Greetings. Welcome to the Equifax Investor Update call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Trevor Burns, Senior Vice President, Corporate Investor Relations. Thank you. Please go ahead.
Thanks. Good morning. Welcome to today's conference call. I'm Trevor Burns. With me today are Mark Begor, Chief Executive Officer, and John Gamble, Chief Financial Officer. Today's call is being recorded, and our copy of the recording will be available later today in the IR calendar section of the News and Events tab at our Investor Relations website. During the call, we'll be making reference to certain materials that can be found in the presentations section of the News and Events tab at our IR website. These materials are labeled Equifax to Acquire Mexico Credit Bureau, Círculo de Crédito. During the call, we'll be making certain forward-looking statements to help you understand Equifax and the Círculo de Crédito business environments. These statements involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from our expectations.
Certain risk factors that may impact the Equifax business are set forth in filings with the SEC, including our 2025 Form 10-K and subsequent filings. During this call, we'll be referring to certain non-GAAP financial measures, including adjusted EPS, adjusted EBITDA, adjusted EBITDA margin, which are adjusted for certain items that affect the comparability of our underlying operational performance. Now I'd like to turn it over to Mark.
Thanks, Trevor. Good morning. An exciting day for Equifax. Turning to slide three, I'm energized to announce that Equifax has signed a definitive agreement to acquire Círculo de Crédito, the fastest growing credit bureau in Mexico, for an enterprise value of $750 million. This acquisition will expand Equifax into the fast-growing Mexico market, the second largest economy in Latin America, and offer Círculo de Crédito customers access to industry-leading Equifax cloud-native capabilities, decision and analytics capabilities, patented EFX.AI technology, and award-winning identity protection and fraud prevention offerings for the development of solutions designed to help customers grow and expand financial inclusion. Mexico is a market we've been focused on for the eight years I've been at Equifax. Actually, longer than that. I think even Rick Smith focused on it during his CEO tenure. Until recently, two of the three credit bureaus in Mexico were owned by the banks.
After TU acquired majority ownership in their bureau, Círculo was the most attractive entry for Equifax. Círculo de Crédito has delivered very strong financial results for the 12 months ended June 30th, with revenue of $134 million, up a very strong 31%, and adjusted EBITDA margins of 46%, both highly accretive to Equifax financial results. For the full-year 2026, Círculo is expected to continue to deliver strong, high double-digit revenue growth, with mid-40s adjusted EBITDA margins, and is expected to be accretive to Equifax adjusted EPS in the first full-year of ownership. Since 2020, Equifax has invested our strong free cash flow in strategic bolt-on acquisitions to drive our financial results and shareholder returns.
Including Círculo de Crédito, we will have invested nearly $5 billion in 17 bolt-on acquisitions since 2020, with a proven track record of integrating these acquired businesses, like our recent acquisition of Boa Vista in Brazil. We expect the Círculo acquisition to be completed in the fourth quarter of this year, subject to customary closing conditions and regulatory approvals. Turning to slide four. We expect to acquire Círculo de Crédito for an enterprise value of $750 million. The enterprise value represents 11.7x adjusted EBITDA multiple at closing based on Círculo's expected 2026 adjusted EBITDA. With the addition of expected run rate synergies to Círculo's 2026 adjusted EBITDA, the adjusted EBITDA multiple is expected to be about 9.4x at closing, which is attractive and significantly below the Equifax current EBITDA multiple of about 12 terms or 12x.
Equifax is delivering a strong 2026, with free cash flow expected to exceed $1 billion and continued strong growth in adjusted EBITDA. We have over $1.5 billion in financial capacity in 2026 while maintaining our leverage at under 3x. That is consistent with our BBB and Baa2 credit ratings. This provides significant capacity to execute the Círculo acquisition while continuing share repurchases. Over the past 12 months through June 30th, we have purchased over 6 million shares of Equifax stock, over 5% of shares outstanding, for almost $1.4 billion. Year- to- date, we have repurchased about 3.1 million shares for about $560 million.
Given our strong financial capacity of over $1.5 billion in 2026, we can complete the Círculo acquisition in the fourth quarter while still executing share repurchases, although at a slower pace than we saw in the first half of 2026, and while continuing to manage balance sheet leverage at just below 3x. This allows us to enter 2027 with a strong balance sheet and consistent with 2026, with significant financial capacity for both acquisitions and share repurchases in 2027. We expect the Círculo acquisition to deliver mid double-digit returns well above the Equifax cost of capital, and we expect Círculo to be accretive to adjusted EPS in its first full-year as part of Equifax.
Accretion expands significantly given strong Círculo revenue growth and the mid-forties adjusted EBITDA margins as well as the significant synergies driven by both revenue expansion as Círculo implements Equifax global cloud-native technology and leading EFX.AI capabilities, and delivers NPI and new product rollouts consistent with Equifax expectations, and cost synergies delivered through the integration into our platforms. The Círculo acquisition, with its very strong revenue growth, margin profile, and cash generation, is accretive to the Equifax long-term financial framework, as well as delivering returns well above our cost of capital, which delivers strong returns to our shareholders. This acquisition fits perfectly in our balanced capital allocation framework, with our focus on highly accretive bolt-on acquisitions while continuing significant ongoing return of capital to shareholders and maintaining our strong investment-grade balance sheet. Turning to slide five.
