Good day and welcome to the TransUnion 2021 First Quarter Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Aaron Hoffman, Senior Vice President of Investor Relations. Please go ahead.

Good morning, everyone and thank you for joining us today. I hope all of you remain safe and healthy. On the call today, we have Chris Cartwright, President and Chief Executive Officer; and Todd Cello, Executive Vice President and Chief Financial Officer. We’ve posted our earnings release and slides to accompany this call on the TransUnion Investor Relations' website. Our earnings release and the accompanying slides include various schedules, which contain more detailed information about revenue, operating expenses and other items, as well as certain non-GAAP disclosures and financial measures, along with their corresponding reconciliations of these non-GAAP financial measures to their most directly comparable GAAP measures. Today’s call will be recorded and a replay will be available on our website. 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 release and the comments made during the conference call and in our most recent Form 10-K and Form 10-Q and other reports and filings with the SEC. We do not undertake any duty to update any forward-looking statement. With that said, let me turn the time over to Chris.

Thanks, Aaron. Let me add my welcome and my best wishes that you and your families are healthy. At TransUnion, our associates continue to largely work from home and continue to demonstrate their ability to support the needs of our customers and consumers. I remain grateful for their efforts and commitment. Now I'd like to lay out the agenda for this morning's call. First, I will discuss some of the broad macro and TransUnion specific trends that we experienced in the first quarter, and how they set the stage for a much stronger year than we previously anticipated. Next I will discuss our portfolio and strategies, which position us for high single-digit revenue growth at an attractive growing margin over the long-term. Finally, I'll pass the baton to Todd to discuss our first quarter results in detail along with second quarter and full year 2021 guidance. Let me start with our strong performance in the quarter. We significantly outperformed our guidance as we experienced a rapid recovery in many markets throughout February and March. Todd will discuss some of the specific revenue trends later as part of his remarks. But the takeaway is that we broadly saw trends improve across our business, consistent with the many improving macro indicators. Notably, according to a JPMorgan report, U.S. consumer spending accelerated during the first quarter, outpacing 2019 levels, and according to the labor department, unemployment fell to 6% a pandemic low. In March, small business owners felt the most optimistic since the onset of the coronavirus pandemic, according to the National Federation of Independent Business. Taking together these and many other salient points from the first quarter indicate the start of what we hope will be a long sustained economic recovery in the U.S. as Americans return to more normal work and…

Thanks, Chris. I want to start by building on Chris's commentary about the accelerated recovery we experienced in the middle of the quarter. This slide shows monthly year-over-year revenue growth for all our reported segments, verticals and geographies. With only a few minor exceptions, you can see a clear inflection over the course of the quarter, reflecting the positive macro dynamics that Chris highlighted. I will note that while total financial services shows relatively consistent monthly growth rates, if you look at the non-mortgage business, it progressed from down mid single-digits in January, two up strong double-digits in March. This timing had a significant impact on how we guided the quarter and the full year on February 16 compared to the actual results we delivered in the quarter, and the revised guidance that I'll share with you shortly. When we built our forecasts for the 2020 year-end earnings call, we had seen actuals for January, and heard limited incrementally positive comments from our customers. Macro indicators still hadn't definitively flipped to more positive trajectories that all changed in the middle of the quarter. More specifically with February's results, we gained additional conviction in the outlook. And March came in substantially better than we would have expected based on all the information we had in early February. As we've always stressed, we want to provide guidance that is based on the best available data and what we have line of sight to which is exactly what we did in February. And that's what we're going to do again this quarter by raising full year guidance based on a more constructive view of our markets supported by concrete, macro indicators, and clear signal from our customers. With that context in place, I'll start my review with our consolidated results. And for the…

Thanks, Todd. And to conclude this morning, we took you through a strong first quarter and a much more bullish outlook for the full-year based on significantly stronger macro trends across most of our markets. And we've discussed the differentiated portfolio market positions that have propelled TransUnion to best-in-class growth since our IPO, and that we believe will allow us to remain on this path in the future. I'll end by reiterating my hope that all of you and your families remain safe and healthy. And with that, I'll turn the time back to Aaron.

Thanks, Chris. That concludes our prepared remarks. As always for the Q&A, we ask - that you each ask only one question so that we can include more participants. And now we'll be glad to take your questions.

