Equifax, Inc.

Greetings, and welcome to the Equifax Q1 2026 Earnings Conference Call and Webcast. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. You may be placed into question queue at any time by pressing star 1 on your telephone keypad. We ask that you please limit yourselves to one question and one follow-up, then return to the queue. As a reminder, this conference is being recorded. If anyone should require operator assistance, please press star zero. It's now my pleasure to turn the call over to Trevor Burns, Senior Vice President, Investor Relations. Trevor, please go ahead.

Thanks, and good morning. Welcome to today's conference call. I'm Trevor Burns. With me today are Mark Vigor, Chief Executive Officer, and John Gamble, Chief Financial Officer. Today's call is being recorded. An archived 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 be making reference to certain materials that can be found in the presentation section of the news and events tab at our IR website. These materials are labeled 1Q2026 earnings conference call. Also, we'll be making certain forward-looking statements, including second quarter and full year 2026 guidance to help you understand Equifax and its business environment. These statements involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from our expectations. Certain risk factors that may impact our business are set forth in filings with the SEC, including our 2025 Form 10-K and subsequent filings. During this call, we'll be referencing 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, 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 and can be found in the financial results section of the financial info tab at our IR website. Now I'd like to turn it over to Mark.

Thanks, Trevor. Turning to slide four, Equifax delivered very strong first quarter results with reported revenue of $1.649 billion of 14%, which was $37 million above the midpoint of our February guidance. On an organic constant currency basis, revenue growth of 13%, which was over 200 basis points above the midpoint of our February framework. Ex-FICO, revenue growth was up about 10% and at the top end of our 7% to 10% long-term growth framework. The revenue outperformance was principally in U.S. mortgage, which was up 38% and better than our February guide from stronger mortgage activity in the middle of the quarter before rates increased due to the Iran conflict. USIS Mortgage also benefited from stronger revenue growth related to its new wins in pre-approval products driven by our twin indicator solution. These mortgage customer wins are a good proof point that our differentiated twin indicator solutions are resonating with mortgage customers. We also expect customer share gains this year in card, auto, and P-Loan as we drive twin indicator deployment more broadly. As a reminder, we are offering the twin indicator as well as our cell phone utility and pay TV attributes at no cost and mortgage to drive share gains. Organic diversified markets constant revenue dollar growth grew almost 6% in the quarter, consistent with our guidance. This was principally driven by strong broad-based execution and workforce solutions. Importantly, first quarter EBITDA of $477 million was up 13%, with an EBITDA margin excluding FICO of 31.2%, up a strong 80 basis points and a very strong 110 basis points above the midpoint of our February framework. The 80 basis point expansion versus last year in EBITDA margin was both above our 75 basis point target for the year and 30 basis points above our long-term 50 basis point framework. The strong EBITDA margins were driven by strong operating leverage, mortgage flow through, and AI-driven cost productivity. Equifax reported EBITDA margins worth 29% in the quarter. EPS at $1.86 per share was also up a very strong 22% and 18 cents above the midpoint of our February guide. As a reminder, first quarter EBITDA margins in EPS are lower than the remainder of the year, primarily due to a large percentage of our employee equity plan expenses being recognized in the quarter. We returned $327 million to shareholders in the quarter, including repurchasing 1.3 million shares or about 1% of shares outstanding for 260 million to take advantage of a weaker Equifax stock price. And last month, we increased our quarterly dividend by 12% to 56 cents per share. Equifax paid 67 million of dividends in the quarter. We continue to expect strong free cash flow of over $1 billion in 2026. with a cash conversion over 100%, which will deliver capacity of approximately $1.5 billion for bolt-on M&A and return of cash to shareholders while maintaining strong leverage levels. The team also continued to execute very well against our EFX 2028 strategic priorities in the quarter by leveraging EFX.AI-based solutions built on our cloud-native infrastructure to drive innovation, new products, and growth. In the first quarter, our vitality index of 17% was at record levels and reflects the focused execution of our teams in driving customer-focused growth through accelerated innovation based on advanced EFX.AI, leveraging our proprietary data assets. As a reminder, we added over 40 EFX.AI-based patents in 2025 and 10 more AI-based patents in the first quarter for a total of 400 