Greetings. Welcome to the Second Quarter 2025 Earnings Conference Call for Equifax Inc. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone today should require operator assistance during the conference, please note this conference is being recorded. I'll now turn the conference over to Trevor Burns, Senior Vice President, Head of Corporate Investor Relations. Thank you. You may now begin.

Thanks, and good morning. With me today are Mark Begor, Chief Executive Officer, and John Gamble, Chief Financial Officer. Today's call is being recorded, and our company recording will be available later today in the IR calendar section, the news and events tab at our Investor Relations website. During the call, we will be making reference to certain materials that can also be found in the presentation section of the news and events tab at our IR website. Also, we'll be making certain forward-looking statements including third quarter and full year 2025 guidance, as well as our long-term financial framework. I hope you understand Equifax Inc.'s business environment. These statements involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from our expectations. Certain risk factors that may impact our business are set forth in our filings with the SEC, including our 2024 Form 10-K and subsequent filings. You'll also be referring to certain non-GAAP financial measures, including adjusted EPS, adjusted EBITDA, and cash conversion, which will be adjusted for certain items affecting comparability of our underlying operational performance. 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.

Turning to Slide four, Equifax Inc. had a very strong second quarter with revenue of $1.54 billion, up 8% in constant currency and 7% reported, nicely within our long-term framework and the highest ever quarterly revenue in Equifax's history. Revenue was $27 million above the midpoint of our April guidance despite the weaker mortgage and hiring markets. The majority of the revenue outperformance was in US mortgage, principally in USIS from stronger preapproval product growth and a slightly stronger market with hard inquiry inquiries down about 8.5% but better than our expectations of down 11%. Non-mortgage was solid in all BUs with outperformance predominantly in workforce solutions with stronger performance in government and consumer lending. USIS had another quarter of solid non-mortgage growth as they are operating at a post-cloud mode. FX negatively impacted revenue year-to-year by $6 million or about 40 basis points compared to last year. However, the US dollar weakened since we provided guidance in April, benefiting second quarter revenue by $9 million, about 60 basis points relative to our April framework. Now Adjusted EPS of $2 a share was $0.10 above the midpoint of our April guidance range from operating leverage from stronger revenue growth and solid cost management with an adjusted EBITDA margin of 32.5%. During the second quarter, AWS had a strong performance with revenue up 8% led by verifier government consumer lending which were both up double digits and mortgage that was up 9%. And AWS had a strong second strong 10% record growth in the quarter. USIS also had a strong performance in the quarter with revenue up 9%. USIS is gaining momentum post-cloud transformation with non-mortgage revenue growth of over 4% and a vitality index of 10%, the strongest vitality ever and in line with our long-term vitality goal across Equifax…

Thanks Mark. Turning to slide eleven, as Mark referenced, hard mortgage credit inquiries were somewhat better in the second quarter than we had expected. However, they continue to decline year to year in the second quarter at down about 8.5% and were down about 9% for the first half of 2025. Thirty-year mortgage rates remained consistently above 6.7% and inventories of available homes remain at low levels. These factors have kept both home purchase and refinance activity at historically low levels with total hard credit inquiries down over 50% from 2015 to 2019 averages. Based on run rates from mortgage hard credit inquiries over the latter part of the second quarter, and continuing volatility in both mortgage rates and volumes our mortgage hard credit inquiry expectation included in guidance for second half 2025 is down over 13% generally consistent with levels we shared in April. As we discussed last quarter, although current home mortgage activity is low, based on Equifax Inc. data, we believe there are almost 13 million 30-year mortgages issued since 2022, interest rate above 6% and about 9 million with an interest rate above 6.5%. This creates a growing pool of mortgages available to refinance when mortgage rates decline. As Mark indicated, we are holding our full year 2025 guidance shown on Slide twelve on a constant currency basis to be unchanged from our April guidance. Even with our strong 2Q performance, there continues to be a heightened level of economic uncertainty continuing to result in weaker levels of hiring as well as uncertainty in the direction of interest rates and therefore mortgage volumes. We increased our guidance to reflect the impact of FX changes since April, increasing the midpoint of our reported revenue guidance by $35 million to about $6 billion and adjusted EPS by $0.03…

Thanks, John. Turning to Slide fifteen at our June Investor Day a few weeks ago, we reconfirmed our 7% to 10% long-term organic growth framework provided a 2030 Equifax Inc. financial scenario that included a base case the mortgage market grows about 2% to 3% annually, in line with long-term GDP growth. With US mortgage pricing growing at mid-single digits. As we discussed at our Investor Day, this is not guidance but a scenario showing how Equifax Inc. can deliver our long-term financial framework without a recovery in the US mortgage market. Without outsized pricing increases in mortgage scores. This scenario reflects organic revenue growth, at an 8.5% CAGR with revenue growing to about $9.6 billion in 2030 EBITDA margins exceeding 35%, and adjusted EPS of about $15 per share. In this scenario, Equifax Inc. would return about $2.5 billion to shareholders in 2030. Adjusting this scenario to reflect the mortgage market recovering the 2015 to 2019 average volume levels by 2030, as measured by hard credit inquiries at current pricing records and penetration 2030 revenue would grow to about $10.8 billion or an 11% CAGR with an adjusted EPS of about $19 a share and Equifax Inc. would return an incremental $1 billion or $3.5 billion to shareholders in 2030. To clarify, the 2030 mortgage market recovery scenario assumes current mortgage pricing products, share, and records with no growth from 2025 levels which is clearly a conservative assumption. As we have shared consistently, we are investing at the right levels in and any mortgage market recovery will drop through to margin and EPS growth for return to shareholders via dividend growth, increased buybacks. We believe Equifax Inc. can deliver our long-term financial framework without a mortgage market recovery with significant potential upside when that mortgage market recovery improves. Wrapping…

Thank you. We will now be conducting a question and answer session. Our first question is from the line of Jeff Meuler with Baird. Please proceed with your questions.

