Good morning. And welcome to TransUnion's 2023 Third Quarter Earnings Conference Call. Please note this event is being recorded. I would now like to turn the conference over to Aaron Hoffman, Senior Vice President. Please go ahead.

Good morning, everyone, and thank you for attending today. Joining me on the call are Chris Cartwright, President and Chief Executive Officer; Todd Cello, Executive Vice President and Chief Financial Officer. We posted our earnings release and slides to accompany this call on the TransUnion Investor Relations website this morning. Our earnings release and the accompanying slides include various schedules, which contain more detailed information about revenue, operating expenses and other items as well as certain non-GAAP disclosures and financial measures along with their corresponding reconciliations of these non-GAAP financial measures to their most directly comparable GAAP measures. Today's call will be recorded and a replay will be available on our website. We will also be making statements during this call that are forward-looking. These statements are based on current expectations and assumptions and are subject to risks and uncertainties. Actual results could differ materially from those described in the forward-looking statements because of factors discussed in today's earnings release and the comments made during this earnings call and 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 all that, let me turn it over to Chris.

Thanks, Aaron. Let me add my welcome and share our agenda for the call this morning. First, I'll discuss the macroeconomic conditions we're facing and the impact that they had on our business in the third quarter. Then I'll provide an overview of our third quarter financial performance. I'll also review the continued progress we're making with Neustar, accelerating revenue growth and achieving savings targets. I'll wrap up with a short discussion about our approach to managing through a more challenging and uncertain macro environment. Finally, Todd will detail our third quarter results, along with our fourth quarter and full year guidance. Economic conditions softened across several TransUnion markets in the third quarter, most notably in the US and the UK. While US consumers continue to benefit from low unemployment and modest real wage growth, lingering inflation and rising borrowing costs have taken a toll on household finances. Spending has slowed and consumers have largely spent through the excess savings accumulated during COVID. Although demand for credit remains strong despite elevated costs, banks have tightened lending standards due to weakening consumer finances and increasing capital constraints. Recent commentary from lenders supports these observations, noting that cracks have appeared across consumer lending, especially in the lower credit tiers. Now TransUnion entered the third quarter cautiously optimistic after exceeding guidance in the first two quarters, while maintaining our full year guidance as a cushion against ongoing economic uncertainty. However, lending volumes in the US and UK softened progressively over the third quarter, causing our revenues to come in slightly under the low end of our guidance. In US Financial Services, year-over-year revenue grew 3% in July and 1% in August, but declined 5% in September. Rising rates in the quarter had a negative impact as the 10-year treasury rate spiked 50 basis points after only increasing 20 basis points in the first half of the year. The decrease in loan demand combined with tighter credit standards also fueled a pullback in marketing activity, which negatively affected our consumer audience and campaign management volumes. We experienced a similar slowdown in our insurance vertical where carriers remain primarily focused on increasing profitability and have reduced marketing to acquire new customers. Insurance revenue grew 5% in July, 4% in August, but declined 4% in September. Increasing policy renewal rates and carriers exiting unprofitable geographies is fueling increased consumer shopping, which only partially offsets the decline in marketing volumes. And while policy attrition from large carriers is often acquired by smaller and nonstandard carriers, TU typically realizes less revenue per transaction as smaller carriers usually do not utilize our full product suite. Financial Services and insurance volumes have a high flow through to profits and their softening has weighed on our adjusted EBITDA dollars and margin. Our International segment continues to benefit from healthy economic conditions in India and Asia Pacific and strong market outperformance in Canada. Other parts of the portfolio, such as the UK, Latin America and Africa slowed over the quarter, although segment revenues in total were up low double digits. In the third quarter, TransUnion grew revenues 3% organically driven by strength in international, Neustar and several verticals within US emerging markets. US markets grew 2% with Financial Services flat and Emerging Verticals up 4% in total due to high single digit revenue growth in Neustar. Our bookings remained strong overall, including within Financial Services insurance and media, and we continue to benefit from our portfolio diversification as we grew double digits in public sector and media and high single digits in tech, retail and e-commerce, all areas of recent organic and inorganic investment. Revenue in our International segment grew by 11% in constant currency in September for the 10th consecutive quarter of double-digit growth. India led with 31% revenue growth while Canada and APAC also grew revenues double digits. We continue to outperform our underlying markets because of solution innovation, share gains and expansion into new adjacencies. We prepaid another $75 million of debt during the quarter, bringing our total for the first nine months to $225 million, and we expect to make further prepayments in the fourth quarter. We also settled two legal matters with the CFPB and the FTC with no admission of wrongdoing. We're pleased to have resolved these matters and to proceed with our work of providing important business services to help consumers reach their goals. Neustar delivered 7% revenue growth in the quarter despite increased macroeconomic headwinds and is proving to be nicely accretive to our growth rates in our core US verticals, even in these challenging market conditions. While bookings and subscriptions continued their strong growth, Neustar's transactional revenues in Marketing and Risk Solutions softened in the quarter. As a result, we're reducing our fourth quarter growth assumptions in line with volumes in September and lowering our full year guide to mid single digits growth instead of high single digits. We also expect a 31% EBITDA margin, up around 450 basis points over 2022 as we complete integration and achieve our target cost synergies. Now in the quarter, we announced a number of new partnerships that further support our confidence in Neustar's growth prospects.

