环联 (TRU) 2026年第三季度业绩电话会议：因国际业务增长加速而上调业绩指引

核心要点

• TransUnion公布2026年第三季度营收增长12%，其中按固定汇率计算的有机增长为8%。若扣除FICO房贷专利费，有机增长约为5.5%。
• 调整后EBITDA增长9%，利润率为35.4%。调整后摊薄每股收益（EPS）增长14%至1.25美元。
• 美国市场业务营收增长7%，其中金融服务业务增长11%领跑。在印度和拉丁美洲均增长18%的支撑下，国际业务按固定汇率计算的有机营收增长10%。
• 管理层上调了全年营收和调整后EBITDA预期指引的下限。目前预计按固定汇率计算的有机营收增长8%–9%，调整后摊薄每股收益增长12%–13%。
• TransUnion预计将在2026年回购约5.00亿美元的股票。其杠杆率降至2.5倍，处于公司长期目标区间之内。
• 管理层估计，在不考虑贷款机构行为可能带来的缓释效应前，受美国联邦住房金融局（FHFA）监管的贷款若全面转向“双报告合并”（bi-merge）模式，将使年度营收减少约3300万美元，调整后摊薄每股收益减少0.15美元。

关键财务数据

业务与运营表现

美国金融服务业务增长11%，若扣除房贷业务则增长5%。尽管行业整体成交量下降，但在定价优化和新客户赢得的推动下，汽车金融营收增长13%。消费贷款增长5%，信用卡和银行业务增长3%。

房贷营收增长21%。在定价提升以及超越传统“三报告合并”（Tri-Merge）报告的新营收驱动下，尽管查询量下降16%，扣除FICO专利费后的增长仍达5%。管理层表示，利率上升导致房贷业务活动环比放缓。

新兴垂直业务增长6%。受基于信用数据的营销、消费者比价活动以及核心信用、驾驶记录和可信呼叫解决方案合同签署的推动，保险业务连续第九个季度实现两位数增长。TransUnion预计保险业务在2026年将创造超过4.30亿美元的营收，并预计中期增长率至少达到高单位数。

国际业务按固定汇率计算的有机营收增长10%。印度和拉丁美洲各增长18%。加拿大增长7%，英国增长5%，非洲增长6%，亚太地区恢复增长，增幅为3%。在信用数据改善、重新设计的信用评分系统以及TrueIQ普及的支撑下，管理层预计未来三年印度将实现15%左右或更高的有机增长。

今年迄今，TransUnion已推出40多款产品及AI驱动的增强功能。管理层估计，近期推出的产品在三年内代表着约3.50亿美元的潜在营收。目前美国大部分信用在线和批量业务均在OneTrue平台上运行，预计美国的迁移工作将在年底前基本完成，少量尾部工作将延续至2027年。

管理层业绩指引

管理层表示，若当前趋势得以延续，业绩可能会达到指引区间的上限。指引区间也为市场进一步软化留出了灵活性。

预计全年房贷营收将增长28%，扣除FICO专利费后增长9%。管理层假设全年房贷查询量将下降约10%，其中第四季度下降超过20%。

TransUnion目前预计2026年净利息支出为2.35亿美元，低于此前预测的2.45亿美元。对于2027年，管理层预计较高的预测利率以及到期利率互换协议的替换将使净利息支出增加约6000万美元。

公司计划在第四季度加大股票回购力度，使全年回购总额达到约5.00亿美元。董事会将回购授权额度扩大了10亿美元至20亿美元，在扣除截至目前已完成的回购后，尚有约15亿美元额度可用。

风险与关注点

高利率正在对房贷查询量和住房负担能力造成压力。管理层还预计，较高的利率将对汽车负担能力和贷款活动产生温和影响，尽管消费贷款和信用卡对利率较不敏感。

第三季度基础利润率收缩了40个基点，原因是营收增长带来的利润提振被技术与产品投资以及更高的法律和合规费用所抵消。后者主要与个人消费者诉讼以及《公平信用报告法》（FCRA）相关诉讼有关。

由于住房市场流动性降低减缓了租赁换租频率，租客和雇佣背景审查业务持续承压。在从旧平台向True Audience迁移期间，由于受众产品使用量有所下滑，媒体业务营收受到影响。

管理层还探讨了房贷“三报告合并”（Tri-Merge）标准可能面临的变化。每年约有1亿美元的营收直接与FHFA的监管要求挂钩。在各占一半份额的“双报告合并”（bi-merge）情景下，管理层估计在不包含评分专利费的情况下，每年对营收的影响约为3300万美元，对调整后摊薄每股收益的影响约为0.15美元。公司认为，贷款机构对更广泛的借款人覆盖率和一致风险评估的需求可能会带来缓释作用。

分析师问答要点

• 房贷差异化优势：管理层列举了TransUnion的趋势化信用数据、金融科技覆盖率、替代数据以及对房贷转售商的中立性，认为这些是在潜在的双报告合并（bi-merge）环境中的竞争优势。
• 美国消费信用：管理层将非房贷金融服务业务增速放缓主要归因于基数较高。管理层表示，放贷条件和逾期趋势保持稳定，恶化迹象未见明显加速。
• 印度市场前景：贷款成交量的改善、更广泛的银行数据共享、重新设计的信用评分以及TrueIQ赢得的新客户，正在巩固TransUnion的地位。管理层预计未来三年有机增长率将达到15%左右或更高。
• 技术投资：新增支出旨在加快OneTrue的全球推广，并扩展其在信用、分析、营销和反欺诈领域的产品功能。
• 国际市场机遇：管理层认为，在正常条件下，国际业务能够实现至少10%的有机复合增长，而印度的复苏以及巴西的新产品将提供额外支撑。
• VantageScore应用普及：管理层表示，其普及程度强于预期。TransUnion将其0.99美元的VantageScore房贷定价延长至2028年，并继续将其信用数据营收与FICO评分定价分离开来。

业绩电话会议完整文字记录

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完整财报电话会议逐字稿

管理层陈述

Operator

Good morning, and welcome to the TransUnion 2026 Third Quarter Earnings Conference Call. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Greg Bardi, Senior Vice President of Investor Relations. Please go ahead.

Gregory Bardi

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, 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

Thank you, Greg. And let me welcome everybody to the call this morning and outline our agenda. First, I'm going to review our third quarter performance and our progress against our strategic priorities. We're then going to have a deep dive into our insurance business. It's a case study that demonstrates how our strategy is driving innovation-led and scalable growth. Then I'll hand it over to Todd, who will provide the details on the third quarter results, our fourth quarter guidance and the guidance for the full year.

So in the third quarter, we delivered broad-based growth and exceeded the high end of guidance for revenue, adjusted EBITDA and adjusted diluted earnings per share. Organic constant currency revenue growth was 8% or approximately 5.5%, excluding FICO mortgage royalties. Now that performance translated into 14% growth in adjusted diluted earnings per share. U.S. Markets revenue increased 7%, within that, Financial Services grew 11% or 5% excluding our mortgage revenues, with double-digit growth in auto. Emerging verticals grew 6%, led by another quarter of double-digit growth in insurance and strength in public sector.

