Equifax Inc. (NYSE: EFX) Q4 2025 Earnings Call dated Feb. 04, 2026
Corporate Participants:
Trevor Burns — Senior Vice President Corporate Investor Relations
Mark W. Begor — Chief Executive Officer
John W. Gamble — EVP, Chief Financial Officer & Chief Operations Officer
Analysts:
Jeff Meuler — Analyst
Toni Kaplan — Analyst
Andrew Steinerman — Analyst
Shlomo Rosenbaum — Analyst
Brendan Popson — Analyst
Faiza Alwy — Analyst
David Paige — Analyst
Jason Haas — Analyst
Kevin McVeigh — Analyst
Kelsey Zhu — Analyst
Scott Wurtzel — Analyst
Craig Huber — Analyst
Zachary Gunn — Analyst
Arthur Truslove — Analyst
Simon Clinch — Analyst
Presentation:
operator
Good morning and welcome to the Equifax Q4 2025 earnings conference call. At this time all participants are in a listen only mode. The question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, Please please press star0 on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Trevor Burns, SVP of Investor Relations. Thank you. You may begin.
Trevor Burns — Senior Vice President Corporate Investor Relations
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. 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. Also 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 may impact our business are set forth in our filings with the SEC, including our 2024 Form 10K and subsequent filings during this call 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. Also 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. This terminology change does not affect any change in reporting structure. Also, for your modeling, 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.
Mark W. Begor — Chief Executive Officer
Thanks Trevor. Before I cover results for the quarter. I want to spend a few minutes. On our 2025 performance. Strong finish to the year which gives us strong momentum for a strong 2026. Turning to Slide 4 Equifax delivered financial results well above both our February and October guidance with revenue of 6.075 billion dol EPS of 765 a share and. Free cash flow of $1.13 billion. 2025 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 US mortgage market that was down 7% and the US hiring market which was down 2%, the mortgage market had about 100 basis point negative impact on Equifax 2025 revenue growth. EWS delivered 6% revenue growth with a 51.5% EBITDA margins but exited the year with strong fourth quarter 9% revenue growth. This accelerated performance was led by Verification services which successfully navigated difficult US mortgage and hiring markets to deliver 8% growth for the year and over 10% in the fourth quarter.
With fourth quarter growth driven by both 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 active 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 big milestones for the business. USIS delivered 10% revenue growth and expanded margins 70 basis points to 35.2%. Diversified markets or non mortgage revenue grew 5% which is the highest USIS organic revenue growth performance since 2021.
In our non mortgage space, mortgage revenue grew 22% and was up low double digits excluding the impact of FICO price increases as they gained share across both pre qual and pre approval. Solutions international 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 complete 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 the core 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 record 2025 Equifax Vitality Index of 15%, which was 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 worked together 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, with plans to launch similar products in the personal loan space early this year.
These unique to Equifax products deliver credit, identity and income and employment data in a single solution are gaining traction with mortgage and card lenders. 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 2025, Equifax secured a spot in the AI FinTech100 list for our new patented explainable AI technology. We now have over 400 AI patents either secured or pending and we added over 40 new AI patents last year.
In US mortgage we made great progress working with mortgage lenders and resellers towards the adoption of VantageScore 4.0 and with over 200 mortgage lenders testing or in production with Vantage given 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. And last we delivered very strong free cash flow of $1.13 billion with very strong 120% free cash flow conversion which was up $230 million from our February guidance with our strong free cash flow, EWS acquired Vault Verify in the fourth quarter and also returned record amounts to shareholders.
As we move into 2026, I’m energized by our commercial momentum and our strong exit from the fourth quarter. Our new product innovation, our AI capabilities. And the benefits of the new Equifax. Cloud Slide 5 provides detail on the strength of our free cash flow and free cash flow conversion. Our growth in revenue and 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% which is 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.
Further, we paid $233 million in dividends resulting in total cash returned to shareholders last year of 1.2 billion. This was up 6x from 2024 and stronger than our plan for the year. In 2026 we expect to again generate significant strong free cash flow in excess of our 95% cash conversion long term framework which will allow us to continue to acquire bolt on M and A and return cash to shareholders via dividends and share repurchases. Turning to Slide 6 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 where the strength was principally in mortgage. Both USIS and EWS saw stronger mortgage markets that were 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. USIS I’m sorry, for the quarter US mortgage revenue represented about 20%. 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 double digits. 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 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% which was slightly below our October guidance.
While EWS and USIS EBITDA margins were above expectations and 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 7 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 comp with continued strong state level penetration and 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 very strong mid double digits in the quarter from double digit revenue growth in P 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 2% in the quarter despite continued weakness on our i9 and onboarding businesses from the weaker hiring market and Workforce Solutions. Ebitda margins of 51.3% were driven by operating leverage from higher than expected revenue growth in the quarter. As mentioned earlier, 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 also up 9% which represented 105 million unique SSNs at 105 million individuals with current records.
In Twin we have 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 8 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, case worker 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 snapped 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 program 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 D.C. 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 big $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 9, 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 preapproval 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 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 our B2B offline business was up low single digits in the quarter.
USIS’s 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 D2C business remains on offense entering into an expanded relationship with Gen Digital providing our differentiated data their Engine by Gen Marketplace. Later this year we’ll also leverage Engine by Gen to power to provide MyEquifax consumers in the US with access to expanded and personalized financial solutions. USIS EBITDA margins were 36.3 in the quarter and up over 100 basis points sequentially and above the top end of our guidance range from stronger than expected revenue growth and operating leverage.
Turning to slide 10, international revenue growth was up 5% in constant currency and below our expectations, principally in Canada. In our European debt recoveries management business. Latin America growth of 6% was led by high single digit growth in Brazil and Argentina. Brazil continues to be a big 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 11 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 data sets. The application of advanced AI and traditional IT based analytical techniques allow us and our customers to to develop solutions that are reliant on our only Equifax proprietary data. As AI advances, we are confident we are able to generate more effective analytical solutions based on our proprietary data at accelerated pace as well as make these advanced analytical solutions available to more customers. Slide 11 provides more perspective on the percentage of Equifax global revenue that is based on data that is proprietary and not available or broadly accessible.
In total, about 90% of Equifax revenue is generated through the direct sale or through derivative products generated from our proprietary only Equifax Data. Within the US almost 90% of our revenue is generated from our proprietary data sets such as the credit file and with our twin income and employment data, 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 Datax, Teletrac 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 Fraud 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 12 AI is fundamentally changing how we operate from technology to data analytics, products, 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 and how we operate every day. Our cloud transformation is now delivering measurable returns across software development, operations and business processes from lowering operational risk from fewer service disruptions that increases customers trust and capacity for innovation, and 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 using AI. 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 and D and technology spend, our angetic AI platform is accelerating and standardizing the development, deployment, monitoring, governance of AI agents across Equifax. This is a strategic differentiator for Equifax that reduces duplicative efforts, 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 scientists to build models using Equifax 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 E3AI 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 US 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 an outstanding nearly 30% lift over legacy models last year. This big 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. And this isn’t a vision for the future of AI at Equifax.
It’s broadly in motion across our business, turning to Slide 13 enabled by our proprietary data and our strong momentum with EFX AI, we continue to make outstanding progress driving innovation new products delivering record 17% new product vitality in the fourth quarter. From broad based double digit performances across all of our businesses and record 15% vitality for the entire year. We expect strong double digit VI 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 a new twin indicator solutions in mortgage, auto and card delivering twin income and employment attributes at no additional cost to our customers which is a huge differentiator. Leveraging our cloud data fabric to create powerful new solutions for our customers. In US mortgage where these solutions were introduced first, we’ve seen strong adoption with over 1400 customers accessing these new only Equifax products. We’ve already seen strong momentum in US Mortgage from Twin indicator with major mortgage lenders which will benefit from our new solution in 2026. In auto we have about 100 customers piloting the new twin indicator solution and we expect accelerating adoption in auto as we move through the year and in Card, although earlier in the product launch we expect to see customer wins in the first half of 2026.
Slide 14 provides perspective on the impact on Equifax operating results from the increase in FICO mortgage pricing over the past few years. As a reminder, Equifax profitability is driven by the sale and the value of our unique data that we sell. The FICO mortgage credit score is passed through to our customers at cost and we earn no margin on the sale of the FICO score. In 2025 FICO mortgage royalties represented only about 3% of our total revenue. In 26 that number will increase to about 6% or double. This drives a substantial P and L impact on Equifax.
Last year Equifax revenue growth excluding the impact of the FICO mortgage royalties was about 6% and 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 of slide 14, the increases in zero profit FICO mortgage core revenue which has no benefit to our EBITDA dollars reduces 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.
When we set our long term financial framework in 2021, we did not anticipate that FICO would have these dramatic price increases benefiting Equifax revenue but negatively impacting Equifax. Reported EBITDA margin rates as we look at 2026 excluding these FICO mortgage impacts, our mortgage revenue growth at about 7% is inside our LTFF and our EBITDA margins are expected to expand 75 basis points which is 25 basis points higher than our 50 basis point long term Financial Framework for Margin expansion as we go forward, we plan to share our performance excluding FICO mortgage royalties given the substantial impacts on our reported results.