Thanks, Chris, and let me add my welcome to everyone. I'll start off with our consolidated financial results. Third quarter consolidated revenue increased 3% on a reported and constant currency basis. There was no impact from acquisitions and immaterial FX impact. Our business grew 2% on an organic constant currency basis, excluding mortgage from both the third quarter of 2022 and 2023. Adjusted EBITDA increased 5% on a reported basis and 4% in constant currency. This result was negatively impacted by an incremental $7 million charge for the recent legal settlements above the amount we previously reserved. We also benefited from a reversal of accruals for variable cash compensation to account for our current view of revenue and adjusted EBITDA for the full year. Our adjusted EBITDA margin was 36.8%, up 50 basis points compared to the year ago third quarter and improved sequentially by 180 basis points from the second quarter of 2023. Third quarter adjusted diluted EPS declined 2% as a result of higher interest expense. Finally, we took a $495 million impairment to our UK business during the quarter. This remains an attractive market and business for TransUnion with a highly diversified portfolio, an array of successful product offerings like TruVision and TruEmpower and an adjusted EBITDA margin over 40%. Leveraging our innovation, we've gained meaningful share across the lending ecosystem and delivered market-leading growth under our ownership. However, the UK has faced an unusually harsh confluence of macro events resulting in inflationary pressures and soaring interest rates which has slowed the underlying lending growth. Before I get into US markets results, a reminder that we are reporting Neustar revenue within our Vertical market structure and we will discontinue providing stand-alone Neustar reporting at the end of 2023. Now looking at segment financial performance for the third quarter. US markets revenues were up 2% compared to the year ago quarter. Adjusted EBITDA for US markets increased 2% and adjusted EBITDA margin was flat at 35.2%. Financial Services revenue was flat. Consumer lending revenue declined 9% compared to single digit growth in the third quarter of 2022. Absolute lending volumes remain healthy as unsecured personal loans have become a mainstream product for our consumers. With that said, marketing activity remains depressed. Rising rates have weighed on consumer demand and capital funding continues to be highly selective. Our credit card business was down 5% compared to low double-digit growth in the year-ago quarter with marketing down mid-teens. Issuers continue to react to rising delinquencies by moderating marketing spend. With that said, like with consumer lending, activity levels for card remain healthy on a historical basis. Our auto business delivered 6% growth in the quarter on the strength of continued share gains, pricing, strong prequalification volumes, the impact of cross-selling Neustar marketing and call center solutions. We are seeing strong demand for new vehicles, somewhat offset by continued weakness in the used vehicle market and challenges around affordability. For mortgage, revenue was up 26% in the quarter despite inquiry volumes falling about 21%. As Chris pointed out, growth slowed considerably over the course of the quarter as mortgage rates jumped to 20-year highs in recent weeks. Existing home sales reached their lowest level since 2011 and applications in mid-October fell to their lowest point since 1995. On a trailing 12-month basis, mortgage represented about 7% of total TransUnion revenue. For 2023, we now expect the inquiry market to be down roughly 30% and our revenue to increase roughly 15%. Let me now turn to our Emerging Verticals, which grew 4% in the quarter. Insurance delivered low single-digit growth despite the challenges that Chris described. Even in this environment, we continue to win new business for innovative products like TruVision driving history, which has grown fivefold over the past five years. Penetration of newer markets like life and commercial auto and successful cross-selling of Neustar and Sontiq solutions. Tenant and employment screening was down as we've recalibrated our solutions to provide the most customer and consumer friendly approach possible. This