Mexico is the second largest economy in Latin America and is one of the fastest-growing credit markets globally, expecting to grow very strong double digits over the next few years, with continued strong growth in the future. Consumer credit growth in Mexico is expected to be driven by expanded access to credit, financial inclusion, and digitization. Círculo de Crédito has been a first mover in the market with the broadest set of data and innovative solutions. More than 25% of the Mexican population is without access to formal financial products, and nearly 44% of the population does not have a bank account. Equifax and Círculo de Crédito have a shared commitment to helping more consumers live their financial best. Together we will continue to offer deeper alternative data and unique insights that can help our customers deliver unique solutions to expand their consumer credit offerings.
Círculo is poised to capture a significant share of the Mexican credit market growth given its unique proprietary data, strong relationship with the expanding fintechs, and strong synergies with Equifax. Turning to slide six. Círculo de Crédito is the fastest-growing credit bureau in Mexico and the only credit bureau licensed to operate both consumer and commercial credit bureau services, with more than 1,700 bank, retail, fintech, small business lending, microfinance, and telecommunication customers, and 2 billion trade lines covering 80 million validated identities. While traditional credit data is required by law to be shared between the credit bureaus, alternative credit data is not. Círculo is a leader in alternative data or information not included in traditional credit reports in Mexico, including gig economy transactions and utility payment history.
This alternative data can responsibly expand access to credit and support a more inclusive economy, critical to a country where nearly 33 million people are engaged in informal employment, such as unregistered micro-businesses or gig employment. Turning to slide seven. Círculo's unique market position has delivered very strong financial results. As you can see from the chart on slide seven, Círculo's compound annual revenue growth was a very strong 23% from 2023 to 2025, with revenue growth for the past 12 months ending June 30th of 31%. Círculo has delivered very strong mid-40s adjusted EBITDA margins in both 2025 and the last 12 months through June 30th, 2026. For the full-year of 2026, Círculo revenue is expected to grow strong high double digits while maintaining their mid-40s adjusted EBITDA margins. Círculo revenue growth has been led by their unique alternative credit data advantage enabled by deep relationships with fintechs.
With over 40% of Círculo's 2025 revenue generated from fintechs, with a growth rate of over 50%. Círculo's unique alternative data and the team's strong relationships with fintech customers are a key driver of future Círculo revenue growth in a market where consumer credit is under-penetrated and growing rapidly. The very attractive Círculo financial results are accretive to the Equifax long-term financial framework of 7% to 10% organic revenue growth and 50 basis points of annual margin expansion. Turning to slide eight. Equifax expects to deliver strong synergies through the integration of Círculo de Crédito. First, we plan to deepen Círculo's retail and fintech data moat while simultaneously expanding their penetration with large financial institutions. By leveraging Equifax's global scale, we can take Círculo's market-leading position with fintechs and extend that influence into the traditional bank and financial institution space where Círculo is not as penetrated.
Second, we expect to leverage Equifax's scalability, technology, and security to modernize Círculo's infrastructure to the new Equifax Cloud-native architecture. By deploying our core data analytics platforms, we can ensure seamless integration and the rapid deployment of global Equifax products, scores, and solutions to Círculo's customers. Lastly, we're committed to delivering deeper alternative data and unique insights to help our customers in Mexico grow. We expect to leverage our global footprint, and specifically our established leadership across Latin America, to introduce high-value products and services integrating our patented EFX.AI cloud-native technology and advanced decisioning platforms into the Mexico market. Together, these initiatives form a comprehensive roadmap for enhancing Círculo's platform, ensuring we are not just acquiring a business, but we're actively elevating its capabilities across the Mexico market and for the new Círculo customers. Turning to slide nine.
Our recent acquisition of Boa Vista in Brazil has outperformed our expectations as well as outperformed other market participants from share gains and the deployment of new solutions to the market to help our customers grow. The acquisition of Boa Vista established our presence in the fast-growing Brazilian market three years ago and added unique retail data assets to our portfolio for that market. The Boa Vista integration gives us significant confidence in our M&A integration playbook as we look forward to rapidly integrating the Círculo business into the new Equifax Cloud-native platforms and technology after closing. Equifax will offer Círculo de Crédito customers access to industry-leading Equifax Cloud-native capabilities, decision and analytics capabilities, patented EFX.AI technology, and award-winning identity protection and fraud prevention offerings for the development of solutions designed to help customers grow and expand financial inclusion.
The Boa Vista integration serves as a great blueprint for the Círculo de Crédito integration. Turning to slide 10, Círculo de Crédito is a highly strategic asset and core to our international and Latin American growth strategy to invest in high-growth markets. Equifax is already a market leader in Latin America, holding leading credit bureau positions in Costa Rica, El Salvador, Honduras, Ecuador, Peru, Chile, Argentina, Uruguay, and Paraguay. By acquiring Círculo, we are firmly expanding our footprint into Latin America as a market leader, complementing the position we established three years ago in the large, fast-growing Brazilian market with Boa Vista. We plan to deploy the same proven global integration playbook that we used to accelerate Boa Vista's growth and share gains to Círculo. Moving to slide 11, the Círculo acquisition closely aligns with our broader strategic bolt-on M&A framework.
