Q1 2021 Equifax Inc Earnings Call

Good day and walk on to the Equifax first quarter 2021 earnings call. Today's conference is being recorded and at this time I would like to turn the conference over to Dorian Hare Senior Vice President and head of Investor Relations. Please go ahead Sir.

Thanks, and good morning, welcome to today's conference call I'm Dorian here with me today are Mark <unk>, Chief Executive Officer, and John Gamble, Chief Financial Officer, today's call is being recorded and archive of the recording will be available later today in the Investor Relations section of the about Equifax tab on our website.

Www Dot Equifax Dot com.

And the call today will be made some reference of certain materials that can also be found and the end of Investor Relations section of our website under events and presentations. These materials are labeled Q1 2021 earnings release presentation.

During this call, we'll be making certain forward looking statements, including second quarter and full year 2021 guidance to help you understand equifax and its business environment. These statements involve a number of risks uncertainties and other factors that could cause actual results to differ materially from our expectations certain risk factors that may impact.

Our business sort of set forth and our filings with the FCC and there are 2020 form 10-K and subsequent filings.

Also we will be referring to certain non-GAAP financial measures, including adjusted EPS attributable to Equifax, and adjusted EBITDA, which will be adjusted for certain items that affect the comparability of our underlying operational performance.

Non-GAAP measures are detailed and 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, Jordan before I address the Equifax has very strong first quarter results. So on again I want to again, thank our 11000 employees and families that supported them with the tremendous dedication. They continue to show under the challenging COVID-19 environment over the past year.

We continue to make the health and safety of our employees the top priority and I hope that you and those close to you remain safe.

Turning to slide four and as I will cover in a moment Equifax delivered an outstanding first quarter with record revenue and strong sequential growth versus the fourth quarter.

And the tremendous progress we have made executing against our strategic priorities and building out our equifax cloud capabilities is allowing us to outperform our underlying markets and deliver outstanding revenue growth and margin expansion.

And the U S where the economy is still recovering from the Covid pandemic more rapidly than we anticipated we continue to outperform the overall mortgage market, which remains strong and the first quarter.

We're also seeing of real recovery and strong growth across our core banking auto insurance government and talent business segments.

We delivered growth again, and the first quarter internationally with continued challenging COVID-19 restrictions in place and most of our global markets and we expect to see acceleration of this growth as economies recover of outside the U S. First.

First quarter was of great start to 2021.

We are energized by our strong momentum and pivoting to our next chapter of growth with the launch of <unk> 2023.

Our new strategic growth framework that will serve as our companywide compass over the next three years.

With our new Equifax Cloud foundation increasingly and place we're focused on leveraging our new Equifax cloud data and technology infrastructure to accelerate innovation new products and growth.

The innovation of new products will fuel our growth and 2021 and beyond as we leverage our new <unk> cloud capabilities to bring new products and solutions and multi data insights to customers faster and more securely and more reliably.

As you know, we ramped our investments and product and innovation resources over the past 12 months to accelerate our new product rollouts, leveraging the new Equifax cloud.

Our highly unique and diverse data assets are at the heart of what creates equifax is differentiation and the marketplace. We of data assets at scale that our competitors do not have including twin and <unk> data <unk> ISI and more and we are committed to expanding and deepening the differentiated data assets through organic actions.

Partnerships and M&A.

We're also relentlessly focused on our customer first mentality, which moves us closer to our customers with the focus on delivering solutions to help the it help solve their problems and drive their growth.

Another critical lever of our strategy is to reinvest our accelerating free cash flow and smart strategic and accretive bolt on acquisitions that both expand and strengthen our capabilities with the goal of increasing our revenue growth by 1% to 2% annually from M&A.

And data security is deeply embedded in our culture. We are clearly established equifax as an industry leader and data security.

Working together as one of aligned global Equifax team, where we leverage our commercial strengths and our new products and our capabilities across our <unk> cloud global platform will allow us to deliver solutions that only equifax and bring to the marketplace.

We're energized around our new <unk> 2023 strategic priorities that will serve as our guide posts over the next three years and support our new long term growth framework that we plan to put in place later this year.

Turning now to slide five Equifax performance and the first quarter was very strong revenue.

Revenue at $1 2 billion was the strongest quarterly revenue and our history.

In the first quarter constant currency revenue growth was the very strong 25% with our core organic growth of 23%, which was also and equifax record.

As a reminder, we're coming off of solid 13% growth and first quarter last year.

All business units performed.

Praful outperformed our expectations and we are seeing positive signs of of Covid recovery, beginning to accelerate particularly in the U S.

Our growth was again powered by our two U S. <unk> businesses workforce solutions in the U S. I S with combined revenue of <unk>.

Free strong 38%.

Mortgage related revenue remained robust and importantly, our non mortgage related verticals grew organically by a very strong 16%.

The adjusted EBITDA margins of our U S. <unk> businesses were 52% of 400 basis points with AWS delivering close to 60% margins.

As a reminder, workforce solutions and U S. I S are over 70% of Equifax revenue and 80% of Equifax business unit EBITDA.

The first quarter Equifax, adjusted EBITDA totaled $431 million up 36% with over 250 basis points of expansion and our margins to 35, 6%.

This margin expansion was delivered while including all cloud technology transformation costs, and our adjusted results, which negatively impacted first quarter adjusted EBITDA margins by over 300 basis points excluding.

Excluding tower cloud transformation costs, our margins would have been up over 500 basis points. We are clearly getting strong leverage out of our revenue growth.

Adjusted EBITDA adjusted EPS of $1 97 per share was up a very strong 37% from last year, which was also impacted by the inclusion of cloud transformation costs. Adjusted EPS would have been $2 20 and up 54% excluding these costs.

We continue to accelerate our <unk> cloud data and technology transformation, and the quarter, including migrating and additional 2000 customers to the cloud and the U S and approximately 1000 customers internationally.

Leveraging our new <unk> cloud infrastructure, we also continue to accelerate new product innovation and the first quarter. We released 39, new products, which is up from 35 launched a year ago and the first quarter continuing the momentum from 2020, where we launched a record 134 new products.

And we're seeing increased revenue generation from these new products, leveraging our new <unk> cloud.

For 2021, we expect our vitality index defined as revenue from new products introduced in the last three years to exceed 8%.

This is of 100 basis point improvement from the 7% guidance, we provided and our vitality index back in February.

And in the first quarter, we completed five strategic bolt on acquisitions with a focus on identity and fraud capability through our acquisition of talent and and accelerating growth and workforce solutions with the acquisitions of higher Tech and IQ verify.

The acquisitions that will broaden and strikes and equifax are a strong lever for continuing to accelerate our growth and our big focus.

We're energized by our fast start to 'twenty, one and are clearly seeing the momentum of our own the equifax model, leveraging our new <unk> cloud capabilities.

Our first quarter results were substantially stronger than the guidance. We provided in February with over 90% of the revenue outperformance delivered and our two U S. <unk> businesses workforce solutions and U S. I S.

Importantly, as we will discuss in more detail shortly over 60% of this outperformance and the U S. <unk> revenue was in our non mortgage segments and both <unk> and workforce solutions.

Non mortgage revenue strength and consistently during the first quarter with March revenue up significantly versus February in both U S I S and AWS.

It is broad based strength was above our expectations and gives us confidence about further strengthening and the second quarter and second half as the Covid recovery unfolds.

Mortgage revenue was also stronger than we expected despite the growth and U S mortgage market of 21% being slightly below our expectations from a slowing from slowing mortgage inquiries and late March which have continued into April.

Our continued strong mortgage results and outperformance was driven by workforce solutions with stronger market penetration and record growth and positive impact from new products U S. <unk> mortgage revenue also exceeded expectations slightly.

The stronger revenue delivered strong operating leverage with substantial improvement and our EBITDA margins and adjusted EPS.

The strength of our first quarter results and workforce solutions and and in U S. Non mortgage revenue across U S. <unk> workforce solutions more broadly gave us the confidence to substantially raise our 2021 guidance for both revenue and adjusted EPS.

We're increasing our revenue guidance by $225 million to a midpoint of $4 6.4 dollars 65 billion and increasing our adjusted EPS guidance by 55 of share to a midpoint of $6 90 per share. This includes our expectation that the U S mortgage market for 'twenty, one 2021 and.

As measured by credit inquiries will decline more and our February guidance of down 5% to a decline of approximately 8%.

Our framework assumes that the mortgage market slows primarily in the third and fourth quarter, which is consistent with our prior of guidance and John will discuss our mortgage assumptions in more detail and a few minutes.

Turning to slide six our outstanding first quarter results were broad based and reflects better than expected performance for off from all four business units.

Workforce solutions had another exceptional quarter, delivering 59% revenue growth and almost 60% adjusted EBITDA margins.

Workforce solutions is now our largest business representing almost 40% of total equifax revenue and the fourth quarter and is clearly powering our results.

Verification services revenue of $385 million was up a strong 75%.

Barricade verification service mortgage revenue again more than doubled for the fourth consecutive quarter growing almost 100 percentage points faster than the 21% underlying growth we saw on the mortgage market credit inquiries in the first quarter.

Importantly, verification services non mortgage revenue was up over 25% and the quarter.

This segment of verification services continues to expand its market coverage and benefit from M. P is new records, new use cases, and as a long term growth lever for workforce solutions.

Talent solutions, which represents over 30% of verifier non mortgage revenue almost doubled.

Driven by both new products, and a recovery and U S hiring.

Government solutions, which represents almost 40% of verifier non mortgage revenue also returned to growth driven by greater usage and multiple states of our differentiated data.

As a reminder, we continue to work closely closely with the social security administration on our new contract that we expect to go live and the second half and ramp to $40 million to $50 million of incremental revenue at run rate in 2022.

Our non mortgage consumer business, principally and banking and auto also showed strong growth and the quarter as well both from deepening penetration with new lenders and from some recovery in those markets that I'll cover more fully and the discussion of U S. I S.

Debt management, which now represents under 10% of verify your non mortgage revenue was as we expected down versus last year, but has stabilized and we expect to see growth in that vertical as we move through 2021.

Employer services revenue of $96 million increased 17% and the quarter driven again by our unemployment claims business, which had revenue of $47 million up around 47% compared to last year.

And the first quarter workforce solutions processed about $2 8 million you see claims which is up from $2 6 million in the fourth quarter.

UWS process, roughly one and three U S. On initial unemployment claims and the quarter, which was up from one and five that they had been processing and recent periods, reflecting the growth in workforce solutions, you see market position.

As a reminder, we continue to expect UC claims revenue to decline sequentially and the second quarter and throughout the balance of 2021 as the U S economy recovers and job losses dissipate.

We currently expected decline and the second quarter, you see revenue of about 45% versus last year and our full year 2000, 2021 decline and you see claims revenue of just under 30%.

Yes.

Employer services non UC businesses had revenue down slightly in the quarter are on nine business driven by our new on nine anywhere solution continued to show very strong growth with revenue up 15%.

Our <unk> business is expected to continue to grow substantially to become our largest employer services business and 2021 and represent about 40% of non UC revenue.

Reflecting the growth of nine nine and the return to growth of workforce analytics, we expect employer services non UC businesses to deliver organic growth of over 20% in 2021.

