EFX Q2 2025: Twin Indicator Spurs Share Gains While EBITDA Margin Flat
- Innovative product differentiation boosting market share: Equifax’s successful rollout of its twin indicator solution in the mortgage prequalification space, which is gaining strong interest from mortgage originators, positions the company for increased share gains without charging extra, driving value only Equifax can deliver.
- Expansion in the government vertical with a large market opportunity: The firm’s government segment is set to grow significantly, highlighted by robust contract renewals (e.g., in Maine) and a substantial long‑term addressable market of $5 billion—providing tailwinds as states and federal agencies update eligibility requirements and verification processes.
- Strong multi-segment revenue performance and operational efficiencies: The earnings call showcased solid growth across core segments (consumer lending, mortgage, USIS, international) along with operational improvements from completed cloud migration and margin management, reinforcing confidence in long-term revenue potential.
- Macroeconomic and tariff uncertainty: Persistent concerns related to tariffs, inflation, and overall economic instability have led to weaker hiring and unpredictable consumer behavior, potentially dampening multiple revenue streams, particularly in the talent and mortgage segments.
- Government revenue volatility: Ongoing state budget pressures and evolving cost-sharing arrangements create uncertainty over government contracts, with delayed contract renewals and cautious spending potentially limiting growth in this key segment.
- Margin pressure from rising costs: Elevated litigation expenses and other corporate costs—coupled with FX headwinds and a lower-margin mortgage pass-through—could restrain earnings growth despite strong revenue performance.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | 7% | Total Revenue grew from $1,430.5M in Q2 2024 to $1,537.0M in Q2 2025, driven by multi‐segment growth. The increase reflects strategic pricing and market expansion initiatives across segments such as Workforce Solutions (+8%), U.S. Information Solutions (+9%), a remarkable boost in Online Information Solutions (+21%), and strong performance in Europe (+12.5%). |
Workforce Solutions | 8% | Workforce Solutions increased from $612.9M to $662.1M, benefitting from higher revenue contributions in its sub-segments. This growth builds on prior gains—particularly in Verification Services—reflecting effective operational enhancements and strategic focus on non-mortgage revenue streams that were evident in previous periods. |
Verification Services | 10% | Verification Services surged from $515.9M to $567.1M, driven by robust growth in talent solutions, mortgage, and consumer lending verticals. This acceleration builds on earlier performance improvements and effective cost management initiatives that have helped expand revenue in this key component. |
U.S. Information Solutions | 9% | U.S. Information Solutions climbed from $478.3M to $521.5M, supported by improved performance in both online and financial marketing sub-segments. Strategic pricing actions and enhancements in product mix—also observed in earlier periods—fueled this upward trend. |
Online Information Solutions | 21% | Online Information Solutions jumped from $377.8M to $457.8M, largely due to accelerated mortgage revenues from improved product pricing, as well as stronger non-mortgage online services and consumer solutions. The marked increase reflects the successful execution of initiatives that had been building momentum in previous reporting periods. |
Europe | 12.5% | Europe's revenue increased from $88.2M to $99.2M, driven by growth in U.K. credit reporting and debt services and aided by favorable local currency fluctuations. This improvement continues prior trends of regional expansion and market-specific gains. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Revenue Growth (%) – Constant Dollar | Q3 2025 | “Just over 6.5% at the midpoint” | “Up over 5% on a constant dollar basis” | lowered |
Adjusted EPS | Q3 2025 | “$1.85 to $1.95 per share” | “$1.87 to $1.97 per share” | raised |
Adjusted EBITDA Margins | Q3 2025 | “Expected to be over 32.5% at the midpoint” | “About 32.5% at the midpoint” | no change |
EWS Revenue Growth | Q3 2025 | “Up over 6.5% year-over-year” | “Up over 3.5% year-over-year” | lowered |
EWS Verification Services Revenue Growth | Q3 2025 | “Expected to grow over 8%” | “About 4.5%” | lowered |
EWS Mortgage Revenue Growth | Q3 2025 | “Expected to grow about 6%” | “Low single digits” | lowered |
EWS Verifier Non-Mortgage Revenue Growth | Q3 2025 | “About 9%” | “Over 5.5%” | lowered |
EWS Government Revenue Growth | Q3 2025 | “Expected to grow in the low double digits” | “Mid‑single digits” | lowered |
EWS Talent Revenue Growth | Q3 2025 | “Expected to grow in the low single digits” | “Consistent with or slightly above Q2” | no change |
USIS Revenue Growth | Q3 2025 | “About 6.5% year‑over‑year” | “About 7%” | raised |
USIS Mortgage Revenue Growth | Q3 2025 | “About 11%” | “Mid‑teens percent” | raised |
USIS Non‑Mortgage Revenue Growth | Q3 2025 | “About 4%” | “About 4%” | no change |
USIS Adjusted EBITDA Margins | Q3 2025 | “Expected to be over 35%” | “About 35.25%” | no change |
International Revenue Growth | Q3 2025 | “About 6.5% in constant currency” | “About 7% in constant currency” | raised |
