Equifax Q2 Earnings Call Highlights

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Equifax (NYSE:EFX) reported second-quarter 2026 revenue of $1.7 billion, up 11% on a reported basis and 10% in constant currency, as growth in Workforce Solutions and U.S. mortgage-related revenue helped offset pressure from higher interest rates and weaker conditions in some international markets.

Chief Executive Officer Mark Begor said revenue was $5 million above the midpoint of the company’s April guidance. Excluding FICO mortgage royalties, reported revenue increased about 7%. Adjusted EBITDA was $552 million, up about 10.5%, and adjusted earnings per share were $2.25, up 13% and $0.05 above the April guidance midpoint. The company said adjusted EBITDA margin excluding FICO was nearly 35%, up 120 basis points from a year earlier.

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Trevor Burns, senior vice president of investor relations, noted at the start of the call that the company recorded a $40 million charge, net of insurance proceeds, for a legal settlement tied to claims related to a previously disclosed coding issue. The company’s comments on EPS, EBITDA margin and cash conversion referred to non-GAAP measures.

Workforce Solutions benefits from diversified markets

Workforce Solutions revenue increased 7%, with Begor citing better-than-expected performance in Verification Services diversified markets. Talent Solutions and consumer lending were both up high double digits in the quarter. Talent volumes increased mid-single digits despite what the company described as a decline in the overall market during the first two months of the quarter.

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Government revenue in Workforce Solutions declined about 4%, which management said reflected a difficult comparison with a large 2025 win. However, Begor emphasized new commercial momentum in the government vertical. He said Workforce Solutions signed about $300 million in annual contract value over the past four months, principally with state agencies, including about $100 million in new business and $200 million in renewals.

Management said most of the benefit from the new government contracts will come in 2027, with some contribution expected in the second half of 2026. Begor said the company’s government pipeline remains about twice the level of a year ago and pointed to opportunities tied to federal and state efforts to improve income validation in Medicaid and SNAP programs.

Workforce Solutions EBITDA margin was 52.1%, consistent with the first quarter and above management’s expectations. The company also reported 10% growth in active records in The Work Number, reaching 217 million active records and 124 million current active records.

USIS grows despite softer mortgage market

U.S. Information Solutions, or USIS, revenue rose 17% in the second quarter and 6% excluding FICO. Diversified markets revenue grew 6%, accelerating more than 300 basis points sequentially. Begor said B2B revenue increased 5%, supported by high single-digit growth in financial institutions and auto, while consumer direct revenue rose 11%.

USIS mortgage revenue was up 40%, or mid-single digits excluding FICO, while hard mortgage inquiries increased only 1%. Management said mortgage rates rose during the quarter, with 30-year fixed rates around 6.6% versus about 6.3% when the company issued April guidance. Begor said industry transaction volumes ran below expectations, but Equifax benefited from new products and share gains in pre-qualification and pre-approval offerings.

The company continued to highlight VantageScore adoption in mortgage following the Federal Housing Finance Agency’s activation of VantageScore use for more than 20 mortgage lenders in April. Begor said second-quarter VantageScore volume was almost three times the first-quarter level, with 2.2 million transactions. About 1,200 lenders pulled a free VantageScore alongside a paid FICO score from Equifax, while about 100 smaller non-GSE lenders and home equity lenders used VantageScore exclusively at a $1 price point.

Begor said Equifax plans to maintain the $1 VantageScore price through the end of 2027 to encourage adoption. Chief Financial Officer John Gamble said the company’s guidance assumes Equifax will continue to calculate and sell FICO scores for all mortgage credit transactions in 2026, with limited VantageScore revenue.

International growth slows; Mexico acquisition planned

International revenue rose about 4% in constant currency. Asia Pacific delivered high single-digit growth, Canada grew mid-single digits, and Latin America and Europe posted low single-digit growth. Begor said market headwinds in Canada and the U.K. weighed on growth. International EBITDA margin was 27.6%, up 120 basis points from a year earlier, helped by technology savings from the company’s cloud transformation and cost management.

Equifax also discussed its recently announced agreement to acquire Círculo de Crédito, a credit bureau in Mexico, for an enterprise value of $750 million. Begor described Círculo as the fastest-growing credit bureau in Mexico and said it is licensed to operate both consumer and commercial credit bureau services. The company expects the acquisition to close in the fourth quarter, subject to customary closing conditions and regulatory approvals, and to be accretive in the first year.

Management said the purchase price represents an 11.7 times EBITDA multiple based on expected 2026 EBITDA, or about 9.4 times including expected run-rate savings. Begor said Círculo has more than 1,700 customers and 2 billion trade lines covering 80 million validated identities in Mexico, with strength in alternative data such as gig economy transactions and utility payment history.

AI initiatives drive higher savings target

Equifax used much of the call to discuss artificial intelligence initiatives tied to its EFX 2028 strategy. Begor said the company launched 54 new products with AI capabilities embedded in their architecture during the first half of the year, contributing to a 16% Vitality Index in the quarter. He also highlighted products such as Ignite AI Advisor and Equifax IQ, which are designed to help customers use Equifax data and analytics through AI-enabled decisioning tools.

The company doubled its AI productivity goal to $150 million in run-rate savings from 2026 through 2028, up from the $75 million target it discussed earlier this year. Begor said savings are expected from operations, technology, product development and support functions. Gamble said the savings for 2026 are already reflected in the company’s guidance and will affect both operating expense and capital spending.

Begor said Equifax is deploying AI in call centers, document processing, software development, IT operations, cybersecurity, cloud cost optimization and corporate functions such as finance, legal and human resources. He said the company remains in the “early innings” of AI adoption and expects additional opportunities to grow revenue and reduce costs.

Guidance held on reported basis

Equifax maintained its full-year 2026 financial guidance on a reported basis, while raising constant-currency guidance in line with the second-quarter revenue beat. Gamble said the benefit from second-quarter outperformance was offset by weaker foreign exchange.

For 2026, the company expects revenue growth of 7.2% to 8.4% excluding FICO mortgage royalties, adjusted EBITDA margin expansion excluding FICO of about 75 basis points and free cash flow of more than $1 billion with cash conversion of at least 100%.

For the third quarter, Equifax expects revenue of $1.68 billion to $1.71 billion, up almost 10% on a reported basis at the midpoint. Excluding FICO mortgage scores, reported revenue is expected to rise about 7% at the midpoint. The company expects third-quarter adjusted EPS of $2.15 to $2.25 and adjusted EBITDA of $547 million to $564 million.

Equifax returned $366 million to shareholders during the second quarter, including $300 million of share repurchases and $66 million of dividends. Begor said the company expects to complete the Círculo acquisition while continuing share repurchases in the second half of 2026 at a slower pace than in the first half, while keeping leverage below three times EBITDA.

About Equifax (NYSE:EFX)

Equifax Inc (NYSE: EFX) is a global data, analytics and technology company that specializes in consumer and commercial credit reporting, decisioning tools and identity solutions. Headquartered in Atlanta, Georgia, Equifax is one of the three major consumer credit reporting agencies in the United States and provides credit information and related services to lenders, employers, governments and consumers worldwide.

The company's offerings include consumer credit reports and scores, credit monitoring and identity protection services, and a range of business-oriented products for risk management, fraud detection and compliance.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected].

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