Equifax - Q4 2025

Transcript

Operator (participant)

Good morning, and welcome to the Equifax Q4 2025 earnings conference call. At this time, all participants are in a listen-only mode. The question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. I will now turn the conference over to Trevor Burns, SVP of Investor Relations. Thank you. You may begin.

Trevor Burns (SVP of Investor Relations)

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 on our Investor Relations website. During the call, we will be making reference to certain materials that can also be found in the Presentation section of the News and Events tab at our IR website. These materials are labeled Q4 2025 Earnings Conference Call. Also, we're making certain forward-looking statements, including first quarter and full year 2026 guidance, to help you understand Equifax and its business environment. 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 may impact our business, are set forth in our filings with the SEC, including our 2024 Form 10-K and subsequent filings. During this call, we're referring to certain non-GAAP financial measures, including adjusted EPS, adjusted EBITDA, adjusted EBITDA margins, and cash conversion, which are adjusted for certain items that affect the comparability of our underlying operational performance. All references to EPS, EBITDA, EBITDA margins, and cash conversion are references to non-GAAP measures. 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. Also, in the fourth quarter, Equifax incurred a charge of $30 million related to a settlement associated with a resolution of inquiry disputes related claims.

We expect costs associated with the settlement to be reimbursed by our errors and omissions insurers, with these insurance recoveries also included as one-time events when received. Moving forward, our non-mortgage results will be referred to as diversified markets. This terminology change does not affect any change in reporting structure. Also, for your modeling, additional 2026 guidance will be posted after the earnings call in the appendix to the earnings slide presentation. Now I'd like to turn it over to Mark.

Mark Begor (CEO)

Thanks, Trevor. Before I cover results for the quarter, I want to spend a few minutes on our 2025 performance, strong finish to the year, which gives us strong momentum for a strong 2026. Turning to slide four, Equifax delivered financial results well above both our February and October guidance, with revenue of $6.075 billion, EPS of $7.65 a share, and free cash flow of $1.13 billion. 2025 revenue was up 7% on a reported and organic constant currency basis at the low end, but within our long-term 7%-10% organic revenue growth framework.

Despite a continued weak US mortgage market that was down 7% and the US hiring market, which was down 2%, the mortgage market had about a 100 basis point negative impact on Equifax 2025 revenue growth. EWS delivered 6% revenue growth with a 51.5% EBITDA margins, but exited the year with strong fourth quarter 9% revenue growth. This accelerating performance was led by verification services, which successfully navigated difficult US mortgage and hiring markets to deliver 8% growth for the year and over 10% in the fourth quarter, with fourth quarter growth driven by both strong low double-digit revenue growth in government, which was above our expectations, and an NPI Vitality Index of over 20%. The EWS team had another outstanding year, adding over 20 million active records to the TWN database.

At the end of 2025, EWS had over 200 million active records, which were up 11% and over 800 million total records, both big milestones for the business. USIS delivered 10% revenue growth and expanded margins 70 basis points to 35.2%. Diversified markets or non-mortgage revenue grew 5%, which is the highest USIS organic revenue growth performance since 2021 in our non-mortgage space. Mortgage revenue grew 22% and was up low double digits, excluding the impact of FICO price increases as they gained share across both pre-qual and pre-approval solutions. International delivered constant dollar revenue growth of 6% and expanded EBITDA margins almost 100 basis points. The international team made strong progress towards cloud completion, which we expect to complete by the middle of this year.

International also delivered 12% vitality last year, which drove good revenue performance despite weak Canadian and UK debt management markets. Driving new product innovation is the core to our long-term growth strategy. In 2025, with 90% of our revenue in the new Equifax Cloud, we pivoted from building to leveraging the cloud and accelerating our use of AI in new products. Equifax had another very strong year of NPI rollouts, with record 2025 Equifax Vitality Index of 15%, which was 500 basis points above our long-term 10% goal and equates to about $900 million of new product revenue during the year.

USIS and EWS worked together to launch new products that deliver USIS credit files and leverage alternative data, including the TWN Indicator income and employment data in mortgage, card, and auto markets, with plans to launch similar products in the personal loan space early this year. These unique to Equifax products deliver credit, identity, and income and employment data in a single solution and are gaining traction with mortgage and card lenders. In 2025, we launched 100% of our new models and scores powered by EFX.AI. These new AI models and scores drive strong incremental lift versus traditional non-AI models and scores. And we're leveraging AI to help our customers identify clear and actionable insights. In 2025, Equifax secured a spot in the AI Fintech 100 list for our new patented explainable AI technology.

We now have over 400 AI patents either secured or pending, and we added over 40 new AI patents last year. In U.S. mortgage, we made great progress working with mortgage lenders and resellers towards the adoption of VantageScore 4.0, with over 200 mortgage lenders testing or in production with Vantage, given the significant cost savings opportunity. As we moved through last year, we also leveraged our industry-leading cloud-native technology and EFX.AI to drive operational efficiencies across Equifax through our new internal AI for Equifax initiative, which we expect to deliver cost savings, efficiencies, speed, and accuracy across Equifax in 2026 and beyond. Last, we delivered very strong free cash flow of $1.13 billion, with very strong 120% free cash flow conversion, which was up $230 million from our February guidance.

With our strong free cash flow, EWS acquired Vault Verify in the fourth quarter and also returned record amounts to shareholders. As we move into 2026, I'm energized by our commercial momentum and our strong exit from the fourth quarter, our new product innovation, our AI capabilities, and the benefits of the new Equifax Cloud. Slide five provides detail on the strength of our free cash flow and free cash flow conversion. Our growth in revenue and EBITDA and declines in CapEx as we complete the cloud are driving accelerated free cash flow. We generated $1.13 billion of free cash flow last year, with a cash conversion record of 120%, which is well above our long-term framework of 95%. This is about $170 million above the midpoint of our October free cash flow guidance.

In 2025, Equifax repurchased over 4 million shares, returning $927 million to shareholders, including $500 million of purchases in the fourth quarter, when our stock was, when our stock was weak and our free cash flow was strong. Further, we paid $233 million in dividends, resulting in total cash return to shareholders last year of $1.2 billion. This was up 6x from 2024 and stronger than our plan for the year. In 2026, we expect to again generate significant strong free cash flow in excess of our 95% cash conversion long-term framework, which will allow us to continue to acquire bolt-on M&A and return cash to shareholders via dividends and share repurchases.

Turning to Slide 6, Equifax's fourth quarter reported revenue of $1.551 billion was up a strong 9% and $30 million above the midpoint, and $15 million above the top end of our October guidance. This strong outperformance was most significant in workforce solutions, where we saw strength in mortgage as well as in government, which was above our expectations, and also in USIS, where the strength was principally in mortgage. Both USIS and EWS saw stronger mortgage markets that were better than our October framework. USIS mortgage hard credit inquiries were down about 1%, but were better than our expectations of down high single digits. For the quarter, USIS—I'm sorry, for the quarter, US mortgage revenue represented about 20% of Equifax revenue.

Diversified markets or non-mortgage constant dollar revenue growth grew over 6% in the quarter, slightly above our expectations and guidance. This was principally driven by broad-based, strong execution in workforce solutions, driven by stronger auto, card, and debt services revenue growth, which was up double digits. Up low double digits, and talent, which was up high single digits. USIS diversified markets revenue was consistent with our expectations, while international was slightly weaker than expected, principally reflecting end market weakness in Canada and European debt management, despite very good performance in Brazil and Australia. On an organic constant currency basis, revenue growth of 9% was over 200 basis points above the midpoint of our October framework, which gives us strong momentum as we move into 2026.

Equifax delivered fourth quarter EBITDA of $508 million, with an EBITDA margin of 32.8%, which was slightly below our October guidance. While EWS and USIS EBITDA margins were above expectations, and international was at the top end of our October guidance range, Equifax overall margins were slightly lower than guidance due to higher incentive compensation, which impacts our corporate expenses. We expect incentive compensation to normalize to target levels in the first quarter, as 2026 compensation targets are set at our plan for the new year.

EPS at $2.09 a share was six cents above the midpoint of our October guidance, and we returned $561 million to shareholders in the fourth quarter, including purchasing 2.3 million shares, or about 2% of shares outstanding, for $500 million to take advantage of a weaker Equifax stock price. Our strong fourth quarter revenue performance and business unit margins give us positive momentum as we move into 2026. Turning to slide seven. Workforce Solutions revenue was up a strong 9% and better than our October guidance and our expectations. Verifier diversified markets revenue growth was up 11%, which is a very positive momentum as we enter 2026. Government had a strong quarter, building off the third quarter performance, with revenue up low double digits.

Government revenue performed very, very well despite a tough comp, with continued strong state-level penetration, and we had minimal impact on EWS revenue from the federal government shutdown in the quarter. Talent Solutions revenue was up high single digits in the quarter. In October, we discussed weaker hiring volumes that continued throughout the fourth quarter. Despite the weaker hiring macro, Talent Solutions continued to outperform their underlying markets, driven by penetration, pricing, and higher hit rates from record additions and new products, including new solutions from the Total Verified Data Hub, which includes trended employment data as well as incarceration, education, and licensing data. Consumer lending continued to perform very well, with revenue up very strong mid-double digits in the quarter from double-digit revenue growth in P-Loans, auto, and card.

EWS mortgage revenue was up about 10% in the quarter, delivering improved sequential trends from new products, record growth and pricing. Employer services revenue was up 2% in the quarter, despite continued weakness on our I-9 and onboarding businesses from the weaker hiring market. In Workforce Solutions, EBITDA margins of 51.3% were driven by operating leverage from higher than expected revenue growth in the quarter. As mentioned earlier, Twin record additions continued to be strong again in the fourth quarter, with 209 million active records, up 11%. Our 120 million total current records were also up 9%, which represented 105 million unique SSNs. At 105 million individuals with current records in Twin, we have a long runway for growth towards the 250 million income producing Americans.

In the fourth quarter, EWS signed agreements with five new partners, bringing our total to 16 new agreements signed during 2025. Turning to slide eight. We continue to see momentum in our discussions in Washington and with state agencies to support their plans to implement the new tightened OMB social service eligibility requirements. Given our strong value proposition from TWN on the speed of social service delivery, case worker productivity, and accuracy of income verifications, Equifax is uniquely positioned with our differentiated TWN data assets and new solutions to help state agencies increase efficiency and strengthen program integrity, particularly with SNAP and CMS. Partnering with our customers, we're already bringing new innovative solutions to federal and state agencies, supporting the government's goal of reducing the $160 billion of social services fraud, waste, and abuse.

In the fourth quarter, we launched our new continuous evaluation solution for SNAP, which identifies changes in recipients' incomes above program levels, enabling states to reduce SNAP error rates, where nearly 80% of states today are above the 6% federal threshold. Given the strong value proposition, we've already contracted with a few states in the first quarter on our new continuous evaluation solution, with many more actively in discussions to utilize this new product from Equifax. We expect this focus on program integrity from OB3 will be a positive tailwind for our EWS government business in 2026 and 2027 and beyond. While OB3-related deals and revenue will likely be in the second half of the year and in 2027, the increased engagement represents positive opportunities in the near term to penetrate states not using Twin today for social service delivery.