Yeah. Thank you. Can you give some more perspective on the Twin State Agency headwinds. Is this more headwinds tied to the programs that are impacted by the federal government data expense subsidization changes, or is it something else? And just any reason why now mid-calendar year, there's incremental headwinds?

Yeah, Jeff. That is the challenge that we're still feeling from the changes the Biden administration made in 2024 around some of the data reimbursements. We've talked about that probably now for three or four quarters. And it's a little bit dynamic as the states are dealing with states that have contract timing that happen throughout the year. And, you know, some states are able to sort through it with their budgets and funding it on their own. Others, it's just taking longer to get that sorted out. So, you know, that's some of the pressures we're seeing in that business in the very near term. We talked a bunch about the momentum that we have. I would call it over the more medium term. You know, for example, some of the waivers that were put in place by the prior administration are now expiring as we speak, meaning in the middle of 2025. They were done by the Biden administration, and they have to go back to the more stringent requirements. So we're seeing momentum in commercial discussions there, which we hope will be fruitful in the second half, but, obviously, those aren't contracted yet. And then the other thing that obviously is a positive as we think about later in the year but more in 2026 is the new OBBBBA bill that is in place and some of the changes that are taking place. We're already having extensive dialogues at the state level around action they've got to start putting in place when those requirements take hold later next year into 2027, whether it's work requirements or the six-month, twelve-month redeterminations. And there are some states that are putting in work requirements already. Meaning in advance of that, which they're able to do because, as you know, they're on the hook for some of those social service payments. So we're seeing some increased activity there. But the impact in the second half for sure is around still absorbing the changes that took place in the prior administration around cost sharing and just working through state budgets, which are very complicated.

Perfect. And then on what's driving the what are the new mortgage prequal products that are already driving strength or share in the quarter? I ask because it sounds like the twin indicator product is still pretty early ramping. And then any other callouts that's leading to the step up in EUSUS vitality? Thank you.

Yeah. So, you know, we've been in the marketplace with the twin indicator now for, you know, call it six months of discussions. You know, we've got it embedded with some of the aggregators. So it's available. The discussions are super positive on. You know, there isn't a single mortgage originator that isn't interested in the solution. I think that's helping us commercially until they can adopt that new solution. It's just helping us commercially win some share in that prequal, preapproval stage. Where customers might be doing a one b or a two b pull instead of a three b. Because of our innovation and our kinda close relationships now. Because we're talking about the new solution with the twin indicator and as a reminder, we're also adding NC plus attributes, you know, telco cell phone utility telco attributes to our mortgage credit file. And I think that's just helping us, you know, from a share perspective. As you point out, we really expect the twin indicator to take hold as we get into the second half in 2026. You have to change the process flow inside of a mortgage originator in order to absorb it. But, you know, just as a reminder and as I said earlier on the call, our intention is to offer that twin indicator as a for our mortgage credit file in order to drive, you know, more value the Equifax Inc. credit file with that twin indicator to drive, you know, share gain. I mean, we're not gonna charge higher price for it. We wanna use it to differentiate in that, you know, kind of pre-application stage when there are many originators that are doing one or two b polls.

And generally on NPI and USIS, it's think we're just seeing more traction on multi-data solutions right there being more effective at delivering more multi-data solutions. It's occurring in commercial. It's occurring in our consumer businesses. And they're also seeing more traction on helping customers use Ignite around marketing and advanced marketing solutions and analytics. So I think generally, what we have been talking about for a long time where we can deliver more data more quickly through standard pipes is occurring, and the team is seeing growth.

The next question is from the line of Andrew Steinerman with JPMorgan. Please proceed with your questions.

Hi. Two questions. First one is just what is mortgage revenues as a percentage of total revenues in the second quarter just reported? And then looking at the beginning of this third quarter that we're in right now for USIS, what are you seeing in terms of non-mortgage lender and consumer credit activity?

So to the first question, it's 22% flat. And in terms of non-mortgage, I think what we're seeing right now is it's continuing to be relatively good like we saw in June. Right? Generally speaking, what we're seeing is auto has remained relatively strong, and it's continuing to perform pretty well. I think FI strengthened a bit, so we expect FI to be stronger in the third quarter, sorry, than we saw in the second quarter. Second quarter growth rate was down a little bit in FI, but that was simply a grow over. We have very good sequential performance in FI in the second quarter. We're expecting to see nice growth in the third. Right? And then broadly speaking, I think we're expecting the other businesses, which aren't as large, but also continue to perform relatively well with some improvements across commercial and some of our payment spaces. So generally speaking, I think we're expecting third quarter to look to look okay.

Good. Thanks, John.

Thank you. Next question is from the line of Manav Patnaik with Barclays. Please proceed with your question.

Hi. Thank you. Good morning. I just wanted to revisit the government business again. You know, maybe it's a question just more on the visibility and assumptions there for the second half of the year? Because, you know, in the last several years, I guess, you have assumed the ramp in the second half, and you've always had to lower it. But this time around, it felt like you had more visibility. So I'm just wondering what exactly changed? Like, was there, like, a state that you had to cancel or had to step out because of budget reasons, or is this just a little bit of, you know, all your different states?

