Equifax Inc. (EFX) on Q1 2025 Results - Earnings Call Transcript
Operator: Greetings and welcome to the Equifax, Inc. Q1 2025 Earnings Conference Call. At this time, all participants are in listen-only mode. [Operator Instructions]. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to your host, Trevor Burns, Senior Vice President, Head of Corporate Investor Relations. Trevor, please go ahead. Trevor Burns : Thanks, and good morning. Welcome today's conference call, I'm Trevor Burns. With me today are Mark Begor, our Chief Executive Officer, and John Gamble, Chief Financial Officer. Today's call is being recorded. An archive of the recording will be available later today in the IR Calendar section of the News and Events tab at our Investor Relations website. During the call, we'll making reference to certain materials that can be found in the presentation section of the news and events tab at our IR website. These materials are labeled 1Q 2025 earnings conference call. Also, we'll be making certain forward-looking statements, including second quarter and full year 2025 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 that differ materially from our expectations. Several risk factors that may impact our business are set forth in filings with the SEC, including our 2024 form 10-K and subsequent filings. We will also be referring to certain non-GAAP financial measures, including adjusted EPS, adjusted EBITDA, and cash conversion, which will be adjusted for certain items that affect the comparability of our underlying operational performance. 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. Now I'd like to turn it over to Mark. Mark Begor: Thanks, Trevor. Turning to Slide 4, Equifax is off to a very strong start in 2025 with revenue of $1.442 billion up 4% reported and 5% in constant dollars, and $37 million above the midpoint of our February guidance. The revenue strength was broad-based with about two-thirds in non-mortgage verticals led by USIS. Mortgage was also stronger than our expectations in the quarter, particularly in USIS with over half of this strength from improved penetration and performance of our mortgage pre-qual and pre-approval products, and a market that was about 400 basis points above our February framework. Adjusted EPS of $1.53 per share was $0.15 above the midpoint of our February guidance from the higher revenue growth and improved margins. And we ended March with debt leverage of 2.5 turns, which is our long-term goal. Team also continued to execute very well against our EFX 2027 strategic priorities, as we pivot from building the Equifax cloud to leveraging our new cloud capabilities to drive innovation, new products, and growth. Our strong first quarter is a proof point to the power of the Equifax cloud as our team can now fully focus on growth, innovation and customers. We launched our first-ever only Equifax solution in mortgage that provides key employment and income information, powered by the scale of the work number along with the USIS mortgage credit file. Our first-to-market mortgage solution that allows lenders to instantly obtain information about both the mortgage applicant's creditworthiness and the application's employment and income status with a single data request from Equifax. We are seeing strong customer demand for this unique solution. We plan to launch twin-powered solutions for the auto and P loan verticals later this year, where both credit and income verifications are integral for the credit underwriting. EWS first quarter revenue was better than our expectations, driven by talent and government. The EWS team also delivered EBITDA margins of over 50%, also better than our expectations. And there's a clear change in Washington around social service and tax integrity, waste and abuse, which we view as a positive macro for workforce solutions. In the quarter, EWS continued the expansion of its use cases in the federal government as they completed amended agreement with the SSA for annual revenue of about $50 million The amendment allows SSA to begin ramping the use of a twin solution that delivers monthly income and employment information for individuals applying for or currently receiving disability benefits from SSA. We are ramping up our engagement in Washington as the new administration gets in place. The EWS team also continued its strong momentum of twin records penetration, adding 3 million active records to the twin database, ending the quarter with 191 million active records, up 11% and 751 million total records, up 12%. This is a very strong performance given the normal attrition in the first quarter from seasonal fourth quarter hiring. In the first quarter, EWS signed agreements with three new partners, which adds to the 15 signed last year and over 50 since the beginning of 2021. We expect these new partnerships to drive twin record growth and EWS revenue growth in 2025. We have a long runway of records growth against the $225 million income producing Americans versus the $138 million unique records we have today. USIS had a very strong quarter with total revenue growth of 7%, well within their 6% to 8% long-term revenue growth framework and above our expectations. Non-mortgage growth was also strong at about 6%. The USIS team has pivoted from building the cloud in 2024 to being fully focused on customers, innovation, new products and growth. They have strong momentum and are winning in the marketplace. In international, the team delivered almost 7% constant currency revenue growth, and completed transformation activities in Spain, and we made very good progress in new product introductions in the quarter with a vitality index of 11%, which was 100 basis point above our long-term framework. We expect some acceleration in vitality during the balance of 2025. And EFX.AI is powering our new solutions, leveraging our scale and unique data in our single data fabric. First quarter was also a very strong start to 2025 across all BUs, particularly in non-mortgage and with our USIS mortgage, pre-approval and pre-qual products. The team is executing very well. We are clearly in a period of significant economic and market volatility, principally from uncertainty around tariffs and their impact on U.S. inflation and interest rates. Given the strength in the first quarter in our current run rates and key verticals, we would normally be increasing our 2025 revenue and adjusted EPS guidance. But given the significant uncertainty in the economy and with consumer and corporate confidence, we are maintaining our 2025 guidance at the levels we provided to you in February. We remain very confident in the Equifax long-term growth model to drive consistent revenue growth, margin expansion, and strong free cash flow with consistent return of cash to shareholders. We expect our business model to be resilient during periods of economic weakness, and our confidence was reinforced by our very strong performance in the quarter. Both financially and in a strong execution against our EFX 2027 strategic priorities. Turning to slide five, as we complete the EFX cloud, we are driving top-line expanding margins and accelerating free cash flow while lowering the capital intensity of our business. We expect to generate about $900 million of free cash flow this year with a cash conversion approaching 95%, which aligns with our long-term framework. Our new long-term capital allocation framework is aligned with our EFX 2027 long-term growth strategy to number 1, maintaining a strong investment grade balance sheet and credit ratings to weather economic events in the future. Second, to continue to invest in Equifax growth, prioritizing high-return capital investments to support new product innovation and to continue to accelerate EFX cloud completion. We expect CapEx at about 6% to 7% of revenue as our new cloud infrastructure is much less capital-intensive. Third, to continue to execute our bolt-on M&A strategy at one to two points of revenue growth, focused on bolt-on acquisitions, aligned with our strategic priorities around unique data assets, strengthening workforce solutions, identity and fraud, and new international platforms like Boa Vista. And last, our new capital allocation plan delivers consistent returns of capital to shareholders while maintaining our strong balance sheet. We plan to grow our dividend in line with earnings and return excess cash through our share purchase program to reduce shares outstanding. This week, the Equifax Board of Directors approved a 28% increase in our quarterly dividend to $0.50 per share and authorized a new $3 billion four-year share repurchase program. This new capital allocation framework is a big milestone for Equifax after our big investments in the Equifax cloud over the past five years. The 28% increase in our dividend reflects our confidence in the new Equifax business model and moves our payout ratio to about 25% of 2025 adjusted net income. Going forward, we plan to increase dividends annually in line with earnings, generally in the first quarter of each year, and about in line with the expected growth in adjusted EPS with a range of 5% to 15%. Our new $3 billion share repurchase program announced today reflects repurchases we expect to make under normal market conditions to be completed over the next four years, while continuing to maintain a strong balance sheet, continue to invest in Equifax through CapEx and bolt-on acquisitions and consistently grow our dividend in the future. We intend to be in the market consistently during EFX trading windows and will flex up share repurchases during periods of stock dislocations and flex repurchase levels up or down based on bolt-on M&A activity. And as free cash flow accelerates in the future from operating leverage and lower CapEx spending and as the mortgage market recovers, we expect to increase the level of cash we return to shareholders versus our share repurchase program. Between both the increased dividend and the $3 billion