The higher tech and IQ verify acquisitions that we closed in March had a de minimis impact on revenue in the quarter, but will add will further add to workforce solutions growth during the rest of <unk> 21 and.

And I will discuss the higher tech and ICU verify a little bit later.

Reflecting the power and uniqueness of twin data strong verifier revenue growth and operating leverage resulted in adjusted EBIT margins of 59, 3% and almost 800 basis point expansion from last year and workforce solutions.

Rudy floater and the workforce solutions team delivered another outstanding quarter and are positioned to deliver a strong 2021.

Workforce solutions is clearly equifax largest and fastest growing business.

U S. <unk> revenue was up a very strong 19% and the quarter with organic growth also of strong 17%.

Total U S mortgage revenue growth of $177 million was up 25% and the quarter, while mortgage credit inquiry growth and up.

21% was slightly below the 24% expectation we shared in February as.

As I mentioned, John will cover our updated view of the mortgage market for 2021 and a few minutes.

U S.

The mortgage revenue outgrew the market by 500 basis points, and the quarter, driven by growth and marketing and debt new debt monitoring products.

Non mortgage revenue performance was very strong with growth of 15% and organic growth of 11%, which is a record for U S. I S and off of fairly strong first quarter last year.

We view this outperformance by U S as meaningful and a reflection of the competitiveness and commercial focus of the U S. I S team.

Importantly, non mortgage online revenue grew a very strong 16% and the quarter with organic growth of almost 11%.

We saw on non mortgage revenue growth accelerate in February and March as the vaccine rollouts increased and financial institutions gain confidence and the consumer and the economy.

Banking auto I'd and fraud insurance and the direct consumer all showed growth in the quarter, which.

Which is encouraging as we move into second quarter and the rest of 2021.

Commercial was about flat, while only telco was down and the quarter as we expected.

Financial marketing services revenue, which is broadly speaking our offline our batch business was $53 million and the quarter up almost 12%, which is also very positive.

The performance was driven by marketing related revenue, which was up over 20% and I'd and fraud revenue growth of just under 10% as consumer marketing and originations ramped up.

And 2021 marketing related revenue is expected to represent about 45% of Fms revenue with identity and fraud of about 25% and risk Decisioning about 30.

This strong growth across our non mortgage businesses, including strong growth and marketing specific offline revenue is very encouraging for both the recovery of our underlying markets and our non mortgage performance as we move into second quarter and the rest of 2021.

The U S ISG and continues to drive growth and their new deal pipeline with first quarter pipeline up 30% over last year, driven by growth and both the volume and the size of new opportunities and NPI Rollouts.

First quarter run rate when rates were also higher than levels seen in 2020.

Sid Singh and as U S ISG and continue to be on offense and are competitive and winning in their marketplace.

In addition to driving core business growth and the first quarter U S. <unk> also achieved an important strategic milestone and closing the acquisition of count and industry leader and providing AI driven fraud prevention and digital identity solutions integration.

The integration efforts are now underway with a key focus on technology and product leveraging the joint Equifax and count data and capabilities of <unk>.

<unk> technology platform will migrate to the Equifax cloud and the next 12 to 18 months, which will allow for the full integration of account and equifax capabilities for new solutions, new products and market expansion in the fast growing identity and fraud marketplace.

U S <unk> adjusted EBITDA margins of 42, 9% and the first quarter were down about 180 basis points from last year about two thirds of the decline was due to the inclusion of tech transformation costs and our adjusted EBITDA in 2021, the remainder of the decline was principally driven by the higher mix of mortgage.

Products and redundant system costs from our cloud transformation.

Moving now to international the revenue was up 3% on a constant currency basis, and the quarter, which is the second consecutive quarter of growth and our global markets that are still very challenged by Covid lockdowns and slow vaccine rollouts.

Revenue growth improved significantly and Canada Asia Pacific, which is our Australian business and Latin America.

And this was partially offset by revenue declines and the UK principally due to continued UK lockdowns and response to the Covid pandemic.

Asia Pacific, which is principally Australia business had a very good performance and the first quarter with revenue of $87 million up 7% and local currency.

Australia consumer revenue continues to improve relative to prior quarters and was down only about 2% versus last year compared to down 5% and the fourth quarter.

Our commercial business combined online and offline revenue was up a strong 9% and the quarter the solid improvement from fourth quarter and fraud and identity was up 15% and the quarter following strong performance and the fourth quarter.

European revenues of $69 million were down, 5% and local currency and the first quarter.

Our European credit business was down about 5% and local currency sustained revenue was down about 1%, while the UK was down about 6% and local currency similar to the fourth quarter from continued challenging COVID-19 environments.

Our European debt management business revenue declined by about 4% and local currency and the quarter of.

Both the CLA and debt management businesses were impacted in the quarter by actions taken by the U K U K government to curtail debt placements and response to the pandemic resurgence and the United Kingdom.

As the Lockdown and other actions lift in April and May we anticipate improvements in the UK CRA revenue and the second quarter and improvements and debt management revenue and the second half of 2021 as collection activity restarts and the latter part of the second quarter.

Latin American revenues of $42 million grew about 1% and the quarter and local currency, which was an improvement from the down 1%. We saw on the fourth quarter. These.

These markets also continue to be heavily impacted negatively by continued COVID-19 lockdowns and slow vaccine rollouts.

We continue to see the benefit and Latam of strong new product introductions over the past three years, which is benefiting the top line.

Canada delivered record revenue of $44 million and the quarter up about 13% and local currency.

Consumer online was up about 3% and the quarter and improvement from the fourth quarter.

Improving growth and commercial analytical and decision solutions and I'd and fraud also drove growth and Canadian revenue in the first quarter.

International adjusted EBITDA margins of 28, 2% or down 30 basis points from last year.

Excluding the impact of the tech transformation cost that we've included in adjusted EBITDA margins were up about 200 basis points.

This improvement was principally due to revenue growth and operating leverage partially offset by system redundant system costs from our cloud transformation.

Global consumer solutions revenue was down 16% on a reported basis and 17% on local currency basis, and the quarter and slightly better than our expectations.

We saw better than expected performance and our global consumer direct business, which sells directly to consumers through equifax Dot com and my Equifax and which represents about half of total gcs revenue.

Direct to consumer revenue was up a strong 11% and the quarter their third consecutive quarter of growth.

The decline and overall GC rapid revenue and the quarter was again driven by our U S lead generation partner business, which has been significantly impacted from Covid beginning in mid 2020.

As we discussed we expect the decline in total gcs revenue from our partner vertical to moderate substantially as we move into the second quarter and returned to growth and the fourth quarter of 2021.

Gcs adjusted EBITDA margins of 24, 6%, we're up about 150 basis points.

We expect margins to be pressured to around 20% and the second quarter, reflecting planned cost to complete the migration of our consumer direct business.

<unk> transformations, and the U S UK and Canada to our new Equifax cloud platform.

Moving to slide seven.

This chart provides an updated view of Equifax core revenue growth.

As a reminder, core revenue growth is defined as equifax revenue growth excluding number one the extraordinary revenue growth and our UC claims business and 2020, one and number two the impact on revenue from U S mortgage market activity as measured by changes in total U S mortgage market credit inquiries.

Core revenue growth is our attempt to provide a more normalized view of equifax revenue growth. Excluding these unusual UC and U S mortgage market factors.

And the first quarter Equifax core revenue growth the green section of the bars on slide seven was up a very strong 20%.

Reflecting the broad based growth across equifax.

And this is up significantly from the 11% core revenue growth, we delivered and the fourth quarter and well above our historic core growth rates.

Workforce solutions and <unk> have continued to strongly outperform the mortgage market.

The 16% organic growth and U S. <unk> non mortgage revenue also drove our core revenue growth.

Importantly, our core revenue growth has accelerated over the past five quarters from 5% and first quarter of 2022 of 11% and the fourth quarter of last year and to 20% this quarter, reflecting the strength and resiliency of our broad based business model power of workforce solutions the market competitive.

And this of Usaf's.

And benefits from our cloud Equifax, our cloud data and technology investments and our increasing focus on leveraging the cloud for innovation and new products.

As you know the strong growth is in the midst of of global market that is still recovering from the Covid pandemic.

Turning to slide eight workforce solutions continues to power Equifax, and clearly is our strongest and most valuable and largest business.

Workforce solutions revenue grew a very strong 59% and the first quarter with core revenue growth accelerating to 46%.

As a reminder of the 59% growth as of 32% growth and first quarter of 2020.

The strong outperformance and sequential improvement reflects the power of the unique twin database and workforce solutions business model.

At the end of the first quarter the.

The twin database reached 115 million active users and 90 million unique records and increase of 9% or 10 million active records from a year ago.

And as a reminder, over 60% of our records are attributed directly by employers that workforce solution provides employer services like you see claims W. Two management on nine what's the and other solutions to and we've built these relationships with these with our customers and the contributors over the past decade.

The remaining 35% of contributed through partnerships most of which are exclusive.

The major payroll processor agreement that we announced on our February call is still on track to go live later, this year, which will add to our twin database.

And we have a dedicated team as you know.

<unk> on growing our twin day database with an active pipeline of record additions to continue to expand our twin database.

The workforce solutions team continues to focus on expanding the number of mortgage companies and financial institutions.

With which we have real time system the system integrations, which as you know drives increased usage of our twin data.

The team is also focused on extending our operations into card and auto verticals as well as across our growing government vertical and as I mentioned earlier, we continue to work closely with the SSA and expect to go live with our new solutions in the second half of this year, which will deliver $40 million to $50 million of incremental revenue and run rate in 2022.

The workforce solutions, new product pipeline is also rapidly expanding as our teams leverage the power of our new Equifax cloud infrastructure.

We are anticipating new products and mortgage accounts solutions government and <unk>, 9% and 2021.

New product revenue will increase and 21 and 'twenty two as we begin to reap the benefits of our new products introduced to the market during last year and of 2021.

Rudy floater and the workforce solutions team of multiple levers for growth in 'twenty, one 'twenty, two and beyond workforce solutions of our most of the workforce solutions is our most valuable business and will continue to power our results and the future.

Slide nine highlights the ongoing exceptional core growth performance and mortgage for our U S <unk> business mortgage businesses workforce solutions and <unk>.

Workforce.

The workforce in the U S. I S outgrew the underlying U S mortgage market again in first quarter with combined core growth of 48% up from 37% and 2020 and in line with the 49% growth they delivered in the fourth quarter.

49% core growth this.

This outperformance was driven strongly by workforce solutions with core mortgage growth of 99%.

Consistent with past quarters workforce solutions outperformance was driven by new records and increased market penetration larger fulfillment rates and new products proof that lenders are increasingly becoming reliant on the unique unique twin income and employment data when making credit decisions.

U S. I S delivered 5% core mortgage revenue growth and the quarter, driven primarily by new debt monitoring solutions with further support from marketing.

Our ability to substantially outgrow all of our underlying markets is core to our business model and core to our future growth.

I would now like to turn it over to John to discuss current trends and the mortgage market and to walk through our revised second quarter and full year 2021 guidance.

