EFX — Q3 2026 Financial Report Analysis

Revenue up 10%, but mortgage growth fell by about half during the quarter and the full-year forecast was cut

Equifax is one of the three big U.S. credit bureaus and also owns The Work Number, a payroll database used to check people's jobs and incomes. Third-quarter 2026 revenue rose 9.6% to $1,692.5 million. Net income attributable to Equifax rose 32% to $211.7 million, and diluted EPS (earnings per share) rose 39% to $1.79. Those GAAP growth rates look strong mainly because a year ago Equifax took a $43.9 million severance charge that did not recur. The more important news is in the forecast. U.S. mortgage revenue growth slowed to 15% from 25% in Q2. Management says the mortgage market weakened "in the latter half of the third quarter as mortgage interest rates increased substantially". As a result, it cut its full-year revenue guidance by $84 million at the midpoint.

Key metrics

Operating margin is operating income as a share of revenue: what is left from each dollar of sales after running the business, before interest and tax. Adjusted EPS, adjusted EBITDA margin and the mortgage and diversified-markets growth rates come from the October 20 earnings release (8-K Exhibit 99.1), not the 10-Q.

Year to date (nine months): revenue $5,041.5M (+11%), operating income $957.2M (+18%), operating margin 19.0% (vs. 17.9%), net income attributable to Equifax $567.1M (+17%), diluted EPS $4.75 (+22%).

Segments

Workforce Solutions (The Work Number). Verification Services revenue rose 9% to $603.2 million. The 10-Q credits growth in "diversified markets, primarily in the talent solutions, consumer lending and government verticals". It says mortgage verification "was flat" in the quarter, after rising 8% in Q2 according to that quarter's release. The release puts talent solutions (pre-hire employment checks) growth at over 20% and government at mid-single digits. Employer Services (outsourced HR work such as I-9 checks and tax-credit filings) fell 5% to $90.7 million. The 10-Q puts this "primarily" down to lower Work Opportunity Tax Credit revenue. The margin edged up to 44.1%, although revenue-share payments to the employers and payroll firms that supply the data, and cloud software amortization, both rose.

USIS (the credit bureau). Online Information Solutions revenue rose 13% to $529.7 million. The 10-Q says this was driven by "mortgage related services, primarily due to product pricing, as well as growth in diversified markets". The release says USIS mortgage revenue rose 28% (40% in Q2) and USIS diversified markets rose 6%, led by banks and auto lenders. Financial Marketing Services (batch credit data used for marketing campaigns) rose 11% to $69.4 million. The margin rose 1.1 points to 24.3%, even though, per the 10-Q, "an increase in mortgage-related royalty costs" partly offset the revenue gain.

International. Revenue rose 9% reported and 7% in local currency, meaning before exchange-rate effects. A weaker dollar added $9.1 million. Asia Pacific grew 20% reported but 12% in local currency, on commercial and identity/fraud products in Australia and on India. Latin America grew 8% in local currency, led by Brazil, Chile and Paraguay. Europe grew 4% and Canada 4%. The margin was flat at 15.8%; the 10-Q says higher people and purchased-data costs absorbed the revenue gain.

What the headline numbers hide

• The 39% GAAP EPS jump is mostly last year's severance charge dropping out. In Q3 2025 Equifax recorded $43.9 million of restructuring charges ($32.8 million after tax), "predominantly" for headcount cuts, according to the release. Add that back and Q3 2025 operating income would have been about $308.2 million, an operating margin of about 20.0%. On that basis this year's operating income grew about 15% and the margin improved about 1 point. That is a real improvement, but not a 3.9-point one. The same adjustment makes the year-ago EPS about $1.56, so underlying GAAP EPS growth was roughly 15%, not 39%.
• The GAAP-to-adjusted gap is $0.47 a share, and most of it recurs. Adjusted EPS of $2.26 excludes $59.9 million of amortization of acquired intangibles, which is a non-cash charge every quarter for the value of customer lists and data bought in past deals. It also excludes $8.9 million of acquisition integration costs and $0.8 million of antitrust-litigation costs related to The Work Number. Nothing in the quarter was a one-off charge.
• Buybacks did about half the work in adjusted EPS. Adjusted net income rose only 6% ($252.9 million to $267.4 million). Adjusted EPS rose 11% because the diluted share count fell 4.8%, from 124.1 million to 118.1 million. A higher tax rate (28.1% vs. 25.0%, because 2025 had "more favorable discrete benefits") and 19% higher interest expense held back growth below the operating line.
• Costs to deliver the product are growing faster than revenue. Cost of services rose 13%, against 10% revenue growth, and reached 44.5% of revenue from 42.9%. The 10-Q attributes the rise "primarily" to "higher royalty and revenue share costs". The margin gain came from lower overhead, not from cheaper delivery.
• Cash conversion is fine in the quarter but flat for the year. Q3 operating cash flow was $560.4 million, against $559.9 million a year earlier and well above net income, as usual for a business with heavy depreciation. For nine months, operating cash flow was $1,142.1 million, slightly below last year's $1,144.9 million, even though net income rose 17%. The 10-Q blames "changes in our working capital position". Part of that is a $60.0 million insurance receivable for the legal settlement booked in Q2. Trade receivables rose 9% since December, below the 11% year-to-date revenue growth, so receivables don't look like a problem.
• Debt was refinanced at higher rates. In July Equifax issued $500 million of 5.00% notes due 2029 and $500 million of 5.65% notes due 2033. It used the money to repay commercial paper (short-term IOUs), which fell to $149.0 million from about $1.4 billion at the end of Q2 and was costing 4.08–4.18% at quarter-end. Total debt fell to $5,206.7 million from $5,467.1 million in June. The average cost of debt rose to 4.6% from 4.3%, so interest costs should keep rising.

