Equifax, Inc. · NYSE:EFX
Equifax — Investor Day (October 2007)
126 slides from Equifax's investor day presentation, Oct 26, 2007
Slide 1: Investor Day at NYSE
2007 Investor Day at NYSE October 26, 2007 New York Stock Exchange
Slide 2: Forward-Looking Statements and Non-GAAP Financial Information
Forward-Looking Statements and Non-GAAP Financial Information Some of our comments today include statements about our expectations for the future, in particular with respect to our strategy, management's objectives, future performance, costs, revenue, earnings and other trend information, including
Slide 3: Agenda
Agenda • Strategy Overview (Rick Smith) • Enabling Growth (Paul Springman) • U.S. Consumer Information Solutions (Dann Adams) • TALX (Bill Canfield) • North America Commercial Solutions (Michael Shannon) • Personal Solutions (Steve Ely) • International (Rudy Ploder) • Financial Review (Lee Adrean) •
Slide 4: The Equifax Growth Playbook
The Equifax Growth Playbook Game Changers
Slide 5: We Deliver on Our Commitments
We Deliver on Our Commitments Commitment in 2006 Performance CEO Grade • 2006 shaping up to be another solid $2.12 GAAP year with adjusted EPS over $2.00 $2.01 Normalized • 31 key initiatives will deliver over $300 million incremental revenue over the On Target planning horizon • New product introdu
Slide 6: We Are Increasingly Recognized as a Leader
We Are Increasingly Recognized as a Leader Equifax EquifaxNamed NamedtotoInformationWeek InformationWeek Magazine’s Magazine’s “MagnificantSeven “Magnificant Seven““ Equifax EquifaxNamed Namedto toFORTUNE FORTUNEMagazine’s Magazine’s List of Most Admired Companies List of Most Admired Companies Equi
Slide 7: We Have a Fundamental Belief
We Have a Fundamental Belief “Our Core” •Data is at the core of our value proposition to our customers “Sweet Spot” •All data is not the same – some data is more unique and valuable (through proprietary nature or value-add) •All decisions are not the same – Equifax creates the most value for custome
Slide 8: A Powerful Vision
A Powerful Vision To be the trusted provider of information solutions that empower our customers to make critical decisions with greater confidence. Equifax Confidential and Proprietary Page 8
Slide 9: And a Strong Core Which Drives Franchise Value
And a Strong Core Which Drives Franchise Value • Large financial service companies – Banks – Credit unions Target – Mortgage lenders Assets • Telcos Customers • Staffing/ • Raw data, Employment datafeeds Core Screeners • Credit data • Income and • Aggregate, cleanse employment data and map records •
Slide 10: With Consistent and Leveraged Performance
With Consistent and Leveraged Performance Revenue Normalized Earnings Per Share* ($ millions) ($ millions) CAGR CAGR 9% 10% $2.01 $1.86 $1,546 $1,443 $1.62 $1,273 $1.46 $1,211 $1,095 $1.38 2002 2003 2004 2005 2006 2002 2003 2004 2005 2006 *For years ending as indicated. Income from continuing operat
Slide 11: Our Strategy Continues to Drive Growth
Our Strategy Continues to Drive Growth Increase Enabling Greater Technologies & share-of-wallet Predictive Sciences and penetration penetration Invest in data sources Target emerging that differentiate opportunities Equifax Confidential and Proprietary Page 11
Slide 12: U.S. Consumer Credit Trends are Challenging
U.S. Consumer Credit Trends are Challenging • Mortgage delinquencies have risen substantially in 2007, driven by sub-prime segment • Significant regional differences exist • Sub-prime lending concentration is consistent with past experience • Overall, consumer credit is stable and many product lines
Slide 13: Mortgage Delinquencies Still Rising
Percent 0% 1% 2% 3% 4% 5% 1q 0 2q 1 0 3q 1 0 4q 1 0 1q 1 0 2q 2 0 Equifax Confidential and Proprietary 3q 2 0 4q 2 0 1q 2 0 2q 3 0 3q 3 0 Page 13 4q 3 0 1q 3 0 2q 4 0 3q 4 0 4q 4 0 1q 4 0 2q 5 0 Quarter 3q 5 0 First Mortgage 4q 5 0 1q 5 0 % of Dollars 30+ Past Due 2q 6 0 3q 6 0 4q 6 Ja 06 n Mortgage
Slide 14: Sub-Prime Mortgage Drives Overall Delinquency
Sub-Prime Mortgage Drives Overall Delinquency Equifax First Mortgage 30+ Past Due Trend 40.00% 35.00% 30.00% 25.00% Percent 20.00% 15.00% 10.00% 5.00% 0.00% Se 7 M 7 7 07 7 01 01 01 01 02 02 02 02 03 03 03 03 04 04 04 04 05 05 05 05 06 06 06 06 07 A 7 0 r0 y0 n0 l0 ug p 1q 2q 3q 4q 1q 2q 3q 4q 1q 2q
Slide 15: Strong Regional Differences Exist
Strong Regional Differences Exist Change in mortgage delinquency rate, 05Q4-07Q2 U.S. = 1.12% > 1.45% .85% - 1.45% < .85% Sources: Equifax, Moody’s Economy.com Equifax Confidential and Proprietary Page 15
Slide 16: Recent Sub-prime Vintages Have Deteriorated
Recent Sub-prime Vintages Have Deteriorated Sub-prime cumulative loss rate, % of original balance 0.20 06 0.15 99 05 0.10 01 03 04 02 0.05 00 0.00 3 4 5 6 7 8 9 10 11 12 # of months of seasoning Sources: Moody’s Economy.com Equifax Confidential and Proprietary Page 16
Slide 17: ARM Resets Are Underway
