Q4 2024 Earnings Summary
- Equifax plans to initiate dividend growth and a multiyear share repurchase program starting in 2025, returning significant capital to shareholders. The company expects strong free cash flow generation, enabling them to both pursue bolt-on acquisitions and increase shareholder returns.
- The ongoing cloud transformation is driving cost savings and margin improvements, with 85% of Equifax's revenue now in the cloud. This allows them to focus on growth, innovation, new products, and AI, introducing new AI-powered products that drive incremental revenue and higher growth rates.
- Equifax's government business has significant growth potential, with a total addressable market (TAM) of about $5 billion in manual verifications. Currently, Equifax generates about $700 million in revenue from this segment, indicating substantial room for expansion.
- Declining mortgage and hiring markets leading to lower growth and margin pressure: Equifax is experiencing a significant decline in mortgage volumes, forecasting a 12% decrease based on sharp declines over the past 6-7 weeks due to higher interest rates and decreased consumer confidence. Additionally, the weak U.S. hiring market, which is expected to decline by over 10%, is negatively impacting their Talent Solutions business. These declines are leading to lower revenue growth and margin pressure, affecting both their top line and bottom line. ,
- Limited margin expansion due to diminished cost savings and margin-dilutive factors: While Equifax has achieved significant cost savings from their cloud transformation in prior years, future cost savings are expected to be much smaller as they are already 85% migrated to the cloud. Additionally, factors such as mortgage supplier price increases are margin-dilutive; they may increase revenue but negatively impact margin percentages. This limits Equifax's ability to expand margins significantly despite cost management efforts. , ,
- Economic headwinds in international markets, particularly the UK: Equifax's international revenue growth is expected to slow down from 11% in Q4 to a guidance of 7% in 2025, partly due to economic slowdown and headwinds in the UK and Europe. The UK economy is expected to be weaker, which could negatively impact Equifax's international business performance, contributing to overall revenue growth challenges. ,
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | +7% (from $1,326.5M to $1,419.4M) | Total revenue increased by $92.9 million, driven by continued strength across multiple segments. The increase reflects ongoing gains from domestic and international businesses, including enhanced product offerings and acquisitions that built on previous period momentum. |
Operating Income (EBIT) | +17.5% (from $245.1M to $288.1M) | Operating income improved significantly due to higher revenue gains combined with more effective expense management. While earlier periods saw revenue growth offset by rising costs, Q4 2024 benefited from improved operating margins, suggesting that cost containment and efficiencies have taken hold compared to the previous period. |
Net Income | +31% (from $132.4M to $174.0M) | Net income surged by $41.6 million, reflecting both the stronger operating performance and improved tax and cost structures. This represents a turnaround from prior challenges such as high interest and regulatory expenses, indicating that adjustments made in previous periods are now yielding better bottom-line results. |
EPS – Basic | +30% (from $1.08 to $1.40) | EPS increased substantially in line with the net income growth, highlighting improved profitability and efficiency. The enhancement in EPS suggests that the company’s strategies to boost margins have translated into higher per-share earnings compared to the prior period. |
US Information Solutions (USIS) Revenue | +10.5% (from $427.7M to $472.5M) | USIS revenue grew sharply, driven by robust growth in mortgage and online solutions revenue. The improvement builds on prior periods where product innovation and favorable market conditions in mortgage-related services were key drivers. |
Workforce Solutions Revenue | +6.8% (from $559.5M to $598.1M) | Workforce Solutions revenue increased modestly, thanks to strong performance in verification services despite some headwinds in employer services. This reflects continued expansion in government and talent verticals, a trend observed in previous periods, even as the decline in certain segments partially offset the growth. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Revenue | Q4 2024 | Between $1.438B and $1.458B, up 9% at midpoint | no current guidance | no current guidance |
Organic Constant Dollar Revenue Growth | Q4 2024 | About 10% at midpoint | no current guidance | no current guidance |
Mortgage Revenue | Q4 2024 | Up 30% | no current guidance | no current guidance |
Non-Mortgage Constant Dollar Revenue | Q4 2024 | Up over 7% | no current guidance | no current guidance |