We're also continuing our positive engagement in DC with multiple federal agencies to support their efforts to strengthen social service program integrity. There are several new incremental opportunities that would drive positive future growth for EWS. This current environment is a unique opportunity for our government vertical, with the big focus on improper social service payments. EWS has significant opportunities for medium and long-term revenue growth, supporting government programs in the big $5 billion government TAM for Equifax, which gives us confidence in our ability to deliver government revenue growth above the EWS long-term revenue growth framework of 13%-15%. Said differently, we expect our government vertical to be our fastest growing business across Equifax going forward. Turning to slide nine. USIS revenue was up a strong 12% in the quarter, driven by strong mortgage outperformance.

USIS diversified, or non-mortgage revenue, grew 5% in the quarter and was in line with our guidance. Within B2B diversified markets, we saw very strong high double-digit growth in auto from pricing and strong volumes in auto pre-approval products, and low single-digit growth in FI. Given the stable lending environment, we have not seen changes in customer marketing or risk management behavior. USIS mortgage revenue was up a very strong 33% and better than our expectations. While hard mortgage credit inquiries were down 1% in the quarter, these volumes were better than our October guidance of down high single digits. FICO pricing, along with growth in mortgage pre-approval products with our new TWN Indicator, drove mortgage revenue growth for USIS.

In 2026, we expect to see share gains in USIS mortgage pre-qual, pre-approval and hard credit inquiry products from the adoption of our new mortgage credit file with twin indicator and twin total income products. Financial marketing services, our B2B offline business, was up low single digits in the quarter. USIS's consumer solutions business had another very good quarter, up high single digits from strong customer acquisition trends in our consumer direct channel, as well as strong growth in partner revenue. Our USIS B2C business remains on offense, entering into an expanded relationship with Gen Digital, providing our differentiated data, their Engine by Gen marketplace. Later this year, we'll also leverage Engine by Gen to provide myEquifax consumers in the US with access to expanded and personalized financial solutions.

USIS EBITDA margins were 36.3 in the quarter and up over 100 basis points sequentially, and above the top end of our guidance range from stronger than expected revenue growth and operating leverage. Turning to slide 10. International revenue growth was up 5% in constant currency and below our expectations, principally in Canada and our European debt recoveries management business. Latin America growth of 6% was led by high single-digit growth in Brazil and Argentina. Brazil continues to be a big success story for Equifax, with strong above-market revenue growth from share gains. Canada, Europe and APAC delivered 4% growth in the quarter. International EBITDA margins of 31.6% were slightly above our October framework. Turning to slide 11.

Proprietary data is the foundation of our highly differentiated products and analytical and decisioning capabilities, through which our customers generate unique solutions to grow their businesses and mitigate risk. Only Equifax can access our unique and proprietary datasets. The application of advanced AI and traditional IT-based analytical techniques allow us and our customers to develop solutions that are reliant on our only Equifax proprietary data. As AI advances, we are confident we are able to generate more effective analytical solutions based on our proprietary data at accelerated pace, as well as make these advanced analytical solutions available to more customers. Slide 11 provides more perspective on the percentage of Equifax global revenue that is based on data that is proprietary and not available or broadly accessible.

In total, about 90% of Equifax revenue is generated through the direct sale or through derivative products generated from our proprietary only Equifax data. Within the US, almost 90% of our revenue is generated from our proprietary datasets, such as the credit file and with our twin income and employment database, which is our most unique and valuable data asset. Within USIS, proprietary data assets include the consumer credit file, along with our alternative consumer credit assets like NC + or NCTUE, DataX, Teletrack, and IXI Wealth Data Exchanges. These USIS assets are proprietary to Equifax and only accessible by Equifax. Within our international businesses, proprietary data includes consumer and commercial credit, as well as other proprietary data exchanges, like our financial services broad exchange in Canada and our Australia Income Verification Exchange, with data approaching 50% of the employment market.

Over 90% of international revenue is generated from proprietary only Equifax data. The proprietary and unique nature of our data is a huge asset for Equifax in this new AI environment, as only Equifax can utilize the data for customer solutions and new products using our advanced AI capabilities. Turning now to slide 12. AI is fundamentally changing how we operate, from technology to data analytics, products, operations, and across Equifax. Our $3 billion cloud investment provides the technology platform that enables us to leverage AI capabilities across every corner of Equifax. We're driving AI deep into the organization, with almost 90% of our team leveraging Google Gemini AI in their day-to-day roles. AI is not just an add-on at Equifax, it's now part of our D&A and how we operate every day.

Our cloud transformation is now delivering measurable returns across software development, operations, and business processes, from lowering operational risk from fewer service disruptions that increases customers' trust and capacity innovation, capacity for innovation, and creating predictable, repeatable deployments and reducing human error with 90% of our infrastructure as code. We are also getting more software output from the same engineering investment, with about 1,900 Equifax software engineers using AI coding tools that have generated over one million lines of code using AI. As we scale adoption across our broader developer population, these gains compound... translating to accelerated product delivery, faster response to market opportunities, and improved return and capacity inside of our R&D and technology spend. Our Agentic AI platform is accelerating and standardizing the development, deployment, monitoring, and governance of AI agents across Equifax.

This is a strategic differentiator for Equifax that reduces duplicative efforts, enables build once, deploy everywhere leverage across Equifax. We're continuing to advance our state-of-the-art machine learning capabilities that allow our data scientists to rapidly build higher predictive models and deploy them quickly, as well as develop capabilities to automate model deployment to make models available faster for our customers. Our advanced model engine also allows our data scientists to build models using Equifax portfolio of proprietary and patented AI algorithms. AI is also extending into Equifax's operations or back office. In the first part of 2026, we're focusing on improving our customer and consumer call centers with AI-enabled and AI-assisted call processes. Our AI call center transformation demonstrates our ability to fundamentally reimagine our labor-intensive workflows, which is a template for broader workforce productivity gains across Equifax.

Over the next three years, we expect to drive towards $75 million of annual cost savings from our EFX.AI operations initiative. The number of new products launched using EFX.AI is up 3x since 2023. We launched our new Ignite AI Advisor in the fourth quarter. This powerful platform includes new AI-driven conversational analytics for deeper customer insights and personalized recommendations that solve a real need for customers. Following a successful US rollout, we are introducing our new Ignite AI Advisor in our global markets in 2026. All new models in 2025 were built using EFX.AI. Our EFX.AI models consistently delivered industry-leading performance, an outstanding nearly 30% lift over legacy models last year.

This big level of performance improvement demonstrates that our AI strategy is not only scaling, but providing the superior predictive value required to lead in the marketplace. In USIS, we recently launched the Credit Abuse Risk Model, an adverse actionable model that leverages AI to help lenders identify first-party fraud and credit abuse behaviors like loan stacking, particularly where traditional credit scores indicate low risk of the consumer. With this score, lenders can identify pockets of prime consumer applicants with delinquency rates as high as 29 times greater than the overall prime delinquency rate. Our new EFX Cloud Foundation is giving EFX an AI advantage in innovation, new products, technology development, operations, and really across every corner of Equifax. This isn't a vision for the future of AI at Equifax. It's broadly in motion across our business.

Turning to slide 13, enabled by our proprietary data and our strong momentum with EFX.AI, we continue to make outstanding progress driving innovation new products, delivering record 17% new product vitality in the fourth quarter from broad-based double-digit performances across all of our businesses, and record 15% vitality for the entire year. We expect strong double-digit VI to continue in 2026 and be above our 10% long-term goal, leveraging our cloud capabilities to drive new product rollouts using proprietary data and EFX.AI capabilities. Last year, we launched a new twin indicator solutions in mortgage, auto, and card, delivering twin income and employment attributes at no additional cost to our customers, which is a huge differentiator, leveraging our cloud data fabric to create powerful new solutions for our customers.

In U.S. mortgage, where these solutions were introduced first, we've seen strong adoption with over 1,400 customers accessing these new OnlyEquifax products. We've already seen strong momentum in U.S. mortgage from Twin Indicator with major mortgage lenders, which will benefit from our new solution in 2026. In auto, we have about 100 customers piloting the new Twin Indicator solution, and we expect accelerating adoption in auto as we move through the year. And in card, although earlier in the product launch, we expect to see customer wins in the first half of 2026. Slide 14 provides perspective on the impact on Equifax operating results from the increase in FICO mortgage pricing over the past few years. As a reminder, Equifax profitability is driven by the sale and the value of our unique data that we sell.

The FICO mortgage credit score is passed through to our customers at cost, and we earn no margin on the sale of the FICO score. In 2025, FICO mortgage royalties represented only about 3% of our total revenue. In 2026, that number will increase to about 6% or double. This drives a substantial P&L impact on Equifax. Last year, Equifax revenue growth, excluding the impact of the FICO mortgage royalties, was about 6%. And in 2026, our guidance implies revenue growth on the same basis, excluding the FICO score pass-through of about 7%, which is within our long-term financial framework. As shown on the right-hand side of slide 14, the increases in zero-profit FICO mortgage score revenue, which has no benefit to our EBITDA dollars, reduces the reported growth in our EBITDA margin %.

2026 EBITDA margins are reduced by over 200 basis points by the FICO mortgage royalties we pass through to our customers, with 2025 EBITDA margins also reduced by over 100 basis points. When we set our long-term financial framework in 2021, we did not anticipate that FICO would have these dramatic price increases benefiting Equifax revenue, but negatively impacting Equifax reported EBITDA margin rates. As we look at 2026, excluding these FICO mortgage impacts, our mortgage revenue growth at about 7% is inside our LTFF, and our EBITDA margins are expected to expand 75 basis points, which is 25 basis points higher than our 50 basis point long-term financial framework for margin expansion. As we go forward, we plan to share our performance, excluding FICO mortgage royalties, given the substantial impacts on our reported results.

Turning to slide 15, our guidance assumes U.S. GDP growth consistent with our long-term financial framework of 2%-3%, and the U.S. mortgage market to be down low single digits in 2026 compared to last year. Internationally, we're expecting economic growth to be weaker than the U.S., particularly in Canada, the U.K. and Brazil. And FX is a positive in 2026 versus last year, benefiting revenue at about 50 basis points and EPS about $0.02 per share. Our 2026 guidance also assumes that all mortgage scores that are delivered will be FICO scores delivered by the three nationwide consumer reporting agencies, consistent with our mortgage scores volume to date in January. There is still uncertainty around when the FHFA will formally accept Vantage for agency mortgage originations. We felt this was a prudent guidance framework at this stage for 2026.

We continue to see strong mortgage industry momentum to move to Vantage, given the sizable cost savings to consumers and the mortgage industry. And we already have over 200 mortgage lenders in production or testing our free VantageScore that we deliver with a paid FICO-scored offering. Total Equifax revenue at the midpoint of guidance is expected to be up about 10.6% on a reported basis and 10% on a constant currency basis in 2026. As discussed previously, Equifax revenue at the midpoint ex-FICO is expected to be up about 7%. Mortgage revenue is expected to be over 20% of our total revenue, and diversified or non-market, non-mortgage revenue, up high single digits on a reported basis and constant dollar basis.

FICO mortgage royalties in our guide are up over 2x from 2025, assuming no Vantage conversion or FICO direct score calculation by mortgage resellers. Excluding these FICO mortgage royalties from both 2026 and 2025, 2025 revenue, as shown on slide 15, you can see our revenue growth at the midpoint is about 7% in 2026 on a reported basis and constant currency basis, and up almost 8%, excluding the low single-digit decline in the mortgage market. Equifax mortgage revenue growth, excluding FICO mortgage royalties, is up mid-single digits. EWS mortgage will continue to outperform the underlying markets by high single-digit %, consistent with our long-term goals.

