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TransUnion (NYSE:TRU)
Q3 2019 Earnings Call
Oct 22, 2019, 9:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day and welcome to the TransUnion 2019 Third Quarter Earnings Conference Call. [Operator Instruction] I would now like to turn the conference over to Aaron Hoffman, Vice President of Investor Relations. Please go ahead.

Aaron Hoffman -- Vice President of Investor Relations

Good morning everyone and thank you for joining us today. On the call 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 includes schedules, which contain 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 measures are also included in these schedules. 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 in the comments made during this conference call in our most recent Form 10-K, Forms 10-Q and other reports and filings with the SEC. We do not undertake any duty to update any forward-looking statement.

With that, let me now turn the time over to Chris.

Christopher A. Cartwright -- President and Chief Executive Officer

Thank you, Aaron. As you saw in our earnings release this morning TransUnion delivered another strong quarter. In fact, it's worth noting that the third quarter saw a record adjusted revenue and adjusted EBITDA in absolute dollars and the highest quarterly adjusted EBITDA margin in our history. The results reflect broad-based innovation-driven growth at attractive expanding margins and we're very proud of our track record since our IPO.

Over the past seven years we have expanded into attractive new verticals and geographies, built or acquired innovative solutions and developed industry-leading technology. At the same time we've also created a culture that emphasizes customer focus, individual accountability and performance.

Our stakeholders have come to expect this from TransUnion, just as we expected from ourselves each day. In short, we built a company that understands the needs of the customers it serves and can deliver best-in-class solutions to meet those needs. We are positioned to continue to deliver market-leading growth and shareholder value creation. And we continue to evolve our organization and to develop new capabilities in order to compete effectively.

Earlier this year we created two new global leadership positions in order to accelerate product development and operational effectiveness. First, we consolidated responsibility for our horizontal solutions under a global leader. Examples of these solutions include fraud mitigation, decisioning, credit products and our growing suite of analytic solutions. Second, we created a global operations role to support the development of customer-focused operational platforms through improved process efficiency and greater automation.

We've also expanded our investment in our vertical markets where our leaders bring significant industry experience and deep insights into customer pain points by adding resources across telecommunications, utilities, e-commerce, gaming and other verticals. This investment in market planning typically enable us to create more valuable solutions, leading to accelerated organic growth. And we continually to lead with deep and differentiated data.

In addition to our traditional attractive positions and consumer credit data, we've added in the rate of alternative data including trended credit, payday, and online short-term loans, retail loans, certain demand deposit Information, utility, and other data. This extended data coverage enables us to provide credit behavior insights on millions of consumers that we could not previous. We've also diversified our business portfolio overall with important extensions into insurance, healthcare, public sector, consumer identity, digital services, and other verticals and categories.

And we recognize that while having deep, differentiated data is important, clients also need effective and user-friendly solutions to visualize, analyzed, model and develop actionable insights from our data that enable better decisions across the enterprise.

While much of our data and the analytics capabilities have been internally developed over these last seven years, we've also executed 18 acquisitions in a host of strategic partnerships that have meaningfully augmented our capabilities and created value for our shareholders. Examples of key acquisitions include TLO, Drivers History, eScan, Callcredit, and iovation, which delivered new data and capabilities and extended our geographic coverage and accelerated our organic growth.

Along the way, TransUnion has developed a flexible and effective technology platform through consistent focus and investment. Our efforts begin with Project Spark, a systems migration from mainframe technology to a cloud compatible architecture based on high performance distributed clusters running both proprietary and open-source software. We've deployed solutions and containers running on our world-class technology stack and also the public cloud as appropriate. At the same time we proactively improve our information security along multiple dimensions, including additional personnel procedures, hardware, software, reporting and the use of independent security experts, the combination of these efforts has produced a technology infrastructure that provides high availability and faster solution deployment at lower cost and with improved security.

And we are improving our software development capabilities by continuing to use SAFe agile across our product and technology organizations. This Scaled Agile for enterprises approach has enabled improvements in software development, consistency, speed, reliability and security. We're enjoying more predictable outcomes in faster throughput than previously. And as technology inevitably progresses, we will continue to invest to improve our infrastructure and development capabilities to effectively meet market needs.

Our current efforts include material new functionality, standardizing applications, implementing a modern micro services architecture developing an API layer and leveraging the public cloud for solutions such as Prama, which require flexible computing capacity based on our customers' varying needs.

In sum, we believe that we understand how to apply advanced information technologies, the high-quality data sets to create differentiated solutions for customers and superior returns for shareholders.

With that, let's talk about the strong performance we've enjoyed in each of our divisions starting with US markets. We saw good performance in both financial services in our emerging verticals, which include insurance, healthcare, collections, rental screening, public sector, media, and a long tail of fast growing diversified markets.

