Equifax’s Solid Financial Performance in 2024

Equifax, a leading global data, analytics and technology company, has reported strong financial results for the third quarter and first nine months of 2024. The company’s diverse business segments, geographic reach, and focus on innovation have contributed to its continued success.

Segment and Geographic Information

Equifax operates through three main segments: Workforce Solutions, U.S. Information Solutions (USIS), and International.

The Workforce Solutions segment provides employment and income verification services, as well as human resources business process outsourcing services. This segment has operations in Canada, Australia, and the U.K.

The USIS segment offers a range of consumer and commercial credit reporting, identity management, fraud detection, and credit monitoring services. It also provides financial marketing services.

The International segment consists of operations in Asia Pacific, Europe, Canada, and Latin America, providing services similar to those offered in the USIS segment.

Geographically, Equifax has operations in 22 countries, with approximately 76% of its revenue generated in the U.S. during the first nine months of 2024.

Key Performance Indicators

Equifax’s management closely monitors several key performance indicators, including operating revenue, operating income, net income, earnings per share, cash flow from operations, and capital expenditures. These metrics demonstrate the company’s strong financial position and operational efficiency.

In the third quarter of 2024, Equifax reported:

• Operating revenue of $1,441.8 million, a 9% increase from the same period in 2023
• Operating income of $247.1 million, with an operating margin of 17.1%
• Net income attributable to Equifax of $141.3 million, or $1.13 per diluted share

For the first nine months of 2024, the company reported:

• Operating revenue of $4,261.7 million, an 8% increase from the same period in 2023
• Operating income of $754.0 million, with an operating margin of 17.7%
• Net income attributable to Equifax of $430.1 million, or $3.44 per diluted share

Operational and Financial Highlights

Equifax did not repurchase any shares from public market transactions during the first nine months of 2024 and 2023. The company had $520.2 million available for future share repurchases at the end of September 2024.

Equifax paid out $144.8 million, or $1.17 per share, in dividends to shareholders during the first nine months of 2024.

Consolidated Financial Results

Equifax’s consolidated operating revenue increased by 9% and 8% in the third quarter and first nine months of 2024, respectively, compared to the same periods in 2023. This growth was driven by strong performance across all three business segments.

The Workforce Solutions segment saw a 7% and 5% increase in revenue for the third quarter and first nine months of 2024, respectively, primarily due to growth in the Verification Services business line, partially offset by declines in the Employer Services business line.

The USIS segment reported a 12% and 10% increase in revenue for the third quarter and first nine months of 2024, respectively, driven by growth in mortgage-related online services, Mortgage Solutions, and Financial Marketing Services.

The International segment experienced a 9% and 13% increase in revenue for the third quarter and first nine months of 2024, respectively, with strong performance in Latin America, Europe, and Canada.

Consolidated operating expenses increased by 11% and 8% in the third quarter and first nine months of 2024, respectively, compared to the same periods in 2023. This was primarily due to higher costs of services, selling, general and administrative expenses, and depreciation and amortization.

Equifax’s consolidated operating margin decreased by 1.6 percentage points in the third quarter of 2024 but increased by 0.2 percentage points in the first nine months of 2024, compared to the same periods in 2023. The margin decrease in the third quarter was due to the increase in operating expenses, while the margin increase in the first nine months was driven by the higher reported revenue.

Interest Expense and Other Income, Net

Equifax’s interest expense decreased by 10% and 4% in the third quarter and first nine months of 2024, respectively, compared to the same periods in 2023. This was primarily due to lower debt balances and a lower weighted average cost of debt.

Other income, net, decreased by 58% and 84% in the third quarter and first nine months of 2024, respectively, compared to the same periods in 2023. This was mainly due to lower interest income from investments and losses on foreign currency transactions, as well as the absence of a gain on the fair market value adjustment of the company’s investment in Boa Vista Serviços S.A. (BVS) that was recorded in 2023.

Income Taxes

Equifax’s effective income tax rate was 26.4% and 25.8% for the third quarter and first nine months of 2024, respectively, compared to 13.9% and 22.0% for the same periods in 2023. The higher effective tax rates in 2024 were primarily due to the write-off of a deferred tax liability related to the company’s original investment in BVS in 2023, which was no longer necessary after the acquisition of BVS.

Segment Financial Results

The Workforce Solutions segment reported a 7% and 5% increase in revenue for the third quarter and first nine months of 2024, respectively, compared to the same periods in 2023. This was driven by growth in the Verification Services business line, partially offset by declines in the Employer Services business line.

The USIS segment saw a 12% and 10% increase in revenue for the third quarter and first nine months of 2024, respectively, compared to the same periods in 2023. This was primarily due to growth in mortgage-related online services, Mortgage Solutions, and Financial Marketing Services.

The International segment experienced a 9% and 13% increase in revenue for the third quarter and first nine months of 2024, respectively, compared to the same periods in 2023. This was driven by strong performance in Latin America, Europe, and Canada.

Liquidity and Financial Condition

Equifax continues to maintain a strong financial position, with $468.2 million in cash and cash equivalents and $1,498.6 million available to borrow under its $1.5 billion revolving credit facility as of September 30, 2024.

Cash provided by operating activities increased by $205.0 million in the first nine months of 2024 compared to the same period in 2023, primarily due to changes in the company’s working capital position.

Capital expenditures decreased by $63.0 million in the first nine months of 2024 compared to the same period in 2023, as the company made progress on its technology transformation initiatives.

Equifax did not complete any acquisitions during the first nine months of 2024, while it had completed the acquisition of Boa Vista Serviços S.A. and a Canadian company within its International segment in the first nine months of 2023.

The company paid $144.8 million in dividends to shareholders during the first nine months of 2024 and did not repurchase any shares of its common stock on the open market.

Outlook and Conclusion

Equifax’s strong financial performance in 2024, driven by growth across its business segments and geographic regions, demonstrates the company’s ability to execute its strategic initiatives and adapt to market conditions. The company’s focus on innovation, data and technology, and operational efficiency has positioned it well to continue delivering value to its shareholders.

Despite the challenges posed by macroeconomic factors, such as changes in foreign exchange rates, Equifax has maintained a solid financial position and generated substantial cash flow from its operations. The company’s liquidity, access to capital markets, and disciplined capital allocation strategy provide it with the flexibility to invest in its business, pursue strategic opportunities, and return capital to shareholders.

As Equifax looks to the future, it remains committed to leveraging its data, analytics, and technology capabilities to drive sustainable growth and create long-term value for its stakeholders.