TransUnion (TRU) 2020 Q2 法說會逐字稿

Good morning. Welcome to TransUnion 2020 Second Quarter Earnings Conference Call. (Operator Instructions) Please note, this event is being recorded.

I would now turn the conference over to Aaron Hoffman. Please go ahead.

Good morning, everyone, and thank you for joining us today. I hope that all of you are safe and healthy. On the call today, we have 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.

Our earnings release and the accompanying slides include various schedules, which contain more detailed information about revenue, operating expenses and other items as well as certain non-GAAP disclosures and financial measures along with their corresponding reconciliations 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 the 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 all that out of the way, let me turn the time over to Chris.

Thank you, Aaron, and I want to welcome all of you to our call and extend our most sincere hope that you and your loved ones are healthy and safe. At TransUnion, we continue to prioritize the health and safety of our associates, our customers and the wider communities in which we operate.

To that end, globally, we have -- we continue to have almost every one of our 8,000 employees working from home. There's no need for us to rush back into our offices as our associates have demonstrated the flexibility to work remotely and run our business with virtually no interruption. We remain deeply appreciative of the selfless and tireless work of health care professionals, first responders and other essential workers. We recognize them for how much they do to keep so many of us safe.

I also want to take a moment to talk about some other heroes. During the quarter, in the wake of the senseless and brutal death of George Floyd, we witnessed a remarkable and swift movement to finally make good in the American Promise of Equality & Justice for All. The millions of Americans who peacefully and thoughtfully took a stand for Racial justice are heroes, too.

At TransUnion, we have a culture that embraces diversity and foster's inclusion with more than a dozen affinity groups for employees, ranging from African de Aspira for our Black associates, to a veterans alliance group, to a group for our LGBTQ population and many more. However, we can and we will do more. As a major employer, there are many ways that TransUnion and I connect for change. My first priority will be to ensure our company is a place where all colleagues have equal access to professional growth and career opportunities and can come to work every day as their authentic selves. In listening to many of our colleagues, I know we have more work to do to make that happen.

To achieve this goal, we must cement a culture of mutual support and open communication, which we started in earnest with many of our black associates. Our focus on inclusion must exist on an ongoing basis. I believe that the whole is strengthened when we understand and embrace diversity, and I believe we can do more to make this happen.

We will not tolerate racism. It has no place at TransUnion. We will become a more diverse company through how we hire, promote and retain our black colleagues and other underrepresented groups. We will improve transparency around promotions and pay. We will increase our training, starting with our managers, and each of us will undertake unconscious bias training this year. We will listen and learn from each other and survey our associates regularly to measure our progress.

I'm grateful to so many of our black associates for having the courage and candor to have this difficult conversation with me and my executive team and help shape the next very important steps with TransUnion. I thank you.

There is no easy transition from here, so I'll just move on to the agenda for this morning's call. First, I will give you a short overview of how the second quarter unfolded. Second, I'll discuss the current volume trends across our primary verticals and markets and how we have supported our customers and consumers during this crisis. You will hear a consistent story of rapidly adapting our go-to-market approach, our product offerings and solutions to the current market conditions. Then I will discuss our ongoing investments to position TransUnion for a continuation of our best-in-class growth. I'll walk you through the early progress we've made with global solutions and global operations. I will also provide you with an update on the status of our accelerated technology initiative: Project Rise. Finally, I'll then turn over the time to Todd to discuss our detailed second quarter results, balance sheet strength and several financial scenarios for the third quarter based on the trends I will describe.

Todd will reiterate this when he talks about the scenarios, but we continue to monitor the socioeconomic situation across the U.S. and around the world. We recognize the fragility of the reopenings and the significant risk of returning to more stringent controls that could, again, have a meaningful negative impact on our business.

Now as you've seen in our earnings release this morning, TransUnion delivered adjusted revenue, adjusted EBITDA and adjusted EPS solidly in our upside case scenario. When we spoke to you in April, we were in the early stages of the pandemic and were dealing with high levels of uncertainty. It appears that April may have been the trough, and we've seen generally positive trends since then.

Over the course of the second quarter, our business benefited as our associates, our customers and consumers transition into a work-from-home and physically-distanced reality. This clearly took some time and created considerable disruption. As we were all settling in, government stimulus began to reach consumers who, in turn, reengaged in the economy, adding momentum to the recovery. And finally, during this time, our customers developed a response, stabilized their businesses and mobilized to manage risk. We participated in this range of actions, supporting them with insights and thought leadership, redesigned new products as well as customized campaigns to strengthen our long-term relationships.

We saw similar behavior across the majority of our markets, and taken together, led to very good results on a relative basis.

So let's take a look at the specifics behind the quarter, starting with U.S. markets. As we did last quarter, I want to review the overall online transaction volumes year-to-date for U.S. financial services, our largest market vertical. As you can see, performance bottomed out in April and has shown a progressive recovery through May, June and into July. Notably, the combination of our sales effectiveness programs, specific market actions that I'll discuss shortly and the efficiency created by traveling less led to an increased sales pipeline and improved win rate in financial services as well as in our other verticals.

Now let's spend some time on the key lending markets that comprise the vertical. Mortgage refinancing activity was very strong throughout the second quarter on the strength of historically low interest rates. At the same time, we saw the home purchase market recover from a sharp decline in the first quarter to modest growth in the second quarter as pent-up demand from March and April may have flowed into the market. The strength in mortgage certainly helped our clients, but we remain cautious about how long this cycle, and it is clearly cyclical growth will persist. The pool of potential refinancing candidates will eventually run its course, though it may be extended as consumers come off forbearance. And we will maintain a conservative stance about the sustainability of the new home purchase market.

Similar to new mortgage activity, auto financing suffered sharp declines in April due to consumer lockdowns and dealer closures. As we moved into May, the market showed great resiliency, and we saw the start of a rebound fueled by pent-up demand from April, stimulus checks, enhanced unemployment benefits and attractive incentives from auto manufacturers. We also saw an elevated level of used car sales and financings, which tend to entail more credit pulls than with the new car purchase. As customers return to the market, new car inventory had shrunk with factory shutdowns, and used car inventory was elevated by off-lease vehicles and the liquidation of rental car fleets.

We continue to have success providing relevant solutions, including enhanced prescreen, account management and fraud mitigation solutions as more transactions have moved online. We're watching the market carefully as manufacturers resume production and government stimulus potentially abates.

Credit card lending continues to be bifurcated between issuers who are benefiting from the pronounced transition to online commerce, offset by those in the travel and terrestrial spaces that have been severely impacted. The latter group will likely experience this sort of pressure until business and leisure travel resume.

