Equifax, Inc. · NYSE:EFX
Equifax — Q3 2023 Earnings Presentation
61 slides from Equifax's earnings presentation, Oct 19, 2023
Slide 1: 3Q23 Earnings Call
3Q23 3Q23 Earnings Call October 19, 2023
Slide 2: Forward-looking Statements
Forward-looking Statements This presentation contains certain forward-looking information, including fourth quarter and full year 2023 guidance, to help you understand Equifax and its business environment. All statements that address operating performance and events or developments that we expect or
Slide 3: Non-GAAP Disclosure Statement
Non-GAAP Disclosure Statement This presentation contains certain non-GAAP financial measures, including adjusted EPS and adjusted EBITDA, which reflect adjustments for certain items that affect the comparability of our underlying operational performance. Adjusted EPS is defined as net income adjusted fo
Slide 4: Strategic Priorities
EFX executing in tougher mortgage market… Non-mortgage revenue up 11% total / 7% organic, EBITDA margins expanded over 60 BPs 3Q Revenue $1.32B… Revenue below guidance range due to continued STRATEGIC PRIORITIES weaker US mortgage and negative FX impact… Outperforming underlying markets from commerc
Slide 5: Strong 11% EWS Non-mortgage Verifier growth off tough 72% comp
Strong 11% EWS Non-mortgage Verifier growth off tough 72% comp driven by strong 23% Government performance and TWN record growth Continued Mortgage Outperformance ✓ TWN records up 12%, 163M current, 641M total ✓ Signed four new payroll provider arrangements in 3Q… 21 signed since 2022, 27 signed since
Slide 6: EWS Non-mortgage revenue up 11% off 40% comp in 3Q22
EWS Non-mortgage revenue up +11% off 40% comp in 3Q22… Strong 23% Government growth EWS Revenue $2,035M $2,325M $596M $583M $577M 3Q23 Strong Gov’t Offset by Macro +39% +14% -8% -4% +3% Verifier revenue +1% total ✓ Non-mortgage +11% total ● Government +23% Non-mortgage +38% +42% ● Talent +6% +11% +4% +
Slide 7: Strong 10% USIS Online B2B Non-mortgage growth
Strong 10% USIS Online B2B Non-mortgage growth Total USIS B2B Non-Mortgage Revenue Growth 3Q23 USIS Online B2B Non-mortgage Remains Strong Inorganic ✓ B2B non-mortgage up +8% / +4% organic ✓ Online B2B non-mortgage up +10% / +6% organic ✓ 3Q23 strong double-digit growth in Commercial, Banking & Lend
Slide 8: Strong 12% INTL growth led by LATAM
Strong 12% INTL growth led by LATAM Constant Currency Revenue Growth Key Growth Areas ✓ EFX Cloud-enabled innovation ✓ Differentiated data and insights ✓ NPI acceleration across INTL platforms, particularly LatAm BVS ✓ Global platforms in local markets ✓ Bolt-on M&A to strengthen portfolio… Boa Vista
Slide 9: Strong 7% Non-mortgage organic growth off 13% comp in 3Q22
Strong 7% Non-mortgage organic growth off 13% comp in 3Q22… Strong EWS Government, USIS revenue growth EFX Non-Mortgage C$ Revenue Growth Total 8-12% BVS EFX LT Growth Framework Organic Non-mortgage C$ revenue growth accelerating in 2H23… strong EWS Government growth Note: Growth rates are in constan
Slide 10: Record 15% NPI Vitality Index
Record 15% NPI Vitality Index… 500 BPs above 10% LT Framework… ~30 NPIs in Quarter Vitality Index1 and NPIs 3Q Product Roll-Outs 3Q 15% ● Specialty Finance Exchange (USIS) - Develops foundation for creating more financially inclusive products with greater coverage through use of nontraditional source
Slide 11: BVS adding $160 million run-rate revenue in $2B Brazil market
BVS adding $160 million run-rate revenue in $2B Brazil market Estimated Brazilian TAM for BVS’s Product EFX will accelerate BVS’ Technology, Product, Offerings and Data Transformation ✓ EFX talent and processes ✓ Move to EFX Cloud, add ~$700M Credit Bureau Interconnect, Ignite, ID&F platforms ✓ Cloud