And International had an excellent quarter and returned to double-digit organic constant currency revenue growth. India and Latin America led the quarter, each up 18%. In India, consumer and commercial credit volumes continued to improve and new wins began to convert to revenue. In Latin America, Colombia and Brazil both delivered strong growth.

Our Mexico acquisition continued to track well ahead of our acquisition case for both revenue and adjusted EBITDA. Following the Mexico acquisition, India and Latin America are now 2 of our largest international regions. Both regions offer attractive economic and demographic characteristics, and we believe we've got a proven playbook to continue outgrowing them. We also repurchased 126 million shares in the third quarter bringing our year-to-date total to $243 million.

Our Board recently increased our repurchase authorization by $1 billion, bringing the total to USD 2 billion. We expect to accelerate repurchases in the fourth quarter and plan to bring our full year total to about $500 million. And we also reached key balance sheet milestone, reducing our leverage ratio to 2.5x within our long-term target range.

Now our results reflect consistent execution despite the ongoing economic and geopolitical uncertainties. Conditions in U.S. consumer credit are largely unchanged from prior quarters. Consumers remain resilient in a labor market with high employment, but moderating real wage growth. Credit demand remains healthy, supported by strong spending. credit performance is stable, though pressures persist in lower income and subprime segments.

Lenders continue to expand their portfolios, supported by strong balance sheets and margins and delinquency rates remain within historical ranges and are broadly consistent across risk tiers. The most significant change has been the rise in inflation and interest rates. The 10-year treasury rate is now roughly 5%, up over 30 basis points since our July earnings call and roughly 80 basis points year-to-date. The 30-year mortgage rate is above 7%, weighing on borrowing costs and home affordability and in an already soft housing market.

As a result, mortgage volumes have slowed incrementally in recent months. That said, with industry volumes over the last several years, already near multi-decade lows, we believe additional downside is limited. Other consumer lending categories are less sensitive to higher interest rates and trends remain broadly consistent. We expect higher rates to moderately reduce auto affordability and lending activity.

Consumer loans are less sensitive because of their shorter duration. Fintechs and other consumer lenders have adequate diversified funding sources, though higher rates increased funding cost and could temper borrower demand. Credit cards are the least rate-sensitive lending product, given already high APRs and the product's revolving nature. And we delivered another strong sales quarter in Financial Services. reflecting sustained demand and commercial momentum for solutions such as TrueIQ, trusted call solutions and identity-based marketing.

More broadly, our portfolio outside U.S. Financial Services offers multiple growth drivers that are less sensitive to the credit cycle. Now with that context, we are raising the low end and maintaining the high end of our full year guidance for revenue and adjusted EBITDA. We expect to deliver 8% to 9% organic constant currency revenue growth and 10% to 11% adjusted EBITDA growth. We expect portfolio diversification benefits, including stronger international growth in the second half of the year to help offset the impact of higher rates and softer mortgage activity in the U.S.

We are raising our adjusted diluted earnings per share guidance by 1 percentage point to 12% to 13% growth, driven by lower net interest expense and the benefit of our share repurchases to date. This would mark our third consecutive year of high single-digit revenue growth and double-digit earnings growth. We believe our guidance appropriately balances our current momentum with ongoing market uncertainty.

If current trends continue, we expect performance at the high end of our guidance range. Our range is also designed to provide flexibility to absorb a reasonable degree of further market softening. And Todd will provide full details on our guidance assumptions later in the call. Now beyond the near-term outlook, we continue to make significant progress on the strategic priorities that underpin our long-term growth.

As U.S. credit migration nears completion and our pace of innovation accelerates, we believe we're in position for stronger and more diversified growth. So in the quarter, we significantly accelerated U.S. credit customer migrations. The majority of U.S. credit online and batch activities now run on OneTrue. We expect to substantially complete the migration by year-end, with a small tail extending into 2027.

We have meaningfully reduced legacy system capacity and met our cost savings commitments. In 2027, we plan to focus on expanding OneTrue into Canada, India and the U.K. and OneTrue is helping our teams develop and launch and scale products faster than ever. Across the enterprise, we've launched more than 40 new products and AI-powered enhancements year-to-date, expanding our pipeline and strengthening sales momentum.

Recent highlights include TrueIQ real-time offers for prescreen campaigns, curated audiences by TU marketing segments and the expansion of branded call display into India. We believe these recent launches represent approximately $350 million in revenue potential over the next 3 years. These efforts support growth across our solutions, verticals and geographies with some of our strongest momentum coming from differentiated capabilities beyond traditional credit volumes.

Insurance is 1 of the clearest examples of this growth playbook in action. It was 1 of the first verticals we entered beyond traditional consumer lending. We built the business by combining deep industry expertise with our credit data and analytics to support personal auto underwriting. Since then, we've substantially expanded our customer base and the breadth of our solutions. Today, we are the market-leading credit bureau serving the insurance life cycle with a comprehensive solution suite.

Insurance is expected to generate more than $430 million revenue in 2026, making it comparable in size to our mortgage business, excluding FICO royalties. We support more than 80% of insurance carriers, including all of the top 20 personal lines insurers, and we also serve most of the leading life and commercial insurers. Our growth in insurance has materially outpaced underlying market trends. Over more than a decade, we've achieved a double-digit compound annual growth rate.

Now 3 durable growth drivers support this performance. recurring policy renewals, wallet share gains and broader adoption of our solutions. Our diversified solutions enable us to grow across varying market conditions. When insurers prioritize growth, higher marketing activity drives volume and new wins across our marketing solutions. In a more challenging environment, increased consumer shopping supports credit demand even as marketing spend and new policy originations slow.

These counterbalancing demand drivers today, together with a highly recurring revenue base, have supported growth across multiple environments. Revenue grew in 2020 despite COVID impacted conditions. and we grew 5% in 2023 despite inflation-driven profitability pressures across the insurance industry. We expect insurance to achieve a third consecutive year of double-digit growth.

Now today, more than half of our insurance revenues are outside of core credit. This broader portfolio expands our addressable market, creates new vectors of growth and reduces the vertical's reliance on any single demand driver. For credit laid the foundation for our business in many of our most important customer relationships, our credit-based solutions support customer acquisition underwriting and portfolio review, helping personal auto insurers more accurately assess risk and set premiums. We've continued to gain market share.

Building on those capabilities and customer relationships we developed a broader suite of insurance-specific solutions. Through our acquisitions of Drivers History and Datalink, we develop our Driver History Solutions, which offer insurers a cost-effective alternative to traditional state motor vehicle reports. We have scaled these solutions from $13 million in 2015 to $125 million today. And most recently, we expanded our offering to include marketing and fraud solutions. Since 2022, marketing and fraud solutions have grown at a combined double-digit compound annual rate with trusted call solutions as a key contributor.

