Q1 2020 Earnings Call

[music].

Please standby.

Good day, everyone and welcome Judy.

First quarter 2020 earnings Conference call today's conference is being recorded.

Now I'll turn the conference your host Mr. Jeffrey Dodge. Please go ahead Sir.

Thanks, and good morning, everyone. Welcome to today's conference call I'm, Jeff Dodge at all to on today's call with you on Mark Siegel Chief Executive Officer, John Campbell, Chief Financial Officer, today's call is being recorded an archive of the recording will be available later today on our website at Www Dot Equifax dock.

Oh, and the Investor Relations section under earnings calls presentations and Webcasts during the call today, we will be making reference to certain materials that can also be felt under the earnings calls presentations and webcasts structure. These materials or labeled Q1 2020 earnings.

Release presentation.

During this call will also be making sure certain forward looking statements to help you understand that's what fracs and its business environment. These statements.

Involve a number of risks uncertainties and other factors, including beyond patches go wide beam like GE and economic conditions on our future operations that could cause actual results to differ materially from our expectations.

Certain risk factors inherent in our business are set forth in filings with the US you see including our 2000 like Jean Paul Cheng Terry and subsequent filings.

Also we will be referring to certain non-GAAP financial measures, including adjusted he P.S. it could be able to equifax and adjusted EBITDA, which will be adjusted for certain items that affect comparability of our underlying operational performance.

For the first quarter 2020, adjusted the P.S. attributable to exercise excludes cost associated with acquisition related amortization expense gauge on fair market value adjustments of equity investments the foreign currency impact of certain intercompany loans.

Are you waiting allowance for certain deferred tax assets a tax benefit on the legal settlement related to the 2017 cyber security answer that.

Income tax effects of stock awards recognized upon vesting were settlement.

In foreign currency losses for women are usually the Argentinian peso denominated net monetary assets.

Adjusted B P S attributable to actual facts.

[laughter] excuse me.

He also excludes legal and professional fees related to the 2017 cyber security incident, principally fees related to our outstanding litigation and government investigations as well as the incremental.

Nonrecurring project cost designed to enhance our technology and data security.

This includes projects to implement.

There's still some cross it seems to enhance our technology and data security infrastructure as well as projects to replace it substantially consolidate a global network.

Just because it's what was the cost to manage these projects.

These projects that will transform our technology infrastructure and further enhance our greatest security Werent heard throughout 2018 in 2000, a light gene are expected to occur in 2020 and 21.

Adjusted EBITDA as defined as net income attributable to exit facts, adding back interest expense net interest income.

Come tax expense depreciation and amortization and also as is the case for adjusted EPS, excluding costs related to the 2017 cyber security incident, you don't fair market value adjustments of equity investments foreign currency impact of certain intercompany loans.

Foreign currency losses for Remeasuring, the Argentinian peso denominated net monetary assets. These non-GAAP measures are detailed in reconciliation tables, which are included with our earnings release and also posted on our website.

Now I'd like to turn it over to Mark.

Thanks, Jeff and good morning, everyone.

We're all facing unprecedented times during the cold the global pandemic Hope you and your families are safe in managing in this unusual environment.

We'd like to start by thanking the dedicated itself with health care professionals first responders volunteers and others around the World War fighting the frontline pandemic.

Their dedication and sacrifices nothing less than her ROIC.

The economic impact from the Cobiz, 19th pandemic, it's still unfolding in would clearly be deeper than anything we've seen in or lifetimes.

Dealt with today's discussion we posted a first quarter 2020, Investor Relations presentation, which is available in the Investor Relations section of our website under events and presentations.

We plan to walk through the presentation on todays call if you want to pull it off.

[noise] Equifax as we execute during his pandemic at our work from home protocol and business continuity plans were focused on five critical priorities highlighted on slide four.

Number one the health and safety of our employees in their families number to continuing deliver for our customers with the highest level of service and supporting our customers would new data analytical services, they will need as they respond to the pandemic in economic impacts in their business and prices our businesses and priorities change.

Number three supporting consumers as they are challenged by the economic impacts to covert 19 by providing free credit reports and financial education.

Number four fixed executing on our cloud technology data and security transformation, our focus and investment in our cloud Native technology date into computer security transformation are continuing at the same levels. We had originally planned for 2020 with the goal is accelerating our cloud based data and technology capabilities to make them available more rapid.

<unk> to our customers.

Funding in executing of our cloud technology transformation continues to be a priority for equifax.

And number five continuing on the new product momentum from 2019, we then <unk> tailored off Equifax is unique data assets for the recession environment.

We started to accelerate new product Rollouts and 29 team that focuses continuing in 2020.

Like most companies we initiated our cobot 19 business continuity plan to mid March which included activating our crisis management team reporting directly to me as well as instituting ongoing interaction with our board to keep them up for apprised of our plans.

We have over 9000 employees working from home o'clock across our global workforce.

Only essential roles and customer support and datacenter operations continue to work from our facilities.

We virtually eliminated travel with limited exceptions for central customer or regulatory business needs.

For close to 2000 associates in a central walls that are still working from our facilities, we've implemented social distancing of work spaces aggressive cleaning <unk> sanitizing and other actions to make sure our sites are safe as possible.

We've been in the work from home mode, and no travel environment for five weeks actually now going on six weeks and our operated continuously and effectively for our customers.

We believe our teams efficiency and productivity is continuing at levels at or better than pre crisis.

We're seeing tremendous benefits from our move to cloud native tools that are driving significant collaboration as a part of our cloud technology and data transformation.

Our development teams are working almost exclusively on Google cloud platform in Amazon Cloud services and their efficiency continues at very high levels in our movement to cloud based security tools over the past 30 months has also proven to be highly beneficial in his new work from home environment.

I hope that gives you a strong sense that equifax executing and delivering well during these challenging times for our customers and consumers, while continuing our cloud and new products new product investments for the future.

I'm also pleased with the team we haven't place to manage through these challenging coded 19 crisis, there battle tested with deep domain experience my personal experience, leading GE capital's card business. During the 2009 Global financial crisis gives me a very unique customer lens on the value of data in a way and analytics.

The recession environment.

Moving now to our results for the first quarter, let's turn to slide five.

We're very pleased with our financial performance in the first quarter as both revenue and adjusted EPS significantly acetic exceeded our expectations and our guidance for the quarter.

The first quarter delivered our strongest performance since the 2017 cyber event and continued our strong momentum from the second quarter second half of 2019, where our organic growth revenue rate jumped to over 9% during the last six months 2019.

First quarter revenue of 958 million was up over 15% in constant currency and up 14% on an organic constant currency basis.

We had strong revenue growth driven by our U.S. you'd be businesses U.S. I asked the need of U.S.. They collectively were up a very strong 22% overall with workforce solutions up an outstanding 32% and U.S. is up a very strong 15%.

You asked mortgage market inquiries were historic high levels, given the low interest rate environment with inquiries up almost 42%.

International revenue was up 3% in constant currency and global consumer continued their pack to pass back to growth with revenue up over 3% consistent with fourth quarter in their third consecutive quarter of year over year growth.

These results were dampened by the Cobot 19 locked down impacts during the last two weeks of March which reduced first quarter revenue by around $20 million.

Adjusted EPS of $1.40 per share was up 16% and well above our expectations and the top end of the guidance we provided in February.

As we discussed on prior calls we incurred redundant systems cost in the quarter, including incremental DNA cloud and other operating costs of $15 million for about nine cents, a share which gap dampened our earnings growth rate.

Adjusted EBITDA was up a strong 20% with margins of 32.4% that were up 190 basis points compared with the first quarter 2019, given our strong revenue growth and the cost actions. We took in the fourth quarter 2018, and first quarter 2019.

With strong margin growth in U.S. is cws and international.

As we discussed on prior calls we expect our EBITDA to grow more rapidly than EPS in the coming years due the increased amortization of our incremental cloud transformation investments.

FX movements in the quarter will more negative to revenue and adjusted EBITDA and adjusted EPS than expected by 13 million and two cents per share respectively.

Our constant dollar revenue growth through February 15% provides a good view of the continued strong progress, we're making across all of our businesses and the positive momentum of equifax over the past three quarters.

This performance positions us well to navigate the cobot 19 economic headwinds.

I'll I'll shift now to discussion of the first quarter performance of each of the four business units as highlighted on slide six.

Later in my comments.

I will discuss in some detail the impact you're seeing in April as the Corona virus lockdowns impact portions of our business and their implications for the our financial performance in the second quarter.

You asked is revenue of 343 million in the first quarter was up 15% versus the first quarter 2019 on a reported basis and 13% on inorganic basis for the quarter online revenue was up 16%.

In line non mortgage revenue was up 3% in the quarter and online non mortgage or garner for grant organic revenue declined 1%, reflecting the decline in March volumes associated with declines in economic activity from the cobot 19 pandemic.

Through February U.S. is online or one mortgage revenue was up 7% in total and a solid 2.5% on an organic basis.

We saw a nice nice growth across auto direct to consumer banking insurance, which was partially offset by declines in telco in the first two months of the first quarter.

In telco, we went back primary share with a major customer beginning in March which is a positive going into second quarter.

The strengthening of online revenue through February is very positive and another sign of our continued progress in U.S. is commercially.

This positive momentum in the first quarter in second half of 2019 will serve us is well as we entered the cobot 19 economic environment.

Mortgage solutions was up a very strong 33% in the quarter and lower than mortgage market inquiry growth given the mix shift in the quarter from mortgage solutions to online.

Mortgage solutions continues to perform very well in this low interest rate environment.

You asked I asked this financial marketing service business revenue was down 2% in the quarter compared to last year.

Revenue per club revenue declines were due to lower than expected project Rabbit revenue in March brought on by the covert 19 Lockdowns.

I'm very encouraged by the performance of syncing U.S. I have steam in the first quarter both in their strong growth through February and into speed at which they are adapting product offerings and they're selling efforts in March to meet the substantial change in customer needs from the cobot 19 pandemic.

This follows U.S. sciences momentum in the second half of 2019.

