Morning Note: Market News and an Update from Experian
Market News
Global equities headed for their longest losing streak in more than two months as inflation fears pushed bond yields higher and weighed on valuations. In the US, both the major indices fell last night – S&P 500 (0.7%); Nasdaq (0.8%) – with the subdued tone continuing in Asia this morning: Nikkei 225 (-1.2%); Hang Seng (-0.5%); Shanghai Composite (-0.2%). Nvidia reports after-hours this evening. Sales are expected to grow 80% in the first quarter as investors focus on the firm’s update on production and competition.
The yield on the US 10-year Treasury is currently 4.65%, while gold is steady at $4,482 an ounce, after tumbling nearly 2% in the previous session. The yield on 20-year JGB slid after a strong auction.
Xi Jinping warned against resuming military operations in the Middle East as he began talks with Vladimir Putin in Beijing. “A comprehensive ceasefire is imperative,” Xi said. India is preparing to send vessels through the Strait of Hormuz to load up energy cargoes from Middle East suppliers, people familiar said. Brent Crude trades at $110 a barrel.
The EU finalised the text of its long-delayed US trade deal ahead of Donald Trump’s threatened deadline for higher tariffs. The deal would eliminate EU tariffs on US industrial goods in exchange for a 15% tariff ceiling on EU exports.
UK inflation fell to 2.8% in April, more than economists estimated. Separately, Rachel Reeves privately proposed voluntary supermarket price freezes to ease cost-of-living pressures. The 10-year Gilt yield slipped to 5.08%, while Sterling trades at $1.3395 and €1.1545. The FTSE 100 is currently down 0.4% at 10,293.
Andy Burnham’s commitment to uphold the UK’s borrowing limits may win the would-be PM a reprieve with bond investors but it raises new questions about whether he would need to raise taxes to fund a more ambitious agenda.
Company News
Experian has released results for the financial year to 31 March 2026 which were at the upper end of management expectations driven by strong strategic momentum. Although the company has taken a prudent approach to macroeconomic uncertainties linked to the Middle East, it expects another year of strong growth in FY2027, with organic revenue growth of 6%-8% and margins at the higher end of its medium-term framework. However, in response the shares are down 4% 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 200m 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 company aggregates it, applies analytics and tools, and sells it back to the customers as a credit report. The industry operates as an oligopoly 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 Great Financial Crisis (GFC) of 2008 and the COVID-19 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 would highlight that AI is only as good as the data it’s trained on. Large Language Models can't see private bank accounts or individual credit histories due to strict regulatory frameworks. As a result, we believe Experian is relatively well placed given its hard-to-replicate proprietary datasets with scope to accelerate product innovation and increase operational efficiency, ultimately enhancing margins. AI has made identity theft and fraud incredibly easy to scale (e.g. deepfake voices for bank authorisation or AI-generated synthetic identities), forcing banks and other businesses to upgrade their defences. In 2025, Experian’s fraud prevention tools, such as Ascend, helped clients avoid $19bn in losses. Furthermore, AI generated a 10-15% uplift in coding productivity in FY2026. Labour costs, at 32% of revenue, are over 300 basis points lower than two years ago.
We note the announcement last week from Fair Isaac (FICO), the company behind the credit scores that lenders use, of the launch of a new Direct License Program for mortgages. Traditionally, Experian (along with its rivals) acts as the middleman, ‘marking up’ FICO scores and re-selling them to lenders. FICO’s new programme allows lenders to bypass the credit bureaus to some extent, threatening a high-margin revenue stream. That said, FICO still cannot generate a score without the bureaus' raw data.
Although the company is listed in the UK, it reported its results in US dollars.
In the year to 31 March 2026, revenue from ongoing activities grew by 11% at constant exchange rates to $8,425m. In organic terms (i.e., underlying before M&A), growth was 8%, in line with guidance to be at the top-end of the 6%-8% range. Organic growth accelerated to 9% in the final quarter. Growth was driven by new product innovation, client wins, and consumer expansion.
The company continued to leverage its scaled proprietary data assets, strong technology foundations and deep expertise to deliver on its strategic priorities and crystallise new AI opportunities. As planned, the company largely completed its cloud migration in North America and Brazil, and remains on track to deliver material cost savings as dual-run costs begin to decline.
All regions contributed to organic revenue growth during the year. In the group’s largest division, North America, which accounts for more than two-thirds of revenue, organic growth was 10%. Financial services generated strong growth (+14%), while Consumer Services delivered underlying organic revenue growth of 6%. Elsewhere, Latin America and EMEA/Asia Pacific grew by 8% and 5% respectively. Growth in the UK & Ireland was only 2% as strong Consumer Services results were offset by ongoing macro headwinds.
By division, B2B revenue (73% 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 9% and 7% respectively. The Consumer Services unit (27% of revenue) grew by 9% in organic terms, driven by audience expansion, enhanced engagement, and increased product penetration. The company now serves over 215m free members globally.
‘Benchmark’ operating profit from ongoing activities grew by 13% at constant exchange rates to $2,407m, with the margin up by 60 basis points at constant currency to 28.6%, above the medium-term framework to grow by 30-50 basis points. Growth was driven by continued scaling of Consumer Services and improving operational efficiency through AI-driven productivity initiatives. ‘Benchmark’ EPS rose by 15% to 179.8c.
The business is very cash generative, with conversion of 93% and operating cash flow up 10% to $2.2bn. The post-tax return on capital employed rose from 16.6% to 17.2%. The group ended the period with financial leverage of 1.7x 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 8.6% of revenue – the company generated $2bn of revenue from new and scaling products, including Ascend modules and consumer marketplaces. The group invested $792m on four acquisitions to support strategic growth. This included AtData which adds significant depth to the group’s email intelligence, bringing over 10bn email addresses into Experian’s data assets.
The dividend was raised by 11% to 69.25c, amounting to a yield of 2%. The group also spent $725m on repurchasing its own shares and has today announced a further $1bn programme to run until June 2027.
For FY2027, the group continues to expect to deliver another year of double-digit Benchmark EPS growth, underpinned by total revenue growth of 8–11%, organic growth of 6–8%, and margin expansion at the higher end of its medium-term framework of 30-50 basis points, at constant currency, driven by operating leverage, the reduction in dual-run costs, and continued AI-led productivity gains.