At the same time, marketing campaigns, particularly using traditional mail, have slowed considerably. We've seen some increase in activity around marketing recently, but it remains well below pre COVID-19 levels.

Finally, consumer lending has started to rebound during the quarter as some lenders have cautiously shifted to customer acquisition while others remain on the sidelines, working with new models and technology to prepare for a fuller consumer recovery.

In the fintech space, we continue to extend our leadership position in the emerging point-of-sale fintech market. The POS lenders have seen a boom in activity as online retail patterns continue to shift in their direction. We also have begun to see additional funding in the fintech space and believe there is considerable capital on the sidelines that will likely be deployed if the economy and consumer health continue to improve.

Across our lending businesses, during the quarter, we provided existing thought leadership of dozens of advisory board meetings. We also created a crisis-focused solutions bundle for account management and developed relevant data to measure the impact of the crisis on consumers' credit files.

As online transactions have risen considerably, so too have incidence of online fraud. To address this, we produced multiple solution bundles to address a range of fraud risk, ranging from online transactions, to applications, to fraudulent requests for government subsidies.

Finally, we developed the suite of COVID-specific attributes called CreditVision Acute Relief that includes a non-adverse actionable set of 88 attributes that identify credit relationships for consumers currently in relief status. Attributes allow lenders and insurers to understand how consumers and their accounts have been affected, creating a more complete financial picture. Lenders can utilize this information to better support impacted consumers, ensuring each person is reliably and safely represented in the marketplace, allowing businesses to transact with confidence and help support their customers.

Our ability to leverage CreditVision with this expanded set of attributes has helped lenders to better tailor their risk-management efforts and improve their direct relationships with struggling consumers. For a number of customers, including some very large lenders, this exposure to CreditVision has led to a significant increase in their interest in using the product more broadly in the future.

As I said in my opening comments, while we have seen the early signs of recovery in the lending markets, we remain responsibly cautious about the potential for a regression if reopenings stall or reverse themselves, creating the sorts of headwinds we experienced in March and April. However, regardless of the situation, we have positioned ourselves to partner with and support our customers through the crisis. We've taken a similar tact in our health care vertical, which helps health care providers navigate the revenue cycle and help improve the patient financial experience and maximize reimbursements for uncompensated care. The front end of the cycle represents about 1/3 of the revenue of the vertical and includes insurance eligibility checks, identity verification and charity determination and patient payment estimation. As expected, the front end of the business experienced sharp volume declines in the second quarter as patients and providers delayed or canceled elective and preventative care. Over the course of the quarter, we saw volume softness slowly abate as patients gained comfort with returning to medical facilities.

Our business also weathered the situation better than the significant volume declines would suggest as our payment estimation solution is priced on a SaaS model, and we have volume floors and pricing minimums in our other solution lines.

The other 2/3 of the vertical is the back end of the revenue cycle, where we help providers identify opportunities to recover lost reimbursement through various revenue recovery products and services. The financial situation for health care providers, frankly, has been quite dire as highly profitable ER visits and preventative and elective care have diminished significantly. We've seen furloughs, layoff and even some hospital closures. In fact, the American Hospital Association currently projects $320 billion in losses for hospitals in 2020. As our back-end products help providers increase their revenue, reduce uncompensated care and avoid bad debt write-offs, we provide a critical source of cash flow and, in some cases, provide essential products and services to assist providers in maintaining financial solvency.

As we signaled last quarter, we face a potential risk as the reduced front-end volumes may translate to fewer recovery opportunities to work on the back end. If the current situation holds or worsens, we may see some sort of impact in the back half of the year. In any scenario, over the long term, our solutions continue to represent a valuable and essential part of the revenue cycle, helping providers reduce risk and increase their cash flow.

Our insurance vertical serves property and casualty, life and commercial insurers with marketing, underwriting solutions and policy management as well as analytics and investigative tools for claims. As we had expected, insurance has been a less severe impact than many other parts of our business. After an initial slowdown, insurers focused on an improved digital experience for consumers, recognizing an increased need for fraud mitigation tools and began to explore solutions to continue to realize efficiencies in the business. For TransUnion, those 3 initiatives contribute to our insurance vertical declining only a few percentage points in the quarter.

Clearly, a better shopping and application experience helps to drive our volumes as insurers pull our data in the underwriting process. At the same time, to combat fraud, we had success selling our risk verification product, which helps the insurer confirm important information, like garaging address, household drivers and other critical underwriting questions. Customers also recognize the potential cost benefits of implementing our driver risk solution to prescreen whether the carrier should pull an often-expensive motor vehicle report. Only about 1/3 of applicants have ratable violations on their record, meaning the insurer can significantly improve efficiency through the utilization of our driver risk solution.

We stimulated engagement through our advisory boards, where we shared valuable insight about the insurance industry while uniquely marrying them with lending trends that provide another window into consumer behavior. Our customers remain engaged on new initiatives, and we saw strong contract signings during the quarter across a spectrum of insurers and insured tech players. As we continue to see consumers reengaging and our customers evolving their approach to the market, we expect our insurance vertical to continue to post solid results relative to many other verticals.

Now to round out my discussion of the U.S. market segment, I want to touch on a few other verticals, starting with public sector, which provides a variety of data-driven solutions for federal, state and local governments. At this point, government agencies largely continue to operate unabated in support of their constituents.

In the quarter, public sector delivered very strong double-digit growth. Actually, it was running ahead of our original plan for 2020. Our team has proactively addressed potential opportunities with both federal and state agencies, primarily around fraud mitigation, insider threat monitoring and contact tracing. While many of our solutions fit our customers' needs, we have also rapidly innovated to tune our products.

For instance, working with our solutions team, we rapidly built a new report within our TLO product to support contact tracing. The report provides and validates contact information so that call centers charged with reaching at-risk individuals can act as efficiently and effectively as possible. We've built a fast-growing, diversified public sector vertical and expect it to continue its strong performance through the COVID-19 crisis and thereafter.

While we certainly see collections as countercyclical over time, we don't expect to see any significant uptick until early 2021, as forbearance programs and state-imposed moratoriums on collections have delayed activity. Government subsidies have helped consumer pay off debts or stay current, leading to lower delinquencies and defaults that we would likely see otherwise. To address the pressure many of our customers face in the near term, we want -- we went to the market with a campaign that offered short-term relief in exchange for extending our contracts. We also executed a successful campaign for customers to add new products with a free introductory period to help them during this challenging time and to enhance our status as a long-term partner. The campaigns have been well received, resulting in incremental revenue over time.