Later in my comments I'll discuss the success, we're having a cross equifax and focusing our efforts with customers on solutions leveraging our unique data assets to help them manage through this new coated 19 recession environment.

You asked is accelerating commercial activity and new deal pipelines remain strong.

During the current market conditions, the number of pipeline opportunities that the as at the end of March was up 6% compared to December 2019.

33% for March 2019 in our win win rate in the first quarter was up about 500 basis points from the first quarter 2019.

We are continuing to close new deals with customers in the past few weeks, even with the coldest 19 work environments and we expect strong mortgage growth in the second quarter in the current low interest rate environment.

U.S. is adjusted EBITDA margins of 44.7% were up 170 basis points from the first quarter 2019, driven by the increase in revenue, partially offset by increased royalty costs as well as the increased investments in new product development data analytics.

Increased customer consumer support costs and reduction in redundant systems costs.

Turning now to workforce solutions, they had another exceptional quarter with revenue up a very strong 32% versus the first quarter 2019.

Rudy Ploder ended dws team delivered the highest growth quarter for E.E.W. Wes since we acquired the business in 2007 and on a run rate basis for the 12 month ended March 31st.

Ws crossed the billion dollar revenue Mark for the first time in their history, both huge milestones.

Verification services revenue was up in extremely strong 48% compared with the prior year, driven by outstanding revenue growth and verification and mortgage.

The strong verification services revenue growth also reflects continued year over year growth in work number active records as well as the rollout of new products in mortgage.

Alan solutions and other verticals in continued expansion of system to system integration with customers, which you know is really critical.

He WMS and verification services Nonmortgage revenue growth was a strong 9% and 15% respectively compared to last year.

Through through February verification services non mortgage revenue growth was up 18%, we start strong double digit growth across key nonmortgage verticals, including government auto talent solutions and debt management.

Nonmortgage verifier revenue growth for the quarter was up 15%, but down from the 18% run rate. We saw in February reflecting the coated 19 impact in the latter half of March principally in auto debt management and talent solutions.

The work number database close the first quarter with 105 million active records and 80 million active unique individuals up 18% compared to March 2019, and the database now or is that represents about half of U.S. nonfarm payroll.

Our contributors are also growing rapidly from just under 30000, a year ago to over 700000 companies contributing in the first quarter.

Growing twin records.

Dr. hit rates that translates into revenue almost immediately.

We expect to continue twin contributor and record growth in second quarter in 2020.

The work number database is equifax as most unique and differentiated asset, particularly with the scale and currency of the database that can provide incremental value to our customers in today's challenging times, where there were there was so much income in employment uncertainty around consumers in the us.

Through February our employer services business revenues were flat compared to first quarter 2019.

This was slightly better than the performance we saw over much of 2019 and reflected growth in our I nine and other talent management businesses offset by declines in unemployment insurance claims management and our workforce analytics business.

For the quarter employer services revenue was up 2% with our unemployment insurance claims management business up 8% organically in the quarter due to very substantial due to a very substantial increase in unemployment claims volume in the second half of March.

Daily volumes up six fold during the last two weeks of March for the quarter, given the rise in us unemployment filings.

We expect continued substantial growth in unemployment claims in the second quarter, John will discuss this in more detail. When he covers March and April trends in a few minutes.

The strong verify revenue growth resulted in strong adjusted EBITDA margins of 51.5% increase of 210 basis points compared to last year due to the strong revenue growth and proactive cost management, which more than offset increased royalty costs redundant system costs from the technology transfer.

Nation.

Workforce solutions is an outstanding business that continues to deliver very strong results even in challenging times.

John will discuss later discuss later that we expect workforce solutions deliver strong growth again in the second quarter.

International revenue of 216 million was up 3% in constant currency and down 4% on a reported basis.

[music] February international constant currency revenue was up a strong 8% with organic revenue growth also up 7.5%.

The strong growth through February with a continuation of international strong second half 29 team momentum.

Their commercial momentum in the first quarter physicians the international business to operate well in the new Kobin 19 environment.

Asia Pacific, which is primarily our Australian in New Zealand business and ADSL and now also includes our India business at first quarter revenue of $70 million up 3% in constant currency year over year.

[music] February However, Asia Pacific was up a strong 5% in local currency, Australia grew over 4% both stronger than our expectations.

Fraud, and I'd and commercial online were both very strong in Australia up, 20% and 9%, respectively and marketing services continued to decline, but at a much lower rate than in 2019.

Shifting now to Europe, our European business with revenue of 66 million was down 1% year over year in constant currency with the credit business and debt management businesses also down 1%.

And our credit businesses negatively impacted by the decline in the economic activity from the Cobot 19 Peck endemic in the second half of March.

Through February in Europe.

We showed strong constant currency growth of 8.5% our UK in Spain credit businesses grew 7% in total through February.

In the UK, we saw growth in our financial services vertical both direct and through reseller partners.

We also saw growth and the gaming vertical and from new products launched in 2019 in open banking in digital marketing.

European get management revenue was up over 10% through February as we saw higher get placements with the UK government.

As John will discuss shortly we are expecting a significant decline in getting management revenue in the UK into second quarter as the UK government has suspended tax collection activities during the Covidien crisis as well as declines in our European credit businesses due to customers pausing on collection activities during the early phases of Copel.

Team.

Shifting now to Latin America Art, our business in Latin America delivered revenue of 43 million in the first quarter and was up 9% in local currency.

However through February Latin America was up a strong 15% in local currency led by strong double digit growth in Argentina, and next in Mexico, low teens growth in Chile in Ecuador, and high single growth in Uruguay.

Our Latin American businesses are adding new logos embedded benefiting from the rapid adaption of ignite and interconnect in their markets.

Canada revenue of $37 million was up 2% local currency in the first quarter.

Unlike most of our international markets, Canada has a mortgage business that benefit like the U.S. from lower interest rates.

Revenue growth in our Canadian mortgage business business in the first quarter, which makes up just over 10% of Canadian revenue were largely offset by declines in our consumer and commercial businesses. During the last two weeks of March due to the Covidien 19 pandemic.

Through February Canada was up 5% driven by consumer credit, specifically mortgage and our commercial and IDN fraud businesses.

International adjusted EBITDA margins at 27.8% were up a strong 250 basis points compared to last year.

The strong growth in margins reflects the benefit of revenue growth and the cost actions implemented by the international team in the fourth quarter 2018 and throughout 2019.

Shifting now to global consumer solutions their revenue was up 3% on a reported basis in the quarter in constant currency basis in the quarter.

The third.

This was the third consecutive quarter of growth.

Global consumer direct revenue, which represents about 40% of total gcs revenue was down about 2% year over year in the quarter.

We saw a mid single digit growth across the UK and candidates combined consumer direct businesses.

While the U.S. consumer direct business declined 7% in the first quarter. It continued to improve from the fourth quarter 2019, It's still represents a substantial improvement from a double digit decline in the U.S. consumer direct business. We saw in the third quarter 2019, and since the cyber event in 2017.

Sequentially doors versus fourth quarter total subscribers are stable to slightly increasing across the us candidate in UK, which is an encouraging sign as we move into second quarter.

Our gcs partner businesses increased 8% in the quarter over quarter as result of growth from our US free model partners, our benefits channel and our breach business offset by revenue declines with some of our paid model partners.

Our partners business was up a solid 9% through February as we saw a nice nice growth in our benefits business and event based businesses as well as our traditional partners.

Revenue was negatively impacted in the last couple of weeks of March by declines at some partners, particularly in the lead Gen space and we expect Kogan 19 impacts that our partners to affect our second quarter partner revenue John will discuss this in a few minutes when he discusses April trends.

Gcs adjusted EBITDA margins of 23.1% decreased 80 basis points compared to the prior year, primarily driven by mix shifts in increased cobot 19 consumer call center support costs in late March.

We also increased marketing spend into us in Canada in the quarter.

With the substantial weakening in several of our business units in verticals that began in the second half of March from the Corona virus pandemic, we took actions to tighten costs.

The tight controls all over our costs in terms of adequately restrict reduced travel.

We frozen hiring expect except for rolls directly related to consumer support.

FX 2020 technology and data transformation or new products.

We'll also continue at current levels and we've also reduced discretionary spending across the company.

At this stage, we're looking at $90 million discretionary cost takeout versus our business plan for 2020, and if necessary we prepared to take additional cost actions as required.

That said, we will take actions to protect our franchise during this economic event.

As I mentioned earlier, we are continuing our cloud technology and data transformation investment spending at planned levels and our new product growth initiatives because of the significant strategic and operational value from both initiatives.

These stricture strategic priorities will benefit equifax during the cold bid economic impacts and power us into recovery.

Shifting now to trends, we're seeing post the started the co bid 19 crisis.

Starting in mid March Equifax began seeing revenue impacts in several of our business units in verticals from the broad locked down actions taking globally to some slow the spread of cobot 19.

To help as you form your view on the potential impact is pandemic. We wanted to provide you with a couple of things.

First our perspective on which portions of our businesses our recession resilient today.

Second our performance during the global financial crisis in a comparison of our business mix in 20 in 2009 compared to today are 2020.

And then last John will cover current revenue trends, we're seeing in our daily transactions and over the past few weeks.

Estimate the impact the recession could have on equifax or will have an equifax, we signed our line of businesses into three categories first recession resistant.

These businesses have drivers that are not directly aligned with economic activity in the recession, and we expect them to them to grow through Kobin 19.

The best examples of these businesses, our workforce solutions, our us mortgage business and our government lines of businesses that we expect will continue to grow from the uniqueness of the data, including twin or from the low interest rate environments, including mortgage.

Second counter cyclical businesses and these are businesses that performed better during the recession in the Best example is our unemployment claims management business in workforce solutions, where we expect significant growth in workforce solutions revenue from growing unemployment claims in the United States.

And third our recession impacted businesses. These are businesses that are directly impacted by economic activity in contraction in a recession and include auto cards in P. loans were both consumer activity declines or lender activity is contracted for risk containment reasons.

We expect these business lines to have negative rent revenue revenue growth in recession.

Today about 65% of Equifax us businesses are either recession resistant where counter cyclical and about 55% of our global business is recession resistant or counter cyclical.

