Equifax (NYSE:EFX) Q4 2025 Earnings call February 04, 2026 08:30 AM ET Company ParticipantsBrendan Lynch - CFADavid Bother - Investment Banking VPJason Haas - CFAJohn Gamble - CFOMark Begor - CEOTrevor Burns - SVP of Investor RelationsConference Call ParticipantsAndrew Steinerman - Stock AnalystArthur Trusolve - Equity Research AnalystCraig Huber - Equity Research AnalystFaiza Alwy - Stock AnalystJeff Meuler - Stock AnalystKelsey Zhu - Senior Research AnalystKevin McVeigh - Stock AnalystScott Wurtzel - Equi ...

Equifax (NYSE:EFX) Q4 2025 Earnings call February 04, 2026 08:30 AM ET Company ParticipantsBrendan Lynch - CFADavid Bother - Investment Banking VPJason Haas - CFAJohn Gamble - CFOMark Begor - CEOTrevor Burns - SVP of Investor RelationsConference Call ParticipantsAndrew Steinerman - Stock AnalystArthur Trusolve - Equity Research AnalystCraig Huber - Equity Research AnalystFaiza Alwy - Stock AnalystJeff Meuler - Stock AnalystKelsey Zhu - Senior Research AnalystKevin McVeigh - Stock AnalystScott Wurtzel - Equi ...

Equifax (NYSE:EFX) Q4 2025 Earnings call February 04, 2026 08:30 AM ET Speaker2Good morning, and welcome to the Equifax Q4 2025 earnings conference call. At this time, all participants are in a listen-only mode. The question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. I will now turn the conference over to Trevor Burns, SVP of Invest ...

Financial Data and Key Metrics Changes - Equifax reported revenue of $1,540,000,000 for Q3 2025, an increase of over 7% in constant currency and reported dollars, exceeding the midpoint of July guidance by $25,000,000 [5][12] - Adjusted EPS was $2.4 per share, $0.12 above the midpoint of July guidance, reflecting stronger revenue growth and solid operating leverage [9][12] - Adjusted EBITDA margins were 32.7%, up 20 basis points sequentially [9] Business Line Data and Key Metrics Changes - USIS mortgage revenue increased by 26% in Q3, driven by stronger market volumes and lower mortgage rates [23][56] - EWS revenue grew by 5%, with government performance driving growth [10][13] - International revenue was up 7% in constant currency, with Canada showing strong growth of 11% [29] Market Data and Key Metrics Changes - Mortgage hard credit inquiries were down about 7%, better than expectations of a decline over 12% [6][12] - Total U.S. mortgage revenue accounted for 21% of Equifax's total revenue in the quarter [8] - The mortgage market decline, as measured by hard credit inquiries, was a nearly 150 basis point drag on revenue growth [44] Company Strategy and Development Direction - Equifax is focusing on leveraging its new cloud capabilities and efx.ai to drive innovation and new product development [32][57] - The company is expanding its VantageScore offerings in response to FICO's price increases, aiming to drive competition in the mortgage credit scoring market [25][28] - The strategy includes enhancing partnerships and developing new solutions to address government program integrity and improper payments [20][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in long-term mortgage activity improvement as inflation stabilizes and rates decrease [7][12] - The company anticipates continued strong performance in the fourth quarter and is raising full-year guidance for revenue and adjusted EPS [12][56] - Management highlighted the positive momentum from government engagements post-OB3 legislation, expecting significant growth opportunities in 2026 and beyond [19][21] Other Important Information - Equifax incurred a restructuring charge of approximately $44,000,000 for cost reduction actions, expected to yield annual savings of about $30,000,000 starting in late 2026 [4] - The company returned about $360,000,000 to shareholders in Q3 through share repurchases and dividends [56] Q&A Session Summary Question: Can you go into more detail on the mortgage pricing changes? - Management noted a groundswell of attention regarding FICO's price increase and the competitive response from Equifax, indicating active conversations with customers about VantageScore [60][62] Question: Can you elaborate on the margin guidance? - Management explained that the reduction in margin guidance is primarily due to increased variable compensation linked to stronger performance and a higher mix of mortgage revenue impacting gross margins [63][66] Question: What is the expected ramp-up in government discussions post-OB3? - Management indicated a mix of both immediate engagement and longer-term revenue opportunities, with states likely to start using solutions ahead of the fiscal year-end [68][70] Question: What is driving the increase in general corporate expenses? - The increase is attributed to higher variable compensation resulting from stronger performance and revenue growth [72][74] Question: What factors explain the difference in mortgage growth between USIS and EWS? - The disparity is largely due to the timing of mortgage activity benefits, with USIS seeing earlier benefits from lower rates compared to EWS [77][78]

