Q4 2021 Equifax Inc Earnings Call

Hello, and welcome to the Equifax Q4, 2021 earnings conference call and webcast at this time all participants are in a listen only mode.

<unk> and answer session will follow the formal presentation. If anyone should require operator assistance. Please press star zero on your telephone keypad. As a reminder, this conference is being recorded its now my pleasure to turn the call over to Dorian Hare Senior Vice President head of corporate Investor Relations. Please go ahead Sir.

Thanks, and good morning, welcome to today's conference call. During her with me today are Mark <unk>, Chief Executive Officer, and John Gamble, Chief Financial Officer.

Today's call is being recorded and archived audio recording will be available later today in the IR calendar section of the news and events tab at our IR website, Www Dot investor Equifax Dot com.

During today's call, we will be making reference to certain materials that can also be found in the presentation section of the news and events tab at our IR website.

Materials are labeled Q4 2021 earnings conference call.

Also we will be making certain forward looking statements, including first quarter and full year 2022 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 materially differently to materially differ materially from our expectations.

Certain risk factors that may impact our business are set forth in our filings with the SEC, including our 2020 Form 10-K and subsequent filings we.

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

These non-GAAP measures are detailed in reconciliation tables, which are included with our earnings release and can be found in the financial results section of the financial info tab at our IR website.

<unk> 2021, equifax incurred a restructuring charge of $8 6 million or <unk> <unk> a share. This charge was for cost principally incurred to reduce technology development expense as we complete the FX dealer in cloud transformation.

This restructuring charge is excluded from adjusted EBITDA, adjusted net income and adjusted EPS as.

As we have previously discussed in July 2019, we entered into a settlement agreement to resolve the U S. Consumer class action litigation arising out of the 2017 cyber security incident.

Settlement agreement has been the subject of numerous court Appeals on January 10, 2020 to the U S. Supreme Court denied the last remaining petitions seeking to appeal and the settlement agreement became effective as of January 11 2022.

In January we deposited the remaining $345 million into the consumer restitution fund and the claims administrator. It will be we'll begin to validate consumer claims.

As a result in the fourth quarter, we eliminated up excuse me as a reminder, in the fourth quarter, we eliminated our gcs operational segment and moved its lines of business into workforce solutions U S is in international in Canada and Europe .

As a result, Equifax now has three operating segments.

Our remarks today, we will discuss 2021 and fourth quarter results as well as our 2022 guidance focused on this new structure.

Unless we indicate otherwise.

For your reference we have included in our <unk> 'twenty one earnings release Q&A reconciliations of our 2020 and 2021 prior business unit operating segment results to this new structure now I'd like to turn it over to Mark Thanks, Joanne and good morning, before I get to our strong fourth quarter results I'd like to spend a few minutes discussing the tremendous progress in our.

As to any results, we delivered last year.

As shown on slide four our financial performance in 2021 was very strong and built up an equally strong 2020.

Revenue was up 19% with organic local currency revenue growth of 15% and core non market growth of 22%.

They're all well above our new $8 to 12% long term financial framework.

Reflecting the strength of the new Equifax growth model adjusted.

Adjusted EPS at $7 64 was up 10% and adjusted for the change in treatment of transformation expenses and 21 was up a strong 24%. This was truly an outstanding year substantially stronger than we expected. When we started 2021 and despite of U S mortgage market that was down more than we expected at seven five.

5%.

We delivered eight consecutive quarters of double digit growth in two years of strong above market performance with 17% growth in 2020, and 19% growth last year.

Workforce solutions delivered a milestone with revenue over $2 billion for the first time up 39% with organic revenue growth of 34% and the business is up to <unk> from their 2019 revenue of $950 million. This.

This was again driven by very strong performance in verification services with revenue up 46% and organic revenue growth of 41%.

Active records on the work number grew by a very strong 22 million records or 19% to 136 million records at the end of the year.

Mortgage revenue was up 41% almost 50 percentage points stronger than the underlying market.

And non mortgage revenue in verification services had organic growth of 41% driven by talent solutions with organic growth of over 100%.

<unk> also had a strong year non mortgage revenue was up 16% with organic growth of 10% <unk>.

Total revenue was up 4% with organic revenue growth of 2%. Despite the seven 5% decline in the U S mortgage market in.

In total our U S businesses of workforce solutions, and <unk>, which together represent almost 80% of Equifax revenue delivered 20% total and 17% organic growth with non mortgage revenue growth of over 21% total and 15% organic again, all well above our new long term.

Framework of 8% to 12%.

International also delivered a milestone in 2021 with their first year of revenues over a $1 billion.

Revenue grew 10% in local currency driven by double digit growth in Asia Pacific, Canada, and Latin America.

In 2021, Equifax core revenue growth the Green section of the bars on slide five grew a very strong 22% with fourth quarter revenue growth also a very strong 18% both substantially above the new 8% to 12% long term growth framework.

Core organic revenue growth in 2021 was 18% and 13% in the fourth quarter again above our long term framework.

Non mortgage organic growth in workforce solutions in U S and growth in international.

Drove almost 9% core organic revenue growth in 2021 and over 8% in the fourth quarter, excluding the impact of acquisitions and FX.

Mortgage outperformance primarily in AWS drove the remaining 9% in 2021, and 45% and fourth quarter, respectively of core organic revenue growth as we move through 'twenty, two and 'twenty three we expect to see continued strong and balanced core growth, reflecting the benefits of this from the strength of workforce solutions, the new Equifax cloud.

And accelerated NPI.

And we expect continued strong non mortgage performance from both organic growth and acquisitions as well as continued strong mortgage outperformance from workforce solutions.

Slide six covers our strong fourth quarter performance.

Revenue at $1 5 billion was up 12% with organic constant currency growth of six 6%. Despite a decline in the U S mortgage market of 21%.

Which was off a strong 23% growth a year ago in the fourth quarter.

As I just discussed earlier core revenue growth was a very strong 18% in the quarter with core organic growth of 13% again, driven by outstanding performance at workforce solutions.

Fourth quarter Equifax, adjusted EBITDA totaled 403 million slightly higher than expected EBITDA margins of 32, 2% were consistent with our expectations. The decline in margins versus last year was primarily due to the inclusion inclusion of cloud technology transformation costs of $47 million.

In our adjusted results in the fourth quarter, which were excluded last year adjusting for these costs our margins with 35, 9%.

John will provide more a more detailed discussion on our 22 margins in a few minutes and the drivers of our up to 200 basis point margin expansion in 2022.

That we're targeting.

Adjusted EPS of $1 84 per share was above the high end of our guidance range as expected adjusted EPS was down from last year and reflected the inclusion of cloud transformation costs of $47 million or <unk> 30, a share and our adjusted results in the quarter, which were excluded last year.

Excluding these costs adjusted EPS would have been up seven 1% about consistent with our organic revenue growth.

The acquisitions completed in 2021 were slightly accretive to adjusted EPS and we expect substantial acceleration in accretion in 'twenty, two and 'twenty three from the acquisitions as we complete the integrations.