This compares in the 2009 global financial quick financial crisis, we're only about 40% of our businesses were either recession resistant or counter cyclical compared to the 55% today.

It's meaningful growth the meaningful growth in Cws and us mortgage since 2009 position to equifax well for the cobot 19 recession.

As shown on slide seven during the 2009 global financial crisis, Equifax performed very well and exhibited the resiliency you expect from big data analytics business.

In 2009, we saw only 6% decline in total revenue for the year with our largest single quarterly decline at 10% in the first quarter of 2009 at the deepest point of the recession.

The largest declines in 2009 were in international with smaller declines in USA, yes, as we benefited from growth in mortgage from low interest rates.

Importantly, workforce solutions grew throughout the period and showed substantial growth of 17% in 2009. Both is the work number continued to grow records and contributors during the global financial crisis, which drove verification hit rates and we saw strong unemployment insurance claims revenue growth.

From growing unemployment levels in the us in 2009, and we expect a similar pattern in 2020.

Shifting now to slide eight.

Equifax business mix is better positioned for an economic event today than it was during the global financial crisis.

Strong workforce solutions growth has increased their relative size in equifax from 10% of revenue in 2009% to 27% of revenue today.

And us mortgage has grown from 12% of Equifax revenue in 2009 to over 20% today.

In addition, workforce solutions growth in revenue and significant margin expansion as their increased their percentage of total equifax EBITDA to 30% today from only 11% in 2008.

Over the last 12 years workforce solutions outsized revenue growth and the expansion of us mortgage as well as the growth of less cyclical government related businesses, including the growth of workforce analytics has increased equifax recession resistant fee and counter cyclical businesses from 40% of revenue.

In 29 in 2009, Dover, 15% over 55% today.

Which we believe has significantly improved our capability to continue to invest and execute during the coated 19 economic impacts.

Our cloud technology and data transformation execution as well timed as the benefits begin to roll in during 2020 and accelerate in 21 and 22.

The cloud transformation investments have allowed us to more rapidly access multi data assets in the new cloud data fabric environment and deliver new products to market with speed to address the new co good economic challenges for our customers.

The cloud transformation will improve our revenue growth cost structure margins in cash generation in the future.

Clearly the coded 19 recession is much different than 2009, unlike anything we've ever seen before but equifax has a stronger business with the scale of workforce solutions and us mortgage and much better positioned to weather the coded 19 economic impacts with our unique data in technology leadership.

Our financial performance in strength allows us to continue invest in the cloud transformation and new products, which will benefit us in the future.

I'll now turn the discussion over to John So he can cover recent financial trends, we're seeing the business units as well as an update on our liquidity technology cost savings in some other financial items I'll come back and review our progress on the cloud technology and data transformation, new products and our vision for the future of Equifax and 20.

One in 22.

John.

Thanks, Mark as a reminder, I will generally be referring to the financial results from continuing operations represented on a GAAP basis, but we'll refer to non-GAAP results as well.

First a few items in one Q 20.

In the first quarter total nonrecurring or onetime costs, principally related to the cyber security incident, and our transformation or $81 million decrease of $16 million compared to the prior year. The cost includes $78 million of technology and security and $3 million for legal fees in the first quarter General Corp.

<unk> expense was $134 million, excluding nonrecurring costs adjusted general corporate expense for the quarter was $91 million.

Up $17 million from one to 19, the increase reflects the higher security technology going equity compensation costs in 2020 as compared to 2019 that we discussed with you in February.

Well one to 20, the effective tax rate used in calculating adjusted EPS was 25.3% and inline with the rate we guided to we guided to in February.

Interest expense for the quarter was $31 million, an increase of $4 million from one to 19 and inline with our expectations due to financing the $341 million legal settlements.

Payments made during threeq to 19.

Our liquidity and balance sheet remains strong as indicated on slide nine we had almost $1.6 billion and available liquidity at March 31, including 370 million in cash and available borrowing capacity on our bank credit and they are facilities of $1.2 billion.

We have no debt maturities in 2020 and 2021, we have debt maturities beginning in June and will likely pay the remaining 355 million dollar of our us comprehensive consumer settlements in the first quarter of 21. In addition, we recently worked with our credit facility lenders to modify our covenants.

Beginning in 223 2021 at March 31, our leverage ratio was 2.7 on the basis of our amended credit agreement well inside of our new leverage Covenant of 4.5 times. This amendment provides us with significant and enhanced financial flexibility.

The continued execution of our Equifax, Twentytwenty cloud technology, and data transformation and investment in new products and capabilities. During this recession.

We are watching current trends closely and we'll continue to manage proactively to protect these critical investments.

This also gives us the ability to manage our liquidity and balance sheet.

One to 20 operating cash flow of $31 million was flat was flat with once you 19 as you know our cash flow in the first quarter of each year as low as we make bonus payments our annual for a one k. match dividends and interest payments all in one Q.

We also make legal settlement payments related to the 2017 cyber security incident, and one Q $20 million to $47 million related to the 100 million dollar accrued in Fourq to 19.

Capital expenditures in one Q 20 was $88 million down $27 million from 29 team.

We have approximately $400 million of remaining payments on litigation and regulatory outcomes related to the 2017 cyber security incident.

About $53 million will be paid and twentytwenty predominantly into Q the timing of when the remaining approximately $350 million of the U.S. consumer restitution fund is paid depends on the resolution of the appeals filed related to this case, which timing is uncertain at this time at this time, we do not expect to fund.

Remainder of the settlement until early Twentytwenty, one details on the status of all outstanding regulatory and legal issues will be provided in our one Q twentytwenty form 10-Q.

Turning to slide 10, entitled Cloud Technology, and data transformation 2020 impacts.

As we discussed in our February call as we put our new cloud native systems into production, we begin to depreciate These new systems and incur the cloud and other operating costs of running these new cloud native systems. It will generally as well as the costs related to our legacy systems. It will generally take six to 12 months.

From the time the cloud native system is fully in production to transition a legacy exchange or Decisioning system to a new cloud native system. During that time period. In addition to the depreciation on the new cloud native systems, we incurred the cloud and other operating cost of the new system as well as the operating costs of the legacy systems.

As twentytwenty as a transition year and the decommissioning of legacy systems is not expected to substantially occur until late Fourq, you 20, and 2021, we will incur these additional redundant system transition costs for much of Twentytwenty.

For 2020, we continue to expect these additional redundant system transition cost to be in the range of 40 to 50 cents per share with increased depreciation are exempt representing about two thirds of this additional costs and cloud costs net of any legacy systems. The decommissioning savings representing approximately one third of this additional costs.

Cost at the midpoint of this range. This is a total of about $75 million with $50 million increased depreciation and $25 million incremental cloud and other operating costs and once you 20. These additional redundant systems costs were about $15 million or nine cents per share as we move ins.

2021, we expect the savings from the decommissioning of legacy systems to begin.

Exceed the cloud and other operating cost from our new cloud native systems, resulting in a net benefit to Cogs at some point in the second half of 2021. This net benefit to Cogs will continue to grow in Twentytwenty, one and through 2022.

As well as customers migrating to our transform infrastructure and we fully deep finish our legacy systems.

As we have said and as shown in slide 11, we expect to generate significant cost savings from our cloud technology and data transformation.

A 15% plus savings and the technology costs, excluding depreciation and amortization of our cost of goods sold.

Moving onetime items in 2019 technology costs represent about 45% of total Cogs.

Full run rate savings in Cogs from the completion of the technology transformation on a 2019 basis would have been about $90 million.

25% reduction in our development expense is expected to be generated when we complete the transformation again at 2019 development expense run rate levels. This is a savings of about $35 million per year.

2019 cost levels. These two items would drive cost savings of up to $125 million and margins to invest in new products and growth as well as higher EBITDA.

And capital spending levels are expected to decreased 35% from the tenant at 5% of revenue we saw in 2019.

We believe our cloud native infrastructure and dramatically reduced applications footprint should allow us to be more capital efficient than our peers.

At or under 7% of revenue from 2019 elevated spend levels. This is a reduction in capital spending of about $115 million per year, which will enhance our long term cash flow.

In total that is a pre tax cash savings of about $240 million per year on a full run rate basis, using 2019 spend levels as a proxy substantially strengthening our financial profile and giving us the capability to further invest in new products and capabilities, while enhancing our margins.

In addition to the cost and cash benefits from the cloud transformation, we expect our new single data fabric and cloud based applications to accelerate innovation and new products that will be accretive to our revenue growth rate.

We expect to begin to seeing met Cogs savings during seven second half of 21 and are targeting reaching the full run rate of Cogs development expense and capital savings. During 22, we will certainly reinvest some of the savings. So we'll all up all the margin we've come a long way since 2018 and are seeing accelerating.

Chris on our cloud technology and data transformation, we are becoming increasingly confident we will achieve our goals now let's take a few minutes to talk about the trends we're seeing in the markets over the past few weeks given the very unique nature of the Kogut 19 led recession. The best perspective, we can provide on the impact on our business is to share the trends we are.

Seen so far in the month of April we are unable to forecast the economic events as Kogut 19 in our markets. So the work we are not providing 2020 got sorry to 220 guidance and removing our guidance for twentytwenty until we have more visibility on the economy.

Slide 12 to 14 show details of revenue trends on a constant currency basis. So far during the month of April and the implications on to Q 20, if they were to continue as.

As you would expect we have daily transaction reporting broadly available across our business, which we turn into daily revenue estimates the trends I'm sharing our based on this reporting and our view of these directional trends, which principally covers our online business activities, which is about 80% of revenue when you asked with lesser coverage and internet.

Additional.

As shown on slide 12.

U.S. I guess represents about 30%, 1% of our revenue in the first quarter, which about 85%. This online between OCI asked on mortgage solutions looking at the trend in April total U.S.

No just pointed toward down a little over 10% versus 2019.

Online mortgage revenue the sum of try merge and online single file has continued to show strong year to year growth in April up about 15%.

Online non mortgage revenue over the month of April is currently point pointed at a decline of about 30% versus last year.

