Q2 2026 Equifax Inc Earnings Call

July 21, 2026

Speaker #1: Greetings, and welcome to the Equifax second quarter 2026 earnings call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation.

Operator: Greetings, and welcome to the Equifax Q2 2026 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Mr. Trevor Burns, Senior Vice President, Investor Relations. Thank you, sir. Please go ahead.

Speaker #1: If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded.

Speaker #1: I'd now like to turn the call over to your host, Mr. Trevor Burns, Senior Vice President of Investor Relations. Thank you, sir. Please go ahead.

Speaker #2: Thanks, and good morning. Welcome to today's conference call. I'm Trevor Burns. With me today are Mark Begor, Chief Executive Officer; and John Gamble, Chief Financial Officer.

Trevor Burns: Thanks, good morning. Welcome to today's conference call. I am Trevor Burns. With me today are Mark Begor, Chief Executive Officer, and John Gamble, Chief Financial Officer. Today's call is being recorded, and an archive of the recording will be available later today in the IR calendar section of the News and Events tab at our investor relations website. During the call, we will 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 2Q 2026 Earnings Conference Call. We will be making certain forward-looking statements, including Q3 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.

Speaker #2: Today's call is being recorded and archived. The recording will be available later today in the IR Calendar section of the News and Events tab on our Investor Relations website.

Speaker #2: During the call, we will make reference to certain materials that can be found in the Presentation section of the News and Events tab on our IR website.

Speaker #2: These materials are labeled Q2 2026 earnings conference call. Also, we'll be making certain forward-looking statements including third quarter and full-year 2026 guidance to help you understand Equifax and its business environment.

Speaker #2: 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.

Trevor Burns: 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 will be making certain non-GAAP financial measures, including adjusted EPS, adjusted EBITDA, adjusted EBITDA margins, and cash conversion, which are adjusted for certain items that affect the comparability of our underlying operational performance. All references to EPS, EBITDA margins, and cash conversion are references to non-GAAP measures. During the Q2, we recorded a $40 million charge net of insurance proceeds for a legal settlement associated with a resolution of claims related to a previously disclosed coding issue. These non-GAAP measures are detailed in reconciliation tables, which are included with our earnings release and can be found in the Financial Results section of the Financial Info tab at our IR website. Now I'd like to turn it over to Mark.

Speaker #2: During this call, we will be making 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.

Speaker #2: All references to EPS, EBITDA, EBITDA margins, and cash conversion are references to non-GAAP measures. During the second quarter, we recorded a $40 million charge, net of insurance proceeds, for a legal settlement associated with the resolution of claims related to a previously disclosed coding issue.

Speaker #2: These non-GAAP measures are detailed, and reconciliation tables are included with our earnings release and can be found in the Financial Results section of the Financial Info tab on our IR website.

Speaker #2: Now, I'd like to turn it over to Mark.

Speaker #3: Thanks, Trevor, and good morning. Turning to slide 4, Equifax delivered strong results in the second quarter with revenue of $1.7 billion, up 11% on a reported basis and 10% in constant currency, which was $5 million above the April guidance midpoint.

Mark Begor: Thanks, Trevor, and good morning. Turning to slide four, Equifax delivered strong results in the Q2 with revenue of $1.7 billion, up 11% on a reported basis and 10% in constant currency, which was $5 million above the April guidance midpoint. Ex-FICO mortgage royalties reported revenue was up about 7%. We also delivered very strong margin performance, driving strong EPS growth of 13%. Organic diversified markets constant dollar revenue grew about 5.5% in the quarter and better than our expectations, principally in Workforce Solutions, benefiting from strong execution in Talent Solutions and consumer lending. EWS government revenue declined slightly in the quarter as expected, due to a tough 2025 comp.

Speaker #3: Next, FICO mortgage royalties reported revenue was up about 7%. We also delivered very strong margin performance, driving strong EPS growth of 13%. Organic Diversified Markets constant dollar revenue grew about 5.5% in the quarter, and better than our expectations, principally in Workforce Solutions, benefiting from strong execution in Talent Solutions and Consumer Lending.

Speaker #3: EWS government revenue declined slightly in the quarter as expected due to a tough 2025 comp. We were very pleased with the commercial execution in government during the first half, signing principally state government contracts that bring the total in the last four months to about $300 million, with about $100 million of the new business that will principally benefit 2027 and $200 million of contract renewals.

Mark Begor: We were very pleased with the commercial execution in government during the H1, signing principally state government contracts that bring the total in the last 4 months to about $300 million, with about $100 million of the new business that will principally benefit 2027 and $200 million of contract renewals. This is a strong indicator of the unique benefit our proprietary twin data provides to government customers and the long runway for government against their $5 billion TAM. USIS diversified markets revenue was slightly better than we expected, accelerating over 300 basis points sequentially, and international revenue was slightly lower than we expected at up 4%, principally reflecting market weaknesses in Canada and the UK. US mortgage revenue was up 25% in the quarter and up 7% ex-FICO. This was stronger than our expectations against a weaker-than-expected US mortgage market from higher interest rates.

Speaker #3: This is a strong proprietary twin data provides to government customers and the long runway for government against their $5 billion TAM. USIS diversified markets revenue was slightly better than we expected, accelerating over 300 basis points sequentially, and international revenue was slightly lower than we expected, up 4%, principally reflecting market weaknesses in Canada and the UK.

Speaker #3: US mortgage revenue was up 25% in the quarter, and up 7% ex-FICO. This was stronger than our expectations, against a weaker-than-expected US mortgage market from higher interest rates.

Speaker #3: During the quarter, US mortgage rates increased meaningfully, with the current 30-year fixed rates up 30 basis points to about 6.6% versus the 6.3% when we gave guidance in April.

Mark Begor: During the quarter, US mortgage rates increased meaningfully with the current 30-year fixed rates up 30 basis points to about 6.6% versus the 6.3% when we gave guidance in April. As a result, we saw overall industry transaction volumes run below our expectations that were offset with new products and some share gains. US macroeconomic conditions remain relatively consistent with the environment we saw in April. The ongoing Middle East conflict has resulted in continued higher levels of inflation that has disproportionately pressured the lower income or subprime consumer demographic. Despite these inflationary pressures, low unemployment continues to support overall consumer health. Continued high employment levels have acted to limit more broad-based credit impacts, which give lenders the confidence to continue originating loans.

Speaker #3: As a result, we saw overall industry transaction volumes run below our expectations, but these were offset with new products and some share gains. U.S. macroeconomic conditions remain relatively consistent with the environment we saw in April.

Speaker #3: The ongoing Middle East conflict has resulted in continued higher levels of inflation, which have disproportionately pressured the lower-income, or subprime, consumer demographic. With these inflationary pressures, low unemployment continues to support overall consumer health.

Speaker #3: Continued high employment levels have acted to limit more broad-based credit impacts, which gives lenders the confidence to continue originating loans. We have not seen financial institutions increase their portfolio management reviews or decrease consumer credit lines, which are actions they would typically take when they anticipate an economic downturn.

Mark Begor: We have not seen financial institutions increase their portfolio management views or decrease consumer credit lines, which are actions they would typically take when they anticipate an economic downturn. To the Equifax team is to leverage the power of AI to expand our margins and free cash flow through accelerating growth of high-margin proprietary database products and driving operational productivity through accelerated AI deployments across Equifax. Q2 EBITDA of $552 million was up about 10.5%, with an EBITDA margin excluding FICO of almost 35%, up a very strong 120 basis points year to year and 40 basis points above the midpoint of our April framework. EBITDA margin expansion was well above our 75 basis point target for 2026 and 70 basis points above our 50 basis point long-term financial framework goal. The strong EBITDA margins were driven by operating leverage and AI-driven cost productivity, principally in operations.

Speaker #3: The Equifax team is to leverage the power of AI to expand our margins and free cash flow by accelerating growth of high-margin proprietary database products and driving operational productivity through accelerated AI deployments across Equifax.

Speaker #3: Second quarter EBITDA of $552 million was up about 10.5%, with an EBITDA margin excluding FICO of almost 35%, up a very strong 120 basis points year-to-year and 40 basis points above the midpoint of our April framework.

Speaker #3: EBITDA margin expansion was well above our 75-basis-point target for 2026, and 70 basis points above our 50-basis-point long-term financial framework goal.

Speaker #3: The strong EBITDA margins were driven by operating leverage and AI-driven cost productivity, principally in operations. Equifax reported EBITDA margins, including the impact of FICO, were 32.5% in the quarter, flat with last year.

Mark Begor: Equifax reported EBITDA margins, including the impact of FICO, were 32.5% in the quarter, flat with last year. EPS at $2.25 per share was up a very strong 13% and $0.05 above our April guidance midpoint. Equifax returned $366 million to shareholders during the quarter, including repurchasing almost 1.8 million shares or over 1% of shares outstanding for $300 million, taking advantage of the lower Equifax stock price. Equifax paid $66 million of dividends in the quarter after increasing our dividend by 12% in February. Over the last 12 months ended 30 June, Equifax has returned over $1.6 billion of cash to our shareholders or 100% of our operating cash flow. We continue to expect strong free cash flow in the future of over $1 billion in 2026 and cash conversion to continue at over 100%.

Speaker #3: EPS at $2.25 per share was up a very strong 13% and 5 cents above our April guidance midpoint. Equifax returned $366 million to shareholders during the quarter, including repurchasing almost 1.8 million shares, or over 1% of shares outstanding, for $300 million, taking advantage of the lower Equifax stock price.

Speaker #3: And Equifax paid $66 million of dividends in the quarter, after increasing our dividend by 12% in February. Over the last 12 months ended June 30th, Equifax has returned over $1.6 billion of cash to our shareholders, or 100% of our operating cash flow.

Speaker #3: We continue to expect strong free cash flow in the future of over $1 billion in 2026, and cash conversion to continue at over 100%.

Speaker #3: With our financial capacity of over $1.5 billion, we can execute the Circulo Decredito acquisition, while maintaining a strong balance sheet with debt leverage at under 3 times EBITDA, and while continuing to repurchase shares in the second half, but at a slower pace than the first half.

Mark Begor: With our financial capacity of over $1.5 billion, we can execute the Círculo de Crédito acquisitions while maintaining a strong balance sheet with debt leverage at under 3x EBITDA and while continuing to repurchase shares in the H2, but at a slower pace than the H1. Equifax continued its strong execution against our EFX 2028 strategic priorities, as listed on the right side of slide four, with several big milestones during the quarter. We further accelerated our implementation of AI and agentic capabilities across our global analytical decisioning and operational platforms for new products. In the H1 of the year, we launched 54 new products that have AI capabilities directly embedded in the product architecture, which directly benefit our customers and contributed to our strong 16% Vitality Index in the quarter.

Speaker #3: Equifax continued its strong execution against our EFX 2028 strategic priorities, as listed on the right side of slide 4, with several big milestones during the quarter.

Speaker #3: We further accelerated our implementation of AI and energetic capabilities across our global analytical decisioning and operational platforms for new products. In the first half of the year, we launched 54 new products that have AI capabilities directly embedded in the product architecture, which directly benefit our customers and contributed to our strong 16% vitality index in the quarter.

Speaker #3: We also expanded the deployment of AI tools and agents across EQUIFAX in internal product and model development, operations, technology, and our G&A support functions.

Mark Begor: We also expanded the deployment of AI tools and agents across Equifax in internal product and model development, operations, technology, and our GNA support functions. The pace of AI adoption inside Equifax is accelerating rapidly, which allows us to double our AI for EFX productivity goal from $75 million to $150 million from 2026 to 2028. We know we are in the very early innings of our deployment of AI and agentic automation inside Equifax, both on enabling new products based on our proprietary data and driving speed, accuracy, and productivity across every corner of Equifax. In the Q2, we delivered a very strong 16% new product Vitality Index leveraging the Equifax Cloud and EFX.AI capabilities. New products based on differentiated proprietary data, including our Twin Indicator solution, continue to drive strong new product growth and share gains.

Speaker #3: The pace of AI adoption inside EQUIFAX is accelerating rapidly, which allows us to double our AI for EFX productivity goal from 75 million dollars to 150 million dollars from 2026 to 2028.

Speaker #3: We know we are in the very early innings of our deployment of AI and energetic automation inside Equifax, both enabling new products based on our proprietary data and driving speed, accuracy, and productivity across every corner of Equifax.

Speaker #3: In the second quarter, we delivered a very strong 16% new product vitality index, leveraging the Equifax Cloud and EFX.AI capabilities. New products based on differentiated proprietary data, including our Twin Indicator solution, continue to drive strong new product growth and share gains.

Speaker #3: We have signed a definitive agreement two weeks ago to acquire Círculo de Crédito, the fastest-growing credit bureau in Mexico, for an enterprise value of $750 million, with a very attractive EBITDA multiple of 9.4 times, including run-rate synergies.

Mark Begor: We were energized to sign a definitive agreement 2 weeks ago to acquire Círculo de Crédito, the fastest growing credit bureau in Mexico, for an enterprise value of $750 million, with a very attractive EBITDA multiple of 9.4x, including run rate synergies. Turning to slide five, Workforce Solutions revenue was up 7% and better than our expectations, principally in Verifier diversified markets, which grew 7%. EWS diversified market revenue growth was driven by outstanding performance in Talent Solutions and Consumer Lending, both up high double digits in the Q2. Talent Solutions continues to outperform the underlying white-collar labor market with strong growth in employment-based solutions and increased product penetration across our incarceration and education datasets, new solutions built co-innovating with background screeners and pricing. Talent volumes were up mid-single digits in the Q2 relative to an overall market decline in the first 2 months of the Q2.

Speaker #3: Bringing up slide 5, Workforce Solutions revenue was up 7% and better than our expectations, principally in Verifier diversified markets, which grew 7%. EWS diversified market revenue growth was driven by outstanding performance in Talent Solutions and Consumer Lending, both up high double digits in the quarter.

Speaker #3: Talent Solutions continues to outperform the underlying white-collar labor market, with strong growth in employment-based solutions and increased product penetration across our incarceration and education datasets, as well as new solutions built by co-innovating with background screeners and pricing.

Speaker #3: Talent volumes were up mid-single digits in the quarter, relative to an overall market decline in the first two months of the second quarter. The team continues to execute very well.

Mark Begor: The team continues to execute very well. Consumer Lending also had another very strong quarter with strong double-digit revenue growth across the portfolio in auto, card, and consumer finance, principally due to strong volume growth and new product rollouts. As mentioned earlier, the EWS government team delivered an outstanding quarter, signing about $300 million in principally state customer agreements in the last 4 months, including renewals, win backs, and new customer wins. This is a very strong performance and reflects the unique Twin position in government and strong commercial momentum post OB3 legislation that was signed last July. The contract signings were a positive and stronger than our expectations. Q2 government revenue was down about 4% and reflects a challenging comp from a large win in 2025.

Speaker #3: Consumer lending also had another very strong quarter with strong double-digit revenue growth across the portfolio in auto, card, and consumer finance, principally due to strong volume growth and new product rollouts.

Speaker #3: As mentioned earlier, the EWS government team delivered an outstanding quarter signing about 300 million dollars in principally state customer agreements in the last four months.

Speaker #3: Including renewals, win-backs, and new customer wins, this is a very strong performance and reflects the unique twin position in government and strong commercial momentum post-OB3 legislation that was signed last July.

Speaker #3: The contract signings were positive and stronger than our expectations. Second quarter government revenue was down about 4% and reflects a challenging comp from a large win in 2025.

Speaker #3: EWS mortgage revenue was up 8% in the quarter and continues to outperform underlying market volumes by high single digits, driven by record growth, new products, and pricing.

Mark Begor: EWS mortgage revenue was up 8% in the Q2 and continues to outperform underlying market volumes by high single digits from record growth, new products, and pricing. In Workforce Solutions, EBITDA margins at 52.1% were consistent with the Q1. However, margins were higher than we expected given strong operating leverage from better than expected diversified markets revenue performance. Work Number record additions continued to perform well again in the Q2, with strong 10% growth in active records up to 217 million and 124 million total current active records, which were also up 10%, which represents 108 million unique SSNs. EWS has a long runway for record growth against the 250 million income producing Americans. Turning to slide six. In the H1, we made outstanding progress with our government customers converting our record commercial pipeline with renewals, extending existing relationships and adding new, principally state government customers.

Speaker #3: And Workforce Solutions EBITDA margins of 52.1% were consistent with the first quarter; however, margins were higher than we expected given strong operating leverage from better-than-expected diversified markets revenue performance.

Speaker #3: Twin record additions continue to perform well again in the second quarter, with strong 10% growth in active records up to 217 million, and 124 million total current active records, which were also up 10%, which represents 108 million unique SSNs.

Speaker #3: EWS has a long runway for record growth against the 250 million income-producing Americans. Turning to slide 6, in the first half, we made outstanding progress with our government customers, converting our record commercial pipeline with renewals, extending existing relationships, and adding new, principally state government, customers.

Speaker #3: In the last four months, EWS signed agreements with state agencies for the provisioning of income and employment data from Equifax supporting CMS and SNAP, totaling about $300 million in annual contract value, including about $100 million in new business and $200 million in renewals.

Mark Begor: In the last 4 months, EWS signed agreements with state agencies for the provisioning of income and employment data from Equifax supporting CMS and SNAP, totaling about $300 million in annual contract value, including about $100 million in new business and $200 million in renewals. An extremely strong result that will deliver some benefits in the H2, but principally drive 2027 growth. These substantial contract signings, along with our current deal pipelines up about 2x versus last year, reinforces our confidence in the medium and long-term growth opportunities for EWS government at the federal level and in supporting states in meeting the new OB3 federal requirements regarding accuracy and frequency of income validation in Medicaid and SNAP. On slide six, we provided examples of some of the recent government wins, including an almost $60 million annual contract value win back supporting a state in delivering CMS benefits.

Speaker #3: An extremely strong result that will deliver some benefits in the second half, but principally drive 2027 growth. These substantial contract signings, along with our current deal pipelines—up about 2x versus last year—reinforce our confidence in the medium- and long-term growth opportunities for EWS Government at the federal level, and in supporting states in meeting new OB3 federal requirements regarding accuracy and frequency of income validation in Medicaid and SNAP.

Speaker #3: On slide 6, we provided examples of some of the recent government wins, including an almost $60 million annual contract value win-back supporting a state in delivering CMS benefits.

Speaker #3: The win-back is a key proof point of the value of the twin data relative to other sources of income verification data, including state wage data and consumer-permissioned data.

Mark Begor: The win back is a key proof point of the value of the Twin data relative to other sources of income verification data, including state wage data and consumer permission data. We are also seeing expanding opportunities with multiple federal agencies in support of their big focus on reducing improper payments. Equifax is serving as a key advisor at the federal and state level, leveraging our differentiated income and employment data to drive speed, accuracy, and productivity of social service benefits delivery. The EWS team is clearly on offense supporting the states with their social service program requirements and has significant opportunities for long-term revenue growth supporting the federal and state programs in EWS's big $5 billion TAM. Turning to slide seven. USIS Q2 revenue was up a strong 17% and up 6% excluding FICO and consistent with their long-term framework.

Speaker #3: We are also seeing expanding opportunities with multiple federal agencies in support of their strong focus on reducing improper payments. Equifax is serving as a key advisor at the federal and state levels, leveraging our differentiated income and employment data to drive speed, accuracy, and productivity in social service benefits delivery.

Speaker #3: The EWS team is clearly on offense, supporting the states with their social service program requirements and has significant opportunities for long-term revenue growth supporting the federal and state programs in EWS's big $5 billion TAM.

Speaker #3: Turning to slide 7, USIS second quarter revenue was up a strong 17% and up 6% excluding FICO, and consistent with their long-term framework. This performance was delivered despite a weaker-than-expected US mortgage market that I discussed earlier.

Mark Begor: This performance was delivered despite a weaker than expected US mortgage market that I discussed earlier. Diversified markets revenue grew 6%, accelerating over 300 basis points sequentially and slightly stronger than our expectations. B2B revenue was up 5% and also up over 300 basis points sequentially. Within online, we saw high single-digit growth in FI from stronger volumes, new business, and pricing, and high single-digit growth in auto from pricing and new business wins. The strength in FI and auto was partially offset by weakness in third-party bureau sales from our sales to Experian and TransUnion. Consumer direct, our D2C business, delivered continued strong growth with revenue up a very strong 11%. USIS mortgage revenue was up 40% and up mid-single digits excluding FICO, with hard mortgage inquiries up only 1%.

Speaker #3: Diversified Markets revenue grew 6%, accelerating over 300 basis points sequentially and slightly stronger than our expectations. B2B revenue was up 5% and also increased over 300 basis points sequentially.

Speaker #3: Within Online, we saw high single-digit growth in FI from stronger volumes, new business, and pricing, and high single-digit growth in Auto from pricing and new business wins.

Speaker #3: The strength in FI and auto was partially offset by weakness in third-party bureau sales from our sales-to-Experian and TransUnion. Consumer Direct, our D2C business, delivered continued strong growth, with revenue up a very strong 11%.

