Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on Experian. We currently have 19 research reports from 3 professional analysts.
Experian’s top-line growth moderated in Q1, largely due to the tough comparable in the‘Decisioning’ segment. Despite this soft start, management remains confident about the business prospects, maintaining its full-year guidance. We will tweak our estimates slightly, but do not expect a material change in the target price.
Experian maintained its strong organic revenue growth momentum in FY18/19. FX headwinds, however, impacted both the reported top-line and profitability. We expect the strong demand of the company’s recently launched products to last, at least in the near term. Positive data regulation in Brazil should also lend some support, in our opinion. We will revise our target price upwards.
The Q3 results came in ahead of our expectations, gaining strength from the robust US performance. Also, the UK provided much-needed support to its topline, led by positive B2B growth and moderating B2C losses. LatAm and EMEA/Asia also remained positive. Moving forward, regulatory risk (dealing with data privacy laws) seems to be the only risk in the US, whereas in the UK, we maintain our cautious stance given Brexit-led uncertainty stretching further. We have revised our estimates upwards. No change in the stock recommendation.
The company’s H1 FY18/19 results were ahead of our estimates. The robust performance of B2B got the much necessary support from B2C. Region-wise – North America grew in double-digits, whereas Brazil and the UK reported a mid single-digit growth. In the upcoming quarters, we expect North America to remain strong, Brazil to improve and Brexit-related winds playing a crucial role in shaping the UK’s performance. We have revised our estimates upwards. No change in the stock recommendation.
The company reported its Q1 FY18/19 results which came in ahead of our estimates. Both North America and EMEA/Asia continued to grow robustly, gaining additional support from Latin America. Despite the uncertain macro-economic environment, the company’s UK and Ireland operations improved further. Furthermore, the permission to operate under an open banking licence opened new pastures for growth. Considering the continuous strength in the US operations and the recovery in the UK region, we have raised our estimates. No change in our stock recommendation.
Experian reported FY17/18 preliminary results in line with our estimates. Although, B2C remained negative on a yoy basis, the quarterly trend showed signs of initial relief (in UK and Ireland, decline moderated on qoq basis, whereas North America turned positive in Q4), providing much needed support for the ongoing positive B2B momentum. Discounting for the higher than expected performance in B2C segment and a robust B2B performance, we have revised our estimates upwards but no change in our recommendation.
Organic growth came in above our estimates but below market consensus. B2B continued to march forward, whereas B2C remained the drag. Geographically, the US was the kernel of company’s growth, gaining support from improving Brazilian economic situation. We maintain our conservative view on US, whereas Brazil remains the strongest pillar in Latin America. In the UK (Consumer Services), Experian’s strategy to monetize its increasing clientele through additional offerings seems to yield favourable initial results. No change in our stock recommendation.
Since Equifax announced a data breach in September 2017, legislators have been trying hard to penalize the lax attitude of data managers (including credit scoring companies). Recently, a bill was tabled in the Senate (Data Breach and Compensation Act), which proposes significant fines in the event of a data breach. Looking into the fine print, the bill recommends a fine of $100 per customer whose personal information gets compromised (with an additional $50 for each piece of data put at risk per person). The total sanctions are capped at 50% of the company’s total gross revenue. Also, if a company fails to disclose the breach to regulators in a timely manner, or has insufficient cyber security in place, the cap will increase to 75%. If this legislation had been in place during the Equifax fiasco, the company would have incurred a fine of at least $1.5bn.
B2B was strong (c.80% of group revenue) but B2C business remained weak. We reiterate our earlier position of a gradual softness in the US economy. We also do not see any long-term benefits from the Equifax fiasco considering a history of customer stickiness (lack of substitutes/limited number of reputed players in the credit scoring business). Although the B2C business is estimated to benefit from a series of small but key steps, it will not return to the black anytime soon. No change in stock recommendation.