ARM Resets Are Underway 60 Prime Agency Unsecuritized Option 50 Alt-A Subprime 40 30 20 10 0 2007 2008 • ARM resets through 2008 • Largest resets in Sub-prime segment Mortgage Debt Outstanding by First ARM Payment Reset ($B) Source: CreditForecast.com and Credit Suisse Equifax Confidential and Propr
Slide 18: While Credit Risk and Bankruptcy Risk Is Stable
While Credit Risk and Bankruptcy Risk Is Stable Equifax Credit Risk and Bankruptcy Score Trends 750 290 700 285 650 280 Bankruptcy Navigator 3.0 Equifax Risk Score 3.0 600 275 550 270 500 . 265 450 260 400 255 350 250 7 Se 7 Fe 7 M 07 Ju 7 01 01 01 01 02 02 02 02 03 03 03 03 04 04 04 04 05 05 05 05
Slide 19: Bankcard Limits and Balances Have Increased
Bankcard Limits and Balances Have Increased Equifax Trend in Bankcard Credit Limits and Balances $3,500.00 500,000,000 $3,000.00 450,000,000 $2,500.00 Number of Bankcards 400,000,000 Billions of Dollars $2,000.00 $1,500.00 350,000,000 $1,000.00 300,000,000 $500.00 $0.00 250,000,000 Se 7 M 07 Ju 7 07
Slide 20: However, Consumers Generally Feel Good About Their Financial Well-being
However, Consumers Generally Feel Good About Their Financial Well-being 100% 80% 60% 40% 20% 0% Q2'06 Q3'06 Q4'06 Q1'07 Q2'07 Q3'07 Good Neutral Bad Source: Equifax Consumer Sentiment Survey Equifax Confidential and Proprietary Page 20
Slide 21: What This Means for Equifax
What This Means for Equifax Customer Impact Our Response • More disciplined • New analytic insights and underwriting modeling tools • Increased focus on • Enabling Technology solutions cross-selling and new products • Aggressive risk management • Portfolio review services • New analytic insights and
Slide 22: We Have a Broad Range of Industries
We Have a Broad Range of Industries Insurance 1% Other 3% Healthcare 1% Government 4% Marketing Services (other) 5% Financial 31% Telco 5% Auto 6% Human Resources 7% Retail 7% Mortgage 13% Commercial 7% Consumer 10% Equifax Confidential and Proprietary Page 22
Slide 23: A Diversified Revenue Base
A Diversified Revenue Base Total Revenue 80% ($ Millions) Recurring $492.5 2004 Q3 2007 $500.0 Mix Mix 25% TALX $394.6 North America Commercial $400.0 7% North America Personal Solutions 35% 50% $300.0 International $200.0 U.S. Consumer Information Services 65% 50% $100.0 $0.0 Q3 2006 Q3 2007 Equifa
Slide 24: A Resilient Growth Strategy
A Resilient Growth Strategy Increase Enabling Greater Invest in data Technologies & Target emerging share-of-wallet sources Predictive Sciences opportunities and penetration that differentiate penetration •Customer intimacy •Deploy enhanced •Robust commercial •Equifax Growth decision systems and dat
Slide 25: Greater Share-of-Wallet and Penetration
Greater Share-of-Wallet and Penetration Aligning Price with Value to Customers Customer Intimacy Creates Value Pricing Governance Value Pricing - Case Study Personal Solutions Customer Segmentation Regional Bank …a differentiated brand Before After Protectors Credit Third Party Third Party File Scor
Slide 26: Increase Enabling Technologies & Predictive Sciences Penetration
Increase Enabling Technologies & Predictive Sciences Penetration Enabling Technologies Powers Customer Decisioning Customer Data Call Center • Intelligent data matching EFX Credit Data • Super-fast analytics EFX Fraud AT&T’s Customer Online Fraud alert • Powerful rules application Data Approve or De
Slide 27: Invest in Data Sources That Differentiate
Invest in Data Sources That Differentiate (U.S. Market) Credit File - 220M (Credit Behavior) 35M 24M Unique Unique Records Records DMS - 190M TALX – 159M (Demographic Behavior) (Employment Income) Equifax Confidential and Proprietary Page 27
Slide 28: Target Emerging Opportunities 1 year later
Target Emerging Opportunities 1 year later … Sept. 2006 “Expand into new data “Win in the “Expand Investor commercial market” globally” sources and markets” Day Progress 9 Acquired TALX 9 Acquired Austin- 9 In various stages Since Tetra for customer of discussion to 9 Investing in our data and enter
Slide 29: A Growth-Driven Culture
A Growth-Driven Culture Innovation Customer Intimacy • Refined NPI process • Strong and recognized • International expansion brand • Growth Council - new • Aligned customer market growth experience • Value-based pricing DRIVING GROWTH High Performing Culture Drive Efficiencies • Invest in human capi
Slide 30: Our Strategy Delivers a Strong Growth Model
Our Strategy Delivers a Strong Growth Model 2008–2010 Planning Period 1-2% 8-11% 3-4% 9 Cash EPS growth 11 – 14% Multi-Year Objectives Revenue CAGR (Est.) 9 High, sustainable 4-6% Operating Margins 27 – 28% Market Core Adjacencies/ Total Organic Organic M&A Growth Initiatives Equifax Confidential an
Slide 31: Enabling Growth
Enabling Growth Game Changers
Slide 32: How We Think About Growth