Workforce solutions had another exceptional quarter delivering revenue of $532 million with reported revenue growth of 29% and organic revenue growth of 17%.

And this of course was delivered despite the 21% decline in the mortgage market in the fourth quarter and against very strong 61% revenue growth that they delivered last year in the fourth quarter.

Non mortgage revenue was up almost 50% with organic non mortgage revenue up about 25%.

Included in workforce solutions fourth quarter results is about $7 million from I'd watchdog, which was previously a part of Gcs and is now part of employer services business in EW us.

The strength of dws, and uniqueness and value of their tween income and employment data was clear again in the fourth quarter.

AWS is our clearly our fastest growing business in powering our results.

Verification services revenue in the quarter was $427 million up 29% with organic growth of almost 17%.

The revenue from our <unk> acquisition is included in verification services.

Application services mortgage revenue.

<unk> grew 6% in the quarter, despite the 21% decline in the mortgage market with the workforce solutions outperformance driven by increased records penetration and new products.

Verification services non mortgage revenue represented just over half of total burfict verification services revenue in the quarter.

Total verify our non mortgage revenue was up almost 65%, reflecting strong 30% organic revenue growth plus. The addition of accuracy insights in October .

Non mortgage organic revenue growth of 30% was very strong, particularly over last year's fourth quarter, which was up 15%.

Our government vertical with the addition of <unk> insights provides a broad set of solutions to federal state and local governments. These include solutions in support of government assistance programs, including food and rental support as well as the bind victims notification service and other law enforcement solutions acquired as a part of <unk> sites the.

Vertical represented about 40% of total non mortgage verification revenue in the quarter and delivered 25% total and over 15% organic revenue growth.

Organic growth was driven by the continued growth in.

In the work number and the continued expansion of state benefit programs. We also continue to see a ramp in volume for our new from our new Social Security administration contract. They went live last quarter and we expect to see significant growth in volume as we move towards run rate levels through 2022.

Talent solutions, which provides income and employment educational background in medical certification Verifications incarceration criminal background medical sanctions and other information for the hiring and onboarding processes through our AWS data hub had another outstanding quarter.

The addition of <unk> in October educational information from the National student Clearinghouse in August and significant growth in the work number during the quarter substantially expanded the AWS data hub supporting continued customer expansion and new products.

Total talent solutions revenue represented about 40% of verifier non mortgage revenue in the quarter with total growth of almost 100%.

Organic growth of 50%.

As you know over 75 million people change jobs in the U S annually with the vast majority having some level of screening as a part of that hiring process. We've seen both the number and the frequency of job changes increasing in the current environment. Our ongoing addition of new data assets to the AWS data hub will enhance new product.

<unk> in this important vertical in the future.

The non mortgage consumer lending business, principally in banking and auto showed strong growth as well up over 50% in the quarter that management with non mortgage consumer lending grew over 30% in the quarter.

Employer services revenue of $105 million was up 28% in the quarter and as you know this is an important growth engine for workforce solutions that also delivers new twin records.

Combined our unemployed on unemployment claims and employee retention credit businesses had revenue of about $54 million up slightly from last year, but down over 15% sequentially as we expected.

Substantial declines in UC revenue in the quarter were offset by growth in ERC revenue.

As a reminder is our business that supports employers obtaining federal employee retention credits.

Employer services, non UC and non ERC businesses had revenue of about $50 million up 60% versus last year with organic revenue growth of about 35%.

Our <unk> business driven by our new <unk> anywhere solution continued to show very strong growth up over 50%.

In the fourth quarter, our <unk> business made up about 40% of employer services non UC and ERC revenue.

In August we acquired healthy FX, which provides services to employers to help them ensure compliance with the affordable Care Act, which we are now combining with our existing workforce analytics business. This combined workforce analytics business represented about 25% of employer non UC and ERC revenue in the quarter.

Workforce solutions adjusted EBITDA margins were 54, 6% for 2021 and have been consistently in the mid fifties over the past two years.

As John will discuss later, we expect workforce solutions margins to be at or above the 54, 6% and delivered in 2021 in both the first quarter and in 2022.

As we expected fourth quarter 'twenty, one EBITDA margins in workforce were 48, 4% and were lower than those levels than our historic levels due to three factors first.

After his insights and healthy FX negatively impacted margins as.

As expected initial margins from these acquisitions are dilutive to workforce solutions as we move through 2022 and drive synergy synergies this dilutive impact will be mitigated.

Second in the fourth quarter Dws ramped one major and several smaller payroll processors record contributions to our verify our database as well as integrated other data contributors to the data hub as we discussed in the past in the quarters, where this occurs we incur incremental costs related to boarding and ramping the new contributors.

<unk>.

And as we've indicated fourth quarter saw substantial new record additions in these in period cost impacted margins in the quarter.

And third our cloud transformation cost negatively impacted margins by about 200 basis points workforce substantially completed to verify a cloud native migration in the fourth quarter. So these costs will decline substantially going forward, we remain confident.

Confident that workforce solutions margins will recover in 2022 and be above the 54, 6% we saw in 2021.

<unk> team delivered another outstanding year and are well positioned to deliver a very strong 2022 and continue to above market growth dws is our fastest growing and highest margin business.

<unk> had revenue of $434 million, which was about flat with the fourth quarter with the mortgage market down significantly and includes $47 million of USAA as consumer revenue previously part of Gcs, which was just about flat.

Total U S mortgage revenue of 126 million was down 18% in the quarter, while mortgage credit inquiries were down 21% about consistent with the expectations. We shared in October outperformance versus the overall market was driven by stronger growth in mortgage solutions solutions, including growth in services.

Non mortgage non consumer solutions revenue of $262 million grew almost 12% with organic revenue growth of almost 6%.

In the fourth quarter insurance continued to deliver double digit growth.

Commercial in identity and fraud were up single digits in FY audit and audit auto and telco were up low to mid single digits and direct to consumer increased over 10% in the quarter.

For the full year non mortgage non consumer solutions revenue was up a strong 16% with organic growth in this category of about 10% for.

For 2021, USDA has delivered double digit organic growth across FY insurance identity, and fraud, and DTC as well as mid to high single digit growth in commercial and auto and telco declined slightly.

Financial marketing services revenue, which is broadly speaking our offline and batch business had revenue of about $79 million, our highest quarterly revenue in history.

This was up about 14% in the quarter. The strong performance was driven by marketing related revenue, which was up over 20%.

Both risk and I'd and fraud revenue, we're up about 10%.

2021, marketing related revenue, which grew more than 20% in each quarter represented about 40% of Fms revenue identity and fraud above 20 and risk decisioning above 30.

The U S commercial team delivered record wins up over 25% versus last year and 5% sequentially in the fourth quarter. There are new deal pipeline remains very strong with overall with the overall pipe slightly higher than the third quarter.

<unk> adjusted EBITDA margins were 39, 4% in the quarter up over 50 basis points sequentially from third quarter.

The decline from the fourth quarter in 2020 was principally driven by two factors first the acquisitions of count Intel attract negatively impacted margins in the period as expected initial margins for these acquisitions are dilutive to us.

