Earnings Call Transcript - TRU Q1 2026

Operator, Operator

Good day, and welcome to the TransUnion First Quarter 2026 Earnings Conference Call. Please note this event is being recorded. I would now like to turn the conference over to Greg Bardi, Senior Vice President, Investor Relations. Please go ahead.

Gregory Bardi, Senior Vice President, Investor Relations

Good morning, and thank you for attending today. Joining me on the call are Chris Cartwright, President and Chief Executive Officer; and 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, and they can also be found in the current report on Form 8-K that we filed 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 the corresponding reconciliation 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 conference 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 that, let me turn it over to Chris.

Christopher Cartwright, President and Chief Executive Officer

Thanks, Greg, and let me add my welcome and outline today's agenda. First, I will review our first quarter results and updated 2026 guidance. Second, I'll discuss how AI is accelerating innovation across TransUnion and driving higher data usage among some clients. And then I'll pass to Todd, who will detail our first quarter results and provide second quarter and full year 2026 guidance. So we started the year very strong, exceeding our first quarter guidance for revenue, adjusted EBITDA and adjusted diluted earnings per share. This is our ninth straight quarter of at least high single-digit organic constant currency revenue growth with 11% growth versus our 8% to 9% guidance. Excluding FICO mortgage royalties, revenue grew 7%, which is also above our expectations. U.S. markets grew 14%. Financial Services led the way, up 24% or 14% excluding FICO mortgage royalties. We delivered broad-based strength across lending types driven by modest volume growth, pricing actions and sales momentum across both credit and non-credit solutions. Emerging verticals had another healthy quarter, growing more than 6% led by insurance and public sector. International revenue was flat organically as expected. Canada and the U.K. grew high single digits and Africa grew 10%, and India declined mid-single digits, slightly better than we'd expected, and we expect a gradual improvement throughout the course of the year. Now strong revenue growth translated into 12% growth in adjusted diluted earnings per share. In line with our disciplined M&A approach focused on highly strategic bolt-ons, we recently completed two acquisitions. TransUnion Mexico extends our global playbook into an attractive market where we now hold the leading position. The smaller acquisition of the Mobile division of RealNetworks adds complementary messaging capabilities to our leading trusted call solutions. In addition to completing these acquisitions, we repurchased $25 million of shares year-to-date through April. We have ample capacity under our $1 billion repurchase authorization and expect to increase repurchases over the rest of the year. Our outperformance reflects consistent execution in a relatively stable operating environment. The strength of our diversified portfolio positions us to navigate potential changes in economic conditions. As a reminder, our customers entered 2026 with cautious optimism. Lenders anticipated loan growth supported by their strong balance sheets, healthy consumer finances and expectations for rate cuts throughout the year. In February, the conflict in Iran added uncertainty about inflation, interest rates and the potential impact on consumers. The 10-year Treasury rate and the 30-year mortgage rate are currently 4.3% and 6.3%, respectively, after briefly dipping below 4% and 6% in late February. We continue to monitor market dynamics and potential second-order impacts on consumers and customers. To date, we have not observed any change in customer behavior tied to these developments. Through mid-April, volume and revenue trends have remained at or ahead of our expectations. We saw a brief pickup in refi-driven mortgage activity during February's rate dip, followed by a March normalization to previous levels. U.S. nonmortgage lending remains healthy. Against this backdrop, we delivered another strong sales quarter, underscoring sustained demand and commercial momentum for our credit marketing and fraud solutions. An uncertain market underscores the importance of our durable growth strategy. We have the broadest, deepest and most relevant solutions portfolio in our history. Our fastest-growing products include trusted call solutions, TruIQ, identity-based marketing and next-gen fraud models, which address customer needs across economic cycles. Looking ahead, we expect our strongest ever cohort of new product launches and major enhancements in 2026. Our investments in global AI-enabled platforms position us for cost efficiency and operating leverage. Against this backdrop, we are maintaining our full year organic constant currency guidance, including revenue growth of 8% to 9%. We are balancing first quarter outperformance driven by healthy underlying trends against macro uncertainty and the need to maintain prudently conservative guidance. The increase to the high end of our guidance, $154 million of revenue, $39 million of adjusted EBITDA and $0.04 of adjusted diluted earnings per share, primarily reflects the addition of TransUnion Mexico. Our guidance approach remains unchanged. If current trends continue, we expect to perform at or above the high end of our range. Alternatively, we expect that we could absorb a reasonable level of