Equifax Delivers Strong Second Quarter 2024 Revenue Growth of 9% Led by Workforce Solutions Non-Mortgage Verification Services
ATLANTA, July 17, 2024 /PRNewswire/ -- Equifax® (NYSE: EFX) today announced financial results for the quarter ended June 30, 2024.
- Second quarter 2024 revenue of $1.430 billion grew a strong 9%, with 13% non-mortgage local currency revenue growth.
- U.S. mortgage revenue grew 4% in the second quarter despite a 13% decline in USIS mortgage credit inquiries.
- Workforce Solutions second quarter revenue grew 5%, with 12% non-mortgage revenue growth from 20% Verification Services non-mortgage revenue growth led by Government and Talent Solutions. Mortgage revenue was down 12%.
- USIS second quarter revenue growth of 7% with 27% mortgage revenue growth and 1% non-mortgage revenue growth.
- International second quarter revenue growth of 17% on a reported basis and up 28% on a local currency basis, with organic local currency revenue growth of 12%.
- Significant new product innovation leveraging new EFX Cloud with 12.5% new product Vitality Index in the second quarter and 89% of new models and scores built using Artificial Intelligence and Machine Learning.
- Maintaining full-year 2024 guidance with midpoint expectation for revenue of $5.720 billion, up 8.6%, with strong non-mortgage local currency revenue growth of over 10% and Adjusted EPS of $7.35.
"Equifax had a strong second quarter against our EFX2026 strategic priorities in a challenging mortgage market delivering revenue of $1.430 billion, up a strong 9%. EWS Verification Services revenue was up a very strong 9% driven by Government revenue up 30%. Our U.S. mortgage business grew 4% despite a 13% decline in USIS mortgage credit inquiries. USIS had strong 27% growth in mortgage revenue, with EWS mortgage revenue down 12% - both as expected.
"Our non-mortgage business, which was about 80% of Equifax revenue in the second quarter, delivered very strong broad-based 13% local currency revenue growth, from continued significant new product performance with a New Product Vitality Index of 12.5% and 89% of new models and scores built using AI and ML. Workforce Solutions delivered very strong 20% non-mortgage Verification Services revenue growth led by the Government and Talent Solutions businesses, with 12% overall non-mortgage revenue growth. International delivered strong 12% organic local currency revenue growth, led by Latin America and Europe. USIS non-mortgage revenue growth of 1% was consistent with the first quarter. We expect improving USIS non-mortgage growth in the Second Half as we complete the full migration of our USIS consumer business to the Cloud early this quarter," said Mark W. Begor, Equifax Chief Executive Officer.
"We are maintaining our full-year 2024 guidance with a midpoint expectation for revenue of $5.720 billion, up 8.6% on a reported basis and organic local currency growth of 8.5%, and Adjusted EPS of $7.35. While Equifax continues to execute well against its EFX2026 strategic priorities, our 2024 guidance reflects an expectation of a decline of about 11% in our 2024 U.S. mortgage credit inquiries, which is consistent with the current run-rates, and compares to down 34% in 2023. Adjusted EBITDA and Adjusted EPS continue to benefit from organic revenue growth and the additional cost savings from Cloud spending reduction plans.
"We have strong momentum in 2024 and are confident in the future of the New Equifax as we deliver strong non-mortgage revenue growth, move towards completion of our Cloud transformation, leverage our new Cloud capabilities to accelerate new product roll-outs that 'Only Equifax' can provide, and invest in new products, data, analytics, and AI capabilities, which are expected to drive growth in 2024 and beyond. We are energized about the New Equifax and remain confident in our long-term 8-12% revenue growth framework that is expected to deliver higher margins and free cash flow."
Financial Results Summary
The Company reported revenue of $1,430.5 million in the second quarter of 2024, up 9% on a reported basis and up 11% on a local currency basis compared to the second quarter of 2023.
Net income attributable to Equifax of $163.9 million was up 19% in the second quarter of 2024 compared to $138.3 million in the second quarter of 2023.
Diluted EPS attributable to Equifax was $1.31 per share for the second quarter of 2024, up 17% compared to $1.12 per share in the second quarter of 2023.
Workforce Solutions second quarter results:
- Total revenue was $612.9 million in the second quarter of 2024, up 5% compared to the second quarter of 2023. Operating margin for Workforce Solutions was 44.5% in the second quarter of 2024 compared to 42.0% in the second quarter of 2023. Adjusted EBITDA margin for Workforce Solutions was 52.8% in the second quarter of 2024 compared to 51.5% in the second quarter of 2023.
- Verification Services revenue was $515.9 million, up 9% compared to the second quarter of 2023.
- Employer Services revenue was $97.0 million, down 11% compared to the second quarter of 2023.