With the Círculo de Crédito acquisition, Equifax will have invested nearly $5 billion in 17 strategic bolt-on acquisitions since 2020, all of which are strictly aligned with our core priorities of adding differentiated data, strengthening our fast-growing workforce solutions business, expanding in fast-growing international markets, and broadening our identity and fraud capabilities. Círculo checks multiple boxes, specifically leveraging unique differentiated data and expanding our international footprint, much like our recent acquisitions of Boa Vista in Brazil and Data-Crédito in the Dominican Republic. We have a very strong history of integrating our acquisitions to deliver growth and shareholder returns. Because of our $3 billion investment in the new Equifax Cloud, we can integrate acquisitions more quickly than ever and move products and platforms quickly between our different markets.
By executing our disciplined bolt-on M&A strategy, we expect to add 100 basis points - 200 basis points of revenue growth to Equifax annually beyond our 7%-10% long-term organic growth framework while expanding our global data moat. Wrapping up, the Círculo transaction is a perfect example of our global bolt-on M&A strategy at work and clearly aligns with our strategic and financial long-term strategic and growth financial framework for the future. We are acquiring the second largest and fastest-growing credit bureau in the rapidly expanding Mexico market at an attractive multiple that will drive shareholder returns. Círculo's strong adjusted EBITDA margins will be accretive to our international business and to the Equifax long-term financial framework, and we expect continued high double-digit growth with strong margin performance from Círculo in 2026 and strong growth in the future.
The acquisition fits perfectly in our balanced capital allocation framework, with our focus on executing on highly accretive bolt-on acquisitions while continuing significant ongoing return of capital to shareholders via dividend and buyback while maintaining our strong investment-grade balance sheet. We're incredibly energized to bring Juan Manuel Ruiz Palmieri, who leads Círculo, and his team into Equifax and onto the Equifax Cloud to accelerate their product innovation and drive strong return for Equifax shareholders after closing. With that, operator, let me open it up for questions.
Thank you. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. To allow for as many questions as possible, we ask that you each keep to one question and one follow-up. Thank you. Our first question comes from the line of Jeff Meuler with Baird. Please proceed with your question.
Morning, Jeff.
Yeah, thank you. Hey, good morning. Congrats on the acquisition. Can you go through the 2025 acceleration and faster growth year-to-date 2026? I guess how much of that is the fintech market? It sounds like that's a really good position and growing really well. I guess are there market inflection points or new products that are driving it, anything beyond, I guess, cyclicality of that end market? Thank you.
Yeah. The underlying market, Jeff, is growing quite rapidly, particularly in the space that Círculo has been really growing and living in. I think as I mentioned in my comments, they don't do a lot of business directly with the traditional banks. Their focus has been on retailers. There's a lot of retail finance in Mexico, with the telcos, and as you point out, with the fintechs. As we said in my prepared comments, they've seen 50% growth in the fintechs, and you've had a lot of new entrants, a lot of new companies being formed there, and a lot of growth in that fintech market. They're uniquely positioned with their large alternative data. They just have more data on that near-prime, call it subprime, call it unbanked consumer.
If you think about a consumer in Mexico that doesn't have a bank account, doesn't have financial products. Their first financial product likely is going to be financing at a retailer to buy an appliance, to buy furniture, and those trade lines become really the basis for their financial future until they do move into the formal financial environment. They've just really been well-positioned given their alternative data, their customer focus and approach to market, their alignment with the fintechs is extremely strong, and they've just been riding that quite strongly. We expect that to continue going forward. One of the new levers for them is the opportunity now with the banks selling off their interest in their credit bureaus. As you know, they sold their interest to TransUnion, they've got a commercial credit bureau that may be something that they decide to monetize.
That opens up the door for Círculo to have direct relationships with the banks because they're no longer owners of the credit bureau. Obviously you think about what we're going to be able to bring, like we did with Boa Vista, bringing down our products, our technology, expanding their score capabilities and our data analytics, our AI. We expect them to really be able to expand their product offerings going forward, which are part of the synergies that we see once we get them on the Equifax Cloud and into our platforms.
Thank you.
Thank you. Our next question comes from the line of Toni Kaplan with Morgan Stanley. Please proceed with your question.
Hey, Toni.
Thanks so much. How are you? Wanted to ask about the competitive landscape, particularly since your two biggest competitors are already in the market. Just wanted to understand if you think that the strategies are going to be similar or how you're expecting to get the different areas of synergies and things like that. Thank you.
Yeah. There's only one in the market, I think as you know. TransUnion I think owned 20% of the bank-owned consumer credit bureau, and they acquired the rest of that, or most of it, I believe. I don't think they have 100%, but they acquired the rest of that about a year ago. TransUnion is in market. They own the previously bank-owned credit bureau. There's a bank-owned credit bureau that's a commercial SMB credit bureau that's still owned by the banks, and then there's Círculo. As of closing, when we close the deal, there'll be two of the global players, Equifax and TransUnion in market. We think we're super well positioned because of Círculo's unique data. They have data that's really much more expansive than TransUnion has in the bank credit bureau.
