Equifax (EFX) Q2 Earnings call transcript Jul 18, 2024
2min read In a recent earnings call, Equifax Inc. reported a strong second quarter with revenue growth of 9%, exceeding the top end of its guidance. The company's global non-mortgage businesses, which account for about 80% of total Equifax revenue, saw strong 13% current constant currency revenue growth, driven by the USIS and EWS divisions.
A significant highlight of the call was Equifax's progress in its cloud transformation, with over 80% of the company's revenue expected to be in the Equifax Cloud by year-end. This migration is expected to provide a competitive advantage by allowing the company to focus on growth, innovation, and new products. The company also highlighted its success in migrating its three largest data exchanges to the Equifax Cloud, including USIS, which is expected to accelerate innovation and new product development.
The second quarter also saw strong performance from Workforce Solutions, with revenue up 5% and non-mortgage verification services revenue up 20%. The government vertical, in particular, showed strong growth of 30%, driven by the EWS division's ability to deliver digital income employment and incarceration data to federal agencies, helping to ensure program integrity and accelerate the delivery of needed social services.
The company's outlook for the rest of 2024 is positive, with revenue expected to grow by 8.6% and adjusted EPS by 9.5%. This guidance implies a strong second-half for Equifax, with revenue at the midpoint of $2.9 billion, up over 9.5%, and adjusted EPS of $4.03 per share, up 13%. Despite the current challenges in the mortgage market, Equifax is confident in its ability to grow mortgage revenue by 18% in the second-half and to achieve significant future mortgage market improvements as rates come down and market activity returns to normal levels.
Equifax is also making significant progress in its international operations, with revenue up 28% in constant currency and 12% in organic constant currency. The company expects to complete cloud migrations and decommissioning in key international markets, including Canada, Europe, and Latin America, by year-end. This will enable Equifax to begin development of new products that integrate TWN income and employment data with USIS credit data solutions for mortgage, auto, cards, and P loans.
The company's innovation efforts, particularly in AI and machine learning, are also noteworthy. Equifax has accelerated the pace of developing new models and scores using AI and ML in areas such as identity and fraud and consumer loan affordability, driving performance and predictability of its solutions.
Despite the challenges faced in the second quarter, particularly in the USIS division, Equifax remains confident in its long-term model of delivering 8% to 12% revenue growth with 50-plus-basis points of margin expansion annually. The company is focused on completing its North America cloud transformation, driving innovation through EFX.AI, and leveraging its new Equifax Cloud capabilities to drive top and bottom line growth.
In conclusion, Equifax's strong second quarter results and outlook for the rest of 2024 demonstrate the company's resilience and strategic focus on innovation and growth. Despite challenges in certain areas, such as the mortgage market and tight credit conditions, Equifax is confident in its ability to navigate these challenges and continue to deliver value to its customers and shareholders. The company's commitment to its cloud transformation and strategic investments in AI and machine learning position it well for future growth and success.