TRU US Equity☆

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of TransUnion’s financial condition and results of operations is provided as a supplement to, and should be read in conjunction with Part I, Item 1A, “Risk Factors,” Part II, Item 6, “Selected Financial Data,” and Part II, Item 8, “Financial Statements and Supplementary Information,” including TransUnion’s audited consolidated financial statements and the accompanying notes. In addition to historical data, this discussion contains forward-looking statements about our business, operations and financial performance based on current expectations that involve risks, uncertainties and assumptions. Our actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including but not limited to those discussed in “Cautionary Notice Regarding Forward-Looking Statements” and Part I, Item 1A, “Risk Factors.”

References in this discussion and analysis to the “Company,” “we,” “us,” and “our” refer to TransUnion and its direct and indirect subsidiaries, including TransUnion Intermediate Holdings, Inc.

Overview

TransUnion is a leading global information and insights company that strives to make trust possible between businesses and consumers, working to ensure that each person is reliably and safely represented in the marketplace. At TransUnion, we find innovative ways to leverage data and information to help businesses and consumers transact with confidence and achieve great things. We call this Information for Good.

Grounded in our legacy as a credit reporting agency, we have built a robust and accurate database of information for a large portion of the adult population in the markets we serve. We use our data fusion methodology to link and match an increasing set of other disparate data to further enrich our database. We use this enriched data, combined with our expertise, to continuously develop more powerful and useful solutions for our customers, all in accordance 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.

We provide consumer reports, actionable insights and analytics such as credit and other scores, and solutions capabilities to businesses. Businesses embed our solutions into their process workflows to acquire new customers, assess consumer ability to pay for services, identify cross-selling opportunities, measure and manage debt portfolio risk, collect debt, verify consumer identities and investigate potential fraud. Consumers use our solutions to view their credit profiles and access analytical tools that help them understand and manage their personal information and take precautions against identity theft. We have deep domain expertise across a number of attractive industries, which we also refer to as verticals, including Financial Services, Healthcare, Insurance and other markets we serve. We have a global presence in over 30 countries and territories across North America, Latin America, Europe, Africa, India, and Asia Pacific.

Our solutions are based on a foundation of financial, credit, alternative credit, identity, bankruptcy, lien, judgment, healthcare, insurance claims, automotive and other relevant information obtained from thousands of sources including financial institutions, private databases, public records repositories, and other data sources. We refine, standardize and enhance this data using sophisticated algorithms to create proprietary databases. Our technology infrastructure allows us to efficiently integrate our data with our analytics and solutions capabilities to create and deliver innovative solutions to our customers and to quickly adapt to changing customer needs. Our deep analytics resources, including our people and tools driving predictive modeling and scoring, customer segmentation, benchmarking and forecasting, enable us to provide businesses and consumers with better insights into their data. Our solutions capabilities, which are generally delivered on a software-as-a-service platform, allow businesses to interpret data and apply their specific qualifying criteria to make decisions and take actions. Collectively, our data, analytics and solutions capabilities allow businesses to authenticate the identity of consumers, effectively determine the most relevant products for consumers, retain and cross-sell to existing consumers, identify and acquire new consumers and reduce loss from fraud and data breaches. Similarly, our capabilities allow consumers to see how their credit profiles have changed over time, understand the impact of financial decisions on their credit scores, manage their personal information and take precautions against identity theft.

Segments

We manage our business and report disaggregated revenue and financial results in three reportable segments: U.S. Markets, International and Consumer Interactive.

•The U.S. Markets segment provides consumer reports, actionable insights and analytics such as credit and other scores, and technology solutions capabilities to businesses. These businesses use our services to acquire new customers, assess consumers’ ability to pay for services, identify cross-selling opportunities, measure and manage debt portfolio risk, collect debt, verify consumer identities and investigate potential fraud. The core capabilities and delivery methods in

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our U.S. Markets segment allow us to serve a broad set of customers across industries. We report disaggregated revenue of our U.S. Markets segment for Financial Services and Emerging Verticals.

•The International segment provides services similar to our U.S. Markets segment to businesses in select regions outside the United States. Depending on the maturity of the credit economy in each country, services may include credit reports, analytics and technology solutions services, and other value-added risk management services. We also have insurance, business and automotive databases in select geographies. These services are offered to customers in a number of industries including financial services, retail credit, insurance, automotive, collections, public sector, and communications, and are delivered through both direct and indirect channels. The International segment also provides consumer services similar to those offered by our Consumer Interactive segment that help consumers proactively manage their personal finances.

We report disaggregated revenue of our International segment for the following regions: Canada, Latin America, the United Kingdom, Africa, India, and Asia Pacific.

•The Consumer Interactive segment offers solutions that help consumers manage their personal finances and take precautions against identity theft. Services in this segment include credit reports and scores, credit monitoring, fraud protection and resolution, and financial management for consumers. The segment also provides solutions that help businesses respond to data breach events. Our products are provided through user-friendly online and mobile interfaces and are supported by educational content and customer support. Our Consumer Interactive segment serves consumers through both direct and indirect channels.

In addition, Corporate provides support services for each of the segments, holds investments, and conducts enterprise functions. Certain costs incurred in Corporate that are not directly attributable to one or more of the segments remain in Corporate. These costs are typically enterprise-level costs and are primarily administrative in nature.

Factors Affecting Our Results of Operations

The following are certain key factors that affect, or have recently affected, our results of operations:

Macroeconomic and Industry Trends; Effects of Coronavirus (“COVID-19”) on our Business and Results of Operations:

Our revenues can be significantly influenced by general macroeconomic conditions, including the impact of the global COVID-19 pandemic, the availability of credit and capital, interest rates, inflation, employment levels, consumer confidence and housing demand. The global spread and unprecedented impact of COVID-19 is complex and continues to evolve rapidly.

On March 11, 2020, the World Health Organization declared COVID-19 a global pandemic and recommended extensive containment and mitigation measures worldwide. The outbreak has reached all of the regions in which we do business, and governmental authorities around the world have implemented numerous measures attempting to contain and mitigate the effects of the virus, including travel bans and restrictions, border closings, quarantines, shelter-in-place orders, shutdowns, limitations or closures of non-essential businesses, school closures, social distancing requirements and various economic stimulus initiatives. While certain of these measures have been relaxed or reversed to varying degrees throughout the world, many have subsequently been reinstated and even tightened, adding an additional layer of uncertainty. In the fourth quarter of 2020, several COVID-19 vaccines were approved for use by various governments throughout the world, including in the United States. The vaccines have begun to be distributed and administered in the United States and various other regions where we operate, with varying degrees of success. The ultimate success of these efforts will also be impacted by vaccine manufacturers’ ability to successfully produce and effectively distribute adequate doses of the vaccine in a timely manner, the availability of a sufficient number of healthcare workers to administer the vaccines, as well as the public’s perception of the safety of the vaccines and their willingness to receive them, among others.

The global spread of COVID-19 and actions taken in response to the virus continue to negatively affect workforces, customers, consumer confidence, financial markets, employment rates, consumer spending, credit markets and housing demand, caused significant economic, business and social disruptions, volatility and financial uncertainty, and led to a significant economic downturn, including in the markets where we operate. Businesses and consumers continue to react and adapt to the uncertainty with varying degrees of success in the markets where we operate. Since mid-March 2020, the COVID-19 pandemic, widespread measures implemented to contain its effects, and business and consumer responses to such measures, have had a material and adverse impact on numerous aspects of our business, including customer demand for our services and solutions in all of our segments. While we have seen some signs of increased demand for our services in the markets where we operate since the low point in April 2020, including ongoing improvements through the fourth quarter 2020, the impact of COVID-19, including government measures and business and consumer responses to such measures, may continue to have a material adverse impact on our business for an uncertain period of time. In addition, if the pandemic continues to create significant disruptions in the credit or financial markets, or impacts our credit ratings, it could adversely impact our ability to access capital on favorable terms or at all.

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In the face of these challenges, our primary focus has been and continues to be the health and safety of our associates, our customers, and the wider communities in which we operate. We quickly and effectively moved to a work-from-home model in the early days of the pandemic in every market we serve, and continue to adhere to that model. This has allowed us to protect our associates and the broader population while continuing to operate our businesses and provide services and solutions to customers and consumers. In addition, we have taken several actions to support those who are financially impacted by the COVID-19 pandemic in the jurisdictions where we operate. We remain focused on ensuring impacted consumers are aware of resources and relief available to them, and we are working directly with our partners across the broader consumer credit ecosystem. We are also working with trade associations and industry peers to develop additional proactive solutions to help impacted consumers and to facilitate access to resources and educational materials aimed at consumers.

The decline in demand for our services and solutions due to COVID-19 resulted in a reduction in certain costs that vary with revenue. In addition, we continue to monitor our cost base and have taken and will continue to take actions with the goal of maintaining financial liquidity and flexibility, such as temporarily halting our travel-related expenses, slowing new hiring as we develop our understanding of the shape and the speed of the expected recovery and canceling in-person meetings. We continue to monitor and plan for other cost levers that we can pull and will evaluate whether additional cost control measures are necessary or desirable to enhance our liquidity and financial profile as the effects of the COVID-19 pandemic continue to evolve. However, there is no certainty that such measures, or measures that we have already taken, will be successful in mitigating the numerous operational, health and financial risks posed by COVID-19 and it may be necessary to further modify our business practices in the future, which could further materially and adversely impact our consolidated financial statements in future periods.

The extent to which COVID-19 impacts our business, operations and our consolidated financial statements is inherently uncertain and will depend on numerous evolving factors that we may not be able to accurately predict, including: the duration, scope and severity of the pandemic; the effectiveness and adoption of vaccine programs: the impact on worldwide macroeconomic conditions during and after the pandemic, including interest rates, employment rates, consumer confidence, and foreign exchange rates in each of the markets in which we operate; governmental, business and individuals’ actions that have been taken and continue to evolve in response to the pandemic, which could include limitations on and changes to our operations or mandates to provide services; the effect on our customers; changes in customer and consumer demand for our services; the effect on consumer confidence and spending; our ability to sell and provide our services, including the impact of travel restrictions and people working from home; the ability of our customers to pay for our services on a timely basis or at all; the health of, and the effect on, our workforce; our ability to maintain sufficient liquidity; and the potential effects on our internal controls, including those over financial reporting, as a result of changes in working environments for our employees, business partners and suppliers. Each of these factors could cause or contribute to the risks and uncertainties described in Part I, Item 1.A, “Risk Factors”, and could further materially and adversely impact our business, consolidated financial statements and our stock price.

We have assessed various accounting estimates and other matters, including those that require consideration of forecasted financial information, in context with the unknown future impacts of COVID-19 using information that is reasonably available to us at this time. The accounting estimates and other matters we have assessed include, but were not limited to, our allowance for doubtful accounts, stock-based compensation, goodwill and other long-lived assets, financial assets, valuation allowances for tax assets and revenue recognition. While our current assessment of these estimates did not have a material impact on our consolidated financial statements as of and for twelve months ended December 31, 2020, as additional information becomes available to us, our future assessment of these estimates, including our expectations at the time regarding the duration, scope and severity of the pandemic, as well as other factors, could materially and adversely impact our consolidated financial statements in future reporting periods.

Our revenues are also significantly influenced by industry trends, including the demand for information services in financial services, healthcare, insurance and other industries we serve. Companies are increasingly relying on business analytics and big-data technologies to help process data in a cost-efficient manner. As customers have gained the ability to rapidly aggregate and analyze data generated by their own activities, they are increasingly expecting access to real-time data and analytics from their information service providers as well as solutions that fully integrate into their workflows. In the long term, and once the impact of COVID-19 subsides, we believe demand for consumer solutions will increase, with higher consumer awareness of the importance and usage of their credit information, increased risk of identity theft due to data breaches, and more readily available free credit information. The complexity of existing regulations and the emergence of new regulations across the globe,

including new and future COVID-19 related regulations on consumer and business activities and interactions and stimulus packages, will continue to make operations for businesses more complex.

