Big data helps keep Experian comfortable during pandemic

Credit checking company’s Q3 results show the importance of analytics, although the UK lags other regions.

Big data is big business, and Experian (LSE:EXPN) is an established leader in the space. Its third-quarter results, released today, confirm this.

The initial stages of the pandemic provided some challenges, with consumers less likely to make big-ticket purchases in the face of job uncertainty. However, there is little doubt that the long-term future of credit information and data analytics is assured, and Experian has a large presence in a number of geographies.

The performance of the business has meant that the company has comfortably kept its head above water during a challenging year, while any economic recovery should provide a springboard for further growth.

The quarter went much better than the company expected, with organic revenue growth of 7%, within which Latin America was the standout performer. The consumer business enjoyed growth of 178%, and with the region accounting for 14% of group revenue, this is notable progress.

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The lion’s share of the business comes from North America, responsible for 63% of group revenue. Any pandemic weakness was blown away by a strong showing from both business and consumer services, with revenue growth of 6% and 18% respectively.

Data surrounding mortgages, healthcare and fraud each enjoyed improving fortunes, underpinned by the advanced tools and analytics which complement the overall offering.

The picture was less rosy in the UK and Ireland unit, which accounts for 15% of group revenue. Nonetheless, a decline of 2% in revenue is currently turning the corner as new business has seen the benefit of improving credit supply.

The Experian Boost facility, which allows consumers to add pieces of data to their credit reports, has been a success in the US and is showing promising early signs after being launched in the UK.

Overall, net debt and additional costs in the background, particularly any regulatory costs, need to be considered. The pandemic has already shown that the company is somewhat exposed to cyclical forces, although the outlook from the company for the fourth quarter and the year overall is optimistic.

Despite the external challenges facing the company, Experian shares have added 1.2% over the last year, as compared to a decline of 12.4% for the wider FTSE 100. Even though the shares are richly valued, reflecting both the quality and positioning of the business, appetite for this growth potential remains, with the market consensus of the shares coming in as a ‘buy’.