market softening within our guidance range. Todd will provide additional details on our guidance assumptions. At the high end of guidance, we expect to deliver our third consecutive year of high single-digit organic constant currency revenue growth and double-digit adjusted diluted EPS growth. This consistently strong financial performance underscores the strength and durability of our growth strategy. As we highlighted throughout our Investor Day last month, AI can enhance that strength and fuel a new generation of growth. Our proprietary and differentiated data assets anchor our competitive advantage as we move into an AI future. Our contributor or credit databases are sourced from thousands of institutions operating under demanding regulatory frameworks. Our industry-leading identity graph combines our proprietary data with billions of dynamic disparate signals in near real time, creating a network effect that powers our marketing and fraud solutions. We power our customers' complex mission-critical workflows with governable, explainable data and deep domain expertise, delivering effective and deterministic outcomes. These solutions are priced economically relative to the significant value that they provide. We believe AI is a growth accelerant, enabling us to activate our data to serve our customers more effectively. Already, AI drives tangible growth for TransUnion in two ways. First, by increasing demand for our data; and second, by accelerating our pace of innovation. Now let me provide additional context for what we highlighted at Investor Day to explain how these dynamics are converging. From a demand perspective, AI models are only as good as the data we can learn from, and customers are prioritizing the freshest, highest-quality signals. Our powerful and flexible OneTru platform enables customers to integrate our best-in-class data directly into their AI environments. As AI-driven workflows scale, we see customers expand their use of TransUnion's data, shifting from episodic transactions toward more embedded partnerships. For these reasons, our most AI-enabled customers are already consuming more data and adopting innovations faster, while most of our customers are early in their AI journey. Let me share two examples of how TransUnion facilitated AI adoption for two lenders and then how we scaled our relationship as a result. One of our most sophisticated fintech customers has embedded AI across underwriting, portfolio management, customer service, marketing and fraud prevention. As these enabled programs scale, the customer expanded their use of our credit, identity and fraud signals within their workflows. Their AI underwriting models also refresh data more frequently, driving higher credit volumes. Their spending with TransUnion increased by more than 60% from 2022 and approached $15 million in revenue in 2025, outpacing 50% loan growth and volumetric unit pricing. Also, a top five credit card issuer has embedded our data across its AI-enabled governance, risk management, servicing and engagement workflows for its 50 million-plus accounts. These workflows support daily customer engagement and risk triggers rather than periodic checks. As a result, our relationship has evolved from a point-in-time transactional data vendor to a mission-critical, enterprise-wide partner under a multiyear subscription-based contract. TransUnion's revenue with this customer increased by over 20% from 2022 to $20 million in 2025, despite a decline in new accounts during that period. We see opportunity to deepen its relationship further by cross-selling additional credit and non-credit solutions. Our next-generation AI-powered products reflect and drive increased demand for our data. During Investor Day, we highlighted three of these solutions, all built on the OneTru platform. These solutions enhance fast-growing products operating at scale, including TruIQ, marketing audiences and fraud analytics, to enable continued growth. They industrialize in-demand customized analytics into scalable solutions that drive higher data usage and monetization across our portfolio. First, TruIQ Analytics Orchestrator uses Google's Gemini models to streamline advanced credit modeling with natural language prompts. Analytics Orchestrator scales the expertise typically delivered in highly effective but ad hoc innovation labs into a self-service solution. This enables customers to build models faster and more frequently with less reliance on our data science teams. We expect Analytics Orchestrator to increase data usage, drive new revenue streams and enable stickier customer relationships. In marketing, we are transforming our static audience segments into curated and outcome-driven audiences built off our identity backbone. We're also providing self-service search and discovery tools that accelerate activation and improve campaign performance. We expect improved efficiency and speed to drive increased consumption of our marketing audiences. In fraud, our AI model factory unifies our identity data and advances analytic capabilities to respond to evolving fraud threat vectors. We're launching new fraud models two to three times faster than previously possible, with 10 new models launched in the last 12 months, including our credit washing and synthetic identity solutions. We generated tens of millions of dollars of incremental pipeline from these new fraud models. So in summary, AI will continue to accelerate our pace of innovation and expand the ways customers consume data, supporting durable growth across our solution suites. Now with that, I'll hand it over to Todd.