Experian reported FY16/17 results in line with our estimates. The lfl revenue growth came in at 4.0% (the same as our estimate; +5% lfl excluding the CCM business), driven by strong momentum in the B2B businesses (+7.0% yoy) – Credit Services (+6% yoy, c.55% of group revenue), Decision Analytics (+9.0%, c.14% of group revenue) and Marketing Services (+8.0%; c.10% of group revenue). However, the B2C business, Consumer Services, witnessed a 4% lfl decline (c.22% of group revenue), largely due to the ongoing transition over the past few quarters. Geographically, North America clocked 5% organic growth (vs our estimate: 4.3%), on the back of positive demand in both Credit and Marketing Services (+8.0% yoy in each segment). The Decision Analytics business remained flat as new-business wins and the strength in scoring and analytics was offset by the non-renewal of a customer contract earlier in the year. Consumer Services ended the year in the red with a 2% lfl decline. UK & Ireland (+1% lfl, c.19% of group revenue) performed in line with our estimates. Growth in B2B businesses (Credit: +3%, Decision Analytics: +5% and Marketing: +5%) was largely offset by the 9% decline in the Consumer business (currently undergoing a transitioning phase), the company has built a free membership base of over 1.7 million members. In the LatAm region (17% of group revenue), the lfl revenue increased by 9.0% (vs our estimate: 7.6%), on account of continued strength from countercyclical products in Credit Services (+6.0% yoy). Marketing and Decision Analytics businesses also registered a positive momentum during the year (+39.0% and +34.0% respectively). Asia Pacific/EMEA (c.8% of group revenue) grew by 9.0% during the year (vs our estimate: 7.4%), driven by the strong performance in Decision Analytics and Marketing services (+21% and +16%, respectively). While Decision Analytics capitalised on new client wins and the strong demand for decisioning and fraud-prevention software, Marketing Services leapt due to good growth in Data Quality and Targeting services. Credit Services declined by 3% due to headwinds in the Nordics and South Africa, partially offset by positive growth in APAC and Southern Europe. The adjusted EBIT margin (excluding the Cross-Channel Marketing business) was 27.7%, up 60bp for the year, reflecting the phasing of investment in strategic growth initiatives and FX tailwinds. The company repurchased shares worth $353m during FY16/17 and announced an interim dividend of $0.415 per share (+4% yoy). Management’s guidance for FY17/18 is for mid single-digit organic revenue growth, capex at 8-9% of revenue and share repurchases of $600m.
Experian reported Q3 FY16/17 results slightly below our estimates. The lfl revenue increased by 4.0% (vs Q2: +5.0%, Q1: +5.0%; our estimate: +5.0%), largely driven by strong growth in credit services (+6.0% yoy; c.50% of group revenue) and the decision analytics business (+10.0% yoy; c.13% of group revenue). North America’s organic revenue growth slowed to 3.0% (vs Q2: +5.2%, Q1: +5.0%; our estimate: +5.5%) due to tougher Q3 FY15/16 comparables in the consumer services business (Q3: -5.0%, Q2: -1.0%). However, this softness was more than offset by good demand for credit services and new contract wins in the marketing services business. Despite ongoing macro headwinds in Brazil, the Latin America region delivered another strong performance during the quarter (Q3: +8.0%, Q2: +5.7%, Q1: +8.0%; vs our estimate: +7.4%). The growth largely emanated from counter-cyclical credit bureau products and increased demand for data and analytics services from large banks and retailers. In the UK & Ireland, organic revenue advanced by 2.0% (vs Q2: +0.6%, Q1: +1.0%; our estimate: +0.1%) as the growth in the services (+5.0% yoy) and decision analytics businesses (+12.0% yoy) was partially offset by a decline in the consumer services business (-12.0% yoy). EMEA/Asia Pacific region clocked lfl revenue growth of 6.0% (vs Q2: +6.7%, Q1: +9.0%; our estimate: +9.0%) on the back of sustained demand for credit decisioning software and fraud prevention services. Fx headwinds (-2% yoy; largely due to weaker GBP vs USD) eclipsed the 2.0% positive scope impact, resulting in total reported revenue growth of 4.0%. On a YTD basis, the company spent $324m on net share repurchases (vs a full year target of $400m). For FY16/17, management guided for mid-single-digit organic revenue growth, stable margins and further progress in the benchmark EPS.