As we move through 2022 and drive synergies this dilutive impact will be mitigated and second cloud transformation costs negatively impacted margins by almost 75 basis points as with AWS. These costs are expected decline as we move through to decline as we move through 2022.

In 2022, we expect <unk> margins to be flat to slightly below the almost 40% delever level, we delivered in 2021.

International revenue of $288 million was up 6% and over seven 5% sequentially on a local currency basis included in international in the fourth quarter was almost $25 million of consumer solutions revenue in Canada, and the U K that was formerly part of Gcs, which was down about 6% versus last year.

The lower growth in the consumer revenue in the fourth quarter was in Europe , which we expect to recover to high single digit growth in the first quarter.

Asia Pacific, which is principally our Australia business performed very well in the quarter with revenue of $88 million up about 9% in local currency Australia.

Australia, and New Zealand consumer revenue remained flat versus last year, our ANZ commercial business combined online and offline revenue was up 9% in the quarter and our HR Verifications business in Australia was up a strong 37%.

European revenues of $90 million were about flat in local currency in the quarter, but up over 20% sequentially. As a reminder, Europe had a very strong baseline from the fourth quarter of 2020, driven by the reactivation of debt services in the U K and large electronic notifications volume in Spain, a consequence of a change in legislation.

Our European credit reporting business, which is about two thirds of European revenue was impacted by Covid lockdowns in the U K and up about 2%.

Commercial data offline in analytics and scores Schussel saw strong double digit growth in the quarter and consumer credit reporting offerings grew high single digit as Lockdowns measures measures East <unk>.

Included in the UK credit reporting business was $7 million from consumer solutions.

Our European debt management business revenue was up over 30% sequentially, but down 5% versus a very strong fourth quarter 2020.

In December Equifax was awarded a new five year extension of the UK government that resolutions tender a debt collections contract with an estimated contract value of $136 million with an incremental $90 million upside from sales of analytics and other CRE CRA related solutions.

We've seen significant increases in debt placements from the UK government over the past several quarters that we expect should deliver strong growth and debt management revenue in the first half of 2022 for our UK business.

Canada delivered revenue of $64 million in the quarter up 6% in local currency. Despite a weakening Canadian mortgage market that was down 4%.

<unk> experienced strong growth in analytic and Decisioning Decisioning solutions with strong growth in Fintech and traditional Si while supply issues continue to impact our auto business included in Canada revenue is $16 million of consumer solutions revenue.

Latin American revenues of $45 million were up a strong 15% in the quarter in local currency, which was their fourth consecutive quarter of growth.

Strong new product introductions over the past three years and pricing actions continue to benefit growth across our Latin American region.

International adjusted EBITDA margins at 29, 9% were up 320 basis points sequentially, mainly due to stronger revenue and positive mix.

Margins were down year to year due to costs related to the cloud transformation, both the cost of redundant systems and inclusion in our adjusted results of the technology transformation costs, which were being excluded in 2000 22020.

Excluding these costs margins were down slightly versus last year.

Turning to slide seven workforce solutions continues to deliver outstanding performance is clearly our strongest and fastest growing and most valuable business.

As mentioned earlier core revenue growth was up 38% in the quarter and 42% for the year with core organic revenue growth of 28% in the quarter and 38% for the full year of 2021.

These strong results were driven by the uniqueness of our twin income and employment data the scale of the twin database and continued expansion of new products and markets driven by outstanding consistent execution by Rudy and his team.

2021 growth of 39% is well above the 13% to 15% long term framework, which we shared with you in November and of course is on top of 51% <unk>.

Delivered growth delivered in 2020.

Uws's ability to consistently and substantially outgrow their underlying markets is driven by three factors.

First growing the work number twin database at the end of the fourth quarter Twin reached 136 million active records, an increase of 19% or 22 million records from a year ago and included 105 million unique individuals, which is almost 70% of U S. Nonfarm payroll this increase in <unk>.

Records makes our twin database more valuable to our customers from both higher hit rates and more complete important when histories.

We're now receiving records every pay period from $2 5 million companies up from 1 million companies. When we started 2021 and 27000 contributors a short two plus years ago.

Our strong momentum continued during the fourth quarter with the signing of three new exclusive agreements with major payroll processors do you expect to implement during 2022.

As a reminder, almost 55% of our records are contributor directly by employers where AWS provides comprehensive employer services like UC claims W. Two management.

Nine what's the ERC HCA and other HR and compliance solutions are acquisitions of higher Tech IQ verify healthy FX and now efficient higher which we announced earlier this week strengthen our ability to deliver to deliver these employer services, both directly and through relationships with payroll processor.

And HRC HR software companies and of course expand our twin database.

We still have substantial room to grow our twin income and employment database and expect to continue to add new direct contributors as well as the additional addition of payroll processors and software partners on an exclusive basis to twin in 2022.

Beyond the just the just under 50 million non farm payroll records not yet into twin database, we've expanded our focus to data records from the 40% to $50 million gig workers and around $30 million pension recipients in the United States marketplace to further broaden and strengthen the twin database.

You probably saw we also announced an expansion of our global footprint for workforce solutions with the launch of our new UK income and employment verification platform. This adds to our existing Australia, Canada, and India AWS business launches outside the United States.

We've got plenty of room to grow twin.

Second growth lever for workforce solutions is increasing average revenue per transaction through new products and pricing our existing products to value recognizing the depth of information twin allows us to deliver to customers.

Workforce solutions, new product pipeline is rapidly expanding as our teams leverage the power of our new Equifax cloud capabilities.

And the third growth lever is by increasing penetration in the markets, we serve and expanding into new markets.

And new verticals for example, we continue to increase our penetration of the mortgage market workforce solutions received an inquiry for over 60% of combined mortgages up from 55% in early 2020.

We have significant runway to grow penetration and the mortgage vertical we.

We are also in the early stages of penetrating the talent market, where today, we received inquiries and about one in 10 hires in the United States plenty of room for growth.

Growing system to system integrations is another key growth lever and driving both increased penetration and increasing the number of pulls per transaction during.

During the quarter about 76% of twin mortgage transactions were fulfilled system to system up over <unk> from the 32% in 2019.

Another great growth lever for workforce solutions.

Workforce solutions is performing exceptionally well with attractive above market and above equifax growth rates and is highly accretive margins that we expect to power workforce power equifax growth in the future.

Slide eight highlights core mortgage revenue growth performance of our U S. <unk> business is workforce solutions in U S. Mortgage revenue grew 19% in 2021 in a down seven 5% market and off 80% revenue growth in 2020.

Our combined U S <unk> businesses outperformed the market the mortgage market by 28 points in 2021, and 16 points in the fourth quarter. This was driven by workforce solutions as they outperformed the underlying mortgage market by 51 points for the year and 'twenty 'twenty seven points in the fourth quarter.

John will cover our updated mortgage market outlook in a few minutes, we have reduced our outlook mortgage outlook for 2021 of 2022 to down 21, 5% versus our prior view of down 15%, reflecting the likely impact of higher interest rates, we expect to offset a large portion of that impact was strong.