Todd Cello, Executive Vice President and Chief Financial Officer

Thanks, Chris, and let me add my welcome to everyone. I'll build on that overview with first quarter results before providing guidance. Starting with the quarter, we exceeded the high end of our guidance across all key metrics by $41 million on revenue and $18 million on adjusted EBITDA, or $22 million and $8 million, respectively, excluding the Mexico acquisition. Total revenue increased 14% on a reported basis and 11% on an organic constant currency basis led by U.S. Financial Services. Excluding FICO mortgage royalties, organic growth was 7%. Growth was broad-based and aligned with the innovation priorities outlined at Investor Day. Credit, excluding FICO mortgage royalties, and fraud both grew high single digits driven by continued traction in TruIQ, alternative data and trusted call solutions. Marketing Solutions delivered mid-single-digit growth with healthy identity performance. Consumer Solutions grew low single digits including another quarter of double-digit growth internationally. Adjusted EBITDA increased 10%. Adjusted EBITDA margin was 35.2%, down 100 basis points year-over-year. As anticipated, underlying margins contracted modestly and FICO mortgage royalties were a 120 basis point headwind. Our Mexico acquisition contributed 25 basis points in the quarter. Adjusted diluted earnings per share was $1.18, up 12% year-over-year and $0.08 ahead at the high end of our guidance. In the first quarter, U.S. markets revenue grew 14% on an organic constant currency basis versus the prior year. Across all our B2B verticals, we delivered strong bookings and retention rates to start the year. Financial Services revenue grew 24% or 14% excluding FICO mortgage royalties. The environment remains constructive, and we outperformed underlying volumes driven by TruIQ, alternative data and non-credit solutions. Within financial services, credit card and banking rose 5% on stable lending volumes and strength from trusted call solutions. Consumer lending grew 13% and was supported by sustained consumer demand and strong fintech performance. FinTechs continue to perform well with increasingly diversified funding bases and delinquency trends within historical norms. Auto was up 11%, outpacing modest industry volume declines through pricing, share gains and new wins across our solution suites. Mortgage revenue grew 50% excluding FICO royalties; revenue grew 24% compared to inquiries up 7%. Inquiries were slightly better than anticipated, with additional outperformance through pricing and increased adoption of non tri-bureau solutions. Emerging verticals grew 6%, led by another quarter of double-digit growth in insurance. Within insurance, credit-based marketing continues to recover as insurers pursue profitable growth. Consumer shopping also remains active. We drove new wins and growth across core credit decisioning, trusted call solutions and marketing solutions. Across our other emerging verticals, public sector grew high single digits and is positioned for a strong year. Tech, retail and e-commerce, and media grew mid-single digits. Communications grew modestly; tenant and employment declined modestly but are expected to return to growth over the rest of the year. Consumer Interactive was flat, driven by indirect channel growth and breach-related wins, offset by declines in the direct channel. In international, all revenue growth comparisons are on an organic constant currency basis. International revenue was flat in the quarter, reflecting varied results across our diversified portfolio. Our two most developed markets drove outperformance against subdued market conditions. The U.K. grew 7%, driven by healthy volumes from our largest banking and fintech customers as well as new wins across verticals. Canada grew 9%, reflecting another quarter of innovation-led growth as well as strong performance from fintechs and insurance. Africa performed well, too, growing 10% with strength across banking, fintech and retail. Across our other emerging markets, India, Latin America and Asia Pacific, growth was softer, reflecting subdued conditions and timing dynamics. India declined 5%, slightly better than guided. We expect a gradual recovery in consumer lending, supporting mid-single-digit growth for India in 2026. We also continued to accelerate the pace of innovation in India. Most recently, we announced a strategic partnership with the leading Indian telco to enable branded calling across its 500 million subscribers as we continue to expand the reach of our leading trusted call solutions globally. Latin America was flat organically with growth in Brazil, offset by modest declines in Colombia and other markets. TransUnion Mexico, which was recorded as inorganic, grew well in the first quarter on the heels of double-digit growth in 2025. Asia Pacific declined 18%, primarily by lapping one-time contracts, as well as softer volumes. Performance across India, Latin America and Asia Pacific is expected to improve in the second quarter and as the year progresses. Turning to the balance sheet, we ended the first quarter with $5.6 billion of debt and $733 million of cash. During the quarter, we funded the approximately $660 million purchase for TransUnion Mexico with $520 million drawn from our credit revolver as well as cash on hand. As a result, our leverage ratio at quarter end increased modestly to 2.8x. For the remainder of 2026 we plan to continue to execute our balanced capital allocation framework, prioritizing debt prepayment and capital return to shareholders. We have repurchased $25 million so far this year and expect to increase the pace of repurchases over