Equifax FY2026 Q3 Earnings: $1.79 EPS Jumps 39% as AI Savings Offset a Mortgage-Driven Guide Cut

Equifax earned $1.79 per diluted share in the third quarter of 2026, up 39% from a year ago, on revenue of $1,692.5 million that grew a reported 10% — and then management cut full-year revenue guidance by $84 million at the midpoint because the U.S. mortgage market weakened sharply in the back half of the quarter. The punchline is what did not get cut: adjusted EPS guidance fell only $0.04, to $8.50, because AI-driven cost efficiencies are, in the company's words, covering "principally" the entire gross-margin impact of the lost mortgage revenue. This is a quarter where the cost structure, not the top line, is the story.

The Headline Numbers​

Every figure below comes from the Form 10-Q and the earnings release filed October 20, 2026.

Read the table from the bottom up and the quarter's mechanics show. Operating income grew 34% on 10% revenue growth — a 3.9-point margin expansion — but adjusted EBITDA margin expanded only 0.4 points. The gap between those two margin stories is almost entirely one line: selling, general and administrative expenses fell $43.7 million, or 10%, because the year-ago quarter carried $43.9 million of realignment charges that did not repeat. Strip that out and underlying SG&A was roughly flat while cost of services grew 13.5%, faster than revenue. Below operating income, two offsets: interest expense rose 19% on the refinanced debt stack, and the effective tax rate climbed to 28.1% from 25.0%. Net income still grew 32% because the operating leverage overwhelmed both. And the extra kick from net income (+32%) to EPS (+39%) is the buyback: diluted shares fell 4.8% to 118.1 million.

Through nine months the picture is consistent: revenue of $5,041.5 million is up 11.4%, net income attributable to Equifax of $567.1 million is up 17.1%, and operating cash flow of $1,142.1 million is essentially flat with last year's $1,144.9 million. Capital expenditures rose to $378.9 million, so implied free cash flow (operating cash less capex, the company's definition) slipped about 4% to $763.2 million — the Cloud and AI build still consuming cash even as earnings accelerate.

Revenue Deep Dive​

Workforce Solutions (+7%) is the profits engine — a 44.1% operating margin on $693.9 million of revenue — and its mix keeps improving. Verification Services grew 9%, and management's vertical detail is unusually specific: Diversified Markets verification revenue up 13%, "led by strong over 20% growth in Talent Solutions, strong high double-digit growth in Consumer Lending and accelerating sequential mid single-digit growth in Government." Mortgage verification revenue was "about flat," which in a quarter where management says the mortgage market weakened substantially in the back half reads as share or price holding volume losses at bay. Employer Services fell 5%, continuing its slow bleed as pandemic-era programs roll off.

U.S. Information Solutions (+13%) posted the fastest growth of the three segments, and the composition is the surprise of the quarter. USIS Mortgage revenue was "up a strong 28% despite the weaker mortgage market," while Diversified Markets grew 6% "led by Financial Institutions and Auto." A 28% mortgage print against a deteriorating market means pricing, volume share gains, or both are doing heavy lifting — balanced against the obvious risk that the market's second-half slide shows up in this line with a lag.

International (+9% reported, +7% local currency) was broad: Asia Pacific +20% reported (+12% local currency) with "low double-digit revenue growth in Australia," Latin America +12% (+8% local, "high single-digit growth in Latin America"), Europe +3% (+4% local) and Canada +2% (+4% local). Management also expects the Círculo de Crédito acquisition to close in the fourth quarter, adding a Mexican-bureau foothold to the Latin American business.

Two release themes deserve quoting verbatim because they recur every quarter and discipline the bull case. On innovation: "New Product Innovation leveraging the EFX Cloud, EFX.AI, and proprietary data delivered record over 17% new product Vitality Index," above the 10% long-term goal. On demand breadth: "Diversified Markets revenue growth of 8% was broad based across all business units." What the release does not say matters too: there is no "demand exceeds supply" language, no industry-upcycle claim, and no mention of pricing power anywhere — growth here is framed as product and share, not price.

