Experian Group (LON:EXPN) is a credit reporting agency that maintains consumer credit records and assists lenders in acquiring and retaining customers. Along with TransUnion LLC and Equifax (EFX), the company is one of the top credit-reporting agencies in the world. Experian is the largest company of its kind, and is nearly twice the size of its nearest competitor by total revenue.
Experian's main source of revenue comes from its credit services line (42% of total revenue). This business segment assists financial services companies in finding new customers for loans, managing the risks of different loans, and reducing exposure to unlikely payable or unpayable debt .  In FY2009, the revenue from this line of business was $1,614 million of the total revenue $3,821 million.
The company has grown through acquisitions in the past. In 2007, the firm acquired Hitwise, which tracks internet and website traffic, for $240 million with an all cash transaction. It also acquired a 65% stake in Serasa, Brazil's largest credit analysis company, for $1.2 billion.  These acquisition assisted Experian's penetration of Latin America.
The year 2008 was a tumultuous year for the financial markets (see 2008 Financial Crisis). While this put pressure on Experian's business, the company's focus on products that do better during economic downturns and investments in non-financial products prevented a significant decrease in revenues. Thus, in the credit services line, the company's revenue declined 4% in the United States and remained flat in the UK and Ireland. 
Experian Group primarily operates in North America and the UK, with its main headquarters in the UK.  The company is a credit-reporting agency and provides information services relating to customer relationship management (CRM), e-commerce, and marketing. With information on over 130 million households, credit information on about 300 million consumers and 30 million businesses in more than 60 countries, Experian helps businesses discover leads and opportunities. 
Experian is the industry leader in its market by revenues. Within the past five years, new products represented over 20% of total revenues .  For the upcoming year, the company is funding projects for identity theft management tools and marketing and analytical products in Latin America and Asia Pacific. Experian is expanding its demographics, obtaining a provisional license to operate a credit bureau in India. 
Fiscal 2009 Summary
In FY 2009, Experian had total revenue of $3,821 million, an increase of 8% from the previous year. Total Earnings before interest and taxes was $939 million, an increase of 8% from the previous year.  Operating cash flow was $927 million, an increase of 4.6%.  The company converted 99% of its EBIT into operating cash flow, well above its 85% target.
|Experian Group (in $millions)||2007||2008 ||2009 |
|Operating Cash Flow||804||886||927|
Experian operates in four business segments:
Credit services helps clients such as credit card companiesfind new customers for credit products, reduce bad debt and the chance of fraud, and predict and manage credit risks. The company owns 13 consumer credit bureaus and ten business credit bureaus. There are only three players in the market for consumer credit information in the US: Experian, Equifax (EFX), and TransUnion. In the business information segment, only Dun & Bradstreet (DNB) is a global competitor.  In FY 2009, Experian Group's credit services revenue was $1,614 million, representing an increase of 10% from the previous year based on constant exchange rates.  US depressed the revenues due to the credit crisis and lack of lending.  In addition, the company decided not to launch a Canadian credit bureau due to the market conditions.  The increase in revenue can be attributed to the products that perform well during bad economic environments, including bankruptcy scores and business delinquency notification services.  Furthermore, the strong growth in Latin America is due to the penetration of Brazil. 
Decision Analytics assist organizations, such as international banks and utility companies, with a large customer base to manage and automate day to day decisions. Experian Group is dominant in all geographics except the US, where Fair, Isaac and Company (FIC) is dominant.  In FY 2009, segment revenue was $487 million, an increase of 6% from the previous year based on constant exchange rates.  Although there was a decrease in loan origination software due to the credit crisis, the increase in revenue can be attributed to the strong demand for products that usually perform well in bad economic environments such as customer analytics, account management, and commercial lending and fraud prevention software. 
Marketing services help clients with customer acquisition and customer retention. In FY 2009, its revenue was $770 million, an increase of 5% from the previous year based on constant exchange rates.  US and European markets saw decreases in revenue in this segment due to the cutback in spending.  The overall increase in revenue was primarily driven by strong demand and market penetration of EMEA/Asia Pacific.  US Markets saw a decrease in revenue in the personal credit reporting aspect but Experian is gaining market share in business credit reporting. 
Weeeee, what a quick and easy soultoin.
Since 41% of Experian's revenues come from financial services clients, Experian Group had a decrease in revenues in the credit services in the United States and United Kingdom as a consequence of these clients who either defaulted or were acquired or merged with other companies as a result of worsening economic conditions.   In addition, Experian focused on expense management on its portfolio by geography, product, sector, and client, which reduced the impact of the risk. The result of these actions can be seen with an increase in EBIT margin from 22.8% to 23.3%.  Furthermore, the company entered non-financial industries, including public services and utilities, by investing in building the sales force. The company also reallocated sales resources towards initiatives that normally perform well during bad economic environments. 
In the US, there are only two pieces of legislation (FCRA and its FACTA amendment) that protect consumer privacy. FCRA stands for Fair Credit Reporting Act, and it regulates credit reporting companies' operations and usage of consumer credit information. FACTA stands for Fair and Accurate Credit Transactions Act, and this amendment allows consumers to receive free credit reports annually.
In the United Kingdom, on January 19, 2008, the Companies Act was enacted, and it protects directors' residential addresses from credit reporting agencies.  Furthermore, this act protects shareholders' addresses from private companies' registry. This would be a problem for Experian's clients, since many lenders need to perform anti-money laundering operations on any shareholder with more than 25% stake in a company. This requires the lenders to obtain the addresses by themselves, thus requiring more labor expenses.  However, Experian intervened, and the DTI (Department of Trade and Industry) allows credit reporting agencies to access the residential information of directors and shareholders for fraud prevention and credit checking.  These stricter privacy laws restricts credit reporting agencies ability to collect information, however the legislation have not affected Experian's revenues significantly.
The weakening of the sterling resulted in foreign currency translation losses of $428 million in total equity for the Group.  The Group does not have foreign currency exposure on the business side. The company incurs all expenses in country it operates in. For the financial reporting, the company denominates everything in U.S. Dollar (USD). When the company reported its earnings in November and held the same exchange rate from the previous year, the adverse affect on the earnings were roughly $25 million.  Thus, since 33% of the Group's EBIT come from outside of the United States, the financial reporting of profits would be impacted. 
There is no single competitor that operates in all four business lines of the Group, however there are a number of competitors within these business lines.
|Company||Revenue (In Millions)||Earnings Before Interest and Taxes (EBIT) (In Millions)||Employees||Sale/Employee (In Thousands)|
|Experian Group||$3,821||$939||15,000||$254.7 |
|Equifax (EFX) ||$1,936||$477.2 ||6,500||$297.8|
|Fair, Isaac and Company (FIC) ||$744.8||$133.3 ||2,480||$300.3|
|TransUnion LLC ||$1,200||--||4,000||$300|