USIS mortgage, excluding the impact of FICO scores, will outperform the market by mid-single-digit percentages as we gain share from the introduction of the Twin Indicator, TWN Income Qualify, and our telco utility data and mortgage products. And again, this assumes no incremental revenue or margin from VantageScore conversions in our 2026 guidance. Diversified markets or non-mortgage constant dollar revenue growth at the midpoint of 7% is up over 100 basis points versus 2025, driven by stronger growth in EWS and USIS. With weaker overall market conditions in international markets, we are expecting revenue growth and growth rates in 2026 to be about consistent with 2025. John will provide more detail in a minute on our revenue growth at the BU level in his more detailed comments around our 2026 framework.

EBITDA dollars are expected to grow by almost 10% at the midpoint of our 2026 guide to about $2.12 billion, $2.12 billion, up from, up from about 5%, 5.5% growth last year. And as a reminder, there is no profitability on the sale of FICO mortgage score by Equifax, so EBITDA dollars are the same in both the with and without FICO mortgage score revenue views. And given there's no profit in the sale of FICO scores in mortgage, we are indifferent to tri-merge resellers calculating FICO scores under the new FICO direct model. EBITDA margins, however, are impacted meaningfully by the zero margin FICO score revenue in our reported results. Including the revenue from FICO mortgage score sales, reported EBITDA margins in 2026 would be down about 30 basis points at the midpoint.

However, ex-FICO, EBITDA margins grow substantially, up 75 basis points in 2026. The 75 basis point margin growth shows the leverage we are driving as we deliver high margin data sales as well as cost savings from technology and AI operational initiatives. EPS in 2026 at the midpoint of $8.50 is up 11% versus last year, and our free cash flow of over $1 billion will deliver free cash flow conversion of at least 100%, which is above our long-term framework.... Turning to slide 16, the changes occurring in the U.S. mortgage market to provide lenders score choice, Vantage or FICO, in 2026, is very positive for consumers, the mortgage industry, and for Equifax.

For lenders and consumers, VantageScore four provides stronger score performance at least half the cost, which is a winning combination for the mortgage industry and consumers. As a reminder, the consumer data from the credit file is the basis for mortgage approvals by lenders and the GSEs, not the scores. Equifax is a provider of not only credit data, but also unique telco and utility data with income and employment data, and remains well-positioned to continue to deliver value to mortgage industry participants. Interest in the mortgage industry to move to VantageScore is extremely high. We have over 200 lenders testing our free VantageScore with pre-qual and pre-approval products through mortgage hard pull products, with over 40 principally non-GSE lenders now in production with only the VantageScore.

We are already providing Vantage historical data going back to 2008, 2009 to market participants, both directly and through advanced analytical capabilities via our Ignite for Mortgage platform, to aid our customers in the conversion to Vantage. And we're providing a free Vantage Score with the purchase of any FICO score across all industry segments, mortgage, auto, card, personal loans, and insurance. In mortgage, we believe that when the FHFA, Fannie and Freddie, clarify the requirements for using Vantage Score and begin full acceptance for mortgage pre-review and underwriting, we'll see migrations to Vantage accelerate. The conversion of Vantage is a significant opportunity to drive margin expansion and EPS growth for Equifax. As a reminder, our 2026 guide assumes no conversion to Vantage Score in the U.S. mortgage market.

For perspective and provide data for your analysis, slide 16 includes our guidance for 2026, assuming no Vantage conversion, and the impact of several Vantage conversion scenarios. For example, full conversion in mortgage to VantageScore from FICO scores in 2026 would reduce Equifax total revenue guidance of $6.7 billion at the midpoint by about $270 million, but would increase Equifax EBITDA by about $160 million and increase EBITDA margins by almost 380 basis points and increase our EPS by about $1 a share. As we move through 2026 and there is more clarity on Vantage conversion timing, we'll update our guidance to reflect this shift and the opportunity for mortgage industry, consumers, and of course, Equifax.

As a reminder, the incremental about $160 million in EBITDA impact in 2026 is with the U.S. mortgage market still operating well below 2015-2019 levels. And now I'd like to turn it over to John to provide more detail on our 2026 assumptions and guidance, and also provide our first quarter framework.

John Gamble (CFO)

Thanks, Mark. Slide 17 provides the specifics on our 2026 full year guidance that Mark discussed in detail. The slide includes additional detail on revenue growth rates and EBITDA margins, excluding FICO mortgage score royalty pass-through revenue and expected BU revenue and EBITDA margins. EWS in 2026 is expected to deliver revenue growth of high single digits and EBITDA margins at 51.2%-51.7%, about flat at the midpoint with 2025. Verification services revenue is expected to be up high single digits to low double digits. Mortgage revenue growth is expected to outperform the market by high single digits against a market that is down low single digits compared to 2025.

Diversified markets verifier revenue is expected to be up about low double digits, again, consistent with Q4 2025, from government revenue growth, particularly in the second half, when new requirements begin to be implemented, as well as in auto, card, and personal loans. Talent revenue is expected to continue to outperform an expected weak hiring market. Strong Twin record growth, new products, and continued growth in both pricing and penetration, particularly in government, will continue to drive verification services. Employer services is expected to grow low single digits in 2026. Again, despite the expected weak hiring market, employer services revenue is expected to decline in the first quarter year-over-year. USIS revenue is expected to be up mid-teens%, and EBITDA margins are expected to be 32.4%-32.9%.

Excluding the increase in FICO mortgage score pricing in 2026, USIS revenue growth would be up mid-single digits at the bottom of our USIS long-term framework of 6%-8%. USIS EBITDA margins would be 39.6%-40.1%, up 100 basis points at the midpoint year-over-year, reflecting leverage on high-margin data sales and disciplined cost controls. USIS mortgage revenue, excluding the benefit of FICO mortgage price increase, is expected to grow at mid-single digit % rates against a mortgage market that is expected to be down low single digits year-over-year. The growth principally from share gains as customers increasingly adopt our Twin and NC Plus-based solutions, as well as price increases. Including the impact of FICO mortgage score price increases, USIS mortgage revenue is expected to be up over 35%.

Diversified markets revenue is expected to improve versus 2025 and grow mid-single digits year-over-year, benefiting from accelerating NPI, including Twin Indicator and total income-based products, and share gains as they accelerate, leveraging Ignite AI capabilities. International constant dollar revenue growth is expected to grow mid-single digits at a lower rate than 2025, with EBITDA margins at 28.6%-29.1%, up approaching 50 basis points at the midpoint from 2025. Revenue growth is below the long-term financial framework for international and 2026 growth rates, principally from weaker economic growth in Canada and the UK. Corporate expense in 2026, excluding DNA, is expected to be up low single digits versus 2025. We believe that our guidance is centered at the midpoint of both our revenue and EPS guidance ranges.

As Mark referenced earlier, we expect to deliver over $1 billion of free cash flow in 2026 and a cash flow conversion of at least 100%. With EBITDA increasing to about $2.12 billion at the midpoint, we are also generating over $400 million in debt capacity at our current debt leverage. This creates about $1.5 billion in capital available in 2026 for M&A and return of cash to shareholders. We continue to look for attractive bolt-on M&A to strengthen workforce solutions, our differentiated proprietary data assets, as well as international platforms, and we have substantial capacity for share repurchases, continuing the almost $1 billion we repurchased in 2025. Slide 18 provides the details of our 1Q 2026 guidance.

In 1Q 2026, we expect total Equifax revenue to be between $1.597 billion and $1.627 billion, up about 11.8% on a reported basis year-over-year at the midpoint. Constant dollar revenue growth at the midpoint is up about 10.6%. Diversified markets revenue is expected to be up mid-single digits on a constant currency basis and near the low end of our long-term financial framework, and U.S. mortgage revenue to be up over 30%. EPS in 1Q 2026 is expected to be $1.63-$1.73 per share, up about 10% versus 1Q 2025 at the midpoint. Equifax 1Q 2026 EBITDA dollars are expected to be $444 million-$459 million, up about 7% at the midpoint.

EBITDA margins are expected to be about 28% at the midpoint of our guidance. As a reminder, first quarter EBITDA, EBITDA margins and EPS are lower than the remaining quarters of the year, in large part due to the structure of our employee long-term incentive and equity plans. Due to their structure, a disproportionately large percentage of the expense of these plans for the year impacts the first quarter. Excluding the impact of FICO mortgage scores, 1Q 2026 revenue would be up 7%-9%, nicely within our long-term financial framework, and EBITDA margins in 1Q 2026 would be 29.9%-30.3%, about flat with 1Q 2025 on the same basis. Turning to slide 19, the left side of the slide provides USIS hard credit inquiry growth rates for 2015 through 2025.

We have historically used our hard credit inquiry growth rates as a proxy for U.S. mortgage market growth, as they have in general tracked together. For 2026, we will continue to provide you the USIS hard credit inquiry growth rate data each quarter. However, in 2026, we believe that USIS hard credit inquiries will likely significantly outperform U.S. mortgage market origination activity, due both to significant Equifax wins that we believe will increase our relative share of hard credit inquiries and also the mortgage trigger lead legislation that goes into effect in March of this year, which we expect will result in an increase in the use of hard credit inquiries by lenders and shopping, and therefore a reduction in pre-qual and pre-approval usage.

We will continue to use the trends that we are seeing in hard credit inquiries, which drive the bulk of USIS mortgage revenue, as well as soft credit inquiries to forecast USIS mortgage revenue. The right-hand side of this slide shows the potential incremental mortgage revenue available to Equifax should the market recover to average 2015-2019 levels. For this view, we have continued to use our historical USIS hard mortgage credit inquiries as a basis. We have also revised this slide to show Equifax mortgage revenue, excluding FICO mortgage royalties, and have updated the market recovery column to include the benefit of a full transition from FICO to VantageScore and Mortgage.

As you can see on this basis, with a full mortgage market recovery and a full shift to VantageScore at 2026 pricing levels and EWS records, Equifax mortgage revenue, which would include no FICO mortgage royalties, could increase by $1.2-$2 billion. At our very high variable margins, this would deliver incremental EBITDA of over $950 million and adjusted EPS of over $5.75 a share. For your perspective, as you determine your view of the 2026 US mortgage market, based on a review of Equifax data on mortgage home purchase issuances since early 2022, we estimate that there are over 13 million mortgages with an interest rate over 5%, including about 11 million with rates over 6% and almost 8 million with rates over 6.5%.

This provides a perspective on the pool of mortgages potentially available to refinance as mortgage rates change. Now, I'd like to turn it back over to Mark.

Mark Begor (CEO)

Thanks, John. Turning to slide 20, as I mentioned earlier, our strong 2025 execution sets us up very well to deliver on our long-term framework in 2026, with constant dollar revenue growth of 7% ex FICO, which is inside our 7%-10% long-term framework. Achieving our long-term revenue framework allows us to deliver EBITDA of over $2 billion up high single digits with a margin rate up 75 basis points ex FICO, which is well, well above our 50 basis points long-term framework, and deliver over $1 billion of free cash flow from cash conversion of at least 100% and 11% EPS growth. We are confident in our ability to deliver organic revenue growth in our 7%-10% long-term target range, to continue expanding EBITDA, to maintain cash conversion above 95%, and to execute on bolt-on M&A.

In 2026, we expect to maintain a strong return of capital to shareholders. On the left side of the slide, you see our updated EFX 2028 strategic priorities, which are principally consistent with our prior framework. However, we've updated our EFX 2028 priorities to reflect our drive to accelerate our use of AI, both internally and externally, to drive efficiencies and cost savings for Equifax and bring new and improved products to market quicker that deliver greater lift and performance for our customers. Wrapping up on slide 21, Equifax executed very well last year against our EFX 2028 strategic priorities inside a challenging economic backdrop with a stronger second half and fourth quarter, which gives us some momentum as we enter 2026. Our new cloud-native infrastructure is already providing competitive advantages of always-on stability, faster data transmission speeds, and industry-leading security for our customers.

