Experian reported their Q1 results for the period April 01 2012 to 30th June 2012 on 13th July, showing strong growth at constant exchange rates across all regions*. The appreciation of the Brazilian Real against the US dollar in particular however dragged the headline growth down to 7%.
In North America, growth in Credit Services (9%) and Decision Analytics (18%) was strong as the businesses benefited from a modest increase in consumer credit activity, particularly mortgages and the continuing expansion into new verticals such as utilities, health and telecoms. In his call with the analysts Don Robert CEO, said that the investment in acquiring Rental payment data was beginning to bear fruit organisations, sought to get a better understanding of their customers over all financial health. Marketing Services and Consumer Services grew at 3% and 7% respectively.
Latin America, continued to post impressive growth results, with Computec, the Colombian Bureau acquired last year, performing slightly above the buy plan. At the time of the acquisition revenues from Computec were stated at c$88m. Plans for rolling out Decision Analytics and Marketing Services solutions to Columbia were currently in progress.
In Brazil, whilst the Bill allowing the sharing of positive credit data had been signed last year, implementation is likely to take some time, not least because of the requirement for lenders to gain the consent of consumers to share the data. Consumers will also have the right to withdraw their consent at any time. Looking forward to a time when sharing such data becomes widely accepted it would be expected that Experian will leverage the data to drive continued growth in Credit Services and Decision Analytics revenues. Don Robert said that the option to acquire the remaining 30% of Serasa was currently being actively considered and that Experian would like to complete this “sooner, rather than later”, he also added that it was imperative during the process that they maintained excellent relations with the Banks who held the 30% stake and were customers of Serasa’s.
UK and Ireland continued to struggle to find growth with Credit Services revenues flat on the same time last year and Decision Analytics revenues declining by 4% primarily due to a strong Q1 in the prior year. Marketing Services also declined by 2%. Consumer Services however recorded 30% growth lifting overall growth in the UK to 7%, assisted by the acquisition of Garlik (Consumer Services) 192 (Decision Analytics -Identity Services) and LM Group (Credit Services – Business Information) in recent months.
Commenting on the UK Don Robert said that mainstream consumer lending organisations were largely focused on managing their existing customer base and had little appetite for risk at present. Growth in non-traditional lending (e.g. Payday Loans) and new market entrants (e.g. Tesco and Virgin) was providing opportunities for growth as these organisations were looking to grow market share whilst taking a balanced approach to risk. He believed that Experian was well placed to gain further growth from these businesses as their operations matured and they had the need for more of Experian’s services. Consumer Services was continuing to experience exceptional growth through a combination of pricing increases, bundling of additional services into the subscription along with the credit report and increased retention rates. This continues a trend for growth in Consumer Services revenues which started last year and runs counter to the depressed consumer lending market. Given its importance to the growth of the UK business at present it’s a trend that will be watched with interest in the future.
Growth in EMEA/APAC at constant exchange rates was 5% with Credit Services growing at 2% and Marketing Services at 12%. Decision Analytics declined by 18% due to difficult trading conditions. It was announced that due to depressed activity in the Eurozone that resources in Decision Analytics, primarily consultants, scoring analysts and sales people would be refocused on Central and Eastern Europe where there were greater growth opportunities.
It is clear that Experian continues to deliver growth from its strategy of geographic and vertical market diversification and investment in new services and products. It is also clear that the continuing growth in Latin America and the fragile recovery in the US need to continue as it faces difficult market conditions in the UK and Eurozone and continues to build scale in Asia Pacific, where revenues are expected to be $250m this financial year. Investment in new platforms, such as Powercurve the new Decision Analytics global platform and Business IQ in the US are also important to future growth. Business IQ and the recently launched Business IQ express targeted at SMEs are direct competitors to the DNBi suite of solutions. Since the launch of these two products around 18 months ago, 10,000 customers are now using the solutions. Experian are looking to accelerate the growth of this product by using partners, including organisations who are lending to SMEs, to extend their sales reach.
Experian’s Q1 results suggest that the Green Shoots of Recovery are still growing; it will be interesting to look at the contrasting fortunes of D&B, Equifax and TransUnion as they publish their quarterly results over the next few weeks.
*Explanation on continuing activities: These exclude the contributions of the comparison shopping and lead generation businesses in North America and the UK and Ireland, and other smaller discontinuing items in UK and Ireland adn EMEA/Asia Pacific.
Source: Experian Press Release