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TransUnion (TRU) Beats Earnings and Revenue Estimates in Q2

Zacks Equity Research

TransUnion TRU delivered better-than-expected second-quarter 2019 results.

Adjusted EPS of 69 cents outpaced the consensus mark by 4 cents and improved 11% year over year.

Total revenues came in at $662 million, which beat the consensus mark by $17 million, increasing 18% year over year on a reported basis, 19% on a constant-currency basis and 10% on an organic constant-currency basis. This uptick was driven by strong performance across all the operating segments of the company — U.S. Markets, International and Consumer Interactive.

Adjusted revenues (excluding the impact of deferred revenue purchase accounting reductions and other adjustments to revenues for the company’s recently acquired entities) came in at $664 million, up 18% year over year on a reported basis, 19% at constant currency and 10% at organic constant currency. Acquisitions of iovation, HPS, Rubixis, Callcredit and TruSignal drove adjusted revenues.

We observe that shares of TransUnion have gained a massive 48.3% year to date, outperforming the 38.4% rally of the industry it belongs to.

Revenue Growth Across All Segments

The U.S. Markets revenues of $406 million increased 13% year over year on a reported basis and 8% on an organic basis. Adjusted revenues also came in at $406 million. Within the segment, Financial Services revenues of $213 million increased 11% and 8%, respectively, on a reported and organic basis. Emerging Verticals revenues, including Healthcare, Insurance and all other verticals, were $193 million, up 16% year over year on a reported basis and 8% on an organic basis.

International revenues surged 42% year over year on a reported, 49% at constant currency and 20% on an organic constant-currency basis to $151 million. Adjusted revenues came in at $153 million. Canada, Latin America and India revenues increased but Asia Pacific revenues decreased year over year on a reported as well as constant-currency basis.

Revenues at the Consumer Interactive segment improved 5% from the prior-year quarter number to $124 million.

TransUnion Revenue (TTM)

 

TransUnion Revenue (TTM)

TransUnion revenue-ttm | TransUnion Quote

Margin Expanded

Adjusted EBITDA was $264 million, up 20% year over year on a reported and 21% at constant currency. Adjusted EBITDA margin of 39.7% expanded 50 basis points (bps) year over year.

Balance Sheet and Cash Flow

TransUnion had $194.7 million in cash and cash equivalents at the end of the second quarter compared with $200.9 million at the end of the prior quarter. Long-term debt was $3.8 billion, compared with roughly $4 billion in the prior quarter. The company generated $177.2 million in cash from operating activities and CapEx was $46.1 million. The company paid out $14.1 million in dividends in the quarter.

Q3 Outlook

For the third quarter of 2019, TransUnion expects adjusted revenues between $672 million and $677 million, suggesting an improvement of 8-9% year over year.

Adjusted EBITDA is anticipated in the range of $269-$273 million, mirroring an increase of 10-11%. Adjusted EPS is expected between 69 cents and 71 cents, indicating a rise of 6-8% year over year. The Zacks Consensus Estimate for third-quarter earnings is pegged at 71 cents.

2019 View

TransUnion raised its 2019 guidance. The company now expects adjusted revenues between $2.628 billion and $2.638 billion, reflecting year-over-year increase of 12%. The previous guidance was between $2.603 billion and $2.618 billion.

Adjusted EBITDA is anticipated in the range of $1.036-$1.044 million, reflecting year-over-year increase of 13-14%. The previously anticipated range was $1.025-$1.037 million.

Adjusted EPS is anticipated in the band of $2.66-$2.69, indicating improvement of 6-8%. The previous expectation was in the band of $2.60-$2.65. The Zacks Consensus Estimate for adjusted earnings is pegged at $2.70.

Zacks Rank & Other Stocks to Consider

Currently, TransUnion carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some other top-ranked stocks in the broader Zacks Business Services sector include Broadridge BR, Accenture ACN and Total System Services TSS, each carrying a Zacks Rank #2.

The long-term expected EPS (three to five years) growth rate for Broadridge, Accenture and Total System is 10%, 10.3% and 12.1%, respectively.

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