Speaker #3: USIS mortgage revenue was up 40%, and up mid-single digits excluding FICO, with hard mortgage inquiries up only 1%. As I referenced earlier, mortgage rates were up from the levels we saw in April throughout most of the quarter, and as a result, mortgage origination activity was lower in the second quarter than the levels we expected when we gave guidance back in April, partially offset by share gains in pre-qual and pre-approval products.

Mark Begor: As I referenced earlier, mortgage rates were up from the levels we saw in April throughout most of the quarter, and as a result, mortgage origination activity was lower in Q2 than the levels we expected when we gave guidance back in April, partially offset by share gains in pre-qual and pre-approval products. As a reminder, USIS began to deliver significant share gains in Q2 of last year from both pre-qual and pre-approval products that included both the unique Twin Indicator and our NC-Plus data. USIS EBITDA margins were 32.8% in the quarter. Excluding FICO, USIS EBITDA margins were 40.5% and up over 140 basis points versus last year, which was a very strong performance. The improvement was driven by stronger diversified markets revenue growth and good cost management. Turning to slide eight.

Speaker #3: As a reminder, USIS began to deliver significant share gains in the second quarter of last year from both pre-qual and pre-approval products that included both the unique Twin Indicator in our NC Plus data.

Speaker #3: USIS EBITDA margins were 32.8% in the quarter. Excluding FICO, USIS EBITDA margins were 40.5% and up over 140 basis points versus last year, which was a very strong performance.

Speaker #3: The improvement was driven by stronger, diversified markets revenue growth and good cost management. Turning to slide 8, in April, the FHFA activated use of VantageScore for over 20 mortgage lenders.

Mark Begor: In April, the FHFA activated use of VantageScore for over 20 mortgage lenders. This was a big milestone to bring score competition to the mortgage industry. While the vast majority of these mortgage lenders have begun using VantageScore, we have also seen a groundswell of VantageScore adoption with about 1,200 additional mortgage lenders pulling our free VantageScore alongside a paid FICO Score from Equifax. On the left side of slide eight, you can see that our Q2 VantageScore volume is up almost 3x compared to Q1. The vast majority of the 2.2 million transactions were pulled by the 1,200 lenders pulling a free VantageScore alongside a paid FICO Score as they drive their adoption of the new VantageScore opportunity.

Speaker #3: This was a big milestone to bring score competition to the mortgage industry. While the vast majority of these mortgage lenders have begun using VantageScore, we have also seen a groundswell of VantageScore adoption, with about 1,200 additional mortgage lenders pulling our free VantageScore alongside a paid FICO score from Equifax.

Speaker #3: On the left side of slide 8, you can see that our second quarter VantageScore volume is up almost 3x compared to the first quarter.

Speaker #3: The vast majority of the 2.2 million transactions were pulled by the 1,200 lenders pulling a free VantageScore, alongside a paid FICO score, as they drive their adoption of the new VantageScore opportunity.

Speaker #3: We also have about 100 mortgage lenders, principally smaller, non-GSE lenders, and lenders underwriting HELOCs, or home equity loans, who have moved exclusively to utilizing VantageScore at our $1 price point for their mortgage originations.

Mark Begor: We also have about 100 mortgage lenders, principally smaller non-GSE lenders and lenders underwriting HELOCs or home equity loans, who have moved to exclusively utilizing VantageScore at our $1 price point for their mortgage originations. Although volumes remain low at about 10,000 transactions in the quarter, we saw significant acceleration as we moved through the tail end of the quarter. As a reminder, we make no margin on the sale of FICO scores. FICO mortgage scores revenue is about 50% of USIS mortgage revenue and almost 7% of total Equifax revenue, delivering zero margins. We continue to expect strong adoption of VantageScore given the substantial $1 billion annual cost savings opportunity for the mortgage originators and consumers. Equifax plans to maintain the $1 VantageScore price through the end of 2027 to continue driving VantageScore adoption with our customers.

Speaker #3: Although volumes remain low, at about 10,000 transactions in the quarter, we saw significant acceleration as we moved through the tail end of the quarter.

Speaker #3: And as a reminder, we make no margin on the sale of FICO scores. FICO mortgage scores revenue is about 50% of USIS mortgage revenue and almost 7% of total Equifax revenue, delivering zero margins.

Speaker #3: We continue to expect strong adoption of VantageScore, given the substantial $1 billion annual cost savings opportunity for mortgage originators and consumers. EQUIFAX plans to maintain the $1 VantageScore price through the end of 2027 to continue driving VantageScore adoption with our customers.

Speaker #3: The FHFA decision last July to allow mortgage score choice between Vantage and FICO is a big win for consumers and for the industry.

Mark Begor: The FHFA decision last July to allow mortgage score choice between Vantage and FICO is a big win for consumers and for the industry. Turning to slide nine. International revenue was up about 4% in constant currency. International saw high single-digit revenue growth in Asia Pacific and mid-single digit growth in Canada. Latin American and Europe delivered low double-digit revenue growth in the quarter. International saw market headwinds in both Canada and the UK, which dampened their growth rates. In LATAM, we saw solid mid to high single-digit growth in our largest markets like Brazil, Chile, and Argentina, with lower growth rates in some of our other smaller Latin American markets. International EBITDA margins were 27.6% in the quarter, up a strong 120 basis points versus last year. EBITDA margin improvements were driven by technology savings as the final stages of our cloud transformation gets completed and strong cost management.

Speaker #3: Turning to slide 9, international revenue was up about 4% in constant currency. International saw high single-digit revenue growth in Asia Pacific and mid-single-digit growth in Canada.

Speaker #3: Latin America and Europe delivered low single-digit revenue growth in the quarter. International saw market headwinds in both Canada and the UK, which dampened their growth rates.

Speaker #3: In LATAM, we saw solid mid- to high-single-digit growth in our largest markets like Brazil, Chile, and Argentina, with lower growth rates in some of our other, smaller Latin American markets.

Speaker #3: International EBITDA margins were 27.6% in the quarter, up a strong 120 basis points versus last year. EBITDA margin improvements were driven by technology savings as the final stages of our cloud tech transformation get completed and strong cost management.

Speaker #3: Moving to slide 10, two weeks ago, Equifax signed a definitive agreement to acquire Circulo Credito for an enterprise value of $750 million. This represents an 11.7 times EBITDA multiple based on Circulo's expected 2026 EBITDA.

Mark Begor: Moving to slide 10. Two weeks ago, Equifax signed a definitive agreement to acquire Círculo de Crédito for an enterprise value of $750 million. This represents an 11.7x EBITDA multiple based on Círculo's expected 2026 EBITDA. With the addition of expected run rate savings, the EBITDA multiple is expected to be about 9.4x, which is attractive and significantly below our current EBITDA multiple. We expect the Círculo acquisition to be completed in Q4, subject to customary closing conditions and regulatory approvals, and for the acquisition to be accretive in year 1. Círculo is the fastest growing credit bureau in Mexico and the only credit bureau licensed to operate both a consumer and commercial credit bureau service with more than 1,700 bank, retail, fintech, and small business lending, microfinance, and telecommunications customers. Importantly, 2 billion trade lines covering 80 million validated identities in Mexico.

Speaker #3: With the addition of expected run rate savings, the EBITDA multiple is expected to be about 9.4 times, which is attractive and significantly below our current EBITDA multiple.

Speaker #3: We expect the Circulos acquisition to be completed in the fourth quarter, subject to customary closing conditions and regulatory approvals, and for the acquisition to be accretive in year one.

Speaker #3: Circulo is the fastest-growing credit bureau in Mexico and the only credit bureau licensed to operate both consumer and commercial credit bureau services, with more than 1,700 bank, retail, fintech, and small business lending, microfinance, and telecommunications customers. Importantly, it has $2 billion in trade lines covering 80 million validated identities in Mexico.

Speaker #3: Circulo is a leader in alternative data, or information not included in traditional credit reports, in Mexico, including gig economy transactions and utility payment history.

Mark Begor: Círculo is a leader in alternative data or information not included in traditional credit reports in Mexico, including gig economy transactions and utility payment history. This alternative data can responsibly expand access to credit and support a more inclusive economy, critical in a country where nearly 33 million people are engaged in an informal employment, such as unregistered micro-businesses or gig employment. This acquisition will offer Círculo de Crédito customers access to Equifax's industry-leading cloud-native capabilities Decision and analytic platforms and patented EFX.AI technology and award-winning identity protection and fraud prevention offerings for the development of solutions designed to help their customers grow and expand financial inclusion in Mexico. The acquisition fits perfectly in our balanced capital allocation framework, with our focus on highly accretive bolt-on acquisitions, while continuing significant ongoing return of capital to shareholders and maintaining our strong investment-grade balance sheet.

Speaker #3: This alternative data can responsibly expand access to credit and support a more inclusive economy critical in a country where nearly 33 million people are engaged in an informal employment, such as unregistered micro businesses, or gig employment.

Speaker #3: The acquisition will offer circulos credito customers access to EQUIFAX's industry-leading cloud-native capabilities, decision and analytic platforms, and patented EFX.AI technology and award-winning identity protection and fraud prevention offerings, for the development of solutions designed to help their customers grow and expand financial inclusion in Mexico.

Speaker #3: The acquisition fits perfectly in our balanced capital allocation framework, with our focus on highly accretive bolt-on acquisitions while continuing significant ongoing return of capital to shareholders and maintaining our strong investment-grade balance sheet.

Speaker #3: Turning to slide 11, Circulo's unique market position has delivered very strong financial results. Circulo's compound annual revenue growth rate was a very strong 23% from 23 to 25, with revenue growth for the 12 months ended June 30th up a very strong 31%.

Mark Begor: Turning to slide 11, Círculo's unique market position has delivered very strong financial results. Círculo's compound annual revenue growth rate was a very strong 23% from 2023 to 2025, with revenue growth for the 12 months ended 30 June, up a very strong 31%. Círculo revenue growth has been led by their unique alternative credit data advantage enabled by deep relationships with Fintechs, with over 40% of Círculo's 2025 revenue generated from Fintechs with a growth rate of over 50%. Círculo's unique alternative data and the team's strong relationships with their Fintech customers are a key driver of future Círculo revenue growth in a market where consumer credit is under-penetrated and growing rapidly. Círculo delivered very strong mid-40s adjusted EBITDA margins in both 2025 and over the last 12 months through 30 June.

Speaker #3: Circulo revenue growth has been led by their unique alternative credit data advantage, enabled by deep relationships with fintechs. Over 40% of Circulo's 2020–2025 revenue was generated from fintechs, with a growth rate of over 50%.

Speaker #3: Circulo’s unique alternative data and the team’s strong relationships with their fintech customers are a key driver of future Circulo revenue growth in a market where consumer credit is underpenetrated and growing rapidly.

Speaker #3: Circulo delivered very strong, mid-40s adjusted EBITDA margins in both 2025 and over the last 12 months through June 30th. For the full year 2026, Circulo revenue is expected to grow at a high double-digit rate, while maintaining very strong, mid-40s adjusted EBITDA margins.

Mark Begor: For the full year of 2026, Círculo revenue is expected to grow high double digits while maintaining very strong mid-40s adjusted EBITDA margins. The very attractive Círculo financial results are accretive to the Equifax long-term financial framework of 7% to 10% organic revenue growth, consistent with our capital allocation plan and driving shareholder returns. Turning to slide 12, Equifax is executing a broad AI agentic strategy that leverages EFX.AI along with our cloud-native technology, our Ignite analytics platform, and our scale proprietary data to deliver higher performing EFX.AI-powered scores, models, and products to our customers. Equifax has a strong AI data moat around Equifax's unique and proprietary data, with over 90% of Equifax revenue generated from proprietary data sources included in over 100 unique data exchanges globally.

Speaker #3: The very attractive Circulo financial results are accretive to the Equifax long-term financial framework of 7% to 10% organic revenue growth, consistent with our capital allocation plan, and driving shareholder returns.

Speaker #3: Turning to slide 12, Equifax is executing a broad AI and energetic strategy that leverages EFX.AI, along with our cloud-native technology, our Ignite Analytics platform, and our scaled proprietary data to deliver higher-performing EFX.AI-powered scores, models, and products to our customers.

Speaker #3: Equifax has a strong AI data moat around Equifax’s unique and proprietary data, with over 90% of Equifax revenue generated from proprietary data sources included in over 100 unique data exchanges globally.

Speaker #3: These exchanges receive contributed proprietary data directly from the data owners that is not publicly available, such as our Income and Employment exchanges, Credit exchanges, Alternative Credit Data exchanges, and other unique proprietary data assets.

Mark Begor: These exchanges receive contributed proprietary data directly from the data owners that is not publicly available, such as our income and employment exchanges, credit exchanges, alternative credit data exchanges, and other unique proprietary data assets. Said differently, only Equifax and our credentialed customers can access our data. The use and protection of our data has another layer of moat from both the national and local laws that restrict the data's usage and by agreements with our contributors, including requirements regarding the accuracy and currency of this data and the requirement to provide consumers in the 24 countries in which we operate these exchanges with the ability to review and dispute the data managed in these unique Equifax exchanges.

Speaker #3: Said differently, only Equifax and our credentialed customers can access our data. The use and protection of our data has another layer of moat from both the national and local laws that restrict the data's usage, and by agreements with our contributors—including requirements regarding the accuracy and currency of this data, and the requirement to provide consumers in the 24 countries in which we operate these exchanges with the ability to review and dispute the data managed in these unique Equifax exchanges.

Speaker #3: For example, in the US, our EWS income and employment data are broad credit and alternative credit data exchanges are not only governed by the agreements with the contributors, but also by the US Fair Credit Reporting Act, or FCRA.

Mark Begor: For example, in the U.S., our EWS income and employment data, our broad credit and alternative credit data exchanges are not only governed by the agreements with the contributors, but also by the U.S. Fair Credit Reporting Act, or FCRA. The contributory nature of this proprietary data and the complex regulatory and contractual compliance requirements that govern our data, along with the coverage and historical data these exchanges contain, create a strong data moat around Equifax's proprietary data. Through leading technology, EFX.AI capabilities, and proprietary data, Equifax is accelerating a strategy to utilize AI agentic capabilities to improve our customers' ability to utilize Equifax data and advanced technology to improve their decisions by incorporating more data and more effective AI-defined algorithms using patented capabilities that deliver explainable results to our customers.

Speaker #3: The contributory nature of this proprietary data, and the complex regulatory and contractual compliance requirements that govern our data, along with the coverage and historical data these exchanges contain, create the strong data moat around Equifax's proprietary data.

Speaker #3: With our industry-leading technology, EFX.AI capabilities, and proprietary data, Equifax is accelerating a strategy to utilize AI and advanced capabilities to improve our customers' ability to utilize Equifax data in advanced technology and improve their decisions by incorporating more data and more effective AI-defined algorithms, using patented capabilities that deliver explainable results to our customers.

Speaker #3: We are expanding from being a provider of data analytics to being an essential partner for the AI-powered decision intelligence that our customers are driving.

Mark Begor: We are expanding from being a provider of data analytics to being an essential partner for the AI-powered decision intelligence that our customers are driving. We are realizing this vision through a growing suite of global EFX.AI-enabled solutions. In the H1 of the year, we rolled out 54 new products that leverage these EFX.AI capabilities that drove our strong 16% Vitality Index. This includes the commercial launch of Ignite AI Advisor and Equifax IQ on our integrated Ignite analytics and InterConnect decisioning global platforms. Ignite AI Advisor is a multi-agent system that delivers AI-driven, real-time, personalized insights and actionable recommendations delivered through our natural language user interface to our customers. Lenders can ask questions through a generative AI chat with complementary visual dashboard illustrations and dynamic charts and graphs.

Speaker #3: We are realizing this vision through a growing suite of global EFX.AI-enabled solutions. In the first half of the year, we rolled out 54 new products that leverage these EFX.AI capabilities, which drove our strong 16% vitality index.

Speaker #3: This includes the commercial launch of Ignite AI Advisor and EQUIFAX IQ on our integrated Ignite Analytics and Interconnect decisioning global platforms. Ignite AI Advisor is a multi-agent system that delivers AI-driven, real-time, personalized insights and actionable recommendations, delivered through our natural language user interface to our questions through a generative AI chat, with complementary visual dashboard illustrations and dynamic charts and graphs.

Speaker #3: This enables our customers, particularly those with limited in-house data and analytics staff, to easily compare information, discover new trends, and make more informed decisions to drive their growth and returns.

Mark Begor: This enables our customers, particularly those with limited in-house data and analytics staff, to easily compare information, discover new trends, and drive more informed decisions to drive their growth and returns. For example, we have customers identifying missed opportunities to capture business from existing customers who have loans with another bank or FI, and customers comparing payoff and paydown speeds against competitors to determine if their rates and terms are competitive to drive application conversions and growth for their business. This solution is now being used by US customers in auto, P-loan, and credit card to pinpoint new opportunities to improve their portfolio performance and is expanding to Canada in the Q3 with further global expansion through the balance of 2026.

Speaker #3: For example, we have customers identifying missed opportunities to capture business from existing customers who have loans with another bank or FI, and customers comparing payoff and paydown speeds against competitors to determine if their rates and terms are competitive to drive application conversions and growth for their business.

Speaker #3: This solution has now been used by US customers in auto, personal loans, and credit cards to pinpoint new opportunities to improve their portfolio performance, and is expanding to Canada and in the third quarter, with further global expansion through the balance of 2026.

Speaker #3: Complementary to EQUIFAX AI Advisor, EQUIFAX IQ is a multi-algorithm AI system that allows customers to transition policy management from a manual rigid process to an AI-driven multi-dimensional optimization engine.

Mark Begor: Complementary to Equifax AI Advisor, Equifax IQ is a multi-algorithm AI system that allows customers to transition policy management from a manual rigid process to an AI-driven, multidimensional optimization engine. Equifax IQ uses EFX proprietary data and customer-contributed data to help our customers better understand new market opportunities, grow their business with the right customers, reduce fraud, and confidently extend more credit. It also delivers portfolio overviews, delinquency analysis, affordability assessments, fraud identification, and policy adjustments while streamlining workflows for a seamless user experience. Our first implementation of Equifax IQ are helping customers across Latin America. In Argentina, we established an advanced origination risk policy for a global vehicle manufacturer's entry into the financing market, evaluating banked and unbanked populations. Equifax IQ will expand to the US and other regions globally as we move through the balance of the year and early in 2027.

Speaker #3: EQUIFAX IQ uses EFX proprietary data and customer-contributed data to help our customers better understand new market opportunities, grow their business with the right customers, reduce fraud, and confidently extend more credit.

Speaker #3: It also delivers portfolio overviews delinquency analysis affordability assessments fraud identification and policy adjustments while streamlining workflows for seamless user experience. Our first implementation of EQUIFAX IQ are helping customers across Latin America.

Speaker #3: In Argentina, we established an advanced origination risk policy for a global vehicle manufacturer's entry into the financing market, evaluating banked and unbanked populations. EQUIFAX IQ will expand to the U.S. and other regions globally as we move through the balance of the year and early in 2027.

Speaker #3: Ignite AI Advisor and Equifax IQ are great examples of the advantages derived from our global, cloud-native infrastructure, which is structured for the rapid expansion of AI and energetic advancements globally.

Mark Begor: Ignite AI Advisor and Equifax IQ are great examples of the advantages derived from our global cloud-native infrastructure, which is structured for the rapid expansion of AI and agentic advancements globally. These optimizations improve customers' processes and outcomes by improving analytical outcomes and more effectively using the breadth of data assets available to customers from Equifax. We believe our investments in EFX.AI will drive our new product rollouts, share gains, revenue growth, and margin expansion. I'm super energized about the momentum and pace of change and the big performance lifts from EFX.AI in our product models and scores development for our customers. Turning to slide 13, in the Q2, we delivered a very strong 16% new product Vitality Index leveraging the Equifax Cloud and EFX.AI capabilities, which is above our 2026 Vitality Index goal of 15% and our 10% long-term framework.

Speaker #3: These optimizations improve customers' processes and outcomes by enhancing analytical results and more effectively utilizing the breadth of data assets available to customers from Equifax.

Speaker #3: We believe our investments in EFX.AI will drive our new product rollouts, share gains, revenue growth, and margin expansion. I'm super energized about the momentum and pace of change, and the big performance leaps from EFX.AI in our product models and scores development for our customers.

Speaker #3: Turning to slide 13, in the second quarter, we delivered a very strong 16% New Product Vitality Index, leveraging the Equifax Cloud and EFX.AI capabilities, which is above our 2026 Vitality Index goal of 15% and our 10% long-term framework.

Speaker #3: In the first half, over 50% of our new products have AI capabilities embedded in the product architecture, which the customer directly interfaces with using LLMs.