the remainder of the year. We also remain committed to pushing our leverage ratio towards our long-term target of under 2.5x. Before getting into guidance details, I want to reiterate our approach. Even with first quarter outperformance and healthy underlying momentum we are maintaining our full year organic growth assumptions. This reflects our disciplined guidance philosophy and provides flexibility in an uncertain environment. In the second quarter, we are guiding revenue to be between $1.271 billion and $1.283 billion, up 12% to 13%. Acquisitions add 4% and FX has an immaterial impact on our guidance. We expect organic constant currency revenue growth of 8% to 9% or 5% to 6% excluding FICO mortgage royalties. We anticipate mortgage revenue growing over 30% or 10% plus excluding FICO, compared to a mid-single-digit decline in inquiries. We are guiding adjusted EBITDA to $439 million to $445 million, up 8% to 9%, implying a margin of 34.5% to 34.7%. Underlying margins expand by 20 to 40 basis points, offset by an 80 basis point drag from FICO royalties and a 60 basis point impact from acquisitions. We expect our adjusted diluted earnings per share to be between $1.13 and $1.15, up 4% to 6%. For full year guidance, we expect revenue to be between $5.1 billion and $5.135 billion, up 11% to 12%. Acquisitions add 3.5% and FX has an immaterial impact on our guidance. Our organic constant currency assumptions are unchanged at 8% to 9% or 5% to 6% excluding FICO mortgage royalties. Our segment level assumptions are also unchanged. For mortgage, we continue to expect growth of 28% or 6% excluding FICO, compared to mid-single-digit inquiry declines, unchanged since February. While the first quarter exceeded expectations, we modestly lowered volume assumptions for the remainder of the year to account for recent interest rate volatility. Full details on mortgage assumptions are provided in our appendix. We anticipate mid-single-digit international revenue growth for the year, driven by gradual recoveries in India, Latin America and Asia Pacific, following a softer first quarter. We expect adjusted EBITDA to be $1.796 billion to $1.816 billion in 2026, up 9% to 10%. That results in a margin of 35.2% to 35.4%, down 60 to 80 basis points. Underlying margins are expected to expand by 50 to 70 basis points driven by revenue flow-through and remaining transformation savings. This strong underlying expansion is offset by a 90 basis point drag from FICO royalties and a 40 basis point impact from our acquisitions. We anticipate adjusted diluted earnings per share to be $4.68 to $4.75, up 9% to 11%. For other guidance items, depreciation and amortization is now expected to be approximately $640 million, or $320 million excluding step-up amortization from our 2012 change in control and subsequent acquisitions. We anticipate net interest expense of $245 million, up $25 million from February reflecting $20 million related to debt financing for the Mexico acquisition and $5 million from higher SOFR on floating rate debt. Our adjusted tax rate is expected to be approximately 25.5%, modestly better than anticipated, driven by favorable geographic mix of earnings and changes in tax law that became effective in 2026. Capital expenditures are expected to be approximately 6% of revenue. We expect free cash flow conversion as a percentage of adjusted net income to be 90% or greater in 2026 and going forward. Slide 17 reconciles our updated full year guidance relative to February. As shown, the increase is driven by our consolidation of TransUnion Mexico, with non-operating items having a net neutral impact on adjusted diluted EPS. While TransUnion Mexico is accretive to 2026 earnings, it is modestly dilutive to our adjusted EBITDA margins this year. Importantly, the Mexico business operates at margins above our company average. The 2026 margin impact is driven by accounting mechanics rather than ongoing economics. Historically, our 26% ownership was accounted for under the equity method, contributing approximately $17 million of adjusted EBITDA in 2025 with no associated revenue. Following the acquisition, Mexico's revenue is fully consolidated, while only the incremental adjusted EBITDA associated with increasing our ownership from 26% to 94% is additive versus prior reporting. As a result, consolidated margins appear modestly lower due to revenue consolidation despite the business's strong underlying profitability. In addition, during 2026, we will incur one-time integration expenses related to the Mexico and the Mobile division of RealNetworks acquisitions, which we are not adding back to adjusted EBITDA. Our 2026 guidance fits within the context of our medium-term financial framework, which we reintroduced at our March Investor Day. Over the medium term, we expect to deliver high single-digit organic revenue growth, 50 basis points of underlying margin expansion and low to mid-teens adjusted diluted earnings per share growth. This guidance is anchored in our repeatable earnings model and the momentum we are delivering today and is not dependent on a recovery in U.S. mortgage or other markets. Our medium-term financial framework reflects our value creation flywheel. Our multiyear transformation is now enabling faster innovation and improved commercial outcomes. We are scaling the business on a common technology and operating platform and deploying AI across the enterprise to drive further productivity. Our scalable growth drives compounding cash flow that we will deploy to fund our growth, optimize our balance sheet and increasingly return capital to shareholders. With that context, I will turn the call back to Chris for closing remarks.

