Equifax® (NYSE: EFX) has announced financial results for the quarter ended September 30, 2022.

  • Strong third quarter 2022 revenue of $1.244 billion, up 2% despite the weak mortgage market and negative impact of foreign exchange
  • Strong non-mortgage constant dollar revenue growth of 20% offsetting mortgage market decline
  • Workforce Solutions revenue growth of 9%, with non-mortgage revenue growth of 40%
  • Strong new product innovation leveraging new EFX Cloud with a Vitality Index of 14%
  • Closed the acquisitions of LawLogix, strengthening EWS I-9 Solutions, and Midigator, strengthening USIS Identity & Fraud
  • Revising fourth quarter guidance to reflect expected impact of further decline in U.S. mortgage originations and the negative impact of foreign exchange. Full Year guidance for revenue unchanged at $5.1 billion at the midpoint, and Adjusted EPS guidance revised downward to $7.54 per share at the midpoint

“We delivered solid results with third quarter revenue of $1.244 billion, up 2% despite the significant 41% decline in U.S. mortgage credit inquiries. Our non-mortgage business, which is over 78% of Equifax, delivered very strong constant dollar revenue growth of 20%, reflecting broad-based strength across our businesses.

Our largest and fastest-growing business, Workforce Solutions, again powered our results, with total revenue growth of 9%, driven by non-mortgage revenue growth of 40%. International also delivered record revenue with very strong local currency revenue growth of 17%. USIS revenue declined 9%, due to the decline in mortgage revenue. USIS non-mortgage B2B revenue growth was 5% with strong non-mortgage B2B online revenue growth of 9%,” said Mark W. Begor, Equifax Chief Executive Officer.

“In October, we have seen further weakening in the U.S. mortgage market and expect that we will now see fourth quarter mortgage originations decline over 60% and mortgage credit inquiries decline over 50%.  As we look to our Full Year 2022 guidance, we are maintaining our revenue guidance of $5.1 billion at the midpoint, as our strong double-digit non-mortgage revenue growth, including the addition of our recent LawLogix and Midigator acquisitions, offsets the more negative impact of both the weaker mortgage market and foreign exchange. We are revising the midpoint of our Adjusted EPS guidance to $7.54 per share, a reduction of approximately $0.13 per share, principally reflecting the negative margin impact of the loss of high margin mortgage revenue as well as increased interest expense.”

“We are confident in the future of the New Equifax as we deliver strong, double-digit non-mortgage growth, make strong progress on our EFX Cloud transformation, leverage our new Cloud capabilities to accelerate new product roll-outs, and invest in new product and data and analytics capabilities to drive future growth. We closed the acquisitions of LawLogix and Midigator, our 11th and 12th bolt-on acquisitions since January 2021, which will strengthen our EWS I-9 Solutions business and our USIS Identity & Fraud business. We continue to reinvest to broaden our capabilities and position Equifax for strong future growth. We are energized about the future of the New Equifax as a data, analytics and technology business and our ability to deliver higher margins and free cash flow.”

Financial Results Summary

The company reported revenue of $1,244.3 million in the third quarter of 2022, up 2 percent compared to the third quarter of 2021 on a reported basis and 4 percent on a local currency basis.

Net income attributable to Equifax of $165.7 million was down 19 percent in the third quarter of 2022 compared $205.4 million in the third quarter of 2021.

Diluted EPS attributable to Equifax was $1.34 for the third quarter of 2022, down 19 percent compared to $1.66 in the third quarter of 2021.

Workforce Solutions third quarter results

  • Total revenue was $558.9 million in the third quarter of 2022, a 9 percent increase compared to the third quarter of 2021. Operating margin for Workforce Solutions was 41.3 percent in the third quarter of 2022 compared to 49.4 percent in the third quarter of 2021. Adjusted EBITDA margin for Workforce Solutions was 49.5 percent in the third quarter of 2022 compared to 53.9 percent in the third quarter of 2021.
  • Verification Services revenue was $454.5 million, up 13 percent compared to the third quarter of 2021.
  • Employer Services revenue was $104.4 million, down 7 percent compared to the third quarter of 2021.

USIS third quarter results

  • Total revenue was $397.4 million in the third quarter of 2022, down 9 percent compared to $437.7 million in the third quarter of 2021. Operating margin for USIS was 20.6 percent in the third quarter of 2022 compared to 29.2 percent in the third quarter of 2021. Adjusted EBITDA margin for USIS was 34.1 percent in the third quarter of 2022 compared to 38.8 percent in the third quarter of 2021.
  • Online Information Solutions revenue was $314.4 million, down 6 percent compared to the third quarter of 2021.
  • Mortgage Solutions revenue was $32.1 million, down 31 percent compared to the third quarter of 2021.
  • Financial Marketing Services revenue was $50.9 million, down 8 percent compared to the third quarter of 2021.

International third quarter results

  • Total revenue was $288.0 million in the third quarter of 2022, up 6 percent and up 17 percent compared to the third quarter of 2021 on a reported and local currency basis, respectively. Operating margin for International was 14.8 percent in the third quarter of 2022, compared to 12.0 percent in the third quarter of 2021. Adjusted EBITDA margin for International was 26.8 percent in the third quarter of 2022, compared to 26.7 percent in the third quarter of 2021.
  • Asia Pacific revenue was $87.1 million, down 2 percent and up 6 percent compared to the third quarter of 2021 on a reported and local currency basis, respectively.
  • Europe revenue was $80.7 million, up 6 percent and up 24 percent compared to the third quarter of 2021 on a reported and local currency basis, respectively.
  • Canada revenue was $66.2 million, up 9 percent and up 12 percent compared to the third quarter of 2021 on a reported and local currency basis, respectively.
  • Latin America revenue was $54.0 million, up 21 percent and up 34 percent compared to the third quarter of 2021 on a reported and local currency basis, respectively.

Adjusted EPS and Adjusted EBITDA Margin

  • Adjusted EPS attributable to Equifax was $1.73 in the third quarter of 2022, down 6 percent compared to the third quarter of 2021.
  • Adjusted EBITDA margin was 32.5 percent in the third quarter of 2022 compared to 33.0 percent in the third quarter of 2021.
  • These financial measures exclude adjustments as described further in the Non-GAAP Financial Measures section.

Source:  Equifax Earnings Release