Mark Begor: In the H1, over 50% of our new products have AI capabilities embedded in the product architecture, which the customer directly interfaces with using LLMs. New products based on differentiated proprietary data, including our Twin Indicator solution for mortgage, continue to drive strong new product growth and share gains. As discussed over the last few quarters, our only Equifax Twin Indicator solutions in card, auto, and P-loans are starting to see early customer interest for these unique solutions. As a reminder, we're providing the Twin Indicator solutions in all those verticals at no cost in order to drive differentiation of our credit file and deliver share gains to Equifax. Turning to slide 14, we're also rapidly expanding the implementation of AI and agentic-based solutions across our internal Equifax processes to improve operational speed, accuracy, and productivity.

Speaker #3: New products based on differentiated proprietary data including our twin indicator solution for mortgage continue to drive strong new product growth and share gains. As discussed over the last few quarters, our only EQUIFAX twin indicator solutions in card, auto, and PLoans are starting to see early customer interest for these unique solutions.

Speaker #3: And as a reminder, we're providing the twin indicator solutions in all those verticals at no cost in order to drive differentiation of our credit file and deliver share gains to EQUIFAX.

Speaker #3: Turning to slide 14, we're also rapidly expanding the implementation of AI- and analytics-based solutions across our internal Equifax processes to improve operational speed, accuracy, and productivity.

Speaker #3: Energetic and AI-assisted process redefinition and improvement is occurring across operations, technology, product development, and support functions, including HR, legal, and finance. The pace of adoption is ramping up very quickly and delivering significant productivity lifts in every corner of Equifax.

Mark Begor: Agentic and AI-assisted process redefinition improvement is occurring across operations, technology, product development, and support functions, including HR, legal, and finance. The pace of adoption is ramping very quickly and delivering big productivity lifts in every corner of Equifax. As you can see from the chart on the left slide of the page, total gross labor spending at Equifax on both expense and capital is currently about $2 billion, or about 40% of total gross spending. Of this amount, about 60% of our gross labor spend is within global operations and technology organizations, where we're seeing early and big gains from AI adoption.

Speaker #3: As you can see from the chart on the left side of the page, total gross labor spending at Equifax, on both expense and capital, is currently about $2 billion, or about 40% of total gross spending.

Speaker #3: Of this amount, about 60% of our gross labor spend is within global operations and technology organizations where we're seeing early and big gains from AI adoption.

Speaker #3: As we continue to rapidly drive rollouts and adoption of AI tools and agents that are delivering meaningful process improvement, we now expect run rate spending savings from these AI for EFX efforts to be about $150 million from 2026 to 2028 which is double the $75 million of savings we discussed with you in February.

Mark Begor: As we continue to rapidly drive rollouts and adoption of AI tools and agents that are delivering meaningful process improvement, we now expect run rate spending savings from these AI for EFX efforts to be about $150 million from 2026 to 2028, which is double the $75 million of savings we discussed with you in February. These AI efficiencies are expected to improve our financial performance while providing increased capability to reinvest and further accelerate our AI agentic deployments for speed, accuracy, and productivity. The foundation of our rapid AI deployment is our new Equifax Cloud-native architecture and our agentic AI development and management platform that is now in production broadly across Equifax, which enables efficient AI agent process development and management that is designed to ensure our agentic processes and capabilities fully comply with our extensive security and compliance requirements.

Speaker #3: These AI efficiencies are expected to improve our financial performance while providing increased capability to reinvest and further accelerate our AI energetic deployments for speed, accuracy, and productivity.

Speaker #3: The foundation of our rapid AI deployment is our new Equifax cloud-native architecture and our energetic AI development and management platform, which is now in production broadly across Equifax. This enables efficient AI agent process development and management that is designed to ensure our energetic processes and capabilities fully comply with our extensive security and compliance requirements.

Speaker #3: In operations, we are executing a rapid rollout of operational AI across our business units and our call centers and document processing operations. In USIS, we are rolling out conversational AI in call centers and already seeing big lifts in customer authentication and fulfillment rates, and AI-assisted processes have delivered decreases in back office dispute handle times, which are delivering productivity.

Mark Begor: In operations, we are executing a rapid rollout of operational AI across our business units in our call centers and document processing operations. In USIS, we are rolling out conversational AI in call centers and already seeing big lifts in customer authentication and fulfillments rates, and AI-assisted processes have delivered decreases in back-office dispute handle times, which are delivering productivity. In technology, we're seeing early but big benefits in our software development, IT operations, cybersecurity, and cloud cost optimization functions. With our agentic AI platform, we have moved beyond pilots to autonomous agents operating core internal processes built and run on a standardized, secure agentic platform with governance, human-in-the-loop checkpoints, and model risk evaluation built in. We are super energized about the pace of our AI adoption inside Equifax, but we know that we are in the very early innings of our rollout.

Speaker #3: In technology, we're seeing early but significant benefits in our software development, IT operations, cybersecurity, and cloud cost optimization functions. With our Energetic AI platform, we have moved beyond pilots to autonomous agents operating core internal processes—built and run on a standardized, secure Energetic platform—with governance, human-in-the-loop checkpoints, and model risk evaluation built in.

Speaker #3: We are super energized about the pace of our AI adoption inside Equifax, but we know that we are in the very early innings of our rollout.

Speaker #3: We are confident there is significantly more opportunity to both grow revenue and reduce costs as AI and energetic capabilities become fully embedded across EQUIFAX.

Mark Begor: We are confident there is significantly more opportunity to both grow revenue and reduce costs as AI and agentic capabilities become fully embedded across Equifax. Now I'd like to turn it over to John to provide our Q3 and full year framework.

Speaker #3: Now I'd like to turn it over to John to provide our third quarter and full year framework.

Speaker #1: Thanks, Mark. Slide 15 provides the specifics of our 2026 full-year guidance. We are holding our full-year 2026 financial guidance on a reported basis, unchanged from our April guidance.

John Gamble: Thanks, Mark. Slide 15 provides the specifics of our 2026 full year guidance. We are holding our full year 2026 financial guidance on a reported basis to be unchanged from our April guidance. On a constant currency basis, we raised our guidance consistent with our Q2 revenue beat. The impact of weakening FX on our full year results offset our 2QB. Our Q2 performance was stronger than our guidance, driven by very good performance in both EWS and USIS diversified markets. Diversified markets revenue growth at the midpoint is expected to be up high single digits for the year. The US mortgage market was slightly weaker than expected in the Q2 and has shown further weakening over the last several weeks as long-term interest rates have again increased.

Speaker #1: On a constant currency basis, we raised our guidance consistent with our second quarter revenue beat. The impact of weakening FX on our full-year results offset our Q2 beat.

Speaker #1: Our second quarter performance was stronger than our guidance, driven by very good performance in both EWS and USIS Diversified Markets. Diversified Markets revenue growth, at the midpoint, is expected to be up high single digits for the year.

Speaker #1: The U.S. mortgage market was slightly weaker than expected in the second quarter and has shown further weakening over the last several weeks as long-term interest rates have again increased.

Speaker #1: Our guidance reflects improved share performance in mortgage as well as continued good performance in diversified markets offsetting the weakness in the US mortgage market.

John Gamble: Our guidance reflects improved share performance in mortgage as well as continued good performance in diversified markets, offsetting the weakness in the US mortgage market. US mortgage revenue is expected to be up just above 20% with mortgage market originations weaker and down low single digits. For your perspective, as you determine your view of the 2026 US mortgage market based on a review of Equifax data on mortgage home purchase issuances since early 2022, we estimate that there are over 16 million mortgages that were issued with an interest rate over 5%, including almost 15 million with rates over 6% and over 9.5 million with rates over 6.5%. This provides a perspective on the pool of mortgages potentially available to refinance as mortgage rates change. Business unit revenue growth rates and EBITDA margin expectations are unchanged from our April guidance.

Speaker #1: US mortgage revenue is expected to be up just above 20% with mortgage market originations weaker and down low single digits. For your perspective, as you determine your view of the 2026 US mortgage market based on a review of EQUIFAX data on mortgage home purchase issuances since early 2022, we estimate that there are over 16 million mortgages that were issued with an interest rate over 5% including almost 15 million with rates over 6% and over 9.5 million with rates over 6.5%.

Speaker #1: This provides a perspective on the pool of mortgages potentially available to refinance as mortgage rates change. Business unit revenue growth rates and EBITDA margin expectations are unchanged from our April guidance.

Speaker #1: This slide also includes additional detail on revenue growth rates and EBITDA margins excluding FICO mortgage score royalty pass-through revenue and expected BU revenue in EBITDA margins.

John Gamble: This slide also includes additional detail on revenue growth rates and EBITDA margins excluding FICO mortgage score royalty pass-through revenue and expected BU revenue in EBITDA margins. We expect to deliver revenue growth of 7.2% to 8.4%, excluding the impact of FICO mortgage royalties in 2026 within our long-term financial framework. We expect to grow EBITDA margins excluding the impact of FICO mortgage royalties by a strong 75 basis points, which is 25 points above our long-term framework. In 2026, we expect to deliver over $1 billion of free cash flow and a cash flow conversion of at least 100%. As we discussed in April, with EBITDA increasing to 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 under three times EBITDA.

Speaker #1: We expect to deliver revenue growth of 7.2% to 8.4%, excluding the impact of FICO mortgage royalties in 2026, within our long-term financial framework. And we expect to grow EBITDA margins, excluding the impact of FICO mortgage royalties, by a strong 75 basis points, which is 25 points above our long-term framework.

Speaker #1: In 2026, we expect to deliver over $1 billion of free cash flow and a cash flow conversion of at least 100%. As we discussed in April, with EBITDA increasing to 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 under three times EBITDA.

Speaker #1: As referenced earlier, this provides the capability for us to complete the circular acquisition as planned in 4Q26 while still executing share repurchases in the second half of '26 although at lower levels than the 560 million and 3.1 million shares we repurchased in the first half of '26.

John Gamble: As referenced earlier, this provides the capability for us to complete the Circulo acquisition as planned in Q4 2026 while still executing share repurchases in H2 2026, although at lower levels than the $360 million and 3.1 million shares we repurchased in H1 2026. Slide 16 provides the details of our Q3 2026 guidance. In Q3 2026, we expect total Equifax revenue to be between $1.68 and $1.71 billion, up almost 10% on a reported basis year-to-year at the midpoint. Constant dollar revenue growth at the midpoint is up almost 9.5%. Excluding the impact of FICO mortgage scores, Q3 2026 reported revenue is expected to be up about 7% at the midpoint. Diversified markets revenue is expected to be up mid-single digits on a constant currency basis and up sequentially from Q2, principally due to stronger EWS diversified markets growth.

Speaker #1: Slide 16 provides the details of our 3Q26 guidance. In 3Q26, we expect total EQUIFAX revenue to be between $1.68 and $1.71 billion up almost 10% on a reported basis year-to-year at the midpoint.

Speaker #1: Constant dollar revenue growth at the midpoint is up almost 9.5%. Excluding the impact of FICO mortgage scores, 3Q26 reported revenue is expected to be up about 7% at the midpoint.

Speaker #1: Diversified markets revenue is expected to be up mid-single digits on a constant currency basis and up sequentially from the second quarter, principally due to stronger EWS diversified markets growth.

Speaker #1: US mortgage revenue is expected to be up about 20%, EPS in 3Q26 is expected to be $2.15 to $2.25 per share up about 8% versus 3Q25 at the midpoint.

John Gamble: US mortgage revenue is expected to be up about 20%. EPS in Q3 2026 is expected to be $2.15 to $2.25 per share, up about 8% versus Q3 2025 at the midpoint. Equifax Q3 2026 EBITDA dollars are expected to be $547 to $564 million, up about 10% at the midpoint. EBITDA margins are expected to be about 32.8% at the midpoint of our guidance. Excluding the impact of FICO mortgage royalties, EBITDA margins in Q3 2026 would be 34.6% to 35%, up over 90 basis points at the midpoint from our Q3 2025 on the same basis. We believe that our full year and Q3 2026 guidance are centered at the midpoint of both our revenue and EPS guidance ranges.

Speaker #1: Equifax 3Q26 EBITDA dollars are expected to be $547 to $564 million, up about 10% at the midpoint. EBITDA margins are expected to be about 32.8% at the midpoint of our guidance.

Speaker #1: And excluding the impact of FICO mortgage royalties, EBITDA margins in 3Q26 would be 34.6 to 35% up over 90 basis points at the midpoint from our 3Q25 on the same basis.

Speaker #1: We believe that our full year and 3Q26 guidance are centered at the midpoint of both our revenue and EPS guidance ranges. As a reminder, our guidance for 3Q26 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.

John Gamble: As a reminder, our guidance for Q3 2026 and fiscal year 2026 assumes Equifax will calculate and sell FICO scores for all mortgage credit transactions, and there will be limited VantageScore revenue. As we move through 2026 and there is additional clarity on Vantage conversion and the FICO direct license program, we will update our guidance to reflect the shift and opportunity for the mortgage industry, consumers, and Equifax. Now I'd like to turn it back over to Mark.

Speaker #1: As we move through 2026 and there is additional clarity on Vantage conversion and the FICO Direct License program, we will update our guidance to reflect this shift and opportunity for the mortgage industry, consumers, and Equifax.

Speaker #1: Now I'd like to turn it back over to Mark.

Speaker #2: Thank you. Slide 17. EQUIFAX had another strong quarter executing very well against our EFX 2028 strategic priorities. The new EQUIFAX is leveraging the EQUIFAX cloud, EFX.AI, and proprietary data assets to accelerate innovation and help our customers grow.

Mark Begor: Looking at slide 17, Equifax had another strong quarter, executing very well against our EFX 2028 strategic priorities. The new Equifax is leveraging the Equifax Cloud, EFX.AI, and proprietary data assets to accelerate innovation and help our customers grow. Our Q2 financial results are an excellent proof point of the broad-based Equifax operating model, including the strong 120 basis points of EBITDA margin expansion in the quarter. We have strong momentum as we enter H2 of the year. EWS signed agreements principally with state agencies with a total ACV of about $300 million. We signed the highly accretive Círculo de Crédito acquisition. We doubled our AI for EFX productivity goal from $75 million to $150 million. Our strong execution and momentum in 2026 sets us up for 2027 and beyond.

Speaker #2: Our second quarter financial results are an excellent proof point on the of the broad-based EQUIFAX operating model including the strong 120 basis points of EBITDA margin expansion in the quarter.

Speaker #2: We have strong momentum as we enter the second half of the year. EWS signed agreements, principally with state agencies, with a total ACV of about $300 million. We signed the highly accretive Circular Credito acquisition, and we doubled our AI for EFX productivity goal from $75 million to $150 million.

Speaker #2: Our strong execution and momentum in '26 set us up for '27 and beyond. Given our strong free cash flow generation and cash conversion over 100% in 2026, we're also delivering on our commitment to return substantial excess free cash flow to shareholders.

Mark Begor: Given our strong free cash flow generation and cash conversion over 100% in 2026, we're also delivering on our commitment to return substantial excess free cash flow to shareholders. In H1 of the year, we returned $560 million to shareholders, repurchasing 3.1 million shares, or about 2.5% of shares outstanding. In H2, we can complete the Círculo acquisition and continue share repurchases, although at a slower pace than we saw in H1, while maintaining a strong investment-grade balance sheet with leverage below 3x EBITDA. I'm energized about our broad-based performance, but even more energized about the future of the new Equifax. With that, operator, let me open it up for questions.

Speaker #2: In the first half of the year, we returned $560 million to shareholders, repurchasing 3.1 million shares, or about 2.5% of shares outstanding. In the second half, we can complete the Circular acquisition and continue share repurchases, although at a slower pace than we saw in the first half, while maintaining a strong investment-grade balance sheet with leverage below three times EBITDA.

Speaker #2: I'm energized about our broad-based performance, but even more energized about the future of the new Equifax. And with that, operator, let me open it up for questions.

Speaker #3: Thank you. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue.

Mark Begor: Thank you. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. To allow for as many questions as possible, we ask that you each ask one question and one follow-up. Thank you. Our first question comes from the line of Jeff Meuler with Baird. Please proceed with your question.

Operator: Thank you. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. To allow for as many questions as possible, we ask that you each ask one question and one follow-up. Thank you. Our first question comes from the line of Jeff Meuler with Baird. Please proceed with your question.

Speaker #3: You may press star two if you'd like to remove your question from the queue. For participants choosing speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Speaker #3: To allow for as many questions as possible, we ask that you each ask one question and one follow-up. Thank you. Our first question comes from the line of Jeff Mueller with Baird.

Speaker #3: Please proceed with your question.

Speaker #4: Yeah, thank you. So you were obviously calling out the tougher TWG government year-over-year this quarter, in advance, on the TRUPs and the coping against the onboarding of the large contract.

Jeff Meuler: Yeah, thank you. You were obviously calling out the tougher TWN government year over year this quarter in advance on the true-ups and the comping against the onboarding of the large contract. The booking figure is kind of a new figure. Obviously, we have the context of the overall size of the business, but it sounds good. Can you just comment maybe on if gross retention rates are still stable and high, and if pricing integrity is holding as we think of kind of using the new business to kind of build on to future revenue?

Speaker #4: The booking figure is kind of a new figure. Obviously, we have the context of the overall size of the business, but it sounds good.

Speaker #4: Can you just comment maybe on if gross retention rates are still stable and high and if pricing integrity is holding as we think of kind of using the new business to kind of build onto future revenue?

Speaker #1: Yeah. Jeff, thanks. We telegraphed, I think, in the April call that our deal pipeline government had been growing rapidly. I think we've been talking about that really for the last year and change since the new administration came in to Washington.

Mark Begor: Yeah, Jeff, thanks. We telegraphed, I think, in the April call that our deal pipeline in government had been growing rapidly. I think we've been talking about that really for the last year and change since the new administration came into Washington and with the OB3 passing in July 2023. We just saw a real uptick in momentum around commercial activity, and that's continued, and our deal pipeline continues to be 2x over 2023, and we're starting to convert some of that pipeline, some of it faster than we thought. We know that there was real momentum, which we talked about really in February and again in April. We were pleased with the $100 million of new wins. These are new, principally state contracts that hadn't been doing business with Equifax before or not in the last couple of years.

Speaker #1: And with the OB3 passing on July, in July last year, we just saw a real uptick in momentum around commercial activity. And that's continued.

Speaker #1: And our deal pipeline continues to be 2x over last year, and we're starting to convert some of that pipeline—some of it faster than we thought. But we know that there was real momentum, which we talked about really in February and again in April.

Speaker #1: So we were pleased with the $100 million of new wins. These are new, principally state contracts that hadn't been doing business with Equifax before.

Speaker #1: Or not in the last couple of years. And then extensions and renewals of another $200 million. So, great indicators of the real value of our solution in the marketplace—the commercial momentum in there around the value of our services being used.

Mark Begor: Extensions and renewals of another $200 million. Great indicators of the real value of our solution in the marketplace, the commercial momentum in there around the value of our services being used. As you know, there's a huge TAM here. To your question around pricing and commercial terms and activity, really no change. We are continuing to have really strong success in the government vertical. We've got a long runway for growth. We've got the right solution. As you know, we're investing in new products like the GIG solution we launched late last year that we're having some traction on, and then some of the new solutions we're starting to bring to market to address some of the new OB3 requirements around Medicaid and SNAP that principally benefit 2027. We remain quite bullish about the government vertical.

Speaker #1: As you know, there's a huge TAM here. To your question around pricing, and commercial terms and activity, really no change. We are continuing to have really strong success in the government vertical.

Speaker #1: We've got a long runway for growth. We've got the right solution. As you know, we're investing in new products, like the gig solution we launched late last year, that we're having some traction on, and then some of the new solutions we're starting to bring to market to address some of the new OB3 requirements around Medicaid and SNAP that principally benefit 2027.

Speaker #1: So we remain quite bullish about the government vertical. We have talked in a couple of calls over the last year and change that in some cases we're using subscription agreements versus transactional agreements with some of our new customers.

Mark Begor: We have talked in a couple of calls over the last year and change that in some cases, we're using subscription agreements versus transactional agreements with some of our new customers. That's been something that helps them with their budgets at the state level, in particular. That's been a positive for us. We're quite enthusiastic and quite energized around the momentum in government and to land some large contracts. We thought it was meaningful to share those with you because they're really going to benefit principally 2027. It gives us a great momentum as we move towards next year.

Speaker #1: That's been something that helps them with their budgets at the state level in particular, so that's been a positive for us. But we're quite enthusiastic and quite energized around the momentum in government, and landed some large contracts. We thought it was meaningful to share those with you because they're really going to benefit principally in 2027.

Speaker #1: So it gives us a great momentum as we move towards next year.

Speaker #4: Very, very helpful. And then on the VantageScore only—the 100 VantageScore only in mortgage, the lenders—I get it's only priced at a dollar, at least through '27.

Jeff Meuler: Very helpful. On the VantageScore only, the 100 VantageScore only in mortgage to lenders. I get it's only priced at $1 at least through 2027, it wouldn't be big revenue dollars for you yet. Does that mean that those 100 are paying for VantageScore at this point?

Speaker #4: So it wouldn't be big revenue dollars for you yet. But does that mean that those 100 are paying for VantageScore at this point, and can you contextualize if there's anyone sizable, or what do they look like?

Mark Begor: Correct.

