Equifax 2009 Annual Report Download - page 20

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS continued
OCIS. Revenue for 2009, as compared to the prior year, declined customer portfolio management services used by institutions to
primarily due to a reduction of online credit decision transaction manage and sustain existing customers. Our financial services cus-
volume as consumer lending activity was lower than a year ago. tomers began increased usage of our portfolio management ser-
The 18% decline in volume for 2009, from the prior year, was par- vices in 2007 and less usage of prescreen services, which reflects a
tially offset by a 4% increase in average revenue per transaction. continuing trend towards the enhanced management of their
This increase was attributable to a disproportionate decline in vol- existing customer portfolios as opposed to new account
ume from large national accounts which are generally billed at a acquisitions.
lower average price per transaction. For 2008, as compared to
2007, revenue declined primarily due to a 7% reduction of online Direct Marketing Services. For 2009 and 2008, as compared to
credit decision transaction volume resulting from the weakness of the prior year periods, revenue declined primarily due to reduced
the U.S. economy. mailing volumes for existing customers reflecting the slowdown in
retail sales and the marketing campaigns of many retailers, as well
Mortgage Solutions. The 2009 increase in revenue, as compared as changes to a contract with a large marketing services reseller.
to 2008, is due to increased activity associated with growth in
demand for our settlement services products which resulted in U.S. Consumer Information Solutions Operating Margin. Operat-
increased revenue of $16.5 million over 2008, higher volumes of ing margin decreased for 2009, as compared to 2008, mainly due
mortgage credit reporting related to increased refinance activity and to revenue declines described above in our OCIS, Consumer Finan-
incremental revenue from our acquisition of certain assets of a small cial Marketing Services and Direct Marketing Services businesses.
mortgage credit reporting reseller. For 2008, as compared to 2007, Our operating expenses generally do not decline at the same rate
revenue grew due to a four-fold increase in activity associated with as our revenue due to a high portion of costs that are fixed rather
our settlement services products and incremental revenue from our than variable in the short term. The overall decline in revenue was
acquisition of certain assets of FIS Credit Services, Inc. in February partially offset by lower personnel costs due to headcount reduc-
2008. These increases were partially offset by continued weakness tions, process efficiencies and lower technology outsourcing costs.
in the U.S. housing market, which led to reduced transaction The increases in revenue from our core mortgage and settlement
volumes from our existing mortgage customer base. services products also contributed to the USCIS margin decline as
these products have higher variable costs and lower margins than
Consumer Financial Marketing Services. Revenue decreased in traditional online database products. Recognizing the continuing
2009 as compared to 2008. As banks and other market partici- impact of current economic conditions, management has taken and
pants reassess current credit conditions and selectively test new is continuing to take steps to streamline operations and increase
marketing approaches, prescreen volumes and pricing for portfolio efficiency in order to minimize the negative effect on operating mar-
management services have declined in what remains a highly com- gins of any continued decreases in revenue.
petitive market. This decline was partially offset by approximately
$6 million of incremental revenue from our acquisition of IXI Corpo- Operating margin decreased for 2008, as compared to 2007, mainly
ration in October 2009. For 2008, as compared to the prior year, due to the decline in revenue described above. With a high portion
revenue declined due to volume decreases from our existing cus- of fixed costs, USCIS operating expenses generally do not decline
tomer base, primarily due to lower revenue associated with new at the same rate as our revenue. The decline in revenue was par-
account acquisition services as financial institutions scaled back sig- tially offset by lower production and royalty costs due to a decrease
nificantly on new marketing and extension of credit. These declines in volume, as well as the impact of cost saving initiatives.
were partially offset by a continued increase in revenue related to
18 EQUIFAX 2009 ANNUAL REPORT
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