Equifax 2007 Annual Report Download - page 40

38 EQUIFAX | 2007 ANNUAL REPORT
NORTH AMERICA PERSONAL SOLUTIONS
Twelve Months Ended December 31, Change
2007 vs. 2006 2006 vs. 2005
(Dollars in millions) 2007 2006 2005 $ % $ %
Total operating revenue $153.5 $126.0 $114.7 $27.5 22% $11.3 10%
% of Consolidated Revenue 8% 8% 8% nm nm nm nm
Total operating income $ 34.0 $ 13.6 $ 13.5 $20.4 150% $ 0.1 1%
Operating margin 22.1% 10.8% 11.8% nm 11.3% nm (1.0)%
nm - not meaningful
The 2007 increase in revenue was primarily due to higher
subscription revenue associated with our 3-in-1 Monitoring, Credit
Watch and ScoreWatch products. Subscription customers grew to
1.4 million in 2007, up from 1.0 million in 2006. This increase was
partially offset by declining transactional revenue associated with
our Credit Profi les, Score Power and Credit Rankings products.
The 2006 increase in revenue was primarily due to higher revenue
related to subscription-based products as we worked to transition
from a transaction-based product mix to subscription-based products.
During 2007 and 2006, we also increased revenues through targeted
advertising, improvement in the conversion of inquiries to sales,
and growth in services provided in third-party data breaches.
The 2007 increase in operating margin was mainly due
to continued subscription-based revenue growth, the 2006
$5.0 million operating expense impact of legal contingencies
that did not recur in 2007, and decreased advertising expense due
to a reduction in radio advertising when compared with 2006.
This improvement was partially offset by higher personnel and
training costs due to higher call center volumes and the addition
of a second outsourced call center in 2007. The 2006 decrease in
operating margin was mainly due to volume-related costs and the
recognition of $5.0 million in pretax loss contingencies related
to certain legal matters, largely offset by growth from increased
subscription-based revenue.
NORTH AMERICA COMMERCIAL SOLUTIONS
Twelve Months Ended December 31, Change
2007 vs. 2006 2006 vs. 2005
(Dollars in millions) 2007 2006 2005 $ % $ %
Total operating revenue $67.6 $49.4 $37.1 $18.2 37% $12.3 33%
% of Consolidated Revenue 3% 3% 3% nm nm nm nm
Total operating income $12.0 $ 9.9 $ 4.4 $ 2.1 21% $ 5.5 125%
Operating margin 17.7% 20.2% 11.8% nm (2.5)% nm 8.4%
nm - not meaningful
The increases in revenue in 2007 and 2006 were primarily due
to our October 2006 acquisition of Austin-Tetra and volume growth
in the U.S. and Canada as we continue to expand the markets for
our commercial credit information and marketing products. Of
the 37% and 33% revenue growth in 2007 and 2006, respectively,
Austin-Tetra contributed 14% and 8% and Canada currency fl uc-
tuation against the U.S. dollar favorably impacted revenue by 3%
and 4%, or $1.5 million in each year. The remaining 20% and 21%
of revenue growth in 2007 and 2006, respectively, was due to
organic growth within our legacy North America Commercial
Solutions product offerings. Online transaction volume for our
commercial credit information products was 4.7 million in 2007,
up from 3.6 million in 2006.
The 2007 decrease in operating margin was primarily attributable
to increased volume-related costs and our investing for future
growth in this segment, including higher salary costs in 2007 due
to additional headcount. The 2006 increase in operating margin
was primarily due to growth driven by overall volume growth and
improved operating leverage.