A large addressable market in durable competitive advantages support continued momentum in insurance. We expect at least high single-digit growth over the medium term, driven by several initiatives. First, we have a significant base of contract wins that is not yet fully ramped. Many large insurer contracts roll out state by state, creating a multiyear ramp from signed wins to fully realized revenue.

In Core Credit, we estimate approximately $225 million in annualized wins from new contracts compared to roughly $190 million in the 2026 revenue base. Now the $35 million difference is expected to ramp up over the next couple of years. In driving history, we estimate approximately $150 million in annualized revenue from contract wins, compared with roughly $125 million in the 26% revenue base.

Second, we see substantial runway to expand in life insurance and commercial auto and to further cross-sell our marketing and fraud solutions to existing customers. And third, we are expanding our telematics capabilities with the industry's first consumer-owned driving score developed in partnership with Cambridge Mobile Telematics. We see strong interest among our largest customers and believe this can become another meaningful insurance-specific growth driver.

Beyond these medium-term drivers, we're well positioned to benefit from longer-term industry trends. Demand for differentiated data to improve insurers acquisition, underwriting, segmentation and retention is accelerating. Over time, agent-enabled shopping could make insurance comparison and switching easier, increasing consumer shopping activity and the associated demand for our data and solutions.

Now taken together, insurance demonstrates our growth playbook in action. We have built a scaled market leader with recurring demand, strong sales momentum, a meaningful wallet share opportunity in a growing innovation pipeline. That combination gives us confidence that insurance can continue to outpace the underlying market.

And with that, let me turn it over to Todd to review third quarter results and provide guidance.

Todd Cello

Thank you, Chris, and let me add my welcome to everyone. Starting with the quarter, revenue and adjusted EBITDA exceeded the high end of guidance by $3 million and $2 million, respectively, Results reflected broad-based growth in U.S. Financial Services and emerging verticals, along with better-than-anticipated performance in international. Total revenue increased 12% as reported and 8% on an organic constant currency basis. Excluding FICO mortgage royalties, organic growth was approximately 5.5%. Adjusted EBITDA increased 9%. Adjusted EBITDA margin was 35.4% at the high end of guidance and down 90 basis points from the prior year.

Underlying margins contracted 40 basis points as revenue flow-through was offset by technology and solutions investments and higher legal and regulatory expenses. FICO mortgage royalties were a 60 basis points drag to consolidated margins. Acquisitions had an immaterial impact, reflecting strong adjusted EBITDA from Mexico. Adjusted diluted earnings per share was $1.25, up 14% year-over-year and $0.04 ahead of the high end of our guidance, driven by adjusted EBITDA growth and the benefit of recent share repurchases.

In the third quarter, U.S. markets revenue grew 7% on an organic constant currency basis, led by 11% growth in Financial Services, and continued double-digit growth in insurance. In nonmortgage financial services, revenue grew 5%. Growth reflected positive though moderated online and batch volumes in credit card and consumer lending along with strong performance in auto. Credit Card and banking grew 3%, supported by recent wins from trusted call solutions.

Consumer lending grew 5% with continued fintech growth and sustained consumer demand. Auto grew 13%, driven by pricing and new wins across our solutions significantly outpacing declining industry volumes. In mortgage, revenue grew 21%. Excluding FICO royalties, mortgage growth was 5% despite a 16% decline in inquiries with outperformance due to pricing actions and revenue beyond traditional tri-merge reports.

The sequential slowdown in growth reflected the impact of rising interest rates on mortgage inquiries. Turning to emerging verticals. Revenue grew 6%. Insurance led the way with its ninth straight quarter of double-digit growth. Within insurance, demand remains strong across our solution suites. Credit based marketing continued to strengthen while elevated consumer shopping supported credit volumes. We also benefited from new wins across core credit, driving history and trusted call solutions. Across our other emerging verticals, we grew modestly. Public sector returned to strong growth while tenant and employment and media volumes were softer than anticipated.

Consumer Interactive declined 3%, in line with expectations with flattish growth in indirect and a decline in the direct channel. In international, all revenue growth comparisons are on an organic constant currency basis. International continued to reaccelerate with 10% growth in the third quarter. Overall results reflected high teens growth in India and Latin America, together with continued healthy performance across our developed markets.

Starting with India. Revenue accelerated to 18% growth. Volumes continued to improve during the quarter across both consumer and commercial lending. We also benefited from new wins converting into revenue. We expect similar growth in the fourth quarter as India is expected to return to a strong double-digit growth trajectory. Latin America growth increased from 5% to 18% in the third quarter including double-digit growth in Brazil and Colombia. While some of the third quarter growth was the result of onetime revenue in Brazil, we expect healthy double-digit growth from Latin America in the fourth quarter.

Additionally, our acquisition of Mexico, which is included in our inorganic growth continues to perform ahead of our acquisition case. Canada and the U.K. grew 7% and 5%, respectively, both markets outpaced muted market volumes through wins across financial services, fintech and insurance. Africa grew 6%, while Asia Pacific returned to growth with a 3% increase.

Turning back to the enterprise. We ended the third quarter with $5.5 billion of debt and $883 million of cash. Our leverage ratio decreased to 2.5x now within our long-term target of 2.5x or less. Also, through the first 3 quarters, total free cash flow was $687 million or an approximately 97% conversion as a percentage of adjusted net income. Our operating performance and strong balance sheet position us for continued accretive capital deployment.

During the third quarter, we repurchased $126 million in shares. Year-to-date, we have repurchased 3.3 million shares at an average share price of about $74 for a total of $243 million. We expect to accelerate repurchases in the fourth quarter, bringing our expected full year total to roughly $500 million. We view share repurchases as an attractive use of capital at current valuation levels.

Our Board recently increased our repurchase authorization by $1 billion to a total of $2 billion. With repurchases made to date, we still have remaining authorization of roughly $1.5 billion. We also today announced an increase in our quarterly dividend to $0.135, up from $0.125 effective in the third quarter and payable in November. The increase is consistent with our commitment to grow the dividend in line with earnings growth, while maintaining a 10% to 15% payout ratio.

During the quarter, we also prepaid the remaining $104 million of our Term Loan B 5, we expect adjusted EBITDA growth to support further natural deleveraging. Finally, we are currently replacing an expiring $1.5 billion notional swap and an interest rate of 1.4% with a new swap of a similar notional amount. We have executed more than half of the replacement swap at an average rate in the mid-4% range and expect to execute the remainder during the fourth quarter. The appendix includes additional details on our debt profile, and a bridge to expected 2026 interest expense.