Effects of Inflation

We do not believe that inflation has had a material effect on our business, results of operations or financial condition.

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Recent Developments

The following developments impact the comparability of our balance sheets, results of operations and cash flows between years:

On March 11, 2020, the World Health Organization declared COVID-19 a global pandemic and recommended extensive containment and mitigation measures worldwide. Since mid-March 2020, the COVID-19 pandemic and widespread measures implemented to contain its effects, and business and consumer responses to such measures have had a material and adverse impact on numerous aspects of our business, including customer demand for our services and solutions in all of our segments. While we have seen signs of increased demand for our services in the markets where we operate since the low point in April 2020, including ongoing improvements through the fourth quarter 2020, the impact of COVID-19, including government measures and business and consumer responses to such measures, may continue to have a material adverse impact on our business for an uncertain period of time.

On March 10, 2020, we entered into two tranches of interest rate swap agreements with various counter-parties that effectively fixes our LIBOR exposure on a portion of our Senior Secured Term Loans or similar replacement debt. The first tranche commenced on June 30, 2020 and expires on June 30, 2022 with a current aggregate notional amount of $1,140.0 million which amortizes each quarter. The first tranche requires TransUnion to pay fixed rates varying between 0.5200% and 0.5295% in exchange for receiving a variable rate which matches the variable rate on our loans. The second tranche commences on June 30, 2022 and expires on June 30, 2025 with a current aggregate notional amount of $1,110.0 million which amortizes each quarter. The second tranche requires TransUnion to pay fixed rates varying between 0.9125% and 0.9280% in exchange for receiving a variable rate which matches the variable rate on our loans. We have designated these swap agreements as cash flow hedges.

On February 27, 2020, the United States Court of Appeals for the Ninth Circuit affirmed in part and reversed and vacated in part the trial court’s judgment in Ramirez v. Trans Union LLC, reducing the trial court’s punitive damages award from approximately $52 million to approximately $32 million. As a result, at that time we recorded $30.5 million of legal expense in selling, general and administrative expenses in 2020. We recorded an additional reserve for this matter in the third quarter of 2020. On December 16, 2020, the United States Supreme Court granted the Petition for Certiorari with respect to whether Article III of the United States Constitution or Rule 23 of the Federal Rules of Civil Procedure permit a damages class action where the vast majority of the class suffered no actual injury, let alone an injury anything like what the class representative suffered. Oral argument is scheduled for March 30, 2021, with a ruling expected to be issued by June 30, 2021. See Item 8, “Notes to Consolidated Financial Statements,” Note 20, “Contingencies” for additional information.

In December 2020, we prepaid $150.0 million of our Senior Secured Term Loans, funded from our cash on hand. During 2019, we prepaid $340.0 million of our Senior Secured Term Loans, also funded from cash on hand. These transactions affect the comparability of interest expense between 2020, 2019 and 2018 as further discussed in “Results of Operations - Non-Operating Income and Expense” below.

On November 15, 2019, we refinanced our B-3 and B-4 loans with a new tranche of Senior Secured Term Loan B (“Senior Secured Term Loan B-5”) which, along with cash of $9.0 million, was used to pay-off the Senior Secured Term Loan B-3 and Senior Secured Term Loan B-4 loans. On December 10, 2019, we refinanced our A-2 loan with a new tranche of Senior Secured Term Loan A (“Senior Secured Term Loan A-3”), which was used to pay-off our existing Senior Secured Term Loan A-2 loans. With this refinance, we also converted the existing Senior Secured Revolving Line of Credit into a new Senior Secured Revolving Line of Credit.

In early July 2019, we determined that TransUnion Limited, a Hong Kong entity that is included in our International segment and in which we hold a 56.25 percent interest, was the victim of criminal fraud (the “Fraud Incident”). The Fraud Incident involved employee impersonation and fraudulent requests targeting TransUnion Limited, which resulted in a series of fraudulently-induced unauthorized wire transfers totaling $17.8 million in early July 2019 that is included in other income and (expense), net, on our Consolidated Statements of Income. In addition to these wire transfers, we have incurred additional administrative expenses investigating the incident and enhancing our controls, which are included in selling, general and administrative expenses. During the period ending December 31, 2019, we incurred a net after tax loss of $17.3 million, of which $7.3 million is attributable to the non-controlling interest and $10.0 million is attributable to TransUnion. During the period ending December 31, 2020, we recovered $1.8 million of these fraudulently-induced unauthorized wire transfers net of additional administrative expenses, of which $1.1 million is attributable to TransUnion and $0.7 million is attributable to the non-controlling interest. There was no impact on Adjusted EBITDA as the net impact of the Fraud Incident was added back to Adjusted EBITDA as presented in the tables below.

On December 17, 2018, we entered into interest rate swap agreements with various counter-parties that effectively fix our LIBOR exposure on a portion of our Senior Secured Term Loans or similar replacement debt, which is currently fixed at 2.702% and 2.706%.

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During the second quarter of 2018, we borrowed $1.925 billion of additional debt against our Senior Secured Credit Facility to fund the purchase of three acquisitions as discussed in “Recent Acquisitions and Partnerships” below and to repay a portion of our Senior Secured Revolving Line of Credit. These transactions affect the comparability of interest expense between 2019 and 2018 as further discussed in “Results of Operations - Non-Operating Income and Expense” below.

Recent Acquisitions

We selectively evaluate acquisitions as a means to expand our business and to enter new markets. Since January 1, 2018, we have completed the following acquisitions, including those that impact the comparability of our results between periods:

•On October 14, 2020, we acquired 100% of the equity of Tru Optik Data Corp (“Tru Optik”). Tru Optik uses its custom audience-building platform to deliver predictive scoring to improve the performance of custom digital marketing campaigns. The results of operations of Tru Optik, which are not material to our consolidated financial statements, have been included as part of our U.S. Markets segment in our consolidated statements of income since the date of the acquisition.

•On August 14, 2020, we acquired 100% of the equity of Signal Digital, Inc. (“Signal”). Signal is a digital marketing company that provides tag management, data collection, and onboarding capabilities to customers for activation in the marketing ecosystem. The results of operations of Signal, which are not material to our consolidated financial statements, have been included as part of our U.S. Markets segment in our consolidated statements of income since the date of the acquisition.

•On May 22, 2019, we acquired 100% of the equity of TruSignal, Inc. (“TruSignal”). TruSignal is an innovative leader in people-based marketing technology for Fortune 500 brands, agencies, platforms, publishers and data owners. TruSignal uses predictive scoring, powered by artificial intelligence, to make data actionable for one-to-one addressable marketing. The results of operations of TruSignal, which are not material to our consolidated financial statements, have been included as part of our U.S. Markets segment in our consolidated statements of income since the date of the acquisition.

•On October 15, 2018, we acquired 100% of the equity of Rubixis, Inc. (“Rubixis”). Rubixis is an innovative healthcare revenue cycle solutions company that helps providers maximize reimbursement from insurance payers. Rubixis brings specialized expertise in the management of denials and underpayments, two significant pain points for healthcare providers. The results of operations of Rubixis, which are not material to our consolidated financial statements, have been included as part of our U.S. Markets segment in our consolidated statements of income since the date of the acquisition.

•On June 29, 2018, we acquired 100% of the equity of iovation, Inc. (“iovation”). iovation is a provider of advanced device identity and consumer authentication services that helps businesses and consumers safely transact in a digital world. The results of operations of iovation, which are not material to our consolidated financial statements, have been included as part of our U.S. Markets segment in our consolidated statements of income since the date of the acquisition.

•On June 19, 2018, we acquired 100% of the equity of Callcredit Information Group, Ltd. (“Callcredit”). Callcredit is an information solutions company based in the United Kingdom, founded in 2000 that provides data, analytics and technology solutions to help businesses and consumers make informed decisions. The results of operations of Callcredit have been included as part of our International segment in our consolidated statements of income since the date of the acquisition.

•On June 1, 2018, we acquired 100% of the equity of Healthcare Payment Specialists, LLC (“HPS”). This part of our Healthcare operating segment provides expertise and technology solutions to help medical care providers maximize Medicare reimbursements. The results of operations of HPS, which are not material to our consolidated financial statements, have been included as part of our U.S. Markets segment in our consolidated statements of income since the date of the acquisition.

Key Components of Our Results of Operations

Revenue

The following is a more detailed description of how we derive and report revenue for our three reportable segments:

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U.S. Markets

U.S. Markets provides consumer reports, actionable insights and analytics such as credit and other scores, and solutions capabilities to businesses. These businesses use our services to acquire new customers, assess consumers’ ability to pay for services, identify cross-selling opportunities, measure and manage debt portfolio risk, collect debt, verify consumer identities and investigate potential fraud. The core capabilities and delivery methods in our U.S. Markets segment allow us to serve a broad set of customers across industries. We report disaggregated revenue of our U.S. Markets segment for the following verticals:

•Financial Services: The Financial Services vertical, which accounts for approximately 55.4% of our 2020 U.S. Markets revenue, consists of our consumer lending, mortgage, auto and cards and payments lines of business. Our financial services clients consist of most banks, credit unions, finance companies, auto lenders, mortgage lenders, online-only lenders (FinTech), and other consumer lenders in the United States. We also distribute our solutions through most major resellers, secondary market players and sales agents. Beyond traditional lenders, we work with a variety of credit arrangers, such as auto dealers and peer-to-peer lenders. We provide solutions across every aspect of the lending lifecycle; customer acquisition and engagement, fraud and ID management, retention and recovery. Our products are focused on mitigating risk and include credit reporting, credit marketing, analytics and consulting, identity verification and authentication and debt recovery solutions.

•Emerging Verticals:Emerging Verticals include Healthcare, Insurance, Tenant and Employment, Collections, Public Sector, Media, Diversified Markets and other verticals. Our solutions in these verticals are also data-driven and address the entire customer lifecycle. We offer onboarding and transaction processing products, scoring and analytic products, marketing solutions, fraud and identity management solutions and customer retention solutions.

International

The International segment provides services similar to our U.S. Markets segment to businesses in select regions outside the United States. Depending on the maturity of the credit economy in each country, services may include credit reports, analytics and solutions services, and other value-added risk management services. In addition, we have insurance, business and automotive databases in select geographies. These services are offered to customers in a number of industries including financial services, insurance, automotive, collections, and communications, and are delivered through both direct and indirect channels. The International segment also provides consumer services similar to those offered by our Consumer Interactive segment that help consumers proactively manage their personal finances.

We report disaggregated revenue of our International segment for the following regions: Canada, Latin America, the United Kingdom, Africa, India, and Asia Pacific.

Consumer Interactive

The Consumer Interactive segment offers solutions that help consumers manage their personal finances and take precautions against identity theft. Services in this segment include credit reports and scores, credit monitoring, fraud protection and resolution, and financial management for consumers. The segment also provides solutions that help businesses respond to data breach events. Our products are provided through user-friendly online and mobile interfaces and are supported by educational content and customer support. Our Consumer Interactive segment serves consumers through both direct and indirect channels.

Cost 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

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.

Non-Operating Income and Expense

Non-operating income and expense includes interest expense, interest income, earnings from equity-method investments, dividends from cost-method investments, impairments of equity-method and cost-method investments, if any, expenses related to successful and unsuccessful business acquisitions, loan fees, debt refinancing expenses, certain acquisition-related gains and losses and other non-operating income and expenses.