Experian reported H1 FY17 results in line with our estimates. Lfl sales increased by 5% (Q2 FY17: +5%, Q1 FY17: +5%, FY16: +5%; our estimate: +5.2%), largely driven by credit services (+7% yoy; new client wins in US hospitals) and the decision analytics business (+8% yoy; higher demand of fraud and identity management software). North America’s organic revenue was up 5% (vs Q1 FY17: +5%, FY16: +3%; our estimate: +5.8%), once again driven by strong credit services demand from the health vertical. The decision analytics business improved sequentially (Q2 FY17: +7%, Q1 FY17: -1%, Q4 FY16: -8.6%), on the back of new business wins in the financial services and public sector. Despite ongoing macro-economic headwinds, Latin America clocked 5% lfl revenue growth (vs Q1 FY17: +8%, FY16: +7%; our estimate: +6.8%). The demand for counter-cyclical products (particularly delinquency notifications) once again led to resilient growth in credit services (+5%; contributes c.91% of the regional revenue). In the UK, organic revenue growth came in at +1% (vs Q1 FY17: +1%, FY16: +5%; our estimate: +1.5%), largely due to depressed growth in both credit (Q2 FY17: 0%, Q1 FY17: +6%) and consumer services business (Q2 FY17: -9%, Q1 FY17: -1%). EMEA/Asia Pacific delivered another strong performance with lfl revenue growth of 8% (vs Q1 FY17: +9%, FY16: +7%; our estimate: +8.9%), driven by significant new client wins for credit-decisioning software and fraud prevention products. Strong FX headwinds (-2% impact on the top-line; due to weak GBP and BRL vs USD) resulted in the total group’s revenue growth of 3% (vs Q1 FY17: +1%, FY 16: -4%, our estimate: +2.9%). Even with better operating leverage in North America, the group’s EBIT margin came in at 25.7%, -10bp yoy due to higher sales mix of counter-cyclical products (lower margin vs other core products) and investment in growth initiatives across the businesses. The company repurchased shares worth US$79m during H1 FY17 (has plans for further US$321m share buy-back in the H2 FY17) and announced an interim dividend of 13c per share (+4% yoy; payable in January 2017). For FY17, management has guided mid-single digit organic revenue growth and currency headwinds of 2% and 1% on top-line and EBIT, respectively.
Experian reported Q1 FY17 results (three months ending 30 June 2016) broadly in line with our estimates. The lfl sales increased by 5% (vs Q4 16: +6%, Q3 16: +6%; our estimate: +4.8%), largely driven by robust growth in credit services (+8% yoy) and the decision analytics business (+6% yoy). In North America (Q1 17: +5% vs Q4 16: +6%, Q3 16: +6%; our estimates: +4.7%), robust demand from automotive and healthcare clients underpinned the growth in credit services business (Q1 17: +11% vs Q4 16: +12%; Q3 16: +11%, our estimate: +8%). The consumer services business clocked organic growth of 1% (vs Q4 16: +1%; Q3 16: +3%, our estimate: +3%) as the company monetised free traffic (accumulated 4.5 million members since the launch of the free site a year ago) through the cross-selling of membership products and lead generation. Despite ongoing macro-economic headwinds, the LatAm business delivered another strong performance (Q1 17: 8% vs Q4 16: 7.8%, Q3 16: +7%; our estimate: +4.9%) on the back of growth in delinquency notification products and deeper client penetration. Additionally, the company launched the consumer services business in Brazil in July 2016. Organic growth slumped to 1% in the UK (vs Q4 16: +6.5%, Q3 16: +4%; our estimate: +3.9%), pulled down by the sequential slowdown in the consumer services business (-1% yoy; undergoing business transition) and a strong comparative in the decision analytics business (Q1 17: -2% vs Q1 16: +15%). In EMEA/ Asia Pacific, new business wins in decision analytics (+27% yoy) and good demand for cross-channel marketing and data quality services in the marketing business (+11% yoy) resulted in revenue growth of 9% on a lfl basis (Q4 16: +10%, Q3 16: +7%; our estimate: +6.7%). Strong FX headwinds (weak GBP and Brazilian real vs the USD) led the total revenue up 1% (FY 16: -4%, Q3 16: -3%, H1 16: -6%, our estimate: 2.3%). Furthermore, Experian announced the acquisition of CSIdentity Corp., a consumer identity management and fraud detection services provider in the US for $360m (annualised revenue of $103m and $21m EBIT in the year ending March 2016). The acquired entity will be aligned to Experian’s ‘Consumer Services’ business. The company plans to spend $400m on a share repurchase programme in FY17 (vs $592m in FY16). Lastly, management reiterated FY17 guidance of mid-single-digit organic revenue growth and stable margins at constant rates (c. 1% headwind to EBIT, if current exchange rates prevail).
