| Significant accounting and reporting policies | Significant Accounting and Reporting Policies Description of Business TransUnion is a leading global information and insights company that makes trust possible between businesses and consumers, helping people around the world access opportunities that can lead to a higher quality of life. That trust is built on TransUnion’s ability to deliver safe, innovative solutions with credibility and consistency. We call this Information for Good. Grounded in our heritage as a credit reporting agency, we have built robust and accurate databases of information for a large portion of the adult population in the markets we serve. We use our identity resolution methodology to link and match our expanding high-quality datasets. We use this enriched data and analytics, combined with our expertise, to continuously develop more insightful solutions for our customers, all while maintaining compliance with global laws and regulations. Because of our work, organizations can better understand consumers in order to make more informed decisions, and earn consumer trust through great, personalized experiences, and the proactive extension of the right opportunities, tools and offers. In turn, we believe consumers can be confident that their data identities will result in better offers and opportunities. We provide solutions that enable businesses to manage and measure credit risk, market to new and existing customers, verify consumer identities, mitigate fraud, and effectively manage call center operations. Businesses embed our solutions into their process workflows to deliver critical insights and enable effective actions. Consumers use our solutions to view their credit profiles, access analytical tools that help them understand and manage their personal financial information, and take precautions against identity theft. Our addressable market includes the global data and analytics market, which continues to grow as companies around the world increasingly recognize the benefits of data and analytics-based decision making, and as consumers recognize the important role that their data identities play in their ability to procure goods and services. We leverage our differentiated capabilities in order to serve a global customer base across multiple geographies and industry verticals. Basis of Presentation The accompanying consolidated financial statements of TransUnion and subsidiaries have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). Our consolidated financial statements reflect all adjustments which, in the opinion of management, are necessary for a fair presentation of the periods presented. All significant intercompany transactions and balances have been eliminated. As a result of displaying amounts in millions, rounding differences may exist in the financial statements and footnote tables. We have recast certain items, including the prior year’s revenue disaggregation disclosures in Note 21, “Reportable Segments,” to conform to the current year presentation. Unless the context indicates otherwise, any reference in this report to the “Company,” “we,” “our,” “us,” and “its” refers to TransUnion and its consolidated subsidiaries, collectively. For the periods presented, TransUnion does not have any material assets, liabilities, revenues, expenses or operations of any kind other than its ownership investment in TransUnion Intermediate Holdings, Inc. Revision of Previously Issued Financial Statements The Company identified an error in the classification of certain costs between cost of services and selling, general and administrative in the Consolidated Statements of Operations, which resulted in an understatement of cost of services and an overstatement of selling, general and administrative in equal and offsetting amounts resulting in no impact to total operating expenses, operating income or net income. This error was incremental to the classification error of employee costs related to certain of our recent acquisitions that was identified in the second quarter of 2023. In addition, the Company identified an overstatement of the supplemental disclosure for cash paid for interest on its Consolidated Statements of Cash Flows for the twelve months ended December 31, 2022. The Company concluded that, while the expense classification errors and supplemental cash paid for interest disclosure were not material to its consolidated financial statements taken as a whole, it should revise its previously issued consolidated financial statements to correct the errors. In doing so, the Company has also corrected an immaterial error related to an over accrual of expenses, net of the related income tax effect, during the twelve months ended December 31, 2021, that had previously been corrected out of period during the twelve months ended December 31, 2022. Accordingly, the Company has revised its previously issued Consolidated Statements of Operations, Statements of Comprehensive Income (Loss), Consolidated Statements of Cash Flows, and Consolidated Statements of Stockholders' Equity for the twelve months ended December 31, 2022 and 2021 to correct for these errors that are not material within these