Equifax - Earnings Call - Q3 2025

Executive Summary

• Q3 delivered revenue and adjusted EPS beats vs S&P Global consensus: revenue $1.545B vs $1.522B*, and adjusted EPS $2.04 vs $1.94*, aided by stronger US mortgage volumes late in the quarter, USIS mortgage growth of 26%, and EWS government strength.
• Management raised FY25 guidance: revenue to $6.03–$6.06B (vs ~“about $6.0B” midpoint in July), adjusted EPS to $7.55–$7.65 (midpoint +$0.12), and FCF to $950–$975M (from $900M+), citing operating momentum and >100% cash conversion.
• Segments: USIS +11% with 26% mortgage growth and 5% non‑mortgage; EWS +5% (Verifier +5%, government high‑single digit); International +6% reported/+7% LC, with margins up 360 bps YoY.
• Strategic catalysts: new mortgage score pricing (VantageScore 4.0 at $4.50/score in 2026) to accelerate conversions and potentially add $100–$200M of annual profit at full adoption; Vitality Index hit a quarterly record 16% (FY guide to 13%) as EFX.AI and cloud scale.

What Went Well and What Went Wrong

What Went Well

• Broad-based growth and beats: revenue $1,544.9M (+7% YoY) and adjusted EPS $2.04 (+10% YoY) exceeded the July outlook; USIS mortgage +26% and total USIS +11% drove upside.
• Record product momentum: Vitality Index 16% in Q3 (FY raised to 13%) on EFX Cloud and EFX.AI; management: “quarterly record” vitality, “accelerating free cash flow” enabling $360M returned to shareholders.
• International margin expansion: adjusted EBITDA margin up to 31.3% (+360 bps YoY) from cloud benefits; LATAM and Canada led growth.
  “Adjusted EPS of $2.04 per share was $0.12 above the midpoint of our July guidance, reflecting stronger revenue growth and solid operating leverage.” — CEO.

What Went Wrong

• Mix and incentive comp pressured margins: company-level adjusted EBITDA margin held flat YoY at 32.7%, as higher variable compensation and a higher mortgage mix weighed on margins despite stronger revenue.
• Hiring softness continued: Talent Solutions growth remained modest given weak U.S. hiring, especially white-collar, tempering EWS Employer Services (+1%).
• Government volatility risk: while momentum improved post‑OB3, management cautioned a prolonged U.S. federal shutdown could defer verification activity; guidance assumes no material extension.

Transcript

Speaker 3

Greetings and welcome to the Equifax Inc. Q3 2025 earnings conference call and webcast. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. You may be placed into question queue at any time by pressing star one on your telephone keypad, and we ask that you please ask one question, one follow-up, then return to the queue. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Trevor Burns, Senior Vice President, Head of Corporate Investor Relations. Trevor, please go ahead.

Speaker 5

Thanks, and good morning. Welcome to today's conference call. I'm Trevor Burns. With me today are Mark Begor, Chief Executive Officer, and John Gamble, Chief Financial Officer. Today's call is being recorded, and an archive of the recording will be available later today in the IR Calendar section of the News and Events tab at our Investor Relations website. During the call, we'll be making reference to certain materials that can be found in the Presentation section of the News and Events tab at our IR website. Also, we'll be making certain forward-looking statements, including fourth quarter and full-year 2025 guidance, as well as our long-term financial framework to help you understand Equifax and its business environments. These statements involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from our expectations.

Certain risk factors that may impact our business are set forth in filings with the SEC, including our 2024 10-K and subsequent filings. In the third quarter, Equifax incurred a restructuring charge for cost reduction actions as we continue to streamline our operations globally, as we complete the new Equifax Cloud™, advance our global data and application cloud infrastructure, and deploy EFX.AI™ capabilities across the organization to drive cost savings. These charges totaled about $44 million and are expected to deliver ongoing savings when completed by late 2026 of about $30 million per year. We will also be referring to certain non-GAAP financial measures, including adjusted EPS, adjusted EBITDA, and cash conversion, which will be adjusted for certain items that affect the comparability of our underlying operational performance.

These non-GAAP measures are detailed in reconciliation tables, which are included with our earnings release and can be found in the Financial Results section of the Financial Info tab at our IR website. Now I'd like to turn it over to Mark.

Speaker 11

Thanks, Trevor. Turning to slide four, Equifax had a strong third quarter with revenue of $1.54 billion, up over 7% in constant currency and reported dollars. Revenue was $25 million above the midpoint of our July guidance, driven by outperformance in U.S. mortgage and EWS and USIS non-mortgage. About two-thirds of the revenue outperformance was in USIS mortgage from stronger market volumes later in the quarter off lower mortgage rates. Mortgage hard credit inquiries were down about 7%, but better than our expectations of down over 12%, with the 30-year mortgage rate dropping just below 6.5% in September. Total U.S. mortgage revenue was up a strong 13% in the quarter. In September, we saw modest mortgage inquiry activity increases. We believe this improvement was likely led by mortgage refi activity off the lower rates.

New home purchase activity appears to be remaining at the lower levels we've seen throughout 2023, reflecting continued low home inventory levels, elevated home prices impacting affordability, and prospective home buyers waiting for further mortgage rate reductions. U.S. mortgage revenue was 21% of Equifax revenue in the quarter. John will cover our expectations for mortgage activity in the fourth quarter shortly, but we continue to believe that mortgage activity will improve over the long term towards the 2015 to 2019 levels as inflation comes under control and rates come down. EWS non-mortgage revenue was better than expected, principally from strong high single-digit revenue growth in EWS government driven by state penetration.

We've seen a meaningful acceleration of post-OB3 discussions as both federal and state agencies move towards implementation of new solutions to comply with the more stringent income and work requirements in OB3, and this is a very encouraging sign for 2026 and 2027 EWS government growth. USIS had another good quarter of B2B non-mortgage revenue growth, up about 150 basis points sequentially, as they are focused on customers and growth in a post-cloud mode. FX had an immaterial impact on revenue in the quarter and was consistent with our July guidance. Adjusted EPS of $2.04 per share was $0.12 above the midpoint of our July guidance, reflecting stronger revenue growth and solid operating leverage. Adjusted EBITDA margins of 32.7% were up 20 basis points sequentially. Our business units continue to execute very well.

During the third quarter, EWS saw revenue growth of 5%, better than our expectations, driven by the above-expectation high single-digit growth in government and 20% growth in consumer lending. EWS also continues to see strong growth with active records, which were up 9% versus last year. USIS revenue growth of 11% was also stronger than expected and well above their 6% to 8% long-term framework. USIS is gaining momentum post-cloud transformation, driving new product innovation and customer growth. In the quarter, USIS launched their new audit credit file with a twin indicator to differentiate our credit file and drive share gains. International constant dollar revenue was up 7%, consistent with their long-term framework. The international team continued strong progress towards cloud completion, which delivers margin expansion from legacy infrastructure decommissioning, and which is a tailwind to their margin expansion.

International adjusted EBITDA margins were up a strong 360 basis points versus last year. We made strong progress in NPIs in the quarter with a vitality index of 16%, which was a quarterly record, with strong new product rollouts like i9 Virtual that we are selling direct and through background screeners and payroll processors, raising our 2025 vitality guidance for the third time this year from 12% to 13%, given our continued strong performance and NPI pipeline. With our strong free cash flow, we returned about $360 million to shareholders, including repurchasing 1.2 million shares for $300 million, or about 1% of our shares outstanding. Given our strong three-quarter results, we are raising our full-year revenue guidance by $40 million and adjusted EPS by $0.12 per share.

With our strong operating performance, we're also increasing our free cash flow guidance to $950 million to $975 million, up from the $900 million we provided in July, with a cash conversion in excess of 100%, up from the 95% framework we had for the year. We have positive momentum from the strong third quarter as we move into the fourth quarter and head towards 2026. John will share more details on our fourth quarter and full guidance shortly. Turning to slide five, Workforce Solutions revenue was up 5% and stronger than expected, driven principally by government performance. Verifier revenue was up over 5% in the quarter, with non-mortgage verifier growth of about 7%.

Government revenue grew high single digits in the quarter and better than our expectations of mid-single-digit growth from state penetration and OB3 momentum, which is positive as we move past the impact from 2024 CMS funding changes. Talent Solutions revenue was up low single digits in the quarter and below our expectations from weaker hiring. Overall, U.S. hiring, particularly white-collar hiring, continued to be relatively weak in the third quarter, with overall BLS data down about 4% in July and August compared to last year. Underlying talent employment verification revenue continued to perform well in the third quarter, driven by new products, penetration, pricing, and records growth. EWS mortgage revenue was up 2% against a market, as measured by U.S. hard inquiries, that was down about 7% and was also slightly better than our expectations.

As a reminder, EWS mortgage inquiry volumes lag USIS credit inquiry volumes as credit is pulled earlier in the mortgage application cycle than income and employment data. USIS typically sees the benefits of mortgage shopping behavior earlier and to a greater extent than EWS. EWS mortgage revenue continues to benefit from record growth and pricing. Consumer lending continues to perform very well, with revenue up a strong 20% in the quarter from broad-based double-digit growth in P loans, auto, and card. Employer services revenue returned to positive growth in the quarter, up 1% and up over 250 basis points sequentially. We continue to see some weakness in i9 and onboarding revenue from the weaker hiring market across both blue-collar and white-collar segments. Workforce Solutions adjusted EBITDA margins of 51.2% were strong and slightly better than expected, driven by both higher than expected revenue growth and strong operating leverage.

