Equifax Breach Costs Top $242M As Q1 Revenue Grows 4 Percent

Equifax’s ongoing data breach recovery efforts will soon bring a new chief technology officer and other top security and IT talent to the credit scoring firm, company leadership said Thursday (April 26) during a post-earnings conference call.

Equifax posted a 4 percent revenue increase in the first quarter of 2018, to $865.7 million, beating the Zacks Consensus Estimate of $854 million. But the massive expense of that hack continues to mount, and the company’s net income took a beating, though its earnings of $1.43 per share was $0.06 higher than the consensus.

Net of insurance recoveries, Equifax spent $68.7 million in the first quarter on costs related to last year’s breach, which exposed sensitive information on an estimated 148 million consumers — including the credit card account numbers for 250,000 individuals. The company so far has spent $242.7 million on breach costs, and more is likely to come, with Equifax in March predicting a further $275 million in related expenses.

The breach could turn out to be the most expensive of all time, according to a Reuters report.

The post-breach clean up goes beyond legal and investigative fees, technology and security investments, identity theft services and other areas. The credit scoring company also has not completed the hiring designed to shore up its defenses and repair its reputation in the market.

Equifax is “very close to landing a CTO from a leading company,” said CEO Mark Begor during the call. Begor himself took over the leadership chair in recent weeks, after Richard Smith retired as CEO in the wake of the breach’s disclosure.

In a nod to additional hiring practices, Begor said, “We are being very aggressive in attracting the absolute best talent in the IT and security space.” That comes on top of an equally aggressive effort to “regain the trust” of customers and shareholders, he added.

Hiring efforts will continue through the coming financial quarters. For 2018’s first quarter, however, revenue for U.S. Information Services reached $306.9 million, a 1 percent decrease year over year. International was a bright spot, driven in large part by sales in Asia-Pacific, with a 13 percent year-over-year increase, to $244.5 million. Workforce Solutions revenue increased 6 percent, to $211.1 million, while Global Consumer Solutions revenue decreased 3 percent, to $103.2 million.

U.S. consumer direct revenue declined 21 percent year over year. “We will not be doing any advertising in our U.S. Consumer Direct business through at least the second quarter 2018, and therefore we will see continued decline in revenue driven by customer churn,” Begor said on the call.

Net income decreased 41 percent year over year, to $90.9 million.