Equifax Inc (EFX) Q3 2026 Earnings Call Transcript

Greetings, and welcome to the Equifax Q3 2026 Earnings Conference Call. At this time, all participants are in a 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 you to please ask one question and one follow-up and return to the queue. As a reminder, this conference is being recorded. If anyone should require operator assistance, please press star zero on your telephone keypad. 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 Begler, Chief Executive Officer, and John Gamble, Chief Financial Officer. Today's call is being recorded, and the 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 be making reference to certain materials that can be found in the Presentations section of the News and Events tab at our IR website. These materials are labeled 3Q2026 earnings conference call. So we'll be making certain forward-looking statements, including fourth quarter and full year 2026 guidance to help you understand Equifax and its business environment. These statements involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from our expectations. Certain risk factors that may impact our business are set forth in our filings with the SEC, including our 2025 Form 10-K and subsequent filings. During this call, we'll be referring to certain non-GAAP financial measures, including adjusted EPS, adjusted EBITDA, adjusted EBITDA margins and cash conversion, which are adjusted for certain items that affect the comparability of our underlying operational performance. All references to EPS, EBITDA, 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 Investor Relations website. Now I'd like to turn it over to Mark.

Thanks, Trevor. Coming to Slave 4, Equifax delivered solid results in the third quarter in a challenging mortgage market driven by strong diversified markets revenue growth of over 8% that exceeded our mid-single-digit guidance with strong broad-based performance across all three business units. This included improved performance in AWS government, which grew mid-single digits in Eventime margins were up a very strong 130 basis points, excluding FICO versus last year, from operating leverage, AI productivity, and good cost management, even with the $20 million of mortgage market headwind in September. EPS grew 11% and at $2.26 per share was above the high end of our guidance, even with the negative mortgage market impact. A very strong broad-based quarter for Equifax against a challenging mortgage market. This strong performance was delivered despite the significant weakening in the U.S. mortgage market as 30-year fixed mortgage rates increased about 75 basis points since July, which negatively impacted overall mortgage market transaction volumes and Equifax revenue versus our expectation by about $20 million in the quarter or over 100 basis points versus our July framework. Equifax revenue of $1.693 billion was up 10% on a reported basis and 9% in constant currency and was slightly below the midpoint of our July guidance due to the negative $20 million of mortgage market impact. Next take on mortgage, revenue growth of 7% was at the midpoint of our July guidance. Excluding the negative impact of the $20 million of U.S. mortgage market decline in September relative to our July guidance, total Equifax revenue would have been above the top end of our guidance range for the quarter. U.S. mortgage revenue was up 15% in the quarter and up 1% ex-FICO, both below our expectations from the higher-rate environment in September. John will provide context on the impact of the significant weakening in the U.S. mortgage market on the fourth quarter and in 2027. Equifix returned $158 million of cash to shareholders in the quarter and about $850 million year-to-date. Share repurchases moderated in the quarter at $92 million, with the Circulo deal expected to close in the fourth quarter, bringing year-to-date repurchases to about $650 million on 3.6 million shares, or 3% of shares outstanding. Since launching our $3 billion share repurchase program in April of 2025, we've used our excess-free cash flow to repurchase $1.6 billion of Equifax stock. We continue to expect strong free cash flow of over $1 billion in 2026 and cash conversion over 100%. With our financial capacity of over $1.5 billion, we can execute the circulated credito acquisition in the fourth quarter and continue to repurchase shares while maintaining a strong balance sheet. Turning to slide five, Workforce Solutions delivered solid results in the third quarter with total diversified markets revenue up 9% and total verified diversified markets revenue up a strong 13%. Mortgage revenue is about flat in the quarter versus last year, reflecting a significant weakening in the U.S. mortgage market. EWS mortgage revenue outperformance was high single digits and consistent with the first half from record growth, new products like Mortgage Qualify, and pricing. Internal Workforce Solutions revenue was up 7% in the quarter as the strong diversified market's revenue performance was partially offset by the weakness in the overall U.S. mortgage market. Third quarter government revenue was up mid-single digits. I'll discuss government in more detail shortly, but we are very pleased with the trajectory of our government revenue growth given the new state wins and our strong deal pipelines in their big $5 billion TAM. Talent Solutions revenue grew a very strong over 20% in the quarter and continues to outperform a soft, white-collar hiring market with growth in new products, increased product penetration across our incarceration and education data assets, and pricing. The talent team continues to execute very well in their big $5 billion TAM. Consumer lending also had another very strong quarter with high double-digit revenue growth led by cloud and consumer finance, principally due to penetration and record growth. This is increasingly an important growth vertical for Workforce Solutions as they roll out new solutions in the auto, card, and P-loan verticals. Employer services revenue was down 5% in the quarter and, as expected, due to the suspension of the Work Opportunity Tax Credit, or WOTC, program. Workforce Solutions EBITDA margins of 51.4% were in line with our expectations, despite the revenue impact from the weaker mortgage market. Twin record additions continue to perform well again in the third quarter with 223 million total active records of 12% and 125 million total current active records up 11%, which represent 110 million unique individuals or SSNs. We expect strong record growth as we exit to 2026 and in 2027 from W-2-based records as well as alternative record sources like Pension, Gig, and 1099 with significant potential for record additions with 250 million income-producing Americans against our 110 million unique SSNs in the twin data set at the end of the quarter. Turning to slide six, in 2026, we've made excellent progress with government customers, converting our large commercial pipeline with renewals, extending existing relationships, and adding new principally state government customers. As a reminder, we operate in a $5 billion TAM at the federal, state, and local level of principally manual income verifications for delivery of social services. Year-to-date, the EWS government team has signed agreements with state agencies for provisioning of income and employment data supporting principally SNAP and CMS, totaling over $550 million in annual contract value, including about $150 million in new business and $400 million in renewals, an extremely strong result that will principally benefit our Workforce Solutions government vertical in 2027. Our discussions with state agencies continue to be robust and productive given the strong value proposition from TWIN on speed of social service delivery, caseworker productivity, and accuracy of income verifications, which drives a reduction in improper payments and helps states get benefits to those who need them more quickly. Further, we've seen strong engagement from states converting to subscription-based contracts that provide more certainty of spending levels, as well as adding new solutions for more solutions. For example, Continuous Evaluation for SNAP is a new EWS solution that identifies changes in recipient incomes above program levels to reduce SNAP error rates. Our new CE solution has been added to several recent state contracts. We're having active discussions with states to support verification of hours worked for new OB-3 Medicaid work requirement obligations beginning in January 2027, and our EWS Complete Income Solution supports states' ability to validate income through a single integrated solution that includes the work number and other sources of income such as gig work, self-employed wages, and non-earned income through applicant permission services. We also have several large new federal opportunities in our deal pipeline. Our strong wins and renewals this year, along with continued strong deal pipelines, reinforces our confidence in the medium and long-term growth opportunities for EWS government, supporting states in meeting requirements regarding accuracy and frequency of income validation in Medicaid, SNAP, and other social services. The EWS government team is clearly on offense supporting federal, state, and local customers with their social service program requirements and has significant opportunities for long-term revenue growth supporting government programs in their big $5 billion TAMP. Turning to slide seven, USIS also delivered a solid quarter with diversified markets revenue growth of 6%, consistent with the solid performance in the second quarter and within their long-term framework. B2B revenue was up 5% with high single-digit online growth in FI from stronger volumes, new business, and pricing, and mid-single-digit online growth in auto from pricing and new business wins. We also saw improved growth in commercial and insurance. Within financial marketing services, our offline batch business, revenue was up over 10% led by very strong broad-based growth across marketing, identity and fraud, and account reviews, principally from new business. Our consumer direct business continued to deliver strong growth of 9% in the quarter from good subscriber growth in our direct channel and new business wins in our partner channel. USIS mortgage revenue was up 28% and up low single digits ex-FICO against the slowing mortgage market late in the quarter. Relative to the underlying mortgage market, RevenueX FICO outperformed the underlying mortgage market by high single-digit percentage driven by share gains in pre-qualification and pre-approval products and pricing. USIS EBITDA margins were 35.4% in the quarter. Excluding FICO royalties, U.S. IS EBITDA margin was 42.4%, up over 320 basis points versus last year, and an outstanding performance. The improvement was driven by improved diversified markets revenue growth, strong cost management, and AI-driven productivity. During slide eight, in September, the FHFA accelerated the use advantage score for conforming mortgages to all U.S. mortgage lenders. With score choice now available to all U.S. mortgage lenders, we're seeing a rapid adoption of Vantage 4 with about 2,000 mortgage lenders using Vantage score in their underwriting processes, up 7x since April. And since April, our mortgage Vantage score volume is up over 230%. Through September, the bulk of mortgage lenders continue to purchase both the FICO mortgage score and obtain a free VantageScore from Equifax, and therefore our mortgage VantageScore revenue continues to be small. However, we now have over 200 mortgage lenders exclusively using VantageScore and expect more lenders to move to the paid VantageScore model as we move through the fourth quarter and into 2027 to take advantage of the higher approval rates and the $1 cost of VantageScore from Equifax. As VantageScore mortgage revenue increases, we will share the positive financial impact on Equifax margins and adjust our revenue and mortgage margin guidance accordingly. The strong adoption of VantageScore is driven by the substantial $1 billion annual savings opportunity for mortgage originators and consumers, as well as VantageScore's ability to score more consumers supporting home ownership. Equifax plans to maintain the $1 vantage score price through the end of 2028 to continue driving the adoption of the lower-priced and higher-performing vantage score. To further provide lenders and brokers with greater flexibility and cost efficiency, two weeks ago, Equifax announced our new Mortgage Score Select product. This new offering enables the mortgage industry to pull an Equifax mortgage credit file without a credit score or pull the mortgage credit file with the credit score they select for their mortgage banking needs, whether that score is Vantage Score 4, Classic FICO, or FICO Score 10T when it is approved. If the lender or broker wants a second look at the mortgage credit file after the initial pull, they are now able to pull the Equifax mortgage credit file again within 24 hours for just $1, along with the cost of their selected mortgage credit score or without a mortgage credit score as a part of that offering. With the mortgage score select, we're helping lenders and brokers achieve two key objectives. First, cost-effectively gaining access to more data to support the lending process, and second, qualifying more borrowers based on these expanded data sets. Turning to slide nine, there have been discussions from the FHFA about eliminating the tri-merge credit report requirement and moving to a two-bureau mortgage credit report. We and the vast majority of industry participants strongly believe the tri-merge credit report is essential to expanding consumer access to credit, lowers mortgage rates for consumers, ensures the safety and soundness of mortgage underwriting. We believe TriMerge is the right solution for consumers, the mortgage industry, and government agencies. We thought it would be helpful to provide more detail on our USIS mortgage revenue and to size the potential impact of a BuyMerge change on Equifax if it were to occur. We expect the impact of GSE-related originations moving to BuyMerge would be manageable for Equifax with roughly $80 million of potential annual revenue impact based on 2026 revenue, which includes the FICO score being delivered with each credit file. We have multiple levers to help manage a potential $80 million revenue and $38 million margin impact given Equifax's unique solutions and assets, including only about 40% of current originations are GSE-related and would be subject to a potential change by the FHFA to buy merge. We expect FHA and VA, which we estimate participate in about 25% of originations, would retain the tri-merge requirement based on their consistent statements supporting the value of tri-merge. Mortgage lenders would have the option to pull a three or two bureau file in the mortgage underrating process, and we expect many would continue with 3B to gain the approval rate lifts from the additional data. And of course, any implementation would take a long time, and Equifax will be advantaged with our unique solutions, including the Twin Indicator or Income Qualify and our NCTUE telco utility data that we deliver today with the Equifax mortgage credit file at no charge that our competitors cannot match. And, of course, our tri-merge go-to-market business will advantage Equifax in this environment. And last, full conversion to vantage scores in mortgage delivers about $35 million of incremental margin to Equifax. And once rates moderate, there's a big $1 billion revenue and $700 million margin upside and a full mortgage market recovery. The bar chart provides an approximate breakdown of expected 2026 USIS mortgage revenue, and as indicated, about 45% of that revenue is FICL royalty pass-through with no margin, and about 10% is pass-through revenue from the resale of TransUnion Experian-Trended credit files to our TriMerge business, which is also no margin. This means about 55% of our USIS mortgage revenue is at zero margin. About 30% of revenue is from the sale of Equifax Trended Credit Files sold principally to resellers that create the TriMerge Report, but also directly through the Equifax TriMerge Report business, which we refer to as HardPoll. The Trended Credit Files sold for this purpose have rich data on the consumer and are used for the mortgage approval process. The remaining about 15% of revenue is principally from the sale of EFX credit files for pre-call or pre-approval products used early in the application by mortgage originators. These principally one-bureau products assist in early evaluation of applications and are defined as soft-pull products. Equifax generates very high variable margins from the sales of credit files in these hard and soft-pull products. Here we go to slide 10. International revenue was up about 7% in constant currency, with a strong 12% Asia-Pacific revenue growth, including Australia, up 11%, and 8% Latin American revenue growth. Canada and Europe both delivered 4% revenue growth, with market headwinds in both the Canadian and the UK market impacting overall growth rates. In Latin America, we saw a double-digit revenue growth in Peru and Central America with high single-digit growth in Brazil. An international EBITDA margin was 30.9% in the quarter. Turning to slide 11, in July, we signed a definitive agreement to acquire Circulator Credito, the fastest-growing credit bureau in Mexico, for an enterprise value of $750 million. This acquisition will expand Equifax into the fast-growing Mexico market, the second-largest economy in Latin America, and offer Circular to Credito customers access to industry-leading Equifax cloud-native capabilities, decision and analytics capabilities, patented EFX.AI technology, and award-winning identity protection and fraud prevention offerings for the development of solutions designed to help customers grow and expand financial inclusion in Mexico. For the last 12 months, including September, Circulo's revenue is up a very strong 24% and delivering 47% EBITDA margins. We expect Circulo to be accretive to Equifax-adjusted EPS in the first full year of ownership. And since 2020, Equifax has invested our strong excess-free cash flow and strategic brought-down acquisitions to drive our financial results and shareholder returns. Including Circular Accredito, we've invested nearly $5 billion in 17 bolt-on acquisitions since 2020, with a proven track record of integrating these acquired businesses, like our acquisition of Boa Vista in Brazil three years ago. We are energized to be entering the fast-growing Mexico market with our Circulo acquisition that we expect to close in the fourth quarter of this year. Turning to 2012, Equifax is executing a broad AI and energetic strategy that leverages It leverages efx.ai, along with our cloud-native technology, our Ignite analytics platform, and our unique proprietary data to deliver higher-performing efx.ai-powered scores, models, and products to our customers. In a third quarter, we delivered a record over 17% new product vitality index, leveraging the Equifax Cloud and efx.ai capabilities, which is above both our 15% 2026 Vitality Guide and our 10% long-term framework goal for Vitality Index. Year-to-date, over 80% of our new products are leveraging efx.ai capabilities that drove our record 17% Vitality Index. We're seeing double-digit performance lists from these efx.ai AI-enabled new analytical products, which is driving strong market adoption. This includes the rollout of Ignite AI Advisor and Equifax IQ on our integrated Ignite Analytics and Interconnect decisioning global platforms. We are leveraging Equifax IQ capabilities across multiple credit risk fraud and collection solutions in several countries, consistently seeing very significant improvements in customer outcomes for these use cases. In Brazil, Equifax IQ is powering collection solutions from multiple large banks, driving an improvement in their collections recovery. Similarly, Equifax IQ is powering credit risk solutions in Latin America, driving risk reduction. We are continuing to build out the platform capabilities to scale Equifax IQ capabilities and expect Equifax IQ will be commercially available in the U.S. early next year. We are also seeing strong adoption of new products based on differentiated proprietary Equifax data, including our twin indicator solution for mortgage and continuous evaluation and public safety solutions in EWS government, which are helping support the EWS sequential government revenue growth in the quarter. Turning to slide 13, we continue to see strong execution by the operations and technology teams across Equifax towards our $150 million AI for EFX productivity goal, which is delivering margin improvements across the business. In July, we reviewed with you the expanded deployment of AI tools and agents across internal Equifax product and model development, operations, technology, and our G&A functions, which is driving cost efficiencies across the entire business. Given our strong ex-FICO third-quarter EBITDA margin performance of up 130 basis points from operating leverage, cost management, and AI productivity, we are raising our full-year EBITDA margin guidance from up 75 basis points to up 100 basis points, or double our long-term framework of 50 basis points, despite the negative about $80 million impact on revenue from the weaker U.S. mortgage market versus our July guidance. We are energized by the rapid deployment of AI tools across Equifax that's driving productivity, and we believe we are still in the early innings at the potential for AI-driven productivity across Equifax. And now I'd like to turn it over to John to provide our fourth quarter and full-year framework.