Within our tenant and employment vertical, tenant screening took a sharp hit initially but has recovered relatively quickly as the rental market has shown some resilience during the crisis. During the quarter, we offered ResidentID, our fraud mitigation tool, for free to customers, and many have now converted to the paid version. And in May, we launched Credit Property Review, which leverages the COVID-acute relief attributes I discussed earlier to provide insights into the credit health of residents and future bad debt risk. We've seen strong initial results from this new offering.

Now weak trends in employment screening persisted through the quarter as unemployment skyrocketed and hiring slowed to a near halt. As economies slowly reopen, we expect some modest recovery in this part of the business. Small businesses and those previously employed by them are among the groups facing the greatest financial hardship as a result of the pandemic. During the quarter, we offered ShareAble for Hires for free to small businesses so that they can get back up and running quickly and help people get back to work faster. By implementing TransUnion's web-based ShareAble for Hires, small businesses can safely and securely conduct background checks on prospective employees within minutes instead of days. As a result of this offer, ShareAble for Hires new account acquisition has nearly tripled since the launch, resulting in a 13% increase in our total customer base.

And finally, in telco, we experienced a significant decline early in the quarter that has shifted to a faster-than-expected recovery due to the pace of reopenings, combined with our customers' quick transition to digital channels.

Turning to Consumer Interactive. We delivered top and bottom line growth in this segment as consumers and customers continue to recognize the value of credit and identity protection, credit monitoring and related financial education tools, like those that we offer both directly and indirectly through partners. We clearly benefit from having a diverse range of customers, including individual consumers that subscribe to our direct products, financial institutions and lead aggregators.

In the quarter, we saw a good performance in our direct channel behind continued successful marketing to consumers focused on their credit health. On the other hand, some of our indirect partners have curtailed their marketing programs, resulting in a decline in subscribers, which is the basis of our revenue model. If these trends persist, we would expect a larger headwind in the back half of this year.

At the same time, though, we continue to have meaningful conversations about long-term opportunities with a number of potential indirect partners that have expressed interest in building more robust consumer-facing offerings, like financial education and modeling tools for their customers who may be facing difficult personal financial situations.

And now wrapping up with our international market. This slide illustrates the sharp decline in revenue that occurred in March and the subsequent recovery we've seen across our regions. The point of this chart is less about the exact numbers and more so about the shape of the curve to help you appreciate the trends that we're seeing at this time.

Let's now spend a few minutes on each region, where you'll see the impact of our focus on highly relevant solutions to help our customers manage through the current situation. These solutions include CreditVision, CreditView, market-leading portfolio management insights and fraud solutions.

In the U.K., much like the U.S., the government has provided significant stimulus to help consumers manage through the crisis for almost 1/3 of the workforce has been furloughed and is receiving government subsidies. Lending markets were weak, particularly as reopenings only recently begun. We've also seen a more significant downturn in subprime and payday lending markets where we have a particularly strong position.

During the quarter, we launched TrueVision Transitional Risk Index to help lenders flag consumers currently receiving government subsidies so they can proactively address those consumers whenever government relief ends. We've seen strong interest from many of our top 30 customers. The weakness in lending markets was partially offset by continued strength in fraud mitigation solutions as well as some recently won COVID relief and mitigation business with the U.K. government.

Now much like the U.K., Canadian lending markets have generally been weak, though significant government stimulus of about 14% of the country's GDP and coordination among the major banks for consumer deferral programs has moderated some of the impact for the time being. Our business held up well, falling less than 2% in the quarter and improving each month throughout the quarter. That relatively good performance reflects 2 of our strengths.

First, our team reacted quickly by providing valuable thought leadership as well as new offerings like risk vulnerability score, COVID benchmarking for competitive analysis and an acute relief package, which will launch in August. The second is the successful adjacency strategy that we have executed in recent years. Key adjacencies in Canada include insurance, public sector, fintech, direct-to-consumer, including the CreditView platform and breach-mitigation services. During the quarter, these areas outperformed our core financial services business.

In India, we experienced dramatically different trends over the course of the quarter. In April, the government implemented an extremely severe lockdown, which depressed volumes considerably. May saw hints of improvement with the reopenings in some areas outside of the major financial centers and increased government stimulus. In June, the country largely reopened and consumers began to reengage in the economy.

During the quarter, and regardless of the changing circumstances, we remain highly focused on serving our customers, engaging with many for as long as 2 hours each day per month, helping them understand the evolving situation and how they can best navigate it. At the same time, we tuned some of our solutions to better serve these customers. For instance, we launched an improved small business score and improved our coverage of the space from 60% to 100%. We also supported the Indian government's effort to provide stimulus to small businesses by sizing the market and helping them identify who should be receiving the support. And we successfully launched a simplified version of our scores and algorithms using CreditVision for fintech lenders who, in India, tend to provide small ticket, very short-duration loans. And like many of our businesses, portfolio reviews provided significant value to our customers.

In LatAm, we serve a variety of markets and, in general, have seen very limited recovery as most governments have provided little stimulus, and there has been a lack of coordination between lenders and governments. The exception, at the moment, is in Colombia, where the recovery appears to be accelerating ahead of most other countries, fueled by a higher level of stimulus.

We also continue to see fits and starts of recovery in South Africa, where we have a diverse portfolio. We have actively worked with our customers to accelerate their transition to more digital channels packaged with valuable fraud-mitigation solutions.

And in Hong Kong, where we saw the impact of COVID-19 the earliest, the country has largely returned to fairly normal activity with schools and businesses almost uniformly open. However, the continuing protests against Chinese-imposed restrictions on certain civil liberties has disrupted a normal reset of the economy. Of note, during the quarter, we relaunched our direct-to-consumer offering and expect that to contribute to our financial growth going forward once again.

Rounding out APAC, the Philippines continues to face significant headwinds with an initial very aggressive lockdown that was partially lifted and then restored when COVID-19 cases surged. We continue to expect a very long and slow recovery in the Philippines.

Despite some of the idiosyncratic challenges in our various international markets, TransUnion has enviable long-term geographic positions. We remain confident in the long-term growth prospects in all of our markets. I've just described how our businesses have adapted to the radical changes our customers and our consumers have faced in the world. I'm pleased with the creativity, urgency and determination that our team has demonstrated to ensure the best possible performance for our business while also strengthening customer relationships. And I'm also pleased that the organization has maintained its commitment to our long-term growth rate at the same time.

I want to highlight the direction and early successes of our newly formed solutions and operations organizations as well as Project Rise, our next major technology investment.