Yeah. It's not a single state, and it's really as a I don't know if you heard the question earlier. Or the that Jeff asked, but similar to that is it's a it's a bit dynamic and it's quite challenging from what the changes that were made last year in the prior administration around the cross-sharing between the federal government and the state government. And these are different contractual periods when we get to that end of the contractual period you know, we don't always know how a state's gonna respond, you know, what impacts they're gonna have from a budget standpoint. I think you read enough to know that you know, most states are quite challenged around their budgets meaning they're in deficit positions. Know, so that creates an impact when they have to come up with additional dollars. And you know, we've solved that in lots of states. We're solving it in others, and you know, as we handicap our outlook in the second half, we thought it was prudent to, you know, put handicaps, you know, as far as where we think some of those discussions are gonna land, that are still in flux in the second half. You know, in a way that, you know, we thought was prudent. You know, as we as we look forward. You know, that we still see you know, lots of positives, but the timing of those of when they're whether they're gonna hit in the second half or likely more in 2026. For example, the waivers that were in place, the COVID waivers that were extended by the Biden administration through the end of June, y'all have all come off. That's created a lot of dialogues with states that now have to respond with more stringent income verification requirements. That's good news for AWS. So know, we expect that to be a positive, but, you know, when those come in, when they have budget dollars because they have to pay for more of it, you know, we handicap that in there. And as I mentioned earlier, you know, the new changes in Washington, you know, are really strengthening the verification requirements, you know, at application and then strengthening the redetermination requirements, meaning six months, and then adding the work requirement those are all gonna be positives, which we're in dialogue on all three of those. You know, at the state level. As far as implementation, principally in 2026, you know, but that's why you know, we still have a lot of confidence, you know, in the growth in this vertical as we go into 2026 and beyond and particularly in this current administration's focus around the $160 billion of improper payments. Just dealing with, you know, kind of the aftermath of what was done in the prior administration. So we gotta work through that in the second half.

K. And then, you know, just on the talent segment, on the criminal data, I think you mentioned something around shared shifts between background screeners. I was hoping you could just elaborate on that and also, you know, what what the alternative is to APPRIS, I guess?

Yeah. So so so we deliver court records, right? And the alternative is to get court records through another source. One of one of the customers that we have a large relationship with happened to lose one of their large customers, and they went to someone else where that that background screener doesn't happen to use Equifax Inc. for court record. That's all it was. So it's it's a revenue impact. But it's not really a material operating profit impact. Obviously, obtaining court records directly from a court, this is the more manual process, is something that is relatively low margin for us. It's a business that we certainly wanna grow, but it's not a strategic business for us, and it's one that we'll continue to invest in. But but not not one that we we consider as important as Twin, for example.

And and just remember on the Aperis Insights business, you know, the core business we have is the dataset we have on all incarceration records that are used as that indicator, you know, it's the first stop you know, in a background check. And that's when where we have, you know, a very strong business and we could continue to grow that. As John pointed out, the second step just takes place when you find out someone has been historically incarcerated is there's a verification of that actual court record. We do some of that. Some background screeners do that on their own. There are some other competitors that only do that step of the process. And as John pointed out, that's a lower margin. In many cases, it's actually a manual operation. In some cases, it's digital. Some states have a digital portal to get those court records where you pay for them. But many states in many courts, you actually have to send in what's called a court runner. To actually go in and and pull the document. So that's a lower margin business and we saw a little bit of change there.

Okay. Thank you.

Next question is from the line of Toni Kaplan with Morgan Stanley. Proceed with your questions.

Thanks so much. Was hoping you could talk about VantageScore and what you're expecting in terms of price competition in the mortgage market are you expecting VantageScore to be priced at a level that could lead to share gains versus FICO? Thanks.

Yeah. I think it's early, Tony, on that whole point. As I said earlier in my comments, you know, we're very pleased with the director, Polke's support of Tri Merge because we think that provides access to credit, and I think that's the it's the right approach, you know, to have, you know, really strong underwriting because of the differences between the three credit files. You know, how the Vantage or FICO is gonna unfold is certainly gonna take time. You know, that's a kind of a complex change for the industry. It's one that, you know, will certainly take time. As you know, we have access to the VantageScore as do to you and Experian as a part of our, you know, joint venture. That's a score that we have, you know, pull access in when we use that. So, you know, we'll certainly work with our customers you know, around that as an option. And I think those conversations, while very new, you know, will unfold as we go through the second half of the year.

Perfect. And wanted to ask also, John, about the EBITDA margin raised to revenue, but lowered EBITDA touch on the margin side. That from investing or is there a mix element there? I just wanted to hear all the drivers. Thanks.

Sure. So for a full year margin, for full year guidance, again, the increase in guidance were really principally related to FX. Right? So revenue went up about $35 million and and EPS about about $0.03 a share. So I think the reason why our EBITDA margin fell a bit, one is just FX is generally positive FX is obviously very beneficial to our revenue, but it's a little dilutive to our margins. Based on the numbers that I just I just shared. And then also, we're seeing some higher corporate expenses, and this is specifically related to those litigation costs, and then also some onetime costs related to some employee exits that occurred in the second quarter. So I so those two items are driving the EBITDA margin down for the year. But BU margins are actually performing nicely. We're seeing very nice growth in in USIS and and the international margins in the second half. And as we talked about in the in the second quarter, we saw very good performance in EWS margins and they remain nicely over 50%. So it's the the reduction in our EBITDA margin in full year guidance is really specifically related to those corporate cost increases related to litigation and one-time actions and then also FX.

Very clear. Thank you.

The next question is from the line of Faiza Alwy with Deutsche Bank. Please proceed with your question.

Yes. Hi. Thank you. John, just to follow-up on those litigation costs, can you give us a bit more color on on what's going on there and if this is something that might continue into 2026.

Yeah. So it so it's effectively two significant portions. Some of it is just general litigation cost related to outstanding lawsuits that we're dealing with, some of which are public and they're generally disclosed in our in our financial filings. The other is the volume that we're seeing of small claims. From individuals. That come into Equifax Inc. and quite honestly come into all three bureaus. And what we're seeing is just a higher volume of those, we believe, across the industry. So there's a cost to obviously settling or resolving those cases, and we're seeing that that cost has gone up. In 2025 relative to 2024, actually more than we expected. And and that's that's a cost probably that we're gonna work to try to manage effectively, but that's a cost that probably is gonna retain remain high for a little bit of time. Some of the costs related to larger some of the larger cases that I referenced, those costs, we may be able to mitigate as we go forward. But but in terms of some of the costs related to the small claims and the the smaller consumer cases, those will probably see elevated levels certainly through the second half as we mentioned in our prepared remarks.

Alright. Understood. And then wanted to follow-up on on the talent business. You mentioned slightly weaker talent market. So I'm curious if you could give us a bit more color on you know, some of the trends, like, when did things start getting worse? And it sounds like you're not assuming an improvement there. So maybe just a finer point on how much of the you know, lowered guidance on talent is related to the criminal data that you talked about versus the market. And also if that is what is driving the lower guide on employer services. Broadly.