share repurchase program, we expect to return about $1 billion a year in cash to shareholders annually over the next four years, with the return to shareholders growing as we grow our business in the future. We are energized to be entering this new phase of Equifax with higher free cash generation and lower capital intensity, and with significant excess free cash flow and leverage to return cash to our shareholders. Turning to Slide 6, our first quarter results were much better than our expectations with revenue and adjusted EPS well above the top end of our February guidance range. Adjusted EBITDA margins of 29.3% were up 20 basis points from last year and about 80 basis points better than expected, with EWS margins above 50%. Relative to our February framework, non-mortgage drove about two-thirds of the revenue outperformance. Our global non-mortgage businesses grew about 5% in constant currency from stronger-than-expected growth in USIS from strength in card and auto, as well as in EWS in both talent and consumer lending. Mortgage revenue was up 7% in the quarter and drove about a third of the outperformance in total Equifax revenue versus our February framework. This outperformance versus guidance were predominantly in USIS as we saw both stronger performance in our mortgage PreQual and pre-qualification products as well as an improvement of about 400 basis points in the mortgage market that was down 9% versus our minus 13% framework for the first quarter. Mortgage rates declined about 30 basis points in late February and March to about 6.7% that delivered some improved mortgage hard inquiry performance during that period, which reflects the mortgage market sensitivity to interest rates. We believe this improvement was likely led by higher mortgage refi activity off the lower mortgage rates. U.S. Mortgage revenue was about 20% of Equifax revenue in the quarter. In the first quarter, USIS mortgage revenue was up a strong 11% and outperformed underlying USIS hard credit inquiries by 20%, again driven by pricing pass through as well as the stronger performance in our mortgage PreQual and preapproval solutions. EWS mortgage revenue was up over 3%, marginally stronger than our expectations from stronger volumes in a down market. Over the last several weeks, we've seen declines in mortgage activity from higher interest rates. We expect to see continued impacts on mortgage activity until there is some stability in Washington. Based on current trends and the overall current economic and market uncertainty, we're maintaining our 2025 U.S. Mortgage market assumption of down 12% for the balance of 2025, which is the same framework we provided to you in February. Turning to slide 7, workforce solutions revenue was up 3%. Verifier revenue growth of 5% was stronger than expected due to stronger verifier non-mortgage revenue that was up 6%. We saw stronger-than-expected revenue in government, talent solutions, and consumer lending. Talent Solutions revenue is up 12% in the quarter, benefiting from better hiring volumes in February and March, as well as easier comps versus first quarter last year. Talent Solutions continues to outperform the underlying markets from new records, new products, penetration and pricing, as well as new solutions from their total verified data hub. Government grew 2% in the quarter given the headwinds related to changes in CMS, federal funding practices at the state level we discussed in February, as well as difficult comps from CMS redetermination volumes in the first quarter last year. We expect government revenue growth to continue to strengthen as we move through 2025, and expect to deliver about 10% government growth in the second half of the year. Our government business will be benefiting from a new $50 million SSA amendment that went online a few weeks ago, as well as continuing to benefit from growing state agency penetration and growth in twin records. Consumer lending revenue was up 11% in the quarter from strong sales execution across card, auto, P loans and debt management, as well as continued growth in new records and new products. Employer services revenue was down 8% in the quarter, as our I-9 and onboarding revenues have been negatively impacted by the weaker hiring market. Workforce solutions adjusted EBITDA margins of 50.1% was over 100 basis points better than our February framework. Driven by higher-than-expected revenue growth and good cost execution. Workforce solutions had a very strong quarter in record growth with 4.4 million companies contributing to twin and 191 million active records with 138 million unique individuals. The continued strong pace of partner and record additions further strengthens the multi-sided twin exchange with a big runway for future growth. Turning to Slide 8, the significant focus of our EWS strategy is penetrating the large $5 billion government TAM at the federal state, and local level. In 2025, we expect EWS government revenue of about $800 million with growth accelerating this second half to about 10%. Clearly, there is heightened focus with the new administration in Washington on program integrity and reducing the estimated $160 billion of improper payments within social service and tax programs. EWS has made significant progress penetrating agencies such as CMS, SSA and SNAP TANF, given the strong value proposition in increasing program integrity with big opportunities for broader utilization of our verified and instant income verification for federally sponsored social services given this new focus in Washington. We also have a big runway to expand twin utilization at the state and state agency level where social services are delivered. We are expanding our presence in Washington and adding state resources to drive state utilization and penetration. Full utilization of twin on all social service programs, new federal use cases such as do not pay, and the IRS earned income tax credit and strengthened program income verification requirements and more frequent redeterminations of $50 million SSA amendment during the quarter is a great proof point of the value Equifax can bring to the $160 billion of improper payments across government programs. We are on offense in Washington and across the states to take advantage of this new focus and have significant opportunities for future growth, supporting the government's goal of program integrity and efficient delivery of social service benefits. Turning to Slide 9, USIS had a very strong quarter with revenue up 7% and much better than our expectations. USIS non-mortgage revenue grew 6% in the quarter, well within their 6% to 8% long-term revenue growth framework, and their strongest organic non-mortgage growth in over two years. Non-mortgage B2B revenue growth of 5% was stronger than we expected in both online and offline. Within B2B online, we continue to see a stable and only slightly muted lending environment. We saw mid-single-digit revenue growth in FI and high single-digit revenue growth in auto. All other online B2B verticals in aggregate were up slightly. Financial marketing services, our B2B offline business was up a very strong 10% in the quarter, driven principally by new business growth within insights and archives at large FIs, as we've modernized our new data delivery services using the new Equifax cloud. We've not seen an increase in portfolio review spending that would be indicative of increased risk management activity in a weaker economic environment. Consumer Solutions revenue remained very strong at up 8%. And USIS adjusted EBITDA margins at 34.1% in the quarter was up about almost 150 basis points compared to last year. The USIS team is on offense with 100% of their post-cloud focus on customers, share gains, innovation, new products and growth. Turning to Slide 10, international revenue was up 7% in constant currency with broad-based revenue growth across all regions. Strong Latin American revenue growth was led by very strong double-digit growth in Brazil and Argentina. The Boa Vista business is performing very well as we bring new Equifax platforms like Ignite in our global products to the business and drive their cloud completion. Asia Pacific performed very well at 7% growth. Canada and Europe growth were slightly weaker than we expected, reflecting the overall economic weaker economic conditions in both markets. And international adjusted EBITDA margins of 24.1% were down 20 basis points versus last year. Turning to Slide 11. The first quarter marked a huge milestone for Equifax, launching our first-ever only Equifax solution, combining twin and credit data for mortgage shopping. Equifax is entering a new phase of innovation, leveraging our unique twin income and employment and credit data to build solutions that only Equifax can deliver enabled by the Equifax cloud and EFX.AI. We expect to launch additional twin-powered credit solutions later this year in auto and personal loans. In the first quarter, we delivered a vitality index of 11% from double-digit performances in EWS and international, which was 100 basis points above our long-term framework. We are seeing post-cloud increases in innovation and new products from USIS that we expect to continue through the balance of the year and increase further in 2026. We expect Equifax to deliver a strong 11% vitality index in 2025, above our 10% long-term goal, leveraging our EFX cloud capabilities to drive new product rollouts using our differentiated data and EFX.AI capabilities. Turning to Slide 12, we are clearly in a period of significant economic and market volatility and uncertainty from the tariff actions in Washington. Economic experts are raising concerns of weaker economic growth going forward as well as concerns of higher inflation in the direction of interest rates. While we've not seen impacts on our businesses to date, this uncertainty has led us to hold our 2025 guidance at the levels we shared in February despite our very strong performance in the quarter. Equifax