All right, thank you to everyone in the audience who's joined us today. My name is Andrew Nicholas and I am the Business Services Analyst here at William Blair. Before getting started, I am required to inform you that for a complete list of research disclosures or potential conflicts of interest, please visit our website at williamblair.com. Very pleased to have TransUnion at the 46th Annual Growth Stock Conference. With me today is TransUnion CFO Todd Sello. So we're going to spend the 30 minutes here just doing a brief Q&A, walking through the major drivers of the business, but we're going to try to do it at a relatively high level for those that aren't familiar. So with that preamble finished, maybe start Todd with just a high-level overview of the business. I think most people know you as a Consumer Credit Bureau, where are your businesses is unique to maybe some of the other bureaus, where are some key areas of competitive differentiation we can kind of go from there.

Sounds like a good place to start. So, thank you, Andrew. Thank you for having us. It's always a pleasure to be at this conference. Great group of investors to meet with, so been a very productive morning. So talk a little bit about TransUnion and where, you know, perhaps we're different. I mean, I guess I'll start with where we're the same. everybody understands you know trans unions you know legacy being one of the three large credit reporting agencies in the u.s but also globally we operate in 30 plus countries credit is the core of what we do but what we've done over the last you know several years is we've developed out capabilities in fraud and marketing as well. The reason for that is TransUnion has been in fraud and marketing using credit data forever in essence. So we see a significant opportunity to continue to expand our offerings in those markets. So we've been quite intentional in repositioning our portfolio over that period of time through mergers and acquisitions and different partnerships to be able to, you know, in essence build up, you know, the capabilities there. We think about TransUnion just, you know, overall, primarily in the U.S. It makes about about 80 percent of our business is in the U.S. Of that, to speak to the diversification I was is talking about about 50 percent of the revenue um you know in the u.s is just pure credit another 15 percent is consumer which is also credit so arguably about 65 percent of the u.s is credit that other 35 though is going to skew towards the marketing and the fraud revenues that i talked about out and in the u.s we go to market through vertical markets financial services through lines of business like mortgage, auto, credit card, banking, and consumer lending. Those are the core areas. We also have what we refer to as an emerging verticals segment and in there we, these are adjacencies in essence where we're able to take the core credit, augment it with products and services like fraud and marketing to go after vertical markets like insurance tech retail e-commerce public sector media tenant employment to name a couple of them there outside the u.s we have about the other 20 of our revenues come from our international business there we have some really nice pieces of our portfolio in particular in india we operate the largest credit bureau in India. We were an initial shareholder of that business. We've consolidated it for about the last 12 years. It's about 25 years old. Really great part of our portfolio with a significant amount of runway going forward. We recently closed on an acquisition in March of the largest credit bureau in Mexico. So now TransUnion has coverage across North America. We have a, obviously I talked about the U.S. We also have a very meaningful business in Canada, but adding Mexico, similar to India, original shareholder on a minority basis, we were able to acquire a majority. We're really excited about the potential there.

Business has been growing double digits without our involvement. so we're very opportunistic that we're going to continue that and then add to the growth rate of the business fantastic well appreciate that that as a start I think one of the things you've also been highlighting as a company over the past several years including it your investor day earlier this year is the technology infrastructure and the tech platform that you've built one true can you spend some time kind of walking through what that platform is what makes it unique and and maybe most importantly what it unlocks for you as an organization yeah for sure it's a really important uh question uh because it's what underpins how we deliver our products and services uh to our to our customers so one true um is the platform that transunion acquired

through the new star acquisition in 2021 it was called one id we named it you know one true so So when we acquired Newstar, fraud and marketing came with the acquisition because that was one of their areas of expertise. So what we're doing now with OneTrue is we're adding credit to it. So in essence, what that means is OneTrue is going to house all of TransUnion's data assets. And that's significant because having all of our data in one place enables our developers to be able to work a lot more efficiently also enables us to be able to deliver to our customers quicker as well, all within a really good compliance structure, making certain that the data that we house together is being used appropriately. There's different regulatory requirements for credit data versus non-credit data. So that's kind of foundational at One Troopa. It's really exciting about what we're doing from a technology perspective is historically TransUnion has operated its businesses with physical data centers. So when I talk about us operating in 30 plus countries, think of each one of those countries has a data center that we would maintain. So if we were to deploy intellectual property, new products and services, you'd in essence have to go to each one of those data centers and deploy it. It's a little inefficient. So underneath One True, what we're doing is we're using cloud services from AWS and Google Cloud Services. So that's the layer underneath One True. and why that's important is no longer will we need those physical data centers anymore so if we put one true on top of that in essence we're able to quickly deploy our product innovation you know into into market as well as you know TransUnion is entrusted with a lot of you know personal data as well to financial related so with that we want to make certain that our security posture is also you know able to you know be quickly you know deployed out so we'll be able to do that so where we're at right now with one true is we are migrating u.s credit as i already said so we expect by the end of this year that we will be complete with the tech migration so the the u.s business will be fully on OneTrue by the end of 2026. We're intentionally taking our time because it's customer impacting. Nothing's more important than making certain that our customers can transact with us in an efficient and obviously smooth way. So we're handling that with care. We'll get that done by the end of the year. We've made really good progress to this point through May. Once we're done, our plans then are to move to Canada and the U.K., which are two of our larger developed markets, and then we'll also hit the Philippines in 2027 as well. At that point in time, we'll have about 90% of TransUnion's revenue on the OneTruth platform, and then the game plan is every other geography that we operate in will also fall into it. It's really exciting when you think about having everything all in one environment. And then really what it ends up being is that customization, that last mile delivery, so to speak, where in each market, you know, things are going to be a little different, maybe from a regulatory perspective. We'll still, you know, customize our products in those ways, but having so much of, you know, the data and the technology all in one place really is going to enable us and set us up for a significant amount of innovation. I think what I've been remiss in talking about throughout this point is this is an AI-enabled platform as well, too. So when you think about what is already in production with fraud and marketing, we're already using AI capabilities. Credit is going to benefit from that when we're there.