Yeah. We've definitely seen, you know, through our customers being the background screeners, continued corporate confidence, nervousness. You know, companies we we see you know, are still being cautious around what's gonna happen with the tariffs, what's gonna happen with inflation, what's gonna happen with the economy. So we're being cautious around new hires, and that's not new. Know, that's really been in place, you know, for the last know, six plus months. And know, we saw maybe a a slight weakening, I think, in June. You know, as far as, you know, new hire activity. Perhaps when, you know, there was a renewed discussion around tariffs you know, as we got into kind of the middle of June, I I my personal view is that corporate confidence know, is gonna continue to be shaky you know, until there's some clarity on, you know, a path towards closure of the tariff this issue. Because of its broad, you know, ranging impact. You saw this morning, you know, General Motors announced Stellantis, the Jeep manufacturer having huge impacts you know, from tariffs on a financial standpoint. Companies like that, you know, I'm sure have very tight hiring you know, in place, you know, when they're having those kinda hits from raw material costs. And and so on. So I I think until that's sorted out, you know, we expect to see certainly in the second half, that's reflected in our guide, a continued you know, kind of softer hiring environment. There's still a lot of jobs changes take place. That's just the reality of the US, you know, kind of workforce economy. But there's just, you know, a dampening of that that has an impact on our rep.

Great. Thank you.

The next questions are from the line of Ashish Sabadra with RBC Capital Markets. Please proceed with your questions.

Thanks for taking my question. I I have a two-part question. On the USIS non-mortgage. One was on autos. We've seen some pretty strong growth there in the first half. Some of it is FICO pricing, but we were wondering if you have also seen any pull forward there or have you seen any slowdown on the auto front? And then the second part is just around the offline business. Again, we've seen some good momentum there in the first half. What's driving it? And how do we think about b to b offline going forward in the second half? Thanks.

Now auto performed nicely in both the first quarter and the second quarter, and it's continuing to perform relatively nicely. Yes, some of its pricing, but overall, we're performing relatively well, and we're happy with how orders performed in the first half, and we expect to see relatively good performance going forward. You've also seen offline or our batch businesses performed relatively well as well. We've seen good performance really across prescreen and across marketing businesses. We've seen a little bit of also benefit across some of the header data we sell into companies if we buy fraud and other types of services as well. So those businesses that have been relatively good, we haven't seen a substantial increase in account reviews, which would generally be an indication that you're starting to go into some into a week in the economy or at least that our customers believe they are because they're ramping up account reviews. We've seen some growth there, but not really material. So overall, quite honestly, this is also an area where we're seeing some of the benefits from NPI. Some of the newer solutions that are being launched are benefiting this line item in our P and L and our marketing business. So we're seeing some benefit there as well, and that we would expect to continue.

That's very helpful color. Thank you.

Our next question is from the line of Owen Lau with Oppenheimer. Please proceed with your question.

Hi, good morning. Thank you for taking my question. So going back to Fendi's core, Mark, I understand that it may be too early to talk about the pricing, but what's the goal for VanDysco longer term? I mean, if you have an opportunity to make a push, would you push for higher market shares? Thanks.

Yeah. You know, we this is not new. We have Vantage's don't know, twenty plus years old, maybe it's thirty. It's been around for a long time and, you know, we Equifax Inc., have been taking that to market along with Equifax Inc. scores you know, to help support our customers. And we've been working to grow that, and we'll continue to do that, not only in mortgage, but, you know, in all verticals. That's a that's a part of our approach to market. You know, I it's very clear that that's a in in some places, it's a tough sell. It has to be a catalyst you know, in order to create that kind of change you know, from traditionally the the wide the the vast majority of the industry uses the FICO score for the reasons of longevity and the depth of that score you know, from its its history. But, you know, we're always in the marketplace trying to support our customers. With solutions that, you know, help them. But I just think it takes time to displace something that's embedded as deeply as.

Got it. That's helpful. And then maybe quickly on consumer lending, it was pretty strong up 19% year over year in the second quarter. From 11% last quarter. And Pilon was very strong. Could you please give us more details on that strength and also the sustainability? Thanks a lot.

Yeah. I think you're referring to EWS, you know, consumer lending, and we are pleased with some of the penetration, new products, and, you know, custom new customers that we're adding there. That's just really taking advantage of that income and employment data you know, principally in personal loans, you know, where there's a verification done at credit, you know, as well as income and employment because of the larger ticket nature of that. Meaning, they're ten, twenty, thirty thousand dollar unsecured loans. So there's more additional underwriting there. That's really been, you know, the driver which we're pleased with.

This is an area where record growth is really, really helpful. Right? As we continue to build out the record base, then more and more customers in consumer lending to use the work number.

Thanks a lot.

Our next question is from the line of Andrew Nicholas with William Blair. Please proceed with your questions.

Hi, good morning. Thanks for taking my questions. First one is just on the international business broadly. In the US, you've kinda characterized the the consumer cat backdrop as as stable, but subdued relative to historical trends. I'm just curious in in your major international markets, would you describe kind of the the status quo there as similar or you know, where where would it be maybe running above or below averages compared to to maybe what you would expect over a full cycle.

Yeah. Broadly, it's quite similar. You know, as you know, we see stronger growth in Latin America just because the dynamic of that consumer base. There's just a lot of unbanked consumers in all Latin American countries, including Brazil, moving into the bank sector. So that's why know, we expect Latin American, it's been performing that way, to be at the, you know, higher end of that seven to nine range for international. Canada has clearly been impacted by the the tariff discussions in 2025. You know, we've seen know, a slowdown in in consumer confidence up there, in really quite meaningful. You know, we were only up 1% in the quarter, which was clearly below our expectations. And know, we expect that to continue, I guess, because of the you know, maybe it's the neighborly rhetoric, but the rhetoric is so much stronger up there around the Trump tariffs and perhaps you know, is more uncertain in that market. It clearly has had an impact economically, meaning less consumers buying cars, less consumers, you know, taking out a new credit card, you know, just just being, you know, kinda conservative in this uncertain time frame. If you go around the rest of the globe into, you know, like Australia, which is a big market for us, UK, Spain, you know, normal. Kinda there's nothing different that we would see there. You know, as far as, you know, what's what's impacting economic activity or or consumer and corporate confidence.

