Greetings, and welcome to the Equifax Inc. Q3 2025 Earnings Conference Call and Webcast. [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Trevor Burns, Senior Vice President, Head of Corporate Investor Relations. Trevor, please go ahead.

Thanks, and good morning. Welcome to today's conference call. I'm Trevor Burns. With me today are Mark Begor, Chief Executive Officer; and John Gamble, Chief Financial Officer. Today's call is being recorded. 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 & Events tab and our IR website. Also, we'll be making certain forward-looking statements including fourth quarter and full year 2025 guidance as well as our long-term financial framework. To help you understand Equifax and its business environment. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from our expectations. Certain risk factors that may impact our business are set forth in filings with the SEC, including our 2024 10-K and subsequent filings. In the third quarter, Equifax incurred a restructuring charge for cost reduction actions as we continue to streamline our operations globally as we complete the new Equifax Cloud and advance our global data and application cloud infrastructure and deploy EFX.AI capabilities across the organization to drive cost savings. These charges totaled about $44 million and are expected to deliver ongoing savings when completed by late 2026 of about $30 million per year. We will also be referring to certain non-GAAP financial measures, including adjusted EPS, adjusted EBITDA and cash conversion, which will be adjusted for certain items that affect the comparability of our underlying operational performance. These non-GAAP measures are detailed in reconciliation tables, which are included in 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.

Thanks, Trevor. Turning to Slide 4. Equifax had a strong third quarter with revenue of $1.54 billion, up over 7% in constant currency and reported dollars. Revenue was $25 million above the midpoint of our July guidance driven by outperformance in U.S. mortgage and EWS and USIS non-mortgage. About 2/3 of the revenue outperformance was in USIS mortgage from stronger market volumes later in the quarter off lower mortgage rates. Mortgage hard credit inquiries were down about 7%, but better than our expectations of down over 12% with the 30-year mortgage rate dropping just below 6.5% in September. Total U.S. mortgage revenue was up a strong 13% in the quarter. In September, we saw modest mortgage inquiry activity increases. We believe this improvement was likely led by mortgage refi activity off the lower rates. New home purchase activity appears to be remaining at the lower levels we've seen 2025, reflecting continued low home inventory levels, elevated home prices impacting affordability and prospective homebuyers waiting for further mortgage rate reductions. U.S. mortgage revenue was 21% of Equifax revenue in the quarter. John will cover our expectations for mortgage activity in the fourth quarter shortly. But we continue to believe that mortgage activity will improve over the long term towards the 2015 to '19 levels as inflation comes under control and rates come down. EWS non-mortgage revenue was better than expected, principally from strong high single-digit revenue growth in EWS government driven by state penetration. We've seen a meaningful acceleration of post-OB3 discussions as both federal and state agencies move towards implementation of new solutions to comply with the more stringent income and work requirements in OB3, and this is a very encouraging sign for '26 and '27 EWS Government growth. USIS had another good quarter of B2B non-mortgage revenue growth, up…

Thanks, Mark. Turning to Slide 12. As Mark mentioned, we are increasing the midpoint of our full year revenue guidance by $40 million given our strong third quarter performance. Total Equifax reported revenue is expected to be up 6.1% to 6.7%, versus the prior year with non-mortgage constant dollar revenue growth over 5.5%. FX is about 40 basis points negative revenue growth. As a reminder, the mortgage market decline as measured by hard credit inquiries in 2025 is almost 150 basis point drag on our revenue growth rate. The midpoint of our full year adjusted EPS is also increasing by $0.12 per share, with year-to-year growth expected to be 3.6% to 5%. Full year free cash flow is expected to be between $950 million and $975 million, up from our July guidance with a cash conversion of over 100%. Our accelerating free cash flow gives us confidence in our ability to execute our capital allocation plans of investing in new products and M&A as well as returning cash to shareholders through increasing dividends and share repurchases. At the business unit level, we continue to expect Workforce Solutions revenue to be up mid-single digits with continued strong adjusted EBITDA margins from 51% to 51.3%. We expect both non-mortgage and mortgage revenue to be up mid-single digits for the year. We are raising our full year USIS revenue estimate to increase high single digits year-to-year, principally from stronger mortgage revenue. Based on run rates for mortgage hard credit inquiries over the latter part of the third quarter and early fourth quarter, our mortgage hard credit inquiry expectations included in guidance for the full year and fourth quarter are both down high single digits, a slight improvement from our July guidance. Full year mortgage revenue is expected to be up approaching 20%. Our…

Thanks, John. Wrapping up on Slide 14. We had a strong third quarter with constant dollar revenue growth of 7%, within our long-term organic revenue growth framework against the mortgage market that was down 7%, led by strong 26% USIS mortgage revenue growth and stronger-than-expected USIS non-mortgage revenue growth and EWS non-mortgage growth driven by stronger growth in Government. As we outlined, we are raising our full year guidance at the midpoint by $40 million of revenue, adjusted EPS by $0.12 per share and full year free cash flow outlook from $900 million to $950 million to $975 million based on our strong third quarter results and momentum in the fourth quarter. Our free cash flow generation and the strength of our balance sheet positioned us well to return cash to shareholders in the quarter. In the third quarter, we returned about $360 million to shareholders through share repurchases and dividends, and we expect to continue to repurchase shares in the fourth quarter against our $3 billion share repurchase program. In the quarter, we also outlined our new Vantage mortgage pricing structure, which we believe will deliver higher profits for Equifax and shareholders as well as lower the cost of lending for our customers and consumers, a win-win for everyone. We're entering the next chapter of the new Equifax with our Cloud transformation substantially behind us as we pivot our entire team to leveraging the new Equifax Cloud for innovation, new products and growth. We are using our new Cloud capabilities, single data fabric, EFX.AI and Ignite our analytics platform to develop new credit solutions, leveraging our scale and unique data assets. And we're accelerating multi-data asset solutions, including those that combine traditional credit alternative credit assets and TWN income and employment indicators in verticals like mortgage, auto, card, and P loan that only Equifax can deliver that will drive share gains and growth. I'm energized by our strong third quarter performance, but even more energized about the next chapter of the new Equifax. This is an exciting time to be at the new Equifax. And with that, operator, let me open it up for questions.