Twin record additions were strong again in the third quarter, with 199 million active records up 9% and 113 million current records, which were up 6%. Twin database growth continues to add significant value for verifiers and contributors from the higher hit rates Twin delivers. We added five new partnerships this year on top of the 10 we added in the second half of last year and expect those new Twin relationships to contribute to record growth in the fourth quarter and in 2026. Our 100 million current SSNs are a great indicator of the long runway for Twin growth towards the 250 million income-producing Americans. Turning to slide six, we continue to engage in Washington and at the state level around the big focus on the estimated $160 billion of improper social service and tax payments, which we believe is a positive medium and long-term macro for Workforce Solutions.

In the second quarter, the president signed the OB3 legislation that provides strong future growth opportunities for our EWS government business from the increased focus on program integrity and the new requirements from OB3. Our discussions in Washington and with the state agencies are ramping rapidly post-OB3, given the strong value proposition from Twin on speed of social service delivery, caseworker productivity, and accuracy of income verifications, which drives a reduction in improper payments. The new OB3 bill tightened verifications in several areas, first in SNAP tying federal funding levels to error rates and enforcing work requirements. Today, over 80% of the states and territories do not meet the new OB3 6% income verification error rate for SNAP, with about 40% of states with an error rate over 10%.

At current error rates, nearly $12 billion in SNAP benefit costs would shift from the federal government to the states, making our Twin solutions even more attractive to drive those error rates down. Second, by adding community engagement or work requirements for certain Medicaid recipients, which we can verify with the hours worked that are included in the Twin dataset. Third, by increasing the frequency of CMS redeterminations for certain populations from 12 months to every six months. Last, by a broader tightening of income verification requirements that Twin delivers. As I mentioned, we've seen a meaningful increase in commercial discussions at the federal and state level post-OB3 signing in July. We're uniquely positioned with our differentiated Twin data assets to help support state agencies meet these new requirements, which we expect to be a big positive for our EWS government business in 2026, 2027, and beyond.

While the OB3 revenue opportunities will likely be in the second half of 2026 and 2027, the increased engagement at the state level presents opportunities in the near term to penetrate the approximately 50% of states not using Twin for CMS or SNAP verifications today. We are also continuing to ramp our engagement in Washington in order to support the administration's broader focus on program integrity and improper payments, on new programs that Twin indicator has historically not supported, including the IRS earned income tax credit, overtime data for the new IRS overtime requirements, and unemployment insurance. These are large potential new programs that will be positive growth drivers for EWS in the future. The EWS government team is also bringing new innovative solutions to federal and state agencies supporting the government's goal of reducing fraud, waste, and abuse.

New products, including continuous evaluation of state SNAP participant income data to verify changes in recipient incomes above program levels and reduce SNAP error rates, will be available this quarter from EWS. Continuous evaluation of state Medicaid hours work data will be available in mid-2026 as a new solution from Workforce Solutions to meet the OB3 work requirements. EWS Complete Income Solution, which was launched in the third quarter and supports states' ability to validate income through The Work Number, includes other sources of income such as gig work, self-employed wages, and non-earned income through permission services. We've already signed one state for this new solution and have several other states in our pipeline. This is a unique window of opportunity for our government vertical with the big focus on improper payments and the new OB3 bill.

EWS has significant opportunities for the medium and long-term revenue growth supporting government programs. We remain confident in our medium and long-term government vertical revenue growth framework at above the EWS long-term revenue growth framework of 13 to 15% as we grow into the large $5 billion government TAM. Turning to slide seven, USIS had a very strong quarter with revenue up 11% and much better than our expectations, principally led by mortgage revenue. Non-mortgage revenue was up 5% in the quarter and better than our expectations, a very positive sign as we look to the fourth quarter in 2026. B2B non-mortgage revenue was up about 5% in the quarter and up over 150 basis points sequentially as we continue to see a stable lending environment, although continuing at levels below longer-term norms.

We saw low double-digit revenue growth in auto and mid-single-digit revenue growth in FI, and all other B2B verticals in the aggregate were up low single digits. Financial marketing services, our B2B offline business, was up a strong 9% in the quarter from very strong revenue growth in our identity and fraud solutions enabled by the new Equifax Cloud™. We have not seen an increase in portfolio review spending that would be indicative of increased risk management activity in a weaker economic environment. Consumer solutions revenue continued to perform well at up 6%, and mortgage revenue in the quarter was up a very strong 26% and above our expectations. This strong growth was driven by mortgage volumes later in the quarter from a small decrease in rates, the benefit of FICO pass-through, and the performance of our new mortgage pre-approval products.

We continue to see strong interest in our pre-approval products with the Twin indicator. USIS adjusted EBITDA margin at 35.2% was up 130 basis points compared to last year. We are seeing the benefits of cost savings from our cloud migration, which we completed in the second half of last year, as well as operating leverage from revenue growth in the quarter. Turning to slide eight, two weeks ago, Equifax announced we are expanding our VantageScore 4.0 mortgage credit score offerings in response to FICO's aggressive price actions. FICO has taken up pricing for mortgage credit scores at a CAGR of over 100% per year over the last four years, including a 2X increase to $10 per score in 2026, even after losing their 30-year monopoly position with the federally guaranteed mortgages in July.

Importantly, we detailed steps to drive competition in the mortgage credit scoring market, drive conversion to VantageScore 4.0, and deliver over $100 to $200 million of savings to our mortgage customers and consumers. Specifically, VantageScore 4.0 for mortgage will be priced at $4.50 a score to accelerate conversions to the higher performing, lower cost VantageScore 4.0. We'll also hold the $4.50 price through the end of 2027 to give customers confidence in the conversion. In 2026, the trended credit file with the VantageScore 4.0 used in a mortgage hard inquiry is expected to be priced in line with the 2025 Equifax trended credit file with a FICO score. We are also going to deliver free Vantage scores through the end of 2026 to all mortgage, auto, card, and consumer finance customers who purchase FICO scores to drive customer acceptance and conversion.

As you know, we've added the new Twin indicator and key employment indicators, which are available on our mortgage pre-qual and pre-approval products at no cost to expand the value of the Equifax credit file and drive share gains. We're adding telco and utility attributes available on our trended mortgage pre-qual, pre-approval, and hard pull credit files also at no cost in 2026 to enhance the value of the Equifax credit file. We plan to incentivize our commercial teams to drive conversion to the VantageScore 4.0 so we can deliver the performance and cost savings to our customers. We believe these are significant steps to drive competition in the scores market while also differentiating the Equifax mortgage credit products.

Following FICO's doubling of their score pricing and Equifax's move to deliver 50% cost savings, we've seen a groundswell of interest from the industry and from mortgage resellers on using VantageScore 4.0 and have many direct mortgage customers either in production with VantageScore, in the contracting stage, or expressing very strong interest in converting to Vantage. As you can see from the left side of the slide, VantageScore 4.0 is expected to deliver an incremental $450 per score in profit to Equifax, which we would expect to generate at full adoption an incremental annual over $100 million of profit at current mortgage levels, an additional over $100 million of profit as the mortgage market recovers for a total of $200 million.

The incremental $200 million of annual profit would be additive to the over $700 million of Equifax EBITDA growth we've discussed previously as the mortgage market fully recovers to normal 2015 to 2019 levels in the future. Conversions like we're driving from FICO to VantageScore are not easy given FICO's 30-year monopoly in federally guaranteed mortgages. We believe FICO's 16X price increase over the past four years and unprecedented 2X price increase to $10 in 2026 provides the catalyst to accelerate Vantage conversion in the mortgage market. Equifax's focus is on delivering savings to our mortgage customers and consumers and margin expansion to Equifax in this new scores environment. We are not expecting to change our 2026 financial framework that we'll share with you in February for mortgage profit in our 2026 guidance as a result of the FICO increase or the new Vantage pricing.

We do expect the conversion to VantageScore 4.0 to be a positive for Equifax over the medium and longer term as those conversions unfold. Turning to slide nine, international revenue was up 7% in constant currency with broad-based revenue growth across all regions. Canada revenue was up 11% in the quarter, which is very strong sequential growth as the team is leveraging their cloud transformation to drive innovation and customer growth. Latin America revenue was up 9%, led by double-digit growth in Argentina and in Brazil. The Boa Vista business is performing very well, up 12% in the quarter versus last year as we bring new multi-data Equifax solutions to the Brazil market and we gain share. Europe and Asia-Pacific both had nice performances, up 4% in the quarter.

International adjusted EBITDA margins of 31.3% was up a very strong 360 basis points versus last year from revenue growth, operating leverage, and cost improvements from our cloud migrations. Turning to slide 10, in the third quarter, we delivered a vitality index of 16%, which was 600 basis points above our 10% long-term goal and a quarterly record. We saw strong double-digit vitality across all business units as we leverage our differentiated data, EFX.AI™, and new technology stack in a post-cloud environment. To date, we've launched over 150 NPIs in 2025, which is the most product launches ever through the third quarter and a very positive sign for the future and in 2026. Given our strong NPI performance, we're raising our full-year vitality index guidance by another 100 basis points to 13%, and this is our third vitality raise in 2025.

