Good afternoon, ladies and gentlemen. My name is Ian, and I will be your host operator on this call. [Operator Instructions] Please note that this call is being recorded as of today, Tuesday, July 28, at 4 p.m. Central Time. I would now like to turn the meeting over to your host for today's call, Colleen Healy, Vice President of Investor Relations at TransUnion. Please go ahead.

Thank you, and good afternoon everyone. Thank you for joining us today. This afternoon, I'm joined by Jim Peck, President and Chief Executive Officer; and Al Hamood, Executive Vice President and Chief Financial Officer. Today's call will start with Jim providing some key takeaways from our second quarter results. He'll turn it over to Al for a more detailed Q2 view, and then Jim will conclude today's remarks by providing guidance for the year. After that, we will take your questions. Our earnings release includes an addendum of financial highlights, which contains more detailed information about revenue, operating expenses and other items including certain non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to their most directly comparable GAAP measure are included in our earnings release. We have posted our earnings release as well as an Excel file which breaks out historical revenue and operating income by segment, on a gross basis, followed by their corresponding intercompany elimination for your convenience. These can be found on our Investor Relations website at www.transunion.com/tru. The earnings release is also available as an exhibit to our current report on Form 8-K furnished today with the Securities and Exchange Commission. Our Form 10-Q for the quarter ended June 30, 2015 will be available on July 31 and available through these same resources. Today's call will be recorded. Please be aware that if you decided to ask a question, it will be included in both our live transmission as well as any future use of the recordings. Shareholders and analysts can listen to a live webcast of today's call at the TransUnion website. A replay of the call will be available at the same site following the conclusion of the call. As we discuss results today, all growth comparisons relate to the comparable quarter of last year unless otherwise specified. We will also be making statements during this call that are forward-looking. These statements are based on current expectations and assumptions, and are subject to risks and uncertainties. Actual results could differ materially from those described in the forward-looking statements because of factors discussed in today's earnings press release, in the comments made during the conference call and in our most recent Forms 10-K, Forms 10-Q and other reports and filings with the Securities and Exchange Commission. We do not undertake any duty to update any forward-looking statements. With that, let me now turn it over to Jim.

Thanks, Colleen, and good afternoon, everyone. Thank you for joining us today on our first earnings call after our successful IPO last month. We'd like to thank all of you who participated in the IPO process, especially the small number of our hard-working TransUnion associates who worked on the IPO in addition to their day jobs. And a big thank you to all our TransUnion associates around the world whose dedication and contributions have built this strong business and who are deeply focused on delighting our customers and partners in order to deliver the robust results that Al and I have the pleasure of sharing today. We're also incredibly pleased to welcome our new investors in the company along with our existing ones that we've been privileged to have, and we look forward to continuing to work with this analyst community coming out of the IPO. We posted record company revenues and very robust growth in the quarter. Aside for this year's size and pace of the growth, the breadth was notable as we stopped -- saw strength across all business segments, platforms, verticals and geographies. We are reaping the benefits of diversification, and investing wisely to drive growth. This has been borne out of the transformation we embarked on in early 2013. When I joined TransUnion back then, I saw an incredible asset that had a stable business that was primed to be expanded through a broader set of risk and information needs across new verticals and geographies, thirsty for data analytics solutions for both business customers and consumers. We set a vision for a more diversified, high-growth business leveraging a common set of capabilities. We’ve since strengthened the management team, which is now comprised of tech-savvy, growth- and results-oriented experts in their field, all operating at a scalable…

Thank you, Jim, and good afternoon. Today, I'm going to walk through a quick review of our consolidated results, and then I will move to the GAAP P&L to operating income along with the adjustments to derive adjusted operating income. Then I will move to segment results, and I will finish up on the balance sheet and cash flow statement. As Jim mentioned, second quarter consolidated revenue was $379 million, an increase of 16% on an as reported basis and 18% on a constant currency basis compared with the second quarter of 2014. Adjusted EBITDA was $135 million, an increase of 16% compared with the second quarter of 2014. These strong results were driven by broad-based growth across all segments offset by investments in key strategic growth initiatives to continue driving long-term future growth. Now let me walk you through the details. As I mentioned, consolidated revenues were up 16% on an as reported basis, 18% on a constant currency basis. Operating income increased 59% compared with the second quarter of 2014 driven by the increase in revenue and a slight decrease in cost of services due primarily to an acceleration of fees in 2014 for data-matching services contract that we terminated along with savings primarily enabled by our technology transformation partially offset by increased variable and nonvariable product cost related to the revenue growth, inorganic increases in operating expense from recent acquisitions that have not fully lapsed and investments in IT productivity initiatives. This was partially offset by a 19% increase in SG&A with increases driven by investments in growth initiatives, inorganic increases in operating expense from recent acquisitions that have not fully lapsed and increased advertising expense at our Consumer Interactive segment and a 24% increase in D&A due primarily to shortening the useful life of certain assets…