Thanks, Mark. Before we discuss 4Q and calendar year 26 guidance, I'd like to spend a minute discussing the current weakness in the U.S. mortgage market and the impact it's had on 3Q26 results as well as 4Q26 guidance. Mortgage market transaction volume began to decline later in August as interest rates started rising, with the decline accelerating as we move through September, with 30-year mortgage rates reaching about 7.5% compared to 6.6% when we provided guidance in July. This mortgage market decline, the bulk of which occurred in the second half of the quarter, drove about $20 million decline versus expectations in U.S. mortgage revenue in the quarter. Our fourth quarter expectations for U.S. mortgage transactions reflect current run rates and a continuation of the current weak mortgage market conditions. On this basis, 4Q26 mortgage revenue is down about $60 million versus our July guidance. For the full year 2026, total U.S. mortgage revenue is now expected to be about $80 million below our previous guidance, with growth rates down over 500 basis points versus July. Excluding FICO mortgage royalty pass-through revenue, Equifax mortgage revenue will be up slightly versus 2025. This reflects U.S. mortgage market originations of down an estimated 6.5 to 7.5 percent. As we look forward to 2027, using current mortgage market transaction levels across USIS and EWS, and applying normal seasonal factors, 2027 mortgage market transactions, which we believe would be consistent with U.S. originations, would be down on average high single-digit percentage in 2027 versus 2026, principally over the first eight months of the year. Looking at overall U.S. market conditions, while the U.S. mortgage market has weakened meaningfully since our guidance in July, overall U.S. market conditions impacting the remainder of our businesses remain relatively consistent with the environment we saw in July. Low unemployment continues to support overall consumer financial health. As we have referenced previously, continued higher levels of inflation has disproportionately pressured the lower income and subprime consumer demographic, but the majority of consumers continue to be resilient, which is good for Equifax and our customers. We have also not seen financial institutions increase their portfolio management reviews or decrease consumer credit lines, which are actions they typically take when they anticipate an economic downturn. As we have seen some slowing in FI and auto volumes late in 3Q and as we begin 4Q, as well as some slowing in overall hiring activity, we continue to watch this closely, particularly in segments impacted by higher interest rates. Slide 14 provides the specifics of our 2026 full-year guidance. As Mark referenced earlier, the Equifax team is executing extremely well. For 2026, we expect to deliver our committed diversified markets revenue growth of high single-digit percent year-to-year. U.S. mortgage revenue, reflecting the current market conditions we discussed, is expected to be about $80 million below our July guidance, with mortgage revenue ex-FICO royalty pass-through slightly above flat year-to-year. As a result, Equifax revenue for 2026 at the midpoint is now expected to be $6.661 billion. The Equifax team continues to execute extremely well in delivering improved efficiency through our AI and broader automation and cost management programs. We are increasing our EBITDA margin ex-FICO mortgage royalty guidance to an increase of 100 basis points in 2026 versus 2025, up from the 75 basis points we guided in July. As a result, we expect to deliver at the midpoint of our guidance EBITDA of $2.125 billion and adjusted EPS of $8.50 per share. Within the guidance range we provided in July, but down slightly from the midpoint, as our team offset the significant majority of the gross margin impact of the over $80 million of lower mortgage revenue versus our July Guide. As Mark covered earlier, we believe we are in the early innings of opportunities from our AI and agentic implementation, both in driving NPI and in AI-driven cost productivity. The acceleration of these benefits is a key focus of our 2027 plans. Slide 14 also provides guidance for BU revenue and EBITDA margins, which reflect both the significant weakening of the U.S. mortgage market, as well as Equifax strengthening EBITDA margin performance. In EWS, we now expect revenue growth of up mid-single-digit percent. This is below our July guidance of high single-digit percent growth solely related to the decline in mortgage revenue. We continue to expect EWS diversified markets revenue to grow high single digits and Verifier diversified to grow low double digits consistent with our July guidance. Consistent with our July guidance, we continue to expect adjusted EBITDA margins to be about flat year to year. In USIS, we continue to expect revenue to grow mid-teens percentage, but at the very bottom end of the range given lower mortgage revenue. We made no changes to our mid-single-digit diversified market's revenue growth expectation. And EBITDA margins ex-FICO mortgage royalties are over 40% and up strongly, reflecting good cost management and continued good progress in AI and other automation and cost structure management programs. International guidance is essentially unchanged from July. In 2026, we expect to deliver over $1 billion of free cash flow and a cash flow conversion of at least 100%. With EBITDA of about $2.1 billion at the midpoint and strong free cash flow, this creates $1.5 billion in capital available in 2026 for M&A and return of cash to shareholders while maintaining debt leverage at about three times EBITDA. As referenced earlier, this provides the capability for us to complete the circular acquisition as planned in 4Q26 while still executing share repurchases in 4Q26. Slide 15 provides the details of our 4Q26 guidance. In 4Q26, we expect total Equifax revenue to be between $1.605 and $1.635 billion, up about 4.5% on a reported basis year-to-year at the midpoint. Excluding the impact of FICO mortgage scores, 4Q26 reported revenue is expected to be up about 3% at the midpoint. Diversified markets revenue is expected to be up six to seven percent on a reported basis. U.S. mortgage revenue, per my previous comments, is expected to be about 60 million weaker than our expectations when we gave guidance in July, reflecting substantial decline in the U.S. mortgage market. U.S. mortgage revenue is expected to be down mid-single digits percent year to year. U.S. mortgage revenue, excluding FICO mortgage royalty-related revenue, is expected to be down mid-double-digit percent year to year. EBITDA margins ex-FICO mortgage royalties are expected to expand about 90 basis points year to year at the midpoint, again reflecting strong execution on our AI and automation programs and broader cost management initiatives. Equifax 4Q26 EBITDA dollars are expected to be $529 to $546 million, up almost 6% at the midpoint. EPS and 4q 26 is expected to be 207 to 217 per share up about 1.7 percent versus 4q 25 at the midpoint 4q 26 EPS growth is lower than EBITDA dollar growth given increased appreciation expense related to transformation assets going into service and a slightly higher tax rate we believe that our full year and 4q 26 guidance are centered at the midpoint of both our revenue and EPS guidance ranges. As a reminder, our guidance for 4Q26 and fiscal year 26 assumes Equifax will calculate and sell FICO scores for all mortgage credit transactions, and there will be limited vantage score revenue. Now I'd like to turn it back over to Mark.

