Experian plc

Hello everybody and welcome to our first half results presentation. I'm joined today by Lloyd who will run through the financials after my initial overview and then as usual we'll open up for Q&A. So we delivered a strong first half performance with organic revenue growth of 7%. This is in line with our expectations with margin progress a little ahead of expectations. And we've also made some great progress on our key strategic and business initiatives. Three of our regions delivered high single-digit organic revenue growth in H1, and we delivered 7% organic revenue growth in each of Q1 and Q2. And this represents good Q2 momentum for our underlying business, since we had a one-off data breach benefit in Q2, which did not repeat in Q2. And when combined with a credit environment that is still subdued, we think this is a very good result. We've made very good progress in North America. We saw strength in consumer information and business information, both excluding mortgage, and both despite unsecured credit volumes, which remain below historical averages. We saw some positive contributions from our vertical markets, and we saw growing momentum in consumer services, again, ex data breach, which contributed favorably in the quarter. In Latin America, Brazil improved to 9% organic revenue growth in Q2 to give 7% for the half, And this is driven mainly by an excellent consumer services performance. And while UK growth is still low single digit, it has been a consistent performer in a still weak UK lending environment. UK consumer services further strengthen Q2, reflecting an improving competitive position. And EMEA Asia Pacific is on a very solid trajectory, following the various actions we've taken to enhance innovation and establish stronger market positions. Overall B2B growth accelerated in Q2 to give 6% for the half. Client expansion, new product contributions, and mortgage were the main drivers of this performance, with key verticals like health, auto, and targeting also contributing positively. 9% growth in consumer services reflects our ongoing actions to grow membership, extract cross-experience synergies, and expand our product ecosystem. Revenue growth translated into 10% concentrate EBIT growth for ongoing activities and 60 basis point EBIT margin progression, which was ahead of the top end of our expectations. Benchmark EPS and dividend per share rose by 8% and 7% respectively. Organically, we continue to invest across a range of initiatives, for example, in B2B, in Ascend platform adoption, and in consumer services in expanding our product ecosystem. and now with over 190 million free members, making us one of the world's largest consumer financial platforms. We also converted some of the larger deals in our M&A pipeline. We deployed over $800 million in acquisitions in key areas like fraud and health. The Ilion acquisition adds scale to our business in Australia, and we've agreed the acquisition of ClearSale to extend our fraud position in Brazil. We've also introduced new generative AI use cases across both B2B and B2C, and all of this positions as well to deliver on our FY25 goals. Our strategy has been very consistent and hopefully by now all familiar to you. We continue to make a lot of progress and we're on track to achieve the objectives we set out in our medium-term framework. Our investment in integrated platforms, our innovation-led approach, And the value exchange we provide to consumers is unique. We're helping to reshape markets, US insurance being a good example, all of which is driving growth across the group. And we're on course to deliver on our technology transformation, introduce generative AI tools, and capitalize on other productivity measures. And we expect this to free up additional resources to invest deeper into our strategy, as well as enhancing future profitability. To give some specifics on our H1 strategic accomplishments, the Ascend platform makes it easier for us to get our products into the hands of our customers. There's significant opportunity to drive more automation, both fraud and credit analytics, and between credit risk and credit marketing. And the Ascend platform helps clients achieve this while also reducing risk and cost, meeting regulatory requirements, and lowering dependence on multiple point solutions to drive cost efficiency. Our primary focus this year is to execute migrations for existing clients, and we use a series of metrics to track our progress. Client solutions and client engagement are all trending in the right direction. And as we go through this process, we're also expanding into new areas of client spend to address. Some of our best growth opportunities are in our verticals. Health is our largest vertical, serving 60% of US hospitals and over 5,500 medical practices. And we're leveraging our broad product portfolio to drive increasing share of wealth on our clients. During the first half, we signed the largest health contract in our company history. We've become a trusted partner for consumers, helping them to manage their financial health. We're driving more personalization and more do-it-for-me solutions. Activate, our lender model deployment tool, has been integrated into our U.S. marketplace and more recently in the