The Margin Story​

The margin story is a tale of two lines moving in opposite directions. Cost of services grew 13.5%, outpacing revenue and compressing the revenue-less-cost spread by 1.6 points — the Cloud, data and AI inputs getting more expensive, or mix shifting toward costlier verification volume. Everything below that line went the other way: SG&A down 10% on the lapped realignment charge, depreciation and amortization up only 6% even as the capitalized-software base keeps growing. The net is the 21.0% operating margin, the best quarterly print in the ledger's history and nearly 4 points above last year — but roughly 2.8 points of that expansion is the non-repeating realignment charge, not run-rate leverage.

That distinction is what makes the guidance math the quarter's defining issue, and it belongs to the next section. For the margin record, note the segment margins too: Workforce Solutions operating margin 44.1% (from 43.8%), USIS 24.3% (from 23.2%), International flat at 15.8% with adjusted EBITDA margin slipping to 30.9% from 31.3% — the one margin in the release moving the wrong way.

The One Big Question: Can AI Savings Fund the Mortgage Shortfall?​

Here is the guidance revision in full. In July, Equifax guided full-year 2026 revenue of $6.710–$6.780 billion and adjusted EPS of $8.39–$8.69. In October, revenue became $6.646–$6.676 billion (midpoint $6.661 billion, down $84 million) and adjusted EPS became $8.45–$8.55 (midpoint $8.50, down $0.04). Management "maintain[ed] Diversified Markets revenue guidance for revenue growth of high single-digit percent" and attributed the entire revenue cut to "this reduction in our U.S. Mortgage related revenue."

Do the arithmetic on what that implies. Losing $84 million of revenue — mortgage revenue, which carries the company's highest incremental margins — while losing only $0.04 of EPS (about $4.7 million of adjusted net income at 118 million shares) means the company is offsetting nearly all of the lost gross profit with cost savings, and doing it inside one quarter. The release names the mechanism twice: "continuing to drive strong AI-driven operating cost efficiencies and optimizations, which should allow us to principally recover the gross margin impact from lower Mortgage revenue," and "expand AI deployment inside EFX to deliver against our $150 million AI productivity goal."

The bridge itself is clean — the $59.9 million acquisition-amortization add-back is the only large item, the 2017 breach accrual is down to $0.2 million, and last year's $43.9 million realignment add-back is gone, which is precisely why GAAP earnings (+32%) outgrew adjusted earnings (+11%) this quarter. The question is not whether Q3 was real; it is whether the $150 million AI productivity program is structural savings or a one-time harvest of low-hanging automation. If structural, Equifax has built a cost offset that converts every future mortgage recovery dollar into nearly pure margin. If one-time, the company just spent its cushion covering a cyclical hole, and a second weak mortgage year has no offset left. The fourth-quarter guide — revenue $1.605–$1.635 billion (+3.5–5.4%) with adjusted EPS of $2.07–$2.17 — implies the offset holding for one more quarter; FY2027 commentary on the AI program's next tranche is the number to watch.

Tracking a $6.7 Billion Company in Plain Text​

A credit bureau is an ideal company to model in Beancount, because double-entry forces every revenue dollar to reconcile against the balance sheet that produced it — and Equifax's balance sheet is dominated by exactly the intangibles a data business runs on. Our how we model every company guide describes the conventions; every figure below is the filed caption from the Form 10-Q.

; FY2026Q3 Income Statement — fiscal quarter ended September 30, 2026
; Check: −1,692.5 + 752.4 + 390.4 + 194.4 + 62.3 − 3.8 + 83.4 + 1.7 + 211.7 = 0 ✓
 
2026-09-30 * "Equifax Inc." "FY2026Q3 Income Statement"
  Income:Revenue                              -1692.5 MUSD  ; operating revenue
  Expenses:CostOfRevenue                        752.4 MUSD  ; cost of services (exclusive of depreciation and amortization below)
  Expenses:SellingGeneralAdministrative         390.4 MUSD  ; selling, general and administrative expenses
  Expenses:DepreciationAndAmortization          194.4 MUSD  ; depreciation and amortization
  Expenses:Interest                              62.3 MUSD  ; interest expense
  Income:OtherNet                                -3.8 MUSD  ; other income, net of 3.8 — a credit, so Income:OtherNet
  Expenses:IncomeTax                             83.4 MUSD  ; provision for income taxes
  Expenses:OtherNet                               1.7 MUSD  ; less: net income attributable to noncontrolling interests
  Equity:Adjustments                            211.7 MUSD  ; net income offset — net income attributable to Equifax 211.7 (RE set by balance assertion)