Your growth stronger core mortgage revenue growth from AWS from the strong twin record additions new products system to system integrations and penetration.

Now expect dws will outperform the U S mortgage market by approximately 30 points up 700 basis points from our prior view and our combined U S <unk> businesses of U S.

Just need about AWS to outperform the U S mortgage market.

By an amount approaching 20 points, which is up 400 basis points from prior view.

2021 was a very strong year for new product innovation in a key priority of our team.

As shown on slide nine we delivered a record 151, new products up from 134 last year I'm, sorry in 2020, and a vitality index of just under 9%, which is our highest vitality that we've achieved since 2018 and stronger than our 8% expectations. When we started 2021.

Our pace accelerated in the fourth quarter as we delivered 36, new products positioning us well for 2022.

In the fourth quarter, we launched significant new products, we expect to drive growth in 2022 and beyond the AWS talent report education product provides all available post secondary degrees instantly sourced from the national student Clearinghouse VNS via an exclusive equifax ordering experience using a single SSN number input.

This enhanced offering helps deliver a more efficient hiring process and the ability to make better informed hiring decisions with a holistic candidate view.

Workforce solutions priority next day, VOA and priority two day BOE products are our quick and seamless manual solutions that deliver verification of employment on the next business day or second business day. Following our clients request. These solutions are available to both our web and integrated clients and.

Complete coverage when combined with our instant verification of employment solutions from twin.

The my Equifax allow access product launched by U S. S allows consumers to be notified instantly when they submit an application to a precision precipitate participating lender that theyre file is frozen and with a few easy steps can unlock their files to their loan can be processed and this is a win win for both the lender and the consumer.

The spending power and affluence index products also launched by U S were introduced as new marketing targeting tools that utilize proprietary data to identify customers and prospects with the greatest capacity to spend on new products or services spin.

Spending power estimate dollars are available to spend after accounting for cost of living expenses, while the affluence index provides a score that differentiates households, based on spending power and credit utilization.

And then last we continue to help our clients automate smarter digital customer acquisition decisions by enabling access to new data sources through the matrix enhancements in Australia, our clients can seem simultaneously identify previously undetected decade risk based on E Mail metadata.

<unk> financial eligibility for a loan based on Australia and residency status.

Leveraging our new Equifax cloud capability to drive new product Rollouts, we expect to deliver a vitality index in 2022 of over 10%, which equates to over $500 million of revenue in 2022 from new products introduced in the past three years the.

The 10% vitality is up over 100 basis points from our strong 2021, new product results and aligns with our new long term growth framework, we provided at our Investor day in November .

Turning to slide 10, <unk> is leading the industry in offering flexible structure for BNP.

Providers to report consumer credit data onto the Equifax U S credit exchange through NPL specific bid business industry codes. This new capability will provide equifax customers and partners. The flexibility to include the fast growing BNP ELD data and credit Decisioning Bordeaux excluded based on their specific needs.

Our new Equifax clouds gives us the ability to quickly adjust and manage diverse data types and develop customer reports through equifax, one and customers and custom scores using equifax decisioning.

Our data ingestion process is simplified by the new Equifax cloud and time to market for products is substantially accelerated as we move through 2022 Youll see this capability further accelerate our NPI based revenue growth.

Before I turn it over to John I wanted to quickly discuss our guidance expectations for 2022.

In October we shared with you a framework for 2022 that included our midpoint revenue of $5 3 billion and adjusted EPS of <unk> 65 per share.

As discussed earlier several factors have impacted our view of 2022 compared to the framework, we shared with you a few months ago.

First expectations for the U S mortgage market have changed meaningfully given the jump in the 30 year mortgage rates from 3% in September to three 6% today.

We now expect the U S mortgage market to decline 21, 5% in 2022 as opposed to the 15% decline we expected back in October .

On its own is 650 basis point further decline in the mortgage market negatively impacts our revenue by over $100 million.

Offsetting that we expect equifax core revenue growth should reach 16% in 2022.

Over 200 basis points higher than what we reviewed with you in October this was principally driven by the strong outperformance from workforce solutions, including the accelerated pace of new twin between record additions and the faster new products Rollouts. This higher core revenue growth drives just over 100 $100 million additional revenue offsetting.

The impact of the additional 650 basis points of mortgage market decline.

Our strong core growth allows us to hold our 2022 guidance at the same level as the 'twenty two framework, we shared with you in October with our expectation that we will be at the midpoint of our 'twenty two guidance for revenue of $5 3 billion and adjusted EPS of <unk> 65 per share now.

Now I'd like to turn it over to Jon to provide more detail on our 'twenty two guidance and assumptions and also to provide our guidance for the first quarter. We're starting off strong in 2022, given the met our momentum from the fourth quarter.

Thanks, Mark before we discuss 2022 I'll share a little more detail on <unk> 21, and <unk> 21 items below operating income specifically net interest and other expenses and effective tax rate came in combined slightly weaker than expected net interest and other expense was slightly weaker than we expected and our 22% effective tax rate was very close to the <unk>.

Guidance, we provided.

As Mark referenced earlier Equifax EBITDA margins came in as expected in the fourth quarter at 32, 2% the factors, resulting in the year to year decline were considered in the guidance. We shared in October specifically two thirds of the decline was driven by the treatment of cloud technology transformation costs in 2021, including them in our adjusted results.

The remaining third of the decline is driven by the items Mark discussed earlier, specifically the impact on workforce solutions in USAF of the acquisitions completed in 2021 and increased royalty costs as Mark discussed regarding acquisitions, we expect to deliver synergies that will support higher EBITDA margins as we move through 2022, and 'twenty three and the <unk>.

Royalties at workforce solutions were partially driven by cost related to the startup of the significant new payroll partners launched in the second half of 2021.

As I will discuss in detail in a moment, we expect <unk> 2022 workforce solutions margins to return to exceed 55% and overall equifax EBITDA margins to return to approach 35, 5% up about 325 basis points sequentially.

Let's start with more detail on our assumptions for the U S mortgage market as shown on slide 11. In 2022, we are expecting a 21, 5% year to year decline in the U S mortgage market credit inquiries with a more rapid increase in the U S mortgage market rates, we have seen in the first quarter, reaching three 6% last week consistent with the increase in the U S 10 year and reduced fed purchase.

Single mortgage mortgage backed securities, we expect refinancing activity to drop more substantially beginning as early as late in the first quarter 2022 U S mortgage market credit inquiries would need to decline an additional just under 5% from 2021 levels to return to average levels. We saw over the 2015 to 2019 period.

The left side of Slide 12 provides perspective on the number of home mortgages for which a refinancing would be beneficial. We have expanded this chart from versions we shared in prior quarters to provide greater perspective on the full in the money population of mortgages as we've discussed in prior quarters and rising mortgage rate environment refinancings will often occur with lower levels.

The rate benefit this is increasingly true during periods of high home price appreciation as homeowners look to borrow against their increasing levels of home equity.