Thanks, Sean. Wrapping up on slide 16, the Equifax team executed very well in the third quarter against our EFX 2028 strategic priorities despite the weaker mortgage market. The North Equifax is leveraging EFX Cloud, EFX.AI, and proprietary data assets to accelerate innovation and help our customers grow. Our broad-based third quarter diversified market revenue growth of 8% and 130 basis points of EBITDA margin expansion from operating leverage and AI for EFX productivity savings are strong indicators of the broad-based Equifax operating model. We delivered above our EBITDA dollar and EPX guidance ranges despite the impact of the negative $20 million from the decline in the U.S. mortgage market in the third quarter. Our updated 100 basis point ex-FICO margin expansion guide for the year driven by strong cost management and AI productivity is up 25 basis points from our 75 basis point framework and twice our long-term goal of 50 basis points from strong cost management and AI driven productivity despite the negative $80 million impact from the weaker mortgage market in the balance of 2026. As cloud, EFX is deploying AI to power higher performing and differentiated solutions for our customers, and AI for EFX is a new gear for margin expansion and free cash flow acceleration as we deploy AI inside of Equifax for cost productivity. Our big cloud investment is the foundation for enabling rapid deployment of AI, and we are still in the early innings of our rollout. Our diversified markets momentum, driven by our strong AI-enabled NPI rollouts and continued execution of AI for EFX productivity, gives us strong confidence and momentum as we finish the year and look forward to 2027. In the first quarter, we expect to deliver approaching 100 basis points of margin expansion from continued strong diversified markets revenue growth and AI for EFX productivity. Our focus continues to be delivering financial results consistent with our long-term framework with organic revenue growth of 7% to 10% and at least 50 basis points of margin expansion from broad-based AI-powered BU revenue growth of low double digits in EWS, 6% to 8% in USIS, and 7% to 9% in international. The EFX Cloud and EFX.AI give us continued confidence to innovate with our customers to exceed the 10% Vitality Index goal with new solutions like Twin Indicator and our suite of AI-enabled solutions like AI Ignite Advisor and Equifax IQ. And our operating leverage, strong post-cloud AI cost management, and AI-driven productivity are powering our margins and free cash flow. Given our strong free cash flow generation, with cash conversion over 100% in 2026, we're also delivering on our commitment to return substantial free cash flow to shareholders. So far in 2026, we've returned $850 million to shareholders, and in the fourth quarter, we can complete the circular acquisition and continue healthy share repurchases while maintaining our strong balance sheet. And as a reminder, while hard to see today with the Middle East conflict-driving inflation and interest rates, these macro factors will resolve in the future and bring rates down and mortgage activity back up. Even at lower levels of mortgage activity, the pipeline of higher-rate mortgages grows every week for future refis when rates contract, with over 17 million mortgages now over 6%. With AI powering Equifax on the top and bottom line, we are clear that in a mortgage market recovery that the incremental revenue margin and free cash flow from mortgage upside will flow to our investors. Equifax is poised to deliver upwards of $1 billion of incremental mortgage market revenue and $700 million of incremental margin expansion that will drop to our EPS and free cash flow when rates contract. We are investing at the right levels for Equifax growth today, and AI-driven productivity is improving our operating leverage. The incremental $700 million of free cash flow for mortgage market recovery will be delivered to investors from accelerated dividend growth and share repurchases and drive incremental shareholder returns. i'm energized about our execution and performance in the quarter and how ai is powering our top and bottom line but i'm even more energized about the future of the new equifax and with that operator let me open it up for questions

certainly we'll now be conducting a question and answer session if you'd like to be placed into question q please press star one on your telephone keypad A confirmation tone will indicate your line is in the question queue.

You may press star 2 if you'd like to remove your question from the queue. We ask you to please ask one question and one follow-up, then return to the queue, and once again, that star 1s be placed into question queue. Our first question today is coming from Jeff Mueller from Baird. Your line is now live.

Yeah, thank you. Good morning. Hey, really good job here on Margins. I hear you at your early innings on AI productivity. um can you just maybe help us think through any puts and takes for 2027 mortgage volumes are obviously one i don't know if there's any other like grow over considerations if there's like one-time adjustments this year to incentive comp accruals because of what's going on in mortgage or anything like that um but uh it seems like there's good momentum on the ai productivity side that should continue to build so just trying to think through margins holistically please.

Yeah, thanks, Jeff. We're very pleased with the momentum that we have on our cost management and AI productivity. As you know, back in February, we set out a $75 million goal over the next couple of years, you know, for cost out, net cost out from AI productivity. We doubled that in July to $150 million to give us, you know, because of the momentum we have. And we just and really pleased with the momentum in a post-cloud world. As you know, we invested heavily in our tech. So our team and our infrastructure is highly tech-enabled with that huge investment we made over the last five years. And we're just seeing our ability to deploy AI and operations and technology and our support functions really scaling very rapidly. And I think you're pleased, so are we, that it's showing up in our margins this year, even with the headwinds of the mortgage market in September and in the fourth quarter that are quite substantial. We're still increasing our mortgage guide for the year. And we believe that gives us real momentum and confidence as we move into 2027. We're not ready to give guidance in 27, 427. We'll do that in February. But clearly, if mortgage rates stay where they are, mortgage activity will be down in 2027, as John laid out. So outside of that, you know, we don't think about anything else as being, you know, kind of meaningful on a year-over-year basis. You know, our momentum in our diversified markets is very strong. You know, we see real momentum in EWS as we kind of move through the year and into the fourth quarter, you know, on their, you know, path back to their long-term framework growth, which I think is really positive. USIS, you know, is inside of their LTFF and performing well. And in the same, you know, with international, you know, so we're pleased with that, you know, and mortgage specifically, while activity at current levels, you know, if that continues in 27, that would clearly be a meaningful negative that, you know, we'll all be able to size. We have the positive of a vantage conversion, you know, when we look to 27, and I'm sure you're thinking about that just as we are, that momentum is super strong. And, you know, when the FHFA opened up the LLPA tables a few weeks ago, what we're hearing from our mortgage customers is they're going to move to the $1 vantage to take advantage of that significant price delta versus the FICO score. So that's something that should be a positive for us in 2027, and we'll size that when we get to February.

And you specifically asked about AIP, how our bonuses work. And just so you're aware, the bulk of our bonuses are paid based on EPS, operating profit, and individual performance objectives. And as you know, our operating profit EPS performance for the year looks very similar to where we started back in February.

Very helpful. And then just with the personal AI agent roll-ups and adoption that has been happening recently, can you just comment on how you're thinking through potential impacts on your business or your customers, things like inquiry volumes and any verticals, anything on identity solutions or potentially something on like twin data or alternatives if Agentec removes friction? Thank you.

Yeah, it's still super early days on that, Jeff, from a customer perspective. Obviously, everyone's talking about it. Everyone's focused on it. We're investing heavily to be enabled to interact in that way. I would tell you there's very little activity right now, although lots of discussions with our customers. So we want to be prepared and really built for it. And because of our big tech investment and, you know, the AI enablement that we have really broadly across Equifax, you know, we think we'll be ready when it moves forward. We think about it as a net positive, you know, in the future, you know, think about 27, 28, 29 as that enables that, you know, the ability for our customers to more rapidly utilize our unique solutions, you know, that becomes advantageous to us because, as you know, there's a lot of friction around change with our customers when they want to use one of our new higher performing scores, one of our new higher performing models, or some of our products that deliver more value. So, you know, we view AI as something that's going to be accretive not only to our top line, but also our bottom line. We already talked about in your first question about, you know, kind of AI cost efficiencies and productivity inside of Equifax and how we operate in tech and operations. You know, that clearly is a big deal and part of the 150 million we've laid out as a multi-year cost out goal. And as I said, and I think John said also, it's still early innings for that, meaning we're continuing to see positive momentum as far as deployment in our ability to achieve the $150 million and look for going north of that. And on the product side, really great work by our team to AI enable a lot of our solutions. You know, you have now have, you know, our new products being rolled out that have AI capabilities in them, as you described, but also AI performance lifts because we're adding more data into the solutions, which is also a big positive for us. And, you know, as you know, we talked about our vitality index, which continues to scale, you know, 17 percent in the quarter was actually a record for Equifax. We've never been that high, and in a post-cloud Equifax environment, in all our focus on innovation, new products, leveraging our differentiated data, and AI enabling those solutions, that 17% is a great momentum for us as we move through the quarter and into 2027.

Thank you. Our next question today is coming from Tony Kaplan from Morgan Stanley. Your line is now live.

Thanks so much. On slide seven, you noted that the twin indicators driving share gains in mortgage. I was hoping you could just give some additional color on that, you know, how much of the market and prequal you think you have or however you want to quantify, you know, share in sort of that tri-merge area.

Yeah, it's a great question, Tony, and it's one that we view as a real asset for Equifax. As you know, we, you know, rolled it out, you know, a little less than a year ago. It's still, I would characterize it as early days in that deployment, but the response from customers is super positive. As you know, the NBA meeting was last week. Our team was there in full force, and that's just one of the items that we had a lot of discussions about, as well as some of our other new products that we're rolling out for the mortgage space, like Mortgage Qualify from the EWS business and the new score solution that we have from USIS. You know, on TwinIndicator, you know, it provides very unique visibility for our customers. And, you know, there's a deployment implementation timeframe that, you know, really lags some of the revenue benefit that we get that is just a reality of process change, you know, in our industry. But the momentum that we have with our customers is positive. We haven't quantified, you know, the actual share gains, but, you know, we know they're positive. You know, I think you can see it in our revenue numbers for USIS in mortgage, as well as, you know, how we characterize the, you know, the performance versus the market, you know, as being positive. And then I'd just add a couple reminders. Number one, we're also rolling out the NC Plus attributes, the cell phone utility attributes. So 54 attributes we're adding to our mortgage credit file also for free to differentiate it in the pre-qual and pre-application process. and we're getting great feedback from customers there. That's another example that that takes time for our customers to really adopt to the ability to ingest those additional attributes and that underwriting they're doing in the pre-qual marketing phase is also in the underwriting stage. But, you know, we all know that more data, you know, is valuable in a underwriting process. And, you know, our customers are focused on how do they optimize their marketing funnel, particularly in a super challenging, you know, market that we're in. So our, you know, ability to offer those unique solutions that are accretive to the core credit file at no cost, we think, is an advantage. So second reminder is that, you know, we're doing the same thing in the Twin Indicator in AutoCard and P-Loan. You know, so that's going to benefit our diversified markets business in USIS as we really do the same thing. You know, work with the auto card and consumer finance or personal loan space to really optimize their, you know, marketing funnel and originations by providing that incremental data on, you know, someone's employment status, you know, their income last year, their employer, et cetera, you know, which really aids them in positioning the right product. and also optimizing, you know, who they focus on as they're trying to bring people through the marketing funnel to make sure that they can, you know, get someone, you know, to a closed loan, which is where they make the money.

Great. And then in government, really nice momentum in the new wins and renewals. You've been calling that out the last two quarters. I guess now that we've passed the 930 fiscal year end, And, you know, how does that impact the sales process in government? Do you tend to get more new sales at the end of their fiscal year or the beginning of the next year when new budget cycles start? Like, just wanted to understand the dynamic on the sales cycle in government.