Let's start with solutions. Our newly formed Global Solutions organization will improve our ability to aggressively and strategically develop and diffuse innovation across the more than 30 geographies in which we compete. We have realized consistent success with our vertical and regional strategies with somewhat inconsistent global application of our product suite. CreditVision and CreditView have both been globalized in an efficient and highly successful manner. However, we have an opportunity to expand our approach more fully. Our vertical strategy hinges on a highly focused team of associates with deep experience in a given area, like insurance or media or the public sector, and our regional strategy benefits from leaders with deep in-market knowledge and expertise. We've extrapolated that approach to build a series of solution-focused teams populated with talented associates with deep product and market knowledge.

In the short time since we put this organization in place, we've seen a number of successes. In fraud, we had 4 high-quality offerings that overlap in some ways and could complement each other and others. To standardize and globalize our position, we brought in Shai Cohen, a seasoned veteran from the fraud and cybersecurity industry, having worked at RSA, EMC and Intel. We've already pulled together 3 of the solutions and are actively developing our go-forward strategy with a unified global vision and approach.

In other cases, this team has accelerated the launch of existing products, including the COVID acute relief attributes that I discussed earlier. I believe that we have just scratched the surface into more fully leveraging our solutions and capabilities on a global scale, which will help sustain our best-in-class top line growth over the long term.

Another avenue to help ensure our long-term growth trajectory is our investment in global operations, which allows us to expand our core capabilities through centralization, process optimization and modernization, leading to a better customer experience as well as cost savings that could be reinvested to fund growth projects. Our team has identified 3 focus areas where they can have the greatest impact.

The first is global procurement. Historically, most of our centralized procurement has resided within our global technology organization. We intend to leverage and build on that discipline against all spend while creating consistent global standards. We started by renegotiating our 20 largest contracts and are implementing a full life cycle procure-to-pay system from Coupa, allowing complete spend visibility globally. We will roll this tool out in August in the U.S. and Canada and follow with our remaining regions over time.

Second, we also have an opportunity to replicate the success of our global capability center in Chennai, India. We opened it 2 years ago with about 600 associates focused on global technology, and we'll likely have more than 1,000 there in the near future. Establishing this center has helped reduce our technology costs and improved our technology capabilities. In fact, the Great Place to Work organization in India recently named the TransUnion Capability Center in Chennai as the #40 best company to work for out of the field of more than 1,000 other companies. We intend to replicate our success in Chennai and other strategic locations around the world to meet the growing needs of our customers while refining our delivery and support capabilities and eliminating concentration risk.

Finally, we have brought our focus to business process optimization, where we have significant opportunities to further enhance the customer experience. Recently, we implemented a contract life cycle management system to convert a very manual process, to automate it and vastly improve that critical interaction with customers and suppliers. We've sped up the contract signing time by over 60%, with about 1/3 of all contracts being executed in a single day.

We also are actively transitioning to an upgraded CRM to provide more sophisticated and effective workflow management, consistent and transparent customer information and standardized processes. We will utilize an upgraded version of Salesforce that will form the backbone of these efforts.

In the future, we will also address other areas like the time for data loading, smart scoring for batch delivery and dispute acceleration in consumer operations. Over time, we are confident that our focus on operations will yield significant efficiency and cost benefits that can either be reinvested or returned to shareholders while also furthering our market leadership through improved customer engagement.

The final investment focus I want to discuss is Project Rise, our accelerated technology initiative to ensure that across TransUnion and, by design, are even more effective, efficient, secure, reliable and performing. And we'll do this through streamlined processes, automation and more rapid adoption of a hybrid public-private cloud architecture globally. We've spoke extensively about these plans on our February earnings call, and I will refer you back to that commentary for additional details.

Project Rise began in earnest early this year with a clear plan and an experienced leadership team in place. In early March, like so much else in the world, we experienced some delays as we transition our organization to a work-from-home model and faced a more challenging environment for hiring, particularly if there were immigration requirements for a candidate. However, just as our business and customers quickly found their footing during the lockdowns, so did the Project Rise team. Already this year, the team has identified a series of critical global applications that will be redeployed in the cloud in early 2021. And others will quickly follow behind them.

At the same time, we continue to progress toward our goal of making our entire organization cloud-ready, not just our technology team. To that end, we have embarked on a company-wide education initiative to ensure that we maximize the power of these investments. This also allows us to build our workforce of the future and avoid being reliant on outside firms over the long term. Just as we did with Project Spark, we will retain a strong internal talent base, which enables consistent and easily managed evolution of our tech stack in the future. At this time, we remain confident in both our time line and the benefits of these investments.

And as I wrap up my review of the business, I want to leave you with a clear message. TransUnion has demonstrated creativity and resilience during the crisis, and we will continue to do so. We also remain deeply committed to delivering outstanding long-term revenue growth and an attractive growing margin. And we have a broad range of opportunities that give us conviction in that outcome.

So with that, I'm going to turn it over to our CFO, Todd.

Thanks, Chris.

As Chris highlighted, we achieved our upside case scenario for the second quarter as we benefited from reopenings in the U.S. and many of our international markets and the efficacy of our proactive response to support customers and consumers. I'll start with our consolidated results. And for the sake of simplicity, all of the comparisons I discuss today will be against the second quarter of 2019 unless noted otherwise, and all revenue discussions relate to adjusted revenue.

Starting with the income statement. Second quarter consolidated revenue decreased 4% on a reported basis and 3% in constant currency. Revenue related to the May 2019, the acquisition of TruSignal, was immaterial in the quarter. Adjusted EBITDA decreased 8% on a reported basis and 7% in constant currency. Our adjusted EBITDA margin was 38.2%, down 150 basis points compared with the year-ago quarter. We realized a much higher margin than anticipated as revenue and margin flow-through were relatively good, and we maintain a conservative posture on expense management, though we continue to invest, as Chris outlined, and we did not reduce headcount. Second quarter adjusted diluted EPS fell 4%, and our adjusted tax rate was 23.7%.

Now looking at segment financial performance. U.S. markets revenue was flat compared to the year-ago quarter. The TruSignal acquisition had virtually no impact. Our financial services vertical revenue grew 4% on a reported and organic basis. As Chris discussed, we saw improvement in all our lending end markets, with considerable strength in mortgage and solid recovery in auto, card and consumer lending. Excluding the cyclical growth in mortgage, the vertical would have declined mid-single digits. Probably not too soon to offer a word of caution about the comparisons we're going to face in mortgage next year as they are likely to be a challenge.

Emerging verticals declined 5% and 6% on an organic basis. Growth in public sector and media helped moderate declines in the other verticals, though the 2 largest, insurance and health care both held up relatively well in the face of such a challenging backdrop. Adjusted EBITDA for U.S. markets decreased 2% on both a reported and organic basis.

