Experian shares tumble as investors fret over cautious forecast

Shares in credit checker Experian fell sharply in early trading this morning after the firm offered a cautious outlook for the year ahead and investors fret over an uncertain borrowing landscape.

The FTSE100 firm said it had seen “growth in every region” and an eight per cent boost in revenues to $6.59bn (£5.3bn) in the year to the end of March, as cash strapped borrowers turn to the firm amid a credit squeeze.

However, bosses said they were expecting revenue to grow between four per cent to six per cent in the year ahead, while analysts had priced in growth expecting a 5.8 per cent growth. Shares in the firm fell beyond five per cent this morning on the update.

“Experian have delivered the growth expected and have painted an outlook which although rosy is, to be honest, no better than that which the market was already expecting them to paint,” said Steve Clayton, Head of Equity Funds at Hargreaves Lansdown.

“The group are exposed to the growth of lending appetite amongst US banks, for they sell them the data to identify the best consumers to target with credit offers. So, the recent struggles of US regional banks, following the collapse of SVB could hold Experian back a little in the near term.”

Experian said profits had also tumbled 19 per cent to $1.17bn (£940m) for the year on the back of a $179m (£144m) write down in the value of some of its assets, known as a goodwill impairment, and an $89m (£72m) hit from the disposal of some assets.

Experian chief Brian Cassin said the firm had delivered “very strong results” for the full year, however, reflecting a “combination of new business wins, new products and expansion into higher growth markets”. 

“For the year ahead, we anticipate another year of growth due to the breadth and the resilience of our portfolio, and significant structural growth opportunities,” he added. 

“Despite the uncertain economic climate, we expect to deliver organic revenue growth in the range of four to six per cent and modest margin accretion, all at constant exchange rates and on an ongoing basis.”

Experian has benefited from cautious borrowers turning to data to keep track of their borrowing. The firm said organic consumer services revenue was up 11 per cent for the year and it now serves 168m free members – up 23 million year-on-year.

Analysts at Edison gave a more upbeat read of the results and said the economic climate pointed to further growth for the firm.

“With the breadth and resilience of its portfolio, Experian anticipates another year of growth, projecting organic revenue growth in the range of four to six per cent. This growth potential is supported by the company’s ability to tap into new business prospects across several markets,” said Edison analyst Neil Shah.