Importantly, Equifax resources and technology product DNA are leveraging the new Equifax Cloud for innovation, new products, and growth. We're using our new single data fabric, EFX.AI, and Ignite, our analytics platform, to develop new credit solutions powered by twin indicators, like in verticals like mortgage, card, and auto, that only Equifax can provide, which is leading to share gains and growth. We're also broadening our product sets in key verticals like government, Talent Solution, and identity and fraud. The Equifax team is fully focused on growth and innovation. Given our strong free cash generation, we are also delivering on our commitment to return substantial excess free cash flow to shareholders.

As mentioned earlier, in 2025, we returned $1.2 billion to shareholders, which was well above our guidance for the year, and in 2026, we expect to have $1.5 billion available to invest in bolt-on M&A, like our 2025 Vault Verify acquisition, and return substantial cash to shareholders through share repurchases and dividends. The new Equifax is investing in technology, EFX.ai, and proprietary data assets to help our customers grow and deliver returns for our shareholders. I'm energized by our momentum as we enter the new year, but even more energized about the future of the new Equifax. And with that, operator, let me open it up for questions.

Operator (participant)

Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, 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 would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. We ask that you please limit yourself to one question and one follow-up question. Our first question has come from the line of Jeff Meuler with Baird. Please proceed with your questions.

Jeff Meuler (Stock Analyst)

Yeah, thanks. Good morning. Mark, loud and clear, you've been front-footed on AI, both from a product and productivity perspective, and it sounds like you also have an Agentic AI platform in-house. Obviously, you have a massive data advantage in employment and income today. I know it's still relatively early, but on Agentic AI, just how do you think about the applicability of Agentic AI to the employment and income business, given that a lot of the market is still manual, I guess, both from an opportunity or a potential risk perspective?

Mark Begor (CEO)

Yeah. Thanks, Jeff. You know, first off, the, the Equifax moat around data is very high. You know, whether it's our twin income and employment data or our other credit data, as you know, our data is proprietary, and over 90% of our revenue comes from proprietary data. What that means is no one else can access it. You know, when you think about credit data or, or in your question, income and employment data, the income and employment data comes from either payroll processors or individual companies, and that's also walled off. So the only way to access that is in a permissioned basis or in an aggregated basis like we have, that's proprietary. So we think that there's a real moat around it from a data perspective.

With regards to using AI in workforce solutions, we're doing a lot around our employer business, where we, as you know, deliver regulated services to HR managers, things like I-9 validations, for new employees, unemployment claims management, Work Opportunity Tax Credit. We see big opportunities, both in how we deliver those services from an AI perspective to the HR managers and their teams, but also how we actually complete the processes. You know, using AI in the paper processing to really drive productivity, speed, and accuracy. We're seeing a lot of opportunities there. And we talked, you know, in my comments earlier, between EWS and USIS, and this has really happened in the last six months for us as we've been applying AI off of our new cloud platforms inside of Equifax.

We're seeing big opportunities for productivity, speed, and accuracy in our operations in using AI call centers, paper processing, in workforce solutions, as you referenced, to really drive efficiencies and productivity, really quite substantially. We talked about over the next couple three years, in the neighborhood of $75 million of productivity from those efforts on internal operations. So we're quite energized, you know, around the use of AI. The investment we made in the cloud gives us a platform now across Equifax, where we can really deploy it inside of Equifax.

Back to the first point I made, and obviously a topical point with what happened in the markets yesterday, you know, we have a lot of confidence around the moat that's around our data broadly, that really protects us from someone else using AI to try to disintermediate us. You know, we have the data, and as you know, you can't do AI without data. And when you have proprietary data, you've got the ability to really protect that and really deploy it in a very effective way.

Jeff Meuler (Stock Analyst)

Very helpful. And then overall margin looks good to me, normalized for FICO, but any additional perspective on the EWS margin outlook, just any specific investments or headwinds, things like the rev share on data partnerships or anything like that? Thank you.

Mark Begor (CEO)

Yeah, we're pleased. I'm pleased, Jeff, that you are. I hope others are, that we're gonna try to be transparent around, you know, the increasingly large impact that the FICO passthrough has on our reported results. And that's why, you know, going forward, we'll, you know, share with you what our, in particular, margin rate impact is, which is quite substantial. And, you know, we're pleased with our guide of 75 basis points of margin expansion. We think that's a big number. You know, it's 50% above our long-term framework. It reflects the operating leverage in the business and, you know, some of the cost actions that we're taking, you know, driven by AI inside of Equifax. With regards to the Workforce Solutions, you know, those EBITDA margins north of 50% are very attractive.

You know, we think a lot about continuing to invest, and we are, in Workforce Solutions to maintain those margins because they're so accretive broadly to Equifax with in our long-term framework, EWS growing faster than the rest of Equifax. And with those fifty-plus percent EBITDA margins, you've got a lot of accretion, you know, to our margin rate, and they generate a lot of EBITDA dollars. So we are continuing to invest there. We talked a little bit in our comments about some of the new products we're investing in, particularly in government, you know, like the continuous monitoring solution. Twin Indicator is a new solution that's a product between EWS and USIS.

So, you know, investing in new products, investing new tech, investing in some of the, AI capabilities inside of Equifax and Workforce Solutions on how they deliver, solutions, like in the employer business, you know, as part of the investments. And, you know, we continue to invest in, acquisition of records and, investing in our commercial team. So it may be a long-winded answer to say, you know, we like our 50%+ EBITDA margins. Our goal is to maintain those, which we've been doing quite consistently, you know, while continuing, continuing to invest in the, in the business to drive that, kind of double-digit long-term framework revenue growth that, is, as we all know, is quite attractive, at those 50%+ EBITDA margins.

John Gamble (CFO)

And as Mark covered, just in the total Equifax long-term plan, right? Again, it's to hold those EWS very high margins and have them outgrow the rest of the company to add accretion, continue to drive USIS margins up, which you're seeing in our guide, continue to drive international margins up, which you're seeing in our guide, and then also to get leverage on corporate expenses that are outside the BUs, which again, I think you're seeing in what we guided for 2026. So I think 2026 is very consistent with our long-term model and something you should expect to see from us consistently going forward.

Jeff Meuler (Stock Analyst)

Got it. Thank you.

Operator (participant)

Thank you. Our next question has come from the line of Toni Kaplan with Morgan Stanley. Please proceed with your questions.

Toni Kaplan (Equity Research Analyst)

Thanks so much. And thanks for all the information around the FICO impacts and spelling out the different scenarios in the slides. I was hoping... I know your guidance is assuming, you know, 100% FICO score sourced through the bureaus. Just maybe flesh out sort of the hurdles that sort of get you, like, get the lenders and resellers to being able to use Vantage. What are what's still remaining and what's the timing on what those could be to get resolved?

Mark Begor (CEO)

Yeah, that's a great question, Toni, and a tough one to answer, the timing element of it. You know, as you know, the real hurdle that's left is the significant hurdle that's left is the FHFA, as well as Fannie and Freddie, you know, completing their work, you know, from a technology and you know, planning process in order to, you know, allow for the adoption and the implementation of the VantageScore. You know, that's really the big hurdle. Our intel is that it's, you know, underway, meaning it's gonna be imminent. It's hard to handicap when that is, and we just thought it was prudent, you know, for... given that that's uncertain when that's going to happen, to you know, put the guide out that we did.

We also talked about, there's a lot of energy in the marketplace with our customers, you know, number one, adopting our free Vantage score for doing their own testing internally about the Vantage score versus the FICO score, which is actually well known. You know, as you know, Vantage is widely adopted in non-mortgage space. You know, so we've got good adoption there. We've got, you know, a couple of lenders that are non-agency, you know, a handful of lenders that have made the conversion because of the cost savings and performance, you know, and gone to full Vantage. They're smaller mortgage lenders for sure, but, you know, they're not the Fannie and Freddie, you know, conforming mortgages. So it's really a matter of, when does that work complete, you know, by both agencies.

You know, we're collaborating with them, you know, around that. As it unfolds, we think there's, you know, energy in the marketplace to, you know, drive conversions once that gets green lighted and is and you're available to submit a mortgage, you know, using Vantage.

John Gamble (CFO)

We also wanted to be clear in the presentation around in terms of the FICO direct model, which I know there's a lot of discussion around that. And again, to us, we're indifferent in terms of operating profit, right? Our level of operating profit generation is the same, whether we sell the score or not, because as Mark made clear, that there is no margin passthrough to us. So, should that occur, doesn't affect our operating profit. Yes, revenue would be lower, but it's again, it's zero margin revenue. So, we think we're in very good shape for that transition as it occurs or if it occurs, and then obviously, we're in very good shape when Vantage transition occurs.

Toni Kaplan (Equity Research Analyst)

... Great. And looking at government, you know, I think there's a big opportunity there with OB3 in this year as well as next year. Could you just talk about the momentum that you're seeing there versus prior quarters, like if getting closer and closer to having to hit those error rate targets is impacting the state's behavior and, you know, is there a large season, like a large quarter for you for government? Like, is there seasonality that we should be aware of? And just anything in terms of momentum in that part of the business. Thanks.

Mark Begor (CEO)

Yeah, it's a, it's a great, great question, Toni. It's one that, you know, we're quite energized about, and we're putting a lot of effort into, given this unique environment that really started a year ago when President Trump came in, and there was a large focus or an increased focus at the federal level and now at the state level around the improper payments. And OB3, that was passed in July last year, you know, is a big catalyst for that. And what it's resulted, I think we've been clear that a lot of the OB3 specific requirements, you know, will have, we believe, revenue impact for us, meaning positive revenue in the second half of the year and into 2027, when some of those requirements actually, you know, have a start date in the, you know, in the States.

But what the OB3 has driven in this focus on improper payments and some of the focus on error rates or the increased focus on penalties from the error rates above the federal thresholds, is a very, very broad-based engagement with each of the states that we haven't seen really in the history that I've been here. Meaning the states are focused on it. They know that they have challenges if they don't, you know, take actions to drive some of the integrity in the programs, and we've just seen an uptick in commercial activity. And I think you've seen the business, you know, really have some sequential improvement in the third and again in the fourth quarter, which we're pleased with.

It was above our expectations of what we characterize as kind of normal state penetration commercial activity that is, is probably, you know, driving, you know, some increased commercial discussions or commercial engagement, you know, because of the focus on improper payments that's so strong, and because the states know that there's these new requirements coming, you know, later in the year and in 2027. So we're, we're really pleased with the engagement at the state and federal level. And the federal level is a very, you know, obviously a, you know, a big, big opportunity for us with the IRS and some of the other agencies who aren't using our data today, which we think there's a real opportunity. So, you know, we expect this business, you know, to be stronger in 2026 than 2025.

As you know, 2025 was impacted by some of the changes made in the Biden administration around cost sharing of data. You know, that was challenging for some of the states. That air pocket that we had is behind us really from a comp standpoint, which I think is positive. And then you've just got some real commercial momentum. And the other thing we talked in our comments with Jeff a minute ago is that EWS is investing increasingly in new products to aid broadly in the delivery of social services, like continuous monitoring and things like that, that we weren't doing before. So that's another catalyst for us as we move into 2026.

Toni Kaplan (Equity Research Analyst)

Great. Thank you.