Turning to Slide 15, our guidance assumes U.S. gDP growth consistent with our long term financial framework of 2 to 3% and the US mortgage market to be down low single digits 2026 compared to last year. Internationally, we’re expecting economic growth to be weaker than the U.S. particularly in Canada, Canada, the UK and Brazil and 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 and delivered by the three nationwide consumer reporting agencies consistent with our mortgage scores 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 Vantage score that we deliver with a paid FICO scored offering total Equifax 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. As discussed previously, Equifax revenue at the midpoint ex FICO is expected to be up about 7%, mortgage revenue is expected to be over 20% of our total revenue and diversified or non mortgage revenue up high single digits on a reported basis and constant dollar basis.
FICO mortgage royalties in our guide are up over 2x from 2025 assuming no vantage conversion or FICO direct score calculation by mortgage resellers excluding these FICO mortgage royalties from both 2026 and 2025 revenue as shown on slide 15. You can see our revenue growth at the Midpoint is about 7% in 2026 on a reported basis and constant currency basis and up almost 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 and USIS Mortgage excluding the impact of FICO scores will outperform the market by mid single digit percentages as we gain share from the introduction of the Twin Report indicator, Twin Income Qualify and our Telco utility data in mortgage products.
And again, this assumes no incremental revenue or margin from Vantage score conversions and in our 2026 guidance diversified markets or non mortgage constant dollar revenue growth at the midpoint of 7% is up over 100 basis points versus 2025 driven by stronger growth in EWS and USIS. With weaker overall market conditions in international markets, we are expecting revenue growth and growth rates in 2026 to be about consistent with 2025. John will provide more detail in a minute on our revenue growth at the BU level in his more detailed comments around our 2026 framework. EBITDA dollars are expected to grow by almost 10% at the midpoint of our 2026 guide to about $2.12 billion, up from about 5.5% growth last year.
And as a reminder, there is no profitability on the sale of FICO Mortgage. Score by Equifax, so EBIT dollars are. The same in both the with and without FICO Mortgage Score revenue views. And given there’s no profit in the sale of FICO scores in mortgage, we are indifferent to Tri Merge resellers calculating FICO scores under the new FICO Direct model. EBITDA margins however, are impacted meaningfully by the 0 margin FICO score revenue in our reported results, including the revenue from FICO Mortgage score sales, reported EBITDA margins in 2026 would be down about 30 basis points at the midpoint. However, ex FICO EBITDA margins grow substantially, up 75 basis points in 2026. The 75 basis point margin growth shows the leverage we are driving as we deliver high margin data sales as well as cost savings from technology and AI operational initiatives.
EPS in 2026 at the midpoint of 850 is up 11% versus last year and our free cash flow of over $1 billion will deliver free cash flow conversion of at least 100% which is above our long term framework. Turning to slide 16 the changes occurring the US mortgage market to provide lenders score choice, Vantage or Fico in 2026 is very positive for consumers, the mortgage industry and for Equifax. For lenders and consumers, Vantage Score 4 provides stronger score performance at at least half the cost, which is a winning combination for the mortgage industry and consumers as A reminder, the consumer data from the credit file is the basis for mortgage approvals by lenders in the GSEs, not the scores.
Equifax is a provider of not only credit data but also unique telco and utility data with income and employment data and remains well positioned to continue to deliver value to mortgage industry participants. Interest in the mortgage industry to move to VantageScore is extremely high. We have over 200 lenders testing our FreeVantage score with Prequal and pre approval products through Mortgage Hard Pull products with over 40 principally non GSE lenders now in production with only the Vantage score. We are already providing Vantage historical data going back to 0809 to market participants both directly and through advanced analytical capabilities via our Ignite for Mortgage platform to aid our customers in the conversion to Vantage and we’re providing a free Vantage score with the purchase of any FICO score across all industry segments mortgage, auto card, personal loans and insurance in mortgage.
We believe that when the FHFA, Fannie and Freddie clarify the requirements for using VantageScore and begin acceptance for mortgage pre review and underwriting, we’ll see migrations to Vantage accelerate the conversion to Vantage is a significant opportunity to drive margin expansion and EPS growth for Equifax. As a reminder, our 2026 guide assumes no conversion to Vantage score in the US mortgage market. For perspective and provide data for Your analysis, Slide 16 includes our guidance for 2026 assuming no vantage conversion and the impact of several Vantage conversion scenarios. For example, full conversion in mortgage to Vantage core from FICO scores in 2026 would reduce Equifax total revenue guidance of 6.7 billion at the midpoint by about $270 million but would increase Equifax EBITDA by about $160 million and increase EBITDA margins by almost 380 basis points and increase our EPS by about a dollar a share.
As we move through 2026 and there is more clarity on Vantage conversion timing. We’ll update our guidance to reflect this shift and the opportunity for mortgage industry, consumers and of course Equifax. As a reminder, the incremental about $160 million in EBITDA impact in 2026 is with the US mortgage market still operating well below 2015-19 levels. And now I’d like to turn it over to John to provide more detail on our 2026 assumptions and guidance and also provide our first quarter framework.
John W. Gamble — EVP, Chief Financial Officer & Chief Operations Officer
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 Mortgage score 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 at 51.2% to 51.7%, about 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 expected to be up about low double digits again consistent with 4Q25 from government revenue growth, particularly in the second half when new requirements begin to be implemented as well as in auto card and personal loans. Talent revenue is expected to continue to outperform an expected weak hiring market, strong twin record growth, new products and continued growth in both pricing and penetration particularly in government will continue to drive verification services. Employer services is expected to grow low single digits in 2026 again despite the expected weak hiring market. Employer services revenue is expected to decline in the first quarter year to year.
USIS revenue is expected to be up mid teens percent and EBITDA margins are 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% and 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 FICO mortgage price increase is expected to grow at mid single digit percent rates against a mortgage market that is expected to be down low single digits year to year.
The growth principally from share gains as customers increasingly adopt our twin and NC based solutions as well as price increases 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 grow mid single digits at a lower rate than 2025 with EBITDA margins at 28.6% to 29.1% up approaching 50 basis points at the midpoint from 2025.
Revenue growth is below the long term financial framework for international and 2025 growth rates principally from weaker economic growth in Canada and the UK. Corporate expense in 2026 excluding DNA is expected to be up 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 a billion dollars of free cash flow in 2026 and a cash flow at least 100% with EBITDA increasing to about 2.12 billion at the midpoint. We are also 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 MA 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 the details of our 1Q26 guidance. In 1Q26 we expect total Equifax revenue to be between 1.597 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 up about 10.6%.
Diversified markets revenue is expected to be up mid single digits on a constant currency basis and near the low end of our long term financial framework and US mortgage revenue to be up over 30%. EPS in 1Q26 is expected to be 163 to 173 per share, up about 10% versus 1Q25 at the midpoint. Equifax 1Q26 EBITDA dollars are expected to be 444 to 459 million up about 7% at the midpoint. EBITDA margins are expected to be about 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 in large part due to the structure of our employee long term incentive and equity plans.
Due to their structure, a disproportionately large percentage of the expense of these plans for the year impacts the first quarter. Excluding the impact of FICO mortgage scores, 1Q26 revenue would be up 7 to 9% nicely within our long term financial framework and EBITDA margins in 1Q26 would be 29.9 to 30.3% about flat with 1Q25 on the same basis. Turning to slide 19 the left side of the slide provides USIS hard credit inquiry growth rates for 2015 through 2025. We have historically used our hard credit inquiry growth rates as a proxy for US Mortgage market growth as they have in general tracked together for 2026.
We will continue to provide you the USIS hard credit inquiry growth rate data each quarter. However, in 2026 we believe that USIS hard credit increase will likely significantly outperform US Mortgage market origination activity due both to significant Equifax wins that we believe will increase our relative share of hard credit inquiries and also mortgage triggered lead legislation that goes into effect in March of this year which we expect will result in an increase in the use of hard credit inquiries by lenders in shopping and therefore a reduction in pre qual and preapproval usage. We will continue to use the trends that we are seeing in hard credit inquiries which drive the bulk of USIS mortgage revenue as well as soft credit inquiries to forecast USIS mortgage revenue.
The right hand side of this slide shows the potential incremental mortgage revenue available to Equifax should the market recover to average 2015-19 levels. For this view, we have continued to use our historical USIS hard mortgage credit inquiries as a basis. We have also revised this slide to show Equifax mortgage revenue excluding FICO mortgage royalties and have updated the market recovery column to include the benefit of a full transition From FICO to VantageScore in mortgage. As you can see on this basis, with a full mortgage market recovery and a full shift to Vantage score at 2026 pricing levels and EWS REX records Equifax mortgage revenue which would include no FICO mortgage royalties, could increase by $1.2 billion at our very high variable margins.
