Equifax, Inc. · NYSE:EFX
Equifax — Q4 2022 Earnings Presentation
71 slides from Equifax's earnings presentation, Feb 9, 2023
Slide 1: Q4 2022 Earnings
February 9, 2023 Q42022 EARNINGS PROPRIETARY | 1
Slide 2: Forward-looking statements
Forward-looking statements This presentation contains certain forward-looking information, including first 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 a
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
US B2B Non-mortgage growth up 14% in 4Q… EFX executing on strategic priorities 4Q Revenue $1.198B and Adj EPS $1.52… Revenue above high end of guidance range and EPS above midpoint STRATEGIC PRIORITIES US B2B Non-mortgage revenue growth of 14% / 11% organic… Strong non-mortgage growth across Workfor
Slide 5: 2022 Non-mortgage revenue growth continues at high-end of 8-12% Long Term Framework
2022 Non-mortgage revenue growth continues at high-end of 8-12% Long Term Framework EFX Non-Mortgage C$ Revenue Growth Organic Total 8-12% EFX LT Growth Framework Note: Growth rates are in constant currency. PROPRIETARY | 5
Slide 6: Workforce Solutions powering EFX with 17% non-mortgage growth in 4Q
Workforce Solutions powering EFX with 17% non-mortgage growth in 4Q.… TWN records up 12% to 152M current Strong Mortgage Levers in Declining Market EWS Mtg growth ✓ TWN records - 152M current, over 600M total in excess of ✓ Signed four new exclusive payroll provider arrangements originations in 4Q…
Slide 7: Strong 17% 4Q EWS Non-mortgage performance
Strong 17% 4Q EWS Non-mortgage performance, down 4% total… Adjusted EBITDA Margins of 47% EWS Revenue Continued Strong Performance in 4Q $508M, -4% $2,325M, +14% Verifier Revenue -7% Total, -7% organic ✓ Non-mortgage +23% Total / +23% Organic +42% ✓ Talent +19% +17% 67% Non-Mtg ✓ Government +43% 75%
Slide 8: Strong 19% 4Q USIS Online B2B Non-mortgage growth
Strong 19% 4Q USIS Online B2B Non-mortgage growth… Adjusted EBITDA Margins of 35% USIS B2B Non-Mortgage Revenue Growth 4Q22 US Online B2B non-mtg remains strong: ✓ US B2B non-mtg up +10% / +7% organic ✓ US Online B2B non-mtg up +19% / +13% organic ✓ Offline / Batch down -9% ✓ Consumer Solutions up +8%
Slide 9: INTL up strong 9% in 4Q
INTL up strong 9% in 4Q… Adjusted EBITDA Margins of 26% INTL Outperforming Underlying Economies Constant Currency Revenue Growth Key Growth Areas ✓ Broad based growth ✓ EFX Cloud-enabled innovation ✓ Differentiated data and insights ✓ NPI acceleration across INTL platforms, particularly Latam ✓ Globa
Slide 10: NPI Vitality Index record 14% in 4Q
NPI Vitality Index record 14% in 4Q … 90% of NPIs driving Non-mortgage growth Vitality Index¹ and NPIs 4Q Product Roll-Outs ● Priority Next Day/Two Day VOI + RVOE (Mortgage) (EWS) Expedites the verification research 14% in 4Q process when information is not instantly available from The Work Number® (
Slide 11: Bolt-on M&A adding over $450M of run-rate revenue since 2021
Bolt-on M&A adding over $450M of run-rate revenue since 2021 Run-rate Revenue M&A PRIORITIES ~$450M+, ~880+ BPS¹ Date Differentiated Data Strengthen EWS Broaden ID&F Capabilities $175M Insights 4Q21 ✓ ✓ ✓ Kount ID&F 1Q21 ✓ ✓ $115M Midigator 3Q22 ✓ ✓ LawLogix 3Q22 ✓ Data-Credito 1Q22 ✓ Efficient Hire 1
Slide 12: 2023 revenue outperforming underlying global macro headwinds
2023 revenue outperforming underlying global macro headwinds from NPI, records, penetration, pricing, synergies Macro Factors EWS International ✓ US Mortgage Market Down -30% ✓ Revenue Growth +6% ✓ C$ Revenue Growth +5% ✓ 1Q23 less than (-55%) ✓ Non-mtg Revenue Growth +13% ✓ Weakening end markets ✓
Slide 13: 2023 Operational Restructuring and Cloud Transformation actions deliver $200M spending reduction
