TransUnion (TRU) Q3 2026 earnings review
TransUnion raises its profit outlook, but fourth-quarter sales growth slows
TransUnion's overseas rebound and share buybacks are lifting earnings while high interest rates weigh on its U.S. mortgage business. Total revenue at the credit bureau rose 12% to $1.31 billion (8% from businesses owned a year ago), and chief executive Chris Cartwright raised the full-year profit per share outlook after India's underlying sales jumped 18%. However, the fourth-quarter plan has underlying sales growth slowing to 3% to 6% as mortgage inquiries drop.
| Sales from businesses owned a year ago | +8% +5.5% excluding FICO mortgage royalties |
|---|---|
| Profit per share, excluding one-offs | $1.25 +14% from a year ago (plan: $1.18–1.21) |
| India underlying sales growth | +18% +8% last quarter and −6% in Q1 |
| Full-year profit per share outlook | Raised $0.06 to $4.81–4.88; Q4 underlying sales planned at +3–6% |
⚖️ Verdict: ⚪ Neutral
The story is unchanged because stronger overseas profit and capital returns are offset by a slower U.S. fourth-quarter outlook and a new interest-cost warning for 2027. The good news: India and the new Mexican bureau drove overseas profit margins up 2.7 percentage points, and the board added $1 billion to the share buyback plan after debt leverage hit its 2.5 times target. The bad news: management trimmed its full-year underlying margin gain on higher legal and reinvestment costs, and warned that expiring interest-rate hedges will add about $60 million to interest costs next year.
The question now is whether the fourth-quarter slowdown to 4.5% underlying growth is just management's usual caution on mortgages or the start of a broader cooling into 2027. If non-mortgage lending and India hold their third-quarter pace, TransUnion will beat its plan again; if high rates spread beyond housing, the $60 million interest headwind will squeeze next year's profit growth. Fourth-quarter U.S. Financial Services growth excluding mortgages will tell.
🐂 Bull Case
India Rebound Carries the International Business
TransUnion's overseas division is accelerating just as its U.S. mortgage business slows down. International sales from businesses it owned a year ago rose 10% in constant currency, up from 6% in the second quarter and under 1% in the first. Chief executive Chris Cartwright credited India, where underlying sales jumped 18% on "gradually improving volumes and strong new business wins".
- India underlying sales: up 18% from a year ago, after rising 8% last quarter and falling 6% in the first quarter
- Latin America underlying sales: up 18% on growth in Brazil and Colombia, while reported sales nearly tripled to $99 million after buying control of Trans Union de Mexico
- International Adjusted EBITDA margin (profit before interest, tax, depreciation and one-offs): 45.9%, up 2.7 percentage points from a year ago
This matters because International carries a 45.9% profit margin, nearly 10 percentage points higher than the U.S. division. In addition, the newly acquired Mexican credit bureau is running ahead of management's plan and added 0.1 percentage points to the company-wide profit margin this quarter, reversing earlier expectations that integration costs would weigh on profitability.
What to watch: fourth-quarter International underlying sales growth against the full-year target of mid-single digits. A second straight quarter near 10% would prove that new software products in India and Latin America can offset slower U.S. lending in 2027.
Buybacks Double as Debt Leverage Hits Target
Cartwright said cash flow and the balance sheet support "an accelerated pace of capital return to shareholders in the near term". After borrowing $520 million on its credit line earlier this year to buy the Mexican bureau, the Chicago-based group has already brought its debt ratio back to its target.
- Share buybacks: $243 million through September (about $129 million in the third quarter by our math), with a full-year plan of up to $500 million
- Buyback authorization: raised by $1 billion to $2 billion, leaving about $1.5 billion available
- Quarterly dividend: raised 8% to $0.135 per share, while the company prepaid the remaining $104 million on its Term Loan B-5
- Leverage ratio (net debt to 12-month Adjusted EBITDA): fell to 2.5 times from 2.8 times in the first quarter
By our math, the full-year buyback target implies about $257 million of repurchases in the fourth quarter alone, more than the first nine months combined. That lowered the diluted share count by 2.3% from a year ago and prompted management to raise its full-year profit per share outlook even while keeping the top end of its revenue plan unchanged.
What to watch: fourth-quarter share repurchases and revolving credit line repayments in the annual report. Retiring shares while paying down the $520 million credit line draw would soften the blow from higher interest rates next year.
Insurance and Fraud Tools Offset Mortgage Volume
TransUnion is relying on non-credit data to grow while consumer lending is subdued. In U.S. Emerging Verticals — industries outside banking, such as insurance, telecoms and government — underlying sales rose 5.6%. The company Spotlighted its insurance business, which brings in over $430 million a year and posted its ninth straight quarter of double-digit growth.
