Equifax 2007 Annual Report Download - page 38

36 EQUIFAX | 2007 ANNUAL REPORT
The small increase in 2007 revenue was due to growth in
Online Consumer Information Solutions being largely offset by
decreased revenues in the other three business units due primarily
to weakness in the U.S. credit and mortgage markets. The 2006
increase in revenue was primarily due to growth in 3 of the
4 business units, offset partially by decreased revenues in Mortgage
Reporting Solutions.
Online Consumer Information Solutions
The 2007 increase in revenue was primarily due to volume
increases from our regional customers and both volume and
price increases from our smaller customers. Revenue from resellers
also rose during 2007 due to price increases that became effective
near the end of 2006, and we recorded higher revenue from our
insurance, banking and regulatory brokerage monitoring customers.
These increases were partially offset by price and volume decreases
from certain large fi nancial services institutions. The 2006 increase
in revenue was primarily due to higher sales volume to our fi nancial
services customers, which offset some decline in telecommunication
accounts and price compression. Online transaction volume in this
business unit was approximately 690 million, 650 million and
610 million in 2007, 2006 and 2005, respectively.
Mortgage Reporting Solutions
The 2007 decline in revenue is primarily a result of weakness in the
U.S. mortgage markets, which led to reduced transaction volumes
from our existing customer base and caused several large mortgage
brokerage customers to cease operations during 2007. This decrease
was partially offset by incremental revenue from our acquisition
of three mortgage affi liates in the fi rst quarter of 2007 and increased
revenue related to our recently-introduced settlement services
products. The 2006 decrease in revenue was primarily due to volume
declines from a large customer that changed its retail mortgage
business model, as well as less favorable mortgage market condi-
tions, including higher interest rates that resulted in lower refi nancing
and mortgage origination activity.
Credit Marketing Services
The 2007 decrease in revenue was primarily due to a decline in
prescreen transaction volume and analysis services from our large
fi nancial services, telecommunications and reseller customers.
This decrease was partially offset by increased prescreen transaction
volumes for our smaller customers. Our fi nancial services customers
increased portfolio review product volumes, which refl ects a
continuing trend towards the enhanced management of their
existing customer portfolios as opposed to new account acquisitions.
The 2006 increase in revenue was primarily due to higher volume
mainly from national and regional customers for certain of our
products that target new customers and our account management
product offerings, as well as continued demand for core prescreen
products and data sales.
Direct Marketing Services
The 2007 decrease in revenue was mainly due to reduced mailing
volumes from our existing customer base, driven in part by the
increase in postage rates. This decrease was partially offset by
increased revenue from new and renewed contracts to provide
services related to our customers’ marketing databases. The 2006
increase in revenue was mainly due to higher volume from existing
customers and revenue from new customers and products.
U.S. Consumer Information Solutions Operating Margin
The 2007 decline in operating margin was primarily a result of the
fi xed cost nature of the USCIS business in the midst of revenue
declines in our Mortgage Reporting Solutions, Credit Marketing
Services and Direct Marketing Services business units. While
revenue of the entire USCIS business was essentially fl at, the
operating expense of maintaining the databases, products, and
customer support capabilities required for the business increased
by 2.4%, refl ecting annual compensation increases and enhanced
product, processing and support capabilities. Recognizing the low
expectations for growth in this business in 2008, given current
economic conditions, management has taken and is continuing to
take steps to streamline operations and increase effi ciency in order
to protect operating margins.
SEGMENT FINANCIAL RESULTS
U.S. CONSUMER INFORMATION SOLUTIONS
Twelve Months Ended December 31, Change
2007 vs. 2006 2006 vs. 2005
(Dollars in millions) 2007 2006 2005 $ % $ %
Operating revenue:
Online Consumer Information Solutions $639.0 $619.2 $594.5 $ 19.8 3% $ 24.7 4%
Mortgage Reporting Solutions 66.1 71.7 85.1 (5.6) (8)% (13.4) (16)%
Credit Marketing Services 156.4 166.3 150.7 (9.9) (6)% 15.6 10%
Direct Marketing Services 108.2 110.9 103.0 (2.7) (2)% 7.9 8%
Total operating revenue $969.7 $968.1 $933.3 $ 1.6 0% $ 34.8 4%
% of Consolidated Revenue 53% 63% 64% nm nm nm nm
Total operating income $383.5 $395.7 $392.2 $(12.2) (3)% $ 3.5 1%
Operating margin 39.6% 40.9% 42.0% nm (1.3)% nm (1.1)%
nm - not meaningful