Yeah, it's a great question. Not every state's on that 930, so others are on different time frames. But, you know, you really have to separate what I would call revenue, you know, showing up in our P&L, meaning the sales become, you know, online and active and become revenue versus the sales cycle. The sales cycle is, you know, can be very long in government as it is in all of our businesses, but in government in particular. And, you know, when we talk about, you know, signing a contract, you know, which we did, you know, this quarter, we talked about it in July again from our strong second quarter on contract signings, you know, we're clear about, you know, some visibility to you, but we know kind of exactly with some real confidence of when that's going to turn into revenue. So there's a differentiation there. So when it comes to contract signings, they happen through the year. They can be lumpy, as we've said, and second quarter was particularly strong because of one large one and a couple of other meaningful ones, but it doesn't change the commercial cycle that we have. And as we've talked about on this call, We talked about it back in July and in February. The commercial momentum is extremely strong, you know, across both the federal, state and local level. There's a lot of interest, some of it OB3 related, which puts, you know, more requirements on the states, but also more broadly, the unique solutions that we deliver is remember we deliver speed of social service delivery. We deliver the productivity of the caseworker and we also deliver that integrity. So, you know, there's a very strong value prop. So I would think about, you know, you should think about, and it's how we operate, that that commercial activity is happening every day. And I think I highlighted in my comments that, you know, for example, we have, and I think we talked about it in July also, we have several, actually more than several, large federal, you know, commercial discussions going on that are quite meaningful. You know, and those, you know, take time, you know, before they crystallize into a contract signing. And then there's an element of implementation when they become revenue. But, you know, what's encouraging to us is the pipeline is robust. The conversations are robust. And, you know, our team is out there. And then, you know, I highlighted in my comments also that we're rolling out new solutions, you know, so we're bringing, you know, more solutions to our customers, you know, in the federal, in the federal state and local government to really help them, you know, better manage, you know, the delivery of social services and also the integrity around that social service delivery. So we're very energized, you know, around the progress by the team and the momentum as we, you know, we finish the third quarter, we move into fourth, and then obviously, you know, we've got a lot of momentum about the setup we have for 2027.

Thank you. Our next question today is coming from Andrew Steinerman from J.P. Morgan. Your line is now live.

Yeah, it's multifaceted. You know, as you know, Andrew, you know, records is certainly a positive. We had a very strong records quarter, and I think we highlighted in our comments that we have, you know, a strong pipeline for continued record additions. That's been a strength of Chad and the EWS team for, you know, multiple years, and it continues. And, again, a reminder, which sometimes our investors forget, you know, while we have, you know, growing records, you know, up kind of low double digits, you know, over the last number of years, there's still a super long runway. We finished the quarter, you know, with 110 million current people or SSNs in our data set. Obviously, we have more records than that because people have multiple jobs, you know, but the 110 million compares to 250 million income-producing Americans. So, you know, we have a runway to more than double the data set going forward, and obviously that's going to take time. So records is a big deal. As you know, when you think about 2027, we typically do price increases on 1-1. So those will flow into, you know, EWS and the Verifier, you know, businesses in 2027. And, you know, we have visibility from an Equifax perspective about what that is. You know, you've also got, you know, new product rollouts and, you know, new customer penetration. You know, penetration is a big deal because of the $15 billion TAM they participate in, you know, so the ability to add new customers. So we've got visibility. And I think you pointed out, and we highlighted in July, you know, the large new state contracts that, you know, we've, you know, shared with you that are going to be substantially benefiting 2027. There's some fourth quarter impact, but the vast majority of that is in 2027. You know, so you see that and obviously we do too, which is, you know, positive. And then I would add just the commercial momentum. You know, I think you've seen, you know, our talent business, you know, very strong performance in a tougher market for white collar hiring, you know, but strong double digit, you know, 20% kind of growth, you know, that's from new products, that's from penetration into that, into that, you know, big $5 billion TAM. So, you know, we're pleased with that. Our consumer finance or auto card personal loan business performing very well, you know, as we look forward to 27, you know, we expect that, you know, kind of performance to continue. So, you know, we've got a lot of confidence in that business, you know, getting back to their, you know, inside of their LTFF framework as we get into 2027.

Thanks, Mark. Appreciate it.

Your next question is coming from Shlomo Rosenbaum from Steeple. Your line is now live.

Hi, thank you very much for taking my questions. Mark, I want to ask a little bit about this discussion about TriMerge to BuyMerge. And can you just talk a little bit, just describe to us what the sentiment is amongst your largest lenders in terms of moving there? Because obviously there's a potential to save costs if you're using BuyMerge instead of TriMerge. But what are their other considerations, and how do they think about it when you talk to them about it, the large lenders, the ones that make the most difference?

Yeah, I would say broadly, and you could add lenders, you could add, you know, many regulators, you could add, you know, legislatures, think about Congress, you could think about, you know, Treasury, you know, who has a role in, you know, the fact that the federal government owns, you know, liability on a lot of loans if they don't, you know, deliver. You know, there's this kind of broad consensus that TriMerge delivers a lot of value around access to credit, having the right price, you know, for the applicant or the homeowner or future homeowner or consumer, and then also safety and soundness. You know, so when you think about from a mortgage originator standpoint, you know, what are they focused on? They're focused on, you know, managing their marketing funnel. You know, they spend a lot of money and typically they're doing digital originations. And so they want to make sure that when they have someone who's coming to their website typically in order to apply for a refi or apply for a new home loan mortgage, that they can approve that consumer and that applicant. And a big part of that is having the complete information. And I think we all know that there's enough significant differences between the three bureaus on the credit file that pulling three, you know, delivers a more accurate, a more complete, and also includes more people and gives them, you know, a better pricing. There's 11 million U.S. consumers that are only on one credit bureau. You know, if you're going to pull two or one, you know, that consumer may not get approved. And I think we know that there's, you know, 40 to 50 million U.S. consumers, most of us on the phone, that have a, you know, 20 to 40 point difference between the three credit bureaus because not every financial institution contributes data to all three bureaus. That's a meaningful difference. If you're pulling two, you don't pull that higher score for that consumer. They end up paying a higher price or maybe they don't get approved. You know, so it's a big element of the approval process. And then the flip side, you know, is if you're the government or if you're a balance sheet lender, which is still a meaningful part, you know, of the mortgage market, you know, you want to make sure you get all of those trade lines from a safety and soundness standpoint. If you're only pulling one or two files and you don't pull that third that has maybe some of those more negative trade lines, you've got to risk your loan. You know, so we think there's kind of broad based support for it. I think, as you know, FHA and VA have come out very clearly, you know, back in April, you know, they put out a press release supporting Vantage and also in that press release supported TriMerge. So I think they clearly understand the value of TriMerge for the consumer, of approving more, and then the value around making sure they get the best price, meaning the lowest price that meets their risk profile because you're getting all the data, and then the safety and soundness that comes from it. So we thought it was important because there's been a lot of confusion, I think, in our investor base about how large could an impact be if HFA decided to go to buy Merge. You know, that's why we decided to size it. You know, we view it as very manageable and likely for those on the call today, you know, a framework that is a lot less than perhaps you were thinking over the last month or two is, you know, that dialogue has been in the press and so on. So that was our intention was to frame it. But, you know, look, we think TriMerge is right for the consumer. We also think it's right for the mortgage industry. And also, we think it's right for federally guaranteed mortgages.

Okay, thanks. And just for my follow-up, John, maybe you could help us out a little bit. Just as everyone is trying to incorporate into their model the impact of higher mortgage rates on the numbers in 2027, where do you expect mortgage to end up as a percentage of revenue for the company? like in total company, USIS, CWS, do you have some kind of like a range or at least a rough estimate that you could give us so that we can kind of sensitize our numbers starting from that when we think about 27? Yeah, go ahead, John, please.

We're not going to give 2027 guidance and certainly not going to give specifics around revenue or percentage of revenue. But the reason why in the script we tried to give some perspective on originations and transaction levels is to allow you to try to do that math on your own. And as we said, we expect that you're going to see mortgage originations activity kind of decline high single digit percentage year on year to the extent that current mortgage run rates stay the way they are as we go through all of 2027 with the bulk of that impact happening in the first eight months. So as you'll remember, fourth quarter of 25 was a strong mortgage period. First quarter of 26 was a strong period as well. So you'll see significant impacts. Obviously, you're seeing it in the fourth quarter. You'd see it in the first quarter. It starts to mitigate a little bit in the second, and then obviously substantially in the third, given what's happened this quarter and what you're seeing in the fourth quarter of this year.

And again, just to be clear, what we always do and what we've done in this scenario modeling for the fourth quarter and trying to give you some visibility for 27 is we've taken current run rates. You know, obviously they're, you know, depressed over the last eight weeks and, you know, we can only assume that they're going to continue at that level until, you know, inflation comes under control and perhaps the Middle East conflict is resolved and then, you know, rates moderate some. you know, I had in my comments, you know, the fact that even at this, you know, lower level, there's still mortgage activity happening. You know, it's down meaningful, it's down over 50% from what we would call normal levels. But there's still mortgage activity happening every day, every week that, you know, is building that pipeline going forward, we're now up to 17 million mortgages over 6%. And I think, as you know, you know, it takes a quarter point 50 point 50 basis point, you know, change in rates and you open up a refi opportunity, you know, for that population, it's hard to see when that's going to happen, you know, with what's happening today, but it's going to happen. You know, it's just a matter of when that timeframe is. And, you know, as we move forward, that $17 million, you know, household number or mortgage number is only going to get larger.

Thank you. Next question today is coming from Jason Haas from Wells Fargo. Your line is now live.

Hey, good morning, and thanks for taking my question. Can I just confirm in a follow-up and a response to a prior question? Did you see that you would expect the EWS business to get back to the long-term framework next year? Did I hear that correctly? Was that the overall EWS?

Yeah, we didn't give 2027 guidance, and it's our intention to give 2027 guidance. I think the question was around, you know, the performance of the business and its momentum, you know, as we finished the year, which we're super pleased with. And, you know, the business is performing well, and you've seen, you know, kind of improvements on a quarter over quarter basis from second to third quarter that we're pleased with. And, you know, we've provided some information on 27 that, you know, you can do your own math on, you know, on some of the setup, like, you know, the government, you know, contracts that we've signed that, you know, are substantially incremental in 27 versus 26 that, you know, give you some visibility.

Okay, great. Thanks for clarifying that. And then, yeah, maybe just to follow up on government. So, the $15 million of new government bookings in 3Q was, you know, very strong. Are you able to give us any expectations? I don't know in there if there was like any sort of big wins or not, or if that's like the right framework to think about what we could see as well in 4Q. And then for government, do you expect that revenue to continue to accelerate in 4Q. Then again, in 2027, I think you had said that previously.

2Q and 3Q were very strong quarters for the government team in terms of signings and renewals. And part of that is just based on the timing of when state budgets move, right? So fourth quarter tends to be much smaller in terms of that type of activity. As Mark said, we're doing a lot with the federal government and other opportunities. Doesn't mean the selling activity changes in any way. But in terms of likely signings, you know, the strongest periods you tend to see are really 2Q and 3Q, a little bit in 1Q, but really 2Q and 3Q tend to be the strongest just based on the way state budget cycles run.

Next question today is coming from Fiza Ali from Deutsche Bank. Your line is now live.

Thank you. So just to follow up on that government question, how much of the $150 million of the new business are you expecting to realize in revenues this year?

Yeah, I think we've said, you know, a couple times that, you know, the new contract signings are principally 27, you know, kind of impact with some of that benefit in the fourth quarter. You know, some of it was in the third quarter, quite small. But, you know, substantially all of that is in 2027.