Turning to fourth quarter guidance. Our ranges reflect a similar level of prudence to the third quarter. If current business trends continue, we expect performance at the high end while the range retains flexibility to manage ongoing market uncertainty. In the fourth quarter, we are guiding revenue of $1.264 billion to $1.294 billion, up 8% to 10%. Growth includes 3% to 6% organic constant currency growth. a 5 percentage point contribution from acquisitions and a 0.5 percentage point headwind from foreign exchange. Excluding FICO mortgage royalties, we expect organic constant currency growth of 3% to 5%.

The sequential deceleration from the third quarter reflects declining mortgage inquiry volumes. Excluding mortgage, we expect revenue growth to remain similar to the approximately 5.5% that we delivered in the third quarter. We are guiding adjusted EBITDA of $450 million to $468 million, up 8% to 12%, implying a margin of 35.6% to 36.2%. Underlying margins are expected to expand by 40 to 120 basis points, partially offset by a 30 basis point drag from FICO royalties and a 20 basis point impact from acquisitions.

The fourth quarter margin expansion is primarily driven by positive revenue mix, including strong growth from international. We expect adjusted diluted earnings per share of $1.15 to $1.22, up 7% to 14%. For full year guidance, we modestly raised the low end of our guidance and now expect revenue of $5.131 billion to $5.162 billion, up 12% to 13%. Acquisitions contributed 4 percentage points and foreign exchange 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.

Our segment level assumptions are broadly unchanged. Our full year mortgage revenue growth guidance is 28% or 9% excluding FICO royalties. Our conservative mortgage assumptions have provided flexibility to achieve our guidance despite higher interest rates. We now expect mortgage inquiries to decline roughly 10% for the full year and more than 20% in the fourth quarter.

Pricing actions and revenue beyond traditional Tri-Merge reports continue to support growth above mortgage market volumes. We expect adjusted EBITDA to be $1.08 billion to $1.827 billion in 2026, up 10% to 11%. That results in a margin of 35.2% to 35.4%, down 60 to 80 basis points, unchanged from prior guidance. Underlying margins are now expected to be flat to up 20 basis points compared with our prior expectation of 50 to 70 basis points of expansion.

Revenue growth and transformation savings continue to drive strong flow-through. However, we are intentionally reinvesting a portion of those benefits into technology and solution initiatives to continue accelerating innovation. Additionally, we have experienced higher legal and regulatory expenses primarily related to individual consumer cases.

Our Mexico acquisition continues to outperform our revenue, adjusted EBITDA and margin expectations. As a result, acquisitions are now expected to have an immaterial impact on consolidated margin. compared with the 40 basis point pressure assumed previously. No margin FICO royalties remain an 80 basis point margin drag. We are raising our adjusted diluted earnings per share guidance due to lower net interest expense and the benefit of share repurchases. We now expect $4.81 to $4.88, up 12% to 13%.

We now expect 2026 net interest expense of $235 million, down from $245 million, reflecting higher interest income and the repayment of our Term Loan B 5. For 2027, a higher of forecast and the replacement of our expiring interest rate swap are expected to increase net interest expense by roughly $60 million. All other guidance items, including depreciation and amortization, adjusted tax rate and capital expenditures as a percent of revenue are unchanged. We continue to expect free cash flow conversion above 90% of adjusted net income.

With that context, I'll now turn the call back to Chris for closing remarks.

Christopher Cartwright

Thanks, Todd. So before we close, I wanted to weigh in on the ongoing discussion about the mortgage Tri-Merge standard. TransUnion firmly believes that comprehensive data allows the responsible expansion of access to credit. It strengthens underwriting, it delivers substantial benefits to consumers, lenders, taxpayers and MBS investors alike. The data and analysis that has been done on this topic show that it's clearly the right policy for the U.S. mortgage market.

But I also want to emphasize that we've looked at this and believe that our financial exposure to an FHFA shift to a by Merge standard for GSE conforming mortgages would have a limited impact on our financial performance and would likely play out over a couple of years at least. Over the past decade, TU has invested several hundred million dollars in data innovation to build a more complete view of consumers. We pioneered the use of trended credit data. We help power the expansion of fintech lending, and we broadened our complementary alternative data assets to deliver a deeper consumer insights.

As a founding shareholder in VantageScore, we also helped foster competition in credit scoring by creating a modern score based on trended credit and alternative data. And together, these innovations enable 33 million more consumers to be scored, thereby increasing financial inclusion in mainstream consumer lending. So this innovation enables responsible credit expansion in the U.S., particularly in the mortgage market, benefiting both homebuyers but also lenders. For homebuyers, trended and alternative data along with the VantageScore expand the mortgage eligible population by approximately 5 million consumers, representing an estimated $1 trillion in incremental mortgage lending opportunity.

Our data and the Tri-Merge also support more equitable outcomes by enabling consumers to be evaluated based on a complete view of their borrowing history. And lenders benefit from this expanded addressable market, along with more accurate risk assessment and loan pricing. Over the past decade, TransUnion data has supported 32 million mortgages, representing $9.2 trillion in loan value. That scale underscores the important role credit data plays in enabling access and sound underwriting across the U.S. mortgage market.

Now TransUnion's credit data delivers meaningful underwriting value at a small fraction of mortgage closing costs. Today, TransUnion charges approximately $11 for our credit data in the Tri-Merge. That fee reflects our innovation and the ongoing investments in innovation, cybersecurity, compliance and consumer dispute management. Our credit file accounts for less than 10% of the Tri-Merge cost, and the Tri-Merge itself accounts for less than 1% of overall mortgage closing costs.

The relevant comparison is not merely the cost of 1 additional credit file, but the value of more complete information relative to the risks and cost of less informed lending decisions. In our view, the potential negative costs of reaching fewer consumers and making lending decisions with less complete information, outweigh the potential modest savings from purchasing on fewer credit file. Our analysis shows that under a by merge model, an estimated 600,000 new mortgage borrowers each year could pay more in interest with affected borrowers paying almost $7,000 more over the life of their mortgage. Although credit data accounts for a small share of closing costs, we support efforts to reduce mortgage closing costs without compromising data completeness or underwriting quality. A key example of this is continued adoption of Vantage Score.

Vantage Score was included in roughly 35% of mortgage credit polls in the third quarter. We expect adoption to continue rising as the unified LLPA grid removes another source of friction. Now we've extended our industry first $0.99 Vantage score for mortgage pricing through 2028 at more than 90% below the current price of the legacy score. This offers potentially meaningful savings for lenders and consumers, while preserving access to complete credit data. We also recently introduced first look, which allows lenders to review credit report insights before purchasing additional scores, improving early-stage underwriting efficiency.

And finally, we believe our direct financial exposure to potential change in FHFA requirements is limited. Within our mortgage revenue, a substantial portion consists of no-margin FICO royalties, prequalification usage and other revenue that is not subject to a Tri-Merge requirement. The remaining Tri-Merge revenue spans FHFA regulated loans as well as other government and nonconforming loans. Only approximately $100 million in annual revenue is directly connected to the FHFA requirement. Now if all FHFA regulated loans moved to by Merge and assuming the bureaus maintained equal share, we expect the annual impact would be roughly $33 million in revenue, excluding cycle royalties and $0.15 of adjusted diluted earnings per share. This equates to less than 1% of total revenue and less than 3% of adjusted diluted EPS.