Just more trade lines because of the retail and fintech and telco contributors are just so much more expansive, and there's just more consumers in that space. We think we're extremely well positioned there. Like we did in Boa Vista, the opportunity where Experian obviously was well established for many, many years, almost a decade in Brazil as a standalone global player bringing in our global platforms, putting Boa Vista and now Círculo on the Equifax Cloud. We'll be able to do that quite quickly. We're going to run the same playbook that we've done in Dominican Republic, that we've done in Brazil, is bring in our new products, bring in our new AI capabilities, bring in our new technology capabilities. Our discussions, I said in my comments, we've been trying to enter Mexico, I think Equifax as a whole, for probably 15 years.
For me personally, for eight years. It's a great market. It's adjacent to the United States. There's a lot of synergies. For example, we have a product now, a global credit report, where we'll take trade lines from a consumer, in this case a Mexican consumer in the U.S., and trade lines from a Mexican consumer that previously may have lived in Mexico and put those together. That's a big opportunity for us. We've really been focused on entering this large market. It's the second largest market in Latin America. It's very fast-growing, Círculo as a business is just super attractive. The growth rates are obviously quite evident and super attractive. It's a great management team, they've been really focused on innovation and new products, which is really driving their growth, we just think we can help accelerate that by having a global partner there.
Our comments with the customers there is they welcome Equifax coming in as a global participant because they know that we can be accretive or additive to an already great business in Círculo by bringing in all of our global capabilities, whether it's our Ignite analytics platform, our InterConnect platform, all of our new products. It's going to bring more solutions for the Mexican customers, which we know is going to be attractive to them and also attractive to our Círculo investment.
Terrific. Thank you.
Thank you. Our next question comes from the line of Manav Patnaik with Barclays. Please proceed with your question.
Hey, Manav.
Thank you. Good day, Mark. Good morning. I just had a question. At 30% growth and mid-40s margins, I mean, you got a pretty good price on this one. So I'm just curious, like longer term, beyond 2026, like what is the right growth framework to think about for this business in that context?
Yeah. 30% is a very high growth rate, Manav. I think as you know that. It's one that they've been achieving over the last call it 18 months, 24 months, but even previous to that they've had strong double-digit growth rate. I think our competitor, TransUnion has kind of low double-digit growth rate. The market itself is underlying a very strong market. That large unbanked population that's moving into the bank population, the influx of global and local fintechs into the space because of the attractive opportunities there, those are all kind of macros that, in our opinion, underlie a very strong underlying market. Think about low double digits.
We think Círculo can be accretive to that going forward, given its unique data sets, which are really a strong asset in this acquisition that they have such a wealth of additional data that's accretive to what I would call the traditional credit file in Mexico. As you know, when you add those additional trade lines and additional data, it results in a higher performing solution. They're well-positioned to drive that going forward. We're not prepared to give long-term guidance on Círculo or the Mexican market. We don't do that typically, as you know. For sure, we think about this as being accretive to our 7- 10 organic and certainly accretive to the seven to nine international long-term framework that we have.
It's clearly going to be above that seven to nine over the long term, given the underlying market and the opportunities that the business itself have with its unique data assets. You have to add to it all the capabilities we're going to bring as a global participant to really expand the arsenal of tools and solutions that Círculo can bring to both their current customers, think fintechs, think retailers, which is a big space there in Mexico that Círculo participates in, think telcos. Also think traditional banks where Círculo hasn't participated in the past, and that'll be an opportunity for them going forward. We're energized about the acquisition and the underlying market. As I said, Rick was after this 10 years ago, trying to get into Mexico, and I've been trying to get in there for eight years.
We've really spent probably the past five years, and more specifically the last 12 months- 18 months, really focused on once the banks opened up the window, they decided they were going to sell the TU Credit Union, and obviously TU was in a position to buy that because of their control or minority position. We really saw this as an opportunity to get into Mexico, and we're super energized to be there.
And remember, very strong margins, accretive to both international margins and our margins, right? It's not just driving revenue growth. Very profitable revenue growth.
Yeah, that makes sense. I just wanted to follow up in the slide. I think you said that over 60% of the trade lines were unique to Círculo. Just trying to appreciate, I guess, just the market structure, because, I guess in the U.S.-
Yeah. It's a great question
just trying to appreciate that. Yeah.
Yeah, it's a great question. Today, the banks, think about the traditional banks, there's I think seven large ones down there, and there's obviously a larger network. They contribute their trade lines to the bank-owned credit bureau, which is TransUnion, and also to the commercial credit bureau. Those trade lines are not contributed to Círculo. Círculo's trade lines are all from fintechs, all from retailers, which again, I want to appreciate. We're not used to that in the United States, where most of us on the call live, that retail finance is still large, but it's more consolidated in the United States. by the likes of Synchrony, and Chase, and Citi and others. In Mexico, most of the retailers do their own retail finance. They have their own finance arms. They finance furniture, appliances, other purchases there.