is better positioned for an economic event than ever in our history, given the mix of our business mix of our businesses growing mix of subscription revenue and the upside from a mortgage market recovery. We have the majority of our cloud technology and data transformation behind us and are beginning to see the benefits of our new cloud capabilities, driving always-on stability and innovation, powered by our Equifax data assets and EFX.AI that are delivering growth and share gains. We're also improving the overall cost structure of our business, which is independent of any economic event. Our EWS government business has big growth potential in their $5 billion TAM in an attractive Washington environment. During a downturn, more consumers will apply for or increase social service benefits, including in our unemployment claims management business that was up double digits during the COVID recession. Workforce solutions will continue to grow the twin database in every economic scenario, which increases our fulfillment rate and revenue. During periods of economic uncertainty, we've historically seen areas of increased twin usage in financing markets as borrower, unemployment, and income status becomes even more critical to lenders during periods of increased unemployment. And our balance sheet and cash flow are strong, with strong cash conversion as our capital spending declines with the completion of our cloud investments. As shown on the left side of slide 12, the mix of Equifax businesses that are recession resilient or countercyclical and we expect to grow in an economic event is very strong at about 67% of our revenue, which is up from 54% in 2022 and up significantly from 37% in 2008. We're a different business today and much more resilient. Our government, identity fraud, debt management, mortgage and credit portfolio review businesses, as well as the significant portions of our employer services, commercial credit and consumer direct businesses that are subscription based are recession resilient and, in most cases, countercyclical, and we expect them to grow in an economic event. For perspective, we included a view of how our businesses may perform in a hypothetical recession in which U.S. GDP declines about 300 basis points and is negative and long-term interest rates decline over 150 basis points in the back half of an economic event to boost activity. In this scenario, we believe Equifax could still grow total revenue 5% to 10% on average over this recession cycle. Our non-mortgage businesses, we believe, would grow low single-digit percentage as the growth in recession-resistant and countercyclical businesses is only partially offset by declines in our recession-impacted businesses. It's shown on the right side of slide 12, we are at historic lows in U.S. mortgage market activity, with 1.2 billion in revenue opportunity for Equifax, with the market still 50% below what we characterize as normal 2015 to 2019 pre-pandemic average mortgage volume activities. Looking at Equifax data on mortgage issuance since early 2022, there are over 13 million mortgages that were issued with an interest rate over 5%, including about 11 million with rates over 6% and almost 8 million mortgages with rates over 6.5% with an interest rate decline in a recession, this creates a large pool of loans available for refinancing, which would drive substantial growth for Equifax from the current depressed mortgage refinance levels. Purchase mortgages could also see strong growth from current levels. For perspective, the last time mortgage rates were about 6%, purchase mortgage volumes were more than 25% higher than the levels we're seeing in 2025. Mortgage revenue could see growth rates of 20% or significantly more against the 50% decline from normal levels today in a reduced rate environment. Given these factors, and as shown on Slide 12, Equifax could grow revenue in the range of 5% to 10% in a typical recession with significant potential upside if mortgage rates decline even further, and mortgage volumes move back towards historical levels. We feel we're well positioned in an economic event given the unique position of our businesses like Twin, our growing subscription revenue and the upside from mortgage market recovery. We expect to continue to deliver strong free cash flow during a typical recession, allowing us to continue to invest in Equifax CapEx for growth and bolt-on M&A, while still delivering on our new capital allocation plan that will grow our dividend and return excess free cash flow with our buyback program, while maintaining a strong balance sheet and credit ratings. And now, I'd like to turn it over to John to provide more detail on our 2025 guidance and also provide our second quarter framework. John Gamble: Thanks, Mark. Turning to Slide 13. As Mark indicated, given the current economic and market uncertainty, our current full year 2025 guidance for USIS mortgage hard inquiries, that down 12%, is unchanged from what we shared in February. USIS hard mortgage credit inquiries run rates declined through last week, consistent with market activity and with the significant uncertainty that exists in the market. Based on these factors, our guidance for second quarter USIS hard mortgage credit inquiries is expected to be down about 11% and is consistent with the full year at down 12%. As Mark indicated, we are holding our full year 2025 guidance on a constant currency basis to be unchanged from our February guidance. We updated revenue by about $20 million reflecting the benefit from the weaker dollar using FX rates on April 10. The EPS benefit of the FX movement is very small. Slide 14 provides our full year 2025 guidance reflecting only the change in FX. Organic constant currency revenue growth is unchanged at 6%. BEU level details are also consistent with our February guidance. Going forward, each quarter, we will disclose the actual level of our share repurchases and the impact on shares outstanding. Slide 15 provides the details of our 2Q '25 guidance. In 2Q '25, we expect total Equifax revenue to be up just over 5.5% on a reported basis year-to-year at the midpoint, with constant dollar revenue growth up just over 6.5% at the midpoint. Adjusted EPS in 2Q '25 is expected to be $1.85 to $1.95 per share, up over 4.5% versus 2Q '24 at the midpoint. The increase in adjusted EPS is principally driven by revenue growth and lower interest expense, partially offset by higher depreciation and amortization. Equifax 2Q '25 adjusted EBITDA margins expected to be over 32.5% at the midpoint of our guidance, up about 50 basis points year-to-year. The increase in adjusted EBITDA margins principally reflects revenue growth and higher margins at both USIS and international. Business unit performance in the second quarter is expected to be as follows: Workforce Solutions revenue growth is expected to be up over 6.5% year-to-year. Verification services revenue is expected to be over 8%. Mortgage revenue is expected to be up about 6% with the growth in records and pricing offset by the expected continued mortgage market decline. Verifier non-mortgage revenue is expected to be up about 9%. Government revenue is expected to be up low double digits and improve sequentially from higher SSA revenue state penetration and records, as Mark indicated. Talent revenue should be up low single digits as growth remains negatively impacted by expected declines in U.S. hiring and with more difficult comp than the first quarter. Employer revenue is expected to be down slightly. EWS adjusted EBITDA margins are expected to be about 52%, down about 80 basis points year-to-year but up about 200 basis points sequentially. USIS revenue is expected to be up about 6.5% year-to-year. Mortgage revenue is expected to be up about 11%, and non-mortgage revenue is expected to be up about 4%. Mortgage revenue is still being impacted by a significant decline in USIS hard inquiries, which are being more than offset principally by third-party vendor pricing actions, as well as strengthening revenue in preapproval and prequalification products. Adjusted EBITDA margins are expected to be up above 200 basis points at over 35%. Again, reflecting the benefits from USIS decommissioned legacy systems and revenue growth. International revenue is expected to be up about 6.5% in constant currency, adjusted EBITDA Margins are expected to be up about 75 basis points at over 26% in 2Q ‘25. Our guidance assumes economic and market conditions do not deteriorate meaningfully from current levels, and U.S. interest rates at levels also about consistent with current levels. Delivering second quarter and full year guidance at the bid point requires continued strong execution by the team against our Equifax 2027 strategic priorities. Now, I'd like to turn it back over to Mark. Mark Begor : Thanks, John. Turning to slide 16, in 2025, despite our very strong performance in the quarter, we're expecting challenging markets in both U.S. mortgage and hiring to continue with the uncertainty in Washington, resulting in our expectation of 6% constant currency revenue growth for the year. We continue to be confident in our long-term growth framework that delivers 8% to 12% growth, including bolt-on M&A, 7% to 10% organic growth, strong operating leverage delivering 50 basis points of margin expansion annually, and strong free cash flow for investment in Equifax and returning cash to shareholders. We have a strong and resilient business model. Wrapping up on slide 17, we're off to a great start in 2025 with first quarter revenue in adjusted EPS well above our February framework in a challenging macro environment. As I said earlier, under normal economic and market conditions, we would be increasing our full year 2025 guidance. However, due to the significant current economic and market uncertainty in Washington, we felt it was prudent to maintain our 2025 full year guidance for Equifax, as well as our view on a weaker mortgage and hiring markets