Thanks, Mark as Mark referenced earlier U S mortgage market inquiries remained very strong and <unk> 'twenty wanted up 21%, but that growth was slightly lower than the 24%. We had expected when we provided guidance in early February.

As shown on the left side of slide 10, as mortgage rates have increased over the past few months and refinancing activity continues the number of U S mortgages that could benefit from our refinancing has declined to about $13 million.

Although still very strong by historic standards. This is down from the levels. We saw on for 'twenty and early <unk> 'twenty one based upon our most recent data from <unk> 'twenty mortgage refinancings, we're continuing at about $1 million per month.

As shown on the right side of slide 10, and the pace of existing home purchases continues at historically very high levels. The strong purchase market is expected to continue throughout 'twenty, one and into 'twenty two.

Based on these trends and specifically the reduction and the pool of mortgages that would benefit from refinancing we are reducing our expectation for the mortgage market financing activity in 2021.

As shown on slide 11, we now expect mortgage credit inquiries to be about flat and <unk> 'twenty, one versus the 220 and to be down about 25% and the second half of 'twenty, one as compared to the second half of 'twenty overall for 2021, we expect mortgage market credit inquiries to be down approximately 8%. This compare.

Ours to the down approximately 5% we discussed with you and February.

Slide 12 provides our guidance for <unk> 'twenty one.

We expect revenue and the range of one of revenue and the range of 114 to $1 6 billion.

Reflecting revenue growth of about 16% to 18%, including a two 1% benefit from FX acquisitions are positively impacting revenue by 2%.

We are expecting adjusted EPS and <unk> 21 to be $1 60 to $1 70 per share compared to <unk> 20, adjusted EPS of $1 63 per share and.

And <unk> 21 technology transformation costs are expected to be around $44 million or <unk> 27 per share. Excluding these costs that were excluded from <unk> 'twenty adjusted EPS <unk> 21, adjusted EPS would be $1, 87% of $1 97 per share up 15% of 21% from.

The <unk>.

And this performance is being delivered and the context of the U S mortgage market, which is expected to be flat versus 2020.

Slide 13 provides the specifics on our 2021 full year guidance, we are increasing guidance substantially despite the expectation of a weaker U S mortgage market.

2021 revenue of between $4, $5, 75, and $4 $6 $75 billion reflects revenue growth of about 11% of 13% versus 2020, including a one 4% benefit from FX and acquisitions are positively impacting revenue by one 7%.

AWS is expected to deliver over 20% revenue growth with continued very strong growth and verification services.

<unk> revenue is expected to be up mid to high single digits driven by growth of non mortgage <unk>.

International revenue is expected to deliver constant currency growth on the upper single digits and Gcs revenue is expected to be down mid single digits and 2021 to <unk> 21 revenue was also expected to be down mid single digits for Dcs.

As a reminder, and 2021 equifax is including all cloud technology transformation costs and adjusted operating income adjusted EBITDA and adjusted EPS. These one time costs were excluded from adjusted operating income adjusted EBITDA and adjusted EPS.

Through 2020.

And 2021, Equifax expects to incur onetime cloud technology transformation costs of approximately $145 million of production of about 60% from the $358 million incurred in 2020 the.

The inclusion in 2021 of this about $145 million and onetime costs would reduce adjusted EPS by <unk> 91 per share. This is consistent with our guidance for 2021 that we gave in February.

2021, adjusted EPS of $6 75 to $7 <unk> per share, which includes these tech transformation costs is down approximately 3% to up 1% from 2020.

Excluding the impact of tech transformation costs of <unk> 91 per share adjusted EPS in 2021, which showed growth of about 10% to 14% versus 2020.

2021 is also negatively impacted by redundant system costs of about of over $65 million relative to 2020. These redundant system costs are expected to negatively impact adjusted EPS by approximately <unk> 40, a share of.

Additional assumptions included in 2020. One guidance are provided will be provided and the <unk> 21 earnings slide deck to be posted later this morning.

Slide 14 provides a view of Equifax total and core revenue growth from 2019 through 2021 core.

Core revenue growth excludes the impact of movements and the mortgage market on equifax revenue as well as the impact of changes and our UC claims of business within our AWS employer services business and also the employee retention credit revenue from our recently acquired higher Tech business.

Employee retention credits are specific U S government incentives for companies to retain their employees and response to COVID-19, and and the associated revenue is not expected to continue into 2022.

The data shown for <unk> 'twenty, one and full year 2021 reflects the midpoint of guidance ranges, we provided and.

And <unk> 21, we delivered very strong core revenue growth of 20% and expect to continue to deliver strong core revenue growth and <unk> 21 of about 20% and 16% for all of 2021. This very strong performance, we believe positions us well entering 2022 and beyond.

And now I'd like to hand, it back over to Mark.

Thanks, John.

Turning to slide 15. This highlights our continued focus on new product innovation, which is of critical component of our next chapter of growth as we leverage the equifax cloud for innovation, new products and growth.

We continue to focus on transforming equifax and to a product led organization leveraging our best in class Equifax cloud native data and technology to fuel fueled top line growth.

And the first quarter, we delivered 39, new products, which is up from the 35, we delivered last year.

And we're encouraged by this continued strong performance, especially following the record 135, new products, we delivered last year.

We wanted to highlight some of these new products, which we expect to drive revenue in 'twenty, one and beyond.

First insight score for credit card launch by U S. <unk> provides the credit card industry with the specific credit risk score created using credit and alternative data that predicts the likelihood of the consumer becoming 90 days past due or more within 24 months of origination.

<unk> also launched a new commercial real estate tenant risk assessment product suite.

Which provides real time and unmatched data analytics and risk assessment for tenants buildings and portfolio strength delivered through and interactive ignite marketplace app or sustained alone report.

And workforce solutions continues to expand its suite of products focused on the government vertical.

There are government enhanced solutions, social security and social services verification product gives the ability for the customer to choose the desired period of employment history with options ranging from three months six months, one year three years or the full employment history.

These products help government agencies quickly and efficiently administer federally federal supplement supplementary nutrition child health insurance Medicaid Medicare benefits, many of child support and ensure program and integrity.

In the first quarter over two thirds of our new products launched or in development leveraged our new Equifax cloud based global product platforms. This.

And this enables significant synergies and efficiencies and how we build the new products are speed to bring the products to market and our ability to move the new products easily to our global markets.

Our new cloud based illuminate platform for fraud management is a great example, which is launching in Canada in the U S simultaneously and will soon launch and the United Kingdom, Australia and India.

This would have taken much longer and been much more expensive and the legacy environment.

We're also rolling out.

Our equifax cloud based interconnect and ignite platforms from marketing and risk and Decisioning and management products throughout Latin America, Europe, Canada, as well as the United States.

As we discussed on our call in February we are focused on leveraging our new cloud capabilities to increase NPI, rollouts and new product revenue growth in 'twenty, one and beyond.

As a reminder, our NPI revenue is defined as the revenue delivered by new products launched over the past three years and our vitality index is defined as the percentage of current year revenue delivered by NPI revenue.

As I mentioned earlier, we've increased our 2020 'twenty, one vitality index guidance from 7% by 100 basis points to 8%.

As you can see from the left side of the slide is significant is the significant increase from about 500 basis points in 2020.

NPI is of a big priority for me and the team as we leverage the equifax cloud for innovation, new products and growth.

Turning to slide 16, M&A plays an important role on our growth strategy and will be central to our long term growth framework.

Our team is focused on building and active pipeline of bolt on targets that will broaden and strength in equifax.

Our M&A strategy centers on acquiring accretive and strategic companies that add unique data assets, new capabilities deliver expansion into identity and fraud or expand our geographic footprint.

And the first quarter, we closed five acquisitions totaling $866 million across strategic focus areas of identity and fraud workforce solutions open data and SME.

We just discussed three of these transactions with you in February which were the acquisitions of count accounts scored credit works.

And as I just discussed earlier, we are excited and excited about expanding opportunities, we see from the combined count and equifax and the fast growing identity and fraud marketplace.

In March we closed two workforce solutions bolt on transactions higher tech and IQ verify which will further broaden and strengthen our workforce solutions business.

<unk> is the Houston based company that provides employee related tax credit services as well as verification services higher Tech also has unique channel relationships to provide the services through payroll providers consulting firms and CPA firms.

IQ verify is the Newberry Port, Massachusetts based company that provides secure digital verifications of income and employment services. The company has the unique nationwide set of record contributing employers and with concentrations in the healthcare and education sectors.

IQ verify also brings unique records to the twin database all of which are contributed by direct relationships.

You should expect equifax to continue to make acquisitions and the strategic growth areas that offer unique data and analytics to our customers with the goal of increasing our top line by 100 to 200 basis points annually from M&A.

Before wrapping up I wanted to speak to you about and area of significant focus at Equifax and importance to me personally.

Slide 17 provides an overview of Equifax is ESG strategy and how it helps position us for long term sustainability.

I Hope you saw it and had a chance to read our annual report letter that highlighted our increased focus on ESG.

First equifax plays an important role and helping consumers live their financial best of primary example of this is debt our alternative data assets, such as utility and phone payment data provide lenders with a better picture of the approximately 30 million U S individuals who do not have traditional credit files or access to the formal financial.

Hmm.

I've also made advancing inclusion and diversity of personal priority since I joined Equifax, believing that diversity of thought leads to better and better decisions. We've taken clear steps to broaden diversity at equifax, including the last three directors added to our board of diverse and all seven individuals who have added to my senior leadership team since.

I joined three years ago I've also been diverse.

We're carrying out this focus on inclusion and diversity across equifax.

We're also focused on environment on our environmental impact and greenhouse gas footprint, our cloud transformation will move our existing legacy technology infrastructure to the cloud, which will dramatically reduce our environmental impact as we leverage the efficiencies and carbon neutral infrastructure at our cloud service providers.

Over the course of this year.

Over the course of the last year, we decommissioned six data centers over 6800 legacy data assets and over 1000 legacy applications.

We are of detailed program underway to baseline on energy usage and benefits from our cloud transformation as we work towards the commitment regarding carbon admissions and a net zero footprint.

We're also committed to be and industry leaders regarding security with the leadership of our <unk> meal foresee our culture of put security one.

All employees of required to take of mandatory security focused training sessions every year.

And all of our 4000 and bonus eligible employees have of security growth goal and the annual MBS.

We believe we also believe and sharing our security protocols and strategies with our partners customers and competitors to collaborate to keep us all safe and.

And 2020, we hosted our inaugural customer security summit, where we detailed our progress on security transformation and discussed advancements and supply chain security.

As threats continue to evolve we remain highly focused on continuing to advance our security efforts.

Wrapping up on slide 18, Equifax delivered a record setting first quarter and we have strong momentum as we move into the second quarter and 2021.

27% overall, and 20% core growth and first quarter reflects the strength and resiliency of our business model, while still operating and a challenging COVID-19 environment.

We've now delivered five consecutive quarters of sequentially improving double digit growth.

We're confident and our outlook for 2021 and as John described are raising our full year mid point revenue by 500 basis points to 465 billion and our EPS midpoint by 9% to $6 90 a share.

Our revised revenue estimate of 12% growth and 2021 at the midpoint of the range off of very set of very strong, 17% and 2020 reflects reflects the resiliency and strength and momentum of the FX business model.