Looking at data from late January at current mortgage rate levels. There are over 16 million homes that would benefit from a refinancing of this amount about $7 8 million mortgages that have a loan to value at 80% or below and for which the borrower has has a 660 or above credit score, which see their mortgage rate declined by 75 basis.

Points are more there is an additional $5 3 million that have an LTV of 70% or below that would see their mortgage rate declined by 25% to 75 basis points and there are another just over $3 million that have an LTV of 70% or below that would benefit by up to 25 basis points from a refinancing although down.

Secondly from the levels, we saw earlier in 2021 when mortgage rates were around 3%. This remains a significant population similar to the levels. We saw in 2009 and about 15% below what we saw in 2016 for.

For perspective for Black Knight data during <unk> 'twenty, one over 35% of refinancings, whereby borrowers benefiting by a rate decrease of less than 75 basis points.

Based upon our most recent data from July 2021 mortgage refinancings were just about 600000 per month.

As shown on the right side of slide 12, the pace of existing home purchases continues at historically very high levels. Our 2022 assumption for U S. Mortgage credit inquiries is that we will see these high levels of purchase mortgage refinancings continue at levels slightly above the levels. We saw in 2021 and that refinancings will decline significantly from the levels we saw in <unk>.

2000 22021.

Slide 13 provides a revenue walk detailing the drivers of the eight 4% constant currency and seven 6% total revenue growth to the midpoint of our 2022 revenue guidance of $5 3 billion.

Using current FX rates FX is a negative impact on 2022 growth of just over 8% about two percentage points weaker than we discussed in October total revenue of $5 $3 billion was up almost 8% from 2021 and in line with the framework. We provided in October the 21, 5%.

In the U S mortgage market is negatively impacting 2022 growth by about six 6% about 200 basis points or just over $100 million more negative than the levels. We discussed in October when combined with the expected declines in the workforce solutions unemployment claims and ERC business total headwinds to 2022 revenue growth of about eight <unk>.

Tonnage points core organic revenue growth on a constant currency basis is anticipated to be over 13%. This is almost 200 basis points higher than we discussed in October where this improvement driven by workforce solutions through the much stronger record growth and accelerating NPI and strong pricing driving higher average unit revenues that mark discussed earlier.

Non mortgage organic growth is driving over 7% of the growth. The largest contributor continues to be workforce solutions with strong organic growth and talent solutions government and employee boarding solutions, including nine usia's non mortgage and international are also expected to drive core growth mortgage revenue outperformance relative to the over.

Raul mortgage market is expected to drive the remaining almost 6% of the core of the organic core growth. This was driven by strong outperformance in workforce solutions.

The acquisitions completed in 2021, plus the efficient higher acquisition closed earlier. This week are expected to contribute about three two percentage points of growth to 2022.

Core revenue growth, excluding FX of almost 16, 5% is well above our long term framework and 200 basis points higher than we discussed in October to the stronger due to the stronger core organic growth in workforce solutions and our good start to the year and acquisitions. This stronger core revenue growth drives just over $100 million in revenue.

Offsetting the impact of the weaker mortgage market.

Slide 14 provides an adjusted EPS walk detailing the drivers of the expected 13% growth at the midpoint of our 2022 adjusted EPS guidance of 865 per share. This is in line with the midpoint of the 2022 framework. We shared in October EBITDA margins are still expected to increase from 175 to 200 basis point range, we discussed in October .

<unk>.

Revenue growth of seven 6% at our 2022 EBITDA margins of about 33, 9% would deliver about 10% growth in adjusted EPS EBITA margin expansion of 175 million to 200 basis points as expected to drive 9% growth in adjusted EPS.

Depreciation and amortization is expected to increase by about $40 million in 2022, which will negatively impact adjusted EPS by about 3%.

DNA is increasing in 2022, as we accelerate putting cloud native systems into production.

The combined increase in interest expense and tax expense in 2022 is expected to negatively impact adjusted EPS by about three percentage points. The increase in interest expense reflects increased debt from the 2021 acquisitions and the higher short term interest rates I've referenced interest rate. The interest expense is higher than our expectation in October by about seven.

Our estimated tax rate used in this framework of 24, 5% does not assume any changes to the U S federal tax rate.

Slide 15 provides a view of Equifax total and core revenue growth from 2017 through 2022, we anticipate delivering strong core revenue growth of 16% reflecting organic.

Growth of 13% and a 3% benefit from acquisitions completed in 2021 plus efficient higher.

Slide 16 provides the specifics on our 2022 full year guidance 2022 revenue between 525 billion and 535 billion reflects growth of about six six to eight 7% versus 2021, including eight 8% negative impact from FX acquisitions are expected to positively impact.

Revenue by three 2% AWS is expected to deliver over 15% revenue growth with continued very strong growth in verification services AWS EBITDA margins are expected to be up from the 54, 6% delivered in 2021.

<unk> revenue is expected to be about flat, reflecting the 21, 5% assumed decline in the U S mortgage market non mortgage revenue is expected to be up 6% to 8% Usia's EBITDA margins are expected to be slightly down from the 39, 9% delivered in 2021.

Combined gws and Usia's mortgage revenue is expected to be down slightly with mortgage outperformance approaching 20% and.

And international revenue is expected to deliver constant currency growth of about 7% to 9% International EBITDA margins are expected to expand by over 175 basis points.

2022, adjusted EPS of $8 50 to $8 80 per share is up 11, 2% to 15, 2% from 2021.

Given the greater decline of the U S mortgage market. We discussed earlier, we believe that our guidance is centered at the midpoint of both our revenue and adjusted EPS guidance ranges.

175 to 200 basis point improvement in our 2022 EBITDA margin from 33, 9% in 2021 is principally driven by the following main factors workforce solutions revenue growth of over 15% with margins at or above their current 54, 6% drives a benefit to overall equifax EBITDA margins of over 150 basis.

Corporate expense as a percentage of revenue is declining year to year on higher overall equifax revenue improving overall equifax EBITA margin by on the order of 100 basis points. The drivers of the lower spend are principally lower corporate technology transformation expense and lower lower variable comp.

International margin expansion of over of over 175 basis points also drives about 25 basis points and overall Equifax EBITA margin.

These are partially offset by the negative impact on overall Equifax EBITDA margins are flat usia's revenue in 2022 due to the very weak mortgage market.

Slide 17 provides our guidance for <unk> 'twenty two we're starting 2022 strong better than previously expected. We expect revenue in the range of $1 three two to $1 $34 billion, reflecting revenue growth of about eight 8% to 10, 5%, including a one 2% negative impact from FX.

U S mortgage market as measured by credit inquiries is expected to be down approximately 24% acquisitions are expected to positively impact revenue by about five 2%.

<unk> 22, EBITDA margins are expected to approach 35, 5% up about 325 basis points sequentially. The improvement is driven by the same two factors we've discussed driving the improvement in our full year 2022, EBITDA margins looking at businesses. The business units in the first quarter workforce solutions revenue is expected to be up over 25% year to year.

<unk> and EBITDA margins are expected to be over 55% driven by significant growth in verifier and seasonally strong workforce analytics revenue workforce solutions will represent about 47% of equifax revenue in the quarter U S revenue is expected to be down 3% to 4% year to year driven by the 24% decline in the U S mortgage more.