[Operator Instructions] Our first question today is coming from Jeff Mueller from Baird.

Can you go into more detail on what you're hearing on the mortgage pricing changes, including anything coming out of the MBA conference? I hear you that the conversions not easy and will to time, but I thought you also said you have some clients in production with VantageScore. So just, I guess, how active are the conversations or transitions?

Yes, Jeff, as you know, MBA is taking place. It started on Sunday. We've got a team down there. John and I are there, but we're getting a lot of feedback. And really, before that, I used the phrase earlier in my comments, there's been a groundswell of attention, obviously, to the huge FICO price increase, doubling to $10 in 2026. And then the response from Equifax to put a very competitive offer on the table. So it's incredibly active. There's a lot of energy around the Vantage opportunity. It's going to take time to do it, but we've got customers that are already engaging around it. And I would say every customer, whether it's a reseller or end user of it is well aware of the massive savings opportunity versus FICO that comes from conversion of Vantage. So there's just a lot of momentum there.

Okay. And then can you give more detail on the margin guidance, including the reduction in USIS margin guidance. I'm just not understanding the message, because I thought that you were going to flow through mortgage-driven upside. And I think non-mortgage is also somewhat better than expected and the incremental margins on mortgage market-driven upside should be higher than your reported margins. I heard a bit about incentive comp, but it's not adding up to me with kind of the prior commentary that you flow through the mortgage market-driven upside, that's it.

Absolutely, right. And we tried to cover this in our commentary, right? So what we're seeing both on a total Equifax level and also for USIS specifically, and again, long -- and what we've indicated is we intend to flow through the profitability related to higher mortgage revenue, and you actually saw it in our improved performance in the third quarter and in the guidance we gave for the full year, right? But in terms of what we're seeing specifically in the very near term, we're seeing some negative impact related to near-term USIS margins and also Equifax margins. One of the bigger drivers is specifically related to variable compensation. Obviously, the performance that we've announced today is substantially better in the second half of 2025 than we had previously ended in July, and that increases variable comp that impacts both Equifax, but also directly impacts USIS. And then there also are some near-term impacts around the fact that we -- that our mix is somewhat higher toward mortgage and therefore, that does impact our gross margins negatively in period. But as we indicated over time, we intend to flow through 100% of that variable profit to shareholders. And again, I think we -- you did see that both from the increased profitability in the quarter, the higher guidance, and also, quite honestly, from the much stronger cash flow performance in the third quarter and the much higher cash flow guidance that we provided for the full year.

Our next question today is coming from Toni Kaplan from Morgan Stanley.

Wanted to start on Government, very helpful commentary about the error rates and the ramp-up that you're seeing in discussions with the states. I guess, do you expect that this will really start to ramp after the end of the government fiscal year-end? Or will states really preemptively start using your solutions ahead of time? I know you talked about second half '26, '27 is really where the sweet spot will be. But just wanted to understand the process a little bit better.

Yes. I think it's a mix of both, Toni. We've been really pleasantly surprised with the rapid increase in conversations at the federal level, and we talked about some of the new programs we're working on. But at the state level after the OB3 signing on July 4 by the President, in the last 90 days, there's just been a real uptick in conversations. And what we're seeing is, as you point out, the OB3 -- most of the OB3 impacts happen late next year. So that revenue from new solutions like our continuous monitoring or the hours worked solutions, those will likely be late in '26 and then really take hold in 2027. But what we are seeing, I mentioned it in my comments earlier, is just the engagement with states around our solution because remember, the error rates that I talked about are really in current period, meaning '25, '26 really set those error rates. So if states want to bend the curve on those error rates and really get ahead of potentially paying for a bigger piece of those benefits that are in the OB3 bill. They've got to address integrity now, so we're seeing an uptick in those conversations quite positively. And then lastly, I think, as you know, what really impacted the business in 2025 was kind of that air pocket from the change in the prior administration around CMS cost sharing around data costs and just the state's challenge to absorb that. We see that kind of behind us now. And the state is really focusing on the more stringent requirements of OB3 that we think will be a positive kind of sequentially as we go into 2026, but then will really take hold when the more -- the new requirements really go into effect late next year.

Next question is from Andrew Steinerman from JPMorgan.

John, could you just go over a little bit more the general corporate expense line in the third quarter and what's driving that?

Sure. And the increase in general corporate expense really specifically is driven by what I referenced in terms of the answer to Jeff's question is really around an increase in variable compensation between the July guidance we provided and what we're seeing now based on the much stronger performance, right? So...

Based on the higher revenue?

And higher revenue and principally operating income, right? So what you're seeing is obviously, much stronger overall performance, higher revenue and operating income, and that's resulting in a higher level of variable compensation and a significant portion of that impacts general corporate expense.

Your next question is coming from Manav Patnaik from Barclays.

The first question, if you could just remind us the different moving pieces, I guess, on the mortgage side. What I'm referring to USIS grew 26%, but EWS was only 2%. Can you just remind us of the different factors? I know there's always a difference but just maybe in this quarter.

