Equifax(US:EFX)2025-10-21 13:30Financial 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]