Thanks, Al. Now let me turn to our forecast for the full fiscal year beginning with some of our key underlying assumptions. For our 2015 forecast, we've assumed the following macroeconomic conditions for the remainder of the year. We expect to continue to be impacted by the strong dollar. For the full year and second half, we expect about 2 points of drag on revenue growth rates year-on-year due to foreign exchange rates. Additionally, interest rates last year at this time in the second half were trending down, providing macro tailwinds. For the second half of this year, however, we see rates going up, providing a slight headwind. Now for our guidance. We expect fiscal year revenue to be about $1.455 billion, growing roughly 11.5% including the foreign exchange impacts I just outlined. Adjusted EBITDA for the year is expected to be around $510 million, up about 12% for the year. Although adjusted EBITDA is expected to grow faster than revenue for our full year, I'll point out that in the second half and in Q3, in particular, we will make investments from strategic growth initiatives so long as we continue to see the related growth coming from those investments. We feel good about our long-term strategic operational and financial objectives that we've set out to achieve, and our full year guidance reflects that. But before we open it up to Q&A, just a few final comments. Overall, we're very happy with the results during the quarter. All 3 of our businesses performed very well, and we posted revenue and adjusted EBITDA growth in the mid-teens for the quarter while continuing to execute on our growth strategy. We feel good about our model and the markets in which we've chosen to compete and how we are going about leveraging our…

Thanks, Jim. Let's now proceed to questions. Operator, will you please repeat your instructions?

[Operator Instructions]. Your first question comes from the line of Gary Bisbee from RBC capital.

Team, first off, just congratulations on successfully completing the IPO. And with that out of the way, I guess I wanted to ask about one of the comments you made at the end there, Jim, where you said you were going to continue to make investments as long as you see the return on them in the back half. Was that specifically marketing, Consumer Interactive or is there other stuff that's included in that?

Yes. What we meant by that, certainly, it includes some marketing in Consumer Interactive. But we are also continuing to invest in our International business, some new solutions that are driving growth and even efficiencies in our International business. And also, we continue to invest in those growth initiatives that we talked about, things like fraud, digital marketing, Credit Vision and others that have actually driven the above-market growth that you're seeing over the last -- really, since last year starting in the third quarter. So we're just continuing to do what we've been doing to follow our growth strategy.

Yes. And then the follow-up is just do you have a target as we think about the next couple of years either like what percent of revenue you want to come from new solutions or some -- how do we think about productivity of these investments that you're making and their contribution to growth?

Yes. We don't have a specific target. I guess I would just point you to the growth that we have had, so the 16% growth that we delivered this quarter is a good example. About half of that came from our core business. And you can think of that as like financial services core, our developed markets, the TU Consumer Interactive. But the other half came from new areas, some new verticals like health care; rental screening; things like TLO, which by the way, grew 60% from this quarter last year; Credit Vision; fraud; and digital. So -- and also, our emerging markets internationally. So we expect, by investing in the right places, that, that will be one of the significant drivers of the above-market growth we expect to achieve.

Your next question comes from the line of Bill Warmington with Wells Fargo.

So a question for you on the Consumer Interactive side. You saw a nice acceleration, year-over-year going from about 23%, 24% up to 31%. And I wanted to ask, specifically, what had driven that lift in the quarter? And then also to ask about what you would advise as a good range to model that particular segment going forward.

Yes. So I guess I'll just remind you that the business has grown double digit over the last 4 years. And in this quarter, in particular, and then actually all those quarters, it's been driven by double-digit growth in both our direct-to-consumer business, so our transunion.com product; and also our indirect business in which we very early on decided that we were going to partner with others who have different business models including companies like Credit Karma and many others and including banks to get to as many consumers as we can to penetrate that market as much as possible through a variety of channels available. And that's been very, very successful for us. And so I think the best way to model it, and I don't think we're going to get specific here, is that we're going to continue to drive double-digit revenue growth going forward. Of course, that will get more difficult as you can imagine as we get to the comparables from years like this year. But I think it's going to be a very successful business for us going forward, and we're pretty bullish on being able to drive double-digit growth.