[Operator Instructions] And the first question comes from Manav Patnaik with Barclays. Please go ahead.

Good morning, gentlemen. And thank you for all that color. I was just hoping you guys could give us some more color on your FinTech vertical. It was obviously a very fast growing area before it did get hit during the pandemic. I was just wondering if you give us some anecdotal color on what that pace of recovery and outlook looks like today?

Yes, sure Manav. Todd and I'll tag team on this one. But first, I would say that the consumer lending sub vertical was in financial services was one of the components of our business that strengthened month over month during the quarter, and that we expect will continue to benefit from the recovery. And of course, the FinTech players are material components of consumer lending. And generally we see strengthening there, we see an increased interest in new customer acquisition, which is terrific. And again, the longer-term we feel like e-commerce is going to become increasingly important to the delivery of financial services and we're very grateful for the partnership we have with so many of the players in that space, but generally speaking, I'd say it's a strengthening component of the portfolio that should benefit us in the quarters ahead. And so, Todd, anything you want to add to that?

Yes, that's for sure. Chris said, I definitely would add to that, that we are in the FinTech players expand into new lending markets like credit card and especially the buy now pay later segment, which we've got a meaningful position and as well too. In addition, the story that we've told about how we won, share with FinTech with accelerated adoption and usage of our CreditVision suite of products continues to hold true as well with this customer group, as they enter into new markets. So we're very encouraged and excited about the potential with the Fintech’s for the remainder of the year.

Yes, and then I would just add, as we've talked about in other calls, the FinTech space has been more stable during this downturn than many expected. And we've seen funding begin to flow back in a substantial way to the space. So it's all very encouraging. Next question?

The next question comes from Andrew Steinerman with JPMorgan. Please go ahead.

So I am going to ask two questions. When looking at Slide 11, I just wanted to make sure for the U.K. line that you felt the revenue declines in the quarter would just related to the lockdowns. Obviously, I saw the plus seven in the month of March and wanted to hear how cross-selling TrueVision and CreditView are going in the U.K. Secondly, I also wanted to know if you want to give us kind of the percentage of revenues for the U.S. financial services, revenues, card, mortgage, fee loan, et cetera?

Yes, I'll leave that second question Andrew to Todd. But I will say, obviously, the U.K. has been very hard hit by COVID and the lockdowns had a negative impact on our business. We also just have some revenue lumpiness in the quarter, because we had a very large piece of business, a non-recurring business last January. And so that exacerbated the decline. What I'll say about TrueVision is that there has been a lot of interest in the product since we introduced it. We generated some revenue last year on a whole variety of customer pilots. We've built a very nice pipeline and we're beginning to convert into recurring revenue some of the banks that are part of that pipeline. So I would say, TrueVision penetration in the U.K. is encouraging and it's very much following the path that we experienced in the U.S. Todd?

Thanks, Chris. Hi, Andrew, just to finish off the question on the U.K., I mean that first of all kind of open up the quarter a little bit right, and show you what the trends look like by month, so a couple of things that are important. In January, we had a comparison to the prior year where we had a large onetime prior year deal in there. And then also you may recall that in January of 2020, that was the last month that we recorded revenue for business we divested by the name of Recipero. So if you exclude those two items, the U.K. actually would have been down mid-single digits in January. But typically, these are things we would never talk about, because we don't show the monthly trends and you would have just seen the quarterly number, but hopefully that that provides the context that you need. As it pertains to your second question about percentage breakouts of the end lending markets and financial services. What I can tell you is mortgage in particular on a trailing 12-month basis revenues were about 13% of total TransUnion mortgage. At this time, Andrew, we are not providing the details on auto, card and consumer lending. So probably that gives you enough - with mortgage.

The next question comes from Jeff Meuler with Baird. Please go ahead.

Chris, as you refresh this, I guess on the growth playbook just wanted to revisit Prama, which was I guess an area that investors were optimistic about, a few years ago, it seemed to fade a bit to the background. So interested when it got a recent call out at an investor conference, and then again this morning as it relates to Canada. So I guess the question is, is Prama starting to gain more traction as part of the broader ongoing business win that you’re talking about. Thanks?