Christopher Cartwright, President and Chief Executive Officer

All right. Thanks, Todd. So before closing, I want to provide our perspective on last week's announcement from the FHFA Director and the HUD Secretary. These developments are an important milestone in a 20-year journey to enable competition and modernization in mortgage credit scoring. As noted by Director Pulte, Fannie Mae and Freddie Mac have begun accepting VantageScore 4.0. Freddie Mac took delivery of VantageScore loans during an operational test and will soon securitize them. The FHFA is expanding this pilot with a group of lenders and the GSEs will communicate pricing guidelines. Additionally, HUD Secretary Scott Turner announced that the VantageScore will also be accepted for FHA mortgages starting later this year. With the combination of VantageScore 4.0 and TransUnion's comprehensive trended and alternative data, we will expand access to creditworthy consumers and promote affordability while maintaining safety and soundness within the mortgage ecosystem. We have taken several steps to foster industry adoption, most recently announcing the industry's first 99-cent VantageScore 4.0 mortgage pricing. Adoption of VantageScore can drive hundreds of millions of dollars of savings for lenders and consumers. Managed Score also represents an incremental revenue opportunity over time. We plan to support continued score validation for our customers with free vintage scores offered to those customers who purchased the FICO score through the end of 2026. We are also offering customers multiyear pricing for credit reports and Vantage 4.0, providing better pricing certainty to lenders. More broadly, our actions reflect our belief that effective mortgage underwriting and responsible financial inclusion are ultimately driven by the quality and the depth of the data used. As stewards of data on over 295 million U.S. consumers, we continue to invest in data sets and analytics that support the fairest and most accurate credit decisions across economic cycles. So in summary, we started 2026 with a good first quarter, growing both our revenue and our earnings by double digits. We've raised our guidance based on our recent acquisitions and anticipate a strong year. We're guiding 8% to 9% organic constant currency revenue growth and 9% to 11% adjusted diluted earnings per share growth. AI continues to accelerate TransUnion's growth, reinforced by the dynamics that we highlighted: expanding data demand and accelerating innovation. We look forward to continuing this conversation in future quarters. Now with that, let me turn it back to Greg.

Gregory Bardi, Senior Vice President, Investor Relations

Thanks, Chris. That concludes our prepared remarks. For the Q&A, we ask that you each ask only one question so we can include more participants. Operator, we can begin the Q&A.

Operator, Operator

And the first question will come from Toni Kaplan from Morgan Stanley.

Toni Kaplan, Analyst, Morgan Stanley

And thanks for the comments at the end on the press conference from last week. I wanted to ask a question about that conference. There was a comment made about scrutinizing pricing in the credit bureau industry. I was hoping you could talk about what areas, maybe in particular on pricing, that investors should be thinking of as maybe under scrutiny?