Steve “Woz” Wozniak, infamous co-founder of Apple, was the latest culprit to send shivers across the tech world by claiming Cybersecurity is the greatest threat the world has faced since the atom bomb. Mr Wozniak was alluding to the heightened sense of fear that recent high profile breaches have caused Cybersecurity to be put at the forefront of political, corporate and now it would appear, investor agendas. As the topic gains increasing awareness, it gives rise to a number of companies claiming to be a “thought leader” in the Cybersecurity space, holding the best IP and the best routes to market. With many companies singing from the same loss making hymn sheet it is making it ever difficult to spot the true “Spartacus” from the crowd.
Companies: BA/ BVC BLTG CHRT 9537 CNS DFX ECK EXPN GBG IGP MPAY NCC OSI SCH TERN
Experian posted better-than-expected results in its Q3 FY16 trading update, generating an organic revenue growth of 6% (vs. 4% in H1 FY16), but currency headwinds totally wiped out this growth as reported sales declined by 3%. All the sales growth numbers are organic unless specified otherwise. Both Credit Services and Decision Analytics clocked 8% growth, while Marketing Services and Consumer Services grew at a meagre 2%. In North America (+6% vs +1% in H1), robust business in healthcare and automotive verticals, and consumer credit activity underpinned the growth in Credit Services (+11% vs +8% in H1), while a one-off on-boarding of a large client led to 3% (vs. -7% in H1) growth in the Consumer Services segment. Decision Analytics, however, declined by 2% (vs +2% in H1). Despite macro-economic headwinds in Latin America (+7% vs +6% in H1), all segments experienced strong upwards momentum. Credit Services (+7% vs. 7% in H1) was driven by an increased contribution from delinquency notifications linked to non-performing loans in Brazil. As the new software implementations across the region fuelled 5% growth in Decision Analytics (vs 9% in H1), an increase in cross-channel marketing led to 4% growth in Marketing Services (vs -19% in H1). The UK grew at a slower pace (+4% vs 5% in H1), pulled down by Decision Analytics (+8% vs +12% in H1) and Consumer Services (+2% vs 5% in H1). It is increasingly facing competition from Equifax (ClearScore) and Callcredit (Noddle). EMEA/Asia Pacific (c.10% of total revenue) was up by 7% (vs +6% in H1), driven by fraud and identity services in Decision Analytics (+23% vs +19% in H1), and new client wins and enhanced cross-channel marketing in Marketing Services (+10 vs +8% in H1 FY16). Management reaffirmed its full year guidance of mid-single-digit organic revenue growth and an 11% FX impact at EBIT level (if current rates prevail).
