Equifax ((EFX)) has held its Q2 earnings call. Read on for the main highlights of the call.

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Equifax’s latest earnings call struck a notably upbeat tone, underscoring strong operating performance despite pockets of macro and regulatory pressure. Management highlighted revenue and EPS upside, margin gains and robust cash generation, while leaning heavily into AI-driven products and a sizable new acquisition. Near-term mortgage weakness, FX and legal costs were acknowledged, but framed as manageable relative to the company’s execution.

Revenue and EPS Outperform Expectations

Equifax reported Q2 revenue of $1.7B, rising 11% on a reported basis and 10% in constant currency, modestly ahead of the April guidance midpoint by $5M. EPS climbed 13% to $2.25, beating management’s prior midpoint by $0.05 and reinforcing the narrative of solid top-line growth translating into stronger bottom-line results.

EBITDA Strength and Margin Expansion

Adjusted EBITDA came in at $552M, up about 10.5% year over year, showcasing healthy profit expansion. Excluding FICO-related pass-through revenue, EBITDA margin reached roughly 35%, improving by about 120 basis points and sitting 40 basis points above April’s midpoint, even though the reported margin of 32.5% was flat versus last year.

Free Cash Flow and Capital Returns

Equifax continued to emphasize cash discipline, returning $366M to shareholders in Q2 through about $300M of share repurchases and $66M of dividends. Over the past 12 months, returns have exceeded $1.6B, equating to 100% of operating cash flow, and management reiterated expectations for more than $1B of free cash flow in 2026 with cash conversion above 100%.

AI-Driven Innovation and Product Vitality

The company is leaning hard into AI, launching 54 new products with embedded AI capabilities in the first half of the year. Its New Product Vitality Index reached 16%, surpassing both the 2026 goal of 15% and the longer-term target of 10%, prompting Equifax to double its AI productivity objective to $150M for 2026–2028.

Strategic Expansion via Círculo Acquisition

Equifax signed a definitive agreement to acquire Mexican credit bureau Círculo de Crédito for an enterprise value of $750M, or 11.7x expected 2026 EBITDA and about 9.4x including run-rate synergies. Círculo brings strong growth credentials, with last-twelve-month revenue up 31%, a 2023–2025 CAGR of 23% and adjusted EBITDA margins in the mid-40s, and is expected to be accretive in year one.

Workforce Solutions and TWN Momentum

Workforce Solutions posted 7% revenue growth in Q2, powered by expansion of The Work Number (TWN) data assets to 217M active records, up 10%, with 124M current active records representing 108M unique Social Security numbers. Mortgage revenue within EWS grew 8%, while state government contracts added about $300M in annual contract value, underscoring a large addressable market.

USIS Performance and Market Share Gains

The U.S. Information Solutions segment delivered 17% revenue growth, or 6% when excluding FICO pass-through. Diversified markets revenue rose 6%, accelerating more than 300 basis points sequentially, while direct-to-consumer increased 11%. USIS mortgage revenue surged 40%, and ex-FICO EBITDA margin in the segment reached 40.5%, expanding more than 140 basis points year on year.

Rising VantageScore Adoption

VantageScore usage is ramping, with pulls up about threefold quarter over quarter to roughly 2.2M transactions. Around 1,200 lenders are now accessing free VantageScore alongside paid FICO scores for testing, and roughly 100 smaller lenders used VantageScore-only at a $1 price point, totaling about 10k transactions in Q2, hinting at evolving score dynamics.

Legal Settlement Weighs on Q2 Results

The quarter included a $40M charge, net of insurance, tied to a legal settlement involving a previously disclosed coding issue. While this created a drag on reported earnings, management treated it as a discrete event, emphasizing that the underlying operating trends remained solid after adjusting for this non-recurring cost.

Mortgage Market Headwinds and Rate Impact

Equifax flagged ongoing pressure from higher mortgage rates, noting the 30-year rate moved about 30 basis points higher to roughly 6.6%, up from 6.3% at the time of April guidance. That shift contributed to lower-than-expected industry originations, with the company now seeing mortgage volumes down low single digits and reminding investors that FICO mortgage royalties carry zero margin.

Government Revenue Timing and Near-Term Drag

EWS government revenue fell about 4% in Q2, reflecting a tough comparison to 2025 and timing issues in contract ramp-up. The company highlighted that roughly $100M of newly disclosed annual contract value is expected to principally benefit 2027, creating near-term risk to revenue recognition despite the long-term growth runway.

International Softness and FX Pressure

International operations grew about 4% in constant currency, but performance was restrained by market weakness in Canada and the U.K. Currency movements further complicated the picture, as FX headwinds effectively offset the constant-currency Q2 beat and led management to keep reported full-year guidance unchanged from April.

Third-Party Bureau Sales Weakness

Management pointed to some softness in third-party bureau sales, including volumes sold to Experian and TransUnion. While not enough to derail overall growth, this weakness partially offset gains elsewhere and serves as a reminder that competitive bureau-to-bureau dynamics can fluctuate and influence reported segment results.

Moderation in Share Repurchases

After returning about $560M to shareholders in the first half, including $300M in Q2 alone, Equifax signaled a slower pace of buybacks in the second half. The company intends to prioritize completing the Círculo transaction while keeping leverage under 3x EBITDA, balancing shareholder returns with balance-sheet flexibility.

Score Mix Risks to Guidance

Equifax’s outlook remains sensitive to the mix of FICO and VantageScore usage in the mortgage market. Current guidance assumes continued FICO royalty sales and limited revenue contribution from VantageScore, with management illustrating that a shift toward broader VantageScore adoption could reduce FICO-related pass-through revenue by roughly $40M–$50M.

Forward-Looking Guidance and Outlook

For Q3, Equifax guided revenue to $1.68B–$1.71B, implying about 10% reported growth and around 9.5% in constant currency, with ex-FICO revenue rising around 7% at the midpoint. EPS is expected at $2.15–$2.25 and EBITDA at $547M–$564M, with margins around 32.8% reported and ex-FICO margin between 34.6% and 35%, up more than 90 basis points year over year.

Equifax reiterated a constructive full-year 2026 view, calling for high-single-digit growth in diversified markets, U.S. mortgage revenue up just above 20% even as originations fall low single digits, and ex-FICO revenue growth of 7.2%–8.4%. The company still targets about 75 basis points of EBITDA margin expansion ex-FICO, over $1B of free cash flow, roughly $1.5B of capital capacity for M&A and shareholder returns and leverage below 3x.

Equifax’s earnings call painted a picture of a company executing well in a complex environment, pairing double-digit revenue and EPS growth with improving margins and strong cash returns. AI-enabled products, expanding data assets and the Círculo acquisition underpin its long-term growth story, while investors will watch mortgage trends, FX and evolving score usage as key swing factors over the coming quarters.