And we also believe that lender behavior and incentives would provide additional mitigation. Now there are several key commercial reasons for lenders to continue using Tri-Merge even in the absence of a regulatory requirement. First, broader market borrower coverage. Complete data expands the mortgage eligible population, and lenders often use Tri-Merge during prequalification despite the availability of single-file options.

Second, there is optionality in the type of loan to originate. For example, lenders at the beginning of the process, often do not know whether they will be originating an FHFA or an FHA loan when they pull credit. Today, the FHA, VA, the USDA continue to support the Tri-Merge standard. And third, the ability to offer the most attractive mortgage rate to consumers is important. These consumers are actively shopping for mortgages, using less complete data could lead lenders to place borrowers in a less favorable credit score tier than their competitors do.

And fourth, consistent and comprehensive risk assessment is essential. For 35% of consumers, at least 1 individual bureau score differs from the Tri-Merge score by 10 points or more. Underwriting with less complete information could increase risk across the mortgage ecosystem and with that risk ultimately borne by lenders, investors or the GSEs. Now taken together, Tri-Merge delivers better outcomes across the mortgage ecosystem. At the same time, we believe our direct revenue exposure to central regulatory change is limited and that TransUnion remains well positioned for a range of potential outcomes.

Now the Tri-Merge discussion reinforces an important point that's evident in our third quarter results. And that is our growth is increasingly diversified, durable and innovation-led rather than dependent on any single product, vertical or geography. We continue to execute our strategic priorities to navigate an uncertain environment and deliver on our commitments.

Now before I conclude, I also want to recognize Todd in his final earnings call as TransUnion's CFO. Todd joined the company as a staff accountant 29 years ago and has helped guide TransUnion through 2 leverage buyouts and an initial public offering and most recently, a transformative period of growth and innovation as our CFO. He has been an exceptional leader, a keeper of our culture and a tremendous partner to me personally. and I want to thank you.

Todd and I are working closely to ensure a smooth transition. Although this marks Todd's final call as CFO, and we are grateful that he will remain in the role through the end of the year and serve as a full-time adviser through March 1. We have begun and are well in process with a comprehensive search for our next CFO, and we will share updates as they become available.

And with that, I'll turn it back to Greg.

Gregory Bardi

That concludes our prepared remarks. For the Q&A, we ask that you each ask only 1 question so that we can include more participants. Operator, we can begin the Q&A.

Operator

[Operator Instructions]

And our first question will come from Toni Kaplan of Morgan Stanley.

分析师问答

Toni Kaplan

And thanks for the extra clarity on the Biomerge impact at the end of the slides there. When you think about market share across the bureaus, I guess, how do you differentiate your credit report from the others? Is it certain data that you can provide that others can't? And maybe in the prequal part of the market, if you could just update us on how much share you have there and how the share is trending?

Christopher Cartwright

Yes. Tony, and thank you for the questions. This is Chris. Well, I guess I would first point to our revenue performance in mortgage in recent years and certainly recent quarters where the growth and the performance relative to our estimates of mortgage inquiries and the like really suggests that we have held or increased our market share particularly during this period were in the early assessment program from the GSEs has -- the market has been digesting it over the past few years and deciding how many credit pools make sense at the origination or the early part of the mortgage origination process.

And as we said, the market is not settling at 1, it's settling it over 2, and there still are lenders that are pulling 3 credit reports for the reasons that I explained in the mortgage slides and the commentary that we ended the presentation on. So in short, I think our financial results in mortgage show that we have continued to perform well.

Now look, in our case, and I would say each of the bureaus will have an argument as to why their bundle of data is attractive. In our case, we lead the industry in core trended credit data. We were the first mover in the space. We go back -- we provide 2.5 years of trended data. As I mentioned in my slides, we've seen a 60% increase in the number of consumers that we have trended data going back 2.5 years on. We also have market-leading coverage in fintech, which has been for well over a decade, a significant portion of the loan origination marketplace. We have leading coverage down the risk spectrum because of an attractive acquisition of a payday lending oriented credit bureau, and we have significantly expanded our alternative data. And so all of that, we have found makes us extremely competitive in terms of the value proposition of our credit data.

And we are also kind of a neutral player providing that bundle of information to the resellers who ultimately serve the mortgage lenders. What that means is we don't compete in the tri-bureau market. And in a bio merge environment, those resellers are going to be able to choose which 2 bureaus that they want to do business with and I think our neutrality as well as the value add from our data bundle positions us well.

Operator

The next question comes from Andrew Steinerman of JPMorgan.

Andrew Steinerman

I'm focused on Slide 13 and particularly looking at the U.S. financial ex mortgage growth in the quarter of 5% and the subsegments that decelerated was Cardon banking and consumer lending and then auto actually accelerated. Could you just tell us why the first 2 subsegments decelerated? And I was a little surprised to see auto accelerate. Chris, you mentioned about affordability and rates. Maybe that was a prospective comment and just help us bring that together.

Todd Cello

Andrew, I'm going to take that one, and then Chris can add on. So in Financial Services, I'm going to answer this big picture first start. When you look at it on a quarter-over-quarter basis throughout 2026, you definitely do see a deceleration from 10% growth in Q1, 8% to 5%. And these numbers I'm giving you all exclude mortgage.

So yes, we did see some moderated growth throughout the third quarter. But as we said in our prepared remarks, the underlying conditions in the market still remain healthy, and we haven't really seen any signal of a downward shift in conditions. And in fact, when we look at our volumes up until yesterday, we really do not see an acceleration of any deterioration in these markets. Where we saw some modest slowing in the quarter was particularly in auto and consumer lending categories.

I think to really provide context on this specific question, it's really important to remember, you have to go back to 2025 as the year that we saw a recovery in these end markets. So we think it's more instructive when you look at things on a 2-year basis. And what we see when you do that is relatively consistent performance.

So to that point, to give you some numbers around that, if you were to look at a 2-year CAGR for financial services, excluding mortgage, Q1, Q2, Q3, the growth rate is 10% and 9%, respectively, in each of those quarters. So yes, we're dealing with the comparable, and that's where you're seeing the deceleration. But when you look at it in that way, you still see a very healthy market. And I would say that, that was all in essence, backed up by the recent bank earnings reports. where there was a consistent theme across large lenders as well as medium and small-sized lenders that lending conditions remain stable and delinquency levels also remain kind of consistent. You didn't see a big increase in loan loss reserves said another way.

And just as a reminder, when we think about the Financial Services business, clearly, mortgage is the most rate-sensitive part of the business. So everybody knows that. But when you think about the other lines of business kind of on a continuum downward, auto would be the next rate sensitive, but then consumer lending and card not as much rate sensitivity to those lines of business.