Our increased 2021 growth framework incorporated our expectation as John discussed that the U S mortgage market will decline about 8% in 2021, and while operating and it's still recovering COVID-19 economy.

Our expectation for core revenue growth of 16% and 2021.

Reflects how our FX 2023 strategic per 40 priorities are delivering.

And.

And workforce solutions had another outstanding quarter of 59% growth and will continue to power Equifax operating performance throughout 2021 and beyond the.

The work number is our most differentiated data asset and workforce solutions, our most valuable business.

Floater and his team are driving outsized growth by focusing on their key levers New records, new products penetration and expansion into new verticals with our differentiated twin database.

<unk> also delivered an outstanding quarter of 19% growth highlighted by non mortgage revenue growth of 15% and 11% organic non mortgage growth.

We expect our non mortgage growth to accelerate as the U S economy recovers.

The acquisition of count is providing new opportunities and products and the rapidly expanding identity and fraud marketplace and <unk> continues to outperform the mortgage mortgage market from new products pricing and increased penetration.

<unk> is clearly competitive and winning in the marketplace and will continue to deliver and 'twenty one and beyond.

International grew and the first quarter for the second consecutive quarter overcome the overcoming economic headwinds from significant COVID-19, lockdowns and slower vaccine rollouts and our global markets.

Our expectations are high for ongoing sequential improvement international and international during 2021 and for accelerating growth as the underlying markets recover from the Covid pandemic.

We're also making strong progress rolling out our new <unk> cloud technology and data infrastructure and remain confident as John described and the significant top line cost and cash benefits from our new <unk> cloud capabilities.

These financial benefits will ramp as we move through 2021 and continue to grow in 2022 and are on are enabled by our always on stability speed the market and ability to rapidly build and move products from around the globe.

Our strong performance operating performance is allowing us to continue to accelerate investments and new products, leveraging our new equifax cloud capabilities and we're off to a strong start in 2021 with 39, <unk> and the first quarter on top of the record 134, we launched in 2020.

And our strong outperformance is fueling our cash generation, which is allowing us to reinvest and accretive and strategic bolt on acquisitions as discussed earlier, we close by the acquisitions and strategic growth areas and the first quarter and we have an active M&A pipeline.

We look for bolt on acquisitions that will strengthen our technology and data assets and that are financially accretive with the goal of adding 100 to 200 basis points to our top line growth rate and the future.

On the energized about what the future holds for Equifax, we of strong momentum across all of our businesses as we move into the second quarter, we're on offense and positioned to bring new and unique solutions to our customers that only equifax can deliver leveraging our new <unk> cloud capabilities and our strong results and the increased guidance that we provided refer.

<unk> debt.

With that operator, let me open it up for questions.

Thank you very much and he would like to ask a question you may signal the licensees.

On the telephone keypad.

And if youre using a speakerphone and.

Sure.

And the signal from each of our equipment again that is star one to ask a question and we'll pause for just a moment to allow everyone an opportunity to signal.

Alright, I will take the first question from David <unk> with Evercore ISI.

Thank you good morning, looking at the over 20% UWS revenue growth guide for this year can you quantify contribution you expect from new unique record growth.

Pricing and new use cases.

Yes, I think the answer is yes.

Those are all meaningful levers I would add the system the system integrations and our mortgage market and other solutions is also a lever for growth.

David I think as you know, we don't break those out specifically, but it starts with records. We've clearly got a real focus on and some real momentum and adding records to the twin database.

You know we of a dedicated team that that's all they do.

And we've got active dialogues going.

With the IND.

Individual corporations to bring their data to us as we add new services like you see claims and watch the and all of the myriad of services that we provide and also with other.

Payroll processors and as you know in February we announced that.

Our plan and we're on track to add.

One of the major payroll processors records to our database in the second half of 2021, which will add meaningfully and I think you know our business model as we grow records, we're able to monetize those really instantly because of the inquiries that we receive just drive our hit rates up.

And clearly have the ability to use price, which we talked about I think you've seen a real increase and the focus on new products at workforce solutions, particularly as they are becoming cloud enabled it's the giving them the opportunity and bring new solutions to the marketplace. They really leveraged their datasets and these new solutions are typically at higher price.

And delivering more value to our customers. So that's another big lever.

And we've talked about debt and.

And the second half.

That continues.

Continuing to focus on system the system integrations, and we just find the higher usage when customers move from accessing the twin database through the web two <unk> system the system integrations, we get.

Really all of our volume, which is another big lift and as I've mentioned, a couple of times, we're still on track to launch our new.

Agreement with the social Security administration, that's a very meaningful contract that will go live in the second half and we expect that to be $40 million to $50 million and run rate. So there's a there's a large amount of levers available for workforce solutions.

You pointed out it starts with records and while we've grown records to 90 million uniques in the quarter. As you know there is the $155 million non farm payroll. So there is a lot of room between $90 million and $155 million as we continue to grow towards the having the full data set and then we talked before that were also <unk>.

Beginning the dataset beyond the W. Two income, including $2 99, and other data sources as we look for other ways to include other portions of the U S population around are they working and how much do they make.

Okay. Thanks for that just as a quick follow up you've closed 2020 at almost 60% EBITDA margin for AWS can you quantify operating leverage and this business for 2021.

Alright.

And Theres a lot of leverage as you can see and the first quarter results.

Youre talking about workforce solutions.

We're continuing to invest and the business. There is no question about that but with the revenue growth that we're getting on both the mortgage and non mortgage side and workforce solutions. There is real operating leverage debt.

We expect to continue through 2021.

Understood. Thank you.

Okay.

All right. Once again that is star one of you would like to ask a question. If you find your question has been answered you may remove yourself from the queue by pressing star queue. The next question is from of partner.

And with Barclays.

Thank you and good morning.

I was just hoping mark you could talk about the comments you made towards the end of the call around acceleration of the non mortgage.

Business with this reopening and perhaps offset the two.

$225 million debt you raised revenue by like how much of that was just the strong performance and AWS you called out with sales, maybe some incremental and me and this reopening benefit that you think youll see.

Yes, we don't have any incremental M&A and net guide we wouldn't we wouldn't include that the acquisitions that we haven't completed yet I think we talked that we have a pipeline and a goal of increasing acquisitions of course, we're off to a very fast start this year on debt.

On the M&A.

You know this man of we took down our framework for mortgage inside of that revenue framework that we shared which is quite.

And quite significant we think that we've got mortgage and the right spot now.

Down 8% versus the down five for the year and as you know that.

The way we framed out is most of that happens at really all of it really happens and the second half.

And the expectation that the.

There will be a recovery and the economies.

Vaccine Rollouts continue and Lockdowns.

Our reduced theres still some impact we believe of.

And the Covid pandemic and the U S market, although as we pointed out we saw.

And some real recovery by our customers.

And I characterize that as confidence, meaning they're starting originations in the latter part of the first quarter and into April, which we expect that to continue.

But you still have our international markets are still significantly impacted by the Covid pandemic and we expect that to unfold at some pace during two.

<unk> 2021, and that'll be a positive as we as we move forward do you add anything John.

You said in the past right the increasingly as we go through 2021 is the non mortgage markets recover increasingly the contribution to core growth is going up so.

So we expect that to continue as we go through the year and the outperformance and the first quarter as we said and now more than half of it was driven and our non mortgage segments and youre.

Seeing that obviously flow through the rest of this year as well and then all of that.

Two of two that I hope you caught our comments around yes.

We really feel like the Equifax cloud is providing benefits our NPI focus is providing benefits that will benefit our mortgage business as well as our non mortgage business and of course, the majority of Equifax is non mortgage but.

The initiatives that we launched over the last couple of years the investments that we've made over the last couple of years, we feel are starting to starting to pay off when you're talking about <unk>.

We've mentioned many times over the last year on each of these quarterly calls that we feel a real strength in the marketplace by our U S ISG and competitively.

<unk>, how theyre going to market I think we've talked about we've rebuilt that team a year ago and there's some real momentum there and again the focus on new products. Those are driving revenue growth and we guided up 100 basis points and our vitality index.

The bulk of that is going to come and our non mortgage business.

Okay got it.

And Mike I was hoping you could just help US also just appreciate the different moving pieces.

I think you talked about workforce solutions growing above 20% and see it but.

And obviously a lot of moving pieces between employer and verification services I was just hoping you could give us some guidance there.

And how those should end up and the year.

You want to try the Ono.

Sure so.

Yes, I think and Mark script, we tried to walk through what the real big drivers right Verifiers continuing to perform extremely well, obviously mortgages of bit of a draw of drag but as you go through the rest of this year.

Think about what we said in February we indicated that for total mortgage for equifax that even though the market was down 5%, we expected revenue to grow more than 10, and the even though we now have the market weaker it down eight we still expect mortgage revenue to grow more than 10, but some significant drivers of AWS.

And in 2020 'twenty, one continues to be and the.

And the non mortgage segment, we talked about talent solutions growing very very fast almost doubling I think we said on the first quarter and 99 also growing very very fast and a recovery and WMA. So so what we think youre going to see is very nice growth across of across the non mortgage segments. Obviously, excluding you see where we gave very specific guidance and.

And then also continued good performance and mortgage despite the fact that the market is slowing right, where we're not going to quantify each of those but directionally thats whats going on.

Alright, thank you.

Alright. The next question is from.

Peterson with Needham.

Hey, good morning, Thanks for taking the question guys.

Just wanted to touch on AWS, and particularly the momentum and increase adoption you guys are seeing and some of the non mortgage could you guys dive a little more and knew where the strongest areas that does that and the other lending products like auto or card or where is some of the strength that you guys.

We're seeing.

Coming from right now.

Yes non mortgage.

And obviously more than financial services, and I'll come back to that but we've talked a bunch about our government vertical which is growing quite positively our employer services non mortgage.

Our talent solutions business. So we've talked about the growth there and I think it's specifically youre talking about non mortgage verification. So on.

I'll go back to that versus non mortgage broadly and workforce because we've got a bunch of levers that are outside of verification that are growing quite positively again, excluding the negative impact of UC claims on a year over year basis. So in financial services as you know.

Mortgages are largest and verification for sure and we're getting real leverage and outgrowing the market there. So.

So first records help everywhere right, so and whatever the solution is as we grow our records and of course, they are up 10% year over year, and we've got a clear path to increase them.

In 2021, and Thats part of our framework.

The hit rates are good.

Political year, and whether it's mortgage or auto of government et cetera. So records of the number one.

And we've had a real focus on new products.

Broadly and the and Equifax and and workforce solutions and then can you talk about some of the verticals, we're seeing increased usage and auto.

We're kind of a year ago.

Our two years ago, it was more of a subprime.

Usage, along with the credit file.

Now, we're seeing it more and near Prime and so there's just more usage in the auto sector and and broader usage at those lower credit scores and so that's helping there on personal loans has always been a pretty strong space for us and the fintech market for verification using it because if you think about our personal loan it's 10 20 $30000.

A very large transaction and verifying how much someone makes and are they employed at the time. It alone is a very important lift and the predictability and then we've talked really for the last I think.