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Results of Operations—Twelve Months Ended December 31, 2020, 2019 and 2018

Key Performance Measures

Management, including our chief operating decision maker (“CODM”), evaluates the financial performance of our businesses based on a variety of key indicators. These indicators include the GAAP measures of revenue, segment Adjusted EBITDA, cash provided by operating activities and cash paid for capital expenditures and the non-GAAP measures Adjusted Revenue and consolidated Adjusted EBITDA. For the twelve months ended December 31, 2020, 2019 and 2018, these key indicators were as follows:

Change

Revenue:

Acquisition revenue related adjustments(2) — 5.9 28.1 (5.9) nm (22.2) nm

Acquisition revenue related adjustments(2) — 0.4 2.0 (0.4) nm (1.6) nm

Acquisition revenue related adjustments(2) — 5.6 26.1 (5.6) nm (20.6) nm

nm: not meaningful

As a result of displaying amounts in millions, rounding differences may exist in the table above.

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Change

Discontinued operations — 4.6 1.5 (4.6) nm 3.1 nm

Adjustments to EBITDA:

Acquisition-related revenue adjustments(2) — 5.9 28.1 (5.9) nm (22.2) nm

Technology Transformation(5) 19.3 — — 19.3 nm — nm

Other Metrics:

nm: not meaningful

As a result of displaying amounts in millions, rounding differences may exist in the table above.

1.We define Adjusted Revenue as GAAP revenue adjusted for certain acquisition-related deferred revenue and non-core contract-related revenue. Beginning in the third quarter of 2019, we no longer have these adjustments to revenue. We define Adjusted EBITDA as net income (loss) attributable to TransUnion plus (less) loss (income) from discontinued operations, plus net interest expense, plus (less) provision (benefit) for income taxes, plus depreciation and amortization, plus (less) the revenue adjustments included in Adjusted Revenue, plus stock-based compensation, plus mergers, acquisitions, divestitures and business optimization-related expenses including Callcredit integration-related expenses, plus certain accelerated technology investment expenses to migrate to the cloud, plus (less) certain other expenses (income). We present Adjusted Revenue as a supplemental measure of revenue because we believe it provides a basis to compare revenue between periods. We present Adjusted EBITDA as a supplemental measure of our operating performance because it eliminates the impact of certain items that we do not consider indicative of our cash operations and ongoing operating performance. Adjusted EBITDA is also a measure frequently used by securities analysts, investors and other interested parties in their evaluation of the operating performance of companies similar to ours. Our board of directors and executive management team use Adjusted EBITDA as a compensation measure under our incentive compensation plan. Under the credit agreement governing our Senior Secured Credit Facility, our ability to engage in activities such as incurring additional indebtedness, making investments and paying dividends is tied to a ratio based on Adjusted EBITDA. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources - Debt.” Adjusted EBITDA does not reflect our capital expenditures, interest, income tax, depreciation, amortization, stock-based compensation and certain other income and expense. Other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure. Because of these limitations, Adjusted EBITDA should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. Adjusted EBITDA is not a measure of financial condition or profitability under GAAP and should not be considered as an alternative to cash flows from operating activities, as a measure of liquidity or as an alternative to operating income or net income as indicators of

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operating performance. We believe that the most directly comparable GAAP measure to Adjusted EBITDA is net income attributable to TransUnion. The table above provides a reconciliation from our net income (loss) attributable to TransUnion to consolidated Adjusted EBITDA for the twelve months ended December 31, 2020, 2019 and 2018.

2.This adjustment represents certain non-cash adjustments related to acquired entities, predominantly adjustments to increase revenue resulting from purchase accounting reductions to deferred revenue we record on the opening balance sheets of acquired entities. Deferred revenue results when a company receives payment in advance of fulfilling their performance obligations under contracts. Business combination accounting rules require us to record deferred revenue of acquired entities at fair value if we are obligated to perform any future services under these contracts. The fair value of this deferred revenue is determined based on the direct and indirect incremental costs of fulfilling our performance obligations under these contracts, plus a normal profit margin. Generally, this fair value calculation results in a reduction to the purchased deferred revenue balance. The above adjustment includes an estimate for the increase in revenue equal to the difference between what the acquired entities would have recorded as revenue and the lower revenue we record as a result of the reduced deferred revenue balance. This increase is partially offset by an estimated decrease to revenue for certain acquired non-core customer contracts that are not classified as discontinued operations that will expire within approximately one year from the date of acquisition. Beginning in the third quarter of 2019, we no longer have these adjustments to revenue. We present Adjusted Revenue as a supplemental measure of our revenue because we believe it provides meaningful information regarding our revenue and provides a basis to compare revenue between periods. In addition, our board of directors and executive management team use Adjusted Revenue as a compensation measure under our incentive compensation plans. The table above provides a reconciliation for revenue to Adjusted Revenue.

3.Consisted of stock-based compensation and cash-settled stock-based compensation.

4.For the twelve months ended December 31, 2020, consisted of the following adjustments: $8.3 million of acquisition expenses; $7.5 million of Callcredit integration costs; a $4.8 million loss on the impairment of a Cost Method investment; $1.6 million of adjustments to contingent consideration expense from previous acquisitions; an ($8.1) million remeasurement gain on notes receivable that were converted into equity upon acquisition and consolidation of an entity; a ($2.5) million gain on a Cost Method investment resulting from an observable price change for a similar investment of the same issuer; a ($1.8) million gain on the disposal of assets of a small business in our United Kingdom region; and a ($0.1) million reimbursement for transition services provided to the buyers of certain of our discontinued operations.

For the twelve months ended December 31, 2019, consisted of the following adjustments: a $(31.2) million gain on a Cost Method investment resulting from an observable price change for a similar investment of the same issuer; a $(0.5) million reimbursement for transition services provided to the buyers of certain of our discontinued operations; $15.8 million of Callcredit integration costs; a $10.0 million loss on the impairment of certain Cost Method investments; a $3.7 million loss on assets of a small business in our United Kingdom region that are classified as held-for-sale; $2.6 million of acquisition expenses; and a $1.2 million adjustment to contingent consideration expense from previous acquisitions.

For the twelve months ended December 31, 2018, consisted of the following adjustments: $29.3 million of acquisition expenses; $6.8 million of Callcredit integration costs; a $2.3 million loss on the divestiture of a small business operation; a $0.4 million adjustment to contingent consideration expense from previous acquisitions; and $(0.1) million of miscellaneous.

5.Represents expenses associated with our accelerated technology investment to migrate to the cloud.

6.For the twelve months ended December 31, 2020, consisted of the following adjustments: $34.7 million for certain legal expenses; $1.6 million of loan fees; $0.9 million of deferred loan fees written off as a result of the prepayments on our debt; $0.2 million loss from currency remeasurement of our foreign operations; $0.2 million of fees related to our new swap agreements; a $(1.5) million recovery from the Fraud Incident, net of additional administrative expense; $(0.4) million reimbursement of fees associated with the refinancing of our Senior Secured Credit Facility; and $(0.2) million of other.

For the twelve months ended December 31, 2019, consisted of the following adjustments: $20.8 million of expenses (including $3.0 million of administrative expenses) associated with the Fraud Incident offset by the $(7.3) million portion that is attributable to the non-controlling interest; $13.0 million of fees related to the refinancing of Senior Secured Credit Facility; $2.0 million of deferred loan fees written off as a result of the prepayments on our debt; $2.0 million of loan fees; and a $0.1 million loss from currency remeasurement; a $(0.7) million reduction to expense for certain legal and regulatory matters; and $(0.1) million of miscellaneous.

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For the twelve months ended December 31, 2018, consisted of the following adjustments: $12.0 million of fees related to new financing under our Senior Secured Credit Facility; a $3.8 million loss from currency remeasurement; $1.6 million of loan fees; $0.5 million of fees incurred in connection with a secondary offering of shares of TransUnion common stock by certain of our stockholders; and a $(0.7) million mark-to-market gain related to ineffectiveness of our interest rate hedge.

Revenue

Since mid-March 2020, the COVID-19 pandemic and widespread measures implemented to contain its effects and business and consumer responses to such measures have had a material and adverse impact on numerous aspects of our business, including customer demand for our services and solutions in all of our segments. While we continue to see improvements in demand for our services in the markets where we operate since the low point in April 2020, including ongoing improvements through the fourth quarter 2020, the impact of COVID-19, including government measures and business and consumer responses to such measures, may continue to have a material adverse impact on our business for an uncertain period of time.

For 2020, revenue increased $60.5 million compared with 2019, due primarily to organic growth in the Financial Services vertical in the U.S. Markets segment, the Consumer Interactive segment, and the Canada region in the International segment, revenue from recent acquisitions in U.S. Markets Emerging Verticals, and revenue from new product initiatives, partially offset by a decrease in revenue in the U.S. Markets Emerging Verticals and the other regions of the International segment, and a 0.8% decrease from the impact of weakening foreign currencies.

For 2019, revenue increased $338.9 million compared with 2018, due to organic growth in all of our segments, including both the U.S. Markets Financial Services and Emerging Verticals and all of the International regions, revenue from our recent acquisitions in our U.S. Markets and International segments, and revenue from new product initiatives, partially offset by the impact of weakening foreign currencies in our International segment. Recent acquisitions accounted for an increase in revenue of 5.1%. The impact of weakening foreign currencies accounted for a decrease in revenue of 1.0%.

Revenue by segment and a more detailed explanation of revenue within each segment are as follows:

Change

U.S. Markets:

International:

Intersegment revenue eliminations:

International (5.2) (5.1) (5.1) (0.1) nm — nm

Consumer Interactive (1.7) (1.0) (0.7) (0.8) nm (0.3) nm

Total intersegment revenue eliminations (75.9) (74.8) (75.7) (1.1) nm 0.9 nm

nm: not meaningful

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As a result of displaying amounts in millions, rounding differences may exist in the table above.

U.S. Markets Segment

For 2020, U.S. Markets revenue increased $87.0 million compared with 2019, due to an increase in revenue in the Financial Services vertical, partially offset by a decrease in revenue in Emerging Verticals.

Since mid-March 2020, the COVID-19 pandemic, widespread measures implemented to contain its effects and business and consumer responses to such measures have had a material and adverse impact on numerous aspects of our business, including customer demand for our services and solutions in our U.S Markets segment. While we continue to see improvements in demand for our services in the markets where we operate since the low point in April 2020, including ongoing improvements through the fourth quarter 2020, the impact of COVID-19, including government measures and business and consumer responses to such measures, may continue to have a material adverse impact on our U.S Markets segment for an uncertain period of time.

For 2019, U.S. Markets revenue increased $164.9 million compared with 2018, due to increases in revenue from both verticals, including an increase of 3.1% from recent acquisitions.

Financial Services: For 2020, Financial Services revenue increased $90.6 million due primarily to improvements in market conditions in our mortgage line of business, as historically low interest rates drove refinance activity and the home purchase market experienced modest growth. The growth in the mortgage line of business, which may not persist, was partially offset by decreases in our other lines of business, which have shown signs of improvement since the lows in April 2020.

For 2019, Financial Services revenue increased $83.9 million due primarily to improvements in market conditions in all of our lines of business, an increase from new product initiatives, and an increase in our credit marketing services revenue.

Emerging Verticals: For 2020, Emerging Verticals revenue decreased $3.6 million due primarily to a decrease in the Healthcare, Collections, and Diversified Markets verticals, partially offset by an increase in the Media, Public Sector, Insurance and Tenant & Employment verticals. Recent acquisitions accounted for an increase in revenue of 1.3%.

For 2019, Emerging Verticals revenue increased $81.0 million due primarily to an increase from new product initiatives and other organic growth in our emerging verticals, particularly our Insurance, Healthcare and Diversified Markets verticals, and an increase of 5.2% from recent acquisitions.

International Segment

For 2020, International revenue decreased $40.8 million, or 6.5%, compared with 2019. The decrease was due primarily to the impact of COVID-19, and a decrease of 3.5% from the impact of weakening foreign currencies.