has cost us some volume in the short term but we believe it will ultimately be a long-term competitive advantage. The public sector, media and tech, retail and e-commerce verticals all delivered strong growth, highlighting the value of our diversified business and in particular the benefits of integrating Neustar solutions into existing TransUnion end markets to enhance growth. The telco vertical was down slightly as declines in landline caller ID offset growth in other areas like trusted call solutions. Consumer Interactive revenue declined 3% in line with our expectations. Adjusted EBITDA margins were 50.4%, up about 80 basis points as a result of more focused advertising spending. Our direct business continues to see moderating declines as we recalibrated our marketing approach to focus on higher value consumers. Thus far, we've seen good returns on the revamped tactics with better than expected customer acquisition stats at attractive cost to acquire. Our indirect business was flat as lenders have pulled back on utilizing offer aggregators and other channels for marketing, like the trends we're experiencing in our financial services vertical. Our breach and identity protection offerings built through our acquisition of Sontiq, continued to deliver good growth. For my comments about International, all revenue growth comparisons will be in constant currency. For the total segment, revenue grew 11% with three of our six reported markets growing by double digits. Adjusted EBITDA margin was 45.3%, up about 95 basis points. Now let's dig into the specifics for each region. In India, our largest international market, we grew 31%, reflecting strong market trends and generally healthy consumers. We saw meaningful growth in both consumer and commercial credit markets as well as from fraud, marketing and direct-to-consumer offerings. We continue to expect India to deliver another year of over 30% growth. In the UK, revenue declined 4%. Excluding revenue related to one-time contracts included with the UK government, we would have declined 2%. While the UK fintech market continues to be challenged, the rest of our business is growing despite the challenged macro environment with good growth in banking driven by share gains and traction with products like TruVision and CreditView as well as strong performance in insurance and gaming. Our Canadian business grew 17% in the third quarter. While the market remains low growth, we have generated strong outperformance across our portfolio and continue to win new share in financial services, fintech insurance and direct-to-consumer. In Latin America, revenue was up 3% with healthy online performance offset by a decline in batch marketing activity. Brazil was down in the quarter as we've seen some weakness in the fintech market. While macro conditions softened across Latin America, our teams continue to win new business in financial services, insurance, government and telcos. In Asia Pacific, we grew 12% from continued good performance in Hong Kong and very strong growth in the Philippines where we continue to add new offerings and win new business. Finally, Africa increased 8% based on a broadly strong performance across the portfolio and the region despite a challenging macroeconomic and social environment in several of our largest markets. We ended the quarter with roughly $5.4 billion of debt after prepaying another $75 million in the quarter, that left us with $421 million of cash on the balance sheet. We finished the quarter with a leverage ratio of 3.7 times. We have now prepaid $225 million of debt in 2023 and at this point, we intend to prepay additional debt in the fourth quarter. Looking back, since we announced the acquisition of Neustar in September of 2021, we've prepaid about $1.5 billion of debt. We're in the midst of refinancing our revolving credit facility and Term Loan A that matures on December 10, 2024. Based on early indications, we expect a favorable outcome and we will update you when we complete this transaction. And to reiterate our previous comment, at this time, we have no intention to pursue any large-scale acquisitions and even smaller bolt-on acquisitions are not in our plans this year. We are focused on integrating and maximizing the growth potential of Neustar, Sontiq and Argus.