Christopher Cartwright, President and Chief Executive Officer

Well, Toni, thank you for the question. It's an important question. Going back to that press conference from last week, first of all, we're really excited to see the momentum at the FHFA and in the GSEs for accepting VantageScore 4.0 and the progress in completing the LLPAs and the pricing guides generally. We see strong demand in the market and expect to see rapid adoption. We're not entirely clear on what Director Pulte was referring to in his comments, and we are following up to try to get clarity on those. I think there's a lot of speculation that it could be a reference to the tri-merge. We've been pretty clear in recent years about the importance of the tri-merge in underpinning the safety and soundness of the mortgage market in the U.S. and ensuring that the potential pool of mortgage applicants that are scored accurately and qualify for mortgages is as substantial as it can be while also accurately assessing the risk that lenders are undertaking that will eventually be passed on to the GSEs and to investors. In short, the rationale for the tri-merge is that it drives the efficacy of underwriting and financial inclusion because you're getting full access to all of the data that's available for diligence. Sometimes discussions about changing from the tri-merge don't appreciate that credit bureau data is not constant across the three bureaus. We have different furnishes. There have been new lending types that have emerged in recent periods like fintech and financial innovation, and the bureaus are actively developing alternative data like rental and utility payments; our files have diverged even more. Using data inconsistently or excluding a report means you'll either be mispricing risk or lowering access for creditworthy borrowers or lowering the hurdles for potential mortgage fraudsters. We firmly believe Tri-Merge is the gold standard. It's deeply embedded in mortgage underwriting processes. The industry is digesting a good degree of change, whether it's the early assessment program and most recently score competition, which is terrific. I think this would be an even more substantial change at a time when stability is particularly important as the administration contemplates the IPO of the GSEs. We charge roughly $10 to $12 per report; that is a fraction of closing costs, less than 1%. By pulling all three reports, you optimize across all the dimensions of the mortgage process. You can score the largest number of consumers and qualify the largest proportion for homeownership, mitigate risk, ensure accurate pricing and minimize the risk to taxpayers via the GSEs. Ultimately, you ensure that investors who are buying these assets once securitized fully understand the risk management process from which they were generated. From my discussions last week, there's a lot of support in the industry for the tri-merge—legislators, regulators and investors understand the value of maximizing diligence. We'll have to wait and see, and we look forward to further discussions with the FHFA Director.

Operator, Operator

The next question will come from Andrew Steinerman from JPMorgan.

Andrew Steinerman, Analyst, JPMorgan

My question is on India. Looking back to the Analyst Day recently, you outlined a double-digit organic revenue growth profile longer term for TransUnion India. How long would it take to get to that cadence? And what needs to change to get there?

Christopher Cartwright, President and Chief Executive Officer

Thanks for the question, Andrew. India is a great part of the TransUnion story, and we're very pleased to own that asset. It's a wonderful market and a growing economy, but it has experienced a variety of macroeconomic and regulatory shocks in recent years, some of which were exacerbated by the conflict in the Middle East and rising energy prices. Despite that, we have seen some stabilization in consumer lending and commercial lending volumes, which is helpful. We did okay versus our guidance in the first quarter. With this foundation of stability, we plan to pivot back toward growth. Overall, we think India will deliver mid-single-digit growth in 2026 and, over time, we aim to return to sustained low double-digit growth and beyond as economic and regulatory conditions stabilize.

Operator, Operator

And the next question is from Andrew Nicholas from William Blair.

Andrew Nicholas, Analyst, William Blair

Chris, in your prepared remarks, I think you made the comment that most of your customers are still pretty early in their AI journey. I was hoping you could flesh that out a little bit more. What are you seeing in terms of pace of adoption? What's a reasonable timeline for some of your customers to get more ready on that front? Any comments on what would be slowing that or expectations for adoption?

Christopher Cartwright, President and Chief Executive Officer

Thanks, Andrew. Societally and economically, we're still in the very early innings of AI adoption. Certain sectors, like software development, have deeper adoption because they created much of the technology, and they're applying it first. We see mass experimentation elsewhere that will accelerate as organizations understand the technology and its potential across business processes. At TransUnion, our developers have been using AI and are materially more productive—I've seen roughly 30% plus productivity gains, varying by the nature of the development activity. It helped accelerate delivery of the OneTru platform and migration of legacy technology onto that platform. At our recent Investor Day, TruIQ Analytics Orchestrator was highlighted; it's one of the most potent applications of AI we have. We're using it across our data and analytics organization and seeing two to three times productivity improvement, allowing us to build more models more frequently with greater accuracy. Internal use is designed to ready the application for licensing and usage by our clients. So, while many customers are early in their AI journey, we expect adoption to accelerate as the productivity and capability advantages become clearer. I don't see anything that will meaningfully slow this down given the productivity potential and ability to lower costs for complex tasks, enabling greater consumption overall.

Operator, Operator

And the next question will come from Jeff Meuler from Baird.

Jeffrey Meuler, Analyst, Robert W. Baird & Co.

On the updated pricing guidelines and dedicated Vantage LLPA grid: have they been communicated to the 21 initially approved lenders? Have you seen them—if so, any perspective you can provide on what they look like? If not, when do you expect them, given that it sounds like they're finalized and how important do you think they are to the share shift that you expect?