2023 Operational Restructuring and Cloud Transformation actions deliver $200M spending reduction in 2023 Total Spending Reduction 2023 Spending Reduction Driven By: Benefits Accelerate in 2Q-4Q23 ~$165M from Workforce Reduction ✓ 10%+ reduction in current workforce of ~23,500 employees and contractor
Slide 14: Margins expanding in 2023 from non-mortgage growth and cost actions
Margins expanding in 2023 from non-mortgage growth and cost actions Adjusted EBITDA Margin Adjusted EPS 500 bps of margin expansion EPS expansion 29.0%¹ 2023 Cost actions driving sequential Adjusted EBITDA margin and Adjusted EPS growth 1. 1Q23 EBITDA margins expected to be ~29%. Adjusted for timing
Slide 15: 4Q Mortgage inquiries down 54%... 2023 expectations
4Q Mortgage inquiries down 54%... 2023 expectations include 1H ~(-44%) and 2H ~(-7%)... 2023 ~(-30%) Volume and Growth in Consumer Credit Inquiries Serving Mortgage Market EFX 2023 Guidance # of inquiries Assumption YoY Growth 2015-2019 Average level of inquiries 2015 2016 2017 2018 2019 2020 2021 2
Slide 16: 2023 Revenue Guidance
2023 Revenue Guidance… Overcoming ~7% Mortgage Market headwinds to deliver 4% CC Growth $ in billions $5.275B - $5.375B ~+5% ~+1% +4% -0.2% +4% $5.122B Acquisitions FX $5.325B ~(-7%) ~+5% (Completed to-date) (Midpoint) Non-mortgage organic growth ~+7% US Mortgage US Mortgage Market Outperformance [~
Slide 17: 2023 Adjusted EPS Guidance
2023 Adjusted EPS Guidance… Revenue Growth and Cost Actions partially offset increased D&A & Interest Expense $ per share ~+5.5% Flat ~(-4%) EBITDA margins flat YTY ~(-6.2%) D&A up +~$50M $7.05 - $7.35 $7.56 4% revenue growth ~(-4.8%) at flat EBITDA Interest / Other Expense margins $7.20 up ~$60M YTY T
Slide 18: 2023 Guidance
2023 Guidance 2023 $ vs 2022 % vs 2022 Revenue1 $5,275M - $5,375M $153M - $253M 3.0% - 4.9%1 Adjusted EPS1 $7.05 - $7.35 / share (-$0.51) - (-$0.21) / share (-6.8%) - (-2.8%) Guidance Specifics Adj. EBITDA Revenue Margins (YTY) Depreciation and amortization ~$375M Business Unit Revenue Amortization o
Slide 19: 1Q 2023 Guidance
1Q 2023 Guidance 1Q23 $ vs 1Q22 % vs 1Q22 Revenue1 $1,270M - $1,290M (-$93M) - (-$73M) (-6.8%) - (-5.4%)1 Adjusted EPS1 $1.30 - $1.40 / share (-$0.92) - (-$0.82) / share (-41.6%) - (-37.1%) Adj. EBITDA Revenue Margins (YTY) Guidance Specifics Business Unit Guidance Depreciation and amortization ~$90M
Slide 20: Strong non-mortgage performance powering EFX in 2022
Strong non-mortgage performance powering EFX in 2022… Positioning for growth in uncertain 2023 Strong 2022 performance amid challenging mortgage market conditions… Revenue up 4% and non-mortgage revenue up 20% EFX 4Q revenue of $1.2B down 4%... EFX non-mortgage C$ growth of 12% EWS outperforming mor
Slide 21: Q&A
Q&A PROPRIETARY | 21
Slide 22: Appendix
Appendix PROPRIETARY | 22
Slide 23: Revenue Trends -- US
Revenue Trends -- US % BU Rev² 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 Online / Verific. ~78% 75% 57% 34% 29% 33% 28% 13% (7%) -Mortgage +100% +50% +20% 6% 3% (13%) (28%) (38%) EWS (~42% -Non-Mortgage 26% 65% 55% 64% 90% 90% 72% 23% EFX Employer Svcs ~22% 17% Flat 39% 28% 33% (3%) (7%) 5% Rev2) -UC
Slide 24: Revenue Trends -- International and EFX
Revenue Trends -- International and EFX % BU Rev¹ 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 APAC ~30% 7% 21% 8% 9% 6% 6% 6% 6% LatAm ~19% 1% 30% 17% 15% 23% 28% 34% 31% INTL Canada ~23% 12% 23% 7% 6% 2% 2% 12% 7% (~24% Europe ~28% (4%) 25% 9% 0% 16% 16% 24% 3% EFX - CRA ~17% (4%) 23% 4% 2% 2% (1%) 7%
Slide 25: Strong FY22 Equifax Core Revenue Growth of 16%
Strong FY22 Equifax Core Revenue Growth of 16%... offsetting mortgage headwinds EFX Strong Core Revenue Growth Continues Core Mortgage Market UC & ERC Note: Mortgage Market growth is that portion of total growth attributable to fluctuations in mortgage volumes, with USIS mortgage related credit inquir
