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Experian – full-year revenue at the top end of guidance

Experian put in a strong final quarter and delivered guidance for the coming year that points to continued growth.
Experian - Consumer services growth pads profits

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Experian reported full-year revenue of $7.1bn, reflecting organic growth of 6% (guidance: 5-6%). Growth was led by Consumer Services, up 7%, with a 12mn increase in free members to over 180mn. All four geographical regions contributed to growth, with Latin America being the standout, achieving double-digit growth.

Underlying operating profit rose 8% to $1.9bn, as margins improved from 27.5% to 27.6%.

Underlying free cash flow increased from $1.1bn to $1.2bn. Net debt stood at $4.1bn, or 1.7 times underlying cash profit (target: 2.0-2.5 times).

Organic revenue is expected to grow 6-8% in the new year, with margins rising 0.3-0.5%.

The board declared a dividend of 58.50 cents per share, up 7%, in addition to a new $150mn share buyback.

The shares rose 7.9% in early trading.

Our view

Experian is a global information services company specialising in data analytics, credit reporting, and identity verification.

Full-year results were strong, and guidance for the new year reflects optimism about ongoing growth. Experian's broad range of products and services continues to position it well across various market conditions.

The US credit bureau market is the core of operations, where Experian helps match borrowers and lenders. It’s a market dominated by three players: Experian, Equifax and TransUnion. This concentration gives pricing power and cash from core operations can be funnelled into new growth areas.

The Consumer Services division differentiates Experian from peers and has shown impressive growth, driven by recent investments and strategic initiatives. It’s further bolstered by a significant rise in free members, now totalling over 180mn. With financial literacy becoming more widespread, Experian is well-positioned to capitalise on this trend, offering tools that empower consumers to manage their credit and financial health more effectively.

As the world continues to digitise, we think Experian's data-led solutions for businesses and consumers are likely to see increasing demand. Identity verification, credit assessments, and fraud prevention are critical services that businesses cannot easily forego, adding a layer of resilience to revenue streams.

In Latin America, Experian is experiencing significant growth, particularly in Brazil, where the company dominates the market. The region's financial services sector is undergoing substantial upgrades, presenting opportunities to expand the consumer base and service offerings.

Artificial Intelligence (AI) remains a focal point for innovation. Experian's vast and unique data sets provide a robust foundation for AI applications, enhancing product offerings and creating new opportunities to add value. AI integration is already underway, and we see substantial potential for future advancements in this area.

Strong cash generation and a healthy balance sheet are attractive qualities. Net debt relative to underlying cash profit is below the target range, this provides stability and helps support the ongoing dividend payments and share buybacks. No shareholder returns are guaranteed.

Experian's robust market position, strategic investments in technology, and diversified growth opportunities all indicate to a strong future. This optimism is somewhat reflected in Experian's valuation, which is above its longer-term average. We think that’s justified and still has upside potential, but nothing is certain.

Experian key facts

All ratios are sourced from Refinitiv, based on previous day’s closing values. Please remember yields are variable and not a reliable indicator of future income. Keep in mind key figures shouldn’t be looked at on their own – it’s important to understand the big picture.

This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by Refinitiv. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.

This article is not advice or a recommendation to buy, sell or hold any investment.No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment.This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication.Non - independent research is not subject to FCA rules prohibiting dealing ahead of research, however HL has put controls in place(including dealing restrictions, physical and information barriers) to manage potential conflicts of interest presented by such dealing.Please see our full non - independent research disclosure for more information.
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Written by
Matt Britzman
Equity Analyst

Matt is an Equity Analyst on the share research team, providing up-to-date research and analysis on individual companies and wider sectors.

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Article history
Published: 15th May 2024