Yeah.

The mortgage decline is partially offset by growth in non mortgage expected to be up mid single digit percentage EBITDA margins will be down slightly sequentially from the from <unk> through 'twenty, one due to the weak mortgage market.

International revenue is expected to be up about 8% year to year in constant currency and EBITDA margins are expected to be down about 100 basis points year to year. The decline in EBITDA margin is driven by increased cost in Canada as we migrate our Canadian credit exchange to be in production on data fabric in the quarter and some negative mix from growth and debt management.

As I just indicated full year EBITDA margins for international should increase 175 basis points year to year corporate expense will decline year to year benefiting overall equifax EBITDA margins.

We are expecting adjusted EPS in <unk> 2022 to be $2 eight to $2 18 per share compared to the <unk> 21, adjusted EPS of $1 97 per share.

Now, let's turn to slide 18 at our Investor Day in November we discussed the strong earnings and cash flow that can be generated by 2025 by equifax executing our new long term financial framework. We also shared a scenario for you to consider that assuming U S mortgage market normalizes by 2025% of the average levels. We saw over 2015 to 2019.

We deliver revenue growth just above the midpoint of our 8% to 12% framework growth rate revenue in 2025 could be about $7 billion.

And continuing to execute our cloud data and tech transformation at these revenue levels could deliver 39% EBITDA margins by 2025.

Beyond 2025, we expect to see revenue expansion of 8% to 12% and deliver margin expansion.

On average 50 basis points per year, reflecting our significant operating leverage and high variable margins.

Shown on slide 19 free cash flow accelerated significantly in 2021, reaching $866 million, 92% of adjusted net income in 2022, excluding the $345 million payment on the on the U S. Consumer class action settlement made in January free cash flow will exceed $1 billion, 95% of adjusted net income.

As we discussed in November at our Investor day to the extent, we are able to deliver revenue growth and EBITDA margins I just referenced in 2025, we could generate $2 7 billion of EBITDA $12 75 in adjusted EPS and $1 6 billion in free cash flow almost double the 866 million that we delivered in 2021, the substantial increase in <unk>.

Free cash flow creates significant capacity for M&A and also for return of capital to shareholders through cash generation and increased debt capacity.

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

Thanks, John as highlighted on slide 20, we remained laser focused on our <unk> 2023 growth strategy to leverage <unk> cloud with innovation new products.

<unk> 2023 is the foundation of our new 8% to 12% long term growth framework and the foundation of the new Equifax.

We continue to make significant progress executing the equifax cloud data and technology transformation.

Now have about half of our revenue being delivered from the new Equifax cloud. This will build meaningfully in 2022 as we expect to substantially complete our North America cloud migrations.

We've now completed almost 112000, <unk> migrations over $10 million consumer migrations and $1 million Gator contributor migrations in North America, our principle consumer exchanges are in production and the new Equifax cloud based single data fabric and delivering to our customers. Our international transformation is also.

Progressing and is expected to be principally complete by the end of 2023 with some customer migrations continuing into 2024, we remain on track and confident in our plan to become the only cloud native data analytics and technology company.

We're in the early days of leveraging our new X FX cloud capabilities, but remain confident that it will differentiate us commercially expand our NPI capabilities accelerate our topline growth and expand our margins from the growth in cost savings in 2022 and beyond.

At our Investor Day in November we discussed how the execution of our new <unk> 2023 strategic priorities, including the Equifax data and technology cloud transformation will lead to stronger revenue growth faster margin expansion and higher adjusted EPS growth.

We introduced the new Equifax long term financial framework shown on slide 21, with total revenue growth of 8% to 12%, including a 100 to 200 basis points of growth from bolt on M&A.

We also expect to deliver margin expansion as John mentioned, a few minutes ago of 50 basis points per year over the long term that will help us deliver adjusted EPS growth of 12% to 16%, which combined with our 1% dividend yield target will allow us to deliver a total return to shareholders of 13% to 18% going forward.

Reinvesting our strong outperformance in strategic and accretive bolt on M&A is a key priority for the future as shown on the left side of Slide 2020, Slide 22, 2021 was a strong year for bolt on M&A with eight acquisitions closed totaling about $3 billion that added 300 million to run rate revenue, including.

Excluding synergies.

Our M&A M&A priorities are clear and focused on expanding and strengthening the core of equifax through number one expanding and strengthening our strongest and fast growing business workforce solutions number two adding unique data assets number three expanding in the fast growing 19 billion dollar identity and fraud space and number four.

For continuing to look to expand our credit Bureau footprint globally.

We expect to add 100 200 basis points in revenue growth each year from bolt on M&A in.

In 2021, we completed eight strategic and accretive acquisitions slowdown shown on slide 23.

We substantially strengthened and broadened workforce solutions through the acquisition of <unk> as well as healthy FX higher tech and ICU verify and we strengthened our identity and fraud portfolio through the acquisition of count in our U S. <unk> differentiated data assets through both the <unk> and <unk> acquisitions.

These were critical acquisitions for Equifax that we're now focused on fully integrating the businesses and driving synergies to accelerate our growth.

Reinvesting our strong cash flow and accretive strategic bolt on M&A is central to our <unk> 2023 growth strategy and long term growth framework.

We're starting off 22.

Starting 'twenty two off strong with a bolt on acquisition that we closed earlier this week as outlined on slide 24 efficient higher further strengthens workforce solutions by bringing expanded employer services to hospitality building services and senior living the.

The acquisition also strengthens workforce solutions to better compete and penetrate the hourly and high volume hiring market and provides us with incremental twin records.

Slide 25 highlights the tremendous growth of workforce solutions, both in revenue and EBITDA margins over the past five years.

Strong growth of the work number and the addition of <unk> insights and expansion of the AWS data hub have dramatically expanded the workforce solutions addressable markets across new verticals account solutions government employer services, including on boarding as well as their core mortgage and financial services markets our ability to access.

These markets with our unique and it's still expanding twin employment income and talent debates data and services will allow AWS to continue to deliver above market core growth and power <unk> in the future.

We're also leveraging the new AWS cloud based tech platform for international expansion with the announcement I mentioned earlier of our new UK income and employment verification services. This adds to our AWS solutions in Canada, Australia and India.

Workforce solutions has grown from about 25% of Equifax revenue three years ago to over 40% last year and will likely grow to over 50% of equifax in the coming years.

The above market growth in workforce solutions and depth and diversity of their people based assets have moved equifax well beyond the traditional credit Bureau space and made us a faster growing and more diverse business than we were a short three years ago.

As shown on slide 26, the new Equifax as a customer and product centric company that will deliver 8% to 12% revenue growth in the future by leveraging our equifax cloud native architecture centered on a single data fabric to enable seamless use of our unique data assets to deliver new products faster and more effectively.

<unk> on our <unk> 2020 growth strategy in delivering revenue growth consistent with the midpoint of our long term framework will allow us to deliver $7 billion of revenue and 39% EBITDA margins in 2025 as John just mentioned a few minutes ago and as we shared with you in November .