For my comments about international, all comparisons will be in constant currency. For the total segment, revenue fell 16%. As we mentioned on our February call, we divested a small business in the U.K., Recipero. Excluding that divestiture, international revenue would have been about 1 point better. We saw a revenue decline across all of our regions. Canada performed quite well on the strength of their diversified portfolio, while India, Latin America, Asia Pacific and Africa were severely impacted early in the quarter and generally realized varying levels of recovery. The U.K. experienced a sharp impact in financial services, partially offset by strength in fraud and government solutions. Adjusted EBITDA for international declined 32%.

Consumer Interactive revenue increased 4%, driven by growth in the direct channel. Adjusted EBITDA for consumer interactive was up 4% even as we increase marketing behind the direct channel during the quarter and continue to see good returns on that investment.

As I stressed last quarter, we have a strong balance sheet and the ability to rapidly build cash. As a result of our attractive cash conversion and prudent steps to appropriately retain cash, we finished the quarter with $432 million of cash on the balance sheet. This is the highest level of cash on hand since we went public 5 years ago. In addition, we clearly benefited from outstanding margin flow-through even on a slightly depressed revenue base. We also experienced little fall-off in our cash collections, which were essentially in line with trends prior to COVID-19. The net of all of this was that our leverage actually fell slightly from 3.1x at the end of the first quarter to 3.0x at the end of June.

In addition to the significant cash build and reduced leverage, we continue to have access to a $300 million revolver and believe we could enter the debt markets at reasonably attractive rates at this time should the need arise. Notably, our loans have retraced much of their price declines in the leveraged loan market since the start of COVID-19 and currently trade a little below par and much better than the BB Index, indicating continued demand for our paper.

A couple of reminders about our portfolio of debt. First, we have hedged about 70% of our debt and are benefiting from extremely low LIBOR rates on the unhedged portion, helping to reduce our expectations for net interest expense. Also, we have no debt maturities until the end of 2024.

Turning to our priorities for cash. Fundamentally, we will continue to take a conservative posture as we face an uncertain back half of the year and want to ensure the health of the company regardless of the macro situation. We continue to prioritize fully funding our business, servicing our debt, paying our dividend and investing in the long-term growth opportunities that Chris described.

With that said, we are in a position to contemplate additional M&A activity that could be funded from cash, the revolver and/or the debt markets. We will also consider debt prepayment if we gain more clarity and confidence about business conditions in the second half of the year.

I believe that we have proactively positioned TransUnion to weather these challenging times, and we will continue to demonstrate our commitment to an appropriate and attractive capital structure for our shareholders.

Given the ongoing and considerable uncertainty about the impact of COVID-19 across all our geographic and vertical markets, we continue to believe that it's prudent to spend -- to suspend full year 2020 guidance related to adjusted revenue, adjusted EBITDA and adjusted diluted EPS. Over time, we will revisit this decision and, at the appropriate time, with sufficient visibility, reinstate full year guidance.

I do want to comment on the 3-year outlook that we provided in March of 2019. As I discussed last quarter, given the truly unique circumstances we are facing, the guidance that we provided at that time of 7% per year average revenue growth, along with 50 basis points per year on average of margin improvement and double-digit EPS growth no longer makes sense at the current time. However, when we return to a more normal post-COVID-19 state, we are confident that our business will deliver against those previous commitments as a result of our persistent strong market positions and the consistent investments we are making even during the pandemic. Of course, we, like everyone else, don't know when that return to normalcy will occur, but we do want to be clear with you about our confidence in our long-term growth.

So turning to our outlook for the third quarter of 2020, we will again provide you with a range of potential outcomes along with the scenarios around each, which is far more instructive and valuable at this time. And as we said last quarter, scenarios like these are not predictions about what is likely to happen, rather, they are intended to help you frame possible outcomes.

On our call today, we provided additional detailed trend information to illustrate how COVID-19 has impacted TransUnion. We expect to continue to offer these details during the pandemic to help investors. We believe that these scenarios represent our best possible view on the information, trend analysis and marketplace intelligence that we have available right now.

The base case is a continuation of the trends Chris previously outlined, which would result in revenue down 5% to flat, and that includes about 1 point of FX headwind. At the segment level, we would expect U.S. markets to be flat to up low single digits, international to be down low teens and Consumer Interactive to be down low single digits. In this scenario, adjusted EBITDA would fall 6% to 12%, and that also includes about 1 point of negative FX impact. Adjusted diluted EPS would fall less than adjusted EBITDA as a result of lower interest expense and adjusted tax rate.

From the framework of this scenario, you can extrapolate that adjusted EBITDA margin would decline slightly on a quarter-over-quarter basis. This would likely be the case as we continue to invest significantly in the initiatives that Chris described related to solutions, operations and global technology. We would expect cash on hand to build again, and that assumes we don't prepay debt or make acquisitions. And our net leverage ratio would remain fairly stable.

Let me quickly highlight both an upside and downside scenario. In the upside scenario, revenue would grow, adjusted EBITDA would decline less than 6% and could grow, and adjusted diluted EPS would be better than adjusted EBITDA. In this case, cash would build fairly significantly and leverage would fall below 3x, again, unless we made an acquisition.

In the downside case, revenue would decline more than 5%, adjusted EBITDA would decline more than 12% and adjusted diluted EPS would decline in line with adjusted EBITDA. In this situation, cash would not build as it does in the other 2 scenarios, and leverage would move up slightly but should remain below 3.5x.

I want to wrap up with some updated thoughts about some of our annual guidance items. First, tax rate to be between 23% and 25%, depending largely on our international earnings. Second, total depreciation and amortization is expected to be about $360 million. Excluding the step-up in subsequent M&A portion, depreciation and amortization should be approximately $170 million. Third, net interest expense should be about $125 million as a result of a reduction of the forward LIBOR curve. And finally, capital expenditures will be around 8% of our revenue in 2020, which will be lower in absolute dollars than we had originally planned, of course.

To conclude, despite the challenges from COVID-19, we delivered results that reflect the strength of our business model and the diversification of our company. We remain focused on managing through these unprecedented times and believe the strength of our business and our balance sheet will allow us to continue to weather this situation.

I'll now turn the call back to Chris for some final comments.

Thanks, Todd.

So to conclude this morning, you've heard about how we have weathered the current crisis environment created by COVID '19 as well as our substantial investments in Global Solutions, Global Operations and Project Rise. We remain deeply committed to delivering strong, above-market growth over the long term, and we have a clear plan to do that.

