Experian: ‘credit where credit’s due’

Experian’s third quarter trading report reveals organic revenue growth of 7% and total revenue growth of 10%, reflecting good results in the Americas, especially in the consumer business, and is ahead of management expectations.

The group now expects fourth quarter revenue growth of 3-5% – with full year operating profit of $1.36bn-£1.38bn.

Commenting on the performance, Brian Cassin, Chief Executive Officer, said: “Our performance in Q3 was better than we expected. We delivered organic revenue growth of 7% and total revenue growth of 10% at constant exchange rates.

“Experian is performing very well, even in the exceptional circumstances created by the pandemic, and we expect to deliver a strong performance for this financial year. This again illustrates the resilience of our business. We remain highly focused on investing to sustain this performance and to take full advantage of the recovery when it comes.

“I am hugely grateful to my colleagues for their hard work and commitment. Their efforts have demonstrated the positive role our business plays in our communities and that data can be a significant force for good in helping to navigate the crisis, ensuring financial support reaches those most in need.”

Industry Reaction

Nicholas Hyett, Equity Analyst at Hargreaves Lansdown said: “Experian’s rise seems unstoppable. It’s core business, credit checks, should be highly cyclical – since when times are hard banks are less willing to lend and customers are less interested in borrowing. Yet it’s emerging from the pandemic stronger than even management had expected. In particular the formerly distressed consumer business is flying under the new free membership model, helped by the Experian Boost which allows consumers to attach non-traditional credit data to their accounts to improve their credit scores.

“Given the stronger than expected revenue result the lack of a profit upgrade is notable. Lower than expected profitability can be forgiven in the middle of a crisis, but given our long term gripe with Experian is around margins it’s an issue to watch closely going forward. With a P/E ratio of 32 times earnings the group ultimately needs to deliver steady or ideally growing margins to justify its valuation.

“Still, credit where credit’s due, this has been an impressive quarter.”