Equifax Inc (EFX) — Q4 2025 Earnings Call Transcript

Thanks and good morning. Welcome to today's conference call. I'm Trevor Burns. With me today are Mark Begor, Chief Executive Officer, and John Gamble, Chief Financial Officer. Today's call is being recorded, and 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 will make reference to certain materials that can also be found in the presentation section of the News and Events tab at our IR website. These materials are labeled 4Q 2025 Earnings Conference Call. We will be making certain forward-looking statements including first quarter and full year 2026 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 to differ materially from our expectations. Certain risk factors that may impact our business are set forth in our filings with the SEC, including our 2024 Form 10-Ks and subsequent filings. During this call, we will be referring to certain non-GAAP financial measures, including adjusted EPS, adjusted EBITDA, adjusted EBITDA margins, and cash conversion, which are adjusted for certain items that affect the comparability of our underlying operational performance. All references to EPS, EBITDA margins, and cash conversion are references to non-GAAP measures. 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. Additionally, in the fourth quarter, Equifax incurred a charge of $30 million related to a settlement associated with a resolution of inquiry disputes related claims. We expect costs associated with the settlement to be reimbursed by our errors and omissions insurers, with these insurance recoveries also included as one-time events when received. Moving forward, our non-mortgage results will be referred to as diversified markets, which does not affect any change in reporting structure. Additional 2026 guidance will be posted after the earnings call in the appendix to the earnings slide presentation. Now I'd like to turn it over to Mark.

