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DATE
- Thursday, July 24, 2025, at 9:30 a.m. EDT
CALL PARTICIPANTS
- President and Chief Executive Officer — Chris Cartwright
- Executive Vice President and Chief Financial Officer — Todd Cello
- Senior Vice President, Investor Relations — Greg Bardi
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RISKS
- Chris Cartwright cited that "the recently passed U.S. fiscal package extends the 2017 rate cuts, increases the deficit, and raises the debt limit. This has raised concerns about higher inflation and interest rates, which could negatively impact economic and lending conditions."
- Todd Cello stated, we expect adjusted diluted earnings per share to be between $0.99 and $1.00 for Q3 2025, representing a decrease of 5% to flat.
- The Asia Pacific segment declined 8% on an organic constant currency basis in Q2 2025, "as we lapped one-time consulting revenue in the prior year." per Todd Cello.
TAKEAWAYS
- Organic Revenue Growth: Organic constant currency revenue grew 9% in the second quarter of 2025, above the company’s 3%-5% guidance for the quarter, marking six consecutive quarters of high single-digit organic revenue growth.
- U.S. Market Segment: U.S. Markets revenue grew 10% on a reported basis in the second quarter of 2025, with Financial Services revenue up 17% and 11% excluding mortgage.
- Mortgage Revenue: Mortgage revenue increased 29% in Q2 2025, despite flat inquiry volumes; about 12% of trailing twelve-month revenue.
- International Segment: The International segment grew 6% organically in Q2 2025, led by India, which grew 8% in the second quarter of 2025, Canada’s organic constant currency revenue grew 10% in Q2 2025, and Africa, which grew 14% in the second quarter of 2025; offset by an 8% organic decline in Asia Pacific during the quarter.
- Consumer Interactive: Consumer Interactive grew 2% organically in Q2 2025, driven by the freemium solution rollout.
- Adjusted EBITDA: Adjusted EBITDA rose 8% to a margin of 35.7% in the second quarter of 2025, surpassing guidance of 34.8%-35.3% for the quarter due to revenue flow-through.
- Adjusted Diluted EPS: Adjusted diluted earnings per share reached $1.08 in Q2 2025, up 9% in organic constant currency revenue compared to the prior year
- Transformation Charges: Incurred $29 million in the quarter, totaling $315 million to date out of a planned $355-$375 million program through year-end 2025.
- Leverage Ratio: The leverage ratio improved to 2.8x in Q2 2025. Management targets a leverage ratio of 2.5x before the Mexico acquisition closes.
- Share Repurchases: $47 million in share repurchases were made through mid-July 2025 as part of capital deployment strategy.
- Trusted Call Solutions (TCS): Trusted Call Solutions is projected to reach $150 million in revenue in 2025, tripling since 2022 (from $50 million in 2022 to an expected $150 million in 2025), and is aiming for nearly $250 million in revenue by 2028.
- Guidance Raised: Full-year 2025 organic constant currency revenue growth is expected at 6%-7% (formerly 4.5%-6%); Adjusted EBITDA guidance was raised to 5%-7% growth for the full year 2025 (non-GAAP).
- Free Cash Flow Conversion: Free cash flow conversion is tracking at 70% in 2025 and committed to 90%-plus in 2026.
- India Long-Term Target: Management sees medium-term annual growth potential above 20% in India.
- Capital Expenditures: Guided at 8% of revenue for 2025, dropping to 6% of revenue starting in 2026 as cloud investments shift expenses from capex to opex.
SUMMARY
TransUnion(TRU 0.80%) management credited outperformance across all business segments to new business wins, innovation, and strong execution, which led to raised full-year 2025 guidance on revenue, adjusted EBITDA, and adjusted diluted EPS. The company highlighted strong uptake in Trusted Call Solutions and continued product modernization, citing a shift to cloud platforms and AI-driven development tools as drivers of operational efficiency. Management identified India as a critical growth opportunity, expecting a rapid rebound in lending activity and a return to high-teens organic constant currency revenue growth by Q4 2025, with secular tailwinds supporting continued outperformance. Cash deployment priorities include further deleveraging, with a clear path to 2.5x leverage before completing the planned Mexico acquisition, and share repurchases balanced with debt prepayment. The call also addressed potential macroeconomic uncertainties, including fiscal policy and inflation risk, stating guidance remains conservative despite robust first-half momentum.
- Chris Cartwright said, "Our customer migrations are focused on minimizing conversion disruptions while delivering our targeted savings within the committed investment levels."
- Todd Cello confirmed, "Operating expense savings from the [transformation] program ... about $85 million [achieved] in 2024 … the remainder will largely come in 2026."
- Cartwright remarked, "We are comfortably above two-thirds of the market in terms of market share" for consumer lending, attributing momentum partly to product suite expansion.
- Leadership emphasized that U.S. credit volumes were 'slightly above expectations' in Q2 2025, especially in consumer lending, though auto and mortgage activity remain below historical trends.
- Todd Cello stated the company "remain focused on delevering to under 2.5 times leverage ratio."
INDUSTRY GLOSSARY
- Trusted Call Solutions (TCS): TransUnion’s platform of data-driven call authentication, fraud prevention, and branded call display solutions used by enterprise clients and telecom carriers.
- Freemium Solution: A consumer-facing offering providing basic services or credit monitoring for free with optional paid subscription add-ons, aimed at user acquisition and upselling.
- FactorTrust: Alternative credit data bureau and analytics platform acquired by TransUnion, delivering non-traditional credit data, especially for subprime and fintech lenders.
- TriMerge Credit Report: A comprehensive mortgage credit report built from the credit data of all three major U.S. credit bureaus.
- OneTrue: TransUnion’s global, configurable, cloud-native platform for data processing, analytics, and product delivery.
- OneTrue Assist: AI-enabled software tool for automating development tasks, improving productivity, and bolstering cybersecurity for TransUnion platforms.
- Adjusted Diluted EPS: A non-GAAP profit metric reflecting earnings per share adjusted for exceptional or non-recurring items.