Well, you could start with the FICO price increase in USIS, obviously, is quite substantial in the year, and we have the pass-through benefits there. So I think that explains a big piece of that high double-digit number in USIS. And then as we mentioned, and you saw it, I think, Manav, when rates came down kind of in September, we saw an uptick in mortgage activity. That usually benefits or always benefits USIS first in the prequal shopping stage. They see the polls earlier than EWS does. EWS, obviously, the mortgage market based on our inquiries was down 7% in the quarter. And that 2% increase in EWS just really reflects their pricing product and records outperformance against that negative market. And as John mentioned, I think, in his comments, we expect to see some improved performance in EWS because they typically are in the closing stage of those mortgages that likely were started in December. So we would expect to see that pick up as we go through into the fourth quarter, and that's in our guide for the fourth quarter.

But again, as Mark said, if you take a look at EWS outperformance over the first 9 months and in the third quarter, obviously, we don't give that number specifically anymore, but we've indicated we expect them to run high single-digit percentage growth outperformance and that's kind of where they're running.

And the feedback on the score pricing, I think that makes sense. So I was just curious if you had received any feedback from your customers on the -- I guess, your credit file cost increases that you made? Is that even something that they talked about?

Yes, those discussions are happening as we speak at MBA. I would think that they're viewed as -- we're not getting a lot of feedback. I think all the attention is on the FICO increase for next year with a doubling of it to $10. So that seems to be taking all the air in the MBA meeting. So our conversations are taking place as we speak.

Next question is coming from Shlomo Rosenbaum from Stifel.

Mark, given the focus on generating more VantageScore traction, can you talk about what it is that you guys can do to kind of drive the adoption in the marketplace? I mean, is there going to be a step up materially in your sales and marketing budgets in the area? Are you guys going to provide some help to the customers in terms of back testing it versus FICO, like how should we be thinking about this operationally? And then where the efforts you guys are going to put in? Obviously, I understand it's a multiyear effort and seems like it's kind of an uphill effort, but the cost advantages over the long term might make sense, but you got to get these big bank behemoths moving on that.

I would actually call it a downhill effort, meaning a lot of momentum with it. With the pricing action that FICO put in place a few weeks ago for 2026, the doubling of the price increase that's $5 or $4.95 in 2025 to $10 in 2026 is going to add $0.5 billion of costs to the mortgage industry and consumers, roughly the way we calculate it. And that is really creating in our view, a real catalyst around this. And actions we took, first was obviously pricing 50% plus below the FICO pricing that got the attention to the industry. That's a big cost savings for them basically the score pricing being flat year-over-year holding that price flat meaning we're going to freeze that price for 2 years, to give the industry some visibility around driving the conversion. And then we really think the -- offering the free VantageScore not only in mortgage, but in every vertical, is also going to drive adoption and understanding on it. And as I said earlier, there's already a lot of momentum. This is not new. There's been a lot of Vantage focus with the increase in 2025 that FICO took, taking it up to $4.95. So it's not like it just started yesterday, there's been dialogues going for a long time. So actions we're going to take, I think we are very proactive and responsive to our customers to try to deliver cost savings for a score that performs at or better than the FICO score with the actions we announced 2 weeks ago. And then as you point out, we're going to use our commercial leverage. We've got a lot of commercial resources in the marketplace. We're going to incent them, meaning part of their incentive compensation will be around Vantage conversions and supporting our customers and really understanding it. We're going to provide analytics to our customers. We're going to try to help them really understand it. We're working with the agencies on it. From my perspective, this isn't a matter of if, it's only when. And as I said earlier, we already have customers that are engaging around using it in the very near term in production. So it's coming. And as a reminder, I think you know this, if you look at other verticals outside of mortgage, mortgage had a 30-year monopoly where the only score you could use with FICO. If you go into other verticals like auto, card and P loan, there are large financial institutions that have been using Vantage for a long time they securitize the loans very successfully. They sell them into the marketplace and they operate very effectively with Vantage. So while it will take time, there's -- in my perspective, an unprecedented momentum on it. And yes, we're going to put the power of Equifax behind it because we want to support our customers. Our customers are really looking for the kind of value and performance that Vantage will deliver.

The next question is coming from Kyle Peterson from Needham & Company.

Great. I wanted to see if you could help us unpack some of the moving pieces in Government. We saw overall looks -- the guide looks pretty solid for the fourth quarter, but I understand there's a little bit of noise with some of the federal business, the shutdown, but then some of these other state and local opportunities that are ramping. So I just wanted to see if you guys could give us any more color on like the net effect and particularly some of the ramp pace of some of the state and local business, that would be really helpful.

Yes. So we were pleased with the government performance in the third quarter, as you thought it was above our expectations and probably yours, which we're pleased with. The kind of air pocket we had from last year's funding changes at CMS seems to be behind us, which is good news. And as I said earlier, there's just a lot of momentum post-OB3 with the focus at the federal and state level around the $160 billion of improper payments and really addressing them. So that momentum is a positive. You saw we guided that we expect Government to grow sequentially in the fourth quarter and exit kind of at high single digits. That's just from core growth. I think John mentioned, as far as the government shutdown, we haven't seen an impact yet. We don't know how long this is going to go on, but a government shutdown would likely more be a deferral of revenue as opposed to a loss of revenue if it was going on for an extended period of time. But again, we haven't seen an impact in that and that's kind of what we put in our guidance was that this will be resolved and won't have an impact on us in the fourth quarter. And that fourth quarter exit rate for Government with the momentum we have with the states and the federal government around kind of conversion, not to remember that we're dealing with a big $5 billion TAM here. And when you think about states, less than half of the states across the U.S. use our solution. So that's always a new business opportunity for us where we deliver integrity. And with this new error rate requirement that's in place that's really, the clock is running as we speak, in '25 and…

Next question is coming from Kevin McVeigh from UBS.

I wonder if you could give us a sense of -- I don't know if you said this or not, John, but for '26, the revenue, could it be in the range of the 7% to 10% on the organic framework, or did you not say that? I just want to make sure I didn't confuse your comments.

