Analyst Note| Rajiv Bhatia, CFA |
Wide-moat rated Experian's fiscal third-quarter trading update shows that the company is faring well as the COVID-19 pandemic continues. During the quarter, Experian generated 7% year-over-year organic constant currency revenue growth, an improvement from the 5% year-over-year growth seen in the second quarter and 2% year-over-year growth seen during the first half of fiscal 2021. Given that revenue is increasing faster than our expectations, we expect to modestly raise our fair value estimate.
Organic constant currency revenue growth was 9% year over year in North America, the same growth rate as the previous quarter. Latin America revenue growth was 13% year over year, an improvement from 10% year over year in the previous quarter driven by strength in decisioning products. U.K. and Ireland growth, though still negative, improved from an 8% year-over-year decline in the second quarter to a 2% year-over-year decline driven by strength in core credit bureau revenue. EMEA and Asia-Pacific continue to be soft but improved. EMEA revenue decreased 9% year over year (versus a 16% year-over-year decline in the second quarter) and Asia-Pacific revenue decreased 14% year over year (versus a 18% year-over-year decline in the second quarter).
Experian's management continues to invest in its consumer offering. With 5.7 million account connections for its Boost offering, Experian is on pace to double enrollment in fiscal 2021. Experian noted that many of its direct-to-consumer competitors have pulled marketing spending and as a result management sees an attractive opportunity to gain market share.