Wrapping up on slide 27, Equifax delivered another strong base quarter with above market growth in 2021 more than offsetting a declining mortgage market. We are operating exceptionally well and have strong momentum as we move into 2022.

We've now delivered eight consecutive quarters of strong above market double digit growth, reflecting the power of the new Equifax business model and our execution against our <unk> 2023 strategic priorities.

<unk> is an offence.

Workforce solutions had another outstanding quarter and year powering our results delivering 29% revenue growth in the fourth quarter, while integrating efforts insights and the other in the three other 2021 bolt on acquisitions that strengthen the core workforce solutions Workforces clearly are our largest fastest growing and most valuable business and Rudy and his team remain focused.

<unk> on driving outsized growth.

<unk> also delivered a strong quarter with 12% non mortgage growth and about 6% organic non mortgage growth offsetting the impact of the sharp over 20% decline in the mortgage market Sydney Usia's team remain competitive and are working and are winning in the marketplace.

International grew for the fifth consecutive quarter with 6% growth in local currency as economies reopen and business activity resumes.

We have high expectations for international as we move into 2022.

We spent the last three years building the Equifax cloud and are in the early days of leveraging our new and uniquely Equifax cloud based technology and single data fabric capabilities as we move into 'twenty, two and beyond we will increasingly realize the top line cost and cash benefits from these new only equifax cloud capabilities.

And we've already added a strategic bolt on acquisition of workforce solutions. This week that combined with the acquisitions. We made in 2021 are contributing 320 basis points or almost $160 million to 2022 revenue growth.

We continue to build our pipeline as we look to add 120 to 100 to 120 basis points of revenue growth annually from bolt on M&A.

Our 2022 guidance with core revenue growth of 16% is well above our new $8 to 12% long term framework and 8% growth in total is aligned with our prior guidance. Despite a 21% decline in the mortgage market.

Our ability to offset the additional 650 basis points of mortgage decline with stronger so with stronger core growth reflects the breadth and strength of the new equifax.

Adjusted EPS is expected to be up 13% to $8.65 at the midpoint, which also aligns with the 22 framework. We reviewed with you in October .

I'm energized about our strong above market performance in 2021, but even more energized about the future of the new Equifax in 'twenty two and beyond.

We remain convinced that our new Equifax cloud based technology differentiated data assets in our new single data fabric and market, leading businesses will deliver higher growth expanded margins and free cash flow in the future.

I'd also like to announce today that Trevor Burns is returning to the Equifax Investor Relations team. Please join me in welcoming Trevor back to IR and feel free to contract to contact Trevor Dorian or sand with any questions and with that operator, let me open it up for questions.

Thank you well now be conducting a question and answer session. We ask that you. Please ask one question. One follow up then return to the queue, if you'd like to be placed in the question queue. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to move your question from the queue.

One moment, please while we poll for questions.

Our first question today is coming from George Melas from Cowen. Your line is now live.

Good morning. This is Allison on for George Congrats on the strong results and outlook and thank you for taking my question.

I was hoping magellan a bit more into the mortgage market estimates given how rates have been moving I'm curious if you can comment on how the 21, 5% decline in mortgage market inquiries.

Estimate was derived in terms of the 10 year yield.

Mortgage rates and how comfortable you are with that estimate.

Yeah I'll start John you can jump in as you know forecasting the mortgage market is quite challenging. The good news is we have a lot of history, which we rely on and we have a lot of data that we rely on but I would.

You make the point that it's obviously challenging but.

We look at all of our data elements of the track record of new home purchases in the marketplace. The refi market John went through some detail on the still sizable.

Population of homes in the United States.

We will benefit from our refinancing. He also highlighted the significant increase in HPA or home price appreciation, which is I think 30%.

For most geographies across the United States, so the availability for consumers.

Excess equity in their homes through a refinancing that was certainly weighed in and of course offsetting that as you point out is the higher interest rates, which.

It reduced the number of homes available for refi. So those were all the factors that we put into our models and our analysis and we thought 21 and a half was the right place given everything we see today, obviously down dramatically from the minus 15, we were using for really the second last portions.

2021, as we are looking forward to 2022, and then of course, we're pleased that the core performance of Equifax is strong and we can.

Offset that with our core growth, particularly from our workforce solutions from the momentum in the fourth quarter.

Long addition of records, which helps power their business and broadly the strong performance of Equifax couple of closely at run rates. So really through January through early February the run rates are consistent with what we've talked about in our first quarter. The first quarter estimate is down 24% wasn't changed that really materially from the estimates we gave in October so we look.

At those run rates, we think they have been relatively predictive and we're also as Mark said, we try to be very open about what we've assumed so that if you have a different view on mortgage at least youll have a very good view as to what we put into our numbers and you can obviously act accordingly.

Okay. Thank you for that that's helpful color and then just as a quick follow up shifting to AWS, how should we be thinking about pricing as a driver for 2022.

Yes, we do.

Don't talk about specific.

<unk> actions, but all of our businesses used price on an annual basis too.

Offset inflation of course, but also reflect the value of the solutions that we're delivering and we've been quite clear in prior discussions with you and our other investors that workforce solutions has.

More pricing power because of the uniqueness of the assets they deliver and the scale of the database. So it's clearly one of the levers, but as you know thats only one they've really ramped up their new product rollouts in the last 12 to 18 months leveraging the cloud, particularly in the second half of 2021, and we talked about new solutions.

We are bringing to market in the mortgage space for example, where we have.

Mortgage solutions that provide more history at a meaningfully higher price point then.

The single solution that we have or the co borrower solution that we now have called mortgage duo that is priced.

Over $175 per pull because it provides real value on co borrowers. So those are examples.

Leverage that workforce has and of course, the other leverage the adding of twin records, our twin records being up 19%.

The new relationships that we've signed exclusively in the latter part of the year that we'll be adding to our records in 2022 as you know because of the.

Very large.

Of inquiries that we get an assistant assistant basis or through the web.

As we add new records, we're able to monetize those really instantly. So that 19% is another very meaningful lever for workforce solutions as we move into 2022.

Great. Thank you.

Thank you. Our next question is coming from David <unk> from Evercore ISI. Your line is now live.

Thank you good morning, Chris shade, all the helpful detail, if we start with the 136 million active work number records from Q4 add the three agreements you signed with payroll product.

Additional work number records.

How should we think about active work number records estimated for year end 'twenty, two and then the associated hit rate.

Yes.

No we don't give <unk>.

Detailed around.

Kind of guidance on the records that were adding during the year, we tried to be very transparent about the current period record additions and as you know those were added at different points. If you think about 2021 during the year. So you get a year over year benefit in 2022 from the record. So the 19% increase will benefit workforce solutions and <unk>.

<unk> thousand 22, and then of course.

These new agreements that we mentioned that we've signed with.

Major some of the larger payroll processors on an exclusive basis, we'll be adding at different points. During the year. It takes time to build the system and the system integrations and to bring those into our dataset and then of course as you know.