Operator (participant)

Thank you. Our next question has come from the line of Andrew Steinerman with J.P. Morgan. Please proceed with your questions.

Andrew Steinerman (Stock Analyst)

Hi, Mark. I wanted to think a little bit more about, you know, slide 11 and proprietary data. When you look at your most sophisticated clients in terms of their, their use of, of AI, are these clients consuming more or less data from Equifax, and why?

Mark Begor (CEO)

Yeah, it's first off, it's more, and we're the only place you can get scale data, you know, at a proprietary basis in the set of datasets that we have. You think about our credit file is proprietary, TransUnion and Experian also have one, they're proprietary. No one else has the scale of that data, and no one else can get to it. Obviously, a bank is gonna have, or a financial institution, their own internal data for their clients, but when they're trying to acquire new clients, and they're also trying to understand what kind of debt does their consumer have in other financial institutions, you have to come to one of the three of us for that. Add to it, the cell phone utility database that we have is only Equifax. DataX, Teletrack, only Equifax.

The IXI dataset, you know, is proprietary at only, only Equifax. And then, of course, the Twin database, you know, if you want to get payroll data, you're gonna come to Equifax, or you're gonna have to go to an individual on a consumer-consented basis. Companies don't share payroll data, you know, just, you know, broadly, in a way that scales. So that's another proprietary dataset. To your question, you know, around the data macro, there's no question that, this is for years, there's been a macro of all of our customers wanting more data, in order to broaden their decisioning.

And as you point out, some of them are using their own AI and ingesting our proprietary data assets, but we're increasingly using our AI to deliver those solutions because we have the scale data assets. So, you know, the moat around our data is very high. It can only be accessed by Equifax or by our customers, you know, when they're buying the data from us. You know, it's just got a very high moat around it, and, you know, we think the combination of that moat around the data in our investments in Equifax AI capabilities, we mentioned on the call, we've got 400 explainable AI patents. We added 40 more in 2025.

You know, so we're expanding our capabilities to leverage our proprietary data assets with AI in order to deliver those higher performing scores, models, and products.

John Gamble (CFO)

... Even with smaller and mid-sized financial institutions, we've delivered technology that lets them ingest our data easier, right? So OneScore, right, integrates a substantial amount of our credit and alternative data, which and it makes it easy for a mid-sized financial institution to access more information using our scores and to drive greater usage. We're seeing that absolutely occur. The AI Advisor that Mark talked about now being launched is supposed to make that even easier because we'll be able to help them create new credit policies more rapidly using our agentic capabilities that will, again, help them ingest more data more quickly using AI Advisor as well as OneScore.

Andrew Steinerman (Stock Analyst)

Makes sense. Thank you.

Operator (participant)

Thank you. Our next question has come from the line of Shlomo Rosenbaum with Stifel. Please proceed with your questions.

Shlomo Rosenbaum (Stock Analyst)

Hi, thank you very much for taking my questions. Mark, I just want to ask you a little bit more about the, mortgage lenders that are testing or in production with Vantage Score. Are you able to discuss, you know, what are the size of some of those mortgage lenders and, you know, FICO talked about, you know, their direct lender, their, you know, the top, top five of the resellers. Where are you with the really heavy users of like, you know, resellers and lenders in that? And then, just in general, are you planning to spend a lot more money this year just marketing that Vantage Score and, and helping your clients test it? Is that, you know, an item that you're absorbing into your margins?

Mark Begor (CEO)

Yeah, so, so on the first half of the question, you know, there's clearly, given the cost difference, you know, between FICO and Vantage, there's a lot of energy around, you know, the testing and utilization, you know, of Vantage. As we've said, you know, we've got, you know, a number of large as well as a large number of customers that are taking advantage of the free Vantage Score delivery. So they can, you know, work on their systems on how you would, you know, bring in a second score and also looking at the performance of that Vantage Score.

We mentioned that there are a number of smaller, recognizable, but smaller lenders that have made the conversion, but they're not in the Fannie and Freddie space, but they've gone from FICO to Vantage. So there's no question that there's, you know, real interest in it, and we think it's just a matter of when does the FHFA, you know, authorize the ability which they, you know, said they're going to do last July to bring the Vantage Score in, and we think there will be a conversion, and it'll obviously take time, but there's definitely a lot of enthusiasm there. With regards to, you know, marketing and costs, you know, we're obviously, you know, working with our customers to support them.

I think, you know, part of the marketing effort was to offer the free VantageScore, you know, with every paid FICO score, not only in mortgage, but in the other spaces. So, you know, that's one that, you know, we're putting commercial effort behind, as well as marketing effort. And, you know, of course, any of our expenses associated with that, which are, you know, I would characterize as, not meaningful, but, you know, are in our, in our P&L and in our, in our guide, you wouldn't-- you shouldn't expect us to do, like, TV advertising or something.

But, you know, we're clearly incenting our commercial teams to work with our customers, you know, around this opportunity to use the VantageScore at, you know, half the price of the FICO score, and really drive that conversion as soon as it becomes available and working hard, you know, to prepare our customers. We're also delivering, you know, data on VantageScore performance, you know, going back to 2008, 2009, to our customers. So, the risk teams can look at the performance, you know, which is, you know, very clear, you know, in the data sets that we have. So that's another element that we're doing to help support our customers as they, you know, evaluate the VantageScore.

You know, as John pointed out, you know, from a guide perspective, we put guidance in place, assuming there's no conversion. We thought that was prudent because we don't know when it's going to be green lighted, you know, by the FHFA. And if there is conversion, it's only upside to us. There's not any downside to it. And, you know, fundamental to that is that we sell the credit file that's used to calculate the FICO score, and we sell the credit file that's used to calculate the VantageScore. And, you know, of course, as we said a couple of times in this call, and it's well understood, when we sell FICO, you know, that $10 is a full pass-through with no margin on it.

But we make full margin on the credit file that we sell because you can't calculate the FICO or VantageScore without our credit data.

Shlomo Rosenbaum (Stock Analyst)

Just a question, if I can follow up with John. Just on net, selling the credit, credit reports, it seems like from the guidance that you're taking the full hit of a pass-through from the FICO score, not marking that up, but it doesn't look like there's much of a change in the cost of the credit reports to offset that. Am I understanding that correctly?

John Gamble (CFO)

So you're talking about we, we indicated excluding the FICO, the pass-through of the FICO revenue, we would be up mid-single digits. So you should compare that against a market that's down low single digits. So doing that math, that's high single digits-ish, right? Type of outperformance relative to the market, which we think is relatively good and relatively good relative to all the other segments in which we operate. So that reflects certainly some price increase. It also reflects share gain that we're driving and we expect to see from Twin Indicator and the other only Equifax products that Mark would have already talked about. And there is also a little bit of a headwind built in there related to what's going on with triggers, right?

So as trigger legislation comes in, our expectation is you'll see increase in hard pulls, but some reduction in soft pulls, and that could have a slight impact on our revenue. We did the best we could to bake all those things in, but we think, we think-

Shlomo Rosenbaum (Stock Analyst)

... growing in that, you know, mid to high single-digit range ex the FICO score is a really nice outcome for our mortgage business.

Mark Begor (CEO)

Well, it's also our long-term framework.

Shlomo Rosenbaum (Stock Analyst)

Yes.

Mark Begor (CEO)

You know, our long-term framework is to grow organically 7-10, and in USIS, 6-8, you know, in there. So, you know, we have our mortgage business ex FICO kind of in that range, which we feel good about, and we think you should, too.

Shlomo Rosenbaum (Stock Analyst)

Thank you.

Operator (participant)

Thank you. Our next question has come from the line of Manav Patnaik with Barclays. Please proceed with your questions.

Brendan Lynch (CFA)

Hey, this is Brendan on for Manav. I just want to follow up on some of the mortgage market commentary. 'Cause, and I've seen the last couple of years, we kind of saw the opposite trend where, you know, there was a lot of shift to pre-qual, and you guys have, you know, taken some share there as well. So it sounds like you think there'll be a reversal of that. So I guess just clarify what's going on on the ground there. And then also, just to be clear, it sounds like you're saying the originations will be down low single digit. That's not the inquiries or hard inquiries you actually think would be better than that?

Mark Begor (CEO)

Sure. So on your last point, generally, we're talking about, we're talking about hard inquiries, and that's generally the way we guide. Now, admittedly, we did indicate that we think we're gaining share there, so, so that we have to kind of net out the share gain when we're coming up with a, with a view of the market. But our, our down low single digits kind of reflects what we think inquiries would be doing, absent the share gain that we're driving and absent some of the shift related to trigger legislation. And, and you know what's going on with trigger legislation. I'm sure you're familiar with it, right?

We think we're going to see some customers choose to purchase a hard pull earlier in the marketing cycle as opposed to purchasing soft pulls, since those hard pulls now cannot be shared with other lenders, so that they have an opportunity to market to the customer that's applying for the loan. We don't think every customer is going to do it. We still think there is... We've seen growth continue in soft inquiries, in pre-qual and pre-approvals, but we think this legislation is probably going to result in some incremental adjustment, where you might see a little more hard pull relative to soft pull for certain customers who choose to move to purchasing hard pulls earlier in the mortgage cycle.

Brendan Lynch (CFA)

Okay, and then on the Twin Indicator, you're, you know, launching that kind of across, across the board, and obviously it's already in market in some areas, but I guess where should we think of the biggest incremental opportunity across your, your different, you know, product lines?

Mark Begor (CEO)

Well, certainly in mortgage. You know, mortgage is the largest FI vertical. You know, it's one where income and employment is used, you know, in every origination, along with credit. And, we've talked many times that, you know, the way the market historically worked is, you know, you pull a credit file up front, but you don't have any visibility if that applicant, you know, is working or what their income and employment characteristics are, because that's typically done later in the process. And that's why we launched the Twin Indicator really last summer. We're seeing great traction with mortgage originators.

We're offering it, I think, as you know, for free, you know, with our credit file, not only in mortgage, but auto and card, and we'll do it in personal loans this year also, because it's really going to differentiate, we believe, our credit file and drive some credit file share, you know, particularly in the mortgage space and that pre-qual application space that'll aid lenders in their kind of marketing funnel, to really differentiate, you know, what kind of loan or will a, will a consumer, you know, close? Because they'll now have visibility, you know, around their employment, a range of income for them that they didn't have before. So we're seeing, you know, some really good traction there and what it should result in, and we're seeing some, some beginning traction there, is share gains.

You know, when there's a 1B pull, you know, in the mortgage pre-qual area, we want it to be an Equifax file because we're offering that differentiated data at no charge, which we think will advantage us from a share perspective. And think about that same opportunity, you know, in auto, which would be kind of the next, you know, big vertical. And then, we're also seeing some traction in card. You know, same, same reasons. You know, historically, you know, card originations have always been done just on someone's credit profile, but you don't know if that credit profile supports someone with the capacity to repay or if they're employed. By adding the twin indicator, it just drives that decision higher, so as a card originator, you can approve more at a lower loss rate.

And if we're doing it for free, which is our, our business model, to drive share gains, you know, we're seeing some traction there, too. So we're super energized around the Twin Indicator, which is a great example of, you know, the kind of solutions we can bring because of the breadth of our proprietary and scale data.

Brendan Lynch (CFA)

All right. Thank you.

Operator (participant)

Thank you. Our next question has come from the line of Faiza Alwy with Deutsche Bank. Please proceed with your questions.

