Equifax: Your Score & More - [Business Breakdowns, EP.130]

This is Matt Reustle and today we are breaking down the data services giant, Equifax. Experian, TransUnion, and Equifax have built this fascinating oligopoly worth studying, but the business has extended well beyond the credit checks on mortgages. Their employee verification tool, The Work Number, may be their most valuable asset today. To break down Equifax, I'm joined by Mo Spolan, analyst at Weitz Investments. We dive into both sides of the business, the unique industry structures that they sit in, the history around competition, and Equifax's future outlook. The newest podcast from Colossus, Art of Investing is dropping next week! This is going to be a series of discussions with the world's best investors, company builders, academics, athletes, artists, and any human beings devoted to exploring the joys of compounding in all its forms. The first two episodes will be released on Monday, October 9. Art of Investing: Trailer Interested in hiring from the Colossus Community? Click here. For the full show notes, transcript, and links to the best content to learn more, check out the episode page here. ----- This episode is brought to you by Tegus, the modern research platform for leading investors. Tired of running your own expert calls to get up to speed on a company? Tegus lets you ramp faster and find answers to critical questions more efficiently than any alternative method. The gold standard for research, the Tegus platform delivers unmatched access to timely, qualitative insights through the largest and most differentiated expert call transcript database. With over 60,000 transcripts spanning 22,000 public and private companies, investors can accelerate their fundamental research process by discovering highly-differentiated and reliable insights that can’t be found anywhere else in the market. As a listener, drive your next investment thesis forward with Tegus for free at tegus.co/patrick. ----- Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes. Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here. Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss | @ReustleMatt | @domcooke Show Notes (00:00:58) - (First question) - How Equifax extends beyond credit checks (00:05:02) - Evolution from the Wild West of credit to a tech-driven, regulated oligopoly (00:10:21) - Give-to-get model builds network; compiles detailed credit history (00:12:16) - How credit bureaus grow with GDP and loan volumes (00:15:19) - The shift from three to two credit checks for mortgages (00:23:16) - Facing cyclical shifts, credit bureaus' margins decline with IT investments (00:25:29) - How The Work Number, acquired by Equifax, has evolved into a critical income verification service (00:28:50) - Ingesting exclusive data, Equifax dominates income verification via a large network (00:32:51) - How Work Number stays atop the verification market despite competition (00:43:36) - Increasing Work Number margins lift Equifax; HR paperwork still strategically important (00:44:57) - Work Number poised for solid double-digit growth; boosts overall business outlook (00:51:15) - The 2017 Equifax breach led to executive shakeup and strategic focus shift (00:55:57) - Increasing competitive intensity, aggressive pricing, and potential regulation are key risks for Equifax (00:59:46) - Lessons learned from studying Equifax