Full Conference Call Transcript
Chris Cartwright: Thanks, Greg. Let me add my welcome and share our agenda for the call this morning. First, I'll provide the highlights of our second quarter 2025 results and an overview of market conditions. Second, I'll discuss progress toward our 2025 strategic priorities, including a spotlight on our fast-growing trusted call solutions business. Finally, Todd will detail our second quarter results and updated 2025 guidance. In the second quarter, TransUnion exceeded all key financial guidance metrics. For a sixth straight quarter, we delivered high single-digit organic revenue growth, highlighting our strong execution in a stable but still subdued market, and the benefits of our accelerating pace of innovation.
Revenue grew 9% on an organic constant currency basis, well above our 3% to 5% guidance. Excluding mortgage, our growth of 6.5% also exceeded expectations. U.S. Market segment delivered 10% growth in the quarter. Financial services grew 17% and growth excluding mortgage accelerated to 11%. Across all lending types, we continue to outperform overall market growth by driving new business wins across our solutions suites. Consumer lending and auto grew double digits, and card and banking grew mid-single digits. We experienced robust activity from FinTech lenders supported by healthy funding and heightened consumer demand for debt consolidation products. Mortgage was up 29%, compared to flat inquiries both modestly above expectations.
Earlier this month, the FHFA announced it will allow lenders to use VantageScore 4.0 for conforming mortgages and that the TriMerge credit report requirement will remain in effect. We believe these policies will provide choice for lenders and enhance certainty within mortgage markets, benefiting homebuyers, lenders, and taxpayers over the long term. Emerging verticals grew 5%. Insurance grew double digits driven by a gradual recovery in marketing and healthy consumer shopping activity. In addition to new wins across our solutions, we also grew across our diversified verticals led by communications and tech, retail, and e-commerce. Consumer Interactive grew 2% organically driven by the successful launch of our freemium solution, marking a key step in our turnaround strategy.
International grew 6% on an organic constant currency basis, India's growth accelerated to 8% as anticipated. We experienced a modest pickup in consumer lending and delivered strong growth in our non-consumer businesses. Within the remainder of the international portfolio, Canada and Africa were standouts, each growing double digits. Supported by our strong financial results, our leverage ratio declined to 2.8 times. We believe we're positioned to delever to 2.5 times before funding our planned Mexico acquisition, which we expect to close by the end of this year. We also opportunistically accelerated our share repurchases in the quarter. Through mid-July, we have repurchased $47 million in shares.
We expect that our financial results will further support disciplined capital deployment throughout the year. Now our second quarter results reflect a strong performance in stable but still muted market conditions. U.S. Credit volumes in the second quarter were slightly above expectations, particularly in consumer lending. Activity in cards remained steady, while auto and mortgage activity is below historical trends. Based on our overperformance in the first half of the year, we're increasing our 2025 full-year revenue and adjusted diluted earnings per share guidance. Even with this increase, we believe our updated guidance remains prudently conservative to accommodate ongoing macro uncertainties. As we will detail later in the call.
In the U.S., consumers and lenders remain sound and resilient, supporting stable lending activity. Consumers are benefiting from low unemployment, modest but positive real wage growth, and manageable inflation. Consumer sentiment in June improved from low levels earlier in the year, reflecting a better outlook for the economy, inflation, and personal finances. Major lenders reported solid second quarter earnings with strong profitability, adequate capital, and good credit performance. Now in April, we noted that trade and fiscal policy proposals added uncertainty to employment levels, inflation, interest rates, and economic growth. The U.S. has reached trade agreements with several countries since then and more expected soon.
However, the recently passed U.S. fiscal package extends the 2017 rate cuts, increases the deficit, and raises the debt limit. This has raised concerns about higher inflation and interest rates, which could negatively impact economic and lending conditions. The ten-year U.S. Treasury rate remains elevated, although below its mid-January peak. And we will continue to monitor the impact of these policy changes on rates, consumers, and our customers. In July, I attended the TransUnion Civil Annual Credit Conference in India, celebrating Civil's twenty-fifth anniversary. The event drew over 2,500 clients, including more than one CEO from major Indian lenders and key Reserve Bank of India regulators.
We discussed future innovations to increase financial inclusion and introduce new solutions and market insights. This event reinforced Civil's strong reputation and the positive impact it has on the Indian economy. Our India strategy reflects our vision to foster trust in global commerce between consumers and businesses. We recognize significant opportunities in India, supported by our scale, well-known brand, high-quality data, innovative products, and strong relationships with bankers and regulators alike. Our future innovation aims to expand credit access for underserved markets such as small and medium-sized businesses, new-to-credit consumers, and microfinance. All identified by India's government as vital economic drivers.
After the event, I'm even more confident that India represents an enormous long-term growth opportunity for TransUnion with the potential to grow over 20% annually over the medium term. In the near term, consumer lending in India is experiencing a gradual volume recovery due to manageable delinquency levels, lower interest rates, and the return to market of non-bank lenders who were sidelined by the Reserve Bank last year. The RBI has reduced interest rates by 100 basis points thus far in 2025 and is balancing lending safety with economic growth.
We anticipate our growth in India will accelerate later this year as lending volumes continue to recover, resulting in nearly 10% organic constant currency revenue growth for the full year and with fourth quarter growth in the high teens. We also continue to transform the company by modernizing our technology, enhancing our global operating model, and accelerating innovation across our product suites. I'll detail our recent progress. In the quarter, we accelerated U.S. Credit customer migrations and further enhanced the core capabilities of One, our global configurable cloud-native platform. Our customer migrations are focused on minimizing conversion disruptions while delivering our targeted savings within the committed investment levels.
To achieve this, we strengthened OneTruise functionality to manage our most complex and customized batch and online workloads. We're achieving notable performance and innovation improvements on the new platform, including over 50% faster processing, robust cybersecurity and compliance controls, and rapid development of new scores, attributes, and models. We also migrated several key consumer indirect customers to our new global consumer technology platform. The scalable platform enables faster product releases, seamless multi-region deployment, and reduced operational complexity. To further enhance OneTrue's capabilities, we have augmented its underlying identity graph with our comprehensive public records database. This integration enhances data fidelity and introduces more robust attributes related to addresses, phone numbers, and emails.
Our identity graph now encompasses a wide array of TU's proprietary data assets, including traditional credit header information, public records, communication and device identifiers, streaming data, and other unique data sources. Together, these elements enable industry-leading consumer identity resolution, improved data onboarding, more targeted marketing, and optimized fraud prevention and risk management. During the quarter, we successfully transitioned over 20,000 specialized risk clients to the enhanced One True identity graph, resulting in significant performance gains for these customers. We also expanded adoption of our AI-driven developer tool, One True Assist, which employs advanced language models to automate repetitive coding tasks, facilitate code translations, and detect and address security vulnerabilities.
