Equifax’s latest results showed momentum in its non-mortgage businesses, including verification for consumer lending and the government sector.
[contact-form-7]Although results came in above expectations, the uncertainty of tariffs — and their impact on interest rates and hiring — have tempered top-line expectations. The company is leaving its local currency revenue expectations in place due to “uncertainties in the economy,” while foreign exchange trends should bump revenues up by $35 million.
Shares dipped 6% at the start of trading on Tuesday (July 22).
The company’s second-quarter earnings data indicated that the period’s revenue stood at $1.5 billion, $27 million above the midpoint of previous guidance, and tied to 14% gains in U.S. mortgage revenues.
Mortgage inquiries were down by 8% in the most recent quarter. Management noted on the conference call with analysts that mortgage rates remain elevated, and second-half inquiries are expected to be down around 13%.
Looking ahead, and through fiscal year 2025, Workforce Solutions revenues are projected to be up 5%, US Information Systems (USIS) revenues are slated to grow 7%, where those rates had been 8% and 9% in the second quarter, respectively.
During the conference call with analysts, CEO Mark Begor said that the solutions segment had marked “stronger performance in government and consumer lending,” as those segments had been up double-digit percentage points, and non-mortgage growth had been “solid.”
“Mortgage revenue was up 20% in the quarter, reflecting expected benefits from annual price increases principally related to credit scores and stronger-than-expected growth in pre-approval products,” he said.
Within the Workforce group, Verifier revenue growth was 10%. Active records were up 10% over last year’s levels.
Uncertainties and Tariffs“Given the uncertainties in the economy, inflation and tariffs, we’re holding our full year constant currency framework from April even with the strong first half performance,” Begor said.
“Hiring and particularly white collar hiring continued to be relatively weak in the second quarter with overall BLS data up only slightly in April and May compared to last year,” he continued. “We have seen hiring transactions slow over the past month from economic uncertainty, impacting both talent solutions and our employer onboarding businesses.”
The government business has been positive as “states implement stronger verification requirements aligned with these new government requirements. This includes our new workforce solutions integrated complete income solution that will support state’s ability to validate income through the work number and validate other sources of income such as gig work, [and] self employed wages,” he said.
New solutions predicated on consumer-permissioned bank transaction data will be launched in the third quarter, Begor added.
Stable Lending EnvironmentB2B non-mortgage revenue grew about 4% in the quarter “as we continue to see a stable lending environment, although continuing at the levels below longer term norms,” Begor told analysts. “We saw high single-digit growth in auto and low single-digit revenue growth in FI (financial institutions)” segments as “all other B2B verticals in aggregate were up low-single digits.
“Financial Marketing Services, our B2B offline business, was up 6% in the quarter, and we saw broad-based growth across all offline segments with strong double-digit revenue growth in pre-screened marketing,” said the executive. “We have not seen an increase in portfolio review spending that would be indicative of increased risk management activity in a weaker economic environment.”
Elevated Mortgage RatesCFO John Gamble said on the call that mortgage headwinds are in place as “30-year mortgage rates remained consistently above 6.7% during the quarter, housing prices remain high 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.”
Looking at the broader picture, the CFO said: “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.”
Later during the call, Gamble said: “Second-half 2025 employer revenue should be down slightly year to year. EWS (Equifax Workforce Solutions) mortgage revenue — based on the slower run rates we have seen over the last several weeks and consistent with the market expectation for USIS hard credit inquiries — should show limited growth in second half at a much slower pace than the about-6% we saw in the first half.”
Over the long term, there’s potential for the mortgage business to reaccelerate once refinancing activity picks up, particularly when combining traditional and alternative data sources.
Begor said: “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 just as a reminder and as I said earlier on the call, our intention is to offer that Twin Indicator as a differentiator for our mortgage credit file in order to drive more value.”
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