In financial services, the momentum we saw in the second quarter continued as a result of several factors. In mortgage, lower interest rates drove an increase in refinancing activity against more favorable year-over-year comparisons. Our industry-leading trended and alternative data solutions CreditVision and CreditVision Link also continue to grow rapidly.

The third quarter was the largest revenue quarter for these products in our history. While part of the strength was due to an increase in mortgage activity, credit card issuers also have increased their usage of trended data in both marketing and underwriting. We expect this trend to continue over the next several years.

Finally FinTech lenders have resumed their growth by meeting consumers expectations for fast, low-friction lending experiences online. The launch of the Apple Card in the third quarter by our client Marcus is a good example of how lenders are responding to consumer demands for speed and ease of use. By working closely together Marcus and TransUnion were able to provide real-time credit decisions and enable usage of the Apple Card through consumers' digital wallets in a matter of seconds. We were well-positioned to support Marcus on this launch based on our investments in our fast, available, and secure technology infrastructure to deliver the array of traditional and alternative data use to render such rapid credit decisions.

Another critical element of our focus on our customers comes through our consumer operations team, which works each day with consumers and furnishers to increase understanding and resolve discrepancies. In addition to our outstanding and knowledgeable call center agents, TransUnion has developed easy-to-use applications to allow consumers to lock or freeze their credit with a single screen swipe when they're not seeking credit and again to quickly unlock their credit files when they become credit active again.

Now, in the other half of the US markets we experienced good performance in our emerging verticals, highlighted by another very strong quarter for insurance and diversified markets along with a good quarter for our healthcare program. As a reminder, diversified markets represents a collection of high-quality verticals that leverage the core data and capabilities of TransUnion such as investigative services, background screening, and telco.

I want to focus on several important areas of growth beginning with insurance. The core of the vertical continues to be auto insurance underwriting where we provide a broad suite of solutions to support Client prospecting, underwriting, account review and claims resolution.

The vertical was built initially using our core consumer credit file. In recent years, we've expanded our offerings through a number of acquisitions, Drivers History and Datalink Services positioned us to identify motor vehicle violations and access state motor vehicle imports and efficiently deliver this data within our clients workflows.

eBureau has been deployed to rapidly develop propensity models for marketing applications. And TLOxp, which I'll talk about in detail shortly provides a world-class investigative tool for evaluating claims. We've also expanded to serve commercial auto customers as well where the industry continues to have profitability challenges and a desire to better assess the drivers using our robust data assets.

In the auto underwriting vertical, our team leverage their insights to improve our customers' decision making.

In life insurance underwriting, our TrueRisk Life Score leverages our data to generate a predictive score to underwrite a life policy without the invasive and expensive medical tests under Riseable [?] card. More recently we've expanded this solution to improve life underwriting, providing yet another avenue for growth. We've built a multi-million dollar business in life and it continues to grow rapidly.

Similarly, we recently developed a Commercial Habitational Risk Score that leverages our existing data assets. This solution helps P/C insurers to more accurately underwrite policies for apartment complexes and condo buildings. This score is increasingly being used by our existing customers as well as new ones and is already a multi-million dollar business. We built them for diversified insurance vertical that has a long significant growth runway ahead fueled by the solutions I've described as well as the opportunity to continue innovating in this attractive market.

The second area of growth I'd like to highlight is in our TLO business fueled by TLOxp, which is a powerful data aggregation, infusion tool that links a vast array of sources between individuals, entities, and locations.

We are in the unique position as a bureau as we have both full credit files and an extensive array of public records data, provide differentiated and value-added solutions to a wide range of customers.

I already mentioned that we used to TLOxp in insurance vertical and it also has application in almost every other vertical that we serve in US markets including more financial services where it's used for corporate data hygiene and, if you will, first-party collections along with investigative services, third-party collections and the public sector where there applications at all levels of government. TLOxp is well-positioned for future growth as we increase and leverage our data assets and continue to address additional end-user markets.

As I discuss today, we're seeing very good performance across the US markets and are confident that this performance will continue as a result of our strong data assets, our innovation, our capability and our vertical expertise.

Now turning to our International segment, we had a tremendous quarter. The growth was broad-based and generally well above the underlying markets in which we participate as a result of executing our international growth playbook, which focuses on innovation, expanding into adjacent capabilities, improving go-to-market operations, and leveraging our core horizontal solutions.

I'll highlight two markets starting with the UK, which delivered very strong performance with 12% constant currency adjusted revenue growth at an attractive market. We experience growth broadly across our UK business. First, despite lingering questions and concerns about Brexit, we saw growth in our core lending business as the market grew slightly, but we were able to capture share. Second, more than a third of the business. relates to fraud mitigation. That market continues to see outsized growth and we are very well positioned to capitalize on it with differentiated solutions like iovation. Third, we have an attractive position in the gaming markets and continue to see strong growth augmented by the effective application of our capabilities in fraud litigation and ID verification.