In the near term, we will continue to prioritize the well-being of our associates, customers and consumers and communities. I'll end by reiterating my hope that all of you and your families remain safe and healthy.

And with that, I'll turn the time back to Aaron.

Thanks, Chris. That concludes our prepared remarks. (Operator Instructions) And now we'll be glad to take those questions.

(Operator Instructions) Our first question is from Manav Patnaik from Barclays.

This is actually Greg calling on for Manav. Nice to hear about the improving sales pipeline and win rates. I just was hoping for a little bit of color on whether you're seeing changes in the type of mix of offerings that are driving that pipeline, and also maybe a little bit of color on converting that pipeline into actual new sales, if you're seeing any slowing sales cycles.

Okay. Yes. Good question. Yes. In fact -- and we spoke about this at the end of our first quarter call. We kind of repositioned our consumer engagement approach -- rather, our customer engagement approach at the beginning of the pandemic to focus more on risk management and less on acquiring new customers as our customers became concerned about increasing delinquency risk. And so what you saw was a conversion, a diminishment of demand for prescreens and marketing efforts in general and a pivot toward account management and general risk assessment. And in support of that pivot, we developed through our analytics group, a suite of CreditVision, our trended credit data attributes, we call it our acute release suite, that helps lenders identify those consumers that may be suffering financial distress as a result of the pandemic, who may have entered into forbearance relationships with their lenders. And so they can determine the appropriate credit management practices but also anticipate which lenders -- or rather consumers are going to need some lending relief after government support subsides. That has been very helpful to the marketplace. We've seen strong demand.

And what I would emphasize also is that with the migration to online selling, which has really accelerated during the pandemic, there has been a concurrent increase in fraud activities. And that's driven a lot of demand and new sales for our fraud mitigation solutions, which we've heavily invested in, in recent years.

And I think the combination of that, plus some just effective go-to-market tactics and a lot of thought leadership and client engagement has allowed us to really maintain a very strong pipeline, and I think more importantly, a high win rate in a high absolute level of new sales volume. And that's in comparison to the sales volume that we had achieved and were trending in the quarters prior to the pandemic. So I feel really good about the way we adjusted our offerings in our go-to-market in the early phases of the pandemic, and we did it on a global basis. And we've had really strong results as a consequence. So thanks.

Our next question is from Jeff Meuler from Baird.

Yes. I guess just maybe to boil it down a little. The third quarter revenue base case implies a similar trend to Q2, July obviously trending better than April was. I know mortgage comp's toughened, and I'll let others ask about kind of the macro and reopening process or restriction factors. I just wanted to make sure I'm picking up on all of the business-specific headwinds that you're calling out that we should think to incorporate. So I'm hearing 3, but I'd love to know if there's anything else that we should be contemplating or including. So the 3 I'm hearing, the back end health care business from the flow-through of the weaker kind of procedures or front-end volumes recently. The second factor would be the indirect consumer solutions on that end market, marketing and subscriber churn. And then the third is the collections pricing concessions. Do I have all 3 of those correct? And any other business-specific kind of headwinds that you know about that you'd call out?

Jeff, this is Todd. I'll take a stab at that one and let Chris jump in afterwards. So when you -- when we think about the third quarter, I think the first thing that's important to call out is that the third quarter of 2019 was a record quarter for TransUnion in that revenue, and adjusted EBITDA were at all-time highs for us. So the fact that we're -- we've got a scenario that's contemplating flat to down five really just speaks to the resiliency and the diversification of TransUnion's business.

As far as the specific drivers, obviously, what we've provided and what we -- what I just stated just a little while ago is that the base case that we put together is the continuation of the trends that we are seeing right now. So that's obviously concentrating that financial services, in particular mortgage as well as auto, remain strong.

But to your point, the areas that we want to -- we're keeping a cautious eye on is exactly that, on health care in the back end. The impact of health care providers slowing down -- or I should say, focusing on COVID-19 cases in care and slowing down the other types of preventative and elective care has an impact on -- that has a tail, because if there's less care upfront, the tail end of that is there will be less insurance to recover later. So that's something we're cautiously watching.

And then Consumer Interactive, we're keeping an eye in particular on the -- our indirect channel, and specifically just the aggregators. And what we saw early in the second quarter was a pullback on marketing spend. We've seen some of those aggregators cautiously enter back into the market.

I'm not -- collections, I don't think is as much of a driver, so I wouldn't particularly focus on that.

Our next question is from Andrew Steinerman from JPMorgan.

I was hoping at this time you could just give us a little more color on the health care revenue declines in the second quarter. Obviously, I listened too carefully as you described Slide 8. Are we talking about high single digit declines? How did they do in the second quarter? And when you say that back-end could have some drag into the second half, could you give us any sense of what your thought on that potential is?

Todd, why don't you start with that one? And then I've got some commentary for the end.

Yes. Sure, and I'll be happy to. Andrew, thanks for the question on that. So yes, in the second quarter, as I was just answering Jeff's question, our health care business was impacted on the front end of the revenue cycle management product offering. So that's where, predominantly, what we're selling is insurance eligibility type of products, but we also have patient optimization services and charity care and other identity products that we sell. The insurance eligibility was lower for the reasons that I just provided to Jeff, just simply because the number of cases or patients to come in was significantly lower at the beginning of the second quarter. And as I said, it was just the focus on COVID-19 for many providers. But we also -- we're dealing with patients afraid of going to the hospital for care as well, too.

As the quarter progressed, we did note that there was somewhat of a recovery on those preventative and elective procedures. And we've actually put out a couple of press releases to kind of make that point throughout the quarter. So take a look at that. That's some good data that we've put out in the market.

What we saw in the back end of health care in the quarter is that the back-end solutions were not down as much, simply because of the reasons I just talked about in the front end. Hospital and all the care providers make the majority of their revenues doing those preventative and elective tariffs. And when they shut down those procedures, it had a -- this very significant impact on their operations. So that put them in a position, unfortunately, was to focus on their liquidity, which is where our back-end revenue cycle management products came in to help them. And that part of our business, as you know, is focused on what we call insurance coverage discovery, which is where we are looking for care that's been provided, but the provider has not been paid by commercial insurer or the government. So those products services actually slightly grew for us in the quarter.

So the net of it is, in Q2, I would -- as I said in my remarks, it held up relatively well. We're not going to -- I'm not going to provide you with the exact number, but it wasn't a significant decline. I think we were very pleased with the results. As we think about the back half of the year, we are seeing, as I said, a little bit of an uptick in the preventative and elective care, which is going to help the front end, but we're a little just cautious about the back end right now, just simply because the volumes that weren't there in the April-May time frame could potentially translate into lower revenues in the second half of the year.