One True Assist supports the entire One True software development lifecycle and has contributed to 20% to 50% productivity increases for developers. Additionally, we recently launched One True AI Studio, which provides low-code and no-code AI workflow solutions for broader non-engineering use cases. We're improving our global operating model as well by strengthening product development practices and our leadership. In Q2, Brian Silver joined us as Head of Marketing Solutions under Mohamed Ablisadek, bringing significant digital marketing experience. We continue to refine our approach to product management to better align resources, streamline decision-making, and accelerate new product iterations. These changes will improve commercial outcomes by integrating our geographic and vertical-led go-to-market strength with enhanced product development expertise.
Our technology stack and operating model are contributing to faster innovation and growth across our six global solutions families. We've increased the pace of new product introductions while also completing foundational technology modernization. FactorTrust customers can now use OneTrue, with its improved processing times, expanded scores and attributes, and more rapid model development. Factory Trust growth rates have reached double digits due to competitive wins and with a strong pipeline of new opportunities. In fraud, we launched new models using our materially enriched identity graph and our analytics and machine learning capabilities. Additionally, we developed a solution to identify consumers who dispute credit trade lines by falsely claiming to be fraud victims.
Early demand for this solution is strong, representing a cross-sell opportunity into credit customers. Marketing Solutions reported stronger retention and increasing sales momentum, particularly within Audience and Identity products. Within U.S. Consumer solutions, we rolled out a new freemium offering with updated web and app experiences, resulting in strong growth in the number of new free users. We plan to further expand these capabilities and offer in our offer inventory. With Manivo, we integrated lenders' underwriting criteria to personalize prequalified offers through online publishers and improve consumer experience and ad conversion. We will continue to build this marketplace by adding new publishers and top-tier lenders to the platform.
Now I'll conclude my remarks with a deeper dive into the innovation and growth of our communication solutions, particularly Trusted Call Solutions or TCS. We entered the communication solutions market through our NuStar acquisition, leveraged its relationships with telco companies to build a suite of data-driven authentication solutions. Our communication solutions help make trust possible in the phone experience by authenticating and clarifying the purpose of phone calls. Our customers report better answer rates and higher consumer satisfaction when using the service. The use cases typically combine fraud mitigation and brand identification to improve consumer engagement. Now, communication solutions overall has grown 10% plus per annum since 2022 and should achieve $320 million in revenue in 2025.
Trusted Call Solutions has grown from $50 million in revenue in 2022 to an expected $150 million this year. Financial services accounts for almost 30% of TCS revenues, with the remaining 70% spread across our emerging verticals. The remainder of communication solutions includes legacy products such as landline caller ID and listings management. These products embed us with telco companies and provide the data necessary for new products such as TCS and are very profitable. Although the revenue growth is flat to declining slightly. In sum, we believe communication solutions can deliver at least high single-digit growth driven by the sizable market for trusted calls.
Now, I'll detail how TCS works, why we're the market leader, and how we will build on our momentum. Trusted Call solutions enhance the phone channel, closing the user experience gap of digital channels. As most businesses rely on phone calls for important communications, and consumers prefer them for urgent matters, unanswered calls and robocalls remain major issues. Over 80% of outbound calls go unanswered, and consumers receive 55 billion robocalls annually, leading to $12 billion in fraud. Our solutions add caller name, logo, and call context to outbound calls. It authenticates inbound calls to block fraudsters and leads to better engagement, brand protection, and financial results. Customers across industries report improved contact and conversion rates.
Now TCS integrates TransUnion into the mobile call ecosystem, establishing an essential framework that benefits telecommunications carriers, enterprises, and end users. Enterprises serve as our primary client. We authenticate and onboard their phone numbers and enriched call data into our comprehensive data management platform. Telecommunications carriers are our strategic partners. When a call is initiated via a mobile network, the carriers access verified rich call data such as name, logo, and contextual information from TransUnion to present on the recipient's device. Enterprises compensate TransUnion for displaying authenticated information and we in turn provide royalties to the carriers. Consumers benefit from an enhanced and trustworthy calling experience enabling them to make informed decisions when responding to calls.
Now TCS is positioned at the forefront of the industry, addressing an estimated opportunity exceeding $1 billion in the U.S. alone. We've identified several sustainable competitive advantages that underpin our success in this market. First, TCS covers 94% of U.S. wireless consumers through our exclusive relationship with AT&T and strategic partnerships with First Orion and TNS. This collaboration enabled the delivery of 5 billion authenticated branded calls across the top three carriers in 2024. Leveraging our broad phone coverage and scale, we partnered with AT&T this year to introduce branded call displays featuring call reasons and providing context to phone calls and improving consumer engagement. Our innovation roadmap includes upcoming releases such as omnichannel capabilities and advanced fraud detection signals.
Second, we steward expansive and authoritative data sets to rigorously verify enterprises and telephone details, which enable us to authenticate and enrich calls. Our robust industry relationships and integration with over 800 carriers enabled us to develop TCS. Third, we possess extensive distribution channels through TransUnion that allow us to deploy TCS in numerous vertical markets. We see significant interest and strong sales across all sectors we cover, including financial services, insurance, healthcare, and the public sector. And finally, TCS integrates seamlessly with our market-leading fraud solutions to safeguard against data breaches, account takeover attempts, phishing, and other impersonation-related threats. Collectively, TCS enhances TU's long-term growth prospects, providing a pathway toward near $250 million in revenue by 2028.
As the market leader, we maintain robust integration with telecom companies and businesses, positioning us to capitalize on a large market opportunity in the U.S. Our strategy includes deeper penetration of our core verticals, scaling existing solutions, and broadening the product portfolio. Furthermore, we believe that we can take this solution to many of our markets globally in the coming years. Recently, we launched a branded call display in Canada, developed in collaboration with TELUS, a leading Canadian telecommunications provider. And we have introduced initial solutions in Brazil and France and are evaluating additional opportunities in markets such as India. We will continue to provide updates on our progress as we scale TCS in the coming quarters.