As we discussed last quarter, both TrueVision and CreditView are now in the market and will take some time to penetrate as customers test the solutions and integrate them into their environments. As these solutions build momentum in the marketplace, we have confidence they will be drivers of incremental growth in 2020 and beyond.

I would also point out that open banking is likely to be an important growth driver in the future. We've already built a very strong solution that has resulted in wins TransUnion ranging from large banks to FinTechs.

Our UK business is positioned for sustainable double-digit growth behind strong execution in our core lending business, rapid expansion of adjacencies like fraud mitigation and gaming and the launch of TrueVision and credit view.

The other market I want to highlight is India where we continue to benefit from attractive overall market conditions and a truly diversified suite of solutions. While the core of the business remains consumer credit, we've augmented that with trended credit data, direct-to-consumer offerings, fraud mitigation and analytic and decisioning solutions. We also have the industry-leading commercial credit score, which has seen rapid growth. The strength of the market in our broad suite of solutions positions us well for long-term growth in India. Across our geographic footprint, we see significant opportunities for continued growth as we effectively execute our international playbook.

And now shifting to Consumer Interactive, again, we saw strength in both our direct and indirect channels. Growth in the indirect channel is primarily a result of continued strong performance by our broad portfolio of partners as well as continue adding new partners. For instance, during the quarter, one of our largest FinTech lenders, LendingClub, began using our CreditView platform. This dovetails nicely with my earlier discussion about our leading position with FinTech lenders. We continue to expand our offerings to help them improve the consumer experience. In our direct channel, consumer interest in credit management and identity protection remained strong and our analytics-driven marketing strategy has addressed these favorable market trends.

We continue to focus marketing efforts in areas that deliver efficient returns and these efforts have proven effective for growing revenue within the direct business.

We also continue to innovate in our direct channel. In the first quarter of this year we launched CreditCompass, an effective tool for consumers to see how good financial behavior based on real data can lead to better credit health and an improved score. It's important to note that these actions benefit the customer with virtually any lender and regardless of what score a lender is using to make an underwriting decision.

Now that concludes my discussion of our business. I'll now turn my time over to Todd who'll walk you through our financial results and our outlook. Todd?

Todd M. Cello -- Executive Vice President and Chief Financial Officer

Thanks, Chris. As usual, for the sake of simplicity, all of the comparisons I discuss today will be against the third quarter of 2018 unless noted otherwise. So let's start with the income statement. Third quarter consolidated adjusted revenue increased 11% on a reported basis and 12% in constant currency.

Adjusted revenue from acquisitions contributed slightly less than 1 point of growth in the quarter related to the 2018 acquisition of Rubixis and the 2019 acquisition of TruSignal.

And one other reminder, the lack of incremental credit monitoring from a breach at a competitor was again about a 1.0 headwind in the quarter.

As we've discussed previously, we are receiving an immaterial amount of revenue this year compared to last year as the offering is now handled by another provider and serves significantly fewer subscribers. And excluding the comparability impact from this revenue, adjusted organic revenue in constant currencies would have grown 12%, adjusted EBITDA increased 15% on a reported basis and 16% in constant currency.

As Chris noted, our adjusted EBITDA margin was the highest we've seen for a quarter at 40.7%. While the third quarter is typically our strongest, this high watermark reflect strong revenue flow through even as we continue to invest aggressively in all aspects of our business.

Third quarter adjusted EPS grew 16% with a 26.2% adjusted effective tax rate. The rate in the quarter was slightly lower than our full year expectation of 27% as a result of realizing the benefits of certain tax planning initiatives. SG&A increased 10% and cost of services was up 6% as a result of higher operating and integration costs related to our recent acquisitions, investments in strategic initiatives, and higher data costs associated with our revenue growth.

As we did all of last year, we want to show you the impact that recent acquisitions have had on our margin and the help you see the good performance of the underlying business. The reported margin expanded by about 135 basis points, excluding the impact of the acquisitions, the margin on our underlying business expanded by about 160 basis points in the third quarter, reflecting the typically strong incremental margin profile of our business.

As the difference between reported and underlying is negligible and will only get smaller as Rubixis will fall out of the calculation in the fourth quarter, we won't to show this slide again until there are additional acquisitions and it makes sense to provide these details.

I'll wrap up my comments on our consolidated results with a couple of important points about cash flow and our balance sheet.

During the third quarter, we voluntarily prepaid another $165 million of debt after prepaying $100 million last quarter and $60 million in the fourth quarter of 2018. This brings our rolling 12-month prepayment total to $325 million. And for the remainder of the year and the absence of significant transactions, I'd expect to voluntarily prepay additional debt.

Now these actions clearly have a very positive impact by reducing our interest expense and helping to derisk our debt profile, which is now approximately 77% fixed and 23% variable. At the same time, our leverage ratio continues to decline and was 3.4x net debt to adjusted EBITDA at the end of the third quarter. We had committed to be at 3.5x or less by year-end. So, I'm pleased to report that we got there early.