As expected the greatest declines are occurring and auto banking and insurance verticals from declines and economic activity with better performance and telco as we remain the primary position with a major customer.

Remaining revenue and US I asked his financial marketing services, which is offline batch revenue, which performed relatively well in the first quarter and was down about 4% in March our assumption Fms will be down over 20% in the second quarter of 20 as it is a blend of marketing related activity, which we expect to decline consistent with.

I'm lying non mortgage offset by portfolio reviews volume, which we expect to perform much better than marketing as a recession unfolds, we do not have a meaningful daily trend for Fms.

Workforce solutions represented about 31% of Equifax revenue in the first quarter of which over 75% is online for verification services over the last three weeks verification services has showed high growth, but at a level below the 48% increase we saw in one Q.

Based on the April trends and movement in growth rates verification services growth appears to be pointed at about a 25% increase over 2019.

Mortgage which is the largest of the verification services verticals has been extremely strong up over 50% over the past three weeks showing substantial growth versus 2019, Nonmortgage verification services is about half government services related to our contract with the center for Medicare services, and the provisioning of benefits at the state level.

With the remaining being talent management services and banking principally in auto Nonmortgage verification services based on the April trends. We have seen is pointed towards the decline of about 15% government verification services revenue is performing better than commercial verticals as CMS has reopened BRAF locations and we.

We're seeing more benefits activity at the state level, the non government verticals, principally debt management talent management and banking had been down consistent with levels seen at U.S., I guess with debt management performing much weaker.

Than expected and the traditional recession as our customer base is weighted toward student loans.

An employer services unemployment insurance claims management represents about half of the revenue.

Expect meaningful revenue growth and you see in the second quarter as we process about 106 unemployment claim filings in the us over the past three weeks claims filings by Cws have averaged about 600000 per week versus an average in 2019 20000 per week, we expect our you see business to increase by well over 50%.

Versus the just under $30 million revenue, we saw in 2019 workforce analytics are W. Two business and our talent management businesses are principally subscription based businesses and make up the bulk of the remainder of employer services. These businesses are expected to see low single digit percentage declines year to year in the second quarter due to limited new customer.

Or acquisitions in total.

People trends hold and as well as these assumptions, we expect employers services revenue to be up over 35% in the second quarter.

Are you are you asked me to be businesses, you ESI S and cws make up about 67% of Equifax revenue.

Online portions of these business businesses make up 54% of Equifax revenue and based on April trends online is trending to be up low single digit percent overall based on April trends and assuming they hold throughout two to are you asked me to be should be up a little under 5% into 20.

Moving to slide 13 international represent about 25% of Equifax revenue, which under half its online across its four regions based on April revenue trends Asia Pacific as pointed to be down about 20 to between 20 and 25%. This excludes revenue from our recent acquisition of the remainder of our India.

Operations, which will be about $2 million in the second quarter, let Tams April revenue trends also point to a decline of a little over 20% in April Canada is seeing more significant declines pointing to revenue declines of about 40% in Europe.

We have both the CRM business on a debt management business. The CRM business has seen a weakening trend in April and as pointing to a decline at current trends of about 40%, although not in online business, our debt management business will be significantly impacted in the second quarter with revenue expected to be down almost 60%, reflecting the UK government.

Suspension of tax related debt collection activities. During the pandemic debt management is about one third of our European business on the basis of these metrics and total international revenue is pacing down over 30% in April Gcs represents about 10% of Equifax revenue gcs consumer direct which represent.

About 40% of the Gcs business, So very limited impact on revenue in the second half of March total subscriptions in the U.S. candidate in the UK, you're down slightly versus one to 20 averages with these trends holding relatively stable.

So as to 19 us consumer direct is expected to be down reflecting subscriber declines that occurred in 2019, we're seeing overall declines and partner revenue run rates and a high single digit percent range as our partners businesses are impacted by that pandemic.

In total Gcs is seeing revenue declines in the high single digit percent so far in April.

Although we are certainly seeing meaningful impact from the code at 19 Lockdowns over the past month, the resiliency of our business model and strength of workforce solutions and our us mortgage business as well as gcs do a degree is mitigating this impact, particularly in the us.

Due to the uncertainties in forecasting the depth and duration of the recession related to the actions to comp combat Cobot 19, we're not going to provide second quarter guidance on a re tax and our retracting all full year guidance as we indicated earlier, we will reinstate guidance when the path of recovery from the Cobot 19 recession becomes more clear.

However for perspective on total Equifax too few 20 performance as shown on slide 14, you're providing an illustrative second quarter framework to help you think about our performance to the extent total equifax revenue continued at the pace I described earlier based on April trends to 220 revenue would be.

Down about six and a half the 8.5% on a constant currency basis or $55 million to $75 million versus two to 19.

Based on current FX rates revenue would be down 8.5% to 10.5% or 70 $595 million year to year, resulting in two to 20 revenue of $785 million to $805 million.

Adjusted EPS in 220 at these revenue levels could be in the range of 70 888 cents per share down 37% to 44% from Twoq to 19.

Slide 19 also provides a walk through explaining the translation versus 2019 of the revenue decline to the decline in pre tax income and adjusted EPS Importantly at these adjusted EPS levels Equifax will still deliver about $225 million on adjusted EBITDA.

With that guidance is there's still much uncertainty as to what impact the pandemic will have on the economy, our customers business activities any past the opening up the economy and therefore, our revenue and earnings.

This this range provided reflects current variability in trends not a view of potential quarter outcomes. We are offering this framework as you determine your view of the possible impacts to amplify equifax revenue in 220 and think about your modeling for Equifax, we hope to detailing framework, we provided on the impacts we.

I've seen to date are helpful. As you estimate Equifax second quarter results, Let me turn it back tomorrow.

Thanks, John I hope our transparency on recent revenue trends in the framework for the second quarter is helpful.

Let me wrap up with a discussion on our future or $1.25 billion FX 2020 cloud technology data transformation and are continuing investment in new products, turning first to the cloud transformation.

As it has only been two months since we last discuss our progress we view on the technology transformation My discussion today will be abbreviated and I'll return to a full update in July.

Our investment in the transformation continues to be a top priority during 2020 as we works towards completing the strategic transformation and delivering the topline revenue cost and cash benefits as John talked about from the investment.

We're not seeing any negative impact on the cloud transformation progress from the new working environment as our technology team was already well versed in remote working capabilities.

We remain on track to complete the additional migrations of several large data exchanges by the end of the third quarter, including the work number NCT, we use consumer risk or acro I xsight wealth.

Us commercial.

Auto and property data assets.

Our data ex exchange will follow in the fourth quarter as we made the decision to migrate aid data X to the new cloud environment. After the Acro database conversion or transformation is completed to allow us to leverage the acro quite exchange for data ex integration.

In addition, initial migration of our E. I'd identity validation systems, we will be completed in April with customer migration is expected to be completed over the next three to four months.

Our new Luminate cloud identity, and fraud suite, which includes a new idea as a service is being developed as a cloud native solution and is expected to be available to customers in the U.S and Canada beginning in the third quarter.

Our ignite analytics and machine learning platform that includes attribute in modeled management capability as well as the ability for customers to easily and securely ingest their own beta is integrate is integrated with interconnect and is now available for customer migration today WSS and on track to be available GCP by the end of this.

Second quarter.

We continue to make strong progress globally rolling out ignite analytics via the ignite analytics platform with almost 200 customers now using ignite direct and marketplace in more than 30 customers using our patented explainable machine learning or MDT based model.

We're continuing our progress to the migration of our customers onto our new cloud based systems, including our interconnect ignite Apiay framework.

As a reminder, this is a common set of services on which we are working to migrate all US is you Ws and international customers.

As of the ended the first quarter U.S. I asked that migrated over 1200 us customers and international completed migrations with almost 1000 customers. This is slightly ahead of the pace. We discussed with you back in February.

We expect this pace to accelerate significantly through 2020 with over 10000 us customer migrations expected by year end.

In the vast majority of us customer migrations completed in early 2021.

Customer migrations are an important part of our technology transformation and we continue to work closely with customers to define to execute migration plans in speed their access to the advanced products and services, we cant increasing we offer with our new cloud native services.

We are seeing the customer migration work continue at a normal pace in the past five weeks of the cobot 19 environment, which is encouraging.

We are focused on the execution and where possible accelerating our cloud technology and data transformation roadmap in 2020 to ensure we deliver the customer and commercial benefits from the transformation and achieved the revenue cost and cash benefits and 21 22.

This is a top priority for equifax.

Turning now to slide 15, new product innovation remains a key component of our FX 2020 strategy and accelerating new product generation is key to our long term revenue growth.

We have an active pipeline of new products with over 100 launches forecast for 2020, which is up from about 90 in 2019 in 60 in 2018.

We're off to a strong start to the year with 34, new product launches in 2020, which is up two effects from the 14, we delivered in the first quarter last year.

Increasingly our new products are leveraging the broad scope and capabilities of our cloud native production systems, including a rapid acceleration in time to market.

This quarter workforce solutions launched several new products, including expanded suite of mortgage products that provide access to richer employment and income data to customers as well as access to pull data throughout the mortgage mortgage application lifecycle.

And enhance talent reports that provide a more complete view a candidate employment income education credentials and licenses as well as identity validation all critical in the hiring process.

In March as the depth of the coated 19 pandemic initiated risk initiated recession became clear our data analytics product and commercial teams quickly refocus their activities to work with customers and partners to leverage Equifax is unique and differentiated data assets and capabilities to support all elements of our.

Customers operations in this challenging work environment.

Central to that effort is the work number are unique and differentiated employment and income data asset becomes increasingly essential in this environment with unprecedented consumer income employment dynamics from accelerating unemployment salary reductions in furloughs in United States.

Our team focused on how to refine existing products as well as generate new products to utilize the differentiated capabilities to meet these new customer needs.

Our data and analytics teams reacted immediately to enhance our credit trends reporting that has long been utilized by our customers to evaluate trends across consumer and commercial lending as well as the changes in overall consumer and small business credit standing.

