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Equifax reports strong Q4 results, shares slip on weak outlook

AInvestThursday, Feb 8, 2024 10:44 am ET
1min read

Equifax, a cornerstone in the U.S. credit bureau industry, has unveiled its financial milestones for the fourth quarter and the entirety of 2023, marking substantial growth amidst a fluctuating economic landscape. The company's fourth-quarter revenue surged by 11% to $1.327 billion, with an annual increment of 3% reaching $5.265 billion. The quarter saw a climb in net income to $132.4 million, with diluted EPS escalating to $1.06 from the previous year's $0.88 in the same period.

A standout performer, the Workforce Solutions segment, which holds a significant revenue share, reported a 10% revenue hike, buoyed by a remarkable 27% leap in non-mortgage Verification Services revenue. This leap was fueled by expansions within Government and Talent businesses. The US Information Solutions (USIS) segment contributed with a 5% revenue boost, while the International segment enjoyed a 20% increase on a reported basis and 22% on a local currency basis, including an organic local currency revenue growth of 6%.

Equifax's Q4 financial success mirrors the company's resilience against the mortgage market's downturn, showcasing an 11% revenue growth and a 19% surge in Adjusted EPS to $1.81 per share. The strategic shift towards non-mortgage revenue streams, now exceeding 80% of total revenue, yielded a 14% local currency revenue growth in these segments.

Nonetheless, Equifax faces industry challenges, notably a 17% downturn in 2023's mortgage revenue and an anticipated decline exceeding 16% in U.S. mortgage credit inquiries for 2024. The company's 2024 outlook acknowledges these challenges while also predicting an outperformance of approximately 24% in the U.S. mortgage market across USIS and Workforce Solutions.

CEO Mark W. Begor commended the alignment of the company's robust performance with the EFX2025 strategic goals, even amidst mortgage market pressures. Begor remains optimistic about the company's 2024 trajectory, underpinned by expected robust double-digit growth in non-mortgage revenue. The culmination of the cloud transformation alongside investments in novel products, data, analytics, and AI capabilities, is projected to fuel growth in 2024 and beyond.

Looking ahead, Equifax's 2024 guidance anticipates a revenue midpoint of $5.720 billion, marking an 8.6% increase, with non-mortgage local currency revenue growth projected to exceed 10.5%. The forecasted Adjusted EPS stands at $7.35, reflective of organic revenue growth, additional cost savings from reduced cloud expenditures, and the normalization of incentive plans.

In sum, Equifax's Q4 and annual financial disclosures underscore the company's adaptability amidst market adversities. The significant growth in non-mortgage revenues, alongside a strategic emphasis on innovation and AI capabilities, heralds promising future prospects. The 2024 outlook positions Equifax to surpass the U.S. mortgage market trends and sustain its growth momentum into the forthcoming year.

$EFX(EFX)

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