pending or granted AI-based patents as we continue to invest in differentiated, explainable AI capabilities at Equifax. In the middle of the first quarter, we saw strength in diversified markets, U.S. credit and mortgage activity, as overall economic activity remained robust, inflation expectations moderated, and interest rates declined. In March, the Iran conflict drove market uncertainty and higher interest rates, and we saw weaker overall U.S. transactional activity from higher interest rates impacting mortgage and, to a lesser degree, auto and banking. Broadly, the U.S. consumer is resilient, even in these uncertain times. We've seen mortgage activity decline in the last six weeks from elevated levels in February from the higher interest rates, and we expect these lower levels of inquiries to continue until the Iran conflict is resolved and interest rates moderate. current mortgage run rates are slightly below the levels reflected in the 2026 framework we shared in February. Despite our very strong first quarter results and given the significant uncertainty related to the current Iran conflict, we felt it was prudent to maintain our 2026 guidance we put in place in February until there's more clarity on the direction of the economy and importantly inflation and interest rates. Absent the uncertainty in economic conditions related to the Iran conflict, we would have raised our full year guidance based on our strong first quarter results. We are maintaining our 2026 guidance for mortgage revenue growth of over 20% consistent with the framework we provided in February as a stronger than expected first quarter mortgage revenue growth is offset by our expectation of current trends of slightly slower growth over the remainder of the year versus our February guide. For the full year, we continue to expect our diversified markets revenue to be up high single digits consistent with the guidance we provide in February. We expect strong execution from EFX.AI driven new products and customer share gains to allow us to deliver at the levels consistent with our February framework. We also expect to deliver strong full year margin expansion excluding FICO of 75 basis points from operating leverage off strong top line growth, higher margin new products and AI driven productivity. The 75 basis points is 25 basis points above our 50 basis point long-term margin framework. Turning to slide five, workforce solutions revenue was up over 10% and better than our expectations. Verifier revenue was up a strong 14% with diversified markets revenue growth of 14%, which is a great start to the year. Within diversified markets, government had a very strong quarter building off their fourth quarter performance with revenue up mid-double digits from continued strong state-level penetration. We expect government revenue in the second quarter to be about flat sequentially against a very tough comp from the SSA contract win last year and timing of state contract activations. We continue to see strong momentum in government from OB3 and the big $5 billion TAM that they operate in. Talent Solutions' revenue is up almost 10% in the quarter. This is the second consecutive quarter of high single-digit revenue growth in a challenging white collar hiring market. In February, we discussed weaker hiring volumes in January that had begun to improve later in the quarter. Despite the overall weaker hiring macro in the first quarter, talent solutions continue to outperform their underlying markets driven by client penetration, higher hit rates from record additions, pricing, and product penetration, including data incarceration and education solutions. The team is doing a great job delivering new solutions to the market, enabling employers to make the right hires with speed and confidence. EWS mortgage revenue was up a strong 14% in the quarter from better than expected volumes, new products including twin income qualify for mortgage, record growth, and pricing. Consumer lending continues to perform very well with revenue up strong mid-double digits from double-digit revenue growth in P-loans and auto. This is the seventh consecutive quarter of double-digit revenue growth in these verticals. Consumer lending is increasingly becoming a larger portion of verifier revenue. Workforce solutions EBITDA margins of 52.3% were very strong and up 200 basis points versus last year from operating leverage from higher revenue growth and AI-driven productivity, while continuing to invest in new products, government, and record additions. Twin record additions continue to be very strong again in the first quarter with 211 million active records up 11% and 120 million total current records up 9%, which represents 105 million unique SSNs. The record growth drives higher hit rates and revenue growth and outperformance against underlying markets across our EWS verifier verticals. In addition to payroll provider partnerships, EWS continues to expand relationships outside of the traditional payroll processing space, including HR software companies, to obtain additional sources of income and employment data. We have a long runway for record growth against 250 million income-producing Americans. Turning to slide six, we remain energized about the mid- and