Since mid-March 2020, the COVID-19 pandemic, widespread measures implemented to contain its effects, and business and consumer responses to such measures have had a material and adverse impact on numerous aspects of our business, including customer demand for our services and solutions in all regions of our International segment. In certain countries in our less developed regions, many of our customers are unable to operate as effectively or at all in a remote work-from-home environment, consumers are less able to transact online, and government stimulus efforts have generally been less than in the United States, all of which adversely impacted revenue in these regions. Our Canada region results were more in line with our United States businesses, while the other International regions lagged behind. While we continue to see improvements in demand for our services in the markets where we operate since the low point in April 2020, including ongoing improvements through the fourth quarter 2020, the impact of COVID-19, including government measures and business and consumer responses to such measures, may continue to have a material adverse impact on our International segment for an uncertain period of time.

For 2019, International revenue increased $151.1 million, or 32.0%, compared with 2018. The increase was due primarily to a 15.5% increase from our acquisition of Callcredit and higher local currency revenue in all regions from increased volumes, partially offset by a decrease of 4.8% from the impact of weakening foreign currencies.

Canada: For 2020, Canada revenue increased $3.9 million, or 3.7%, compared with 2019. The increase was due primarily to higher local currency revenue from increased volumes including new product initiatives, partially offset by a decrease from the impact of COVID-19 primarily in the second and third quarters, and a decrease of less than 1.0% from the impact of weakening foreign currencies.

For 2019, Canada revenue increased $8.1 million, or 8.4%, due primarily to higher local currency revenue from increased volumes including new product initiatives, partially offset by a decrease of 2.5% from the impact of weakening foreign currencies.

Latin America: For 2020, Latin America revenue decreased $17.7 million, or 17.0%, compared with 2019. The decrease was due primarily to a decrease in local currency revenue as a result of COVID-19 primarily in the second, third and fourth quarters,

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and a decrease of 11.5% from the impact of weakening foreign currencies, partially offset by higher local currency revenue from increased volumes including new product initiatives in the first quarter.

For 2019, Latin America revenue increased $2.0 million, or 1.9%, due primarily to higher local currency revenue from increased volumes including new product initiatives, partially offset by a decrease of 7.5% from the impact of weakening foreign currencies.

United Kingdom: For 2020, United Kingdom revenue decreased $3.6 million, or 1.9%, compared with 2019. The decrease was due primarily to a decrease in local currency revenue as a result of COVID-19 primarily in the second, third and fourth quarters, partially offset by higher local currency revenue from increased volumes including new product initiatives in the first quarter and an increase of 0.7% from the impact of strengthening foreign currencies.

For 2019, United Kingdom revenue from continuing operations was $186.7 million, compared with $71.3 million in 2018. All of our revenue in the United Kingdom is attributable to Callcredit. We acquired Callcredit on June 19, 2018, which obscures the comparability of our results between periods.

Africa: For 2020, Africa revenue decreased $12.2 million, or 20.0%, due primarily to a decrease in local currency revenue as a result of COVID-19 primarily in the second, third and fourth quarters, and a decrease of 10.1% from the impact of weakening foreign currencies, partially offset by higher local currency revenue from increased volumes including new product initiatives in the first quarter.

For 2019, Africa revenue decreased $3.0 million, or 4.7%, compared with 2018, due primarily to a decrease of 8.9% from the impact of weakening foreign currencies, partially offset by an increase in local currency revenue from increased volumes including new product initiatives.

India: For 2020, India revenue decreased $8.1 million, or 7.5%, due primarily to a decrease in local currency revenue as a result of COVID-19 primarily in the second and third quarters, and a decrease of 4.5% from the impact of weakening foreign currencies, partially offset by an increase in local currency revenue from increased volumes including new product initiatives in the first and fourth quarters.

For 2019, India revenue increased $26.3 million, or 32.1%, due primarily to higher local currency revenue from increased volumes including new product initiatives, partially offset by a decrease of 4.3% from the impact of weakening foreign currencies.

Asia Pacific: For 2020, Asia Pacific revenue decreased $3.0 million, or 5.0%, due primarily to a decrease in local currency revenue as a result of COVID-19 primarily in the second, third and fourth quarters, partially offset by an increase of 1.5% from the impact of strengthening foreign currencies and an increase in local currency revenue from increased volumes including new product initiatives in the first quarter.

For 2019, Asia Pacific revenue increased $2.4 million, or 4.3%, to higher local currency revenue from increased volumes including new product initiatives, partially offset by lower direct-to-consumer revenue in Hong Kong. The impact of foreign currencies did not have a significant impact in 2019.

Consumer Interactive Segment

For 2020, Consumer Interactive revenue increased $15.3 million compared with 2019, due primarily to an increase in revenue from our direct channel. The impact of COVID-19, including government measures and business and consumer responses to such measures, may have a material and adverse impact on our Consumer Interactive segment for an uncertain period of time, particularly in our indirect channel.

For 2019, Consumer Interactive revenue increased $21.9 million, compared with 2018, due primarily to an increase in revenue from both our direct and indirect channels, partially offset by a decrease in incremental credit monitoring revenue due to a breach at a competitor.

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Operating Expenses

Operating expenses for the periods reported were as follows:

Change

As a result of displaying amounts in millions, rounding differences may exist in the table above.

Cost of Services

For 2020, cost of services increased $46.4 million compared with 2019. The increase was due primarily to:

•an increase in labor costs in our U.S. Markets segment, primarily due to key strategic growth initiatives;

•an increase in product costs in our U.S. Markets and Consumer Interactive segments; and

•an increase in costs from our accelerated technology investment,

partially offset by:

•a decrease in travel and entertainment expenses due to travel restrictions and shelter in place orders related to COVID-19; and

•the impact of weakening foreign currencies on the expenses of our International segment.

For 2019, cost of services increased $83.9 million compared with 2018. The increase was due primarily to:

•operating and integration-related costs relating to the business acquisitions in our U.S. Markets and International segments; and

• an increase in product costs resulting from the increase in revenue, primarily in our U.S. Markets segment;

partially offset by:

• the impact of weakening foreign currencies on the expenses of our International segment

Selling, General and Administrative

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For 2020, selling, general and administrative expenses increased $48.2 million compared with 2019. The increase was due primarily to:

•an increase of $58.1 million for legal and regulatory matters primarily related to the Ramirez litigation;

•an increase in bad debt expense due to an increase in our estimated reserves including our current expected impact of COVID-19 primarily in our U.S. Markets and International segments;

•an increase in advertising costs, primarily in our Consumer Interactive segment; and

•an increase in costs from our accelerated technology investment;

partially offset by:

•a decrease in travel and entertainment expenses due to travel restrictions and shelter in place orders related to COVID-19;

•a decrease in stock-based compensation from lower expected achievement on certain performance-based awards due to COVID-19; and

•the impact of overall weakening foreign currencies on the expenses of our International segment.

For 2019, selling, general and administrative expenses increased $104.5 million compared with 2018. The increase was due primarily to:

•operating and integration-related costs relating to the business acquisitions in our U.S. Markets and International segments;

• an increase in labor and professional services costs as we continue to invest in key strategic growth initiatives; and

• an increase in advertising costs, primarily in our Consumer Interactive segment;

partially offset by:

• a decrease in litigation costs in our U.S. Markets segment; and

• the impact of weakening foreign currencies on the expenses of our International segment.

Depreciation and amortization

For 2020, depreciation and amortization increased $5.8 million compared with 2019, due primarily to recent acquisitions of tangible and intangible assets, partially offset by a decrease in amortization related to certain intangible assets from our 2012 change in control transaction that have become fully amortized.

For 2019, depreciation and amortization increased $55.2 million compared with 2018, primarily in our International and U.S. Markets segments, primarily due to fixed assets and intangible assets acquired with our 2018 and 2019 business acquisitions.

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Adjusted EBITDA and Adjusted EBITDA margin

(dollars in millions) 2020 2019 2018 $ Change % Change $ Change % Change

Adjusted Revenue(1):

Less: intersegment revenue eliminations (75.9) (74.8) (75.7) (1.1) nm 0.9 nm

Adjusted EBITDA(1):

Adjusted EBITDA margin:

Consolidated Adjusted EBITDA margin 38.5 % 39.8 % 39.1 % (1.3) % 0.7 %

nm: not meaningful

As a result of displaying amounts in millions, rounding differences may exist in the table above.

1.See the reconciliation of net income attributable to TransUnion to Consolidated Adjusted EBITDA and the reconciliation of segment revenue to segment Adjusted Revenue in the “Key Performance Measures” section at the beginning of our discussion about our Results of Operations. See the “Revenue” table above for details of the intersegment revenue eliminations by segment. Segment Adjusted EBITDA margins are calculated using segment gross Adjusted Revenue and segment Adjusted EBITDA. Consolidated Adjusted EBITDA margin is calculated using consolidated Adjusted Revenue and consolidated Adjusted EBITDA.

For 2020, consolidated Adjusted EBITDA decreased $14.1 million due primarily to:

•an increase in expense for legal and regulatory matters as discussed above;

•a decrease in revenue in our International segment;

•an increase in labor costs in our U.S. Markets segment, as we invested in key strategic growth initiatives;

•an increase in product costs in our U.S. Markets and Consumer Interactive segments; and

•an increase in advertising costs in our Consumer Interactive segment,

partially offset by:

•an increase in revenue in our U.S. Markets and Consumer Interactive segments;

•a decrease in travel and entertainment expenses due to travel restrictions and shelter in place orders related to COVID-19; and

•the impact of weakening foreign currencies on the expenses of our International segment.

For 2020, Adjusted EBITDA margins for the U.S. Markets segment decreased due primarily to the impact of COVID-19 on revenue in the Emerging Verticals, an increase in expense for legal and regulatory matters and an increase in labor costs primarily due to key strategic growth initiatives, partially offset by improving market conditions in the mortgage line of business in the Financial Services Vertical and a decrease in travel and entertainment expenses.

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Adjusted EBITDA margins for the International segment decreased due primarily to the impact of COVID-19 on revenue, partially offset by a decrease in travel and entertainment expenses and the impact of weakening foreign currencies on the expenses of our International segment.

Adjusted EBITDA margins for the Consumer Interactive segment decreased due primarily to an increase in advertising costs and variable product costs, partially offset by an increase in revenue.

For 2019, consolidated Adjusted EBITDA increased $142.0 million due primarily to:

•an increase in revenue in all of our segments, including revenue from recent acquisitions; and

•a decrease in litigation costs in our U.S. Markets segment;

partially offset by:

•an increase in operating and integration-related costs relating to the business acquisitions in our U.S. Markets and International segments;

•an increase in product costs resulting from the increase in revenue, primarily in our U.S. Markets segments;

•an increase in labor costs, primarily in our U.S. Markets and International segments and an increase in labor costs and professional services in Corporate, as we continue to invest in key strategic growth initiatives; and

•an increase in advertising costs, primarily in our Consumer Interactive segment.

For 2019, Adjusted EBITDA margins for the U.S. Markets segment increased due primarily to the increase in revenue and decrease in litigation costs, partially offset by the increase in operating and integration-related costs of recent business acquisitions, an increase in product costs resulting from the increase in revenue, and an increase in labor costs.

Adjusted EBITDA margins for the International segment increased due primarily to the strong increase in revenue in India and higher margins in our United Kingdom region in 2019 compared with 2018, partially offset by the increase in operating and integration-related costs of recent business acquisitions, an increase in labor costs, and an increase in product costs resulting from the increase in revenue.

Adjusted EBITDA margins for the Consumer Interactive segment stayed relatively consistent year over year, due primarily to the increase in revenue partially offset by the increase in advertising costs and increase in product costs resulting from the increase in revenue.

Non-Operating Income and Expense

Change

Other income and (expense), net:

Other income (expense), net 8.5 3.9 (5.2) 4.6 nm 9.0 nm

Total other income and expense, net (0.4) (14.4) (46.9) 14.0 nm 32.5 nm

nm: not meaningful

As a result of displaying amounts in millions, rounding differences may exist in the table above.

