Equifax Cuts 2026 Revenue Outlook, Raises Ex-FICO Margin Target

Equifax Inc. (NYSE: EFX) lowered its 2026 revenue outlook by about $80 million as a weaker U.S. mortgage market weighed on expectations, but increased its adjusted EBITDA margin growth target excluding FICO mortgage royalties, citing cost management and progress toward its $150 million AI and process-productivity goal.

For the third quarter, revenue rose 10% on a reported basis and 9% in constant currency. Excluding FICO mortgage royalties, revenue increased 7%, led by 8% growth across Diversified Markets, which includes all Equifax businesses outside mortgage. Adjusted earnings were $2.26 per share.

Adjusted EBITDA margin excluding FICO royalties expanded 130 basis points to 35.2%, 40 basis points above the midpoint of the company’s July guidance. FICO mortgage royalties totaled about $100 million during the quarter and carry no margin for Equifax.

Workforce Solutions growth led by verifier businesses

Workforce Solutions revenue increased 7%, with an adjusted EBITDA margin of 51%. Verifier Diversified Markets revenue rose 13%, supported by greater market penetration, record growth and new products.

Talent revenue grew more than 20%, while Consumer Lending posted high-double-digit growth. Government revenue increased by a mid-single-digit percentage. Equifax said it had signed about $550 million of annual contract value in the government business year to date, comprising roughly $150 million of new business and $400 million of renewals.

The Work Number database reached 223 million active records, up 12% year over year. Equifax reported 125 million current active records covering 110 million Social Security numbers, 863 million total records and contributions from more than 5 million companies. The company identified an opportunity to expand current records from 110 million to 250 million earners.

USIS benefits from mortgage royalties and cost efficiencies

U.S. Information Solutions revenue grew 5% excluding FICO royalties. Mortgage revenue increased 28% on a reported basis but only by a low-single-digit percentage when FICO royalties were excluded. Diversified Markets revenue rose 6%, including high-single-digit growth from financial institutions and mid-single-digit growth in auto.

The segment’s adjusted EBITDA margin excluding FICO royalties reached 42%, an increase of more than 320 basis points. Equifax attributed the expansion to operating leverage and AI-related cost efficiencies. Mortgage hard inquiries declined 9%, reflecting continued pressure in the underlying market.

Equifax also highlighted wider adoption of VantageScore after the Federal Housing Finance Agency allowed its use by all mortgage lenders. About 2,000 lenders were using VantageScore in their workflows by October, including more than 200 using it exclusively, compared with roughly 300 total users through April. Approximately 5% of mortgage loans were securitized with VantageScore in September.

The company said full VantageScore conversion could provide about $35 million of annualized margin upside, alongside an approximately $400 million revenue impact. Equifax plans to keep VantageScore priced at $1 through 2028 to encourage conversion.

The presentation also addressed the potential shift of government-sponsored enterprise originations from tri-merge to bi-merge credit reports. Equifax estimated a possible impact of about $80 million on USIS revenue and $38 million on contribution margin, though it emphasized that the estimate is not guidance. The calculation assumes that GSE-related loans represent about 40% of originations and that the three credit bureaus are affected equally.

International revenue rises in constant currency

International revenue increased 7% in constant currency, led by 12% growth in Asia Pacific and 8% growth in Latin America. Australia revenue rose 11%, driven by commercial business, while Canada and Europe each grew 4%. The International segment recorded a 31% adjusted EBITDA margin.

Equifax expects to complete its $750 million acquisition of Mexican credit bureau Círculo de Crédito in the fourth quarter. Círculo generated 24% revenue growth and a 47% adjusted EBITDA margin for the 12 months ended Sept. 30, 2026, based on information provided by the target and converted into U.S. dollars at the exchange rate specified in the presentation. Equifax expects the transaction to be accretive to adjusted EPS in the first year.

2026 outlook reflects weaker mortgage assumptions

Equifax now expects full-year revenue of $6.646 billion to $6.676 billion, representing growth of 9.4% to 9.9%. Adjusted EPS is projected at $8.45 to $8.55, up 10.4% to 11.7%, while adjusted EBITDA is expected to range from $2.116 billion to $2.133 billion.

The company forecasts a reported adjusted EBITDA margin of 31.7% to 32.0%, ranging from a 20-basis-point decline to a 10-basis-point increase from 2025. Excluding FICO mortgage royalties, however, Equifax now expects margin expansion of 100 basis points, compared with its prior target of 75 basis points.

Management assumes U.S. mortgage originations will decline 6.5% to 7.5% for the year. Equifax mortgage revenue is expected to rise by a high-double-digit percentage on a reported basis and by a low-single-digit percentage excluding FICO royalties. Diversified Markets revenue is projected to grow by a high-single-digit percentage.

For the fourth quarter, Equifax forecast revenue of $1.605 billion to $1.635 billion, adjusted EPS of $2.07 to $2.17 and adjusted EBITDA of $529 million to $546 million. Total U.S. mortgage revenue is expected to decline by a mid-single-digit percentage, or a mid-double-digit percentage excluding FICO royalties. Adjusted EBITDA margin excluding those royalties is expected to increase by about 90 basis points.

Equifax continues to expect more than $1 billion of free cash flow and cash conversion above 100% in 2026. It returned $158 million to shareholders during the third quarter, including $92 million spent to repurchase 500,000 shares and $66 million in dividends.

The outlook depends on mortgage-market conditions, interest rates, inflation, acquisition execution and the expected benefits of AI and productivity programs. Equifax also cautioned that geopolitical uncertainty, economic conditions and technology and data-security risks could cause actual results to differ from its projections.