A key driver, as you can see on this slide is our fast growing adjusted EBITDA and good cash conversion reinforcing our ability to rapidly delever even as we aggressively invest organically, participate in strategic M&A, pay our dividend, and prepay debt.

Now looking at segment revenue and adjusted EBITDA. US Markets adjusted revenue grew 12% excluding the impact of the acquisitions of Rubixis and TruSignal, organic adjusted revenue would have been up 10%. Our Financial Services vertical grew 13% on a reported and organic basis. The other verticals combined grew 11% and 8% on an organic basis. Insurance, diversified markets, and public sector continued to deliver strong results.

Healthcare had another solid quarter as we continue to see earlier contract signings begin to monetize. As our recent acquisitions have integrated effectively, we are starting to realize cross sell synergies between them and our core back end business. This keeps us in position to achieve our guidance of mid single-digit growth for the full year. Adjusted EBITDA for US Markets increased interest 18% on both the reported and organic basis.

Moving to International, adjusted revenue grew 10% and 14% in constant currency. Four of our six regions delivered double-digit constant currency revenue growth ranging from 34% in India to 13% in Latin America to 12% in the UK and 12% in Canada. Africa was solid with 7% growth. And Asia-Pacific grew slightly as we continue to face a headwind from having temporarily shut down our direct-to-consumer platform.

Without the impact of the direct to consumer platform, revenue would have grown low double digits reflecting continued strength in the Philippines and ongoing strength into our business-to-business trends in Hong Kong.

Adjusted EBITDA for International grew 12%. On a constant currency basis, it was up 16%. Consumer Interactive adjusted revenue increased 7% driven by a balanced growth between the indirect and direct channels. As I noted earlier, this result includes the headwind of comparing against the lack of incremental credit monitoring from a breach at a competitor and the segment would have grown low double digits, excluding that.

In addition to good performance across the business, we also benefited from several one-time opportunities related to a breach remediation. Adjusted EBITDA for Consumer Interactive grew 10%.

Turning now to our guidance for 2019, as we typically do, we're going to flow this quarter's outperformance through to the full year. You will note that greater FX headwinds are offsetting some of the ongoing trends in the fourth quarter.

Now let me start with an update to some base assumptions. For the full year, acquisitions including Callcredit, iovation, HPS, Rubixis and TruSignal should add approximately 5 points of adjusted revenue growth.

For FX, we expect to see about one point of headwind impacting both adjusted revenue and adjusted EBITDA. There is also a 1.0 headwind from the absence of incremental monitoring revenue from a competitor's reach[?]. We expect adjusted revenue to come in between $2.644 billion to $2.649 billion, up 13%. So on an organic constant currency basis, excluding the incremental monitoring, adjusted revenue should be up 9.5% to 10%.

Adjusted EBITDA is expected to be between $1.048 billion and $1.052 billion, up 14% to 15%.

At the high end of our guidance, adjusted EBITDA margin is expected to be up about 60 basis points from 39.1% in 2018. Adjusted diluted earnings per share for the year are expected to be between $2.74 and $2.76, up 10%. This improvement from previous guidance reflects our stronger operating results along with the benefits of prepaying debt and reducing our interest expense.

To update you on some of the modeling assumptions, there is no change to our tax rate expectation, which is approximately 27% in 2019.

Total D&A is still expected to be approximately $360 million. Excluding the step-up and subsequent M&A portion, D&A should be about $155 million and net interest expense should now be about $170 million as a result of prepaying debt in the quarter.

We anticipate that capital expenditures will be about 7.5% of revenue this year as we aggressively invest in new products and integrate our recent acquisitions, though now slightly below previous expectations due to the timing of projects.

Turning to the fourth quarter of 2019, let me provide our assumptions for the quarter. For adjusted revenue, we expect about 50 basis points of contribution from M&A. There is approximately one point of impact on both adjusted revenue and adjusted EBITDA from FX. And there is a 1.0 headwind from the absence of incremental monitoring revenue from a competitor's reach[?].

Adjusted revenue should come in between $667 million and $672 million, an increase of 7% to 8%. Excluding the impact of not having the incremental monitoring revenue, organic constant currency adjusted revenue is expected to be up 8% to 9%. Adjusted EBITDA is expected to be between $264 million and $268 million, an increase of 6% to 8%. Adjusted diluted earnings per share are expected to be $0.69 to $0.71, an increase of 5% to 7%.

You may recall that in the fourth quarter of 2018, we recognized a number of benefits from our tax planning initiatives. The tough comparison negatively impacts our EPS growth in the quarter.

That concludes my review of our financial results. I'll turn the call back to Chris for some final comments.