Adjusted EBITDA Margin | Q4 2024 | About 35.5% at midpoint | no current guidance | no current guidance |
Adjusted EPS | Q4 2024 | Between $2.08 and $2.18, up 18% vs Q4 2023 | no current guidance | no current guidance |
Capital Expenditures | Q4 2024 | Just over $105M | no current guidance | no current guidance |
Workforce Solutions Revenue Growth | Q4 2024 | Up about 10% | no current guidance | no current guidance |
Workforce Solutions Non-Mortgage Revenue | Q4 2024 | Up about 8% year-to-year | no current guidance | no current guidance |
Verifier Non-Mortgage Revenue Growth | Q4 2024 | Strong double-digit growth, though below Q3 levels | no current guidance | no current guidance |
Verifier Mortgage Revenue Growth | Q4 2024 | Benefiting from strong growth in TWN records | no current guidance | no current guidance |
Workforce Solutions Adjusted EBITDA Margin | Q4 2024 | About 52% | no current guidance | no current guidance |
USIS Revenue Growth | Q4 2024 | Up over 10% year-to-year | no current guidance | no current guidance |
USIS Non-Mortgage Revenue | Q4 2024 | Up about 3% year-to-year | no current guidance | no current guidance |
USIS Adjusted EBITDA Margin | Q4 2024 | Over 38% | no current guidance | no current guidance |
International Revenue Growth | Q4 2024 | Up over 9% in constant currency | no current guidance | no current guidance |
International Adjusted EBITDA Margin | Q4 2024 | Over 32% | no current guidance | no current guidance |
Constant Currency Revenue Growth | FY 2024 | About 10% | no current guidance | no current guidance |
Organic Constant Currency Growth | FY 2024 | About 8% | no current guidance | no current guidance |
Mortgage Revenue | FY 2024 | Expected to grow about 12.5% | no current guidance | no current guidance |
Non-Mortgage Constant Dollar Revenue | FY 2024 | Expected to grow almost 10%, with organic growth over 7% | no current guidance | no current guidance |
FX Impact | FY 2024 | About 180 bps negative | no current guidance | no current guidance |
Adjusted EPS | FY 2024 | $7.30, growing 9% | no current guidance | no current guidance |
Adjusted EBITDA Margin | FY 2024 | 32.4%, growing 9% year-over-year | no current guidance | no current guidance |
Capital Expenditures | FY 2024 | $485M | no current guidance | no current guidance |
Depreciation & Amort. (excl. acquisition) | FY 2024 | $410M | no current guidance | no current guidance |
Revenue | Q1 2025 | no prior guidance | Between $1.390B and $1.420B, 1% reported growth (3% cc) | no prior guidance |
Adjusted EPS | Q1 2025 | no prior guidance | Between $1.33 and $1.43, down 8% y/y at midpoint | no prior guidance |
Adjusted EBITDA Margin | Q1 2025 | no prior guidance | About 28.5%, down 50 bps y/y | no prior guidance |
Workforce Solutions Revenue Growth | Q1 2025 | no prior guidance | About 1% | no prior guidance |
Verification Services Revenue Growth | Q1 2025 | no prior guidance | 2.5% | no prior guidance |
Mortgage Revenue | Q1 2025 | no prior guidance | Expected to remain flat | no prior guidance |
Verifier Non-Mortgage Revenue Growth | Q1 2025 | no prior guidance | 3.5% | no prior guidance |
Government Revenue | Q1 2025 | no prior guidance | Expected to remain flat | no prior guidance |
Talent Revenue Growth | Q1 2025 | no prior guidance | Mid-single digits | no prior guidance |
Employer Revenue | Q1 2025 | no prior guidance | Decline mid-single digits | no prior guidance |
USIS Revenue Growth | Q1 2025 | no prior guidance | About 3% | no prior guidance |
USIS Mortgage Revenue Growth | Q1 2025 | no prior guidance | About 5% | no prior guidance |
USIS Non-Mortgage Revenue Growth | Q1 2025 | no prior guidance | About 2.5% | no prior guidance |
International Revenue Growth | Q1 2025 | no prior guidance | About 6% cc | no prior guidance |
Revenue | FY 2025 | no prior guidance | $5.95B, up 4.7% reported, 6% cc | no prior guidance |
EBITDA | FY 2025 | no prior guidance | $1.9B, up 5% | no prior guidance |
EBITDA Margin | FY 2025 | no prior guidance | Expected to increase by 25 bps | no prior guidance |
Adjusted EPS | FY 2025 | no prior guidance | $7.45, up 2% y/y | no prior guidance |
Free Cash Flow | FY 2025 | no prior guidance | $900M, 95% free cash flow conversion | no prior guidance |
Capital Spending | FY 2025 | no prior guidance | $480M | no prior guidance |
Tax Rate | FY 2025 | no prior guidance | 26.75% | no prior guidance |
International Revenue Growth | FY 2025 | no prior guidance | 7% cc | no prior guidance |
USIS Revenue Growth | FY 2025 | no prior guidance |
| no prior guidance |
Workforce Solutions Revenue Growth | FY 2025 | no prior guidance |
| no prior guidance |
Verification Services Revenue Growth | FY 2025 | no prior guidance | 8% | no prior guidance |
Mortgage Revenue Growth | FY 2025 | no prior guidance | 3% | no prior guidance |
Non-Mortgage Verifier Revenue Growth | FY 2025 | no prior guidance |
| no prior guidance |