How We Think About Growth • Understand customer needs to create unique value • Deliver differentiation through Analytics and Enabling Technologies • Deploy a value-based pricing strategy • Implement a strong innovation culture through NPI and new markets Equifax Confidential and Proprietary Page 32
Slide 33: Customer Intimacy Creates Value
Customer Intimacy Creates Value Personal Solutions Customer Segmentation …a differentiated brand Protectors Managers Buyers …an enhanced customer experience Improved profitability and market position Price Discipline applied to the approval process Strugglers Benefit to EFX 2006 Value Price Understa
Slide 34: Leverage Thought Leadership with Analytic Solutions
Leverage Thought Leadership with Analytic Solutions Strategic Themes • Product globalization • Key enabler in geographic expansion • Pioneer innovative analytics • Provide unique market insight and intelligence in sync with market conditions Create leading edge solutions which provide unique insight
Slide 35: VantageScore Gaining Momentum
VantageScore Gaining Momentum • Customer use increasing • GSE’s, Regulators and Rating Customer Mix Agencies view as effective Banks 48% risk assessment tool Telcos 4% • Revalidations confirm model Retailers 4% performance Credit Unions 20% • 8 of top 20 banks using Other 24% VantageScore • Aggressi
Slide 36: Market Conditions Demand Timely Solutions
Market Conditions Demand Timely Solutions Customer need: Identify consumers in non-real estate portfolios that are likely to have Adjustable Rate Mortgages ARMs Percent with Adjustable Distribution of Consumers Predictor Rate Mortgage across Segments Segment 1 6.41% 29.1% 2 13.48% 48.9% 3 20.27% 13.
Slide 37: Helping Customers Understand Their Mortgage Exposure
Helping Customers Understand Their Mortgage Exposure • Customer need: • To identify “highest risk” home equity customers • How they compare to other benchmarks • Watch dog criteria: • Open accounts with risk scores <660 • Other delinquent loans • Debt/limit ratio for all revolving accounts > 80% U.S
Slide 38: Enabling Technologies Solutions Deliver Customer Performance Lift
Enabling Technologies Solutions Deliver Customer Performance Lift Strategic Themes • Provide enhanced solutions globally • Increase customer penetration • Evolve to highly configurable software in order to penetrate new markets • Build on market-leading capabilities Equifax Confidential and Propriet
Slide 39: Enabling Technologies Powers Customer Decisioning
Enabling Technologies Powers Customer Decisioning Customer Data Call Center • Intelligent data matching EFX Credit Data • Super-fast analytics EFX Fraud AT&T’s Customer Online Fraud alert • Powerful rules application Data Approve or Decline Customer Deposit Required Transaction • Real-time decisioni
Slide 40: Our Focus Is on Creating Value
Our Focus Is on Creating Value Improved profitability and market position • Value-based pricing • Governance & process Price • Linking solutions to price Discipline applied to the approval process Benefit to EFX 2006 Value Price Volume Equifax Confidential and Proprietary Page 40
Slide 41: NPI Focus Is Delivering Results
NPI Focus Is Delivering Results NPI Process Ideation Inception Elaboration Construction Launch Applications 2006 Products Launched • Fraud • Blended Score • Target Point USCIS 25 International 43 Data Solutions • SIRAN PSol 4 • Settlement Services • Trade Data N.A. Commercial 8 Enabling Technologies
Slide 42: Innovation Fuels a Diverse Growth Model
Innovation Fuels a Diverse Growth Model • Implemented our Growth New Council Geographies New Markets • Launched ideas@equifax New Solutions • Proactively looking and Synergies prioritizing new markets • Feeds our NPI and M&A Created a pipeline $100-$200M idea pipeline Equifax Confidential and Propri
Slide 43: U.S. Consumer Information Solutions
U.S. Consumer Information Solutions Game Changers
Slide 44: Major Highlights
Major Highlights 2006 Growth Strategies Results Moving from product- • Successfully integrated Consumer Information centric to solution-centric Solutions and Marketing Services sales teams focus • Achieved initial revenue targets Drive greater customer • Realigned sales organization around customer
Slide 45: A Solid Foundation for Profit and Cash Flow
A Solid Foundation for Profit and Cash Flow Revenue Operating Income ($ millions) ($ millions) $392 $400 $968 $933 $342 $836 2004 2005 2006 2004 2005 2006 Operating 41% 42% 41% Margin * Normalized to exclude impairment charges in 2003 and 2004 and litigation contingency in 2006 Equifax Confidential
Slide 46: Consistent Financial Performance
Consistent Financial Performance Total Online and Mortgage Revenue Growth 800 90 Economic 700 downturn 80 70 600 60 ($ millions) ($ millions) 500 50 400 40 300 30 200 20 100 10 0 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Online Revenue (left axis) Mortgage Rep
Slide 47: We Compete in a Mature $7.5B Market