Financial Data and Key Metrics Changes - Equifax reported revenue of $1.54 billion, an increase of 8% in constant currency and 7% reported, marking the highest quarterly revenue in the company's history [7] - Adjusted EPS was $2.00, exceeding the midpoint of guidance by $0.10, with an adjusted EBITDA margin of 32.5% [9][12] - Free cash flow for Q2 was $239 million, up over $100 million from the previous year, with expectations to generate over $900 million in free cash flow for 2025 [43] Business Line Data and Key Metrics Changes - Workforce Solutions revenue grew by 8%, driven by a 10% increase in verifier revenue and a 14% increase in government revenue [13] - USIS revenue increased by 9%, with mortgage revenue up 20% and non-mortgage revenue growth of over 4% [10][21] - International revenue grew by 6% in constant currency, with strong growth in Latin America and Europe [25] Market Data and Key Metrics Changes - Mortgage hard credit inquiries declined by 8.5%, with expectations for a further decline of over 13% in the second half of 2025 [29][32] - The U.S. hiring market remains weak, impacting overall revenue growth in talent solutions [14][33] - Economic uncertainty continues to affect hiring trends and mortgage volumes, with corporate expenses expected to rise due to litigation costs [36][37] Company Strategy and Development Direction - Equifax is focusing on leveraging cloud capabilities to drive innovation and new product development, with a vitality index of 14% indicating strong new product introductions [26][49] - The company is increasing its vitality outlook for 2025 from 11% to 12%, reflecting confidence in future growth [12] - A new capital allocation framework includes a $3 billion share repurchase program and a 28% increase in quarterly dividends [43] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding economic uncertainties, inflation, and interest rates, holding full-year guidance steady despite strong first-half performance [12][48] - The company anticipates continued challenges in the mortgage market but sees potential for growth in government services due to new federal requirements [19][72] - Management remains optimistic about long-term growth, projecting organic revenue growth of 7% to 10% and a focus on multi-data solutions [45][49] Other Important Information - The company repurchased $127 million in shares during the quarter as part of its share repurchase program [12] - Adjusted EBITDA margins are expected to be flat year-over-year, impacted by higher corporate costs and litigation expenses [37][84] Q&A Session Summary Question: Can you provide perspective on the Twin State agency headwinds? - Management indicated that challenges stem from changes in federal data reimbursement policies and state budget complexities, affecting near-term performance [51][54] Question: What are the new mortgage pre-qual products driving strength? - The Twin Indicator product is gaining traction, helping to win market share in pre-qualification and pre-approval stages [55][58] Question: What is mortgage revenue as a percentage of total revenues in Q2? - Mortgage revenue accounted for 22% of total revenues, remaining flat [63] Question: What visibility exists for the government business in the second half? - Management noted that visibility is challenging due to state budget constraints and the impact of prior federal policy changes, but remains optimistic for future growth [67][72] Question: Can you elaborate on the litigation costs? - Litigation costs are driven by both general legal expenses and an increase in small claims, which are expected to continue into 2026 [86]

Financial Data and Key Metrics Changes - Equifax reported revenue of $1.54 billion, an increase of 8% in constant currency and 7% reported, marking the highest quarterly revenue in the company's history [5][10] - Adjusted EPS was $2.00, exceeding the midpoint of April guidance by $0.10, with an adjusted EBITDA margin of 32.5% [7][10] - Free cash flow for Q2 was $239 million, up over $100 million from the previous year, with expectations to generate over $900 million in free cash flow for 2025 [43][44] Business Line Data and Key Metrics Changes - Workforce Solutions revenue increased by 8%, driven by a 10% growth in verifier revenue and a 14% increase in government revenue [11][12] - USIS revenue grew by 9%, with mortgage revenue up 20% and non-mortgage revenue up over 4% [8][19] - International revenue saw a 6% increase in constant currency, with strong growth in Latin America and Europe [22][24] Market Data and Key Metrics Changes - Mortgage hard credit inquiries declined by 8.5% year-over-year, impacting home purchase and refinance activity [28][29] - The U.S. hiring market remained weak, with overall BLS data showing only slight increases compared to last year [12][30] - International growth was led by Latin America, with an 11% increase, while Canada experienced only 1% growth due to economic conditions [22][24] Company Strategy and Development Direction - The company is focusing on leveraging cloud capabilities and multi-data solutions to drive innovation and growth [25][50] - Equifax is increasing its vitality outlook for 2025 from 11% to 12%, indicating strong performance in new product introductions [10][25] - The company is committed to expanding its government business in response to new federal programs and verification requirements [15][17] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding economic uncertainties, inflation, and hiring trends, holding full-year guidance steady despite strong first-half performance [10][30] - The company anticipates continued challenges in the mortgage market but sees potential for growth as interest rates decline [28][29] - Management remains optimistic about long-term growth, projecting a 7% to 10% organic growth framework [45][48] Other Important Information - The company repurchased $127 million in shares under a $3 billion share repurchase program [10][43] - Corporate expenses increased to $152 million, primarily due to higher litigation costs [35][90] - The company is investing in new solutions that combine traditional and alternative credit data to enhance its offerings [50][26] Q&A Session Summary Question: Can you provide perspective on the Twin State agency headwinds? - Management indicated that challenges stem from changes made by the Biden administration regarding data reimbursements, affecting state budgets and contract timing [52][53] Question: What are the new mortgage pre-qual products driving strength? - The Twin Indicator product has been positively received in the market, helping to gain share in pre-qualification stages [55][56] Question: What is mortgage revenue as a percentage of total revenues in Q2? - Mortgage revenue accounted for 22% of total revenues [63] Question: What is the visibility and assumptions for the government business in the second half? - Management noted that visibility is challenging due to state budget constraints and the impact of prior administration policies [66][70] Question: Can you elaborate on the trends in the talent segment? - The talent market has shown weakness, impacting revenue guidance, with specific challenges in criminal data services due to shifts in customer relationships [72][90]