Faiza Alwy (Stock Analyst)

Yes, thank you. I wanted to follow up on the government vertical. So one is, it sounds like you're saying the verifier business for diversified markets will be up low double digits. So one, I'm curious, you know, what you're embedding for the government vertical growth. And then, I guess, as you're having these conversations with, you know, various states and agencies, like, what are some of the factors that they're focused on? Sort of how important is, you know, pricing as a consideration, and if, you know, some of the funding issues that we saw with some of the states, you know, seem to have resolved?

Mark Begor (CEO)

Yeah, government, you know, as you know, has had a long track record of very strong growth, you know, through 2024. You know, kind of the five years prior, it had a CAGR of over 20%. You know, so it's been penetrating into that large $5 billion TAM, which is principally at the state level. And as you know, what we're delivering to states is, you know, speed of social service delivery because it's done instantly versus a manual verification of income eligibility. We're delivering productivity for the caseworkers at the state level, which is a very strong value prop. Then we also deliver integrity, you know, meaning it's, you know, very current. It's data that's from last week's paycheck, you know, so it's a very current data set.

That growth penetration is really because of those three value props, and that hasn't changed. You know, at, you know, south of around 700 million of run rate revenue, a little north of that in our government vertical, versus the $5 billion TAM, our commercial team's focus is, you know, on those states and agencies, it's really agencies, that are still doing it fully manually. And when you think about a $5 billion TAM in our business, you know, at, you know, less than 20% of that, there's a long runway for growth as we work with the, with the states. To your question around, you know, what are... why isn't it a $3 billion business? You know, we think it will be over time.

There are challenges around technology, around process flow change, and as you point out, there can be challenges around budgets, you know, in states. We deliver a very, very high ROI. We deliver a big ROI on caseworker productivity, you know, meaning they can cover more individuals who are coming after social services. But we also deliver a huge ROI payback, you know, on the improper payments. And as you know, the federal government pays for social services, you know, with the states delivering it, and you know, over the last year, they've really quantified the improper payments as being a massive number of $162 billion. So that's the incentive at the federal and state level.

And, you know, what changed in, you know, the last, call it 12 months, is the passing of the OB3 bill that put more teeth into the requirements that the states have to deliver those social services, meaning they have to use more verified data. They've got to do it more frequently. Today, there's 12-month redeterminations. It goes to six months, you know, in 2027. You know, all those actions are really putting teeth around addressing the $162 billion, and it creates opportunity for Equifax and Workforce Solutions. So, you know, we were pleased to see the kind of above expectation revenue growth from, call it, state penetration. That's where it happened in the fourth quarter. There was some of that in the third quarter, and we expect that to continue in 2026.

And then you've got, you know, kind of the macro of the OB3 requirements that go into place, you know, later this year and into 2027 and beyond. You know, a lot of those conversations are happening now about how do I get prepared for that? Because of the, you know, incentives or penalties, perhaps you wanna call it, that are embedded in OB3 for states that, that don't take these actions. They're now gonna have, you know, massive cost sharing or cost shifting from the federal government to the states, where the states are gonna be required to pay for a large portion of the social services if they don't get their error rates down. So that's been a real catalyst for, you know, an increase in conversations, which gives us confidence, you know, in this vertical going forward.

As we've said a couple times on this call, you know, it's our expectation that this government vertical will be our fastest growing business, not only in Workforce, but across Equifax going forward, because of the uniqueness of our data set and our solutions, and because of the ROI and value we deliver, you know, to the agencies, when they utilize our data.

Faiza Alwy (Stock Analyst)

Great. Thank you. And then just to follow up on the mortgage, and correct me if I'm wrong, I think you're guiding mortgage to, you know, low double digits ex FICO in the first quarter and mid-single digit for the year 2026. So just curious, like, is that conservatism? Are you assuming higher rates, you know, for the remainder of the year? Or, you know, what's behind that assumption?

Mark Begor (CEO)

It's really, it's really related to the, the way the mortgage market and overall mortgage revenue moved in 2025, right? You saw, improving levels as you moved through the year. So when you do year-over-year growth rates, they just look a little different than a flat level of performance relative to, a consistent level of performance in each quarter. So that's all that's happening. So the run rates that we're seeing today, relative to where the first quarter was last year, actually results in a little better mortgage performance in the first quarter. As you move through the year, if that run rate is maintained, then what you'll find is that you'll see the growth rates decline as we go through the year, and that's what it reflects.

Faiza Alwy (Stock Analyst)

Understood. Makes sense. Thank you.

Operator (participant)

Thank you. Our next question has come from the line of Ashish Sabadra with RBC Capital Markets. Please proceed with your questions.

David Bother (Investment Banking VP)

Hi, good morning. This is David on for Ashish. Just following up on the government vertical, I was wondering if you could talk about some of the pricing trends you've seen or expect to see in that vertical. I understand the three value props that you're providing, which seems strong, but there was some letter sent by some Dem senators regarding pricing. And then, as a follow-up, was there any update to the tri-merge to bi-merge saga? Thank you.

Mark Begor (CEO)

Yeah, on the first question, you know, we have, you know, modest price increases, you know, at the government vertical. You know, we don't. Price is not really a lever for us. We really think more about penetration. You know, in the last year, we've gone to more subscription models in government in order to, you know, help, a new state, get used to using the service, you know, and, and really help them in the adoption of our, solution. So we don't think about price as being, you know, a big, lever for us, and, you know, it's, it's not one that, you know, is central. You know, we, we have, multiple levers in Workforce Solutions. It's, when you think about government, penetration is such a huge one.

You know, we focus on delivering the right value in return for our customers. Product is a big one as we roll out new solutions. You know, last year, we rolled out a consumer consented solution in government, to go after some of the gig individuals who are going after social services that might have a W-2 job and be in our data set, but we don't have the gig income, so we've got that in market now. We talked about our new, you know, monitoring solution that we're rolling out, and we're seeing some real traction with that. So product is a big one. And of course, you know, record additions are a big positive in this business and unique to Workforce Solutions.

You know, when we add new records, and we added five more partners in the fourth quarter and 12 last year, in Workforce Solutions, you know, that really drives higher hit rates. So you've got a lot of levers, you know, for growth. With regards to your second question, you know, of the Bi-merge, Tri-merge, obviously, there's still some noise around that. You know, everyone we talk to understands, whether it's the mortgage industry, you know, our customers, you know, or you know, on the Hill or with the agencies, they understand the large differences between the three credit files from TU, Experian, and Equifax, and why a Tri-merge is so important. You know, number one, around access to credit.

You know, for example, there's 10 million consumers in the U.S., roughly, that are only on one credit file. So if you don't pull all three, you might not be able to approve that consumer, you know, in a mortgage, which is federally guaranteed, with the intent of you know, expanding access to housing, you know, with the federally guaranteed support. So, you know, from an access to credit and getting a complete picture on the consumer, the tri-merge is super important, and there's all kinds of studies that have supported that.

And then from a safety and soundness, same thing, you know, if you went to pulling, you know, one or two of the credit files instead of three, you may not pick up all the trade lines, and there could be trade lines that are either positive, that help the consumer, or negative, that say there's a more risk with that consumer. And that's why we think tri-merge is well embedded, is an important tool, you know, for the underwriting of consumers in mortgage.

You know, frankly, the most sophisticated lenders in the United States, outside of mortgage, you know, pull tri-merge for cards, they pull it for auto, they pull it for personal loans for that same reason, because they get a more complete picture on the consumer, and it really drives their ability to approve more at lower losses, but also make sure that they're managing their loss profile from an underwriting standpoint.

David Bother (Investment Banking VP)

Thanks so much.

Operator (participant)

Thank you. Our next question has come from the line of Jason Haas with Wells Fargo. Please proceed with your questions.

Jason Haas (CFA)

Hey, good morning, and thanks for taking my questions. I'm curious if you could talk about your philosophy on how you're thinking about pricing the credit file. I guess we know the price for this year, but for next year and going forward, curious how you're thinking about that. Thank you. And I guess, particularly for mortgage.

Mark Begor (CEO)

Yeah, I think it's the same in mortgage and non-mortgage. You know, we do price increases every year in all of our products, you know, and across, whether it's Workforce Solutions or USIS or across our international business, we generally do those on 1-1. You know, we think about those as being reasonable and modest, you know, compared to what FICO has done, you know, it's obviously public, you know, doubling their price. That. We don't do doubling a price and, you know, we have lots of relationships, you know, with our customers, which is why, you know, I would characterize it, we're balanced around price, and we'll continue to be balanced, you know, going forward.

Jason Haas (CFA)

Got it. That, that makes sense. Very helpful. And then I wanted to focus in on, on talent, which I, I thought was a bright spot, even despite the soft hire market. Can you just reiterate, what, what drove the, the strength there, and how you expect that to trend, going forward? Thanks.

Mark Begor (CEO)

Yeah, so our talent business is really heavily driven by not only our, our twin data, which continues to perform well, and we continue to increase penetration, but we also have a broader set of products, including in education, around incarceration, right? That are also expanding. So I think the way we continue to outperform that market, which, you know, as you saw, BLS was down low single digits. We grew, obviously, much stronger than that, up, up mid- to high single digits. So very good performance on our talent business is really driven by continued performance on the team of continuing to build penetration with our income-based products, and then also expand consistently our education and other products, including incarceration, which also continue to grow. So nice, nice, very, very nice performance by the team in a very tough market.

Jason Haas (CFA)

That's great. Thank you.

Operator (participant)

Thank you. Our next question has come from the line of Kevin McVeigh with UBS. Please proceed with your questions.

Kevin McVeigh (Stock Analyst)

Great, and congratulations on the execution. So obviously, a lot of moving parts out there. I, I guess just a little bit higher level, I mean, it seems like there's really no changes to the longer-term framework, right? Despite a pretty meaningful shift from FICO. So is the offset you're able to lean into, to the AI a little bit more to drive more re-- I mean, you see it in the Vitality Index. Is that driving more revenue and expense management or, or other parts to, to the business you're helping offset that? And, you know, obviously, there'll, there'll be some shift as, as VantageScore starts to, to, to kinda season a little bit. But just any thoughts on, on the model overall, just given, you know, pretty dynamic shift in, i-in FICO?

Mark Begor (CEO)

... Yeah, FICO is one that obviously is just a no margin pass through for us, you know, and it's very sizable now, which is why we opted to spike it out, and we will do going forward because it's such a big piece of our revenue and, you know, zero calories. You know, when we sell a FICO score, you know, we just pass that through and, you know, we're gonna do that. You know, the performance of the business, we're pleased with. You know, we're pleased with, you know, our revenue guide and, you know, for 2026, with a mortgage market that's, you know, down slightly again. You know, we had hoped that inflation would come under control and the rates would move down.

Obviously, they've ticked back up, which has put some pressure on the mortgage market. But, you know, to have a 7% ex FICO guide, you know, which is at the lower end of our long-term framework, ex the mortgage market, you know, I think we're something closer to 8%. You know, we feel good about that. And when you look at the three businesses, you know, versus their long-term framework against the 7%-10%, you know, having EWS, you know, in that low double digits, we think is a big, big positive moving forward, you know, as they return to their long-term growth rate. USIS performing well, both mortgage and diversified markets or non-mortgage, and then same with international. So, you know, what's driving that?

You know, I think it starts with our unique and differentiated data, and, you know, as you point out, you know, we've had a big focus, obviously investing in our technology, but our technology is now enabling us to deliver, you know, more innovation and more new solutions. You know, we think that's accretive, you know, and supports our growth rate, you know, and the fact that we have our Vitality Index, you know, last year, 50% above, you know, our, long-term framework of 10% is really good. You know, because that's momentum as we go into 2026, you know, those new products. And you look at new- some of the new products we're rolling out that a year ago, we weren't talking about with you, we weren't doing because we were still finishing the cloud, you know, like the Twin Indicator.