We immediately move from a monthly update to weekly reporting service and added more proprietary equifax data to help customers have more real time data to make critical decisions.

This product is now available on our ignite marketplace analytics platform.

We also customized this capability for specific needs of our customers. This includes making it available over secure ignite application that includes advanced visualization of analytics across our diverse data assets, including over 11 industry groups eight different vantage score bands for 11 loan products with three delinquency.

Stages across 55 states in territories as well as 300 over 350 metropolitan areas in the United States.

In the mortgage market, we are working across the industry to utilize our data to meet the requirements for the more current employment and income data in origination using twin enhancing offline analysis using including the use of income unemployment data again to help mitigate portfolio risk and help customers identify consumers that may require.

Our specific collections treatment or support.

We're in discussions with customers about weekly and monthly versus quarterly or annual portfolio reviews, using our differentiated data given the rapidly changing financial condition of the consumer.

We've also launched a product we call response now a premium portfolio review solution across auto credit card personal loan and other product lines, which incorporates credit trends, we reporting economic data consumer financial behavior and income unemployment solutions, allowing.

Customers to proactively manage their risk portfolio and lower credit losses, while factoring in current economic the current economic environment.

These models are highly predictive and calibrated to the current economic environment to help lenders identify deteriorating credit risks.

We also launched a capital markets economics, we a suite of products to provide insight to the credit health of us consumers and small businesses, including delinquency default and loss severity analytics for mortgage and other products other products as well as the loan detailed level across zip codes vintages and market segments.

Our ability to bring these new capabilities to market. So quickly is accelerated by our progress for moving our data assets into a cloud native data fabric. This is just the beginning of the new product and analytic offerings in front of us from our cloud data and technology investments.

We will continue to prioritize investing new products, including recession based products solutions during the second quarter and beyond.

We recognize that equifax that we recognize the important role that equifax plays in the markets around the world, where we do business.

During this co bid 19 pandemic, we are working with consumers and other stakeholders in the public and private sectors on creative solutions that ease the burdens on consumers and businesses, while assisting in recovery effort recovery efforts.

In every country, where we do business Equifax is actively engaged with national and local governments to ensure continued credit reporting the captures the status of consumer payments in lender accommodations, while recognizing intentions of policymakers to minimize negative impacts to consumers credit ratings caused by cobot 19 hardships.

In the US we've worked independently and in conjunction with Experian and trends Union to provide assistance to financial institutions seeking guidance on how to report during this challenging time period.

We recognize that many consumers have been impacted by the cobot 19, pandemic and we will experience economic distress, particularly in the short term.

Equifax is offering support to our website and other channels to consumers looking to minimize the pandemics potential impact on their credit standing.

Yesterday, we announced at the three us credit bureaus Equifax.

Experian and trends Union would be making free weekly credit reports available to all us customers all U.S. consumers for one year through April 2021.

We're also offering free credit reports to Canadian consumers, we encourage consumers to take advantage of ongoing educational support regarding how credit reports and scores work and for small businesses, we are partnering with policymakers and others to support small businesses as they as they navigate the current environment.

I'm proud of the many steps that we've taken a support consumers and small businesses and look forward to engaging as a constructive partner to help with additional solutions to help consumers and businesses in the overall economy. During this challenging time.

Wrapping up let's turn to slide 16 on the future of Equifax and 20 Twond 2021 in 22.

As we battled through the economic impacts of Cobot 19, we remain confident that the future of Equifax has strong.

Our financial performance allows us to continue one off events and invest in our cloud transformation and new products as we look forward to the rest of 2020 and into 21 in 22, we are confident in our business model, our investments and our ability to perform in this challenging coated 19 economic environment.

First we have the right team in place of seasoned leaders, who understand data analytics and how to operate recessionary environment.

Second our unique and differentiated data assets, including consumer credit employment and income utilities and property data assets, along with unique commercial credit data assets position us to deliver the products and analytics our customers will demand is they manage through this unprecedented environment.

Third workforce solutions is a powerful business that we expect to grow through the cobot 19 recession and had strong growth potential in the long term.

Our very unique twin income in employment data is even more valuable in its unprecedented economic environment due to the scale accuracy in latency of the data.

Vws will continue to grow and monetize between database as real scale with half of the U.S. nonfarm payroll in the database today would strike drives hit rates in workforce solutions revenue.

At 105 million records. The twin database is up more than two X from 2009, making it even more valuable than the global financial crisis, many years ago.

We expect twin record growth to continue into enhance the value of the database that hit rates continue to increase.

Fourth the momentum of the U.S. right recovery and US is international and Gcs performances in the second half a 19 in the first quarter give us confidence that our businesses, our competitive and well down the path of recovery. Following the 2017 cyber event.

Fifth Equifax is winning in the marketplace recently workforce solutions was awarded one of the largest contracts in our history from US Social security administration that is expected to deliver $40 million to $50 million of revenue per year over five years, starting in 2021.

This contract reinforces the unique capabilities of our twin data assets and will deliver strong growth and margin in the future.

We are continue to invest and new products as you know npis fuel our growth not only in the current year, but in the future in 2019, we increased our npis spending in delivered 90, new products, we're continuing to invest in 2020 and expect over 100, new products. This year, our npis capabilities are being accelerate.

Good by our cloud transformation and remain a top priority for 2020 in the future.

We will continue to expand our investments in new products inspect the cloud transformation to accelerate our growth from NC npis into future.

In seventh and less we're making strong progress on our cloud transformation and in the execution of the cloud investments is a clear priority for our team in 2020 Theres no change in our spending we're focused on the cloud transformation, we're continuing our investments and expect to made continued progress in 2020 and be subset.

Additionally, complete north in the North America transformation, nearly 21 with international to follow.

Our new cloud native data and applications and always on stability in speed to market and ability to profit product products around the globe will deliver significant benefits to equifax as John discussed earlier.

They will enhance our competitiveness and drive our market share new products and accelerate our revenue growth.

Still reduced our technology Cogs and development expense by over 15% delivering $125 million of savings in 21 and 22.

These savings ramp through 21, and 22 and allow us to reinvest further in new products and growth, while expanding EBITDA margins.

And they also reduced our capital spending to below 7% of revenue in the 21 and 22 period from the tenant 5% of revenue. We saw in 2019 in during the last couple of years. This is equivalent to about $115 million reduction in capital spending from 2019 levels, which provides additional cash for investments.

You should to shareholders.

We believe equifax is well positioned to weather the economic challenges with strong revenues for growth in 21 in 22, we.

We are still working towards the reestablishing, our long term financial framework and invest and an investor day in the second half of 2020.

Wrapping up these are challenging an unprecedented times for everyone.

None of us know the depth and duration of this economic event, but equifax is operating well we're prepared for the crisis and we're well positioned to weather the economic impacts of the cobot 19 pandemic.

We are focused on protecting the health and safety of our team supporting consumers and delivering for our customers worldwide.

We remain confident that the future of Equifax is strong our financial performance allows us to continue to invest in our future.

Our business model is resilient and we've seen a strong we have a strong balance sheet that allows us to invest and accelerate our cloud transformation and new product investments for future growth cost improvements margin expansion in cash generation in 21 22.

We hope for the continued health of our employees into consumers customers partners shareholders and all of our stakeholders.

And again, we think the healthcare professionals first responders and others on the front line of the pandemic for their bravery and dedication.

We will continue to be transparent with you in our investors as the co. Good 19 pandemic and the economic fallout unfolds, we plan to reinstate our 2020 guidance as soon as we have more clarity on the economic impact from Cobot 19 in the past the recovery.

And with that operator, please open it up for questions.

Thank you.

I didn't answer session will be conducted electronically ask a question. Please press star one on your telephone keypad.

Is there any speakerphone. Please make sure your mute function is turned off to allow the second over return equipment again.

I Wonder if you would like to ask a question.

We'll go first you Andrew Steinerman with JP Morgan.

Hi, Good morning, first trial I want to thank you for that slide deck that disclosure is like industry back.

I wanted to go back to slide slide seven when you really went over the great financial crisis, and how over division gate, including ADW actually occurring during back price fish and 17% growth you pointed to in 2000 Ini then mark you kind of okay, great they're talking about how how your w. last might do.

Through.

Dan This crisis and.

I feel like I think you back to 2009 2009 is really just two years. After trucks was acquired in 2007 net I remember it was benefiting getting a lot of benefit initial benefit I'm, just being part of the equifax.

And then now obviously decades later that sort of like on a standard and so I'm thinking just about verifier do you feel like it might just be more subject to end market volatility a hot now that it was again in 2000 and 2009, just progress again that benefit has been kind of in place.

Decade now.

Hey, Andrew Thanks for the question then.

You're right.

Workforce solutions are talks with only a couple of years in equifax at the point, maybe with a different scale of the business their database.

As a fraction of the size. It is today, it's a two X the scale of it Theres no question that there will be pockets in our perspective I think John showed you some of the trends in April where income employment data is used in personal loans or in auto subprime auto where we're seeing some.

No pressure there declines in the recent weeks as result of.

Reductions in originations there aren't many people buying cars in the last five weeks for example.

But if you look at the broader perspective of the business and were income unemployment data use we believe that the twin data or income unemployment data is more valuable today in this economic event from Coven 19, then it wasn't a global financial crisis in the global financial crisis, you had.

Unemployment levels that were quite high we're going to have that again, but you didnt have the uncertainty around consumers that were on furlough that had reduced salaries you didnt have the salary reductions that are so widespread today and you didnt have the pace of the scale of the unemployment waves going through the economy and what we're hearing.

From our customers is that the value of knowing if someone's working in the value of knowing how much they're making is more important today in this economic cycle because of the on precedented impact on consumers incomes in the United States is really just.

Changes dramatically you add to it.

The scale of the use of the product in mortgage which is what is much larger today than it was back then the system Decison connections that we have we have a low interest environment today, that's going to drive refinance the purchase volume, we expect to be down during the pandemic, but with low interest rate environments and stimulus will that increase in the future.

And then you have the ability to business to continue to add data records, we've really scaled our capability to add records as you know.

While we have.

Hit rate could vary from 30% to 40% we have 50 60, 70%.