consolidated financial statements taken as a whole. The impact of the revisions is presented below. Consolidated Statements of Operations Twelve Months Ended December 31, 2022 Twelve Months Ended December 31, 2021 As Reported Adjustment As Revised As Reported Adjustment As Revised Cost of services (exclusive of depreciation and amortization) $ 1,222.9 $ 162.2 $ 1,385.1 $ 991.6 $ 30.7 $ 1,022.3 Selling, general and administrative 1,337.4 (158.0) 1,179.4 943.9 (34.9) 909.0 Total operating expenses 3,079.3 4.2 3,083.5 2,312.5 (4.2) 2,308.3 Operating income 630.5 (4.2) 626.3 647.7 4.2 651.9 Income from continuing operations before income taxes 387.2 (4.2) 383.0 501.4 4.2 505.6 Provision for income taxes (119.9) 1.0 (118.9) (130.9) (1.0) (131.9) Income from continuing operations 267.3 (3.2) 264.1 370.5 3.2 373.7 Net income 284.7 (3.2) 281.5 1,402.2 3.2 1,405.4 Net income attributable to TransUnion 269.5 (3.2) 266.3 1,387.1 3.2 1,390.3 Income from continuing operations attributable to TransUnion 252.1 (3.2) 248.9 355.5 3.2 358.7 Basic earnings per common share from: Income from continuing operations attributable to TransUnion $ 1.31 $ (0.02) $ 1.29 $ 1.86 $ 0.02 $ 1.87 Net income attributable to TransUnion $ 1.40 $ (0.02) $ 1.38 $ 7.25 $ 0.02 $ 7.26 Diluted earnings per common share from: Income from continuing operations attributable to TransUnion $ 1.31 $ (0.02) $ 1.29 $ 1.84 $ 0.02 $ 1.86 Net income attributable to TransUnion $ 1.40 $ (0.02) $ 1.38 $ 7.19 $ 0.02 $ 7.20 Consolidated Statements of Comprehensive Income (Loss) Twelve Months Ended December 31, 2022 Twelve Months Ended December 31, 2021 As Reported Adjustment As Revised As Reported Adjustment As Revised Net income $ 284.7 $ (3.2) $ 281.5 $ 1,402.2 $ 3.2 $ 1,405.4 Comprehensive income 283.3 (3.2) 280.1 1,386.6 3.2 1,389.8 Comprehensive income attributable to TransUnion 270.4 (3.2) 267.2 1,373.9 3.2 1,377.1 Consolidated Statements of Cash Flows Twelve Months Ended December 31, 2022 Twelve Months Ended December 31, 2021 As Reported Adjustment As Revised As Reported Adjustment As Revised Net income $ 284.7 $ (3.2) $ 281.5 $ 1,402.2 $ 3.2 $ 1,405.4 Income from continuing operations 267.3 (3.2) 264.1 370.5 3.2 373.7 Trade accounts payable (20.7) 4.2 (16.5) 45.7 (4.2) 41.5 Other current and long-term liabilities (435.3) (1.0) (436.3) (33.5) 1.0 (32.5) Cash provided by operating activities of continuing operations 301.0 — 301.0 759.4 — 759.4 The Company revised its supplemental disclosure for cash paid for interest for the twelve months ended December 31, 2022 by $91.2 million, reducing it from the previously reported amount of $312.3 million to $221.1 million as revised. Consolidated Statements of Stockholders’ Equity Twelve Months Ended December 31, 2022 Twelve Months Ended December 31, 2021 As Reported Adjustment As Revised As Reported Adjustment As Revised Retained Earnings, Beginning Period Balance $ 2,254.6 $ 3.2 $ 2,257.8 $ 937.4 $ — $ 937.4 Net income 269.5 (3.2) 266.3 1,387.1 3.2 1,390.3 Retained Earnings, Ending Period Balance $ 2,446.6 $ — $ 2,446.6 $ 2,254.6 $ 3.2 $ 2,257.8 Total Equity Beginning Period Balance $ 4,006.2 $ 3.2 $ 4,009.4 $ 2,636.1 $ — $ 2,636.1 Net income 284.7 (3.2) 281.5 1,402.2 3.2 1,405.4 Total Equity Ending Period Balance $ 4,269.4 $ — $ 4,269.4 $ 4,006.2 $ 3.2 $ 4,009.4 The Company will also revise previously reported quarterly and year-to-date financial information for these errors in its future filings, as applicable. A summary of the corrections to the impacted financial statement line items to the Company’s previously issued consolidated financial statements for each quarterly and year-to-date period is presented in Note 26, “Quarterly Financial Data (Unaudited).” Principles of Consolidation The consolidated financial statements of TransUnion include the accounts of TransUnion and all of its controlled subsidiaries. Investments in nonmarketable unconsolidated entities in which the Company is able to exercise significant influence are accounted for using the equity method. Investments in nonmarketable unconsolidated entities in which the Company is not able to exercise significant influence, our “Cost Method Investments,” are accounted for at our initial cost, minus any impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. Use of Estimates The preparation of consolidated financial statements and related disclosures in accordance with GAAP requires management to make estimates and judgments that affect the amounts reported. We believe that the estimates used in preparation of the a ccompanying consolidated financial statements are reasonable, based upon information available to management at this time. These estimates and judgments affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the balance sheet date, as well as the amounts of revenue and expense during the reporting period. Estimates are inherently uncertain and actual results could differ materially from the estimated amounts. Segments Operating segments are businesses for which separate financial information is available and evaluated regularly by our chief operating decision maker (“CODM”) deciding how to allocate resources and assess performance. We have three