Very helpful. Thank you. And then for my follow-up, just on the guidance broadly, obviously, two really strong quarters to start the year. Above guidance on both of those. Your decision to to kinda maintain the full year guide, I'm just curious, how much of that would you characterize as conservatism versus you know, the macro deterioration maybe you've seen a little bit in in talent or or delays in the government business. If there's a way to kind of frame the different factors and and what ultimately led you to to maintain the full year guidance.

Yeah. I'll take a shot. Ben, John could jump in. You know, there's a when you think about macros, you know, clearly the mortgage market is defined by us by hard inquiries was better than we expected in the second quarter, but that declined as we exited June and came into July. Know? So we've got back down to that, you know, kind of negative 12% know, mortgage market is we're running today. So that's what we guided out for the second half. So that's clearly an impact. The hiring market, you know, has been weaker than, you know, we expected kinda going through the year. So that's clearly had an impact. That we carried through in the second half. We talked about you know, some of the some of the the state issues we're working through due to the prior administrations of funding changes. So there's some element to that. And then I think broadly, you know, there's enough uncertainty with what's happening with tariffs. I think the whole tariff narrative in Washington schooled up again, you know, kind of in late June and into July and, you know, it's it's more topical now that and it's unresolved. And it just feels quite uncertain. You know, we we've seen the impact on the ten year. We've seen the impact on mortgage rates, you know, and then you know, you see consumer confidence, which a few months ago was very weak. Now it's a little bit better. But, you know, we don't have a a new read on, you know, how consumers feel about this latest tariff discussion. To me, the big variable is you know, when are when are corporations United States around the globe gonna have some clarity you know, around what the new tariff game is. And I think until that happens, there's gonna be enough uncertainty that we wanted to be prudent. We want to be balanced. You used the word conservative. I don't know if I'd necessarily use that. I'd use the term balanced, but our intention was to be balanced in our guidance for the second half given the uncertainty that we've seen. You know, we're we're super pleased with our first and second quarter performance, and you should be too. I think you are. And hopefully, you know, you appreciate that we're intending to provide guidance that is balanced around everything we know and, you know, factoring in enough of the uncertainties, which I just rattled on about, that, you know, are still out there that are unresolved principally in my eyes and our eyes around, you know, what's gonna happen with tariffs, how that's gonna impact interest rates, how that's gonna impact the economy. You know, in the second half. We want to be balanced on that.

What do you think I'd add is it's it's uncertainty and it's also volatility. We've seen lots of meaningful movements in the level of mortgage activity even within a quarter. Right? We saw increases in mortgage activity early in the quarter and then substantial decreases and lots of lots of lots of movement as we went through periods. And so it so, certainly, direction is uncertain. And it's also very volatile. So your ability to put a band around it becomes more difficult. So that's really why we decided just to to be what we believe is prudent, but at but probably also conservative in terms of the way we got it.

Thanks, Mark. Thanks, John.

Our next question is from the line of Surinder Thind with Jefferies. Please proceed with your questions.

Thank you. I'd like to start with the talent business and just kind of the big picture overall here. As you think about just hiring trends and generally how they've consistently been weaker for some time now. Are there secular considerations here as as we kind of you know, the narrative of AI continues to kind of take hold and in terms of hiring plans and especially within the white collar environment. How have you taken that into consideration as you think about big picture here?

I think everything you you just talked about is right. You know you know, it starts with, you know, when corporations are nervous around the future, they tighten their belts. And the first place they tighten their belts is on hiring. They leave jobs open longer. They and, you know, they take time to fill them or they, you know, do hiring freezes, you know. So I think there's a clearly an element to that going on. I think your point on AI is also right on. I'm not sure there's a lot of near-term impact from AI on you know, certainly white collar jobs, you know, or even, you know, blue collar jobs. But, you know, we know what we're doing inside of Equifax Inc. You know, we're gonna be more productive through operational AI going forward and that's, you know, clearly a big effort of ours internally. And I think every company is doing that. And I think over time, you know, you think over the long term, you know, I think that's a macro that will will result in, you know, less hiring. Going forward, meaning less jobs, you know. And again, you described long term. Is it five years? Is it three years? But directionally, that's clearly gonna take place in you know, I'm sure there's some companies out there that are keeping a tight belt around bringing new people in until you know, they, you know, see what kind of traction they're getting out of AI. Know, that's gonna or improve operational efficiency. So I think all of the above, but I would just caution all of us that there's a lot of churn in the US workforce. Know, you think about there's still seventy million plus people a year changing jobs. Both in blue and white collar. So there's a lot of churn. That ain't gonna go away. Is it gonna be dampened? Sure. But is it still a massive amount of change takes place that know, our customers are in the middle of, meaning the background screeners and, you know, we're gonna be providing a data for, you know, I I it's not gonna go away.

Currently, right now, what we're seeing in our own data is that the level of churn is just down. Right? So you're leaving and hiring is down. Right? People are staying in roles longer, and hiring is also down. So the longer-term trend, as Mark described, is one we'll certainly we're watching closely. But currently, it's it just it appears given the uncertainty in the economy, people aren't leaving jobs either. So churn is just way down. That's helpful. And then just as a follow-up, just regarding all of the headlines and the news around the FHFA I When we actually think about the timeline for implementation of of what the FHFA FHFA would like with the introduction of VannieScore four followed by FICO ten t. Any color that you can provide that would help us understand what a timeline might look like in from a complexity perspective, meaning that assuming you know, the the FHFA goes ahead and, you know, we get the infrastructure in place from their perspective, to be able to accept value score for then the lenders come in and they gotta update everything in their systems. So what is a realistic timeline or how should we think about when you guys might realistically be able to start selling or the bank start incorporating FannieScore into the into the originations process.