Thanks, Trevor. Before I cover our results for the quarter, I want to spend a few minutes on our 2025 performance. A strong finish to the year gives us strong momentum for a successful 2026. Equifax delivered financial results well above both our February and October guidance with revenue of $6.075 billion, EPS of $7.65 a share, and free cash flow of $1.025 billion. Revenue was up 7% on a reported and organic constant currency basis at the low end but within our long-term 7% to 10% organic revenue growth framework. Despite a continued weak U.S. mortgage market that was down 7%, and the U.S. hiring market which was down 2%, the mortgage market negatively impacted Equifax's 2025 revenue growth by about 100 basis points. EWS delivered 6% revenue growth with 51.5% EBITDA margins but exited the year with strong fourth-quarter 9% revenue growth. This accelerating performance was led by verification services, which successfully navigated difficult U.S. mortgage and hiring markets to deliver 8% growth for the year and over 10% in the fourth quarter, driven by strong low double-digit revenue growth in government, which was above our expectations, and an NPI vitality index of over 20%. The EWS team had another outstanding year, adding over 20 million records to the Twin database. At the end of 2025, EWS had over 200 million active records, which were up 11%, and over 800 million total records, both significant milestones for the business. Internationally, we delivered constant dollar revenue growth of 6% and expanded EBITDA margins almost 100 basis points. The international team made strong progress towards cloud completion, which we expect to finish by the middle of this year. International also delivered 12% vitality last year, which drove good revenue performance despite weak Canadian and UK debt management end markets. Driving new product innovation is central to our long-term growth strategy. In 2025, with 90% of our revenue in the new Equifax cloud, we pivoted from building to leveraging the cloud and accelerating our use of AI in new products. Equifax had another very strong year of NPI rollouts with a record 2025 Equifax vitality index of 15%, which is 500 basis points above our long-term 10% goal and equates to about $900 million of new product revenue during the year. USIS and EWS collaborated to launch new products that deliver USIS credit files and leverage alternative data, including the Twin Indicator income and employment data in mortgage, card, and auto markets. We plans to launch similar products in the personal loan space early this year. In 2025, we launched 100% of our new models and scores powered by efx.ai. These new AI models and scores drive strong incremental lift versus traditional non-AI models and scores, and we're leveraging AI to help our customers identify clear and actionable insights. In U.S. mortgage, we made great progress working with mortgage lenders and resellers towards the adoption of VantageScore 4.0, with over 200 mortgage lenders testing or in production with Vantage due to the significant cost savings opportunity. As we move through last year, we also leveraged our industry-leading cloud-native technology and efx.ai to drive operational efficiencies across Equifax through our new internal AI for Equifax initiative, which we expect to deliver cost savings, efficiencies, speed, and accuracy across Equifax in 2026 and beyond. We delivered very strong free cash flow of $1.1 billion with a remarkable 120% free cash flow conversion, which was up $230 million from our February guidance. With our robust free cash flow, EWS acquired Vault Verify in the fourth quarter and also returned record amounts to shareholders. As we move into 2026, I am energized about our commercial momentum and our strong exit from the fourth quarter, our product innovation, our AI capabilities, and the benefits of the new Equifax cloud. Slide five provides detail on the strength of our free cash flow and its conversion. Our growth in revenue, EBITDA, and declines in CapEx as we complete the cloud are driving accelerated free cash flow. We generated $1.13 billion of free cash flow last year with a cash conversion record of 120%, well above our long-term framework of 95%. This is about $170 million above the midpoint of our October free cash flow guidance. In 2025, Equifax repurchased over 4 million shares, returning $927 million to shareholders, including $500 million of purchases in the fourth quarter when our stock was weak and our free cash flow was strong. Furthermore, we paid $233 million in dividends, resulting in a total cash return to shareholders last year of $1.2 billion. This was up six times from 2024 and stronger than our plans for the year. In 2026, we expect again to generate significant strong free cash flow in excess of our 95% cash conversion long-term framework, allowing us to continue to acquire bolt-on M&A and return cash to shareholders via dividends and share repurchases. Turning to slide six, Equifax fourth quarter reported revenue of $1.551 billion was up a strong 9% and $30 million above the midpoint and $15 million above the top end of our October guidance. This strong outperformance was most significant in Workforce Solutions, where we saw strength in mortgage as well as in government, which was above our expectations, and also in USIS. The strength was principally in mortgage. Both USIS and EWS saw stronger mortgage markets better than our October framework. USIS mortgage hard credit inquiries were down about 1% but were better than our expectations of down high single digits. For the quarter, U.S. mortgage revenue represented about 20% of Equifax revenue. Diversified markets or non-mortgage constant dollar revenue growth grew over 6% in the quarter, slightly above our expectations and guidance. This was principally driven by broad-based strong execution in Workforce Solutions, driven by stronger auto, card, and debt services revenue growth, which was up low double digits, and talent, which was up high single digits. USIS diversified markets revenue was consistent with our expectations, while international was slightly weaker than expected, principally reflecting end market weakness in Canada and European debt management, despite very good performance in Brazil and Australia. On an organic constant currency basis, revenue growth of 9% was over 200 basis points above the midpoint of our October framework, which