Christopher Cartwright

Yes. Look, I would just -- I agree with that. There's no change in our perspective on -- how these different consumer lending verticals are impacted in rising rates. like Todd said, mortgage is the most sensitive because it's the largest loan over the longest duration. Auto is probably the next largest loan. And again, as rates have risen over the past couple of years, you've seen the duration of auto loans increasing so that the consumer monthly payment remains affordable.

Consumer lending, not as rate sensitive because the spread in the APR is higher and the duration is lower, and of course, card has the highest spread and as balances revolve rates can adjust. Now look, the numbers in this particular quarter may deviate a little bit from that kind of hierarchy or those dynamics, if you will. I wouldn't read -- I want to read too much into it, right? There can be a variety of puts and takes in any of these categories in a given quarter. And so I think the way Todd, Todd framed it looking at the trajectory over the past couple of years, and considering that we've had some pretty heady growth in consumer lending as it is resurged. I think that kind of explains what you're seeing in the current quarter.

And it doesn't necessarily reflect what we expect to happen in the fourth quarter. So I think that probably covers the waterfront of perspective on that issue.

Operator

The next question comes from Jeff Meuler of Baird.

Jeffrey Meuler

Todd, congratulations and best wishes to you. My question is on India. I know you've talked about kind of the recovery starting to set in, in recent quarters that we're expecting acceleration. But it seems to be accelerating more and faster than expected. So help us with what's driving that or how you kind of think about the growth potential looking out over the next 12 months for it?

Todd Cello

Okay. Thanks, Jeff. And look, let's just pause for a moment and enjoy the good news at the third quarter brought in India. It's exciting to see it get back to this level of growth. And we think that's indicative of the level of growth that we can get out of India in the coming years. It is a combination of some market improvements both on the consumer lending, in the commercial side with better volumes. the RBI is more comfortable with the lending practices in the unsecured consumer lending market. And so some of the pressures there that were dampening volumes have been lifted. And we're seeing the big banks post some good loan growth, and that's even with a recent rate hike, right?

The economy in India continues to grow. It's 7% plus and inflation is manageable. But I think what I'm most excited about is the way we're competing in India, we've had a couple of years of challenging macros, which we've discussed many times in these quarterly calls, but the business today is materially stronger than it was a couple of years ago in a very foundational way. we have improved our Core Credit data asset by broadening the number of banks that are furnishing to us and increasing the breadth of data that they're furnishing. That's one.

Two, we have redeveloped all of our consumer and commercial credit scores. And so they're performing better relative to the competition. That's helping us win more and then finally, we've got tremendous momentum around TrueIQ, our analytics platform in India. I mean we've recently had client events there that were just really successful. We're building a great pipeline. We've also already achieved multimillion-dollar bookings from multiple banks and I think this gives us a new vector for growth in India.

So as we think about the next 3 years, we think it's mid-teens top line organic plus and hopefully, it will be plus because India is still an enormously attractive market. As I said, 7% real GDP growth, manageable inflation. great demographics, 840 million people under the age of 35. And our share is very stable. And as I mentioned, our competitive position never better. And we are introducing into the Indian market, some of our new global products. First is TrueIQ. We've also made great progress with the telcos in establishing the relationships for trusted call solutions.

And then our fraud product will be the next to launch in India, and we're even taking part of the marketing portfolio. India is less developed from a marketing data perspective, but we're bringing our media mix modeling services to India, and we're starting to gain traction there. So a lot to feel good about with the India business.

Operator

The next question comes from Andrew Nicholas of William Blair.

Andrew Nicholas

Congrats Todd. I had a quick question for you, Todd. On the comment you made about reinvesting some of the margin in the fourth quarter. Could you flesh that out a little bit? I think you -- you mentioned it being focused on technology and potentially some legal costs. Is that a fourth quarter item only? Or is that something that we should think about from a reinvestment perspective looking ahead to next year?

Todd Cello

Andrew, thanks for the question. And I think it's a good opportunity for us to kind of unpack the fourth quarter guidance, and I can talk specifically to start just about us being perhaps opportunistic in the third quarter with making certain investments back into the business from more of a technology perspective to enable the solutions growth that we talked about during our Investor Day in March of this year.

So -- and not -- we're going to do that when we see the opportunity on a go-forward basis. I don't think it's something that you necessarily need to be overly concerned about there was just a good opportunity for us to expand on that spend. So we did that. We also did talk about higher litigation expense in the quarter. This is more related to individual small claims cases. It is an industry-wide issue pertaining to FCRA litigation. So not just a TransUnion specific dynamic most recently, Law 360 ran an article last week, articulating this in the marketplace.

So it's -- we're focused, as we always are, on a proactive litigation strategy, but most importantly, implementing internal process enhancements to make the process as smooth as possible for the consumer when they interact with TransUnion. Now diving into the fourth quarter itself and the guidance that we have. When we look at things, excluding the FICO mortgage royalty, in essence, the revenues for Q3 and then for -- if you compare that to the Q4 high-end guidance and essence that revenue is pretty much exactly the same. So as far as drivers are concerned, when you look at things from Q3 to Q4, you obviously saw a strong international performance in that trajectory, we expect to continue into the fourth quarter.

But when you look at things from the third quarter to the fourth quarter in U.S. markets, there are some seasonal aspects pertaining to credit card, marketing activity as well as consumer lending that we would normally see a seasonal uptick. So revenues -- think about revenues as a repeat performance. in essence, on an absolute dollar basis. When we look at the expenses, which go to the initial part of your question, the expense base also when we exclude the FICO mortgage royalty, it's roughly flat on a quarter-to-quarter basis.

So no big expectation that we have to manage costs down. I mean, in essence, we left the run rate of the business continue onward. And that all shakes out to an adjusted EBITDA of about the same as well. from $465 million that we achieved in the third quarter and the high end of our guidance for the fourth quarter is at $468 million. So that gives us the conviction that another repeat performance is out there for us just simply doing what we just did in the third quarter.

And I would point you to the fact that, again, we look at the high end of the guidance is something that we look to achieve. So we're guiding you again to the high end of the guidance, the noise here, though, will continue to be mortgage and whatever happens with interest rates. But we feel comfortable that the range that we put together for the fourth quarter should be able to absorb any potential disruption that could be potentially on the horizon. So we feel very strong about what we've laid out for the fourth quarter.

Christopher Cartwright

Andrew, since you asked about the technology journey and the technology investment. I'll take this chance to jump on the OneTrue. So obviously, we've been investing heavily over the past several years to build our next-generation tech platform. That's OneTrue. And we're approaching the end of the migration in the U.S. of the U.S. credit customers to the Ontro platform. we feel comfortable that we're going to get that done by the end of this year, largely done. If there are a couple of customers that require a bit more time. We have provisioned the capacity for them to run on the legacy platform for a period of time.