Jeff Meuler: Can you contextualize if there's anyone sizable or what do they look like?

Speaker #1: No. They're not sizable yet. All of the mortgage customers that we have, which is really every mortgage customer, are focused on vantage because it's a significant cost savings.

Mark Begor: No, they're not sizable yet. All of the mortgage customers that we have, which is really every mortgage customer, are focused on Vantage because of the significant cost savings. As you know, the FHFA is still gating the agency mortgages, the number of lenders that can be utilizing Vantage. We expect that to increase as time passes, meaning the lenders are all engaging with FHFA about their interest of accessing Vantage. We expect that momentum to continue as we move into Q3 and into H2. As we pointed out in the prepared comments, we intend to keep our pricing at $1 in 2027 to really continue to drive that engagement with our customers, but also giving them visibility now that they can count on Vantage as an attractive scoring solution along with our credit file for their mortgage underwriting going forward.

Speaker #1: As you know, the FHFA is still gating the agency mortgages the number of lenders that can be utilizing vantage. We expect that to increase as time passes, meaning the lenders are all engaging with FHFA about their interest of accessing vantage.

Speaker #1: So, we expect that momentum to continue as we move into the third quarter and into the second half. And, as we pointed out in the prepared comments, we intend to keep our pricing at a dollar in 2027 to really continue to drive that engagement with our customers, but also giving them visibility now that they can count on Vantage as an attractive scoring solution along with our credit file for their mortgage underwriting going forward.

Speaker #1: But just maybe summarizing one more time, there's a lot of momentum here by the mortgage lenders, and we expect that activity to continue as we move into the second half.

Mark Begor: Just maybe summarizing one more time, there's a lot of momentum here by the mortgage lenders. We expect that activity to continue as we move into H2.

Speaker #2: Thanks, Mark.

Jeff Meuler: Thanks, Mark.

Speaker #1: Thanks, Jeff.

Mark Begor: Thanks, Jeff.

Speaker #3: Thank you. Our next question comes from the line of Tony Kaplan with Morgan Stanley. Please proceed with your question.

Mark Begor: Thank you. Our next question comes from the line of Toni Kaplan with Morgan Stanley. Please proceed with your question.

Operator: Thank you. Our next question comes from the line of Toni Kaplan with Morgan Stanley. Please proceed with your question.

Speaker #5: Thanks so much. I wanted to start with the government business also you talked about some win backs in the presentation and so I was hoping you could maybe expand on the opportunity that you see for those win backs and basically maybe thinking about 3Q for government, how are you looking on that especially based on you have this really good pipeline but maybe some of that isn't flowing into the growth rate as quickly.

Toni Kaplan: Thanks so much. I wanted to start with the government business also. You talked about some win-backs in the presentation, I was hoping you could maybe expand on the opportunity that you see for those win-backs, basically maybe thinking about Q3 for government, how are you looking on that, especially based on you have this really good pipeline, maybe some of that isn't flowing into the growth rate as quickly.

Mark Begor: Yeah. Again, we were pleased, Toni, I hope you are too, with the commercial momentum in government. It was above our expectations. We knew it was coming. When you've got a deal pipeline that's up 2x year-over-year, we've got a lot of discipline around our commercial pipelines. It was just a matter of time when those convert from pipeline into contracts. You'll remember that, you go back to July of 2024, the Biden Administration changed some of the Medicare cost savings, I think we were clear with you really in H2 2024 and into 2025 that we were able to work with many of the states to resolve the challenges they had with their budgets, with that kind of unexpected cost sharing that happened in 2024, where the states had to pick up incremental costs for the data that was used.

Speaker #1: Yeah, yeah. So again, we were pleased. Tony, I hope you are too, with the commercial momentum in Government. It was above our expectations, but we knew it was coming.

Speaker #1: When you've got a deal pipeline that's up 2X year over year, we've got a lot of discipline around our commercial pipelines. It was just a matter of time before those convert from pipeline into contracts.

Speaker #1: You'll remember that, going back to July of 2020, the Biden administration changed some of the Medicare cost savings. And I think we were clear with you, really in the second half of '24 and into '25, that we were able to work with many of the states to resolve the challenges they had with their budgets, with that kind of unexpected cost sharing that happened in 2024, where the states had to pick up incremental costs for the data that was used.

Speaker #1: And there were some states that couldn't manage it, and they had to turn our solution off. And I think that's kind of been well discussed by us over the last year and change.

Mark Begor: There were some states that couldn't manage it, and they had to turn our solution off. I think that's kind of well discussed by us over the last year and change, and it was reflected in our P&L. We're winning back some of those states, and I think it's a great reflection of the value of the income and employment data that we deliver to social services at the state level. There was a large one, which you can see on the slide there that was included, that's going to be on a run rate basis, net new revenue for us really principally late in the year, but in really in 2027 is where that will benefit. As I said in my comments earlier, that kind of $100 million of ACV from new relationships and win-backs is principally benefiting 2027.

Speaker #1: And it was reflected in our P&L. We're winning back some of those states. And I think it's a great reflection of the value of the income and employment data that we deliver to social services.

Speaker #1: At the state level, and there was a large one—which you can see on the slide there—that was included. That's going to be, on a run-rate basis, net new revenue for us really principally late in the year, but really in 2027 is where that will benefit.

Speaker #1: And as I said in my comments earlier, that kind of $100 million of ACV from new relationships and win-backs is principally benefiting 2027.

Speaker #1: And then, of course, there's another $200 million of renewals, which means it stays in our runway, which we were very pleased with. So, the commercial activity is strong, and we're really pleased with the momentum and the setup we have for 2027 in government.

Mark Begor: There's another $200 million of renewals, which meaning it stays in our runway, which we were very pleased with. The commercial activity is strong and we're really pleased with the momentum and the really setup we have for 2027 in government. Again, as a reminder, you've got a business that's approaching $800 million of revenue in government in workforce solutions, but it's operating against a $5 billion TAM. Again, a reminder that the OB3 requirements that were put in place in the July bill that was signed last year really go into effect late this year and in 2027. We expect that to be a catalyst for growth. You're seeing the $100 million is at least a piece of that which will be positive for us as we get into the new year in 2027.

Speaker #1: And again, as a reminder, you've got a business that's approaching 800 million dollars of revenue in government and workforce solutions but it's operating against a 5 billion dollar TAM.

Speaker #1: And again, a reminder that the OB3 requirements that were put in place in the July bill that was signed last year really go into effect late this year and in 2027.

Speaker #1: And we expect that to be a catalyst for growth. And you're seeing the 100 million is at least a piece of that which will be positive for us as we get into the new year in '27.

Speaker #5: Great. And then I wanted to ask about the 1,200 lenders that are using VantageScore with FICO. I guess I know you're giving Vantage for free if someone is using FICO.

Toni Kaplan: Great. I wanted to ask about the 1,200 lenders that are using VantageScore with FICO. I guess I know you're giving Vantage for free if someone is using FICO. Out of the 1,200, is there a way that you know how many are testing, or are they just getting it and hopefully they're testing it and will convert at some point?

Speaker #5: So out of the 1,200, is there a way that you know that how many are testing or are they just getting it and hopefully they're testing it and will convert it?

Speaker #1: No. No. No. No. No. You should think about the 1,200 as all are testing their technology systems, their processes, their workflows as and we've talked over the last year or so that this is a big change for the industry that's been using one credit score for three decades almost.

Mark Begor: No.

Toni Kaplan: Okay.

Mark Begor: No, you should think about the 1,200 as all are testing their technology systems, their processes, their workflows. We've talked over the last year or so that this is a big change for the industry that's been using one credit score for three decades almost. That technology and process flow change was important. That's why we made the decision last fall to offer a free VantageScore with every paid FICO score so our customers could test their tech, their product, as well as their other workflows. You should think about, and we think about that 1,200 meaning lots of mortgage lenders are really preparing to use Vantage. A reminder, as you know, the FHFA in April, their announcements I think was 22 or 23 lenders that were approved, and that's only 22 or 23.

Speaker #1: So that technology and process flow change was important. That's why we made the decision last fall to offer a free vantage score with every paid FICO score.

Speaker #1: So our customers could test their tech, their product as well as their other workflows. So you should think about and we think about that 1,200 meaning lots of mortgage lenders are really preparing to use vantage.

Speaker #1: As a reminder, as you know, the FHFA in April—their announcement I think was 22 or 23 lenders that were approved, and that's only 22 or 23.

Speaker #1: We would expect that to increase moving forward because those 1,200 lenders, using that example, they all want to take advantage of the value—get their share of that $1 billion worth of cost savings that's available to them by using the VantageScore.

Mark Begor: We would expect that to increase moving forward because those 1,200 lenders using that example, they all want to take advantage of the value, get their share of that $1 billion worth of cost savings that's available to them by using the VantageScore. We would expect that adoption to continue to grow as the FHFA opens up more lenders to be able to utilize the VantageScore and the actual loan origination versus FICO.

Speaker #1: So we would expect that adoption to continue to grow as the FHFA opens up more lenders to be able to utilize the vantage score and the actual loan origination versus FICO.

Speaker #5: Terrific. Thank you.

Toni Kaplan: Terrific. Thank you.

Speaker #3: Thank you. Our next question comes from the line of Andrew Steinerman with J.P. Morgan. Please proceed with your question.

Toni Kaplan: Thank you. Our next question comes from the line of Andrew Steinerman with JP Morgan. Please proceed with your question.

Operator: Thank you. Our next question comes from the line of Andrew Steinerman with JP Morgan. Please proceed with your question.

Speaker #4: Hi. This is Alex Hess on for Andrew. Just a couple of points of clarification. On the government ACV number, I think it was asked earlier, but what was the associated retention dynamic?

Alex Hess: Hi, this is Alex Hess on for Andrew. Just a couple points of clarification. On the government ACV number, I think it was asked earlier, but what was the associated retention dynamic like? Were there churn or was it-

Speaker #4: Were there?

Speaker #1: 100 million. The 100 million is all new business for us versus think about 2026. Meaning that's all additive to our revenue and principally in '27.

Mark Begor: The $100 million is all new business for us versus think about 2026, meaning that-

Alex Hess: Okay.

Mark Begor: That's all additive to our revenue and principally in 2027.

Speaker #4: So no.

Alex Hess: No churn on that.

Speaker #1: The $200 million—the $200 million is renewals of existing contracts that's in our revenue in '26.

Mark Begor: The $200 million is renewals of existing contracts that's in our revenue in 2026.

Speaker #4: Understood. So no churn of note. Then just switching to mortgage, mortgage revenues in USIS were up 60% in one quarter, up 40% in two quarters.

Alex Hess: Understood. No churn of note. Just switching to mortgage. Mortgage revenues in USIS were up 60% in Q1, up 40% in Q2. Can you just sort of walk us through the bridge of that comedown, if you will?

Speaker #4: Can you just sort of walk us through the bridge of that come down, if you will?

Speaker #1: Sure. The biggest driver obviously is the mortgage market weakened, right, as you take a look at what occurred year over year. And we talked about that.

Mark Begor: Sure. The biggest driver, obviously, the mortgage market weakened, right? As you take a look at what occurred year over year, we talked about that. We saw weakening as rates rised as you went through Q2. Also, in Q2 of last year, we started gaining share in pre-qual. We had a little more difficult comp because we had picked up some share that we hadn't had in place in Q1 2025. Those are two big drivers that are impacting why the year-over-year growth rate is lower in Q2 versus Q1.

Speaker #1: We saw weakening as rates rose as you went through the second quarter. And also, in the second quarter of last year, we started gaining share in pre-qual.

Speaker #1: So we had a little more difficult comp because we had picked up some share that we hadn't had in place in the first quarter of 2025.

Speaker #1: So those are two big drivers that are impacting why the overall growth rate is lower, and the second quarter year-over-year growth rate is lower in the second quarter versus the first.

Speaker #4: Understood. And then final clarification, please. You say vantage score transactions were up roughly 3X to 2.2 million. How are you defining a transaction in this case for the quarter?

Alex Hess: Understood. Then final clarification, please. You say VantageScore transactions were up roughly 3x to 2.2 million. How are you defining a transaction in this case for the quarter? What is a transaction in this?

Speaker #4: What is a transaction in this?

Speaker #1: This was us delivering a VantageScore, right? So that's effectively what they are. Yeah.

Mark Begor: This is us delivery of a VantageScore, right? That's effectively what they are. Yeah.

Speaker #4: Thank you so much.

Alex Hess: Thank you so much.

Speaker #3: Thank you. Our next question comes from the line of Shlomo Rosenbaum with STEFO. Please proceed with your question.

Alex Hess: Thank you. Our next question comes from the line of Shlomo Rosenbaum with Stifel. Please proceed with your question.

Operator: Thank you. Our next question comes from the line of Shlomo Rosenbaum with Stifel. Please proceed with your question.

Speaker #6: Hi, thank you very much for taking my questions. Mark, can you talk a little bit more about the twin indicator and the progress you're seeing in auto and credit card?

Shlomo Rosenbaum: Hi, thank you very much for taking my questions. Mark, can you talk a little bit more about the TWN indicator and the progress you're seeing in auto and credit card? Are you seeing more evidence of volume shifts and just anything, maybe quantitative that you can point to that, Hey, this could be a longer-term game changer?

Speaker #6: Are you seeing more evidence of volume shifts? And is there anything, maybe quantitative, that you can point to that suggests this could be a longer-term game changer?

Speaker #1: Yeah. It's still early days in those verticals. We're further deployed, as you know, in mortgage, because we launched that really last summer/fall. We launched it in mortgage and we really only launched in auto, card, and personal loan in the early part of 2026.

Mark Begor: Yeah. It's still earlier days in those verticals. We're further deployed, as you know, in mortgage because we launched that really last summer/fall when we launched it in mortgage, we really only launched in auto card and P-loan in the early parts of 2026. The response from customers is super strong. They see real value. The same value we talked about in a marketing funnel in a mortgage application process where you're really blind to the income or whether the applicant is working because you only have credit data historically. Now, the addition of that Twin Indicator that shows that Mark's working and what my compensation was in the prior year, the last 12 months, and that I work for, in my case, Equifax, is really valuable. It's the same case in an auto loan. An auto marketing funnel is quite similar.

Speaker #1: The response from customers is super strong. They see real value—the same value we talked about in a marketing funnel, in a mortgage application process, where you're really blind to the income or whether the applicant is working.

Speaker #1: Because you only have credit data historically, now the addition of that twin indicator that shows that Mark's working and what my compensation was in the prior year, the last 12 months, and that I work for, in my case, Equifax, is really valuable.

Speaker #1: It's the same case in an auto loan. An auto marketing funnel is quite similar. The auto dealer, or the digital transaction auto, they're trying to figure out: is this an applicant that I'm going to be able to get to a closing of an auto loan, and how can I differentiate from those that don't close? The information that I'll have, including the income and employment data from Equifax with a twin indicator, really gives them a leg up in managing their marketing funnel.

Mark Begor: The auto dealer or the digital transaction auto, they're trying to figure out, is this an applicant that I'm going to be able to get to a closing of an auto loan? How can I differentiate from those that don't close versus the information that I'll have, including the income and employment data from Equifax with a Twin Indicator really gives them a leg up in managing their marketing funnel. Same in a personal loan process that's typically digital, although some are physical, but the bulk is digital, same process. In card, it just gives the ability to give a larger credit line, which typically will result in a higher take rate from the consumer. With the addition of income, you can actually do a lower interest rate, which will drive kind of pipeline conversion. We're energized about that rollout.

Speaker #1: It's the same in a personal loan process—that's typically digital, although some are physical, but the bulk is digital. It's the same process. And then, in card, it just gives the ability to offer a larger credit line, which typically will result in a higher take rate from the consumer.

Speaker #1: And with the addition of income, you can actually do a lower interest rate which will drive kind of pipeline conversion. So we're energized about that rollout there's not a lot of share shift happening yet.

Mark Begor: There's not a lot of share shift happening yet but a lot of really strong commercial discussions happening in those auto card and P-loan verticals. We're energized about that momentum, and we'll continue to drive that engagement with our customers in the H2.

Speaker #1: But a lot of really strong commercial discussions happening in those auto, card, and P-lone verticals. So we're energized about that momentum and we'll continue to drive that engagement with our customers in the second half.

Speaker #6: Okay, thank you. And then, just shifting back to that VantageScore discussion, FICO is reducing the cost of the 10T to a dollar, but putting in a really big success fee at the other end of the transaction.

Shlomo Rosenbaum: Okay, thank you. Just shifting back to that VantageScore discussion. FICO is reducing the cost of the 10T to $1 by putting in a really big success fee at the other end of the transaction. Given your experience with the mortgage market, do lenders look at that as a straight-through, pass-through that they don't care about? Is that something that a success fee at the other end is something that weighs on the consumer and they actually do care about that? I'm just trying to understand, does the $1 make it comparable, or is it really still not comparable in the eyes of the people that are going to be buying this?

Speaker #6: And given your experience with the mortgage market, do lenders look at that as a straight-through pass-through that they don't care about? Or is that something that a success fee at the other end is something that weighs on the consumer and they actually do care about that?

Speaker #6: I'm just trying to understand does that make their the $1 make it comparable or does it is it really still not comparable in the eyes of the people that are going to be buying this?

Speaker #1: I think it's the latter. We don't hear or see any traction on that. It's one that the success fee thing is something FICO's been talking about for about a year.

Mark Begor: I think it's the latter. We don't hear or see any traction on that. It's one that the success fee thing is something FICO's been talking about for about one year. There's nothing really happening in the marketplace on it. I think the point you raised around the consumer is an excellent one because the consumer, there's a RESPA regulation that's around mortgage originations. It's legislation in the United States that mortgage originators have to follow it. Basically, it means that they have to treat the consumer fairly with regards to services that they purchase for them and then charge the consumer for.

Speaker #1: There's nothing really happening in the marketplace on it. And I think the point you raised around the consumer is an excellent one. Because the consumer there's a RESPA regulation that's around mortgage originations that's legislation in the United States that the mortgage originators have to follow it.

Speaker #1: And basically, it means that they have to treat the consumer fairly with regard to services that they purchase for them, and then charge the consumer for.

Speaker #1: So the idea of charging that consumer 66 dollars for a credit score which is what FICO's proposing with their closed-loan pricing versus a dollar with a vantage score or 10 dollars with today's FICO score pricing just doesn't make a lot of sense.

Mark Begor: The idea of charging that consumer $66 for a credit score, which is what FICO's proposing with their closed loan pricing versus $1 with a VantageScore or $10 with today's FICO score pricing just doesn't make a lot of sense which is why there isn't a lot of traction there. I know you know this, and we don't see any path of where this really makes a lot of sense, either commercially or from a regulatory, legislative legal standpoint. We just don't see any traction on it. We're focused on really supporting our customers with the $1 Vantage. I think as we said earlier, we're going to continue that pricing in 2027 to give our customers visibility around how we're trying to support them in credit scoring and driving credit score competition.

Speaker #1: Which is why there isn't a lot of traction there. And I know you know this but and we don't see any path of where this really makes a lot of sense either commercially or from a regulatory legislative legal standpoint.

Speaker #1: And we just don't see any traction on it. So we're focused on really supporting our customers with the $1 vantage. I think as we said earlier, we're going to continue that pricing in 2027 to give our customers visibility around how we're trying to support them in credit scoring and driving credit score competition.

Speaker #1: And we think that's going to help drive adoption and conversion to vantage in the mortgage space as we go through the second half and move into 2027.

Mark Begor: We think that's going to help drive adoption and conversion to Vantage in the mortgage space as we go through H2 and move into 2027.

Speaker #6: Thank you.

John Gamble: Thank you.

Shlomo Rosenbaum: Thank you.

Speaker #3: Thank you. Our next question comes from the line of Mana Patnayak with Barclays. Please proceed with your question.

John Gamble: Thank you. Our next question comes from the line of Manav Patnaik with Barclays. Please proceed with your question.

Operator: Thank you. Our next question comes from the line of Manav Patnaik with Barclays. Please proceed with your question.

Speaker #4: Thank you. Good morning. I guess we're just looking for a little bit more help on the way government kind of flows through for the rest of the year and into '27.

Manav Patnaik: Thank you. Good morning. I guess we're just looking for a little bit more help on the way government kind of flows through for the rest of the year and into 2027. The pipeline and the backlog, all that makes sense for the growth in 2027. I guess you've grown about 5% in H1 of this year. Just trying to appreciate how it ends and then how quickly all this new business rolls into in 2027 as well.

Speaker #4: I mean, the pipeline and the backlog—all that makes sense for the growth in '27. But I guess you've grown about 5% in the first half of this year.

Speaker #4: So just trying to appreciate how it ends, and then how quickly all this new business rolls in in '27 as well.

Mark Begor: The 2027 new business rolls in quite quickly. As I think we said, much of it's driven off some of the OB3 changes, but the $100 million of new business is 2027 ACV run rate and would be principally in that run rate early in 2027.