gives us strong momentum as we move into 2026. Equifax delivered fourth quarter EBITDA of $508 million with an EBITDA margin of 32.8%, slightly below our October guidance. While EWS and USIS EBITDA margins were above expectations, international was at the top end of our October guidance range. Equifax overall margins were slightly lower than guidance due to higher incentive compensation, which impacts our corporate expenses. We expect incentive compensation to normalize to target levels in the first quarter as 2026 compensation targets are set at our plan for the new year. EPS at $2.09 a share was $0.06 above the midpoint of our October guidance, and we returned $561 million to shareholders in the fourth quarter, including purchasing 2.3 million shares or about 2% of shares outstanding for $500 million to take advantage of a weaker Equifax stock price. Our strong fourth quarter revenue performance and business unit margins give us positive momentum as we move into 2026. Turning to slide seven, Workforce Solutions revenue was up a strong 9% and better than our October guidance and our expectations. Verifier diversified markets revenue growth was up 11%, which is a very positive momentum as we enter 2026. Government had a strong quarter building off the third quarter performance with revenue up low double digits. Government revenue performed very well despite a tough comparison with continued strong state-level penetration. We had minimal impact on EWS revenue from the federal government shutdown in the quarter. Talent Solutions revenue was up high single digits in the quarter. In October, we discussed weaker hiring volumes that continued throughout the fourth quarter. Despite the weaker hiring macro, Talent Solutions continued to outperform their underlying markets driven by penetration pricing and higher hit rates from record additions and new products, including new solutions from the Total Verified Data Hub, which includes trended employment data as well as incarceration, education, and licensing data. Consumer lending continued to perform very well with revenue up mid double digits in the quarter from double-digit revenue growth in personal loans, auto, and card. EWS mortgage revenue was up about 10% in the quarter, delivering improved sequential trends from new products, record growth, and pricing. Employer services revenue was up two in the quarter despite continued weakness in our i9 and onboarding businesses due to the weaker hiring market. In Workforce Solutions, EBITDA margins of 51.3% were driven by operating leverage from higher-than-expected revenue growth in the quarter. Twin record additions continued to be strong again in the fourth quarter with 209 million active records up 11%. Our 120 million total current records were up 9%, representing 105 million unique SSNs. 105 million individuals with current records in Twin, provide a long runway for growth towards the 250 million income-producing Americans. In the fourth quarter, EWS signed agreements with five new partners bringing our total to 16 new agreements signed during 2025. Turning to slide eight, we continue to see momentum in our discussions in Washington and with state agencies to support their plans to implement the new TITAN OB3 social service eligibility requirements. Given our strong value proposition from Twin on the speed of social service delivery, caseworker productivity, and accuracy of income verifications, Equifax is uniquely positioned with our differentiated twin data assets and new solutions to help state agencies increase efficiency and strengthen program integrity, particularly with SNAP and CMS. Partnering with our customers, we're already bringing new innovative solutions to federal and state agencies supporting the government's goal of reducing the $160 billion of social services fraud, waste, and abuse. In the fourth quarter, we launched our new continuous evaluation solution for SNAP, which identifies changes in recipients' incomes above program levels, enabling states to reduce SNAP error rates where nearly 80% of states today are above the 6% federal threshold. Given the strong value proposition, we've already contracted with a few states in the first quarter on our new continuous evaluation solution, with many more actively in discussions to utilize this new product from Equifax. We expect this focus on programming integrity from OB3 will be a positive tailwind for our EWS government business in 2026 and 2027 and beyond. While OB3-related deals and revenue will likely be in the second half of the year and in 2027, the increased engagement represents positive opportunities in the near term to penetrate states not using Twin today for social service delivery. We're also continuing our positive engagement in DC with multiple federal agencies to support their efforts to strengthen social service program integrity. There are several new incremental opportunities that would drive positive future growth for EWS. This current environment is a unique opportunity for our government vertical with the big focus on improper social service payments. EWS has significant opportunities for medium and long-term revenue growth supporting government programs in the $5 billion government TAM for Equifax, which gives us confidence in our ability to deliver government revenue growth above the EWS long-term revenue growth framework of 13% to 15%. Said differently, we expect our government vertical to be our fastest-growing business across Equifax going forward. Turning to slide nine, USIS revenue was up a strong 12% in the quarter driven by strong mortgage outperformance. USIS diversified or non-mortgage revenue grew 5% in the quarter and was in line with our guidance. Within B2B diversified markets, we saw very strong high double-digit growth in auto from pricing and strong volumes in auto pre-products and low single-digit growth in FI. Given the stable lending environment, we have not seen changes in customer marketing or risk management behavior. USIS mortgage revenue was up a very strong 33% and better than our expectations. While hard mortgage credit inquiries were down 1% in the quarter, these volumes were better than our October guidance of down high single digits. FICO pricing, along with growth in mortgage preapproval products, along with our new twin indicator, drove mortgage revenue growth for USIS. In 2026, we expect to see share gains in