And with that, I'll hand it over to Todd.
Todd Cello: Thanks, Chris. And let me add my welcome to everyone. As Chris mentioned, in the second quarter, we exceeded our guidance across all key financial metrics, driven by broad-based outperformance in our U.S. Market segment led by financial services. Second quarter consolidated revenue increased 10% on a reported and 9% on an organic constant currency basis. The Mounivo acquisition contributed 0.5% to growth. Most of Monevo's revenue is recognized in the UK, with the remaining US revenue recognized in Consumer Interactive. The impact from foreign currency was immaterial. Our business grew 6.5% on an organic constant currency basis, excluding mortgage from both 2024 and 2025. Adjusted EBITDA increased 8%.
Our adjusted EBITDA margin was 35.7%, ahead of our 34.8% to 35.3% guidance due to flow-through on stronger revenue growth. Adjusted diluted earnings per share was $1.08, $0.9 ahead of the high end of our guidance and an increase of 9%. Finally, in the second quarter, we took $29 million of one-time charges related to our transformation program. $5 million for operating model optimization and $23 million for technology transformation. To date, we have incurred $315 million of planned one-time transformation expenses over the course of the program and remain on track for $355 million to $375 million in one-time expenses by the end of 2025. Looking at segment financial performance for the second quarter, U.S.
Markets revenue was up 10% compared to the year-ago quarter. Adjusted EBITDA margin was 37.9%, down 110 basis points due to the timing shift of investments from the first quarter to the second quarter as we discussed in April. Financial Services revenue grew 17% or 11% excluding mortgage. Credit card and banking was up 5% against flattish online volumes. We saw good growth from alternative data sales and trusted call solutions as well as healthy batch activity. Consumer lending growth accelerated to 18%. We experienced further strengthening in marketing and online volumes from FinTech and point-of-sale lenders. We also delivered strong factor trust growth.
Auto grew 19% driven by pricing of our data and third-party scores as well as good growth in our communications and marketing solutions. Volumes remained elevated in April likely due to a pull forward of demand ahead of tariffs. But normalized in May and June towards levels seen early in the year. For mortgage, revenue grew 29% despite flat inquiry volumes, benefiting from third-party score pricing and non-triburo revenue. Mortgage accounts for about 12% of TransUnion's trailing twelve-month revenue. Emerging verticals grew 5% led again by double-digit growth in insurance. Tech, retail and e-commerce, telco, and tenant employment all grew mid-single digits. Media was flat and Public Sector and Services declined.
We expect media growth to improve in the second half as marketing wins convert to revenue, and public sector to return to growth later in the year. Insurance, we delivered another strong quarter supported by stable market conditions. Marketing activity continues to recover as insurers benefit from improved rate adequacy, especially in personal lines auto. Consumer shopping also remained active. We delivered broad-based new business wins, including in core credit and driving history as well as trusted call solutions, and our modern marketing products. Turning to Consumer Interactive, revenue grew 2% on an organic constant currency basis. Both our direct and indirect channels grew in the quarter.
Excluding the impact from lapping a large breach remediation win, in the third quarter of 2024, we expect growth in the direct and indirect channels in the second half of the year. For my comments about international, all revenue growth comparisons will be in organic constant currency terms. For the total segment, revenue grew 6%. Adjusted EBITDA margin was 42.7%. Looking at the specifics for each region, India growth accelerated to 8% as anticipated and up from the 1% growth in the first quarter. Commercial credit, direct to consumer, and new products like our API marketplace drove growth offsetting still muted consumer credit volumes. Our UK business grew 5%.
Batch and online activity remained healthy for our largest banking customers and we continue to ramp new business wins across our verticals. In Canada, we grew 10% in a muted market. We drove growth through sales of our innovative fraud identity and consumer indirect solutions. Share gains across financial services, auto, and insurance, and increased portfolio review batch activity. We also benefited from some one-time revenues in the quarter. In Latin America, revenue grew 4%, with modest growth in Colombia and Brazil and high single-digit growth in our other Latin American countries. In Asia Pacific, we declined 8% as we lapped one-time consulting revenue in the prior year. Philippines growth remains strong. While Hong Kong faces a softer economic backdrop.
We expect Asia Pacific to return to growth in the second half of the year. Finally, Africa increased 14% with broad-based growth across financial services, retail, and insurance. Turning to the balance sheet, we ended the quarter with $5.1 billion of debt and $688 million of cash. Our leverage ratio at quarter-end was 2.8 times. We have repurchased $47 million in shares year-to-date through mid-July in line with our balanced approach to capital deployment. We remain focused on delevering to under 2.5 times leverage ratio. Throughout the remainder of the year, we plan to balance debt prepayment and share repurchases based on market conditions.
We also plan to preserve capital ahead of our TransUnion acquisition which we expect will close by year-end. Turning to guidance. As Chris mentioned, we are raising our guidance for the full year primarily to account for strong first-half results as well as continued business momentum. Even with the guidance raise, we maintained a prudently conservative posture for the remainder of the year to account for ongoing market uncertainty. We believe we can manage some level of U.S. lending activity softening within our guidance range. Should current conditions persist, we would expect to deliver results at or above the high end of our guidance range. That brings us to our outlook for the third quarter.
We expect FX to be less than 0.5% headwind to revenue and adjusted EBITDA. We expect Winivo acquisition to add 1% to revenue. We expect revenue to be between $1.115 billion and $1.135 billion or up 24% on an organic constant currency basis. These growth rates include a 4% headwind from lapping the large breach remediation win in last year's third quarter. Excluding the breach comparison, our organic constant currency growth guidance would be six to 8%. Our revenue guidance includes approximately two points of tailwind from mortgage. In the third quarter, we expect mortgage inquiries to decline modestly. We expect adjusted EBITDA to be between $397 and $411 million, up 1% to 4%.
We expect adjusted EBITDA margin of 35.6% to 36.2%, down 10 to 70 basis points. Our margin expectation for the third quarter is consistent with our results in the first half of the year as well as our expectation for the full year. We expect our adjusted diluted earnings per share to be between $0.99 and $1.00, down 5% to flat. Turning to the full year, anticipate FX to be less than 0.5% headwind to revenue and adjusted EBITDA. And the Munevo acquisition to contribute 0.5% to revenue. We expect revenue of between $4.432 and $4.472 billion. We expect organic constant currency revenue growth of 6% to 7%, an increase from our prior guidance of 4.5% to 6%.