USIS second quarter results:
- Total revenue was $478.3 million in the second quarter of 2024, up 7% compared to the second quarter of 2023. Operating margin for USIS was 20.6% in the second quarter of 2024 compared to 23.1% in the second quarter of 2023. Adjusted EBITDA margin for USIS was 33.2% in the second quarter of 2024 compared to 36.0% in the second quarter of 2023.
- Online Information Solutions revenue was $377.8 million, up 5% compared to the second quarter of 2023.
- Mortgage Solutions revenue was $40.4 million, up 33% compared to the second quarter of 2023.
- Financial Marketing Services revenue was $60.1 million, up 7% compared to the second quarter of 2023.
International second quarter results:
- Total revenue was $339.3 million in the second quarter of 2024, up 17% and up 28% compared to the second quarter of 2023 on a reported and local currency basis, respectively. Operating margin for International was 11.9% in both the second quarter of 2024 and the second quarter of 2023. Adjusted EBITDA margin for International was 25.6% in the second quarter of 2024, compared to 24.2% in the second quarter of 2023.
- Latin America revenue was $97.3 million, up 71% compared to the second quarter of 2023 on a reported basis and up 124% on a local currency basis.
- Europe revenue was $88.2 million, up 12% compared to the second quarter of 2023 on both a reported basis and a local currency basis.
- Asia Pacific revenue was $84.6 million, down 4% compared to the second quarter of 2023 on a reported basis and down 2% on a local currency basis.
- Canada revenue was $69.2 million, up 4% compared to the second quarter of 2023 on a reported basis and up 6% on a local currency basis.
Adjusted EPS and Adjusted EBITDA Margin:
- Adjusted EPS attributable to Equifax was $1.82 in the second quarter of 2024, up 6% compared to the second quarter of 2023.
- Adjusted EBITDA margin was 32.0% in the second quarter of 2024 compared to 32.7% in the second quarter of 2023.
- These financial measures exclude certain items as described further in the Non-GAAP Financial Measures section below.
2024 Third Quarter and Full Year Guidance | |||||||
Q3 2024 | FY 2024 | ||||||
Low-End | High-End | Low-End | High-End | ||||
Reported Revenue | $1.425 billion | $1.445 billion | $5.690 billion | $5.750 billion | |||
Reported Revenue Growth | 8.0 % | 9.5 % | 8.1 % | 9.2 % | |||
Local Currency Growth (1) | 9.9 % | 11.4 % | 9.9 % | 11.0 % | |||
Organic Local Currency Growth (1) | 8.6 % | 10.1 % | 7.9 % | 9.0 % | |||
Adjusted Earnings Per Share | $1.75 per share | $1.85 per share | $7.22 per share | $7.47 per share | |||
(1) Refer to page 8 for definitions. |
About Equifax
At Equifax (NYSE: EFX), we believe knowledge drives progress. As a global data, analytics, and technology company, we play an essential role in the global economy by helping financial institutions, companies, employers, and government agencies make critical decisions with greater confidence. Our unique blend of differentiated data, analytics, and cloud technology drives insights to power decisions to move people forward. Headquartered in Atlanta and supported by nearly 15,000 employees worldwide, Equifax operates or has investments in 24 countries in North America, Central and South America, Europe, and the Asia Pacific region. For more information, visit www.equifax.com.
Earnings Conference Call and Audio Webcast
In conjunction with this release, Equifax will host a conference call on July 18, 2024 at 8:30 a.m. (ET) via a live audio webcast. To access the webcast and related presentation materials, go to the Investor Relations section of our website at www.equifax.com. The discussion will be available via replay at the same site shortly after the conclusion of the webcast. This press release is also available at that website.
Non-GAAP Financial Measures
This earnings release presents adjusted EPS attributable to Equifax which is diluted EPS attributable to Equifax adjusted (to the extent noted above for different periods) for acquisition-related amortization expense, accrual for legal and regulatory matters related to the 2017 cybersecurity incident, fair market value adjustment and gain on sale of equity investments, foreign currency impact of certain intercompany loans, acquisition-related costs other than acquisition amortization, income tax effect of stock awards recognized upon vesting or settlement, Argentina highly inflationary foreign currency adjustment, and realignment of resources and other costs. All adjustments are net of tax, with a reconciling item with the aggregated tax impact of the adjustments. This earnings release also presents (i) adjusted EBITDA and adjusted EBITDA margin which is defined as consolidated net income attributable to Equifax plus net interest expense, income taxes, depreciation and amortization, and also excludes certain one-time items, (ii) local currency revenue change which is calculated by conforming 2024 results using 2023 exchange rates and (iii) organic local currency revenue growth which is defined as local currency revenue growth, adjusted to reflect an increase in prior year Equifax revenue from the revenue of acquired companies in the prior year period. These are important financial measures for Equifax but are not financial measures as defined by GAAP.