long-term growth opportunities for EWS government at both the federal and the state level in meeting new federal requirements regarding accuracy of income validation in Medicaid and SNAP, as well as work, education, and community engagement requirements in Medicaid benefits. We are seeing strong interest with our pipelines for new and existing expanded government services up over 2X versus last year. As is typical in government, we are seeing some timing issues in new deal closures and activations as states manage technology implementations and challenging budget frameworks. We continue to expect to see the benefit of the new OB3 opportunities later in 26 and in 27 and beyond. As state agencies implement required validations of expanded work requirements and increase redeterminations for certain Medicaid populations and take actions to reduce SNAP error rates, Equifax is serving as a key advisor leveraging our differentiated income and employment data to drive speed, accuracy, and productivity. Our new products, such as continuous evaluation for SNAP, built using EFX.AI that we launched in the first quarter, have already delivered strong results for a few states by identifying errors within their beneficiary population. We also see expanding opportunities with multiple federal agencies in support of their focus on reducing improper payments. Given our strong value proposition from TWIN on speed of social service delivery, caseworker productivity, and accuracy of income verifications, We are 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. EWS has significant opportunities for long-term revenue growth supporting government programs and their big $5 billion TAM. Turning to slide seven, before discussing USIS results, I'd like to welcome David Smith, our new USIS president, to the team. David's broad consumer finance experience, proven executive leadership, customer focus, innovation capabilities, and regulatory depth will be a big asset for USIS as they drive innovation and revenue growth for their customers. It's great to have David on the Equifax team. In the first quarter, USIS revenue was up a very strong 21% and 8% excluding FICO driven by significant mortgage outperformance. The 8% growth is strong and at the high end of our 6% to 8% long-term framework for USIS. USIS mortgage revenue was up 60% and up a strong 24% excluding FICO and better than our expectations. USIS saw meaningful share gains in mortgage pre-approval soft pull products with our new twin indicator contributing to mortgage revenue outperformance in the quarter. And as mentioned previously, USIS saw increased mortgage activity in the middle of the quarter before rate increases from the Iran conflict reduced activity over the past six weeks. USIS diversified markets revenue grew 3% in the quarter and were slightly below our expectations, with B2B up 2% and B2C up a strong 9%. While B2B delivered low single-digit growth rates, core online auto and FI transaction revenue delivered solid mid-single-digit growth. Offline batch was about flat, principally related to a tough comp due to the strength in offline batch jobs last year. We did not see changes in customer marketing or risk management behavior in the quarter. We expect USIS diversified markets revenue growth to be up mid single digits in the second quarter. USIS EBITDA margins were 30.3% in the quarter, excluding FICO, USIS EBITDA margins were 37.9% and down slightly compared to last year. Absent some one-time costs incurred in the quarter, margins would have grown at levels consistent with our expectations. We continue to expect USIS EBITDA margins ex FICO to be almost 40% in the year, up over 75 basis points versus 2025. Turning to slide eight, as a reminder, we make no margin on the sale of FICO scores. FICO mortgage scores revenue is about 50% of the USIS mortgage revenue and 6% of total Equifax revenue, delivering zero margin. To be conservative, our 2026 framework continues to assume Equifax will calculate and sell only FICO scores this year, and there will be no vintage conversion in 2026. However, we are seeing strong momentum for mortgage originators on using Vantage. We expect conversions to VantageScore to accelerate once FHFA activates VantageScore, and indications are that we're getting closer to FHFA formally activating VantageScore for agency mortgage originations. A few weeks ago, we lowered our Vantage mortgage pricing from $4.50 to $1 to further incent conversion by the industry. We believe this pricing change will further accelerate mortgage originator conversions to Vantage, given the substantial $1 billion of annual savings opportunity for originators and consumers by using Vantage. The FHFA's decision last July to allow mortgage score choice between Vantage and FICO is a win for consumers and for the industry. We currently have over 240 mortgage originators ingesting our free Vantage score with a paid FICO score offering. and we have over 50 principally non-GSE mortgage lenders using Vantage for their mortgage originations. For perspective and to provide data for your analysis, we have included a chart in the appendix of our earnings deck that provides details on the annual $35 million margin upside from full conversion advantage score at current