And we saw some of the contracts that we talked about in the second quarter start to monetize in the third quarter, and any of them are monetizing in the fourth.

Okay, got it. Okay. And then I wanted to ask about, you know, Vantage adoption, and you talked about moving to a paid model. So I just want to understand, you know, the strategy there. Are you going to continue to offer, you know, Vantage for free when someone is buying the FICO score from you, or is, you know, is that strategy changing? And then I think you talked about $35 million annualized margin upside. I'm just curious, what does that represent at this point?

Yeah, so your last question, and we've been clear about that, is we wanted to calculate for you if there was full vantage conversion of all the FICO scores. Obviously, we don't make any money today when we sell a FICO score. That's zero margin, which is to pass through to FICO. And if we sell the vantage score, we make a dollar on each score. So that at current kind of run rate levels, if we move everyone, you know, our piece of that would be a margin upside of in the 30 to 40 million dollar range. And, you know, obviously that's going to take time, but we see some real, real momentum there. We did, we did announce at MBA last week, and I shared on that call this morning that we're planning to keep our $1 Vantage score at $1 through 2028 to give our customers, you know, more confidence in visibility, you know, around, you know, Vantage pricing versus FICO pricing, you know, as they make that decision to, you know, use the Vantage score. And yes, we are still offering the free Vantage score with every paid FICO score in order to drive adoption. But you remember, you know, for the customers, you're not getting any savings because you're still paying, you know, the $10 plus for the FICO score, you know, versus the dollar that's available if you move to Vantage. And that's why, you know, we said on the call, I think we have 200 customers smaller, you know, that have moved to the dollar vantage score exclusively because they're getting better score performance and in the marketing side of the origination in prequal, and they're getting the big cost savings. And, you know, you've seen press releases from, you know, some of the larger mortgage lenders, and, you know, we're talking to them also, you know, they're well aware of the, you know, huge cost savings that they have, because as you know, seven, six out six out of 10, seven out of 10, eight out of 10 mortgages don't close, and that's a COGS for them. So the ability to do that pre-qual or pre-application with a Vantage score for a dollar is a huge savings. It's on the neighborhood between a credit file and the Vantage score versus a credit file versus a FICO score. It's like a 45% savings for the originator, and that's just a lot of savings. That also passes through the consumer because the consumer pays for the tri-merge at closing and at a $1 score, you know, there's a meaningful savings for the consumer also. So there's a lot of momentum, you know, around that conversion, and we expect that to pick up in the fourth quarter and then move forward in 2027, you know, when we expect FHA and VA to move to adopting Vantage, you know, inside of their processes, you know, we understand around January 1st.

Thank you. Next question today is coming from I'm Al-Tatnayek from Barclays, your line is now live.

Hi, this is Wahid Amin on Fermanov. Just wanted to talk about the event that FHFA decides to go from try-merge, and I talked about my merge, but ultimately if it goes to a single file, would the economics hold true in your view that lenders will still want to pull all three, and would it still be manageable? And outside of that, I understand the twin indicator and the NC+, but is there any other way you can differentiate the credit file outside of that?

First, to be clear, our knowledge, and maybe you have different knowledge, but everything we know is the FHFA has not made a decision to go to buy merge. Obviously, they've talked about it. There was a press article, I believe, in Bloomberg that said they were expecting an announcement from FHFA, and that, to our knowledge, hasn't happened yet. But that's why we decided to, you know, put some, you know, framework in our discussion this morning about what a potential impact would be to Equifax. And we view it as manageable. And we've already talked on the call this morning about why we think TriMerge is important. And, you know, to your question, you know, our expectation is it wouldn't be a requirement to go to buy or single merge. it would be an option for the lender, and the lender would make the decision about what they want to do in their marketing process and underwriting process to make sure that they're managing their marketing funnel, they're approving more consumers, they're providing the right price to the consumer around what price the interest rate is on the loan. And then, as you point out, We have a lot of advantages at Equifax in a buy-merge world for FHFA loans because of unique solutions we deliver, the twin attributes, the twin data that we have in the credit file, the NC plus attributes that we're offering at no charge. Also, the fact that we own a tri-merge business where we go to market. So we would obviously take advantage of that and how we deliver our credit file in the marketplace. So, you know, I think it's one that our intention this morning was really just to size the impact and then we'll be ready to respond, you know, if, in fact, the FHFA goes down the path. But as you point out, you know, our expectation is the lender, you know, would make that decision about, you know, what they want to do as far as credit files that they're pulling.

Thank you. And then on government, I know you mentioned some of the contract wins have been towards subscription based. as you're having more conversations with these state counterparts? Are they leaning more towards subscription-based contracts? And if not, is that something you think the government is headed towards?

Yeah, it's one that we started deploying commercially a couple of years ago. It's clearly something that many of our customers like the idea of the certainty of a subscription. And as you know, all budgets are complex, whether you're in the government side or if you're in the commercial side. In the case of government, they're more complex because they generally have to get at the state or local level, you know, funding for expenditures for projects, you know, from their legislature. So, you know, having the ability to have some more certainty around, you know, during that, you know, fiscal year, what this spend is going to be on our solution, you know, is positive. So we've seen a growing trend there, but we still offer, you know, both. And we want to be flexible, you know, with our customers, you know, around helping them, you know, utilize our solution. We want to drive, you know, penetration into that big TAM. You know, as a reminder, it's a $5 billion TAM. You know, we've got less than, you know, 20% of it, you know. So there's, you know, a lot of manual verifications that are still being done that, you know, are opportunities for us. So we want to, you know, be responsive and flexible commercially, you know, to help our customers adopt our solution.

Thank you. Next question today is coming from Andrew Nicholas from William Blair. Your line is now live.

Hi, thank you, and good morning. I wanted to dig a little bit further into talent, momentum. I think you mentioned mid-single-digit growth for underlying growth, but outperformance relative to that market is holding very strong, if not accelerating. So I was hoping you could spend a bit more time on kind of what is driving increased penetration, what, how much of that performance is new products and any other color on kind of market makeup there in your evolution as a key provider to the space.

Yeah, you know, we're pleased with the performance, you know, they had strong performance last year, you know, also it's a, it's a big TAM. It's one where we deliver a lot of value and kind of our core solution about verifying past employment. I think, as you know, the APRES incarceration data acquisition that we did several years ago has been a very positive one for us. That's used very broadly in background screens, doing that incarceration check. And we've rolled out new products there and are driving penetration. You know, the TAM is quite large here also. You know, that's a multi-billion dollar, five billion dollar TAM. You know, and again, here we have, again, less than, you know, 15 percent of the of the market is using our solution from a penetration standpoint. So, you know, our team at EWS has a lot of penetration opportunities. And then, as you point out, you know, we've been rolling out new products in the education space, in the employee verification space. We now have an hourly solution where there's less data required to verify past employment. education solutions that we're rolling out you know every year we take price up we'll do that again on January 1st in the in the talent vertical so you know when we look forward you know we're still benefiting from the price we did in early this year in for 2026 you know so a lot of really strong performance and then of course record growth you know when we grow records we have higher hit rates. You know, we can deliver, you know, more complete information on that, you know, employment background. So multifaceted and, you know, strong execution and a big TAM by the Workforce Solutions team.

We've also expanded into healthcare. We've launched more and broader healthcare solutions into the talent vertical as well, which we think is also going to help drive long-term growth.

Great. Very helpful. And then for my follow-up, I wanted to ask on income and employment verification. I think last month, a competitor of yours announced an integration with a large partner of yours. Wanted to see if you had any thoughts on what that means for your business, but maybe more broadly, if you could touch on kind of your conviction in having exclusive relationships on that front, or maybe again, like the resilience of your model to competition.

Yeah, we viewed that more as a one-off that was really driven by some decisions that they wanted to make about, you know, how they go to market. You know, we saw a very strong relationship, you know, with that customer. We expect that continue to going forward. And, you know, when we look broadly, we're very pleased with our record growth. You know, we deliver, you know, a lot of value to those partners that, you know, we work with in the payroll, HR software, pension, benefits administrator space. There's just a lot of continued momentum there. Our benefits are the scale of our distribution is very, very large. We have connections in the mortgage, auto, card, P-loan, background screening, government, social service space that are really second to none. When it comes to our ability to grow, our business and then share and a rev share with them, you know, we just have very substantial advantage there, which is a positive in those, you know, partnerships that we have. You know, we also invest heavily in our technology and in our product capabilities. So, you know, when you think about, you know, us rolling out new solutions, you know, in all of our verticals, those benefit those partnerships, you know, which are, you know, really valuable to us. So, you know, know, we have a lot of confidence in our ability to continue to grow our records. We have a lot of confidence in our ability to deliver value to our partners, you know, in those partner relationships. And, you know, we don't expect that to change going forward.

Thank you. Our next question today is coming from Ashish Sabhadra from RBC Capital Markets. Your line is now live.

Thanks for taking my question. I just had a question on the EWS margins. The guidance implies a step down for 4Q, which I believe, John, you attributed to mortgage weakness. So as we think about some of the puts and takes? Obviously, you talked a lot about the AI benefit, but how should we think about the EWS margins going forward, even with some mortgage pressure there? Thanks.

Yeah, we're very pleased with the EWS margins. They're, you know, very, very high and attractive. And, you know, our intention is to continue to invest in the business because of the high growth it delivers, as well as the high margins that it generates. But at the same time, make sure that We're, you know, deploying everything we have around, you know, productivity and AI productivity and operating leverage, you know, not only at EWS, but at our other businesses. And, you know, we're seeing very positive, you know, benefits by the EWS team as they deploy AI productivity in their operation centers. You know, they have very large operation centers in our employer business. You know, we have the same kind of call centers, although not as large, both for, you know, consumers, for employees, you know, of our contributors, and also for our B2B customers that we're deploying AI in, you know, and then our technology operation in EWS, same thing. So, you know, our goal is to continue to maintain those very attractive, you know, 50 plus percent EBITDA margins going forward, you know, by the strong operating leverage that comes from their top line growth, and also the deployment of AI productivity.

That's very helpful, Kala. And then maybe just on mortgage inquiries, and I know this question was asked before, but as we think about like that high single digit, mostly on the first eight months of 2027, are there certain nuances by quarter that we need to be cognizant of? Any particular color that you can provide there will be helpful.

So the way, as Mark described it, what we do is we just apply normal seasonality to our expectations for the next year, because we don't have any basis to think of anything else. However, you obviously know what happened in 2026. So in 2026, the first quarter was a pretty good mortgage quarter, right, until rates started increasing in March. And then second quarter weakened, but was certainly better than what we saw in the third and the fourth quarter of this year. So on a year-over-year basis, it would indicate that the largest impact year-over-year is likely going to be in the first half. But, again, that's just based on us using normal seasonality in 2027 because that's what we know today.

Thank you. The next question is coming from Curtis Nagle from Bank of America. Your line is now live.

Thanks so much for taking the question. So, yeah, policies I missed, but just any color you could provide on the verifier government mortgage expectations for 4Q. Should we expect something similar to 3Q in terms of year-over-year growth? You know, does it accelerate? You know, give Mark, at your point, some more new. But business coming in. Yeah, just a little more color, if you could, in terms of what's contemplated in the guide.