That's a very big market that's unique to Círculo, those trade lines. The telcos are also unique to Círculo. That large array of trade lines, if you think about it, Manav, there's multiples of transactions, meaning many more transactions happening in that ecosystem of think about retail, fintech, and telcos than there are in the banks. That gives them the advantage. It also gives them the advantage in that unbanked, and in our vernacular in the United States, think about subprime, near-prime type consumers and unbanked is like there's no credit file on them. That large portion of the population is 33 million people in Mexico without a bank account. They're doing retail finance and they're creating trade lines when they're financing that refrigerator that they're purchasing.
That's a huge asset for Círculo and was one of the many reasons we were attracted to the business.
Got it. Thank you.
Thank you. Our next question comes from the line of Andrew Steinerman with JP Morgan. Please proceed with your question.
Hi, Andrew.
Hey. I have two questions, Mark. The first one is, given how different the data is in the credit reports in Mexico, do Mexican lenders typically pull both of the top credit reports? Of course, they're just different type of data. The second is, when you talked about the kind of unique alternative data that you guys had, you mentioned telcos, you mentioned gig. My question is about data furnishing. Are there any unique sources that Círculo has in Mexico, like the way Equifax U.S. has the Telco Utility Exchange, and are there any ways Equifax could expand data furnishing, how it works in Mexico?
Yeah. On the first one, there's actually a law in Mexico that was put in place because of the unique structure of the banks owning the credit bureaus, where the credit bureaus are required to share trade lines between each other when a credit report is pulled. There's a financial ecosystem where, in essence, the bureaus buy data from each other and share it to deliver a complete credit report, if you will. The advantage Círculo has is all the inquiry data and the positive data that's shared. Only negative data is shared, positive data is not. They have a real advantage in the wealth of positive data that they have around consumers that is really unique to them, and they just have more contributors. Think about 1,700 contributors.
I don't know what the exact number is for TransUnion, but it's a different number and lower than that. That's the real asset that they have, is that network of retailers, large and small, the network of fintechs, where they've had a presence there for a long time that's very strong. That data advantage is a real positive for them.
Remember, it's both a consumer and a commercial business, right? They have both licenses, unlike our competitors.
Great. Thank you.
That's one that, as you know, we have a large commercial SMB business globally, particularly in the United States and other markets. As another reason, as John pointed out, we were attracted to Círculo is that not only can we offer that consumer solution, but we can grow and expand the commercial or think about small business or SMB type space.
Makes sense. Thank you.
Thank you. Our next question comes from the line of Shlomo Rosenbaum with Stifel. Please proceed with your question.
Hey, Shlomo.
Hi. Thank you. First, hey, thanks for taking my questions. I just want to go back exactly to what Andrew was talking about. If there's a bank that's lending right now, are they pulling both from TransUnion and from Círculo because of what you have? Exactly what's shared and what's not shared, I just wanted to understand. I understand that their positive data is not shared, but is the negative data from the bank shared? Is there also positive data in the TransUnion one that does not come to Círculo? If you can just explain that to us so you could basically explain how you have the ability or what you see the opportunity is to sell to the banks.
Yeah. It is a unique market unlike any other that I'm familiar with globally because of the historical structure of the banks for many years owned the credit bureaus. The banks contribute their data to TransUnion and the commercial bureau. There's a law in Mexico that if Círculo wants to get access to the trade lines, they're able to do that from TransUnion and vice versa. These are the negative trade lines. The positive trade lines, which are super accretive to a decision, are really unique to both credit bureaus. Those are bureaus where TransUnion will deliver those to their customers, the positive trade lines that they have, and then Círculo will deliver their unique positive trade lines to theirs.
The other positive that Círculo has is that many of their data contributors, the trade lines that they have are on a weekly basis versus monthly, where the bank trade lines are typically on a monthly basis. Those more frequent trade lines are another asset with Círculo. Círculo just has more trade lines, meaning more consumers in its credit bureau, more trade lines in its credit bureau because it has the weekly versus monthly. There's just much more transactions happening in a retailer. I mean, retail finance is very large in Mexico, and also with the fintech. It's one of the advantages that Círculo has and one that we look forward to taking advantage of.
Could you talk a little bit about the split of commercial versus consumer and is commercial really growing much? How is it that this company has a commercial license, but the other one did not have a commercial license? Maybe give us a little bit of background on that.
Yeah. More historical structure, which I don't know all of the reasons why, but way back when, I don't know whether it's 30 years ago or something like that, the banks created two credit bureaus, one consumer and one commercial, and they were run and owned by the banks. They were actually one entity. When they sold the entity to TransUnion, they carved out the commercial credit bureau as a separate entity. It sits there today, and TransUnion acquired, and you could talk to TransUnion about this. The consumer credit bureau and the commercial credit bureau is still owned by the banks and whether they're going to continue to own that or not. You may know that the commercial credit bureau in Mexico is much smaller, owned by the banks than the consumer credit bureau, which TransUnion's already talked about how large that is.