And we've greatly consolidated the cost of running the legacy platform so that we have achieved the full savings and beyond. But as we stressed before, the real goal is to roll this platform out across our markets globally. And so the next focus is on the next 4 largest markets, plus the Philippines which if we can migrate them all to the OneTrue platform will mean about 94% of our revenue globally, we'll be running on the common platform. That's going to enable step change function in both our revenue performance and our cost structure.

And so when we say we're spending a bit more in the third quarter, and we have an eye toward -- it's because we're trying to accelerate that. We're trying to get the global rollout to compress the time it's going to take to get that so we can get the step function benefits in the technology operating environment. It's also worth mentioning that after several years of building a new platform and then migrating legacy to the new platform, this is an opportunity for us to accelerate the feature functionality and robustness of the various products that run on the platform, be it credit, analytics, marketing, fraud, et cetera.

And so we put more of our resources against accelerating innovation in those categories because that can help us achieve higher top line growth sooner. And again, that's a real priority for our business. So hopefully, that gives you the color you're looking for.

Operator

The next question comes from Faiza Alwy of Deutsche Bank.

Faiza Alwy

Yes. And congratulations from me as well to you, Todd. I wanted to ask about the emerging vertical businesses and some of the puts and takes there. I think you mentioned softer-than-expected revenues in media and tenant employment screening. So just wanted to talk about that because I know you have a tougher comp in 4Q and some project-related revenue in the media business. So just wanted to understand if this is more timing or just any additional color you can provide?

Christopher Cartwright

Yes, so happy to provide that. So emerging verticals, as you know, is almost half of the revenue coming out of the U.S. And as you can see from the slides we provided, insurance is the anchor tenant, so to speak, it's about 1/3 of those revenues, and it's been compounding double-digit over the last 5 years. I mean, in the recent couple of years, it's performed exceptionally well.

And the reason we wanted to showcase it because we wanted to illustrate the way in which our broader mix of products have enabled us to accelerate growth in that particular vertical over the fullness of time. So not only have we innovated on the quality of credit data and scores and analytics, but we were able to acquire some unique insurance data assets like driving history and motor vehicle record access that broadened our value proposition, diversified our revenues and allowed a step-up in growth.

And then the final incremental growth component has been the marketing and fraud suite that we acquired and built in recent years, which are just starting to really contribute meaningfully to the overall revenue mix in insurance. And look, I frame this up because that's what we're going to do across all the various verticals in emerging and in particular, in the diversified markets. Now as you pointed out, we achieved 6% growth in the quarter. That is solid, but we had some puts and takes on performance.

I'd say starting on the positive side of things, we had a good quarter of growth for our public sector business. Public sector was challenged in recent years because of cost-focused efforts at the federal level. That's really Dodge. Dodge had some moderate impact on our existing revenues, but it certainly chilled new business acquisition, right? Now we have seen an improvement in the environment, an improvement in closes and also pipeline, particularly for our fraud suite, the fraud suite again, we've made a lot of investments in recent years. We've got some great assets that we've brought together on the OneTrue platform.

And we recently achieved FedRAMP certification which is a certification that is required for us to sell the fraud solution across the federal government, and it's also kind of a foundation and enabler for selling at the state level as well. In short, because of the certification and the strength of the fraud solution, we think we're going to get better growth out of public sector going forward, and we think there's a lot of upside for us. Now there were all -- there were some weaknesses as we mentioned,

I'll start with tenant and employment. Even though we've seen improving growth rates in recent quarters, the volume of moves has been under pressure because of the housing market in general in the U.S. is under pressure. And so what happens is, typically, you would have homeowners that typically would have renters leaving rental units to purchase their first homes, creating capacity, that capacity gets filled and our tenant and employment revenues benefit as a result.

But because of higher rates and really lower availability both of new homes, but also of new apartment units, you really are not seeing the volume of movement or the velocity of movement. And so tenant employment had a difficult quarter and is, I think, probably resetting to a more modest level of volume in the coming quarters.

We also had some challenges in media which you asked about. Now what I would say about media is like even though the vertical is down, there are definitely some marketing growth highlights within that. First, we have 3 core marketing products, identity audiences and measurement, as you might recall, the identity products are growing exceptionally well. As we've said many times, we've got a tremendous foundation of credit marketing, fraud and public records information in the U.S. that gives us a leading identity graph and that's being recognized and we've got great bookings, revenue and pipeline there.

Our media spend planning and measurement services is also doing well. And to your question, we got a big fourth quarter that we're comping against. But our guide contemplates that. And we've been looking at the inventory of measurement performance jobs that we've got, and we feel pretty well positioned for the fourth quarter. So you should feel comfortable about that. And again, thank you for your question.

The challenge has been on the audience side. Now we have created a next-generation marketing audience and activation product on OneTrue. It's called True Audience. But today, the revenue lives on a series of legacy platforms. And we're in the process of migrating customers from the legacy platforms to the more functional and attractive OneTrue audience and activation platform. And this is the 1 area of our product migration where we actually have to engage with our clients and handhold as they move from the legacy to the next generation. And in this intermediate transition, what we've seen is a reduction in the usage volume. So that took us negative, and we might have a few bumps over the next couple of quarters as we complete the migration. The good news is we're really confident in the new True Audience product. We get migrated to it from the legacy, and we don't see any reason why over the medium term, we won't get back to growthfulness in audiences. So that's kind of the range for emerging vertical in this quarter.

Operator

The next question comes from Simon Clinch of Rothschild & Co.

Simon Alistair Clinch

Todd, I'll echo everyone's comments here and just say congrats and wish you all the best. I was wondering if you could just talk about the international opportunity more broadly. We've had some strong growth in the strong growth in LatAm but we've also got quite a lot of volatility happening in certain parts of Brazil, for example, more recently, I was just wondering, is there anything on the horizon that you see that gives you some cause of sort of concern that unpredictability or anything like that, that is worth sort of calling out? And how you think about sort of navigating any of those kind of issues?

Christopher Cartwright

Yes. Well, thanks for the question, Simon. Look, clearly, geopolitical risks around in this environment as we all know. That said, I think I'm pretty optimistic about international. I think for the past couple of years, they have been working through some challenges in India, but also in the Asia Pac region, some bumps and difficult revenue comps in Hong Kong related to a surge of onetime revenues, consulting revenues preparing for a bureau competition, the CRA change in Hong Kong, which we've talked about previously.

But in the most rotable part of Asia Pac, the Philippines has really been hit hard by rising oil prices. And so there's been contraction there and the slowing of our growth. And so international has been working through all of that. When we think about international, we think about it as at least a 10% organic compounder in okay conditions around the world, but it can certainly grow above that. And we saw that in the COVID time and the COVID where it was growing near 15% for 2 to 3 years, right?

So I think the international business gives us great growth potential and also really helpful diversification as we experienced this quarter when rising rates over the course of the year, 80 bps year-to-date has put some pressure on U.S. Financial Services volumes.