Three of four quarters about the fact that we're seeing a number of card issuers.

Take our data and of course a.

A sliver of our data, we don't see given the depth of data that they would.

And the mortgage.

Application.

And using it and originations and other applications and the card space and we've got now I believe too.

Of the large card issuers that are using our data at origination along with the credit file which is a big breakthrough we've been chasing this market for some time you know on an old card originator I did debt for a decade.

And for Equifax the <unk>.

<unk> ability of adding as someone working and how much do they make to the credit file enhances every credit decision period.

And it was really around getting our database the scale and we've talked a last couple of quarters that as we've gone over 50% hit rates and the database as we get to that 90 million uniques versus the $155 million non farm payroll it becomes a dataset that's more usable because you get more hit rates.

So that's another thing that we reason we think we're getting.

More.

The new uses of it in things like carts and.

The only thing I'd add right and as Mark said, our two biggest segments and verify our government and talent solutions and they are growing very fast and both of those are highly benefited by the depth of the database by the fact that we have over 450 million total records.

Being able to fried history and those market segments is very important. So so we're seeing very strong growth on the two biggest non mortgage verifier segments of both government and talent solutions.

Got it that's that's sort.

Helpful Color and then I guess, just a quick follow up on the verification side of the business.

Scene and increased.

The increased.

Noise and the last few months with Transunion and clad both making.

Some slashes in that space and you guys notice any change in competition. When you guys go to market either with users of the verification services or.

The potential employers payroll providers et cetera.

We have not we actually hear mostly about it from you.

Meaning the sales side.

And.

We've talked many times that we think we have a strong franchise the scale of our database.

Freely large think of the 90 million uniques of $150 million and 150 million of actives.

The ability to get those kind of records is quite challenging we believe the meaning to have a database that is usable.

And having a database that has $1 billion of $2 million of $3 million of 10 million Records.

Just very challenging for to take out the market.

And we can deliver over 50% hit rates.

Just.

And it's quite challenging and I think you know.

60% of our records come from individual companies.

And we get those records through long term relationships, we've been doing this for a decade.

We have a whole suite of services, we provide HR managers that allow us access to those records and we provide debt service the income and employment piece of that for free to the company and to their employees is that and it's a real benefit to them. So those kind of services of really required. The we think to have a database of our scale and as we've talked.

The other 35% or so of our database comes from payroll partnerships and the bulk of those are exclusive meaning we're an exclusive arrangement. They are not going to provide those records of someone else. So and we think thats quite challenging and you add on top of that debt, we've been investing and this business for over a decade.

We've put about $2 billion into it.

Including a couple of acquisitions, just and the last.

The 30 days to strengthen and workforce solutions.

And the last.

Two or three years, we probably invested the.

$2 million to $300 million and the technology of the business. This is requires a massive investments and I'm not sure the competitive and you referenced.

Thinking about or is planning to have the kind of investments that we have and just to be clear and we intend to per.

Cash and grow our franchise.

Got it that's really helpful color, thanks, guys nice quarter.

Thanks.

Thank you and the next question is from.

Missouri with Jefferies.

Good morning, Thank you.

My question is just on the the fraud and I'd business. You know you had mentioned e-commerce maybe.

And maybe retail is new verticals with the current deal.

And at the same time.

And you talked about the scale could you maybe talk about whether the fraud and I'd business is at scale today, how do you define scale and and just as part of that discussion of <unk>.

And companies like Mastercard recently by of Qatar.

Mitek is doing some stuff our armed IBD.

Is there a lot more M&A opportunity and this and this market or how do you think about sort of.

When this business scales or if it's at scale today.

Yes, it's a great question. It's one that's been a deliberate of focus of ours and <unk> heard us talk about it from the last couple of years debt.

It's a fast growing space the IGN broad space globally, as I don't know $18 billion, something like that growing at 20%.

You have seen.

Had the growth there we've been in it for a long time, we have a lot of existing differentiated data assets and equifax around I'd and fraud and account acquisition was quite strategic for us. So they have real scale and I think as a reminder, they <unk>.

<unk> in the retail e-commerce space.

We have real scale around their interactions I think its 32 billion consumer interactions per year, they've got the 400 million unique.

E mail address and verified and they've got cell phone addresses the verified IP addresses so just a wealth of data and the power is really combining their data with <unk> and that's really why we acquired accounts and as you pointed out. It also brings us into a new vertical we werent in the REIT.

Retail E Commerce space, and that's where <unk> plays and of course, we're going to bring count and their data into financial services banking Telco insurance, where we play. So that's why we acquired count. The answer is yes, you heard me comment earlier. This morning on the call that when we think about new M&A or additional M&A I'd and fraud as a place.

We want to continue playing it and we see opportunities we have opportunities and our pipeline to continue to strengthen the combination of equifax and count going forward and then when you your question of scale.

And from our perspective.

The combination of Equifax and count gets us into kind of a strong market position, but it's a huge market.

$18 billion, so theres, a lot of room to grow and.

We look at product introductions, we're investing and like our new illuminate platform gets us more capabilities organically and this marketplace and as I mentioned earlier, we're rolling that out and then acquisitions like count really strengthen our data assets and the combination of Equifax and count is quite powerful so you should.

Look for us over the.

The coming years.

To find ways to grow certainly we're going to invest organically, but also to invest.

Through M&A to strengthen this we like the space and we want to be bigger on it.

Okay great.

Gotcha and my second question I've asked this before a couple of quarters ago, but I think I'm going to ask it a bit differently. So if we exclude workforce solutions.

And we just look at U S I S and and and you know the margin differential just between the U S <unk> and international.

It's pretty large and then if you look at your international margin and you compare it to your competitor.

There's also a big gap and so I realize that.

So we're taking workforce solutions out of out of the mix.

And so then maybe there's some mix of differentials between the <unk> and international and I realize the international has just has to get the revenue where you got the incremental margin and the op leverage and Thats, maybe and you know earlier innings, but.

But could you how much of the GAAP and you close between international and U S. I S and.

How much of the GAAP is structural.

And you know, we're excluding workforce solutions here.

And again, we don't exclude workforce solutions, but we'll just do that for your discussion and really focus on those other other businesses, obviously usia's has real scale and that scale drives their margins and that's clearly a big difference when you think about our international International we're in 25 countries, we have some larger bids.

This is like Australia, that's over $300 million and.

And then some smaller countries that we play in.

And so that drives a different and the difference and the margins between.

Our use of <unk>, which is <unk>.

Really massive scale versus our international businesses, we're always focused on improving our margins the cloud investments that we're making will benefit the workforce solutions margins <unk> margins and international and Gcs margins, that's part of our strategy to improve our cost structure, but theres no question the subscale name.

<unk> of some of our international markets results and margins being lower which I would characterize the structural but we see opportunities to improve those margins going forward would you add anything John.

And as you look at the countries. We're in the countries that are look more like Usaf's, where theyre more specifically like for example, Canada margins are much better and so as Mark said it really depends on the size of the market and then the diversity of the market that we're playing in and then and so we certainly expect to see improvements and margins as we go.

To the cloud.

But some of it certainly is structural just by the fact that we're in so many markets and some of those businesses of very small so not to get into specific numbers, we could expect to see improvements on those margins over time.

But some of the structural we have no expectation of that theyre going to reach the type of margins, we see with USAF.

Got it thank you very helpful.

Okay. The next question is from Andrew <unk> with <unk>.

J P Morgan.

It's Andrew I wanted to share about the different areas of U S credit application from and in card and auto and personal loans with the large pickup and non mortgage you asked I asked online revenue is accelerating to a 16% and the first quarter in particular.

Don't think we've heard the credit card issuers and talk about loan growth picking up yet and I just wanted to know if you anticipate that soon.

I think we said Andrew that it was fairly broad based and.

Some of the marketing spend is.

Card issuers, starting to I would characterize restart originations.

But thats the marketing piece that doesn't necessarily result of loan growth yet I think that the.

Starting to spend money and starting to put new offers out in the marketplace that presumably would result in some loan growth either in second and third quarter, but theres a lag on that between the marketing spend and when and when those originations go on their books and become loans and broadly I would say what we hear from the.

U S customers is.

Elements of confidence that wasn't in place certainly for most of 2020.

Certainly the early parts of 2021, and I think as we've all seen vaccine rollouts and the United States really accelerate and now really everyone overreached, 16th and get one.

The resulting and consumer confidence and we've seen it and retail spending and you've seen banks.

And the earnings releasing reserves.

So I think there is an element of confidence of we're moving towards.

A more normal economy, I would say, we're not there yet, but we saw some.

Real increases, what I would call and confidence and it's in our numbers.

In March and as we moved into April.

And in which areas of strength.

So auto was stronger than card right. So if you just kind of tier of our structure auto auto was stronger than card and identity and fraud was also very strong.

Okay. Thank you.

Okay.

And your next question is from Greg Hubert with Huber Research partners.

Yes, hi, Thank you and wanted to focus on costs, if I could please.

Can you give us a sense of what your hiring plans are this year in terms of full time equivalent employees are you thinking of plans that should we be pick up of hire another say, 5% more employees and the U S.

That's my first question on the other related question of that is.

As we move through this.

Virus things hopefully get better.

Please return to the ought to the offices and stuff in the U S should we expect your cost base to materially go up and when that happens.

Yes first of all Craig Welcome I think this is your first the equifax call or at least in recent times. So it's great to have you covering the company on yet.

On the people side I would say our employment will be fairly stable. There is some areas where we're investing.

Like in product resources.

And some technology areas, but at the same time I think you know we've got plans to reduce some of our technology cost is the cloud transformation on hold so there'll be some.

The reductions in that area, which is in our in our in our framework.

So I wouldn't think about big changes and our employment.

But you should think about equifax.

And being on offense, meaning we're investing.

And with our strong performance and of course, our acquisitions that we've talked about the five acquisitions bring incremental employees into our head count, which is and our framework that we've shared with you with the.

Regards to the return to office, we've been open since last June.

We've been very careful about that it's been.

Really up to our team if they want to come in and we've limited our occupancy to 50% no more than 50% and of course exercising all of those protocols and we've seen and the last I don't know 30 to 60 days is actually and rollout.

And have increased and increase of people coming back.

Our office.

And what we've been telling of our employees when Youre vaccinated.

And come back and.

And start operating with Equifax, we also announced.

Post whatever our full reopening is which is hard to see what that data is working on it we introduced what we call of <unk>.

<unk> Flex day, where we're going to have some flexibility and our workforce that they can pick one day per week with the manager's approval to work remotely and it was really a reflection on that there are many benefits that we learned over the last year that we can be productive from working from home, but the so called for one meaning we're going to work from the office at least four days per week.

<unk> is a reflection that we're collaborative.

Sure. The teamwork is how we operate whether it's doing NPI or technology or new customer solutions, we think that happens best in the office and to your question about.

We don't expect our cost to go up we havent.

Changed our footprint.

And we don't expect them to go down as the result of this return to office.

And as you think about our cost structure, just for perspective, right, where like most technology companies, obviously, a significant portion of our cost structure as our own employees. We also have a very significant footprint of contract employees and contractors right. So we end up we move costs, but.

Obviously, if the contractor workforce is more variable to us.

