And the CFPB and the FTC in particular have been very clear. They’ve said, with this change of practice and with this settlement, this TU reset, if you will, expresses the new standard for the industry. Now we expect the other rental screeners and their clients who will now have regulatory risk to begin adjusting their practices. So that’s in large part why tenant hasn’t provided the growth that it typically would, but we expect it to stabilize and for the growth prospects to improve now that we’ve got this industry reset.
Todd Cello: Let me just add on to your question, Heather, because Chris definitely talked about the two verticals where we have the most challenge, but I think we’d be remiss to not point out that we have had some success as well in the emerging verticals. In particular, the media vertical grew double digits. And as Chris already said, we expected something greater than that. But nevertheless, in this environment, we posted some pretty strong results in that business. And it was on the back of some significant wins with the Neustar marketing capabilities. And just to remind you, Chris talked about those in his prepared remarks. So that’s a big deal for us as well. Our public sector vertical also grew very strong double digits.
And we saw growth in what we refer to as services collections as well as tech, commerce and communications. In those areas, in particular, what we are seeing a really nice benefit from is our trusted call solutions also from Neustar. The revenue is up significantly across those verticals.
Operator: The next question comes from Toni Kaplan of Morgan Stanley.
Toni Kaplan: You mentioned in the prepared remarks that September trends had been getting — got a lot worse. I wanted to ask about sort of the early October trends, just given rates started to move quicker. Did you see it getting worse or just continuing on sort of at the pace that you are seeing in September?
Todd Cello: So I think to start on this one is where the best place to go is just the beginning of the third quarter. And I would say July and August were months that were okay,t hey were tracking to the guidance that we have provided on our earnings call in late July. Unfortunately, we saw a sudden shift of lending volumes, as Chris has already articulated in September. And that impacted just to reiterate, in consumer lending, card, mortgage and insurance and the media coming in a little bit lower than what we had expected. So as we looked out into the fourth quarter to prepare our guide for the remainder of the year, we took that sudden reduction that we experienced in September and we rolled that forward. We also looked at where we were at up until last week in October and where volumes were at. And what we feel like we have done is we’ve taken this rather weak environment and we have thoroughly derisked the Q4 guide with the numbers that we have put out today.
Operator: The next question comes from Ashish Sabadra of RBC Capital Markets.
Ashish Sabadra: I just wanted to clarify whether the CFPB settlement, whether that’s included within the adjusted EBITDA, and if you could quantify how much was it in third quarter or fourth quarter? Because the question we’re getting from investors is the revenue at the high — at the midpoint of the fiscal year ’23 revenue guidance was lowered by $54 million, but the EBITDA was lower by $78 million. Why was the EBITDA so much like — EBITDA guidance lowered significantly more than the revenue guidance, is that due to CFPB settlement?
Todd Cello: So Ashish, you got two questions there for us this morning. So let me take the first one as it pertains to the CFPB. We settled two matters with the CFPB and one pertains to the FTC, and that was our rental screening settlement that Chris has talked about, that was for $15 million. And then on the security freeze matter, we settled for $8 million for a total of $23 million. All of those settlements have been reserved for within our adjusted EBITDA not as an add back coming into the quarter with the exception of $7 million. And in my prepared remarks, I made reference to that. So there was an incremental aspect of $7 million in the quarter that we did not have in our guidance. So the other amount was already accrued for and had impacted adjusted EBITDA.
So the second question is pertaining to our Q4 adjusted EBITDA outlook and why the change. If you look at revenue compared to our prior guide and why EBITDA is a little bit greater than that. And if it goes back to the question that Toni just asked about what the trends in September and our Q4 guide, so it really starts with the revenue and the revenue that we saw suddenly fall off in late September is more of our core credit type of products that carry a higher margin. And so that is what we have taken down. What that’s been offset by is growth that we’ve seen in products such as the trusted call solutions, which I just referred to, that while still at a very attractive margin relative even to TransUnion’s adjusted EBITDA margin is one that is at a lower margin than the core credit products carry.
So when you take that mix together, you end up with a situation where the profit expectation ends up being greater than what the revenue takedown is.
Chris Cartwright: Yes, I think that’s an important dynamic to appreciate. I mean you’ll see in our financial disclosure that our cost structure remain the same, it’s not a cost issue quarter-to-quarter, it’s a revenue mix issue. And so when we confirmed our guide in July, based on the lending trends that we’ve seen, we simply expected to sell more credit products than we actually ended up selling and credit products have a very, very high flow through to profit. But as I’ve discussed, we had to retrieve volumes in lending, which reduced credit products. In the parts of the portfolio that performed best have a lower contribution margin, things like our mortgage credit because of the [Technical Difficulty] score and trusted call solutions because of license data costs.
Operator: The next question comes from Manav Patnaik of Barclays.
Manav Patnaik: I was just hoping we could talk to all your fintech exposures, please. So just in the UK, like what was it, I suppose, as a percentage of revenues and exactly what led to the write-down? And then maybe what the US exposure is and if there’s any kind of risk we should consider there as well?
Chris Cartwright: Well, let me just start fintech generally, Manav, and you and I have talked about this before. We have a very large and leading share in fintech and that is true both in the US and also in the UK. And fintech has been materially impacted in the downturn because of rising rates and also tightening lending standards. So that’s already had an impact and that’s already incorporated in our third quarter results but also our thinking about the fourth quarter guide, which Todd just articulated. Now shifting to our UK business and the write-down in goodwill. If you recall, we acquired the business in 2018. It was a low double digit grower then, but it was not particularly profitable. So we took cost action, which slowed revenue growth for about six months.
By the time we exited ’19, we posted 9% organic growth and the exit quarter was back to low double digit. And that was our expectation, high single, low double digit that underpinned the assessment of book value and the amount of goodwill that we put on the balance sheet. Well, from that point forward, the UK market has been buffeted by a series of macro issues. The first is that the regulators in the UK decided to put pressure on small dollar unsecured lenders. We would call them payday lenders here, some of them were online, they call them the money lenders in the UK. Well, call credit had a disproportionate share of that marketplace. It was a foundational component of their business. So first, we had to adjust to that contraction, which we did and we compensated for it by pushing further upstream into the core and mainstream lending market and taking share, which we did.