Those are one entity, then they were separated into two, and the commercial credit bureau sits there. 20 years ago, when Círculo was formed, they got the license to do both consumer and commercial, and that is why they have both bureaus. The commercial credit bureau or the commercial business in Círculo is very small, but it is one that we believe is an asset to have the license. It is one that we would expect to invest and grow in. We like the idea because we have it in other markets, the idea of having both a consumer and commercial.
As you know, what is really important in SMB is that much of the underwriting of a small business is done on what trade lines they have as a small business, but also the trade lines of the owner or entrepreneur, typically single entrepreneur in micro businesses both of those sets of trade lines, the consumer and commercial are very valuable. That is the playbook we run in the United States. We run that in other markets around the world, and we would do that here in Mexico also.
Thank you.
Thank you. Our next question comes from the line of Kyle Peterson with Needham & Company. Please proceed with your question.
Hey, Kyle.
Hey. Good morning, guys. Congrats on getting the deal done, and thanks for taking the questions. Wanted to just ask if, given the fintech presence here, it sounds like it's really scaled in Mexico. I understand a lot of these fintechs in Mexico also have operations in other countries, whether it be in Latin America or Europe. I just wanted to see, are there opportunities for you guys to potentially deepen some of these relationships once this deal closes, or are these relationships you guys already have? Is there a lot of customer overlap just with other divisions? Just wanted to get a sense of potential cross-selling opportunities in the fintech space in other geos.
Yeah, it's actually a bit of all the above. You got to start with, Círculo has a very strong market position in Mexico with the fintechs. Super strong. You think about where they've built their business. First, it was off retail finance. I would remind you to recognize that retail finance is very big in Mexico. It is very big in other Latin American markets. We don't talk about it a lot, meaning the retailer itself does their own finance of their products to their consumers. How the business was formed 20 years ago. It was off retail finance. Then, over the last 10 years, five years, Juan Manuel and their team have done a great job of really positioning themselves with the fintechs. Why? Because they have the unique data.
The fintechs are typically financing around the globe and in Mexico, subprime, unbanked, near-prime consumers. There's better returns in those kind of loans, it's where the fintechs really spend their focus. They've got a extremely strong market position with really all of the fintechs in the market. They've built their business to be responsive to the fintechs around how they deliver products and solutions, they have the underlying data to really approve and deliver data on more of those consumers than others in the market can, the traditional credit bureaus in the market, just because they have so much alternative data. To your question, yeah, there's a bunch of global players there that we have relationships with. For example, there's a large fintech that we have a large position in Brazil in that is growing in Mexico.
They're, I know, going to be very pleased that we're going to be helping grow Círculo with our global platforms and capabilities. I think that'll be another asset where we can take advantage. I would also make the point that our global banking relationships will also be an asset for Círculo as they work to enter the traditional bank environment which they haven't participated in directly. That's another opportunity going forward. We have relationships with many of the global banks that are in Mexico. They could be Canadian banks or they could be, for example large banks, Santander from Spain or Scotiabank from Canada. We have large global relationships there in Mexico. That's another opportunity for us going forward.
We're really excited about the market position that Juan Manuel and his team have really built in the market, and we look forward to bringing our products, our capabilities, our tech, our AI, our DNA to really help Juan Manuel and the team accelerate that growth.
Great. Really appreciate for the color . Thank you.
Thank you. Our next question comes from the line of Jason Haas with Wells Fargo. Please proceed with your question.
Hey, Jason.
Mr. Haas, maybe your line is muted.
Oh, hey. Sorry about that. I wanted to start just focused on margins. I'm curious if you could talk about what drove the step-up in margins in 2025. Bigger picture, I'm curious, what enables this business that's smaller than your overall international business to run at such high margins? Obviously a good thing, but just curious, what about the industry or the market in Mexico allows it to run at such high margins? Thanks.
Yeah. First question really is just operating leverage. That obviously with that high kind of revenue growth, it drives a lot of operating leverage in the business. That's the beauty of Círculo, it's the beauty of Equifax, it's the beauty of the space that we participate in. Generally, we have fairly high fixed costs, when you get incremental revenue growth that's very high, that drives margin expansions. We have businesses in our international portfolio that are above our international average and some that are below. We have businesses that are north of our average because of the unique positions that they have in certain markets. It's not, I would say, unusual, but there are businesses that operate that way.
We're pleased with their margins, and we expect with the addition of our capability to help them continue the strong top-line growth and some of the technology cost synergies that we'll have moving to our platform, those are going to be additive going forward.
The margins we're talking about, I think, are not inconsistent with the margins of other players in Mexico.
Yeah.
I think we're seeing very strong margins, and they're consistent with market standards.
Got it. That's very helpful. Just as a follow-up, could you just talk about your confidence in that 4Q close date? The reason I ask is, when that largest competitor was recently acquired, I believe it took over a year since.
Yeah
since the announcement of that acquisition. Maybe it's not apples to apples, but yeah, if you could just talk to that. Thanks.
No, it's a great question, actually. I think Regulatory cycle time for TransUnion's acquisition was something like a year, in that kind of neighborhood. We think we're better positioned. As I said, we've been trying to get in the Mexico market for 15 + years. For the eight years I've been here, we've been trying to get there. For the last five years, we've had an application in with the Mexican government to form a credit bureau. We're well down that path and really at the final stages. We've been engaging regularly with the regulator, which you have to be approved to be a credit bureau. This transaction has to be approved, which we expect it to happen. Obviously, they approved the TransUnion acquisition as a strong global player. We expect the same with Equifax.