Yeah. I think it's it's still early to, you know, give any kind of a concrete timeline except to say it's, as you pointed out, it's super complex. You know, there's a lot of different you know, most mortgage originators have their own platforms, the large ones, and and then there's just all kinds of technology work that would have to go into that process in order to, you know, put it in place. So I think it's safe to say it's very complex. It's it's safe to say that it's gonna take time. I wouldn't think about anything in the second half of this year like a meaningful change. You know, that, you know, we're gonna be able to see or you're gonna be able to see. It's one that, clearly will take time to, implement. And then, you know, obviously, the originators are gonna have choice. You know, based on, you know, what the director has has put in place. And, you know, there's lots of originators that may may decide that you know, they wanna stay with what they've been using for thirty years. Know? So I think that's something that the industry will have to sort through and it'll be driven by know, the individual originators and how they think about the know, risk profile, how they think about change, the investments they wanna make in their process flows and their technology. It's clearly gonna take time.

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

Great. Can you give us a sense, has the mortgage pricing been fully seasoned so far? And what is the pricing dynamic or across the rest of the business? So what's pricing contributing to to kind of the overall revenue embedded in the guidance?

Yeah. So, you know, pricing broadly for Equifax Inc. goes in place on a calendar basis, you know, broadly on a one one. Both mortgage and non-mortgage and generally around the globe. So you know, using your word seasoned, it's, you know, what we have in our guide is pricing that we put in place early this year you know, in our different products, you know, in all the different business units. So when we talk about the impact of price, in, like, second quarter, it's versus second quarter last year and you know, the vast majority, meaning most of our businesses had some level of price increase on one one. You know, so that's clearly in place. I think as you know, you know, because of the credit pricing in mortgage, the credit score pricing, that is one where there's a been a larger price increase this year, also last year. So in USIS mortgage, you've seen that. In our results. There's a big impact you know, from that pass through of the credit score pricing. So that's embedded in our guide for the year and, you know, we have real visibility, you know, around that. So, you know and then our non-mortgage pricing is typically much lower than what what we you see in that pass through of the credit score. In in mortgage. And then AWS has their own, you know, pricing you know, algorithms or or or structures that they put in place on one one and those are embedded in our in our outlook and guide for 2025.

Great. Thank you.

The next question is from the line of Kyle Peterson with Needham and Company. Please proceed with your question.

Hi. This is Brendan Popson on for Kyle. Thanks for taking my question. Just one for me. I'm just wondering if you can dig in on the international growth in the quarter and the rest of the year. Particularly in LATAM and Europe cloud adoption and new products. And maybe how margins should shape up for that side of the business in the back half of the year. Thank you.

Yeah. We're pleased with the international performance. You know, when I talked about Canada, Canada is obviously you know, lagging because of the economic situation up there from the concerns around tariff. We expect that to be know, better in the second half with some new product rollouts and, you know, some share gains. We we're gonna land in the second half in Canada. You know, and broadly, we expect, you know, the second half to be similar to the first half for international. You know, as far as our revenue performance. I talked earlier on some of the q and a around some of the regions like LatAm and Brazil and Boa Vista that are performing know, at the higher end of our kind of outlook because of the dynamics in those markets. We're really pleased with our progress in Brazil and Vova Vista, which we acquired now two years ago. Performing you know, very, very well and, we're adding our new solutions, an interconnect that Ignite, identity products down there that we think will enhance our competitiveness versus Experian SIRASA. So we're you know, pleased with, you know, how that's that's performing. Latin America's performing well. You know, we still have cloud completion work to do in international. As you know, that North America has done US and Canada. And some of that's in Latin America. So know, we expect some incremental you know, it's in our guide, but incremental cloud cost savings you know, in the second half as we complete you know, some of the cloud migrations in 2025 and there'll be a a tale of international cloud completions in 2026, principally in in Australia. Know you had anything else, John, on.

International NPI tends to be very high, so they deliver a lot of new products. I think as we guided, right, we expect we expect something around 7% for the year, so a little better than 7% the second half. You asked about margins. I think you already you gave guidance on margins. We expect to see nicely increasing margins in the third quarter and nicely increase margins for the full year. So as international completes cloud migration, they're also being very diligent on cost. And as they're growing, obviously, that flows through at a very high variable rate. So they've delivered nice margin growth, and we expect them to continue to deliver nice margin growth for the rest of the year.

Okay. Great. Thank you guys. Thank you.

Next question is from the line of Arthur Truslove with Citi. Please proceed with your questions.

Thank you very much, and thanks for answering my question. I guess one for me really. I'm just wondering how you think about the kind of midterm outlook for cycle pricing. Obviously, mortgage revenues have significantly exceeded volumes. In USIS. And a decent chunk of that is clearly as a result of FICO. Obviously, as as as you say, the FHFA boss has been talked about this. What do you think FICO will price as we look forward? And what sort of impact do we do you think that's gonna have on your growth rates? Thank you.

Yeah. I think, you know, with regards to FICO pricing, you should call FICO, you know, or join their earnings call, which I think is next week. And and see what Will has to say about that. You know, I'm sure he's got a point of view and, you know, we don't have visibility to that. Generally, you know, we'll get inputs from them on what they're thinking about for the next calendar year as we get into later in the in the year to typically September, October, November, somewhere in that time frame. You know, we clearly had a, you know, a positive impact you know, from that pass through in 2024, in 2025. If if you were a part of our investor day and you saw I put in know, the slide we used in investor day where we provided you know, kind of a scenario for 2030 you know, where we showed, Equifax Inc., you know, growing you know, well within our long-term, growth framework, you know, 8% between now and 2030, you know, without any mortgage market growth or, you know, with very modest mortgage pricing increases in it, you know. So we're not counting on that to deliver our long-term framework know, kind of substantial mortgage pricing pass through. You know, we believe we have a you know, in the mortgage business and in our you know, broader non-mortgage business, which is the bulk of Equifax Inc. You know, lots of leverage for growth to deliver, you know, a very strong framework, you know, going forward. And as we think about you know, kind of medium longer term, you know, we've got a lot of confidence in our ability to, you know, grow the business, you know, going forward. You know, without that kind of a passer.