We're energized by our post-cloud completion momentum in innovation and new products. The next chapter of product innovation is deploying EFX.AI™ along with our cloud-native technology, our Ignite analytics platform, and proprietary data to deliver higher performing EFX.AI™-powered scores, models, and products to our customers. Our strategy is to expand from being a provider of data in analytics to also being an essential partner with AI-powered decision intelligence. We are realizing this vision with our recently announced Ignite AI Advisor solution. Part of a growing suite of EFX.AI™-enabled solutions and new to the Equifax Ignite ecosystem, Ignite AI Advisor uses a lender's own data alongside Equifax data to create clear, actionable insights that drive more informed decision-making for our customers. Lenders can ask questions through a generative AI chat with complimentary visual dashboard illustrations, dynamic charts, and graphs.

This enables lenders, particularly those from smaller organizations that may not have large in-house data and analytics staff, to easily compare information, discover new trends, and create new offers for their consumers and small businesses. We will formally launch additional EFX.AI™-powered innovations in the first quarter of 2026, including our powerful new EFX IQ capability, which is currently in pilots across a number of organizations in the U.S. and several global markets. EFX IQ is designed to help our customers make fundamentally better and faster decisions across every stage of their business, from marketing to originations to account management, using our EFX.AI™ capabilities. One element of EFX IQ is our new affordability model, which moves beyond predicting risk to predicting a consumer's actual capacity to take on new debt. This allows for more precise and responsible lending that will drive customer approval rates and lower losses.

EFX IQ also includes a unique decision optimization model, which allows clients to simulate the impact of different lending policies on their business outcomes before they implement them. We are seeing strong market validation for these offerings and our EFX IQ strategy. Fraud remains one of the most significant and rapidly evolving threats our customers face. We are leveraging our new advanced AI capabilities and unique data assets to deliver a new generation of fraud prevention tools that can identify risks that are invisible to traditional methods. We are launching two powerful new solutions this quarter to address distinct high-cost fraud challenges for our customers. First, our next-generation synthetic identity model is designed to combat one of the fastest growing types of fraud where criminals fabricate new identities. Our AI model analyzes billions of non-traditional data points to detect the subtle patterns of these ghost identities.

Second, our new first-party fraud model targets credit abuse where an individual takes out credit with no intention of paying it back. This behavior is difficult to distinguish from a normal consumer, and EFX.AI™ is highly effective at identifying the behavioral patterns that predict this fraudulent intent. We are also accelerating development and implementation of EFX.AI™ systems in our internal operations. This will allow us to generate meaningful opportunities to improve customer service and accuracy while driving revenue growth and cost savings. A powerful example of this inside Equifax is our AI agent for model performance monitoring, which automates the critical and labor-intensive work of ensuring our models are performing accurately and fairly while reducing the time required for monitoring investigation by the Equifax team. This frees up our data scientists to focus on innovation and allows us to more easily identify opportunities to improve our models.

We're also expanding our use of EFX.AI™ capabilities to improve the efficiency of internal processes, including in our customer and customer support, operations, finance, and other support functions. These are some of the meaningful steps we're taking as we rapidly build out our global AI capabilities and deploy AI agents and capabilities across our entire enterprise. These capabilities will be a key driver of future operational efficiency and margin expansion and will accelerate our ability to embed intelligent automation into our products and services. Driving EFX.AI™ with customers and inside Equifax is a big priority for 2026 and beyond. In 2025, the number of new products launched using EFX.AI™ is up 3X since 2023. All new models that we've developed have been built using EFX.AI™ this year, and our EFX.AI™ models maintain an over 30% performance increase for our customers over legacy models.

In 2026, we plan to share more metrics on how we're delivering higher revenue and greater cost efficiency through the use of EFX.AI™, both in the scores, models, and products we deliver to our customers and across Equifax in our back office to drive speed, accuracy, productivity, and cost savings. Turning to slide 11, we are seeing very positive customer response to our Twin indicator rollouts that we expect to drive share gains for the USIS credit file. Our ability to deliver information to our customers from The Work Number alongside a credit report provides value only Equifax can deliver to our customers. Understanding a consumer's employment status along with their credit file adds valuable information in the marketing process to tailor application strategies that drive higher approval rates and speed and efficiencies for our customers.

As a reminder, we're delivering the Twin indicator alongside our USIS credit file at no incremental cost in all verticals in order to differentiate our credit file and drive incremental growth and share gains. Our new mortgage pre-qual credit file solution with a Twin indicator differentiates our credit file with incremental data, including work status, employer name, and potentially some levels of historic income. This unique solution is helping mortgage lenders optimize their marketing processes and delivering more certainty for an applicant to accelerate the underwriting process. This is in addition to our unique telco, utility, and pay TV attributes that will also be delivered alongside our traditional mortgage credit file at no charge.

The use of these expanded data insights provides expanded trade lines and visibility to millions of credit invisible consumers, those without traditional credit files, and enhance the financial profiles of thin, young, and unscorable consumers as they complete first mortgage applications. USIS has seen very strong interest in this new solution with several customers in production. Recently, we also launched a Twin indicator solution for auto dealers in the auto industry. Like mortgage, we've seen strong interest from auto dealers who are looking to strengthen identity verification, improve customer segmentation, streamline workflows, and support better credit decisions with the addition of the Twin employment status at no charge with their Equifax credit file. We expect to launch similar Twin indicator solutions in P loan and card in the first half of 2026.

Now I'd like to turn it over to John to provide more detail on our 2025 guidance and our fourth quarter framework. John?

Speaker 2

Thanks, Mark. Turning to slide 12, as Mark mentioned, we are increasing the midpoint of our full-year revenue guidance by $40 million, given our strong third-quarter performance. Total Equifax reported revenue is expected to be up 6.1% to 6.7% versus the prior year, with non-mortgage constant dollar revenue growth over 5.5%. FX is about 40 basis points negative to revenue growth. As a reminder, the mortgage market decline, as measured by hard credit inquiries in 2025, is almost 150 basis point drag on our revenue growth rate. The midpoint of our full-year adjusted EPS is also increasing by $0.12 per share, with year-to-year growth expected to be 3.6% to 5%. Full-year free cash flow is expected to be between $950 million and $975 million, up from our July guidance, with a cash conversion of over 100%.

Our accelerating free cash flow gives us confidence in our ability to execute our capital allocation plans of investing in new products and M&A, as well as returning cash to shareholders through increasing dividends and share repurchases. At the business unit level, we continue to expect Workforce Solutions revenue to be up mid-single digits, with continued strong adjusted EBITDA margins from 51% to 51.3%. We expect both non-mortgage and mortgage revenue to be up mid-single digits for the year. We are raising our full-year USIS revenue estimate to increase high single digits year to year, principally from stronger mortgage revenue. Based on run rates for mortgage hard credit inquiries over the latter part of the third quarter and early fourth quarter, our mortgage hard credit inquiry expectations included in guidance for the full year and fourth quarter are both down high single digits, a slight improvement from our July guidance.

Full-year mortgage revenue is expected to be up approaching 20%. Our full-year non-mortgage revenue growth expectations of mid-single digits growth are consistent with our July guidance. Full-year adjusted EBITDA margin is expected to be 34.9% to 35.2%. Our full-year international revenue and adjusted EBITDA growth expectations are consistent with our July guidance. Equifax adjusted EBITDA margins are expected to be about 32%. This is down slightly from the levels we discussed in July, principally due to a higher mix of mortgage revenue and higher variable compensation reflecting stronger revenue and operating earnings. Slide 13 provides the details of our 4Q25 guidance. In 4Q25, we expect total Equifax revenue to be up about 6.5% on a constant dollar basis year to year at the midpoint, with FX favorable to reported revenue growth by about 60 basis points. Adjusted EPS in 4Q25 is expected to be $1.98 to $2.08 per share.

The year-to-year decline in adjusted EPS is driven principally by higher depreciation and amortization and higher variable compensation in 4Q25. Variable compensation was at low levels in 4Q24 as the mortgage market and related mortgage revenue and profitability declined substantially. Equifax 4Q25 adjusted EBITDA margins are expected to be from 33% to 33.3%, up slightly from 3Q25. At the business unit level, we expect Workforce Solutions revenue to be up mid-single digits with continued strong adjusted EBITDA margins from 50% to 50.3%. We expect verifier non-mortgage revenue growth to be up high single digits with improving sequential trends. Mortgage revenue is expected to be up low single digits, consistent with the third quarter, and employer revenue is expected to be up low single digits. We expect USIS revenue to be up high single digits with adjusted EBITDA margins from 35.8% to 36.1%.

We expect non-mortgage revenue growth to be mid-single digits. Mortgage revenue is expected to be up over 20%. International revenue growth is expected to be up at the high end of mid-single digits, consistent with the third quarter, with adjusted EBITDA margins from 31.2% to 31.5%. We have seen a limited negative impact from the U.S. federal government shutdown to date, specifically in transaction volumes with some federal agencies. Our guidance does not assume that the federal shutdown extends materially. To the extent that the shutdown extends materially, we would likely see an impact on our government business, principally from delayed verification activity. Overall, our guidance assumes economic and market conditions do not change meaningfully from the levels we saw in September and does not assume a broader economic slowdown driven by an extended federal government shutdown. We are centered in the guidance ranges we provided.

