Equifax Delivers Robust Financial Results for First Quarter of 2024

Equifax Reports First Quarter of 2024 Results

Dayna Friedman, Bloomberg

Equifax Inc. delivered fiscal first-quarter revenue that exceeded its own projections, buoyed by a strong performance in its core mortgage business even as unemployment tax-processing revenue declined.

The Atlanta-based credit-reporting company said it generated $1.389 billion in revenue during the period, up 7% from a year earlier and higher than the $1.379 billion it estimated in February. On a conference call with analysts, it also forecast a stronger performance for the year.

"We are off to a great start in 2024 with strong performance across our businesses," said Mark Begor, Equifax's chief executive officer.

Here are the key highlights from the report:

Revenue Increase

Revenue for the first quarter was $1.389 billion, up 7% from the same period in 2023. This was higher than the company's expected revenue of $1.379 billion.

Strong Performance in Mortgage Business

The performance was driven by a 6% increase in revenue from the U.S. mortgage business, which was fueled by the U.S. Information Solutions segment's 38% rise in mortgage revenue.

Growth in Non-Mortgage Businesses

Non-mortgage businesses experienced a 9% rise in constant currency revenue. The company witnessed mid-single-digit growth in the auto market and in direct-to-consumer revenue.

Expansion into High-Growth Verticals

Equifax is expanding into high-growth verticals, including government and talent, and expects strong growth in these areas. The company added four million current records to the The Work Number database, a 10% increase from the previous year.

AI and ML Innovation

The company is heavily investing in AI and ML, with 85% of new models and scores being built using these technologies.

Full-Year Outlook

Despite the downturn in employer revenue, Equifax maintained its full-year forecast, expecting revenues of $5.72 billion and an adjusted EPS of $7.35 per share.

Increased Focus on the Cloud

Equifax aims to have 90% of revenue in the Equifax Cloud by year-end. The company expects to complete its North America cloud transformation in 2024, with CapEx increasing by over $100 million.

Here is a summary of the bullish and bearish highlights from the report:

Bullish Highlights

• Strong constant dollar non-mortgage revenue growth of over 10%.
• Expansion into high-growth verticals, including government and talent.
• Addition of four million current records to The Work Number database, a 10% increase from the previous year.
• Increased focus on the cloud, with plans to complete its North America cloud transformation in 2024.
• Higher investment in AI and ML, with 85% of new models and scores being built using these technologies.

Bearish Highlights

• Decline in employer revenue, excluding ERC, of approximately 10% in Q1.
• Adjusted guidance for non-mortgage revenue growth of about 3%, down from the previous forecast of 4%.
• Weakness in the auto market and D2C revenue in Q1.
• Sales to other credit bureaus declined due to reduced marketing and increased competition.

Here is a summary of the Q&A highlights from the conference call:

Impact of Interest Rates on Business

Interest rates are expected to have a tailwind on the mortgage market as they normalize. The talent vertical is expected to grow as well.

Cloud Migration

The cloud migration is anticipated to benefit margin expansion and revenue growth in 2024 and beyond.

VantageScores

The addition of VantageScores alongside FICO scores is not expected until 2025.

Here is a snippet from a news article that accompanies the provided information:

"Equifax is off to a strong start in 2024, with first-quarter results that beat expectations," said Trevor Burns, senior vice president of corporate investor relations at Equifax. "Our focus on revenue growth, enhanced profitability, and the continued evolution of our data and technology offerings positions us well to deliver sustainable long-term growth."

The article also notes that Equifax's revenue growth was driven by a strong performance in its core mortgage business, and that the company's focus on revenue growth, enhanced profitability, and the continued evolution of its data and technology offerings positions it well for sustainable long-term growth.

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