EQUIFAX INC (EFX)·Q4 2024 Earnings Summary

Executive Summary

• Q4 2024 revenue was $1.419B (+7% reported, +9% LC) and diluted EPS was $1.39; adjusted EPS was $2.12 and adjusted EBITDA margin expanded to 35.4% .
• Revenue came in below the October Q4 guidance range ($1.438–$1.458B) due to a sharp late-quarter weakening in U.S. hiring and mortgage activity; cost control delivered EBITDA and EPS at guidance midpoints .
• Management initiated Q1 2025 guidance ($1.390–$1.420B revenue, $1.33–$1.43 EPS) and FY 2025 guidance ($5.890–$6.010B revenue, $7.25–$7.65 EPS), assuming ~12% decline in 2025 U.S. hard mortgage inquiries and an effective tax rate ~26.75% .
• Strategic execution remained strong: Vitality Index 12%, ~85% of revenue in EFX Cloud, record additions in TWN to 188M active records, and plans to grow dividend and initiate multiyear buybacks in 2025 .

What Went Well and What Went Wrong

• What Went Well

  • USIS mortgage revenue growth +47% YoY and overall USIS revenue +10% YoY, with margin expansion (Adj. EBITDA margin 38.3%) .
  • Workforce Solutions Verification Services +10% YoY; EWS adjusted EBITDA margin improved to 51.9% despite macro headwinds .
  • International grew +11% LC; Latin America +29% LC; strong sequential margin improvement (Adj. EBITDA margin 32.5%) .
  • “First quarter in Equifax history of adjusted EBITDA over $500 million” and “first quarter of adjusted EPS over $2” since Q2’22 (cost discipline offset revenue shortfall) .
  • Management Quote: “We are energized about the New Equifax that is expected to deliver higher margins and accelerating free cash flow in the future.” .

• What Went Wrong

  • Q4 revenue missed October guidance midpoint due to late-quarter deterioration in U.S. hiring and mortgage markets; non‑mortgage growth came in ~150 bps below expectations .
  • Employer Services declined 9% YoY; talent/onboarding impacted by weak hiring volumes; government growth moderated on tough comps and funding changes .
  • FX headwind (~$12M vs October guidance) and higher D&A pressured EPS trajectory; EWS margins guided down in 2025 on onboarding costs and mix .
  • Lender behavior shift (less tri-bureau pulling during shopping) and consumer confidence weighed on mortgage shopping volumes late in quarter .

Financial Results

Segment Breakdown (Revenue, $MM)

KPIs and Operational Metrics

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “Equifax delivered fourth quarter revenue of $1.419 billion… led by very strong 29% U.S. Mortgage revenue growth… despite headwinds from the U.S. hiring and mortgage markets.”
• “This is the first quarter in Equifax history of adjusted EBITDA over $500 million… Adjusted EPS of $2.12 per share was at the midpoint of our October guidance.”
• “We now have close to 85% of Equifax revenue in the new Equifax Cloud… leveraging our new Cloud capabilities to accelerate new product solutions and EFX.AI capabilities.”
• “Based on weak hiring trends… we expect 2025 U.S. hiring to be down about 8%… and hard mortgage inquiries declining 12%.”
• “We plan to launch a multiyear share repurchase program in 2025 and grow our dividend.”

Q&A Highlights

• EWS margins: 2025 contraction driven by onboarding costs for 15 new partners, product mix (education/insights with lower variable margins); payout ratios unchanged .
• Mortgage metrics: ~70%+ of mortgage revenue is hard pulls; hard inquiries best correlate with originations; Q4 hard pulls ~flat vs YoY .
• Government cadence: CMS reimbursement change (75% federal/25% state) impacts 1H’25; SSA extension and pricing escalators support 2H’25 return to double-digit growth .
• Capital allocation: plan to increase dividends and begin multiyear buybacks in 2025; pacing depends on macro visibility (mortgage/hiring) .
• Competitive positioning: lender shopping shifts (1–2 bureaus) addressed via TWN indicators embedded in Equifax credit file for mortgage/auto to defend share and enhance price realization .

Estimates Context

• S&P Global consensus EPS and revenue estimates for Q4 2024, Q3 2024, and Q2 2024 were unavailable due to an SPGI request limit at the time of retrieval. We cannot provide vs-consensus comparisons for Q4 2024. Values would be retrieved from S&P Global if available.*

Key Takeaways for Investors

• Q4 revenue miss vs October guidance reflects macro sensitivity (mortgage rates >7%, hiring slowdown), but margins and EPS execution were solid; watch for macro stabilization as upside catalyst .
• Mortgage/hiring assumptions baked into 2025 guidance (hard inquiries -12%, hiring -8%); upside exists if rates fall or confidence improves; FX could be a ~130 bps revenue drag .
• Structural advantages (EFX Cloud, EFX.AI, TWN data) underpin sustained Vitality Index and margin expansion; TWN indicators in credit files may defend share amid shopping changes .
• Segment mix matters: USIS mortgage pricing/prequalification strength offsets inquiry weakness; Employer Services and talent tied to hiring cycle; government normalization expected 2H’25 .
• Free cash flow inflecting ($813M in 2024; ~$900M targeted 2025) supports capital returns; dividend maintained and buybacks planned—potential stock support as programs roll out .
• International diversification (Latin America strength) and cloud-driven cost reductions bolster resilience even as U.S. cyclicals fluctuate .
• Near-term trading: sensitivity to rate trajectory and hiring data; medium-term thesis: cloud/AI/product innovation drive organic growth and margin leverage with capital return optionality .

Notes: *Estimates unavailable due to SPGI daily limit exceeded; comparisons to Wall Street consensus could not be computed at this time.