Yes, good question. I mean, look Prama remains a vital part of our new product offerings, and I'd say technology integration with our clients if you will. And we continue to invest materially in the product not only because it represents a new revenue stream for us as we mature the feature functionality, and we increasingly license it across the markets that we serve. But I think Prama and tools such as Prama are going to become more a supporting way of engaging with the marketplace. They provide direct access to the range of information that TransUnion and other bureaus provide, a lot of analytic and modeling technology, the ability to upload and append other types of information or unique financial institution information with the other data the TransUnion provides, the ability to place orders and monitor the status of the orders. And so it's a new interface layer to the range of services that the industry provides that we'll be building out over time. And we think it's going to provide uplift on revenues, one through direct licensing, but also really through improved utilization, and increased stickiness with our customers.

The next question comes from Gary Bisbee with Bank of America Securities. Please go ahead.

Todd. I think I heard you say your guidance now implies mortgage flat for the year versus the prior down. Since you last reported, industry trends have clearly deteriorated. So can you help us understand like what you mean or why you now see it that way? And then it's part two of the question. I guess that would be a portion if I heard that right of the improvement in the guidance, but it seems like a smaller portion, can you just sort of give us a sense of what are two or three of the key areas that have improved most since you last provided the initial outlook for the year. Thank you.

Hi, Gary, thanks for the question. Obviously an important one for us to go through this morning. So we are starting with our assumption around mortgage. First, in our February earnings call, we did call for a 10% year-over-year decline. And I think what we saw happen in the first quarter, his mortgage actually continued to perform relatively well, albeit though, we did start to see the year-over-year growth rates start to taper off throughout the quarter as the comparison obviously gets significantly more difficult, because if you think back to March of 2020, that's really when mortgage took off on significantly when interest rates plummeted. So that's definitely, a part of it is that the Q1 performance was definitely stronger in my opening remarks, hopefully, I provided the necessary context on what our business would have grown with and without on the mortgage contribution. So as we extrapolate mortgage out for the remainder of the year, I think we had a little bit more of a pessimistic thought about what was going to happen and I think what we're seeing is the market is relatively holding in particular with refinance, but also know we continue to see a good activity on the purchase side of things. So with that being said if you just dive a little bit more into mortgage, what we talked about for Q1, as we said that, we had a 3% benefit, in the quarter from mortgage. And the guide that we’re providing for the second quarter calls for a 2% headwind. So now we're starting to run into the comparables. And for the full year, we're calling for a 1% to a 1.5% on headwind. So if you just do the math, and kind of come up with okay well, what's going to happen…

Yes Todd look, that's great color. And I appreciate the breakdown. The one small thing I find out on mortgage is that, we're incredibly focused on this as well forecasts will no doubt vary great. But as the rates have increased, and that has impacted the business, mortgage lenders are still very busy. There's a tremendous amount of work in process. And there's also they've been operating on a generous spread. And as we talked about in prior calls, there's the opportunity to cut into that spread in order to stimulate further demand.

The next question comes from Hamzah Mazari with Jefferies. Please, go ahead.

My question is just around a little more around the playbook that you guys articulated, which had great color, specifically on the media and digital ad offering. Could you maybe talk about how differentiated that offering is, what the competitive set looks like there? And then, do you continue to expect to scale this up through M&A just given the leverage today, is at an all time low for you?

Yes thank you for the, thanks for the question. Yes, as we talked about for quite some time now. We think that the media and digital marketplaces will benefit from the precise matching logic and high data quality that TransUnion can bring. We have claim of scenes for many years now fueled the matching append operations of different players in this ecosystem. There is a slightly different set of players. And so, we decided to formalize it and enter you know, initially well obviously, we bring a lot of quality data sets. And as I mentioned, our match logic is very powerful given the core credit markets that we serve and more recently, we did acquisitions to acquire underlying data management technologies that allow us to bring together the range of data that we have in our match logic in a very user friendly way, where digital marketers can generate audiences on the fly. Also, recent acquisitions have brought us data and insights, as to which households are subscribing to various streaming services, both audio and video streaming services, which is letting which will allow advertisers to tap a really rapidly growing marketplace that does not have the same level of insights or add precision that the rest of the marketplace has. So, we've just bought a couple of businesses and Tru Optik and Signal, and we're merging them into our existing operations. We find the management team. We're doing product integration, integration on a variety of levels. And we're building out, are selling our products support, our product integration, and our platform integration activities, quite materially, that's going to continue to be a focus. It's an area where, we expect to have higher than average earnings for the foreseeable future. And we think it's a large end market that it can mature into one of our larger emerging verticals over time. And certainly, we're open to M&A to add additional capabilities as we see fit.