Our current 2025 guidance compares very favorably to the initial guidance we provided back in February. Revenue and adjusted EPS growth at the midpoint of our current guidance are up about 150 basis points from what we provided in February. This is a strong performance by the team, given the continued mortgage and hiring headwinds, as well as periods of macro uncertainty. EBITDA margins are slightly below our February guidance, principally reflecting a higher mix of mortgage revenue. As Mark discussed, we believe that the Equifax mortgage pricing structure for 2026 will result in lower combined cost of credit data and scores for customers that elect to use the VantageScore. We also believe this pricing structure will result in improved dollar profitability for Equifax should customers elect to use a FICO score, purchasing either from Equifax or a mortgage tri-merge reseller.

For customers that choose the higher performing, lower cost VantageScore, Equifax dollar profitability is further enhanced as we have no COGS on a VantageScore. In terms of 2026 revenue, the pace of VantageScore adoption and FICO calculation by mortgage resellers is difficult to predict. Although these shifts could negatively impact revenue growth in 2026, as I and Mark referenced, they will actually enhance dollar profitability relative to 2025 and our long-term financial framework. As we look forward and consistent with our discussions at our investor day in June and in our July earnings outlook, we expect to deliver financial results consistent with our long-term financial framework of 7% to 10% organic revenue growth and 50 basis points of EBITDA margin expansion under normal market conditions. As a reminder, our long-term financial framework assumes overall economic growth, including growth in the U.S. mortgage market at about 2% to 3% per year.

For perspective, at current run rates and using mortgage hard inquiries as a proxy, in 2026, the U.S. mortgage market would be up low single digits versus 2025. We will provide 2026 guidance, including our assumptions regarding mortgage industry volumes and the pace of shift to VantageScore and mortgage reseller direct score generation at our earnings call in early February. Now I'd like to turn it back over to Mark.

Speaker 11

Thanks, John. Wrapping up on slide 14, we had a strong third quarter with constant dollar revenue growth of 7% within our long-term organic revenue growth framework against a mortgage market that was down 7%, led by strong 26% USIS mortgage revenue growth and stronger than expected USIS non-mortgage revenue growth and EWS non-mortgage growth driven by stronger growth in government. As we outlined, we are raising our full-year guidance at the midpoint by $40 million of revenue, adjusted EPS by $0.12 per share, and full-year free cash flow outlook from $900 million to $950 million to $975 million based on our strong third quarter results and momentum in the fourth quarter. Our free cash flow generation and the strength of our balance sheet positioned us well to return cash to shareholders in the quarter.

In the third quarter, we returned about $360 million to shareholders through share repurchases and dividends, and we expect to continue to repurchase shares in the fourth quarter against our $3 billion share repurchase program. In the quarter, we also outlined our new VantageScore 4.0 mortgage pricing structure, which we believe will deliver higher profits for Equifax and shareholders, as well as lower the cost of lending for our customers and consumers, a win-win for everyone. We are entering the next chapter of the new Equifax with our cloud transformation substantially behind us as we pivot our entire team to leveraging the new Equifax Cloud™ for innovation, new products, and growth. We're using our new cloud capabilities, Single Data Fabric, EFX.AI™, and Ignite, our analytics platform, to develop new credit solutions leveraging our scale and unique data assets.

We're accelerating multi-data asset solutions, including those that combine traditional credit, alternative credit assets, and twin income and employment indicators in verticals like mortgage, auto, card, and P loan that OnlyEquifax™ can deliver that will drive share gains and growth. I'm energized by our strong third-quarter performance, but even more energized about the next chapter of the new Equifax. This is an exciting time to be at the new Equifax. With that, operator, let me open it up for questions.

Speaker 3

Certainly. We'll now be conducting a question and answer session. If you'd like to be placed in the question queue, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. As a reminder, we ask that you please ask one question and one follow-up, then return to the queue. Once again, that's star one to be placed in the question queue. Our first question today is coming from Jeff Mueller from Baird. Your line is now live.

Yeah, thank you. Good morning. Can you go into more detail on what you're hearing on the mortgage pricing changes, including anything coming out of the MBA conference? I hear you that the conversion's not easy and will take time, but I thought you also said you have some clients in production with VantageScore 4.0. Just, I guess, how active are the conversations or transition?

Speaker 11

Yeah, Jeff. As you know, MBA is taking place. It started on Sunday. We've got a team down there. John and I aren't there, but we're getting a lot of feedback. Really, before that, I used a phrase earlier in my comments. There's been a groundswell of attention, obviously, to the huge FICO price increase at doubling to $10 in 2026. The response from Equifax, you know, to put a very competitive offer on the table. It's incredibly active. There's a lot of energy around the Vantage opportunity. It's going to take time to do it, but we've got customers that are already engaging around it. I would say every customer, whether it's a reseller or an end user of it, is well aware of the massive savings opportunity versus FICO that comes from a conversion of Vantage. There's just a lot of momentum there.

Okay. Can you go into more detail on the margin guidance, including the reduction in USIS margin guidance? I'm just not understanding the message because I thought that you were going to flow through mortgage-driven upside, and I think non-mortgage is also somewhat better than expected. The incremental margins on mortgage market-driven upside should be higher than your reported margins. I heard a bit about incentive comp, but it's not adding up to me with the prior commentary that you'd float through the mortgage market-driven upside.

That's it. Thanks.

Absolutely, right? We tried to cover this in our commentary, right? What we're seeing both on a total Equifax level and also for USIS specifically, and what we've indicated is we intend to flow through the profitability related to higher mortgage revenue. You actually saw it in our improved performance in the third quarter and in the guidance we gave for the full year, right? In terms of what we're seeing specifically in the very near term, we're seeing some negative impact related to near-term USIS margins and also Equifax margins. One of the bigger drivers is specifically related to variable compensation. Obviously, the performance that we've announced today is substantially better in the second half of 2025 than we had previously guided in July, and that increases variable comp. That impacts both Equifax, but it also directly impacts USIS.

There also are some near-term impacts around the fact that our mix is somewhat higher toward mortgage, and therefore that does impact our gross margins negatively in period. As we indicated over time, we intend to flow through 100% of that variable profit to shareholders. I think you did see that both from the increased profitability in the quarter, the higher guidance, and also quite honestly from the much stronger cash flow performance in the third quarter and the much higher cash flow guidance that we provided for the full year.

Speaker 3

Thank you. Next question today is coming from Tony Kaplan from Morgan Stanley. Your line is now live.

Thanks so much. I wanted to start on government, a very helpful commentary about the error rates and the ramp-up that you're seeing in discussions with the states. Do you expect that this will really start to ramp after the end of the government fiscal year end, or will states really preemptively start using your solutions ahead of time? I know you talked about second half 2026, 2027 as really where the sweet spot will be, but just wanted to understand the process a little bit better.

Speaker 11

Yeah, I think it's a mix of both, Tony. We've been really pleasantly surprised with the rapid increase in conversations at the federal level. We talked about some of the new programs we're working on. At the state level, after the OB3 signing on July 4th by the president, in the last 90 days, there's just been a real uptick in conversations. What we're seeing is, as you point out, the OB3, most of the OB3 impacts happen late next year. That revenue from new solutions like our continuous monitoring or the hours worked solutions, those will likely be late in 2026 and then really take hold in 2027. What we are seeing, and I mentioned it in my comments earlier, is just the engagement with states around our solution.

Remember, the error rates that I talked about are really in current period, meaning 2025 and 2026 really set those error rates. If states want to bend the curve on those error rates and really get ahead of potentially paying for a bigger piece of those benefits that are in the OB3 bill, they've got to address integrity now. We're seeing an uptick in those conversations quite positively. Lastly, I think, as you know, what really impacted the business in 2025 was kind of that air pocket from the change in the prior administration around CMS cost sharing, around data costs, and just the state's challenge to absorb that. We see that kind of behind us now. The state's really focusing on the more stringent requirements of OB3 that we think will be a positive kind of sequentially as we go into 2026.

They will really take hold when the new requirements really go into effect late next year.

Speaker 3

Thank you. Next question is coming from Andrew Steinerman from J.P. Morgan. Your line is now live.

Speaker 12

Hi, John. Could you just go over a little bit more of the general corporate expense line in the third quarter and what's driving that?

Speaker 11

Sure. The increase in general corporate expense really specifically is driven by what I referenced in terms of the answer to Jeff's question. It is really around an increase in variable compensation between the July guidance we provided and what we're seeing now based on the much stronger performance, right? So our product.

Speaker 3

Based on the higher revenue.

Speaker 11

The higher revenue and principally operating income, right? What you're seeing is obviously much stronger overall performance, higher revenue and operating income, and that's resulting in a higher level of variable compensation. A significant portion of that impacts general corporate expense.

Speaker 3

Okay. Thank you. Thank you. Next question is coming from an off-put in from Barclays. Your line is now live.

Speaker 12

Thank you. Good morning. The first question, if you could just remind us, you know, the different moving pieces, I guess, on the mortgage side. What I'm referring to is USIS grew 26%, but EWS was only 2%. Can you just remind us of the different factors? I know there's always a difference, but just maybe in this quarter?

Speaker 11

You could start with the FICO price increase in USIS. Obviously, it was quite substantial in the year, and we have the pass-through benefits there. I think that explains a big piece of that high double-digit number in USIS. As we mentioned, and you saw it, I think, Manav, when rates came down kind of in September, we saw an uptick in mortgage activity. That usually benefits or always benefits USIS first in the pre-qual shopping stage. They see the pulls earlier than EWS does. EWS, obviously, the mortgage market based on our inquiries was down 7% in the quarter. That 2% increase in EWS just really reflects their pricing, product, and records outperformance against that negative market.