We believe our approval process will be quicker because we're so deep after five years in the regulatory process as Equifax, launching a de novo credit bureau. Now we'll be able to use that kind of engagement with the regulator over the past five years, to, we believe, accelerate our approval process.
Got it. That makes sense. Thank you.
Thank you. Our next question comes from the line of Scott Wurtzel with Wolfe Research. Please proceed with your question.
Hey, Scott.
Hey, good morning, guys. Thanks for taking my question. Just one from me. Just wondering if there are any sort of products or solutions that Círculo has that you would think about maybe deploying across the rest of your business. Thanks.
Yeah, for sure. As you might imagine, it's both ways. We'll spend more time obviously, during the integration process after closing. We see a lot of products going both ways, both from Círculo, super creative in some of the solutions they bring to their fintech customers that we'll take into Latin America. Juan Manuel and his team are really a similar DNA to Equifax. I think that was another attraction for us in the business and the leadership team. They put customers first. They really understand customers' workflows and processes. A very close engagement with customers. They're very innovative around new products and new solutions. I think as you know, we have a big part of our DNA is our Vitality Index. When we talk with Juan Manuel and his team about the Vitality Index at Equifax, they nod their heads because that's how they operate.
I think there's going to be a very fast integration of products going both ways, particularly some of their fintech unbanked solutions. I think we'll be able to bring identity and fraud solutions in to help them. We'll take our count data which we're taking globally on identity and fraud, and we'll bring that in as an additional data asset into the Mexican market through Círculo. Obviously, the tech integration will be super positive of moving them to the Equifax Cloud. We'll provide a lot of capabilities for them. They don't have an analytics platform like we have globally. That's one we're going to bring Equifax Ignite down there. As you know, we've been investing heavily in the AI capabilities around Equifax Ignite, which we think will be purpose-built for a lot of the fintechs in Mexico.
We're excited about bringing that innovation into the Mexican market through the Círculo team.
To the earlier question, the depth of their fintech relationships is something we think we can export, right? Some of their customers are doing business and moving into the U.S., right? Other parts-
Totally
of Latin America. We think it provides a real opportunity for us to grow in other markets.
I mentioned earlier in the comments what we call the global credit report, but the idea of combining trade lines for a consumer in Mexico with their U.S. trade lines. As you know, there's a lot of immigration back and forth both formally and informally. Another opportunity to bring that solution to Mexico and bring the Mexico trade lines to the United States. A lot of exciting opportunities for us after we get the deal closed later in the year.
Great. Thanks, guys, and congrats on the deal.
Thanks.
Thank you. Our next question comes from the line of Curtis Nagle with Bank of America. Please proceed with your question.
Hey, Curtis.
Great. Thanks so much. Hey, Mark. How you doing? Thanks for taking the question. Maybe first question just in terms of talking about the opportunity that now opens up with the traditional banks and maybe some of the more traditional credit consumers in Mexico as opposed to the core offering to the lower tier and the unbanked. How large is this market? How complementary could this be to forward growth above the 7%-9% framework you have for the international business as it stands now? Just what's the opportunity there?
I think we said earlier that we clearly believe Círculo will be positioned to be accretive to our 7-9 international long-term framework. They're growing multiples of that now. The market itself and our competitor you can look at their numbers, is doing very well in Mexico with double-digit growth. We clearly expect over the medium term to see strong growth as they're really growing with the fintechs, the retailers, and the telcos. As you point out, there is a large market with the banks. I think you know the TransUnion business is larger from a revenue standpoint than Círculo. That size is kind of the bank market in consumer is quite large.
There's opportunity that's accretive for Círculo to do penetration there with their unique data assets now that there's a more open market with the banks not owning their consumer credit bureau. They're going to be looking for solutions that will drive incremental growth for them. We're excited about that opportunity. The core is what Juan Manuel and the Círculo team have built over the last decade and 20 years is their very strong position with the fast-growing retail fintech and Telco market. That's the core in the business that has a long runway in it. There's more fintechs entering both globally and locally. There's a very entrepreneurial fintech market in Mexico that Círculo has a very strong position with, those are expanding and growing because of the underlying opportunity.
I think that's one we also have to appreciate is that large unbanked population and the ability of those consumers now to have access to credit. I point out again, everyone on the call probably remembers my background was at GE Capital when I ran Synchrony, which is the retail finance business. I know that that's, in the U.S., for subprime consumers is a place where they generally do their first financial transactions. In Mexico, that's clearly where they do it with a retailer. There's just a lot of opportunity for them to continue to penetrate that space going forward.
Okay, got it. Maybe just a quick follow-up, just going back. Andrew's question in terms of the data moats here. Understand the point you make in terms of the breadth, the depth, the network of the data you're getting from the fintechs and the retailers. In terms of, I guess, is it exclusive aside from just the network effects, how walled off is that data?