We didn't. And I'll help John with that, he can jump in too. But no, we did not give guidance 2026 today. We'll do that in February as we typically do. What we did say is we wanted to clarify because we've gotten a bunch of questions about the FICO announcement and then Equifax's announcement on what those 2 announcements might have with regards to mortgage on our 2026 guidance, and what we intended to say a few minutes ago, and we also said it earlier in kind of investor meetings over the last couple of weeks is that the FICO announcement and the Equifax announcement doesn't change how we think about 2026. We had a view of it when we had our Investor Day, back in June. As you know, in the Investor Day, we laid out an outlook through 2030. In that longer-term outlook, we think the whole mortgage opportunity with Vantage is a net upside. But with regards to '26, we intended today to say that the mortgage change we've made around the discounted Vantage pricing to drive adoption, we think will take time, but it hasn't changed how we think about our outlook for '26, and we'll share that with you in Feb.

That's very helpful. And then, Mark or John, I don't know, this may be a tough question, but any thoughts on what you define as success from a market share perspective on VantageScore longer term given the shift? And obviously, to your point, it was a 30-year monopoly. But as that share shifts, what would be a reasonable proxy? And does it go to market motion factoring your partners on Vantage, or is it independent?

Yes. The partner one, I think partners are lying too. When you think about -- I think when we say partners, you're referring to the tri-merge resellers. We've had conversations, I have personally with all of them over the last couple of weeks, all the big ones. They're as challenged as the whole industry is around the FICO price increase. And I think your question on success is a good one. Obviously, share gains. We believe there's real momentum now because of the pricing umbrella, if you want to call it that, that FICO created by doubling the price for 2026. allowed us to really create some really massive value for the mortgage industry with our solution at $4.50. And we believe that's going to drive real conversion. So what success is obviously is going to be share gains. I think to be fair, it's going to take time. This is a very complex industry. But you could add to it, what's FICO going to do in '27? What are they going to do in '28? Are they going to be discounting their price? Or are they going to be increasing it again? And if they increase it again in '27, that creates a bigger pricing umbrella and envelope for value to drive by share gains. So I think we're in the right place to really drive that. And as we pointed out in our press release a couple of weeks ago and on the call this morning, there's a new profit pool for Equifax that's quite substantial for Equifax and our shareholders. When we sell a FICO score next year, it's going to cost us $10. When we sell a VantageScore, we make $4.50. And our customers save $5.50. It's kind of a win-win across the board. So I think it's just a matter of time. And as I said earlier, we're going to put the weight of Equifax behind it to really support our customers and consumers around getting a mortgage score that provides equal or better value, the VantageScore, we believe, and at really a massive amount of economic value.

And it's across mortgage, but also across auto, P loans, really across the entire footprint, and we'll be making the same push broadly.

Next question is coming from Surinder Thind from Jeffrey.

Mark, just a question on the bigger picture VantageScore and the adoption curve here. A lot of conversation seems to be focused on VS 4 versus classic FICO. Can you have any thoughts on 10T entering into that equation? Because when I think about it from the perspective of a lender, wouldn't the lender first want to make the decision of whether they're going to stick with classic FICO or upgrade? And if they choose to upgrade, then it's actually VS 4 that's 10T, not VS 4 versus classic FICO in the decision.

Yes, I think that's fair. 10T is still being introduced in the marketplace. That's going to take time. I think it's what we understand it's a higher performing score than FICO classic, which is good, but it's double the price. And we believe, and Vantage has a lot of data out there now that the Vantage 4.0 outperforms FICO classic and is on par or better than 10T. But either way, when you have a score that is in the same ZIP code of performance, but it's half the price, that creates a real incentive for change. And the numbers are so large. When you think about the impact for the industry, if they stick with FICO classic or stick with FICO in 2026, that's $500 million roughly of neighborhood of increased cost to the industry. There's a lot of catalysts to take a hard look at Vantage, and we think there's going to be real adoption. As we said earlier, there already is. There's already momentum to do it. We've got customers in production. We've got lots of conversations happening. And remember, this is not 3 weeks old, the $10 is, but the focus on FICO pricing has been going on for a couple of years. So this is something that the industry has been thinking about for a long time. So we think there's a real opportunity to bring both performance with 4.0 as well as value with where FICO took pricing.

That's helpful. And then in 1 of your other comments, I think you talked about just being more than a data provider. Are we shifting to more of a platform and an analytics approach here at this point? Like how should we think about that part of the transition?

Yes. So we're investing heavily in EFX.AI for our scores models and products. We've had great performance there and seeing big lifts in really the score and model performance and product performance by the addition of AI. We also talked about deploying AI inside of Equifax, and we'll talk more about that in '26 and in February, but we see big opportunities from an operations productivity, speed and accuracy standpoint with AI inside of Equifax. And then on the call this morning, we also talked about really enhancing our Ignite platform that, as you point out, is an analytics engine by using AI capabilities to make it easier for midsized or FIs that have smaller data analytics teams to really more easily use the solution, and we've just seen some lift there. So that's what we're -- we talked about some of the new products or new enhancements is probably a better term to our existing platforms to make them more usable and deliver quicker and higher performing analytics for our customers, which we are quite energized about.

Next question is coming from Andrew Nicholas from William Blair.

I wanted to first ask about just overall consumer credit trends or conditions, seen some headlines and bankruptcies lately in the auto space, in particular. Just kind of curious what you're seeing in terms of scores or credit conditions and ability to pay within your different markets?

