Morning Note: Market News and an update from credit data company Experian

Market News

US bonds gained – the 10-year Treasury yield slipped to 4.07% – after softer jobs data strengthened bets on a Federal Reserve interest-rate cut. Private data showed that US companies shed an average of 11,250 jobs per week in the four weeks ending 25 October. Gold continued its recovery and currently trades at $4,130 an ounce.

Global crude demand may rise 13% by 2050, the IEA said in its annual report, reversing its earlier view of a near-term peak. The stronger outlook hinges on a slower pace of EV adoption. Brent Crude moved back up towards $65 a barrel.

US equities were mixed last night – S&P 500 (+0.2%); Nasdaq (-0.3%) – with Nvidia and Tesla holding back big tech. Advanced Micro Devices jumped 5% in extended trading after the company predicted accelerating sales growth. FedEx also rose after saying its profit will improve this quarter, easing concerns over the holiday season.

Visa and Mastercard announced a revised settlement with merchants that, if approved, would end 20 years of litigation. The accord, which requires court approval, calls for Visa and Mastercard to lower swipe fees, which are now typically 2% to 2.5%, by 0.1 percentage points for five years.

In Asia this morning, equities were mainly higher: Nikkei 225 (+0.4%); Hang Seng (+0.9%); Shanghai Composite (-0.1%). Japan’s finance minister issued a fresh warning about FX moves after the yen edged toward 155 against the dollar.

The FTSE 100 is currently 0.2% higher at 9,914, while Sterling trades at $1.3150 and €1.1345. The Smithson Investment Trust is up 6% following the announcement of a proposal to roll over its assets into a new open-ended fund. The move aims to address the persistent discount to NAV that the company's shares trade on.  

Source: Bloomberg

Company News

Experian has today released its financial report for the six months ending 30 September 2025. Performance was strong, with revenue growth at the top end of management expectations. Guidance for the full year has been raised. In response, the shares are little changed in early trading.

Experian is a global information services company that helps businesses to manage credit risk, prevent fraud, target marketing offers, and automate decision-making. The group also helps individuals check their credit report and credit score and protect against identity theft. The company has credit data on 1.4bn people and 190m businesses. The ownership of such rich, unique, and valuable data has become more important in an increasingly digital world, and the group is targeting a total addressable market of more than $140bn.

Experian operates an attractive business model where its customers supply the company with raw credit history data for free. The bureau aggregates it, applies analytics and tools, and sells it back to the customers as a credit report. The industry operates as an oligarchy with high barriers to entry because of large historical databases and regulatory know-how.

The company has shifted from simply selling data to selling enhanced decision tools and analytics software which are essential in automating customers’ decisions, helping to reduce costs, and managing risk. As a result, customer relationships are very ‘sticky’, with renewal rates of 90%, and revenue is very resilient. The business has a long history of weathering uncertainty – notably, revenue grew in organic terms in both the GFC of 2008 and pandemic of 2020. Although credit application volumes slow in a recession, we believe the company has a natural hedge of risk management and asset protection products, as well as exposure to healthcare and other defensive segments.

Regarding the potential opportunities and threats posed to the business by AI, we believe the company is well placed given its hard-to-replicate proprietary datasets with scope to accelerate product innovation and increase operational efficiency, ultimately enhancing margins. In the last financial year, the company made good progress on its cloud programme, with significant new products and Generative AI features launched.

Although the company is listed in the UK, it reported its results in US dollars.

In the half-year to 30 September, revenue from ongoing activities grew by 12% at constant exchange rates to $4,058m. In organic terms (i.e., underlying before M&A), growth was 8%, at the top-end of its full-year guidance range of 6%-8%. Growth was driven by new product innovation, client wins, and consumer expansion.

The group saw growth in every region. In the group’s largest division, North America, which accounts for more than two-thirds of revenue, organic growth from ongoing activities was 10%. Financial services generated strong growth (+13%), while Consumer Services delivered underlying organic revenue growth of 12%. Elsewhere, Latin America and EMEA/Asia Pacific grew by 4% and 6% respectively. Growth in the UK & Ireland was only 1% as strong Consumer Services results were offset by ongoing macro headwinds.

By division, B2B revenue (72% of the total) was up 8% in organic terms, driven by new product innovation and key client wins. Within B2B, Financial Services and Verticals were up 8% and 7%, respectively. The Consumer Services unit (28% of revenue) grew by 9% in organic terms, driven by audience expansion, enhanced engagement, and increased product penetration. The company now serves over 208m free members. Excluding a c.4% headwind from one-off data breach services, Consumer Services organic revenue growth was 13%.

‘Benchmark’ operating profit from ongoing activities grew by 14% to $1,149m, with the margin up by 50 basis points on a comparative basis to 28.3%, driven by strong progress in internal productivity from AI enablement across the workforce. ‘Benchmark’ EPS rose by 13% to 85c.

The business is very cash generative, with conversion of 77% in the seasonally weaker half of the year and operating cash flow up 25% to $885m. The group ended the period with financial leverage of 1.8x net debt to EBITDA, below the target range of 2.0x-2.5x.

Cash flow is sensibly reinvested in organic and strategic investments that generate attractive returns. Capital expenditure focused on data, technology, and new products represented 8% of revenue and the group invested $377m in acquisitions to support strategic growth. The first-half dividend was raised by 10% to 21.25c and the group spent $194m of its $200m share repurchase programme.

For FY2026, the group now expects to deliver organic revenue growth of 8%, at the top-end of its 6%-8% target range, and margin expansion in line with the group’s medium-term framework of 30-50 basis points, at constant currency and on an ongoing basis. Looking further ahead, the company expects the combination of economic recovery, continued new product and vertical market expansion, as well as productivity gains from technology cloud transition to drive strong financial performance.

Source: Bloomberg