Excluding mortgage, we expect organic constant currency growth of 4% to 5%. These growth rates include a 1% headwind from lapping the large breach win from last year's third quarter. Specific to our segment organic constant currency assumptions, we expect U.S. Markets to grow mid-single digit both including and excluding mortgage. We anticipate financial services to be up low double digits or high single digit excluding mortgage. Expect mortgage revenue to increase by over 20% against modest declines in mortgage inquiries. We expect emerging verticals to be up mid-single digit. We anticipate Consumer Interactive decreasing low single digit but increasing low single digit when excluding the impact of last year's large breach win. We anticipate international growing high single digit.
Turning back to the total company outlook. We expect adjusted EBITDA to be between $1.58 and $1.61 billion, up 5% to 7%, an increase from our prior guidance of 3% to 6%. That would result in an adjusted EBITDA margin of 35.7% to 36%, down 30 basis points to flat. We anticipate adjusted diluted earnings per share to be $4.03 to $4.14, up 3% to 6%, also an increase from prior guidance of flat to 4% growth. Our expected adjusted diluted earnings per share growth reflects strong underlying performance and is inclusive of a 400 basis point headwind from foreign exchange and a higher tax rate in 2025. Expect depreciation and amortization to be approximately $570 million.
We expect the portion excluding step-up amortization from our 2012 change in control and subsequent acquisitions, to be about $285 million as technology modernization initiatives go into production and start to depreciate. We now anticipate net interest expense will be $200 million for the full year. We expect our adjusted tax rate to be approximately 26.5%. Capital expenditures are expected to be about 8% of revenue. We continue to expect to incur $100 million to $120 million in one-time charges in 2025 related to the last year of our transformation program. Given those investments, we expect our free cash flow conversion as a percentage of adjusted net income to be 70% in 2025 before improving to 90% plus in 2026.
In closing, we delivered strong results and are quickly approaching a period in 2026 and beyond that we believe we'll see stronger free cash flow generation and a leverage ratio within our target range. This will enable discipline and shareholder-friendly deployment of capital similar to our approach throughout the first half of the year. I will now turn the call back to Chris for final comments.
Chris Cartwright: Thanks, Todd. In summary, we delivered a robust second quarter surpassing our guidance across all key financial metrics and marking our sixth consecutive quarter of high single-digit organic revenue growth. Based on our strong performance in the first half of the year and sustained business momentum, we're raising our 2025 guidance, now anticipating 6% to 7% organic constant currency revenue growth. And we continue to make substantial progress toward our strategic priorities. Following several years of investment, our current focus is on execution and value creation. Our growth playbook, which is historically emphasized differentiated vertical market engagement and geographic expansion, has driven our industry-leading growth over the past decade.
As a result of our transformation, we are equipped with an expanded suite of solutions for our customers. Product innovation is an increasingly essential component of our growth playbook, complementing our established vertical and geographic strategies. We are confident that our strategic investments and our disciplined execution will further enhance our product offerings and customer experience, positioning us for another phase of industry-leading growth. And with that, let me turn over the time to Greg.
Greg Bardi: That concludes our prepared remarks. The Q&A, we ask that you each ask only one question so that we can include more participants. Operator, we can begin the Q&A.
Operator: We will now begin the question and answer session. If at any time your question has been addressed and you would like to withdraw it, please press star then 2. At this time, we will pause momentarily to assemble our roster. And as a final reminder, we ask that you keep your questions to one at a time. Our first question comes from Faiza Alwy from Deutsche Bank. Please go ahead.
Faiza Alwy: Yes, hi. Hi, thank you. Good morning. Chris, you mentioned in your prepared remarks that across all lending types, you're outperforming the overall market driven by new business wins. And I'm curious sort of is this more customer mix or is it related to some of the new technology and product innovation? Or something else you're doing? Just would love a little bit more color there.
Chris Cartwright: Yeah. Sure, Faiza. Well, I would say it's a combination of some of those elements. On the customer mix side, consumer lenders have come back strong in recent quarters as we expected. Funding is flowing again to the space. They're addressing an attractive market opportunity to consolidate revolving card balances at lower rates. It's what they're really good at. And as we know, consumer lending, FinTech in particular was really bruised during the market slowdown in '22 and '23. But now they're back and they're back in force. And it's going to benefit us disproportionately because we have a very large share there.
We are comfortably above two-thirds of the market in terms of market share, and they had a standout quarter and they've got good momentum. I would say we're also selling into these financial services subcomponents whether it's mortgage, consumer lending, card, auto, a broad array of products. Remember, these are market segments for us. They're not products. So, we're selling credit, and credit analytics, but we're also selling trusted call solutions. We're selling marketing solutions. In particular, in the auto vertical, we posted really great growth. In the second quarter. Less than half of that was the price benefit from the score price increases and it was just a little bit from volume.
The rest of it is coming from the performance of our product suite in the auto segment. Think it's an important thing to mention there. But look, we've got good momentum in financial services as you can see from Q2 and the whole first half. And that's allowed us to raise the guide materially for the year. While still maintaining a very conservative posture.
Operator: The next question comes from Andrew Steinerman of JPMorgan. Please go ahead.
Andrew Steinerman: Hi. Just two quick questions. One, I definitely noted the momentum at Factor Trust and other kind of alternative bureaus in the marketplace. Could you just give us a comment of why there's good momentum right now to the alternative data bureaus? And is that tied to stronger P loan growth? And then let me just give you my second question. About the Mexico acquisition, how is that asset performing now? And just remind us why it takes kind of a longer period of time to close? Meaning longer than a traditional U.S. acquisition?
Chris Cartwright: Yeah. For sure, Andrew. Okay. So regarding alternative credit data, of which Factor Trust is a market leader, you know, for us, it's really a story of replatforming in innovation and then relaunching Factor Trust. We acquired Factor Trust some years ago. It's a great dataset with good coverage. It was on an antiquated technology platform until we prioritize moving it to One True. In the process of replatforming it on One True, one, of course, we did prove out that we could handle, you know, credit at volume. With real-time reporting and the various complexities on the One True platform. We also considerably innovated on the analytics side.