Slide 12: Expected Mortgage inquiries down additional 3 points from July Framework
Expected Mortgage inquiries down additional 3 points from July Framework to - 34%… -$47M 4Q impact Mortgage Market Credit Inquiries EFX 2023 Guidance Assumption YoY Growth 2015-2019 Average Level of Inquiries Number of Inquiries 2015 2016 2017 2018 2019 2020 2021 2022 2023 Full year 15% 12% -6% -8%
Slide 13: 4Q23 Guidance
4Q23 Guidance 4Q 2023 $ vs 4Q 2022 % vs 4Q 2022 Revenue1 $1,307M - $1,327M $109M - $129M 9.1% - 10.8%1 Adjusted EPS1 $1.72 - $1.82 / share $0.20 - $0.30 / share 13.3% - 19.9% Revenue Adj. EBITDA Business Units Growth Rate Margins (YTY) Guidance Specifics Workforce Solutions ~8% ~50.5% Depreciation an
Slide 14: 2023 Guidance
2023 Guidance 2023 $ vs 2022 % vs 2022 Revenue1 $5,246M - $5,266M $124M - $144M 2.4% - 2.8%1 Adjusted EPS1 $6.62 - $6.72 / share (-$0.94) - (-$0.84) / share (-12.5%) - (-11.1%) Revenue Adj. EBITDA Business Units Growth Rate Margins (YTY) Guidance Specifics Workforce Solutions ~(-0.5%) ~50.5% Deprecia
Slide 15: Strong 9% 2023 Non-mortgage growth in challenging mortgage market
Strong 9% 2023 Non-mortgage growth in challenging mortgage market Delivered on 3Q Margin and EPS framework against challenging mortgage macro… Adjusted EPS and Adjusted EBITDA margins in-line with expectations… EBITDA margins +60 bp sequentially Strong 11% EWS Non-mortgage growth… signed 4 new payro
Slide 16: PROPRIETARY | 16
PROPRIETARY | 16
Slide 17: Trevor Burns, Investor Relations
Trevor Burns • Investor Relations • trevor.burns@equifax.com Copyright © 2023, Equifax Inc. All Rights Reserved. Equifax is a registered trademark of Equifax Inc.
Slide 18: Investor Relations October 2023
Investor Relations October 2023
Slide 19: Index
Index Pages The New EFX 20-33 Workforce Solutions Overview 34-37 Identity and Fraud Overview 38-41 Supplemental Financial Information 42-56 Glossary 57-60 PROPRIETARY | 19
Slide 20: The New EFX
The New EFX PROPRIETARY | 20
Slide 21: The New Equifax… we are just getting started
The New Equifax… we are just getting started EFX Revenue Growth The New EFX Yesterday Today Technology Legacy Cloud-native Data Siloed Single Data Fabric New EFX Innovation Process-driven Agile, customer-driven NPI Sales-centric Product-centric EWS #2 BU Largest business M&A Opportunistic Accelerate
Slide 22: EFX Long Term Framework
EFX Long Term Framework Long Term Financial Framework New EFX Organic revenue growth 7-10% LTFF Revenue Growth M&A contribution 1-2% EWS USIS INTL Total growth 8-12% 13-15% 6-8% 7-9% EBITDA% margin improvement +50 bps Cash EPS growth 12-16% Dividend yield ~1% Annual shareholder return 13-18% Faster
Slide 23: The EFX Cloud
The EFX Cloud PROPRIETARY | 23
Slide 24: EFX Transformation to Cloud Native on Track
EFX Transformation to Cloud Native on Track TECHNOLOGY Remediation Migrations, Driving decom Robust NPI Migrate data, Enabled rapid and Build out core decom, and enabling pipeline with products, and global product transformation infrastructure and new new markets & faster path to customers developme
Slide 25: A Robust Foundation for Comprehensive Solutions
A Robust Foundation for Comprehensive Solutions Insights are Created Through Connected and Differentiated Data Consumer Telco, Cable Employment Consumer Education & Credit & Utility & Income Consented Credentials Traditional Unique Direct from Information Degree, & Specialty National Data Employers O
Slide 26: Broadening Our Global Presence in Important Growth Markets
Broadening Our Global Presence in Important Growth Markets CANADA UNITED KINGDOM UNITED STATES IBERIA INDIA Key Revenue Drivers Consumer Credit Brazil Commercial Credit LATAM Employment & Income AUSTRALIA NEW ZEALAND Identity & Fraud Analytics Collections PROPRIETARY | 26