Great segue. So obviously, I have to cover the AI topic. It's a broad one, but maybe I'll start with the data itself. Can you just kind of hit home for everyone in the audience the data moat that TransUnion has, the uniqueness of the sources, alternative data, how difficult it would be to replicate and just kind of outline that for everyone since it's top of mind in market right now.

So as a credit reporting agency, TransUnion receives credit data from tens of thousands of lenders across the world and the value that TransUnion and our competitors play is that we have the ability to link and match that data to put together a comprehensive report on the consumer. But because of the sensitivity of the data that we are entrusted with, it's heavily regulated. In the in the US, it's called the Fair Credit Reporting Act. So there's, you know, certain obligations and use cases as to how that data, you know, can be used. So I already talked about all the the contributors to that data right so think of the scale there like just a number of data contributors we call them furnishers as well that you know enable us to make the file but then you also have the regulatory framework itself right and what's so powerful about credit data is it's sourced independently right and so it's coming from the from the lenders and it's refreshed frequently so that we call the top of the credit report we refer to that as the header and in essence what that means is that's your name it's your address it's your phone number date of birth social security number email addresses your phone number indicative information about who the consumer is so we're able to leverage that data and it's permissible we We take that header data and we're able to use that to build identity graphs. So what that means is to then take non-credit data and add it to the consumer profiles that we maintain. And that's really where the value comes for TransUnion, is that we are looking to best represent a consumer in the marketplace by fully showing who they are. And then why is that beneficial then for our customers is they're then able to transact with more confidence that they know who they're dealing with and what the potential risks are before they get into, you know, any type of potential, you know, engagement. it. Off of that credit file, TransUnion has proprietary data assets. I just go through a couple of them. Think of what I talked about with the credit header as the spine. I like to refer to it as the glue that holds everything together. Non-credit data, then, that we have, for example, one would be our short-term lending credit bureau data. Think of short-term lenders, payday lenders, not part of the traditional credit ecosystem. We're able to, we bought a business several years ago that has that data. We're able to take that data and then append it to that spine that I was talking about. Another example would be our Argus database. This is where we have a contributory database from credit card issuers where we have credit card transactions and deposit data. We're able to take that data, also put it, you know, on the identity graphs. We have, from a fraud perspective, we have device-based fraud information. We have about 14 billion devices that we've built up through a consortium that we know if a device has been associated with fraud or not, and what consumer that links to. So you put that, you know, on this identity graph. And then another area is, you know, TransUnion is responsible for helping to run caller ID, landline, in the United States. So we get a tremendous amount of signal from phone calls as well, too. So there's good examples of the proprietary data, you know, that we have, but we're not done yet at that point. I like to say we have an insatiable appetite for data, right? It It goes back to wanting to be able to represent the consumer more comprehensively, right? So what we do then is we engage with third parties where we might have a need to build out that profile for the consumer. We'll engage with third parties who might have different data elements, and we buy that So we'll also append that to the identity graph as well, too. Now we're in market with the identity graph, and you're using the capabilities that we have, by just simply using our products we're also able to derive signal from it. So a good example of that would be if you think of its fraud mitigation and we're able to help our customer identify a fraud instance, well we're able to capture that information and then we're able to use it within the identity graph and it makes it stronger. So we refer to that as like a flywheel effect that we have. Marketing is another example of that, right, where we help our customers build audiences to tailor their uh their marketing campaigns to those offers that they send out if a consumer engages and corroborates you know that they want their their data can be used we're able to bring that um you know information in so the whole flywheel effect um is is incredibly powerful very helpful um obviously with proprietary data as kind of the anchor uh one of our kind of theses for the space or the information services sector as a whole has been that AI will benefit the sector through increased supply or product innovation, demand generation, and operational

efficiency. So I just kind of want to hit those three things.

