TransUnion (TRU) Q4 Earnings Beat, Revenues Miss Estimates

TransUnion TRU delivered mixed fourth-quarter 2018 results, with earnings surpassing the Zacks Consensus Estimate and revenues missing the same.

Adjusted earnings per share (EPS) of 66 cents outpaced the consensus mark by 3 cents and improved 32% year over year. Lower tax rate, resulting from Tax Cuts and Jobs Act, significantly contributed to the company’s earnings in the reported quarter.

Total revenues came in at $613 million, which missed the consensus mark by $11 million. The figure rallied 21% on a reported basis, 22% in terms of constant currency (cc) and 11% at organic cc. This uptick was driven by strong performance across all of the company’s operating segments — U.S. Information Services (USIS), International and Consumer Interactive — along with contributions from incremental credit monitoring revenues due to a breach at a competitor.

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 $624 million, up 23% year over year on a reported basis, 26% at cc and 11% at organic cc. Acquisitions of FactorTrust, iovation, HPS, Rubixis and Callcredit drove adjusted revenues.

In a year’s time, shares of TransUnion have gained 8.9%, significantly outperforming the industry’s 7.4% rally.

Let’s delve deeper in to the numbers

Operating Segments’ Revenues

The U.S. Information Services (USIS) revenues of $369 million increased 18% year over year on a reported basis and 12% on an organic basis. USIS adjusted revenues amounted to $370 million.

Within the segment, Financial Services revenues of $190 million increased 19% and 15%, respectively, on a reported and organic basis. Emerging Verticals including Healthcare, Insurance and all other verticals, revenues were $179 million, up 18% year over year on a reported basis and 9% on an organic basis. Adjusted revenue was $180 million.

International revenues surged 47% year over year on a reported and 57% on a constant-currency basis to $141 million. Canada, Latin America, Africa and India revenue increased while Asia Pacific revenues decreased year over year.

Revenues at the Consumer Interactive segment improved 6% from the prior-year quarter number to $121 million. This included roughly $5 million of incremental credit monitoring revenues due to a breach at a competitor.

TransUnion Revenue (TTM)

TransUnion Revenue (TTM) | TransUnion Quote

Margins

Adjusted EBITDA was $249 million, up 27% year over year on a reported and 29% at cc. Adjusted EBITDA margin of 39.9% expanded 110 basis points (bps) year over year.

Balance Sheet and Cash Flow

TransUnion had $187.4 million in cash and cash equivalents at the end of the fourth quarter compared with $226.6 million at the end of the prior quarter. Long-term debt was $4 billion compared with 4.1 billion in the prior quarter. The company generated $146.3 million in cash from operating activities and spent $61.8 million on capex.

Q1 Outlook

For the first quarter of 2019, TransUnion expects adjusted revenues between $614 million and $619 million, reflecting an improvement of 14-15% year over year.

Adjusted EBITDA is envisioned in the range of $233-$236 million, mirroring an increase of 15-17%. Adjusted EPS is expected between 58 cents and 59 cents, indicating a rise of 2-4% year over year. The Zacks Consensus Estimate for fourth-quarter earnings is pegged at 64 cents.

2018 View

TransUnion expects adjusted revenues between $2.59 billion and $2.61 billion, reflecting year-over-year increase of 10.5-11.5%.

Adjusted EBITDA is anticipated in the range of $1.017-$1.032 million, mirroring year-over-year increase of 11-13%. Adjusted EPS is anticipated in the band of $2.57-$2.63, indicating improvement of 3-5%. The Zacks Consensus Estimate for adjusted earnings is pegged at $2.80.

Zacks Rank & Upcoming Releases

TransUnion has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Investors interested in the broader Zacks Business Services sector are keenly awaiting fourth-quarter 2018 results from key players like Avis Budget CAR, Green Dot GDOT and Delphi Technologies DLPH. While Avis Budget and Green Dot are scheduled to report on Feb 20, Delphi Technologies is slated to release the same on Feb 21.

Zacks' Top 10 Stocks for 2019

In addition to the stocks discussed above, wouldn't you like to know about our 10 finest buy-and-holds for the year?

From more than 4,000 companies covered by the Zacks Rank, these 10 were picked by a process that consistently beats the market. Even during 2018 while the market dropped -5.2%, our Top 10s were up well into double-digits. And during bullish 2012 – 2017, they soared far above the market's +126.3%, reaching +181.9%.

This year, the portfolio features a player that thrives on volatility, an AI comer, and a dynamic tech company that helps doctors deliver better patient outcomes at lower costs.

See Stocks Today >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Avis Budget Group, Inc. (CAR) : Free Stock Analysis Report
 
TransUnion (TRU) : Free Stock Analysis Report
 
Delphi Technologies PLC (DLPH) : Free Stock Analysis Report
 
Green Dot Corporation (GDOT) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research