Christopher A. Cartwright -- President and Chief Executive Officer

Thanks, Todd. So let me end where I started. The business model and culture of TransUnion are very strong, in tuned for long-term growth and success. Our people, data, technology, capabilities, culture, and of course, innovation, are our synergistic blend that enables superior shareholder value creation. As you've heard regularly from us, including today, there are many avenues for our long-term growth and you can be confident that our management team is pursuing them aggressively.

With that, I'll turn the time back to Aaron.

Aaron Hoffman -- Vice President of Investor Relations

Thanks Chris. That concludes our prepared remarks today. For the Q&A, as always, we ask that you each ask only one question, so that we can include more participants and let's take those questions.

Questions and Answers:

Operator

[Operator Instructions] First question today will come from Andrew Nicholas of William Blair. Please go ahead.

Andrew Nicholas -- William Blair -- Analyst

Hi, good morning. I just wanted to ask a quick question about EBITDA guidance. I think it implies that margins are down a bit in the fourth quarter relative to last year. I'm just wondering if you talk about what's driving your outlook for margins. Is there anything in terms of investments or timing you would call out for the fourth quarter or any reason you would expect margin expansion is slow?

Todd M. Cello -- Executive Vice President and Chief Financial Officer

Hey, good morning, Andrew. This is Todd. I'll take that question. I think the way to think about it is if you look at our adjusted EBITDA margin in the fourth quarter of 2018, and we were at 39.9%. So the guide that we put out is in essence to maintain that margin. We're just staying flat to that. And if you think about that a little bit more at the 40% EBITDA margin if you round it. So that's very strong.

And when we think about how we're going to operate the business in the fourth quarter, clearly, there are some investments that we're going to make. So we actually feel really good about this guidance that we're able to make those investments and still deliver what's approximately a 40% adjusted EBITDA margin.

Andrew Nicholas -- William Blair -- Analyst

Thank you.

Operator

Our next question will come from Jeff Meuler of Baird. Please go ahead.

Jeff Meuler -- Baird -- Analyst

Yeah. Thank you. The US financial services performance look particularly good to me especially considering how hard the comp was in a year ago. I know mortgage market is a factor, but just, other factors worth, I guess, discussing like CV and CV Link, I understand that they're strong but are they accelerating. And then I think Chris had a call out about the financial tech end market maybe being more active, but just any additional color on the US conserved growth.

Christopher A. Cartwright -- President and Chief Executive Officer

Hi, good morning, Jeff. This is Chris. I think performance overall of financial services was strong and positive across the varying market segments. Certainly mortgage had a very strong quarter given low prior-year comps and the improvement in volume we saw because of low interest rates. We've got a nice growth in the consumer lending space as well. Card originations continue to be moderate to strong. Even auto is showing some growth. So it was a quarter of well-balanced growth across all of financial services.

In terms of our trended, in our trended plus alternative data products, we continue to make a very nice new sales, prior implementations are ramping contributing nicely to results, and again I think the call out was that it was our largest quarter in absolute sales dollars for both CreditVision and CreditVision Link, the two trended products. So we're excited.

Operator

Our next question will come from Manav Patnaik of Barclays. Please go ahead.

Manav Patnaik -- Barclays -- Analyst

Thank you. Good morning. I just had a question on the emerging verticals. I was hoping you could elaborate a little bit more on the growth in the diversified or in the non-insurance verticals, then maybe just update us on if healthcare is coming back to the high-single digits as you guys anticipate.

Todd M. Cello -- Executive Vice President and Chief Financial Officer

Hey, Manav, good morning. This is Todd. I'll take the question on emerging verticals. So as you already spoke about, the insurance vertical was very strong, and Chris, obviously, talked about that in his opening remarks this morning. When we think about the -- when we look at the rest of the emerging verticals, healthcare had a nice quarter. But it also was rebounding against what would be considered to be a weaker comp in the prior year, but the business delivered on the expectations that we were anticipating in the quarter.

I would say that the only area that might be down a little bit is our collections vertical, which is down on a year-over-year basis and I think that's really just more of a testament to the overall strength that we're seeing just in the consumer space in the US. The consumer right now is healthy and I think that's reflected in our financial services results.

So when you flip that over to the emerging verticals, that's the nice counterbalance we have in our business, right, by having the collections vertical there. It's down in good times, but it will probably be up as delinquencies on the consumer space tick up. And right now we're not seeing that in a meaningful way. So when we look at the growth, that's what's pulling that back.

Operator

Our next question will come from Gary Bisbee of Bank of America Merrill Lynch, please go ahead.

Gary Bisbee -- Bank of America Merrill Lynch -- Analyst

Hey. Thanks. Maybe I could take another cut at that last one. The comp in the emerging verticals got -- sticks a little more than 6 points easier and yet the growth rate year-over-year was, let's call it the same as last quarter. So I don't think collections is big enough that unless that changed dramatically from last quarter that that would have that big an impact. So something else must have deteriorated or healthcare just didn't get much better despite the comp. Is there anymore color and whatever it is, is it short term in nature or is there some reason the growth potential of that business is decelerating somewhat? Thank you.