This would deliver incremental ebitda of over $950 million and adjusted EPS of over 575 a share. For your perspective as you determine your view of the 2026 US Mortgage Market based on a review of Equifax data on mortgage home purchase issuances since early 2022, we estimate that there are over 13 million mortgages with an interest rate over 5%, including about 11 million with rates over 6% and almost 8 million with rates over 6.5%. This provides a 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.
Mark W. Begor — Chief Executive Officer
Thanks John turning to Slide 20 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% ex FICO which is inside our 7 to 10% long term framework. Achieving our long term revenue framework allows us to deliver ebitda of over $2 billion up high single digits with a margin rate up 75 basis points ex FICO which is well above our 50 basis point long term framework and 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 in our 7 to 10% long term target range, to continue expanding EBITDA to maintain cash conversion above 95% and to execute on bolt on M and a. And 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. However, We’ve updated our EFX 2028 priorities to reflect our drive to accelerate our use of AI both internally and externally, to drive efficiencies and cost savings for Equifax and bring new and improved products to market quicker that deliver greater lift and performance for our customers.
Wrapping up on slide 21 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 which gives us a 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 for our customers. And importantly Equifax Resources in technology Product DNA are leveraging the new Equifax cloud for innovation, new products and growth. We’re using our new single data fabric EFX AI and Ignite, our analytics platform to develop new credit solutions powered by twin indicators in verticals like mortgage, card and auto that only Equifax can provide which is leading to share gains and growth.
We’re also broadening our product sets in key verticals like government talent solution and identity and fraud. The Equifax team is fully focused on growth and innovation given our strong free cash generation. We are also delivering on our commitment to return substantial excess free cash flow to shareholders. As mentioned earlier, in 2025 we returned $1.2 billion to shareholders which was well above our guidance for the year and in 2026 we expect to have $1.5 billion available to invest in Bolt on M and a like our 2025 vault, verify acquisition and return substantial cash to shareholders through share 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’m energized by our momentum as we enter the new year, but even more energized about the future of the new Equifax. And with that operator, let me open it up for questions.
Questions and Answers:
operator
Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press Star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the Star keys. We ask that you please limit yourself to one question and one follow up question. Our first questions come from the line of Jeff Mueller with Baird.
Please proceed with your questions.
Jeff Meuler
Yeah, thanks. Good morning, Mark. Loud and clear. You’ve been front footed on AI, both from a product and productivity perspective. And it sounds like you also have a Gentec AI platform in house. Obviously have a massive data advantage in employment and income today. I know it’s still relatively early, but on agentic AI, just how do you think about the applicability of agentic AI to the employment and income business given that a lot of the market is still manual, I guess both from a opportunity or a potential risk perspective.
Mark W. Begor
Yeah, thanks Jeff. You know, first off, the Equifax moat around data is very high. You know, whether it’s our twin income and employment data or our other credit data. As you know, our data is proprietary and over 90% of our revenue comes from proprietary data. What that means is no one else can access it. You know, when you think about credit data or in your question, income and employment data, the income and employment data comes from either payroll processors or individual companies and that’s also walled off. So the only way to access that is in a permissioned basis or in an aggregated basis like we have.
It’s proprietary. So we think that there’s a real moat around it from a data perspective. With regards to using AI in workforce solutions. We’re doing a lot around our employer business where we, as you know, deliver regulated services to HR managers. Things like i9 validations for new employees Unemployment, claims management, work opportunity, tax credit. We see big opportunities both in how we deliver those services from an AI perspective to the HR managers and their teams, but also how we actually complete the processes. You know, using AI in the paper processing to really drive productivity, speed and accuracy.
We’re seeing a lot of opportunities there. And we talked, you know, in my comments earlier between EWS and usis. This has really happened in the last six months for us as we’ve been applying AI off of our new cloud platforms inside of Equifax, we’re seeing big opportunities for productivity, speed and accuracy in our operations and using AI call centers, paper processing in workforce solutions as you referenced, to really drive efficiencies and productivity really quite substantially. And we talked about over the next couple three years in the neighborhood of $75 million of productivity from those efforts on internal operations.
So we’re quite energized, you know, around the use of AI. The investment we made in the cloud gives us a platform now across Equifax where we can really deploy it inside of Equifax. And back to the first point I made and obviously a topical point with what happened in the markets yesterday, you know, we have a lot of confidence around the moat that’s around our data broadly that really protects us from someone else using AI to try to disintermediate us. You know, we have the data and as you know, you can’t do AI without data.
And when you have proprietary data, you’ve got the ability to really protect that and really deploy it in a very effective way.
Jeff Meuler
Very helpful. And then overall margin looks good to me, normalized for fico. But any additional perspective on the EWS margin outlook? Just any specific investments or headwinds, things like the rev share on data, partner ships or anything like that. Thank you.
Mark W. Begor
Yeah, and we’re, we’re pleased. I’m pleased, Jeff, that you are. I hope others are, that we’re going to try to be transparent around, you know, the increasingly large impact that the FICO pass through has on our reported results. And that’s why, you know, going forward we’ll, you know, share with you what our in particular margin rate impact is, which is quite substantial. And you know, we’re pleased with Our guide of 75 basis points of margin expansion. We think that’s a big number. You know, it’s 50% above our long term framework, the operating leverage in the business and some of the cost actions that we’re taking driven by AI inside of Equifax with regards to workforce solutions.
Those EBITDA margins north of 50% are very attractive. We think a lot about continuing to invest and we are in workforce solutions to maintain those margins because they’re so accretive broadly to Equifax with, in our long term framework ews growing faster than the rest of Equifax. And with those 50 plus percent EBITDA margins you’ve got a lot of accretion, you know, to our margin rate and they generate a lot of EBITDA dollars. So we are continuing to invest there. We talked a little bit in our comments about some of the new products we’re investing in, particularly in government.
You know, like the continuous monitoring solution Twin indicator is a new solution that’s a product between EWS and usis. So you know, investing in new products, investing new tech, investing in some of the AI capabilities inside of Equifax and workforce solutions on how they deliver solutions like in the employer business, you know, as part of the investments and you know, we continue to invest in acquisition of records and investing in our commercial team. So it may be a long winded answer to say, you know, we like our 50 plus percent EBITDA margins. Our goal is to maintain those which we’ve been doing quite consistently, you know, while continuing to invest in the business to drive that kind of double digit long term framework revenue growth that is as we all know is quite attractive at those 50 plus percent EBITDA margins.
John W. Gamble
And as Mark covered just in the total Equifax long term plan. Right. Again it’s to hold those EWS very high margins and have them outgrow the rest of the company to add accretion, continue to drive USIS margins up which you’re seeing in our guide, continue to drive international margins up which you’re seeing in our guide and then also to get leverage on corporate expenses that are outside the bus, which again I think you’re seeing in what we guided for 2026. So I think 2026 is very consistent with our long term model and something you should expect to see from us consistently going forward.
Jeff Meuler
Thank you.
operator
Thank you. Our next questions come from the line of Tony Kaplan with Morgan Stanley. Please proceed with your questions.
Toni Kaplan
Thanks so much and thanks for all the information around the FICO impacts and spelling out the different scenarios in the slides. I was hoping, I know your guidance is assuming, you know, 100% FICO score sourced through the bureaus, just maybe flesh out sort of the hurdles that sort of get you like get the lenders and resellers to being able to use Vantage, what’s still remaining and what’s the timing on what those could be to get resolved?
Mark W. Begor
Yeah, that’s a great question, Tony, and a tough one to answer. The timing element of it. You know, as you know that the real hurdle that’s left is significant hurdle that’s left is the FHFA as well as Fannie and Freddie, you know, completing their work, you know, from a technology and, you know, planning process in order to, you know, allow for the adoption and the implementation of the Vantage score. You know, that’s really the big hurdle. Our intel is that it’s underway, meaning it’s going to be imminent. It’s hard to handicap when that is and we just thought it was prudent given that that’s uncertain when that’s going to happen to put the guide out that we did.
We also talked about there’s a lot of energy in the marketplace with our customers, number one, adopting our free Vantage score for doing their own testing internally about the the Vantage score versus the FICO score, which is actually well known, you know, as you know, Vantage is widely adopted in non mortgage space, you know, so we’ve got good adoption there. We’ve got, you know, a couple of lenders that are non agency, you know, a handful of lenders that have made the conversion because of the cost savings and performance, you know, and gone to full Vantage.
They’re smaller mortgage lenders for sure, but you know, they’re not the Fannie and Freddie, you know, conforming mortgages. So it’s really a matter of when does that work complete, you know, by both agencies, you know, we’re collaborating with them, you know, around that and is it as it unfolds? We think there’s, you know, energy in the marketplace to, you know, drive conversions. Once that gets green lighted and is you’re available to submit a mortgage, you know, using Vantage.
John W. Gamble
We also wanted to be clear in the presentation around in terms of the FICO Direct model, which I know there’s a lot of discussion around that. And again to us we’re indifferent in terms of operating profit. Right. Our level of operating profit generation is the same whether we sell the score or not because as Mark made clear that there is no margin pass through to us. So. Should that occur, doesn’t affect our operating profit. Yes, revenue would be lower but it’s again, it’s zero margin revenue. So we think we’re in very good shape for that transition as it occurs or if it occurs. And then obviously we’re in very good shape. When Vanche’s transition occurs.