That brings us to our outlook for the fourth quarter. We expect FX to be insignificant to revenue and adjusted EBITDA. We expect revenue to come in between $917 million and $932 million or up 2% to 3% on an as reported and organic constant currency basis. Our revenue guidance includes approximately 2 points of tailwind from mortgage, meaning that we expect the remainder of our business will be flat to up 1% on an organic constant currency basis. We are reducing our revenue assumption considerably from that implied in our previous guidance. We have essentially extrapolated the difficult September results across the fourth quarter to better match the current trends in our business. We expect adjusted EBITDA to be between $303 million and $315 million, down 2% to 6%. We expect adjusted EBITDA margin to be down 180 to 260 basis points. I want to spend a minute on the sequential change quarter-over-quarter in our adjusted EBITDA expectations. The high end of our fourth quarter is $41 million lower than the actual result for the third quarter. More than three quarters of that change is a result of the reduced revenue outlook, which primarily came in financial services and carries a very high flow through to margin. The remainder is largely the result of the two items I mentioned earlier and the third quarter benefited from a reduction in variable cash compensation that was partially offset by the incremental reserve related to our settlement with the CFPB. We also expect adjusted diluted earnings per share to be between $0.67 and $0.72, a range of down 8% to 14%. Turning to the full year. We expect approximately 1 point of headwind from FX on revenue and adjusted EBITDA and we expect less than 1 point of impact from M&A. We expect revenue in between $3.794 billion and $3.809 billion or up 2% to 3% on an as reported and organic constant currency basis and up about 2%, excluding the impact of mortgage. The roughly $53 million reduction at the midpoint of our full year revenue expectation is comprised of $9 million from weaker mortgage inquiries and $6 million of FX headwinds, with the remainder largely as a result of the softening trends in consumer lending, insurance and Neustar. For our business segments, we expect US markets to grow low single digits and flat excluding mortgage. We anticipate financial services to be flat and down low single digits, excluding mortgage. We expect emerging verticals to be up low single digits. We anticipate that international will grow low double digits in constant currency terms, driven by ongoing strength in emerging markets. And we continue to expect Consumer Interactive to decline low single digits. Turning back to total company outlook. We expect adjusted EBITDA to be between $1.32 billion and $1.333 billion, down 1% to 2%. That would result in adjusted EBITDA margin being down 130 to 150 basis points. We anticipate adjusted diluted EPS being down 9% to 11%. And we continue to expect our adjusted tax rate to be approximately 23%, depreciation and amortization is expected to be approximately $520 million, and we expect the portion excluding step-up amortization from our 2012 change in control in subsequent acquisitions to be about $225 million. We anticipate net interest expense will be about $270 million for the full year, down slightly as a result of our continued debt prepayments and we expect capital expenditures to come in at about 8% of revenue. Finally, given the current level of uncertainty about the global economy, we believe it is prudent to withdraw the 2025 financial targets that we provided in mid-March of 2022. Clearly, a lot has changed in the macro backdrop since our Investor Day in March of 2022. However, we remain as bullish as ever about our long-term prospects, the value of our expanded product portfolio and our ability to outgrow our underlying markets. We intend to reestablish new targets when we have greater visibility into the trajectory of the global economy. I'll now turn the call back to Chris for some final comments. Thank you, Todd. And to wrap up, the third quarter proved to be more challenging than expected and conditions deteriorated as it progressed. But despite these headwinds, we delivered growth from our diversified portfolio and we remain focused on delivering a good 2023. We continue to execute against our strategy and we're proactively driving new revenue opportunities, investing in our business, managing our cost structure and maintaining our capital discipline. We remain highly confident in the long-term performance and potential of our business, and we're taking all the necessary steps to deliver the best possible results for shareholders. Now let me turn the time over to Aaron.