Yeah, so we don't give specific guidance. going forward by segment or line of business, right? So I think what we have said is that we're happy with the pace at which we've added new clients and new customers in government, that we've seen a fair number of the contracts we signed in the second quarter start to monetize and others would start to monetize in the fourth quarter. So we're very happy with that. And then more broadly, when we talked about what we're seeing in the economy, we indicated that we are seeing some weakening in talent And we are seeing some weakening just in industry run rates around auto and FI, right, and more heavily around things that are more interest rate sensitive. So what we said is we're looking at those. But as you're thinking about fourth quarter, those are some of the trends that we're thinking about as we look through the next quarter and into next year.

Okay. Let me be able to shift it to somewhat of a two-part advantage. I guess outside of the three large lenders that are currently originating, I think do mostly originating, what's your sense in terms of preparedness for the rest of the industry in terms of them turning on Vantage to originate? And I guess how much do you think, Mark, you alluded to this, the move to the unified grid potentially shifts more volume to Vantage?

Yeah, I think the industry has been preparing for quite some time. I think, as you know, it's a year ago, July, when the FHFA first announced, you know, that they were going to adopt Vantage. And, you know, then in April, you know, they actually turned it on. And, you know, in that time frame, a lot of the technical work, process work has been completed. You know, in some cases, there's still testing happening, which is why, you know, last year we started offering the free Vantage score, you know, so they could, you know, adopt and really process through their workflows, you know, both scores. So, you know, I think substantially the industry is pretty well prepared and, you know, the fact that they made the decision a few weeks ago to, you know, normalize the LLPA tables, you know, I think that opens up and we've heard a lot of feedback from our customers that they plan to really start ramping, you know, their vantage adoption because of the big cost savings that come with it. You know, that's the numbers are just quite substantial, you know, for the industry and consumers. It's a billion dollars. You know, that's, you know, hard to not focus on, particularly in this mortgage environment where, you know, the whole industry is extremely pressured, you know, by the lower activity. So, you know, we see all of our customers, you know, really moving to implementation mode. So we would expect to see, you know, that adoption to grow in the fourth quarter and then continue to, you know, accelerate in 2027.

And really, really good progress in the third quarter also with connector and technology partners, enabling Vantage. So there was a substantial change in the third quarter, which we think has a lot of momentum and is continuing.

Thank you. Our next question today is coming from Svendrith in from Jeopardy. Your line is now live.

Thank you. Mark, just one question here. can you talk about just the way that lenders are behaving or they're thinking about the consumer and their willingness to market, to spend, to originate? Obviously, some sensitivity around rates and consumer behavior, but is there a delay effect that we should be thinking about, or are there certain metrics that really need to degrade before we see any material change in lender behavior?

Yeah, I think you've seen our USI's business, which is probably the right place to look, and even EWS in our consumer finance or auto card P-loan business performed very well. Our DDM business, which is where some of this activity would be, was strong, but principally around marketing activities. So we haven't seen a real uptick in what you would typically see when investors are more nervous about the economic conditions, you know, where they're doing more portfolio management reviews. That hasn't happened. And, you know, the real indicator, you know, I've been around consumer finance for decades. And, you know, the real indicator is, you know, unemployment. And, you know, it's still quite strong, meaning employment is still quite strong. Employment is quite low. When people are working, you know, while they can be pressured, and they are in many income demographics because of what's happening with inflation and oil, they still manage to pay their bills. And I think we've seen a lot of the bank earnings last week were very strong in their consumer businesses, meaning they're originating and operating in a quite normal way. So we don't see a change happening in that. And we don't expect, it's hard to see one happening in kind of the medium term as we move through the quarter and into the early parts of 2027, that you just don't see that on the horizon as long as unemployment stays low.

Thank you. Next question is coming from Kyle Peterson from Neiman Company. Your line is not live.

Great. Good morning. Thank you guys for taking the questions. I wanted to dig a little more into talent. So I guess if I'm looking at the numbers there, it actually looks like you guys had a really strong quarter in talent, and you guys think you're being a little conservative there in the outlook. So I guess is there kind of how the quarter trended or recent weeks based on some of the data you guys are seeing or are you guys gaining share? Just any additional color there to kind of explain the divergence and maybe a little more cautious outlook than I would expect would be super helpful.

Well, start with third quarter was extremely good, the strongest we've seen in a long time, right? And I think what we've talked about is we expect the talent business to continue to perform very well, but but performing consistently at the level we saw in the third quarter given maybe some weakening and hiring in general um is probably something that would be difficult to deliver consistently so we think talent is going to perform very well they had a great third quarter we expect them to continue to perform well but we are seeing we did see some weakening in the overall hiring market and specifically as it related to white collar hiring as we move through the quarter and we're just reflecting that in our guidance in general and in our commentary.

Okay. Okay. That is really helpful and appreciate the additional color. And then I wanted to switch over to the international business, particularly Latin America. It looks like you guys had a really nice quarter there, especially on a currency basis. So I just wanted to see where is most that growth coming from are you guys seeing more of this from you know some of the larger banks were you know are you guys seeing better adoption with with fintechs i know fintechs in that region have been gaining a lot of share so where where are you guys seeing the most success there i think that would be um really good for everybody here yeah it's fairly broad-based you know brazil which is boa vista as you know where we acquired that business a little over three years ago performing very well.

And, you know, we think, you know, gaining some share. They're doing very well with fintechs and also, you know, picking up some business with the larger banks. So, you know, performing, you know, well there, you know, broadly, I think, as you point out in Latin America, you know, fintech is quite large and is performing well and we're well positioned with them. So we've seen, you know, kind of broad performance in Chile and Peru and Argentina, Ecuador, you know, some of the other markets in Central America, you know, where we're performing well. And then as I commented on the call earlier, we're super energized to get the Circulo deal closed. That business is also performing well. We don't own it yet, but we will soon. And that business has been up strong double digit, actually growing faster than the rest of Latin America and the fastest growing credit bureau business in Mexico because they've really focused on fintechs. They've got a very strong market position and actually don't do as much as, you know, we see an opportunity to do more business with the banks, you know, where the competitor plays, but the fintech growth has been, you know, super positive. And, you know, running all the plays you'd expect us to run, you know, we're now cloud native in Latin America. I think that's a big deal. We've just completed that, you know, in the quarter. So having that, you know, complete, most of the countries have been complete for, you know, months and years, but that allows the team to fully focus on growth. We're rolling out a lot of the new AI-powered new products. I think that's benefiting us. Some of the new scores that bring more data in is really powering their business down there, and we're pleased with how it's performing.

Thank you. Our next question today is coming from Simon Clinch from Rothschild & Company of Edburn. Your line is now live.

Thanks. Thanks for taking my question. I just wanted to start with the UCIS B2B online business. So I just wanted to give some color as to the trajectory of growth there. We've seen some kind of pickup here to, you know, I think mid-single digit last quarter, 4% this quarter versus low single digits before. But I was wondering if we could square how to think about this going forward, given your comments around some of the slowing we've seen in those key markets. And if there's any sort of one-time or unusual impacts that we need to think about as well for this business.

Yeah, nothing one time, but you're seeing some of the benefits. As you remember, the USIS was, you know, kind of our last large U.S. business, a very large U.S. business to complete the cloud. So they're, you know, kind of 18, 24 months into that post-cloud mode, and they've really accelerated their new product rollouts. You know, their vitality index is, you know, up above north of 10 percent now, which is really great news. You know, it wasn't for years. You know, it was kind of in mid-single digits, you know, kind of when they were doing the cloud transformation. So that's benefiting them, you know, commercially and some of the new solutions, you know, we talked about, you know, twin indicator, you know, that we we are clearly it's been a lot of focus on in the mortgage space. But we're rolling it out in auto card and P loan, you know, offering that as a is an addition to the credit file, you know, at no cost in order to drive some share gains. So we're starting to see some traction there. It's been quite modest because we're early days in the rollout. But we would expect, you know, that to be a positive for us going forward. So I would think about, you know, commercial execution. We've got a new leader that we're really energized about, David Smith, who's leading the business now. And, you know, he's got his feet on the ground and really focusing on commercial execution. And then the new product rollouts, you know, we expect to continue to be, you know, a positive for them in the quarter, you know, as we finish the year. But, you know, more importantly, in 27 and beyond.

Okay, that's beautiful. Thank you. And just changing time, going back to Vantage, I was wondering if you could just help us think about, so we've gone to a unified LLPA grid for Vantage and FICOs. That's been viewed as a real beneficiary for Vantage score. What if we move to an actual bespoke or specific LLPA grid for Vantage, which isn't just a one-to-one map with FICO. How does that impact the likelihood of lenders using the product or any of those dynamics? Any sort of color you can give around that would be useful.

Sure. I would expect that to happen. I think it's just a matter of time when they get to that stage that they'd have really an LLPA table that's specific to FICO Classic, which they have today, and then they'd have one specific to 10T. But remember, the credit score in a mortgage underwriting process is really only used in the pre-application, pre-qualification process in order to give an indicator to the consumer before the credit data is used, which is really what's used in underwriting, you know, actually calculates the actual underwriting and then the actual price that that consumer is going to be offered. What the originator does is use the credit score early in the process before they submit the application to the agencies, and we're talking about, you know, GSE, FHA type loans, they use that credit score really just as an indicator from those tables to tell the consumer that, you know, hey, based on your credit score that we're looking at today, this is the kind of, you know, price that you'll have. And, you know, what they want to do is make sure that they're using the most accurate, complete information. And today, you know, I think it's widely viewed that, you know, Vantage 4.0 includes more data than FICO Classic, you know, so it provides a more complete picture on the consumer. So, you know, that's a reason, you know, 10T will close some of that gap once it gets approved, you know, by the agencies. But that's only an indicator. And the fact that that price is, you know, dramatically different of a dollar versus 10 plus, you know, when you're a mortgage originator, you know, you really have to focus on both the performance of the score in that pre-qual process and the cost to actually use it. And it's just so substantially different. You know, our expectation is, is that that's going to be a real determinant and we're seeing it, you know, with the mortgage originators in, you know, using the Vantage score because it's just delivers a lot more value, you know, for the service. And just, you know, as a reminder, once the application comes, goes in, you know, the score is really not used in the underwriting process, the credit data is used in the TriMerge report, including the report from Equifax to do that underwriting and to confirm the actual interest rate that's going to be offered on that mortgage, you know, based on the, you know, the consumers or the applicants, you know, credit data, you know, not the credit score. So, you know, we think there's going to be a lot of momentum to utilize the Vantage score because of the value it delivers, you know, both on the performance, but also on the cost to use it.

Thank you. Our next question today is coming from Ryan Griffin from BMO Capital Markets. Your line is now live.

Hey, thank you so much. Just one for me. I wanted to ask about the new mortgage score select. I know that's still early innings, but what behavioral patterns have you seen from the lenders that have worked on that workflow thus far? Thank you.

Yeah, well, we launched that solution specifically based on lender input, right? So we're expecting we'll see adoption. We think it creates a lot of flexibility for lenders as they're going through the approval process so that they could move forward and use a Vantage score. And to the extent they see some reason through the closing process, like for instance today with a VA loan, that they need to pull a FICO score as well, that it gives them the flexibility to do that later at a lower cost, right, without having to repurchase the credit file. So we think it's in response to industry demand and something that will be adopted, we think adopted significantly, and we think it should also help promote movement to Vantage Core more quickly.

Thank you. Next question is coming from Andy Grobler from BNP Paraby. Your line is now live.

Hi. Thank you for taking my question. Firstly, just to go back to John's comment from earlier about seeing some slowing in FICO and auto volumes in the latter part of the quarter, can you quantify at all? To what extent that flowed and has that continued into the early part of Q4?