Slide 27: A Strong Portfolio of Businesses
A Strong Portfolio of Businesses 2022 Business Mix 2022 Vertical Mix Other 2% Resellers 3% ID&F 2022 Revenue Growth 2022 Adjusted (Constant $) EBITDA Margin Healthcare 3% 5% International 12% 25.7% Financial 19% Corporate Telco 3% US (Employers) Information -7% 36.8% 16% Commercial 5% Solutions Cons
Slide 28: Workforce Solutions (WS)
Workforce Solutions (WS) Accelerating growth through The Work Number expansion, advanced analytical solutions, and vertical expertise across direct and indirect channels 2022 Revenue Mix - $2,325M Focus Areas Data HUB I-9 & Onboarding Acquisitions Commercial <1% • Grow active TWN • Grow adoption and
Slide 29: EWS Long Term Growth Framework
EWS Long Term Growth Framework Organic Revenue Growth % LTFF Growth Drivers Employer ● The Work Number® record growth thru Verifier New EFX Services direct clients, strong partnerships and 2% 13-15% alternative data 4% ● Growth in new verticals: Talent, 9-11% Government 3% 4% ● Robust set of growth l
Slide 30: US Information Solutions (USIS)
US Information Solutions (USIS) Strengthen our foundation of assets and capabilities while investing in solutions and adjacencies that accelerate sustainable growth in existing and new markets 2022 Revenue Mix - $1,658M Focus Areas Other 2% Growth in Core Markets Building Emerging Businesses ● Drive
Slide 31: USIS Long Term Growth Framework
USIS Long Term Growth Framework Organic Revenue Growth % LTFF Growth Drivers New EFX ● Enable the digital client experience: ● “Say Yes More” and frictionless, 2-3% 6-8% personalized experiences 5-7% ● Be the leader in identity solutions ~2% ● New product innovation enabled by ~1% differentiated data
Slide 32: International (INTL)
International (INTL) Address customer needs through unique data assets to drive insights delivered via strategic technology platforms complemented by M&A for geographic and domain expansion 2022 Revenue Mix - $1,139M Focus Areas Data & Insights Consumer Focus AreasB2B Commercial B2B Other ● Driving
Slide 33: INTL Long Term Growth Framework
INTL Long Term Growth Framework Organic1 Revenue Growth % LTFF Growth Drivers New EFX ● EFX Cloud-enabled innovation 8-10% 7-9% ● Differentiated data and insights 1.0-1.5% 1.5-2.0% ● NPI acceleration across INTL platforms 2.5-3.0% Regions ● Global platforms in local markets range between ● Bolt-on M&
Slide 34: Workforce Solutions Overview
Workforce Solutions Overview PROPRIETARY | 34
Slide 35: Unique Dual-sided Business Model Driving Growth
Unique Dual-sided Business Model Driving Growth Supply Networks Dual-sided Business Model Demand Networks 640M+ TWN Employer Verification 500M+ records services Insights services TWN and 2.9M inquiries Record analytics contributors Alliance partners Employment System-to-System ~50% Records via direct
Slide 36: Multiple Drivers for EWS Revenue Growth
Multiple Drivers for EWS Revenue Growth Number of Contributors (Thousands) 2023 Growth Drivers +0.3M increase 3Q23 vs. 3Q22 ● TWN Record Growth ● Penetration, more pulls ● New Products / Use cases Number of Records +17M increase (Millions) 3Q23 vs. 3Q22 ● Data Hub Expansion 121M Unique SSNs ● M&A In
Slide 37: EWS Non-Mortgage Products and Trends
EWS Non-Mortgage Products and Trends 3Q23: $143M; +23% 3Q23: $117M; +6% 3Q23: $118M; +13% Government Talent Solutions Employer Services Optimize Social Security Drive utilization and leverage new Grow adoption of I-9 & Administration (SSA) Payroll products based on industry needs Onboarding products
Slide 38: Identity and Fraud Alternative Data