USIS mortgage pre-qual, pre-approval, and hard credit inquiry products from the adoption of our new mortgage credit file with Twin Indicator and Twin Total Income products. Financial Marketing Services, the B2B offline business was up low single digits in the quarter. USIS' consumer solutions business had another very good quarter, up high single digits from strong customer acquisition trends in our consumer direct channel as well as strong growth in partner revenue. Our USIS B2C business remains proactive entering into an expanded relationship with Gen Digital providing our differentiated data to their Engine by Gen marketplace. Later this year, we'll also leverage Engine by Gen to provide MyEquifax consumers in the U.S. with access to expanded and personalized financial solutions. USIS EBITDA margins were 30.3% in the quarter and up over 100 basis points sequentially above the top end of our guidance range from stronger-than-expected revenue growth and operating leverage. Turning to slide ten. International revenue growth was up 5% in constant currency and below our expectations principally in Canada and our European debt recovery management business. Latin America growth of 6% was led by high single-digit growth in Brazil and Argentina. Brazil continues to be a significant success story for Equifax with strong above-market revenue growth from share gains. Canada, Europe, and APAC delivered 4% growth in the quarter. International EBITDA margins of 31.6% were slightly above our October framework. Turning to slide eleven, proprietary data is the foundation of our highly differentiated products and analytical and decisioning capabilities through which our customers generate unique solutions to grow their businesses and mitigate risk. Only Equifax can access our unique and proprietary datasets. The application of advanced AI in traditional IT-based analytical techniques allows us and our customers to develop solutions reliant on our proprietary data. As AI advances, we are confident we are able to generate more effective analytical solutions based on our proprietary data at an accelerated pace as well as make these advanced analytical solutions available to more customers. In total, about 90% of Equifax revenue was generated through the direct sale or through derivative products generated from our proprietary only Equifax data. In the U.S., almost 90% of our revenue is generated from our proprietary datasets such as the credit file, and with our Twin income and employment data database, which is our most unique and valuable data asset. Within USIS, proprietary data assets include the consumer credit file, along with our alternative consumer credit assets like NC Plus, DataX, Teletrack, and IXI Wealth Data Exchanges. These USIS assets are proprietary to Equifax and only accessible by Equifax. Within our international businesses, proprietary data includes consumer and commercial credit as well as other proprietary data exchanges like our financial services Broad Exchange in Canada and our Australia Income Verification Exchange with data approaching 50% of the employment market. Over 90% of international revenue is generated from proprietary only Equifax data. The proprietary and unique nature of our data is a huge asset for Equifax in this new AI environment as only Equifax can utilize the data for customer solutions and new products using our advanced AI capabilities. Turning now to slide twelve, AI is fundamentally changing how we operate, from technology to data analytics, product operations, and across Equifax. Our $3 billion cloud investment provides the technology platform that enables us to leverage AI capabilities across every corner of Equifax. We're driving AI deep into the organization with almost 90% of our team leveraging Google Gemini AI in their day-to-day roles. AI is not just an add-on at Equifax; it's now part of our DNA in how we operate every day. Our cloud transformation is now delivering measurable returns across software development, operations, and business processes, lowering operational risk from fewer service disruptions that increase customer trust and capacity for innovation, creating predictable repeatable deployments, and reducing human error with 90% of our infrastructure as code. We are also getting more software output from the same engineering investment, with about 1,900 Equifax software engineers using AI coding tools that have generated over a million lines of code. As we scale adoption across our broader developer population, these gains compound, translating to accelerated product delivery, faster response to market opportunities, and improved return and capacity inside of our R&D and technology spend. Our Angetic AI platform is accelerating and standardizing the development, deployment, monitoring, and governance of AI agents across Equifax. This is a strategic differentiator that reduces duplicative efforts and enables build-once, deploy-everywhere leverage across Equifax. We're continuing to advance our state-of-the-art machine learning capabilities that allow our data scientists to rapidly build higher predictive models and deploy them quickly as well as develop capabilities to automate model deployment to make models available faster for our customers. Our advanced model engine also allows our data to build models using Equifax's portfolio of proprietary and patented AI algorithms. AI is also extending into Equifax's operations or back office. In the first part of 2026, we're focusing on improving our customer and consumer call centers with AI-enabled and AI-assisted call processes. Our AI call center transformation demonstrates our ability to fundamentally reimagine our labor-intensive workflows, which is a template for broader workforce productivity gains across Equifax. Over the next three years, we expect to drive towards $75 million of annual cost savings from our E3 AI operations initiative. The number of new products launched using efx.ai is up 3x since 2023. We launched our new Ignite AI Advisor in the fourth quarter. This powerful platform includes new AI-driven conversational analytics for deeper customer insights and personalized recommendations that solve a real need for customers. Following the successful U.S. rollout, we are introducing our new Ignite AI Advisor in our global markets in 2026. All new models in 2025 were built using efx.ai. Our efx.ai models consistently delivered