We Compete in a Mature $7.5B Market Estimated Total Market $7.5B Consumer Credit Credit Marketing Consumer Lists Database Marketing Other Other CPS Other FICO Other TU TU HHS Experian ADS (Epsilon) Abacus Experian (acquired by ADS) IUSA Acxiom Acxiom Equifax Equifax Experian Experian Equifax Equifax
Slide 48: Executing a Strong Growth Strategy
Executing a Strong Growth Strategy Increase Enabling Greater Invest in data Technologies & Target emerging share-of-wallet sources Predictive Sciences opportunities and penetration that differentiate penetration • Consultative selling • Increase Inter- • Enrich and • Expand into new with analytics C
Slide 49: Settlement Services Drives Incremental Revenue
Settlement Services Drives Incremental Revenue Equifax Settlement Services Incremental Revenue Model • Joint venture with ATM launched mid-2006 Average price per unit • “Full suite” of appraisal, 60 - 70x ~$700 title, and closing services • Typically drives 10-day reduction in first mortgage cycle t
Slide 50: New Products for USCIS
New Products for USCIS Products Products Launched in Pipeline Risk & Fraud 8 32 Enabling Technologies 6 5 Mortgage 2 9 Consumer Marketing 9 16 Equifax Confidential and Proprietary Page 50
Slide 51: Integrated Solutions Drive Competitive Edge
Integrated Solutions Drive Competitive Edge Customer segments Problem- solution maps Banks Credit Telco Mortgage Auto Unions Inter- Decision APPRO Database Enabling eID Loan Technologies Connect Power Services Origination Predictive • Income • Bankruptcy • Auto Sciences • Risk • Fraud • Sub-prime Da
Slide 52: New Insights Identify Opportunities for Customers
New Insights Identify Opportunities for Customers Lost opportunity analysis Customer base insights Product vector analysis and benchmarking Adjustable Rate Mortgage exposure analysis Number of Credit Bank Best Group Mean Relationships Percent of Customer Balances with 1st mortgage 1 91.19% 86.85% AR
Slide 53: Integrated Solutions Capture the Opportunity
Integrated Solutions Capture the Opportunity Analytics Lost Opportunity Bank Customer and Marketing Analysis ROI Employment Credit Data Customer Centric “Propensity Data Product Silo Solution “Ability to to Pay” Pay” Generic Application InterConnect e.g. Triggers Net Worth Data VRU “Capacity to Pay”
Slide 54: Many Customers Rely on Enabling Technologies
Many Customers Rely on Enabling Technologies U.S. Financial U.S. Communication Institutions Companies 4 of the Top 6 Telecom Companies 18 of Top 20 U.S. Banks 6 of the Top 6 Cable/Satellite Companies Equifax Confidential and Proprietary Page 54
Slide 55: Enabling Technologies "Changed the Game" by Creating Incremental Value
Enabling Technologies “Changed the Game” by Creating Incremental Value for Customers Enabling Cross-sell Giving Our Customers at Bank of America Access to new Channels Example Example Pre-screen solution at customer Interface provides indirect lenders touch-points powers top 5 bank access to the ind
Slide 56: Further Enhancing Our Customer Relationships
Further Enhancing Our Customer Relationships Percent of core online volume through Enabling Technologies 50% • Enabling 44% Technologies 40% drives core 35% volume growth 30% 30% • Focused on 23% Strategic and 20% 18% Mid-Market 14% penetration 10% 3% 4% • Objective: 50% 0% penetration 2004 2007 YTD
Slide 57: Aligning Price with Value to Customers
Aligning Price with Value to Customers Pricing Governance Value Pricing - Case Study Regional Bank Before After Credit Third Party Third Party File Score Score Credit File • Launched automated web- Current 1.1X Increase in based deal approval system Spend customer spend • Improves price realization
Slide 58: USCIS Will Deliver Strong Growth and Improving Margins
USCIS Will Deliver Strong Growth and Improving Margins Revenue $M 2008-2010 4-7% $968 CAGR • Sustainable $933 operating $836 margins over 40% • Expansion into new vertical markets • Penetration with integrated solutions 2004 2005 2006 Equifax Confidential and Proprietary Page 58
Slide 59: TALX
TALX Game Changers
Slide 60: Major Highlights
Major Highlights 2006 Growth Strategies Results Increase The Work Number • Realized 15% record growth in TWN database with coverage and verifications total records nearing 159,000,000 • Showed 19% growth in verification revenue despite reduced housing starts and loan originations (verifications in m
Slide 61: A Leader in Providing Employment and HR Solutions
A Leader in Providing Employment and HR Solutions The Work Number Services Tax Management Services Talent Assessment Services Equifax Confidential and Proprietary Page 61
Slide 62: A Solid Foundation for Growth and Profit
A Solid Foundation for Growth and Profit Revenue Operating Income ($ millions) ($ millions) $255 $68 $191 $49 $143 $25 2004 2005 2006 2004 2005 2006 Operating Margin 18% 26% 27% (pre–acquisition) Equifax Confidential and Proprietary Page 62
Slide 63: Leveraging The Work Number Service