Great. Thank you.

Our next question is from the line of Kelsey Zhu with Autonomous Research. Please proceed with your questions.

Hi. Good morning. Thanks for taking my question. I have two questions on government vertical. The first one being, you know, we saw that you recently won an RFP with the state of May as part of your contract renewal, and just in front of the cost proposal, it looks like the contract value saw significant improvements from I think it was one to two million in a a couple of years ago, and the proposal would suggest nine million a year with the recent renewal. So just curious to hear your perspective on, you know, what's driving the significant growth there. We did see one of the main attributes that they asked for is hours worked. So maybe you can talk about, you know, the the traction you're gaining with state Medicaid programs after the one big bill has been passed.

Well, first, I would say super impressive to have that level of detail on one of our contracts in Maine. You actually got John and I both be on any details on that contract. As you know, we've got you know, contracts with many of the states, but there's many states where we don't. And typically, the contracts are with specific agencies in the states. As opposed to, you know, the state itself. So we'll have to follow-up with you with with some details on that. But I suspect you know, it's an example of, you know, a state using more of our services for their social service delivery know, because of the accuracy and speed and productivity that it delivers to them. So you know, we'll follow-up with you on that one. You know, kind of, you know, broadly, you know, we're not seeing any impact now, in our revenue around the changes that were made in the bill, that was signed, you know, around July fourth by president Trump. That included a lot of the work requirements. As you pointed out, the six-month redeterminations in some of the more stringent income verifications. As I commented earlier, we do we are having conversations now with states about their implementation of that, but it's not gonna happen until in my view, later this year or probably know, more accurately in 2026. But that's planning has started. It's not gonna show up in the revenue, but it gives us a whole bunch of confidence as we think about, you know, 2026, 2027, 2028 you know, this is a there's a lot of positive macros in government for us at the federal and state level. You didn't ask about it, but we commented in our comments on it. There's also a number…

Got it. Super helpful. And just more broadly, Mark, I was wondering if you can help us think through the opioid aid impact on e AWS. Because on the on the positive side, you know, you've highlighted some of these drivers, you know, the working hours were requirement, the double the determination. We'll obviously all present tailwinds for Equifax Inc. But then on the flip side, you know, there's some studies that would suggest that you know, something like eight million fewer people will be able to prove that they're eligible for Medicaid enrollment as an example. Which could present a headwind to EOBs. So just curious to hear your perspective on all of this.

Yeah. I think, you know, you point out, you know, with with the increased redetermination with the work requirements, the increased income verification requirements, that'll likely mean there's less people you know, that are receiving the services and, you know, is is the intention is is that you're not receiving services if you don't deserve them and you don't qualify, you know, so I think that's the intent. But, you know, we think about the tailwinds as being, you know, way overwhelming that impact. Because remember, you know, we characterize, and I think you supported, a $5 billion TAM you know, if our services were used fully at the state and federal level, know, for all social service delivery. And we think we have know, the right solution in order to deliver social services to those that qualify for it. In a very accurate way. And against that $5 billion, you know, our revenue is, you know, roughly $800 million. You know. So the tailwinds to go into that, you know, $4 billion plus of market opportunity for us are just massive. And, you know, we've never I've only been at Equifax Inc. for seven years and changed, but you know, you can go back you know, multiple administrations. There's never been a focus around eligibility accuracy and never been a focus on the what improper payments. You know, you can go back to four, five, six of this even Trump one point o. There's just a real focus around you know, getting social services to people that qualify and deserve it because they need it. But those that no longer qualify not receiving it. And you know, we shared before the income demographics of individuals receiving social services are very dynamic. The individuals have life challenges where maybe they're…

Thanks so much. Appreciate this.

Next question is from the line of Scott Wurtzel with Wolfe Research. Please proceed with your questions.

Hey, good morning guys. Just one from me. Going back to the margin guidance specifically on USIS, you raised your revenue growth guidance, but kept the margin guidance pretty flat or maintained it for the year. Just wondering what the dynamics are that are driving that? Thanks.

Sure. So I mean, again, as a reminder, there are margins. Some of the outperformance what you're seeing is in mortgage, right? Because we took up the mortgage revenue guidance more than we more than the non-mortgage revenue guidance. Mortgage has a lower margin profile, because of the FICO costs and then the tri-merge costs that are embedded in there. So end up with a little bit of negative mix. Then also, obviously, they're continuing to invest aggressively to drive NPI faster. So we think they're gonna be able to deliver that gonna deliver better revenue performance, hold the margins, and then put themselves in a very good position to continue that growth at the beginning of 2026 as they invest in new products.

Great. Thanks guys.

The next question comes from the line of George Tong with Goldman Sachs. Please proceed with your questions.

Hi, thanks. Good morning. Given the variability in state-level funding, are you considering any alternative pricing strategies to reduce revenue volatility in the EWS government segment?

Yeah. It's actually a good question. I don't know if I would answer it the way you asked it. But, yeah, we're working to be super flexible, George. Know, around helping states navigate this current period of, as you described, budget challenges. And I think we talked on the April call about, you know, where we're offering some subscription-type solutions, you know, for a time frame to help them bridge to their next, you know, budget calendar year. As you might imagine, you know, we wanna support our customers. We wanna be flexible, you know, around helping them navigate this I guess, call it a 2025 window, you know, where the funding requirements change, you know, by the prior administration. And we've had, you know, a lot of success with that. But, you know, government governments and state governments are complex. You know, they have lots of budget challenges. They're as I said earlier in the call, you know, most states are operating at deficit positions, you know, meaning they're spending more than they're taking in and, you know, that creates challenges when there's a know, a new, you know, requirement for funds in order to continue a program, you know, like know, income verification for social services. But we've had a bunch of success and we expect that to continue and, for sure, we're being super flexible around product structure of contract, in order to help our customers you know, through this period.