Toni Kaplan
Great. And looking at government, you know, I think there’s a big opportunity there with OB3 in this year as well as next year. Could you just talk about the momentum that you’re seeing there versus prior quarters? Like if the getting closer and closer to having to hit those error rate targets is impacting the state’s behavior and is there a large season, like a large quarter for you, for government? Is there seasonality that we should be aware of and just anything in terms of momentum in that part of the business? Thanks.
Mark W. Begor
Yeah, it’s a great question, Tony. It’s one that we’re quite energized about and we’re putting a lot of effort into, given this unique environment that really started a year ago when President Trump came in and there was a large focus or an increased focus at the federal level and now at the state level around the improper payments and OB3 that was passed in July last year, you know, is a big catalyst for that and what it’s resulted. I think we’ve been clear that a lot of the OB3 specific requirements, you know, will have, we believe, revenue impact for us, meaning positive revenue in the second half of the year and into 27, when some of those requirements actually, you know, have a start date in the, you know, in the states.
But what the OB3 has driven in this focus on improper payments and some of the focus on error rates or the increased focus and penalties from the error rates above the federal thresholds is a very, very broad based engagement with each of the states that we haven’t seen really in the history that I’ve been here. Meaning the states are focused on it. They know that they have challenges if they don’t take actions to drive some of the integrity in the programs. And we’ve just seen an uptick in commercial activity. And I think you’ve seen the business really have some sequential improvement in the third and again in the fourth quarter, which we’re pleased with.
It was above our expectations of what we characterize as kind of normal state penetration commercial activity that is probably driving some increased commercial discussions or commercial engagement because of the focus on improper payments that’s so strong and because the states know that there’s these new requirements coming, you know, later in the year and in 2027. So we’re really pleased with the engagement at the state and federal level. And the federal level is a very, you know, obviously, you know, a big, big opportunity for us with the IRS and some of the other agencies who aren’t using our data today.
Which we think there’s real opportunities. So, you know, we expect this business, you know, to be stronger in 2026 and 25. As you know, 25 was impacted by some of the changes made in the Biden administration around cost sharing of data. You know, that was challenging for some of the states. That Air Pocket that we had is behind us really from a comp standpoint, which I think is positive. And then you’ve just got some real commercial momentum. And the other thing we talked in our comments and with Jeff a minute ago is that EWS is investing increasingly in new products, you know, to aid in, broadly in the delivery of social services, like continuous monitoring and things like that that we weren’t doing before.
So that’s another catalyst for us as we move into 2026.
Toni Kaplan
Great, thank you.
operator
Thank you. Our next questions come from the line of Andrew Steinerman with JP Morgan. Please proceed with your questions.
Andrew Steinerman
Hi, Mark, I wanted to think a little bit more about slide 11 and proprietary data. When you look at your most sophisticated clients in terms of their use of AI, are these clients consuming more or less data from Equifax? And why?
Mark W. Begor
Yeah, first off, it’s more. And we’re the only place you can get scale data at a proprietary basis. In the set of data sets that we have, you think about are credit files proprietary. TU and Experian also have one. They’re proprietary. No one else has the scale of that data and no one else can get to it.
Obviously a bank is going to have or a financial institution, their own internal data for their clients. But when they’re trying to acquire new clients, and they’re also trying to understand what kind of debt does their consumer have in other financial institutions? You have to come to one of the three of us for that. Add to it, the cell phone utility database that we have is only Equifax Data X Teletrac, only Equifax. The IXI data set, you know, is proprietary at only. Only Equifax. And then of course, the twin database, you know, if you want to get payroll data, you’re going to come to Equifax or you’re going to have to go to an individual on a consumer consented basis.
Companies don’t share payroll data, you know, just, you know, broadly in a, in a way that scales. So that’s another proprietary data set. To your question around the data macro. There’S no question that this is. For years there’s been a macro of all of our customers wanting more data in order to broaden their Decisioning. And as you point out, some of them are using their own AI and ingesting our proprietary data assets. But we’re increasingly using our AI to deliver those solutions because we have the scale data assets. So, you know, the moat around our data is very high. It can only be accessed by Equifax or by our customers, you know, when they’re buying the data from us. You know, it’s just, it’s got a very high moat around it. And you know, we think the combination of that moat around the data and our invested investments in Equifax AI capabilities.
We mentioned on the call we’ve got 400 explainable AI patents. We added 40 more in 2025. You know, so we’re expanding our capabilities to leverage our proprietary data assets with AI in order to deliver those higher performing scores, models and products.
John W. Gamble
And even with smaller and mid sized financial institutions, we’ve delivered technology that lets them ingest our data easier. Right. So one score. Right. Integrates a substantial amount of our credit and alternative data which, and it makes it easy for a mid sized financial institution to access more information using our scores and to drive greater usage. And we’re seeing that absolutely occur. And the AI Advisor that Mark talked about now being launched is supposed to make that even easier because we’ll be able to help them create new credit policies more rapidly using our agentic capabilities that will again help them ingest more data more quickly using AI Advisor as well as one score
Andrew Steinerman
makes sense.
Thank you.
operator
Thank you. Our next question has come from the line of Shlomo Rosenbaum with Stifel. Please proceed with your questions.
Shlomo Rosenbaum
Hi, thank you very much for taking my questions. Mark, I just want to ask you a little bit more about the mortgage lenders that are testing or in production with VantageScore. You want to discuss, you know, what are the size of some of those mortgage lenders? And you know, FICO talked about, you know, their direct lender. They’re, you know, the top top five of the resellers. Where are you with the really heavy users of like, you know, resellers and lenders in that? And then just in general, are you planning to spend a lot more money this year just marketing that Vantage score and helping your clients test it? Is that, you know, an item that you’re absorbing into your margins?
Mark W. Begor
Yeah. So on the first half of the question, you know, there’s clearly given the cost difference, you know, between FICO and Vantage, there’s a lot of energy around, you know, the testing and utilization, you know, of Vantage as We’ve said, you know, we’ve got, you know, a number of large as well as a large number of customers that are taking advantage of the free Vantage score delivery so they can, you know, work on their systems on how you. How you would, you know, bring in a second score. And also looking at the performance of that Vantage Score.
And we mentioned that there are a number of smaller, recognizably, but smaller lenders that have made the conversion, but they’re not in the Fannie and Freddie space. But they’ve gone from FICO to Vantage. So there’s no question that there’s, you know, real interest in it. And we think it’s just a matter of when does the FHFA authorize the ability, which they said they’re going to do last July, to bring the Vantage score in? And we think there will be a conversion and it’ll obviously take time, but there’s definitely a lot of enthusiasm there with regards to marketing and costs.
We’re obviously working with our customers to support them. I think part of the marketing effort was to offer the free Vantage score with every paid FICO score, not only in mortgage, but in the other spaces. So that’s one that we’re putting commercial effort behind as well as marketing effort. And of course, any of our expenses associated with that which are I would characterize as not meaningful, but are in our P and L and in our guide. You shouldn’t expect us to do like. TV advertising or something, but we’re clearly incenting our commercial teams to work with our customers around this opportunity to use the Vantage score at half the price of the FICO score and really drive that conversion as soon as it becomes available. And working hard to prepare our customers. We’re also delivering data on Vantage score performance going back to 0809 to our customers so the risk teams can look at the performance, which is very clear in the data sets that we have. So that’s another element that we’re doing to help support our customers as they evaluate the Vantage.
As John pointed out, from a guide perspective, we put guidance in place, assuming there’s no conversion. We thought that was prudent because we don’t know when it’s going to be greenlighted by the fhfa. And if there is conversion, it’s only upside to us. There’s not any downside to it. You know, fundamental to that is that we sell the credit file that’s used to calculate the FICO score and we sell the credit file that’s used to calculate The Vantage score. And of course as we said a couple times in this call, and it’s well understood when we sell FICO that $10 is a full pass throw with no margin on it.
But we make full margin on the credit file that we sell. Because you can’t calculate the FICO or Vantage score without our credit data.
Shlomo Rosenbaum
Just a question, if I can follow. Up with John just on that, selling the credit reports, it seems like from the guidance that you’re taking the full hit of a pass through from the FICO score, not marking that up, but it doesn’t look like there’s much of a change in the cost of the credit reports to offset that. Am I understanding that correctly?
John W. Gamble
So you’re talking about we indicated excluding the pass through of the FICO revenue, we would be up mid single digits. So you should compare that against a market that’s down low single digits. So doing that math, that’s high single digits. Ish. Right. Type of outperformance relative to the market which we think is relatively good and relatively good relative to the other segments in which we operate. So that reflects certainly some price increase. It also reflects share gain that we’re driving and we expect to see from Twin indicator and the other only Equifax products that Mark would have already talked about. And there is also a little bit of a headwind built in there related to what’s going on with triggers. Right. So as, as trigger legislation comes in, our expectation is you’ll see increase in hard pulls but some reduction in soft pulls and that could have a slight impact on our revenue.