We implemented a better identity spine underpinning the data, added a lot of data attributes. We enabled our True IQ analytics solution for more rapid modeling. And as a result, we're just winning more business with FactorTrust than we did previously. And we have a very robust pipeline. So I think the momentum in Factor Trust is gonna continue. Perhaps we're getting some benefit selling it as an add-on, into some of these other segments. Consumer lenders are the FinTech guys do like this alternative data. Anybody with a subprime focus is also interested in the subprime data. And we posted some nice sales of Factor Trust in the auto vertical as well.
Now in terms of the time for Mexico, or just the performance, the asset continues to perform well. It's on plan. And we're still on plan in terms of clearing the government review and regulatory hurdles to closing the acquisition. We are targeting and hoping to close the deal before the end of the year. And look, some of this just takes a bit of time. But you know, the fact that it takes time shouldn't raise any concerns.
That's just the operating standard in Mexico but we're getting a great asset at a really fair price and we're going to bring a ton of innovation to the Mexican market that I think is going sustain and increase the growth rate for many years to come.
Operator: Our next question comes from Jeff Moeller of Baird. Please go ahead.
Jeff Meuler: Yes. Thank you. So on the CI freemium and marketplace rollout, it sounds like it's a little bit staggered or there's kind of like a beta period. So what are the most important initial learnings? And then what's the timeline to more fully integrate capabilities and build out marketplace? And then, I guess, finally, are you willing to share anything on what you now expect intermediate term for growth out of the consumer interactive business? Thank you.
Chris Cartwright: Yeah. Yeah. For sure. So look, it was a solid quarter. For the consumer segment overall. The direct business and the indirect business both grew low single digits. As you know and everybody on the call knows, we've been investing heavily in this space for several years now to add the capabilities that you need to grow in this current environment. We've launched our new freemium solution. That means new user interface, integrating subscription offerings, and integrating a full complement of consumer loan offers. As well as identity protection and breach remediation. You know, we exited the beta period in the first quarter.
In the second quarter, we've been converting our core customer base, and we're probably plus 75% at this point. And we're converting over the offer inventory to the new platform and that's probably at 75% or 80% too. But, you know, right away, you can see that it's gonna have a positive impact on the growth rates of the business. Particularly on the direct side where we've been working hard to mitigate the decline. I think we've got that behind us now. And our goal is to kind of stabilize this low single-digit growth in the coming quarters as we start to optimize these different elements that we've got now.
Offers, freemium, an integrated offering of subscription freemium breach all of these things coming together, the interplay we're gonna be optimizing our marketing, optimizing our customer flows and conversion, if you will. The pricing, all of this stuff. And then look over time, we're going to bring more and more lenders and offer types onto the platform. It won't be so card-focused. There'll be a lot of different opportunities for consumers to engage with TransUnion in a freemium way and get the full range of consumer lending and insurance offers and other opportunities there.
In terms of the guide, look, right now, we're just executing on a whole bunch of goodness bringing it together, and returning this $600 million chunk of business to consistent growth. In the intermediate term, mid-single-digit growth. And I think once we're firing on all cylinders, we would expect to push even beyond mid-single digits. So hopefully that clarifies.
Operator: The next question comes from Toni Kaplan of Morgan Stanley. Please go ahead.
Toni Kaplan: Thank you. I was hoping to talk about the consumer lending environment. I think late last year and early this year you had talked about it being a stable but muted environment. Now it seems like you're saying it's a little bit better than expected and better than that. And when I look at US financial services, you grew double-digit ex mortgage. So just it sounds like you're still being a little bit cautious on how the environment plays out just with potential for deficits and inflation and that potentially impacting lending. But maybe just talk through where you like much better is it now?
Where do you think for the remainder of the year we sort of are in terms of market strength and into next year. And just the puts and takes around all of that.
Chris Cartwright: Thanks. Yeah. Well, we'll give you some flavor there around financial services. So you know, yes, it's stable, but muted. I think that's a fair assessment. Although perhaps, a little bit less so than it has been talked about in recent quarters. I mean, you can see, consumer lending is coming back, and I've already that opportunity. Card is still a more tempered environment. Kind of flattish online volumes. And we are selling in, you know, alternative data and trusted call solutions. Into cards. The big banks all reported over the past couple of weeks, and their commentary on card was a bit more optimistic, I think, than we've seen.
And we're starting to see some nice positive batch activity in card, which means card lenders are moving more towards the front foot if you will, which is good. But, you know, it's far short of saying, you know, happy days are here again. You know, auto, I talked about, the volumes are still you know, net positive a bit. A lot of that is the pull forward because of tariff fears. But we're selling a lot of products into the auto vertical, which is great. Driving, you know, our revenue growth. And look, mortgage is bouncing along what I think is a bottom. You know, this is kind of like, you know, industry existential volume levels.
The tenure rates remain elevated. And there's still I don't know, kind of neutral in terms of whether they're going to go up or whether they're going to go down. We're going to have to see how that plays out. And so I don't expect a big refinance boom to happen, you know, anytime soon. And as affordability is still a challenge because of, you know, the supply side of the housing equation. But what it really shows is one, as an industry, we're trading on rather tempered volume levels because of all of the rate increases that happen in the twenty-two early twenty-three time period, as we've said.
And so if you get just a little perk up in volume activity, you get nice growth rates. It also speaks to the portfolio diversification. That we have achieved. Again, we talk about consumer lending or card or auto, these are market segments. We're not just selling credit products. We're selling analytics. We're selling alternative data, marketing fraud. Phone solutions, etcetera. Right? And the breadth of the offering is appealing, and we're putting good points on the board.
Operator: The next question comes from Manav Patnaik of Barclays. Please go ahead.
Manav Patnaik: Thank you. Yeah, I was just hoping for maybe a quick update on your fintech exposure, how that's performing, some of the positive business momentum they're talking about, you know, how much of that is from that customer category?
Chris Cartwright: Sure. You know, so Manav, I've touched a couple of times on consumer lending. And while the category is broader than just FinTech, FinTechs are an important part of that. And as you can see from the results of the larger players, they're doing much better. In fact, they've recovered. The stability that we see in the market environment even at an elevated interest rate allows funding to flow back into the market. And that takes care of the supply side of things.