Todd M. Cello -- Executive Vice President and Chief Financial Officer

Yeah, no, Gary. Great, great question and a good call-out on that. I really when we look across the portfolio, all the vertical markets is that, make up emerging are growing. I would say the insurance business is outsized this. I already mentioned and Chris talked about already this morning, healthcare did post a nice rebound, delivered everything that we said. We saw good growth out of our diversified markets business. But yeah, the rest of the verticals while they grew, they probably didn't -- they did not grow as fast as the 8%, right. So then that becomes the drag on the overall growth rate. So, but by and large, I'd say the verticals that we're most focused in with the emerging space, the healthcare insurance, we're very happy with the performance that they posted in the quarter.

Gary Bisbee -- Bank of America Merrill Lynch -- Analyst

Okay. Thank you.

Operator

Our next question will come from Toni Kaplan of Morgan Stanley. Please go ahead.

Toni Kaplan -- Morgan Stanley -- Analyst

Thank you. Consumer had a really strong quarter. Can you break out how much of your mix is coming from direct versus indirect and sort of the trends you're seeing in each? Are you signing new partners? Are you seeing higher volumes? What are the main drivers there? And the margins were really strong two in consumer. So is that helped by sort of more of the direct or indirect as well? Thank you.

Todd M. Cello -- Executive Vice President and Chief Financial Officer

Hey, Toni, this is Todd. So as it pertains to the Consumer Interactive business, when we think about the direct versus the indirect channel, think about that as one-third direct, two-thirds indirect. And then when you get into the overall margins of that business, a lot of it has to do with the type of products that the consumer is purchasing from us, right. So if it's a single euro products, meaning that it's just the TransUnion credit report that's being provided, obviously, that's a higher margin product for us to deliver because it's our data that we're delivering. The opposite of that would be where we're offering a free bureau monitoring product where we have to purchase a credit file from Equifax and from Experian to deliver that.

So there is cost associated with it. So the margin profile gets hit. So when you look at the overall performance of the margins this quarter, yes, we did definitely benefit from a mix shift and that's not always something that's deliberate for us either. It's just depending on the buying patterns of our customers. Just going back to the top line though, I would say that the business performed exceptionally well in both channels. First, the direct business, it has been an area that we've been investing incremental advertising dollars into because we are able to attract high-quality consumers that we're able to retain. So they're interested in monitoring their credit and they're staying with us.

Conversely, on the indirect side of our business, we benefited from a couple of Breach Services Agreements, which we highlighted in our prepared remarks that's also providing for growth, but then also all the rest of the indirect partners continued in general to grow overall very nicely for us.

Toni Kaplan -- Morgan Stanley -- Analyst

Thank you.

Operator

Our next question will come from George Mihalos of Cowen. Please go ahead.

George Mihalos -- Cowen -- Analyst

Good morning, guys. Thanks. Thanks for taking my question. Chris, wanted to ask a question on PSD2 in the UK and open banking, which is something that you highlighted in your remarks. Is that a potentially a meaningful driver of the UK business next year and can you maybe kind of scope for us how you're thinking about that opportunity between servicing FinTechs and traditional banks in the UK?

Christopher A. Cartwright -- President and Chief Executive Officer

Okay. Hey, good morning, George. We're really excited with the growth that we posted this quarter in the UK, 12% organic as you saw. It came from a broad mix of areas. We gained some market share in quarter credit origination services. We have a very robust fraud business there and fraud mitigation is fast growing. And now with the addition of our iovation capabilities, it's made us even more competitive. And open banking is really just in the early phases of adoption in that market. As we look to next year, we do believe that open banking and kind of transaction categorization services will generate some interesting revenues for us, but we're really thinking about the UK as an opportunity to apply the same approach, the same playbook that we've applied internationally with success.

Our growth playbook, it's a combination of just good knowledge-based marketing and blocking and tackling in the field, having strong products trended products and alternative data as well. And then bringing in some of our global horizontal solutions like CreditView, like our ever broadening analytical suite and again emphasizing iovation in the marketplace. So really, we're looking for broad-based growth and hoping to acquire additional share in the process.

Operator

Our next question will come from David Togut of Evercore ISI. Please go ahead.

David Togut -- Evercore ISI -- Analyst

Thank you. Good morning. You called out strength in mortgage, solid performance in credit card and auto is driving the underlying strength in the US markets. Could you comment on the sustainability of these three big macro drivers of US credit reporting demand?

Christopher A. Cartwright -- President and Chief Executive Officer

Happy to share some thoughts and then maybe Todd and I can tag team on this question. But the growth rate that we experienced in the third quarter in mortgage, as I look forward, I don't know, 12 or 18 months, I would be surprised if we continue to grow at that trajectory. Again, it's a bit of a turnaround on top of a soft comp. That said, home prices are easing. Interest rates are low, and there could arguably be further downward pressures that's always good for refinancing volume. We may even get an uptick in new home purchases in the future. Although that has been fairly slow.