Slide 26: EWS Delivers Strong 34% Core Revenue Growth in 2022
EWS Delivers Strong 34% Core Revenue Growth in 2022… Double Digit Core Revenue Growth Consistently since 2018 Total EWS Total Revenue (M) 2018 2019 2020 2021 2022 $846 $971 $1,462 $2,035 $2,325 Core Mortgage Market UC & ERC Note: 08/09 growth was calculated by taking the average growth rates from 4Q
Slide 27: US B2B Core mortgage growth up 13% in 2022
US B2B Core mortgage growth up 13% in 2022 … partially offsetting 37% decline in credit inquiries and 56% decline in estimated mortgage originations Total Mortgage Mortgage Market Core Revenue Growth 11% EWS/USIS core mortgage growth 16% EWS core mortgage growth 4% USIS core mortgage growth US B2B Mo
Slide 28: 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 29: 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 30: Investor Relations
Investor Relations February 2023
Slide 31: Index
Index Pages The New EFX 32-44 Workforce Solutions Overview 45-48 Identity and Fraud Overview 49-52 Supplemental Financial Information 53-66 Glossary 67-70 PROPRIETARY | 31
Slide 32: The New EFX
The New EFX PROPRIETARY | 32
Slide 33: The New Equifax… we are just getting started
The New Equifax… we are just getting started EFX Revenue and Core 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 A
Slide 34: The EFX Cloud
The EFX Cloud PROPRIETARY | 34
Slide 35: 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 36: A Robust Foundation for Comprehensive Multi-Data Solutions
A Robust Foundation for Comprehensive Multi-Data 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
Slide 37: 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 38: 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 39: 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 | 39
Slide 40: 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 41: 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 42: 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 43: 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 44: 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 45: Workforce Solutions Overview
Workforce Solutions Overview PROPRIETARY | 45
Slide 46: Unique Dual-sided Business Model Driving Growth
Unique Dual-sided Business Model Driving Growth Supply Networks Dual-sided Business Model Demand Networks 600M+ TWN Employer Verification 500M+ records services Insights services TWN and 2.6M inquiries Record analytics contributors Alliance partners Employment System-to-System 51% Records via direct
Slide 47: Multiple Drivers for EWS Revenue Growth
Multiple Drivers for EWS Revenue Growth Number of Contributors (Thousands) 2022 Growth Drivers ● TWN Record Growth +0.2M increase 4Q22 vs. 4Q21 ● Deeper Integration with USIS in Key Verticals: Mortgage, Government, Banking, Auto, FinTech ● Expanding Key Employer Verticals: Number of Records +16M inc
Slide 48: EWS Non-Mortgage Products and Trends
EWS Non-Mortgage Products and Trends 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 across Exchange, increase CMS penetration, direct, p
Slide 49: Identity and Fraud Alternative Data
Identity and Fraud Alternative Data PROPRIETARY | 49
Slide 50: 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 51: 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 52: Kount & Midigator acquisitions and new product investment to fuel EFX identity and fraud growth
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 53: Supplemental Financial Information
Supplemental Financial Information PROPRIETARY | 53
Slide 54: Expanding TAM and Broadening Revenue Base
Expanding TAM and Broadening Revenue Base EFX TAM +$1B Non-Mtg Rev Since 2019 Non-Mortgage Up 3x $5.1B Growth Levers $45B US – Empl. Svcs /HR ✓ EWS expansion into US - Govt Talent, Government, US - Talent $3.5B I9 / Onboarding ✓ USIS Identity & ID&F Fraud accelerating ✓ New INTL markets $3.9B drivin