Did you add some new -- let me phrase the question, so did you add some net new clients in this quarter that -- or had a ramp in a new client this past quarter in light of account for some of the lift?

Sure, yes. We've had multiple new clients. The one we were able to mention is U.S. Bank. As you know, we delivered our CreditView product to them, which is a really differentiated offering. And they're not the only bank by the way, but that and others are ramped quite nicely in this quarter to drive growth and will continue to ramp.

Got it. Also, are you seeing a pick-up in the affinity market? That's one that had been quiet for a long time, and it seems like they're starting to see some activity there. And I was curious if you were seeing activity. If you were participating in that. If you had any wins that you can talk about there.

We -- again, we don't talk about specific wins. But certainly, the affinity market is an area where we're engaged. And we see that there's potential for growth there as that channel, I guess, kind of revives itself.

And our next question comes from the line of Shlomo Rosenbaum from Stifel.

Jim and Al, can you talk about how much you expect acquisitions to contribute to growth this year? And then also, as CIBIL is kind of anniversary-ing, can you talk about the growth that's happening, specifically there in India, kind of like what you did for TLO?

Yes, Shlomo, we can do that. What I would say right now is if you look at growth related to acquisitions or I think some acquisitions for the first half of the year, I think it's on a first half of the year revenue, total revenue on a constant currency basis, it's been about 18.1%. On an organic constant currency basis, about 15.2%. So on an organic constant currency basis, it's added about 300 basis points of growth. Now CIBIL lapses out, but that'll go away as we look at the second half of the year. Having said that, we are seeing very, very strong performance out of CIBIL in India. We don't give specific guidance, but you can see in our emerging markets segment that's pretty strong. That will continue to be strong, and that will be solid double-digit growth, obviously, the rest of this year and into the future.

And then can you just talk about some of the opportunities that you see, just broadly, to take the domestic products into all the various international locations like South Africa and India and Hong Kong? You talked about Hong Kong using some of the newer products over there. What's -- what are some of the highlights or some of the things that you think are near-term addressable that you can bring them into international locations?

Shlomo, thanks for the question. I think the best example is Credit Vision because it's happening as we speak. It's a product that we've obviously brought to market in the U.S. As far as revenue growth in U.S. alone, it's doubled since last time -- this time last year. We've also brought that market in -- that product in the market in Canada, which is helping us take share. We brought that market -- that product in the market in Hong Kong, which is helping us with driving attractive growth rates there. We'll be taking that product into India as we continue to gain traction in that space as well as South Africa. And basically, every country that we're in, it applies, and it drives substantial -- more predictability of risk for our customers.

Okay. And then just in the Interactive. You talked about a sale to one of the banks that are out there. Could you talk a little bit about how this product -- or selling some of the things directly to these -- to the banks, how does that increase the runway for the growth of this business? This business has had such a strong growth that the question is how long it will continue, and people have been asking about that. Where do you see the bank area kind of extending the runway or in some way you could talk about either qualitatively or quantitatively?

I think more qualitatively at this point. I think, as you know, banks are increasingly interested in developing more engagement with their customers or consumers through more kind of interactive solutions. So CreditView is a solution that is in -- we keep mentioning U.S. Bank, but it's also been put into multiple other banks. And we have a nice pipeline for continued growth. And that, by the way, is not only in the U.S., but also in other countries where consumers are getting more and more interested in understanding how their credit profile and their behavior is affecting their access to goods and services. So I would call it a meaningful part of our growth going forward, and one of the reasons why we continue to think that overall business will be performing at double digit.

And our next question comes from the line of David Togut with Evercore ISI.

Could you break out the growth of the Financial Services segment within Online Data Services? And in particular, could you talk about the growth rates of mortgage, credit card and auto within Financial Services? And in particular, how you see those trending in the back half of the year?

Yes. Let me tell you, for the second quarter, how that was broke out. For 2015, Q2, total growth for Online was 12%. Total growth for Credit Marketing Services was 10%, and Decisioning Services was 28%. Biggest driver behind Decisioning Services is what we continue to see in the health care channel, which is a very, very strong outperformer. But as you can see, with double-digit growth in both Online and Credit Marketing Services, it's broad-based growth in our complete USIS business. As it relates to segmenting out auto, credit card and mortgage, here's what I would say. Here's the way that we kind of talk about it. Because we don't always know what our end-user customers are doing with their credit -- what they're using it for, generally speaking, within our business, financial services or core financial services within USIS represents roughly 50% of the overall revenue base. Then to break that down even further, within that 50%, auto is approximately 25%; mortgage is approximately 25%; and credit card and other consumer-related products such as HELOCs, student loans, et cetera, represents approximately 50%. And based on that segmentation, our business is following the current trends with mortgage, auto, credit card. So all those trends, we think, right now are fairly strong.