U.K. Activate enables real-time decisioning At the point a member engages with a product, it greatly strengthens our panels, helps provide pre-approved and no-risk credit offers, and creates a better, more seamless experience. Activate is a prime example of how we can leverage our B2B products into our consumer ecosystems to create differentiation in the market. Our insurance marketplace has made tremendous progress. New features like insurance rate monitoring mean we can search on behalf of consumers for savings. and we continue to see more carrier engagement. Insurance policy sales have grown rapidly, demonstrating the value of the platform. We've now launched EVA, our virtual agent, which will use Gen-I natural language to deliver more personalized credit education. In Brazil, we're offering more services to help consumers on their financial journey, and we have unique ways to drive engagement. To give two quick examples, we've started to explore new opportunities in the insurance market, following a small investment in this space in Brazil. And our payments capability can instantly reflect the debt payment to help consumers boost their credit scores, which helps drive engagement. As we've made clear in the past, we have a very disciplined approach to deploying capital. Many of the deals that we have announced have been long been in our pipeline, and all of them represent excellent strategic fits for Experian. In fraud and IDE, we've acquired new assets to extend our market position. Our recent acquisition of NeuroID adds fraud behavioral analytics capabilities, which is transferable across all of our regions. We've already added the capability to the Ascend platform. In Brazil, our acquisition of ClearSell marks our entry into the large and growing transaction fraud market in Brazil, and when combined with our existing fraud assets and bureau data, will open up new growth opportunities. In Australia, we're very excited to have completed the acquisition of Ilion, It transforms our position in the Australia and New Zealand market and takes us another step towards our ambition to be number one or two in our chosen EMEA APAC markets. While it's still early days, the integration so far has progressed well. Leon gives us additional scale in data, products, and people. And we've started to engage with clients and we're confident we'll have the expanded client opportunities as a result of this transaction. And this will build on the strong foundations we have already had in that market for decisioning. and we expect opportunities to emerge in many new client segments as well. So those are some of the H1 strategic highlights. Let's turn now to our H1 regional performance, starting with North America. Organic revenue growth of 7% included high single-digit organic growth from the majority of our business lines, including consumer information, business information, auto, health, and consumer services. In consumer information, business information decisioning, we're delivering next generation data, analytics and software to manage credit risk and fraud. And we made very solid underlying progress even when mortgages stripped out and despite still constrained conditions for unsecured credit volumes. Client win rates for Clarity were strong with good momentum too for Ascend, including upgrades, renewals and new wins for key modules such as Sandbox and Ascend Marketing. We also have several trials underway, fraud sandbox, and we enjoyed really good growth in fraud generally, and NeuroID has had a very good start. In income and employment verifications, record count continues to expand, now totaling 61 million records, and we continue to make very good progress adding new client logos. Our other verticals also contributed positively. The auto market still faces headwinds from affordability and uncertainty, We've been helped by the breadth of our product suite, especially around marketing, and there is scope for conditions to improve as rate cuts feed through to consumer affordability. Strong new bookings helped targeting to a good result in H1. We added new logos and secured new business from existing customers, all helped by our enhanced digital identity offers. And there's also some sign of a recovery in the underlying client spend. Health has had a great start to the year with record bookings. Wave HTC has been a very good acquisition for us. This product, which we've integrated into our healthcare suite and now called Patient Access Curator, helps reduce claims denial. That's helped with new business performance through expanded client relationships and new logos. North America consumer services grew 7% organically. Premium services, marketplace, and partner solutions all contributed positively, so a very nice broad-based performance. Strong premium membership enrollments and upsells have been helped by new features to better manage financial health. We'll take this a step further as we roll out EVA, our Gen AI financial assistance, which will offer more personalized financial education. Our credit marketplace is yet to recover with card supplies still weak. Strategically, we've made a lot of progress having onboarded new partners to activate, positioning us favorably for when supply fully returns. and we're