Christopher Cartwright, President and Chief Executive Officer

I'll remind you that for our guidance purposes this year, we didn't assume any share shift. We viewed this year as one of learning, experimentation and transition. We're not clear on exactly which lenders are in the initial cohort of 21 and whether the FHFA has communicated the LLPAs to all of them. We know from discussions with FHFA staff and the VantageScore CEO that the guides are complete and that they're in dialogue with firms in this initial cohort, but I'm not sure about the time frame for public release. Some of these questions will need to be answered by the FHFA. The Director was clear and enthusiastic that they're ready to go and ready to scale, and he's eager to push that forward to get competition going.

Operator, Operator

The next question will come from Faiza Alwy from Deutsche Bank.

Faiza Alwy, Analyst, Deutsche Bank

I wanted to ask about the contribution of non-credit products to your growth in Financial Services, particularly outside of mortgage, and what the traction has been there. Relatedly, you alluded to some macro uncertainty related to the conflict and said you could absorb a reasonable level of market softening within the guidance range. Could you double-click on that because I'm assuming to the extent there is softening it would impact more of your credit growth?

Christopher Cartwright, President and Chief Executive Officer

I'll give a broader lens on the quarter. We're off to a good start and are nicely ahead of expectations, positioned to deliver a third straight year of high single-digit revenue growth, low double-digit profit flow-through and low to mid double-digit EPS growth. Strength is concentrated in the U.S. right now with a lot of strength in mortgage, consumer lending, auto and card. Emerging verticals are on plan and growing 6% this quarter. Given the conflict in Iran, there are new uncertainties and pressures on energy costs, inflation and potentially interest rates. In February, when the 10-year fell to about 4% and the 30-year mortgage dipped below 6%, we saw a disproportionate volume bump driven by refis; it was short-lived and volumes reverted. We prefer a conservative guide early in the year. If volumes remain stable, we expect to deliver at or above the high end of guidance. Through the beginning of this week, volumes across all our credit categories are steady and we are not seeing negative impacts on loan volumes. If stability continues, we would fully expect to perform at or above the high end. On subprime and consumer lending, which grew 13% in the quarter, delinquencies are holding up as expected. Solid underwriting practices, small loan amounts, good controls and fintechs using alternative data have kept delinquencies in check. So, we're not seeing problematic trends at this point.

Todd Cello, Executive Vice President and Chief Financial Officer

Faiza, to address the contribution of non-credit products to Financial Services: excluding mortgage, we continue to see stable volumes. The diversification of our products resulted in several outperformers—TruIQ Analytics platform, alternative data, and our trusted call solutions all performed very well within Financial Services.

Operator, Operator

And our next question will be from Manav Patnaik from Barclays.

Manav Patnaik, Analyst, Barclays

I wanted to follow up on the comment about absorbing a reasonable level of market softening within the guidance range. Can you put parameters on that? What does the low end of the range imply from some of the volume trends you're seeing today?

Todd Cello, Executive Vice President and Chief Financial Officer

Manav, thanks. We continue to see stability within our volumes and are pleased with a solid Q1 where organic constant currency growth, excluding the FICO mortgage royalty, was 7%. For geopolitical reasons and out of prudence, we chose not to raise full-year guidance despite the Q1 beat. Essentially, the math is this: after printing 7% in Q1 and maintaining our organic constant currency growth rates, we end up at about a 6% rate for the full year. For Q2 guidance, the high end also implies 6%, which means the second half would be roughly 5%. If volumes stay stable, we orient you toward the high end of guidance—meaning we should beat in subsequent quarters. If volumes soften, the range itself provides some cover. We're comfortable with the guidance provided today.

Christopher Cartwright, President and Chief Executive Officer

Manav, over the past three years we've prioritized stable and consistent delivery at or above the high end of our guidance. That was our posture going into 2026. Given heightened geopolitical risk and our Q1 outperformance, we thought it prudent to add more contingency to revenue and profit guidance, not because we're seeing negative volume trends today, but to ensure prudent conservatism.

Operator, Operator

And the next question will come from Ashish Sabadra from RBC.

Ashish Sabadra, Analyst, RBC Capital Markets

I wanted to better understand if the Iran conflict is having any impact on the international markets. Could you provide any color on your conversations with customers or if you've seen any trends softening in those international markets?

Christopher Cartwright, President and Chief Executive Officer

Yes. On the international side, some markets have more exposure to rising energy prices. India has some exposure but is being helped by the ability to purchase Russian oil, which offsets some inflationary pressures. The Philippines has been particularly affected due to dependence on imported energy; the government has responded with subsidies and other measures. That contributed to a more difficult quarter in parts of Asia Pacific, although a primary driver of the APAC decline was lapping one-time analytics work in Hong Kong related to the MCRA transition. That work has finished, comps improve and performance is already stabilizing. The U.K. and Europe have more energy exposure, but we have a strong business in the U.K. and it's performing well with high single-digit growth.