So we did the best we could to bake all those things in, but we thinking, we think growing in that mid to high single digit range X, the FICO score is a really nice outcome for our mortgage business.
Mark W. Begor
Well, it’s also our long term framework. Our long term framework is to grow organically 7 to 10 and in USIS 6 to 8 in there. So we have our mortgage business ex FICO kind of in that range which we feel good about and we think you should too.
Shlomo Rosenbaum
Thank you.
operator
Thank you. Our next question has come from the line of Pranav Patnaik with Barclays. Please proceed with your questions.
Brendan Popson
Hey, this is Brendan on from Manav. I just want to follow up on. Some of the mortgage market commentary. Because. Obviously in the last couple of years we kind of saw the opposite trend where there was a lot of shift to pre qual and you guys have, you know, taken some share there as well. So it sounds like you think there’ll be a reversal of that. So I guess just clarify what’s going on the ground there. And then also the. Just to be clear, it sounds like you’re saying the originations will be down low, single digit. That’s not the inquiries or hard inquiries you actually think would be better than that.
John W. Gamble
Sure. So on your last point, generally we’re talking about, we’re talking about hard inquiries and that’s general. Hard inquiries you actually think would be better than that. Sure. So on your last point, generally we’re talking about hard inquiries and that’s generally the way we guide. Now, admittedly we did indicate that we think we’re gaining share there so that we have to kind of net out the share gain when we’re coming up with a view of the market. But our down low single digits kind of reflects what we think inquiries would be doing absent the share gain that we’re driving and absent some of the shift related to trigger legislation. And you know, what’s going on with trigger legislation, I’m sure you’re familiar with it.
Right. We think we’re going to see some customers choose to purchase a hard pull earlier in the marketing cycle as opposed to purchasing soft pulls, since those hard pulls now cannot be shared with other lenders so that they, so that they have an opportunity to market to the customer that’s applying for the loan. So we don’t think every customer is. Going to do it. We still think there is. We’ve seen growth continue in soft inquiries, in prequal and pre approvals. But we think this legislation is probably going to result in some incremental adjustment where you might see a little more hard pull relative to soft pull for certain customers who choose to move to purchasing hard pulls earlier in the mortgage cycle.
Brendan Popson
Okay. And then on the twin indicator, you’re. Launching that kind of across the board. And obviously it’s already in market in some areas. But I guess where should we think of the biggest incremental opportunity across your different product lines?
Mark W. Begor
Certainly in mortgage. Mortgage is the largest fi vertical. It’s one where income and employment is used in every origination along with credit. And we’ve talked many times that, you know, the way the market historically worked is, you know, you pull a credit file up front, but you don’t have any visibility if that applicant, you know, is working or what their income and employment characteristics are, because that’s typically done later in the process.
And that’s why we launched the twin indicator really last summer. We’re seeing great traction with mortgage originators. We’re offering It I think as you know, for free, you know, with our credit file not only in mortgage, but auto and card and we’ll do it in P loans this year also because it’s really going to differentiate, we believe our credit file and drive some credit file share, you know, particularly in the mortgage space, in that pre qual application space that will aid lenders in their kind of marketing funnel to really differentiate, you know, what kind of loan or will a consumer, you know, close because they’ll now have visibility around their employment range of income for them that they didn’t have before.
So we’re seeing some really good traction there and what it should result in. And we’re seeing some beginning traction. There is share gains when there’s a 1B pull in the mortgage pre qual area. We want it to be an Equifax file because we’re offering that differentiated data at no charge, which we think will advantage us from a share perspective. And think about that same opportunity, you know, in auto, which would be kind of the next, you know, big vertical. And then we’re also seeing some traction in card, you know, same, same reasons. You know, historically, you know, card originations have always been done just on someone’s credit profile.
But you don’t know if that credit profile supports someone with the capacity to repay or if they’re employed by adding the twin indicator, it just drives that decision higher. So as a card originator, you can approve more at a lower loss rate. And if we’re doing it for free, which is our business model to drive share gains, you know, we’re seeing some traction there too. So we’re super energized around the twin indicator, which is a great example of, you know, the kind of solutions we can bring because of the breadth of our proprietary and scale data.
Brendan Popson
Thank you.
operator
Thank you. Our next question has come from the line of Faiza Alwi with Deutsche Bank. Please proceed with your questions.
Faiza Alwy
Yes, thank you. I wanted to follow up on the government vertical. So one is, it sounds like you’re saying the verifier business for diversified markets will be up low double digits. So one, I’m curious what you’re embedding for the government vertical growth. And then I guess as you’re having these conversations with various states and agencies, like what are some of the factors that they’re focused on, sort of how important is, you know, pricing as a consideration and if, you know, some of the funding issues that we saw with some of the states seem to have resolved.
Mark W. Begor
Yeah, government, you know, as you know, has had a long track record of very strong growth, you know, through 2024, you know, kind of the five years prior, it had a CAGR of over 20%. You know, so it’s been penetrating into that large $5 billion TAM, which is principally at the state level. And as you know, what we’re delivering to states is speed of social service delivery because it’s done instantly versus a manual verification of income eligibility. We’re delivering productivity for the caseworkers at the state level, which is a very strong value prop. Then we also deliver integrity, meaning it’s very current.
It’s data that’s from last week’s paycheck. So it’s a very current data set. And that growth penetration is really because of those three value props. And that hasn’t changed, you know, at, you know, south of around 700 million of run rate revenue, a little north of that in our government vertical versus the $5 billion TAM. Our commercial team’s focus is, you know, on those states and agencies. It’s really agencies that are still doing it fully manually. And when you think about a $5 billion TAM and our business at less than 20% of that, there’s a long Runway for growth as we work with the states.
To your question around, why isn’t it a $3 billion business? We think it will be over time. There are challenges around technology, around process flow change, and as you point out, there can be challenges around budgets in states. We deliver a very, very, very high roi. We deliver a big ROI on caseworker productivity, you know, meaning they can cover more individuals that are coming after social services. But we also deliver a huge ROI payback, you know, on the improper payments. And as you know, the federal government pays for social services, you know, with the states delivering it.
And you know, over the last year they’ve really quantified the improper payments as being a massive number of $162 billion. So that’s the INC at the federal and state level. And you know, what changed in the last call it 12 months is the passing of the OB3 bill that put more teeth into the requirements that the states have to deliver those social services, meaning they have to use more verified data. They’ve got to do it more frequently. Today there’s 12 month redeterminations. It goes to six months in 2027. All those actions are really putting teeth around addressing the 162 billion.
And it creates opportunity for equifax and workforce solutions. So, you know, we were pleased to see the kind of above expectation Revenue growth from, call it state penetration. That’s where it happened in the fourth quarter. There was some of that in the third quarter and we expect that to continue in 2026. And then you’ve got, you know, kind of the macro of the OB3 requirements that go into place, you know, later this year and into 2027 and beyond. You know, a lot of those conversations are happening now about how do I get prepared for that because of the, you know, incentives or penalties, perhaps you want to call it, that are embedded in OB3.
For states that don’t take these actions, they’re now going to have, you know. Massive cost sharing or cost shifting from. The federal government to the states where the states are going to be required to pay for a large portion of the social services if they don’t get their error rates down. So that’s been a real catalyst for, you know, an increase in conversations which gives us confidence, you know, in this vertical going forward. And as we’ve said a couple times on this call, you know, it’s our expectation that this vertical government will be our fastest growing business, not only in workforce, but across Equifax going forward because of the uniqueness of our data set and our solutions and because of the ROI and value we deliver to the agencies when they utilize our data.
Faiza Alwy
Great, thank you. And then just to follow up on mortgage and correct me if I’m wrong, I think you’re guiding mortgage to low double digits ex FICO in the first quarter and mid single digit for the year 2026. So just curious, like, is that conservatism? Are you assuming higher rates, you know, for the remainder of the year or, you know, what’s, what’s behind that assumption?
John W. Gamble
It’s really, it’s really related to the way the mortgage market and overall mortgage revenue moved in 2025. Right. You saw improving levels as you moved through the year. So when you do year over year growth rates, they just look a little different than a flat level of performance relative to a consistent level of performance in each quarter. So that’s all that’s happening. So the run rates that we’re seeing today relative to where the first quarter was last year actually results in a little better mortgage performance in the first quarter as you move through the year.
If that run rate is maintained, then what you’ll find is that you’ll see the growth rates decline as we go through the year. And that’s what it reflects.
Faiza Alwy
Understood. Makes sense. Thank you.
operator
Thank you. Our next question has come from the line of Ashish Sabhadra with RBC Capital Markets. Please proceed with your questions.
David Paige
Hi, good morning, this is David on for Ashish. Just following up on the government vertical. I was wondering if you could talk about some of the pricing trends you’ve seen or expect to see in that vertical. I understand the three value prop that. You’Re providing, which seems strong, but there was a letter sent by some senators regarding pricing. And then as a follow up, was. There any update to the try merge. To buy merge saga? Thank you.