operating and reportable segments; U.S. Markets, International and Consumer Interactive. We also report expenses for Corporate, which provides support services to each segment. Details of our segment results are discussed in Note 21, “Reportable Segments.” Revenue Recognition and Deferred Revenue All of our revenue is derived from contracts with our customers and is reported as revenue in the Consolidated Statements of Operations generally as or at the point in time our performance obligations are satisfied. A performance obligation is a promise in a contract to transfer a distinct good or service to a customer. We have contracts with two general groups of performance obligations; those that require us to stand ready to provide goods and services to a customer to use as and when requested (“Stand Ready Performance Obligations”) and those that do not require us to stand ready (“Other Performance Obligations”). Our Stand Ready Performance Obligations include obligations to stand ready to provide data, process transactions, access our databases, software-as-a-service and direct-to-consumer products, rights to use our intellectual property and other services. Our Other Performance Obligations include the sale of certain batch data sets and various professional and other services. Deferred revenue generally consists of amounts billed in excess of revenue recognized for the sale of data services, subscriptions and set up fees. The current and long-term portions of deferred revenue are included in other current liabilities and other liabilities. See Note 16, “Revenue,” for a further discussion about our revenue recognition policies. Costs of Services Costs of services include data acquisition and royalty fees, personnel costs related to our databases and software applications, consumer and call center support costs, hardware and software maintenance costs, telecommunication expenses and occupancy costs associated with the facilities where these functions are performed. Selling, General and Administrative Expenses Selling, general and administrative expenses include personnel-related costs for sales, administrative and management employees, costs for professional and consulting services, advertising and occupancy and facilities expense of these functions. Advertising costs are expensed as incurred. Advertising costs, which include commissions we pay to our partners to promote our products online, for the years ended December 31, 2023, 2022 and 2021 were $64.2 million, $87.7 million and $92.9 million, respectively. Stock-Based Compensation Compensation expense for all stock-based compensation awards is determined using the grant date fair value. For all equity-based plans, we record the impact of forfeitures when they happen. Expense is recognized on a straight-line basis over the requisite service period of the award, which is generally equal to the vesting period. The details of our stock-based compensation program are discussed in Note 19, “Stock-Based Compensation.” Restructuring Restructuring expenses consist of employee-separation costs, including severance and other benefits calculated based on long-standing benefit practices and local statutory requirements. In some jurisdictions, the Company has ongoing benefit arrangements under which the Company records estimated severance and other termination benefits when such costs are deemed probable and estimable, approved by the appropriate corporate management, and if actions required to complete the termination plan indicate it is unlikely that significant changes to the plan will be made or the plan will be withdrawn. Severance and other termination bene fits for which there is not an ongoing benefit arrangement are recorded when appropriate corporate management has committed to the plan and the benefit arrangement is communicated to the affected employees. In addition, restructuring expenses include impairment of leased facility assets whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Income Taxes Deferred income tax assets and liabilities are determined based on the estimated future tax effects of temporary differences between the financial statement and tax basis of assets and liabilities, as measured by current enacted tax rates. The effect of a tax rate change on deferred tax assets and liabilities is recognized in operations in the period that includes the enactment date of the change. We periodically assess the recoverability of our deferred tax assets, and a valuation allowance is recorded against deferred tax assets if it is more likely than not that some portion of the deferred tax assets will not be realized. See Note 18, “Income Taxes,” for additional information. Foreign Currency Translation The functional currency for each of our foreign subsidiaries is generally that subsidiary’s local currency. We translate the assets and liabilities of foreign subsidiaries at the year-end exchange rate, and translate revenues and expenses at the monthly average rates during the year. We record the resulting translation adjustment as a component of other comprehensive income in stockholders’ equity. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency of an entity are included in the results of operations as incurred. The exchange rate losses for the years ended December 31, 2023, 2022 and 2021 were not material. Cash and Cash Equivalents We consider investments in highly liquid debt instruments with original maturities of three months or less to be cash equivalents. The carrying value of our cash and cash equivalents approximate their fair value. Trade Accounts Receivable We base our allowance for doubtful accounts estimate on our historical loss experience, our current expectations of future losses, current economic conditions, an analysis of the aging of outstanding receivables and customer payment patterns, and specific reserves for customers in adverse financial condition or for existing contractual disputes. The following is a roll-forward of the allowance for doubtful accounts for the periods presented: Twelve months ended December 31, 2023 2022 2021 Beginning Balance $ 11.0 $ 10.7 $ 17.1 Provision for losses on trade accounts receivable 8.8 5.9 (2.6) Write-offs, net of recovered accounts (3.4) (5.6) (3.8) Ending balance $ 16.4 $ 11.0 $ 10.7 Contract acquisition costs We recognize an asset for the incremental costs of obtaining a contract with a customer if we expect the benefit of those costs to be longer than one year. We have determined that certain sales incentive programs meet the requirements to be capitalized. We use a portfolio approach to amortize capitalized contract acquisition costs on a straight-line basis over five years, which reflects the estimated average period of benefit and is consistent with the transfer of our services to our customer to which the contract relates. We classify capitalized contract acquisition costs as current or noncurrent based on the timing of expense recognition. The current and noncurrent portions are included in "Other current assets" and "Other assets", respectively, in our Consolidated Balance Sheets. Amortization expense is included in "Selling, general and administrative" within our accompanying Consolidated Statements of Operations. As of December 31, 2023 and 2022, we had capitalized contract acquisition costs of $39.9 million and $20.2 million, respectively, which have been included in "Other current assets" and "Other assets" in our accompanying Consolidated Balance Sheets. Long-Lived Assets Property, Plant, Equipment and Intangibles Property, plant and equipment is depreciated primarily using the straight-line method, over the estimated useful lives of the assets. Buildings and building improvements are generally depreciated over 20 years. Computer equipment and furniture and purchased software are depreciated over 3 to 7 years. Leasehold improvements are depreciated over the shorter of the estimated useful life of the asset or the lease term. Intangibles, other than indefinite-lived intangibles, are amortized using the straight-line method, which approximates the pattern of usage, over their economic life, generally 3 to 40 years. Assets to be disposed of, if any, are separately presented in the Consolidated Balance Sheet and reported at the lower of the carrying amount or fair value, less costs to sell, and are no longer depreciated. See Note 5, “Property, Plant and Equipment” and Note 7, “Intangible Assets” for additional information about these assets. Internal Use Software We monitor the activities of each of our internal use software and system development projects and analyze the associated costs, making an appropriate distinction between costs to be expensed and costs to be capitalized. Costs incurred during the preliminary project stage are expensed as incurred. Many of the costs incurred during the application development stage are capitalized, including costs of software design and configuration, development of interfaces, coding, testing and installation of the software. Once the software is ready for its intended use, it is amortized on a straight-line basis over its useful life, generally 3 to 10 years. Impairment of Long-Lived Assets We review long-lived asset groups that are subject to amortization for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Recoverability of asset groups to be held and used is measured by a comparison of the carrying amount of an asset group to the estimated undiscounted future cash flows expected to be generated by the asset group. If the carrying amount of an asset group exceeds its estimated future cash flows, an impairment charge is recognized equal to the amount by which the carrying amount of the asset group exceeds the fair value of the asset group. There were no significant impairment charges recorded during 2023, 2022 and 2021. Goodwill Other than goodwill, we have no other indefinite-lived assets. Goodwill is allocated to our reporting units, which are an operating segment or one level below an operating segment. We conduct an impairment test annually in the fourth quarter of each year, or more frequently if events or circumstances indicate that the carrying value of goodwill may be impaired. We have the option to first perform a qualitative analysis to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying value. If the qualitative analysis indicates that