Yes. I think we said in the comments earlier that fairly stable. I think it's still a good environment. Our customers broadly are strong and the consumers are working. So I think that is fairly stable. Activity is lower than, I would call it, peak levels, but very stable. The bankruptcies you've highlighted really are not from what we understand, I think you read the same stuff we do are not credit-driven bankruptcies. There -- it sounds like there's like fraud involved and things like that. So it's not really from an underlying consumer problem that these couple of auto companies had some struggle. It's just how they went to market and perhaps how they were operating in the marketplace. So when we look forward to the fourth quarter and into '26, at least the early parts of '26, it feels like a quite stable environment. As you know, GDP is growing. Unemployment is still fairly low, although there isn't a lot of job creation, which is a problem that the -- I know the Fed -- we read that the Fed is watching around job creation. So we see it as a fairly balanced environment going forward.

As Mark said, if you look at auto, card, FI, really you're seeing slow growth, probably below what we call trend, but it's been fairly consistent, right? Slow growth kind of flat overall market, but weaker than long-term trends, but very consistent.

Got it. And then maybe just a point of clarification. I think within EWS non-mortgage consumer lending was up 20%. I think in absolute dollars far and away the best quarter that line has had in my model. Just curious what's driving that and maybe the sustainability of that level of growth?

That's a high growth rate. You wouldn't think -- I wouldn't think about that as a long-term trend for that part of EWS. But it's really just the deployment of the value of TWN in some of those verticals is very powerful. The combination of a credit score with someone's income and employment is really quite positive, and we just had some success with new customers. Remember, we don't have full penetration in those verticals of using TWN, we think every lender should use it in some way, which is why we're offering it as a TWN indicator is we're going to be rolling it out with our credit file for all verticals, because it provides so much visibility about not only someone's credit score, which is their propensity to repay a loan, but also their ability to repay because they're working, meaning they have a job. So we're energized about the future of EWS in that space.

And as a reminder, that business for EWS is just much smaller than USIS. So the growth rates tend to bounce around a little more. So as Mark said, yes...

You win a couple of customers.

Win a couple of customers, it's much stronger. So you shouldn't take that as a longer-term rate. The other thing that's in there, just to remind everyone is debt management and you really haven't seen a lot of activity yet around student loans. So given that, that's the case, that's an opportunity as we get into 2026, but not something that's really been beneficial yet.

Next question today is coming from Ashish Sabadra from RBC Capital Markets.

This is David Paige on for Ashish. I was just wondering maybe you could touch on International. What -- maybe double click on what you saw in the quarter and then how you're thinking about it the rest of the year?

Yes, good performance. We're pleased with the team's performance. I think we talked about very strong performance in Canada kind of post-Cloud. They finished the Cloud last summer and they're really deploying some new solutions and driving some share gains. LatAm was very strong. We talked about Brazil with our not new, but 2 years now, having Boa Vista performing really well, had a very, very strong quarter as we rolled out new solutions in Brazil, and we think we're seeing some share gains there. And in the other markets, solid performance in Australia, U.K., Spain, were solid performance.

U.K. just completed their transformation really late in the second quarter. So they say, let's call it 6 to 9 months behind where Canada was. So we're -- we feel very good about them being able to drive improving performance again as we get into 2026 based on utilizing the new infrastructure they have, which we think is much stronger than what our competitors in the U.K. have.

The next question is coming from Rayna Kumar from Oppenheimer.

I know you mentioned earlier that hiring, particularly white collar hiring continues to remain stressed. Can you give us some detail on what you're hearing from your conversations with customers and background screeners, and what is the expected impact to Talent in the fourth quarter?

Yes. I think pretty consistent. It's a sluggish market, and we all read about that as far as job creation, employment broadly is fairly high. Unemployment is fairly low. There isn't a lot of as much new job creation, I think as the -- everyone would like to see, I think you still have -- and we talked about it on the last call, what we hear from our background screening customers is they're hearing from their clients, which is the HR managers of corporations across the U.S. There's still a lot of cautiousness around hiring because kind of the broader outlook about our tariffs is going to be resolved and where are those going? There's still quite a bit of uncertainty on that. And I think to me, that's one of the catalysts that has to get sorted out. And it feels like the administration is getting closer on that. They're making progress, but it's just taking quite some time.

Your next question is coming from Jason Haas from Wells Fargo.

This is Jun-Yi on for Jason Haas. Your USIS mortgage outperformance was 33% in the quarter, which was a step-up sequentially. Is that driven from the new mortgage pre-approval products, or what else drove that incremental outperformance?

I don't think it was 33%.

I don't think it was 33%.

It was 26%.

But the outperformance is really being driven by the same thing. It's been driven by all year, right? So we had obviously the very large FICO price increase that occurred last year, which is flowing through in our revenue. And yes, there is some growth in the prequal and pre-approval products. But probably the larger driver is the FICO price increase that happened last year.

Sorry, the 33%, I meant was like you did 26% revenue growth and then inquiries were down 7%, so you got 33%...

Yes, got it. Yes. Well done. Understood. Yes.

I get your point sir. Sorry, my second question. So 1 major adoption hurdle for VantageScore is often cited as its acceptance within the securitization market. So giving out for you VantageScores along with each purchase of a FICO score helps you get visibility among lenders. But I don't think the securitization market will end up seeing it. Correct me if I'm wrong, but how do you plan to navigate these adoption challenges?

Yes. So we already sell Vantage into the securitization market really that they use today. They've been using it for quite some time in the mortgage industry. I'm not from the origination side because there was a 30-year monopoly, but in kind of post loan or post-closing analysis around mortgages, in mortgage portfolios, we've been using it for quite some time. So I think as you point out, that's going to take time. I would point also to other verticals like auto and cards where it's widely accepted, meaning large lenders sell packages of loans with Vantage and securitize loans with Vantage. So it's definitely something that happens broadly, and it will definitely take some time.

And we're continuing to expand the number of tools through Ignite and then data through very long-term data panels that we're making available to those -- to the securitization market to rating agencies to others so that they can more rapidly complete their analytics, and we can accelerate adoption.

Your next question today is coming from Faiza Alwy from Deutsche Bank.