And then also if I could ask is in the U S where do you think the biggest opportunity is to be able to raise price of steady as each of those goes.

It goes on and the U S operations.

Yes, we don't talk a lot of our price but.

If you think about our U S businesses, which is really.

I'll leave our consumer business aside gcs, but you think of our <unk> and workforce solutions.

We focus on new product Rollouts that day.

Come incremental margin and many times at a higher price point, because they are delivering incremental value to the customers. So that's one way to get revenue.

Rice and margins and more.

Of course solutions is clearly our most differentiated business and differentiated data asset and has more ability to bring more value to our customers that we can monetize with different price points of the solutions, we are delivering and if you think about it if.

If you look at our hit rates now that are over 50% and you go back two years ago. When they were I don't know pick the right number 40%.

And about 50% hit rate is more valuable to our customers.

It becomes it becomes of data asset that they can use more broadly and their solutions. So workforce is clearly a business that has more ability to drive its topline through multiple levers that we've talked about a couple of times on this call.

Great. Thank you.

And your next question is from Toni Kaplan with Morgan Stanley.

Thank you so much.

I wanted to ask of bit of a different question on the guide.

My interpretation is that it seems like the vast majority of the increase is from the <unk> and then the rest I'm expecting is maybe a better QQ with two H in line with your expectations. Previously is that a fair assessment and I know your mortgage expectations or a little debt lower than before.

And.

The rest of the year it.

It just seems like a lot of your non mortgage trends are positive. So I'm just hoping you could provide any extra color on how you're thinking about whether these positive trends continue through the year or not thank you.

Yes, I think Tony you got to remember we have seen in the last 60 days of weakening slight weakening of mortgage inquiries, which we rolled into our new framework. So we took down mortgage by.

300 basis points of for the year, which we think is prudent.

Offsetting that and.

Our ability to guide up as debt.

Of our outsized and strong performance and non mortgage and the quarter and our expectation and that will continue John.

Well, if youre looking at revenue Tony right, I mean that the two of the.

The over $200 million increase right only less than half of it was really out of the first quarter.

And then obviously, yes, the second quarter of stronger and then the third as Mark said third and fourth quarter are impacted somewhat by the the much greater decline and the mortgage market, but but we are seeing very substantial growth and we think improvement in the non mortgage segments and and as you look at revenue, we think of significant amount of the improvement and the guide is from periods. After the first quarter.

Okay.

And then looking at financial marketing on you mentioned the true.

And the percent marketing related growth just <unk>.

Aureus about why theirs.

The wide marketing dollars are being spent there but within the consumer indirect business, you're still seeing pressure I'm just wondering what the disconnect between that and when do you expect the indirect business and consumer yet to show signs of recovery.

Yeah, and it's Tony I think about it quite naturally what we saw and what I would have done when I was running GE capital's credit card business is when you get in a tougher economy, you tighten up originations and stop spending marketing money and the first place you start spending marketing money is with third parties, meaning lead Gen companies.

The same thing when you come out of a difficult environment. The first place Youll start as your own you have more confidence and that is generally lower cost and more efficient desire of predictability and thats what were seeing and we do expect.

Our indirect to improve but it's going to be.

<unk> is at least the framework we put together.

And happened later of the year.

Great. Thank you.

And we'll take the next question from Andrew Nicholas with William Blair.

Hi, good morning.

You touched on it a bit and your prepared remarks, but I was hoping you could walk through the <unk> acquisition of bit bit further.

How should we think about it contributing to the twin database in terms of record count and then Relatedly can you give us a sense of how many other assets like this are out there that could add records to the database and.

The meaningful way certainly it seems like these types of deals come with with some pretty immediate revenue synergies. So any additional detail on that opportunity that would be helpful.

Yes.

Many of.

We know who all of the they all are and we talked to them all the time.

There are a handful of companies like IQ verify and higher tech and <unk>.

As you May know <unk>, followed us for a while that we've made acquisitions like this over the last couple of 345 years.

So when they are available we like to make them and maybe I'll just touch on the higher Tech first.

Higher Tech has what we thought was a very attractive watch the salute.

Solution, particularly delivered through third parties to companies.

And.

So again one of the ways to get records is to deliver value added services like <unk> like <unk> like unemployment claims like W. Two management like HCA.

Two companies and then in order to complete those services for them, which are of regulatory requirements.

We get access to records and and higher tax case.

We have a watch the business so today and but Theres was we thought very attractive and how they.

And deliver those solutions through partners and we'd like to grow our partner Watson business, which not only will bring the records they already have but get access to records and the future and of course, there's the revenue stream just from providing those watch the services as John mentioned they also have.

And economic recovery credit ERC, which is very special and unique credit in 2021 that is another way to gain access to records, which will.

And will benefit us this year and IQ verify a bit different and their approach the market. They have a very attractive we like the team a lot as we.

Due on higher tech the IQ verify team.

And was very.

Advanced around.

The relationships and how they went to market with the nonprofit organizations.

With the health care industry or hospitals and hospitals.

And the education or think universities, and theres lots of employees and those kinds of organizations and companies and they have developed a very attractive.

Go to market of how they built relationships and delivered those services and.

So we like that which is why we were very attracted to high IQ verify and we're looking for them to really expand our relationships through different services, we provide to those kind of companies and then allow us to get records.

The order to grow our records and again you know at 90 million Uniques, we're very pleased with the scale of our database, but theres a lot of runway between $90 million and $155 million.

Great and it makes sense and that's all very helpful. Thank you and then for my follow up.

You mentioned, the 100 basis point improvement and your vitality index expectation of couple of times.

And I imagine Thats, primarily a consequence of faster than expected adoption.

On the new product side. So I was just kind of hoping you could talk about what's driving that specifically through the first couple of months of the year and then related Lee.

What do you think that pickup and adoption means as you think about the vitality index and 22 and beyond and how and Pis are expected to contribute over a longer term timeframe. Thanks.

Yeah, and I think you know we've been pretty clear that we've been talking for well over a year, maybe two years about the power of NPI and Thats not new to Equifax, it's not new to our industry. Our competitors are focused on new products and.

It really is the fuel for growth that allows us to grow multiples of GDP.

The inherent and a data analytics business and we talked a bunch about our investments and the cloud transformation over the last three years from 2018 through 2020, the 1 billion five we invested and our new infrastructure.

We did that for lots of reasons.

And you've got the fire alarm.

Please standby.

Please continue to hold on the conference will continue and just one moment.

This is lee.

Good day.

Sorry, we're back we had a fire alarm go off here and we.

We just got it shut it off we're fine.

And Andrew Sorry could you repeat your question again.

No problem that can't not surprised that that would throw anyone off.

Yes. My question was just under vitality index and Oh, yes, yes.

And how you might look at 2022 and beyond on that metric given the faster and unexpected adoption. So far this year.

I think I was talking about the cloud investment, we invested and the cloud because we knew was going to give us cost benefits security and a competitive advantage, but we really invested and the cloud to deliver new products and growth and we've been really focused on that over the last 12 to 18 months, we talked last year that we've been expanding our resources in and new product capabilities.

We think we're starting to see the leverage of the cloud our ability to <unk>.

Bring new solutions to the marketplace and our guide up was really.

We increased our NPI rollouts last year to 139, which was a record.

39, and the first quarter, which is up from 35, So we've got more products and the marketplace and you've got of commercial team that's out there selling them. So.

That's why we feel the confidence of increasing the guidance going forward at least for 2021 I don't want to get into 2022 guidance will include debt and our long term framework.

We intend to put in place late.

Later this year and.

The vitality index of new products will be central and really important to us and <unk>.

How we grow the business going forward.

Great. Thank you.

Thank you and the next question is from Shlomo Rosenbaum with Stifel.

Alright, I don't know if for some of them can you talk a little bit more about the unemployment unemployment claims strength.

From better industry volumes on expected or will have more to do with from a product sales from our client.

Yes.

We've been taking advantage of whats the strong unemployment claims market over the last year and.

Youre looking for new <unk>, new customer relationships. So the teams out there still selling and growing our space and I think we mentioned.

We have grown our share slightly to we believe one and three claims we process versus one and five maybe in 2020. So it's just another area of growth and we're focused on and as we also guided we clearly expect our revenue in 2021 to come down kind of sequentially and in the second third and fourth quarter, but this.

As a business that is important to workforce solutions processing, the unemployment claims for companies and.

And it gives us.

A very nice revenue source of long term, we generally sell these on a subscription basis with limits. If you go over a certain number of claims process, which is why we've had such strong incremental revenue and the high unemployment market and the last couple of years, but we are of very sophisticated solutions.

The operates while on the marketplace and remember the second benefit of.

The <unk> processing these claims and having this is the business is it gets us access to records that then we can monetize over and our twin database and our verification business.

Okay. Thanks.

And your next question is from George <unk> with the Cowen.

Hey, guys. Thanks for taking my question and congrats on the on the quarter and the outlook.

Wanted to start off on on on <unk>.

Mortgage and you know again, if we look at.

I'd verification revenue was up another 100%.

Well higher than what you saw in the U S. I guess of revenue growth and as a matter of fact the growth of Dws has stayed kind of consistent at 100%, even if when when when sort of usaf's volumes.

And in mortgage have come down can you maybe talk a little bit about that decoupling is it is simple of strong record growth or is there something else, that's allowing you to outperform that massively.

Even when when volumes come down a bit on the <unk> side.

Yes, I think you know of.

And we've shown these charts before the workforce solutions has been consistently outperforming all markets that they operate and including the mortgage market and.

And much more substantially the <unk>, so just have more levers.

And I'll use the same levers that are.

Our U S. ISO use which is price so the increased price and an up or down market youre going to have more revenue on new products is one where they just have more opportunities and you've heard us talk over the last I don't know four of five quarters about their increased focus on new products and things like historically, we had a single report that we offer and now we are offering.

One with more history on it 12 months 24 months 36 months and instead of having a report that we sell of $25. We've got price points at $150 and $200 and that provides real value to the mortgage originator and we rolled out of product Thats for co borrowers.

A lot of mortgages and the stage of a dual career of couple underwritten the underwriting the mortgage and so we have a new solution there and instead of having 225 dollar reports polled we've got of $200 solutions, We've got solutions and new products now that encourage more pulse.

We'll have the solution, where we sell it at a higher price point that includes multiple pull so new products is a real lever for workforce solutions of course records, we've talked multiple times on this call adding records.

Drives hit rates, because remember, we're getting inquiries on those mortgages all of those credit cards of auto loans, but your question was around mortgage were getting inquiries.

For the full database the full set of consumers and.

I'd say, we only have 90 million uniques and as we grow that database those hit rates go up automatically. So records are very central part of workforce solutions ability to outgrow the mortgage and all of their underlying markets and there is also a large portion of mortgages, we don't see still.

Still we only see I think it's 65% of mortgages. So we are out in the marketplace talking to those that are not doing business with equifax and are using pay stubs of some other mechanism for approving the income and employment elements of a mortgage application to use our solutions the move from.

A customer we sell of a lot of our customers I think over a third debt access our data through the web meaning they are actually keying in the mortgage.

