Equifax: AI, Mexico, and a $300M Government Splash — But Mortgage Rates Still Hold the Key
Second-quarter beat and margin expansion overshadowed by a new M&A bet and the ongoing FICO/VantageScore shuffle.
EFX · Earnings Call · 2026-07-21
AI and Government Fuel a Margin Beat
Equifax delivered a strong second quarter: revenue of $1.7 billion (up 11% reported, 10% constant currency), EPS of $2.25 (up 13%), and EBITDA margin excluding FICO up 120 basis points year-over-year to nearly 35%. The company beat its own April guidance by $5 million on revenue and $0.05 on EPS. Management credited operating leverage and a rapid ramp in AI for EFX. “We know we are in the very early innings of our deployment of AI and agentic automation inside Equifax, both in enabling new products based on our proprietary data and driving speed, accuracy, and productivity across every corner of Equifax.” — Mark Begor, Chief Executive Officer · 2026-07-21 The AI savings target was doubled from $75 million to $150 million over 2026–2028. John Gamble explained the pace:
We feel like we're progressing very rapidly, I think specifically because of the fact that we have a very modern cloud-based infrastructure to start with.
The fundamentals confirm the momentum: Total Revenue is up 14% year-over-year, and Operating Margin rose to 17.4%, up 1.1 points.
Government was a star, with ~$300 million in annual contract value signed over the last four months, including $100 million of new business—mostly landing in 2027. “This is a strong indicator of the unique benefit our proprietary TWN data provides to government customers and the long runway for government against their $5 billion TAM.” — Mark Begor, Chief Executive Officer · 2026-07-21
Círculo de Crédito: The Bold Bet on Mexico
Two weeks before the call, Equifax signed a definitive agreement to acquire Círculo de Crédito, the fastest-growing credit bureau in Mexico, for $750 million (9.4x EBITDA including synergies). The deal adds 2 billion trade lines and 80 million validated identities, plus a leadership position in alternative data. Mark Begor: “We were energized to sign a definitive agreement two weeks ago to acquire Círculo de Crédito, the fastest growing credit bureau in Mexico, for an enterprise value of $750 million with a very attractive EBITDA multiple of 9.4x, including run rate synergies.” — Mark Begor, Chief Executive Officer · 2026-07-21 This is a fresh strategic chapter—Círculo de Crédito appears as a top keyword for the first time, a pivot from earlier quarters centered on domestic cloud migration. The acquisition fits the company's bolt-on M&A mantra and is expected to be accretive in year one.
VantageScore and the Mortgage Crosscurrent
Mortgage remains the swing factor. USIS mortgage revenue grew 40% reported (mid-single digits ex-FICO), but industry volumes were weaker than expected as rates rose. The company continues to push VantageScore adoption: ~1,200 lenders now pull a free VantageScore alongside FICO, and ~100 have moved exclusively to Vantage. Mark Begor dismissed FICO's alternative success-fee pricing: “The idea of charging that consumer $66 for a credit score, which is what FICO's proposing with their closed loan pricing, versus $1 with a VantageScore or $10 with today's FICO score pricing, just doesn't make a lot of sense.” — Mark Begor, Chief Executive Officer · 2026-07-21 This echoes prior quarters— “There's been a groundswell of attention, obviously, to the huge FICO price increase, doubling to $10 in 2026.” — Mark Begor, Chief Executive Officer · 2025-10-21 And from April, the company's optimism on government persisted: “We remain very bullish about our government vertical, given the big TAM and also OB3.” — Mark Begor, Chief Executive Officer · 2026-04-21 The impact of FICO remains a headwind to reported revenue growth, but the company frames margin expansion ex-FICO as the true driver—with the stock up only 8% in the last 90 days and still 37% below its 2024 peak, the market is waiting for the next act.