Mark, I wanted to ask about a significant push that the MBA seems to be making around a shift away from the tri-merge report, I know we had this discussion a couple of years ago when the bi-merge was first introduced, the idea was first introduced, but it just seems like the voices are getting a bit louder. So I would just love to hear how you would respond to that and how that might impact you and what you're doing to sort of counter that?

Yes. There's some voice on that. We don't think it's a real drumbeat. I think there's more focus on score pricing certainly currently, and there is around tri-merge. We've been quite consistent with the regulators, with the agencies and with our customers that there's a lot of value in the tri-merge because there's so many differences between the 3 credit bureaus as far as the credit data that we have. And there's just -- for example, there's 10 million -- roughly 10 million consumers that are only on 1 credit file of the 3. So if you only pull 1 or 2, that individual wouldn't have access to a mortgage. There's 40-plus million consumers that have a 30 to 40-point score difference between the 3 credit bureaus. If you're pulling 1 or 2, you obviously either improve or have a negative impact on a consumer and then you also have the whole integrity. So in our perspective, there's a lot of broad focus on that. I think the MBA's focus is more around the cost that's been driven by the FICO score increase has really impacted the industry. And hopefully, the discussions happening at the MBA meeting this week is around the actions that we're taking and our competitors did, too, around trying to offer an alternative to bring score pricing down for the mortgage originators and for consumers.

All right. Understood. And then just to follow up on Government. I know you recently launched your complete verification product. Just curious how much traction you're seeing with that product versus more of an instant verification. I'm curious if you can comment on the competitive environment on the consumer permission side within Government.

Yes. And you may remember, our solution is integrated with the TWN instant solution. So if you're a state or an agency that's using it, and we rolled this out, as you know, last quarter, we already have 1 customer signed up to use it, and we've got an attractive pipeline for it. But the intention is to -- the vast majority of social service recipients have W-2 income, which is where we have the data on it. So they'll access in the workflow, our TWN solution first. And then if the applicant for the also has some gig income, then they would integrate right through to our total income solution with the consumer permission data. And we deliver a report back with both sets of income. It's very common for many of the social service recipients to have a W-2 job, either at restaurant or a warehouse or a retail operation, but then they might be -- have a gig income on the weekends or at night for DoorDash or Uber or whatever that self-employed income would be. And our solution provides kind of a complete picture there. And we believe that integrated solution is quite important for the case workers in order to provide productivity and also the speed of the social service delivery. So we're quite optimistic about deploying that further in the marketplace to really help provide access to that nontraditional income.

Our next question is coming from Craig Huber from Huber Research Partners.

Mark or John, what do you say to investors out there that point out that VantageScore in the marketplace has roughly 5% market share versus autos, credit card, P loans out there and basically negligible market share in nonconforming mortgages out there. What's going to change going forward in your mind in those markets to materially move your market share up in VantageScore given that VantageScore has been out there for 19, 20 years so far.

Yes. But remember that I think you're talking principally in mortgage. And the difference in mortgage is that it wasn't allowed in mortgage until July. So it just wasn't permissible. And then when you have the primary score provider, FICO, driving price up the way they have from $4.95 to $10 in 2026, we think that provides a catalyst. And what we're seeing in the last number of weeks is a real -- a lot of momentum around lenders wanting to drive towards that alternative because of the challenging cost of the FICO score. And so clearly, it's going to take time. I think we tried to point out also on the call that, look, we have -- this -- the FICO score increase or the Vantage option that we announced doesn't change our long-term outlook for the company. It just provides a new positive profit pool over the medium and long term. There's a -- we never thought about the $100 million to $200 million that profit pool for Equifax until the score went up to $10 by FICO a few weeks ago. We think that provides an opportunity for us to gain some share with Vantage, and that's what we're going to focus on. But that doesn't change our long-term outlook of the company. In essence, in the long term, it provides an upside to that as far as the range that we have. But we're focused on looking at that opportunity and trying to deliver those savings to our customers.

I'm sorry, I'm talking about the nonconforming part of the mortgage market. You can use Vantage or FICO, right, for many years here and stuff. I believe VantageScore is negligible market share. There was a non...

Yes, it does. But there's -- most of the lenders that are doing conforming and nonconforming really have 1 system. And when FICO is -- was required for 30 years and built into their workflows and their processes, the incentive to change was challenging to have 2 scores, if you will, in the nonconforming as you point out. And then as you know, until recently, meaning it's only last 3 or 4 years that FICO is put the gas pedal to their pricing and really changed it quite dramatically and been quite aggressive. So there really wasn't enough of a catalyst perhaps on the nonconforming side. But I think it's more just their systems and capabilities. If they're using FICO for 80% of their mortgages in the conforming side, nonconforming, it didn't make a lot of sense to do it. We believe now it does.

But I'm sorry, the other part of my question, a 5% rough markets, your autos, credit card P loans that VantageScore has built up here over 19, 20 years. What's going to change in that part of the market for VantageScore?

Well, I think as you know, FICO -- I think as you know, in those verticals, FICO hasn't doubled their price, taking it up 16x, so they've been more balanced around their pricing there. So there has been the pricing catalyst or the cost catalyst there. But notwithstanding that, there are lenders that have moved to it because there is a price advantage with the VantageScore versus FICO. We think there's going to be an opportunity to drive some share gains in that space beyond what has happened so far, which is why we're offering the free VantageScores in that space to really drive understanding and adoption that the score is equivalent in the non-mortgage verticals like auto, cards and P loans, the VantageScores pricing is significantly below FICO. So there's going to be an opportunity there.

Our next question is coming from Kelsey Zhu from Autonomous Research.

You cited VantageScore upside in the mortgage vertical, which was very helpful. So I was just wondering if you can talk about a little bit more VantageScore opportunity in non-mortgage vertical and particularly around current penetration rate within card and auto and pricing difference with FICO, and where you see the adoption rate for VantageScore could be in the next 3 to 5 years?