Thanks, Chris. That concludes our prepared remarks today. For 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 session now.

Our first question will come from Kelsey Zhu of Autonomous.

Chris, I was wondering if you can help us understand the Neustar revenue mix a little bit better in terms of what percentage of Neustar revenue comes from subscription versus usage-based revenue across marketing, fraud and communications?

Yes, sure. Aaron, you want to...

So Kelsey, roughly 80% of the marketing portion of Neustar is subscription-based. Marketing is about 40% of the total. So, 80% of 40 is about 32. So about a third of total Neustar is subscription-based revenue.

Let's take this chance to discuss Neustar's performance in the third quarter. It was one of our leading growth areas with 7% organic growth year-over-year, which we consider strong given the tough macro conditions we've mentioned in our prepared comments. However, we were anticipating higher growth from Neustar, aiming for around 10% organic growth in the second half of the year. What we actually experienced was different. With the macroeconomic pullback affecting lending and insurance, various aspects of our business were impacted. This led to a decrease in the number of batch prescreens and marketing campaigns, which affected our audience generation, segmentation, and campaign planning tools. The subscription segment of Neustar's overall revenue has performed well and met our financial expectations, which is a positive sign. We also achieved what we expected to book at this stage of the year and are on track to reach our full bookings targets, projected to surpass last year's record bookings for Neustar. The sale of Neustar products across our three lines is encouraging. However, the mix of our sales did not align with our expectations; we sold less data and audience services, which generate quicker revenue recognition, and more effectiveness measurement projects that require more time to realize revenue. This caused some revenue from bookings to be pushed out of the third quarter and even affected our fourth-quarter expectations. Additionally, the third component impacting our outlook relates to the volume of data sales from TruAudience and audience generation in specific marketing campaign management, which correspond to the fluctuations in lending volume and insurance origination. I hope this provides clarity on the dynamics influencing Neustar's performance.

The next question comes from Faiza Alwy of Deutsche Bank.

I wanted to touch on your comment regarding lending standards that tightened through the course of the quarter. I'm curious if it was across the board in terms of lenders, whether it's regional banks, fintechs or big banks. And if you can talk about any trends across various consumer cycles whether it's subprime versus prime, so just a bit more color around what's happening with lending standards.

I'm pleased to provide an overview of the macro conditions in the banking sector. As the quarter progressed, there were some positive signs such as low unemployment rates and real wage growth, even though there's a general agreement that the employment market is softening. However, while there are some positive and negative metrics, a significant decrease in the excess savings on consumer balance sheets has been noted. The Federal Reserve Bank in San Francisco recently indicated that these excess savings would be depleted by the end of the third quarter, and that has already been the case for most demographics, except for the wealthiest segment. Throughout the quarter, particularly in September, banks have become more cautious in originating new loans. Recently, large publicly traded banks reported their earnings; although their performance was slightly down, it generally exceeded expectations. However, the area that did fall short was new lending volumes. When looking into the details, the revolving loans are stable, but the volume for consumers has been significantly affected. Another factor to note is that earlier in the year, concerns about stability led to a shift of deposits to larger banks perceived as more secure. In this latest round of earnings, while these large banks are performing well due to growth in net interest income, their lending activities have decreased. Conversely, mid-market and smaller banks are experiencing a notable slowdown in new credit origination. This trend is reflected in our numbers, considering that lending constitutes a substantial part of our portfolio, which includes serving traditional and fintech banks of various sizes. We're observing a decline in lending volumes, and when banks exercise more caution, it leads to fewer batch prescreens, diminished credit pools, and reduced marketing planning. This overall withdrawal in lending is affecting our business fundamentals.

The next question comes from Jeff Meuler of Baird.

So I know Chris had more details to come on accelerating structural expense in efficiency programs. But just anything else you can talk to regarding how much opportunity there is to adjust the expense structure to a weaker volume environment? And I caught the decremental margins and the incentive comp adjustment in Q3, but the Q4 margins and implied decremental margins in Q4 still seem really weak. And I'm just trying to understand if that's more a function of time to implement the new programs or just how we can think through like incremental margins going forward if the volume environment remains weak for a while. Sorry for the long question.

That's a great question, and there are several aspects to consider. Firstly, we included our year-over-year revenue growth rates for each month in the quarter to illustrate the significant decline in volumes during September in both lending origination and insurance. We have recently experienced a revenue drop, and it hasn't left us much time to adjust our expense structure. Over the last 18 months, as our markets have gradually slowed, we have been actively managing expenses. This involves straightforward measures like reducing travel and entertainment costs, cutting external consulting, and trimming marketing budgets, along with being very cautious about our headcount. We slowed down new hiring and implemented a hiring freeze, opting not to fill backfill positions. These actions have enabled us to adjust our expense structure proactively in a declining revenue environment while maintaining strong margins. However, we still need to work on balancing our cost structure with the current revenue situation, and you can trust that we will take the necessary steps. My earlier comments were mainly about the advantages of the global operating model introduced about three years ago, which has progressively increased the proportion of employees located in centers of excellence in attractive talent markets that help lower our cost structure over time. Currently, about one-third of TransUnion employees operate in these markets, but we still see opportunities to achieve an ideal balance concerning total employees and management structures, and we will keep pushing in this area to enhance our structural profitability. Additionally, we have centralized all operational support functions for our various credit businesses, which will help us manage costs against volumes more effectively. On the technology front, we have been investing to transition to the cloud through our project Rise. We have migrated a significant proportion of our applications and integrated the Neustar technology, leveraging the core Neustar platform, OneID, now called OneTru, for our data product platforms globally. Our next step is to accelerate the consolidation of multiple, redundant platforms onto this advanced technology platform, which will allow us to reduce technology costs significantly. Lastly, we need to complete the work on acquisition integration, where we are performing well. We are confident that we will eliminate $80 million from the Neustar cost structure and will benefit from fully realizing those synergies. We also expect to achieve our integration goals for Argus and Sontiq. Therefore, consider cost management in these areas. Yes, there's been a revenue drop, and it takes time to correct our cost structure, but we have a number of structural benefits in progress that will be expedited, resulting in margin improvements associated with acquisition integration.