Mark W. Begor
Yeah. And the first question, you know, we have, you know, modest price increases, you know, at the government vertical, you know, we don’t price is not really a lever for us. We really think more about penetration. You know, in the last year we’ve gone to more subscription models in government in order to, you know, help a new state get used to using the service, you know, and really help them in the adoption of our solution. So we don’t think about price as being, you know, a big lever for us and you know, it’s not one that, you know, is central.
You know, we have multiple levers in workforce solutions. It’s when you think about government penetration is such a huge one. You know, we focus on delivering the right value in return for our customers. Product is a big one as we roll out new solutions. You know, last year we rolled out a consumer consented solution in government to go after some of the gig. Individuals. Who are going after social services that might have a W2 job and be in our data set but we don’t have the gig income. So we’ve got that in market now. And we talked about our new, you know, monitoring solution that we’re rolling out and we’re seeing some real traction with that. So product is a big one and of record additions are a big positive in this business and unique to workforce solutions when we add new records and we added 5 more partners in the fourth quarter and 12 last year in workforce solutions that really drives higher hit rates.
So you’ve got a lot of levers for growth. With regards to your second question of the buy merge, tri merge, obviously there’s still some noise around that everyone we talk to understands whether it’s the mortgage industry, our customers or on the hill or with the agencies, they understand the large differences between the three credit files from tu, Experian and Equifax and why a tri merge is so important. Number one around access to credit. For example, there’s 10 million consumers in the US roughly that are only on one credit file. So if you don’t pull all three, you might not be able to approve that consumer in a mortgage which is federally guaranteed with the intent of expanding access to housing with the federally guaranteed support.
So from access to credit and getting a complete picture on the consumer, the Tri Merge is super important. And there’s all kinds of studies that have supported that. And then from a safety and soundness, same thing. If you went to pulling one or two of the credit files instead of three, you may not pick up all the trade lines. And there could be trade lines that are either positive that help the consumer or negative that say there’s more risk with that consumer. And that’s why we think trimerge is well embedded as an important tool for the underwriting of consumers in mortgage. And frankly, the most sophisticated lenders in the United States outside of mortgage, you know, pull Tri merge for cards. They pull it for auto, they pull it for personal loans for that same reason, because they get a more complete picture on the consumer and it really drives their ability to approve more at lower losses, but also make sure that they’re managing their loss profile from an underwriting standpoint.
David Paige
Thanks so much.
operator
Thank you. Our next questions come from the line of Jason Haas with Wells Fargo. Please proceed with your questions.
Jason Haas
Hey, good morning and thanks for taking my questions. I’m curious if you could talk about. Your philosophy on how you’re thinking about pricing the credit file. I guess we know the price for this year, but for next year and going forward. Curious how you’re thinking about that. Thank you. And I guess particularly for mortgage.
Mark W. Begor
Yeah, I think it’s the same in. Mortgage and non mortgage. You know, we do price increases every year in all of our products, you know, and across whether it’s Workforce Solutions or usis or across our international business generally. Do those on one one. We think about those as being reasonable and modest compared to what FICO has done. It’s obviously public doubling their price. We don’t do doubling a price. And we have lots of relationships with our customers, which is why I would characterize it. We’re balanced around price and we’ll continue to be balanced going forward.
Jason Haas
Got it. That makes sense. Very helpful. And then I wanted to focus in. On talent, which I thought was a bright spot, even despite the soft, tired markets. Can you just reiterate what drove the. Strength there and how you expect that to trend going forward? Thanks.
John W. Gamble
Yes, our talent business is really heavily driven by not only our twin data, which continues to perform well and we continue to increase penetration, but we also have a broader set of products, including in education around incarceration. Right. That is, that are also expanding. So I think the way we continue to outperform that market which as you saw BLS was down low single digits, we grew obviously much stronger than that up into high single digits. So very good performance on our talent business is really driven by continued performance on the team of continuing to build penetration with our income based products and then also expand consistently our education and other products including incarceration, which also continue to grow. So very nice performance by the team in a very tough market.
Jason Haas
That’s great. Thank you.
operator
Thank you. Our next questions come from the line of Kevin McVeigh with UBS. Please proceed with your questions.
Kevin McVeigh
Great. And congratulations on the executions. Obviously a lot of moparts out there. I guess just a little bit higher level. I mean it seems like there’s really no changes to the longer term framework. Right. Despite a pretty meaningful shift from fico. So is the offset you’re able to. Lean into the AI a little bit more to drive more revenue? I mean you see it in the Vitality index is that driving more revenue and expense management or other parts to the business are helping offset that. And obviously there’ll be some shift as Vantagecore starts to season a little bit. But just any thoughts on the model overall? Just given a pretty dynamic shift in fico.
Mark W. Begor
Yeah, FICO is one that obviously is just a no margin pass through for us, you know, and it’s very sizable now, which is why we opted to spike it out and we will going forward because it’s such a big piece of our revenue and zero calories.
You know, when we sell a FICO score, you know, we just pass that through and you know we’re going to do that, you know, the performance of the business. We’re pleased with, you know, we’re pleased with, you know, our revenue guide and you know, you know, for 2026, with a mortgage market that’s down slightly again, we had hoped that inflation would come under control and the rates would move down. Obviously they’ve ticked back up which has put some pressure on the mortgage market. But to have a 7% ex fico guide, which is at the lower end of our long term framework ex the mortgage market, I think we’re something closer to 8%.
We feel good about that. And when you look at the three businesses versus their long term framework against the 7 to 10, having EWS in that low double digits we think is a big, big positive moving forward as they return to their long term growth rate. Usis performing well. Both mortgage and diversified markets are non mortgage and then same with international. So what’s driving that? I think it starts with our unique and differentiated data. And as you point out, we’ve had a big focus obviously investing in our technology, but our technology is now enabling us to deliver more innovation and more new solutions.
We think that’s accretive and supports our growth rate. And the fact that we have our vitality index last year 50% above our long term framework of 10% is really good, you know, because that’s momentum. As we go into 26, you know, those new products and you look at new, some of the new products we’re rolling out that a year ago we weren’t talking about with you we weren’t doing because we were still finishing the cloud, you know, like the twin indicator, you know, that is we think a really powerful solution. We’re offering it, you know, at no charge to our customers to drive share gains for our USIS credit file.
And as you know, the next credit file we sell is very high incremental margins. So. So we’re pleased about that. With regards to the margin ex FICO of 75 basis points, you should be pleased about that. We are. That’s 50% above our long term framework of 50 basis points. That’s really positive. It’s going to drive double digit EBITDA growth and EPS growth which is going to drive our free cash flow. We’re really pleased about that. And that’s really driven by the pure operating leverage that we have with very high fixed cost cost structure. So our next product sale, our next credit file sale or twin indicator sale or you know, twin data sale is very high incremental margin.
So that operating leverage is very high on revenue growth. And then as you point out, you know, we’re driving really in the last six months, the second half of last year, you know, a big focus on using AI inside of Equifax to drive productivity, speed, accuracy, customer service. But on the productivity side we laid out that we’ve got a plan for 75 odd million of cost saves over the next couple three years from a lot of AI deployment inside of our back office. So I think that’s a real positive. So we’re excited about the execution of the business and really the performance and momentum coming out of last year.
But then our outlook for 2026 we’re pleased with.
Kevin McVeigh
Very helpful. Thank you.
operator
Thank you. Our next question has come from the line of Kelsey Zhu with Autonomous Research. Please proceed with your questions.
Kelsey Zhu
Hi, good morning. Thanks for taking my question. Some of your peers have called out the improvement in the underlying consumer credit supply demand Dynamics. Was wondering if you can talk a little bit more about your seeing there in terms of volume growth outlook for card, auto and personal loans. Thanks a lot.
Mark W. Begor
Yeah, the market is still quite solid. We talked about the mortgage market. We tend to talk about that from a market standpoint because it’s so impactful and it’s been a negative for quite some time because of the high interest rates go into the other verticals and they’re solid. Some of the activity is kind of below still pre Covid levels but there’s still attractive originations. And then there was a question earlier around kind of the data macro that’s a positive for us as well as our ability to use AI to deliver higher performing products and solutions.
Our customers from an origination standpoint are still originating. There’s no change. We don’t see any kind of behavior around people thinking about slowdowns or recessions. But they’re after more data which is a positive for us. They’re after higher performing scores and models and we talked about some of the big lifts we’re delivering now with our AI generated scores and models and those become positives for us to penetrate in with our customers because we’re delivering higher performing solutions. But your question on the markets like our customers are strong meaning financially the banks and financial institutions and broadly the consumer is in good shape because they’re still working and spending.
So that’s a positive for us.
John W. Gamble
So we’re seeing FI for us has been good. If you look at online we’re seeing nice mid single digit type of performance auto really strong which I know Mark talked about in his comments. Insurance was very strong. We’re seeing double digit type of movements there as well. So very, very strong. And for us really across these segments fintech is performing extremely well. So that’s an area of real growth for us where we’re seeing very good performance that’s helping us across each of those segments that I referenced. So overall we think our performance in usis, especially as you look at online is very good.