Leveraging The Work Number Service 20M Adds 180 160 140 (millions of records) 120 . 100 80 60 40 20 0 Dec-97 Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07F Equifax Confidential and Proprietary Page 63
Slide 64: Tax Management and HR Services
Tax Management and HR Services • Tax Management Services – Unemployment Claims Services • 8,000 clients • Important source of cross-selling The Work Number – Tax Reduction services • Unemployment Taxes • Employment Tax Credits – Federal (WOTC, IEC, Katrina) – State & Local (Enterprise, Job related)
Slide 65: How We Will Continue to Drive Growth
How We Will Continue to Drive Growth • Expanding database from 159 million records by adding 1 million new records per month • Accelerating verification revenues • Increase share-of-wallet through complementary services • Leverage value-based pricing model • Revenue synergies with USCIS and Personal
Slide 66: Executing a Strong Growth Strategy
Executing a Strong Growth Strategy Increase Enabling Greater Invest in data Technologies & Target emerging share-of-wallet sources Predictive Sciences opportunities and penetration that differentiate penetration •Grow core human •Continue to invest in •Continue to invest in •Leverage resource, tax n
Slide 67: Increasing Employee Data Records and Expanding Verification Usage
Increasing Employee Data Records and Expanding Verification Usage The Work Number Business Model Employers Verifiers Mortgage / Banking > 20,000 employees Social Services • 55% share of database Consumer Lending > 3,500 employees • 40% share of The Work database Number Collections Database < 3,500 e
Slide 68: Like Equifax, TALX Manages the Exchange of Data Between Multiple Parties
Like Equifax, TALX Manages the Exchange of Data Between Multiple Parties TALX Core Business Model Customers Employers Mortgage Bankers & Brokers Pre-Employment Screeners The Work Number Database Social Services Consumer Lenders Equifax Business Model Financial Customers Institutions / Banks Mortgage
Slide 69: TALX Revenue Synergies
TALX Revenue Synergies • Scoped 17 opportunities Specific Data • Near term focused on “quick Appends New Products wins” – cross-selling, linking Employment and Income New Scores, Combined Products solutions data appended to portfolio reviews Priority Full Revenue Aggregated Data Potential High $15-2
Slide 70: A Diverse, Growing Business
A Diverse, Growing Business The Work Number Revenue Mix Complementary Work 20% Number Services* 18% Mortgage 18% 27% Other Verificat ions 30% 1% Government/Social 11% Services 1% 10% Consumer Finance 26% 24% Pre-employment 16% 16% CY06 CY07 *The Work Number Services, Tax Management Services, Talent
Slide 71: Driving Strategic Initiatives
Driving Strategic Initiatives Expand workforce information solutions to drive profitable growth Increase Records for The Work Number The Work Number Tax Management Talent Assessment Services Services • Increase record • Increase sales by • Leverage talent coverage through penetrating the assessment
Slide 72: TALX Will Deliver Strong Growth and Improving Margins
TALX Will Deliver Strong Growth and Improving Margins Revenue $M 2008-2010 14-17% $255 CAGR • Margins in the 20%-25% range $191 • Increase market $143 penetration • Exceed revenue synergy targets 2004 2005 2006 Equifax Confidential and Proprietary Page 72
Slide 73: North America Commercial Information Solutions
North America Commercial Information Solutions Game Changers
Slide 74: Major Accomplishments
Major Accomplishments • Year-to-date 2007 revenue of $46M, up 42% • Strong annual growth in transaction volumes and share gains – U.S. transaction volume grew 54% during last 12 months – 85% penetration with Equifax proprietary small business risk scores – New customer growth of 50% during last 12 m
Slide 75: Equifax Commercial Today
Equifax Commercial Today • Provider of industry-leading credit risk and marketing solutions – Created Small Business Financial Exchange to meet need for better small business information U.S. business – Strengths in financial services and telco industries; and in scoring and analytics Expanding comm
Slide 76: Delivering Value To Top Industry Players
Delivering Value To Top Industry Players U.S. Financial Institution Customers U.S. Telco & Utility Customers Within Top 30 Small Business Card Within Top 7 Telco’s & Issuers & Top 50 Visa & MC 5 Major Utilities… Commercial Issuers… …we capture over 95% …we capture over 98% of credit card trade-lines
Slide 77: A Great Opportunity in a $1.7B North American Market
A Great Opportunity in a $1.7B North American Market Estimated Total Market $1.7B Commercial Marketing Services Commercial Risk and Analytics Other Other Experian Experian Acxiom D&B InfoUSA D&B Equifax Equifax $0.8B $0.9B Equifax Confidential and Proprietary Page 77
Slide 78: A Solid Foundation for Growth