Speaker #1: The '27 new business rolls in quite quickly. I think we said much of it's driven off some of the OB3 changes, but it's the $100 million of new business—it's a 2027 ACV run rate and would be principally in that run rate early in 2027.

Speaker #6: Yeah. In terms of second half, we're expecting government to return back to growth and we'll start to see some of the benefits, small amount, from these new contracts start to flow through.

John Gamble: Yeah. In terms of the H2, we're expecting government to return back to growth, and we'll start to see some of the benefits, a small amount, from these new contracts start to flow through. Again, the wins, as Mark said, are a really strong indicator of the strength of the solution and how we think it's going to drive growth as we get not so much through the H2 of this year, although we will see growth in the H2 of this year, but really as you get into 2027 and beyond.

Speaker #6: So again, the wins as Mark said are really strong indicator of the strength of the solution. And how we think it's going to drive growth as we get not so much through the back half of this year although we will see growth in the back half of this year but really as you get into 2027 and beyond.

Speaker #4: And sorry, when you say 'return to growth,' are we talking about something similar to the 5% in the first half, or less?

Manav Patnaik: Sorry, when you mean return to growth, are we saying similar to the 5% in the H1 or less?

John Gamble: We haven't given a specific number.

Speaker #6: ...number, but you're going to start to see government growth again as we go through the second half.

Manav Patnaik: Okay.

John Gamble: You'll see government growth again as we go through the H2.

Speaker #4: Okay, got it. And then John, similarly on the mortgage inquiry assumption, I think low single digits technically was unchanged. So just trying to appreciate if there's a range within which you want to guide us to on that low single digits, and I think you mentioned you offset that with share gains.

Manav Patnaik: Okay, got it. Then John, similarly on the mortgage inquiry assumption, I think low single digits technically was unchanged. Just trying to appreciate if there's a range within which you want to guide us to on the low single digits, and I think you mentioned you offset that with share gains. Is that correct, or did I misread that incorrectly?

Speaker #4: Is that correct or did I read that incorrectly?

Speaker #6: So I think you’re talking about originations, and yeah, we continue to expect to see originations to be down low single digits. Obviously, that’s a range, and effectively we’re indicating we’re going to be lower in the range of low single digits than we indicated before.

John Gamble: I think you're talking about originations. Yeah, we continue to expect to see originations to be down low single digits. Obviously, that's a range, and effectively, we're indicating we're going to be lower in the range of low single digits than we indicated before. We do expect to continue to win share gains principally in soft pulls as we go through the rest of this year. We think the team's making great progress. Mark answered a question earlier about TWN indicator and the progress we're making there, and that's really driving the benefit.

Speaker #6: And we do expect to continue to win share gains principally in soft pulls as we go through the rest of this year. We think the team's making great progress.

Speaker #6: Mark answered a question earlier about twin indicator and the progress we're making there. And that's really driving the benefit.

Speaker #1: It's said differently, Manava. I want to make sure that we're getting the right response to you on the mortgage—our view of the mortgage market.

Mark Begor: Said differently, Manav, I want to make sure that we're getting the right response to you on our view of the mortgage market. It definitely weakened from April as rates continued to stay high and actually increased a bit in May and June, and we expect that to continue. It's hard to see that what's happening in the Middle East is going to be resolved and then inflation is going to come down and then rates are going to come down. Our guide in the H2 is kind of at the very low end of that low single digit kind of market outlook for the H2.

Speaker #1: It definitely weakened from April as rates continued to stay high and actually increased a bit in May and June. And we expect that to continue.

Speaker #1: It's hard to see that what's happening in the Middle East is going to be resolved and then the inflation is going to come down and then rates are going to come down.

Speaker #1: So, our guide in the second half is kind of at the very low end of that low single-digit kind of market outlook for the second half.

Speaker #4: Okay. Thank you. Appreciate that.

Manav Patnaik: Okay. Thank you. Appreciate that.

Speaker #3: Thank you. Our next question comes from the line of Faiza Alway with Deutsche Bank. Please proceed with your question.

Manav Patnaik: Thank you. Our next question comes from the line of Faiza Alwy with Deutsche Bank. Please proceed with your question.

Operator: Thank you. Our next question comes from the line of Faiza Alwy with Deutsche Bank. Please proceed with your question.

Speaker #5: Yes. Hi. Thank you. Good morning. I first wanted to ask about Talent. You've seen really strong growth there in the quarter. And I'm curious sort of is that sustainable?

Faiza Alwy: Yes, hi. Thank you. Good morning. I first wanted to ask about talent. You've seen really strong growth there in the quarter. I'm curious sort of is that sustainable? Sort of what's driving that growth?

Speaker #5: What's driving that growth?

Speaker #6: Well, we saw very good growth in Talent in both the first and the second quarter. And they've done an outstanding job both in continuing to grow penetration in VOE.

John Gamble: We saw very good growth in talent in both Q1 and Q2. They've done an outstanding job both of continuing to grow penetration in VOE, so verification of employment, but also to continue to drive penetration in education and then the other incarceration type of activities that we're also able to provide data on. Really good performance by the team, continuing to expand their presence and grow their penetration across background screeners generally. We do expect them to consistently outperform the underlying hiring market, and they've obviously done that to a very wide degree in the first two quarters of this year. I can't tell you that they're going to grow at this rate consistently going forward because obviously outgrowing the market by the amount we did in Q2 is larger than our long-term guidance.

Speaker #6: And so, verification of employment, but also to continue to drive penetration in education. And then the other incarceration-type activities that we're also able to provide data on.

Speaker #6: So, really good performance by the team, continuing to expand their presence and grow their penetration across background screeners generally. And we do expect them to consistently outperform the underlying hiring market.

Speaker #6: And they've obviously done that to a very wide degree in the first two quarters of this year. I can't tell you that they're going to grow at this rate consistently going forward because, obviously, outgrowing the market by the amount we did in the second quarter is larger than our long-term guidance.

Speaker #6: But we expect them to continue to perform well, and that is consistent with the strong outperformance relative to the market that we've indicated we should deliver long-term.

John Gamble: We expect them to continue to perform well consistent with the strong outperformance relative to the market that we've indicated we should deliver long term.

Speaker #5: Okay. Great. And then just to follow up on the government vertical. So I think you talked about flat growth in the second quarter and it ended up being a little bit weaker than what you had indicated.

Operator: Okay, great. Just to follow up on the government vertical. I think you talked about flat growth in the Q2, and it ended up being a little bit weaker than what you had indicated. I'm curious what led to that, and I guess relatedly, I'm assuming that it has to do with the usage. As you're signing these new contracts, are these all fixed subscription-based contracts, or is there a usage element to this where you could have upside downside based on what type of usage or hits you end up getting?

Faiza Alwy: Okay, great. Just to follow up on the government vertical. I think you talked about flat growth in the Q2, and it ended up being a little bit weaker than what you had indicated. I'm curious what led to that, and I guess relatedly, I'm assuming that it has to do with the usage. As you're signing these new contracts, are these all fixed subscription-based contracts, or is there a usage element to this where you could have upside downside based on what type of usage or hits you end up getting?

Speaker #5: So I'm curious what led to that. And I guess relatedly, I'm assuming that it has to do with the usage. And so, as you're signing these new contracts, are these all fixed subscription-based contracts, or is there a usage element to this where you could have upside or downside based on what type of usage or hits you end up getting?

Speaker #6: Yeah. So, in terms of the specific performance in the second quarter, the team, as Mark said, performed extremely well in signing new agreements and renewing agreements.

John Gamble: Yeah. In terms of the specific performance in the Q2, the team, as Mark said, performed extremely well in signing new agreements and renewing agreements. The timing of those is sometimes hard to predict, and some agreements that we had expected that would close in the quarter actually closed just after the quarter ended, and it impacted some of the revenue delivery that would have occurred in quarter. That's really the big driver of what happened in the Q2 relative to our expectations. It's not material on a go-forward basis for the business because again, they performed extremely well in signing new agreements. As Mark already mentioned, we are seeing an increase in the percentage of time that customers want to go to subscriptions because it makes it easier for them to budget. Not all contracts certainly are for subscriptions.

Speaker #6: The timing of those is sometimes hard to predict, and some agreements that we had expected would close in the quarter actually closed just after the quarter ended.

Speaker #6: And it impacted some of the revenue delivery that would have occurred in the quarter. And that's really the big driver of what happened in the second quarter relative to our expectations.

Speaker #6: It's not material on a go forward basis for the business because again, they performed extremely well in signing new agreements. As Mark already mentioned, we are seeing an increase in the percentage of time that customers want to go to subscriptions because it makes it easier for them to budget.

Speaker #6: But not all contracts certainly are for subscriptions. We still have a significant number of contracts. That are signed that are usage-based. And you'll continue to see a mix of that although we would expect to see probably the mix of contracts that are subscription-based to grow over time.

John Gamble: We still have a significant number of contracts that are signed that are usage-based, you'll continue to see a mix of that, although we would expect to see probably the mix of contracts that are subscription-based to grow over time.

Speaker #5: All right. Thank you.

Operator: All right. Thank you.

Faiza Alwy: All right. Thank you.

Speaker #3: Thank you. Our next question comes from the line of Andrew Nicholas with William Blair. Please proceed with your question.

Operator: Thank you. Our next question comes from the line of Andrew Nicholas with William Blair. Please proceed with your question.

Speaker #7: Hi, good morning. I appreciate you taking my questions. I wanted to circle back to the AI cost savings that you increased this quarter. Obviously, it's only been a couple months since the $75 million number.

Andrew Nicholas: Hi, good morning. Appreciate you taking my questions. I wanted to circle back to the AI cost savings that you increased this quarter. Obviously, only been a couple of months since the $75 million number. I'm just curious what has specifically changed, or what are you most excited about or incrementally excited about versus last quarter? Relatedly, how much, if anything, of those savings are already in the expense base or the run rate now?

Speaker #7: So I'm just curious kind of what has specifically changed or what are you most kind of excited about or incrementally excited about versus last quarter?

Speaker #7: And relatedly, how much if anything of those savings are already in the expense base or the run rate now?

Speaker #1: Yeah. So back in February, we put out the $75 million of savings from AI, and you may remember we talked about that being principally from our operations team.

Mark Begor: Yeah. Back in February, we put out the $75 million of savings from AI, and you may remember we talked about that being principally from our operations team. Think about our call centers and paper processing centers, which are a meaningful part of our cost structure. That was where we started with AI deployment. In that operation, we've had really strong success of accelerating some of the AI agent deployment. We've got AI agents starting to take calls. We've got AI agents really managing a lot of the massive paper that we bring into the operation. That pace of deployment and pace of productivity has really just moved rapidly. That's a piece of the increase from $75 to $150 million. We also said to you that we've been deploying AI capabilities across the rest of Equifax.

Speaker #1: Think about our call centers and paper processing centers, which are a meaningful part of our cost structure. That was where we started with AI deployment.

Speaker #1: In that operation, we've had really strong success accelerating some of the AI agent deployment, where we've got AI agents starting to take calls.

Speaker #1: We've got AI agents really managing a lot of the massive paper that we bring into the operation. So that pace of deployment and pace of productivity is really just moved rapidly.

Speaker #1: So that's a piece of the increase from $75 million to $150 million. And then we also said to you that we've been deploying AI capabilities across the rest of Equifax.

Speaker #1: Technology is a very large part of our cost structure and CapEx structure. We've had really strong momentum in deploying AI capabilities for coding or code development, where we have large portions of our code development now being done by agents and managed by our team.

Mark Begor: Technology is a very large part of our cost structure and CapEx structure. We've had really strong momentum in deploying AI capabilities for coding or code development, or we have large portions of our code development now being done by agents and managed by our team. The QC elements of that. That's been moving very rapidly, and that's a piece of that increase from $75 to $150 million. Then in our kind of G&A functions, when you think about finance, legal, and HR, we've also seen great deployment there in legal, finance, and HR. We're seeing productivity opportunities there. We thought the time was right to increase it from $75 to $150 million. As stated, it's between this year and 2027 and 2028, so it's multi-year in nature. You're seeing, in 2026, a piece of that benefit in our margin performance, which is extremely strong.

Speaker #1: The QC elements of that. So that's been moving very, very rapidly. And that's a piece of that increase from 75 to 150 million. And then in our kind of G&A functions, when you think about finance, legal, HR, we've also seen great deployment there in legal, finance, HR.

Speaker #1: So we're seeing productivity opportunities there, so we thought the time was right to increase it from $75 million to $150 million as stated. It's between this year and '27 and '28.

Speaker #1: So it's multi-year in nature. You're seeing, in 2026, a piece of that benefit in our margin performance, which is extremely strong. If you look at the margin performance for the quarter, we were up 120 basis points.

Mark Begor: If you look at the margin performance for the quarter, we were up 120 basis points. That's versus our normal kind of 50 basis point operating leverage that we get from our 7 to 10 organic revenue growth. Think 7% in the quarter. You're seeing those AI productivity and cost savings benefits show up in 2026. We wanted to give some visibility that it's moving quite rapidly. AI is real at Equifax, for sure. We've been talking for the last couple of years around how AI is changing the kind of product scores and models we bring to market. Our investments that we're making in our AI technology or explainable AI technology to really advance our product innovation. We talked about in the call that over 50% of our products that we delivered in the quarter now include AI capabilities or agents inside of them.

Speaker #1: That's versus our normal kind of 50 basis points of operating leverage that we get from our 7% to 10% organic revenue growth. Think 7% in the quarter.

Speaker #1: So, you're seeing those AI productivity and cost savings benefits show up in '26. And we wanted to give some visibility that it's moving quite rapidly.

Speaker #1: AI is real at Equifax for sure. We've been talking for the last couple of years about how AI is changing the kinds of product scores and models we bring to market.

Speaker #1: Our investments that we're making in our AI technology, or explainable AI technology, are really advancing our product innovation. We talked about on the call that over 50% of the products we delivered in the quarter now include AI capabilities or agents inside of them.

Speaker #1: And then back to the point of your question, really late last year, we started as we completed the cloud, really started deploying AI inside EQUIFAX.

Mark Begor: Back to the point of your question, really late last year, as we completed the Equifax Cloud, really started deploying AI inside Equifax. We call it AI for EFX. That's our kind of project team focus inside of the company. As I said, operations was the first focus, and now we're really seeing great momentum in tech and the rest of the company. We're energized to see those benefits will come forward not only this year, but also in 2027 and 2028.

Speaker #1: We call it AI4EFX. That's our kind of project team focus inside of the company. And as I said, operations was the first focus, and now we're really seeing great momentum in tech and the rest of the company.

Speaker #1: So we're energized to see those benefits will come forward not only this year but also in '27 and '28.

Speaker #6: And just for specifics, on the $2 billion gross labor spend, just so you have perspective, about 80% is expense and about 20% is capital.

John Gamble: Just specifics. On the 2 billion gross labor spending, just so you have perspective, about 80% is expense, about 20% is capital. The savings would impact both expense and capital. As Mark said, the savings for 2026 are in the guide.

Speaker #6: So the savings would impact both expense and capital. And as Mark said, the savings for 2026 are in the guide.

Speaker #7: Got it. That's helpful. And maybe I'll just stick with the AI theme. I appreciate the operating expense efficiency and the embedding of AI in a lot of your products.

Andrew Nicholas: Got it. That's helpful. Maybe just I'll stick with the AI theme. Appreciate the operating expense efficiency, appreciate kind of the embedding of AI in a lot of your products. I think I asked a similar question last quarter. I'm just curious, since it's all moving pretty quickly, have you noticed a change on the demand side? Are your clients actively pursuing your data on a more frequent basis? Are they particularly interested in AI-infused products? Just wondering if kind of the maturation of this cycle at the lender level is impacting the way that they demand your data, how they get it, and how often they use it. Thank you.

Speaker #7: But I think I asked a similar question last quarter. I'm just curious since it's all moving pretty quickly, have you noticed a change on the demand side?

Speaker #7: Are your clients actively pursuing your data on a more frequent basis? Are they particularly interested in AI-infused products? Just wondering if the maturation of this cycle at the lender level is impacting the way that they demand your data, how they get it, and how often they use it.

Speaker #7: Thank you.

Speaker #1: Yeah, it's all of the above. And I think you raised a really important point that every one of our customers is doing versions of what we're doing.

Mark Begor: Yeah. It's all of the above. I think you raise a really important point that every one of our customers are doing versions of what we're doing. Meaning they're changing their operations, they're embedding AI in their workflows. There's different pace of implementation with every customer. Some more advanced, some moving quickly, et cetera. I would make the point that this is changing rapidly. I think the productivity piece that we talked about inside of Equifax of just in a six-month period, our outlook for the benefits from AI in our operations, think operations tech and our support functions doubling in six months. That's the pace of adoption is really quite remarkable to me. From a customer perspective, there's no question that they're becoming more AI-enabled in how they want to access our solutions.

Speaker #1: Meaning they're changing their operations. They're embedding AI in their workflows. And there's different pace of implementation with every customer. Some more advanced, some moving quickly, etc.

Speaker #1: I would make the point that this is changing rapidly. And I think the productivity piece that we talked about inside of Equifax—just in a six-month period, our outlook for the benefits from AI in our operations (think operations tech and our support functions) has doubled in six months.

Speaker #1: That's kind of the pace of adoption is really quite remarkable to me. From a customer perspective, there's no question that they're becoming more AI-enabled and how they want to take access our solutions.

Speaker #1: What is really driving our top line and really driving our competitive advantage is our ability to deliver higher-performing solutions using our AI capabilities.

Mark Begor: What is really driving our top line and really driving our competitive advantage is our ability to deliver higher performing solutions using our AI capabilities. Think about a score that delivers higher performance. We've talked about that before. Whether you're AI-enabled or not, if you're a customer and you have the ability to approve more consumers at a lower loss rate because you've got a higher performing score that Equifax is delivering, which is powered by AI and generally includes a lot more data elements, which is part of the foundation that we have, meaning we have more differentiated data. That's a solution they want to buy, whether they're AI-enabled or not. I think that's the commercial activity is we are investing to have higher performing scores, models, and products. Remember, what we principally sell to our customers is ROI.

Speaker #1: So think about a score that delivers higher performance. And we've talked about that before. And whether you're AI-enabled or not, if you're a customer and you have the ability to approve more consumers at a lower loss rate—because you've got a higher-performing score that Equifax is delivering, which is powered by AI and generally includes a lot more data elements, which is part of the foundation that we have.

Speaker #1: Meaning we have more differentiated data. That's a solution they want to buy, whether they're AI-enabled or not. So I think that's kind of the commercial activity—we are investing to have higher-performing scores, models, and products.

Speaker #1: And remember what we principally sell to our customers is ROI. So that's kind of the forefront of where we've been investing for the last couple of years in products.

Mark Begor: That's the forefront of where we've been investing for the last couple of years in products. The enabler that comes with that is the investments we're making in Ignite and our other enabling tools that our customers use to access our tools, AI enabling those with agents in them that make them conversational with our customers. That's another gear around the engagement with our customers. It starts with performance. Are you able to deliver a product that's going to deliver more ROI to your customers? That's where our AI focus is in our products, models, and scores. We are seeing rapid adoption, some in pilot, some more extensively, of AI Advisor, right? It's our most advanced solution. Customers are starting to utilize it already.

Speaker #1: And then the kind of the enabler that comes with that is the investments we're making in Ignite, in our other enabling tools that our customers use to access our tools.

Speaker #1: AI-enabling those with agents in them that make them conversational with our customers—that's kind of another gear around the engagement with our customers. But it starts with performance.

Speaker #1: Are you able to deliver a product that's going to deliver more ROI to your customers? And that's where our AI focus is and in our products models and scores.

Speaker #6: And we are seeing rapid adoption. Some are in pilots, some more extensively, of AI Advisor, right? And it's our most advanced solution. Customers are starting to utilize it already.

Speaker #7: Thank you.

Ashish Sabadra: Thank you.

Speaker #8: Thank you. Our next question comes from Line Sabadra with RBC Capital Markets. Please proceed with your question.

Ashish Sabadra: Thank you. Our next question comes from the line of Ashish Sabadra with RBC Capital Markets. Please proceed with your question.

Operator: Thank you. Our next question comes from the line of Ashish Sabadra with RBC Capital Markets. Please proceed with your question.

Speaker #9: Thanks for taking my question. If you don't mind, I'll ask another question on Government. Historically, except for last year, Government revenues are sequentially flat from Q2 to Q3.

Ashish Sabadra: Thanks for taking my question. If you don't mind, I'll ask another question on government. Historically, except for last year, government revenues are sequentially flat from Q2 to Q3. Is that a similar cadence that we should expect before we see a step up in a sequential revenue into Q4?

Speaker #9: Is that a similar cadence that we should expect before we see a step up in a sequential revenue into Q4?

Speaker #6: Yeah. So again, I think we were asked earlier, do we expect to see growth in the second half in government? And we do, right?

Mark Begor: Yeah. Again, I think we were asked earlier, do we expect to see growth in the H2 in government? We do, right? I think that's probably as far as we're going to go on specific guidance on government or specific guidance by line of business. We're expecting to see growth in government in the H2. As Mark said, with the 100 million of new contracts and 200 million of renewals, some of which include expansions, we would expect to see accelerating growth as we go into next year.

