Equifax
Data tollbooth with a growing cash engine, but new rules and score wars to watch
Equifax is one of three scaled consumer credit bureaus globally and owns The Work Number, the leading U.S. income and employment verification network. After a multi‑year cloud transformation, capex is rolling down and free cash flow is inflecting.
On trailing twelve months through June 30, 2025, we calculate free cash flow of about 917 million dollars, supported by 1,389 million dollars of operating cash flow and 472 million dollars of capex. That implies an improving FCF margin near 16 percent on roughly 5.84 billion dollars of TTM revenue.
Net debt at June 30, 2025 was about 4.73 billion dollars, or roughly mid‑2s leverage on an adjusted EBITDA basis, manageable given cash generation and long‑dated maturities. The moat rests on differentiated proprietary data and efficient‑scale market structure.
The Work Number ended 2024 with 188 million active and 734 million total employment records contributed by 4.2 million U.S. employers, creating material network effects and switching costs for lenders and government agencies.
However, rule changes are reshaping the landscape: the CFPB finalized removal of medical debt from credit reports in January 2025, and FHFA’s evolving path toward new mortgage score models and potential reporting changes adds uncertainty. Equifax is counter‑punching with aggressive VantageScore pricing in response to FICO’s direct‑to‑lender push.
We view the core franchise as durable, but we trim our moat durability score for regulatory and competitive vectors.
Does Equifax have a strong competitive moat?
Equifax benefits from multiple reinforcing moats. Efficient scale: the U.S. consumer credit ecosystem is an oligopoly of three nationwide bureaus embedded into thousands of lender decision flows, reseller platforms, and regulatory frameworks. Switching at scale is risky and operationally costly, which preserves share.
Network data assets: The Work Number is a unique, permissioned payroll data network with 188 million active and 734 million total employment records from 4.2 million employers as of December 31, 2024, enabling instant verifications for lending, hiring, and government benefits.
These data are hard to replicate, and every new employer or integration increases its value. Intangibles and process integration: Equifax’s cloud‑native platforms and analytic scores are embedded in customer underwriting and fraud workflows.
Risks: regulatory changes can reshape what data are permissible, and FHFA’s evolving approach to mortgage score models and reporting requirements can alter mix and pricing power; FICO’s direct score distribution also pressures the mortgage profit pool. Net, we view the moat as strong but not invulnerable.
Does Equifax have pricing power in its industry?
Pricing power is solid in verification and several USIS use cases because of differentiated data and integration costs for customers; Workforce Solutions margins and growth underscore willingness to pay for TWN’s speed and coverage.
In Q2 2025, Workforce Solutions posted a 46.4 percent operating margin and 53.3 percent adjusted EBITDA margin, reflecting strong unit economics.
That said, mortgage credit‑score rails are seeing pressure: FICO announced a direct licensing model to resellers, and Equifax countered by discounting VantageScore 4.0 (e.g., 4.50 dollars per score) and offering promotional free access for customers buying FICO scores in 2025–2026, signaling reduced near‑term pricing power in that niche.
Regulatory removal of medical debt further narrows some fee opportunities. Overall, pricing remains favorable where Equifax owns unique data (TWN), but more contested in mortgage scores.
How predictable is Equifax's business?
Revenue is diversified across Workforce Solutions, U.S. Information Solutions, and International, with a high mix of recurring and transaction‑recurring activity. Mortgage and hiring cycles add variability, but underlying non‑mortgage growth has been steady and new product vitality is rising.
For the six months ended June 30, 2025, operating revenue grew 6 percent year over year to 2.98 billion dollars; full‑year 2025 guidance implies mid‑single‑digit growth. The TTM revenue through Q2 2025 is about 5.84 billion dollars (2024 full‑year 5.681 billion plus H1 2025 minus H1 2024).
Predictability is enhanced by embedded roles in credit, fraud, and government benefits decisioning, though regulatory changes and score‑model transitions introduce medium‑term uncertainty.
Is Equifax financially strong?
Balance sheet is sound. As of June 30, 2025, total debt was about 4.92 billion dollars with 189 million dollars of cash, for net debt of roughly 4.73 billion dollars. Debt maturities are laddered across 2025–2037; the company maintains a 1.5 billion dollar revolver backstopping its CP program.