The next question is from Toni Kaplan with Morgan Stanley. Please, go ahead.

I wanted to start by saying I appreciate the strength and acceleration from January to March. But you mentioned the non-mortgage financial services growth of 5%, which is below what your closest competitor reported in the quarter of 11% organically. And I'm sure you have some ideas on what you think is driving the delta? Just want to know if you think it's tough - you had a tougher comp or is there a mix component here, or is it a sign that environment is just getting a little bit more competitive for you - just or anything else? So I just wanted to give you a chance to explain your thoughts on that? Thank you.

Toni, this is Todd sorry about the background noise there. As it pertains to the comparison to the prior year for our non-mortgage financial services business, I think what you know couple of things. First the financial services, the mortgage piece did, the growth did decelerate as - I've already said. We have seen a good recovery in many of our end markets like auto, which I talked about in my prepared remarks, that that was an area of particular strength for us. Card and banking and consumer lending, I would say I mean it's really the areas where, when you look at it on a year-over-year basis, perhaps the growth rate isn't as strong. And a significant part of that is, you can't forget that Q1 of 2020 was a relatively strong quarter for us. We were not heavily impacted by the pandemic it was only about two weeks on it particular in the U.S. So if you think back to that period of time, the performance that we were seeing from our FinTech customers was exceptionally strong last year. So we're comping against that. And as I already said, our position with the FinTech’s is an area that we're incredibly proud of. And we've got deep relationships with these customers. So again, as I answered in previous question, these guys are branching into, new businesses, and we're right there partnering with them. So they're a little bit slower to recover in the first quarter because of that comparison, but I think what's more instructive is what's ahead. And then that's really where we get into, just you know the opportunity of low double-digit growth in financial services, ex mortgage that space is a big part of that. Other thing to that I'd throw out there on FinTech side is, there's a lot of consumer lending that goes on in that space. Don't forget about two stimulus checks arrived for many consumers in the quarter, one early January and another one when quarter ended. So demand might not necessarily have been as strong as it has in the past. The other part that to I spent a lot talking about FinTech the other part though, is our bank and credit card business. Again, we were comparing against some really good growth in the prior year and the strength of credit card marketing activity that was pretty good in Q1 of 2020. And that business is now starting to recover as our customers are going to start fighting for wallet share with potential travel and dining out, picking up so we started to see that as well. So that's also just another part about the future that I think is important.

Yes, good color Todd and look, I would just boil it down to this Toni, the engine is firing on all cylinders in Q1 of 2020 with the exception of the last two months of March when the lockdowns occurred. And I mean look - the non-mortgage portion of financial services grew 14% in the first quarter of 2020. The fact that we're now posting growth over that high level of growth, and I would guess that was probably a high watermark for our business, is just really encouraging going forward. And I think you're going to see that growth rate and that spread accelerate against the easier comps that we say in certainly Q2, but also Q3 and Q4.

The next question comes from Andrew Jeffrey with Truist. Please go ahead.

I appreciate taking the question guys. I think TransUnion has a particularly enviable position in fraud and ID, which you highlighted. Chris, can you talk about whether you think there's any sort of pandemic affected demand in those horizontal offerings or is that also sort of more digitally structural I guess driven by pandemic just trying to get a sense of where the puts and takes are on reopening of it?

Yes, I'm not sure about the dynamic specifically related to reopening. But look as we all know, the pandemic resulting in the lockdowns was an enormous ecommerce forcing mechanism. And ecommerce penetration worldwide grew by multiples, right. And that has caused I think a structural change in consumer behavior. And then all of - that's just an increase in anonymous digital transactions, which require increasingly sophisticated identity and authentication. That's where I think our portfolio is well positioned because of the historic strengths that we've got, because we know a lot about individual consumers and can vary them. And we have sophisticated fraud propensity models, but we've also infused this with just gobs of digital information from iovation that's collected from almost every country in the world.

The next question comes from Kevin Mcveigh with Credit Suisse. Please go ahead.