Speaker #6: So, I think that's probably as far as we're going to go on specific guidance on government or specific guidance by line of business. But we're expecting to see growth in government in the second half.

Speaker #6: And as Mark said, with the $100 million of new contracts and $200 million of renewals, some of which include expansions, we would expect to see accelerating growth as we go into next year.

Speaker #9: That's very helpful, Color. And maybe just on the diversified markets, the guidance for Q3 was up mid-single digits. That's a modest slowdown compared to Q2.

Ashish Sabadra: That's very helpful color. Maybe just on the Diversified Markets, the guidance for Q3 was up mid-single digit. That's a modest slowdown compared to Q2. I was just wondering, is that just conservatism? Any particular puts and takes that you can call out as we think about the Diversified Markets growth for the rest of the year? Thanks.

Speaker #9: I was just wondering, is that just conservatism? Any particular percentage that you can call out as we think about the diversified market growth for the rest of the year?

Speaker #9: Thanks.

Speaker #6: No, I think diversified markets—we're expecting them to be pretty much consistent with what we saw in the second quarter, right? So I think we're very happy with the performance we saw in diversified markets in the second quarter.

Mark Begor: No, I think Diversified Markets we're expecting to be pretty much consistent with what we saw in Q2, right? I think we're very happy with the performance we saw in Diversified Markets in Q2. We saw very good performance in particularly USIS as their Diversified Markets growth improved by 300 basis points. We're expecting nice performance by USIS again. EWS will see good improvement obviously as government growth improves meaningfully as we go into H2. We're expecting to see a better growth out of international as well. No, I think we're expecting to see good performance in Q3 in Diversified Markets and at least consistent with what we saw in Q2.

Speaker #6: We saw very good performance, particularly in USIS, as their diversified markets' growth improved by 300 basis points. We're expecting nice performance by USIS again.

Speaker #6: EWS will see good improvement. Obviously, as government growth improves, meaningfully as we go into the second half. And we're expecting to see a better growth out of international as well.

Speaker #6: So, no, I think we're expecting to see good performance in the third quarter in diversified markets, and at least consistent with what we saw in the second quarter.

Speaker #9: That's very helpful, Color. Thank you.

Trevor Burns: That's very helpful, Trevor. Thank you.

Ashish Sabadra: That's very helpful, Trevor. Thank you.

Speaker #8: Thank you. Our next question comes from the line of Jason Haas with Wells Fargo. Please proceed with your question.

Trevor Burns: Thank you. Our next question comes from the line of Jason Haas with Wells Fargo. Please proceed with your question.

Operator: Thank you. Our next question comes from the line of Jason Haas with Wells Fargo. Please proceed with your question.

Speaker #10: Hey, good morning. And thanks for taking my questions. When you give us the ACV bookings for government, the 100 million dollars, are we supposed to take that and divide that by the 800 million of government revenue to imply like, I don't know, low double digit growth for government for 2027?

Jason Haas: Hey, good morning, and thanks for taking my questions. When you give us the ACV bookings for government, the $100 million, are we supposed to take that and divide that by the $800 million of government revenue to imply, I don't know, low double-digit growth for government for 2027? Is that the right framework to show that you're confident getting back to that low double-digit plus growth for government next year? Thanks. Yeah, we're not obviously giving guidance for 2027 yet. We'll do that at the right time early next year. We told you on our last call in April that we saw the pipeline over the last year grow dramatically, which we expected, but it was stronger than we anticipated. Having this meaningful pipeline conversion, we thought it was meaningful to share with you. We did that this morning.

Speaker #10: Is that the right framework to show that you're confident getting back to that low double digit plus growth for government next year? Thanks.

Speaker #1: Yeah, we're not obviously giving guidance for 2027 yet. We'll do that at the right time early next year. We thought it was prudent given the we told you on our last call in April that we saw the pipeline over the last year grow dramatically, which we expected, but it was stronger than we anticipated.

Mark Begor: Yeah, we're not obviously giving guidance for 2027 yet. We'll do that at the right time early next year. We told you on our last call in April that we saw the pipeline over the last year grow dramatically, which we expected, but it was stronger than we anticipated. Having this meaningful pipeline conversion, we thought it was meaningful to share with you. We did that this morning.

Speaker #1: And having this meaningful pipeline conversion we thought it was meaningful to share with you. So we did that this morning. The 200 million of renewals are in the kind of base run rate.

Mark Begor: The $200 million of renewals are in the base run rate, and there's some expansions in there. The $100 million is new revenue versus 2026. There'll be some of that small amount in the H2, but it'll be principally in 2027, which is really how we thought about government unfolding as we move into 2027 and beyond. We still have a strong degree of confidence, that's actually reinforced by the commercial pipeline and by the pipeline conversion of the $100 and the $200. When we think about government in 2027 beyond, there's just a long runway to grow into that big $5 billion TAM, we're seeing some real success as reflected in the $100 million of new business. Great. Got it. Okay. That makes sense. I want to follow up on the EWS margins.

Speaker #1: And there's some expansions in there. The $100 million is new revenue. Versus 2026, there'll be some of that, a small amount, in the second half, but it'll be principally in 2027, which is really how we thought about Government unfolding as we move into '27 and beyond.

Speaker #1: We still have a strong degree of confidence, and that's actually reinforced by the commercial pipeline and by the pipeline conversion of the 100 and the 200.

Speaker #1: When we think about government in 2027 and beyond, there's just a long runway to grow into that big $5 billion TAM. And we're seeing some real success, as reflected in the $100 million of new business.

Speaker #10: Great. Got it. Okay. That makes sense. And then I want to follow up on the EWS margins. So I know nothing's changing and the margins are guided flat for this year.

Jason Haas: I know nothing's changing, the margins are guided flat for this year.

Speaker #10: But just conceptually, I'm trying to understand why that is, because it sounds like you're getting some good AI benefits to your cost structure. We're certainly seeing that in the XFICO USIS margins, which are going to expand this year.

Jason Haas: Just conceptually, I'm trying to understand why that is, because it sounds like you're getting some good AI benefits to your cost structure. We're certainly seeing that in the ex-FICO, USIS margins, which are-

Jason Haas: Yep

Mark Begor: Yep

Jason Haas: going to expand this year. What's the offset? Is it investment in the business? Is it because you're selling more incarceration and other records that maybe makes the business lower? Just conceptually, why aren't those margins going higher this year?

Speaker #10: So what's the offset? Is it investment in the business? Is it because you're selling more incarceration and other records that maybe mixes the business lower?

Speaker #10: Just conceptually, why aren't those margins going higher this year?

Speaker #1: Yeah. So we've been clear that, look, 50-plus percent EBITDA margins are pretty unusual. And quite attractive. And EWS has been delivering those for, I don't know, a decade, as long as I've been at EQUIFAX, they've had those kind of 50-plus percent EBITDA margins.

Mark Begor: Yeah. We've been clear that, look, 50-plus% EBITDA margins are pretty unusual and quite attractive. EWS has been delivering those for, I don't know, a decade. As long as I've been at Equifax, they've had those kind of 50-plus% EBITDA margins. When we think about our long-term framework, we've always thought about maintaining that 50-plus% EBITDA margin. By doing that, we want to keep reinvesting inside of EWS to really drive that above 7 to 10. We think that they're going to grow over the long term, low double digits, driving that very high top line with those attractive margins. That's how we think about the business. It's a place we want to keep investing in. Yes, they are getting some of those AI productivity savings. We're investing those to keep that top-line growth moving.

Speaker #1: And when we think about our long-term framework, we've always thought about maintaining that 50-plus percent EBITDA margin, and by doing that, we want to keep reinvesting inside of EWS to really drive that above 7 to 10.

Speaker #1: We think that they’re going to grow over the long term in low double digits, driving that very high top line with those attractive margins. That’s how we think about the business.

Speaker #1: It's a place we want to keep investing in. And yes, they are getting some of those AI productivity savings. We're investing those to keep that top-line growth moving.

Speaker #1: And then, when you think about overall Equifax, they're growing faster than the rest of Equifax with those higher EBITDA margins. That's one of the drivers of the 50 basis points of base operating leverage.

Mark Begor: When you think about overall Equifax, they're growing faster than the rest of Equifax with those higher EBITDA margins. That's one of the drivers of the 50 basis points of base operating leverage that we have over the long term. In 2026, you're seeing strong outperformance of that 50 basis point long-term frame for operating margin expansion, principally from AI productivity that we've already talked about, the $75 million, which is now at $150 million, accreting into that margin. That's how we think about the overall framework going forward. We should see strong margin expansions in USIS and international and corporate, and we want to maintain those 50-plus% EBITDA margins in the future at EWS.

Speaker #1: That we have over the long term. And then in 2026, you're seeing strong outperformance of that 50 basis point long-term frame for operating margin expansion principally from AI productivity that we've already talked about, the 75 million, which is now 150 million, accreting into that margin.

Speaker #1: So that's how we think about the overall framework going forward. We should see strong margin expansions in USIS, International, and Corporate. And we want to maintain those 50 basis point—I'm sorry, 50% plus EBITDA margins in the future in EWS.

Speaker #10: Okay. Great. That makes sense. Thank you very much.

Jason Haas: Okay, great. That makes sense. Thank you very much.

Speaker #8: Thank you. Our next question comes from the line of Kyle Peterson with Needham & Company. Please proceed with your question.

Jason Haas: Thank you. Our next question comes from the line of Kyle Peterson with Needham & Company. Please proceed with your question.

Operator: Thank you. Our next question comes from the line of Kyle Peterson with Needham & Company. Please proceed with your question.

Speaker #1: Hey, Kyle.

Mark Begor: Hey, Kyle.

Speaker #11: Hey, morning, guys. Thank you for taking the questions. I want to start off on the consumer lending business. It seems like that was a notable area of strength you guys called out, and it's good to see the momentum there.

Kyle Peterson: Hey, good morning, guys. Thank you for taking the questions. I wanted to start off on the consumer lending business. Seems like that was a notable area of strength you guys called out, good to see the momentum there. I wanted to see how much of that is either strength with the banks. I know some of the card issuers and stuff have gotten a little more into that. Versus like, are you guys gaining some share in fintech or is it a little bit of both? Just wanted to get more color there.

Speaker #11: I want to see how much of that is either strength with the banks. I know some of the card issuers and stuff have gotten a little more into that.

Speaker #11: Versus, are you guys gaining some share in fintech or is it a little bit of both? Just wanted to get more color there.

Speaker #1: Yeah, it's really all the above. And I think USIS, it had some strong momentum in the quarter. We talked about twin indicator. A lot of look at the vitality index.

Mark Begor: Yeah, it's really all the above. I think USIS had some strong momentum in the quarter. We talked about the Twin Indicator. Look at the Vitality Index. A lot of new products that USIS is above 10% vitality in the quarter. That's a positive that we've got more solutions that they're bringing to market. The end markets are solid outside of mortgage, which is a positive. We talked about the fact that we had very strong growth in EWS, where the Twin data is used in auto card P-loan, performed very well. We're seeing stronger adoption there because of the value of the combination of credit data with income and employment data. That's been a positive momentum.

Speaker #1: A lot of new products at USIS have above 10% vitality in the quarter, so that's a positive that we've got more solutions that they're bringing to market.

Speaker #1: The end markets are solid. In outside of mortgage, which is a positive. And then we talked about the fact that we had very strong growth in EWS, where the twin data is used in auto car P-lone performed very well.

Speaker #1: We're seeing stronger adoption there because of the value of the combination of credit data with income and employment data. So that's been a positive momentum.

Speaker #1: And with USIS online, I mean, we saw very good performance. The good news is right across the portfolio, right? Very good performance in auto, strong performance online and FI, actually nice performance in telco as well.

John Gamble: With USIS Online, we saw very good performance. The good news is right across the portfolio. Very good performance in auto, strong performance online in NFI. Actually, nice performance in telco as well, good growth there. We're seeing increasing improving growth in insurance. The only place we saw some weakness is in our sales where we actually sell to our two competitors in our D2C business. Other than that, we have very strong performance across the board in USIS Online.

Speaker #1: Good growth there, and we're seeing increasing and improving growth in insurance, right? The only place we saw some weakness is in our sales where we actually sell to our two competitors—our D2C business.

Speaker #1: But other than that, we have very strong performance across the board in USIS Online.

Speaker #11: Great, really appreciate the color there. And then maybe a follow-up, kind of shifting back to some of the AI discussions—good to see the savings and efficiency gains there.

Kyle Peterson: Great. Really, thanks for the color there. Then maybe a follow-up, kind of shifting back to some of the AI discussions. Good to see the savings and efficiency gains there moved up dramatically. The cash flow conversion seems like you guys were able to reiterate that. Maybe there's been a lot of discussion on AI investments and paybacks and CapEx commitments and such. How are you guys thinking about this conceptually in terms of initial investments, payback periods, and such in terms of deploying AI within Equifax?

Speaker #11: Moved up dramatically. So but the cash flow conversion seems like you guys are able to reiterate that. So maybe there's been a lot of discussion on kind of AI investments and paybacks and CAPEX commitments and such.

Speaker #11: So, how are you guys thinking about this conceptually, in terms of initial investments, payback periods, and such, in terms of deploying AI within Equifax?

Speaker #1: Yeah. We're seeing very high returns in ROIs on our AI investments. So it's very positive. It's really I don't know how to describe it with enough enthusiasm meaning the pace of adoption by EQUIFAX, our organization, is something I haven't seen before.

Mark Begor: Yeah. We're seeing very high returns and ROIs on our AI investments. It's very positive. I don't know how to describe it with enough enthusiasm, meaning the pace of adoption by Equifax, our organization, is something I haven't seen before, meaning the ability to do it. Very high ROIs, and the $150 million really reflects our expectation of the investments we'll make in the AI tokens and tools and agents that'll be used to deliver that. We're still optimizing that, meaning it's still early days. Think about it. A year ago, we weren't talking about this. We weren't doing it. It's really quite remarkable about how rapidly we, and I think the world, are deploying these kind of capabilities.

Speaker #1: Meaning the ability to do it. So very high ROIs. And the 150 million really reflects our expectation of the investments we'll make in the AI tokens and tools and agents that'll be used to deliver that.

Speaker #1: And we're still optimizing that. Meaning, it's still early days. Think about it—a year ago, we weren't talking about this, we weren't doing it.

Speaker #1: So it's really quite remarkable how rapidly we—and I think the world—are deploying these kinds of capabilities. And we're being very disciplined, as we are with all of our investments, around returns and expectations on paybacks.

Mark Begor: We're being very disciplined as we are with all of our investments around returns and expectations on paybacks because we want to make sure we're deploying it smartly. We're also driving real engagement here across every corner of Equifax to look at the opportunities to deploy it. I think as you pointed out, in the matter of six months to have our outlook really double on the capabilities is just a reflection of how we're rapidly deploying it.

Speaker #1: Because we want to make sure we're deploying it smartly. But we're also driving real engagement here across every corner of EQUIFAX to look at the opportunities to deploy it.

Speaker #1: And I think, as you pointed out, in the matter of six months to have our outlook really double on the capabilities is just a reflection of how rapidly we're deploying it.

Speaker #1: And we think we're really benefiting heavily by the fact that we rebuilt onto a cloud platform over the past five years, right? So our data has already been built in a standard data fabric to make it easier for agents and AI to access it.

John Gamble: We think we're really benefiting heavily by the fact that we rebuilt onto a cloud platform over the past 5 years. Our data has already been built in a standard data fabric to make it easier for agents and AI to access it. Yes, there's additional investments that have to be made to make it easier specific for AI, but we had made a lot of progress on that just from the cloud migration. Same thing can be said around the way we built our agentic platform that everybody can use. That effectively because we're working on standard Google tools, we can implement those capabilities, we think much more simply and rapidly than others can because our infrastructure is very modern and built on those cloud-based services already. We feel like, yes, there's certainly been investment.

Speaker #1: Yes, there's additional investments that have to be made. To make it easier specific for AI, but we had made a lot of progress on that just from the cloud migration.

Speaker #1: The same thing can be said about the way we built our agentic platform that everybody can use, right? Because we're working on standard Google tools, we can implement those capabilities.

Speaker #1: We think much more simply and rapidly than others can because our infrastructure is very modern and built on those cloud-based services already. So we feel like, yes, there's certainly been investment.

Speaker #1: We've been able to contain it in inside the numbers that we told you we would spend in 2026. And we feel like we're progressing very rapidly.

John Gamble: We've been able to contain it inside the numbers that we told you we would spend in 2026. We feel like we're progressing very rapidly, I think specifically because of the fact that we have a very modern cloud-based infrastructure to start with.

Speaker #1: I think specifically because we have a very modern, cloud-based infrastructure to start with.

Speaker #11: Great. Really appreciate the color. Thank you.

Kyle Peterson: Great. Really appreciate the color. Thank you.

Speaker #8: Thank you. Our next question comes from the line of Kevin McPhee with UBS. Please proceed with your question.

Kyle Peterson: Thank you. Our next question comes from the line of Kevin McVeigh with UBS. Please proceed with your question.

Operator: Thank you. Our next question comes from the line of Kevin McVeigh with UBS. Please proceed with your question.

Speaker #12: Great, thanks so much. Can you give us a sense of what type of mortgage rates you've got embedded in the second half guidance, relative to what it was in the initial '26 guidance?

Kevin McVeigh: Great. Thanks so much. Can you give us a sense of what type of mortgage rates you've got embedded in the H2 guidance relative to what it was in the initial 2026 guidance?

Speaker #1: Yes. So right now, what we've embedded in the guidance is current mortgage rates, right? And we actually do that in every earnings release.

John Gamble: Yes. Right now what we have embedded in the guidance is current mortgage rates. We actually do that in every earnings release. We use the February rates in February, and we would have used the April rates in April. I think they're up on the order of 30 to 40 basis points. We can get to that exact number between April and now. That's really what we've seen occur while we're seeing a slowdown in mortgage, and we're using current run rates and current rates.

Speaker #1: So, we use the February rates in February, and we would have used the April rates in April. I think they're up on the order of 30 to 40 basis points.

Speaker #1: We can get to that exact number between April and now. So that's really what we've seen occur while we're seeing a slowdown in mortgage.

Speaker #1: And we're using current run rates and current rates.

Speaker #12: Got it. And then, just when you talk about the AI implementation across the expense structure, going to, I guess, that slide 14—is there any reason you're not looking at sales and marketing and G&A at this point? Or is there more incremental opportunity as AI becomes more embedded in the expense and, I guess, the organization overall?

Kevin McVeigh: Got it. Just when you talk about the AI implementation across the expense structure, going to, I guess, that slide 14, is there any reason you're not looking at sales and marketing and G&A at this point, or is there more incremental opportunity as the AI becomes more embedded in the expense and I guess organization overall?

Speaker #1: Yeah. I think we're going to where we're seeing the momentum so far and where we have our largest cost bases, which is really in operations, and tech is larger than operations.

Mark Begor: Yeah, I think we're going to where we're seeing the momentum so far and where we have our largest cost bases which is really in operations and tech is larger than operations. I said earlier that finance, HR, legal, even the commercial team is using AI tools now to prepare for meetings with customers. We're definitely doing it across the board. Conceptually, we don't think about reducing our commercial resources. We think that that's always going to be something we're going to want to invest in. We want to AI enable them to be more effective on how they go to market. We're seeing it really AI deployment across every corner of Equifax.

Speaker #1: But I said earlier that finance, HR, legal, even the commercial team is using AI tools now to prepare for meetings with customers. So we're definitely doing it across the board.

Speaker #1: Conceptually, we don't think about reducing our commercial resources. We think that that's always going to be something we're going to want to invest in.

Speaker #1: But we want to AI enable them to be more effective on how they go to market. But we're seeing it really AI deployment across every corner of EQUIFAX.

Speaker #1: Yeah. And efficiencies in G&A are included in the 150 million just as Mark said, not marketing and sales. That's an area we're investing in.

John Gamble: Yeah. Efficiencies in G&A are included in the $150 million, just as Mark said, not marketing and sales. That's an area we're investing in.

Speaker #12: Thanks.

Kevin McVeigh: Thanks.

Kevin McVeigh: Thank you. Our next question comes from the line of Surinder Thind with Jefferies. Please proceed with your question.

Operator: Thank you. Our next question comes from the line of Surinder Thind with Jefferies. Please proceed with your question.

Speaker #8: Thank you. Our next question comes from the line of Serena Finn with Jefferies. Please proceed with your question.

Speaker #13: Thank you. Mark, when you think about the savings that you've been generating through the use of AI tools and reinventing some of those workflows, are some of those costs sustainable if AI costs were normalized?

Surinder Thind: Thank you. Hey, Mark, when you think about the savings that you've been generating through the use of AI tools and reinventing some of those workflows, are some of those costs sustainable if AI costs were normalized? I think there's a lot of debate out there about.

Speaker #13: I think there's a lot of debate out there about.

Speaker #1: We think so, yeah. Go ahead.

