TRU Financial Analysis

Analysis Date: 1/28/2025

Business Model

TransUnion generates revenue through three main segments: U.S. Markets, International, and Consumer Interactive services.

Revenue Sources

• U.S. Markets: Financial Services (credit cards, consumer lending, mortgage, auto lending)
• U.S. Markets: Emerging Verticals (insurance, technology, retail, telecommunications, etc.)
• Consumer Interactive: Direct and indirect consumer credit monitoring services
• International: Credit and information services across global markets

Income Statement Analysis

• Revenue growth of 12% driven by strength across all segments
• Operating income improved significantly due to absence of prior year goodwill impairment
• Adjusted EBITDA margin of 36.3% declined 50bps year-over-year

Balance Sheet Analysis

• Strong cash position with $643M in cash and equivalents
• Total debt reduced through $105M in prepayments year-to-date
• Leverage ratio improved to 3.1x from 3.4x at year-end 2023

Cash Flow Analysis

• Operating cash flow increased 30% driven by improved operating performance
• Lower investing cash outflow due to reduced capital expenditures
• Reduced financing cash outflow from lower debt prepayments

Capital Allocation

TransUnion is focused on debt reduction with $105M in prepayments YTD 2024. Capital expenditures are targeted at 8% of revenue in 2024, down from 9% historically. The company maintains strong investment in technology modernization and operating model optimization initiatives to drive future cost savings and innovation.

Management Commentary

Exceeded third quarter financial guidance for revenue and earnings

Accelerated revenue growth to 12% driven by broad-based strength

Transformation program delivering faster savings than expected

Raising full-year 2024 guidance to 9% revenue growth

Overall Sentiment: Very positive with strong execution on growth initiatives and transformation program

Recommendation

Rating: Buy

Reason for Rating: Strong execution, improving growth trajectory and successful transformation initiatives support a positive outlook

Disclaimer: This analysis is based on company filings and public information. It is for informational purposes only and not financial advice. Past performance does not guarantee future results.

Generated on: 1/28/2025, 6:11:10 AM