Equifax warns on post-breach costs, revenue hit

Credit reporting company Equifax Inc. offices are pictured in Atlanta
Credit reporting company Equifax Inc. corporate offices are pictured in Atlanta, Georgia, U.S., September 8, 2017. REUTERS/Tami Chappell

November 10, 2017

By Jim Finkle and Aparajita Saxena

(Reuters) – Equifax Inc on Friday issued a fourth-quarter profit outlook that fell short of Wall Street expectations, saying the massive breach of its consumer data earlier this year would hurt sales and result in costs of $60 million to $75 million during the period.

Executives at the credit-reporting company blamed the expected revenue decline on delays in contract signing from business and government customers, which began in the third quarter and continued into the current quarter.

“We’re hoping to win back their trust and then be able to regain the business that we’ve indicated has been deferred,” Chief Financial Officer John Gamble said in the call. “We’re still working through that process.”

Equifax shares were little changed in midday trading. They have dropped around 25 percent since the company’s Sept. 7 disclosure of the breach that exposed sensitive data on 145.5 million consumers.

Analysts on Friday’s call probed Equifax for further details on its recovery effort. The company declined to provide estimates on total costs from the breach or say how much might be covered by insurance.

“When is your cyber security going to be up to code, or up to standard, or however you want to define that?” asked Wells Fargo Securities analyst William Warmington.

“This is a journey,” interim Chief Executive Paulino do Rego Barros Jr responded, saying the firm was working to make sure its security team could protect current systems.

The company forecast fourth-quarter adjusted profit of $1.32 to $1.38 per share, below the average forecast of $1.42 per share, according to Thomson Reuters I/B/E/S.

It said fallout from the breach will cut revenue by 3 percent to 4 percent in the quarter. The company expects revenue of $825 million to $835 million, compared to the average analyst forecast of $833.65 million.

Investors are looking for clues to help assess whether the breach will have a long-term impact on the company’s sales and profit, Stephens Inc analyst Brett Huff said.

The latest management commentary “generally supports the view that the long-term business model looks at least okay,” said Huff, who has an “equal weight” rating on Equifax shares.

Equifax also said it has halted a share buyback program.

(Reporting by Jim Finkle in Toronto and Aparajita Saxena in Bengalaru; Editing by Meredith Mazzilli)

  • TYvets

    more than well-deserved

  • Dave Clark

    Consumers don’t have a choice.. their identity information are sent to these ‘unsecured’ companies without authorization or permission. Hope they go bankrupt over this breach after the class-action lawsuits are done.

  • Dave Clark

    Consumers don’t have a choice.. their identity information are sent to these ‘unsecured’ companies without authorization or permission. Hope they go bankrupt over this breach after the class-action lawsuits are done.

    • HarryObrian

      Is it me or does it seem that companies like Equifax should not exist in the form they are in? Should a company make money off of the one key piece of vital personal information that can make or break a person? Should a company even create such a maligned and manipulated standard of measure of a person? and should that standard be so easily wounded and scarred and allowed to fester instead of being allowed to heal?
      Who allowed these pathetic and inept companies to become the controller of people?

    • David Wambsganz

      I have wondered that also, but the way it was explained to me is that every time you take out a loan or a mortgage you sign a authorization to disclose all of that personal information including your social security number to the three big credit agencies. So when you ask the question what gives them the right to have all of these details about us we should all take a look in the mirror.

      • gregg56

        Demand the authorization be removed or do not sign.

        • TYvets

          Then the loan is denied

          • Sonny Shaw

            Then that act by the Mortgage company at settlement will result in a law suit. The privacy laws are far more updated than they use to be. The only way around not being sued is a strict understanding that the information goes to only the 3 credit monitoring companies; that no other entity will receive any of the information disclosed by any documents signed by the borrower for any other purpose than to close the financial arrangement between the parties involved.

          • TYvets

            Doesn’t happen at settlement. Happens in a data breach.

    • Sonny Shaw

      Some crazy Judge on the Federal bench will grant Equifax Bankruptcy protections and the poor consumers will get the shaft.

  • Akjustice

    These credit reporting companies have entirely too much power. They affect entirely too many lives…

    • HarryObrian

      Except the rich and powerful. Any politician or friend of any employee of those companies can make a simple call and get information on anyone they want at anytime while normal people themselves can’t even get that info sometimes. And what’s with this little known 4th credit bureau that was created to bypass a person’s ability to block their credit report from the thieves of data?

  • brandehhh

    Its their own fault…but hold millions of people’s futures in their untrustworthy “hands”

    • HarryObrian

      I used to work in a small town government but stopped because of all the hush hush corruption that goes on within. From simple ‘favours’ that only ‘friends’ get, to full blown inside information of future events that made people like builders millions of dollars and violated state and federal environmental and building codes. It’s sickening to realize the level of corruption that happens everyday in all facets of public governments and private companies.