Did last time's read hold up?

Our Q2 report flagged three things to watch: whether USIS margins could rise while mortgage royalties kept climbing; when government contract wins would show up in Workforce Solutions; and whether the pace of buybacks would hold ahead of the Círculo de Crédito purchase. USIS margins did rise, by 1.1 points to 24.3%, although royalty costs went up again. Government grew mid-single digits, which management calls "accelerating sequential" growth, but the ~$300 million of first-half contract signings are still mainly a 2027 story. Buybacks slowed sharply before the deal had even closed: $92.0 million in Q3, against $300.0 million in Q2. That let debt fall. Results also met July's Q3 guidance. Revenue of $1.6925 billion was inside the $1.680–1.710 billion range, and adjusted EPS of $2.26 was a cent above its top end.

Mortgage: the cycle is catching up with the pricing story

In Q2, mortgage revenue grew 25% while the market was expected to be roughly flat, which meant price increases were doing most of the work. That is still true at the credit bureau, where USIS mortgage revenue grew 28% and the 10-Q again cites "product pricing". But price only multiplies volume, and volume is now falling. The Work Number's mortgage revenue, which depends more on loan applications, was flat. The 10-Q's planning language also hardened. In Q2 it expected 2026 mortgage originations to be "slightly below" 2025; now it says simply "below the levels of activity seen in 2025". Neither filing gives a mortgage credit-inquiry count for the quarter, so the size of the volume decline can't be measured from these documents. The guidance cut, all of which management attributes to "U.S. Mortgage related revenue", shows its direction.

Cash returns and the Mexico deal

Equifax returned $158 million in Q3: $92 million of buybacks (532,391 shares) and $66 million of dividends at $0.56 a share (up from $0.50). Free cash flow, here operating cash flow minus capital spending, was about $433 million in the quarter. So shareholder returns were well covered this time, unlike in the first half, when they ran at more than twice free cash flow. About $1.4 billion remains under the $3 billion buyback authorization. Círculo de Crédito, a Mexican credit bureau agreed in July for an enterprise value of $750 million ($825 million purchase price less about $75 million of expected cash), is still expected to close in Q4.

Takeaway: This was a decent quarter that the forecast overshadows. Growth outside mortgage (8%) and lower overhead carried Q3, and the 39% GAAP EPS jump is mostly last year's $43.9 million severance charge dropping out. The bigger signal is that U.S. mortgage growth fell from 25% to 15% within one quarter, and the new guidance implies only 3.5–5.4% revenue growth in Q4. Equifax's double-digit growth rate depends more on mortgage volumes than the "pricing" story suggested.

Outlook

Management kept its "high single-digit" growth guidance for diversified markets. It expects the weaker mortgage market "to continue through the remainder of 2026". It says cost control, including AI-driven efficiencies toward its $150 million productivity target, "should allow us to principally recover the gross margin impact from lower Mortgage revenue".

Our read: Taking $84 million off revenue while cutting adjusted EPS only 4 cents means management is relying on cost cuts in Q4, at a time when royalty costs are still rising faster than revenue. That is believable for one quarter, because overhead already fell in Q3. It is harder to repeat if mortgage volumes stay weak into 2027. Watch three things in Q4: whether the USIS mortgage price increases still hold up as volumes fall; whether Work Number mortgage revenue turns negative; and how much the Círculo de Crédito purchase adds to debt, which would leave less room for buybacks. Growth outside mortgage (talent solutions above 20%, consumer lending, government) is the part of the business that does not depend on interest rates. It now has to carry more of the growth.

Source: Equifax Form 10-Q for the quarter ended September 30, 2026 (filed October 20, 2026). Adjusted EPS, adjusted EBITDA margin, mortgage and diversified-markets growth rates, the Q3 2025 restructuring charge detail and guidance are from Equifax's Q3 2026 earnings release (Form 8-K, Exhibit 99.1, October 20, 2026). Previous guidance is from the July 21, 2026 release, as reported in our Q2 2026 analysis.