industry-leading performance, with an outstanding nearly 30% lift over legacy models last year. This level of performance improvement demonstrates that our AI strategy is not only scaling but providing the superior predictive value required to lead in the marketplace. In USIS, we recently launched the credit abuse risk model, an adverse actionable model that leverages AI to help lenders identify first-party fraud and credit abuse behaviors like loan stacking, particularly where traditional credit scores indicate low risk of the consumer. With this score, lenders can identify pockets of prime consumer applicants with delinquency rates as high as 29 times greater than the overall prime delinquency rate. Our new EFX cloud foundation is giving EFX an AI advantage in innovation, new products, technology development, operations, and really across every corner of Equifax. It's not a vision for the future of AI at Equifax; it's broadly in motion across our business. Turning to slide thirteen, enabled by our proprietary data and our strong momentum with efx.ai, we continue to make outstanding progress driving innovation and new products, delivering a record 17% new product vitality in the fourth quarter from broad-based double-digit performances across all of our businesses and a record 15% vitality for the entire year. We expect strong double-digit vitality to continue in 2026 and be above our 10% long-term goal, leveraging our cloud capabilities to drive new product rollouts using proprietary data and efx.ai capabilities. Last year we launched new Twin Indicator solutions in mortgage, auto, and card delivering Twin income and employment attributes at no cost to our customers, leveraging our cloud data fabric to create powerful new solutions. In U.S. mortgage, these solutions were introduced first, and we've seen strong adoption with over 1,400 customers accessing these new only Equifax products. We've already seen strong momentum in U.S. mortgage from the Twin Indicator, with major mortgage lenders set to benefit from our new solution in 2026. In auto, we have about 100 customers piloting the new Twin Indicator solution and expect accelerating adoption in auto as we move through the year. For card, although earlier in the product launch, we expect to see customer wins in 2026. Turning to slide fourteen, we want to provide perspective on the impact on Equifax operating results from the increase in FICO mortgage pricing over the past few years. Last year, Equifax revenue growth excluding the impact of the FICO mortgage was about 6%. In 2026, our guidance implies revenue growth on the same basis excluding the FICO score pass-through of about 7%, which is within our long-term financial framework. As shown on the right-hand side, the increases in zero profit FICO mortgage score revenue, which has no benefit to our EBITDA dollars, reduce the reported growth in our EBITDA margin percent. 2026 EBITDA margins are reduced by over 200 basis points by the FICO mortgage royalties we pass through to our customers, with 2025 EBITDA margins also reduced by over 100 basis points. This significant price increase by FICO was not anticipated when we set our long-term framework in 2021, and therefore we plan to share our performance excluding FICO mortgage royalties to provide clearer visibility into our results. Turning to slide fifteen, our guidance assumes U.S. GDP growth consistent with our long-term financial framework of 2% to 3% and the U.S. mortgage market to decline low single digits in 2026 compared to last year. Internationally, we expect economic growth to be weaker than in the U.S., particularly in Canada, the UK, and Brazil. FX is a positive in 2026 versus last year, benefiting revenue at about 50 basis points in EPS, about $0.02 per share. Our 2026 guidance also assumes that all mortgage scores that are delivered will be FICO scores delivered by the three nationwide consumer reporting agencies, consistent with the volume to date in January. There is still uncertainty around when the FHFA will formally accept Vantage for agency mortgage originations. We felt this was a prudent guidance framework at this stage for 2026. We continue to see strong mortgage industry momentum to move to Vantage given the sizable cost savings to consumers and the mortgage industry. We already have over 200 mortgage lenders in production or testing our free VantageScore that we deliver with a paid FICO Score offering. Equifax total revenue at the midpoint of guidance is expected to be up about 10.6% on a reported basis and 10% on a constant currency basis in 2026. Furthermore, Equifax revenue at the midpoint ex-FICO is expected to increase by about 7%. Mortgage revenue is projected to make up over 20% of our total revenue, and diversified or non-market revenue to rise by high single digits on a reported basis and constant dollar basis. FICO mortgage royalties in our guide are increasing by more than double from 2025 assuming no Vantage conversion or direct FICO score calculation by mortgage resellers. Excluding these FICO mortgage royalties from 2026 and 2025 revenue, our revenue growth at the midpoint is approximately 7% in 2026 on both a reported and constant currency basis and nearly 8% excluding the low single-digit decline in the mortgage market. Equifax mortgage revenue growth excluding FICO mortgage royalties is up mid-single digits. EWS mortgage will continue to outperform the underlying markets by high single-digit percent consistent with our long-term goals. In addition, USIS mortgage excluding the impact of FICO scores is anticipated to outperform the market by mid-single digits percentages. Turning to slide sixteen, the changes occurring in the U.S. mortgage market to provide lenders with choice between Vantage or FICO in 2026 is very positive for consumers, the mortgage industry, and for Equifax. For lenders and consumers, VantageScore 4 provides stronger score performance at half the cost, which is a winning combination for the mortgage industry and consumers. There are ongoing efforts in the mortgage industry to move to VantageScore given the substantial cost savings to consumers. We're already providing Vantage historical data to market participants both directly and through advanced analytical capabilities to aid their testing. As we move through 2026 and there is clarity on Vantage conversion timing, we'll update our guidance to reflect this shift.