These non-GAAP financial measures should be reviewed in conjunction with the relevant GAAP financial measures and are not presented as an alternative measure of net income or EPS as determined in accordance with GAAP.
Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures and related notes are presented in the Q&A. This information can also be found under "Investor Relations/Financial Information/Non-GAAP Financial Measures" on our website at www.equifax.com.
Forward-Looking Statements
This release contains forward-looking statements and forward-looking information. These statements can be identified by expressions of belief, expectation or intention, as well as statements that are not historical fact. These statements are based on certain factors and assumptions including with respect to foreign exchange rates, revenue growth, results of operations and financial performance, strategic initiatives, business plans, prospects and opportunities, the U.S. mortgage market, economic conditions and effective tax rates.
While Equifax believes these factors and assumptions to be reasonable based on information currently available, they may prove to be incorrect. Several factors could cause actual results to differ materially from those expressed or implied in the forward-looking statements. These factors relate to (i) actions taken by us, including, but not limited to, restructuring actions, strategic initiatives (such as our cloud technology transformation), capital investments and asset acquisitions or dispositions, as well as (ii) developments beyond our control, including, but not limited to, changes in the U.S. mortgage market environment and changes more generally in U.S. and worldwide economic conditions (such as changes in interest rates and inflation levels) that materially impact consumer spending, home prices, investment values, consumer debt, unemployment rates and the demand for Equifax's products and services. Deteriorations in economic conditions or increases in interest rates could lead to a decline in demand for our products and services and negatively impact our business. It may also impact financial markets and corporate credit markets, which could adversely impact our access to financing or the terms of any financing.
Other risk factors relevant to our business include: (i) any compromise of Equifax, customer or consumer information due to security breaches and other disruptions to our information technology infrastructure; (ii) the failure to achieve and maintain key industry or technical certifications; (iii) the failure to realize the anticipated benefits of our cloud technology transformation strategy; (iv) operational disruptions and strain on our resources caused by our transition to cloud-based technologies; (v) our ability to meet customer requirements for high system availability and response time performance; (vi) effects on our business if we provide inaccurate or unreliable data to customers; (vii) our ability to maintain access to credit, employment, financial and other data from external sources; (viii) the impact of competition; (ix) our ability to maintain relationships with key customers; (x) our ability to successfully introduce new products, services and analytical capabilities; (xi) the impact on the demand for some of our products and services due to the availability of free or less expensive consumer information; (xii) our ability to comply with our obligations under settlement agreements arising out of the 2017 cybersecurity incident; (xiii) potential adverse developments in new and pending legal proceedings, government investigations and regulatory enforcement actions; (xiv) changes in, and the effects of, laws, regulations and government policies governing our business, including oversight by the Consumer Financial Protection Bureau in the U.S., the U.K. Financial Conduct Authority and Information Commissioner's Office in the U.K., and the Office of Australian Information Commission and the Australian Competition and Consumer Commission in Australia; (xv) the impact of privacy laws and regulations; (xvi) the economic, political and other risks associated with international sales and operations; (xvii) the impact on our reputation and business if we are unable to fulfill our environmental, social and governance commitments; (xviii) our ability to realize the anticipated strategic and financial benefits from our acquisitions, joint ventures and other alliances; (xix) any damage to our reputation due to our dependence on outsourcing certain portions of our operations; (xx) the termination or suspension of our government contracts; (xxi) the impact of infringement or misappropriation of intellectual property by us against third parties or by third parties against us; (xxii) an increase in our cost of borrowing and our ability to access the capital markets due to a credit rating downgrade; (xxiii) our ability to hire and retain key personnel; (xxiv) the impact of adverse changes in the financial markets and corresponding effects on our retirement and post-retirement pension plans; (xxv) the impact of health epidemics, pandemics and similar outbreaks on our business; and (xxvi) risks associated with our use of certain artificial intelligence and machine learning models.