<unk> social security number of data birth name et cetera, there's a lot of friction there, meaning it doesn't happen and every mortgage application for that originator or we don't get multiple pulse so going to system. The system integrations is a big part of our strategy and we're increasing the system Assembly system integrations every quarter, we've got a dedicated team.

And it works with mortgage originators.

Have them do system the system integrations. Another lever is the number of pulse and a mortgage application and.

And a credit application credit on the credit side, there's four to five polls and many mortgage applications of the credit file.

Historically, there was more like one to two and the <unk>.

Income and employment data, where and seeing the more sophisticated originators whole our data of more often on every mortgage application and remember you think about a couple of elements number one it's a big ticket transaction 200 5300 $400000 of more is the loan and then second is the mortgage originator of that spending 45.

$1000 and the application process they want to make sure that they are spending time on and applicant that they can close on so not only verifying their credit multiple times and the process of making sure that applicant is still working and how much they make as a part of the application process is another big opportunity. So there's just.

A half dozen of very strong on <unk>.

Or is that all have dedicated teams on it and they have been executing very strongly on on those levers another kind of overriding macro if you will for workforce solutions is just really the scale of the database. If you go back and.

Our last economic crisis, and a weight on nine or pick your year go back 345 years ago, our database and twin.

It might have been having.

Having hit rates of 30 of 40% now the world well over 50% it becomes a very valuable data and data asset and all of our customers know that you enhanced the credit decisioning of.

Of and applicant if you add is someone working and how much do they make to their credit file that drives predictability and so when you have a database that almost as a catalyst the word inflection point of going over 50%. We think thats. Another positive factor of course, we've got a lot of opportunity and a lot of work to do on workforce and.

And we're quite optimistic about the long term impact of our fastest growing business with margins and revenue growth rates that are highly accretive to equifax.

Okay.

Super comprehensive so really really appreciate that and then just really quickly.

Mark maybe going back to Andrew's question on.

On the on the deck on that side, the increase that youre seeing in it and marketing per card solicitations and the like.

Is it too early to know if the success rate or the hit rates for the banks.

On our in line with what they saw historically as they rolled out those programs.

Yes, we wouldn't add visibility visibility to that.

But what I'll tell you what we do find is debt.

All of our finance. This is the macro that started before Covid is the all applications all uses of data whether it's in.

Banking credit cards mortgage auto lending telco.

All of our customers want to use more data and.

And they want to use more differentiated and alternative data because it enhances the predictability of the decision, they're making and let's use the originations and Thats why youre seeing more alternative data being used we think our cloud transformation is going to differentiate us and the ability to how is that data too and as well as surface and deliver that data to our customers and then of.

Of course twin we talked earlier and this conversation and the call. This morning about the power of that dataset in net credit decisioning, meaning is someone working how much are they making.

Added to the credit file and the other alternative data is very very powerful.

Thank you.

And the next question is from Simon Collins with Atlantic Equities.

Hi, Hi, everyone. Thanks for taking my question.

I was wondering if the first of all sort of apologies I was actually dropped off from the Internet connection during this call.

And I was wondering if you could just refresh me on the great targets for 2021 for the segments that you laid out please.

Sure. So on the weight of drop off to we had of firearm go up but there was not of fire. So we were off for a few minutes to if you want the cycles out of all the tenant.

And just talk to brokerage and you'll just the growth rates by segment that we raised earlier, yes, okay sure yes, because all of these uses.

So we indicated that we expected workforce solutions to be up over 20%.

We indicated we expected <unk> to be up mid to high single digits.

We indicated we expected.

The international to be up.

The constant currency high single digits and that we expected gcs to be down mid single digits and also expected gcs to be down mid single digits and the second quarter.

Okay. Great. Thanks, So I was wondering if I could follow on from that and just on the international business then.

I mean.

This is the obviously with what happened through the pandemic because of the comparisons are incredibly easy.

And.

And given sort of where we're expecting.

And the framework you provided for.

The recovery out of the pandemic through the back and back end of this year.

And I'm curious is that sort of how.

And how sensitive do you think that and that sort of high single digit number is because it seems to me it should be fairly easy and some ways to drive significantly higher grades for the for the international segment on.

Just wondering if you could give a little color on them.

Now, let's see Simon we're counting on a recovery of the international markets, but.

There's still a pretty decent amount of uncertainty and those markets.

And you follow it too but.

Canada's vaccine rollout is really slow and <unk>.

Got lockdowns and back in place and some other markets Australia as vaccine rollout is like really slow like not happening I'm not sure when they're going to get a vaccine rollout.

So there and kind of walk down the pressure on that economy the U K.

Got the vaccines out there, but they've still got high Covid cases, so we've got lockdowns and the U K.

And some other markets the big market for us like Chile, They used I think the Chinese vaccine and it turns out to be not effective.

And it rolled out so they've got lockdowns in place so.

We expect them to recover we expect the.

And that seems to get in place during 2021, but I think theres still some uncertainty there and in our framework. We do we are counting on and expect to see some improvement and you saw on our numbers. We've got some markets that are adapting the COVID-19 like the U S did.

And I think some of the international markets took longer to adapt meaning the.

On the U S and some markets like auto and others and the second and third quarter last year figured out how to sell cars virtually and other things that happen more slowly from our perspective and international markets, where youre starting to see that Canada had a very strong quarter for us and the first quarter, Australia to even notwithstanding these COVID-19 lockdown.

And so we expect international to improve but I would say that we're watching it because there's still some uncertainty there.

Our fourth quarter of 'twenty and international was Okay, we grew and the fourth quarter of 'twenty right. So yes.

Yes of course.

Okay.

And I was wondering if I could have a quick follow up as well and then maybe this one more for you John.

When I think about the and the push pull for the use of margins going forwards.

Because I know you didn't breakout of the tech times of the transition costs by quarter, but we're not think about the underlying inc.

Incremental margins of this business I mean could you give me a little color on how to think about that and then layer on top of the potential dilution from acquisitions to margins and how we should think about that beyond once we move beyond that sort of the year cut size deals.

Yes, so we did give some perspective on the.

On the <unk> this quarter, we indicated kind of the negative movement and their margins.

Was up two thirds driven by tech transformation.

So to give you some perspective.

And and what we've said is over the longer term, we expect to see improvements and margins driven by the fact that we're going to drive substantial cost benefits related to the tech transformation, but we wouldn't start to see those benefits occur until late 'twenty, one and then really kicking in and in earnest and 2022. So so as we think about the the movement in margins.

The drivers of the margin obviously, it will be a tech transformation spend start to decline as you move through 'twenty, one and into 'twenty, two really moving into 'twenty, two and then as we start to get savings related to those decommissioning that will occur as tech transformation completes and that doesn't really start to have a net savings of decommissioning more than cloud costs until very late and <unk>.

The one and then obviously accelerating and 'twenty two.

Okay, and so the incremental cost from acquisitions that you've already made already kind of be.

Minimal.

So we expect of acquisitions, we make to move to <unk> type margins over a reasonable period of time right. So certainly not in the first year.

But then as we move into year, two and certainly year three we expect them to deliver margins like the rest of the business.

And the acquisitions are all accretive to generally our revenue growth rates and each of the businesses. Yogurt example, accounts, we're really excited about the the space they play and and the their historical growth and the opportunities with the synergies between <unk> and count on both the top of the topline and some of the cost synergies.

Yes understood. Thank.

Thank you.

And the next question is from Andrew Jeffrey with true with Securities.

Hey, good morning, I. Appreciate you taking the question I know, it's been kind of of a long call Jeff.

Very high level, Mark what I'd like to try to understand if you can help us.

Just simplistically how much do you think of your non mortgage strength in particular.

It's being driven by a snapback and share gain obviously there was a period of time over the last few years, where equifax was.

Focused internally.

And you've clearly righted, the ship and accelerated NPI and <unk> and are making what is apparently of very effective cloud transition are we seeing normalization and share how much of that is playing a role and this growth non mortgage and mortgage and that matter is the problem.

Yes, I think we tried to be clear and we use this phrase last year for <unk>.

All four quarters last year that we feel like based on the wins the use of <unk> and Sid Singh and his team are landing and the U S marketplace and USAA of space that we're competitive and we're winning in the marketplace. We've talked about the deal pipeline, we shared some metrics that earlier in the call that it's up 30%.

<unk> and <unk>.

So what are the factors there and there's no question, we were pressured in 2018 and 19 after the cyber event competitively we were in the penalty box with a lot of customers.

And it took us a while to get out of that meeting.

Through the end of 2019 and 2020, we were on what I would characterize and the first quarter kind of a normal competitive footing and then COVID-19 hit which created some.

Visibility challenges, perhaps for you, but in that timeframe, we kept our consistent.

<unk> with you that.

<unk> was winning and was the competitive in the marketplace. So you've got.

The commercial the post the post cyber event is clearly behind us.

On a strong footing commercially we think we're advantaged commercially with the cloud transformation.

And you think about it it's actually quite logical if you're a.

The commercial leader and you're out talking one of your customers and say, Hey, Equifax, just invested 1 billion five and our technology to support you.

And that creates a very positive dialogue and then you add to it equifax is differentiated data <expletive>ets that we have.

Data <expletive>ets, our competitors don't which we think helps us commercially and you can lead with twin obviously, which as you know U S. <unk> sales in the marketplace for US is one commercial team a cell twin to all of our financial customers and but add to it and <unk> side and our data X. So we think thats advantaged us.

The leveraging of the cloud for new products and.

And is clearly taking hold on the <unk>.

The rest of the business Rolling out these new cloud based products that we.

We think of giving us and ability to bring new solutions that drive incremental revenue.

With our customers and the mortgage and non mortgage space, which is quite positive. So we think there is the.

A lot of momentum there is still more to do.

But the team is really focused I think the last point I'd raises the you know we brought in are no longer a new leader to years ago, Sid Singh, but he used 2019 to rebuild the business and the team and continue that in 2020. They are hitting their strides we re lever of the team we have.

Got a new chief revenue officer.

We've got Cid who's the very commercially oriented leader I think thats benefiting U S. ISR also and how they are operating in the marketplace.

Okay. That's that's helpful and then maybe for John just quickly any.

Kind of unusual timing items, we should be thinking about John and it just it seems like AWS and mortgages holding up really well as the mortgage market kind of weak and is there.

Is there any sort of timing vis vis your growth versus the market as a whole.

The timing of the aware of which im sure Youre aware of because it happens every year right as the in AWS and employer services the.

Employer services revenue was strongest in the first quarter substantially because several of the services. They provide think W. Two.

Thank workforce analytics are directly related to tax filings and since that's the case of their revenue is much higher and those segments and the first quarter and during that period. Obviously the margins are very strong and those businesses. So youll see stronger margin and workforce solutions and it also obviously benefits equifax and the first quarter and generally the.

And Theres, a negative trend sequentially going into the second quarter for that reason the other the other thing that it just timing related related to Equifax is our.

Our annual salary increases our merit increases are generally pretty much uniformly at April one. So you tend to see of cost increase occur and the company and the second quarter and that brings margin staff. Okay. So so those of two things that are just timing related.

Other than that and nowhere I think we're just what we're seeing and AWS and really across the business was just good execution.