The next question comes from Andrew Steinerman of JPMorgan.

I believe you mentioned launching a new fraud platform today. I wanted to ask if fraud still accounts for about a quarter of Neustar's business. Also, on the fraud side, how have you integrated Neustar with iovation and TLO, or is that something planned for the next phase of fraud?

So the Neustar risk or fraud business is roughly 20% of their total revenue. Communications would be the largest, it grew quite nicely, low double digits in the quarter and marketing grew high single digits in the quarter. We just expected it to grow much faster. Risk didn't grow very much, right? It grew low single digits, and it's really because of the impact we see on the risk volumes that are coming through call centers and online. And look, our contracts are volume bounded. And when we budget or set expectations, we're assuming a certain degree of upcharges because of volume excess. That just didn't happen this quarter, we believe it's tied to the softening macro conditions. Now in terms of platforms and the next generation of this, look, fraud is a substantial part of our business. We have multiple fraud products and platforms in the US. When we acquired CallCredit, we got another set of attractive, although largely duplicative fraud solutions in the UK market. Then when we bought Neustar, where we got a variety of risk point solutions but we also got a great platform in OneID upon which we can unify all of these different fraud mitigation products, on a common data repository with orchestration and advanced analytics in machine learning and AI. We have been working for really since the outset of the acquisition to accomplish all of that technical work. We launched that version of the product in the early part of next year. Now you can think of that as like an advanced beta launch with friendly customers. but it's going to allow us to do two things. One, it is truly a platform of the future. It's next generation. It's a global consolidation of all of our point solutions and it can be leveraged across the globe, right? So we're very excited about that, and it should allow us to accelerate growth in this important product category. It's also going to allow us to retire all of the legacy cost structures, whether it's the variety of solutions in the UK or it's iovation, or it's the legacy solutions here in TransUnion in Chicago.

The next question comes from Heather Balsky of Bank of America.

I was hoping you could just dive in a little bit more on your emerging vertical segment. Just given the changes that you made in the tenant screening part of the business and what you're seeing in insurance, can you just help us kind of think about what you need to see for those sales to accelerate and kind of visibility in the near term?

So I mean, look, from a first principles basis, we've talked about the diversification we've achieved in our portfolio because of our investments in recent times. And even though this is a difficult quarter in a challenging macro period, you can see some of those benefits coming to the fore. Old TransUnion would be reporting results based on US credit sales only, and those would be negative. We've got 4% growth happening in the emerging markets, although not all cylinders are firing any emerging as you point to, right? But we are benefiting from some offset there. Now look, insurance, typically, in normal conditions, is a high single-digit grower and our sales have continued to be strong in insurance. The problem that we're seeing and it's what we've been discussing and the industry has been discussing is that risk isn't priced appropriately right now and insurers are reluctant to ramp up their underwriting engines. And so they're increasing their prices a lot upon renewal and they're walking away from some consumer risk in some jurisdiction or geographical risk. Now it takes some time for those unfulfilled policies, if you will, to trickle down in the ecosystem, some go to smaller carriers, some go to nonstandard carriers, some go unfulfilled, right? And as I mentioned, the revenue dynamics is upstream, we've got greater penetration of the full suite of our products. So we're realizing a higher data payload per origination for policy origination. So insurance is going to remain soft for a bit. Now the carriers are working hard to correct that. They continue to push for approvals, for higher rates and I think that will be successful over time, but right now they’re cautious. Tenant deployment screening is undergoing a bit of a reset because of regulatory scrutiny, which led to the settlement that we announced with the CFPB around our renter screening business. And what happened there is the current leadership of the CFPB believes that certain categories of information around evictions and even criminal records should not be used in tenant screening or should only be used in a certain way at a certain point in time. Now that is a different interpretation of the SCRA and it defers materially from historic industry practices. But in working with the CFPB, we've had to adjust the data that we provide. And when we provide it in accordance with their views and we've done that in our tenant employment screening business. And the CFPB and the FTC in particular have been very clear. They've said, with this change of practice and with this settlement, this TU reset, if you will, expresses the new standard for the industry. Now we expect the other rental screeners and their clients who will now have regulatory risk to begin adjusting their practices. So that's in large part why tenant hasn't provided the growth that it typically would, but we expect it to stabilize and for the growth prospects to improve now that we've got this industry reset.