You've alluded to some of them, but just on the supply side, are there specific things that AI is enabling in term or one true from a new product innovation perspective that you'd call out new products that that maybe weren't able to to be facilitated before that's or at least now easier to do on a quicker timeline yeah for sure so let me let me go through and you know I'll address that question through credit marketing fraud but you asked me a couple other questions yeah let's get back to it because that's a big question you just asked me so if we if we just focus on the innovation and how we're using you know ai today let me answer it you know in the three categories that i've talked about with credit marketing and fraud so from a credit perspective a great example you know today is what we call our true iq um analytics orchestrator and in essence what true iq is is think of it as an analytic sandbox it's where our customers come to you build their models to understand different risk scenarios and if they would engage and how they would engage with a particular consumer. So what we've done with this new capability is we've been able to partner with Google Gemini to use some of their models in essence to enable our customers to use, you know, to speak basically um you know to to do the work on the analytics that i was talking about um historically what trains union has done is we've we've hosted innovation labs where we've brought our customers you know to the office and you know we do the analytic work um you know with them what this capability does is it puts more autonomy back in the customer of course we want to work with our customers we want to be side by side with them but it's a lot more efficient if they're able to do some of the work themselves. So that's been a significant change for us that we feel is going to drive some incremental revenues going forward. From a marketing perspective, in marketing, a lot of what we've done from audience generation in the past has been good data on audiences, but static, maybe not as fresh. So what we're able to do now with OneTrue is because of how fast that the platform operates is we're providing more real-time, fresher data to build those audiences. And then the final area would be in fraud. And in fraud, what we've seen there is that just by leveraging our OneTrue platform, the turn times in building scores is two to three times faster. And just as an example, last year, we built 10 new scores, and that would have taken a significant amount of time. And we were able to do that in a short period of time last year. And you made reference to our investor day earlier. I mean, we highlighted a credit washing score, or capability, I should say, at the investor And in essence, that's where consumers are trying to manipulate their credit file. They're trying to almost move faster than TransUnion can move. So we're able to use AI capabilities to detect that and to make sure that that doesn't happen. So those are good examples on the innovation side. Yeah, so that's supply. So demand.

I think one of the things that was super interesting at the Investor Day was just kind of how you talked about how your clients are interacting differently with you in this new paradigm. So could you flesh that out?

Yeah, for sure. So from a demand perspective, what we see is from customers that are more sophisticated early on in using AI capabilities, they're more frequent users of our data. So in particular, again, I've been talking a lot about analytics and scoring, but typically our customers would refresh their own scores or their analytics maybe once a year, maybe two or three years, right? because it was a arduous process what we're seeing now is customers that have ai capabilities they're requesting more of our data so they can refresh their models um to the point where we've seen some even get to monthly so think about from what was years to they're able to do it monthly so what that means is they're ingesting you know more of our data more frequently um so they can continuously you know calibrate so those are you know typically they're more sophisticated they're larger customers under multi-year type of agreements they're they got volumetric pricing with us so you know that we do see incremental revenues but it's not prohibitive right so that's why it's an important important point you know to make there so that's been a positive in the second area as well too is these same customers that are you know more sophisticated with AI capabilities, they want to ingest more of our products and services. They want to ingest more of our marketing and more of our trusted call solutions just as two examples. And what's kind of fascinating to me about that, where the bottleneck's at, it's really more on the customer side. It's not our ability to give it to them. They can take it, but where there's a little bit of a pause is their validation of these products. So for them to, you know, go back and test and make certain, you know, that it's, you know, something that will be beneficial, you know, to their decisioning, you know, criteria. So that's encouraging to me, right? Because they can take the product innovation, but, you know, it's that testing piece that they're going to check. All right. So third, efficiency benefits.

So it just seems like the data and information services space would be really well positioned to benefit from this technology from an operating efficiency perspective. So maybe you could highlight kind of what you're seeing on that front, what the opportunity looks like, where you are finding savings, if any, and we can go from there.