Now when I think about the various countries, obviously, Canada has done a terrific job and continues to compound above market rates. I think the same thing is true with our U.K. business, and we're positioned to strengthen that business through introducing OneTrue and some of the new global products. India is getting back online. Asia Pac is pivoting from shrinking to growing.

And then Brazil, yes, there's been some volatility, but there's been a huge step forward in Brazil because we are successfully seeding the market and launching trusted call solutions in Brazil, right? And so that will give us a whole new product and a whole new growth vector. So net-net, I'm optimistic about international, and I think it's additive to the growth profile overall and really helpful diversification.

Operator

The next question comes from Ashish Subrata of RBC Capital Markets.

Ashish Sabadra

As you think about some of the headwinds going into next year, you've called out the interest expense headwind there, which is roughly 5 points to the earnings growth, but -- and potentially some headwinds from mortgage volume as well. But as we think about some of the tailwinds, can you highlight some of the tailwinds which you can continue to help you deliver on your midterm guidance?

Christopher Cartwright

Yes, for sure. I mean, look, so we've had some discussion of the headwinds and we would just characterize the headwinds as higher rates leading to lower volumes in mortgage, in particular, and then some cooling and other product categories. But I think we've been clear on our perspective there. And then again, we're going to have some comps in the first half of next year that could create some pressures depending on the volumes and depending on the rates in U.S. Financial Services.

To the upside, again, I would point to international. I'm not going to elaborate because we just had -- I just provided some lengthy context of that in the prior question. But international will definitely buttress and kind of fortify our growth rates going into next year. And then on top of that, in the emerging markets, I mean, we still have products like our fraud solutions and our marketing solutions that can reach another year of growth and sustain it. That's part of the reason why we are investing more in advancing the value props for -- from end marketing, as I mentioned previously.

And then we have spent a good deal of this year rolling out the TrueIQ analytics solution to India, the U.K. and Canada, we'll probably push it to more markets next year. That gives us another product to monetize. And so I would view that as some of the positives supporting our growth next year.

Todd Cello

Chris, I just would want to add on to that. Just think about the performance that we just delivered in the third quarter and what we anticipate in the fourth quarter. To me, that is a display of us being able to deliver strong results despite a challenging interest rate environment in the U.S., and that really speaks to the portfolio diversification that we've intentionally built at TransUnion.

And hand in hand with that, strong free cash flows that we're also generating in the most recent quarter and what we expect going forward from a capital allocation perspective, as the business is able to absorb these challenges still going to enable TransUnion to be in a position to focus on shareholder returns.

Christopher Cartwright

That's a good point. I mean we haven't talked about our capital allocation in the third quarter on the call yet and what we expect. But I mean the fact that EBITDA is growing, free cash flow conversion is high. It's in the low 90s. The debt level is now within our long-term target range. We're going to buy back a lot of shares. We've got an increased authorization by $1 billion, that brings it to $2 billion, and Todd and team will be putting that to good use in the fourth quarter and beyond.

Operator

Our last question will come from Kelsey Zhu of Autonomous.

Kelsey Zhu

Chris, what's your expectation around the adoption rate for FICO preferred? Obviously, we know your selling FICO scores at 0% margin. The cycle preferred will lead to revenues for lenders inroad in that program as well. And I also just want to get your updated expectations for Vantage Core adoption rate in '27 and '28. And just to double confirm the first look for mortgage program, is that going to be available through resellers because if it is not, does that mean that lenders were pulling both 5one Banesco, will incur double the credit in a fee under the cycle preferred program.

Christopher Cartwright

Okay. So we got preferred. We've got Vantage adoption and first look. Okay. Probably a good question because we're all curious about the dynamics in the mortgage market, both scoring and credit. We'll start with the preferred program. We read with interest the launch of this program on -- via press release on Thursday and Friday night. What I'll say is, as is typically the case, there's still work to do to translate between the press release in contractual terms and operational requirements to make the program a reality.

And we're working with FICO on that as you would expect. There's also an additional portion of it. I mean the preferred program is only 1 part of how FICO intends to monetize their score in 2027. And the other parts, which they haven't publicly announced, they are working through with us and the other bureaus in real time as we renew our annual pricing in terms and conditions.

And look, all of that at this point is confidential between TransUnion and FICO and our customers, the resellers and some lenders directly. So more news to come on that. I would say generally, with the preferred program and other efforts, I mean, look, what is clear is that the market has an enormous appetite for score competition? And I think the rate of adoption across the mortgage market has been stronger than most people anticipated and even stronger than we anticipated.

And again, many sell-side analysts and other sources are kind of providing the weekly reports on the rate of adoption. And that's just what's happened in the current period. We got greater insights into all of the preparations that are taking place with various lenders across the mortgage ecosystem to adopt the Vantage score. And so I think what you'll see is various efforts to try to slow the migration by changing monetization paths, if you will,

And again, give us a bit more time to work things out as an industry. And I think all the various approaches to score monetization will become clear. But stepping back, I would make 2 points. The first is that regardless of a preferred program for any other way of monetization that may be put forward, what is clear is that the Vantage score performs extremely well, better than the incumbent, and it only costs 1/10 of the incumbent.

And in our experience, working around the globe, it is -- that price is more reflective of what scores sell for. They don't sell for $10 elsewhere. And so regardless of changes in monetization approach, while that may slow migration in the near term, it won't stop the overall movement of the market to a highly performing score that cost 90% less than the current score, right? And we are going to continue to support the efforts of lenders and resellers across the spectrum by providing them with free credit reports in the analytic and evaluation phase and $0.99 credit reports through the end of 2028, right?

So I think that's our thoughts on preferred in the Vantage adoption. And look, first look is, again, it's another innovation from us to try to address 4 lenders the cost of evaluating and originating mortgages and what will continue to be a challenging environment. And so with this, they're able to pull Vintage and to pull a credit report and get a perspective on the attractiveness of the loan and where they might sell it before they have to pull a more expensive product.

And then again, within a narrow time window, we will allow them to pull an additional credit score and apply it to the same report that they pulled from TransUnion if they're looking for additional information that might provide additional insights or alpha for them. And again, this is our effort to address the cost of evaluating and originating mortgages in a very mortgage challenged market.

The second point that I want to make clear, and it just bears reiteration is at the end of last year or into the last year, we changed our pricing structure at TransUnion. And also our competing bureaus did as well. And our industry has essentially decoupled our revenue from the FICO score. And we charge for the data, they can charge what they want for the score. They can direct license if they choose. We're happy to support almost all of the options that they have articulated at this point.

But we chart our own course on revenue, and we offer a score that is tremendously valuable, and it's at 1/10 of the price. And that is just additive revenue to everything that we do. And we're going to maintain this attractive level of pricing and promote market share -- market shift and share adoption in the coming years.

Operator

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