mortgage run rates. As we move through 2026 and there is more clarity on Vantage conversion timing, or the FICO direct license program, we will update our guidance to reflect this shift and the opportunity for mortgage industry, consumers, and Equifax. Turning to slide nine, international revenue is up 4% in constant currency and consistent with our expectations of mid single-digit growth. International saw strong high single-digit revenue growth in Canada and ANZ, and Latam and the UK and Spain CRA businesses delivering mid-single-digit revenue growth in the quarter. International EBITDA margins were 25% in the quarter, up a very strong 80 basis points versus last year. Turning to slide 10, as we discussed in February, there's a strong AI moat around Equifax's unique and proprietary data. 90% of Equifax revenue is generated from proprietary data sources, including our income and employment exchanges in the U.S., U.K., Canada, Australia, our U.S. and international consumer and commercial credit exchanges, and our alternative data sets, including our NCTUE telco and utility exchange in the U.S., This proprietary data is contributed to Equifax and its use is managed by Equifax and is subject to significant regulatory and privacy controls. To be clear, the data is not available on the web and only Equifax can access this data. Equifax's scale and proprietary data along with our cloud native global technology platforms that include implementation of leading AI and ML capabilities is at the center of our momentum on new product innovation that has delivered accelerating NPIs and driven our NPI vitality index to almost 14% over the past three years. The application of advanced EFX.ai based and traditional IT based analytical techniques allows us and our customers to rapidly develop new solutions that are built off our only Equifax proprietary data. Turning to slide 11, Our cloud-native technology and EFX.AI capabilities have accelerated our innovation cycle over the past five years since we moved to the cloud. Last year, over 90% of our products were built on our new global cloud-based platforms. With more efficient cloud-native technology leveraging global platforms and EFX.AI, we have quadrupled the number of products in our innovation funnel and reduced product development life cycles by half resulting in a record level of new products launched in 2025, which was up 2x over historic levels. 100% of our new models and scores in 2025 were built using EFX.ai. We're building more complex products generating higher performance for our customers with about 50% of our new products now powered by multiple EFX data assets. And last, we're seeing higher performing products with year three NPI revenue up about 70% in 25 over historical levels. We are just getting started leveraging the power of our proprietary data, the new Equifax cloud and efx.ai to deliver higher performing products, models and scores to help our customers grow and deliver higher growth and free cash flow to Equifax. Recently, we launched Ignite AI Advisor for Auto, an AI platform that provides lenders with instant plain English analytics, benchmarking, and automated insights alongside conversational agents for deeper exploration by our customers. We expect to launch similar solutions in cards and personal loan portfolios this year while integrating advanced synthetic and credit abuse fraud detections. As EFX.AI advances, we'll leverage our new global cloud infrastructure combined with our energetic AI and Google Vertex AI capabilities and proprietary data to deliver higher performing analytical solutions at an accelerating pace, positioning these advanced analytical solutions for more customers. Equifax is on offense with AI. Turning to slide 12. As I previously mentioned, USIS is gaining traction with their twin indicator solutions in mortgage that supported our strong mortgage revenue growth in the quarter. In April, we were energized to launch the work number record indicator or twin indicator for auto lenders and personal loan originators, which are additive to our suite of twin indicator solutions for mortgage, auto dealers, and card. These solutions deliver income and employment insights from the work number alongside the Equifax consumer credit report at the pre-qual or marketing stage of the auto or personal loan application process. The twin indicator returns a response indicating whether a verification of income or employment is available for an applicant from the EWS work number. This immediate visibility gives lenders the ability to instantly segment their workflows Fast-tracking appropriate borrowers through an automated paperless path while proactively identifying those who may require manual documentation. By reducing guesswork from the start of the application process, lenders can offer appropriate loans while borrowers can benefit from a faster approval process. We expect continued share gains from our twin indicator suite as we move through 2026. And as a reminder, Equifax is delivering twin income and employment attributes at no cost to our customers to drive credit file share gains in twin VOI and VOE growth in the future. Now I'd like to turn it over to John to provide our second quarter and full year framework.