As John mentioned, I think in his comments, we expect to see some improved performance in EWS because they typically are in the closing stage of those mortgages that likely were started in September. We would expect to see that pickup as we go through the end of the fourth quarter. That is in our guide for the fourth quarter. If you take a look at EWS outperformance over the first nine months and in the third quarter, obviously, we do not give that number specifically anymore, but we have indicated we expect them to run high single-digit % growth outperformance, and that is kind of where they are running.

Speaker 12

Thank you. The feedback on the score pricing, I think that makes sense. I was just curious if you had received any feedback from your customers on your credit file cost increases that you made. Is that even something that they're bothered about?

Speaker 11

Yeah, those discussions are happening as we speak at MBA. I would think that, you know, they're viewed as we're not getting a lot of feedback. I think all the attention is on the FICO increase for next year with the doubling of it to $10. That seems to be taking all of the air in the MBA meeting. Our conversations are taking place as we speak.

Speaker 12

All right. Thank you.

Speaker 3

Thank you. Next question is coming from Sloan Man Rosenbaum from Stifel. Your line is now live.

Hi, and thank you very much for taking my question. Hey, Mark, given the focus on generating more VantageScore 4.0 traction, can you talk about what it is that you guys can do to kind of drive the adoption in the marketplace? I mean, is there going to be a step up materially in your sales and marketing budgets in the area? Are you guys going to provide some help to the customers in terms of, you know, back testing it versus FICO? Like, how should we be thinking about this operationally? Where are the efforts you guys are going to put in? Obviously, I understand it's a multi-year effort, and it seems like it's kind of an uphill effort, but you know, the cost advantages over the long term might make sense, but you know, you got to get these big bank behemoths moving on that.

Speaker 11

Yeah, I would actually call it a downhill effort, meaning a lot of momentum with it, with the pricing action that FICO put in place a few weeks ago for 2026, the doubling of the price increase. That $5 or $4.95 in 2025 to $10 in 2026 is going to add half a billion dollars of costs to the mortgage industry and consumers, roughly the way we calculate it. That is really creating, in our view, a real catalyst around this. Actions we took, first was obviously pricing 50% plus below the FICO pricing. That got the attention of the industry. That's a big cost savings for them. Basically, the score pricing being flat year over year, holding that price flat, meaning we're going to freeze that price for two years, gives the industry some visibility around driving the conversion.

We really think the offering, the free VantageScore, not only in mortgage but in every vertical, is also going to drive adoption and understanding on it. As I said earlier, there's already a lot of momentum. This is not new. There's been a lot of Vantage focus with the increase in 2025 that FICO took, taking it up to $4.95. It's not like it just started yesterday. There's been dialogues going for a long time. Actions we're going to take, I think we are very proactive and responsive to our customers to try to deliver cost savings for a score that performs at or better than the FICO score, with the actions we announced two weeks ago. As you point out, we're going to use our commercial leverage. We've got a lot of commercial resources in the marketplace.

We're going to incent them, meaning part of their incentive compensation will be around Vantage conversions and supporting our customers and really understanding it. We're going to provide analytics to our customers. We're going to try to help them really understand it. We're working with the agencies on it. From my perspective, this isn't a matter of if, it's only when. As I said earlier, we already have customers that are engaging around using it in the very near term, in production. It's coming. As a reminder, I think you know this, if you look at other verticals outside of mortgage, mortgage had a 30-year monopoly where the only score you could use was FICO. If you go into other verticals like auto, card, and P loan, there are large financial institutions that have been using Vantage for a long time.

They securitize the loans very successfully, sell them into the marketplace, and operate very effectively with Vantage. While it will take time, there's, in my perspective, an unprecedented momentum on it. We're going to put the power of Equifax behind it because we want to support our customers. Our customers are really looking for the kind of value and performance that Vantage will deliver.

Speaker 3

Thank you. Thank you. Next question is coming from Kyle Peterson from Needham & Company. Your line is now live.

Speaker 12

Great. Thanks, guys. Good morning. Appreciate you taking the questions. Wanted to see if you could help us unpack some of the moving pieces in government. Saw overall, the guide looks pretty solid for the fourth quarter, but understand there's a little bit of noise with some of the federal business with the shutdown, and then some of these other state and local opportunities that are ramping. Just wanted to see if you guys could give us any more color on the net effect and particularly some of the ramp pace of some of the state and local business. That would be really helpful.

Speaker 11

Yeah. So, you know, we were pleased with the government performance in the third quarter. As you saw, it was above our expectations and probably yours, which we're pleased with. The kind of air pocket we had from last year's funding changes at CMS seems to be behind us, which is good news. As I said earlier, there's just a lot of momentum post-OB3 and with the focus at the federal and state level around the $160 billion of improper payments and really addressing them. That momentum is a positive. You saw we guided that we expect government to grow sequentially in the fourth quarter and exit at high single digits. That's just from core growth. I think John mentioned, as far as the government shutdown, we haven't seen an impact yet.

We don't know how long this is going to go on, but a government shutdown would likely more be a deferral of revenue as opposed to a loss of revenue if it was going on for an extended period of time. Again, we haven't seen an impact in that. That's kind of what we put in our guidance, that this will be resolved and won't have an impact on us in the fourth quarter. That fourth quarter exit rate for government, with the momentum we have with the states and the federal government around conversion, you have to remember that we're dealing with a big $5 billion TAM here. When you think about states, less than half of the states across the U.S. use our solution. That's always a new business opportunity for us where we deliver integrity.

With this new error rate requirement that's in place, the clock is running as we speak in 2025 and 2026. States are focused on, we've got to take action now in order to get in front of that error rate so we don't end up having to pay a merely massive amount of share of the benefit cost. There's just a lot of positives there. I think we talked about some of the new programs in Washington that that momentum continues. Chad Borton and myself are in Washington every couple of weeks, meeting on things like the earned income tax credit with the IRS and Treasury and some of the other opportunities that are really new, new business for us that really address that $160 billion of improper payments. It's a good time for EWS government, and we continue to be optimistic going forward.

As I said in my comments, when you look over the long term, we continue to believe government will be our fastest growing vertical in Workforce Solutions, and it'll outgrow the underlying business really because of the value proposition, the market opportunity, that $5 billion TAM, and you can add to it OB3. The requirements to tighten up those income verification requirements are really a very positive catalyst for the value that the twin solution delivers in social service delivery.

Speaker 12

That's really helpful. Thank you very much. Nice results.

Speaker 3

Thank you. Next question is coming from Kevin McVey from UBS. Your line is now live.

Great. Thanks so much. Hey, I wonder if you could give us a sense of, I don't know if you said this or not, John, but for 2026, the revenue, could it be in the range of the 7% to 10% on the organic framework, or did you not say that? I just want to make sure I didn't confuse your comments.

Speaker 11

We didn't. I'll help John with that. He can jump in too. No, we did not give guidance for 2026 today. We'll do that in February as we typically do. What we did say is we wanted to clarify because we've gotten a bunch of questions about the FICO announcement and then Equifax's announcement on what those two announcements might have with regards to mortgage on our 2026 guidance. What we intended to say a few minutes ago, and we also said it earlier in investor meetings over the last couple of weeks, is that the FICO announcement and the Equifax announcement doesn't change how we think about 2026. We had a view of it when we had our investor day back in June. As you know, in the investor day, we laid out an outlook through 2030.

In that longer-term outlook, we think the whole mortgage opportunity with Vantage is a net upside. With regards to 2026, we intended today to say that the mortgage change we've made around the discounted Vantage pricing to drive adoption, we think will take time, but it hasn't changed how we think about our outlook for 2026, and we'll share that with you in February.

That's very helpful. Mark or John, I don't know, this may be a tough question, but any thoughts on what you would define as success from a market share perspective on VantageScore longer term, given, you know, the shift in, obviously, to your point, it was a 30-year monopoly. As that share shifts, what would be a reasonable proxy? Does a go-to-market motion factor in your partners on Vantage, or is it independent?

Yeah, the partners one, I think partners are aligned too. When you think about, I think when we say partners, you're referring to the tri-merge resellers. We've had conversations, I have personally with all of them over the last couple of weeks, all the big ones. They're as challenged as the whole industry is around the FICO price increase. I think your question on success is a good one. Obviously, share gains. We believe there's real momentum now because of the pricing umbrella, if you want to call it that, that FICO created by doubling the price for 2026 allowed us to really create some really massive value for the mortgage industry with our solution at $450. We believe that's going to drive real conversion. What success is obviously going to be is share gains. I think, to be fair, it's going to take time.

This is a very complex industry, but you could add to it, what's FICO going to do in 2027? What are they going to do in 2028? Are they going to be discounting their price, or are they going to be increasing it again? If they increase it again in 2027, that creates a bigger pricing umbrella and envelope for value to drive share gains. I think we're in the right place to really drive that. As we pointed out in our press release a couple of weeks ago and on the call this morning, there's a new profit pool for Equifax that's quite substantial for Equifax and our shareholders. When we sell a FICO score next year, it's going to cost us $10. When we sell a VantageScore, we make $450, and our customers save $550. It's kind of a win-win across the board.

I think it's just a matter of time. As I said earlier, we're going to put the weight of Equifax behind it to really support our customers and consumers around getting a mortgage score that provides equal or better value, the VantageScore, we believe, and at really a massive amount of economic value. It's across mortgage, but also across auto, P loans, really, really across the entire footprint. We'll be making the same push broadly.