Alright I appreciate it thank you.

And the next question is from George Tong with Goldman Sachs.

Hi, Thanks, good morning.

The guidance for 2021 core revenue growth was upwardly revised from 10, 5% previously to 16% at the midpoint approximately how much of the increase and core revenue growth of the estimate is coming from non mortgage compared to outperformance within the mortgage market.

And remember we took our mortgage guidance down.

You should think about that.

But clearly as the negative impact on net and.

The whole offset us.

Non mortgage.

We are raising and John yes.

Yes, So George we said pretty consistently right that as we move through 'twenty, one youre going to see and increasing contribution to core revenue growth from non mortgage relative to the mortgage obviously and the first quarter. We saw really good outperformance relative to the mortgage market.

Across AWS as well as <unk>, and we indicated I think and an earlier answer to a question that even though the mortgage market is going to be weaker by three points from the year, we will still grow.

Faster than 10% right. So we're going to see better performance better outperformance relative to the market that we had previously guided so there is some some benefits of core revenue growth from better output performance on the mortgage market, but obviously also youre seeing a substantial contribution now thats starting to occur as you move through 'twenty, one from the non mortgage market.

Got it very helpful. And then secondly, equifax hasn't yet been stated its long term financial framework, what do you need to see and the business before you feel comfortable reinstating long term targets.

Yes, George Hey, we talked to you before and.

And I was clear earlier and the discussion this morning.

We're intending to put that in place and 2021.

We said in February and kind of same comment to you now is that we wanted to see a few more quarters.

Of our months, perhaps of the Covid recovery things are still.

And volatiles, the wrong word, but still evolving the mortgage market from just I don't know.

Less than 90 days ago as has.

And as softened.

And of course, the Covid recovery I would say is stronger than we anticipated in the last 60 days and the non mortgage side. So we want to see a few more months of that but we know what we want to do we're ready to do it.

Given the hopefully you a lot of indications of.

How that's going to be framed and it's our intention to put that in place.

And in concert with likely and Investor day and.

Before the end of the year and 2021.

Very helpful. Thank you.

And the next question is from Jeff Mueller with Baird.

Yes. Thank you. So my question is on slide nine and the Middle chart.

UWS core mortgage growth.

It was 99% and I think you have 9% records growth. So it's a 90% core ex records growth mortgage growth and verification services.

Look back the 2020. It also had this m<expletive>ive step up 80%, maybe high 60% or 70 X Records growth.

And to be.

And this I guess of 11% to 21% range and probably half or more than half of that was record. So there is a much bigger contribution starting in 2020 from those X Records factors and Mark.

Repeated several times all of the factors that go into that so I don't need you to repeat that but what is so different about 2020 and.

And going into 2021 in terms of like I don't know if its the inflection and if it's the tech transformation like if it's a specific factor just what's the different about 2020 and 2021 in that regard.

Yes, I think Theres, a couple of things there, Jeff and we've said to you and the others repeatedly there is a degree of inflection point when you are north of 50%.

Kind of hit rates, we think it becomes a more valuable <expletive>et and so many other cases and I'll. Just use. My example, 10 years ago when out of the G capital, we didn't use the data <expletive>et because the hit rates. We're at about 25%. It just didn't make sense to put it in your workflows. When you can only hit one and four customers now that you're over 50. We believe there is an element of inflection there. We also believe the cloud <unk>.

Formation is a big deal and.

And that's across Equifax workforce has benefited from that for example.

Ingesting the amount of records, but even more complex.

Adjusting the amount of employers that we now have and the dataset. If you go back 18 18 months ago. We may have had 150000 employers of $200 something like that and now we're well over 1 million companies contributing of dataset, we couldn't have done that without the cloud.

Remember when we get those data records they are generally and different formats and your cloud capabilities allow you to normalize those of net and then put them in a format that you can bring them to your customers and then I won't go through all of the other levers that workforce has.

But you know they are pretty wide and broad and with the scale of the business, meaning the infrastructure. We have the people we have the resources to invest in really dedicated teams and I don't mean to repeat this but we have a dedicated team focused on records period, that's hard to do and this is.

The multi person team we have a dedicated team focused on working with our mortgage customers on system the system integrations and that's all they do on the <unk>.

<unk>, we have another team that's focused on convincing the mortgage originators that arent doing business with the go forward with the scale of our business.

Becomes a flywheel that allows us to invest and the business. So I think there is all of it was just going back up what are the bigger macros.

I would say the inflection point of being north of 50% and the.

Cloud transformation, taking hold and and.

If you followed us for a long time.

On the new product front, you didn't hear a lot out of workforce solutions. In 2015, 16, 17, 18, 19 and around new products now with the cloud we can really take advantage of this data <expletive>et and and you know the power of coming up with the new way to monetize of data <expletive>et the you've already paid for.

<unk> the.

And the dual borrow or mortgage solutions the mortgage solution that.

<unk> allows the mortgage originator to have multiple polls the.

On the mortgage solutions has 36 months of our history and it at a higher price point those are all opportunities that we've started to deploy and 2020. When we had the FX cloud really taking hold inside of workforce and across Equifax and those of the kind of solutions, you should see and as.

Central to our FX 2023 strategy is really leveraging the crowd the cloud around innovation and new products and we're excited about our progress there, but we're in early innings of this.

And Jeff John as part of the thank you Mark on the trade.

You've talked about three years ago for every four credit polls, there was one or less and one employer poll ranked verifications bolt now for every two theres more than one right. So the level of penetration is up dramatically and the time period, you're describing.

Which substantially etch the growth right and and then you also and obviously in a period of very rapidly growing market benefit all variances improve right. So we're certainly benefited across the business by the fact that the market, so large and ranked but the and.

And so much faster this year, but the increase in penetration as the huge driver and the past three years.

Got it helpful. Thank you.

And your next question is from Kevin Mackay with Credit Suisse.

Hey, Kevin Great. Thanks, So much hey, how are you.

Hey, Mark or John can you give us a sense given the new product innovation and how are you.

Thinking about it.

Longer term subscription perspective versus transaction institution.

And what we spend historically.

And as much more transaction oriented.

And the incremental cloud shift it seems like youre going to be more embedded in your clients, you're introducing more products and become.

More monitoring so how are you thinking about subscription versus transaction growth, maybe historically and where that can be and the business longer term.

Yes, so I think our business continues to be heavily transaction focused.

And likely will continue to be what.

And increasingly you see minimums and our contracts, but generally not subscriptions right we.

We do have some products that are subscriptions like you said monitoring services tend to look more of like subscriptions, but the vast majority of our revenue generation continues to be driven by <unk>.

And continues to be driven by transactions and we benefited from that obviously very substantially over the past several years businesses, where you can where you see more things that look like subscriptions are certainly on the unemployment insurance claims business you see things of that looked like subscriptions with minimum with the volume caps on them. So we have businesses that are structured.

Like that.

And we have some businesses that are that are somewhat more software focus where you see more subscriptions, but generally speaking we are still heavily transaction base.

And that will likely continue.

That's helpful. And then can you just remind us if you think about the.

The pool of.

Records within AWS I noticed that the target is there of remember some of them about 168 million from <unk>.

Think of that alternative income sources things like that.

The total addressable market.

Actually out there based on the cash.

The ability to GAAP today.

Yes, you talked about the non farm payroll there is a lot of runway there and as you know a lot of economic value as we grow the database and the traditional non farm payroll of W. Two income of $10 99 is a very big market. I think it's 30 of 40 million people that have 10 99 type income that's the space that we're adding data records we don't.

About those because it's not and our.

The $90 million of $150 million in total and.

The other datasets that we're starting to add and we have some records now as the pension of income I think theres 20 of $30 million defined benefit.

Pensioners in the United States and receive monthly pension checks either at the state federal or corporate level <unk>.

They are applying for credit products. So that's another data set that we're out there chasing and it just goes back to the.

And the power of the scale of our business.

And have those relationships and for example of company that we're collecting the active employees from many of those companies also process their pension of income. So it is an opportunity for us to bring that income and.

And do our datasets same thing with the payroll processor that's doing.

Primarily W. Two income there also and some cases going to of 10 99 income. So it's another way for us to build those out. So we've got a very clear focus of not only building out W. Two but going beyond that.

Another focus of that Didnt early stages is really just getting data around debt someone logging in or checking in and checking out of their appointment.

Whether it's a restaurant and worker logging in.

There are software that they used to operate in the restaurant and we're getting net data <expletive>et we might not know how much they're making although theyre working so is another element of data. So we've got a broad focus there.

And going beyond W. Two.

Thank you very much.

And our last question is from Gary Bisbee with Bank of America Securities.

And I appreciate your stick and again.

Around long enough to end of the question just one on <unk>.

And on the non mortgage.

Acceleration, which was which was impressive across the across the businesses.

And I look at USAF and in particular, and I don't think Thats grown meaningfully and a couple of years and if I heard you right ex the acquisitions. It was nearly 11% year to year growth in the quarter.

Would it be reasonable to think a decent portion of that is an easy comp and margin or is this.

Much more momentum, it's really picked up and if so what are the key one or two drivers of that sequential improvement and the non mortgage growth and USA and thank you. Gary you noticed and just remember is that <unk> had a decent quarter in first quarter last year I think it was up three five per cent.

Certainly it was low single digits, yes, something like that and the first quarter last year and the Covid pandemic really didn't hit them or us until the last two weeks of March.

And at three and a half was.

And inside of the two weeks in March which really were.

Significantly impacted so we felt we feel quite good about the progress we have really all through 2020.

And that the team is really delivering you of.

Got a lot of factors that we've already talked about it a bunch of the call about the commercial focus by the team and we think that's real and we think theyre getting benefits already from the cloud transformation competitively, meaning wanting to do business with equifax, because we have a different technology infrastructure than our competitors. So that's a positive for them.

Other it's on share you could.

And think about other factors like the ntis.

Those are reminder, we were building NPI and 2018 and 19, we really couldnt sell them, because we were and the penalty box, we started selling them in 2020, but that's really benefiting them and we're continuing to accelerate our NPI rollouts. So I think thats a benefit of the business and then there's an element of Covid recovery I think we were clear that day.

In March and April we've seen some of their verticals move.

Move back much more strongly than they were earlier in the quarter and certainly stronger than they were and in 'twenty and 2020, So I think thats part of that too.

Would it be safe to say that the step function element of just dramatically better looking growth has more to do with <unk> been making progress, but the COVID-19 impact from much of last year sort of.

Offset that or we couldnt see it through because of the correction of that and I think Thats fair I think thats fair that the Covid environment and ask their performance, which is why every quarter, we talked about their deal pipeline to at least give you a metric that we look at on what their commercial activity looks like.

Thank you and I think as Mark and as Mark mentioned on the call right. It got better each month rates of March was certainly by far the strongest month of the free.

Thank you.

Alright, there appears to be no further questions at this time, Mr. <unk> I'd like to turn the conference back to you for any additional or closing remarks.

Thanks, everybody for your interest and Equifax of for joining US today. This does conclude our first quarter earnings call. We look forward to joining you later on this summer to review our second quarter results.

This concludes today's conference. Thank you for your participation you may now disconnect.

And.

And.

Yes.