Arthur Truslove

Arthur Truslove sought clarification on whether the dollar contribution per mortgage inquiry would be higher, lower, or the same in 2026 compared to 2025, given Equifax calculates the FICO score. He also asked if the USIS long-term framework assumed significant organic growth benefit from FICO aggressively raising prices annually.

Answer

CEO Mark Begor confirmed that margin dollars per mortgage inquiry will be higher in 2026 due to the increased price of Equifax's credit file, clarifying that while the margin rate is impacted by the zero-margin FICO pass-through, absolute margin dollars will increase. CFO John Gamble reiterated that EBITDA, EPS, and cash flow are unchanged regardless of who sells the score. Begor stated that the 2021 USIS long-term framework did not assume FICO's dramatic price increases, which is why Equifax will now report performance with and without FICO pass-through.

Arthur Truslove sought clarification on whether the dollar contribution per mortgage inquiry would be higher, lower, or the same in 2026 compared to 2025, given Equifax calculates the credit score using the FICO algorithm. He also asked if Equifax's long-term framework for USIS assumed a significant benefit from FICO raising prices annually.

Answer

Mark Begor, Chief Executive Officer, confirmed that the margin dollars per mortgage inquiry would be *higher* in 2026 due to the price increase on Equifax's credit file, contributing to overall low double-digit EBITDA growth. John Gamble, Chief Financial Officer, reiterated that EBITDA, EPS, and cash flow are unchanged whether the score is sold by CRA or Equifax. Mr. Begor stated that the 2021 long-term framework for USIS did *not* assume significant annual FICO price increases, which is why Equifax now highlights the FICO impact to provide better visibility into underlying performance and the strong 75 basis points ex-FICO margin expansion.

Arthur Truslove asked about the medium-term outlook for FICO's pricing strategy and its potential impact on Equifax's growth, given its significant contribution to recent USIS mortgage revenue.

Answer

CEO Mark Begor deferred questions on FICO's strategy to FICO itself but emphasized that Equifax's long-term growth framework, as presented at its Investor Day, does not rely on substantial mortgage pricing pass-throughs. He expressed confidence in the company's ability to grow through its many other levers across the entire business.

Arthur Truslove asked how much of the Q1 acceleration in USIS non-mortgage was due to market conditions versus post-cloud execution, and requested quantification of the cloud-related cost benefits in the quarter.

Answer

CEO Mark Begor attributed the 'vast majority' of the USIS non-mortgage outperformance to post-cloud execution, stating the market was unchanged from Q4. He highlighted the team's renewed focus on customers and innovation. CFO John Gamble confirmed the USIS cloud migration is complete but declined to quantify the cost savings, instead pointing to the strong margin expansion as evidence of the benefit.

Arthur Truslove questioned why the 2025 USIS margin expansion is only 100 bps given cloud savings, confirmed the basis for the -12% mortgage forecast, and asked for the margin impact of onboarding TWN partners.

Answer

CFO John Gamble cited lower revenue growth and the margin-percentage dilutive effect of supplier price pass-throughs as constraints on USIS margin. CEO Mark Begor confirmed the mortgage forecast is 100% based on the sharp decline seen in recent weeks. Management noted partner onboarding incentives are dilutive but did not quantify the impact.

Arthur Truslove of Citigroup asked when management became aware of the Q1 demand pull-forward, as it wasn't recalled from the Q1 call, and inquired about the contribution of pricing to Q2's organic growth.

Answer

EVP & CFO Ryan Robinson clarified that the company did mention the potential for pull-forward in the Consumer business on the Q1 call. He also stated that for testing businesses in Q2, the contributions from price and volume to organic growth were similar, with a slight weighting towards price. President & CEO Jennifer Scanlon added that the company continues to implement its value-based pricing strategy through its new CPQ system.

Arthur Truslove from Citi asked about the magnitude of any Q1 demand pull-forward, the contribution of pricing to organic growth, and the performance of the company's labs in China.

Answer

CFO Ryan Robinson noted a potential small pull-forward in the Consumer segment and stated that price and volume contributed fairly evenly to organic growth. CEO Jennifer Scanlon reported that China had 'outstanding performance' and that new labs there are improving the company's cost position.

Arthur Truslove of Citi asked about the margin impact from FX, which segment was most affected by the pull-forward of ongoing certification revenue, and the role of staff incentives in the Consumer segment's Q4 margin performance.

Answer

CFO Ryan Robinson explained that while FX creates a revenue headwind, it is mostly offset by translated expenses, with the Consumer segment being more susceptible. He indicated the ongoing certification pull-forward had a larger impact on the Industrial segment. He also clarified that incentive expense amounts in Q4 2024 were very similar to Q4 2023, so they were not a material driver of margin changes.