Employer Services Revenue | FY 2025 | no prior guidance | Expected to remain flat | no prior guidance |
EWS Adjusted EBITDA Margin | FY 2025 | no prior guidance | 50.5%, down from 51.8% in 2024 | no prior guidance |
USIS Adjusted EBITDA Margin | FY 2025 | no prior guidance | 35.5%, up 100 bps y/y | no prior guidance |
International Adjusted EBITDA Margin | FY 2025 | no prior guidance | 28.5%, up 100 bps y/y | no prior guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Revenue | Q4 2024 | $1.438B - $1.458B | $1,419.4M | Missed |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Cloud transformation and diminishing cost-savings impact | In Q1–Q3 2024, Equifax emphasized moving revenue to the cloud (from 70% to 80%+), anticipating cost savings and margin benefits. They noted these savings would peak in 2025, with depreciation temporarily offsetting some gains. | By Q4 2024, they have 85% of revenue in the cloud, but cost-savings are tapering: only smaller incremental benefits remain, especially after completing migrations in certain international markets. | Consistently mentioned; cost-savings impact is diminishing in 2025. |
Mortgage market volatility and potential rebound | In Q1–Q3, Equifax repeatedly cited mortgage market weakness and the possibility of a rebound if rates declined, noting activity was about 50% below historic levels. | In Q4 2024, they saw a sharp decline in mortgage activity (rates above 7%), negatively impacting revenue and creating forecasting challenges, but they still highlight a potential rebound if rates drop. | Ongoing volatility; more pessimistic near term but still sees long-term upside. |
Talent and Employer Solutions revenue fluctuations | Prior quarters showed varying performance: Talent Solutions sometimes outperformed hiring markets, while Employer Services was pressured by ERC declines and weaker hiring. | In Q4 2024, Talent Solutions grew 2% but was hurt by a weak U.S. hiring market, and Employer Services revenue fell 9% due to lower I-9/onboarding. | Consistently mentioned; sentiment more bearish due to sustained hiring slowdown. |
Dividend growth and share repurchases planned for 2025 | In Q1–Q3, Equifax signaled returning cash to shareholders after achieving a 2.5x leverage ratio, planning to grow the dividend and start buybacks. | In Q4 2024, they confirmed a strong intention for dividend growth and a multiyear share repurchase program through 2027, dependent on market visibility. | Consistent; details now more firm with a multiyear plan. |
Government business expansion with significant TAM | In Q1–Q3, they described robust government vertical growth with a $5B TAM, focusing on state agency market penetration. | In Q4 2024, they highlighted about $700M in revenue and the $5B TAM opportunity, especially around manual verifications and improper payment reduction initiatives. | Continued emphasis; large future growth potential. |
International performance shifts: Latin America growth vs. UK headwinds | Earlier quarters showed strong Latin America growth (boosted by Boa Vista in Brazil) and generally solid UK performance, with no major UK issues flagged. | In Q4 2024, Latin America continued double-digit growth, contrasting with UK weakness (slower economy, mid-single-digit growth). | Trend of divergence; UK headwinds now more pronounced. |
Boa Vista integration progress | In Q1–Q3, they reported steady integration steps: deploying Ignite/Interconnect in Brazil, one-year ownership milestones, and optimism for future market share gains. | No mention in the Q4 2024 earnings call [—]. | Previously highlighted; not referenced in Q4. |
New product innovation (AI, identity, alternative data) | Q1–Q3 updates showed rising AI adoption (models built with AI 70%→89%), new identity/fraud and alternative data solutions, and a rising Vitality Index. | By Q4 2024, 95% of new models used AI/ML. They launched One Score with cell phone utility data and a mortgage credit file combining credit and income info, aiming to differentiate in the market. | Consistent focus; expanded AI usage and product differentiation. |
Margin expansion challenges despite prior cost savings | Q2–Q3 noted overlapping cloud costs, higher depreciation, and slower revenue impacting margins. | In Q4 2024, weaker mortgage/hiring markets, higher onboarding costs, and product mix tempered margin gains, despite cloud-related savings. | Consistent topic; increased headwinds in Q4. |
Auto market and credit bureau sales weakness | Q1–Q3 showed soft auto demand due to higher loan rates and declines in third-party bureau sales. | In Q4 2024, auto revenue grew slightly, but higher rates still constrained new car financing. Credit bureau sales improved marginally in D2C, yet telco/identity segments remained weak. | Continuing concern; moderate improvement in some bureau sales, but rates remain a drag. |
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Mortgage Market Impact
Q: How are mortgage declines affecting growth and EPS?