Thank you.

Speaker 3

Thank you. Next question is coming from Serindra Tin from Jefferies. Your line is now live.

Hi, Mark. Just a question on the bigger picture of VantageScore and the adoption curve here. A lot of the conversation seems to be focused on VantageScore 4.0 versus classic FICO. Do you have any thoughts on 10T entering into that equation? Because when I think about it from the perspective of a lender, wouldn't the lender first want to make the decision of whether they're going to stick with classic FICO or upgrade? If they choose to upgrade, then it's actually VantageScore 4.0 versus 10T, not VantageScore 4.0 versus classic FICO in the decision.

Speaker 11

Yeah, I think that's fair. You know, 10T is still being introduced in the marketplace. That's going to take time. I think it's a, what we understand, it's a higher performing score than FICO classic, which is good, but it's double the price. We believe, and Vantage has a lot of data out there now that the VantageScore 4.0 outperforms FICO classic and is on par or better than 10T. Either way, when you have a score that is in the same zip code of performance, but it's half the price, that creates a real incentive for change. The numbers are so large. When you think about the impact for the industry, if they stick with FICO classic or stick with FICO in 2026, that's $500 million roughly of increased cost to the industry.

There's a lot of catalysts to take a hard look at Vantage, and we think there's going to be real adoption. As we said earlier, there already is. There's already momentum to do it. We've got customers in production. We've got lots of conversations happening. Remember, this is not three weeks old. The $10 is, but the focus on FICO pricing has been going on for a couple of years. This is something that the industry has been

Speaker 3

Thinking about for a long time, we think there's a real opportunity to bring both performance with 4.0 as well as value with where FICO took pricing.

Speaker 5

That's helpful. In one of your other comments, I think you talked about just being more than a data provider.

Speaker 3

Yeah.

Speaker 5

Are we shifting to more of a platform and an analytics approach here at this point? How should we think about that part of the transition?

Speaker 3

Yeah. Yeah. You know, we're investing heavily in EFX.AI™ for our scores, models, and products. We've had great performance there and seen big lifts in really the score and model performance and product performance by the addition of AI. We also talked about deploying AI inside of Equifax. We'll talk more about that in 2026 and in February. We see big opportunities from an operations productivity, speed, and accuracy standpoint with AI inside of Equifax. On the call this morning, we also talked about really enhancing our Ignite platform that, as you point out, is an analytics engine, by using AI capabilities to make it easier for mid-sized or FIs that have smaller data analytics teams to really more easily use the solution. We've just seen some real lifts there.

That's what we talked about, some of the new products or new enhancements, is probably a better term, to our existing platforms to make them more usable and deliver quicker and higher-performing analytics for our customers, which we are quite energized about.

Speaker 5

Thank you.

Speaker 11

Thank you. Next question is coming from Andrew Steinerman from William & Barry. The line is now live.

Speaker 2

Hi. Thank you and good morning. I wanted to first ask about just overall consumer credit trends or conditions. I've seen some headlines and bankruptcies lately in the auto space in particular. Just kind of curious what you're seeing in terms of scores or credit conditions and ability to pay within your different markets.

Speaker 3

Yeah. I think we said in the comments earlier that, you know, fairly stable. I think it's still a good environment. You know, our customers broadly are strong, and the consumers are working. I think that is fairly stable. Activity is lower than I would call it peak levels, but very stable. The bankruptcies you've highlighted really are not, from what we understand—I think you read the same stuff we do—are not credit-driven bankruptcies. It sounds like there's fraud involved and things like that. It's not really from an underlying consumer problem that these couple of auto companies had some struggle. It's just how they went to market and perhaps how they were operating in the marketplace. When we look forward to the fourth quarter and into 2026, at least the early parts of 2026, it feels like a quite stable environment. As you know, GDP is growing.

Unemployment is still fairly low, although there isn't a lot of job creation, which is a problem that the, I know the Fed—we read that the Fed's watching—around job creation. We see it as a fairly balanced environment going forward.

Speaker 11

As Mark said, if you look at auto, card, FI, really, you're seeing slow growth, probably below what we call trend, but it's been fairly consistent, right? Slow growth, slow growth to kind of flat overall market, but certainly weaker than long-term trends, but very consistent.

Speaker 2

Got it. Thank you. Maybe just a point of clarification, I think within EWS non-mortgage, consumer lending was up 20%. I think in absolute dollars far and away the best quarter that line has had. In my model, just curious what's driving that, and maybe the sustainability of that level of growth.

Speaker 3

That's a high growth rate. I wouldn't think about that as a long-term trend for that part of EWS. It's really just the deployment of the value of Twin in some of those verticals, you know, is very powerful. The combination of a credit score with someone's income and employment is really quite positive. We just had some success with new customers. Remember, we don't have full penetration in those verticals of using Twin. We think every lender should use it in some way, which is why we're offering it as a Twin indicator, as we're going to be rolling it out with our credit file for all verticals because it provides so much visibility about not only someone's credit score, which is their propensity to repay a loan, but also their ability to repay because they're working, meaning they have a job.

We're energized about the future of EWS in that space.

Speaker 11

As a reminder, that business for EWS is just much smaller than USIS. The growth rates tend to bounce around a little more, right? As Mark said, yeah, it was very good.

Speaker 3

Yeah, we had a couple of customers.

Speaker 11

We had a couple of customers. It's much stronger. You shouldn't take that as a longer-term rate. The other thing that's in there, just to remind everyone, is debt management, right? You really haven't seen a lot of activity yet around student loans. Given that that's the case, that's an opportunity as we get into 2026, but not something that's really been beneficial yet.

Thank you. Next question today is coming from Ashish Sabhadra from RBC Capital Markets. Your line is now live.

Hi. This is David Page on for Ashish. I was just wondering, maybe you could touch on international, what, you know, maybe double-click on what you saw in the quarter, and then how you're thinking about it for the rest of the year. Thank you.

Speaker 3

Yeah. Good performance. You know, we're pleased with the team's performance. I think we talked about, you know, very strong performance in Canada, kind of post-cloud. They finished the cloud last summer, and they're really deploying, you know, some new solutions and driving some share gains. LATAM was very strong. We talked about Brazil with our not new, but two years now, having Boa Vista performing really well. Had a very, very strong quarter, you know, as we roll out new solutions in Brazil. We think we're seeing some share gains there. In the other markets, you know, solid performance in Australia, UK, Spain, you know, were solid performers.

Speaker 11

UK just completed their transformation really late in the second quarter. They're, let's call it, six to nine months behind where Canada was. We feel very good about them being able to drive improving performance again as we get into 2026 based on utilizing the new infrastructure they have, which we think is much stronger than what our competitors in the UK have.

Great. Thank you.

I think the next question is coming from Reina Kumar from Oppenheimer. Your line is now live.

Speaker 12

Hi. Good morning. Thanks for taking my question. I know you mentioned earlier that, you know, hiring, particularly white-collar hiring, continues to remain stressed. Can you give us some detail on what you're hearing from your conversations with customers and background screeners? What is the expected impact of talent in the fourth quarter? Thank you.

Speaker 3

Yeah. I think pretty consistent. You know, it's a sluggish market. We all read about that as far as job creation. You know, employment broadly is fairly high. Unemployment is fairly low. There isn't as much new job creation, I think, as everyone would like to see. You still have, and we talked about it on the last call, what we hear from our background screening customers is they're hearing from their clients, which is the HR managers of corporations across the U.S., is there's still a lot of cautiousness around hiring because, you know, kind of the broader outlook about, you know, are tariffs going to be resolved and, you know, where are those going? There's still quite a bit of uncertainty on that. I think, to me, that's one of the catalysts that has to get sorted out.

It feels like the administration is getting closer on that, that they're making progress, but it's just taking quite some time.

Speaker 12

Appreciate the caller.

Thank you. Next question is coming from Jason Haas from Wells Fargo. Your line is now live.

Good morning. This is Jimmy on for Jason Haas. Your USIS mortgage outperformance was 33% in the quarter, which was a step up sequentially. Is that driven from the new mortgage pre-approval products, or what else drove that incremental outperformance?

Speaker 3

I don't think it was 33.

Speaker 11

I don't think it was 33, but the.

Speaker 3

It was 26.

Speaker 11

The outperformance is really being driven by the same thing it's been driven by all year, right? We had, obviously, the very large FICO price increase that occurred last year, which is flowing through in our revenue. Yes, there is some growth in the pre-qual and pre-approval products, but probably the larger driver is the FICO price increase that happened last year.

Sorry. The 33% I meant was like, you know, you did 26% revenue growth, and then increase was down 7, so you get 33%.

Got it. Yeah. Well done. Understood. Thank you.

Speaker 3

Yeah, yep. Very nice job.

I got your point, too. Sorry. My second question. One major adoption hurdle for VantageScore is often cited as its acceptance within the securitization market. Giving out free VantageScores along with each purchase of a FICO score helps you get visibility among lenders. I don't think the securitization market will end up seeing it. Correct me if I'm wrong. How do you plan to navigate these adoption challenges?