Yes. And the one point I would just add to that is regarding the overall health of the health care business, we feel pretty good about it. You will remember a couple of years ago, we slipped off of a trend of double-digit organic growth. At that point, we did a major restructuring of our sales force. We restructured. We also expanded it, and they began selling the entire suite of solutions, both what we've traditionally provided but also HPS and Rubixis to recovery solutions that we added through acquisition.

And really, within 1 quarter of doing that reorganization, we doubled the level of new sales and new implementations, and we have continued on that pace. So even though the overall demand for the services has been disrupted because of the unique circumstances around the pandemic, which Todd, I think, just really nailed in detail, the underlying health of the business is strong. And had it not been for COVID-19, I'm very comfortable that we would have returned to the high single-digit organic growth that we'd talked about previously.

Our next question is from Gary Bisbee from Bank of America Securities.

I guess a question on the costs. And as we think about all the investments you're making in technology and some of the process improvement stuff, but also, obviously, focused on costs at this point. Any -- is there any color you can give on how we might think of the cadence of costs? And I guess part of the question is also the incremental or decremental margin, whatever you want to call it, on the revenue performance. This quarter was quite a bit better than, I think, how we were thinking about it following your commentary a quarter ago. So just any color to help us think through the moving parts on costs would be great.

Gary, it's Todd. Let me take a stab at that one for you, and thanks for asking it because it's an important one. So as we entered into the second quarter, Chris and I focused quite intensely on managing costs and just overall liquidity of TransUnion just due to the high level of uncertainty that we were operating in. When you -- if you go back to April, which we hope is a trough for us.

So things that we did during that time was we put a freeze on headcount with the exception of select areas that we felt were important to invest back into, in particular, Project Rise. We also managed our T&E expense and other controllable expenses that we have. And I think you can see that when you look at the relative performance of our operating expense in the quarter, I think total operating expenses were only up about $8 million in the quarter. And last year, we had a very significant benefit on stock-based compensation. So for all intents and purposes, we manage the cost base pretty -- very strong, and -- but while also making those certain investments.

What we also dealt with in the second quarter was -- and you can see it just in the trends that we provided in the presentation materials, you can see the recovery in volumes, in particular in the U.S. And then our international business might have been a little bit of lag, but [we saw] the recovery there. So it was -- there was definitely a very high flow-through to margin, which resulted obviously in a very nice adjusted EBITDA performance for the second quarter.

As we go forward though on cost, we said at the onset of the call, we are being very deliberate about taking the opportunity to invest back into the business. And Chris went into significant detail on the great programs that we have going on in our operations group as well as in our solutions group in addition to Project Rise. So there are just -- we highlighted some of those, with procurement and our global capability center, the CRM contract processing in the ops; and on the solutions side, what we're doing with fraud. So we're going to continue to be aggressive investing in those areas because those are important parts of our organization that we believe are going to drive future growth, and when we get out COVID-19, will be a source for the top line from the solutions group, and from the ops group, a source of efficiency and lower operating expenses.

Yes. And just, I think from a philosophical perspective, to answer your question, Gary. I mean, we're still very much focused on strengthening the business during this period. As a management team, when I became CEO, obviously, we had a nice run of results, but we all believed that there was an opportunity to further strengthen the business. And that was in terms of accelerating top line growth, certainly, ensuring that we could consistently compound at the levels that we had previously, and even freeing up cost for further growth investments or for margin improvements. And in the pre-pandemic world, we were confident as a team that we could make the investments in solutions, operations and in Project Rise and still deliver against the margin trends that we'd established in the prior quarters.

Obviously, the macro environment has been materially disrupted. I think, all things equal, we're weathering the storm pretty well. And I think it's just really important that we not take our eye off the ball because there's a great opportunity to strengthen the business while still delivering very satisfactory results to the market. And we're going to focus on that because I'm confident we're going to emerge from this, and I'm confident that we're going to be able to resume a solid growth trajectory, and it's just going to be better enhanced as a result of the work we're doing in these 3 areas.

Our next question is from Toni Kaplan from Morgan Stanley.

Just wanted to ask about the consumer Interactive segment. It sounds like on the direct side, you're making some investments. And just wanted to understand what kind of benefit you're targeting from those?

And then on the indirect side, you talked about some of the headwinds. I'm just wondering if there's any steps that you can take to mitigate some of those? Just trying to understand if there could be upside to your outlook there.

Okay. Well, let me talk about the dynamics there, and then you can define upside against outlook. But the 2 parts of our business, again, direct is 40% of our consumer interactive business and the indirect is roughly 60%. The customers that we serve on the indirect side, their business models rely heavily on monetizing leads that they generate by offering our credit report services and other services. And obviously, in an environment where customer acquisition is diminished, their models are going to suffer, and their ability to advertise and acquire is going to get restricted. We're working with a variety of the partners that we support to be helpful during this period. We have numerous ideas to continue to innovate and provide them with support and solutions beyond just reselling our credit data and our trended credit data. That's a way for us to get growth in that segment while the macro landscape is challenged.

The benefit and the real balance in our portfolio is this is still a very fertile market to establish subscription relationship with consumers directly. And we've taken advantage of that by accelerating our investment. Our yield is really strong, our conversion there, and it's pushing very nice organic growth on the direct side, which is helping to balance the headwinds that we've got on the indirect side.

Our next question is from Andrew Jeffrey from SunTrust.

Hello, Mr. Jeffrey?

Sorry about that, guys. Chris, I'm wondering if you can talk about plans to potentially build out a competitor to Equifax's work number database, the EWS business generally. Is that initiative, that you think is important, is that an area where you think TransUnion has the ability to be more competitive and perhaps change some of the growth profile through the cycle for the UIS business?

Well, let me share a few thoughts. I mean first, obviously, the work number, the tox business, generally is a tremendous franchise. And with the current very favorable market circumstances, it's performing amazingly well. As you can see through our efforts and also Xperian's efforts and others, there is a, I'd say, a next generation of income solutions that's coming to market. Beyond income verification, it's really directly tapping into consumers' checking accounts, their demand deposit accounts, with consumer permission, of course, through partnerships with financial aggregators. And there are also other vehicles for gathering both income, current account and other alternative data sources that can be predictive of financial management behavior. And I think you'll see all 3 bureaus developing these solutions.

What that landscape ends up looking like is still open for debate. But it is clear that this is a critical new frontier for developing income solutions or rather alternative data solutions that everybody is going after.

