Equifax (EFX) investor relations material

U.S. consumer credit environment and emerging risks

• Credit environment remains stable with low unemployment and high employment supporting consumer strength, but inflation and lower wage growth are pressuring lower-end consumers, leading to increased delinquencies in that segment.

• Delinquencies are rising in asset classes like auto, especially among subprime and near-prime consumers affected by inflation.

• Customers, including fintechs, are investing more in data to manage complexity and risk in lending to challenged consumer segments.

• No significant changes in customer behavior regarding subprime lending; focus remains on leveraging more data for better underwriting.

• Employment and consumer confidence are key indicators being closely monitored for future credit trends.

Product innovation and data differentiation

• New solutions leverage alternative data and employment indicators (like TWIN) to enhance underwriting and differentiate offerings.

• Expansion of TWIN indicator from mortgage to auto and other asset classes aims to provide a more complete consumer profile.

• Vitality Index, measuring revenue from new products, is running above target, contributing 300+ basis points to growth.

• Continuous record additions and product penetration drive higher growth, especially in the work number database.

• Contractual relationships with background screeners, similar to subscriptions, incentivize broader product adoption and pricing benefits.

Market outlook and growth drivers

• Long-term organic growth target is 7%-10%, assuming normal macro conditions and 2-3% GDP growth.

• Mortgage market has been in a prolonged downturn, down 50% from 2015-2019 levels, but is expected to bottom out and recover as rates decline.

• Recovery in mortgage could add $1.2 billion in revenue and $700 million in EBITDA, with further upside as pricing increases.

• Growth framework does not rely on mortgage recovery; recovery would be incremental to the 7-10% target.

• New product innovation, price increases, and government sector opportunities are key growth levers.