Identity and Fraud Alternative Data PROPRIETARY | 38
Slide 39: EFX well positioned within $19B digital identity and fraud prevention market
EFX well positioned within $19B digital identity and fraud prevention market growing in high-teens annually Total Fraud, Risk & Authentication Market at $35B Digital Acceleration with Digital Signals - Kount’s Identity & EFX + Kount & 1 Fraud Solutions to increase approvals and convert more good cus
Slide 40: IDentity Foundry
ID Foundry will leverage Data Fabric to fuel Identity and fraud products with insights created from multi-domain data sources (Equifax + 3rd Party) Intrinsic Value EFX Data Raw Data w/Key Meta Data (e.g. Match Score) 1 Expanding data reach in features, capabilities, and products IDentity Foundry Key
Slide 41: Kount & Midigator acquisitions and new product investment
Kount & Midigator acquisitions and new product investment to fuel EFX identity and fraud growth Revenue Growth Trajectory Financial Highlights ~$245M ~$215M ● Digital capabilities revenue to grow ~2x driven by Kount & Midigator acquisitions and new products ~$150M ● Global approach to identity and f
Slide 42: Supplemental Financial Information
Supplemental Financial Information PROPRIETARY | 42
Slide 43: Expanding TAM and Broadening Revenue Base
Expanding TAM and Broadening Revenue Base EFX TAM Up 3x +$1.5B Non-Mtg Rev Since 2019 Non-Mortgage $49B Growth Levers Brazil US – Empl. Svcs /HR $5.25B ✓ EWS expansion into US - Govt $5.1B Talent, Government, US - Talent I9 / Onboarding $3.5B ✓ USIS Identity & ID&F Fraud accelerating $4.3B ✓ New INT
Slide 44: EFX more resilient and well positioned for potential recession
EFX more resilient and well positioned for potential recession EFX / EWS Revenue Growth Recession Resilient $5.1B, +6% CC Recession Growth Levers 1. EWS growth… records, EFX penetration, product, Employer, Talent, Government, UC 2. Cloud benefits… cost savings and $1.8B, +5% share gains 3. NPI growth
Slide 45: Q4 & FY23 Guidance - Corporate Expense, Capex, D&A, Interest
Q4 & FY23 Guidance - General Corporate Expense, Capital Spending, D&A, Interest Expense and Other Income and Expense, excluding non-recurring costs General Corporate Expense* – 4Q23 Capital Expenditures (incurred) in 4Q23 are expected to be slightly more Expected to be ~$107M in 4Q23 compared to 4Q2
Slide 46: 2020-2023 Effective Income Tax Rate
2020-2023 Effective Income Tax Rate The effective tax rate used in calculating our GAAP and Adjusted EPS is as follows: GAAP EPS Adjusted EPS FY 2021 21.2% 23.6% 1Q 2022 26.7% 25.9% 2Q 2022 23.9% 24.7% 3Q 2022 24.0% 24.1% 4Q 2022 22.8% 22.3% FY 2022 24.7% 24.5% 1Q 2023 25.4% 26.1% 2Q 2023 27.4% 27.0%
Slide 47: FY 2022 Equifax Results
FY 2022 Equifax Results Dollars in millions (except per share amounts) FY 2022 FY 2021 Reported Revenue $5,122.2 $4,923.9 Growth % 4.0% 19.3% Local Currency Revenue $5,217.0 $4,873.5 Growth % 6.0% 18.1% GAAP Net Income $696.2 $744.2 Growth % -6.4% 43.1% Adjusted EBITDA Margin 33.6% 33.9% Growth % -3
Slide 48: FY 2022 Business Unit Performance
FY 2022 Business Unit Performance Reported Local Currency Adj. EBITDA Margin Adj. EBITDA Margin Revenue Growth Revenue Growth Growth / (Decline) Workforce Solutions 14.3% 14.3% 51.3% (320 bps) Verification Services 16.3% 16.3% N/A N/A Employer Services 6.6% 6.6% N/A N/A USIS (7.2%) (7.2%) 36.8% (310
Slide 49: 3Q 2023 Equifax Results
3Q 2023 Equifax Results Dollars in millions (except per share amounts) 3Q23 3Q22 Reported Revenue $1,319.1 $1,244.3 Growth % 6.0% 1.8% Local Currency Revenue $1,325.3 $1,272.9 Growth % 6.5% 4.1% GAAP Net Income $162.2 $165.7 Growth % -2.1% -19.3% Adjusted EBITDA Margin 33.1% 32.5% Growth % +60 bps -