Yeah, I think we quantified that the mortgage market clearly slowed in the third quarter and that impacted us in the neighborhood of $20 million negative in the third quarter. And then we also sized for you, you know, what the impact at current run rates, which is the only thing we can run off, the impact would be in the fourth quarter. Is that what your question is about?

But I think I said auto and FI, not I think we heard FICO. We saw some slowing. We didn't say it was substantial, but we did see some slowing since it occurred. We reflected in what we're seeing in the fourth quarter, and we just wanted to share with you that that was something we were starting to see as you're considering the fourth quarter as well.

Okay, thank you. And then just a follow-up on the government vertical. So you had a very good quarter, again, in terms of growth. There has been some change in competition in that market with a relatively new entrant in Truve winning at least a couple of state contracts. Are you seeing the dynamics in that market change at all? Is there space for all of you, given the size of the TAM or anything else we should consider about kind of the changing competitive environment?

There have been other competitors around for quite some time. I think you should talk to them about how large their contracts are or are not. Our understanding is they're quite small, but obviously we focus on competitors that are trying to enter the space. as you point out, it's a very big TAM. You know, there's a lot of space to participate. You know, we think we have, you know, a very, very strong, you know, offering, you know, with the instant solution, you know, from Equifax through the twin data set, you know, that's extremely competitive. And we've been investing in new solutions, you know, particularly around, you know, consumer consented data, you know, where we don't have, you know, all the records to have an integrated solution. And what we hear from our customers is that they, you know, really want an integrated solution, you know, because they think about the first place they want to check, you know, is the twin database because it has such large coverage and then integrate into, you know, solutions like our consumer consented, which we've signed a couple of states on it. So big space, you know, we think, you know, we have a strong position, you know, and we're going to continue to invest to make sure we maintain that.

Excellent. Thank you very much.

Thank you. Next question is coming from Kevin McVeigh from UBS. Your line is now live.

Great. Thanks so much. Great to see the cost momentum. I guess, can you help us understand what drove the upsized, the $150 million up from $75 million on the AI? And then I think you talked, and maybe it's in nuances, but just cost management versus AI-driven cost efficiencies.

Maybe just dimensionalize what those two things are but I guess first just the 150 up from 75 and then you know the cost management versus AI efficiencies yeah I think as you know we announced the 75 back in February we doubled that in July to 75 because of the momentum we've seen on AI deployment our early AI deployment think about the latter half of 2025 inside of Equifax was in operations you know most companies start there and call centers and document processing centers are kind of purpose you know built for that you know i talked a bunch about on the call already this morning that we think the fact we invested so heavily in our tech stack you know over the last five years you know and that's obviously behind us now that we're cloud complete and in the cloud but that positioned us to really effectively deploy ai you know we think better than others and so the 75 was you know our first step of sharing with you what we're doing internally, you know, as far as some of the AI productivity, you know, going forward. And then, you know, we've just seen kind of rapid adoption. The big, you know, change between February and July and now is that, you know, the deployment of AI, you know, in Equifax, in technology, that's our largest team. You know, as you know, we're a data analytics technology company, you know, but using AI for coding new products and capabilities has seen, you know, really rapid adoption and deployment by our teams, which is super positive. And then we're also seeing, you know, in finance, HR legal, you know, AI being deployed there to drive efficiencies. And, you know, I said it on the prepared comments earlier this morning that we're still early innings on this. You know, I think that's what's exciting for me and John and the rest of the Equifax team is that, you know, we just see a lot of potential going forward. So when we think about, you know, that translating into operating margin dollars and margin rate, you know, obviously we have a metric we use is our margin rate. We started doing it ex-FICO, so it's really more clear around the fact that FICO, you know, distorts that in some way because we passed through the FICO score with no margin on it. You know, and we set a goal, you know, in our long-term framework to grow our margin rate 50 basis points per year. we set a goal early in the year to do 75 and as you know we've outperformed it in first second and third quarter which is why we now raised it to 100 basis points so inside of that 100 basis point of margin expansion you know the the the biggest lever we have is operating leverage if our revenue is growing and our costs are growing slower than the operate than the revenue you get operating leverage that drives margin expansion so that's you know the way i think about it and we think about it, that kind of 50 basis points in our long-term framework is the operating leverage that we should get from our 7% to 10% long-term organic growth rate. So that is clearly a base part of how we think about the business going forward. And that becomes free cash flow. And in that free cash flow, it becomes substantially ends up in buyback because that's where the incremental cash is going to go. And then the new gear, the new lever for us in operating margin expansion is really the deployment of AI across Equifax. We branded it internally as AI for EFX. We have it as one of our strategic priorities that we set out in January was not only to deploy AI for our products, models, and scores to drive our top line, but also to really aggressively deploy AI across Equifax to drive speed, to drive efficiencies, to drive capacity and also to drive productivity. So, you know, that was the $150 million that we laid out in July. We were clear that was going to be a multi-year, you know, impact. It's going to impact both OPEX and CAPEX because, you know, a lot of our technology costs get capitalized. So as we have efficiencies there, there'll be OPEX savings, but also CAPEX. So, you know, we're really energized around our ability to deploy AI. And I think we're one of the few info services stocks out there that have put a marker out fairly early in the AI journey around, you know, the benefits that we expect to get from it, which is, again, that $150 million. And then, obviously, it's showing up in our P&L in 2026, you know, and, you know, with our ability to increase our operating margin rate guidance for the year, you know, while having the significant, you know, mortgage top line pressure, you know, we think, you know, shows a lot to us as well as to our investors that, you know, there's, you know, some real, you know, positive change happening and, you know, how we run our business internally from an efficiency and AI productivity standpoint.

Very helpful. Thank you.

Thank you. Next question is coming from Scott Wurtzel from Wolf Research. Your line is now live.

Hey, good morning, guys. Thanks for taking my questions. Just, too, on the government side of things, I wonder if you can talk about maybe how much of the new ACV that you're seeing is being driven by some of these new products that you've introduced into the ecosystem. And then just a clarification on the renewal ACV. Does that include any sort of expansion with current customers or pricing increases, or is that just a straight renewal of existing services? Thanks.

Yeah. So on your second question, it would be, you know, substantially renewal of existing business, but there's always some element of price in a lot of the conversations. There's also the element of we add new solutions in those renewals. And then the new ACV we think about is, you know, being, you know, kind of new customers. And, you know, there's clearly when you think about what's driving the bulk of that revenue, I would think about it as our core products, you know, about verifying income, you know, that we've been doing for, you know, a lot of years. But there's an element of the new solutions we've talked about over the last 6, 9, 12, 18 months that we're adding into the market, like continuous evaluation, you know, for our customers and, you know, the complete income, you know, adding that as a solution where we're adding some of the consumer consented stuff. So, you know, it's, you know, the bulk of that new ACV would be in what I would call our core solutions and just really penetrating the TAM. You know, it's I think a lot of us forget, meaning our investor base, that, you know, we have a big business, you know, obviously, and we have a big business that's growing, but we operate in a TAM that's substantially manual. You know, when you think about the $5 billion TAM and the $4 plus billion of that TAM that we don't participate in today, you know, that's states, that's agencies, that's federal government, that's local, you know, local government, you know, kind of social services that are being done principally manually. You know, so that's the opportunity for us to really deliver, you know, the real value we deliver in our core solution, which is speed of social service delivery, you know, case worker productivity, you know, think about a $5, $7, $10 transaction with Equifax versus, you know, a case worker who's, you know, paid $30 an hour with benefits, you know, working on it. And then, obviously, the huge integrity side, you know, and there's been increased focus around, you know, attacking the way the federal government frames the $180 billion of improper payments that happen and the roughly trillion dollars of social service delivery. So, you know, we just have strong momentum in our pipelines and, you know, really, you know, a good runway going forward to continue to penetrate into that big TAMP.

Great. Thank you.

Thank you. Next question is coming from Kelsey Zhu from Autonomous Researcher. Your line is now live.

Good morning. Thanks for taking my question. What is your expectation around paid vantage score adoption in the mortgage vertical in the medium term, and any updates on cycle 10C implementation timeline for the GSE levels and how that might change the competitive landscape between cycle and vantage score?

Thanks a lot. yeah um so the the paid vantage is still fairly small i think we've been clear about that um the free vantage is very high and i if we think about that as an indicator you know of the industry's focus you know on uh you know preparing to move to full vantage and then when we talk to our customers and some of them put out press releases you can check on that you know there's clearly you know a lot of focus on taking advantage of the huge cost savings you know that come with Vantage. With regards to 10T adoption and activation, you should talk to FICO. We're not involved in that. That's something FICO is working on. I suspect there'll be a point in time where it will be adopted, but we're not close enough to know what's happening or not happening in that space. We do believe that 10T will close what we view as a gap between FICO Classic and Advantage 4.0 from a performance standpoint. I think it's well understood in the industry that Advantage 4.0 includes more data, has more trended data, and provides a more complete picture on the consumer around what their creditworthiness is. So I think that's well understood. Our view is that 10T will close some of that, but then you've got the challenge of that's at least currently priced at over $10 a score versus advantages at a buck. That's a massive delta that you know, we think advantages, you know, Vantage even when 10T is in the marketplace.

Got it. Very helpful. Director Polky also alluded to releasing the GSC credit scores to the marketplace. Is that something you've been working with agency on and how are you thinking about having Fannie score and Freddie score potentially competing with Vantage score in the marketplace?

Yeah, I think you'd have to talk to FHFA about their plans on that. while we collaborate very closely with them because they're a close partner, I wouldn't want to comment on what they are or not going to do around their own credit scores. We know that they, I think it's well understood that the way the underwriting process works is that after the application goes in, the score, Vantage score or FICO classic score is not used in that underwriting process. The credit date is used in that process and they have an underwriting process. It's very robust and very complex and very sophisticated, you know, that ingests all of the trade lines from all three credit reports in order to do their underwriting, because remember, they own the loan at closing, and that includes, you know, some element of score calculation that they use internally, but you'd have to talk to them about, you know, what they think they might want to do with that, you know, in the marketplace.

Thank you. Our next question today is coming from Craig Huber from Huber Research Partners, or line is now live.

Great. Thank you. My first question is, if we go back to October of 2022, when the Biden administration proposed going to buy merge, and then given all the pressure, et cetera, nothing happened on that front, you know, through the rest of the administration, roughly 27 months. I guess my question to you is, what's changed in the marketplace out there that even if Pulte wants to go that route here, besides the fact we have a different administration, what's changed now that it would actually get implemented somewhat quickly? Obviously, you talk about the Treasury being against it, a lot of congressmen being against it, regulatory folks underneath Pulte being against it, much of the industry against it, et cetera. But what's changed that actually could get implemented this time if he wants to go that way?