Let me just add on to your question, Heather, because Chris definitely talked about the two verticals where we have the most challenge, but I think we'd be remiss to not point out that we have had some success as well in the emerging verticals. In particular, the media vertical grew double digits. And as Chris already said, we expected something greater than that. But nevertheless, in this environment, we posted some pretty strong results in that business. And it was on the back of some significant wins with the Neustar marketing capabilities. And just to remind you, Chris talked about those in his prepared remarks. So that's a big deal for us as well. Our public sector vertical also grew very strong double digits. And we saw growth in what we refer to as services collections as well as tech, commerce and communications. In those areas, in particular, what we are seeing a really nice benefit from is our trusted call solutions also from Neustar. The revenue is up significantly across those verticals.

The next question comes from Toni Kaplan of Morgan Stanley.

You mentioned in your prepared remarks that the trends in September had deteriorated. I wanted to ask about the early October trends, considering that rates started to change more quickly. Did you observe a further decline or did it remain at the same pace as what you experienced in September?

So I think to start on this one is where the best place to go is just the beginning of the third quarter. And I would say July and August were months that were okay; they were tracking to the guidance that we have provided on our earnings call in late July. Unfortunately, we saw a sudden shift of lending volumes, as Chris has already articulated in September. And that impacted just to reiterate, in consumer lending, card, mortgage and insurance and the media coming in a little bit lower than what we had expected. So as we looked out into the fourth quarter to prepare our guide for the remainder of the year, we took that sudden reduction that we experienced in September and we rolled that forward. We also looked at where we were at up until last week in October and where volumes were at. And what we feel like we have done is we've taken this rather weak environment and we have thoroughly derisked the Q4 guide with the numbers that we have put out today.

The next question comes from Ashish Sabadra of RBC Capital Markets.

I wanted to clarify whether the CFPB settlement is included in the adjusted EBITDA and if you could specify how much it impacted the third or fourth quarter. Investors are asking why the revenue guidance for the midpoint of fiscal year '23 was lowered by $54 million, while the EBITDA was reduced by $78 million. Why was the reduction in EBITDA guidance significantly greater than the revenue guidance? Is this related to the CFPB settlement?

So Ashish, you got two questions there for us this morning. So let me take the first one as it pertains to the CFPB. We settled two matters with the CFPB and one pertains to the FTC, and that was our rental screening settlement that Chris has talked about, that was for $15 million. And then on the security freeze matter, we settled for $8 million for a total of $23 million. All of those settlements have been reserved for within our adjusted EBITDA not as an add back coming into the quarter with the exception of $7 million. And in my prepared remarks, I made reference to that. So there was an incremental aspect of $7 million in the quarter that we did not have in our guidance. So the other amount was already accrued for and had impacted adjusted EBITDA. So the second question is pertaining to our Q4 adjusted EBITDA outlook and why the change. If you look at revenue compared to our prior guide and why EBITDA is a little bit greater than that. And if it goes back to the question that Toni just asked about what the trends in September and our Q4 guide, so it really starts with the revenue and the revenue that we saw suddenly fall off in late September is more of our core credit type of products that carry a higher margin. And so that is what we have taken down. What that's been offset by is growth that we've seen in products such as the trusted call solutions, which I just referred to, that while still at a very attractive margin relative even to TransUnion's adjusted EBITDA margin is one that is at a lower margin than the core credit products carry. So when you take that mix together, you end up with a situation where the profit expectation ends up being greater than what the revenue takedown is.