Research Tree provides access to ongoing research coverage, media content and regulatory news on Experian. We currently have 19 research reports from 3 professional analysts.
|16Jul19 07:00||RNS||Trading update, First quarter|
|11Jul19 17:27||RNS||Transaction in Own Shares|
|05Jul19 17:36||RNS||Second Interim Dividend|
|28Jun19 15:30||RNS||Share repurchases|
|28Jun19 12:46||RNS||Total Voting Rights|
|21Jun19 16:05||RNS||Director/PDMR Shareholding|
|21Jun19 16:00||RNS||Director/PDMR Shareholding|
We expect an H1 FD EPS weighting of 27%, vs 43% in FY18. The significant H2 weighting leaves a lot of work to do in a difficult trading environment.
Companies: Staffline Group
Strix confirms that it has traded in line with FY19 profit expectations in the first half of the year. Interim profit after tax will be ahead yoy and underlying cash generation strong leading to good performance in terms of net debt, considering investment in the new manufacturing site, the acquisition of HaloSource in Q1 and the increased dividend. We leave forecasts unchanged on today’s statement despite the apparent progress in terms of cash generation as Capex relating to the factory move is expected to ramp up in H2 as part of the two year £20.0m investment. Important for profitability, the underlying Controls market remains solid and continues to grow, albeit at a marginally slower rate than reported in FY18. Strix Global market share by volume is broadly stable and it has increased share in China, as predicted at the end of last year. AO has also maintained market share but in a market that has declined in H119. The shares trade on 11.4x current year earnings falling to c. 10.5x in FY20. The 4.8% yield is attractive on a conservative balance sheet with less than one times Net debt/ EBITDA.
Companies: Strix Group
“Don’t fight the Fed” is a tried and tested Wall Street strategy that has worked a treat over the past decade. Basically it states that when US interest rates fall, global equities should rise thanks to lower borrowing costs for consumers and corporates alike. Similarly after last week’s dovish testimony to Congress by FOMC Chair, Jerome Powell, we believe this bias towards more monetary easing should keep the economy ticking along, and places a ‘Put’ under valuations
Strix H1 trading update just published: ‘The Group has delivered a solid performance for the period …and expects to report (FY) results in line with market expectations’. Accordingly, we leave our FY 19/20 forecasts unchanged. Reassuringly, Strix reconfirms at this stage its intention to pay total dividends of 7.7p per share for FY 19, +10% YoY. This should underline the income attractions of this stock to investors.
Companies: Strix Group
Voyager AIR The Company will focus on the acquisition, leasing and management of primarily widebody aircraft, with asset management services to be provided by Amedeo Limited the IPO will comprise a Placing and Offer for Subscription of Shares to raise up to approximately US$200m. Uniphar, a diversified healthcare services business with a workforce of over 2,000, is looking to join AIM. Raising EUR135m with market cap on admission of EUR309.6m, expected 17 July 2019. Roxi Music UK music streaming service plans London IPO as it goes up against Spotify. They have appointed investment bank Arden Partners for an initial public offering (IPO) on the London Stock Exchange later this year.
Companies: CALL BIRD ABC KDR EMAN BST SCE ZEG SAG FUL
The Senate Banking Committee on Monday released the testimony of David Marcus, the head of Facebook's cryptocurrency projects ahead of his testimony Tuesday. In his prepared remarks, Marcus perfectly outlines the business model behind the social network’s upcoming Libra digital currency and its Calibra digital wallet. Microsoft might be the primary competitor for Slack, but the widespread adoption of Microsoft's software is not a major problem for Stewart Butterfield, co-founder and CEO of the messaging app. Last week, Microsoft said Teams had more daily active users than Slack. Cybersecurity company Symantec Corp has walked away from negotiations to sell itself to chipmaker Broadcom over price disagreements, people familiar with the matter said on Monday. Symantec's decision raises new questions over the future of the US antivirus software provider, which is looking for a new CEO and has been struggling to grow its business serving companies.