Thanks, Mark. Slide 17 provides the specifics on our 2026 full-year guidance that Mark discussed in detail. The slide includes additional detail on revenue growth rates and EBITDA margins excluding FICO MortgageScore royalty pass-through revenue and expected BU revenue and EBITDA margins. EWS in 2026 is expected to deliver revenue growth of high single digits and EBITDA margins of 51.2% to 51.7%, remaining flat at the midpoint with 2025. Verification services revenue is expected to be up high single digits to low double digits. Mortgage revenue growth is expected to outperform the market by high single digits against a market that is down low single digits compared to 2025. Diversified markets verifier revenue is projected to increase by low double digits again consistent with Q4 2025, with government revenue growth, particularly in the second half when new requirements begin to be implemented. Talent revenue is expected to continue to outperform the anticipated weak hiring market. Employer services is expected to grow low single digits in 2026, despite the expected weak hiring market. Employer services revenue is expected to decline in the quarter year to year. USIS revenue is anticipated to be up by mid-teens percent with EBITDA margins expected to be 32.4% to 32.9%. Excluding the increase in FICO mortgage score pricing in 2026, USIS revenue growth would be up mid-single digits at the bottom of our USIS long-term framework of 6% to 8%. USIS EBITDA margins would be 39.6% to 40.1%, up 100 basis points at the midpoint year to year, reflecting leverage on high-margin data sales and disciplined cost controls. USIS mortgage revenue excluding the benefit of mortgage price increase is expected to grow at mid-single-digit percent rates against a mortgage market that is expected to decline low single digits year to year. Including the impact of FICO mortgage score price increases, USIS mortgage revenue is expected to be up over 35%. Diversified markets revenue is expected to improve versus 2025 and grow mid-single digits year to year, benefiting from accelerating NPI, including Twin indicator and total income-based products and share gains, as they accelerate leveraging Ignite AI capabilities. International constant dollar revenue growth is expected to improve by mid-single digits at a lower rate than 2025, with EBITDA margins at 28.6% to 29.1%, improving approaching 50 basis points at the midpoint from 2025. Corporate expense in 2026 excluding D and A is expected to increase by low single digits versus 2025. We believe that our guidance is centered at the midpoint of both our revenue and EPS guidance ranges. As Mark referenced earlier, we expect to deliver over $1 billion of free cash flow in 2026 and a cash flow conversion of at least 100%. With EBITDA increasing to about $2.12 billion at the midpoint, we are generating over $400 million in debt capacity at our current debt leverage. This creates about $1.5 billion in capital available in 2026 for M&A and return of cash to shareholders. We continue to look for attractive bolt-on M&A to strengthen workforce solutions, our differentiated proprietary data assets, as well as international platforms. And we have substantial capacity for share repurchases, continuing the almost $1 billion we repurchased in 2025. Slide 18 provides details of our Q1 2026 guidance. In Q1 2026, we expect total Equifax revenue to be between $1.597 billion and $1.627 billion, up about 11.8% on a reported basis year to year at the midpoint. Constant dollar revenue growth at the midpoint is around 10.6%. Diversified markets revenue is anticipated to rise by mid-single digits on a constant currency basis and be near the low end of our long-term financial framework, with U.S. mortgage revenue up over 30%. EPS in Q1 2026 is expected to be between $1.63 and $1.73 per share, up about 10% versus Q1 2025 at the midpoint. Equifax Q1 2026 EBITDA dollars are expected to be $444 million to $459 million, up about 7% at the midpoint. EBITDA margins are anticipated to be around 28% at the midpoint of our guidance. As a reminder, first-quarter EBITDA, EBITDA margins, and EPS are lower than the remaining quarters of the year due to the structure of our employee long-term incentive and equity plans. Excluding the impact of FICO mortgage scores, Q1 2026 revenue would be up 7% to 9%, nicely within our long-term financial framework, with EBITDA margins in Q1 2026 expected to be 29.9% to 30.3%, about flat with Q1 2025 on the same basis. Turning to slide nineteen, we will continue to provide you with USIS hard credit inquiry growth rates as a proxy for U.S. mortgage market growth. For 2026, we believe USIS hard credit inquiries will likely significantly outperform U.S. mortgage market origination activity due to significant Equifax wins, which will increase our relative share of hard credit inquiries. We will continue to use trends we see in hard credit inquiries to forecast USIS mortgage revenue. On the right-hand side of this slide, you'll see potential incremental mortgage revenue available should the market recover to average 2015 to 2019 levels. We estimate that there are over 13 million mortgages with an interest rate above 5%, including about 11 million with rates over 6% and almost 8 million with rates over 6.5%. This provides perspective on the pool of mortgages potentially available to refinance as mortgage rates change. Now I'd like to turn it back over to Mark.