scaling up offers like pre-approval and no-risk apply, which are very attractive to our membership. Insurance is going really well. We've added new carriers to our panel, new features like continuous rate monitoring and driving engagement rates, with take-up rates all supported by our new marketing campaigns. Over the past few years in Brazil, we've built out a comprehensive product portfolio, and we saw continued great progress in the half across fraud and ID, software, SME, and particularly in consumer services, which led to H1 organic revenue growth of 7%. B2B organic growth, 2% in the half is lower than we would have liked due to earlier floods in the south of Brazil and a more uncertain macro backdrop. All that said, we've made fantastic progress in Brazil B2B, and we expect to reap benefits from our platform integration strategy going forward. 27% growth in Latin American consumer services and outstanding results. We have steadily expanded this business, again, centered around the concept of financial empowerment, and we continue to grow and diversify our ecosystem. We started with Limpanome, which helps consumers negotiate and resolve outstanding debts, and which continues to perform strongly in a market where consumer indebtedness remains very high. We've linked Limpanome to a payments proposition, which consolidates consumer overdue bills in one place. Contributions from our credit marketplace have grown on the back of an expanded lender panel, and we now have the ability to extend into insurance. These developments position us uniquely in Brazil. Through our fully integrated platform, we can provide end-to-end payment solutions, more personalized consumer experience, and extract strategic synergies across B2B and B2C. The UK delivered 2% organic revenue growth, While it's not fully reflective of performance, our strategic position in the UK B2B continues to strengthen. And while B2B growth is 1%, strategic progress across Ascend, FinCrime, data quality and verifications all build on the superior quality of our bureau data assets and set us up well for when core volume recovery comes. We've entered into a series of Ascend platform proof of values, verifications data coverage has expanded, and we've started to drive usage of that data. Our new business performance has also been strong. In UK consumer services, the results of our investments have become increasingly more visible. We've made great progress across both premium and marketplace. Our products are better, and by introducing Experian Activate, we've enlarged our lender panel to the extent that nearly all card and loan clients will soon be on the Activate platform. And this is driving stronger loan conversion, which has helped us become one of the most meaningful marketplaces in the UK for cards and loans. In Asia Pacific, organic revenue growth of 7% represents another half of solid progress, reflects a growing mix of exclusive data additions, new score introductions, and fraud, which have driven new business wins. We'll continue this focus on new product introductions, where we can leverage our large global solutions to strengthen our competitive position. Ascend is a great example. It gives us potential to lengthen contract terms, drive up contract values, including more analytics and fraud capabilities in solutions. We started this process and there's much more to come. Already it's opened up new opportunities with existing clients and we see good prospects to extend to clients in adjacent sectors such as BNPL. And with that, I'm going to hand over to Lloyd for the financials.

Thanks, Brian. Good morning, everyone. As you've seen, we've delivered strong results in the first half of FY25 with revenue in the middle of our guidance range and strong margin expansion. For the half, organic and total revenue was up 7% at constant currency, whilst total revenue growth at actual rates was 6%, reflecting a 1% headwind from FX. We grew EBIT margins by 60 basis points, with benchmark EBIT from ongoing activities up 10% at constant rates and 8% at actual rates. EBIT growth converted well into EPS growth of 9% at constant rates and 8% at actual rates. Operating cash flow was at $707 million at a conversion of 71% in our seasonally week and a half for cash generation. We continue to deliver our growth with high returns on capital employed at 16.6% for the half. We've announced an interim dividend per share of 19.25 cents, up 7% on the prior year. And finally, we remain strongly financed with our net debt to EBITDA leverage of two times, at the bottom of our 2 to 2.5 times target range. As you've heard from Brian, we delivered consistent growth through the half, with the strength of our diverse portfolio and strategy delivery offsetting a still subdued lending environment. Organic growth in Q2 was 7%, supported by strengthening in North America core bureau growth, stronger growth in Latin America, offset by a lower level of one-off data breach deals. Now looking at organic revenue growth across our B2B and consumer segments, on the left-hand chart, you can see our quarterly trends in B2B, where we saw underlying trends in B2B firm in Q2, with growth increasing from 5% in Q1 to 7% in Q2. Growth in the core bureau in North America, excluding mortgage, improved