Companies: KAPE AVST CNS DFX ECSC FLX IGP NCC OSI SWG SOPH
Gateley continued its strong growth track record in FY 2019 with adj. EPS up +18% driven by organic sales growth of +10% and acquisitions (total sales +20%). The balance sheet remains strong with net debt of only £3.2m, and the dividend was raised by 14% to 8.0p. The outlook is positive, with the group continuing to attract high quality staff and acquisitions at least meeting expectations, growing the range of services offered. We make no major changes to our forecasts but upgrade our target price from 193p to 210p as we roll forward a year and update the market FCF yield that supports our model from 5.5% to 5.1%.
Management has delivered a very strong set of interims and anticipates results ahead of market expectations for the full year. Including today’s 10% upgrade, FY2019E PBT forecasts have now risen by 45% so far this year as momentum has built. Cost savings now exceed expectation at £6m p.a. and market drivers remain strong in key segments within the Treatment & Disposal and North Sea divisions, where H1 revenues were ahead 39% and 43% respectively. We still see forecasts as conservatively framed and would highlight that net cash is now at £22.8m, up £14.6m in the first half
Boku’s H1 trading update confirmed continued strong growth in the Payments business and progress in growing the Mobile Identity business. Management’s expectations for FY19 are unchanged; we maintain our forecasts, which assume seasonally stronger payment volumes and a step-up in revenues from the identity business in H219.
As foreshadowed by the trading update in May, Gateley has delivered results in line with expectations. This continues a pattern of organic growth (pre- and post-IPO) on a broad front supplemented by acquisitions of complementary professional services businesses. A focus on long term projects and cross-selling with a diverse client base, coupled with some counter-cyclic business lines lends considerable confidence and we suggest the FY’20 PER discount of nearly 40% to the generally similar Knights Group (not rated) looks very overdone.
Results in line, strong relative positioning
Kin & Carta has announced the appointment of John Kerr as Non-Exec Chairman, effective 22 nd July 2019. Today’s statement suggests that John brings a wealth of experience having served a number of senior roles at Deloitte Consulting, and specifically leading the creation of Deloitte Digital in 2012. We see this as a sound appointment for the company as it continues to make progress in executing its strategy, with a focus on digital transformation. At 11.4x FY19e P/E (falling to 9.5x in FY20e), we remain buyers and reiterate KCT as one of our top picks for 2019, seeing 31% upside to the shares.
Companies: Kin and Carta
Capital reiterated it is on track to achieve full year revenue guidance of US$110-120 million, and whilst the headline revenue number for the half year is slightly below our expectations, we are confident that the company will be able to achieve guidance. The newly announced contract wins (described below), and some H1 seasonal effects in West Africa, imply a stronger H2 for the company. We are assuming an EBITDA margin of 24.2% for the half year, implying H1/2019 EBITDA of US$13.2 million, or 3.0x current EV on an annualised basis. We estimate US$5.5 million of free cash flow generated for the half year, equivalent to a 12.1% yield, which well covered the US$2.0 million dividend payment in May.
Companies: Capital Drilling
A recent visit to Reading persuaded us that its production issues have been resolved. This should help reverse the recent margin decline as Reading’s production costs fall once again and better service levels restore pricing power.
Companies: Volution Group
Altitude prelims are in line with expectations and lead to unchanged forecasts. The focus on the performance of AI Mastermind (since rebranded AIM Smarter (“AIM”)) has continued to deliver momentum in member numbers (up 10% since January 2019). With the extension of the supplier partner agreements to cover all transactions with members, not just transactions on the AIMPro platform, the focus on ‘onboarding’ is now eased in favour of signing up suppliers to commit to service fees to Altitude/AIM regardless of how the order is placed with the supplier – this has already been achieved for 149 suppliers. Prospects remain strong, the acquisition is delivering the potential outcome in line with unchanged forecasts, and the valuation continues to expose more and more upside as proof of execution success is forthcoming. Our 140p target is reiterated and we look forward to a continuing news flow and the development and execution of a simplified set of KPIs to demonstrate growing service fees from a growing transaction flow from a growing number of distributors.
Companies: Altitude Group