There's two really good examples of how we're being able to leverage AI internally. So I already talked about the OneTrue platform being AI enabled, but when you think about our developers, people that are working with OneTrue every day to build our products and services, they're software coding. And we've built something called OneTrue Assist, which in essence enables our developers to be able to speak code and code clean up. So what we've seen there is about a 20% productivity gain. So, before anyone asks, like, when is that going to show up and adjust it even to margin, you know, we're being intentional because that's increased capacity, you know, for us. So we're able to point that excess capacity towards product innovation. So we're really encouraged, you know, about that, about that opportunity. A second area that we've seen some meaningful traction is how we handle consumer disputes. So if I go back to your second question about the credit bureau and being regulated, one of those criteria is that if a consumer thinks that they have an inaccuracy in a credit report, as a credit reporting agency, you are required to answer that consumer's call and investigate and come to a resolution within a set number of days. So as you can imagine, we have a high volume of disputes that come in on consumers' credit But as you can probably imagine, there's a lot of commonalities in the requests that do come in. So we're able to use AI capabilities to be able to find those similarities and to build a better workflow to most efficiently handle the consumers when they come in. and we want them to have a good experience when they come in and deal with this, right? So if there's that much commonality and there's repetition, we now know, oh, we've seen that before, and AI is helping us do that. So that's a positive from an engagement and a relationship with the consumer, plus there's productivity gains because we're not necessarily having to answer the phone, right, we might be able to do that in a digital kind of frictionless manner for the consumer.

All right, great, we have maybe five minutes left. I think we've hit a lot of the major points on the AI topic. Maybe we can switch gears to just the current environment. What are you seeing in terms of the health of the consumer? I think you described April-to-date activity on your earnings call as being at or ahead of expectations. What are you seeing now? How would you describe the overall market environment in the U.S. in particular?

Yeah, so high level, what we're seeing is a continuation of the trends that we talked about on our April earnings calls. If I look at where we're at through the middle of May, we are trending towards the high end of our guidance, if not being ahead, which is what we messaged. We said that if trends persisted, we oriented the market to that level. That's what we're seeing to this point. That's where we're at. So what underpins that in the U.S. is a generally resilient consumer. So a big driver for TransUnion is employment. And if consumers are employed, obviously they can live up to their financial obligations. But they also can aspire to a higher quality of life as well, too, through, such as maybe buying a house or buying a car or paying for college education, things that you may need loans for, we really haven't seen much of a deterioration there. But a common question we get, and we recently put something out in our newsroom, is about this K-shaped economy that we're operating in, and that is its prevalence. We definitely see that happening. Consumers that are in the lower, the part of the K that's pointing down are definitely impacted by higher energy costs, higher inflation. We've seen their delinquencies tick up a little bit, still within historical ranges, but not ideal where it should be. So that's all in the market. But what our research has shown us, and our research is leveraging our core credit reporting database right so it's a phenomenal place to look is that we're seeing that in prime near prime prime and super prime we're actually seeing the proportion change and that there's more consumers compared to four years ago in those categories in that subprime place is kind of held flat so what that means is we're seeing consumers actually in aggregate actually getting better but But there still are the consumers on the lower part of the cave that are definitely being impacted. So the way we're thinking about it is you kind of net those together and that's the resiliency. And then that's also the employment piece that I talked about, you know, that's there as well, too. And you know, across our businesses, you know, like core lending businesses, mortgage continues to be incredibly low. I mean, we're still talking about volume levels we haven't seen since the mid-90s. Before the conflict with Iran, we saw the 30-year mortgage go below, around six or below, and we saw a significant increase in our volumes. And then, unfortunately, that was short-lived, and it went up. So the reason I bring that up is, if we're talking about volumes from the 90s, and you think about population growth in the U.S., If interest rates get much higher in mortgage, there's really not going to be that much of an impact to us. But a 50 basis point reduction in interest rates, let's just say we get back to six or below on that, it's going to unlock a significant amount in mortgage. In particular, we can see, again looking at our credit file, that there's 10 million mortgages that have an interest rate of 6% or above. So that just speaks to the refinance opportunity that's out there. Markets like auto, kind of tepid right now, right? Home, I'm sorry, new car sales and used car sales are kind of flattish, right? And the average life of a used car is seven or eight years, you know, right now. So I would look at that as under trend as well, too. So there should be some upside coming from mortgage and auto in a more normalized environment. Our card and banking business has been resilient, low to mid-single-digit grower. I still think that that's a little bit below trend. And then probably the strongest part of our core lending has been in consumer lending, home to our fintech customers. They're healthy. They've got funding. Delinquencies are manageable. And the personal loan has become more of a mainstream product, so they're selling to more than the subprime consumer.

We have eight seconds. I don't know that we can finish this whole question in that second, but I'm going to try to squeeze something. Is there any major distinction between what you just described in the U.S. versus what you're seeing internationally or any kind of major changes? Obviously, conflict in the Middle East might have a very specific impact in those regions.

Conflict in the Middle East, we're watching closely India and the Philippines because of the Strait of Hormuz being a source of where energy comes from. not at a material impact at this point in time. Otherwise, the other geographies that we operate in, it's more dealing with the higher energy price and inflation. So think about the UK and Canada. But again, what we're seeing is through May, I'd orient you to the high end of the guide right now. Great. Thanks a lot, Todd.

Thanks, everyone.