Core credit files now make up only 46% of insurance revenue, because insurers also buy driving-history records (expected to reach $125 million this year) and marketing and fraud tools. Across the whole company, Trusted Call Solutions — software that verifies business phone calls to stop scams — grew about 40% in the first nine months, and a majority of U.S. credit traffic now runs on OneTru, its cloud software platform.
What to watch: full-year revenue for Trusted Call Solutions in the fourth-quarter report, which management only discloses once a year. Clearing $200 million would keep the product on track for its 2028 target and prove that fraud tools are scaling.
🐻 Bear Case
Rising Mortgage Rates Slow Fourth-Quarter Growth
Cartwright said the company is "balancing business momentum against rising interest rates and overall market uncertainty". Because the 10-year U.S. Treasury yield has risen by more than 0.3 percentage points since July, homebuyers are pulling back, and U.S. mortgage credit inquiries fell about 16% from a year ago in the third quarter.
- Fourth-quarter mortgage inquiries: expected to drop more than 20% from a year ago
- Fourth-quarter underlying sales growth: planned at 3% to 6% (3% to 5% excluding FICO mortgage royalties), down from 7.6% in the third quarter
- Consumer Interactive (direct-to-consumer credit monitoring): down 3.0% to $140.3 million, shrinking for a second straight quarter
TransUnion still grew U.S. mortgage revenue by 21% in the quarter (5% excluding FICO price pass-throughs) by raising prices on credit files. However, the fourth-quarter outlook calls for total underlying growth to slow to 4.5% at the middle of the range, the weakest pace in two years. Even if management is using "conservative rate and activity assumptions", high rates are delaying a housing recovery.
What to watch: U.S. Financial Services underlying growth excluding mortgages in the fourth quarter. A drop below this quarter's 5% pace would mean high interest rates are hurting auto loans and credit cards as well as home loans.
FICO Royalties and U.S. Costs Squeeze Margins
TransUnion says its cloud migration is making the business more efficient, but its U.S. profit margin is shrinking. Company-wide Adjusted EBITDA margin fell 0.9 percentage points from a year ago to 35.4%, and U.S. Markets Adjusted EBITDA rose just 0.7% to $353.3 million despite a 7.0% rise in segment sales, pulling the U.S. margin down 2.2 percentage points to 36.2%.
Two things caused the drop. First, FICO raised the royalty it charges on mortgage scores; TransUnion passes that fee to lenders at no profit, which added $75 million in third-quarter revenue (up from $47 million a year ago) and cut the company margin by 0.6 percentage points. Second, excluding one-time cloud migration costs from last year, cost of services rose 1.6 percentage points of revenue by our math, and management cut its full-year underlying margin change from up 0.5–0.7 points to up 0.0–0.2 points, citing growth investments and higher legal costs.
To reduce its reliance on FICO, the bureau offers its competing VantageScore 4.0 for 99 cents (extended through 2028) and gives it away free with FICO pulls this year. VantageScore appeared in about 35% of its third-quarter mortgage pulls, up from 30% last quarter, and the company estimated that a federal shift from three-bureau to two-bureau mortgage reports would cut less than 1% of revenue ($33 million).
What to watch: fourth-quarter underlying margin expansion, which the plan puts at 0.4 to 1.2 percentage points. Missing that step-up would show that legal and reinvestment costs are eating up the cloud savings.
Expiring Interest Swaps Add $60 Million in 2027 Costs
Lower interest costs helped TransUnion raise its 2026 earnings outlook this quarter, as management cut its full-year net interest forecast by $10 million to about $235 million. However, that tailwind will reverse next year because the company's cheapest interest-rate hedges are about to expire.
TransUnion carries $5.46 billion in total debt and uses interest-rate swaps to lock in fixed rates on about 70% of it. A swap covering $1.5 billion of debt at a fixed rate of 1.39% expires on December 31, 2026. In its presentation, the company warned: "Swap replacement and higher SOFR forecast expected to increase net interest expense by ~$60M in 2027." By our math, a $60 million pre-tax headwind equals about $0.23 per share after tax, or nearly 5% of this year's profit.
What to watch: the fixed interest rate locked in on the new replacement swaps during the fourth quarter. A higher rate will require faster debt paydown in 2027 to hit management's target of low-to-mid teens earnings growth.
Risks this quarter didn't answer
Several standing risks from prior quarters could not be fully checked in the earnings release and presentation.
- Regulatory and legal reserves: management blamed "higher litigation" for trimming its full-year underlying margin outlook, but the release does not update the $92.1 million legal accrual or the paused Consumer Financial Protection Bureau dispute-handling probe; the quarterly 10-Q filing will show the reserve balance.
