Morningstar | TransUnion’s Pace Slows a Bit in 3Q
TransUnion's revenue, excluding acquisitions and currency effects, was up 11% year over year. This marks a modest deceleration from recent results, driven by a slight hiccup in the company's healthcare business. However, growth remains at a level the company’s larger peers would envy. We will maintain our wide-moat rating and $68 fair value estimate.Domestic revenue, on an organic basis, was up 11% year over year. The core credit bureau business is holding up well, but the company did see growth slow in decision services, which was up only 3% on an organic basis, due to a flat result in the healthcare business that management attributed to consolidation in its customer base. This issue does not particularly concern us. While we think the company has done a nice job leveraging its consumer credit data to serve new verticals, healthcare is a fairly small portion of the business, and this issue looks temporary.
International results remain strong, up 12% year-over-year excluding acquisitions and currency effects, with a 9% and 14% rate in developed and emerging markets, respectively. In our view, replicating the credit bureau business model in emerging markets is the most value-creative long-term opportunity for the credit bureaus, and India is the largest opportunity. We are pleased to see TransUnion continuing to benefit from its leading market share position in this country, with growth at 37% excluding currency effects.
The consumer business saw 11% year-over-year growth. This segment was aided by some business won as a result of the Equifax breach, an event we view as one-time in nature. We expect growth in this business to slow once this is anniversaried.
Adjusted EBITDA margin improved modestly to 39.4% from 39.0%. We continue to believe the scalable nature of the business will allow for meaningful margin expansion over time and are pleased with the progress this quarter. However, we continue to expect margin improvement in the near term to be modest, as TransUnion consolidates gains over the past few years and reinvests to maintain growth.
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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