Equifax Inc.
CEO : Mr. Mark W. Begor
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2022 Q4 | -4.4% YoY | -30.2% | -12.0% | 2023-02-09 |
Mark Begor says,
Revenue and EBITDA Performance
- Reported revenue for Q4 2022 was $1.2 billion, down 4.5%, and down 4% on an organic constant currency basis, but above the high end of October guidance from broad-based strength across Equifax and stronger NPI rollouts.
- Fourth quarter adjusted Equifax EBITDA totaled $371 million with an EBITDA margin of 31%.
Business Segment Performance
- Equifax US mortgage revenue was down 41% in the quarter, but outperformed the overall market by 27 percentage points with estimated US mortgage originations down 68%.
- Global non-mortgage businesses were very strong with 12% constant currency and 10% organic constant currency revenue growth, stronger than expected when provided guidance in October and at the top end of the 8% to 12% long-term growth framework.
- Workforce Solutions had outstanding performance with 17% non-mortgage revenue growth overall and 23% non-mortgage revenue growth in Verifier. Government continued very strong in Workforce Solutions with growth over 40%.
- USIS non-mortgage had an outstanding quarter, delivering very strong double-digit B2B non-mortgage growth of 10% total and 19% online, which was much better than expectations.
- International delivered another strong quarter with 9% constant dollar and 8% organic constant dollar growth, led by very strong performance in Latin America.
Transformation and Restructuring
- Strong progress was made in 2022 to complete the North American cloud transformation, with about 70% of North American revenue delivered from the new Equifax Cloud.
- Capital spending was increased by approximately $175 million to a total of $625 million to accelerate the completion of the North American cloud transformation. Capital spending will decline significantly in 2023 due to the strong progress at completing the cloud last year.
- In 2023, Equifax is executing a broad operational restructuring reflecting both the acceleration of the cloud transformation and a broader focus on operational process improvements. Total spending reductions from these actions in 2023 are expected to be about $200 million with about $120 million reduction in expenses and an $80 million reduction in CapEx.
New Product Innovation
- New product innovation executed at a very high level with a record Vitality Index of 14% in the quarter, a 500 basis point improvement from the 9% Vitality Index last year and 400 basis points above the 10% long-term new product vitality goal.
- The focus on new solutions leveraging the new Equifax Cloud is paying off.
A â Mark Begor says,
Significant Decline in Purchase Volume
- Refinancing has virtually disappeared from the mortgage market since the rates started increasing around six months ago.
- Anticipated that refi won’t come back until there’s a decline in interest rates.
- Purchase volume has significantly declined, which is 30% below the 10-year average.
Outlook for 2023
- Mortgage inquiries are expected to be 30% below the 10-year average in 2023.
- Purchase volume may improve in 2024, but it is tied to economic stabilization, including inflation and interest rates.
Economic Stabilization
- The economy’s stabilization would improve purchase volumes in the mortgage market.
- Purchase volume may improve in 2024 or 2025 if the economy stabilizes.
- Interest rate increases have flattened out, and consumers that are thinking about a home can have some confidence around where the economy is going.
Q & A sessions,
Strong and Broad-Based Quarter
- Equifax delivered above-market growth in 2022, more than offsetting the significant 55% decline in the US mortgage market originations.
- The company delivered their eighth consecutive quarter of strong, above-market double-digit core revenue growth and strong double-digit 12% non-mortgage growth.
Workforce Solutions Outstanding Year
- Workforce Solutions delivered 14% revenue growth and strong organic non-mortgage growth of 24%.
- Current records reached $152 million, up 12%, and total records surpassed 600 million.
- The Workforce Solutions team delivered a Vitality Index of over 20% from innovative new products and solutions, leveraging their cloud capabilities while further penetrating the high-growth Talent and Government verticals.
Strong Finish for USIS
- USIS had a very strong finish to 2022 with fourth quarter non-mortgage growth of 10% total and 7% organic.
- The USIS team remains competitive and is winning in the marketplace.
International Double-Digit Growth
- International delivered 12% local currency growth, their second consecutive year of double-digit growth.
- The 2022 Vitality Index of 13% was a record as the company delivered over 100 new products for the third consecutive year in a row.
Cloud-Based Technology Transformation
- Equifax has made significant progress in 2022, executing against their EFX cloud, data, and technology transformation with about 70% of North American revenue being delivered from the new Equifax Cloud.
- The company is laser-focused on completing their North American migration in 2023 to become the only cloud-native data analytics company.
- Equifax’s strong progress on the cloud allowed them to accelerate cost savings and launch a proactive restructuring across Equifax that will deliver $200 million of cost savings in 2023 that will expand their margins to 36% as they exit 2023 and position them for an uncertain economic environment.
No bad stock 