Experian delivers growth across the board

Data services provider Experian (EXPN) managed to grow its profits across all regions in the first half of its financial year, with both the business-to-business (B2B) and consumer divisions performing well. 

Total revenue rose by 5 per cent to $3.4bn (£2.7bn) in the period and adjusted operating profit increased by 6 per cent to $928mn. Statutory operating profit leapt by 56 per cent, but this was largely down to a $152mn goodwill impairment in 2022, which did not rear its head again this year.

There were concerns that tight credit conditions would impact demand for Experian’s services, and disappointing results from TransUnion (US:TRU) last month further spooked investors. However, the consumer business still managed to attract 21mn new free members and entice more premium subscribers in the US. It achieved organic revenue growth of 6 per cent.

Meanwhile, the B2B arm added to the depth and breadth of its data sets, which helped to offset “weaker credit issuance conditions across some client categories in the USA and the UK”. Fraud prevention and credit risk tools did particularly well, and organic sales rose by 4 per cent.

Latin America continues to be a key market for Experian. The region – now the group’s second-biggest – delivered organic sales growth of 11 per cent, as consumer memberships jumped and demand from small- and medium-sized enterprises strengthened. However, the mature North American market also put in a good showing, growing organic revenue by 4 per cent.

Experian doesn’t come cheap: it trades on a forward price/earnings ratio of 22. However, this is below its five-year average of 28 and the company is proving its resilience and consistency in difficult economic conditions. Buy

Last IC View: Buy, 2,658p, 17 May 2023