That's very helpful. Just as a quick follow-up, can you talk about success you're having -- you've been having in upselling in the Consumer Interactive channel? And are there any milestones we should be watching for in your upselling initiatives?

Yes. I would categorize it this way: we upsell both in our direct-to-consumer as well on our partner channel. I don't have a specific kind of event that's going to occur relative to upselling other than I keep pointing back to CreditView, which essentially an upsell from getting kind of the standard credit report and feedback. You're actually able to interact with that tool as a consumer to determine how -- what your -- how your behavior, as it changes, could impact your ability to get better loans or better rates.

And our next question comes from the line of Paul Ginocchio from Deutsche Bank.

This is Ato Garrett on for Paul. Just looking at the margins, things look pretty strong. Margins look pretty strong right now, and you mentioned you have plans to invest particularly in the third quarter. So I just wanted to get a sense of what your thoughts were around the current leverage -- the current level of leverage on the business and where do you think you might take that over time.

Yes. So I think we've kind of alluded to the fact that we continue to invest in those things that are driving our really nice topline growth, and we took the opportunity to do that here in the second quarter. And we'll likely take the opportunity to do that in the third quarter. We're very comfortable overall this year that we're going to get to the 35% adjusted EBITDA margin guidance that we've already given you. So good, good, comfortable there. There are also a number of dynamics that we believe are going to allow us to continue to expand margins. Those include Project Spark, which is our technology project, which is driving efficiencies, and we'll continue to next year. That's kind of an event-driven thing, and we're very much on track there. Our -- all of our initiatives, essentially, continue to perform well across the board. And as they continue to perform, they're helping us expand our margins. And I think we'll get back to a more normalized investment levels. Because as you might recall, our strategy at the beginning of '13 was to invest significantly to jumpstart many of our growth initiatives as well as Project Spark. So all those, kind of added up together, give us good confidence that you'll see us continue to expand margins as we go forward.

And our next question comes from the line of Andre Benjamin from Goldman Sachs.

I think most of my questions have been answered. One mulling question then. You mentioned that Credit Vision doubled this year, year-over-year. And I guess to put this achievement in context, is there any color that you can give that helps to indicate what percentage of the total business is USIS? Or any metric you would like to provide it is today and whether that could go over the medium term?

No. I don't think we're really prepared to do that, Andre. But what I would say is that Credit Vision, among many other initiatives, and I think I said this in the roadshow, kind of performing at a single, let's call it, stretching into a double. And so many, many initiatives like Credit Vision, digital marketing, fraud, some of the new things we're doing in rental. TLOxp that are all starting to make bigger and bigger impact on the business. And taken together, this is more a statement of our overall business, not just U.S. with our emerging markets and our new verticals, drove 8% of our growth this quarter.

And then we clearly have the full year guidance, and you've given some color on spending in the third quarter versus fourth quarter. But I was wondering is there anything that you think we should be mindful of in terms of the growth rates in the various segments, third versus fourth quarter, particularly given the comps get a bit tougher as we go into the second half of the year?

Yes, I think you bring up a very good point. If you look back, the strategy that we’ve been on with our growth initiatives started to really kick in along with some tailwind and the good performance in the core starting in the third quarter of last year, so we're definitely lapping those comparables which make the growth rates more difficult to achieve. But we still -- we'll see a very nice growth. I think our full year growth is going to be 11.5% and 13.5% on a constant currency basis, so we're going to see very nice growth from a combination of our core and initiatives. And I would say we're not really counting on the tailwind that came from mortgage. It accounted for 1.5 to 2 points of our growth.

And there will be, Andre -- there will be probably same level of investment in Q3 as we saw in Q2, so probably the growth on a year-over-year basis will be slightly less than what you'd expect. And that starts to get out of our system in Q4 and sets us up very, very nicely for '16.

And our next question comes from the line of Sara Gubins with Bank of America.

A couple of questions. First, are you seeing any changes in the competitive dynamics in India?