Kelsey Zhu
Got it. So second question. Understanding that you are EBITDA agnostic on the Cycle Direct program, but it does impact revenues. So just curious to hear what you’re seeing in terms of trimers, resellers, adoption or or pick up for the FICO Direct program and your guidance I think implies 0% penetration rate for this program. So just want to get more of your thoughts behind that assumption.
Mark W. Begor
Yeah, I think we said in Our Comments There’s 0 CRA reseller score calculation so far this year, meaning in January. We know there’s dialogues going on between the CRA resellers and Equifax and the CRA Trimerge resellers and fico. I think FICO talked about that on their call maybe last week. I believe they said that, you know, that they didn’t see this happening until maybe the second half, but, you know, meaning that the resellers being prepared to do it, going through the approval process, et cetera. But you know, really, we tried to say in our comments earlier that we’re kind of agnostic whether we calculate the score or the Tri Merge reseller calculates the score.
Because if they calculate the score, we’re going to sell them the credit file at our full price and then presumably they’re going to have to pay FICO $10 for the score. Whether they pay the $10 to FICO and calculate the score or we do it, we’re kind of agnostic because it has no margin impact to us. Meaning we don’t get any margin when we sell the FICO score. We get the margin when we sell the FICO credit, sorry, the Equifax credit file. So, you know, how that will unfold is tough to handicap. What the incentives are, Why a reseller would want to calculate the score is, you know, I think something they’re trying to figure out.
Meaning how are they going to make. Incremental margin for investing in the score calculation if they’re paying a full price to FICO and a full price to Equifax? I think that’s challenging, but. But we’re agnostic and we’re going to be collaborative with our customers, which are the Tri Merge resellers, to help them in ways that make sense if they decide they want to do it. Because there’s really no P and L impact to us, meaning we think about P and L as our ebitda, our EPS and our free cash flow. It’s neutral to us whether we calculate the score or not. And again, because of that uncertainty, we opted to have a guide that said there’s going to be no CRA score calculation in 2026 and there’s going to be no Vantage conversion.
I don’t think either of those are true, but it was kind of the best guide that we could put together. And we thought putting those scenarios in place for you helps you think about if there is a conversion, what it means to Equifax. And we’ll be super transparent every quarter on what activity we’re seeing or not seeing on both of those fronts, you know, so we can share with you and then you’ve got enough information so you can make your own assessments of, you know, how you think it’s going to unfold going forward. But you know, between the FHFA and Fannie and Freddie’s decisioning and timetable being uncertain and the same with the cra, you know, trimurge resellers, we thought that was the right guidance to put in place, you know, for Equifax.
Kelsey Zhu
Super helpful. Thanks a lot.
operator
Thank you. Our next question has come from the line of Scott Wurtzel with Wolff Research. Please proceed with your questions.
Scott Wurtzel
I just wanted to go back to the EWS margins and just, you know, with sort of this, you know, assumption around, you know, new kind of government revenue from these benefits coming in in the second half of the year. Should we assume that there could be like a ramp in EWS margins as we move throughout the year? Thanks.
Mark W. Begor
Yeah. So I think John said it and I said it in a different version. You know, we like our 50 plus percent EBITDA margins in EWS. Our goal is to maintain them, you know, in our long term framework because they’re so accretive, you know, from a free cash generation as well as to overall Equifax, you know, margin, you know, rates, which is so, are so powerful. And you know, we’re making investments to keep that top line at ews, which is also accretive to Equifax, you know, going whether it’s around new products, you know, new technology.
We’re investing in AI I talked about from some of our product delivery in the employer business, new products that we’re rolling out. So we’re going to keep that balance of investing in EWS to keep their top line, double digit top line growth over the long term going while still balancing, maintaining those 50 plus percent plus EBITDA margins for overall Equifax. Obviously if they’re growing faster, that’s part of the accretion. It’s in our 75bps expansion this year, you know, and then the operating leverage in the rest of Equifax helps drive that 75 basis points, which, you know, we’re very pleased with, you know, that’s well in excess of our 50 basis point, you know, framework over the long term.
Scott Wurtzel
That’s helpful. And then just a quick follow up just on sort of your outlook on Internet and sort of your assumptions around the macro and key geographies. I know you called out some weaker economic growth prospects I think in Canada and the uk But I know there’s also been some macro volatility in Brazil as well. So just wondering if you can kind of give sort of high level macro assumptions in your key international geographies. That’s sort of underpinning guidance this year. Thanks.
Mark W. Begor
Yeah, I think it’s well recognized the Canadian and UK economic kind of macro challenges. You know, just to contrast, in the UK we performed well in our CRA business, you know, very strong performance even in a weak market. The debt management business, where, you know, we do a lot of debt recovery analytics, you know, was under pressure in the uk Canada is clearly has got a challenge, you know, from the tariff conversations that’s happened really over the last year. You know, we expect to see, you know, that be pressure for that business. But we expect better performance in 26 and 25 out of, out of Canada, Australia, fairly stable and we’ve seen, you know, good performance in our business there.
Latin America broadly, you know, in good position. There are some Brazil economic conditions. But you know, we had, we’ve had very strong performance in Boa Vista. You know, our acquisition we made a couple years ago, you know, is where we’re gaining share there. So, you know, we would expect that business to perform well again in 2026. So you know, international we’ve got kind of framed out at the lower end of their long term guidance of 7 to 9, you know, principally for some of the underlying economic weaknesses, you know, in some of the markets.
Scott Wurtzel
Thanks guys.
operator
Thank you. Our next questions come from the line of Craig Huber with Huber Research Partners. Please proceed with your questions.
Craig Huber
Great, thank you. My first question, you said several times today and in the past that you’re agnostic. If a FICO score was sold through Equifax or the resellers and so forth. Obviously you’re agnostic because you’ve raised the price of your credit file for mortgages and the associated fees to offset that, which is fair. It must have data if you want to originate a mortgage out there and stuff like I’m curious on two fronts there. What has the reaction been to the price increase, your credit file, significant price increase there in the mortgage market? What’s been the reaction out there and is there any learnings there about that reaction there that you could potentially think about raising prices more aggressively in other markets, credit cards or maybe auto? More importantly.
That’s my first question. Thank you.
Mark W. Begor
Yeah, Craig, your comments really aren’t accurate around what we’ve done with the credit file. And I think there’s some misconceptions out. There about, you know, what was marked up or what was not marked up. You know, from our perspective, we’ve always been selling a credit file and a credit score, you know, for years. And that credit file, you know, included the FICO score, you know, where we passed through the cost of the FICO score. So, you know, from our perspective, we haven’t had a large increase in the credit file in 2026, and we haven’t in the past. And, you know, we’ve shared that in prior investor meetings. You know, we passed through the FICO credit score. And, you know, I would tell you that there’s, you know, a lot of, you know, consternation in the, in the marketplace, meaning with mortgage originators around a FICO credit score going from 495 to 10 bucks.
You know, that’s just a reality. You know, that’s not, you know, we didn’t take our credit file price up anywhere near, you know, 100 miles away from that kind of a price increase. So that’s really been the focus of the conversation. And, you know, what’s the learning for us, you know, is we’re going to continue to have very modest increases on our credit file going forward. You know, we would not do those kind of large price increases, and we’ve not done them in the past.
John W. Gamble
And as a reminder, we added a twin indicator and we added NCTUE data to our credit file. Right. With that modest price increase. So we not only had a modest price increase, we also made the information we’re delivering more rich. Right. So a better product with a modest price increase.
Craig Huber
Sorry, just to be clear on my end, so where did you exactly get the extra money to make up for the loss that you’re not no longer getting a margin on the FICO score that you were selling?
Mark W. Begor
We never again. This is a narrative that was created by, you know, really fico. We never had a margin on the, on the FICO score. And I think we’ve been very clear on that. We sell a credit file, and that credit file cost is what we’ve been delivering to our customers. And then we pass through a FICO score Last year was 495, and we passed that through. It was very clear to our customers. And this year it’s $10, and we’re very clear to our customers on that period.
Craig Huber
Okay, and my last question, if I could your vitality index of 15%. Just talk real quick, if you could, about the AI enhanced products or new products that you’re very Excited about here. That’s a big number. 15.
Mark W. Begor
Yeah, there’s a bunch. I had them in my prepared comments earlier. And you know, a lot around scores and models around, you know, risk underwriting, credit underwriting, where we’re seeing, you know, big tension, 15 point kind of lift in performance, which is massive. So those higher performing scores using more data, you know, from our differentiated data sets deliver higher performance for our customers. So we’re seeing share gains, we call that, you know, one score is one of our products that pulls together all of our differentiated data that we rolled out last year and we’re seeing a lot of take there.
We’re also seeing in identity and fraud really the same thing. By ingesting more identity and fraud data assets, we’re seeing higher, you know, hit rates or higher performance rates on our identity solutions or higher pass rates. So that’s been a real positive. So scores and models, you know, really big deal. We talked about some of the additions we’re making in our adding AI capabilities to our Ignite analytics platform to make that, you know, more functional, more usable, you know, for large but particularly medium and smaller lenders. So it’s easier to use energetic AI around those product solutions.