Great, thank you and congratulations. Hey Chris and Todd. Just wanted some question around framing the recovery relative to prior cycles and just, feel like you're better position given the pace of disruption as we're coming out of this season. The way to think about how that it can impact the revenue growth longer term, particularly the positioning at FinTech as it becomes more pervasive across the enterprise? And if there's any frame is it the incremental growth and margin profile of the business as you're seeing on the FinTech opportunity given the pace of disruption?

Yes, good question. And I agree that we are well positioned coming out of this pandemic, recovery and I mean it feels a bit premature, to sit back given what's going on in some of our international markets in particular India and Brazil. But things are substantially better in the U.S. The vaccines are highly available the vaccination rates are substantially improving and in stages and have turned back towards the normal and consumption and that's really fitting our business. As Todd mentioned, the benefits are in almost every vertical across our portfolio in the U.S. with the exceptions of mortgage, which is going to face headwinds for a couple of years because the air is going to get let out of that balloon if you will that was caused by the low interest rates. And also, it's going to take some more orders for our healthcare business to return and to grow - find everybody that, in the first quarter of 2020 the healthcare business grew organically 9%. And we'd really kind of return to the targets that we expected and in particular during this pandemic. But look, the portfolio is still not firing on all cylinders. But I do think it's positioned for meaningful recovery quarter-by-quarter, as we re-emerge from this. I think you're going to see and acceleration in financial services from the non-mortgage verticals. I think the emerging markets are in the U.S. are particularly - the emerging verticals that is, are particularly going to accelerate. In the direct-to-consumer business, as lenders become more focused on new customer acquisition, our indirect channel will again become a strength, a differentiator that's going to propel further growth. And again, I'll remind everyone that in the couple of - in the few years prior to this pandemic, our international portfolio was growing at 12% to 15% organically, right. And it was a real strength within our enterprise. We grew 3% in the first quarter. And while that is a substantial improvement, look there is a lot of just inherent organic growth across that portfolio given that we serve emerging markets, growing middle classes, and increasing financial penetration, it's just those markets are grappling with COVID right now. But again, as vaccines rollout, and as we approach herd immunity in different markets, it's going to have a significantly beneficial impact on our results.

The next question comes from Shlomo Rosenbaum with Stifel. Please go ahead.

Thanks very much for squeezing me in. Hey Todd, I thought I just kind of asked you about a little bit of the organic growth expectation for the year. Is there some way you can parse it and if it’s not quantitatively, may be qualitatively in terms of the economic recovery boost versus kind of a company getting back to aggressively being able to drive the sales from internal initiatives? Just trying to figure out how you guys are looking at that internally? How much is going to just be the boost from the economic recovery and how much is we're getting back on our front foot again?

Hi, Shlomo. Thanks for the question. And yes, it's obviously a good one to ask, because so much of the focus is on economic recovery, which undoubtedly does benefit TransUnion. But I would say that, if you were to look back over the last year, and we were to look at our portfolios and say - our pipeline of sales deals in the March timeframe. It was for deals to help our customers continue to grow their business, because that was the mode that they were in at that period of time. And it was remarkable how quickly our sales force pivoted to what was a new expectation from our customers to help them manage their existing portfolio. So if you were to look at our pipeline in May of last year, it drastically changed. And the reason I tell you that is it's just the expertise that we have in our sales force and understanding the customer's needs. But more importantly, how we are able to pivot not just sales, but the team supporting sales all of our - all the products and our performing teams to start to deliver products that are relevant for the customer at that time and we did that last year. And we reacted and we continued to win a significant amount of business throughout the remainder of 2020. As you move into the first quarter of this year, it's again, kind of remarkable how that pipeline turns over again. And you've heard us in our commentary talk about our customers looking to acquire again and start to market. So that pipeline has again changed, and it's changing for a different market that we've adapted to. So when we look and we provide guidance for the full year, we're not only just taking into consideration the macro factors, but we're also taking a look at the deals that the team has won and that's factored in here. So Shlomo I can't give you the precise breakdowns, but I think what's important is pipeline is robust. Our sales force is executing and we're winning. And it's really again driven by the superior product innovation that TransUnion has that arguably makes our sales teams very effective in the marketplace.

This concludes our question-and-answer session. I would now like to turn the conference back over to Aaron Hoffman for any closing remarks.

Great, I'll just thank everyone for joining us today. And I hope that you have a wonderful rest of the day. We look forward to speaking with many of you over the course of the quarter. Have a good day. Bye, bye.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.