Mark Begor: We think so.

Surinder Thind: costs of

Mark Begor: Yeah.

Speaker #13: Well, I guess what I would add here is, though, one of the disappointments, I think, with cloud has been that the hyperscalers have constantly been raising prices, such that, I guess, the users of cloud never truly realize the savings that they were promised.

Surinder Thind: Well.

Mark Begor: Go ahead.

Surinder Thind: Well, I guess what I would add here is, though, one of the disappointments I think with cloud has been that the hyperscalers have constantly been raising pricing such that I guess the users of cloud never truly realize the savings that they were promised. I'm just wondering if you get these mortgage savings.

Mark Begor: Go ahead.

Speaker #13: I'm just wondering if you get these new savings.

Mark Begor: We did. We clearly saw the cloud savings. Again, you think about cloud savings versus our legacy mainframe. We think that was a successful investment, that we delivered the returns on that one. When it comes to AI, we are seeing the ability to really access the AI tools that are available that we're using and deliver very meaningful ROIs to drive the cost savings. We're being very disciplined and deliberate around how we roll out tokens, how we manage the tokens to deliver ROI, and we're seeing returns. I think we wouldn't have gone from $75 to $150 million if we're not. To your question, yeah, we think they're sustainable given the scale of the benefits that can be delivered there.

Speaker #1: We did, yeah. We clearly saw the cloud savings. Again, when you think about cloud savings versus our legacy mainframe, we think that was a successful investment and that we delivered the returns on that one.

Speaker #1: When it comes to AI, we are seeing the ability to really access the AI tools that are available that we're using. And deliver very meaningful ROIs to drive the cost savings.

Speaker #1: And we're being very disciplined and deliberate around how we roll out tokens and how we manage the tokens to deliver ROI. And we're seeing returns.

Speaker #1: So I think we wouldn't have gone from $75 million to $150 million if we're not. And to your question, yeah, we think they're sustainable given the scale of the benefits that can be delivered there.

Speaker #1: Yeah, and cloud cost management is a discipline that we think we're very good at, right? So we think it extends very directly into AI and token management.

John Gamble: Yeah. Cloud cost management is a discipline that we think we're very good at.

Mark Begor: Yeah.

John Gamble: We think it extends very directly into AI and token management, and we're already managing it in that way using the same discipline. We feel good about our ability to manage this going forward. It's not only a financial discipline, it's a technical discipline. It's how do you change your applications to make them more efficient. We think we'll be able to do the same thing around AI and the models we choose.

Speaker #1: And we're already managing it in that way, using the same discipline. So we feel good about our ability to manage this going forward. And it's not only a financial discipline.

Speaker #1: It's a technical discipline. It's about how you change your applications to make them more efficient. We think we'll be able to do the same thing around AI and the models we choose.

Speaker #13: That's helpful. And then, I guess, just turning to mortgage and maybe looking at pre-qual and kind of the ongoing movement from three bureaus to kind of one bureau pulls by lenders, I guess I would suggest that they're quite sensitive to the current costs.

Surinder Thind: That's helpful. When, I guess, just turning to mortgage and maybe when looking at pre-qual and kind of the ongoing movement from three bureaus to kind of one bureau pulls by lenders, I guess that would suggest that they're quite sensitive to the current cost. Is the goal here that you think you can take the majority of the market share in pre-qual? Or given that your incremental costs of delivery are quite negligible, would you actually consider moving to a loan close fee where it's just all you can eat upfront? I know you've talked about RESPA, but what would be the downside of

Speaker #13: So, is the goal here that you think you can take a majority of the market share in pre-qual? Or, given that your incremental costs of delivery are quite negligible, would you actually consider moving to a loan close fee, where it's just all-you-can-eat upfront?

Speaker #13: I know you've talked about RESPA. But what would be the downside of moving to that model?

Surinder Thind: Moving to that model.

Speaker #1: Yeah, we don't think that's a model we want to move to, nor does the industry want to move to that. We already maybe covered that earlier.

Mark Begor: We don't think that's the model we want to move to, nor does the industry want to move to that. We already maybe covered that earlier. I want to clarify, you said the move from 3B to 1B. There's no move underway there, and I think you may have seen, maybe 45 days ago, the HUD statement that 3B is here to stay in their loan originations. We think the industry is very aligned around the power of 3B because the differences in the credit files. With regards to pre-qual and pre-approval, we definitely want to try to grow our share there, and that's why we're trying to differentiate our solution. Remember, we're using two unique levers to Equifax. One is the Twin Indicator for free on our mortgage pre-qual, pre-application credit file, we want to do that to drive share.

Speaker #1: I want to clarify. You mentioned the move from 3B to 1B. There's no move underway there. And I think you may have seen, maybe 45 days ago, the HUD statement that 3B is here to stay.

Speaker #1: And their loan originations. And we think the industry is very aligned around the power of 3B, because the difference is in the credit files.

Speaker #1: With regards to pre-qual and pre-approval, we definitely want to try to grow our share there, and that's why we're trying to differentiate our solution.

Speaker #1: And remember, we're using two unique levers to EQUIFAX. One is the twin indicator for free on our mortgage pre-qual, pre-application. Credit file and we want to do that to drive share.

Speaker #1: And we've seen some share gains in the second half of last year and the first half of this year, and we expect some of those to continue.

Mark Begor: We've seen some share gains in H2 of last year and H1 of this year, we expect some of those to continue. We're also delivering with our mortgage credit file, our cellphone utility attributes for free to differentiate. That's a big data set for us. It provides a lot more credit data in the mortgage credit file than our competitors can. That's another advantage for Equifax. Those are all to differentiate ourselves going forward. We are super pleased to have the assets that we have, and now with the cloud behind us, we can deliver those to our customers in a way that can differentiate our credit file solution to drive those share gains.

Speaker #1: And then we're also delivering, with our mortgage credit file, our cell phone and utility attributes for free to differentiate. That's a big dataset for us.

Speaker #1: It provides a lot more credit data in the mortgage credit file than our competitors can. So that's another advantage for EQUIFAX. And those are all to differentiate ourselves going forward.

Speaker #1: So we are super pleased to have the assets that we have, and now with the cloud behind us, we can deliver those to our customers in a way that can differentiate our credit file solution to drive those share gains.

Speaker #13: Got it. Thank you.

Surinder Thind: Got it. Thank you.

Speaker #8: Thank you. Our next question comes from the line of Curtis Nagle with Bank of America. Please proceed with your question.

Surinder Thind: Thank you. Our next question comes from the line of Curtis Nagle with Bank of America. Please proceed with your question.

Operator: Thank you. Our next question comes from the line of Curtis Nagle with Bank of America. Please proceed with your question.

Speaker #14: Great, thanks so much for taking the question. Maybe, John, just a quick one for you. Could you talk about the flow-through of the EBIT margins for the second half?

Curtis Nagle: Great. Thanks so much for taking the question. Maybe, John, just a quick one for you. Just talk about the flow-through of the EBITDA margin through the H2. I think there's a bit of a step down in Q3 and then a re-acceleration sequentially implied for Q4. Maybe just walk through the puts and takes there, and then I'll have a follow-up.

Speaker #14: I think there's a bit of a step down in Q3, and then re-acceleration sequentially implied for Q4. So maybe just walk through the puts and takes there.

Speaker #14: And then I'll have a follow-up.

Speaker #1: Yeah. So, for the full year again, we're indicating that we're going to deliver EBITDA margin growth of 75 basis points or higher. We feel very good about that.

Mark Begor: Yeah. For the full year, again, we're indicating that we're going to deliver EBITDA margin growth of 75 basis points or higher. We feel very good about that, much higher than our 50 basis point long-term model. I think in the Q3, we're still talking about growth even well above that 75 basis points on the order of 90 basis points. We feel great about what we've done year to date. We feel good about the guide for the Q3, and we believe we're being consistent with what we've talked about full year in terms of being able to deliver very strong EBITDA margin growth ex FICO again at north of 75 basis points for the full year. We feel good about our margin expansion.

Speaker #1: Much higher than our 50 basis point long-term model. And I think in the third quarter, we're still talking about growth even well above that—75 basis points, on the order of 90 basis points.

Speaker #1: So we feel great about what we've done year to date. We feel good about the guide for the third quarter. And we believe we're being consistent with what we've talked about for the full year in terms of being able to deliver very strong EBITDA margin growth ex-FICO, again at north of 75 basis points for the full year.

Speaker #1: So we feel good about our margin expansion. As Mark's already said, some of that is being driven by AI benefits. But in 2026, those aren't that large yet, right?

Mark Begor: As Mark's already said, some of that is being driven by AI benefits, but in 2026, those aren't that large yet, right? They're going to accelerate as we go through 2027 and 2028 with the increased level of $150 million that we announced today.

Speaker #1: And they're going to accelerate as we go through '27 and '28. With the increased level of 150 million that we announced today.

Speaker #14: Okay. And then just going back to the 200 million in renewals, I guess any stats you'd be able to give in terms of, I don't know, rate of improvement or change in renewal rate, compared to some of the prior quarters?

Curtis Nagle: Okay. Just going back to the $200 million in renewals, I guess any stats you'd be able to give in terms of, I don't know, rate of improvement or change in renewal rate, compared to some of the prior quarters.

Speaker #1: Renewal rate very, very high. Very, very high. So think about that as something that is super high. And it's a big number. So we made a decision to share the new business, which we typically don't do, but it's such a sizable number.

Mark Begor: Renewal rate very, very high. Think about that as something that is super high, and it's a big number. We made a decision to share the new business, which we typically don't do, but it's such a sizable number. We wanted to share the $100 million, we opted to share also the renewal rate. Similar pricing, similar structure. There's not changes happening there. It just reinforces the market presence and the market position that our unique TWN solution has. Again, as a reminder, I think investors sometimes forget this, there's a long runway here, meaning you got $5 billion of potential customer relationships, and we're at $800 million and heading towards that $5 billion with $100 million of incremental new contract signings that we shared this morning.

Speaker #1: We wanted to share the $100 million and we opted to share also the renewal rate similar pricing, similar structure. There's not changes happening there.

Speaker #1: It just reinforces the market presence and the market position that our unique twin solution has. And again, as a reminder, I think investors sometimes forget this.

Speaker #1: There's a long runway here, meaning you got 5 billion dollars of potential customer relationships and we're at 800 million and heading towards that 5 billion with the 100 million of incremental new contract signings that we shared this morning.

Speaker #14: Okay. All right. Appreciate it. Thank you.

Curtis Nagle: Okay. All right. Appreciate it. Thank you.

Speaker #1: Yep.

Mark Begor: Yep.

Speaker #8: Thank you. Our next question comes from Line of Raina Kumar with Oppenheimer & Company. Please proceed with your question.

Mark Begor: Thank you. Our next question comes from the line of Raina Kumar with Oppenheimer & Co. Inc. Please proceed with your question.

Operator: Thank you. Our next question comes from the line of Rayna Kumar with Oppenheimer & Co. Inc. Please proceed with your question.

Speaker #15: Good morning. Thanks for taking my question. I just want to better understand your appetite for more acquisitions here. And if you do have an appetite, which areas do you expect your M&A efforts to be focused on going forward?

Mark Begor: Good morning. Thanks for taking my question. I want to better understand just your appetite for more acquisitions here, and if you do have an appetite, which areas do you expect your M&A efforts to be focused on going forward?

Rayna Kumar: Good morning. Thanks for taking my question. I want to better understand just your appetite for more acquisitions here, and if you do have an appetite, which areas do you expect your M&A efforts to be focused on going forward?

Speaker #1: Sure. And I think we've been very clear since I've been at Equifax that we're super disciplined around bolt-on M&A. We're looking for businesses like Circulo—a great example.

Mark Begor: Sure. I think we've been very clear since I've been at Equifax that we're super disciplined around bolt-on M&A. We're looking for businesses like Círculo is a great example. Unique opportunity to enter the Mexico market, really fast-growing market, fits with our international strategy, kind of a market leader, super attractive growth. Our financial criteria for bolt-on M&A is to buy businesses that are accretive to our seven to 10 long-term growth rate. Círculo checks that box as an example. Accretive to our margins. Their mid-40s EBITDA margins are clearly accretive and then deliver shareholder value, meaning we bought it well. After synergies, the 9.5 or 9.4 times multiple. You think about where we want to buy, we're also very clear that international platforms is one.

Speaker #1: Unique opportunity to enter the Mexico market. Really fast-growing market. Fits with our international strategy. Kind of a market leader super attractive growth. Our financial criteria for bolt-on M&A is to buy businesses that are accretive to our 7 to 10 long-term growth rate.

Speaker #1: Circulo checks that box as an example. Accretive to our margins—they’re mid-40s. EBITDA margins are clearly accretive. And then deliver shareholder value, meaning we bought it well.

Speaker #1: After synergies, the 9.5 or 9.4 times multiple. And when you think about where we want to buy, we're also very clear that international platforms is one.

Speaker #1: And as you know, a couple of years ago, we bought Boa Vista in Brazil to enter the Brazilian market. We bought Círculo de Crédito.

Mark Begor: As you know, a couple of years ago, we bought Boa Vista in Brazil to enter the Brazilian market. We bought Círculo to Crédito, the leader in Dominican Republic. I'm sorry, we bought the number one player in Dominican and now Círculo in Mexico. International platforms are a priority. Strengthening Workforce Solutions is another one. As you know, we've been quite acquisitive there. We bought Appriss Insights. That's been a really successful acquisition for us, high returning with the incarceration data. So that was a real win there. We've done, I think six or so, maybe seven over the last 5 years, acquisitions to strengthen our employer business, whether it's around WOTC or I-9 kind of solutions. Vault Verify that we bought in November is an example of that. Number 2 is strengthening our fastest-growing, highest margin business Workforce Solutions.

Speaker #1: The leader in Dominican Republic. And now Circulo I'm sorry, we bought the number one player in Dominican and now Circulo in Mexico. So international platforms are a priority.

Speaker #1: Strengthening workforce solutions is another one. And as you know, we've been quite acquisitive there. We bought Aperis Insights—that's been a really successful acquisition for us.

Speaker #1: High returning with the incarceration data, so that was a real win there. And we've done, I think, six or so, maybe seven, over the last five years—acquisitions to strengthen our employer business, whether it's around WOTC or I-9 kind of solutions.

Speaker #1: Vault Verify that we bought in November is an example of that. So, number two is strengthening our fastest-growing, highest-margin business, Workforce Solutions.

Speaker #1: Number three is unique proprietary data assets that add to our data moat. We've done a number of acquisitions there, principally in USIS, with the acquisition of PayNet on commercial data, DataX and Teletrack.

Mark Begor: Number three is unique, proprietary data assets that add to our data moat. We've done a number of acquisitions there, principally in USIS, with the acquisition of PayNet on commercial data, DataX, and Teletrack. We want to continue finding unique data assets that are alternative to the credit file. That's a third priority. Number four is identity and fraud. Our sizable acquisition we did a number of years ago was Kount. That's been a very positive acquisition for us in that fast-growing vertical. Those are the four swim lanes that we think about bolt-on M&A.

Speaker #1: So, we want to continue finding unique data assets that are alternative to the credit file. So that's a third priority. And number four is identity and fraud.

Speaker #1: And you know our sizeable acquisition we did a number of years ago was account that's been a very positive acquisition for us. And that fast-growing vertical.

Speaker #1: So those are the four kinds of swim lanes that we think about for bolt-on M&A. And as you know, we were very clear last April when we rolled out our capital allocation plan after the cloud completion that we're going to use our excess free cash flow to do this bolt-on M&A, like a Boa Vista, like an Aperis Insights, like a Circulo de Credito in Mexico.

Mark Begor: As you know, we were very clear last April when we rolled out our capital allocation plan after the Equifax Cloud completion that we're going to use our excess free cash flow to do this bolt-on M&A, like a BoaVista, like an Appriss Insights, like a Círculo or Crédito in Mexico. Then our excess free cash flow, we're going to use to buy back stock. We've been very aggressive in our eyes, buying back stock, $1.6 billion over the last year, $500 million in Q4, $300 million in Q2. With our growing top line, with our growing margin expansion and our very high cash conversion, we have substantial excess free cash flow after CapEx and dividend to do the bolt-on M&A and return substantial amounts to our investors going forward.

Speaker #1: And then our excess free cash flow, we're going to use to buy back stock. And we've been very aggressive. Our eyes buying back stock—$1.6 billion over the last year, $500 million in the fourth quarter, $300 million in the second quarter.

Speaker #1: So with our growing top line with our growing margin expansion and our very high cash conversion, we have substantial excess free cash flow after CapEx and dividend to do the bolt-on M&A and return substantial amounts to our investors going forward.

Speaker #1: And as we said on the Circulo call, we expect in 2027 to have a similar slightly larger capacity of a billion plus of free cash flow.

Mark Begor: As we said on the Círculo call, we expect in 2027 to have a similar, slightly larger capacity of $1 billion plus of excess free cash flow after dividend and CapEx. Then debt capacity or leverage because our EBITDA, we expect to grow another $1.5 billion, just like the $1.5 billion we have this year for bolt-on M&A and returning cash to shareholders through buyback.

Speaker #1: Excess free cash flow after dividends and CapEx, and then debt capacity or leverage, because our EBITDA—we expect to grow by another $1.5 billion, just like the $1.5 billion we have this year—for bolt-on M&A and returning cash to shareholders through buyback.

Speaker #8: Thank you. Our next question comes from Line of Kelsey Zhu with Autonomous Research. Please proceed with your question.

Mark Begor: Thank you. Our next question comes from the line of Kelsey Zhu with Autonomous Research. Please proceed with your question.

Operator: Thank you. Our next question comes from the line of Kelsey Zhu with Autonomous Research. Please proceed with your question.

Speaker #16: Good morning. Thanks for taking that question. Any thoughts around the timeline for full-scale implementation for both VantageScore and FICO 10C? We'd also love to get your latest expectation around VantageScore adoption rate in mortgage by the end of 2026 and 2027.

Kelsey Zhu: Good morning. Thanks for taking my question. Any thoughts around the timeline for full-scale implementation for both VantageScore and FICO 10T? Would also love to get your latest expectation around VantageScore adoption rate in mortgage by the end of 2026 and 2027.

Speaker #1: Yeah. 10C, you should talk to FICO about. I don't think we have a really strong perspective on that. I think that's going to take time.

Mark Begor: Yeah. 10T, you should talk to FICO about. I don't think we have a really strong perspective on that. I think that's going to take time, would be kind of my assessment. I think the Vantage conversion is probably a reflection that the 10T change is going to be challenging, meaning it takes time to do it. On Vantage, we're seeing strong momentum. Just as a reminder, it's only really a few months ago that the FHFA opened up the gates for Vantage adoption. It's still being gated to 20 plus lenders. We would expect that to increase. The momentum's quite strong. It's hard to handicap how quickly the agencies are going to start allowing more lenders to underwrite mortgages using agency mortgages using Vantage, but we expect that to continue going forward. The billion-dollar cost savings is a big number.

Speaker #1: Would be kind of my assessment. I think the Vantage conversion is probably a reflection that the 10C change is going to be challenging, meaning it takes time to do it.

Speaker #1: On Vantage, we're seeing strong momentum. Just as a reminder, it's really only been a few months since the FHFA opened up the gates for Vantage adoption.

Speaker #1: It's still being gated to 20-plus lenders. We would expect that to increase, but the momentum is quite strong. So it's hard to handicap how quickly the agencies are going to start allowing more lenders to deliver and underwrite mortgages using agency mortgages with Vantage.

Speaker #1: But we expect that to continue going forward. The billion-dollar cost savings is a big number. And when we meet—when I meet with mortgage originators—they're well aware of that opportunity for them.

Mark Begor: When I meet with mortgage originators, they're well aware of that opportunity for them. They're under really meaningful margin and cost pressures in the current mortgage environment. It's something that is on their radar screen, and I think a reflection of the growing number of lenders that are taking our free VantageScore to just make sure their process flows and technology is operating is a great indicator that there's going to be conversion going forward. I would remind you and others that are still on the call that whether it's Vantage full conversion or FICO stays forever, it doesn't change our business model. We get a small amount. It's not small, but on full Vantage conversion, it's $40 to $50 million of incremental margin. If FICO stays there forever, it doesn't change our ability to grow our underlying business.

Speaker #1: They're under really meaningful margin and cost pressures in the current mortgage environment. So it's something that is on their radar screen. And I think a reflection of the growing number of lenders that are taking our free Vantage score to just make sure their process flows and technology are operating is a great indicator that there's going to be conversion going forward.

Speaker #1: I would remind you and others that are still on the call that whether it's Vantage full conversion or FICO stays forever, it doesn't change our business model.

Speaker #1: We get a small amount. It's not small, but on full Vantage just conversion, it's 40 to 50 million of incremental margin. But if FICO stays there forever, it doesn't change our ability to grow our underlying business.