It’s really quite broad based on the energy we have around AI. And as you point out our 15% vitality last year or 17 in the fourth quarter, obviously we ramped through the year. A lot of that is being driven by our differentiated data that’s really proprietary to Equifax. And then second, our use of AI. And as I mentioned on the call, we continue to invest in our explainable AI capabilities. With 40 more AI related patents that we filed in 2025, I think that’s a great kind of indicator of our investments to drive our industry leadership around using AI to deliver our differentiated data to our customers.
Craig Huber
Great, thank you.
operator
Thank you. Our next questions come from the line of Zach Lassic with FT Partners. Please proceed with your questions.
Zachary Gunn
Hi, thanks for the question. Despite no impact to EBITDA or eps, is there an assumption built into the revenue guidance on what percentage of mortgage volumes will move to the Direct model for fico? And any color on how the brokers have been thinking about the direct model and the option for the performance pricing would be greatly appreciated. Thanks.
Mark W. Begor
Yeah, I think we said earlier in our comments and there was a question a couple minutes ago on that one that, you know, our assumption in our guide is that there’s no Vantage conversion and there’s also no CRA reseller or tri merge originator, so called direct model using FICO’s term score calculation.
And we haven’t seen any of that in the first so far in the first quarter, meaning in January. And our conversations, you know, with, you know, those, you know, kind of tri merge resellers is, you know, there’s no dates we can see, you know, call it like in the first quarter. I don’t see any of that happening. And just as a reminder, again, for probably the fourth or fifth time on this call, we’re agnostic to that because there’s no P and L impact to Equifax or benefit for the customer. You know, for the Trimerge resellers calculating the score, you know, we’re going to sell our credit file at the full price to them and then they’ll buy the FICO score presumably for $10, you know, from FICO and then sell that once they start doing it.
It’s hard for me to see what the benefit is of a reseller doing it. But that’s why we put our guide together, because there’s no indications that that’s, you know, has any certainty about when it’s going to happen. There’s also some questions about what kind of approvals would have to be completed by the regulators around someone else calculating the score. And that likely means time. But again, just to be crystal clear, we’re agnostic. You know, if the Trimerge resellers and FICO decide they want to calculate the score, we’re cool. It has zero impact on Equifax, P and L, meaning ebitda, EPS and free cash flow.
It’ll clearly impact our revenue because someone else will calculate the score. But when you know, that zero calorie revenue, we’re agnostic to that, so we’ll see how it unfolds. And we thought we gave the right guide of assuming none of that happens. I think that guide is likely wrong because there’ll likely be some activity at some point, but it’s impossible for us to handicap when that will happen. But the Equifax bottom line, you know, is not impacted by that change.
operator
Thank you. Our next question comes from the line of Arthur Trusler with Citi. Please proceed with your questions. Hi there.
Arthur Truslove
Thank you very much for taking my question. So just sort of following on from that. I just wanted to clarify in simple terms, if what we’re seeing is that you are calculating the credit score for mortgages using the FICO algorithm, are you able to say whether the sort of contribution in dollars per mortgage inquiry is going to be higher, lower or the same in 2026 relative to 2025. Thank you.
Mark W. Begor
It’s higher. Yeah. There’s no question we’ll make more margin dollars because we took up the price of our credit file and John kind of gave a framework of what that increase looked like. So, you know, we’ll have higher margin dollars. Our revenue obviously is impacted by the FICO score going from 495 to $10 because that’s the pass through that we have. But our margin dollars on mortgage by selling the FICO credit score are clearly going to go up. Now the margin rate is impacted just by the math, but the margin dollars are what you and I should care about.
And we’ve given a framework for overall Equifax margin dollars being up low double digits broadly in the business. And this is one of the elements that drives that.
John W. Gamble
Just to reiterate, if the score is sold by the CRA or if the score is sold by Equifax, our ebitda, EPS and cash flow are unchanged. Right. Doesn’t matter. Right, yes.
Arthur Truslove
No, thank you. And the second question I had just sort of following up from that. When you produced your long term framework for usis, did you assume that you were going to benefit from an organic growth perspective from FICO very significantly raising prices every year or not?
Mark W. Begor
Okay, of course not, no. This was done back in 2021. When we put that long term frame in place, I think the FICO score was like 55 cents. And we expected, which they had for the decade before that to them they would do modest price increases, which was in our long term framework. Think about, you know, kind of mid. To high single digits. Something like that was in our, in our long term framework. Obviously that changed dramatically and that’s why we’ve, you know, opted to spike out the FICO impact because it’s so significant, you know, in our reported results and give you better visibility, you know, around the underlying performance which was always there. You could always look at our EBITDA dollar change and of course we set as a framework a margin rate of 50 basis points per year. But that clearly did not assume that there’d be this kind of FICO price increase, which is why going forward we’ll show it to you with and without fico.
And again you should. And we’re really pleased with the operating leverage of 75 basis points x the FICO pass through. That’s quite strong and one that we’re really pleased with.
Arthur Truslove
Brilliant. Thank you very much.
operator
Thank you. Our final questions will come from the line of Simon Clinch with Rothschild co Redburn. Please proceed with your questions.
Simon Clinch
Hi. Thanks for filling me in, Mark. I was wondering if you could help us think about quite an important question today. Given all the ruptures we’ve seen in the market with the application of AI to alternative data sets beyond your own proprietary set, is there any situation where the value extracted from that data reduces the relative value that you extract from your proprietary data sets and thus makes the market more competitive in that front? That’s definitely a question that I think a lot of people ask these days. Thanks.
Mark W. Begor
Yeah, it’s clearly we’ve been swept into a neighborhood that we don’t think we live in where AI could disrupt or disintermediate our business. I think the scaled data assets we have are unmatched. You know, there’s no way to get to the kind of credit data we have or something that has the same predictive elements of our proprietary credit data, our alternative data, the income and employment data we have, and the fact that it’s not publicly accessible, you know, by third parties through any kind of AI tool, you know, pick the dozens out there that are creating very sophisticated tools that can access public market data, they can’t get to ours.
So I think that’s a, a big part of the Equifax moat around data. To your question I think you were heading towards is what other kinds of data that might be accessible from a public standpoint could replicate what we do today? And we don’t see any. You can’t get credit data in the public market. You can’t go out to the web and really aggregate that kind of data. You can’t get payroll data, you can’t get income and employment data. It’s just that those kind of data sets, you know, are proprietary to proprietary. The contributors that are giving us that data, you know, that data is in a proprietary environment in their world.
You know, think about the 20,000 financial institutions that contribute data to us, you know, every month, you know, they’ve got a walled garden, you know, around their data. It’s not accessible. You know, same with income and employment data. You know, the 4.8 or 9 million companies delivering payroll data to us, either directly or through a payroll processor or HR software company, you know, that’s a walled data set that’s not accessible from an AI tool in any way. So, you know, we think, obviously what happened in the last 24 hours, you know, in the broader industry around AI concerns of disintermediating businesses that principally, in my view, you know, rely on Public market data.
We’re not in that neighborhood, but we’ve been swept into it. So, you know, we’ll work to continue to communicate to our investors around the Equifax moat, you know, around our data, which we think is, you know, big and tall and one that, you know, we think is going to be long term sustainable. And only Equifax can use the data for our customers when they authorize. When we authorize them to do it in order to use that data in any way.
Simon Clinch
That’s really useful. Thank you, Mark. And I think just as a follow on to that, I mean, as I’m thinking particularly long term here, but do you see the value of a credit score maintained in an environment where AI is producing a lot more value and insight from even your own proprietary data? Is there a situation where the value of Vantage score to the market as a whole goes down while the value of your underlying data goes up?
Mark W. Begor
Well, we think the underlying data is always the linchpin. You can’t calculate a score without the data. And remember, like Vantage only can calculate the score. Because we own Vantage along with TU and Experian, we use that Vantage algorithm on our data. So like a third party AI algorithm can’t calculate a score because it has no data. You know, the only way to do that is to have the access to the data. And obviously we control, you know, who uses our data and how it’s delivered. So in my view, you know, with all the data we have only gets more valuable.
And as you know, central to our strategy is to continue to add more data, either organically or through acquisitions. And you know, we’ve done acquisitions of like Paynet Data X Teletrac, we’ve done a number of acquisitions to add more data into our proprietary data set. And you know, to me, I think what’s fundamentally missing in the market today is that, you know, investors need to understand you can’t use AI without data. And if you fundamentally believe that Equifax data in our case is proprietary, that’s a pretty big moat because the only ones who can use AI on our data is Equifax.
Simon Clinch
That’s great. It’s really good to hear you say that. Thank you.
operator
Thank you. We have reached the end of our question and answer session and with that I’d like to turn the floor back over to Trevor Burns for some closing comments.
Trevor Burns
Yep. Thanks everybody for your time today. Appreciate it. If you have any follow up questions, you can reach out to Molly and I. Otherwise, have a great day. Thank you.
operator
Ladies and gentlemen, thank you for your participation. This does conclude today’s teleconference. Please disconnect your lines at this time and enjoy the rest of your day.
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