A Solid Foundation for Growth Revenue Operating Income ($ millions) ($ millions) $49 $9.9 $37 $28 $4.4 $0.2 2004 2005 2006 2004 2005 2006 Equifax Confidential and Proprietary Page 78
Slide 79: Executing a Strong Growth Strategy
Executing a Strong Growth Strategy Increase Enabling Greater Invest in data Technologies & Target emerging share-of-wallet sources Predictive Sciences opportunities and penetration that differentiate penetration • Improved customer • Enhanced scores • Exclusive small- • Expanding experience (blended
Slide 80: Building A $150M Business By 2010
Building A $150M Business By 2010 2007 2010 •Unique small business bank trade •Complete small business view; commercial and consumer data •Scores – especially in financial •Most predictive scores across services industries •Large, financial services decisioning •Decisioning platforms across platform
Slide 81: How We Will Win in the Marketplace
How We Will Win in the Marketplace Comprehensive View of the Customer Developing new value …leveraging new …allows entry into new proposition… capabilities… customer verticals Consumer data on proprietors • Data investment underway – Firmographics, Small business public records, financial corporate
Slide 82: New Trade-lines Will Enrich Our Data Advantage
New Trade-lines Will Enrich Our Data Advantage Equifax D&B Experian Trying to acquire small business trade lines 17K Large & Trying to acquire Mid-size Businesses* small business trade lines Expand file: add new records 25M Small Enrich current file: Businesses* Add non-financial trade lines Focus *
Slide 83: With Solutions That Enhance Customers' Decision-making
With Solutions That Enhance Customers’ Decision-making Assessing risk when extending credit to small businesses often requires both a view of the proprietor and the business % charge-offs Scoring approach correctly predicted Consumer-only score 63.1% Equifax blended score 84.6% (consumer and commerc
Slide 84: New Product Innovations Will Drive Value for Customers
New Product Innovations Will Drive Value for Customers Our Commercial Insight product helps our customers increase their share-of-wallet New Product Innovation Missed Opportunity Analysis Number of Business Loans • Commercial insight • Business failure score • Data packets • ID assist • Commercial d
Slide 85: Creating Value through Superior Customer Management Insights
Creating Value through Superior Customer Management Insights Recent competitive win: Master Data Management • Global Fortune 200 company needed comprehensive visibility Customer need of its sales relationships with customers (i.e. account mgt) • Current provider was not providing the quality of data
Slide 86: Solution Suite Meets Multiple Customer Needs
Solution Suite Meets Multiple Customer Needs Marketing/Purchasing Risk Management Marketing/Sales Corp. Linkage/Data Cleansing Business Credit Scoring Sales Leads / SOHO BusinessClass Marketing Customer Data Management (Austin-Tetra) Database Equifax Commercial Risk Database Equifax Consumer Databas
Slide 87: NACS Will Deliver Strong Growth and Improving Margins
NACS Will Deliver Strong Growth and Improving Margins Revenue 2008-2010 $M 25-35% $49 CAGR • Operating margins increase through 2010 $37 • New products $28 drive growth and franchise value • New data and markets diversify revenue 2004 2005 2006 Equifax Confidential and Proprietary Page 87
Slide 88: North America Personal Solutions
North America Personal Solutions
Slide 89: Major Highlights
Major Highlights 2006 Growth Strategies Results Customer Segmentation • Reoriented our business around customer segments • Subscription revenue mix grew from 46% to 67% Customer Retention • Implemented Call Center Save Team improving save rates from 15% to 25% • Changed marketing tone to loyalty-bas
Slide 90: A Solid Foundation for Growth and Profit
A Solid Foundation for Growth and Profit Revenue Growth Profit Growth $M $M $19* $126 $18 $115 $96 $14 2004 2005 2006 2004 2005 2006 Annual Growth % 19% 10% Margins 18% 12% 15% * w/o Hillis law suit expense Equifax Confidential and Proprietary Page 90
Slide 91: Growing a Recurring Revenue Stream
Growing a Recurring Revenue Stream (Percentage of Revenue) 33% 40% 54% Q3 71% 67% 60% 46% 1H06 2H06 Q3YTD 2007 Operating 6% 23% 21% Margin Subscription Transaction Equifax Confidential and Proprietary Page 91
Slide 92: Equifax Growth Outpacing the Market
Equifax Growth Outpacing the Market Estimated Total Market $1.25B Subscription Transaction TransUnion Affinion Intersections FI/other Affinion TransUnion (Trilegiant) FICO FI/other Experian Experian Equifax Equifax $1.0B $0.25B Equifax Confidential and Proprietary Page 92
Slide 93: Executing a Strong Growth Strategy
Executing a Strong Growth Strategy Increase Enabling Greater Invest in data Technologies & Target emerging share-of-wallet sources Predictive Sciences opportunities and penetration that differentiate penetration •Leveraging a •Improve on-line •Invest in •Expanding regulated Call experience additiona
