Equifax Inc. (EFX) Cash Flow Statement

The persistent premium of operating cash flow over net income appears structurally explained by depreciation and amortization running near $184-196M per quarter, which substantially exceeds the $120-136M of quarterly capex and flatters accrual-based earnings relative to realized cash. This implies reported net income understates the cash economics of the business, but investors should note the ratio is partly a function of heavy historical cloud-migration investment being amortized rather than a pure signal of earnings quality. The consistency of conversion above 1.4x even in weak first quarters (1.41x in Q1 2026, 1.63x in Q2 2024) suggests the earnings-to-cash gap is durable rather than driven by one-off working capital movements.

The violent quarter-to-quarter swings in FCF margin appear dominated by working capital timing rather than operating deterioration, since capex and D&A are stable while working capital contributions range from -$173.0M to +$159.1M. On a stacked basis the trajectory looks constructive: the 2026 first-half troughs (7.4% and 12.0%) still exceed the comparable 2025 troughs only modestly, but the Q3 2026 print of 25.8% came despite a $101.1M working capital contribution that was smaller than Q3 2025's $159.1M, suggesting the underlying cash engine strengthened year over year. Given that free cash flow is running ahead of the accelerating EPS growth flagged in the income statement work, cash generation does not appear to be the weak link in the thesis.

The compression in capital intensity alongside D&A now running roughly 1.6x capex suggests the heavy cloud-native build phase may be transitioning into a harvesting phase, which would mechanically expand free cash flow conversion without requiring revenue acceleration. This interpretation is consistent with the income statement finding that legacy system costs are being eliminated; however, capex trending below depreciation for an extended period can also signal underinvestment in data infrastructure renewal, and investors should monitor whether CapEx/Rev stabilizes near 7% or continues lower. The recent step-down from the 8.4-9.6% range to 7.3% is material enough that any reversal would compress the record free cash flow margins observed in Q3 2026.

The deployment pattern suggests management is recycling the cash flow uplift from the cloud transition into shareholder returns, with buybacks plus dividends totaling roughly $2.19B over the ten-quarter window against $2.59B of cumulative free cash flow, leaving limited slack for debt reduction or large-scale M&A beyond the $74.6M acquisition in Q4 2025. Notably, the $260-300M quarterly buyback pace in early 2026 coincided with the weakest FCF quarters (7.4% and 12.0% margins), implying repurchases were funded partly from balance sheet cash rather than current-period free cash flow. This raises the question of whether the deployment rate is sustainable through a mortgage downturn, and warrants monitoring of whether buybacks moderate if USIS transactional volumes weaken.