from 2% in Q1 to 6% in Q2, and we saw stronger mortgage revenue growth. Latin America B2B growth also improved in Q2. On the right-hand side, you can see our consumer segment trends in total and excluding our data breach business. As we mentioned through last year, we secured several large one-off data breach contracts following elevated levels of breach activity in the market, with the contribution peaking in Q3 last year. As you can see, excluding data breach, underlying growth was stable last year, but has firmed through the first half with improvements across all regions. In particular, in North America, we've seen subscription and marketplace growth improve as the half progressed. Turning now to FY25 Q2 regional growth trends, North America grew 7% organically in Q2, with B2B growing 9%. Within B2B, the CIBI Bureau delivered double-digit growth and excluding mortgage profile revenue grew by 6% in the quarter, up from 2% in Q1. Mortgage profiles revenue grew 56% on volume growth of 4%. Our Ascend modules continue to scale, delivering double-digit growth following new business wins, growth in volume through the platform, and annualization of wins from the prior year. Clarity Services returned to double-digit growth in the quarter following a weaker Q1, and we continue to see a subdued general lending environment and no broad-based improvement in lending. Our verticals continue to grow well. Automotive grew 5%, whilst targeting growth strengthened in Q2 to 7%, as our digital platforms continue to perform well in market, and we continue to innovate our propositions. Health continued to grow well, had 8%, where we had a strong quarter for product deliveries and made good progress following the integration of our Wave acquisition onto our platform. Consumer services grew 3% in Q2, as you saw on the earlier slide. Data breach was a headwind to growth as we lapped contracts in the prior year. And excluding data breach, consumer services growth was 9%. Subscription grew well at mid-single digit, improving from Q1 as new features continue to improve retention rates. Marketplace grew double digits as auto insurance grew strongly, and the loans vertical in credit marketplace showed good growth despite credit cards remaining weak. As expected, organic growth in Latin America improved to 9% in Q2. B2B improved to 3% growth in Q2 as we made progress with new innovations in software and analytics, against a backdrop of uncertain economic conditions and rising interest rates. Consumer services grew strongly, up 30%, with improved Limpinomi payment conversion, marketplace expansion of new partners, and integration of our platform propositions. The UK NI was consistent through the half with 2% organic growth. Bureau growth of 3% is broadly in line with our performance in Q1. against what remains a soft underlying credit market in the UK. We're making good progress in expanding our Ascend functionality and expanding the number of client trials. Targeting in automotive was down 14% in the quarter due to specific client actions in automotive insourcing some of their activity. Decisioning was down 1% as the environment for new software solutions reflects the lending environment. And consumer services growth improved to 8% as marketplace further strengthened in Q2, following the rapid rollout of our Activate proposition. And subscription continued to grow modestly. In EMEA and Asia Pacific, growth for the quarter was 8%, consistent with the performance in Q1, following strong decision growth in South Africa and Southern Europe, as well as good growth across the bureaus. Turning now to EBIT margin, where we delivered 60 basis points of margin expansion. And as usual, we've restated the prior year margin for the benefit of exited activities with reported margin of 80 basis points in total. Consumer services margin progress was strong, continuing the trends of recent years as we continue to benefit from the growing scale and diversity of the business and engage our free consumer base across a growing set of propositions. B2B margin was slightly lower in the half due to revenue mix and our investments in new growth verticals such as verifications. And at a regional level, margins in North America contributed to group margin, whilst the phasing of investments and revenue mix kept the margins in the other regions broadly stable. Turning now to EPS, where we delivered growth of 9% at constant FX and 8% at actual rates. EBIT from continuing operations grew 9% at constant currency following good revenue growth and 60 basis points of margin expansion. And this translated to 9% EPS growth at constant currency and 8% at actual rates. Now looking at our usual reconciliation of benchmark to statutory results, our benchmark profit before tax grew 8% at actual FX rates, driven by revenue performance and good margin progression. Acquisition-related expenses decreased slightly to $8 million. And there was little change in the fair value of contingent consideration on prior acquisitions. We incurred $24 million of costs in relation to our technology-enabled restructuring program and recovered $11 million of costs related to prior legal matters. And that brings statutory PBT before non-cash items being up 10%. Amortization of acquisition