A: The unexpected mortgage market decline, with rates over 7%, has sharply reduced activity in the last six to seven weeks, impacting growth and EPS [(26)]. Without mortgage and hiring headwinds, growth would have been 200 basis points higher [(1)]. The decline was surprising, as they previously expected a slightly positive mortgage environment [(1)]. -
EWS Margin Contraction
Q: Why are EWS margins contracting despite revenue growth?
A: EWS margins are impacted by the mortgage market decline removing high-margin revenue and increased onboarding costs from adding 15 partners and 20 million records last year [(0)]. Growth in lower-margin education products and substantial investments in EWS also pressure margins [(0)]. There is no change in payout ratios to TWN record partners affecting margins [(0)]. -
Capital Allocation Plans
Q: What are your plans for dividends and share buybacks?
A: After completing the cloud transformation, Equifax plans to return cash to shareholders by increasing the dividend and initiating a multi-year share buyback program in 2025 [(8)]. They await more visibility on the economy, mortgage, and hiring markets before making decisions, but are confident in strong free cash flow generation [(8)]. -
Government Business Outlook
Q: How will CMS changes and SSA contract affect government business?
A: CMS reduced reimbursement from 100% to 75%, impacting revenues as states adjust to paying 25% of data costs [(2)]. This affects the first half of 2025, but they expect the government business to return to double-digit growth in the second half [(2)]. A large SSA contract extension signed in September will positively impact the second half of 2025 [(2), (18)]. -
New Product Initiatives
Q: What are your key new product developments?
A: Equifax is rolling out a mortgage credit file with TWN indicators, differentiating their product as only they can provide this data [(6), (10), (17)]. Similar initiatives are underway in auto and personal loans, leveraging their cloud capabilities to combine data assets and enhance offerings [(10), (17)]. -
Changing Customer Behavior
Q: How are customers reacting to higher prices and pulling fewer credit files?
A: Some mortgage originators are moving from pulling three credit files to one or two in the shopping process due to higher prices [(6), (23)]. Equifax focuses on differentiating their credit file with TWN indicators to be the preferred choice [(6), (23)]. -
Record Additions in EWS
Q: How do record additions impact EWS growth?
A: They added 15 partners and 20 million records in 2024, with record growth expected to continue in 2025 [(0), (19)]. Onboarding costs associated with these additions impact margins in the short term but benefit future revenue [(0), (27)]. -
USIS Non-Mortgage Growth
Q: What caused the slowdown in USIS non-mortgage growth?
A: USIS non-mortgage growth was 2% versus 5% last quarter due to lower FMS revenue, which was exceptionally strong in Q3 from new customers [(4)]. Online performance remained consistent, with auto and financial institutions performing relatively well [(4)]. -
International Revenue Growth
Q: Why is international revenue growth decelerating?
A: International revenue growth guidance is 7% in 2025, within their long-term model of 7–9% [(14)]. Growth is strong across most geographies, but the UK faces market headwinds, and Brazil's growth may not be double-digit in 2025 [(14)]. -
Margins and Cloud Savings
Q: What drives margin expectations and potential upside?
A: Margin expansion is driven by cost savings from cloud transformation and revenue growth [(16), (26)]. With 85% in the cloud, major savings occurred in 2024, with smaller savings expected in 2025 [(16), (29)]. Upside to margins depends on accelerating revenue, especially if mortgage and hiring markets improve [(26)]. -
Talent Verification Performance
Q: How did talent verification outperformance trend and what's expected?
A: In Q4, talent verification outperformed the white-collar hiring market by about 8 percentage points, slightly lower than previous quarters due to timing of price increases [(11)]. They historically run between high single digits and low double digits better than the market [(11)]. -
Competitive Dynamics
Q: Are there any shifts due to the First Advantage and Sterling merger?
A: Equifax maintains strong relationships with both Sterling and First Advantage and views them as strategic partners, with no specific impacts disclosed [(21)]. -
Macro Expectations from Banks
Q: What are banks indicating about credit performance?
A: Banks report that consumers are generally healthy, with low unemployment supporting bill payments [(28)]. There is some increase in delinquencies among subprime consumers, but no significant changes expected in customer or consumer behavior entering 2025 [(28)].
Research analysts covering EQUIFAX.