Yeah. We already sell Vantage into the securitization market, you know, really that they use today. They've been using it for quite some time in the mortgage industry. I'm not, you know, from the origination side because there was a, you know, a 30-year monopoly. In kind of post-loan or post-closing analysis around mortgages and mortgage portfolios, we've been using it for quite some time. I think, as you point out, that's going to take time. I would point also to other verticals, you know, like auto and cards, where it's widely accepted, meaning, you know, large lenders sell packages of loans with Vantage and securitize loans with Vantage. It's definitely something that happens broadly. It'll definitely take some time.

Speaker 11

We're continuing to expand the number of tools through Ignite and then data through very long-term data panels that we're making available to those in the securitization market, to rating agencies, to others so that they can more rapidly complete their analytics and we can accelerate adoption.

Thanks. That's a great caller.

Thank you. Next question today is coming from Faiza Ali from Deutsche Bank. Your line is now live.

Yes. Hi. Thank you. Good morning. Mark, I wanted to ask about a significant push that the MBA seems to be making around a shift away from the tri-merge report. I know we had this discussion a couple of years ago when the bi-merge was first introduced. The idea was first introduced. It just seems like the voices are getting a bit louder. We'd just love to hear how you would respond to that and what that might impact you and what you're doing to sort of counter that.

Speaker 3

Yeah. You know, there's some voice on that. We don't think it's a real drumbeat. I think there's more focus on score pricing, certainly currently than there is around tri-merge. We've been quite consistent with the regulators, with the agencies, and with our customers that there's a lot of value in the tri-merge because there's so many differences between the three credit bureaus as far as the credit data that we have. For example, there's roughly 10 million consumers that are only on one credit file of the three. If you only pulled one or two, that individual wouldn't have access to a mortgage. There's 40+ million consumers that have a 30 to 40-point score difference between the three credit bureaus. If you're pulling one or two, you obviously either improve or have a negative impact on a consumer. You also have the whole integrity.

In our perspective, there's a lot of broad focus on that. I think the MBA's focus is more around the cost that's been driven by the FICO score increase, which has really impacted the industry. Hopefully, the discussions happening at the MBA meeting this week are around the actions that we're taking, and I think our competitors did too, around trying to offer an alternative to bring score pricing down for the mortgage originators and for consumers.

All right. Understood. Just to follow up on government, I know you recently launched your complete verification product. I'm just curious how much traction you're seeing with that product versus more of an instant verification. I'm curious if you can comment on the competitive environment on the consumer permission side within government.

Yeah. You may remember our solution is integrated with the Twin indicator Solution. If you're a state or an agency that's using it, we rolled this out last quarter. We already have one customer signed up to use it, and we've got an attractive pipeline for it. The intention is, the vast majority of social service recipients have W-2 income, which is where we have the data on it. They'll access in the workflow our Twin indicator Solution first, and then if the applicant also has some gig income, they would integrate right through to our total income solution with the consumer permission data. We deliver a report back with both sets of income.

It's very common for many of the social service recipients to have a W-2 job, either a restaurant or a warehouse or a retail operation, but then they might have a gig income on the weekends or at night, for DoorDash or Uber or whatever that self-employed income would be. Our solution provides kind of a complete picture there. We believe that integrated solution is quite important for the caseworkers in order to provide productivity, and also the speed of the social service delivery. We're quite optimistic about deploying that further in the marketplace to really help provide access to that non-traditional income.

Great. Thank you, Mark.

Thank you. Next question is coming from Craig Huber from Huber Research Partners. Your line is now live.

Oh, great. Thank you. Hey, Mark or John, what do you say to investors out there that point out that VantageScore in the marketplace has, you know, roughly 5% market share versus, you know, autos, credit card, P loans out there and maybe basically negligible market share in nonconforming mortgages out there? What's going to change going forward in your mind in those markets, to materially move your market share up in VantageScore given that VantageScore has been out there for 19, 20 years so far?

Yeah. Remember that, and I think you're talking principally in mortgage. The difference in mortgage is that it wasn't allowed in mortgage until July, so it just wasn't permissible. When you have the primary score provider, FICO, driving price up the way they have from $4.95 to $10 in 2026, we think that provides a catalyst. What we're seeing in the last number of weeks is a lot of momentum around lenders wanting to drive towards that alternative because of the challenging cost of the FICO score. Clearly, it's going to take time. I think we tried to point out also on the call that, look, we have this, the FICO score increase or the VantageScore 4.0 option that we announced doesn't change our long-term outlook for the company. It just provides a new positive profit pool over the medium and long term.

We never thought about the $100 million to $200 million profit pool for Equifax until the score went up to $10 by FICO a few weeks ago. We think that provides an opportunity for us to gain some share with VantageScore 4.0, and that's what we're going to focus on. That doesn't change our long-term outlook of the company. In essence, in the long term, it provides an upside to that as far as the range that we have, but we're focused on looking at that opportunity and trying to deliver those savings to our customers.

I'm sorry. I'm talking about the nonconforming part of the mortgage market. You can use VantageScore or FICO, right, for many years here and stuff. I believe VantageScore has negligible market share though in the nonconforming part.

Yeah, it does. There's, you know, most of the lenders that are doing conforming and nonconforming really have one system. When FICO was required for 30 years and built into their workflows and their processes, the incentive to change was challenging to have two scores, if you will, in the nonconforming, as you point out. As you know, until recently, meaning it's only the last three or four years that FICO's put the gas pedal to their pricing and really changed it quite dramatically, and been quite aggressive. There really wasn't enough of a catalyst perhaps on the nonconforming side. I think it's more just their systems and capabilities. If they're using FICO for 80% of their mortgages in the conforming side, nonconforming, it didn't make a lot of sense to do it. We believe now it does.

I'm sorry. Back to my other part of my question of 5% rough market share in autos, credit card, P loans that VantageScore has built up here over 19, 20 years here. What's going to change on that part of the market for VantageScore?

I think, as you know, in those verticals, FICO hasn't doubled their price, taken it up 16X. They've been more balanced around their pricing there. There hasn't been the pricing catalyst or the cost catalyst there. Notwithstanding that, there have been lenders that have moved to it because there is a price advantage with the VantageScore versus FICO. We think there's going to be an opportunity to drive some share gains in that space beyond what has happened so far.

That's great.

Which is why we're offering the free Vantage Scores in that space to really drive understanding and adoption, that the score is equivalent. In the non-mortgage verticals like auto, cards, and P loans, the Vantage Score's pricing is significantly below FICO. There's going to be an opportunity there.

Thank you. Our next question is coming from Kelsey Shu from Autonomous Research. Your line is now live.

Speaker 12

Hi. Good morning. Thanks for taking my question. You sized VantageScore upside in the mortgage vertical, which was very helpful. I was just wondering if you can talk about a little bit more, VantageScore's opportunity in the non-mortgage vertical and particularly around, you know, current penetration rate within card and auto and pricing difference with FICO and where you see the adoption rate for VantageScore could be in the next three to five years.

Speaker 3

Yeah. I think that that's a space, as I mentioned earlier, that FICO has not been as aggressive on pricing. So it's gotten less attention than the dramatic pricing that they've had in the mortgage vertical where they had that monopoly position. We think there's still savings opportunities for our customers and, you know, a performance that, you know, looks a lot like FICO. As I said earlier, you have to have a catalyst to drive a change like this. There's clearly, you know, a real catalyst in our view in the mortgage space. We're going to work to provide optionality for our customers by providing the free VantageScore. As said earlier, and you probably have the same intel we do, there's a number of large lenders that have switched a while ago.

The question is, is there enough catalyst, you know, between the VantageScore pricing and the FICO score pricing outside of mortgage? We think there's an opportunity there, which is why we're going to focus on it and deliver the free VantageScore with every paid FICO score in those verticals also.

Speaker 12

Got it. Thanks a lot. Second question on the government vertical. I was just wondering if you can tell us a little bit more about the evolution of the SNAP contracts because I remember in the Q3 2023 call, you talked about the $38 million contract with the USDA, which I think was a base year value. That was possibly impacted by the funding practice changes at the USDA in 2024. On slide 6, you talked about launching a new product that provides agencies monthly life changes to reduce error rates. Just curious to get your thoughts around how much revenue has Equifax generated from the USDA or SNAP contract the last two years, but also your outlook going forward.

Speaker 3

Yeah. We don't typically talk about specific customer contracts, as you know. Our intention in the discussion on government was really to highlight some of the opportunities that we see going forward, you know, from the OB3 bill and the focus on the improper payments and $160 billion of improper payments at the federal level. We just see a lot of opportunities. OB3 really presents a whole bunch of new opportunities, going from 12 months to 6-month redeterminations, the work requirements. We're working collaboratively at the federal and state level about solutions we deliver because we have hours worked in our data set. The error rates that come through within SNAP, and we mentioned that there's a lot of states that are north of those error rates. They're going to be wanting to focus on getting them down.

We think the broader adoption of our solution is going to be a positive going forward.

Speaker 11

I know you know this, but the vast majority of our revenue regarding SNAP is with the states directly.

Speaker 12

Got it. Thanks a lot.

Thank you. Next question is coming from Scott Wurtzel from Wolfe Research. Your line is now live.

Hey, guys. Thanks for squeezing me in. I just wanted to ask another one on the government vertical, particularly as it relates to the shutdown. If we do see this sort of extend longer than what is anticipated, just wondering if you can talk a little bit more about the potential impacts. I understand there will probably be impacts to your federal program contracts. Is there anything at the state level that is tied to federal programs that could potentially see impacts as well? Thanks.

