Equifax reported third-quarter revenue of $1.69 billion, up 10%. A lead financial expert at Timberline Associates said the stock jumped because the damage looked smaller than feared. Adjusted earnings per share reached $2.26, above a consensus of $2.20.
Shares gained about 10.7% even though management lowered its full-year revenue outlook. Mortgage weakness drove the cut. The size of the cut, not its direction, moved the stock.
A Small Cut and a Large Relief
The full-year revenue midpoint fell to $6.661 billion from about $6.75 billion. That is a reduction of roughly 1.3%. The earnings midpoint fell by only $0.04 to $8.50, or about 0.5%.
Investors had braced for a larger reset after mortgage volumes weakened. A trim of this size reads as contained. The market paid for that certainty.
Reading the Beat
Adjusted earnings per share beat the consensus by 2.7%. Last year’s figure works out near $2.04, so growth was 11%. Revenue grew 10% reported and 9% in local currency.
Reported earnings per share were $1.79, up 39%. The gap to the adjusted figure is $0.47, or 21% of the adjusted number. Adjusted figures exclude items such as acquisition-related costs.
One Segment Does Half the Work
Workforce Solutions earned $693.9 million, 41% of revenue. Its adjusted EBITDA margin was 51.4%, producing about $357 million in segment profit. That is roughly 52% of profit across all three segments.
Verification Services makes up 87% of the unit and grew 9%. Employer Services fell 5%. The verification business, which confirms income and employment for lenders, is the engine.
Mortgage Is the Swing Factor
American mortgage revenue rose 15% overall. Within credit information, mortgage revenue jumped 28%. Within Workforce Solutions, it was roughly flat.
Management said the mortgage market weakened sharply in the second half of the quarter as rates rose. That 28% growth therefore flattens the average. The late-quarter slowdown explains the cut.
Credit Information Takes the Lead
The credit information unit earned $599.1 million, up 13%. Last year’s figure was near $530 million. The unit added about $69 million.
That equals roughly 45% of the group’s dollar growth from 35% of revenue. Its EBITDA margin was 35.4%. It is the fastest-growing large unit in the company.
Where the Profit Sits
Adding segment EBITDA gives about $692 million. Workforce Solutions supplies roughly 52% of it. Credit Information supplies about 31%, and International about 18%.
Group adjusted EBITDA was near $560 million at a 33.1% margin. The $132 million difference reflects corporate-level costs. That equals about 19% of segment profit.
Margin Progress
Last year’s adjusted EBITDA works out near $503 million at a 32.7% margin. This year’s $560 million is a gain of about 11%. Profit grew slightly faster than the 10% rise in revenue.
Adjusted EBITDA excludes interest, taxes, depreciation, and amortization, plus some other items. A rising margin shows that cost control is working well.
What the Year Implies
The full-year revenue midpoint of $6.661 billion less the fourth-quarter midpoint leaves about $5.04 billion for nine months. That averages near $1.68 billion a quarter. The fourth quarter at $1.62 billion runs about 3.6% below that average.
The company expects to close the year below its recent average. Management ties the lower outlook to mortgage weakness. A drop in mortgage rates would help reverse it.
International Margins Slip
International revenue was $399.5 million, up 9%. Latin America grew 12%, and Asia Pacific grew 20%. Europe grew 3%, and Canada grew 2%.
The EBITDA margin slipped to 30.9% from 31.3%. Faster growth came with slightly lower profit per dollar.
The Fourth-Quarter Step Down
Fourth-quarter revenue is guided to $1.605 billion to $1.635 billion. The midpoint of $1.62 billion sits 4.3% below the quarter just posted. Earnings per share are guided to $2.07 to $2.17.
The earnings midpoint of $2.12 is 6.2% below the latest quarter. A dip of that size likely reflects weaker mortgage activity.
Cash Returned to Owners
Equifax returned $158 million in the quarter. Buybacks took $92 million, and dividends took $66 million. That equals about 75% of net income of $211.7 million.
Net income rose 32%, and the net margin is near 12.5%. The payout leaves room to reduce debt and invest.
Why Verification Holds Up
Verification Services grew 9% while mortgage activity cooled. Lenders, landlords, and employers all pay for income and employment checks. That demand base is wider than home loans.
The unit earned $603.2 million, so it is large enough to move the group. Growth outside mortgage helps explain why the cut stayed small. It also supports the 51.4% margin in the segment.
What Portfolio Holders Should Track
Three items deserve attention. They are mortgage activity, Workforce Solutions growth near 7%, and margins in International. A faster mortgage slowdown would pressure the outlook.
Position sizing should reflect a stock that rallied hard on a modest cut. Staged entries reduce timing risk. Diversified holders can pair data exposure with steadier sectors.