Very helpful. Thank you.

The next question is from coming from the line of Ryan Griffin with BMO Capital Markets. Please proceed with your questions.

Hey. Thanks so much. You'd previously called out deepening penetration and broadening the solution set with the background screeners at your recent investor day. Know it's early now, but any updates worth sharing, your client feedback, and how does that mesh out with the price you take there as you look ahead? Thank you.

Yeah. I think we continue to what we we continue to Mark just talked about the way we're structuring contracts with in government. We're doing something very similar in talent. Right? We're putting contracts in place that provide them with access to all of our products. Right, where we can drive revenue growth and we can help them drive higher usage of our products and more efficient usage of our products, which actually can improve their cost structure. So we're doing this across multiple large customers and talent. It's something we expect to continue to expand. As you said, it's only been about a month, so I can't tell you there's been a lot of progress in the last thirty days, but I'd say is it directionally, that's something that we're moving forward with. We've actually had some success already with some very large customers. So we feel good about that direction. And the broadening product base that we have in town.

Great. Thank you.

Our next question comes from the line of Matt O'Neil with FT Partners. Please proceed with your questions.

Good morning. Thanks for squeezing me in. Most of my questions are asked and answered, but I thought I would ask one. Recently, there's been some headlines and announcement that JPMorgan would be rolling out fees for API data pulls. Was curious if this would impact Equifax Inc. directly in the extent to which other banks were to follow suit? Is that something that, you know, would would sort of become a potentially larger dynamic to think about for for you guys? Thank you.

No. We don't expect that to be an impact on kind of data we get from financial institutions for sure.

Great. Thanks.

The next question is from the line of Simon Clinch with Rothschild and Company Redburn. Please proceed with your questions.

Hi. Thanks for taking my question. Maybe I could go back to the question previously about the challenges you're facing at the I guess, at the state level budgetary level. The headwinds that we're facing on the government side, what exactly are those states doing with their verifications? You what data are they ending up using? Are they just doing you know, just electing to you to do lower volumes? Yeah. How how is that actually mapping out? And then how do we think about, you know, in the context of the OBBB bill, and the, you know, potential doubling of verifications, you know, the I how how do the budgetary constraints today manifest in that kind of environment as well?

Yeah. So on the first the first side, it varies by state and what they're doing. In some cases, they relax income requirements. They're using state wage data that they get on a lag basis, and it's not as complete as certainly the twin data. In all cases, they want to go back to using the twin data because of the speed of execution of the process, the productivity it delivers, as well as the accuracy from improper payment. And then with the federal government putting more stringent income requirements on the states, they really have to have more accurate processes which Twin delivers. So, you know, that's good something we're gonna work through. In states, just they're complex, more complex probably than companies, around how rigid their budgets are from their calendar year process. And, you know, some of them have September calendar year, so have January calendar years, you know, so there's varying elements there. And, you know, we're working through it, but it's complex, and we think we will navigate through it. When you think about the future, obviously, when there's more stringent requirements from the federal level, they're gonna have to put in their budgets in the future. Whether it's in the 2026 budget or 2027 budget, the client's kind of expenditures in order to deliver that level of verification that's gonna be required, whether it's going twelve months to six-month redeterminations, whether it's the more stringent upfront income requirements, whether it's the addition of work requirements, that's the dialogues we're having now about our solutions to help support that. And then, you know, working with them in order to get this into their number one, budget plans, but number two, for the future, but also into their workflow plans because they're gonna have to change their processes. Whether it's a six-month versus twelve months, adding a work requirement is super complex because I think, as you know, it includes not only employment, but also includes some volunteer work or other elements that can be used as evidence of your attempt to have activity when you're receiving social services. So it's gonna require a bunch of work, but, you know, when we think about the macro for Equifax Inc., with a $5 billion TAM, we think that's good news for us and that's why we're putting so much effort into supporting our customers as they navigate through these changes.

That's really useful. Thanks, Mark. And just to does this bill do you consider the new policies as expanding that $5 billion term opportunity?

Yeah. It's a great question. And it certainly does and we haven't updated the $5 billion TAM. You know, the way we think about it, $5 billion is a big number. It's a ton of offer. And it's one you know, obviously, that only went in place a few weeks ago. It's a great reminder that we should take a fresh look at the $5 billion around the impact that's gonna have on us, and we'll do that. But know, look at you think about $800 million versus $5 billion, $4 billion plus of potential growth. There's plenty of growth for us in the government sector which is why we're energized about it and that's why we're continuing to put more resources into it.

Great. Thanks very much. Thank you.

Final question is from the line of Craig Huber with Huber Research Partners. Please proceed with your questions.

Great. Thank you. You may have touched on this as I missed part of the call earlier, but can you just give us your outlook for credit cards in your auto business the second half of the year and maybe also just touch on the volume levels that you're seeing in those two areas now, say, pre-COVID? How they stack up versus history?

Yeah. So we didn't give specific volume level. What we did indicate was auto had been very strong through the first half of the year and our expectation was we continue to see good auto performance as we move through the rest of this year. And that's what we've seen even later in the as we move through the second quarter. And around we didn't give credit card specifically, but our FI business in general. Right? We had nice performance in the first quarter. It was a little weaker year on year in the second quarter. I think that's that was mostly related to just a grow over second quarter of last year was very, very strong. Sequentially, we saw nice growth in our FI business. First to second quarter, and we expect to see we expect to see good performance in FI in the back half of the year.

Okay. Great. Thank you.

Thank you. At this time, this concludes our question and answer session. I'll now turn the floor back over to Trevor Burns for closing comments.

Yep. Thanks for your time today. If you have any follow-up questions, you can reach out to my cell phone, Molly. Thank you.

Thank you. This will conclude today's conference. You may now disconnect your lines at this time. Thank you for your participation and have a wonderful day.