Yeah, there's longstanding relationships there that I don't think there's contractual exclusivity. You think about kind of operational connections that are super strong. There's long relationships there. There's strong connections, and there's kind of a give-get that's very positive. We feel like there's a strong data advantage, a strong data moat that they have. I'm sure TransUnion feels the same way around their bank data that they get from the banks. We'll look to try to obtain some of that data directly as I suspect they'll try to obtain some of the fintech retail Telco data that we have in Círculo today. We think over the long term our position in Círculo is very strong and very deep.
Okay. Thanks for answering my questions.
Thank you. Our next question comes from the line of Craig Huber with Huber Research Partners. Please proceed with your question.
Great. Thank you. You answered most of my questions. One data point you put out there earlier, if I heard you right, you said the fintech part of their revenue was over 50%. I think you said it's about 40% of the revenues come from that. Can you talk about the growth rate of the more traditional side, what they're doing there? Those numbers imply roughly 15% growth, so still quite good with the traditional part of the market. Just talk about that, if you would.
Yeah. Again, traditional, I think you're talking about the retail and Telco space. That's growing double digits. It's very strong growth on the underlying Mexico market. When I think about the credit market step back, I think about the credit market for all of the credit transactions and the banking transactions in Mexico, it's a fast-growing market and the second largest in Latin America after Brazil. There's just a lot of underlying growth for the participants in the market which today are Círculo, the bank-owned and TransUnion and tomorrow will be Equifax and Círculo and TransUnion. We're excited about the long-term growth potential there of the underlying market.
As we said multiple times in this call, we're really energized about the unique position Círculo has outside of what I would call traditional banking in the fintech retail and telco space, which is growing faster than the banking side.
Great. Thank you.
Thank you. Our next question comes from the line of Zach Vlacich with FT Partners. Please proceed with your question.
Hey, good morning. Thanks for taking my question here. Just one for me. You pointed to the Boa Vista integration as giving you confidence in this playbook in Mexico. What specifically transferred well in Brazil and do you expect anything different this time around? Thanks.
Yeah, I think I talked about it in my comments earlier. What we're really energized about with our bolt-on M&A strategy, I think as you know, we're super disciplined around acquisitions we want to do. We have the financial criteria that they have to be accretive to our long-term revenue and margin framework. Accretive to margins and accretive to revenue and that generates accretion to cost of capital and it generates shareholder returns for our shareholders. Now that we're post cloud completion, we put the $3 billion into our tech stack. We found in Boa Vista that we could more rapidly integrate Boa Vista into our new cloud capabilities. We could more rapidly deploy new products from other markets into Brazil and Boa Vista. We expect that playbook to continue and even more quickly in our Círculo integration.
The other lever that we've seen that's really accretive in our acquisition integration and of course inside of our broader Equifax is just the AI deployment in our business. We talk a lot about what we're doing with AI around products, models, and scores. That will run that playbook. All those capabilities, which we know will be additive to Círculo, we'll bring to Mexico just like we did to Brazil. Our ability to use AI in operations, our ability to use AI in tech, our ability to use AI in the tech integration and accelerate both the timetable to move to the new tech, but also the cost to do it, is more efficient. These are many reasons why we put the $3 billion into our tech stack. Number one was to fundamentally transform Equifax going forward.
A very strong lever we have is the ability to integrate acquisitions, and it also gives us the ability when we look at a bolt-on acquisition to have more confidence around delivering the synergies. Because we have that confidence of the integration into our tech stack, the deployment of our platforms like Ignite into the new market, and the deployment and ability to move products, and as we pointed out in the call, move products both ways. Because we have a global infrastructure that's on one tech platform, is a real advantage for us going forward, both in how we run our business, how we deploy AI for our customers in products, models, and scores, how we deploy AI for productivity and speed in our operations and technology and our support functions, and also how we're able to do the integrations more quickly.
Thank you. Our final question this morning comes from the line of Ryan Griffin with BMO Capital Markets. Please proceed with your question.
Hey, Ryan.
Hey, thanks so much. Just one question for me. I'm just curious how durable that growth trend is in the fintech market. I know the comparison to the U.S. fintech market, where the higher interest rates at the tail end of the pandemic constrained that model. Just any way to think about the growth through the cycle. Thank you.
We're not intending to give long-term growth rates for Mexico or to the fintech sub-segment inside of Círculo. The way we think about it, obviously the current growth is super attractive. At the same time, you think about 30% compounded growth, over the long term is a very high growth rate, and it's not our expectation. We do expect the underlying market to grow double-digit, over the medium and long term. The underlying market has those fundamentals of that large unbanked population moving into the formal financial environment that results in financial transactions and credit data being required for that. That's a very positive underlying macro. Then Círculo's unique position in what I would call the fast-growing portion of the Mexico market, meaning fintechs, retailers, and telcos, that's really well positioned.
We think about this business clearly being accretive to our 7-9 international growth rate over the long term. It'll be a fast grower for us as long as we can see, which is one of the many reasons we were energized to acquire the business.
Thank you. Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to Mr. Burns for any final comments.
Thanks everybody for their time today. Please reach out to me and email it if you have any follow-up questions. We're around today, the rest of the week. Thank you.
Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.