for the balance of the year. Our strong free cash flow generation and the strength of our balance sheet positions us well to return cash to shareholders return. Our new long-term capital allocation plan is a big step forward for Equifax. We are energized to be increasing our quarterly given by 28% this quarter to $0.50 per share in launching our new $3 billion share repurchase program that we expect to complete over approximately the next four years. Our capital allocation plan continues high-return investments across Equifax and CapEx and bolt on M&A, while returning cash to shareholders and maintaining a strong balance sheet. Equifax is better positioned than ever in its history to weather an economic event, while delivering growth margin expansion, free cash flow generation, and returning cash to shareholders. We are entering the next chapter of the new Equifax with our cloud transformation substantially behind us as we pivot our entire team from building the cloud to leveraging the new Equifax cloud for innovation, new products and growth. We're using our new cloud capabilities, single data fabric, EFX.AI and Ignite, our analytics platform, to develop new credit solutions leveraging our scale and unique data assets. And we're accelerating multi-data asset solutions, including those that combine traditional credit, alternative credit assets from DataX and TeleTrac, and TWIN income and employment indicators in verticals like mortgage and auto that only Equifax can deliver that will drive share gains and growth for Equifax in the future. I'm energized about our strong start to 2025, but even more energized about the next chapter of the new Equifax with our new capital allocation plan in place. This is a big milestone for Equifax and an exciting time to be at the new Equifax. One final note. We're planning an Investor Day the morning of June 17 in New York City, where you'll hear from the Equifax leadership team on our long-term growth plans that are aligned with our EFX 2027 growth framework. The event will be held in person as well as webcast live. Please mark your calendars and look for more information to come soon from Trevor and Molly on our Investor Day. And with that, operator, let me open it up for questions. Operator: Certainly. We'll now be conducting a question-and-answer session. [Operator Instructions] Our first question is coming from Jeff Meuler from Baird. Your line is now live. Jeff Meuler : Thank you. Good morning. So great to see the amended FSA contract. Just now that Doge is further into its work, can you just try to give us any more color on, I guess, the twin federal government discussions or opportunities as well as any risk that you're hearing that could arise from that? Mark Begor: Yes. Thanks, Jeff. We feel it's a real tailwind for us in the current administration with their focus on improper payments. As you know, it's a huge number. This is not our number, it's from the government of $160 billion a year with improper payments, either from social services or tax support that go to consumers, and Twin is really the answer. As I said in my comments earlier, we're ramping up our presence in Washington. I was up there a couple of weeks ago. Chad Borton, who leads EWS, I think is there next week. I'm going to be there again in a couple of weeks. And the discussions are very constructive around their desire to really tackle this challenge for the federal government and really drive they all want to have individuals that deserve social service and get them quickly, but those that no longer qualify, they really want to take those benefits back, and TWIN is really the answer. So, we're spending a lot of time with the new agency heads. We see opportunities in existing programs for increasing requirements around the authentication of income at the state level, perhaps doing more frequent redeterminations, which are currently every 12 months and this demographic, their income profile changes more rapidly, so doing that more often. And then, there's some very significant programs that we've been working on for four, five, six years. One is the Do Not Pay system, which we're not in today. We were making momentum in the last couple of years in the last administration. We think that will accelerate, and that's kind of a stopgap for all social service programs would check that database before making social service payments. Another big one for us that we've been working on the last couple of three years is with the IRS around the earned income tax credit, which they frame as being something like $16 billion of improper payments. So, the tone in Washington is super positive, we think around this. And as you point out, the amendment that we got with the SSA contract a couple of weeks ago, I think is a great proof point that even in this administration, which there's a lot of change going on in Washington, the value of Twin is clear. I'd also point out that as most of the TAM for that $5 billion TAM versus our roughly $800 million run rate of our business, that 4 plus billion is really at the states. There's a lot of states that don't use our data today. there's a lot of agencies that don't use our data. So that's a big part of the penetration opportunity. And as I said earlier in my comments, we're adding more state resources to really help drive that at the state level. I would also tell you that many states we're seeing are adopting, if you want to use the term, the Doge mentality, but the focus on integrity at the state level. And we play into that, too. So, we're really enthused around the momentum in the current administration around integrity of social service and tax refund payments, like earned income tax credit, and we're really on spending a lot of time in DC, but spending a lot of time in the states to really drive growth there. Jeff Meuler : And then I appreciate the resilience of the business and you providing a recession framework. The recession impacted businesses being down only 3% to 5%. I think that might be better than some investors would expect. So how did you come up with that estimate, and what are kind of the offsets relative to potential, I guess, end market origination volume declines? Mark Begor : Yes, we've been trying to be pretty consistent on that. Last time we did it was around going into COVID, as you know, we looked back to ‘08, ‘09, which was the last economic event. We looked at how our different business lines performed during that timeframe, which businesses were impacted, which businesses kind of grew through that timeframe, and then kind of rolled that forward to the current mix of the business. The other thing we factored in is, even since 2021, there's been a meaningful increase in our subscription-based revenue that is not going to be recession-impacted or economic impact. Meaning, we're locking into like 12-month contracts with volumes in government space and some of our FI space. The other thing, as you know, is that there is an element of counter cyclicality that we really carried forward the same trends we saw in 08, 09 and in 2021 as we went into the COVID pandemic. When there is an economic event, you may see credit activity slow from a marketing standpoint. It doesn't go to zero, obviously, but then there's a real pickup in management of existing books. So, more data is used in managing existing portfolios to drive collections and line management. The other thing that I think is also changing along with the subscription revenue is that the value of more data is really a positive for Equifax and a positive for our customers, meaning in an economic event, more data will be used in originations, because it helps identify those consumers that can really handle that next credit card or that next auto loan or mortgage. So that the power of more data is also a positive for us. Anything John, you'd add? John Gamble : Just also to make sure everyone's clear. This is really directional, because what a typical recession is very hard to define, and we did everything relative to our long-term framework. So, when you see 3% to 5% decline, that's relative to our long-term framework for non-mortgage of 7% to 10%. So, what we're talking about is just a very substantial reduction in the level of growth that we would see and an actual decline in those businesses that in our long-term framework, would've been growing 7% to 10%. So, we think that's quite material, as Mark said, that is somewhat consistent with what we saw back in the last two recessions that we're able to track. Mark Begor : And Jeff leaving mortgage aside. And I think we all understand the mortgage impact that happens in a recession when typically, rates are cut in the back half of a recession in order to boost economic activity. You've got businesses like government today that are huge for us. And notwithstanding the macro in Washington and around the states, around unemployed, typically, right? Unemployment goes up. We get a benefit from our unemployment claims business, which you saw during the COVID pandemic, was a significant, I think, $75 million or so uptick over a couple of quarters as there was very sharp layoffs during that timeframe. But then also with government social services, you'll see more individuals go into government and social services, meaning take advantage of it. That drives our business also. So, there's just a massive change in our business that's happening quite rapidly, over even the 21 to 25 timeframes around the mix of our businesses, where they are from a recession resiliency basis. Those that are recession-impacted are still there, but they're a smaller portion of Equifax revenue. And then, I would also point you to the increase really across all of our businesses around subscription revenue, versus transaction revenue. That's a change that's been happening over the last five years, three years, two years. Number 1, based on the types of businesses that are growing faster, but also number 2, based on how we're going to