Operator, Operator

And our next question will come from Kelsey Zhu from Autonomous.

Kelsey Zhu, Analyst, Autonomous Research

Could you talk a bit more about your expectations around VantageScore market share gains and future pricing policy in the mortgage vertical over the medium term? Specifically, Cycle 100's latest pricing model is $0.99 upfront and then $65 at closing. Could VantageScore pricing adopt a similar framework of lower cost upfront and then success via closing? Or is that not something you're considering?

Christopher Cartwright, President and Chief Executive Officer

There are many pricing options in the medium term. TransUnion's position, which I see reflected in competitor behavior, is that the priority is to get this started. We've discussed price competition for a long time; now a regulator is willing to push it forward. We have attractive pricing at roughly $1 per score with no tail or success fee attached, which is important to note. Pricing frameworks depend on the objectives of different stakeholders. The administration and FHFA aim to reduce borrowing costs and improve affordability; charging $65 for a score at closing versus a one-time $1 fee is a material difference. We're focused on introduction, transition and share gain. Downstream there's a lot of optionality for pricing constructs, but for now our priority is to move forward with Vantage 4.0 adoption and competition.

Operator, Operator

The next question will come from Jason Haas from Wells Fargo.

Jason Haas, Analyst, Wells Fargo Securities

Just wanted to follow up on the strength in mortgage. Can you talk about what drove the strength there outside of FICO?

Todd Cello, Executive Vice President and Chief Financial Officer

Jason, I'll take that. In the first quarter, we guided for a modest increase in inquiries and 35% growth for mortgage revenues; we posted a 7% increase in inquiries and 50% growth in mortgage revenue. The outperformance primarily related to volumes. In late February, when the 30-year mortgage rate dipped below 6%, we saw a significant increase in volumes, which reversed in early March when rates rose amid the conflict in Iran. Pricing assumptions we had assumed held fairly steady, so the primary driver was the volume dynamic. To be clear, a drop in rates can produce substantial incremental refinance activity; conversely, a rate increase would be a more modest negative because we're already near historic floors for activity. The opportunity is significant if rates move down, but for guidance we're assuming inquiries down mid-single digits for the remainder of the year.

Christopher Cartwright, President and Chief Executive Officer

I'll add that prequalification and early assessment volumes have been favorable to our guidance assumptions. We're three years into the early assessment program from the GSEs and changes in prequalification practices matter. When lenders are going to sell loans to the GSEs, variances in credit scores can materially affect realized economics. Even when only one report may be used in theory during prequalification, we see the industry settling somewhere between two and three reports. Many players still pull three reports, and others have increased the number of pulls for mortgages because fully understanding and optimizing around price matters to their economics and the incremental cost of an extra credit report is relatively small.

Operator, Operator

Our final question today will come from Scott Wurtzel from Wolfe Research.

Scott Wurtzel, Analyst, Wolfe Research

I wanted to ask on trusted call solutions. Can you unpack drivers of the growth you saw during the quarter? And as a related follow-up, you mentioned the trusted messaging opportunity down the line—what is your expectation on timing to productize that and when we might see it start to contribute to growth?

Christopher Cartwright, President and Chief Executive Officer

Trusted call solutions had another very strong quarter and are a core component of our fraud mitigation services. It remains a unique, differentiated and durable offering. While digital commerce is growing, analog commerce over the phone is still important for authentication and transaction safety. We want to extend that authentication to the messaging channel. The Mobile division of RealNetworks we acquired has complementary technology for messaging. We expect about a one-year integration and productization timeline for that technology. Once integrated, it will complement our existing trusted call capabilities. Combined with our digital device, behavioral and reputational assets, the combined offering should be very powerful in the fraud space.

Todd Cello, Executive Vice President and Chief Financial Officer

To add numbers and context: trusted call solutions were a $27 million product for us in 2021. At the time of the Neustar acquisition, we highlighted strong long-term growth expectations. This year, we're expecting trusted call solutions to be a $200 million product by the end of 2026. By 2028, we expect that to be about a $300 million product.

Gregory Bardi, Senior Vice President, Investor Relations

All right. Chris, Todd, I think that's a good place to end. Everyone, thanks for the time today, and have a great rest of your day. Thank you.

Operator, Operator

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