The demand side is good because you know, during the COVID era when credit scores artificially were inflated, a lot of cards were issued to a lot of consumers that might not have qualified for them previously and they took advantage of that. And they levered up in the revolving those balances and that creates a great demand side opportunity for loan consolidation. So we're definitely seeing a pickup in FinTech within consumer lending. But look, I just want to emphasize it's more than just consumer lending. The growth is great. We expect it to continue, but we're really doing solid performance across all of the financial services subcategories.
Operator: Our next question comes from Ashish Sabadra of RBC Capital Markets. Please go ahead. Apologies, Ashish. I seem to have lost your line. We will be going with the next question and answer Scott Wirtzl from Wolfe Research. Please go ahead.
Scott Wirtzl: Hey, good morning guys. Thank you for taking my question. I just wanted to touch on the mortgage side and specifically on the prequal environment. I'm just wondering if you could speak to what you're seeing in the market from general shopping activity to also the competitive dynamics in that space? Thanks.
Todd Cello: Hey, Scott. Good morning. Thanks for the question. I'll jump in here on that. As far as, you know, mortgage is concerned, I think, you know, what we've been pleased with the performance that we've seen, you know, to date. You know, in general, through the first half inquiries, have been in line. And as a reminder, when we, you know, talk about our inquiries, we're talking about prequalification as well as, tri merge. So in the second quarter, in particular, we were roughly flat. And this goes to what Chris just said in a previous response to there's we believe we're at a bottom here and that there should be, you know, upside in the space.
The revenue that we saw did outperform, specifically to your question, due to prequalification. We have seen, you know, good traction with our customers. You know, in that space, especially after the change last year with the early access program. So we've been able to maintain our position, if not even gain, you know, on what we have there. But in mortgage, we've, you know, outside of just the pricing, that we all know about, you know, and what drives the majority of the 29% revenue increase that we saw.
We've also had some success selling other parts of our product portfolio such as batch marketing, as well as trusted call solutions, which we obviously covered, you know, in-depth, you know, on the call here today. So, as we, you know, look to go forward into the second half of the year, I mean, for all intents and purposes, you know, we're pretty much holding to the guidance that we've been providing thus far. So that will call for the second half for inquiries to be sound modestly. And then for the full year, also, be down modestly as well too.
Operator: Alright. Once again, I will introduce Ashish Sabadra of RBC Capital Markets as our next question asker. Please go ahead.
Ashish Sabadra: Thanks for taking my question. I just wanted to go back to India. Obviously, we saw some pretty material acceleration in India. From 1Q to 2Q, you've talked about 20% growth in the over the mid I was just wondering if you could provide some color about the second half of the year, how should we think about the puts and takes there? Thank you.
Chris Cartwright: Yeah. I just got back from a week in India. It was very exciting. Invigorating, in fact. First, it's great to see the business pick up materially as a dig increasing from one to 8% organic. I feel like consumer lending momentum is returning in that market as we expected. Now that the posture of the Reserve Bank is pivoted to balancing growth as well as safety and soundness. The team there is still confident that for the full year, can hit a 10% growth rate. And that means by the fourth quarter, you know, we should be back to high teens organic growth.
And then that sets us up to a return to, you know, probably low 20% kind of compounding and potentially better. You know, as I mentioned, I was over there because we were celebrating the twenty-fifth anniversary of our bureau over there. It's called Cibill. And I interact with just a ton of CEOs and a ton of senior regulators. And they confirmed that because of the actions of the RBI, they expect consumer lending to return full force over the next four quarters. And so that's in addition to this improvement in volume that translated into 8% growth for us in the second quarter. And look, the reasons are the RBIs cut rates by 100 bps already.
Very focused on stimulating economic growth. Inflation is lower in India than it has been in quite a number of years. That's encouraging too. So that's part of the pro-growth stance. The RBI has also indicated that they're comfortable with the loan to deposit ratio in consumer lending currently and with the lending practices of certain key non-bank financial players who were sidelined over much of the past six quarters but have now come back into the market and are beginning to resume lending. And look, delinquencies overall are holding up nicely. They're manageable. They're within historical standards. So we're really setting up for the recovering consumer lending in India that we expected.
It took about six quarters for India to slow down. To, you know, the to the bottom. In Q1. It'll probably take about six quarters until they are fully back rolling along. And we're two quarters in. But look, India represents an enormous long-term opportunity. What's exciting about being over there is regulators and lenders, they really appreciate the value of credit reporting agencies. Having a foundation of objective and quantitative data to base their lending practices on. They've only had a functioning score in that market for about twenty years. And, you know, these CEOs can tell you what it was like lending to consumers previously, which is they were very conservative, were very cautious.
And they recognize that, you know, in working with us, over this period, they've been able to bring literally hundreds of millions of Indian consumers into mainstream consumer finance. So financial inclusion has been great that helped drive their economic growth. And in addition to all the secular tailwinds of great demographics, further financial penetration potential, the continuing digitalization of commerce there and urbanization trends, there's a ton of growth opportunity. And we're maintaining our market share. In the low seventies, which is great. We have a data quality advantage. And I think it sets us up for at least 20% compounding over the longer term.
It's also a diversified portfolio with all this growth potential in consumer 60% of our revenues today and there's a lot of opportunity for innovation there. And microfinance, agrolending, lending to small medium businesses, plus, we're setting up to bring marketing and fraud solutions to India on one true. And we just launched the TrueIQ analytics platform there and completed our first innovation lab. And there's an enormous appetite for more analytics in the Indian market. We partnered with this customer. We earned several $100,000 worth of consulting fees. Now we've got their data business, you know, for the long term. And there's great potential.
And I guess the last thing I would say is look, I had the privilege of meeting with the governor of the Reserve Bank of India while I was there, my team and I, and really their focus is all about how they can bring more of the Indian population into the mainstream lending economy. While they're pleased that, you know, there are now hundreds of millions of folks participating in that, there are still hundreds of millions of people, particularly in rural areas, that want access to capital on more favorable terms.
And they want to understand how they can leverage all of this alternative data that they've created with their federal registry for, you know, for wealth, for real estate, for the data that's flowing through their universal payment interface. And we're positioned to help them think through the opportunity and partner on the execution. So India is indeed a very bright growth opportunity for us and we're fortunate to have it.
Operator: The next question comes from Kelsey Xu of Autonomous. Please go ahead.
