As you reference Equifax quantifies the (latent) upside optionality (reproduced below)
Have you thought through what the latent FICO Revenue; EBITDA; EPS optionality is?
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The U.S. mortgage market assumed in our 2025 guidance is over 50% below its historic average hard credit inquiry levels. As the mortgage market recovers toward its historic norms at current mortgage pricing and mix and current TWN records, that represents on the order of $1.2 billion of annual revenue opportunity for Equifax. At current average mortgage growth margins, this would deliver adjusted EBITDA and adjusted EPS above the $700 million and $4 per share,
I think a lot more hinges on pricing than vols recovery. Fico mentioned that the trimerged royalty for the score was $15, and they’re softly guiding towards 1% of closing costs ($60-$80), although numbers far above that also don’t seem that onerous, especially when the bureaus pass them on. At $70 + normalised vols, we’re looking at almost 9x mortgage revenue. Mortgage is 44% of scores (I think). That’s a lot of incremental business. Uber bullish scenario would be $100 scores and Covid level mortgage volumes. That’s 18x current mortgage revenue.
Thank you for the update.
As you reference Equifax quantifies the (latent) upside optionality (reproduced below)
Have you thought through what the latent FICO Revenue; EBITDA; EPS optionality is?
---
The U.S. mortgage market assumed in our 2025 guidance is over 50% below its historic average hard credit inquiry levels. As the mortgage market recovers toward its historic norms at current mortgage pricing and mix and current TWN records, that represents on the order of $1.2 billion of annual revenue opportunity for Equifax. At current average mortgage growth margins, this would deliver adjusted EBITDA and adjusted EPS above the $700 million and $4 per share,
I think a lot more hinges on pricing than vols recovery. Fico mentioned that the trimerged royalty for the score was $15, and they’re softly guiding towards 1% of closing costs ($60-$80), although numbers far above that also don’t seem that onerous, especially when the bureaus pass them on. At $70 + normalised vols, we’re looking at almost 9x mortgage revenue. Mortgage is 44% of scores (I think). That’s a lot of incremental business. Uber bullish scenario would be $100 scores and Covid level mortgage volumes. That’s 18x current mortgage revenue.