Our next question is from Bill Warmington from Wells Fargo.

So you had some cautious comments about the 2021 mortgage comps. And I thought it might make sense to ask about how -- what mortgage is as a percentage of revenue these days, and then also to ask about some of the drivers that you mentioned and how they would play out in terms of the refi backlog, the purchase market and then the impact of forbearance ending, how that all comes into the mix.

Okay, Bill. Yes. Let me get started on that. I mean in more normal circumstances, let's say, pre pandemic, we've told you mortgage is between 7% and 8% of our revenues. Right now because of the surge in volume due to the low interest rates, it's getting closer to 10% of revenues, which is certainly a helpful countercyclical component at this point in time. When we look at the current mortgage rates and we think about the total universe of mortgages in the U.S. that could be refinanced, it's, oh, I don't know, maybe 18 million, 20 million, something like that. So that depends somewhat on the degree to which the banks lower mortgage pricing to increase the addressable market.

And then I think if you just look at the volume of daily refinancings, there's enough backlog where we're comfortable that through the end of '20, we're going to continue to see strong mortgage performance. I think it's hard to see how it really extends beyond the middle of '21, so if I were to take a guess, some time second quarter of next year, we start to see some material diminishment in the refinance bubble that we're all enjoying currently.

Todd, would you care to add anything to that?

No. I think you covered it well, Chris. Good.

Okay.

The next question is from Seth Weber from RBC Capital Markets.

Chris, you mentioned a few times kind of investing in the fraud business. I'm wondering, can you just give us some more details on really what you feel like you still need to do to build out that platform to get to where you want it to be?

Yes. Sure. Well, I would just say, range, in recent years, we made a couple of material acquisitions that brought great fraud assets into the portfolio. And that complements an already strong business providing what we call knowledge-based authenticators to mitigate online fraud, basically challenging individuals to demonstrate that they know things that only that individual would know about their credit, about information that resides in their public records in order to confirm identity.

That's effective, but it adds a lot of transactional friction and breakage. And so as a result, we acquired one of the leading providers of device-based identification and fraud detection, and that is Iovation based in Portland. And they complemented another device-based acquisition that we had done previously, a solution out of Ireland called Trustev. And then when we acquired the Callcredit business, the Callcredit business, roughly 1/3 of those revenues come from fraud mitigation solutions. The product there is called CallValidate, and it overlaps materially with the product that we have in the U.S.

So what we're currently focused on is: one, understanding from a global perspective how we need to evolve these capabilities in order to meet both current market demands but also where we see the market going, because that's one thing about fraud, it is challenging and persistent and difficult to mitigate because the fraudsters are super creative. So we're getting a very clear sense on where the market's going, and then integrating all of these applications on a single next-generation platform, supported by a global sales force and a consistent value proposition that we push out into all of the markets that we serve. And again, we're in 30 regions globally. And they all have varying degrees of e-commerce fraud currently.

I mean if you look at fraud activity, it's highly concentrated in the U.S. markets, Western Europe as well. But as banks and other lenders just raised their barriers of defense in those markets, it will push out into other markets globally. So there's great tailwinds in fraud because it's difficult, and there's a lot of financial opportunity. And we want to have a best-in-class solution that is configurable and leverageable into all the different markets that we compete.

And did you feel like you have the adequate the assets in-house already and it's just a question of kind of configuring them? Or do you feel like that's an area where you might do more M&A?

Look, I think we've got a great complement of assets currently. And if we integrate them all, we're going to achieve some efficiency that we can apply toward ongoing organic product development internally. That said, there's any number of complementary fraud mitigation solutions that we could acquire or continue to invest in. I mean I think we've got a nice position in one of the leading providers of cellular phone data, which is a great, persistent consumer identifier. And it's also a dataset on which our analysts can configure fraud mitigation algorithms. And so we have tended to make those type of early strategic investments in emerging datasets that are helpful to mitigate fraud overall but also kind of lays a path toward acquisitions.

Our next question is from George Mihalos from Cowen.

Just had a quick question as it relates to the emerging markets vertical on Page 10. Can you sort of rank order for us what those subsegments contribute to the emerging verticals sort of after health care and insurance?

And then, Chris, just the political climate that's out there, a lot of rhetoric that's out there. Just curious if you can make any sort of high-level comments as to how you think maybe some of these comments, I'm not even sorry to call them initiatives, sort of play out and the potential impact on the bureaus.

Okay. So I'm going to ask Todd to handle the first. I'm not sure we give rank-ordering, but I'm sure he can provide some color. And then I'll handle the question about the political landscape. Todd?

Yes. I'll take the question. George, thanks for the question on that. Yes. So as far as the emerging verticals are concerned, obviously, we emphasize insurance and health care, those are clearly the 2 biggest in there. If I were to kind of think about it from other significant contributors, I mean there, I'd say, diversified markets, which Chris spoke to earlier, so think of what we do with utilities and telecommunications, just these 2 examples, but it's a broad basket of retailers, e-commerce, businesses like that fall into it. I would then say tenant and employment and then collections. And then from there, think about verticals that we also highlighted in media as well as in the public sector.

Yes. And in terms of the political landscape, if you look at the various proposals that are being discussed by consumer advocates or conservative politicians and the like, there's really nothing that we haven't seen previously. I'd also point out that often, there's a gap between the rhetoric of the campaign versus the reality of legislating post election.

From our perspective, the most important thing that we can do is stay engaged in the process. We have a very evolved understanding of the role that the data that we provide plays in fueling the U.S. economy and also economies around the world. We believe that accurate, comprehensive, unbiased and transparent data is critical to enabling maximum consumer lending and fueling economic growth, and we're committed to demonstrating that and explaining that with legislators and regulators alike. And I think, overall, we've got a pretty deep and balanced understanding of that perspective.

Now from time to time, there are criticisms that the body of information that's used to originate loans have certain biases in it. We really haven't seen it. We have looked hard at this issue over time. We have several smart and aggressive regulators who also look hard at this issue, and it really hasn't been demonstrated. And I think you just have to get back to the fundamental economic motivations in the situation. It's our desire to provide all the information that we can to promote financial inclusion and really expand the lendable universe. That's good business for TransUnion. It's good for American consumers, and it's good for lenders alike. So we want to provide comprehensive and unbiased and accurate information. And I feel, as a whole, that our industry does.

Great. Thanks, Chris, and thanks, everybody, for joining us on the call. We hit the bottom of the hour here, so we're going to wrap up the call. Let everybody -- I know there's a lot of calls going on today, get on to those. Thanks, everybody, for your time, and we hope you continue to be safe and healthy. All the best.

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