For the twelve months ended December 31, 2020, interest expense decreased $47.4 million compared with 2019, due primarily to the impact of the decrease in the average interest rate and a decrease in our average outstanding principal balance. We refinanced our Senior Secured Credit Facility in late 2019 resulting in a lower interest rate. During 2020, we prepaid $150.0 million of our Senior Secured Term Loans and in the second half of 2019, we prepaid $340.0 million of our Senior Secured Term Loans, which impacts the comparability of interest expense between periods. Our future interest expense could be

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materially impacted by changes in our variable interest rates caused by COVID-19 or other macro-economic factors, to the extent our variable rate debt is not hedged with fixed rate debt. See Part II, Item 8, “Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements,” Note 10, “Debt,” for additional information about our debt.

For the twelve months ended December 31, 2019, interest expense increased $36.2 million compared with 2018 due primarily to the impact of the increase in our average outstanding principal balance as a result of funding our business acquisitions in June 2018.

Acquisition fees represent costs we have incurred for various acquisition-related efforts. For 2020, acquisition fees included costs related to our acquisitions of Tru Optik and Signal Digital and costs of our other acquisition efforts. For 2019, acquisition fees included costs related to our acquisition of TruSignal and costs of our other acquisition efforts. For 2018, acquisition fees included costs related to our acquisition of Callcredit, iovation, HPS, and Rubixis, and costs of our other acquisition efforts.

For 2019, loan fees included $13.0 million of refinancing fees and other net costs expensed as a result of refinancing our Senior Secured Term Loan late in 2019, $2.0 million of deferred loan fees written off as a result of prepaying our debt and $2.0 million of other fees. For 2018, loan fees included $12.0 million of fees related to the additional debt we incurred to fund our recent business acquisitions and $1.6 million of other fees. See Part II, Item 8, “Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements,” Note 10, “Debt,” for additional information on these loan fees and our refinancing activities.

For 2020, other income (expense), net included an $8.1 million remeasurement gain on notes receivable that were converted into equity upon acquisition and consolidation of an entity; a $2.9 million recovery from the Fraud Incident net of additional administrative expenses; a $2.5 million gain on a Cost Method investment resulting from an observable price change for a similar investment of the same issuer; a ($4.8) million loss on the impairment of a Cost Method investment, currency remeasurement, hedge gains and losses, and other miscellaneous non-operating income and expense items.

For 2019, other income (expense), net included a $(31.2) million gain on a Cost Method Investment resulting from an observable price change for a similar investment of the same issuer, $17.8 million of expenses associated with the Fraud Incident, a $10.0 million loss on the impairment of certain Cost Method investments, a $3.7 million loss on assets of a small business in our United Kingdom region that are classified as held-for-sale, currency remeasurement, hedge gains and losses, and other miscellaneous non-operating income and expense items.

Provision for Income Taxes

For 2020, we reported a 22.0% effective tax rate, which is higher than the 21.0% U.S. federal corporate statutory rate due primarily to an increase in state taxes, valuation allowances on foreign tax credit carryforwards and uncertain tax positions including related interest and penalties, partially offset by excess tax benefits on stock based compensation and foreign taxes in jurisdictions, which have tax rates lower than the U.S. federal corporate statutory rate.

For 2019, we reported a 19.0% effective tax rate, which is lower than the 21.0% U.S. federal corporate statutory rate due primarily to excess tax benefits on stock based compensation, partially offset by U.S federal tax on foreign earnings and foreign taxes in jurisdictions, which have tax rates that are higher than the U.S. federal corporate statutory rate.

For 2018, we reported a 15.9% effective tax rate, which is lower than the 21.0% U.S. federal statutory rate due primarily to the one-time impacts resulting from enactment of the Act in December 2017 and the excess tax benefits on stock-based compensation that were recorded to tax expense upon our adoption of ASU 2016-09 on January 1, 2017.

Significant Changes in Assets and Liabilities

Total debt at December 31, 2020 compared with December 31, 2019, decreased because in addition to our required repayments, we made additional early prepayments of $150.0 million during the year ending December 31, 2020. Total debt at December 31, 2019 compared with December 31, 2018, decreased because in addition to our required repayments, we made additional early prepayments of $340.0 million during the year ending December 31, 2019. See “Recent Developments” above and Part II, Item 8 “Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements,” Note 10, “Debt,” for additional information.

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Liquidity and Capital Resources

Overview

Our principal sources of liquidity are cash flows provided by operating activities, cash and cash equivalents on hand, and our senior secured revolving line of credit. Our principal uses of liquidity are working capital, capital expenditures, debt service and other capital structure obligations, business acquisitions, and other general corporate purposes. We believe our cash on hand, cash generated from operations, and funds available under the senior secured revolving line of credit will be sufficient to fund our planned capital expenditures, debt service and other capital structure obligations, business acquisitions and operating needs for the foreseeable future. Since mid-March 2020, the COVID-19 pandemic, widespread measures implemented to contain its effects and business and consumer responses to such measures have had a material and adverse impact on numerous aspects of our business, including customer demand for our services and solutions in all of our segments, and our consolidated financial statements. At this time, however, we do not expect the impact of COVID-19 to affect our ability to fund our operating needs for the foreseeable future. Our ability to maintain adequate liquidity for our operations in the future is dependent upon a number of factors, including our revenue, macroeconomic conditions, the length and severity of business disruptions caused by COVID-19, our ability to contain costs, including capital expenditures, and to collect accounts receivable, and various other factors, many of which are beyond our control. We will continue to monitor our liquidity position and may elect to raise funds through debt or equity financing in the future to fund operations, significant investments or acquisitions that are consistent with our growth strategy. In addition, if the pandemic continues to create significant disruptions in the credit or financial markets, or impacts our credit ratings, it could adversely affect our ability to access capital on favorable terms or at all. We may, however, elect to raise funds through debt or equity financing in the future to fund significant investments or acquisitions that are consistent with our growth strategy.

Cash and cash equivalents totaled $493.0 million and $274.1 million at December 31, 2020 and 2019, respectively, of which $232.0 million and $176.5 million was held outside the United States. As of December 31, 2020, we had no outstanding balance under the Senior Secured Revolving Credit Facility and $0.1 million of outstanding letters of credit, and could have borrowed up to the remaining $299.9 million available.

We also have the ability to request incremental loans on the same terms under the existing senior secured credit facility up to the greater of an additional $1,000.0 million and 100% of Consolidated EBITDA. Consolidated EBITDA is reduced to the extent that the senior secured net leverage ratio is above 4.25-to-1. In addition, so long as the senior secured net leverage ratio does not exceed 4.25-to-1, we may incur additional incremental loans, subject to certain additional conditions and commitments by existing or new lenders to fund any additional borrowings.

With certain exceptions, the Senior Secured Credit Facility obligations are secured by a first-priority security interest in substantially all of the assets of Trans Union LLC, including its investment in subsidiaries. The Senior Secured Credit Facility contains various restrictions and nonfinancial covenants, along with a senior secured net leverage ratio test. The nonfinancial covenants include restrictions on dividends, investments, dispositions, future borrowings and other specified payments, as well as additional reporting and disclosure requirements. The senior secured net leverage test must be met as a condition to incur additional indebtedness, make certain investments, and may be required to make certain restricted payments. The senior secured net leverage ratio must not exceed 5.5-to-1 at any such measurement date.

The balance retained in cash and cash equivalents is consistent with our short-term cash needs and investment objectives.The Company may be required to make additional principal payments on the Senior Secured Term Loan B based on excess cash flows of the prior year, as defined in the agreement.There were no excess cash flows for 2020 and therefore no additional payment will be required in 2021. Additional payments based on excess cash flows could be due in future years. See Part II, Item 8, “Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements,” Note 10, “Debt,” for additional information about our debt.

During 2020, we prepaid $150.0 million towards our Senior Secured Term Loans, funded from our cash on hand.

During 2020, the board of directors declared four quarterly dividends of $0.075 per share each quarter, of which we paid $57.6 million.

Any determination to pay dividends in the future will be at the discretion of our board of directors and will depend upon results of operations, financial condition, contractual restrictions, restrictions imposed by applicable law and other factors our board of directors deems relevant. We currently have capacity and intend to continue to pay a quarterly dividend, subject to approval by our board. While we are comfortable paying the dividend at this time, if circumstances further deteriorate, we would consider recommending that our board temporarily reduce or suspend our dividend.

During the first quarter of 2020, 0.9 million outstanding employee restricted stock units vested and became taxable to the employees. The employees used 0.3 million shares of the vested stock to satisfy their payroll tax withholding obligations in a net share settlement arrangement whereby the employees received 0.6 million of the shares and gave TransUnion the remaining 0.3 million shares that we have recorded as treasury stock. We remitted cash equivalent to the $32.1 million vest date value of

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the treasury stock to the respective governmental agencies in settlement of the employee withholding tax obligations. On occasion, as other stock units vest or stock options are exercised throughout the year, employees use shares of stock to satisfy their payroll tax withholding obligations in a net settlement arrangement and we remit the equivalent value of those shares to the respective governmental agencies.

On February 13, 2017, our board of directors authorized the repurchase of up to $300.0 million of our common stock over the next three years. Our board of directors removed the three-year time limitation on February 8, 2018. During 2017, we repurchased $133.5 million of our stock and can repurchase up to the additional $166.5 million authorized.

We have no obligation to repurchase additional shares, and the timing, actual number and value of the shares that are repurchased, if any, will be at the discretion of management and will depend on a number of factors, including market conditions, the cost of repurchasing shares, the availability of alternative investment opportunities, liquidity, and other factors deemed appropriate. Repurchases may be suspended, terminated or modified at any time for any reason. Any repurchased shares will have the status of treasury shares and may be used, if and when needed, for general corporate purposes. While the existing share repurchase program remains authorized by the board of directors, given the uncertainties arising from the COVID-19 pandemic, we do not intend to repurchase additional shares in the short term. We may resume share repurchases in the future at any time, depending upon market conditions, our capital needs and other factors.

Sources and Uses of Cash

Twelve months ended December 31, Change

Operating Activities

For 2020, the increase in cash provided by continuing operations was due primarily to a decrease in interest expense and a decrease in working capital, partially offset by a decrease in operating performance as a result of COVID-19. For 2019, the increase in cash provided by operating activities was due primarily to the increase in operating income excluding depreciation and amortization and non-cash items, partially offset by an increase in interest expense resulting from the increase in outstanding debt.

Investing Activities

For 2020, the increase in cash used in investing activities was due primarily to proceeds from the disposal of discontinued operations in 2019 that did not recur in 2020, an increase in cash used for acquisitions and an increase in capital expenditures, partially offset by an increase in proceeds from the sale of investments in 2020. For 2019, the decrease in cash used in investing activities was due primarily to significantly lower cash used for acquisitions and proceeds from the sale of the Callcredit discontinued operations, partially offset by an increase in capital expenditures.

Financing Activities

For 2020, the decrease in cash used in financing activities was due primarily to a decrease in debt prepayments, $150 million in 2020 compared with $340 million in 2019. For 2019, the increase in cash used for financing activities was due primarily to the loan proceeds borrowed in 2018 to fund our acquisitions, partially offset by $340.0 million of prepayments made on our outstanding debt in 2019 compared with $60.0 million in 2018, $39.2 million of cash used to pay employee withholding taxes on restricted stock that vested during the year that we have recorded as treasury stock, and one additional quarterly dividend payment made in 2019 compared with 2018.

Capital Expenditures

We make capital expenditures to grow our business by developing new and enhanced capabilities, to increase the effectiveness and efficiency of the organization and to reduce risks. We make capital expenditures for product development, disaster recovery, security enhancements, regulatory compliance, and the replacement and upgrade of existing equipment at the end of its useful life.

For 2020, cash paid for capital expenditures increased $15.6 million to $214.1 million. For 2019, cash paid for capital expenditures increased $18.4 million to $198.5 million.