Slide 94: Three Levers Drive Growth
Three Levers Drive Growth Acquisition Share-of-Wallet Retention • Optimize ROMS • Drive subscription • Enhanced customer upgrades loyalty • Enrich segments • Drive multi-product • Optimize contact • Optimize buyers strategy Equifax.com • Optimize pricing • Save based upon • Scale Call Center strateg
Slide 95: Enhanced Consumer Experience
Enhanced Consumer Experience Simplified design & shopping experience: • Average revenue per member up over 20% over last year • Consumer satisfaction with site usability and content up ~15% • Improved conversion rate Improved education & tools: • Learn.equifax.com • Introducing consumer portal Equif
Slide 96: Consumer Needs Evolve…and Fuel Innovation
Consumer Needs Evolve…and Fuel Innovation Consumers are more worried about their identity. Consumerism and the Internet is changing the way people want to conduct commerce. Social networks are rapidly growing and changing the ways consumers interact. Equifax Confidential and Proprietary Page 96
Slide 97: Will Deliver Strong Growth and Improving Margins
Will Deliver Strong Growth and Improving Margins Revenue 2008-2010 $M 15-20% $126 • Stable margins – CAGR $115 20 – 25% $96 • Recurring revenue business model • Strong consumer brand with diverse product offerings 2004 2005 2006 Equifax Confidential and Proprietary Page 97
Slide 98: International
International Game Changers
Slide 99: Major Accomplishments
Major Accomplishments • Increased revenue growth within International franchise from 12% in 2006 to 15% for September YTD 2007 driven by successful sales initiatives in market penetration and share-of-wallet • Strong earnings performance with YTD margins increasing from 29.5% to 30.3% • Transferred
Slide 100: A Solid Foundation for Growth and Profit
A Solid Foundation for Growth and Profit Revenue Operating Income ($ millions) ($ millions) $403 $118 $359 $101 $313 $78 2004 2005 2006 2004 2005 2006 Operating 25% 28% 29% Margin Equifax Confidential and Proprietary Page 100
Slide 101: International Has a Strong Franchise Today
International Has a Strong Franchise Today CANADA UNITED KINGDOM Consumer #1 Consumer #2 Commercial #3 IBERIA Spain Consumer #1 Portugal Consumer #1 ANDEAN REGION • Peru #1 • Uruguay #1 • El Salvador #1 BRAZIL • Honduras #1 Commercial #2 • Ecuador #1 Consumer #3 CHILE #1 ARGENTINA #1 *Consumer Risk
Slide 102: A $2.7B Market Across 12 Countries
A $2.7B Market Across 12 Countries Estimated Market Size (select markets) Canada UK UK Brazil Brazil Consumer Commercial Consumer Commercial Consumer Other FICO ACSP Other Other MKTG Other ACSP Trans Union Callcredit FICO Experian Serasa LBM Acxiom ICC DNB Serasa Equifax Experian Experian Equifax Eq
Slide 103: Competition in Brazil Is Shifting
Competition in Brazil Is Shifting • Serasa and Experian continue to be good competitors for Equifax • Large banks have indicated a willingness to provide negative data – 4 of 10 largest banks currently providing to Equifax • Have identified additional sources for negative data • Expect positive data
Slide 104: Delivering Our Growth Strategy
Delivering Our Growth Strategy Increase Enabling Greater Invest in data Technologies & Target emerging share-of-wallet sources Predictive Sciences opportunities and penetration that differentiate penetration Focus on key verticals: •Develop generic •Positive consumer •New Adjacencies •Banking models
Slide 105: Growth Will Come Through Four Initiatives
Growth Will Come Through Four Initiatives “Corporate “Local Execution” “Innovation” Development” Core and Product New Business Core Initiatives Transfer Adjacencies Diversification Overview Overview Overview • Over-achievement in • Transfer best-in-class • New ideas drive • Diversify International c
Slide 106: New Products Key for Growth
New Products Key for Growth Products Products Launched in Pipeline Risk & Fraud 28 55 Enabling Technologies 9 17 Consumer Marketing 6 14 Equifax Confidential and Proprietary Page 106
Slide 107: Process to Leverage Innovation and Adjacencies
Process to Leverage Innovation and Adjacencies Ideate Incubate Transfer Monetize • Growth • Build concept • Identify • Execute in local concepts properties to markets to • Pilot launch transfer concept optimize • Prioritization • Refine penetration and • Scoping and proposition and • Build and refin
Slide 108: Product Transfer
Product Transfer Enabling Technologies Marketing Services • Leverage Applications Processing • Integrated Marketing Services Description assets to fill product gaps proposition • Transfer existing platforms to meet – Deploy replicable Marketing needs in other geographies Services platform – Leverage
Slide 109: New Markets
New Markets Applications Fraud Campaign Management • Allows applications to be • ASP campaign management Description checked for inconsistencies software that combines Equifax • Workflow software allows prospect pool with client data additional due-diligence • Creates installed Marketing Services ba