You know, that is, we think, a really powerful solution. We're offering it, you know, at no charge to our customers to drive share gains for our USIS credit file. And as you know, the next credit file we sell is very high incremental margins. So we're pleased about that. With regards to the margin, you know, ex FICO of 75 basis points, you should be pleased about that. We are. You know, that's 50% above our long-term framework of 50 basis points. You know, that's really positive. It's gonna drive double-digit EBITDA growth and EPS growth, which is, you know, gonna drive our free cash flow. You know, we're really pleased about that. And that's really driven by the, you know, pure operating leverage that we have with very high fixed cost structure.

So our next product sale, our next credit file sale or twin indicator sale or, you know, twin data sale is very high incremental margins. So that operating leverage is very high on revenue growth. And then, as you point out, you know, we're driving... Really, in the last six months, the second half of last year, you know, a big focus on using AI inside of Equifax to drive productivity, speed, accuracy, customer service. But on the productivity side, we laid out that, you know, we've got a plan for $75-odd million of cost saves, you know, over the next couple, three years, from a lot of AI deployment inside of our back office. So I think that's a real, a real positive.

So, you know, we're excited about the execution of the business and, you know, really the performance and momentum coming out of last year. But then, you know, our kinda outlook for 2026, we're pleased with.

Kevin McVeigh (Stock Analyst)

Very helpful. Thank you.

Operator (participant)

Thank you. Our next question has come from the line of Kelsey Zhu with Autonomous Research. Please proceed with your questions.

Kelsey Zhu (Senior Research Analyst)

Hi, good morning. Thanks for taking my question. Some of your peers have called out the improvement in the underlying consumer credit supply-demand dynamics. Was wondering if you can talk a little bit more about what you're seeing there in terms of volume growth, outlook for card, auto, and personal loans? Thanks a lot.

Mark Begor (CEO)

Yeah, the market is still quite solid. We talked about the mortgage market. We tend to talk about that, you know, from a market standpoint because it's so impactful and it's been a negative for, you know, quite some time because of the high interest rates. You go into the other verticals and they're, you know, solid. You know, they're some of the activity is kind of below still pre-COVID levels, but, you know, they're still, you know, attractive originations. And then, you know, there was a question earlier around, you know, kind of the data macro. That's a positive for us, as well as, you know, our ability to use AI to deliver higher performing products and solutions. You know, our customers, you know, from an origination standpoint, are still originating. You know, there's no change.

We don't see any, you know, kind of behavior around people thinking about slowdowns or recessions, but they're after more data, which is a positive for us. They're after higher performing scores and models, and we talked about some of the big lifts we're delivering now with our AI-generated, you know, scores and models, and, you know, those become positives for us to, you know, penetrate, you know, in with our customers, because we're delivering higher performing solutions. But your, your question on the markets, like, our customers are strong, meaning financially, you know, the banks and financial institutions, and, you know, broadly, the consumer is in, you know, good shape, because they're still working and spending. So, you know, that's a positive force.

John Gamble (CFO)

So we're seeing FI for us has been good. If you look at online, we're seeing nice mid-single-digit type of performance. Auto, really strong, which I know Mark talked about in his comments. Insurance was very strong. We're seeing double-digit type of movements there as well, so very, very strong. And for us, really across these segments, fintech is performing extremely well. So that's an area of real growth for us, where we're seeing very good performance that's helping us across each of those segments that I referenced. So overall, I think we think our performance in USIS, especially as you look at online, is very good.

Kelsey Zhu (Senior Research Analyst)

... Got it. So second question, understanding that you are EBITDA agnostic on the FICO Direct program, but it does impact revenues. So just curious to hear what you're seeing in terms of tri-merge resellers adoption or pickup for the FICO Direct program. And your guidance, I think, implies 0% penetration rate for this program. So just want to get more of your thoughts behind that assumption.

Mark Begor (CEO)

Yeah, I think we said in our comments, there's zero CRA reseller score calculations so far this year, meaning in January. You know, we know there's dialogues going on between the CRA resellers and Equifax, and the CRA tri-merge resellers and FICO. I think FICO talked about that on their call maybe last week. I believe they said that, you know, that they didn't see this happening until maybe the second half, but, you know, meaning that, that the resellers, being prepared to do it, going through the approval process, et cetera.

But, you know, really, we tried to say in our comments earlier that we're kind of agnostic, whether we calculate the score or the tri-merge reseller calculates the score, because, if they calculate the score, we're going to sell them the credit file, you know, at our full price. And then presumably, they're going to have to pay FICO $10 for the score. You know, whether they pay the $10 to FICO and calculate the score or we do it, we're kind of agnostic because, you know, it has no margin impact to us, meaning we don't get any margin when we sell the FICO score. We get the margin when we sell the Equifax credit file. So, you know, how that'll unfold is tough to handicap.

What the incentives are, why a reseller would want to calculate the score, is, you know, I think something they're trying to figure out, meaning how are they going to make incremental margin for investing in the score calculation if they're paying a full price to FICO and a full price to Equifax? I think that's challenging, but we're agnostic, you know, and we're going to be, you know, collaborative, you know, with our customers, which are the, you know, the Tri-merge resellers, to, you know, help them in ways that make sense if they decide they want to do it, because there's really no P&L impact to us. Meaning, and we think about P&L as, as our, EBITDA, our EPS, and our free cash flow.

You know, it's neutral to us whether we calculate the score or not. And again, because of that uncertainty, we opted to have a guide that said, there's going to be no CRA score calculation in 2026, and you know, there's going to be no Vantage conversion. You know, I don't think either of those are true, but it was the kind of the best guide that we could put together, and we thought, you know, putting those scenarios in place for you helps you think about, you know, if there is a conversion, you know, what it means to Equifax. And we'll be super transparent, you know, every quarter on what activity we're seeing or not seeing, you know, on both of those fronts.

You know, so we can share with you, and then you've got enough information so you can make your own assessments of, you know, how you think it's going to unfold going forward. But, you know, between the FHFA and Fannie and Freddie's decisioning and timetable being uncertain, and the same with the CRA, you know, tri-merge resellers, we thought that was the right guidance to put in place, you know, for Equifax.

Kelsey Zhu (Senior Research Analyst)

Super helpful. Thanks a lot.

Operator (participant)

Thank you. Our next question is coming from the line of Scott Wurtzel with Wolfe Research. Please proceed with your questions.

Scott Wurtzel (Equity Research Analyst)

Sure. I just wanted to go back to the EWS margins and just, you know, with sort of this, you know, assumption around, you know, new kind of government revenue from these benefits coming in in the second half of the year, should we assume that there could be, like, a ramp in EWS margins as we move throughout the year? Thanks.

Mark Begor (CEO)

Yeah, so I think John said it, and I said it in a different version. You know, we like our 50%+ EBITDA margins in EWS. Our goal is to maintain them, you know, in our long-term framework because they're so accretive, you know, from a free cash generation as well as to overall Equifax, you know, margin rates, which are so powerful. And, you know, we're making investments to keep that top line at EWS, which is also accretive to Equifax, you know, going, whether it's around new products, you know, new technology. We're investing in AI, I talked about, from some of our product delivery in the employer business, new products that we're rolling out.

So we're going to keep that balance of investing in EWS to keep their top line, double-digit top line growth over the long term, going, while still, balancing, maintaining those 50% plus, EBITDA margins. For overall Equifax, obviously, if they're growing faster, that's part of the accretion. It's in our 75 basis points expansion this year, you know, and then the operating leverage in the rest of Equifax, helps drive that 75 basis points, which, you know, we're very pleased with. You know, that's, well in excess of our 50 basis points, you know, framework, over the long term.

Scott Wurtzel (Equity Research Analyst)

That's helpful. And then just a quick follow-up, just on, sort of your outlook on international, and sort of your assumptions around, you know, the macro and key geographies. I know you called out, you know, some weaker economic growth prospects, I think, in Canada and the UK, but, you know, I know there's also been some, you know, macro volatility in Brazil as well. So just wondering if you can kind of give sort of a high level, you know, macro assumptions in your key, international geographies that's sort of underpinning guidance this year. Thanks.

Mark Begor (CEO)

Yeah, I think it's well, well recognized, the Canadian and U.K. economic kind of macro challenges. You know, just to contrast, in the U.K., we performed well in our CRA business, you know, very strong performance, even in a weak market. The debt management business, where, you know, we do a lot of debt recovery analytics, you know, was under pressure in the U.K. Canada is clearly has got a challenge, you know, from the tariff conversations that's happened, really over the last year. You know, we expect to see, you know, that be a pressure for that business, but we expect better performance in 2026 than 2025 out of out of Canada. Australia, fairly stable, and we've seen, you know, good performance in our business there. Latin America, broadly, you know, in good position.

There are some Brazil economic conditions, but you know, we've had very strong performance in Boa Vista. You know, our acquisition we made a couple of years ago, you know, is where we're gaining share there. So, you know, we would expect that business to perform well again in 2026. So, you know, international, we've got kind of framed out at the lower end of their long-term guidance of 7-9, you know, principally for some of the underlying economic weaknesses, you know, in some of the markets.

Scott Wurtzel (Equity Research Analyst)

Great. Thanks, guys.

Operator (participant)

Thank you. Our next question is coming from the line of Craig Huber with Huber Research Partners. Please proceed with your questions.

Craig Huber (Equity Research Analyst)

Great, thank you. My first question, you said several times today and in the past, that you're agnostic if a FICO score was sold through Equifax or the resellers and so forth. Obviously, you're agnostic because you've raised the price of your credit file for mortgages and the associated fees to offset that, which is fair. I mean, it's must-have data if you wanna originate a mortgage out there and stuff. I'm curious on two fronts there: What has the reaction been to the price increase to your credit file? A significant price increase there in the mortgage market. What's been the reaction out there? And is there any learnings there about that reaction there, that you could potentially think about raising prices more aggressively in other markets, credit cards or maybe auto, more importantly? That's my first question. Thank you.

Mark Begor (CEO)

Yeah, Craig, your comments really aren't accurate, you know, around what we've done with the credit file, and I think there's some misconceptions out there about, you know, what was marked up or what was not marked up. You know, from our perspective, we've always been selling a credit file and a credit score, you know, for years. And that credit file, you know, included the FICO score, you know, where we passed through the cost of the FICO score. So, you know, from our perspective, we haven't had a large increase in the credit file in 2026, and we haven't in the past. And, you know, we've shared that in prior investor meetings.

You know, we passed through the FICO credit score, and you know, I would tell you that there's you know, a lot of consternation in the marketplace, meaning with mortgage originators around a FICO credit score going from $4.95 to $10. You know, that's just a reality. You know, that's not... You know, we didn't take our credit file price up anywhere near you know, in a hundred miles away from that kind of a price increase. So that's really been the focus of the conversation. And you know, what's the learning for us? You know, is we're gonna continue to have very modest increases on our credit file going forward.

Craig Huber (Equity Research Analyst)

You know, we would not do those kind of large price increases, and we're, we've not done them in the past.

John Gamble (CFO)

As a reminder, we added a twin indicator, and we added NCTUE data to our credit file, right? With that modest price increase. So we not only had a modest price increase, we also made the information we're delivering more rich, right? So a better product with a modest, modest, modest price increase.