an impairment is more likely than not for any reporting unit, we perform a quantitative impairment test for that reporting unit. We have the option to bypass the qualitative analysis for any reporting unit and proceed directly to performing a quantitative impairment test. When we perform a quantitative impairment test, we use a combination of an income approach, using the discounted cash flow method, and a market approach, using the guideline public company method, to determine the fair value of each reporting unit. For each reporting unit, we compare the fair value to its carrying value including goodwill. If the fair value of the reporting unit is less than its carrying value, we record an impairment charge based on that difference, up to the amount of goodwill recorded in that reporting unit. The quantitative impairment test requires the application of a number of significant assumptions, including estimates of future revenue growth rates, EBITDA margins, discount rates, and market multiples. The projected future revenue growth rates and EBITDA margins, and the resulting projected cash flows of each reporting unit are based on historical experience and internal operating plans reviewed by management, extrapolated over the forecast period. Discount rates are determined using a weighted average cost of capital adjusted for risk factors specific to each reporting unit. Market multiples are based on the guideline public company method using comparable publicly traded company multiples of EBITDA for a group of benchmark companies. See Note 6, “Goodwill,” for additional information about our 2023 impairment analysis and impairment of our United Kingdom reporting unit goodwill . Marketable Securities We classify our investments in debt and equity securities in accordance with our intent and ability to hold the investments. Held-to-maturity securities are carried at amortized cost, which approximates fair value, and are classified as either short-term or long-term investments based on the contractual maturity date. Earnings from these securities are reported as a component of interest income. Available-for-sale securities, if any, are carried at fair market value, with the unrealized gains and losses, net of tax, included in accumulated other comprehensive income. At December 31, 2023 and 2022, the Company’s marketable securities consisted of available-for-sale securities. The available-for-sale securities relate to foreign exchange-traded corporate bonds. There were no significant realized or unrealized gains or losses for these securities for any of the periods presented. We follow fair value guidance to measure the fair value of our financial assets as further described in Note 20, “Fair Value”. We periodically review our marketable securities to determine if there is an other-than-temporary impairment on any security. If it is determined that an other-than-temporary decline in value exists, we write down the investment to its market value and record the related impairment loss in other income. There were no other-than-temporary impairments of marketable securities in 2023, 2022 or 2021. Benefit Plans We maintain a 401(k) defined-contribution profit sharing plan for eligible employees. We provide a partial matching contribution and a discretionary contribution based on a fixed percentage of a participant’s eligible compensation. Contributions to this plan for the years ended December 31, 2023, 2022 and 2021 were $34.7 million, $32.9 million and $34.5 million, respectively. Recently Adopted Accounting Pronouncements There are no recent accounting pronouncements that have been adopted by TransUnion in 2023. Recent Accounting Pronouncements Not Yet Adopted On November 27, 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07 , Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures . This ASU updates the requirements for segment reporting to include, among other things, disaggregating and quantifying significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included in the measure of segment profit, describing the nature of amounts not separately disaggregated, allowing for additional measures of a segment's profit or loss used by the CODM when deciding how to allocate resources, and extending nearly all annual segment reporting requirements to quarterly reporting requirements. The update is effective for annual periods for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and requires retrospective application. Early adoption is permitted. We are currently assessing the impact of adopting the updated provisions. On December 14, 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosures . This ASU requires income tax disclosures to include consistent categories and greater disaggregation of information in the rate reconciliations and the disaggregation of income taxes paid by federal, state and foreign, and also for individual jurisdictions that are greater than 5% of total income taxes paid. The update is effective for annual periods for fiscal years beginning after December 15, 2024 on a prospective basis. Early adoption is permitted. We are currently assessing the impact of adopting the updated provisions. |
