2024-07-18 14:10:29 ET
Equifax Inc. (EFX)
Q2 2024 Earnings Conference Call
July 18, 2024 8:30 AM ET
Company Participants
Trevor Burns - Senior Vice President, Head of Corporate Investor Relations
Mark Begor - Chief Executive Officer
John Gamble - Chief Financial Officer
Conference Call Participants
Manav Patnaik - Barclays
Andrew Steinerman - JPMorgan
Heather Balsky - Bank of America
Kelsey Zhu - Autonomous Research
Faiza Alwy - Deutsche Bank
Surinder Thind - Jefferies
Andrew Nicholas - William Blair
Jeff Meuler - Baird
Scott Wurtzel - Wolfe Research
Kyle Peterson - Needham & Company
Shlomo Rosenbaum - Stifel
Owen Lau - Oppenheimer
Craig Huber - Huber Research Partners
Toni Kaplan - Morgan Stanley
George Tong - Goldman Sachs
Presentation
Operator
Hello, and welcome to the Equifax Inc. Q2 2024 Earnings Conference Call. [Operator Instructions] A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.
It's now my pleasure to turn the call over to Trevor Burns, Senior Vice President, Head of Corporate Investor Relations. Please go ahead, Trevor.
Trevor Burns
Thanks, and good morning. Welcome to today's conference call. I'm Trevor Burns. With me today are Mark Begor, Chief Executive Officer; and John Gamble, Chief Financial Officer. Today's call is being recorded. An archive of the recording will be available later today in the IR Calendar section of the News and Events tab at our Investor Relations website.
During the call, we'll be making reference to certain materials that can also be found in the Presentations section of the News and Events tab at our IR website. These materials are labeled 2Q 2024 Earnings Conference Call. Also, we'll be making certain forward-looking statements, including third quarter and full year 2024 guidance, to help you understand Equifax and its business environment. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from our expectations. Certain risk factors that may impact our business are set forth in our filings with the SEC, including our 2023 Form 10-K and subsequent filings.
We will also be referring to certain non-GAAP financial measures, including adjusted EPS and adjusted EBITDA, which will be adjusted for certain items that affect the comparability of our underlying operational performance. These non-GAAP measures are detailed in reconciliation tables, which are included with our earnings release and can be found in the Financial Results section of the Financial Info tab at our IR website.
Now, I'd like to turn it over to Mark.
Mark Begor
Before I cover our strong second quarter results, I want to update you on the significant progress in our cloud transformation. Over the next several weeks, USIS will complete the migration on to the cloud data fabric of all customers and services for their consumer credit and telco and utilities exchanges, which is a huge milestone for Equifax. Along with the EWS Work Number Exchange, which we completed migrating to the Equifax Cloud over two years ago, we will have our three largest data exchanges in the new Equifax Cloud.
As of the end of July, we expect over 80% of Equifax revenue will be in the Equifax Cloud, with about 90% of our revenue in the cloud by year-end. The cloud migrations have been a huge effort across Equifax over the four plus -- the past four-plus years. We expect to have a significant competitive advantage as we pivot from building to leveraging the cloud that will allow us to fully focus on growth, innovation, new products, and AI going forward.
Completing the USIS cloud and expanding EFX.AI, along with continued expansion of our differentiated data assets, will accelerate innovation and new products at USIS that will drive our top and bottom line. We now have streamlined access to our proprietary data through the data fabric, which will accelerate new product development. We also expect to reduce product development times, resulting in faster time to market for our new solutions. USIS has already begun to see their New Product Vitality Index accelerate.
USIS is deploying Equifax proprietary Explainable AI, along with Google Vertex AI across Ignite, our global analytics platform, and Interconnect, our global decisioning platform. For USIS, Vertex AI enables faster and more predictive model development on our Ignite platform. The USIS cloud will deliver always on stability and faster data transmission that will give Equifax a competitive advantage in today's digital market, driving share gains. We're also driving faster data ingestion and analytics with greater processing power with the new Equifax Cloud.
And most importantly, completing the cloud is going to free up the USIS team to fully focus on growth and expanding innovation, new products, data sets and markets. With both USIS and EWS in the cloud, we'll also be able to begin development of new products that integrate TWN income and employment data with USIS credit data solutions for mortgage, auto, cards, and P loans that only Equifax can deliver.
Completing the USIS consumer and telco and utility migrations to the Equifax Cloud allows us to start decommissioning legacy on-prem systems in the third quarter, supporting our goal of spending reductions in 2024 that will improve operating margins and lowering the capital intensity of our business.
In the second quarter, we also made substantial progress on our international cloud transformation activities. Canada is expected to complete their consumer credit exchange customer migrations to data fabric next month. Europe continues to make significant progress with the goal of completing Spain's consumer credit exchange migration to the data fabric and decommissioning of their legacy systems by year-end, and the U.K. is on schedule to complete cloud migrations and decommissioning in the first-half of 2025....
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Equifax Inc. (EFX) Q2 2024 Earnings Call Transcript