Morningstar | TransUnion Sees Growth Return in 2Q
Following a few soft quarters, TransUnion returned to strong growth in the second quarter. Revenue was up 18% year over year, or 9% excluding the Callcredit acquisition and currency effects. This level of organic growth is roughly in line with our long-term expectations for the company. Management is more optimistic about the second half of the year and raised guidance slightly. Overall, though, nothing in the quarter alters our long-term view, and we will maintain our $69 fair value estimate and wide moat rating.The company’s turnaround was concentrated in its domestic business, with the newly renamed U.S. markets segment up 8% on an organic basis. To some extent, this appears to reflect a turnaround on the mortgage side, but solid growth in the insurance and healthcare verticals suggests management is executing on secular growth opportunities.
International results also saw growth pick up a bit, with revenue up 20% year over year excluding currency effects and acquisitions. India was a positive standout, with 37% constant currency growth. Long run, we think the most value-creative opportunity for TransUnion and its peers lies in replicating their business model in emerging markets, and India looks to us to be the largest opportunity by far. We’re encouraged to see that TransUnion’s early entry and dominant share in this market continue to pay off, and we think this market offers a very long growth runway.
Adjusted EBITDA margin improved to 39.7% from 39.2% last year. We think the scalability of the business model will allow TransUnion to improve margins over time, and the rate of improvement this quarter was in line with our long-term expectations.
TransUnion is an information and insights company. The company provides consumer reports, actionable insights and analytics such as credit and other scores, and decisioning capabilities to businesses. The company has the following reportable segments: United States Markets, which provides consumer reports, actionable insights and analytics such as credit and other scores, and decisioning capabilities to businesses; International, which provides services similar to its United States Markets segment to businesses in select regions outside the United States; and Consumer Interactive, which provides solutions that help consumers manage their personal finances and take precautions against identity theft.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
We have operations in 27 countries.
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