Situations, where we can't meet customers request for income unemployment data because our database is only 50% of nonfarm payroll so as we grow the database.

The revenue in that business just grows from hit rates because of the system systems that impacts there so thats a bit of a long winded discussion that.

First off we we think workforce solutions has a really strong position in mis coded pandemic environment.

And we think it has a lot of levers to continue to strengthen that position going forward and then left is that we really believe that if you think about data assets in value in the coded pandemic versus the global financial crisis or prior recessions.

Understanding someone's income unemployment is critical.

I would that help.

Okay, great. Thank you.

Thanks, Andrew.

Well go next to Andrew Jeffrey with Suntrust.

Hi, Good morning, I appreciate all the detail guys.

Mark a couple of questions for you I guess first of all I think about verifier you touched on in response Andrew's question can you.

Scott how much of the business is SNB it seems like much of the disruption we're seeing is.

That level, so I wonder if that how much in terms of the employer business how much.

Capturing based on mix.

You mean under contributor side or on the verification side, Andrew on the contributor side.

Yes. It will there's no question you look back I think we shared some stats back in 2009, we had 30000 contributors those were largely large primarily large businesses and I think you know we've had an intentional strategy of not only adding large businesses over the last decade and last year and current months, but also really getting to small businesses because that is.

We're allowed the Workforces and we ended the quarter I think was 700000 companies contributing data to us. So we're clearly getting more small businesses contributing.

What were the impact of the pandemic is it it's really going to be widespread you think about large companies, whether theyre airlines or hotels or hospitality restaurants.

There's large companies out there that are furloughing lots of their employees.

They are executive team and it very and salaried employees are taking large salary reductions.

So this is a pretty broad based economic event and as I discussed with Andrew.

What we're hearing from our customers is that.

Understanding the impact of Forbearances in delinquencies is is it is a challenge and is more challenging now that it wasn't a global financial crisis, but understanding who is working how much they're making has their salary been reduced are they on furlough at 30% reduction are they in a salary reduction in down fit.

80% is really critically important in the pace of those changes are so rapid meaning salary reductions happening last week and if you think about the data assets. We have an industry has this is the most current data asset in the industry, meaning were updated every paced cycle. So we have gain.

Every week or two weeks from our contributors, which makes that data incredibly valuable because of its currency. So thats a.

Why that business is doing so well and why we expected to do well in this economic environment and.

We're not going to slow down our.

Strategy around adding new records as you know.

We have a dedicated team that's all they do is work with big companies in the in payroll processors to increase our data contributors and that's clearly a part of our strategy you saw the growth that we've had in the last year up to 105 million.

Records or 80 million uniques and.

Thats going to continue so thats another lever for that business in April and May and June and in the second half of 2020 as we continue to add data records going forward. While we're pleased we have close to half of the nonfarm payroll in our database, we don't have the other half and that's our operating.

Sorry to go work on that which is a unique lever.

For growth because as you know the business model the system the system integrations, when a mortgage origination originators hitting our file if they get hit rate on our 80 million uniques.

Then they use that for the incoming employment verification if they don't they have to get out another path. So every day that we're adding new records that revenue goes up in any economic cycle as they hit our database.

Okay. That's all very helpful. Thanks, and then just a quick follow up on mortgage and I know, you're not making projections, but if you look into the back half you think CEO MBA forecast is the right way to think about your business.

Yes, as you know and I'll, let John jump in we don't forecast the mortgage it's not our gig.

Theres, while others that.

With that quite well, we look at all the mortgage forecast when we're doing our normal modeling I think as you know and we translate that through at a pretty formulaic way into our typical five forecasts and guidance and I think as John pointed out.

With where.

The future is it's very hard I think even for them to forecast, what's going to happen. So we're not really using that.

Beyond.

We're really focused on daily trends at this point.

Okay. Thank you.

And as you know right between MBK, Fannie and Freddie that their forecasts are extremely divergent right now so it's made it more difficult to rely on those we obviously talk to them a great deal understand what their economists think but as Mark said given that that no. One can really forecast the economy right now we're heavily focused on trends.

Great.

Our next question will come from.

With Barclays.

Well. Thank you. Good morning, gentlemen, My first question is going in to your point you just need around the wide impacted the crude prices with new account leads for loans across the board I was just curious why.

Pocket.

Good day.

Recession resilient pocket and it can be the trends early on with the weights in the Wi Fi, but I'm just curious how you think about how that will perform when can you maybe compared to only.

Mine and the new loans between which as you probably.

Okay, I think that have thanks for the question I.

I think we and I don't think there's any company out there that can forecast where there is going to go how long. These lockdowns going to last winter there is going to be relaxing of economic activity what consumers are stuck in their homes.

How can they buy a car or how can they do a lot of financial activity and that's why we don't see away.

To forecast 2020 versus 2009, we tried to point out some of the very powerful differences in equifax versus the global financial crisis, which we think serves us well as we entered into this co vid crisis, but we don't know what the next stimulus package is going to be.

We don't know what's going to happen.

When the payroll protection program ends in September is there going to be another wave of lay offs.

Likely you would think.

It's hard to tell our people going to start flying again and going to hotels are they going to go to restaurants.

Those things there's so many uncertainties. So we focused on was try to be really transparent with you.

Try to help you understand the significant changes in equifax.

Versus 2009 with workforce solutions up to 37% of our business and.

Sizable part of our EBITDA us mortgage, which we expect to continue to grow through this.

Pandemic because of low interest rates and revised I'm driving that and the cost actions that we've taken we tried to give you. The best framework, we can and as soon as we add some visibility around where we think 2020 or 21 is going well certainly provided but we think we're better positioned today than we certainly.

In 2009, because of the mix of our businesses.

Got it and then just.

Clarifying the employer services business in the business tied to plan Coombs, John I think you mentioned you do you guys do one six screens that just curious if the revenue model just things do you get paid for screen or is that at some other warrants which has some confusion around that.

Sure. So the way the business model works is it's it's a subscription business and effect where when people.

Signup for subscription they get a certain number of claims as part of the subscription and then as they run through the subscription they pay overages. So what's occurring right is obviously because no one anticipated. This level of claims so customers are running through their annual subscription and then when they run through that they start to pay overages.

And the reason you're seeing the revenue start to grow but it's at a it isn't consistent necessarily with movements on unemployment is because of the fact that there that as employers run through their their subscription level than we start they started paying for overages based on when their subscription.

Effectively started so so so that's what you're seeing and that's why you're seeing the growth rates that we're talking about.

And I know John.

Our happening as we speak meeting just with the massive spike in unemployment claims coming in men of we're we're certainly in.

Revenue mode with those subscription agreements that we have.

Got it thanks again.

Well go next to George Mihalos with Cowen.

Turning to energy.

Let me let me.

Mike Thanks for the other presentation you put out this morning.

Well I'd like to start is if we look at at.

Slide number 12, what you're talking about the 21 April revenue trends.

Hi.

If you look I asked that need everywhere.

Could you maybe give us a sense of how those trends have trended throughout the month of April with a dramatically different last week versus say before we put the month.

John maybe I started I'll start a little bit maybe you can jump in on there was a difference between the last two weeks of March and as we got into April for sure and if you remember the last two weeks in March.

All of US were Spooling up our BPP plans going into work from home and they're just was I think a different level of activity with our customers and with consumers as we got into April.

You want to call the work from home shelter in place.

Mode being some level of normal it was more normal in April and but John I don't think there was much difference.

Outside of like unemployment claims coming in and stuff like that.

But I guess, the only thing I would add to that is it has been relatively variable right. So so we look at that at the trends daily and and you will see meaningful changes in any given day in the level of revenue when you look year over year right and that's why we tend to look over the longer periods.

I don't think there were any really distinct trends, probably if you took the if you looked at U.S. online mortgage you'd say was probably somewhat trending a little bit negative, but quite honestly, we we consider that.

In the in the chart that we put forward so.

But other than that the trends I'd say the trends are a bit variable and thats quite honestly why we put a range on what we provided on slide 14, not because it's a guidance range, but because there is variability in the activity we're seeing in the month.

And and and the only other place we're probably seeing some trends, where we mentioned is seeing a little bit of a trend in the UK, it's trending negatively.

And and in some countries, we're seeing some stability right. So we started to see stability in let's say, Australia, so thats been somewhat of a positive but but.

Overall, the trends are relatively consistent.

But but they are they are highly variable in the period, although wobbling around the average as we gain.

I think what will be interesting is that next couple of weeks.

Because everyone's watching.

Youre seeing some markets start to relax the shelter in place.

Chile, I think where we have a business is it starting next week, a New Zealand just starting you see some states in the United States that are talking about relaxing that in the coming weeks and I think that will be indicative of as we have this walked back from shelter in place to having some levels of economic activity.

You know of what that goes to our current run rates.

Yes.

Thanks, Eric is we're clear on writers and international right the percentage of online business. There's just lower so so the clarity on the impacts of the rates that we're giving you. The percentages were giving you on the entire businesses last we think we think what we've done reasonable, but but the level of online reporting is just lower.

Understood understood appreciate that color then John just just just two numbers question. If I may just on slide 11.

125 million potential savings, which obviously would would go into Rob.

EBITDA one for consummated.

Is it right to think that from an earnings perspective, there will also be additional savings coming through from lower depreciation and amortization.

And then I know, you're not giving guidance on on slide 14.

But looking at that that negative 85 to 100 million dollar impact.

Is it reasonable to assume that there will be some offsets from the 90 million of annualized cost cutting that.

That mark talked about earlier in the call. Thank you.

Yes, so just looking at slide 11, right I mean the.

What we tried to do was just provide some inc. indicative levels of dollars based on 2019 actual cost levels. Since that's what we that's the only thing that we have that's a complete year end available. So we've talked about this in the past rate so the cogs savings or exit DNA and and those those are things that will ramp in as we start shutting.

In systems down right, so as things be commission.

Basically starting very late this year and then going into 2021, and then 2022, you'll see those ramp.

The development expense, obviously next year, we stop with Sierra reporting in 2021, So our development expense, you'll actually see an increase in 2021, not because of spending as higher spending will actually be lower it's just because in 2020 and 2019, we were showing.