market on the kind of way we're positioning our products from a contractual basis. Unidentified Company Representative: Yes. And as Mark stressed in his comments, right, I think importantly in non-mortgage, what we think is we'll grow during a typical recession and we think that's really the most important outcome of the substantial change that we have in the percentage of our revenue that's recession resilient. The amount any individual segment that we showed you could grow, obviously, that could be right or wrong and move around, but the fact of the matter is we feel like we're going to grow our non-mortgage business in a typical recession, and we think that's very substantial. Operator: Thank you. Next question is coming from Andrew Steinerman from JPMorgan. Your line is now live. Andrew Steinerman : Hi, John. Just two questions. One is, could you just give us in the quarter just reported the percentage of U.S. Mortgage revenues? And then the second question has to do with free cash flow. Obviously, this is that great inflection year where free cash flow for the year is guided to be strong in terms of conversion of free cash flow. But when I look at the first quarter, it doesn't have that high conversion rate. I surely know it's been a while since we've seen seasonality. So just help us bridge the free cash flow that we just saw in the first quarter with the strong free cash flow conversion that you're guiding for the rest of the year? And then I assume that's sort of like the conversion we can expect going forward? John Gamble: Yes. So, to your first question, it's 21%, right? To your second question, free cash flow for Equifax Andrew Steinerman : 21% is a percent of mortgage revenue. It's a percent of mortgage revenue. John Gamble: That was your first question, right? 21% is your percent of mortgage revenue. In terms of free cash flow, the first quarter for Equifax free cash flow is always much lower, right, which would mean our conversion would be lower principally because it's the period in which we pay out our variable compensation. Unidentified Company Representative: From the prior year. John Gamble: From the prior year. So, it's a very large payment that occurs in the first quarter. The reason why the growth in free cash flow doesn't look as strong in the first quarter of 25 relative to 2024, is that the payments made in the first quarter of 2025 were substantially larger than the payments made in the first quarter of 2024 because as you'll remember 2023 was a more difficult year for us. So, our variable comp payments were much lower. If you were to normalize the variable comp payments and free cash flow, our growth rate would be over 20% in first quarter of 25 versus first quarter of 24. So, we feel good about the way free cash flow came in, and it's actually very consistent with the $900 million number that we talked about when we gave guidance both in February and in April. Operator: Thank you. Next question is coming from Manav Patnaik from Barclays. Your line is live. Brendan Popson: This is Brendan on for Manav. I just want to ask on just the level of visibility you have for the second quarter and kind of the trends you saw the first couple of weeks of April and not just mortgage, but also in kind of your non-mortgage, your consumer and card and other categories like that? Mark Begor: Yes. We kind of talked about that in our prepared comments around the second quarter. I think we have quite a bit of visibility in the second quarter in most of our business lines, actually the vast majority outside of what happens with rates on mortgage. Everything else, I think we have clear visibility. We talked about that auto has been a little bit stronger perhaps some pre-tariff buying in lending happening. But all the other businesses, we've really seen no negative impact; if anything, it's been extremely muted in any kind of activity. So, we've got a good visibility. Where rates are going to go with what's happening in Washington. It's hard to read. I think you saw the variability we had in the first quarter versus our minus 13% framework ending up at minus 9% because there was some lower rates for a number of weeks that really boosted mortgage activity. The guide that we put together for second quarter and the year, we think reflects what we're seeing over the last couple of weeks on mortgage. Operator: Your next question is coming from Toni Kaplan from Morgan Stanley. Your line is live. Toni Kaplan: I wanted to ask a follow-up on Government. Just to confirm, I wanted to make sure the low double-digit in Government is for 2Q that you're expecting? And does that have -- with the SSA amendment that you just signed, like is there a disproportionate amount in 2Q or is that sort of recognized straight line through the next... Mark Begor: No, that spreads through the quarters in a normal fashion. There's some level of ramping but not disproportionate. John Gamble: Yes. And the low double digit does reflect -- is in the second quarter as well. Yes. Toni Kaplan: Okay. Fantastic. And then I think that's better than expected. And then also, if I look at Talent, Talent was better than expected in 1Q. I guess maybe just shifting to Talent. What were the main sort of drivers that got you to that better spot? And how should we think about Talent as we sort of go through towards the back half of the year as well. Mark Begor: Yes. So really, in first quarter, we exited the year with kind of some tight hiring markets that we heard from our customers and we saw in our numbers. So, the market ended up being a little bit better as we went into February and March than what we saw in January and kind of the framework we put together. That was a portion of the, what I would call, strong performance from Talent, but there was also a significant portion of just kind of execution with new products, expanding our penetration into the background screening TAM, new solutions that we're bringing to customers, that's really helping us outgrow the underlying market in a positive way. And of course, record additions drives just more records across all of the Workforce Solutions business, including Talent. John Gamble: Yes. And look, low single digits also just reflect that the year ago period, first quarter of '24 was just weaker than first quarter first -- second quarter of '24. So, we just have a grow-over difference. And also, we're assuming that we're going to see hiring weaken a bit as we go through the year, right? So, we didn't change our full-year guide. Our full year guide had weaker hiring for the year when we provided the guide back in February and we've assumed that's going to continue and start to occur as we go through the second quarter and then be in place in the third and fourth. Operator: Our next question is coming from Kyle Peterson from Needham & Company. Your line is live. Kyle Peterson: Great. Good morning, guys, and thanks for taking my question. Just wanted to clarify on some of the moving pieces within the guide. I know it sounds like at least you have the 1Q upside, and then you're at least reflecting that mortgage kind of compressed a bit in the last few weeks. But I guess the first few weeks since tariffs and some of the stuff has driven a lot of things into more volatile state here. Does the guide reflect what you guys have seen in the last few weeks across the board, or is some of the decision-making and everything has been a little too volatile to extrapolate based on the last 2 weeks that you guys held the guide? Mark Begor: We certainly factored into our guide of holding the full year guidance even with a first quarter beat. As we said, you would expect and we would typically be raising the year based on that, but there's just so much uncertainty in our eyes around where the economy is going likely in the second half, meaning that there's enough visibility through the second quarter given that we're approaching the tail end of April, we thought it was prudent to be balanced or conservative whatever term you want to use and just hold the full year guidance until we see more around what kind of economic event we're going to have. As you know, there's been a kind of a CNBC and Wall Street Journal call for a recession in the second half by the expert economists, if that's going to happen, that's tough to factor into a guide when you have a strong first quarter performance, and we think decent second quarter performance, just hard to handicap what that means in the second half. So, we felt it was balanced to put together a guide that just holds the full-year numbers. John Gamble: Yes. And mortgage that as we said, the trends actually weakened over the past 10 days and the trends that we're seeing... Mark Begor: Long with the tenure in mortgage rates, yes. John Gamble: Long with the tenure, yes, are fairly consistent, right, with the guide we gave for the year, right? So yes, we saw a better first quarter, but we saw much weakening in the first 2 weeks and mortgage -- as mortgage rates went up. So, our quarter and our year reflect those run rates. And we didn't really see weakening in any other line of business over the last couple of weeks, right? So, I guess to your question, yes, it reflects the run rates we're seeing currently. Kyle Peterson: Okay. Okay. That is very helpful. And then maybe just a follow-up, I guess, in aggregate, it seems like the non-mortgage business is holding up pretty well. Is there anything you guys are seeing either in the data or conversations with customers, whether you're getting any sort of tightening in areas, whether it be subprime versus higher-end consumers or has it really been broad-based, not just in aggregate, but at a more kind of micro level as well? Mark Begor: I think the conversations are much like this conversation. Their businesses are performing well. The consumer is still working, meaning unemployment is still low, but they're also watching what's happening in Washington. And all reflecting on is there going to