Yeah, Craig, as a reminder, when you go back to the Biden administration, you know, what they were, they did a study and they got industry inputs. So it was a very formal process. They reached out to the industry. We provided inputs. I think our competitors did. I'm sure FICO did. And, you know, in the industry participants did. And they they really asked to do a study on two things. Number one, moving from tri-merge to bi-merge, and at the same time, they proposed going to Vantage and FICO score, meaning requiring both scores be used. There was a lot of input from the industry. I think universally the industry input was a move from tri-merge to bi-merge wasn't a good thing for the consumer, wasn't going to provide a complete picture on the consumer, was going to result in situations where consumers aren't approved, It was going to result in situations where consumers are paying a higher interest rate because you're not having the complete picture on them. And then it was also going to result in a, you know, a less accurate, less complete underwriting because you're not going to have the trade lines, you know, including some of the negative trade lines on a consumer. So there's a safety and soundness impact. And at the same time, you know, there was feedback from the industry that understands how the process works well, that there was no value in having two credit scores used in really the prequel process. And then, you know, that's really how that unfolded. But that same sentiment around, you know, try merge to buy merge, you know, hasn't changed today from my perspective, from what I know in my communications and our communications, you know, around the value. The facts are the facts. Because of our contributory system in the United States is voluntary to the three credit bureaus, not every financial institution contributes every trade line to all three credit bureaus. And that results in meaningful differences between the three credit reports. And when you're talking about something as substantial as a home mortgage, that's the largest transaction any homeowner does, any consumer does, it can have significant impacts, you know, on whether they're approved, what the price they pay if you don't have all the data on that consumer. So I think that's well understood. And then the safety and soundness is crystal clear. You know, if you're going to exclude data, that's okay if it's positive data, but if it's negative data and you don't know when you're only doing a buy merge, whether you're getting all of the, you know, complete information on that consumer and whether there's negative data out there that means that loan is riskier, you know, that's something that's on the shoulders of the federal government. You know, and I remind investors, you know, when I'm in one-on-one meetings often that, you know, some of the most sophisticated non-mortgage lenders pull TriMerge for all of the reasons I described. They own the loan. It's on their balance sheet. They want to approve every consumer. They want to give the consumer the right price, meaning the price that they qualify for based on all of their trade line data. And that's why even in non-mortgage where there's no requirement, the most sophisticated lenders will pull a tri-merge because they want to get that complete picture on approvals to approve more, and they also want to have the complete picture on the loans they put on their balance sheet.

I appreciate that. I mean, I think what you say makes an awful lot of sense. You've said that many times over the years, publicly and I'm sure privately as well to the regulators. My question further is here, you've got Pulte, Director Pulte out there being very upset about what he perceives as the price to value for credit reports, but also the price increases as he goes on and on about now versus last year.

Can you just quantify for us how much apples to apples, if you're willing to, apples to apples, how much your credit file price has gone up this year versus last year? two years ago however you want to talk about it but just what why is he so upset about the price increase from his vantage point thank you well i think you'd have to talk to him we talked to him lots of the industry participants too we've got a lot of respect for director pulte and you know we've applauded his decision which was really uh you know groundbreaking you know along along with secretary turner at fha you know to uh drive adoption advantage to drive some score competition You know, from our perspective, you know, I think we all know, you know, what's happened with FICO pricing over the last five years. And I think that's been the principal focus, you know, of the regulators, you know, around the impact that's had on the mortgage industry, as well as the impact that's had on consumers. Because remember, ultimately, consumers pay for their credit reports at closing. And, you know, so they've been bearing this cost of, you know, the rapid increase of the FICO score. You know, our pricing is, you know, year over year is actually down on the credit file. You know, we, you know, have been, you know, tried to be very supportive of the industry, you know, given the pressures that they're under and also supporting consumers. And, you know, I think the Vantage score itself, the fact that, you know, we're being super responsible and super supportive of the industry and consumers with the $1 pricing. And as I said this morning, last week, we announced to our customers we're going to extend that not only through 27, but through 28, meaning keeping it flat at a buck, you know, so we can provide that support in a probably the most challenging mortgage environment that we've seen in decades, you know, and support consumers, you know, who are struggling with the cost of homeownership. You know, this provides, you know, clearly recognized a very small benefit, but a positive benefit for them of the, you know, dollar versus 10.

And remember, we launched free-qual and pre-approval products, which are at much lower prices, which give our customers and mortgage underwriters the ability to manage their credit costs as they see fit.

Thank you. Next question is coming from Craig Moore from FT Partners. Your line is now live.

Yeah, hi. Just quick, I want to follow up on the international question. What are some of the trends you're seeing in APAC that drove the sharp acceleration in third quarter? And, you know, where's the largest opportunity for international growth in 27?

Yeah, great questions. You know, we're really pleased with the Australia performance. You know, I think a piece of that is that they're really moving well down the path of their cloud completion. That's the last place we have to finish. But, you know, I think they've got, you know, a lot of that complete, which is allowing them to more broadly focused on innovation and new products. Our leader, Mel Cochran, is doing a great job down there in the marketplace. We've had some, you know, share gains versus our competitors, you know, in that marketplace, you know, which has really been a positive. And, you know, we expect, you know, that, you know, be a solid grower for us as we move forward in the future. You know, your question around, you know, where do we expect to see growth, you know, kind of as we look forward internationally. Latin America is, you know, clearly going to be the fastest growing geography for us. It's obviously a big place and we've got big positions. And remember, we're, you know, we entered Brazil three years ago with the Boa Vista acquisition. A leader down there is doing a great job driving innovation and growth. Enrique Morales is doing a terrific job, you know, of really driving the growth in that business. You know, in Brazil, we're super energized to get Circulo closed. You know, that business has been growing, you know, very, you know, kind of over 20%, you know, so far in 2026. six. So really a strong performance there. So that'll be a positive contributor, you know, as we get it closed in the fourth quarter, as we move into into 2027. And then in the more, you know, I would call it traditional markets for us that, you know, are more developed markets, maybe is a better term of like Canada and UK. You know, we're looking for those businesses, you know, some of the innovation, new products that they've got in the marketplace, you know, we're seeing progress, you know, around, you know, share gains and performance in those markets. So, we would expect them to, you know, be, you know, positive, you know, for growth as we look forward. Thank you.

Thank you. Next question is coming from Owen Lau from Clear Street. Your line is out loud.

Hi, good morning. Thank you for taking my question. So, going back to the LLPA question, if there are essentially two different LLPA grids, How will this impact the back-end securitization part, how to harmonize the whole value chain, and also ultimately how it would impact which score to use? Thank you.

Yeah, from our perspective, the credit score is not a big determinant in the capital markets. It's the underwriting that takes place by the mortgage originator you know, and by the, you know, banks and financial institutions and agencies, you know, whether it's Fannie, Freddie or FHA, it's their underwriting process really supports the capital markets. And, you know, that underwriting process that includes robust data, you know, today the tri-merge, you know, and making sure that you got the complete picture on the consumer, you know, that's what drives the capital markets. You know, the change in the LLPA tables, you know, are are important. The change that was made a few weeks ago by FHFA was important to really put on parity Vantage versus FICO. When they go to more custom LLPA tables, I don't think that has an impact on Vantage versus FICO. The real impact is going to be price. With the significant price advantage that Vantage has, it's going to be a score that the industry is going to want to use just because, you know, a lot of those, you know, pre-qual loans don't move to application. And that becomes a COGS form. And at $1 versus $10 plus, you know, there's just meaningful savings. That's the billion dollars we talk about. You know, and in this environment and likely an environment in 27 where the mortgage industry is going to be challenged until rates come down, you know, this kind of cost productivity for the mortgage industry is significant. So, you know, we think there's a lot of momentum, you know, around vantage conversion as we move through the quarter and into next year.

Got it. And then on the Vantage score adoption, can you please talk about the use cases of pooling both Vantage score and FICO at this point? I know many of them can get Vantage for free, but I think they cannot use two different scores for the same loan in originations. So how are lenders actually leveraging Vantage when they have FICO? Thank you.

Yeah. Remember that this was a massive change for the industry. You know, for 25 plus years, the only score that was used was one, which was the FICO score and their systems, their processes. Think about the workflows that happen inside of a financial institution like a mortgage originator. Those all had to be changed and rebuilt to have the ability to, you know, absorb a second score and have it work through their process. So that's why, you know, last summer, you know, when FHFA and Director Pulte announced that they were going to allow Vantage to be used in the Fannie and Freddie underwriting process, you know, the industry had to start investing in technology changes and process flow changes in order to make that happen. And that's a big project. It took a lot of time. It's, you know, substantially complete now. And that's why we're we we made the decision last year to offer the free, you know, Vantage score with every paid FICO score. So our customers could start, you know, absorbing it, you know, flowing it through. They could see, you know, the score difference on a consumer, you know, which is very insignificant between Vantage and FICO. and also, you know, update their workflows so they could actually, you know, make that decision. And, you know, that process is, you know, happening. And as I said, we've got 200 lenders that, you know, are understandably smaller lenders, but the big ones, you know, have built their processes, built their workflows, and, you know, everything we hear from them, you know, they're going to start moving to the paid Vantage score to get that substantial cost savings versus the $10 plus, you know, FICO score, you know, going forward. We rolled out a new solution last week, because we heard from lenders that they may want to, for example, pull the Vantage score first for a dollar, and then on certain consumers, they may decide, well, I'm also going to pull the FICO score. And they wanted to have a process to be able to do that, you know, so we built that technology, you know, in order to bring that through. From my perspective and our perspective, what we know of the industry, that will be more an anomaly, you know, than the norm that, because remember, if you pull Vantage at a buck and then FICO at 10 plus, you know, that's $11 you've got invested. You know, if the $1 Vantage serves your purpose from a marketing standpoint, that's better for the consumer because they end up ultimately paying for it. And then it's also better for the lender because not every loan closes. So, you know, there's just a huge advantage with the $1 Vantage score.

Thank you. Our final question today is coming from George Tong from Goldman Sachs. Your line is now live.

Hi, thanks. I wanted to go back to the government business. Beyond the $150 million of new state business already signed, you mentioned active discussions around the new Medicaid work requirements. Can you frame the potential incremental opportunity there and where those states are in the decision and contracting process?

Yeah, it's a great question, George. And it's not only the work requirements, it's the new SNAP requirements, you know, where they have the error rate, you know, audit requirements from the federal government. If they're over the error rate, then they're going to have to start paying for some of the SNAP benefits, you know, going forward. So those are all changes that went in place a year ago, July, with OB3 that, you know, are driving kind of new product rollouts by us, but also, you know, engagement, you know, by the states. And as the federal government intended, they wanted to have, you know, more robust verification of income to try to bring down that $180 billion of improper payments. So, you know, that's a part of the pipeline, you know, going forward. And, you know, as I said earlier in one of the questions, you know, our kind of our core solutions, again, as a reminder, I know you know this, George, because you know us well, you know, when you think about a $5 billion TAM, you know, we're less than 20% of that today, you know, meaning less than half of the states use us for Medicaid, less than half of the states use us for SNAP, you know, less than half of the states use us for a lot of the other benefits. It's that white space, you know, which we think about as new customers and new states and new agencies we want to do business with, you know, are doing their verifications principally manual today. And that's our opportunity. And that's a big part of our pipeline. It always has been. So that hasn't changed with OB-3 and it's just OB-3 has just increased the commercial discussions, the frequency of them, the level of them. But the core value prop we have hasn't changed, and it's really around delivering that value of speed of social service delivery with an instant verification, the caseworker productivity that delivers from our solution versus doing it manually, and then, of course, the integrity that comes in using our verified data to make sure that the applicant should be receiving the benefits, or if they have the benefits, to make sure they should still be getting them. And, you know, as you know, the $180 billion is a, you know, is a lot of opportunity, you know, for the federal government working through the states, you know, to, you know, reduce the cost, you know, of social services for those that, you know, currently don't qualify.

Very helpful. Thank you.

Thank you. We've reached the end of our question and answer session. I'd like to turn the flyback over to Trevor for any further closing comments.

Thanks for everybody's time today. If you have any follow-up questions, reach out to me and Molly and we'll be available. Thank you.

Thank you. That does conclude today's teleconference webcast. You may just connect your line at this time and have a wonderful day. We thank you for your participation today.