yeah, so the positive surprises, you know, definitely were, you know, the technology and just the underlying, you know, capabilities, you know, that we acquired. And, you know, like I said earlier, we knew what we were gonna do from a data perspective, you know, at the time of the acquisition. But back in November of 2023, when we announced, you know, our transformation program, we're able to further leverage the Neustar technology. Not just the database, which is what we call OneTru, but also just the underlying, you know, tech. So that's been, you know, a positive surprise, is that we've been able to, you know, further leverage on those capabilities. And that's important to call out because, you know, from a cost synergy perspective, we committed to $70 million of synergies initially. We increased that number to $80 million. What I'm talking about with the tech's not even in that number. So there's just a tremendous amount of efficiency, you know, that, that we're driving. So that's definitely been a positive. I spoke earlier about, you know, the TruValidate platform and the predictive nature of that, and we're excited about it. So that's been a positive as well. You know, look, on the negative side, we bought this business with an assumption that we would be growing high single digits, right? And, you know, the fact of the matter is, we've grown mid single digits, you know, the last two years. Still accretive, though, to the overall, US markets', you know, growth rate, which is where the acquisition resides at. We definitely face some, you know, macro challenges, you know, in, in particular with, building of audiences, you know, in the, in the marketing channel. But otherwise, I would say that that's that's, you know, the negative, obviously. But otherwise, we've been very pleased, you know, with the acquisition, and we think it's we believe that it's gonna set us up, for some really good growth, in the coming years because of the tech and the, the data capabilities. And then, as you mentioned, Consumer Interactive is now reported as a vertical within the U.S. markets business, but when you used to report it, it was almost 20% of consolidated EBITDA, so it's sizable for you. You've been, thus far, I guess, well short of the targets laid out at the 2022 Investor Day for that business. So just to help us understand, like, what's been worse, and maybe more importantly, like, what is the growth strategy for Consumer Interactive? Sure. Yeah, so we have two channels in our Consumer Interactive business. You know, one, the direct channel, where we're selling, you know, credit products direct to consumers. So this is where I was talking about the VantageScore, you know, being used. You know, that business was growing nicely through 2021, but what happened is, you know, prevalence of, you know, freemium players, you know, had an impact, you know, on that business for us, as well as just the offer aggregators. During that time, we acquired Sontiq, which provided us with a capability and identity protection that we didn't have. So when we look at, you know, the offerings that we have in our direct channel, it's more comprehensive by having credit and identity protection. But what we don't have yet are the offers and, you know, the freemium type of product. We are working on, you know, something that we, you know, believe we'll be able to do in a capital-efficient manner. You know, to address that, you know, we'll talk about that at the appropriate time, but the team is definitely focused on that. That's probably where the most pressure has been. The other part of the Consumer Interactive business is our indirect channel, and this is where we have relationships with the freemium players and the offer aggregators. This is where we're, you know, providing data. That business, you know, with the rising rate environment, you know, kind of back to the question on fintech earlier, this is where we saw, you know, a lot of lenders pull back on the account acquisition. So indirectly, we saw a pullback, you know, in, in that channel. What we see now is more of a stabilization, and we're starting to see, you know, that business, you know, start to, you know, recover, so. You have the leading credit bureau in India, and you've built it into a broader, information solutions company. You did a great job highlighting it on your last earnings call. It's worth a listen for people. 27%, 5-year CAGR through COVID. You call it a multi-decade growth story. There's headlines out today about the Indian election outcome. It's been a good environment for you. Do you see any risk to the business from the election outcome? Look, the way I would characterize, you know, what we have in India is we never take that for granted. We're not complacent, at all, and, we are, first and foremost, always, you know, working with, our regulator, in the Indian market. As we become more and more important, you know, that relationship, is, you know, paramount to us. So, that's how we approach that market. You know, specific to the elections, I don't know if I even have an opinion on that. I mean, it just seems like, you know, our focus is, you know, just continue to run the business, serve consumers, in the best way possible, and continue to drive the innovation that we have to help our customers, you know, solve the problems, you know, that they face in their business. Then just last, free cash flow conversion. I think that, candidly, low free cash flow conversion's been an overhang on the stock. The improvement gets pushed back by the latest round of tech transformation. So give us kind of the roadmap in terms of what your free cash flow conversion targets are. And then, should investors be expecting kind of like a tech transformation every, call it, five years out of TransUnion that gets added back to numbers? Or after the current one, are you gonna be in a good place for a while? Yeah, so from a free cash flow conversion perspective, we definitely are at a lower level, you know, this in 2024 because of the significant investments that we're making. Again, we announced these back in November of 2023. It's twofold, right? It's an organization optimization model, where we're leveraging our global capability centers to standardize and centralize work. That's a significant component of it. But then the second component is the, what we, you know, refer to as our tech transformation. This is where we're, you know, building out the capabilities I've been talking about with, you know, Neustar's, you know, tech. So this year, yeah, there's a drag. You know, with probably about $200 million, you know, worth of cash that's going towards that program, so the free cash flow conversion's lower. But when you get out into 2025 and then ultimately into 2026, we're committing to $200 million of annual free cash flow benefit, and that'll come from lower operating expense, as well as lower capital expenditures. We've been historically at about 8% of CapEx, and we're gonna target 6%, you know, in those years. In our March 2022 Investor Day, you know, we, we showed a 90% conversion. That still is our long-term goal. All right, and, that's all the time we have for questions in this room. Todd and the TransUnion team are now available for a breakout session in Astor Suite A, but please join me in thanking them for their presentation.