be a second half event? We haven't seen a change in how they're operating. We haven't seen a change in buying behavior. We've seen a little bit of impact in Canada and in the U.K., which perhaps are more tariff-impacted with some of the conversations in March. We're quite aggressive, pointed north of Canada. There was -- consumer confidence went down in Canada, and there may have been some pullback principally in consumer activity. It's very de minimis, but that's the only place that we've seen anything that I would characterize as kind of an economic, I wouldn't even use the term slowdown, but any kind of change. Outside of that, I think everyone is watching to see what's going to happen. And to us, one of the big indicators I always watch is what's happening with employment. If people are still working, and as you know, we had a good number a couple of weeks ago. If people are still working, that's good for our customers and it's good for Equifax. And will that change? We'll have to see. But it's clearly a super-uncertain environment, which is why we wanted to be balanced around our guide for the rest of the year. John Gamble: And the trends in terms of the health of the consumer are consistent with what they've been for the last 18 months, right? You're seeing some weakening in subprime, you're seeing delinquencies go up slightly in card and auto. But this has been the same story that we talked about every quarter for probably 1.5 years, and we really haven't seen it move above subprime. Operator: Your next question is coming from Shlomo Rosenbaum from Stifel. Your line is live. Shlomo Rosenbaum: Thank you, very much. I just wanted to ask a little bit about like a follow-up on the last question. with your banking and financial customers, are they doing anything now or is it wait and see, is it a deer in the headlights? And also, Mark, your whole career, I think, was in financial services, you worked on card. Are they usually ahead of the curve, concurrent or lagging when something changes over there? Like how should we think about that? Mark Begor: I think they're -- I think increasingly, just with the sophistication of data and the sophistication of CROs across all the financial services companies, they're quite responsive. What they're looking at is that, obviously, they've been managing, as John pointed out, some subprime delinquencies. But the core consumer where most of the financial activity is still employed still operating well. Inflation is down from where it was. So, no, we haven't seen it. We would see -- I think I used in my comments, we haven't seen any uptick in kind of special projects to rescore portfolios when they're worried about the risk that will happen. We'll see an uptick in revenue there when they're starting to see stress with the consumer or unemployment go up, that hasn't happened yet. But we're getting ready. We're going to see likely some impact in late second quarter and into the second half with the student lending collection starting again. We all saw that announcement yesterday from the Head of the Department of Education. That's going to be an impact in the second half. That will be one that will be helping our customers manage through that with more data around who's going to be impacted and why, and what that means for their other financial services lines and exposure they have out there. But no, I think everyone's watching to see when there's going to be those early signals of a change in economic activity. Everyone is, I think, watching consumer and corporate confidence, which is going in the wrong direction. That's a problem. But people are still working. And once that changes, I think we'll start to see some changes in activity. You may see our customers start to tighten up credit lines, change score cutoffs, but they're still going to keep ridging, but just be more prudent on the marketing side. And then we would expect to see them start to do some more portfolio management work, which would benefit Equifax, that's part of the countercyclical element of a company like ours in a downturn. We offset part of that marketing decline. It just hasn't happened yet, and we don't see any signs of it yet. John Gamble: We saw really good revenue performance in our offline business, right, which was very good. So, they are doing projects, right? They're doing archives. We saw nice growth in payments. We even saw some growth in prescreen projects. So -- and what -- I think what we're seeing is with Data Fabric now and with Ignite now, we're finding that our ability to deliver is very strong analytics and also our ability to deliver real-time. So, I think we feel very, very good about the position of that business, and we did see strength there. So, our customers are investing. Shlomo Rosenbaum: Okay. Great. I want to pivot to something completely outside of what's been talked about. One of the smaller competitors to the work number, True work, is being sold to Checker. I just wanted to ask you what you made of that transaction and how you think about it in terms of the talent business in terms of what it says about the industry? I just wanted to get some of your thoughts. Mark Begor: Yes. To be honest, I don't think we spent a bunch of time on it. We saw the announcement. We're not -- I'm not really sure what the Checkers strategy is in buying the business. We know it's super small. I think their revenue is something around $20 million, $25 million of revenue. So, it's quite small. We talked many times that we don't really feel an impact from them in the marketplace. Given the scale of our data assets, I believe they do a lot of what I would characterize as manual verifications, which would typically happen when we don't have the records. But no, I don't know a lot about what Checker strategy is. Checker is a customer and we interact with them and have a lot of respect for them. So, I'm sure we'll engage with them after they complete the acquisition. And just understand how we can either work together or how we'll certainly compete against them. Operator: Your next question is coming from Andrew Nicholas from William Blair. Your line is live. Andrew Nicholas: Good morning, thanks for taking my question. I wanted to go back to the recession scenario that you outlined and maybe ask about the puts and takes on margins in your framework. I would imagine incremental margins on mortgage are pretty helpful there, but curious about maybe the offsetting impact in the other pieces or if that 50 basis point kind of annual margin expansion target from your long-term framework would still apply in that sort of scenario as well? Mark Begor: Yes. I -- first off, margins -- incremental margins on all Equifax growth is very attractive. They are very high incremental margins, whether it's mortgage or non-mortgage really across Equifax. So, when you think about a business -- our business growing in the 5% to 10% range, there's a lot of operating leverage there. I would remind you second is that we didn't really put this into our model, but we have the ability to tighten our build cost wise -- if -- dependent upon what kind of economic event is there, but that's something that we would certainly be thoughtful about. We typically, in other economic events like during the COVID pandemic, we kept investing because of our view of the future and the high incremental margins we have. So, we would expect to grow our income and grow our margins in an economic event where we're growing 5% to 10%. That has very high incremental margins, and so it's going to result in our ability to continue to grow both the top and the bottom line. John Gamble: Just as a reminder, if you model it yourself, right, 7% to 10% is our long-term growth framework organic, and it's that growth rate in which we indicated we could grow 50 basis points. So however, you're modeling recession, you're below that, well, that's probably -- that would impact margin growth. And then also, as Mark said, our margins are very strong in mortgage and non-mortgage, but as we've talked about in the past, non-mortgage margins are higher than mortgage margins, right? So -- and it's principally because of the payments to our partner, right? So, the -- to our vendor. So, our margins are lower in mortgage. They're still very healthy, but they're not as high as they are in non-mortgage. Andrew Nicholas: Very helpful. Thank you. And then switching gears a little bit for my follow-up and maybe a hard question to answer, but I'm going to ask it anyway. In a choppier macro with the work number, does that competitively get prioritized relative to manual options or maybe do-it-yourself verifications from like a direct-to-consumer lens just based on how quickly conditions are changing? Or I just wanted to see like -- from like a relative performance perspective would you might expect that to do better? Mark Begor: We think there's a positive trend for the income and employment data in every economic event. If you look at like card, it's used in some places, but most don't. In an economic event, understanding someone's credit score and if they're working allows that card originator to originate more cards because they have more confidence in that consumer's ability to pay. So, in an economic event, I would say, broadly, more data is going to be used and one of the most powerful data assets we have is that someone's working. I would also add to it our alternative data, whether it's NC Plus, DataX, Teletrac and our new One Score solution that really drives a lift in -- off the straight credit file, that's another example of data that's going to be very valuable in an economic event. So, as we move post-cloud is we now have all our data in a single data fabric, and is that we have the ability to really effectively combine data elements using our EFX.AI to really drive higher-performing solutions, those become more valuable in every economic event. But as you point out, in a downturn, it allows our customers to better