Craig Huber (Equity Research Analyst)

Sorry, just to be clear on my end: So where did you exactly get the extra money to make up for the loss, that you're no longer getting a margin on the FICO score that you were selling before?

Mark Begor (CEO)

We never... Again, this is a narrative that was created by, you know, really, FICO. We never had a margin on the on the FICO score, and I think we've been very clear on that. We sell a credit file, and that credit file cost is what we've been delivering to our customers, and then we pass through a FICO score. Last year was $4.95, and we passed that through. It was very clear to our customers, and this year it's $10, and we're very clear to our customers on that, period.

Craig Huber (Equity Research Analyst)

Okay, and my last question, could your Vitality Index of 15%, just talk real quick, if you could, about the AI-enhanced products or new products that you're very, very excited about here. That's a big number, 15.

Mark Begor (CEO)

Yeah, there's a bunch. I had them in my prepared comments earlier, and you know, a lot around scores and models, around you know, risk underwriting, credit underwriting, where we're seeing you know, big 10-15-point kinda lift in performance, which is massive. So those higher performing scores, using more data you know, from our differentiated data sets, deliver higher performance for our customers. So we're seeing share gains, we call that you know, OneScore. It was one of our products that pulls together all of our differentiated data that we rolled out last year, and we're seeing a lot of take there. We're also seeing in identity and fraud, really the same thing.

By ingesting more identity and fraud data assets, we're seeing higher, you know, hit rates, or higher performance rates on our identity solutions, or higher pass rates. So that's been a real positive. So scores and models, you know, really big deal. We talked about some of the additions we're making in our adding AI capabilities to our Ignite analytics platform to make that, you know, more functional, more usable, you know, for large, but particularly medium and smaller lenders, you know, so it's easier to use Agentic AI, you know, around those product solutions. It's really quite broad-based on, you know, the energy we have around AI. And as you point out, you know, our 15% vitality last year, or 17 in the fourth quarter, obviously, we ramped through the year.

You know, a lot of that is being driven by our differentiated data, you know, that's really proprietary to Equifax, and then second, our use of AI. And as I mentioned, you know, on the call, we continue to invest in our explainable AI capabilities with 40 more AI-related patents that we filed in 2025. You know, I think that's a great, you know, kind of indicator of our investments to, you know, to drive our industry leadership around using AI to deliver our differentiated data to our customers.

Craig Huber (Equity Research Analyst)

Great. Thank you.

Operator (participant)

Thank you. Our next question has come from the line of Zach Lasich with FT Partners. Please proceed with your questions.

Zach Lasich (Senior Research Analyst)

Hi, thanks for the question. Despite no impact to EBITDA or EPS, is there an assumption built into the revenue guidance on what percentage of mortgage volumes will move to the direct model for FICO? And any color on how the brokers have been thinking about the direct model and the option for the performance pricing would be greatly appreciated. Thanks.

Mark Begor (CEO)

Yeah, I think we said earlier in our comments, and there was a question a couple of minutes ago on that one, that you know our assumption in our guide is that there's no Vantage conversion. There's also no CRA reseller or tri-merge originator, so-called direct model using FICO's term, score calculation. And we haven't seen any of that so far in the first quarter, meeting in January. And our conversations you know with you know those you know kind of tri-merge resellers is you know there's no dates we can see you know call it like in the first quarter, there's... I don't see any of that happening.

Just as a reminder, again, for probably the fourth or fifth time on this call, we're agnostic to that because there's no P&L impact to Equifax, or benefit for the customer. You know, for the Tri-merge resellers calculating the score, you know, we're going to sell our credit file at the full price to them, and then they'll buy the FICO score, presumably for $10, you know, from FICO, and then sell that once they start doing it. It's hard for me to see what the benefit is of a reseller doing it, but you know, that's why we put our guide together, because there's no indications that that's you know has any certainty about when it's going to happen.

There's also some questions about what kind of approvals would have to be completed by the regulators around someone else calculating the score, and that likely means time. But again, just to be crystal clear, we're agnostic. You know, if the tri-merge resellers and FICO decide they want to calculate the score, we're cool. It has zero impact on Equifax P&L, meaning EBITDA, EPS, and free cash flow. It'll clearly impact our revenue because someone else will calculate the score, but when, you know, it's zero-calorie revenue, we're agnostic to that. So, you know, we'll see how it unfolds, and we thought we gave the right guide of assuming none of that happens.

I think that guide is likely wrong, because there'll likely be some activity at some point, but it's impossible for us to handicap when that'll happen. But, the Equifax bottom line, you know, is not impacted by that change.

Operator (participant)

Thank you. Our next question comes from the line of Arthur Truslove with Citi. Please proceed with your questions.

Arthur Trusolve (Equity Research Analyst)

Hi there. Thank you very much for taking my question. So just sort of following on from that, I just wanted to clarify in simple terms, if what we're seeing is that you are calculating the credit score for mortgages using the FICO algorithm, are you able to say whether the sort of contribution in $ per mortgage inquiry is going to be higher, lower, or the same in 2026 relative to 2025? Thank you.

Mark Begor (CEO)

It's higher. Yeah, there's no question we'll make mortgage more margin dollars, because we took up the price of our credit file, and John kind of gave a framework of what that increase looked like. So, you know, we'll have higher margin dollars. Our revenue, obviously, is impacted by the FICO score going from $495 to $10, because that's the pass-through that we have. But, our margin dollars on mortgage, by selling the FICO credit score, are clearly going to go up. Now, the margin rate, you know, is impacted just by the math, but the margin dollars are what you and I should care about.

You know, we've given a framework for overall Equifax, you know, margin dollars of being up, you know, low double digits, you know, broadly in the business, and this is one of the elements that drives that.

John Gamble (CFO)

Yeah. Just to reiterate, just if the score is sold by the CRA or if the score is sold by Equifax, our EBITDA, EPS, and cash flow are unchanged, right? Doesn't matter, right? Yeah.

Arthur Trusolve (Equity Research Analyst)

No, thank you. And the second question I had, just sort of following up from that. When you produced your long-term framework for USIS, did you assume that you were going to, you know, benefit from an organic growth perspective from FICO very significantly raising prices every year?

Mark Begor (CEO)

Of course not.

Arthur Trusolve (Equity Research Analyst)

Or not? Okay.

Mark Begor (CEO)

Of course not. No, you know, this was done back in 2021. You know, when we put that long-term frame in place, I think the FICO score was, like, $0.55. You know, and we expected, which they had for kind of the decade before that, to them, they would do modest price increases, you know, which was in our long-term framework. You know, think about, you know, kind of mid to high single digits, something like that, was in our, in our long-term framework. Obviously, that changed dramatically, and that's why we've, you know, opted to spike out the FICO impact because it's so significant, you know, in our, reported results and, give you better visibility, you know, around the underlying performance, which was always there. You could always look at our EBITDA dollar, change.

and of course, we set as a framework a margin rate of 50 basis points per year, but that clearly did not assume that there'd be this kind of FICO price increase, which is why, going forward, we'll show it to you with and without, you know, FICO. And, you know, again, you should, and we're really pleased, you know, with the operating leverage of 75 basis points ex the FICO pass-through, you know, that's quite strong and, one that we're really pleased with.

Arthur Trusolve (Equity Research Analyst)

Brilliant. Thank you very much.

Operator (participant)

Thank you. Our final questions will come from the line of Simon Clinch with Rothschild & Co Redburn. Please proceed with your questions.

Simon Clinch (Stock Analyst)

Hi, thanks for fitting me in. Mark, I was wondering if you could help us think about quite an important question today, given all the disruptions we've seen in the market. With the application of AI to alternative data sets beyond your own proprietary sets, is there any situation where the value extracted from that data reduces the relative value of... that you extract from your proprietary data sets, and thus it makes the market even more competitive in that front? That's definitely a question that, you know, I think a lot of people are asking these days. Thanks.

Mark Begor (CEO)

Yeah, it's clearly, we've been swept into a neighborhood that we don't think we live in, you know, where AI could disrupt or disintermediate our business. I think the scaled data assets we have are unmatched. You know, there's no way to, you know, get to the kind of credit data we have or something that has the same predictive elements of our proprietary credit data, our alternative data, the income and employment data we have, and the fact that it's not publicly accessible, you know, by third parties through any kind of AI tool, you know, pick the dozens out there that are creating very sophisticated tools that can access public market data, they can't get to ours. So I think that's a big part of the Equifax moat, you know, around data.

You know, it to your question, I think you were heading towards is, you know, what other kinds of data that might be accessible from a public standpoint, you know, could replicate, you know, what we do today? And we don't see any. You know, you can't get credit data in the public market. You know, that you can't go out to the web and, you know, really aggregate that kind of data. You can't get payroll data. You can't get, you know, income and employment data. It's just that those kind of data sets, you know, are proprietary to proprietary. The contributors that are giving us that data, you know, that data is in a proprietary environment in their world. You know, think about the 20,000 financial institutions that contribute data to us, you know, every month.

You know, they've got a walled garden, you know, around their data. It's not accessible. You know, same with income and employment data. You know, the 4.8 or nine million companies delivering payroll data to us, either directly or through a payroll processor or HR software company, you know, that's a walled data set that's not accessible from an AI tool in any way. So, you know, we think, obviously, what happened in the last 24 hours, you know, in the broader industry around AI concerns of disintermediating businesses that principally, in my view, you know, rely on public market data. We're not in that neighborhood, but we've been swept into it.

You know, we'll work to continue to communicate to our investors around the Equifax moat, you know, around our data, which we think is, you know, big and tall, and one that, you know, we think is gonna be long-term sustainable, and only Equifax can use the data for our customers when we authorize them to do it, in order to use that data in any way.

Arthur Trusolve (Equity Research Analyst)

That's really useful. Thank you, Mark. And I think just as a follow-on to that, I mean, as I'm thinking particularly long term here, but you know, do you see the value of a credit score maintained in an environment where AI is producing a lot more value and insight from even your own proprietary data? I mean, is there a situation where VantageScore, the value of VantageScore to the market as a whole goes down while the value of your underlying data goes up?

Mark Begor (CEO)

Well, we think the underlying data is always the linchpin. You can't calculate a score without the data. And remember, like, Vantage only can calculates a score because we own Vantage, along with TU and Experian. We use that Vantage algorithm on our data. So like a third-party AI algorithm can't calculate a score because it has no data. You know, the only way to do that is to have the access to the data, and obviously, we control, you know, who uses our data and how it's delivered. So in my view, you know, with all the data we have only gets more valuable. And as you know, central to our strategy is to continue to add more data, either, organically or through acquisitions. And, you know, we've done acquisitions of, like, PayNet, DataX, Teletrack.

You know, we've done a number of acquisitions to add more data into our proprietary data set. You know, to me, I think what's fundamentally missing in the market today is that, you know, investors need to understand you can't use AI without data. If you fundamentally believe that Equifax data, in our case, is proprietary, that's a pretty big moat, because the only ones who can use AI on our data is Equifax.

Arthur Trusolve (Equity Research Analyst)

That, that's great. It's really good to hear you say that. Thank you.

Operator (participant)

Thank you. We have reached the end of our question and answer session, and with that, I'd like to turn the floor back over to Trevor Burns for some closing comments.

Trevor Burns (SVP of Investor Relations)

Oh, yep. Thanks, everybody, for your time today. Appreciate it. If you have any follow-up questions, you can reach out to Molly and I. Otherwise, have a great day. Thank you.

Operator (participant)

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. Please disconnect your lines at this time and enjoy the rest of your day.