10-QPeriod: Q1 FY2022

EQUIFAX INC Quarterly Report for Q1 Ended Mar 31, 2022

Filed April 21, 2022For Securities:EFX

Summary

Equifax Inc. reported solid top-line growth in the first quarter of 2022, with total operating revenue increasing by 12% year-over-year to $1.36 billion. This growth was primarily driven by a significant 33% surge in the Workforce Solutions segment, fueled by strong performance in Verification Services and acquisitions. The U.S. Information Solutions (USIS) segment experienced a 6% decline in revenue, largely due to a slowdown in the mortgage market. Profitability also showed improvement, with consolidated net income attributable to Equifax rising by 10% to $221.8 million, translating to a diluted EPS of $1.80, up from $1.64 in the prior year. While overall operating expenses increased, driven by higher cost of services, SG&A, and depreciation, the company managed to improve its operating income by 8%. Despite a higher effective tax rate, Equifax demonstrated resilient profitability, underscoring its diversified business model's ability to navigate market shifts.

Financial Highlights

51 data points
Beta

Revenue

$1.36B

Net Income

$221.80M

16.3% Net Margin

EPS (Diluted)

$1.80

Total Assets

$11.39B

Cash & Equivalents

$200.90M

Free Cash Flow

-$198.50M

Financial Statements
Beta
Revenue$1.36B
SG&A Expenses$340.30M
Operating Expenses$1.03B
Operating Income$332.40M
Interest Expense$39.70M
Net Income$221.80M
EPS (Basic)$1.82
EPS (Diluted)$1.80
Shares Outstanding (Basic)122.20M
Shares Outstanding (Diluted)123.50M

Key Highlights

  • 1Total operating revenue increased by 12% to $1.36 billion, driven by strong performance in Workforce Solutions.
  • 2Workforce Solutions revenue surged by 33%, primarily due to growth in Verification Services and acquisitions.
  • 3U.S. Information Solutions (USIS) segment revenue decreased by 6%, impacted by a slowdown in mortgage inquiry volumes.
  • 4Consolidated net income attributable to Equifax grew by 10% to $221.8 million.
  • 5Diluted earnings per share (EPS) increased to $1.80 from $1.64 in the prior year.
  • 6Operating margin slightly decreased to 24.4% from 25.3% due to operating expenses growing faster than revenue.
  • 7The company made a significant consumer class action settlement payment of $345.0 million in January 2022, impacting operating cash flow negatively for the quarter.

Frequently Asked Questions

Revenue growth was primarily driven by a strong 33% increase in the Workforce Solutions segment, which benefited from robust performance in Verification Services and contributions from recent acquisitions. The International segment also saw a 6% increase in revenue.

The USIS segment's revenue decreased by 6% due to a significant decline in mortgage inquiry volumes, impacting both Online Information Solutions and Mortgage Solutions. Financial Marketing Services also saw a decrease.

While most of the legal and government investigations related to the 2017 cybersecurity incident have been resolved, the company made a significant $345.0 million payment in January 2022 as part of the U.S. Consumer MDL Litigation settlement. This payment negatively impacted cash flow from operating activities for the quarter.

Equifax's planning for 2022 anticipates a decline of over 35% in the U.S. mortgage market (measured by credit inquiries) for the remainder of the year compared to 2021. This slowdown directly impacts the USIS segment, particularly Mortgage Solutions and Online Information Solutions, as evidenced by the revenue decline in the current quarter.