identify those consumers that can handle the loan typically that they're trying to give to that consumer. So, I think we're well-positioned to go into an economic event with our differentiated data assets, the fact that we're substantially cloud complete. And as you know, now we're ramping our product and innovation focus because we have the bandwidth to do it with cloud behind us, so we're able to bring those solutions together. And I think the one that we talked about during the call earlier is the TWIN indicator on mortgage, which is something I want to do since I joined Equifax, we now have in market, it's something we couldn't do before, and only Equifax can do it. And we're going to do the same thing in auto, where income is verified on lots of auto loans and the same thing in P loans. So, we think we're well-positioned with our differentiated data assets to bring more value to our customers around decisioning in any economic event, including a downturn. Operator: Your next question today is coming from Jason Haas from Wells Fargo. Your line is live. Jason Haas: Good morning, and thanks for taking my questions. Actually, I wanted to follow up on that twin indicator that you just mentioned. I was curious if you could talk about what the reception has been like? How long does it take mortgage lenders to start to utilize that? Should we think about it as it takes several quarters for them to make that switch or what's the time frame? And then... Mark Begor: Yes, it's early days. We've only been in the market for, I don't know, 60 days, the reception is super positive. I was with one of our partners last night, and they're helping us bring that to market. Super-energized about it, feedback from the mortgage space is very, very positive around that shopping window with a consumer, which up until today, the only visibility that a mortgage originator would have or a mortgage broker would have in that window is what their credit score is. We're able now to add an indicator that says they're working. We can add an indicator that says, here's their employer. We have an indicator that here's their last 12 months income, not their current income, but what their average income was. It just gives them confidence on which consumer to work on, which consumers they can move to an application and which consumers they have confidence they can close. And remember, mortgage originator is spending $5,000 from the start of that shopping process through to a closed loan. So, if they can optimize that and close more loans, it makes our credit file with the TWIN indicator super valuable. So, we're really energized around that differentiation we can now bring to market in mortgage. And as I said, we're going to do the same thing in other verticals like auto and card -- I'm sorry, auto and P loans, where these are big-ticket transactions where income and employment provides real visibility around someone's capacity to repay along with their propensity to repay from their credit score. Jason Haas: Is there any risk? Are you seeing any evidence? I know it's early days that there's been any cannibalization of the... Mark Begor: Yes. It's obviously something we're super thoughtful about. No, because the indicators were using provide, we believe, enough value to enhance that shopping process. But still, the lender is still required to do a current income validation for a mortgage that's well defined. And in auto, it's typically defined by the lender and then the securitization market and the same with P loans. So, we're obviously trying to balance how much information you've given at shopping process to make sure it's enough to benefit that marketing or shopping window. But then, as you point out, protect the full TWIN pools later on. So, it's something we'll continue to watch, but we think we have the right balance. And the other thing we expect it will actually promote in some regards is the use of TWIN. As you know, we don't have full penetration of TWIN in any of those verticals. There's still a handful of mortgage originators that are fully manual. So, by having the TWIN indicator on the shopping file, it helps them know that we have an income and employment report for that consumer. And as you know, we don't have full penetration yet. It's going to take a long time to get to the full population, but it also provides that visibility. So, there's a lot of benefits that we're energized about and we're still in the early days, as you point out, to as far as rolling it out in penetration. And we -- that's going to accelerate as we go through second quarter and through the balance of the year. And then, of course, we'll add those other verticals later in the year. Jason Haas: That's great. And if I could ask a follow-up on the EWS margin outlook? It's good to see that the margins came in better in 1Q, still down year-over-year, and it looks like the guidance now implies that the year-over-year decEFX Ratings Summary
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UBS Reiterates Buy on Equifax, Sees Cloud and International Growth Driving Long-Term Upside
UBS reaffirmed its Buy rating and $315 price target on Equifax (NYSE:EFX), highlighting the company’s strong growth framework and significant long-term earnings potential, particularly if the mortgage market rebounds more meaningfully.
Equifax recently reaffirmed its long-term revenue growth target of 8–12%, countering expectations that it might scale that back to a more modest 7–10% range. UBS sees this as a positive signal, underpinned by the company's ongoing cloud transformation, which is expected to accelerate product development and enhance integration across its U.S. Information Solutions (USIS) and Employer Services (EWS) segments—together comprising nearly 80% of revenue.
The firm also sees sizable international expansion opportunities within a total addressable market exceeding $50 billion. While the outlook for the U.S. mortgage market remains cautious—with only modest 2–3% annual growth assumed through 2030—the base case doesn't factor in a full recovery. Should mortgage activity rebound more significantly, UBS estimates a potential 27% boost to 2030 EPS, increasing it to around $19 versus its current projection of $15.
UBS maintains that Equifax is well-positioned to deliver on its capital allocation plans, targeting $1.35 billion in 2025 and over $3 billion by 2030. Overall, the firm sees a compelling long-term investment case backed by strong execution, scalable infrastructure, and optional upside from cyclical recovery.
Equifax Tops Q1 Estimates, Hikes Dividend
Equifax (NYSE:EFX) delivered a stronger-than-expected start to 2025, with first-quarter results beating analyst forecasts, thanks to solid revenue gains across key business segments. The company also boosted its shareholder returns with a dividend increase and a fresh stock repurchase program.
Adjusted earnings came in at $1.53 per share on $1.44 billion in revenue, outpacing expectations of $1.50 and $1.40 billion, respectively. Total revenue grew 4% year-over-year, or 5% on a local currency basis, coming in $37 million above the midpoint of company guidance.
The quarter’s growth was led by a 7% jump in U.S. mortgage-related revenue within the Information Solutions unit, which helped lift segment revenue to $499.9 million. Workforce Solutions generated $618.6 million in revenue, up 3%, as Verification Services grew 5%. International sales inched up 1% on a reported basis and rose 7% in local currency to $323.5 million.
Despite ongoing macro uncertainty, Equifax reaffirmed its full-year guidance, projecting 6% local currency revenue growth and adjusted earnings of $7.45 per share.
Equifax Tops Q1 Estimates, Hikes Dividend
Equifax (NYSE:EFX) delivered a stronger-than-expected start to 2025, with first-quarter results beating analyst forecasts, thanks to solid revenue gains across key business segments. The company also boosted its shareholder returns with a dividend increase and a fresh stock repurchase program.
Adjusted earnings came in at $1.53 per share on $1.44 billion in revenue, outpacing expectations of $1.50 and $1.40 billion, respectively. Total revenue grew 4% year-over-year, or 5% on a local currency basis, coming in $37 million above the midpoint of company guidance.
The quarter’s growth was led by a 7% jump in U.S. mortgage-related revenue within the Information Solutions unit, which helped lift segment revenue to $499.9 million. Workforce Solutions generated $618.6 million in revenue, up 3%, as Verification Services grew 5%. International sales inched up 1% on a reported basis and rose 7% in local currency to $323.5 million.
Despite ongoing macro uncertainty, Equifax reaffirmed its full-year guidance, projecting 6% local currency revenue growth and adjusted earnings of $7.45 per share.
Equifax Inc. (NYSE:EFX) Earnings Report Highlights
- Earnings Per Share (EPS) of $2.12, aligning with estimates and showing growth from the previous year.
- Reported revenue of $1.42 billion fell short of the estimated $1.44 billion.
- Valuation ratios such as the price-to-earnings (P/E) ratio of 55.08 and price-to-sales ratio of 5.55 reflect high market expectations and investor confidence.
Equifax Inc. (NYSE:EFX) is a leading global data, analytics, and technology company, known for its comprehensive credit reporting services and data analytics capabilities. The company competes with major credit reporting agencies like Experian and TransUnion, operating across various segments including Workforce Solutions, US Information Solutions, and International.
On February 6, 2025, Equifax reported an EPS of $2.12, which was in line with the estimated EPS of $2.12. This performance marks a positive trend, with the company having reported an EPS of $1.81 in the same quarter of the previous year, indicating a growth in earnings. However, Equifax's actual revenue of approximately $1.42 billion fell short of the estimated $1.44 billion, according to Zacks Investment Research.