Not substantially. As you know, CIBIL is a very, very big brand there and has been for a very long time. And so we really are focusing in India on the agenda that basically the new Prime Minister has, which is financial inclusion and building a middle class and helping their statement of banks become more efficient in lending and as well as adding our other solutions in the market around going direct-to-consumer and going in other verticals like insurance. So we really don't see any substantial competitor coming in, and kind of our focus is really on our customers themselves.

Okay, great. And then separately, you're clearly beating your near to midterm outlook of 6% to 7% revenue growth this year. As you look out a bit further, what sort of assumptions around the broader economy are baked into that 6% to 7%? I'm wondering if we kind of stay on the current trajectory from a macro perspective, if there is much upside to that 6% to 7% outlook or if that still seems reasonable?

Yes. It is, Al. It's -- I mean here is the way that I think about that. Our USIS business, as I talked about earlier, and if you take that paradigm and talk about it, 50% of that is like core consumer credit. If you plan for that to be like a GDP-type plus business and that's where we're putting a lot of our new growth initiatives. That's going to propel that GDP-type plus even higher than what it is right now. The other half of that business is where we have a lot of our emerging verticals such as health care, insurance, government, rental screening. Those were double-digit growers. So you take that approximate $800 million pie, that's how we think about it. When you move over into the International segment, we think that will always be high to low double-digit grower, particularly the way India continues to grow and how that's organic. And then on our Interactive side of the business, that's consistently been a low double-digit grower. The 6% to 8% on a combined basis is kind of what we see. Things that will go better could be Interactive outgrows that. Emerging markets in International outgrows that. And then the growth initiatives that we deployed in our core USIS business grows faster and then starts to bring that core up.

Great. And then just last quick question. Can you talk about how you're thinking about acquisitions going forward? And what areas you're focused on?

Yes. This is Jim. The way we think about acquisitions is, I guess, in several categories. One, we think about what can bring us new capabilities, and that usually comes in terms of data and/or technologies, TLOs, a very good example of that. Or ones that get us into more meaningful into what we consider very attractive verticals like health care, so e-Scan is a good example or that. Or of course, ones that get us into very nice and meaningful growth geographies, and India is a good example of that. So we have a pipeline of opportunities that we continue to kind of cultivate. And that will be our strategy going forward, is we won't shy away from those opportunities when we see them.

And your next question -- your last question for today comes from Manav Patnaik from Barclays.

I just wanted to understand if you could help break out -- you said the Interactive Services number of users, I believe, you said was 50 million. I was just hoping you could give us some color in terms of how much was that -- how much of that was direct versus indirect. Is that just -- is there a U.S. versus international mix? I'm just trying to understand the level of overlap in counting that number between all of the different partnerships in your direct business that you have.

We -- actually, we don't disclose those numbers by channel or I guess breaking down by countries. I guess what I would say is that we have increased the overall subscribers to -- from 35 million at the end of 4Q to over 50 million currently, so it is growing substantially. And that obviously is because our strategy has been to go to market through as many channels as possible including our own, which is growing double digits. And our retention rates are better than ever. And our -- these vintages that reflect our newest kind of advertising campaign and offerings are doing very well. So we could double-digit growth going forward there as well as all the different partners that we're using including companies like Credit Karma, which I know you're aware of, and others as well as the banks we go to market to. So we're basically covering the whole market.

Okay. And then I guess maybe just on the direct side of the thing. It sounds like you said you have healthy growth there. Most of the other peers of yours aren't seeing a lot of growth there. Is there something particularly embedded in your product? Is it just better marketing? Like any color on the progress there versus your peers.

Yes, so I call it a combination of things. We're trying to put in services that help us be very interactive with our customers. And as you can imagine, because we're out in so many parts of the market, we're learning a lot about what is effective right now. And so we’ve taken a much more scientific approach to identifying the kind of personas we want to go after, some of which are the kinds of folks who have maybe built a free offering, and also for-pay offering that's more robust. And by doing those things, we've been able to, like I said, grow double digits. And that's primarily because our pick-up rates are very good, and our retention rates are very good on these latest vintages.

Thank you, Manav.

Thank you very much.

Thank you.

And thank you, everyone, for your participation in today's call. If you have any further questions, please feel free to call me or Lindsey Whitehead and my team directly. As mentioned previously, we will post the audio replay of this call on our website at www.transunion.com later today. I will now turn it back to the operator to conclude the call please.

This does conclude today's conference call. You may now disconnect.