Slide 110: Current Status of Priority Markets
Current Status of Priority Markets India Applied for license to Reserve Bank of India Investing in venture Mexico Final stages to close a targeted acquisition Russia Preliminary discussions with potential partners China Exploratory discussions underway Equifax Confidential and Proprietary Page 110
Slide 111: International Will Deliver Strong Growth and Improving Margins
International Will Deliver Strong Growth and Improving Margins Revenue 2008-2010 $M 9-11% CAGR $403 • Operating $359 margins will continue to $313 improve through 2010 • Expansion into new markets/ geographies • Accelerated product transfer 2004 2005 2006 Equifax Confidential and Proprietary Page 11
Slide 112: Financials
Financials Game Changers
Slide 113: We Have a Broad Range of Industries
We Have a Broad Range of Industries Insurance 1% Other 3% Healthcare 1% Government 4% Marketing Services (other) 5% Financial 31% Telco 5% Auto 6% Human Resources 7% Retail 7% Mortgage 13% Commercial 7% Consumer 10% Equifax Confidential and Proprietary Page 113
Slide 114: Strategy Provides Multiple Sources for Growth
Strategy Provides Multiple Sources for Growth Increase Enabling Greater Invest in data Technologies & Target emerging share-of-wallet sources Predictive Sciences opportunities and penetration that differentiate penetration •Integrated solution •High value analytics •Broaden commercial •Adjacent mark
Slide 115: A Diversified Business Mix
A Diversified Business Mix Total Growth 8-11% Expected Annual $500.0 Growth Q3 2007 Mix 2008-2010 TALX 14% 14-17% $400.0 North America Commercial 3% 25-35% North America Personal Solutions 8% 20-25% Revenue ($ millions) $300.0 International 25% 9-11% $200.0 U.S. Consumer Information Services 50% 4-7
Slide 116: Solid, Long Term Growth
Solid, Long Term Growth 2008–2010 Planning Period 1-2% 8-11% 3-4% Multi-Year Objectives Revenue CAGR (Est.) 4-6% Market Core Adjacencies/ Total Organic Organic M&A Growth Initiatives Equifax Confidential and Proprietary Page 116
Slide 117: That Yields Strong Operating Performance
That Yields Strong Operating Performance 2008–2010 Planning Period 1-2% 8-11% 3-4% 9 High, sustainable Operating Multi-Year Objectives Margins 27 – 28% Revenue CAGR (Est.) 4-6% Market Core Adjacencies/ Total Organic Organic M&A Growth Initiatives Equifax Confidential and Proprietary Page 117
Slide 118: And Allows Us to Invest for Growth
And Allows Us to Invest for Growth CAPEX* to Revenue 8.00 6.00 CAPEX to Revenue (%) 4.00 2.00 0.00 2006A 2007F 2008F 2009F 2010F * CAPEX is defined as additions to property and equipment and additions to other assets as disclosed in the Company’s consolidated statements of cash flows included in fil
Slide 119: Use of Cash Flow
Use of Cash Flow • Invest in organic growth initiatives to drive internal growth • Share repurchase • Debt paydown • Invest next in acquisitions which strengthen franchise and drive growth Equifax Confidential and Proprietary Page 119
Slide 120: Solid, Long Term Growth
Solid, Long Term Growth 2008–2010 Planning Period 1-2% 8-11% 3-4% 9 High, sustainable Operating Multi-Year Objectives Margins 27 – 28% Revenue CAGR (Est.) 9 Strong cash flow 4-6% to reduce debt and repurchase stock 9 Cash EPS growth 11 – 14% Market Core Adjacencies/ Total Organic Organic M&A Growth
Slide 121: With Highly Attractive Fundamentals for Investors
With Highly Attractive Fundamentals for Investors Projected 2010 • Revenue $2.4B - $2.6B • Growth rate (2008-2010) 8-11% • High recurring revenue ~80% • High operating margins 27-28% • Cash EPS $3.20-$3.40 Equifax Confidential and Proprietary Page 121
Slide 122: The Equifax Growth Playbook
The Equifax Growth Playbook Game Changers
Slide 123: A Resilient Growth Strategy
A Resilient Growth Strategy Increase Enabling Greater Technologies & share-of-wallet Predictive Sciences and penetration penetration Invest in data sources Target emerging that differentiate opportunities Equifax Confidential and Proprietary Page 123
Slide 124: Drives Strong Projected Financial Performance
Drives Strong Projected Financial Performance • The business will generate solid 8-11% revenue growth and 11-14% EPS growth over the next three years • Integration of TALX and revenue synergies contributing 1% of incremental growth • New geographic markets positioned for long term growth and profita
Slide 125: Which Appeals to Our Investor Base
Which Appeals to Our Investor Base • Powerful, proven business model • Unique product solutions • Strong franchise and excellent reputation • Highly recurring, transaction-based revenues • Consistent free cash flow, low CAPEX requirement • Superior, high value technology • Leading international mark
Slide 126: The Equifax Growth Playbook
The Equifax Growth Playbook Q&A Panel Game Changers