Equifax slashes Fourth Quarter Guidance due to Security Breach

Equifax Inc. (NYSE: EFX) reported its third quarter financial results for fiscal year 2017. Equifax beat analysts’ estimates in earnings, but missed revenue. Shares fell by as much as 3 percent early morning on Friday.

For the third quarter, Equifax reported revenue of $834.8 million, decreasing 3 percent year over year, also falling short of analysts’ estimates by $12.25 million. Equifax reported an EPS of $1.53, up 6 percent year over year, and beating analysts’ estimates by $0.03. Net income was $96.3 million, down 27 percent year over year.

Other segments of the company such as its international, workforce solutions, and global consumer solutions all reported increased or flat revenues year over year.

But currently, the biggest concern for the Equifax is regarding the massive data breach that affected nearly 143 million people.

“We recognize that we have an important journey in front of us to regain the trust and confidence of consumers and our business customers," said Paulino Barros, Interim Chief Executive Officer at Equifax, named CEO after Richard Smith stepped down, "Our teams have taken immediate actions to improve our data security and provide improved support for consumers who were impacted by our cybersecurity incident.”

Equifax says that the massive data breach impacted the financial results heavily due to its declining consumer base. The breach costed the company $87.5 million in damages and legal fees.

Analysts on Friday’s conference call asked Equifax further matter regarding the breach. Analysts asked for specifics such as the total costs, updates to security, and how much insurance will cover.

Equifax has lowered its fourth quarter guidance due to the security breach. The company is expecting an EPS of $1.32 to $1.38, below Thomson Reuters analysts’ estimates of $1.42. Equifax slashed its revenue by 3 percent to 4 percent, expecting $825 million to $835 million compared to analysts’ forecast of $833.65.

“As we look to the future, I have committed Equifax to four things: protecting consumers, enhancing our security, empowering consumers to control access to personal credit data, and leading our industry to confront the massive economic and national security threats represented by cyber criminals.” said Barros.

“I have high confidence in our global teams, and as we focus on these critical imperatives we will emerge from this an even stronger company."

Shares were trading 0.4 percent under midday on Friday. Equifax shares have now fallen 25 percent since the breach back on September 7.

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