Slide 55: 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 56: EFX 2023 - Economic & Market Assumptions
EFX 2023 - Economic & Market Assumptions US economy slows moving through 2023… Planning reflects low GDP growth w/o US Recession ● US hiring expected to decline by over ~10% from 2022 International economies also assumed to have slowing growth in 2023. Canada and Australia with marginally positive GD
Slide 57: 2023 Guidance: General Corporate Expense, Capital Spending, D&A, Interest
2023 Guidance General Corporate Expense, Capital Spending, D&A, Interest Expense and Other Income and Expense, excluding non-recurring costs General Corporate Expense* – 1Q23 Capital Expenditures (incurred) in 1Q23 are expected to be ~$150M, up from $141M in 1Q22. Capital Expenditures (incurred) in
Slide 58: 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 2020 23.2% 23.7% 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 22.7% 22.3% FY 2022 24.7% 24.5% 1Q 2023 Estimate ~26
Slide 59: 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 60: 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 61: 4Q 2022 Equifax Results
4Q 2022 Equifax Results Dollars in millions (except per share amounts) 4Q22 4Q21 Reported Revenue $1,197.9 $1,253.2 Growth % -4.4% 12.0% Local Currency Revenue $1,228.6 $1,254.8 Growth % -2.0% 12.2% GAAP Net Income $108.2 $122.1 Growth % -11.4% -63.9% Adjusted EBITDA Margin 31.0% 32.2% Growth % -120
Slide 62: 4Q22 Business Unit Performance
4Q22 Business Unit Performance Reported Local Currency Adj. EBITDA Margin Adj. EBITDA Margin Revenue Growth Revenue Growth Growth / (Decline) Workforce Solutions (4.4%) (4.4%) 46.8% (165 bps) Verification Services (6.6%) (6.6%) N/A N/A Employer Services 4.5% 4.5% N/A N/A USIS (6.5%) (6.5%) 35.3% (420
Slide 63: 4Q22 International Highlights
4Q22 International Highlights Geographic Region Financial Performance Commentary Revenue: $284M, +9% International Adj. EBITDA: $73M, 25.8% B2B Consumer: +9% Asia Pacific Revenue: $85M, +6% B2B Commercial: +7% European Credit Reporting Business: (1%) B2B Consumer: (4%) Europe Revenue: $81M, +3% B2B
Slide 64: 4Q2022 General Corporate Expense, Capital Spending, D&A, Interest Expense
4Q2022 General Corporate Expense, Capital Spending, D&A, Interest Expense and Other Income and Expense, excluding non-recurring costs General Corporate Expense* – 4Q22 Capital Expenditures (incurred) in 4Q22 were $163M, up from $145M in 4Q21. $101 million in 4Q22, as compared to $130 million in 4Q21
Slide 65: Strong balance sheet and liquidity
Strong balance sheet and liquidity December 31, 2022 Cash $285M Available Borrowing Capacity¹ $933M Total Liquidity $1,218M Leverage Ratio for 4Q22² 3.31x Credit Ratings BBB (S&P) / Baa2 (Moody’s) Next debt maturity: 3.95% $400M Sr Notes Due 6/15/2023 1. $1.5 billion Revolver PROPRIETARY | 65 2. Cov
Slide 66: Cash Flow and Other Metrics
Cash Flow and Other Metrics Dollars in millions 4Q22 4Q21 FY 2022 FY 2021 Operating Cash Flow* $325.4 $385.3 $757.1 $1,334.8 Capital Expenditures (Cash) ($156.1) ($136.1) ($624.5) ($469.0) Free Cash Flow $169.3 $249.2 $132.6 $865.8 Cash Capex as a % Revenue 13.0% 10.9% 12.2% 9.5% Depreciation Expens
Slide 67: Glossary
Glossary PROPRIETARY | 67
Slide 68: Glossary
Term Our Definition GLOSSARY 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 69: Technology Glossary
Term Our Definition TECHNOLOGY GLOSSARY 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 70: Technology Glossary
Term Our Definition TECHNOLOGY GLOSSARY 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 71: 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.