- Paid VantageScore adoption: while 35% of mortgage credit pulls included VantageScore 4.0, the materials do not disclose how many lenders paid for VantageScore alone rather than taking the free-with-FICO bundle that ends in December.
- Standalone Mexico financials: TransUnion reported that Mexico beat its profit plan, but the standalone revenue and profit of the Mexican bureau awaits the acquisition footnote in the 10-Q filing.
💲 Other KPIs
Free cash flow — cash from operations minus capital spending — jumped 50.6% from a year ago in the third quarter by our math, bringing the nine-month total to $687.3 million (up 56.6%). Capital spending fell to 5.2% of revenue over the first nine months from 6.7% a year ago because the cloud migration program finished at the end of 2025.
Reported operating profit rose 28.7% from a year ago, lifting the operating margin by 2.6 percentage points to 20.4%. The increase outpaced revenue growth because last year's third quarter included $22.1 million of one-time cloud migration costs and $11.5 million of restructuring and optimization charges that dropped to zero this year.
Money owed by customers fell 2.6% from $1,047.5 million at the end of June, helping boost third-quarter cash collections. Compared with a year ago, receivables are up 14.2% against a 12.2% rise in reported sales, reflecting the addition of the Mexican credit bureau's balance sheet earlier this year.
🔮 Guidance
New. The plan calls for 8% to 10% reported growth (9.2% at the middle of the range) and 3% to 6% underlying constant-currency growth. Acquisitions add about 5 percentage points and FICO royalties add 1 point. TransUnion has beaten its quarterly revenue midpoint for four straight quarters by an average of 2.8%; if the pattern holds, fourth-quarter revenue would land near $1,314 million by our math.
New. The outlook points to 8% to 12% profit growth (10.2% at the middle of the range, up from 9.3% in the third quarter) and a margin of 35.6% to 36.2%. That margin is flat to up 0.6 percentage points from a year ago, as 0.4 to 1.2 points of underlying cost savings offset drags from FICO royalties and acquisition integration.
New. Profit per share excluding one-offs is planned to rise 7% to 14% from a year ago (10.7% at the middle of the range, down from 13.6% in the third quarter). Sequential earnings dip from $1.25 in the third quarter because credit inquiries are seasonally quieter at year-end.
New. Reported net profit is planned to rise 25% to 38% from a year ago (26% to 40% per share), with a net profit margin of 10.0% to 10.8%. Growth is high because last year's fourth quarter carried $24.7 million of final cloud and restructuring charges.
Raised at the bottom end. The middle of the range moved up by $2 million to $5,146.5 million (12% to 13% reported growth, and 8% to 9% underlying constant-currency growth). It is the third raise this year, and each has been smaller than the last: +$154 million (when Mexico was added), +$27 million, and +$2 million.
Raised at the bottom end. The low end ticked up by $1 million, keeping growth at 10% to 11% and the full-year margin at 35.2% to 35.4% (down 0.6 to 0.8 percentage points from 2025). Management trimmed its underlying margin expansion estimate from 0.5–0.7 points to 0.0–0.2 points, offset by stronger margins in Mexico.
Raised. The middle of the range rose by $0.055 to $4.845, lifting full-year growth to 12% to 13% (from 11% to 12%). It is the third raise in three quarters (+$0.045, +$0.075, +$0.055), driven by a $10 million cut in expected net interest expense to $235 million and larger share buybacks.
Raised. The middle of the net profit range rose by $16 million (and by $0.105 per share), pointing to 81% to 84% reported profit growth and a 16.0% to 16.2% margin. Full-year reported profit includes the $225.5 million one-time accounting gain from buying control of the Mexican bureau in the first quarter.
❓ Key Questions
How many mortgage lenders pay for VantageScore without FICO?
VantageScore 4.0 was included in 35% of third-quarter mortgage pulls, but TransUnion offers it free through December to customers who buy FICO scores. Investors need to know how much of that 35% will convert into paid, standalone VantageScore orders in 2027.
What litigation drove the cut to underlying profit margins?
Management cut its 2026 underlying margin expansion from 0.5–0.7 percentage points to 0.0–0.2 points, citing growth reinvestment and higher litigation. In the first half, legal reserves jumped by $29.9 million, so management should clarify which legal matter is driving the new expense.
What swap rate is assumed in the 2027 interest warning?
TransUnion warned that replacing its expiring $1.5 billion, 1.39% interest-rate swap will help push net interest expense up by about $60 million in 2027. Management should state what fixed swap rate it expects to lock in this quarter and whether it will pay down the $520 million revolver first.
When will the remaining U.S. online credit customers move to OneTru?
The presentation says a majority of U.S. online and batch credit volume now runs on the OneTru platform and migrations will be "largely completed by year-end", softening last quarter's promise to convert the entirety of the U.S. market this year.