Equifax's 2024 Earnings: EPS Misses Expectations, but Cloud Migration and Acquisitions Drive Growth

Equifax, the global leader in consumer credit reporting, reported its full-year 2024 earnings on February 24, 2025, with earnings per share (EPS) missing analyst expectations. Despite this, the company's revenue growth and strategic initiatives, such as cloud migration and acquisitions, have driven its financial performance and future prospects. Let's delve into the key factors contributing to Equifax's EPS miss and explore the strategic initiatives that have positioned the company for growth.

Equifax's EPS missed analyst expectations primarily due to a decline in operating margin, rising costs, high debt load, legal proceedings, and economic sensitivity. The company's operating margin declined from 20.6% in 2022 to 18.3% in 2024, signaling rising costs outpacing revenue growth. This decline in profitability negatively impacted EPS. Equifax's high debt load of $5.0 billion, with $688 million due within a year, increases financial risk and sensitivity to interest rate changes. Ongoing legal proceedings and government investigations, including CFPB inquiries and Canadian class actions related to the 2017 cybersecurity incident, represent potential liabilities and reputational risks. Equifax's sensitivity to economic conditions, particularly in the mortgage market, could pressure revenue and earnings in the future. The expectation of weaker U.S. mortgage credit activity in 2025 could further impact earnings.



Despite the EPS miss, Equifax's revenue growth in different segments contributed to the overall earnings performance. The Workforce Solutions segment's revenue grew by 7% in the fourth quarter of 2024, driven by strong 10% Verification Services revenue growth led by the Government and Mortgage businesses. The USIS segment's revenue grew by over 10% in the fourth quarter, led by very strong 47% Mortgage revenue growth. The International segment's revenue grew by 11% on a local currency basis and 3% on a reported basis, with Latin America leading the growth with a 29% increase in revenue on a local currency basis.

Equifax's strategic initiatives, such as cloud migration and acquisitions, have significantly impacted its financial performance and future prospects. The company's strategic focus on cloud migration reshaped its technology infrastructure, aiming to enhance agility and innovation. By the end of 2024, close to 85% of the company's revenue was generated from the new EFX Cloud. This migration led to a 12% increase in the New Product Vitality Index, demonstrating the success of leveraging new cloud capabilities for product innovation. The cloud transformation is expected to boost innovation and efficiency, driving growth in 2025 and beyond, and delivering higher margins and accelerating free cash flow in the future.

Equifax's acquisition of Boa Vista Serviços (BVS) in Latin America was a key driver of international growth. In 2024, Latin America led the region with 32% revenue growth, boosted by the BVS acquisition. The BVS acquisition demonstrates Equifax's commitment to international expansion, particularly in Latin America, but integration and FX risks need careful management. Successful execution of these acquisitions is crucial for long-term competitiveness, as they position Equifax to capitalize on growing market needs and potentially create stronger moats.



In conclusion, Equifax's EPS miss in 2024 was primarily driven by a decline in operating margin, rising costs, high debt load, legal proceedings, and economic sensitivity. Despite this, the company's revenue growth in different segments and strategic initiatives, such as cloud migration and acquisitions, have positioned Equifax for future growth. As investors, we must remain vigilant and monitor Equifax's progress in managing its costs, reducing financial risk, addressing legal and reputational issues, and adapting to economic changes. By doing so, we can capitalize on the company's strategic initiatives and potential growth opportunities.