The strategic planning process identified many initiatives that the Company is pursuing. Which ones do you view as the most significant Game Changers in terms of shaping how Equifax’s business will look in 2010?
Leveraging our enabling technologies and predictive sciences capabilities represents a tremendous opportunity for growth and differentiation. The fact that our technology becomes integrated with our customers’ systems and processes is a big advantage for us. We become their partner in growth. We’ve seen the power of enabling technologies at work in our U.S. business. It’s a significant competitive differentiator for us. When we take this technology and our analytical capabilities to every market we serve, it creates very compelling growth scenarios. We know from experience that unique data also differentiates us from competition and opens new markets, leading to new revenue.
What are the advantages you bring to the North America commercial market?
The core processes that we go through every day to deliver our automated consumer solutions are essentially the same processes required to provide commercial solutions. This extension is a clear example of how we can leverage our core competencies into new industries. In addition to unique financial data about small businesses, customers find that consumer information about the business owner is a valuable decision-making tool. Our acquisition of Austin-Tetra significantly enhances our commercial services. Their product, the A-T Number® is based on proprietary technology and a data-match verification process that allows our customers to see linkage among related businesses. We are approaching the commercial market with clear competitive strengths.
There are large, existing players in the global commercial marketplace. Do you think these advantages are enough to win in this space?
Yes, the global commercial space is a multi-billion-dollar market. We have built a $125 million business with commercial offerings in North America, Europe and Latin America. Our goal is to more than double this over the next four years. This represents a significant growth opportunity for Equifax. Customers want more information and newer technologies to make better decisions. They want choices. Today, they have limited choices; we’re changing the game!
New products are a large part of your strategy to gain market share. How is the Company approaching new product development?
We’re utilizing New Product Innovation (NPI), a disciplined, systematic, rapid assessment process that funnels new products from idea to launch. In 2006, we asked, “What do our customers need?” and “How do we make money?” The answers generated 220 ideas around the world. Currently, we’ve launched, or have in development, 68 new products with the potential of generating up to $50 million in revenue during 2007. NPI provides a centralized discipline for product development, and innovation on a global basis. Our goal is to generate $100 million in new revenue each year by the year 2010.
How will you decide when and where to expand in the global marketplace?
Historically, we have used partnerships outside of the United States to enter the countries in which we currently do business. This model has been very successful for us. As part of our planning process for future expansion, we conducted a rigorous assessment of target countries and will focus on a handful: China, India and Mexico. We have teams evaluating entry strategies and determining likely partners who have on-the-ground knowledge in each market. Global expansion will be a very methodical process and should be viewed as a long-term investment.
What level of capital investment is necessary to achieve your financial growth goals, and how are you allocating resources?
For the next two years, you should expect us to invest generally in the range of 6 percent to 8 percent of revenue to build new products and to improve our IT infrastructure. After that, we expect to return to historical levels, which are in the 4 percent to 6 percent range.
You have spoken about Equifax functioning as a “meritocracy.” How do you define a meritocracy, and how does this benefit customers and shareholders?
Those individuals who make the greatest impact on this company will be rewarded with better pay, equity and career development opportunities. A meritocracy will help us recruit and retain the best talent and move us to a higher-performance culture, so that we can more effectively meet customer needs and achieve shareholder growth objectives.
Much of Equifax’s business is focused on helping customers evaluate risks and make critical decisions. As the Company expands into new areas, what tools will Equifax use to evaluate risk within its own business?
A solid plan acknowledges, identifies and mitigates risks. That’s why we’ve developed an Enterprise Risk Management (ERM) system to continually track our key initiatives and compare them against changing risk profiles and industry landscapes. This system also helps us better monitor regulatory activity so that we can continue to stay abreast of issues and provide input regarding proposed changes that could affect our business.
Why should potential investors consider including Equifax in their portfolios?
Equifax offers a powerful value proposition for shareholders. The Company has a great global franchise built around the needs of its customers. We have a business model that delivers a high level of recurring revenue, produces significant cash and generates attractive margins. We have a framework to sustain profitable growth in a smart and disciplined manner. It has been very gratifying to tell the Equifax story to investors and to see how their understanding of our value is reflected in our stock performance. I believe investors see a successful, proven company that is truly taking its game to a new level.