Thanks, John. Turning to slide twenty, as I mentioned earlier, our strong 2025 execution sets us up very well to deliver on our long-term framework in 2026. With constant dollar revenue growth of 7% excluding FICO, which is inside our 7% to 10% long-term framework. Achieving our long-term revenue framework allows us to deliver EBITDA of $2 billion, up high single digits with a margin rate up 75 basis points excluding FICO, which is well above our 50-basis point long-term framework for margin expansion, and to deliver over $1 billion of free cash flow from cash conversion of at least 100% and 11% EPS growth. We are confident in our ability to deliver organic revenue growth within our 7% to 10% long-term target range, continue expanding EBITDA to maintain cash conversion above 95%, and to execute bolt-on M&A. In 2026, we expect to maintain a strong return of capital to shareholders. On the left side of the slide, you see our updated EFX 2028 strategic priorities, which are principally consistent with our prior framework but updated to reflect our drive to accelerate our use of AI both internally and externally to drive efficiencies and cost savings and bring new improved products to market quicker that deliver greater lift and performance for our customers. In conclusion, Equifax executed very well last year against our EFX 2028 strategic priorities inside a challenging economic backdrop with a stronger second half and fourth quarter, giving us momentum as we enter 2026. Our new cloud-native infrastructure is already providing competitive advantages of always-on stability, faster data transmission speeds, and industry-leading security. We are using our new single data fabric EFX.ai and Ignite analytics platform to develop new credit solutions powered by clean indicators like verticals such as mortgage, card, and auto that only Equifax can provide, leading to share gains and growth. We are broadening our product sets in key verticals like government, talent solutions, and identity and fraud. The Equifax team is fully focused on growth and innovation. Given our strong free cash generation, we are delivering on our commitment to return substantial excess free cash flow to shareholders. In 2025, we returned $1.2 billion to shareholders, which was well above our guidance, and in 2026, we expect $1.5 billion available for bolt-on M&A and substantial cash returns to shareholders through repurchases and dividends. The new Equifax is investing in technology, EFX.ai, and proprietary data assets to help our customers grow and deliver returns for our shareholders. I am energized by the momentum as we enter the New Year, but even more excited about the future of the new Equifax. And with that, operator, let me open it up for questions.

