Equifax Inc., the Atlanta-based credit reporting agency, reported lower earnings in the second quarter, mainly due to weakness in its U.S. Information Services [USIS] business, including lower revenue in both its online information solutions and financial marketing services businesses.
The company has struggled to recover trust with customers since September 2017, after hackers accessed the data records of more than 143 million consumers, including personally identifiable information like Social Security numbers, drivers’ license numbers and credit card data.
The company reported adjusted earnings per share of $1.56, a 3 percent drop from the year-ago quarter. Net income fell 12 percent to $144.8 million, or $1.19 per share, compared with the year-ago quarter. The company said its second quarter performance fell just shy of internal earnings estimates.
The domestic weakness was mainly due to lower revenues in its online information solutions and financial marketing services business in the U.S. The company’s international businesses showed solid revenue gains, particularly in Canada and the Asia Pacific region.
Equifax reported overall revenue of $876.9 million in the quarter, an increase of 2 percent from the year-ago quarter.
Equifax shares were down 4.3 percent to $122.20 per share in late-morning trading on Thursday, when the company provided an earnings outlook for the third quarter of 2018 that appears to be short of Wall Street consensus estimates.
CEO Mark Begor, who just joined the company in March, said he has been consistently meeting with major customers in an effort to regain trust with them and rebuild their strong relationships. He noted that he met last Friday with two key customers in North Carolina and just returned from meeting with another customer there.
“We’re intently focused on bringing USIS to return back to a normal growth mode,” Begor told analysts during the conference call.
Equifax said revenue in its USIS business fell 2 percent to $324.6 million in the quarter.
Begor said the company is seeing heightened competition from competitors as it works to regain trust with its customers, and in some cases has lost business. The firm is planning to restore its domestic marketing campaign later this year after previously suspending efforts following the breach.
“It wasn’t lost on them what happened to us,” he told analysts. “That being said, we’re going to be aggressive too.”
Equifax has made a number of key management changes in recent months to help restore order in its domestic business.
Less than a week ago, the company named its former interim CEO Paulino do Rego Barros Jr. as the new president of the USIS business, replacing Trey Loughran, who is leaving the company to pursue a new opportunity.
In June, Equifax named Bryson Koehler, the former chief technology officer of IBM’s Watson and cloud platform division, as its new CTO. Begor, a former managing director at Warburg Pincus, was named the new permanent CEO in March, following the September resignation of Richard Smith after the data breach.
Earlier this month, Equifax also made a key acquisition, buying a firm called DataX, which specializes in credit reporting and data for alternative lending to underbanked consumers.
The company expects to see third-quarter revenue between $853 million to $863 million and adjusted earnings per share between $1.39 and $1.44. The company is maintaining its annual guidance of between $3.425 billion and $3.525 billion in revenue and adjusted earnings of between $5.80 and $6.00 a share.
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