We included some of this development spending in Sierra in separate reporting right, which we had separated so that it wasn't included in our in our adjusted and our adjusted EPS. So you'll see an increase in debit expense, but then as we complete the transformation you will see the debit spend start to decline principally to get into 2022 and.

Mark's comments same thing with capital right as you complete the U.S. transformation, which mark talked about completing in 2021. Once that's complete thats. When you start seeing the capital reduction start to occur. So these things will phase in over time DNA DNA I think we'd indicated was a big step up this year, we don't have a crystal ball into 2020 wanted.

Is unlikely you'll see a big reduction 2021, you could actually see somewhat of an increase based on the spending we're seeing now im so I wouldn't expect that but again that we don't have a crystal ball that's that's.

That's that's a difficult thing at this point to forecast in terms of near term if you're talking about second quarter getting some benefit from this on the second quarter. Now we've included everything that that we believe that will occur in the second quarter and it's the prior slide which gives a view as to the impact on the transformation in 2020.

And there were actually incurring the incremental cost of transformation, because we're seeing the duplicate costs.

That does that we've talked about in the past than that we've shown on slide 10, So hopefully that covered your question.

John maybe I could just add I think the group on the call knows that up until today's call. We've kind of talked about percentages that we see from savings from the cloud transformation, but now that were it.

Kind of the ended the first quarter and heading towards the last three quarters of the year. We thought it was helpful to put some dollars in of what we expect those benefits to be in 21 and 22.

Going forward.

Thank you.

Thanks, We'll go next to David Togut with Evercore ISI.

Thank you good morning.

Thanks.

Disclosure.

Mark you called out of 500 basis points increase year over year.

In the first quarter can you just elaborate a little bit on where are you seeing the biggest increases your win rate.

Segment.

This point do you feel that you're completely back to where you were pretty breach in terms of win rates.

Hi.

Yes, Thats Great question, then there's clearly been momentum we've seen fairly steady, but theres been some lumpy sequential improvement over the last couple of years post the cyber event in 2017, and you know US is it was impacted most significantly and as we got into the second half of 2019 in the first quarter you can see the.

The non mortgage online responding there the win rates have been pretty broad based I think you know.

We've got a really strong commercially oriented leader in sitting at.

You know is kind of be a year and change into his role. So he's really taking hold he's a ease restructure the commercial organization in the last.

Few months and that's bringing some new energy into how their focus in the marketplace.

New product Rollouts were helpful growing products last year gives him more stuff to sell and his team, which I think is quite helpful.

So really there isn't a segment that stands out we're focused on all of them and I think you know we put a particularly focused on fintech, because that's a space where our competitors are much stronger than we are and Weve spooled up.

I think we've gone probably from a year or 18 months ago from a couple of people, calling on fintech too close to a dozen.

Today that are in that space and of course that is historically been growing.

Pre cove it much more rapidly than the normal market. So it was a space that we wanted to play in so no. Good answer on anything that really stands out accepted.

It's just been a real focus around.

Driving that in the second half of your question is are we back yet in the questions. Now of course US is our competitors pre covidien I don't know what their first quarter numbers look like but I'd expect their non mortgage growth organic growth would be higher than us is is in the United States. So thats.

A growth rate, we're still chasing.

We still believe that that.

Our team has the potential to get back and be competitive as exhibited by the win rates that they're having in the marketplace and when I think about going into the coated.

Pandemic in the economic impacts having that momentum from us is still in.

Recovery mode is positive.

The fact that they've had to sequential growth in the performance in the second half of 19 in the first quarter performance.

Gives me confidence that they're going to you know reacted and support our customers in the marketplace and then you couple that with having the some of the unique data assets. We have like twin that to US is teen can sell in the marketplace that can bundle with existing credit file sales or other.

Ways to go to market and bring value to our customers.

And using our new single data fabric with integrated solutions that combine our us is data with our twin data those are more opportunities for that team to have more wins in the marketplace.

Thank you very honest.

The only thing I'd throw in there is as you know an answer every business with dealing with as we now work through April May and June we're evaluating the funnel very closely given the effects that.

That that are happening to our customers around.

Because of the pandemic so.

Understood. Thank you.

Well go next to Jeff Miller with Baird.

Yes. Thank you just.

Wanted to talk through I guess, the margin impacts and the cost cutting a bit more so what's so in the 90 million of annualized are you, reflecting any of the benefit into Q2 illustrative examples and is it just like the cost actions or does it also includes savings from things like.

Variable compensation that might be impacted or like the hiring freeze just whats all in there and it will impact in Q2 at all.

Yeah, Yeah, we would like most companies we took actions as soon as we saw the pandemic hit.

As I said in my comments, we've got a hiring freeze the in place that equifax.

But that excludes where we see we need resources for the cloud transformation or for new products.

So to some benefits from that that you would expect Jeff would roll through the travel benefits no one's traveling.

Well I would it I would guess there'll be no internal travel it equifax for the rest of the year and until Theres, some clarity around the vaccine and there'll be limited commercial travel so that that rolls in there and then we also are tightening our belts around our other discretionary costs with third parties the advisers consultants.

Others that are doing work that.

Not the integral to the cloud transformation or to the our new product Rollouts those are areas that.

No were trimming back and that John can answer the question around the framework.

And I'll, let John ticket.

Sure so.

You also specifically mentioned variable compensation and no. It doesn't include saving some variable compensation since the first quarter was so strong.

The obviously if that was to occur that would be in the future. So I.

I think mark covered it effectively what it is it's the removal of any growth we had in in spending.

The plan that we would have shared with you.

Back in them back in February and then the real reductions come in and in the reductions in discretionary spend which we have taken some and we're continuing to work and we'll expect to have more progress. There and then also substantial reductions in TNT and then in terms of our our our employee expense. So effectively we are holding everything flat as Mark said so.

The higher no new hiring and and we'll see the benefit of attrition, but that's what's in that Thats whats in the numbers today and that's what the second quarter reflects.

And that's how we've done our longer term scenario planning as we plan our business.

Through the end of through the end of 2020 beyond that there is no incremental benefits to cost savings in the illustrative view that we provided you on slide 14.

Jeff maybe ill add one more comment.

From our perspective, when you think about how we're running the company.

I said in my comments quite clearly I, hopefully clearly that we're going to protect our franchise, we've got the financial strength.

To continue to make strategic investments even in this challenging economic time and that includes the cloud transformation, which.

John and I, both said were on we're spending what we plan to spend in 2020, and frankly, if we could find a way to accelerate the spending to accelerate the savings and benefits we might do that in the same within pie as you know last year, we increased our spending and npis and that resulted in more new products.

If we find opportunities to increase our spending around new products in 2020, we will do that in order to.

Delivering the near term.

New products related to the to the recession impacts, but also for the future of Equifax and then on the discretionary cost side. These are belt tightening that are obviously meaningful.

We are focused on areas, where we won't.

In my words impact the franchise in the future of Equifax and 21 and 22.

Okay, and then I understand the subscription with over just model for the UK claims business, but can you just kind of help me better understand the timing factor like one do you recognize revenue relative to one the initial claim as filed.

Well, let there if they are outside of their subscription.

Pretty quickly, meaning they are on the clock thats, how the economics work.

Yes, it's just technically it's when we delivered the surface right. So when this when this this is delivered in Mclean would be filed and weak and then the overage has occurred and we can build for it than the revenue would be recognized in period.

But we're clearly that.

With a whole bunch of what.

A lot of the customers.

In the last couple of weeks.

Thank you guys.

Thanks, Jeff.

Well go next to Bill Warmington with Wells Fargo.

Bill Good morning, everyone.

So for us if not say congratulations on these sorts of security contract and I wanted to ask when in 2021 start generating revenues that as Jan first start.

Yes, we don't have specific timetable for that it's a very significant contract horses I'd mentioned, it's the largest contract in our history. If we look back on and it's one that really represent the the power of that income unemployment data that we have in any WMS and we wanted to give you.

He is we are talking about 21, and 22, and obviously 23 in 24, because it's a five year contract.

That that that contracts going to be rolling in and as we get closer to.

So either the next few quarters or closer to our 21 guidance or the financial framework that we plan to put in place later in the year, we'll certainly give you more specifics on that.

Okay.

Then for my follow up.

I was going to ask if you could put some numbers around what you're seeing in terms of volume like originations for for credit card for auto and for insurance and it also be helpful. In terms of doing on modeling.

If you could get a sense or what that represents the percentage of total equifax revenue.

Yes, John you're going to help me on that one I don't know if we have handy that kind of data I think you probably know that when it comes to cards and p. loans were smaller than our competitors in the United States in that space. They are much larger than we are.

And you know Weve clearly globally.

Being the largest.

Impacts in cards P. loans in auto just because it's common sense rate if.

Consumers can't get out of their homes. They can't go to a car dealership and by a car than they can't use the financing on it. So there's clearly been impacts in every market in those spaces, John would you add to that anyway.

No I just I'd say, we gave I think we gained quite a quite good detail on non mortgage in total, but no. We havent broken it down for for everybody Bye Bye line of business. So I think thats. So that's a level of granularity we're going to hold back.

Okay, where we are I think maybe just as you might imagine what we are seeing is that.

The customers, we deal with pull back on.

Pre screens or originations.

They are raising risk scores because of the uncertainty around the consumer which impacts their volume and as I mentioned in my comments you may recall that I was running GE capital's credit card business, which is now synchrony back in 2009 and those the actions we took.

Until you have some clarity around the consumer in those kinds of businesses, whether its PD lone auto were.

Cards, youre going to be more conservative on your originations.

The flip side of that is as I mentioned, which is the beauty of the business that were in is the counter cyclical side is.

In my experience, we spent more money on portfolio management and credit line increase in decrease actions in order to manage the existing book that you have because the consumers changing so rapidly in one area we seeded.

We're seeing some real traction on his increased.

Discussions and activity around our income unemployment data from workforce solutions in some of those spaces, where we historically.

Had less.

Penetration or market share.

