Equifax Beats Q4 Estimates, But Mortgage Headwinds Cloud FY24 Forecast

Equifax Inc EFX shares are trading higher after the company after the company reported fourth-quarter FY23 results.

Revenues of $1.327 billion, up 11% Y/Y and 14% Y/Y in non-mortgage local currency, beating the consensus of $1.313 billion.

Workforce Solutions revenues rose 10% Y/Y to $559.5 million, reflecting strong growth of 17% in non-mortgage revenue and 27% in Verification Services non-mortgage revenue growth.

U.S. Information Solution revenues rose 5% Y/Y to $427.7 million, with 16% mortgage revenue growth and 3% non-mortgage revenue growth.

The company witnessed solid new product innovation in Equifax Cloud business, with Vitality Index of 14%.

Adjusted EBITDA margin expanded to 33.7% from 31.0% a year ago. Adjusted EPS rose 19% Y/Y to $1.81, beating the consensus of $1.75.

Outlook: Equifax expects first quarter revenue of $1.375 billion-$1.395 billion (consensus: $1.41 billion) and adjusted EPS within $1.33-$1.43 (consensus: $1.82).

For FY24, it expects revenues of $5.670 billion-$5.770 billion vs. consensus of $5.74 billion and adjusted EPS of $7.20-$7.50 vs. consensus of $8.08.

Also Read: Equifax Named Top Pick For 2024 By Needham, Price Target Raised On Expected Mortgage Rate Tailwinds

Mark W. Begor, CEO, said, “While Equifax continues to execute well against its EFX2025 strategic priorities, our 2024 guidance reflects an expectation of an over 16% decline in our 2024 U.S. mortgage credit inquiries, compared to down 34% in 2023, with first half mortgage credit inquiries weaker than second half.” 

“Across USIS and Workforce Solutions, we expect to outperform the U.S. mortgage market by about 24%. EBITDA margins are expected to expand to 33.3%, reflecting organic revenue growth and the additional cost savings from Cloud spending reductions plans as well as higher costs from normalization of incentive plans.”

Also Read: Mortgage Market Trough Likely To Benefit Equifax, Analyst Upgrades Stock

Price Action: EFX shares are up 2.6% at $248.40 on the last check Thursday.