Speaker 3

Yeah. I think you used a phrase, which I'd love to get your view on, that longer than anticipated, you know, the shutdown. I think none of us really understand enough about politics, although I think the Treasury Secretary said, I believe yesterday, that expectations can be resolved this week. Broadly, we think, and it's hard to pick a time frame, you know, like how long is it going to go. Broadly, any impacts, we would see as being a deferral of revenue that would be made up because those applicants are still going to be there. The state's not really impacted, you know, because they're still delivering social services. We don't see an impact there. In our guide that we have for the fourth quarter, we just really don't see an impact there.

I think, you know, look, if this went on for months, that's like, you know, kind of a very extreme scenario that would be hard to handicap. Where it's tracking so far, we don't see an impact.

Got it. That's helpful. On the vitality index side and the strong results that you're seeing out of the new products, I know you mentioned the i9 Virtual that has been driving some strength there. I'm just wondering if you can talk about a few more products that kind of drove that 16% vitality index this quarter, and you're raising your guidance from 12% to 13%.

Yeah. It's a bunch. You know, it really starts with, you know, we laid the groundwork three, four years ago to invest in more product resources and really build out our product DNA. That was our goal. As you may remember, we increased our, you know, kind of long-term goal for vitality from kind of 5, 6, 7 to 10% four years ago. We've been outperforming that for the last number of years. Now that we're in what I would call a post-cloud transformation environment, with most of our cloud completion complete, the bandwidth has really opened up for our team. I think that starts with, you know, why are we outperforming our 10% goal so strongly, is because we have the capabilities now with the cloud. We have the bandwidth to focus on customers and innovation. We built the DNA to really focus on it.

Other products, you know, we talked a bunch about the Twin indicator. We're energized about that for mortgage. That's in production now. We've got customers that are using it. We've got mortgage resellers that are delivering it to their customers. That's a positive for us that we think is going to be a very positive NPI for us, not only in mortgage but in auto, cards, and P loans as we continue to roll that out. i9 Virtual is an attractive solution. We've got some new identity scores, really leveraging our account data and our Equifax data that are higher performing that we're seeing some positives in. We talked about some of the new solutions that we're just bringing to market to enhance our Ignite analytics engine through the use of AI capabilities that we think will drive adoption of that. We're quite bullish around our innovation capabilities.

Remember, that's one of the reasons we invested so heavily in the cloud as well as invested to put all our data into a single data fabric was really to drive innovation for our customers. Adding to that, our AI capabilities is really driving performance, meaning just higher KS scores, higher predictability of our scores, models, and products. We're seeing that flow through. That's showing up in that higher vitality index. That momentum is obviously positive for 2026. To have that kind of sequentially growing vitality index means we have more products in our commercial teams' briefcase to go out and bring to our customers to really drive innovation and share gains and revenue growth for Equifax.

Great. Thanks, guys.

Thank you. Next question is coming from Ryan Griffin from BMO Capital Markets. Your line is now live.

Speaker 2

Hey, thanks for squeezing me in. I know it's late, so I'll just ask one. Just wanted to dig into the pricing strategy in the non-mortgage verticals, whether on the credit file itself or some of the other package fees. Do you think there's room to move that higher over time? Thank you.

Speaker 3

Yeah, we have a constant strategy to price for value. In all of our verticals, we typically take price up on January 1. We see the opportunity to do that. I think that's in our long-term framework for a couple of points of price over the long term. The value of our differentiated data gives us the ability to do those kind of, you call them modest, but price increases that we expect to continue in 2026 and beyond.

Thank you. Next question is coming from George Tong from Goldman Sachs. Your line is now live.

Hi. Thanks. Good morning. Your pricing VantageScore 4.0 mortgage score is at $4.50 a score. That compares to TransUnion pricing at $4 a score and Experian offering VantageScore for free. How do you expect VantageScore mortgage market shares among the bureaus to shake out with each credit bureau pricing VantageScore differently?

I think, George, you should check. Again, I'm not Experian, but you should check Experian's press release or call Experian. My understanding is they're not offering the VantageScore for free. I believe they're offering it, if I read the press release correctly, at 50% below the FICO price, which would make it $5. You know, look, there's competition between the three of us. As you know, there's still a, and we expect that to continue to be, there's still a 3B credit file requirement by the FHFA and the agencies. Each of us will compete around what kind of score we offer. I think you see some differentiation between the three of us. I'll speak for Equifax. At our $4.50, we think it is a substantial discount to the $10 that FICO has put into the marketplace.

We've talked in our comments as well as in the Q&A that we've seen a really strong response from the mortgage industry, meaning our customers, around that proactive pricing to deliver value to them. We would expect to see, and we're already seeing, some conversions from FICO to VantageScore, which is good for Equifax. When we sell a FICO score in 2026, it's going to cost us $10. When we sell a VantageScore, we're going to make $4.50. When we sell a VantageScore versus FICO, the industry is going to save $5.50.

Okay. Got it. I believe Experian's strategy is they're offering it for free, but if they choose to monetize it, then they'll charge 50% below FICO going forward.

I would talk to them. I don't think that's the case, but I'm not Experian.

Okay. Great. Secondly, you're launching various EFX.AI™ solutions, including the Ignite AI Advisor. How are you planning to monetize your AI products? How does that monetization compare to the cost to deploy AI?

Yeah. The cost is in our COGs. We've been, as you know, investing in AI for longer than I've been here. We've got over 300 explainable AI patents. We added, I think, 16 AI patents in the first half of this year. We're continuing to develop and build out our capabilities. That's in our core COGs. Now we're really focused on deploying those capabilities in a post-cloud environment. It takes different forms. In a score or a model that we're delivering, the AI-powered solutions are delivering much higher predictability. That means ROI for our customers, meaning a higher score performance. We're seeing big 10-point lifts in the identity or underwriting scores from using our AI capabilities. What's underneath that is you have to have differentiated data. We believe we've got more differentiated data than our peers. That allows us to deliver those AI solutions.

We talked on the call earlier about some of the AI capabilities we're adding to our Ignite analytics engine to make it easier to use and easier to deploy. That's one that we would look for more adoption of that platform, which generally means that customer, if they're using our analytics platform, they're generally going to have us in a primary position. It drives share gains if we can have a more higher-performing solution. That's why we're investing there. We're quite energized around our post-cloud capabilities off our differentiated data using AI for our customers. You'll also hear us talk more and more going forward around how we're using AI inside of Equifax to drive productivity and cost savings.

Thank you. Next question is coming from Simon Clinch from Rothschild & Company and Redburn. Your line is now live.

Hi. Thanks for squeezing me in right at the end. I was curious on the government side, Mark, perhaps you could talk to us about the funding side of that discussion that you're having with the states here. You know, because clearly, if they were to expand their business with the Twin indicator in an effort to, you know, to improve the quality or even reduce error rates in SNAP, to me, it seems like they would have to increase expanding. They'd have to find the funding elsewhere. Is that covered by the OB3?

It's not. It is in some cases, but generally, it's not. The states really have to look at it as, number one, we deliver productivity. If you've got a caseworker that's spending 45 minutes, an hour, hour and a half on an adjudication of someone's income eligibility for one of the social service benefits, and then they can do it instantly with Equifax, that obviously delivers pure cost productivity. As you point out, they have to find budget dollars, which is always the complexity of operating really with any customer. You have to deliver ROI. In the case of government, it may be more complex because they have to deliver the budget dollars. What changed in OB3, though, is some of the requirements that are really mandatory from the federal government to drive a higher compliance with the integrity side of social service delivery to really attack the $160 billion.

That includes like the SNAP error rates that we talked about. A state that has SNAP error rates that are above the 6% threshold is either going to have to start paying for more of the SNAP benefits, which is billions of dollars, and we highlighted $12 billion for the states that are over, or they're going to use budget dollars to use a solution like Equifax's in order to drive higher integrity and bring those error rates down. Those are the conversations that we see real momentum in post-OB3. States realizing that they've got to enhance their investment in order to have a higher accuracy in the income validation of a recipient. That's the conversations that we're seeing. We expect that to be a positive for the states. They're going to be able to avoid paying a larger portion of the social service benefits.

A positive for Equifax as we expect our Workforce Solutions government vertical to have some incremental growth going forward. We also talked about some of the new programs, like today, the IRS doesn't use our data for the earned income tax credit. We think that's a big opportunity for them. There are just other opportunities like that with this administration's focus on the $160 billion of improper payments.

Yeah. Okay. That's pretty helpful. Thank you. Just a follow-up question. On the mortgage market, could you give us a sense of how to think about the impact that trigger leads have on inquiry volumes broadly, and how to think about the introduction of that new sort of legislation coming in March? Thanks.

Speaker 11

Yeah, it's relatively small, right? Certainly in our volumes.

Speaker 3

For Equifax, yeah.

Speaker 11

For Equifax, it's relatively small. You need to talk to, obviously, our competitors about their volumes. For us, it's relatively small. Yes, there could be an impact. There could be a shift, perhaps away from pre-qual and pre-approval back toward hard inquiry type of transactions. We'll have to see how as the market progresses.

Thank you. We reached the end of our question and answer session. I'd like to turn the floor back over for any further or closing comments.

Speaker 5

Hi. This is Trevor. Thanks, everybody, for joining the call. Please feel free to reach out to Molly or myself if you have any follow-up questions. Otherwise, have a great day.

Thank you. That does conclude today's teleconferencing webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.