International Adjusted EBITDA Margins | Q3 2025 | “Expected to be over 26%” | “About 29.5%” | raised |
Free Cash Flow | FY 2025 | “Approximately $900 million, with a cash conversion rate approaching 95%” | “Over $900 million, with a cash conversion of over 95%” | no change |
Revenue ($USD) | FY 2025 | no prior guidance | “Approximately $6 billion, increased by $35 million due to FX changes” | no prior guidance |
Constant Currency Revenue Growth (%) | FY 2025 | no prior guidance | “Unchanged from April guidance” | no prior guidance |
Non‑Mortgage Constant Dollar Revenue Growth (%) | FY 2025 | no prior guidance | “About 6%” | no prior guidance |
Mortgage Revenue Growth (%) | FY 2025 | no prior guidance | “Over 6%” | no prior guidance |
Adjusted EPS ($USD) | FY 2025 | no prior guidance | “$7.48 per share, increased by $0.03 due to FX changes” | no prior guidance |
Workforce Solutions (EWS) Revenue Growth (%) | FY 2025 | no prior guidance | “About 5%, down from 7% in April guidance” | no prior guidance |
USIS Revenue Growth (%) | FY 2025 | no prior guidance | “About 7%, stronger than April guidance” | no prior guidance |
USIS Mortgage Revenue Growth (%) | FY 2025 | no prior guidance | “About 13%, up from April guidance” | no prior guidance |
USIS Non‑Mortgage Revenue Growth (%) | FY 2025 | no prior guidance | “Over 4.5%, up about 50 basis points from April guidance” | no prior guidance |
International Constant Currency Revenue Growth (%) | FY 2025 | no prior guidance | “About 7%, consistent with April guidance” | no prior guidance |
EWS EBITDA Margins (%) | FY 2025 | no prior guidance | “About 51%, up 50bps from April guidance” | no prior guidance |
USIS EBITDA Margins (%) | FY 2025 | no prior guidance | “About 35.5%, up about 100bps year‑over‑year” | no prior guidance |
International EBITDA Margins (%) | FY 2025 | no prior guidance | “About 28.5%, up about 100bps from 2024” | no prior guidance |
Adjusted EBITDA Margins (%) | FY 2025 | no prior guidance | “Flat versus 2024, reflecting FX impact and increased corporate expenses” | no prior guidance |
Corporate Costs ($USD) | FY 2025 | no prior guidance | “About $590 million, up from April guidance” | no prior guidance |
Tax Rate (%) | FY 2025 | no prior guidance | “About 26.5%, down from 26.75% in April guidance” | no prior guidance |
USIS Mortgage Hard Inquiries | FY 2025 | “Expected to decline 12% year‑over‑year” | no current guidance | no current guidance |
Organic Constant Currency Revenue Growth | FY 2025 | “6%, unchanged from February guidance” | no current guidance | no current guidance |
Capital Expenditures (CapEx) | FY 2025 | “Expected to be about 6% to 7% of revenue” | no current guidance | no current guidance |
Dividend Growth | FY 2025 | “A 28% increase in the quarterly dividend to $0.50 per share” | no current guidance | no current guidance |
Share Repurchase Program | FY 2025 | “Authorized a new $3 billion 4‑year share repurchase program” | no current guidance | no current guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Total Revenue | Q2 2025 | Up over 5.5% year-over-year | 1,537.0, up ~7.45% from 1,430.5 | Surpassed |
Workforce Solutions | Q2 2025 | Up over 6.5% year-over-year | 662.1, up ~8.0% from 612.9 | Surpassed |
USIS | Q2 2025 | Up about 6.5% year-over-year | 521.5, up ~9.0% from 478.3 | Surpassed |
International | Q2 2025 | Up about 6.5% year-over-year in constant currency | 353.4, up ~4.16% from 339.3 | Missed |
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Government Business
Q: What are the current state-level funding headwinds?
A: Management noted that changes in the prior administration’s cost-sharing have created near-term challenges at state levels, though evolving requirements and new federal initiatives (like OBBBA) point to strong medium-term upside with a $5B TAM potential. -
Mortgage Revenue
Q: What percent of revenue comes from mortgage?
A: Management confirmed that mortgage revenue remains at 22% flat of overall revenues, demonstrating resilience despite a softer market as non-mortgage growth in USIS bolsters performance. -
Margin Outlook
Q: How does revenue mix affect margins?
A: Despite solid USIS margins, a shift toward lower-margin mortgage revenue—impacted by FICO and TriMerge costs—results in an overall flat EBITDA margin, even amid revenue growth. -
FICO Pricing
Q: What is the midterm outlook for FICO pricing?
A: While recent pass-through pricing has benefited margins, management deferred detailed forecasts to FICO’s upcoming guidance, indicating no clear view beyond current levels. -
Talent Trends
Q: How is weaker hiring impacting talent revenue?
A: Management observed that persistent corporate caution—amplified by tariff and economic uncertainties—continues to slow hiring activity, contributing to softer performance in the talent segment. -
Auto & Offline Business
Q: What trends are seen in auto and offline segments?
A: The auto business is performing strongly with healthy pricing and growth, while the offline batch and marketing solutions remain stable, collectively supporting overall revenue. -
Twin Indicator
Q: How is the twin indicator influencing pre-qualification?
A: Early market discussions show high interest in the twin indicator, which is helping secure share gains in the pre-qualification stage, with broader adoption expected by 2026 without additional charges.
Research analysts covering EQUIFAX.