Speaker #1: It doesn't change our ability to deliver our long-term framework of 7 to 10 percent growth ex FICO. Because we make no margin on FICO, which is why we started to talk about our margin expansion ex FICO, which is really what you should care about because that generates the free cash flow that we're able to use for CapEx, dividends, bolt-on M&A, and then importantly returning cash to shareholders through buyback.

Mark Begor: It doesn't change our ability to deliver our long-term framework of 7% to 10% growth ex-FICO because we make no margin on FICO, which is why we started to talk about our margin expansion ex-FICO, which is really what you should care about because that generates the free cash flow that we're able to use for CapEx dividends, bolt-on M&A, and then importantly, returning cash to shareholders through buyback.

Speaker #8: That's very helpful. Also, I want to get your thoughts on score gaming. Based on your conversations with lenders and the data you're seeing, are you seeing a lot of score gaming because the two scores are fairly similar and people are running zero score gaming right now?

Mark Begor: That's very helpful. Also wanted to get your thoughts on score gaming. Based on your conversation with lenders and the data you're seeing, are you seeing a lot of score gaming because the two scores are fairly similar-

Kelsey Zhu: That's very helpful. Also wanted to get your thoughts on score gaming. Based on your conversation with lenders and the data you're seeing, are you seeing a lot of score gaming because the two scores are fairly similar-

Mark Begor: Zero

Mark Begor: Zero score gaming right now?

Kelsey Zhu: Zero score gaming right now?

Speaker #1: Yeah. Because you use the term score gaming, we don't hear anyone thinking about it that way. Why would they do it? And remember, in order to if they wanted to buy a credit two credit reports and a Vantage and FICO score, they could do that.

Mark Begor: Yeah. You use the term score gaming, we don't hear anyone thinking about it that way. Why would they do it? Remember, if they wanted to buy two credit reports and a Vantage and FICO score, they could do that, but it's just cost-prohibitive, and there's no value in doing it. Remember, the credit score in a mortgage origination is only used in the pre-application, pre-approval process for the mortgage lender to determine, is this a consumer that's going to qualify or an applicant that's going to qualify for the kind of mortgage they want to take out? It's not used in the underwriting. It's actually the pricing is revalidated based on the credit file data and trade lines that come from the three credit bureaus. That's how the underwriting is done. No, we don't hear or see anything around so-called score gaming.

Speaker #1: But it's just cost prohibitive. And there's no value in doing it. Remember, the credit score in a mortgage origination is only used in the kind of pre-application, pre-approval process for the mortgage lender to determine is this a consumer that's going to qualify or an applicant that's going to qualify for the kind of mortgage they want to take out.

Speaker #1: It's not used in the underwriting. It's actually the pricing is revalidated based on the credit file data and trade lines that come from the three credit bureaus.

Speaker #1: That's how the underwriting is done. So no, we don't hear or see anything around so-called score gaming.

Speaker #8: Just a quick follow-up. Are you seeing lenders that have set up a waterfall structure, where they want to pull the cheaper score first to see if it hits the top LPA bucket?

Mark Begor: Just a quick follow-up. Are you seeing lenders that have set up a waterfall structure where they want to pull the cheaper score first to see if it hits the top LLPA bucket? Is that how it works right now?

Kelsey Zhu: Just a quick follow-up. Are you seeing lenders that have set up a waterfall structure where they want to pull the cheaper score first to see if it hits the top LLPA bucket? Is that how it works right now?

Speaker #8: Is that how it works right now?

Speaker #1: No, no, same comment. You'd have to buy two credit files, and there's just no incentive to do that. The score difference is so small, and we should all understand that sooner versus later there will be LLPA tables that will incorporate both FICO, and then there will be a separate LLPA table.

Mark Begor: No. Same comment. You'd have to buy two credit files. There's just no incentive to do that. The score difference is so small. We should all understand that sooner versus later, there'll be LLPA tables that will incorporate both FICO, and then there'll be a separate LLPA table, I would think, for Vantage. That's going to be a non-issue, and it is a non-issue today in our eyes.

Speaker #1: I would think for Vantage. So that's going to be a non-issue, and it is a non-issue today in our eyes.

Speaker #8: Thanks so much. Appreciate it. Thank you. Our next question comes from the line of Scott Worcel with Wolfe Research. Please proceed with your question.

Kelsey Zhu: Thanks so much. Appreciate it.

Kelsey Zhu: Thank you. Our next question comes from the line of Scott Wurtzel with Wolfe Research. Please proceed with your question.

Operator: Thank you. Our next question comes from the line of Scott Wurtzel with Wolfe Research. Please proceed with your question.

Speaker #1: Hey, good morning, guys. Thanks for taking my questions. Just one from me. I just wanted to touch on the government bookings that you disclosed.

Scott Wurtzel: Hey, good morning, guys. Thanks for taking my questions. Just one from me. I just wanted to touch on the government bookings that you disclosed. I'm wondering if there's any seasonality with those that we should be aware of. I think, just in the context of a lot of state fiscal years ending on 30 June, if maybe Q2 is a seasonal peak for the bookings?

Speaker #1: I'm wondering if there's any seasonality with those that we should be aware of. I think just in the context of a lot of state fiscal years ending June 30th, it may be two Q is a seasonal peak for the booking.

Speaker #1: No, there are a bunch that end in September, and there's no uniform kind of state budget windows. And no, I wouldn't think about contract signings as being seasonal.

Mark Begor: No, there's a bunch that end in September, and there's no uniform state budget windows. No, I wouldn't think about contract signings as being seasonal. Sometimes the effective dates are. As we should all remember, with a new contract, there's also an implementation process with some states as far as their technology and process flow. It doesn't happen immediately, meaning it takes time on their side, and we support that to happen. No, I wouldn't think about seasonality of how government operates. It's really across the board.

Speaker #1: Sometimes the effective dates are—well, we should all remember that with a new contract, there's also an implementation process. In some states, this involves their technology and process flow.

Speaker #1: It doesn't happen immediately, meaning it takes time on their side, and we support that happening. But no, I wouldn't think about seasonality in how government operates.

Speaker #1: It's really across the board. Got it, thank you. Yep.

Scott Wurtzel: Got it. Thank you.

Mark Begor: Yep.

Mark Begor: Thank you. Our next question comes from the line of Simon Clinch with Rothschild & Co Redburn. Please proceed with your question.

Operator: Thank you. Our next question comes from the line of Simon Clinch with Rothschild & Co Redburn. Please proceed with your question.

Speaker #8: Thank you. Our next question comes from the line of Simon Clinch with Rothschild & Co Redburn. Please proceed with your question.

Speaker #7: Hi, everyone. Thanks for fitting me in. Mark, I was wondering if I could get your thoughts on Vantage score 5.0. I know we're all talking about 4.0, but I've seen some news out on 5.0 recently, and I'm just curious as to how that kind of fits into the picture over the next few years.

Simon Clinch: Hi, everyone. Thanks for fitting me in. Mark, I was wondering if I could get your thoughts on VantageScore 5.0. I know we're all talking about VantageScore 4.0, but I've seen some news out on VantageScore 5.0 recently, and I'm just curious as to how that kind of fits into the picture over the next few years. What needs to happen to make that a reality-

Speaker #7: What needs to happen to make that a reality to compete, I guess, more effectively with Tenti? Thanks.

Mark Begor: Sure

Simon Clinch: to compete, I guess, more effectively with 10T? Thanks.

Speaker #1: Yeah. We think Vantage 4.0 really competes very effectively with Tenti. That's our perspective. And Tenti is really catching up, if you will, from FICO Classic, which is used in the marketplace. I don't know if this is directionally right.

Mark Begor: Yeah. We think VantageScore 4.0 really competes very effectively with 10T. That's our perspective. 10T is really catching up, if you will, from Classic FICO, which is used in the marketplace, which is, I don't know if this is directionally right, I think it's about 10 years old, maybe it's not quite 10. Something like that is when Classic FICO was put in place. VantageScore 4.0, I think the industry and the marketplace understands it performs much more strongly than Classic FICO. I think 10T closes that gap. As you might imagine, we're encouraging Vantage, which we own, along with Experian, to continue to invest in the next level of sophistication around the score that they use in the marketplace. They're making those investments.

Speaker #1: I think it's about 10 years old. Maybe it's not quite 10, but something like that is when FICO Classic was put in place. So Vantage 4.0, I think the industry and the marketplace understands it performs much more strongly in FICO Classic.

Speaker #1: I think Tenti closes that gap. And as you might imagine, we're encouraging Vantage, which we own, along with Q and Experian, to continue to invest in kind of the next level of sophistication around the score that they use in the marketplace.

Speaker #1: And so they're making those investments. But we're very pleased with the Vantage 4.0 positioning and our expectations of its outperformance against Classic and how it'll compete against Tenti. And again, I'll remind one more time that in mortgage in particular, but more broadly in the other verticals, the score is less relevant in the underwriting.

Mark Begor: We're very pleased with the VantageScore 4.0 positioning and our expectations of its outperformance against Classic and how it'll compete against 10T. Again, I'll remind one more time that in mortgage in particular, but more broadly in the other verticals, the score is less relevant in the underwriting. What's relevant is the credit data that's used underlying the creation of that credit score. While it's important to continue to invest in the credit score, what's really used in the underwriting is the credit data that comes from our credit file and Experian's.

Speaker #1: What's relevant is the credit data that's used underlying the creation of that credit score. So while it's important to continue to invest in the credit score, what's really used in the underwriting is the credit data that comes from our credit file and T1 experience.

Speaker #7: Thanks. And just a follow-up on a slightly different topic. First of all, congratulations on the acquisition in Mexico. I noticed though in your commentary for that that you were actually considering standing up a de novo credit bureau in Mexico, which took me by surprise.

Simon Clinch: Thanks. Just a follow-up on a slightly different topic. First of all, congratulations on the acquisition in Mexico. I noticed, though, in your commentary for that, you were actually considering standing up a de novo credit bureau in Mexico, which took me by surprise. I was just wondering if Is that something you've always done in new markets and sort of considered that and actually done some work to do that? Is there something technologically that's made it easier for you to do that this time around? Because I always assumed it was incredibly hard to stand up a brand-new credit bureau in any market.

Speaker #7: And I was just wondering if there's anything that is that something you've always done in new markets and sort of considered that and actually done some work to do that?

Speaker #7: Or is there something technologically that's made it easier for you to do that this time around? Because I always assumed it was incredibly hard to stand up a brand new credit bureau in any market.

Mark Begor: It's incredibly hard, and we've never done it. Mexico, as you may know, I'll use the words, was a closed market until recently. As you may know, the bank owned the only credit bureau there that competed with Círculo. Círculo was a privately held, owned by principally retailers and investors in Mexico, and it competed really against the bank-owned credit bureau that was a consumer commercial credit bureau. There was an ownership interest that TransUnion had, and I think FICO had an interest in D&B, in the commercial credit bureau. The banks decided to break that into two businesses, a commercial and consumer credit bureau. TransUnion, because of their control position, bought the consumer bureau last year. That really opened up the market.

Speaker #1: It's incredibly hard. And we've never done it. Mexico, as you may know, was—I'll use the word—was a closed market until recently. As you may know, the bank owned the only credit bureau there that competed with Circulo.

Speaker #1: Círculo was privately held, owned principally by retailers and investors in Mexico. And it competed really against the bank-owned credit bureau, which was a consumer commercial credit bureau.

Speaker #1: There was an ownership interest that TransUnion had, and I think FICO had an interest in DNB. In the commercial credit bureau. And then the banks decided to break that into two businesses, a commercial and consumer credit bureau, TransUnion, because of their control position, bought the consumer bureau last year.

Speaker #1: And that really opened up the market. Until that time, we did decide—because we really were attracted to the market—to put an application in, really about five years ago, for a credit bureau launch. I think we would struggle with the economics of doing that, but we thought strategically it would position us, at least, to make that decision if we could get that approval to do a de novo credit bureau.

Mark Begor: Until that time, we did decide, because we really were attracted to the market, to put an an application in really about five years ago, for a credit bureau launch. I think we would struggle with the economics of doing that, but we thought strategically, it would position us at least to make that decision, if we could get that approval, to do a de novo credit bureau. It was really not our choice. Once the market opened up and TransUnion made their acquisition, it really gave us the opportunity to really spend time with Círculo and really make that acquisition. We much prefer the path we're on with Círculo, and we're super pleased to do it.

Speaker #1: It was really not our choice. And then, once the market opened up and TransUnion made their acquisition, it really gave us the opportunity to spend time with Circulo and really make that acquisition.

Speaker #1: So we much prefer the path we're on with Circulo and we're super pleased to do it. And the fact that we're well known to the Mexican regulators because we've been in this application process for close to five years, we think it positions us well for the regulatory approval process, which obviously TransUnion went through and obviously navigated quite effectively.

Mark Begor: The fact that we're well known to the Mexican regulators because we'd been in this application process for close to five years, we think it positions us well for the regulatory approval process, which obviously TransUnion went through and obviously navigated quite effectively and we would expect to do the same. We think we're advantaged because of our de novo application has been in there for quite some time, and we've been engaging with the regulators. Clearly, we're going down the path that we would have preferred, which is an acquisition. As you pointed out, a de novo build is super hard, and we've never done it. Actually, I don't know. As long as I've been at Equifax, I don't think anyone's tried it because it's just super challenging to collect the data, and it would be quite expensive to build out the capabilities.

Speaker #1: And we would expect to do the same, but we think we're advantaged because of our de novo application has been in there for quite some time and we've been engaging with the regulators.

Speaker #1: But our clearly we're going down the path that we would have preferred, which is an acquisition. And as you pointed out, a de novo build is super hard and we've never done it.

Speaker #1: Actually, I don't know, as long as I've been at Equifax, I don't think anyone's tried it because it's just super challenging to collect the data.

Speaker #1: And it would be quite expensive to build out the capabilities.

Speaker #7: That's really useful, Carla. Thank you very much.

Simon Clinch: That's really useful, Connor. Thank you very much.

Speaker #8: Thank you. Our next question comes from the line of Ryan Griffin with BMO Capital Markets. Please proceed with your question.

Simon Clinch: Thank you. Our next question comes from the line of Ryan Griffin with BMO Capital Markets. Please proceed with your question.

Operator: Thank you. Our next question comes from the line of Ryan Griffin with BMO Capital Markets. Please proceed with your question.

Speaker #5: Hey, good morning. I know it's late, so I'll just ask one question. I'm competitive dynamics and government. Understand the work numbers, record penetration, opportunity, but can you elaborate just on the right to win against some of the consumer-based verification programs and then the open source providers like EMI in case we're missing anything?

Ryan Griffin: Hey, good morning. I know it's late, so I'll just ask one question on competitive dynamics in government. Understand The Work Number is record penetration opportunity, can you elaborate just on the right to win against some of the consumer-based verification programs and then the open source providers like Emmi, in case we're missing anything? Thank you.

Speaker #5: Thank you.

Speaker #1: Yeah. I think that hopefully for you—it certainly does for us—that strong renewals on the $200 million that we shared, and $100 million in new business, I think it reflects the real depth and how the marketplace, meaning our customers and new customers, really view the Twin solution. It's instant; it can be integrated very quickly.

Mark Begor: Yeah, I think that hopefully for you, it certainly does for us, that strong renewals on the $200 million that we shared and $100 million new business, I think it reflects the really depth and how the marketplace, meaning our customers and new customers, really view the TWN solution. It's instant. It can be integrated very quickly. It has very high coverage. It delivers the ability to approve someone's social services instantly in that application process, which every social service administrator wants to deliver services quickly. It delivers productivity to the caseworker. If you're using consumer consented, there's a lot of change that goes back and forth between the applicants and the case administrator in order to do that. It also delivers the integrity.

Speaker #1: It has very high coverage. It delivers the ability to approve someone's social services instantly in that application process, which every social service administrator wants to deliver.

Speaker #1: Services quickly. It delivers productivity to the caseworker. If you're using consumer-consented, there's a lot of change that goes back and forth between the applicant and the case administrator in order to do that.

Speaker #1: And then it also delivers the integrity. So we feel quite confident about the value that we deliver to our customers and the ability that we have to continue to drive higher kind of conversion or approval rates I think we didn't talk about it.

Mark Begor: We feel quite confident about the value that we deliver to our customers and the ability that we have to continue to drive higher conversion or approval rates. I think we didn't talk about it. We talked about in our comments, no one asked a question about it. Our records were up 10% in the quarter. That delivers higher access rates for all of our customers, including government which is a real positive. We're quite pleased with the momentum by our government team. As mentioned a couple times on the call, our commercial pipeline is still up 2x from where it was a year ago. We're just pleased to see meaningful conversion of that pipeline in the last number of months.

Speaker #1: We talked about in our comments, but no one asked the question about it, but our records were up 10% in the quarter. So that delivers higher access rates for all of our customers, including government, which is a real positive.

Speaker #1: So we're quite pleased with the momentum by our government team and as mentioned a couple of times on the call, our commercial pipeline is still up 2X from where it was a year ago.

Speaker #1: And we're just pleased to see meaningful conversion of that pipeline in the last several months.

Speaker #8: Thank you. Our final question this morning comes from the line of George Tong with Goldman Sachs. Please proceed with your question.

Mark Begor: Thank you. Our final question this morning comes from the line of George Tong with Goldman Sachs. Please proceed with your question.

Operator: Thank you. Our final question this morning comes from the line of George Tong with Goldman Sachs. Please proceed with your question.

Speaker #1: Hey, George.

George Tong: Hey, George.

Mark Begor: Hey, George.

Speaker #7: Hi. Thanks. Good morning. With respect to the AI productivity initiatives, can you talk a little bit about the timing of the savings realization? Is it relatively linear over the next few years or more back-end loaded towards 2028?

George Tong: Hi. Thanks. Good morning. With respect to the AI productivity initiatives, can you talk a little bit about the timing of the savings realization? Is it relatively linear over the next few years or more back-end loaded towards 2028?

Speaker #1: Well, I think you're seeing it come through in 2026 from the 75 million we announced in February. On our fourth quarter earnings call, hopefully you're pleased, George, with our margin performance this year.

Mark Begor: Well, I think you're seeing it come through in 2026, from the $75 million we announced in February on our Q4 earnings call. Hopefully, you're pleased, George, with our margin performance this year, is I think above your expectation and certainly above our long-term guide. We guided for 75 basis points ex FICO for the year, and the H1 we're north of that. You're seeing it crystallize in 2026. We're not giving guidance for 2027 or 2028, but we've given you a good boundary and obviously with a much larger number of doubling our expectation around those AI productivity benefits from $75 million to $150 million over the 2026, 2027, 2028 timeframe.

Speaker #1: I think it's above your expectation and certainly above our long-term guide. And even though we guided for 75 basis points ex-FICO for the year, in the first half, we were north of that.

Speaker #1: So you're seeing it crystallize in 2026. And we're not giving guidance for '27 or '28, but we've given you a good boundary, and obviously, with a much larger number—doubling our expectation around those AI productivity benefits from $75 million to $150 million—over the '26, '27, '28 timeframe.

Speaker #7: Got it. That's helpful. And, of the $150 million in savings, how much do you expect to retain as margin expansion? I know some of it's flowing through this year versus reinvesting it back into the business.

George Tong: Got it. That's helpful. Of the $150 million in savings, how much do you expect to retain as margin expansion? I know some of it's flowing through this year versus reinvesting it back into the business.

Speaker #1: Yeah, I think we told you that we're going to make those decisions about reinvestment as we go through the calendar in the future. We'll give guidance in 2027 around what we expect our margin expansion to be.

Mark Begor: Yeah, I think we told you that we're going to make those decisions about reinvestment as we go through the calendar in the future. We'll give guidance in 2027 around what we expect our margin expansion to be from operating leverage against our long-term framework of 50 basis points and how much incremental will be. We'll give that guidance in February. You should reflect, George, I hope you are on the fact that in a matter of six months, our confidence in our ability to deploy AI inside of Equifax is growing really rapidly, with the increase of our savings goal from $75 million to $150 million.

Speaker #1: From operating leverage, against our long-term framework of 50 basis points and how much incremental will be, we'll give that guidance in February. But you should reflect, George.

Speaker #1: I hope you are on the fact that, in a matter of six months, our confidence in our ability to deploy AI inside of Equifax is growing really rapidly, with the increase of our savings goal from $75 million to $150 million.

Speaker #7: Great. Thanks very much.

George Tong: Great. Thanks very much.

Speaker #8: Thank you. Ladies and gentlemen, that is our question and answer session. I'll turn the floor back to Mr. Burns for final comments.

George Tong: Thank you. Ladies and gentlemen, that is our question and answer session. I'll turn the floor back to Mr. Burns for final comments.

Operator: Thank you. Ladies and gentlemen, that is our question and answer session. I'll turn the floor back to Mr. Burns for final comments.

Speaker #5: Thanks for everybody's time today. If you have any follow-up questions, please reach out to me or Molly. And have a great day. Thank you.

Trevor Burns: Thanks for everybody's time today. If you have any follow-up questions, please reach out to myself and Molly. Have a great day. Thank you.

Trevor Burns: Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.

Operator: Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.

Q2 2026 Equifax Inc Earnings Call

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