The company's strong performance in the fourth quarter of 2024 was driven by robust growth across its various segments, despite missing revenue targets. The price-to-earnings (P/E) ratio of 55.08 and the price-to-sales ratio of 5.55 suggest high market expectations for future earnings growth and reflect investor confidence in its revenue-generating capabilities.
Further financial metrics such as the enterprise value to sales ratio of 6.44 and the enterprise value to operating cash flow ratio of 27.23 provide insights into Equifax's valuation relative to its revenue and cash flow generation. The earnings yield of 1.82% offers a perspective on the return on investment for shareholders. Additionally, Equifax's debt-to-equity ratio of 1.11 indicates a moderate level of debt compared to its equity, while the current ratio of 0.88 suggests potential challenges in covering short-term liabilities with short-term assets.
Equifax Inc. (NYSE:EFX) Earnings Report Highlights
- Earnings Per Share (EPS) of $2.12, aligning with estimates and showing growth from the previous year.
- Reported revenue of $1.42 billion fell short of the estimated $1.44 billion.
- Valuation ratios such as the price-to-earnings (P/E) ratio of 55.08 and price-to-sales ratio of 5.55 reflect high market expectations and investor confidence.
Equifax Inc. (NYSE:EFX) is a leading global data, analytics, and technology company, known for its comprehensive credit reporting services and data analytics capabilities. The company competes with major credit reporting agencies like Experian and TransUnion, operating across various segments including Workforce Solutions, US Information Solutions, and International.
On February 6, 2025, Equifax reported an EPS of $2.12, which was in line with the estimated EPS of $2.12. This performance marks a positive trend, with the company having reported an EPS of $1.81 in the same quarter of the previous year, indicating a growth in earnings. However, Equifax's actual revenue of approximately $1.42 billion fell short of the estimated $1.44 billion, according to Zacks Investment Research.
The company's strong performance in the fourth quarter of 2024 was driven by robust growth across its various segments, despite missing revenue targets. The price-to-earnings (P/E) ratio of 55.08 and the price-to-sales ratio of 5.55 suggest high market expectations for future earnings growth and reflect investor confidence in its revenue-generating capabilities.
Further financial metrics such as the enterprise value to sales ratio of 6.44 and the enterprise value to operating cash flow ratio of 27.23 provide insights into Equifax's valuation relative to its revenue and cash flow generation. The earnings yield of 1.82% offers a perspective on the return on investment for shareholders. Additionally, Equifax's debt-to-equity ratio of 1.11 indicates a moderate level of debt compared to its equity, while the current ratio of 0.88 suggests potential challenges in covering short-term liabilities with short-term assets.
Equifax Inc. (NYSE:EFX) Sees Positive Analyst Outlook Amid Strategic Expansions and Innovations
- The consensus target price for Equifax Inc. (NYSE:EFX) has been steadily increasing, indicating growing analyst optimism.
- Strategic international expansions and innovations in fraud detection and identity verification are key drivers of Equifax's positive outlook.
- Equifax's strong performance in non-mortgage businesses and anticipated growth in mortgage revenue due to potential interest rate cuts are bolstering confidence.
Equifax Inc. (NYSE:EFX) is a prominent player in the information solutions and human resources business process automation outsourcing industry. The company operates through three main segments: Workforce Solutions, U.S. Information Solutions (USIS), and International. These segments provide a variety of services, such as employment and income verification, credit information and scoring, fraud detection, and identity verification. Equifax serves a wide range of clients across industries like financial services, healthcare, and government, and has a global presence.
The consensus target price for Equifax's stock has been on an upward trajectory over the past year. A month ago, analysts set the average price target at $320.50, up from $317.18 a quarter ago, and significantly higher than the $299.89 target from a year ago. This trend suggests growing optimism among analysts about Equifax's stock performance, as highlighted by the recent strong quarterly earnings report. The company's robust performance in its Workforce Solutions and USIS segments has likely contributed to this positive outlook.
Equifax's strategic expansion in international markets, particularly in Asia and Latin America, is another factor driving analyst confidence. This expansion is expected to fuel future growth, as evidenced by the anticipated revenue growth in Europe and Latin America for the third quarter of 2024. Analyst Georgios Mihalos from Cowen & Co. has set a price target of $295, reflecting a positive outlook for Equifax's international ventures.
Innovations in fraud detection and identity verification are also bolstering Equifax's competitive position. The company's investment in advanced technologies is likely to enhance its service offerings, contributing to the optimistic target price outlook. Equifax's strong growth in non-mortgage businesses and expected recovery in mortgage revenue further support this positive sentiment, as indicated by the 'Strong Buy' rating and a one-year price target of $360 per share.
Equifax's recent achievements, such as an 8% organic revenue growth in the second quarter and a notable 13% increase in non-mortgage sectors, demonstrate its resilience and adaptability. Despite a decline in mortgage credit inquiries, the company has maintained strong performance. The anticipated interest rate cuts by the Federal Reserve are expected to boost Equifax's mortgage revenue and overall Workforce Solutions, potentially accelerating growth from fiscal year 2025 onwards, as supported by analyst Georgios Mihalos.
Equifax Inc. (NYSE:EFX) Sees Positive Analyst Outlook Amid Strategic Expansions and Innovations
- The consensus target price for Equifax Inc. (NYSE:EFX) has been steadily increasing, indicating growing analyst optimism.
- Strategic international expansions and innovations in fraud detection and identity verification are key drivers of Equifax's positive outlook.
- Equifax's strong performance in non-mortgage businesses and anticipated growth in mortgage revenue due to potential interest rate cuts are bolstering confidence.
Equifax Inc. (NYSE:EFX) is a prominent player in the information solutions and human resources business process automation outsourcing industry. The company operates through three main segments: Workforce Solutions, U.S. Information Solutions (USIS), and International. These segments provide a variety of services, such as employment and income verification, credit information and scoring, fraud detection, and identity verification. Equifax serves a wide range of clients across industries like financial services, healthcare, and government, and has a global presence.
The consensus target price for Equifax's stock has been on an upward trajectory over the past year. A month ago, analysts set the average price target at $320.50, up from $317.18 a quarter ago, and significantly higher than the $299.89 target from a year ago. This trend suggests growing optimism among analysts about Equifax's stock performance, as highlighted by the recent strong quarterly earnings report. The company's robust performance in its Workforce Solutions and USIS segments has likely contributed to this positive outlook.
Equifax's strategic expansion in international markets, particularly in Asia and Latin America, is another factor driving analyst confidence. This expansion is expected to fuel future growth, as evidenced by the anticipated revenue growth in Europe and Latin America for the third quarter of 2024. Analyst Georgios Mihalos from Cowen & Co. has set a price target of $295, reflecting a positive outlook for Equifax's international ventures.
Innovations in fraud detection and identity verification are also bolstering Equifax's competitive position. The company's investment in advanced technologies is likely to enhance its service offerings, contributing to the optimistic target price outlook. Equifax's strong growth in non-mortgage businesses and expected recovery in mortgage revenue further support this positive sentiment, as indicated by the 'Strong Buy' rating and a one-year price target of $360 per share.
Equifax's recent achievements, such as an 8% organic revenue growth in the second quarter and a notable 13% increase in non-mortgage sectors, demonstrate its resilience and adaptability. Despite a decline in mortgage credit inquiries, the company has maintained strong performance. The anticipated interest rate cuts by the Federal Reserve are expected to boost Equifax's mortgage revenue and overall Workforce Solutions, potentially accelerating growth from fiscal year 2025 onwards, as supported by analyst Georgios Mihalos.
