Equifax Inc. Q3 FY2025 earnings call

• Equifax incurred a $44 million restructuring charge for cost reduction actions to streamline operations and advance cloud infrastructure, expecting ongoing savings of $30 million per year by late 2026.
• Strong third quarter revenue growth driven by U.S. mortgage, EWS non-mortgage, and USIS non-mortgage. Adjusted EPS and EBITDA margins improved.
• Workforce Solutions Government business受益于OB3立法，有大量业务机会，新推出多种创新解决方案。
• USIS因FICO价格上涨及自身产品创新实现高增长，推出含TWN指标的新汽车信贷文件。
• 国际业务通过云转型实现收入增长和利润率提升。
• 大力推进EFX.AI能力部署，推出多种AI相关解决方案，提升产品性能和运营效率。

Equifax had a strong third quarter with revenue of $1.54 billion, up over 7% in constant currency and reported dollars. Workforce Solutions revenue was up 5%, driven principally by Government performance. Verifier revenue was up over 5% in the quarter with non-mortgage Verifier growth of about 7%. Government revenue grew high single digits. Talent Solutions revenue was up low single digits. USIS had revenue up 11%, principally led by mortgage revenue. Non-mortgage revenue was up 5%. USIS adjusted EBITDA margin at 35.2% was up 130 basis points compared to last year. International revenue was up 7% in constant currency with broad-based revenue growth across all regions. International adjusted EBITDA margins of 31.3% was up a very strong 360 basis points versus last year from revenue growth, operating leverage and cost improvements from Cloud migrations. In the third quarter, Equifax delivered a Vitality Index of 16%, raising full year Vitality Index guidance to 13%.

• Raised full year revenue guidance by $40 million, adjusted EPS by $0.12 per share, and free cash flow guidance to $950 million to $975 million.
• Fourth quarter 2025 expected total revenue up about 6.5% in constant currency, adjusted EPS $1.98 to $2.08 per share, adjusted EBITDA margins 33% to 33.3%.
• Workforce Solutions revenue expected mid-single digits growth, USIS revenue expected high single digits growth, International revenue expected high end of mid-single digits growth.
• Long-term financial framework expects 7% to 10% organic revenue growth and 50 basis points of EBITDA margin expansion under normal market conditions.

• Potential impact of federal government shutdown on government business, likely deferral of revenue if extended.
• Uncertainties in hiring due to economic and trade policy uncertainties.
• Risks associated with FICO score pricing changes and VantageScore adoption challenges.

Q: Can you go into more detail on what you're hearing on the mortgage pricing changes?

A: There's a lot of momentum around lenders wanting to drive towards VantageScore due to FICO's price increase, with customers aware of the savings opportunity.

Q: Can you give more detail on the margin guidance?

A: Variable compensation and mortgage revenue mix impact margins, but intend to flow through profitability to shareholders.

Q: Wanted to start on Government, very helpful commentary about the error rates and the ramp-up that you're seeing in discussions with the states. Do you expect that this will really start to ramp after the end of the government fiscal year-end?

A: It's a mix of both, with increased conversations post-OB3 and states focusing on addressing error rates now.

Q: Could you just go over a little bit more the general corporate expense line in the third quarter and what's driving that?

A: Increase in general corporate expense is driven by higher variable compensation due to stronger performance.

Q: The first question, if you could just remind us the different moving pieces, I guess, on the mortgage side. What I'm referring to USIS grew 26%, but EWS was only 2%. Can you just remind us of the different factors?

A: USIS benefited from FICO price increase pass-through and mortgage activity uptick, while EWS mortgage revenue was impacted by market decline but outperformed due to pricing and records.