TTM free cash flow is about 917 million dollars (CFO 1,389 million minus capex 472 million), and management expects over 900 million dollars of FCF in 2025. We estimate net leverage in the mid‑2s on an adjusted EBITDA basis, reasonable for a recurring‑revenue data business.
Key risks include any sharp mortgage downturn and potential regulatory limits that could curtail data monetization, but liquidity and cash conversion are strong.
How effective is Equifax's capital allocation strategy?
Equifax completed a heavy multi‑year cloud migration; capex is trending down from 2022–2024 levels, improving FCF conversion. 2024 operating cash flow was 1,324.5 million dollars with 511.5 million dollars of capex; H1 2025 capex declined versus H1 2024. The firm resumed significant capital returns: in April 2025 it authorized a new 3 billion dollar buyback and raised the dividend 28 percent; 127 million dollars was repurchased in Q2 2025. M&A has focused on bolt‑ons that deepen data moats (e.g., Boa Vista Serviços in Brazil).
SBC runs at about 82 million dollars per year, manageable versus cash generation, and share count is relatively stable. We view capital deployment as disciplined with a clear priority order: reinvest for product/data, then buybacks/dividends when leverage is appropriate.
Does Equifax have high-quality management?
CEO Mark Begor has led since 2018 and successfully navigated the post‑2017 breach era, executed the cloud transformation, and expanded proprietary data assets while sustaining growth through cyclical mortgage swings. Governance and disclosures are robust.
Leadership is now pivoting from transformation to innovation and cash returns, with rising new‑product vitality. We view execution credibility as high, though the team must now balance competitive score dynamics with regulatory engagement.
Quality Value Investing Checklist (scores and brief notes): 1) Wide or Narrow Moat: 90. Multiple moats via data network effects, switching costs, and efficient scale; trimmed for potential regulatory erosion. 2) High and Consistent Return on Capital: 65. 2024 GAAP operating margin 18.3 percent; ROIC depressed by acquisitions and prior capex, improving as capex declines. 3) Revenue and FCF Growth: 75. Revenue up 8 percent in 2024 and 6 percent in H1 2025; FCF inflecting with lower capex. 4) High Margins: 80. Segment margins strong; Q2 2025 adjusted EBITDA margin 32.5 percent; Workforce Solutions highly accretive. 5) Owner‑CEO: 70. Not founder‑led, but seasoned operator with aligned incentives. 6) Simplicity: 75. Core bureau and verification economics are straightforward; regulatory overlays add complexity. 7) Very Low Debt: 60. Leverage is moderate and serviceable but not low. 8) Dilution: 75. SBC moderate; buybacks offset. 9) Favorable Jurisdiction: 80. Predominantly U.S. with selective international; regulatory intensity is high but predictable. 10) Trend Alignment & Boringness: 85. Long‑term digitization, fraud prevention, and real‑time verification tailwinds. 11) Superinvestor Inspiration: 80. Oligopolistic data tollbooth characteristics align with quality value principles. 12) Valuation: 55. At a fair multiple we outline, prospective returns look reasonable; patience warranted for margin of safety.
Is Equifax a quality company?
Equifax is a good quality company with a quality score of 83/100
- Multiple moats: proprietary employer‑contributed payroll data (The Work Number), efficient‑scale credit infrastructure, and embedded workflows create high switching costs; TWN active records reached 188 million in 2024.
- Cash inflection: TTM FCF ≈ 917 million dollars on 5.84 billion dollars of TTM revenue as of Q2 2025; company guides to 900 million dollars plus FCF in 2025.
- Regulatory overhang: CFPB finalized rule removing medical debt from reports; FHFA’s credit‑score and reporting transition introduces medium‑term uncertainty for mortgage workflows.
- Competitive dynamics: FICO’s direct licensing and Equifax’s cut‑price VantageScore response signal near‑term pricing pressure in mortgage score rails.
- Capital returns re‑starting: new 3 billion dollar buyback program, 28 percent dividend increase, and 127 million dollars repurchased in Q2 2025 while leverage remains reasonable.
What is the fair value of Equifax stock?
Is Equifax a good investment at $226?
The following analysis is provided for informational and educational purposes only. It does not constitute financial advice, investment advice, or a recommendation to buy or sell any security. The opinions expressed are based on publicly available information and historical data. Beanvest and its contributors may hold positions in the securities mentioned. Investors should conduct their own due diligence or consult a licensed financial advisor before making any investment decision.