Yes. I think that's a space, as I mentioned earlier, that FICO has not been as aggressive on pricing. So it's gotten less attention than the dramatic pricing that they've had in the mortgage vertical, where they had that monopoly position. It's -- we think there's still savings opportunities for our customers and a performance that looks a lot like FICO. As I said earlier, you have to have a catalyst to drive a change like this. And there's clearly a real catalyst in our view, in the mortgage space. We're going to work to provide optionality for our customers by providing the free VantageScore. And as I said earlier, and you probably have the same intel we do there's a number of large lenders that have switched a while ago. The question is, is there enough catalyst between the VantageScore pricing and the FICO score pricing outside of mortgage. We think there's an opportunity there, which is why we're going to we're going to focus on it and deliver the free VantageScore with every paid FICO score in that -- in those verticals also.

Got it. And then second question on the Government vertical. I was just wondering if you can tell us a little bit more about the evolution of the SNAP contracts. Because I remember in the Q3 2023 call, you talked about the $38 million contract with the USDA, which I think was a base year value. but that was possibly impacted by the fund practice changes at the USDA in 2024. And then on Slide 6, you talked about launching a new product that provides agencies monthly life changes to reduce error rates. So just curious to get your thoughts around how much revenues Equifax generated from the USDA or SNAP contract the last 2 years and also your outlook going forward?

Yes, we don't typically talk about specific customer contracts, as you know. But our intention in the discussion on Government was really to highlight some of the opportunities that we see going forward from the OB3 bill and the focus on the improper payments and $160 billion of improper payments at the federal level, we just see a lot of opportunities. And OB3 really presents a whole bunch of new opportunities going from 12 months to 6-month redeterminations, the work requirements, we're working collaboratively at the federal and state level about solutions we deliver because we have hours worked in our data set. And then the error rates that come through in SNAP, and we mentioned that there's a lot of states that are north of those error rates, and they're going to be wanting to focus on getting them down. So we think the broader adoption of our solution is going to be a positive going forward.

And I know you know this, but the vast majority of our revenue regarding staff is with the states directly.

Next question is coming from Scott Wurtzel from Wolfe Research.

Just wanted to ask another 1 on the Government vertical, particularly as it relates to the shutdown. And if we do see this sort of extend longer than what is anticipated. Just wondering if you can talk a little bit more about the potential impacts like understand there will probably be impacts to your federal program contracts. But is there anything at the state level that is tied to federal programs that could potentially see impacts as well?

Yes. I think you used the phrase, which I'd love to get your view on that longer than anticipated, the shutdown. I think none of us really understand enough about politics, although I think the Treasury Secretary said I believe, yesterday that the expectation is going to be resolved this week. Broadly, we think -- and it's hard to pick a time frame, like how long is it going to go? But broadly, any impacts we would see us be a deferral of revenue that would be made up because those applicants are still going to be there. The state is not really impacted because they're still delivering social services. So we don't see an impact there. So in our guide that we have for the fourth quarter, we just really don't see an impact there. And I think, look, if this went on for months, that's like kind of a very extreme scenario would be hard to handicap. Where it's tracking so far, we don't see an impact.

Got it. That's helpful. And then just on the Vitality Index side and the strong results that you're seeing out of the new products, I know you mentioned the I-9 virtual that has been driving some strength there, but just wondering if you can talk about a few more products that kind of drove that 16% Vitality Index this quarter, and you're raising your guidance from 12% to 13%?

Yes, it's a bunch. It really starts with we laid the groundwork 3, 4 years ago to invest in more product resources and really build out our product DNA. That was our goal. And as you may remember, we increased our kind of long-term goal for Vitality from kind of 5%, 6%, 7% to 10%, 4 years ago, and we've been outperforming that for the last number of years. And now that we're in, what I would call a post-Cloud transformation environment with most of our Cloud completion complete, the bandwidth has really opened up for our team. So I think that starts with why are we outperforming our 10% goal so strongly is because we have the capabilities now with the Cloud. We have the bandwidth to focus on customers and innovation, and we've built the DNA to really focus on it. So other products, we talked a bunch about the TWN indicator. We're energized about that for mortgage. That's in production now. We've got customers that are using it. We've got mortgage resellers that are delivering it to their customers. So that's a positive for us that we think is going to be a very positive NPI for us, not only in mortgage, but in auto cards and P loans as we continue to roll that out. I-9 virtual is an attractive solution. We've got some new identity scores, really leveraging our account data and our Equifax data that are higher performing that we're seeing some positives in. We talked about some of the new solutions that we're just bringing to market to enhance our Ignite analytics engine through the use of AI capabilities that we think will drive adoption of that. So we're quite bullish around our innovation capabilities. And remember, that's one of the reasons we invested so heavily in the cloud as well as invested to put all our data into a single data fabric was really to drive innovation for our customers. And then adding to that, our AI capabilities is really driving performance, meaning just higher KS scores, higher predictability of our scores, models and products. We're seeing that flow through, and that's showing up in that higher Vitality Index. And that momentum is obviously positive for 2026 to have that kind of sequentially growing Vitality Index means we have more products in our commercial team's brief case to go out and bring to our customers to really drive innovation and share gains and revenue growth for Equifax.

Next question is coming from Ryan Griffin from BMO Capital Markets.

I know it's late, so I'll just ask one. Just wanted to dig into the pricing strategy in the non-mortgage verticals, whether on the credit file itself or some of the other package fees. Do you think there's room to move that higher over time?

Yes. And we have a constant strategy to price for value. In all of our verticals, we typically take price up on January 1st, and we see the opportunity to do that. I think that's in our long-term framework for a couple of points of price over the long term. And the value of our differentiated data gives us the ability to do those kind of, you call them modest, but price increases that we expect to continue in 2026 and beyond.