Yes, I think that's an important dynamic to appreciate. I mean you'll see in our financial disclosure that our cost structure remains the same, it's not a cost issue quarter-to-quarter, it's a revenue mix issue. And so when we confirmed our guide in July, based on the lending trends that we've seen, we simply expected to sell more credit products than we actually ended up selling and credit products have a very, very high flow through to profit. But as I've discussed, we had to retrieve volumes in lending, which reduced credit products. In the parts of the portfolio that performed best have a lower contribution margin, things like our mortgage credit because of the score and trusted call solutions because of license data costs.

The next question comes from Manav Patnaik of Barclays.

I was just hoping we could talk to all your fintech exposures, please. So just in the UK, like what was it, I suppose, as a percentage of revenues and exactly what led to the write-down? And then maybe what the US exposure is and if there's any kind of risk we should consider there as well?

Well, let me just start fintech generally, Manav, and you and I have talked about this before. We have a very large and leading share in fintech and that is true both in the US and also in the UK. And fintech has been materially impacted in the downturn because of rising rates and also tightening lending standards. So that's already had an impact and that's already incorporated in our third quarter results but also our thinking about the fourth quarter guide, which Todd just articulated. Now shifting to our UK business and the write-down in goodwill. If you recall, we acquired the business in 2018. It was a low double-digit grower then, but it was not particularly profitable. So we took cost action, which slowed revenue growth for about six months. By the time we exited '19, we posted 9% organic growth and the exit quarter was back to low double digit. And that was our expectation, high single, low double digit that underpinned the assessment of book value and the amount of goodwill that we put on the balance sheet. Well, from that point forward, the UK market has been buffeted by a series of macro issues. The first is that the regulators in the UK decided to put pressure on small dollar unsecured lenders. We would call them payday lenders here; some of them were online, they call them the money lenders in the UK. Well, call credit had a disproportionate share of that marketplace. It was a foundational component of their business. So first, we had to adjust to that contraction, which we did and we compensated for it by pushing further upstream into the core and mainstream lending market and taking share, which we did. The next impact came from Brexit and then COVID and then all of that together seems to have fueled some high rates of inflation and increasing unemployment in the UK, which has made it a very difficult lending environment, which continues to impact the fintechs. So after digesting all of this and looking back at the growth rates that we expect, the one that we've achieved but also that we can expect in the intermediate period given the condition of that economy, we thought it was prudent to take the charge to goodwill that we did in the quarter.

The next question comes from Andrew Nicholas of William Blair.

I heard quite a bit about some of the strengths and weaknesses within core credit in the US. I just wanted to ask maybe more directly on market share there. It seems like most of the rationale to this point is tied to end market weakness or end market dynamics. Is there anything that you can say about kind of competitive positioning or competitive successes in that market and how much conviction you have that you're still growing share there?

As we look at it, we don't believe it's a share issue, it's an issue more of business comparability at this point. As many of you have noted, the portfolios of the three bureaus have diverged over time. Some are more focused on direct-to-consumer, some of them are more focused on employment and income and then TransUnion has a very large share, arguably leading market share in the US, providing services to lenders and insurers that want to originate loans and policies. There's also a question of what's reported in the various segments and kind of the surgery you've got to do to get a true comparison. One example is that we report batch marketing services within our US vertical, not everybody does. We separate direct-to-consumer, some people include that. We don't have commercial data and given the size of our lending business overall, the benefits in mortgage of a significant price increase from a third-party score provider gets diluted a bit over our larger market share and lending base than with other players in the space. And so as we compare and evaluate our own performance, you got to consider those differences in what's included as well as the varying size of the respective positions. But no, we don't think share has really anything to do with this and we're not really pointing anything to the positive or the negative.

Great. And given the time as we're on a busy earnings day, we are going to end our call at this point. We thank you all for joining us this morning, and we look forward to speaking with you either later this week or over the course of the quarter. Thanks.

The conference has now concluded. Thank you for attending today's presentation, and you may now disconnect.