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Debt

Hedge

On March 10, 2020, we entered into two tranches of interest rate swap agreements with various counter-parties that effectively fix our LIBOR exposure on a portion of our Senior Secured Term Loans or similar replacement debt. The first tranche commenced on June 30, 2020, and expires on June 30, 2022, with a current aggregate notional amount of $1,140.0 million that amortizes each quarter. The first tranche requires TransUnion to pay fixed rates varying between 0.5200% and 0.5295% in exchange for receiving a variable rate that matches the variable rate on our loans. The second tranche commences on June 30, 2022, and expires on June 30, 2025, with a current aggregate notional amount of $1,110.0 million that amortizes each quarter after it commences. The second tranche requires TransUnion to pay fixed rates varying between 0.9125% and 0.9280% in exchange for receiving a variable rate that matches the variable rate on our loans. We have designated these swap agreements as cash flow hedges.

On December 17, 2018, we entered into interest rate swap agreements with various counter-parties that effectively fix our LIBOR exposure on a portion of our Senior Secured Term Loans or similar replacement debt, which is currently fixed at 2.702% and 2.706%. We have designated these swap agreements as cash flow hedges. The current aggregate notional amount under these agreements is $1,410.0 million, decreasing each quarter until the second agreement terminates on December 30, 2022.

Effect of certain debt covenants

A breach of any of the covenants under the agreements governing our debt could limit our ability to borrow funds under the senior secured revolving line of credit and could result in a default under the senior secured credit facility. Upon the occurrence of an event of default under the senior secured credit facility, the lenders could elect to declare all amounts then outstanding to be immediately due and payable, and the lenders could terminate all commitments to extend further credit. If we were unable to repay the amounts declared due, the lenders could proceed against any collateral granted to them to secure that indebtedness.

With certain exceptions, the senior secured credit facility obligations are secured by a first-priority security interest in substantially all of the assets of Trans Union LLC, including its investment in subsidiaries. The Senior Secured Credit Facility contains various restrictions and nonfinancial covenants, along with a senior secured net leverage ratio test. The nonfinancial covenants include restrictions on dividends, investments, dispositions, future borrowings and other specified payments, as well as additional reporting and disclosure requirements. The senior secured net leverage test must be met as a condition to incur additional indebtedness, make certain investments, and may be required to make certain restricted payments. The senior secured net leverage ratio must not exceed 5.5-to-1 at any such test date. Under the terms of the Senior Secured Credit Facility, TransUnion may make dividend payments up to the greater of $75 million or 7.5% of Consolidated EBITDA per year, or an unlimited amount provided that no default or event of default exists and so long as the total net leverage ratio does not exceed 4.75-to-1. As of December 31, 2020, we were in compliance with all debt covenants.

Our ability to meet our liquidity needs or to pay dividends on our common stock depends on our subsidiaries’ earnings, the terms of their indebtedness, and other contractual restrictions. Trans Union LLC, the borrower under the senior secured credit facility, is not permitted to declare any dividend or make any other distribution subject to certain exceptions, including compliance with a fixed charge coverage ratio and a basket that depends on TransUnion Intermediate Holding, Inc.’s consolidated net income.

For additional information about our debt and hedge, see Part II, Item 8, “Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements,” Note 10, “Debt.”

Contractual Obligations

Consolidated future minimum payments for noncancelable operating leases, purchase obligations and debt repayments as of December 31, 2020, are payable as follows:

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Purchase obligations and other includes $193.2 million of trade accounts payable that were included in our balance sheet as of December 31, 2020. Purchase obligations and other includes commitments for outsourcing services, royalties, data licenses, maintenance and other operating expenses. Loan fees and interest payments are estimates based on the interest rates in effect at December 31, 2020, and the contractual principal paydown schedule, excluding any excess cash flow prepayments that may be required. See Part II, Item 8, “Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements,” Note 10, “Debt,” and Note 19, “Commitments,” for additional information about our interest payments and purchase obligations.

Off-Balance Sheet Arrangements

As of December 31, 2020, we had no off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K.

Application of Critical Accounting Estimates

We prepare our consolidated financial statements in conformity with generally accepted accounting principles (“GAAP”). See Part II, Item 8, “Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements” Note 1, “Significant Accounting and Reporting Policies,” for additional information about our significant accounting and reporting policies that require us to make certain judgements and estimates in reporting our operating results and our assets and liabilities. The following paragraphs describe the accounting policies that require significant judgment and estimates due to inherent uncertainty or complexity.

Goodwill

As of December 31, 2020, our consolidated balance sheet included goodwill of $3,461.5 million. As of December 31, 2020, we did not have any other indefinite-lived intangible assets. We conduct an impairment test 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 analysis for that reporting unit. We have the option to bypass the qualitative analysis for any reporting unit and proceed directly to performing a quantitative analysis.

Our quantitative analysis consists of a fair value calculation for each reporting unit that combines an income approach, using the discounted cash flow method, and a market approach, using the guideline public company method. The quantitative impairment analysis 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 and EBITDA margins, and the resulting projected cash flows of each reporting unit is based on internal operating plans reviewed by management, extrapolated over the forecast period. The discount rate for each reporting unit is based on the weighted average cost of capital for the reporting unit. Market multiples are based on the Guideline Public Company Method using comparable publicly traded company multiples of earnings before interest, taxes, and depreciation and amortization for a group of benchmark companies.

We believe the assumptions we use in our qualitative and quantitative analysis are reasonable and consistent with assumptions that would be used by other marketplace participants. In order to ensure the assumptions used in the analysis are reasonable, we compare the sum of the fair value of the reporting units to our market capitalization, to ensure it is within a reasonable range. However such assumptions are inherently uncertain, even more so in times of greater economic instability such as during this current COVID-19 pandemic, and a change in assumptions could change the estimated fair values of our reporting units and, therefore, future impairment charges could be required, which could be material to the consolidated financial statements.

In 2020, we elected to bypass the qualitative goodwill impairment analysis, and instead performed a quantitative goodwill impairment analysis for all reporting units. For each of our reporting units, the fair value exceeded the carrying value and no impairment was recorded. Further, a 10% decrease in the estimated cash flows or a 10% increase in the discount rate, combined with a 10% decrease in the market multiple would not result in an impairment for any of our reporting units. Our reporting units that have longer operating histories have greater headroom compared with reporting units that include significant recent acquisitions.

Legal Contingencies

In the ordinary course of business, we are routinely named as defendants in, or parties to, various legal actions and proceedings relating to our current or past business operations. These actions generally assert claims for violations of federal or state credit reporting, consumer protection or privacy laws, or common law claims related to the unfair treatment of consumers, and may include claims for substantial or indeterminate compensatory or punitive damages, or injunctive relief, and may seek business practice changes. We believe that most of these claims are either without merit or we have valid defenses to the claims, and we vigorously defend these matters or seek non-monetary or small monetary settlements, if possible. However, due to the uncertainties inherent in litigation, we cannot predict the outcome of each claim in each instance.

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In the ordinary course of business, we also are subject to governmental and regulatory examinations, information-gathering requests, investigations and proceedings (both formal and informal), certain of which may result in adverse judgments, settlements, fines, penalties, injunctions or other relief. In connection with formal and informal inquiries by these regulators, we routinely receive requests, subpoenas and orders seeking documents, testimony, and other information in connection with various aspects of our activities.

In view of the inherent unpredictability of legal and regulatory matters, particularly where the damages sought are substantial or indeterminate or when the proceedings or investigations are in the early stages, we cannot determine with any degree of certainty the timing or ultimate resolution of legal and regulatory matters or the eventual loss, fines, penalties or, if any, that may result. We establish reserves for legal and regulatory matters when those matters present loss contingencies that are both probable and can be reasonably estimated. However, for certain matters, we are not able to reasonably estimate our exposure because damages have not been specified and (i) the proceedings are in early stages, (ii) there is uncertainty as to the likelihood of a class being certified or the ultimate size of the class, (iii) there is uncertainty as to the outcome of similar matters pending against our competitors, (iv) there are significant factual issues to be resolved, and/or (v) there are legal issues of a first impression being presented. The actual costs of resolving legal and regulatory matters, however, may be substantially higher than the amounts reserved for those matters, and an adverse outcome in certain of these matters could have a material adverse effect on our consolidated financial statements in particular quarterly or annual periods. During 2020, we accrued amounts for certain legal and regulatory matters for which losses were considered to be probable of occurring based on our best estimate of the most likely outcome. It is reasonably possible actual losses could be significantly different from our current estimates. In addition, there are some matters for which it is reasonably possible that a loss will occur, however we cannot estimate a range of the potential losses for these matters. Legal fees incurred in connection with ongoing litigation are considered a period cost and are expensed as incurred.

As of December 31, 2020 and 2019, we have accrued $76.0 million and $30.4 million, respectively, for anticipated claims. The accrued liabilities are included in other current liabilities in the consolidated balance sheets and the associated expenses are recorded in selling, general and administrative expenses in the consolidated statements of income.

See Part II, Item 8 “Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements,” Note 20, “Contingencies,” for further information.

Income Taxes

As of December 31, 2020, TransUnion’s consolidated balance sheet included noncurrent deferred tax liabilities of $396.8 million. Certain deferred tax assets, including net operating loss and foreign tax credit carryforwards, may be deducted from future taxable income in computing our federal income tax liability. Our deferred tax liability includes deferred tax assets and liabilities resulting from net operating loss and tax credit carryforwards, temporary differences, and unrecognized tax benefits for uncertain tax positions.

We have made certain judgments and estimates to determine various tax amounts recorded, including future tax rates, future taxable income, whether it is more likely than not a tax position will be sustained, and the amount of the unrecognized tax benefit to record. We have deferred tax assets related to loss and credit carryforwards of $130.1 million, net of valuation allowances of $65.7 million. Our estimate of the amount of the deferred tax asset we can realize requires significant assumptions about projected revenues and income that are impacted by future market and economic conditions. We believe the judgments and estimates used are reasonable, but events may arise that were not anticipated and the outcome of tax audits may differ significantly from what is expected.

Recent Accounting Pronouncements

For information about recent accounting pronouncements and the potential impact on our consolidated financial statements, see Part II, Item 8, “Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements,” Note 1, “Significant Accounting and Reporting Policies.”

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In the normal course of business we are exposed to market risk, primarily from changes in variable interest rates and foreign currency exchange rates, which could impact our results of operations and financial position. We manage the exposure to this market risk through our regular operating and financing activities. We may use derivative financial instruments, such as foreign currency and interest rate hedges, but only as a risk management tool and not for speculative or trading purposes.

Interest Rate Risk

Our Senior Secured Credit Facility consists of senior secured term loans and a $300.0 million Senior Secured Revolving Line of Credit. Interest rates on these borrowings are based, at our election, on LIBOR or an alternate base rate, subject to floors, plus applicable margins based on applicable net leverage ratios. As of December 31, 2020, essentially all of our outstanding debt was variable-rate debt. As of December 31, 2020, our variable-rate debt had a weighted-average interest rate of 1.74% and a weighted-average life of 5.25 years. During 2020, a 10% change in the average LIBOR rates utilized in the calculation of our actual interest expense would have increased our interest expense by $2.3 million for the year.

On March 10, 2020, we entered into two tranches of interest rate swap agreements with various counter-parties that effectively fix our LIBOR exposure on a portion of our Senior Secured Term Loans or similar replacement debt. The first tranche commenced on June 30, 2020, and expires on June 30, 2022, with a current aggregate notional amount of $1,140.0 million that amortizes each quarter. The first tranche requires TransUnion to pay fixed rates varying between 0.5200% and 0.5295% in exchange for receiving a variable rate that matches the variable rate on our loans. The second tranche commences on June 30, 2022, and expires on June 30, 2025, with an initial aggregate notional amount of $1,110.0 million that amortizes each quarter after it commences. The second tranche requires TransUnion to pay fixed rates varying between 0.9125% and 0.9280% in exchange for receiving a variable rate that matches the variable rate on our loans. We have designated these swap agreements as cash flow hedges.