Next question is coming from George Tong from Goldman Sachs.

Your pricing Vantage mortgage priced at $4.50 a score. That compares to TransUnion pricing at $4 a score and Experian offering VantageScore for free. How do you expect Vantage mortgage market shares among the bureaus to shake out with each credit bureau pricing VantageScore differently?

I think, George, you should check -- and again, I'm not Experian, but you should check Experian's press release or call Experian. My understanding is they're not offering the VantageScore for free. I believe they're offering it. If I read the press release correctly, at 50% below the FICO price, which would make it $5. But look, there's competition between the 3 of us. As you know, there's still a -- and we expect that to continue to be -- there's still a 3B credit file requirement by the FHFA and the agencies. So each of us will compete around what kind of score we offer, and you see some differentiation between the 3 of us. But I'll speak for Equifax, at our $4.50, we think is a substantial discount to the $10 that FICO has put into the marketplace. And we talked in our comments as well as in the Q&A that we've seen really strong response from the mortgage industry, meaning our customers around that proactive pricing to deliver value to them. And we would expect to see and we're already seeing some conversions from FICO to Vantage, which is good for Equifax. When we sell a FICO score in 2026. It's going to cost us $10. When we sell a VantageScore, we're going to make $4.50. But when we sell a VantageScore versus FICO, the industry is going to say $5.50.

Okay. Got it. And I believe Experian strategy is they're offering it for free, but if they choose to monetize it, then they'll charge 50% below FICO going forward.

I would talk to them. I don't think that's the case, but I'm not Experian.

Okay. Great. Secondly, you're launching various Equifax.AI solutions, including the Ignite AI Advisor. How are you planning to monetize your AI products? And how does that monetization compare to the cost to deploy AI.

Yes. So the cost is in our COGS. We've been, as you know, doing -- investing in AI for longer than I've been here. We've got over 300 explainable AI patents. We added, I think, 16 AI patents in the first half of this year. We're continuing to develop and build out our capabilities. So that's in our core COGS. And now we're really focused on deploying those capabilities in a post-Cloud environment, and it takes different forms. In a score or a model that we're delivering, the AI-powered solutions are delivering much higher predictability. And that means ROI for our customers, meaning a higher score performance. So we're seeing big 10-point lifts in the identity or underwriting scores from using our AI capabilities. And as you know, what's underneath that is you have to have differentiated data. And as you know, and we believe we've got more differentiated data than our peers, and that allows us to deliver those AI solutions. We talked on the call earlier about some of the AI capabilities we're adding to our Ignite analytics engine to make it easier to use and easier to deploy. That's one that we would look for more adoption of that platform, which generally means that, that customer, if they're using our analytics platform, they're generally going to have us in a primary position. So it drives share gains if we can have a more higher-performing solution. So that's why we're investing there. So we're quite energized around our post-Cloud capabilities of our differentiated data using AI for our customers. And then you'll also hear us talk more and more going forward around how we're using AI inside of Equifax to drive productivity and cost savings.

Next question is coming from Simon Clinch from Rothschild & Co Redburn.

I was curious on the government side, Mark, perhaps you could talk to us about the funding side of that discussion that you're having with the states here, because clearly, if they were to expand their business with the TWN in an effort to improve the quality or even reduce error rates and SNAP. To me it seems like they will have to increase the pace to find the funding elsewhere. Is that covered by the OB3?

It's not. It is in some cases, but generally, it's not. And the states really have to look at it is, number one, we deliver productivity. If you've got a case worker that's spending 45 minutes, 1 hour, 1.5 hours on an adjudication of someone's income eligibility for one of the social service benefits and then they can do it instantly with Equifax. That obviously delivers pure cost productivity. As you point out, they have to find budget dollars, which is always the complexity of operating really with any customer. You have to deliver ROI. But in the case of government, maybe more complex because they have to deliver the budget dollars. What changed in OB3, though, is some of the requirements that are really mandatory from the federal government to drive a higher compliance with the integrity side of social service delivery to really attack the $160 billion. And that includes like the SNAP error rates that we talked about. So a state that has SNAP error rates that are above the 6% threshold is either going to have to start paying for more of the SNAP benefits, which is billions of dollars, and we highlighted $12 billion for the states that are over or they're going to use budget dollars to use a solution like Equifax' in order to drive higher integrity and bring those error rates down. And those are the conversations that we see real momentum in post-OB3, states realizing that they've got to enhance their investment in order to have a higher accuracy in the income validation of a recipient. And that's the conversations that we're seeing, and we expect that to be a positive for the states. They're going to be able to avoid paying a larger portion of the social service benefits and then a positive for Equifax, as we expect our Workforce Solutions Government vertical to have some incremental growth going forward. And then we also talked about some of the new programs like today, the IRS doesn't use our data for the earned income tax credit. We think that's a big opportunity for them, and there's just other opportunities like that with this administration's focus on the $160 billion of improper payments.

Yes, okay. That's really helpful. Just a follow-up question. On the mortgage market, could you give us a sense of how to think about the impact that trigger leads have on inquiry volumes broadly? And how to think about the introduction of that new legislation coming in March?

It's relatively small, right? Certainly in our volume.

For Equifax. Yes.

Yes. For Equifax, it's relatively small. You need to talk to obviously our competitors about their volumes. But for us, it's relatively small. So yes, there could be an impact. There could be a shift perhaps away from prequal and pre-approval back toward hard inquiry type of transactions, but we'll have to see as the market progresses.

Thank you. We reached the end of our question-and-answer session. I'd like to turn the floor back over for your further or closing comments.

This is Trevor. Thank everybody for joining the call. Please feel free to reach out to Molly or myself if you have any follow-up questions. Otherwise, have a great day.

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