A summary of additional risks and uncertainties can be found in our Annual Report on Form 10-K for the year ended December 31, 2023 including, without limitation, under the captions "Item 1. Business -- Governmental Regulation" and "-- Forward-Looking Statements" and "Item 1A. Risk Factors" and in our other filings with the U.S. Securities and Exchange Commission. Forward-looking statements are given only as at the date of this release and Equifax disclaims any obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
EQUIFAX INC. CONSOLIDATED STATEMENTS OF INCOME | ||||
Three Months Ended June 30, | ||||
2024 | 2023 | |||
(In millions, except per share amounts) | (Unaudited) | |||
Operating revenue | $ 1,430.5 | $ 1,317.6 | ||
Operating expenses: | ||||
Cost of services (exclusive of depreciation and amortization below) | 630.9 | 588.0 | ||
Selling, general and administrative expenses | 352.6 | 343.1 | ||
Depreciation and amortization | 164.8 | 149.6 | ||
Total operating expenses | 1,148.3 | 1,080.7 | ||
Operating income | 282.2 | 236.9 | ||
Interest expense | (57.3) | (60.7) | ||
Other (expense) income, net | (0.3) | 15.9 | ||
Consolidated income before income taxes | 224.6 | 192.1 | ||
Provision for income taxes | (59.4) | (52.7) | ||
Consolidated net income | 165.2 | 139.4 | ||
Less: Net income attributable to noncontrolling interests including redeemable noncontrolling interests | (1.3) | (1.1) | ||
Net income attributable to Equifax | $ 163.9 | $ 138.3 | ||
Basic earnings per common share: | ||||
Net income attributable to Equifax | $ 1.32 | $ 1.13 | ||
Weighted-average shares used in computing basic earnings per share | 123.7 | 122.7 | ||
Diluted earnings per common share: | ||||
Net income attributable to Equifax | $ 1.31 | $ 1.12 | ||
Weighted-average shares used in computing diluted earnings per share | 124.8 | 123.8 | ||
Dividends per common share | $ 0.39 | $ 0.39 | ||
EQUIFAX INC. CONDENSED CONSOLIDATED BALANCE SHEETS | ||||
June 30, 2024 | December 31, 2023 | |||
(In millions, except par values) | (Unaudited) | |||
ASSETS | ||||
Current assets: | ||||
Cash and cash equivalents | $ 181.9 | $ 216.8 | ||
Trade accounts receivable, net of allowance for doubtful accounts of $16.7 at June 30, 2024 and December 31, 2023 | 1,012.4 | 908.2 | ||
Prepaid expenses | 148.5 | 142.5 | ||
Other current assets | 74.8 | 88.8 | ||
Total current assets | 1,417.6 | 1,356.3 | ||
Property and equipment: | ||||
Capitalized internal-use software and system costs | 2,698.0 | 2,541.0 | ||
Data processing equipment and furniture | 253.7 | 247.9 | ||
Land, buildings and improvements | 283.9 | 272.9 | ||
Total property and equipment | 3,235.6 | 3,061.8 | ||
Less accumulated depreciation and amortization | (1,350.3) | (1,227.8) | ||
Total property and equipment, net | 1,885.3 | 1,834.0 | ||
Goodwill | 6,746.5 | 6,829.9 | ||
Indefinite-lived intangible assets | 94.8 | 94.8 | ||
Purchased intangible assets, net | 1,690.3 | 1,858.8 | ||
Other assets, net | 317.8 | 306.2 | ||
Total assets | $ 12,152.3 | $ 12,280.0 | ||
LIABILITIES AND EQUITY | ||||
Current liabilities: | ||||
Short-term debt and current maturities of long-term debt | $ 769.6 | $ 963.4 | ||
Accounts payable | 201.9 | 197.6 | ||
Accrued expenses | 238.4 | 245.1 | ||
Accrued salaries and bonuses | 144.6 | 168.7 | ||
Deferred revenue | 104.6 | 109.5 | ||
Other current liabilities | 327.8 | 334.7 | ||
Total current liabilities | 1,786.9 | 2,019.0 | ||
Long-term debt | 4,742.7 | 4,747.8 | ||
Deferred income tax liabilities, net | 426.6 | 474.9 | ||
Long-term pension and other postretirement benefit liabilities | 95.8 | 100.1 | ||
Other long-term liabilities | 266.7 | 250.7 | ||
Total liabilities | 7,318.7 | 7,592.5 | ||
Redeemable noncontrolling interests | 120.8 | 135.1 | ||
Equifax shareholders' equity: | ||||
Preferred stock, $0.01 par value: Authorized shares - 10.0; Issued shares - none | — | — | ||
Common stock, $1.25 par value: Authorized shares - 300.0; Issued shares - 189.3 at June 30, 2024 and December 31, 2023; Outstanding shares - 123.7 and 123.3 at June 30, 2024 and December 31, 2023, respectively | 236.6 | 236.6 | ||
Paid-in capital | 1,856.8 | 1,761.3 | ||
Retained earnings | 5,800.4 | 5,608.6 | ||
Accumulated other comprehensive loss | (544.3) | (431.2) | ||
Treasury stock, at cost, 65.0 and 65.4 shares at June 30, 2024 and December 31, 2023, respectively | (2,647.6) | (2,635.3) | ||
Stock held by employee benefits trusts, at cost, 0.6 shares at June 30, 2024 and December 31, 2023 | (5.9) | (5.9) | ||
Total Equifax shareholders' equity | 4,696.0 | 4,534.1 | ||
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