Income is negative (credit) and expenses positive (debit); the transaction sums to zero with the $211.7 million attributable net income as the offset. The one balance-sheet number that tells the narrative is treasury stock: $4,229.1 million at cost, up from $2,644.9 million at the end of 2024 — $652 million of repurchases in nine months, the mechanism behind the 4.8% share-count decline juicing EPS. The matching story on the other side is the debt term-out: short-term debt fell from $1,038.0 million to $157.7 million while long-term debt rose from $4,055.3 million to $5,049.0 million on $998.1 million of new issuance — maturities pushed out, at a higher coupon, visible in the 19% rise in interest expense.

The Multi-Year Arc​

Five years, two stories. Revenue compounded 5.4% annually while net income went backward — $744.2 million to $660.3 million — because operating margin compressed five points as the mortgage boom faded and the Cloud build loaded the cost base. That capitalized-software row is the EFX Cloud investment program in one line: $1.37 billion of gross software added in four years, the asset base behind both the Vitality Index product engine and the AI productivity program now harvesting savings from it. The trough looks passed: 2023 was the earnings bottom ($545.3 million), margins stabilized around 18%, and the 2025–2026 buyback — treasury stock up $1.6 billion in 21 months — signals management believes the earnings power exceeds the current quote. Q3's 21.0% operating margin tops every annual print since 2021; whether it is the realignment lap or the new run rate is the whole debate.

The Verdict: Bull vs. Bear​

Bull Case

• Diversified Markets growing 8% broad-based across all units de-risks the mortgage cycle: the guide cut was mortgage-only, and the rest of the business held its high-single-digit outlook.
• A record 17%+ Vitality Index, 7 points above the long-term goal, means nearly a fifth of revenue comes from new EFX.AI and Cloud products — product-led growth, not price extraction.
• The $150 million AI productivity program demonstrably works: nearly all of the lost mortgage gross profit was offset inside one quarter, and any mortgage recovery now falls onto a structurally leaner base.
• Capital returns are accelerating with conviction: $652 million of buybacks in nine months plus a raised $0.56 quarterly dividend, funded by $1.14 billion of operating cash flow.
• USIS Mortgage +28% against a deteriorating market suggests genuine share gains that compound when volumes normalize.

Bear Case

• Cost of services growing 13.5% — faster than revenue — says the core data-and-verification engine is getting more expensive to run; the "broad-based" demand language has no pricing-power claim behind it, so this looks like cost absorption, not investment.
• 2.8 of the 3.9 points of operating-margin expansion is a lapped realignment charge; the underlying margin run rate barely moved, and International EBITDA margin actually slipped.
• The $84 million revenue cut with a $0.04 EPS trim spends the AI cushion on a cyclical hole — if mortgage stays weak into 2027, there is no second $150 million program disclosed to offset with.
• Interest expense up 19% and rising: the $998 million debt term-out pushed maturities but at higher coupons, a permanent P&L tax on the leveraged balance sheet.
• The 28% USIS Mortgage print against a weak market is more likely timing and mix than share; mortgage revenue that outperforms a down market by 40 points can revert just as fast.

Our Take: Buy the cost transformation, underwrite zero mortgage recovery. Equifax just proved — with filed numbers, not promises — that its AI program can absorb a mortgage downturn nearly dollar for dollar, and the 17% Vitality Index plus 20%+ Talent Solutions growth say the product engine is real. At a 21% operating margin with Diversified Markets compounding at high single digits, the business works even if mortgage stays weak; any normalization is free upside. The risk is that the savings are one-time, so the position sizes on FY2027 commentary about the next AI tranche — but the burden of proof has shifted to the bears.