Equifax Beats Q4 Forecasts, Eyes Growth in 2026 Despite Mortgage Market Headwinds
ATLANTA – Equifax (NYSE: EFX) capped off 2025 on a high note, reporting fourth-quarter earnings that surpassed expectations and setting what executives called a foundation for "strong momentum" heading into the new year. The performance comes despite persistent unevenness in key U.S. markets like mortgage and hiring.
For the full year, revenue reached $6.075 billion, a 7% increase on an organic, constant-currency basis. Adjusted earnings per share landed at $7.65. A significant highlight was free cash flow, which hit a record $1.13 billion, representing a 120% conversion rate. "Our results were well above the guidance we provided, demonstrating the resilience and diversification of our business model," said CEO Mark Begor during the earnings call.
The fourth quarter alone saw revenue of $1.551 billion, a 9% jump. Strength was notably concentrated in the Workforce Solutions unit—buoyed by government and mortgage-related services—and the U.S. Information Solutions (USIS) segment, where mortgage revenue surged 33%. This growth was attributed partly to higher FICO score royalty pass-through revenue and new products like the TWN Indicator for mortgage pre-approvals.
However, this very pass-through revenue became a focal point of the call. Executives spent considerable time explaining that these royalties, which are passed on to FICO at cost, are inflating top-line revenue but applying pressure to reported EBITDA margins. To provide clearer insight, Equifax plans to disclose results both with and without these pass-throughs moving forward. Excluding them, the company's underlying margin performance appears stronger.
Looking ahead, Equifax's 2026 guidance projects revenue of approximately $6.7 billion and adjusted EPS of $8.50, assuming a modestly declining U.S. mortgage market. A major wildcard remains the potential adoption of VantageScore by mortgage agencies. While not factored into the outlook, a full switch in 2026 could, per company analysis, reduce revenue but significantly boost profitability by eliminating FICO royalty costs.
Beyond financials, the narrative centered on Equifax's strategic pillars: its unique data assets and AI integration. Begor stated that roughly 90% of revenue stems from proprietary "only Equifax" data. On the AI front, the company is leveraging tools like Google Gemini for employee productivity and expects $75 million in annual cost savings from its EFX.AI initiative over the next three years.
Market Voices: Analyst & Investor Reactions
David Chen, Portfolio Manager at Clearwater Capital: "The cash flow conversion is impressive and speaks to the operating leverage coming through post-cloud transformation. The guidance for 10%+ revenue growth in 2026 is ambitious but seems achievable if their non-mortgage diversified markets hold steady. The VantageScore overhang is the key variable to watch."
Rebecca Shaw, Senior Analyst at FinTrust Advisors: "The underlying business health is better than the headline margins suggest once you strip out the FICO pass-throughs. The Work Number database growth and the vitality index hitting 15% show they're innovating and monetizing their data effectively. This was a solid operational quarter."
Michael Torrance, Independent Financial Blogger: "Are we just glossing over the fact that a core driver of their 'beat' was a cost they pass through? It's accounting gymnastics. And touting AI for writing code while facing a potential $270 million revenue hit if the mortgage score landscape changes? That's a massive risk they're downplaying. The stock's run-up feels premature."
Linda Gibson, Retired Bank Compliance Officer: "As a former user of their services, the expansion of The Work Number is a double-edged sword. It's powerful for verification, but every new record collection point raises serious privacy questions. I hope their AI 'efficiency' drives include robust data security, not just call center automation."