Shares in Experian Group LON:EXPN are approaching a 52 week high today as the company announced Q3 organic revenue growth of 6% and guided an increase in full year organic revenue growth guidance of 5-6% (prev. 4-6%). But credit markets in the UK and US remain tight. What lies in store for Experian investors in 2024?
This was a positive update from Experian, with organic growth c.1% ahead of consensus expectations and FY24 guidance raised to the high end of the previous range.
Despite ongoing slowdowns in the lending markets, from both the US and the UK, Experian’s growth in the third quarter was ahead of expectations. Lenders are still keeping their belts a little tighter than usual, as consumers and businesses battle through the current inflationary cycle.
Experian’s US mortgage lending business looks a little weak
Mortgages in the US are a particular weak spot, there’s simply very little incentive to move house with many Americans sitting on long-term products at low rates.
But the range of products, across various markets, continues to hold Experian in good stead. Latin America remains a growth leader, underscoring Experian’s adept navigation of evolving financial landscapes in the region. The free credit check service Experian is offering remains a powerful draw across all geographies, attracting millions and serving as a gateway to a suite of premium offerings.
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Stockbroker Killik says it remains Buy-rated on Experian, and continues to believe that Experian’s competitive strengths, structural growth opportunities, high and growing profit margins and consistent cash generation leave it well positioned to compound shareholder returns at an attractive rate over the medium- to long-term. The shares currently trade on 25.9x March 2025 earnings and yield 1.6%.
Experian’s revenue growth from ongoing activities was 9%. At constant FX, revenue growth was 7%. Organic revenue growth was 6%. B2B organic revenue growth was 5% and Consumer Services organic growth was 10%.
Experian is seeing solid growth from North America
In North America, Experian’s most important market, organic revenue growth was 5%, and total revenue growth was 6%. B2B organic revenue growth was 3%, including positive contributions from Clarity, Experian Ascend, employer services, automotive and health, but this was offset by continued volume weakness in smaller fintechs and mortgage lending business.
Experian’s Consumer Services division grew organically by 9%, with premium services, the insurance marketplace, and partner solutions performing well, offset by supply constraints in the credit marketplace.
Latin America delivered organic revenue growth of 13% and total revenue growth of 17% at constant FX. B2B organic revenue growth was 10%, with further adoption of positive data scores and analytics in Brazil among the main drivers. Consumer Services grew by 26% organically, driven by positive contributions from the Limpa Nome debt resolution service and expanded e-wallet payment integrations in Brazil.
Consumer Services division flat in UK and Ireland
The UK and Ireland had organic and total revenue of growth of 3%. B2B organic revenue growth was 3%, driven by strong performance across consumer bureau activities. Organic revenue in Consumer Services was flat, reflecting continued stability in subscription revenue trends and a positive contribution from databreach services, while marketplace revenues continue to reflect soft market conditions.
In EMEA and Asia Pacific (6% of group revenue) organic revenue growth was 7%, and total constant FX growth was 8%, reflecting strong progress across a number of key markets, including Australia, India and Italy.
For FY24, Experian now expects full-year organic revenue growth to be between 5%-6% (from 4%-6% previously), with modest margin accretion, all at constant FX and on an ongoing basis.
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