So I would say, nice mid single-digit volume growth perhaps for the future. Auto was flat as we've talked about before from a volume perspective. However, there is starting to be a shift between new cars and used cars and typically a bit more credit gets pulled to finance the used cars. So there is a certain offset to the volume slowdown. You didn't mention consumer lending growth but there was nice growth again in consumer lending.

I think the marketing that we're seeing there in the FinTech space is more restrained than it has been in prior years, but it is still active and a growth-full category probably expanding the lending pie and also capturing some share from traditional lenders. And then card continues to churn along nicely in the mid-single digit volume growth, high-quality account origination from a risk perspective. And then really across all of these segments, risk is being well managed, the consumer and the economy is strong overall, certainly, but delinquencies remain well below pre-recession levels.

And so, all that is very good for our core financial services business, although it is a drag on our collections businesses as Todd explained before.

David Togut -- Evercore ISI -- Analyst

Thank you.

Operator

The next question will come from Bill Warmington of Wells Fargo. Please go ahead.

Bill Warmington -- Wells Fargo -- Analyst

Good morning, everyone. So, you mentioned in your remarks that you've got about 6 million consumers in India benefiting from CreditView Dashboard. I just wanted to ask how that compared to a more mature market like the US and how long do you think it will take India to reach similar penetration, and if so, what kind of revenue opportunity to does that present.

Christopher A. Cartwright -- President and Chief Executive Officer

Do you mean CreditView or CreditVision?

Bill Warmington -- Wells Fargo -- Analyst

I mean sorry, CreditView Dashboard.

Christopher A. Cartwright -- President and Chief Executive Officer

Oh, OK. Yeah. So the Credit -- yeah, just for clarity on the call, CreditVision is branding for the premium product. CreditView is a white-label packaging of our direct-to-consumer functionality that we license to lenders in order so they can cultivate and eventually monetize the audience that they have. That product has done extremely well in the US. We had a nice quarter and year-to-date of selling efforts. I can't tell you exactly the audience that we have. I'm not sure that all of our lenders would report that information back to us. So I'm just not clear on that.

We have introduced that product into a variety of other international markets including India. We're having some selling success there. I very much expect that that will be a very complementary product to our overall data offerings, and just a way for us to leverage the deep relationships that we've cultivated with both of our traditional bank lenders, and the non-bank financial companies.

Todd M. Cello -- Executive Vice President and Chief Financial Officer

Hey, Bill, and just one other thing to add to that is we're talking about CreditView and everything Chris just explained. And that's the relationship that we would have with the financial institutions that don't offer credit, but we also have a nice growing direct business as well in India. So it's -- you got to think about both channels in that space similar to how we operate in the US.

Bill Warmington -- Wells Fargo -- Analyst

Got it. Thank you.

Operator

Our next question will come from Andrew Jeffrey of SunTrust. Please go ahead.

Andrew Jeffrey -- SunTrust -- Analyst

Hi, good morning, appreciate you taking the question. I wanted to ask about the FinTech performance and, specifically, looking at Slide 5 in your deck. I wonder, Chris, you call out mortgage and how that might be a transitory tailwind, but clearly FinTech demand and the success you've had there is more structural. How do you think about the potential zero-sum game that arises as legacy financial institutions when you share. Is that a net benefit to you over time simply because you have such leadership position in FI? Or is that something you think about and talk about and try to balance in your long-term growth plans?

Christopher A. Cartwright -- President and Chief Executive Officer

Yeah. So first, some commentary on market and share. I mean, and again I'm -- this is more anecdotal than scientific. But I would -- my feeling is that the rise of the FinTechs, the rise of online consumer finances growing the pie and it's not necessarily zero sum, right. No doubt, there is some shared gain by this FinTech space collectively. And I mean, you can see that bear out -- that is borne out by some of the numbers that we track internally.

I would expect that consumer online lending will continue to outpace traditional lending market growth. And because we have first-mover advantage and a nice concentration of share there, it means that we have a superior file[?]. We've seen much more of the increase that take place with marketing and origination activities because it's a more robust data asset that reinforces the value and secures the share that we've got. Now that said, it's still a highly competitive space. There is price compression as we've talked about before as these lenders renegotiate based on the very substantial volumes that they've obtained. That's not necessarily a bad thing. It's just the natural development of a market like this. And we're super excited to serve all of these clients in the way that we do.

So advantage position or not, I wouldn't perhaps state it so strongly. We're trying to compete aggressively in every segment that we serve. If you look at traditional lenders, their online capabilities are extremely impressive as well. And I think, as we tried to convey in Slide 5, it's really all for the net benefit of the consumer, the rise of the Internet, the rise of data-infused decision making in near real-time, super user-friendly applications, these are all in response to consumer demands for fast and frictionless experience and that demand is permeating the way all lenders are competing.