Yes, thanks. Good morning. Mark, you've been front-footed on AI, both from a product and productivity perspective, and it sounds like you also have an AgenTeq AI platform in-house. I know it's still relatively early on AgenTeq AI, just how do you think about the applicability of AgenTeq AI to the employment and income business given that a lot of the market is still manual, both from an opportunity or a potential risk perspective?

Yeah. Thanks, Jeff. First off, the Equifax moat around data is very high. Whether it's our Twin income unemployment data or our other credit data, our data is proprietary, and over 90% of our revenue comes from proprietary data. No one else can access this data. In your question, the income and employment data comes from payroll processors or individual companies, secured via permissioned or aggregated basis like we have that’s proprietary. We see big opportunities around AI in our employer business. We're doing extensive work to deliver regulated services to HR managers, things like i9 validations for new employees and unemployment claims management. We're seeing a lot of opportunities using AI to enhance service delivery to HR managers while also streamlining the completion of processes. We talked in prior comments about between AWS and USIS. There's substantial productivity gains of $75 million expected in the next few years from AI application in our operations. We’re excited about our AI usage and confidence around the moat that protects our proprietary data.

Very helpful. Any additional perspective on the EWS margin outlook just for specific investments or headwinds like the revenue share on data partnerships or anything like that?

Yes. We're pleased to maintain our visibility on transparency regarding FICO impacts on our results and glad that you are as well. We're guiding on margin expansion of 75 basis points, reflecting the operational leverage of the business and some CI actions we’re taking, driven by AI. EWS EBITDA margins north of 50% remain attractive. We’re committed to investing in Workforce Solutions while maintaining those margins through new products, technology, and record additions. We look forward to maintaining them while investing in a growing workforce.

As Mark covered, the long-term plan aims to hold EWS high margins and have them outpace the growth of the rest of the company.

Thanks so much for all the information around the FICO impacts. I was hoping you could talk about the hurdles for lenders to use Vantage. What are the main challenges that remain?

The significant hurdle is the FHFA to complete their work to allow for the adoption of VantageScore. Our intel suggests it's underway, but it’s tough to predict timing. There's energy in the market for adopting our free Vantage Score for testing internally against FICO. Vantage has gained wide adoption in non-mortgage spaces, but we are awaiting FHFA authorization for compliance.

Great. Regarding government, can you speak about the momentum you’re seeing there versus prior quarters and how the focus on error rate targets impacts states? Is there a large quarter that we should be aware of?

We're quite energized by the government vertical, especially with the OB3 bill changing the focus on improper payments and putting more engagement with states. This increased focus has caused us to see above-expectation revenue growth in 2025, with expectations for it to strengthen further in 2026. The focus on error rates has led us to engage with states, reducing improper payments is a significant opportunity for Equifax. We aim to penetrate the large $5 billion TAM surrounding government services and believe our government vertical will be our fastest-growing business.

Hi, Mark. I wanted to understand how your most sophisticated clients are consuming more data from Equifax. Are they utilizing more or less in terms of the value given the AI integration?

They're definitely consuming more data. Equifax is the only source for large-scale proprietary datasets like our credit file. Financial institutions come to us for insights into credit data for new client acquisition and understanding client debt across different institutions. We have a macro trend where customers are looking for more data to support their decision-making, and we are leveraging our AI to deliver these solutions, thus creating higher demand for our data.

Can you provide clarity on the mortgage markets related to pricing trends and how that impacts your guidance?

We're taking modest price increases across all products, including mortgage, to maintain our long-term relationship with our customers. The reaction to price changes has overall been positive. Our ongoing sales efforts and enhancement of our credit files support that. We won’t implement drastic increases as others have done.

We're guiding to a mid-single-digit revenue growth in mortgage, maintaining alignment with our long-term framework. We expect to sustain margins and growth, further benefiting from the adoption of AI advancements in our operating environment.

To summarize, we view both our proprietary datasets and our novel AI applications as core to our growth strategy moving forward with a strong focus on enhancing our service delivery.

Thanks everybody for your time today. If you have any follow-up questions, you can reach out to Molly and I. Otherwise, have a great day.