Slide 50: 3Q 2023 Business Unit Performance
3Q 2023 Business Unit Performance Reported Local Currency Adj. EBITDA Margin Adj. EBITDA Margin Revenue Growth Revenue Growth Growth / (Decline) Workforce Solutions 3.3% 3.3% 50.9% 145 bps Verification Services 1.0% 1.0% N/A N/A Employer Services 12.9% 12.9% N/A N/A USIS 7.2% 7.2% 34.2% 10 bps Online
Slide 51: Revenue Trends – US
Revenue Trends – US % BU Rev² 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 Online / Verific. ~81% 29% 33% 28% 13% (7%) (11%) (6%) 1% -Mortgage 6% 3% (13%) (28%) (38%) (38%) (20%) (15%) EWS -Non-Mortgage 64% 90% 90% 72% 23% 16% 4% 11% 2 ~44% EFX Rev Employer Svcs ~19% 28% 33% (3%) (7%) 5% 4% 4% 13% -UC /
Slide 52: Revenue Trends – International and EFX
Revenue Trends – International and EFX % BU Rev¹ 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 APAC ~30% 9% 6% 6% 6% 6% 11% 4% 2% LatAm ~20% 15% 23% 28% 34% 31% 32% 23% 62% INTL Canada ~23% 6% 2% 2% 12% 7% 8% 8% Flat (~22% Europe ~27% 0% 16% 16% 24% 3% (4%) (2%) (2%) EFX - CRA ~18% 2% 2% (1%) 7% (1%) 7% 7
Slide 53: 3Q 2023 International Highlights
3Q 2023 International Highlights Geographic Region Financial Performance Commentary Revenue: $316M, +12% International Adj. EBITDA: $83M, 26.3% B2B Consumer: +6% Asia Pacific Revenue: $85M, +2% B2B Commercial: (4%) European Credit Reporting Business: +8% B2B Consumer: +9% Europe Revenue: $85M, (2%)
Slide 54: 3Q2023 - General Corporate Expense, Capital Spending, D&A, Interest
3Q2023 - General Corporate Expense, Capital Spending, D&A, Interest Expense and Other Income and Expense, excluding non-recurring costs General Corporate Expense* – 3Q23 Capital Expenditures (incurred) in 3Q23 were $146M, down from $161M in $104 million in 3Q23, as compared to $104 million in 3Q22 3
Slide 55: Strong balance sheet and liquidity
Strong balance sheet and liquidity September 30, 2023 Cash $413M Available Borrowing Capacity¹ $1,016M Total Liquidity $1,429M Leverage Ratio for 3Q23² 3.34x Credit Ratings BBB (S&P) / Baa2 (Moody’s) Next debt maturity: 2.60% $750M Sr Notes Due 12/1/2024 1. $1.5 billion Revolver 2. Covenant complian
Slide 56: Cash Flow and Other Metrics
Cash Flow and Other Metrics Dollars in millions 3Q23 3Q22¹ FY 2022¹ FY 2021 Operating Cash Flow* $381.7 $354.9 $757.1 $1,334.8 Capital Expenditures (Cash) ($134.3) ($153.0) ($624.5) ($469.0) Free Cash Flow $247.4 $201.9 $132.6 $865.8 Cash Capex as a % Revenue 10.2% 12.3% 12.2% 9.5% Depreciation Expe
Slide 57: Glossary
Glossary PROPRIETARY | 57
Slide 58: Glossary
GLOSSARY Term Our Definition The organization of our data and analytic professionals responsible for developing new analytic insights used for new products and other Data & Analytics (D&A) research endeavors. Insights Analytical interpretations of various data assets that enable institutions to make
Slide 59: Technology Glossary
TECHNOLOGY GLOSSARY Term Our Definition A method of project management used in software development that is characterized by the division of tasks into short phases of work Agile and frequent reassessment and adaptation of plans. API – Application A software intermediary that allows two applications
Slide 60: Technology Glossary
TECHNOLOGY GLOSSARY Term Our Definition Data Gateway A system that connects to multiple data sources and provides a single and central point of access to connect to each data source. Data Governance The overall management of the availability, usability, integrity and security of data used in an Enter
Slide 61: Trevor Burns, Investor Relations
Trevor Burns • Investor Relations • trevor.burns@equifax.com Copyright © 2023, Equifax Inc. All Rights Reserved. Equifax is a registered trademark of Equifax Inc.