intangibles was flat at $95 million. And non-cash financing remeasurements were $93 million adverse, principally due to movements in our interest rate fixing program, leaving statutory profit before tax down 6%. Now taking a look at cash flow. On the slide, you can see our long-term operating cash flow and conversion metrics, with the first half on the left and the full year on the right. As you can see from the slide, the first halves are weaker half for conversion due to the timing of compensation, payments, and other seasonal factors. And you can also see the effect in FY21 to 23 of certain COVID recovery effects and one-off contracts. And outside of these effects, we have a strong and consistent track record of full-year cash conversion in the 90% plus range. This half, we've delivered $770 million of operating cash flow at a conversion of 71%. Average sales outstanding reduced during the half, whilst payable days expanded, mostly due to the timing of deferred income, including the effects of timing of data breach revenues and cash flow. And we're on track to deliver cash conversion in line with our guidance for the full year of greater than 90%. Now turning to acquisitions. As you've heard from Brian, we made a number of acquisitions during the half, spending over $800 million in support of our key strategic focus areas. When we spoke back in May, we expected the acquisitions we'd made during FY24 to add less than 1% to revenue growth during FY25. With these additional acquisitions, we're increasing that guidance to around 1.5% contribution with run rate revenue of $150 million into FY26 or an additional 1% inorganic growth in FY26. And as recently announced, we signed an agreement to acquire ClearSale in Brazil. Subject to regulator and shareholder approval, we expect this to close in the first half of calendar 2025 and would add a further 85 million or just over 1% to group inorganic revenue in FY26 across a full year. Moving now on to leverage, at the end of the first half and taking into account the investment in Australia, at the end of the half, our net debt to EBITDA ratio was two times, at the bottom of our 2 to 2.5 times leverage range. With our interest rate fixing program, we've kept average interest rates on our net debt constrained, despite the rise in market interest rates, at 3.2% in the half. And we continue to generate very strong post-tax returns on capital employed, with Rocky at close to 17% in the half. So turning now to updated FY25 modeling considerations, which relate to our ongoing activities and does not include any acquisitions that have not yet completed and where timing is uncertain. We continue to expect 6% to 8% organic revenue growth for the full year. We've increased the contribution from acquisitions on revenue to around 1.5%, which reflects the expected performance of businesses acquired during the half. with firm margin guidance to the upper end of our 30 to 50 basis points guidance range, thanks to the strong start to the year. And based on current FX rates, we now expect FX to be around a 2% headwind to both revenue and EBIT growth, principally relating to the weakening of the Brazilian REI against the US dollar. With the investment in acquisitions, we now expect net interest for the year to be around $155 million, The benchmark tax rate is now expected to be 26% at the lower end of the previous guidance range of 26% to 27%. We expect the weighted average number of shares to be in the region of $914 million for the year. There's no change to our CapEx guidance, which is expected to be around 9% of revenue. No change to cash flow conversion to be over 90% for the full year. And no changes to our share buyback program of up to $150 million completed by June 2025. And finally, as you'll recall, we announced our new medium term financial framework in May. And as you can see from our first half results and updated for your outlook, we're delivering on that framework. Organic revenue growth is strong with underlying trends positive. We delivered strong margin progression in the first half and expect to be in the upper end of our guidance for this year. CapEx was stable as we progress well in our technology migration, which unlocks a medium term trend towards CapEx at 7% of revenue, and we've increased our capital deployment, investing in high-quality strategic assets to fuel future growth and returns. So with that, I'll hand you back to Brian.

Thanks, Lloyd. So in closing, we've made a very good start to the year. We delivered well financially, and we've made a lot of strategic progress, both organically and through M&A pipeline conversion. We're on track to deliver on our previous organic revenue growth guidance in FY25, with margin expansion now expected to be at the upper end of our guidance range. We've also progressed well towards the medium-term outlook we shared in May. Our confidence in this is high and will be further enhanced when we get the full benefit of unsecured credit volume recovery and our technology transformation program. Alongside this, we continue to invest successfully behind a range of initiatives to support future growth of the business. And with that, I'm now going to hand back to the operator for your questions. Operator, over to you.