On December 17, 2018, we entered into interest rate swap agreements with various counter-parties that effectively fix our LIBOR exposure on a portion of our Senior Secured Term Loans or similar replacement debt, which is currently fixed at 2.702% and 2.706%. We have designated these swap agreements as cash flow hedges. The current aggregate notional amount under these agreements is $1,410.0 million, decreasing each quarter until the second agreement terminates on December 30, 2022.

Based on the amount of unhedged outstanding variable-rate debt, we have a material exposure to interest rate risk. In the future our exposure to interest rate risk may change due to changes in the amount borrowed, changes in interest rates, or changes in the amount we have hedged. Since the onset of the COVID-19 pandemic, LIBOR has dropped significantly, and may be more volatile in the future, which could materially impact our total interest expense due to the unhedged portion of our debt. The amount of our outstanding debt, and the ratio of fixed-rate debt to variable-rate debt, can be expected to vary as a result of future business requirements, market conditions or other factors.

See Part II, Item 8, “Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements,” Note 10, “Debt,” for additional information about interest rates on our debt.

Foreign Currency Exchange Rate Risk

A substantial majority of our revenue, expense and capital expenditure activities are transacted in U.S. dollars. However, we transact business in a number of foreign currencies, including British pounds sterling, the South African rand, the Canadian dollar, the Indian rupee, the Colombian peso and the Brazilian real. In reporting the results of our foreign operations, we benefit from a weaker U.S. dollar and are adversely affected by a stronger U.S. dollar relative to the foreign currencies.

We are required to translate the assets and liabilities of our foreign subsidiaries that are measured in foreign currencies at the applicable period-end exchange rate in our consolidated balance sheets. We are required to translate revenue and expenses at the average exchange rates prevailing during the year in our consolidated statements of income. The resulting translation adjustment is included in other comprehensive income, as a component of stockholders’ equity. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in other income and expense as incurred.

In 2020, revenue attributable to our foreign operations was $582.7 million, and Adjusted EBITDA attributable to our foreign operations was $219.8 million. A 10% change in the value of the U.S. dollar relative to a basket of the currencies for all foreign countries in which we had operations during 2020 would have changed our revenue by $58.3 million and our Adjusted EBITDA by $22.0 million.

A 10% change in the value of the U.S. dollar relative to a basket of currencies for all foreign countries in which we had operations would not have had a significant impact on our 2020 realized foreign currency transaction gains and losses.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Financial Statements

TransUnion:

Reports of Independent Registered Public Accounting Firms 66

Consolidated Balance Sheets 69

Consolidated Statements of Income 70

Consolidated Statements of Comprehensive Income 71

Consolidated Statements of Cash Flows 72

Consolidated Statements of Stockholders’ Equity 73

Notes to Consolidated Financial Statements 76

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of TransUnion

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheet of TransUnion and its subsidiaries (the “Company”) as of December 31, 2020, and the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for the year then ended, including the related notes and financial statement schedules listed in the index appearing under Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2020, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audit of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated

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financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Goodwill Impairment Assessment –Reporting Unit Within the International Segment

As described in Notes 1 and 4 to the consolidated financial statements, the Company’s consolidated goodwill balance was $3,461.5 million as of December 31, 2020, of which $1,423.1 million was allocated to the International reportable segment. Management conducts an impairment test in the fourth quarter of each year, or more frequently if events or circumstances indicate that the carrying value of goodwill may be impaired. Management performed a quantitative impairment test for all reporting units. To determine the fair value of each reporting unit, management uses a combination of an income approach, using the discounted cash flow method, and a market approach, using the guideline public company method. For each reporting unit, management compares the fair value to its carrying value including goodwill. If the fair value of the reporting unit is less than its carrying value, management records an impairment charge based on that difference, up to the amount of goodwill recorded in that reporting unit. The quantitative impairment analysis requires the application of a number of significant assumptions by management, including estimates of future revenue growth rates, EBITDA margins, discount rates, and market multiples.

The principal considerations for our determination that performing procedures relating to the goodwill impairment assessment of a reporting unit within the International segment is a critical audit matter are (i) the significant judgment by management when developing the fair value measurement of the reporting unit; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to the estimates of future revenue growth rates, EBITDA margins, the discount rate, and market multiple; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessment, including controls over the valuation of the reporting unit within the International segment. These procedures also included, among others (i) testing management’s process for developing the fair value estimate; (ii) evaluating the appropriateness of the discounted cash flow method and guideline public company method; (iii) testing the completeness and accuracy of underlying data used in the fair value estimate; and (iv) evaluating the significant assumptions used by management related to the estimates of future revenue growth rates, EBITDA margins, the discount rate, and market multiple. Evaluating management’s assumptions related to the estimates of future revenue growth rates and EBITDA margins involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the reporting unit; (ii) the consistency with market data; and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in the evaluation of the management’s discounted cash flow method and guideline public company method, and the discount rate and market multiple assumptions.

/s/ PricewaterhouseCoopers LLP

Chicago, Illinois

February 16, 2021

We have served as the Company’s auditor since 2020.

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Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of TransUnion and subsidiaries

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of TransUnion and subsidiaries (the Company) as of December 31, 2019, the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2019, and the related notes and financial statement schedules for each of the two years in the period ended December 31, 2019 listed in the Index at Item 15 (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2019, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2019, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We served as the Company’s auditor from 2005 to 2020.

/s/Ernst & Young LLP

Chicago, Illinois

February 18, 2020

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TRANSUNION AND SUBSIDIARIES

Consolidated Balance Sheets

(in millions, except per share data)

Assets

Current assets:

Cash and cash equivalents $ 493.0 $ 274.1

Trade accounts receivable, net of allowance of $26.6 and $19.0 453.7 443.9

Liabilities and stockholders’ equity

Current liabilities:

Short-term debt and current portion of long-term debt 55.5 58.7

Stockholders’ equity:

Accumulated other comprehensive loss (272.1) (251.6)

Total TransUnion stockholders’ equity 2,540.2 2,245.4

Noncontrolling interests 95.9 94.0

Total liabilities and stockholders’ equity $ 7,311.6 $ 7,113.2

See accompanying notes to consolidated financial statements.

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Table of Contents

TRANSUNION AND SUBSIDIARIES

Consolidated Statements of Income

(in millions, except per share data)

Twelve Months Ended December 31,

Operating expenses

Non-operating income and (expense)

Earnings from equity method investments 8.9 13.2 9.9

Other income and (expense), net (0.4) (14.4) (46.9)

Total non-operating income and (expense) (112.2) (167.3) (169.0)

Income from continuing operations before income taxes 455.8 440.5 343.5

Discontinued operations, net of tax — (4.6) (1.5)

Less: net income attributable to noncontrolling interests (12.4) (5.1) (10.9)

Net income attributable to TransUnion $ 343.2 $ 346.9 $ 276.6

Income from continuing operations attributable to TransUnion 343.2 351.5 278.1

Discontinued operations, net of tax — (4.6) (1.5)

Net income attributable to TransUnion $ 343.2 $ 346.9 $ 276.6

Basic earnings per common share from:

Discontinued operations, net of tax — (0.02) (0.01)

Net Income attributable to TransUnion $ 1.81 $ 1.85 $ 1.50

Diluted earnings per common share from:

Discontinued operations, net of tax — (0.02) (0.01)

Net Income attributable to TransUnion $ 1.79 $ 1.81 $ 1.45

Weighted-average shares outstanding:

See accompanying notes to consolidated financial statements.

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TRANSUNION AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

(in millions)

Twelve Months Ended December 31,

Other comprehensive income:

Foreign currency translation:

Foreign currency translation adjustment 8.9 66.1 (148.9)

Benefit (expense) for income taxes 0.8 (0.5) —

Foreign currency translation, net 9.7 65.6 (148.9)

Hedge instruments:

Net change on interest rate cap 4.1 (11.0) 7.6

Net change on interest rate swap (43.5) (35.4) (10.7)

Cumulative effect of adopting ASU 2017-12 — 1.0 —

Benefit for income taxes 9.5 11.5 0.8

Hedge instruments, net (29.9) (33.9) (2.3)

Available-for-sale securities:

Net unrealized gain 0.3 — —

Expense for income taxes (0.1) — —

Available-for-sale securities, net 0.2 — —

Total other comprehensive (loss) income, net of tax (20.0) 31.7 (151.2)

Comprehensive income attributable to TransUnion $ 322.7 $ 378.0 $ 129.2

See accompanying notes to consolidated financial statements.

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TRANSUNION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(in millions)

Twelve Months Ended December 31,

Cash flows from operating activities:

Add: loss from discontinued operations, net of tax — 4.6 1.5

Loss on debt financing transactions — 15.0 12.0

Provision for losses on trade accounts receivable 13.1 10.0 8.6

Changes in assets and liabilities:

Other current and long-term assets (0.7) (26.5) 17.1

Other current and long-term liabilities 46.4 36.3 20.6

Cash provided by operating activities of continuing operations 787.4 784.0 559.4

Cash used in operating activities of discontinued operations — (7.3) (3.7)

Cash flows from investing activities:

Proceeds from sale/maturity of other investments 90.6 35.9 24.3

Purchases of other investments (73.5) (31.4) (31.8)

Cash used in investing activities of discontinued operations — — (0.1)

Cash flows from financing activities:

Proceeds from refinance of Senior Secured Term Loans — 3,750.0 1,800.0

Payments from refinance of Senior Secured Term Loans — (3,759.1) —

Proceeds from Senior Secured Revolving Line of Credit — — 125.0

Payments of Senior Secured Revolving Line of Credit — — (210.0)

Debt financing fees — (11.2) (33.8)

Dividends to shareholders (57.6) (56.8) (41.6)

Distributions to noncontrolling interests (10.9) (3.9) (10.1)

Payment of contingent consideration (6.4) (1.9) —

Effect of exchange rate changes on cash and cash equivalents (4.4) 0.6 (6.6)

Net change in cash and cash equivalents 218.9 86.7 71.6

Cash and cash equivalents, beginning of period 274.1 187.4 115.8

Cash and cash equivalents, end of period $ 493.0 $ 274.1 $ 187.4

Supplemental disclosure of cash flow information:

Cash paid during the period for:

See accompanying notes to consolidated financial statements.

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Common Stock

Other comprehensive income (loss) — — — — — (147.4) (3.8) (151.2)

Distributions to noncontrolling interests — — — — — — (10.7) (10.7)

Noncontrolling interests of acquired businesses — — — — — — 0.3 0.3

Stock-based compensation — — 55.9 — — — — 55.9

Employee share purchase plan 0.2 — 11.3 — — — — 11.3

Exercise of stock options 2.3 — 16.6 — — — — 16.6

Treasury stock purchased — — — (1.2) — — — (1.2)

Dividends to shareholders ($0.225 per share) — — — — (42.6) — — (42.6)

Cumulative effect of adopting Topic 606, net of tax — — — — (6.0) — (0.1) (6.1)

Cumulative effect of adopting ASC 2016-16 — — — — (2.2) — — (2.2)

Other — — — 0.1 (0.1) — — —

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Common Stock

Other comprehensive income — — — — — 31.1 0.6 31.7

Distributions to noncontrolling interests — — — — — — (4.1) (4.1)

Noncontrolling interests of acquired businesses — — — — — — (0.1) (0.1)

Stock-based compensation — — 48.4 — — — — 48.4

Employee share purchase plan 0.3 — 15.2 — — — — 15.2

Exercise of stock options 1.6 — 11.4 — — — — 11.4

Vesting of restricted stock units and performancestock units 1.7 — — — — — — —

Treasury stock purchased (0.6) — — (39.2) — — — (39.2)

Dividends to shareholders ($0.30 per share) — — — — (57.1) — — (57.1)

Cumulative effect of adopting ASC 2017-12 — — — — (1.0) — — (1.0)

Other — — — (0.1) 0.1 — — —

See accompanying notes to consolidated financial statements.