Andrew Jeffrey -- SunTrust -- Analyst

Thank you.

Operator

Our next question will come from Ashish Sabadra of Deutsche Bank. Please go ahead.

Ashish Sabadra -- Deutsche Bank -- Analyst

Yeah, thanks for taking the question. So congrats on such a solid quarter. My question was just on the 4Q revenue guidance that implies like some amount of moderation in organic growth. I was just wondering, can you help us understand what's causing that slowdown. Is that conservatism or there is -- or your assumptions around mortgage benefit? So, any color on that trend. Thanks.

Todd M. Cello -- Executive Vice President and Chief Financial Officer

Hey, Ashish, this is Todd, thanks for the question. Yeah. So typically, our position going into any given quarter is to provide the market with a forecast and ultimately, obviously this guidance that we feel comfortable that we can achieve and that's really where we're at right now. When we go into our business review meetings and do the deep dives with teams and have a sense of what the pipelines look like and the conversion of that, we feel good about the numbers that we put out for the -- for the fourth quarter. I'll be -- to your point, it's a little bit slower than what we saw in the third quarter. But nevertheless, if there is over-performance to be had, that will materialize throughout the quarter for us.

Ashish Sabadra -- Deutsche Bank -- Analyst

Thanks. That's helpful.

Operator

And our next question today will come from Kevin McVeigh of Credit Suisse. Please go ahead.

Kevin McVeigh -- Credit Suisse -- Analyst

Great, thank you. Hey, congrats on the margins; really, really strong. Todd, any sense of a way to think about how much to the extent there is incremental benefit on margins, how much of that goes to reinvestment to come to continue to spur the organic growth as opposed to -- get shared with the market? And does that kind of mix vary over time?

Todd M. Cello -- Executive Vice President and Chief Financial Officer

Yeah, Kevin, that's a great question, and that's one that we debate quite a bit as a management team. And when we are -- especially when we are approaching this year, the high end of our guide, the full year being at 39.7%, approaching 40% for the full year. That's a significant amount of margin that's there. And I think the way we think about it is, first, we believe there is a lot of runway left with our organic offerings that we already have in market, but we're also excited about just of products that are still gaining traction with. So, Chris, spoken about Prama as an example. So I, -- we're very deliberate in investing back in those businesses. And in those products to ensure sustainability of the top line performance.

When we go back to the Investor Day and the long-term guide that we provided, we said that we would grow our revenues by 7% on average over the next three years. So we've always got that number in our mind that that's something that we have committed to the market and it's something that we want, that we strive to achieve. And the only way we're going to do that is by continuously innovating and differentiating ourselves in the marketplace.

And then when you get to the margin itself, approaching 40% is significant and I think we somewhat tempered expectations back on the Investor Day where we said we would grow the margin 50 basis points on average over the next three years. And really what that's getting to is that the margin profile of TransUnion has changed so much from our IPO in 2015 when we are around 35%. We've sustained that getting almost up to 40%. But it's really more of a question of how much margin do we want to squeeze out at TransUnion or do we believe that there is long-term revenue growth potential. So we believe that. We believe that there is a lot more to go, as I've already said. So I'd expect on the margin side for us to be very deliberate and focused on topline growth and making investments and maybe not having as much flow through to the bottom line and adjusted EBITDA.

Kevin McVeigh -- Credit Suisse -- Analyst

Sure. Thank you. Again, congrats.

Todd M. Cello -- Executive Vice President and Chief Financial Officer

Thank you.

Operator

And ladies and gentlemen, this will conclude our question-and-answer session. At this time, I'd like to turn the conference back over to Aaron Hoffman for any closing remarks.

Aaron Hoffman -- Vice President of Investor Relations

Great, thank you very much. And we appreciate everyone's time today. As we're at the top of the hour, we're going to wrap things up. We hope you have a terrific day. Thank you.

Operator

[Operator Closing Remarks].

Duration: 57 minutes

Call participants:

Aaron Hoffman -- Vice President of Investor Relations

Christopher A. Cartwright -- President and Chief Executive Officer

Todd M. Cello -- Executive Vice President and Chief Financial Officer

Andrew Nicholas -- William Blair -- Analyst

Jeff Meuler -- Baird -- Analyst

Manav Patnaik -- Barclays -- Analyst

Gary Bisbee -- Bank of America Merrill Lynch -- Analyst

Toni Kaplan -- Morgan Stanley -- Analyst

George Mihalos -- Cowen -- Analyst

David Togut -- Evercore ISI -- Analyst

Bill Warmington -- Wells Fargo -- Analyst

Andrew Jeffrey -- SunTrust -- Analyst

Ashish Sabadra -- Deutsche Bank -- Analyst

Kevin McVeigh -- Credit Suisse -- Analyst

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