Equifax Q3 Earnings Call Highlights

Key Points

• Equifax exceeded third-quarter adjusted EPS guidance, reporting revenue of $1.693 billion, up 10%, and adjusted EPS of $2.26, up 11%. Profitability benefited from diversified-market growth, operating leverage, AI productivity initiatives and cost management despite mortgage weakness.
• Higher mortgage rates pressured the outlook. Equifax expects full-year U.S. mortgage revenue to come in about $80 million below its July forecast and projects 2027 mortgage transactions to decline by a high-single-digit percentage from 2026.
• Management highlighted growth opportunities and shareholder returns, including rising VantageScore adoption, strong international and Workforce Solutions performance, and the planned $750 million acquisition of Mexico’s Círculo de Crédito. The company raised its 2026 EBITDA-margin expansion outlook and returned about $850 million to shareholders year to date.

Equifax NYSE: EFX reported third-quarter 2026 results that exceeded its adjusted EPS guidance despite a sharp late-quarter weakening in the U.S. mortgage market, as growth in diversified markets and productivity initiatives supported profitability.

Chief Executive Officer Mark Begor said revenue totaled $1.693 billion, up 10% on a reported basis and 9% in constant currency. Adjusted EPS rose 11% to $2.26, above the high end of the company’s guidance range. Revenue was slightly below the midpoint of its July outlook, however, after a mortgage-market decline reduced third-quarter revenue by about $20 million relative to expectations.

Begor said 30-year fixed mortgage rates increased by about 75 basis points since July, reaching roughly 7.5% in September versus 6.6% when Equifax issued its prior guidance. The higher-rate environment weakened mortgage transaction volumes, particularly during the second half of the quarter.

Excluding FICO-related mortgage revenue, Equifax’s revenue grew 7%, in line with the midpoint of its prior guidance. Diversified-markets revenue increased more than 8%, exceeding the company’s mid-single-digit outlook. Adjusted EBITDA margins excluding FICO expanded 130 basis points year over year, which Begor attributed to operating leverage, AI-related productivity and cost management.

Workforce Solutions and USIS Results

Workforce Solutions revenue increased 7% in the third quarter. Diversified-markets revenue grew 9%, while verified diversified-markets revenue rose 13%. Mortgage revenue was approximately flat from a year earlier, as growth from new products, pricing and record additions was offset by the weaker housing market.

The Workforce Solutions government business grew at a mid-single-digit rate. Equifax said it signed agreements with state agencies totaling more than $550 million in annual contract value year to date, including approximately $150 million in new business and $400 million in renewals. The company expects those agreements to benefit the government vertical principally in 2027.

Begor said the company is also discussing new requirements related to Medicaid work obligations and SNAP program accuracy. Equifax offers income and employment verification products intended to support the administration of social-service programs, including its Continuous Evaluation for SNAP and Complete Income offerings.

Within Workforce Solutions, talent solutions revenue rose more than 20%, aided by product penetration, new offerings and pricing. Consumer lending revenue grew at a high-double-digit rate, while employer services revenue declined 5% following the suspension of the Work Opportunity Tax Credit program. Workforce Solutions adjusted EBITDA margin was 51.4%.

The Work Number database ended the quarter with 223 million active records, up 12%, including 125 million current active records, up 11%. The company said those records represent 110 million unique individuals or Social Security numbers.

U.S. Information Solutions, or USIS, posted 6% diversified-markets revenue growth. Business-to-business revenue rose 5%, supported by high-single-digit online growth in financial institutions and mid-single-digit online growth in auto. Consumer-direct revenue increased 9% on subscriber growth and partner-channel wins.

USIS mortgage revenue increased 28%, or low single digits excluding FICO. Begor said the segment outperformed the underlying mortgage market through share gains in prequalification and preapproval products, as well as pricing. USIS adjusted EBITDA margin was 35.4%; excluding FICO royalties, the margin was 42.4%, up more than 320 basis points from a year earlier.

Mortgage Outlook and VantageScore Adoption

Chief Financial Officer John Gamble said the company now expects full-year U.S. mortgage revenue to be about $80 million below its July forecast. Mortgage revenue excluding FICO royalty pass-through revenue is expected to be slightly higher than in 2025, against estimated U.S. mortgage originations that are down 6.5% to 7.5%.

For the fourth quarter, Equifax expects mortgage revenue to be about $60 million below its July outlook. Gamble said fourth-quarter mortgage revenue is expected to decline by a mid-single-digit percentage year over year, while mortgage revenue excluding FICO royalty-related revenue is expected to fall by a mid-double-digit percentage.

Using current transaction levels and normal seasonality, the company expects 2027 mortgage-market transactions to decline by a high-single-digit percentage from 2026, with the bulk of the decline occurring in the first eight months of the year.

Equifax also highlighted adoption of VantageScore 4.0 after the Federal Housing Finance Agency accelerated its use for conforming mortgages. The company said about 2,000 mortgage lenders are using VantageScore in underwriting processes, up sevenfold since April, and mortgage VantageScore volume has increased more than 230% over that period.

While most lenders continue to purchase FICO scores and receive a free VantageScore, Equifax said more than 200 lenders are exclusively using VantageScore. The company plans to maintain a $1 VantageScore price through the end of 2028. Begor said full conversion from FICO scores to VantageScore would provide roughly $35 million of incremental margin to Equifax at current mortgage activity levels.

Management also addressed potential industry movement from tri-merge mortgage credit reports to two-bureau reports. Equifax estimated a potential annual revenue impact of about $80 million, based on 2026 revenue, if GSE-related originations moved to a two-bureau model. The company characterized the potential impact as manageable and said it has differentiating products, including The Work Number Indicator and telecommunications and utility-data attributes.

International Growth, Acquisition and Guidance

International revenue increased about 7% in constant currency. Asia-Pacific revenue rose 12%, including 11% growth in Australia, while Latin American revenue increased 8%. Canada and Europe each grew 4%, with market headwinds affecting growth in Canada and the United Kingdom.

Equifax expects to close its $750 million acquisition of Mexico-based credit bureau Círculo de Crédito during the fourth quarter. Begor said Círculo’s revenue rose 24% over the 12 months through September and its EBITDA margin was 47%. Equifax expects the acquisition to be accretive to adjusted EPS in the first full year of ownership.

For full-year 2026, Equifax now expects revenue of $6.661 billion at the midpoint, EBITDA of $2.125 billion and adjusted EPS of $8.50 at the midpoint. The company raised its outlook for EBITDA margin expansion excluding FICO mortgage royalties to 100 basis points from 75 basis points.

Fourth-quarter revenue is projected at $1.605 billion to $1.635 billion, with adjusted EPS of $2.07 to $2.17. Equifax expects more than $1 billion in 2026 free cash flow and cash conversion of at least 100%.

The company returned $158 million to shareholders during the third quarter and about $850 million year to date, including $92 million of share repurchases in the quarter. Begor said Equifax has the financial capacity to complete the Círculo acquisition and continue repurchasing shares while maintaining its balance sheet.

About Equifax (NYSE:EFX)

Equifax Inc NYSE: EFX is a global data, analytics and technology company that provides information and services to help businesses, governments and consumers make informed financial and workforce decisions. The company is best known for its credit reporting activities, but its offerings also include identity verification, fraud prevention, income and employment verification, marketing services and risk management solutions.

Equifax provides consumer and commercial credit information, credit reports and related analytics to lenders and other businesses.

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