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Common Stock

Other comprehensive income (loss) — — — — — (20.5) 0.5 (20.0)

Distributions to noncontrolling interests — — — — — — (10.9) (10.9)

Noncontrolling interests of acquired businesses — — (3.7) — — — 0.3 (3.4)

Stock-based compensation — — 43.7 — — — — 43.7

Employee share purchase plan 0.2 — 19.1 — — — — 19.1

Exercise of stock options 0.9 0.1 6.7 — — — — 6.8

Vesting of restricted stock units and performance stock units 1.1 — — — — — — —

Treasury stock purchased (0.4) — — (36.1) — — — (36.1)

Dividends to shareholders ($0.30 per share) — — — — (57.7) — — (57.7)

Other — — — — — — (0.4) (0.4)

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TRANSUNION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2020, 2019 and 2018

1. Significant Accounting and Reporting Policies

Description of Business

TransUnion is a leading global information and insights company that strives to make trust possible between businesses and consumers, working to ensure that each person is reliably and safely represented in the marketplace. At TransUnion, we find innovative ways to leverage data and information to help businesses and consumers transact with confidence and achieve great things. We call this Information for Good.

Grounded in our legacy as a credit reporting agency, we have built a robust and accurate database of information for a large portion of the adult population in the markets we serve. We use our data fusion methodology to link and match an increasing set of other disparate data to further enrich our database. We use this enriched data, combined with our expertise, to continuously develop more powerful and useful solutions for our customers, all in accordance 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 the opportunities they deserve.

We provide consumer reports, actionable insights and analytics such as credit and other scores, and solutions capabilities to businesses. Businesses embed our solutions into their process workflows to acquire new customers, assess consumer ability to pay for services, identify cross-selling opportunities, measure and manage debt portfolio risk, collect debt, verify consumer identities and investigate potential fraud. Consumers use our solutions to view their credit profiles and access analytical tools that help them understand and manage their personal information and take precautions against identity theft. We have deep domain expertise across a number of attractive industries, which we also refer to as verticals, including Financial Services, Healthcare, Insurance and other markets we serve. We have a global presence in over 30 countries and territories across North America, Latin America, Europe, Africa, India, and Asia Pacific.

Our solutions are based on a foundation of financial, credit, alternative credit, identity, bankruptcy, lien, judgment, healthcare, insurance claims, automotive and other relevant information obtained from thousands of sources including financial institutions, private databases, public records repositories, and other data sources. We refine, standardize and enhance this data using sophisticated algorithms to create proprietary databases. Our technology infrastructure allows us to efficiently integrate our data with our analytics and solutions capabilities to create and deliver innovative solutions to our customers and to quickly adapt to changing customer needs. Our deep analytics resources, including our people and tools driving predictive modeling and scoring, customer segmentation, benchmarking and forecasting, enable us to provide businesses and consumers with better insights into their data. Our solutions capabilities, which are generally delivered on a software-as-a-service platform, allow businesses to interpret data and apply their specific qualifying criteria to make decisions and take actions. Collectively, our data, analytics and solutions capabilities allow businesses to authenticate the identity of consumers, effectively determine the most relevant products for consumers, retain and cross-sell to existing consumers, identify and acquire new consumers and reduce loss from fraud and data breaches. Similarly, our capabilities allow consumers to see how their credit profiles have changed over time, understand the impact of financial decisions on their credit scores, manage their personal information and take precautions against identity theft.

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. Certain prior period presentations have been recast to conform to current year presentations.

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.

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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 accompanying 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.

Impact of coronavirus (“COVID-19”) On Our Financial Statements

On March 11, 2020, the World Health Organization declared COVID-19 a global pandemic and recommended extensive containment and mitigation measures worldwide. The outbreak has reached all of the regions in which we do business, and governmental authorities around the world have implemented numerous measures attempting to contain and mitigate the effects of the virus, including travel bans and restrictions, border closings, quarantines, shelter-in-place orders, shutdowns, limitations or closures of non-essential businesses, school closures, social distancing requirements and various economic stimulus initiatives. While certain of these measures have been relaxed or reversed to varying degrees throughout the world, many have subsequently been reinstated and even tightened, adding an additional layer of uncertainty. In the fourth quarter of 2020, several COVID-19 vaccines were approved for use by various governments throughout the world, including in the United States. The vaccines have begun to be distributed and administered in the United States and various other regions where we operate.

The global spread of COVID-19 and actions taken in response to the virus continue to negatively affect workforces, customers, consumer confidence, financial markets, employment rates, consumer spending, credit markets and housing demand, caused significant economic, business and social disruptions, volatility and financial uncertainty, and led to a significant economic downturn, including in the markets where we operate. Businesses and consumers continue to react and adapt to the uncertainty with varying degrees of success in the markets where we operate. Since mid-March 2020, the COVID-19 pandemic, widespread measures implemented to contain its effects, and business and consumer responses to such measures, have had a material and adverse impact on numerous aspects of our business, including customer demand for our services and solutions in all of our segments. While we have seen signs of increased demand for our services in the markets where we operate since the low point in April 2020, including ongoing improvements through the fourth quarter 2020, the impact of COVID-19, including government measures and business and consumer responses to such measures, may continue to have a material adverse impact on our business for an uncertain period of time.

We have assessed various accounting estimates and other matters, including those that require consideration of forecasted financial information, in context with the unknown future impacts of COVID-19 using information that is reasonably available to us at this time. The accounting estimates and other matters we have assessed include, but were not limited to, our allowance for doubtful accounts, stock-based compensation, goodwill and other long-lived assets, financial assets, valuation allowances for tax assets and revenue recognition. While our current assessment of these estimates did not have a material impact on our consolidated financial statements as of and for twelve months ended December 31, 2020, as additional information becomes available to us, our future assessment of these estimates, including our expectations at the time regarding the duration, scope and severity of the pandemic, as well as other factors, could materially and adversely impact our consolidated financial statements in future reporting periods.

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 four operating segments; U.S. Markets, Healthcare, International and Consumer Interactive. We aggregate our U.S. Markets and Healthcare operating segments into the U.S. Markets reportable segment. We report our financial results in three 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 18, “Reportable Segments.”

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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 Income 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. See Note 13, “Revenue,” for a further discussion about our revenue recognition policies.

Deferred revenue generally consists of amounts billed in excess of revenue recognized for the sale of data services, subscriptions and set up fees. As our contracts with customers generally have a duration of one year or less, our contract liabilities consist of deferred revenue that is primarily short-term in nature. The current and long-term portions of deferred revenue are included in other current liabilities and other liabilities.

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, 2020, 2019 and 2018 were $89.9 million, $83.5 million and $79.3 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 plan, 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 16, “Stock-Based Compensation.”

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 15, “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, 2020, 2019 and 2018 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.

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Trade Accounts Receivable

We base our allowance for doubtful accounts estimate on our historical write-off experience, current 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. Beginning January 1, 2020, we also considered our current expectations of future economic conditions, including the impact of COVID-19, when estimating our allowance for doubtful accounts. We made an immaterial increase to our allowance for doubtful accounts as a result of our current estimate of the impact COVID-19 will have on the collectability of our accounts receivable. As additional information becomes available to us, our future assessment of our allowance for doubtful accounts could materially and adversely impact our consolidated financial statements in future reporting periods.

The following is a rollforward of the allowance for doubtful accounts for the periods presented:

Twelve months ended December 31,

Provision for losses on trade accounts receivable 13.1 10.0 8.6

Write-offs, net of recovered accounts (5.5) (4.5) (5.0)

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 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. Other assets are depreciated over 5 to 7 years. 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 3, “Property, Plant and Equipment,” and Note 5, “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 7 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 2020, 2019 and 2018.

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 are carried at fair market value, with the unrealized gains and losses, net of tax, included in accumulated other comprehensive income.

At December 31, 2020 and 2019, 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

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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 17, “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 2020, 2019 or 2018.

Goodwill

Goodwill is allocated to our reporting units, which are an operating segment or one level below an operating segment. We have no indefinite-lived intangible assets other than goodwill. We conduct an impairment test 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 a reporting unit, we perform a quantitative impairment analysis for that reporting unit. We have the option to bypass the qualitative analysis for any reporting unit and proceed directly to performing a quantitative analysis.

When we perform a quantitative impairment analysis, 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 analysis 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 and EBITDA margins, and the resulting projected cash flows of each reporting unit, is based on internal operating plans reviewed by management, extrapolated over the forecast period. The discount rate for each reporting unit is based on the weighted cost of capital for the reporting unit. Market multiples are based on the Guideline Public Company Method using comparable publicly traded company multiples of earnings before interest, taxes, and depreciation and amortization for a group of benchmark companies.

See Note 4, “Goodwill,” for additional information about our 2020 impairment analysis.

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, 2020, 2019 and 2018 were $27.2 million, $29.6 million and $28.4 million, respectively.

Recently Adopted Accounting Pronouncements

On June 16, 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. In addition, these amendments require the measurement of all expected credit losses for financial assets, including trade accounts receivable, held at the reporting date based on historical experience, current conditions, and current expectations of future economic conditions based on reasonable and supportable forecasts. We adopted this guidance on January 1, 2020. Upon adoption and at December 31, 2020, this new guidance did not have a material impact on our consolidated financial statements.

In March 2020, the FASB issued ASU 2020-4, Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting in response to concerns about structural risks of interbank offered rates including the risk of cessation of the London Interbank Offered Rate (LIBOR), regulators in several jurisdictions around the world have undertaken reference rate reform initiatives to identify alternative reference rates that are more observable and less susceptible to manipulation. The provisions of this ASU are elective and apply to all entities, subject to meeting certain criteria, that have debt or hedging contracts and other contracts that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. This ASU, among other things, provides optional expedients and exceptions to applying certain U.S. GAAP requirements to these contracts if certain criteria are met for a limited period of time in order to ease the potential burden in accounting for or recognizing the effects of reference rate reform on financial reporting. This ASU is effective for all entities as of March 12, 2020 through December 31, 2022.

We have adopted this guidance and have applied certain optional expedients and exceptions and expect to apply other optional expedients and exceptions to our existing debt and hedge contracts that reference LIBOR, and to any other new contract that

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references LIBOR or another reference rate when these reference rates are discontinued and as our contracts are updated up through the transition period that ends December 31, 2022. The adoption of these expedients and exceptions did not and is not expected to have a material impact on our Consolidated Financial Statements.

Recent Accounting Pronouncements Not Yet Adopted

On December 18, 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This ASU removes specific exceptions to the general principles in Topic 740. Among other things it eliminates the need for organizations to analyze whether the following apply in a given period: an exception to the incremental approach for intra-period tax allocation; exceptions to accounting for basis differences when there are ownership changes in foreign investments; and an exception in interim period income tax accounting for year-to-date losses that exceed anticipated losses. This amendment also improves financial statement preparers’ application of income tax-related guidance and simplifies GAAP for: franchise taxes that are partially based on income; transactions with a government that result in a step up in the tax basis of goodwill; separate financial statements of legal entities that are not subject to tax; and enacted changes in tax laws in interim periods. This guidance is effective for annual reporting periods beginning after December 15, 2020, including interim periods therein. We do not expect the impact to our consolidated financial statements to be material.

On January 16, 2020, the FASB issued ASU 2020-01, Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)-Clarifying the Interactions between Topic 321, Topic 323, and Topic 815. This amendment, among other things, clarifies that a company should consider observable transactions that require a company to either apply or discontinue the equity method of accounting under Topic 323, Investments-Equity Method and Joint Ventures, for the purposes of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method. This amendment also clarifies that, when determining the accounting for certain forward contracts and purchased options a company should not consider, whether upon settlement or exercise, if the underlying securities would be accounted for under the equity method or fair value option. This guidance is effective for annual reporting periods beginning after December 15, 2020, including interim periods therein. We do not expect this guidance to impact our consolidated financial statements.

2. Other Current Assets