Okay. Thank you very much.

Well go next to Andrew Nicolas with William Blair.

Hi, good morning.

You talked quite a bit about the new product that we had since you've rolled out to address the recessionary environment.

Many of which seem to prioritize more frequent data update.

Do you think demand for this level of frequency could persist coming out of the crisis and then need related they are there any other change if you customer behavior that you've seen that you think it has a more lasting impact on the demand side.

Yeah, I think that.

It's really tough to.

Predict what's going to happen because we've never seen anything like this and.

So theres so many uncertainties about.

How is the consumer going to come back with the stimulus going to look like is there going to be a second wave.

After the payroll protection plans here in the United States of unemployment action. So you have all those things laid it layered in there which really impact.

How long the cycles going to be and how much stimulus is going to be put added clearly we've seen unprecedented amounts that will be helpful. But the depth of this one when you think about travel and.

Unemployment and the impacts from unemployment in so many sectors is just massive.

Whether it will persist on the frequency.

Posted its economic event.

Hard to predict.

I do expect the frequency of.

Refreshing your data refreshing your portfolio to be much more in this economic invented it wasn't 2009, just because there's so many more uncertainties in this environment. The second thing I would say that I mentioned earlier my comments that I think is going to be.

Uniquely valuable for Equifax as income unemployment data who's working and who's not.

Going to be.

We didnt have the database in a scale that we had and 29.

We do today, but the volatility of people's salaries and ability to repay their debt is so different in this economic environment than last one and then to your point.

Does that result in work number or our twin income unemployment data, becoming more of the workflows going forward I think it's really possible.

We're opportunistically trying to work on that when you think about mortgage.

Every mortgage in the United States that originated for the most part pulls all three credit files and most of it and they all have to really verify income employment.

We're very integrated network flow, but we still have more opportunities for system. The system integration. We don't have we only have I say only we only have half of the nonfarm payroll. So there's 50% of the originations or whatever the percentages something like that they'd have to be.

Verified in another way, so we'll be able to grow going in that space. We don't have that same penetration.

In.

Some of the other sectors and.

This could result in an extended period for workforce solutions to increase its market share in some of those other spaces like auto like P. loans.

Unlike cards, which we've been working on pre pandemic and we're really spooling up now.

Great, but that's helpful well known from one quick one.

As the workforce solutions business mix potentially stabilizes the but this year with the faster growing employer services business could you refresh us on their margin profile of the verification for services businesses, just trying to get an appreciation for how a stronger employer services that might impact margin expansion trends.

And for recorded points.

John you could take that one.

Yes, so we haven't given specific margin differences, what we have said is that.

Is that verification services looks somewhat likely online portions of us somewhat lower right because they have some royalty payments that are larger than than what USS us I ask might pay and that employer services as quite a bit below that okay, but we havent actually given a specific breakdown, although given the detail we give on.

On split of revenue and then total margin for the for the B you I think you can probably get pretty close.

I think it's safe to say to be incremental margins margins on this incremental unemployment claims volume is quite high.

It is it is quite a size the verification budgets.

It is relatively high.

Thank you.

Our next question will come from Gary Bisbee with Bank of America.

Hi, guys.

Good morning.

I guess two part question first on.

Your employer services.

I'm, sorry workforce solutions business, how do we think about 22 million jobs lost in the last.

Couple of weeks on the records.

How does that can you talk about continue grow records, but it would seem to me the active record goes down as people lose their jobs, how does that flow through the rhetoric.

Well, that's clearly be some impact there we don't process all unemployment claims we pick up that data, which is valuable on the claims that we that we do process.

So there could be some impact, but I think it's quite minimal John.

Yes, so effectively that that the dynamic thats occurring right is that is that as we get them as we get payroll files to the extent that we havent given employer that has done a lay off so that the employment as much lower which I think is what you're referring to then yes work number records with decline what's been offsetting that right I mean, certainly year on year, but also continue.

Going through this quarter I'm, sorry last quarter in the first quarter is there was a substantial increase in a number of subscribers starting really as we talked about kind of September through the end of last year and a very large increase in records. So what you're looking at is very large increases in record year on year and absolutely some offset from the.

From unemployment, increasing once individuals become unemployed.

And I think the dynamic thats benefiting us is the year over year benefit we have from what I just referenced and then also the continued work that the team is doing to add new contributors I'm at a relatively rapid pace. So so as we go through this year, we'll have to see how those two dynamics play out in terms of our ability to add new contributors and then also the negative effect, which is.

Which as our contributors have lower employee bases that you see our AR.

Impact the record base, but so far.

Because of the large additions in new contributors, we've seen over the past five six to seven months.

It continues to be a net positive.

As we go through the year, we'll keep you up to date on what it looks like.

Maybe just to add to that is is you as you probably know you may know, we sell various flavors of our work workforce solutions twin data we sell.

Create a system the system integration, if the consumers going through a mortgage process and the originator hits our file if theres a consumer in that file then they pulled that record in there we charge them for whether they are working today, where there were working six months ago nine months ago, 12 months ago et cetera dependent upon the product that they Poland. We also there is.

Applications or customer use cases, where.

So called inactive records meeting someone was working or on our database a year ago or six months ago or two months ago and is not active today is the other revenue source for us that we sell to there's multiple ways that we're able to sell the data, including the active records.

Okay, Great and then just a quick follow up we've seen the number of reports out there about tighter bank underwriting standards, beginning to impact refinancing volumes and potentially consumer lending more broadly you are you seeing that in the data is that incorporated all in that in the mortgage strength.

Slide by that April trend data. Thank you.

I think it's hard for us to see that in mortgage because thats mortgage is fairly strong both in the.

Credit file in the US I asked him and with the verification and workforce solutions I think as John pointed out and US is our non mortgage volume is obviously trends are down versus.

First quarter in last year in those are going to reflect.

So things like auto and P. loans and credit cards, and it's going to be a combination between primarily of them you know reducing originations part of it is just from economic activity or foot traffic.

Meeting with people in shelter in place you can't buy a car you can but is not as much happening.

And then some of its going to be as you described of.

In lenders, which some I've talked to and I know Thats, what I get in 29 2009, when I was running GE capital's business.

You tighten up origination so you figure out where that consumer where the consumers going to be.

So you raise score cut offs or.

Different ways too.

Make sure you're protecting your book, while you're still doing some originations, but we clearly see.

Declines in those markets not only in United States, but in other markets around the globe.

Well go next to Brett Huff with Stephens incorporated.

Good morning, and thanks for the exit rate data guys.

Doing well a couple of questions for me I am looking back at my model and I think you guys bottomed out in the USA as online outlines 13% and one of the quarters in a nine if I'm remembering right.

I think you said, you're seeing about minus 30% now and just wondering Conrad compare contrast.

Tune those two numbers if I've got those right look different than what similar between those two and one more today.

Well, there's nothing similar about 29, new or there is but I'm being a little sharpen that Doug. This is so different.

2009, there wasn't shelter in place and there wasn't.

Every retail operation auto dealers you name it shut down for months at a time that dramatically different.

And just the economic activity and as I mentioned earlier as we are starting to see some relaxation.

States like here in Georgia, they're going to allow restaurants to open in a week or two were in things like that.

That to me is what is one point, it's just dramatically different than you really can't compare.

How we perform until we get back to what I would call.

Normal ACA impact.

Economic activity, meaning consumers are allowed to go to stores and want to go to stores and so on even with that it's my view that this is going to be dramatically different than 2009 from an economic standpoint, just because of.

How consumers are going to operate are they going to go on a plane and on vacation that drives economic activity in credit cards are they going to put off buying a new car.

The waves of unemployment, we are very different now than they were into 2009, and we've never seen in our lifetime the waves of furloughs or salary reductions just never been at that scale, which obviously changes how the consumer.

His is operating in can operate so thats just dramatically different now why we thought it was important to share that with you have what we looked like in 2009 was not about the specific percentages, but really how are the resiliency of our businesses and we tried to.

Give you our view of how we categorize the businesses and business like workforce solutions powered through the 2009 crisis is currently powering through the Koby crisis, we expect that to continue the same with us mortgage with low interest rates.

Being over index to mortgage in the United States is a good thing regenerating margin that we can use to reinvest in the business as.

As that business goes forward, so I think theres more differences is similarities.

But the difference is around the scale of our recession resistant businesses being dramatically larger in this economic event versus 2009, which was the worst we'd ever seen until now I think serves us well as we get deeper into this.

Coated economic recession.

Just for clarity.

Just for clarity, we set non mortgage is down 30% online.

Total online we sit down just over 10% I just wanted to make sure you're comparing the right numbers Thats. All got you. That's helpful. Thank you and then the second question is John you mentioned kind of having the online kind of Deeley Cali, if you will.

Do you have any insight into the credit tires that are being cold or the data that's being used.

What use cases are being more or less impacted and I'm thinking sort of the difference between maybe marketing.

Credit offers versus originating credit offer versus doing kind of portfolio management type stuff with any sort of hints in the data on that or is that.

We will take still.

So for US most most not all marketing and portfolio management would be batch so that would be in Fms and that that's a place where we would have lease less visibility now I think as you mentioned in the call because that.

Fashion business tends to happen.

Before it ended periods ended isn't really as some.

Subject to reliable trends.

So we've made assumptions about what will happen there, but they are far less based on trends and they're based on the trends, we're seeing an online within online we do know by we do know by.

General industry type and I think there is some detail within industry type.

A deeper than that but in terms of a specific use cases within a.

Within a lender no not so much rate. So for example at someone pulls a mortgage file will certainly know told it but we don't necessarily know if it's where rifai.

Or not or we don't mess or versus a new purchase or in some cases, it's difficult to tell if it's even for for Eli.

Great. That's it thanks guys.

Thanks.

And now I would like to turn the call overheads Jeffrey Dutch. Please go ahead.

Okay that will conclude our call for today appreciate Everybodys time, I know the call went a little bit longer than normal, but again refer you to the.

Material that is on our website and with that operator, we will conclude I call. Thanks, everybody.

That does conclude today's conference. Thank you all for your participation you may now disconnect.

Okay.

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