Kelsey Xu: Hi, good morning. Thanks for taking my question. With the recent announcement from the FHFA in terms of validating the usage of Vantage 4.0 in mortgage underwriting, I was just wondering how you really think about the strategy to gain share for VantageScore, not just in mortgage, but also in non-mortgage verticals? Thanks a lot.
Chris Cartwright: Yeah. Fair enough. Kelsey. So look, first, I would just say that you know, appreciate and we support the clarification around policy that the FHFA has made recently with their pronouncements around the mortgage tri merge and score competition. We think they're the right decisions for consumers, for the GSEs, and for just the safety and soundness of the mortgage economy overall. And, basically, they're just founded on the principle that more data, particularly when the data is accurate, curated, and predictive, will result in better outcomes across the board. And look, that was our positioning all along on the mortgage tri merge. Right? You know, the bureaus have differences in their data.
And a mortgage decision is enormously important for the typical American consumer. It's not only a quality of life issue, it's one of the best wealth-building opportunities we should bring to bear all of the accurate curated data that's available to make the best possible decision for behalf of that consumer as a borrower also on the behalf of all those consumers who are also taxpayers and ultimately bear the risks of the GSE. Maintaining the tri merge makes a ton of sense. Regarding, you know, scores and score competition, clearly, we think it's time to modernize scoring. The current score that has been in effect since 2004, you know, can be improved.
And it also relies on point-in-time credit data. Right? And, you know, for over a decade now, the entirety of the consumer lending industry has been pivoting to trended credit data. Now we led that with the introduction of our credit vision trended credit data in the U.S. in 2012. But all of the bureaus have trended credit data. All of the clients across all lending categories are using trended credit data. And it's so much more predictive and effective that all the clients pay a material price premium to use it.
So for the purpose of evaluating whether a mortgage application qualifies, as conforming or not for the GSEs, by all means, let's pivot the credit scores that are based on trended data and let's encourage competition. The competition leads to innovation, it leads to sharpening the pencil on price. And so we're very supportive of the policy decision. Now look. With any major policy pivot like this, it's gonna take some time until all of the operational nuances are ironed out. You know, the regulators are working hard on that now. And, look, we are we're standing at the ready.
Along with Vantage to complete whatever analytics or comparisons that they want between the various score that are out there in the market. And look, we hope that the GSEs will pursue that. We know that they're interested, and we know that we're willing. And we'll just have to see how this plays out because it is a complex industry and a complex situation but I'm confident that the right policies are in place for the right reasons. That ultimately, it's going to benefit the overall mortgage economy.
Operator: Our final question this morning comes from Jason Haas of Wells Fargo. Please go ahead.
Jason Haas: Hey, good morning and thanks for taking my question. I wanted to follow-up on some of the figures that you've given around the investment you expected that benefits from the cost savings program. So you've called out a 100 to a 120 million of investments this year. Can I confirm that next year, the expectation is that, that goes to zero? And then alongside that, the expected benefit is 120 million to 140 million of OpEx savings? Are you able to give me a sense for how much is will be incremental for next year? So from yeah. So how much, you know, versus this year? And then yeah. That'll be it. Thank you.
Todd Cello: Hey, Jason. This is Todd. I'll take that question. So, the answer, to the first part of your question is it pertains to the investment you're referring to the one-time cost for both the optimization of our org model as well as our technology transformation we committed to a spend of up to $375 million. We are on track to hit that number. And be in probably not even exceed it. We'll be right around it. And the expectation is that it's going to stop at end of 2025. As we committed to. The benefits from that program as we shift into 2026 what we're focused on is the free cash flow benefit.
And if you remember, when we announced the transformation program in November, we committed to a $200 million free cash flow benefit going forward in 2026. And we have really good line of sight to that. As a reminder, on the operating expense, savings from the program, we achieved a significant portion of that in 2024. It was about $85 million. The remainder of those cost saves, are going to largely come in 2026 because in 2025, we need we always planned to complete our tech transformation work, and that's what we're in the midst of doing right now. Last component of this is capital expenditures.
We are running at about 8% of our revenue, which has been historically where TransUnion has run at. The commitment for 2026 and beyond is that capital expenditures will drop down to 6% of our revenues. And a lot of that just pertains to moving our computing environment to a cloud where the a cloud-based environment where the expense shows up in the P and L as opposed to being capitalized. So the net of all of this is the free cash flow conversion. This year, we anticipate to make a significant progress in improving the free cash flow conversion to 70%.
And what's most important with those free cash flow savings that I already talked about in 2026, we are committing to 90% plus on the free cash flow conversion. Yes. And so look, the net of it is the program is on track. We are very confident that we're going to deliver the savings that we articulated. And that we're not going to spend more than the investment that we articulated and it's going to happen within the timeframe. That we targeted. And so that's great, and that's all the kind of financial savings that's aspect of it. But again, this modernization is also leading to a real acceleration in our innovation.
And that's why in my comments, talked about the retooling of Factor Trust and how we're getting great commercial value out of that. The launch of our TrueIQ analytics in multiple markets around the world, including data enrichment, innovation and fraud, innovation in our identity graph, this is all being enabled by this one true platform that we're creating. And we're gonna get tremendous leverage about it. And look, I'd be remiss if we ended the call if we didn't just reinforce that you know, we have put forth improved guidance for 2025 and we firmly believe that it is conservative guidance. We grew 89% organically in the first two quarters.
And if you do the math, which I'm sure all of you smart analysts have, our guide still assumes that we are decelerating in the third quarter and particularly in the fourth quarter. And the reason we're doing that is because we're being prudently conservative. We want to have guidance that while elevated would still allow us to support and offset a slowdown in lending that may or may not arise. What I do want to be clear is that this slowdown is not reflected in our current business momentum. Right? We're almost done with July. July is a continuation of the strength that we saw in the second quarter.
And unless there's a slowdown in lending or a slowdown in the economy generally, we would expect to exceed the high end of the guidance that we've provided today. And that's true not only on revenue, but EBITDA and all the different financial metrics. I just wanna be clear on that before we end the call.
Greg Bardi: Perfect. That's a good place to end. Thanks for all your questions today and have a great rest of the day.
Operator: The conference has now concluded. Thank you for attending today's presentation and you may now all disconnect your lines.