Close to 60% of our records come from individual company relationships that we have from our employer services business and that's a very active area for us to add records, which we do on a kind of on a daily weekly basis actually John and I get a report every Friday.

<unk> that are added and those are we're really strengthening our ability to add records from individual companies.

We build out our employer services solutions, whether that nine.

Nine work opportunity tax credit HCA W. Two and as you know we did three acquisitions last year that add to that space, including one this week that grow our solutions in employer services business, but they also bring record. So we have a really a multi sided approach and really scale focus.

On adding records and just back on the payroll processors, we still have a pipeline of the relationships. We don't have we're in active dialogues with those as we've talked about.

We have real momentum as you know and I don't know in the last 18.

Months, we've added some meaningful new relationships, including a large one in third quarter last year that we announced I guess a year ago on our fourth quarter call and then we've got the three that we added on an exclusive basis.

In the last few weeks that will be rolling in in 2022, So big focus on adding those records.

As you think about it there's a long runway I would encourage you to think about total records, but also.

Unique records remember.

$135 million as total records, but we have $105 million SSN or unique individuals. So there's 30 million people in there that have multiple jobs.

The path from 100 $505 million to $155 seven or eight whatever the right number is now nonfarm payroll is another $50 million plus individuals that we are focused on adding and then of course, we have a big focus of going beyond nonfarm payroll to really get those very valuable 40 to 50 million gig records.

Meaning individuals that are self employed either as a second job.

Beyond nonfarm payroll or someone who is just self employed and then also the 20 to 30 million Pensioner Records that is another valuable source for income verification for those that are.

Not in the workforce today, so you add those up you're looking at.

Something north of $100 million additional records, we can add if you think about the 105, we have unique individuals and add that potential we have the ability to still kind of double the twin database and we're focused on it.

Thanks for that just as a follow up John for the first quarter, you're guiding workforce solutions revenue growth over 25%, which is well above the 15% guidance for the full year can you talk to the cadence of expected workforce solutions revenue growth throughout 2022.

In Q1, so far above the full year guide.

I think one of the biggest factors would be the fact that we did the large acquisitions in the second half of this year. So you wrap around the addition of that revenue as you get into this into the third quarter, but principally in the fourth quarter, but overall, we expect workforce solutions to continue to perform extremely well and drive very high organic growth throughout the year.

Thank you.

Thanks, David.

Our next question is coming from Kevin Mcveigh from Credit Suisse. Your line is now live.

Hey, Kevin Hey, how are Ya.

Congrats on.

On the vitality index it seems like you're clearly outpacing that.

If I heard you right is about 10% in 2022.

Maybe help us understand that is this just a function of some of the more recent product.

Brought to market or broader acceptance, just what's driving that outperformance.

Yes, yes, and yes, and I think you know and I hope you get a sense that it's a huge priority of ours.

<unk> really ramped up our focus on new products I would call. It two years ago, when we added.

Significant resources meeting new people I think as you know we have for the first time now in the last two years, a chief product officer, who is on my leadership team, we're really driving leveraging our differentiated data.

And the Equifax cloud and what Youre seeing is the I would call. It the early days or early innings of our ability to leverage the cloud of course, while we're.

More than half way as far as kind of cloud complete that will substantially accelerate in 2022 that have that is complete is starting to take hold where whats happening is what we thought would happen is we're able to combine data assets bring new solutions to market.

More quickly so it's a combination of.

Resources and focus we have a monthly deep dive, Jon and I with the product team around their pipeline.

And then the ability to leverage our new capabilities. This is why we invested in the cloud why we invested in a single data fabric was our ability to ramp up new product introductions and as you point out going from <unk>.

<unk>, 6% a couple of years ago vitality to.

We started last year, hoping to do eight we ended at 9% vitality and then as you pointed out to be.

Our goal in 2022 of 10% that's half a billion dollars of new products introduced in the last three years and we're very deliberate about how we define a new product that has to be new new.

And we view that as a very attractive growth lever for us as you know new products and incremental revenue are very high incremental margins for our business and its inherent in our long term framework that we rolled out in November where we increased the low end 100 bps in the high end 200 basis points.

Total growth going forward that NPI there'll be a meaningfully part meaningful part of that and when we talked in November we set our long term goal is to get to 10% vitality.

So we're chasing that this year and we.

As we talked a few minutes ago, our goal is to deliver 10% vitality in 2022.

That's great and then just one quick follow up if you said this I apologize but.

One.

Mortgage rate do you have embedded in the assumptions for 2022.

So I don't have a specific forecast for mortgage rates right. What we do is I think we had an earlier question. We look at the current forecast that are out there for the tenure and we try to consider those.

And the decisions we made great. So right now I think if you took a look at the Bloomberg averages you'd see an expectation that we're going to see the 10 year go up say somewhere between 35% and 50 basis points. So we make an assumption that probably you are looking at mortgage rates moving in a similar direction.

To be fair as Mark said forecasting the mortgage market incredibly hard and actually tying the movement in the fork in the mortgage market to the 10 year also incredibly hard, but that's basically what we've assumed in the practice.

Thank you very much.

Thank you. Our next question is coming from Andrew Stein from Jpmorgan. Your line is now live.

Good morning.

John I was just hoping you could provide mortgage revenues as a percentage of total revenues in the fourth quarter and if you could give mortgage revenues.

Again for fourth quarter for Us and AWS is as a percentage of revenues.

So I can get the first one I have 26, 27% I think we did given the script some detail on mortgage revenue for for AWS and <unk>, specifically, but for Equifax fourth quarter mortgage was 27% of total revenue and for the full year. It was 32% and Andrew just as an FYI a little later today, we'll post.

The supplemental deck and in that will be the updated pie charts that show revenue by segment for.

For Equifax in each of the business units and I think the pie charts are annual rate.

Okay. Thank you very much.

Thank you. Our next question today is coming from Manav Patnaik from Barclays. Your line is now live.

Good morning, Good morning, Mike I, just wanted to focus on obviously AWS is going well et cetera. We know the mortgage market can you just talk a little bit about the U S diet.

Non mortgage businesses and some of the trends you're seeing there.

It sounds like the consumer is healthy.

Hoping for that.

And the Orient.

Sure I can start and I'm sure Mark will jump in right. So we had non mortgage organic growth of about 6%. We had total growth of about 12 right.

As Mark mentioned in the script, we're seeing very good growth continues in insurance, we set up double digits up high single digits in commercial high single digits.

Identity and fraud. So again, we think very good performance strong strong growth in our marketing, which we expect to translate as we go into 2022 and online absolutely right. So with <unk> and with <unk>. Obviously, we saw very strong growth as Mark said in Fms, which we think is going to translate into two strengthening growth as we go through all of 2022. We've also had as Mark mentioned in his comments.

Really nice new business wins in <unk>, a lot of that around EFI and then we've had actually some several significant wins with larger <unk> that should ramp as we go through 2022. So so we think we're going to see nice increases on organic growth as we move through 2022, both total organic growth.

Organic growth specifically to <unk>.

As we look at identity and fraud, we saw really nice growth in let's call. It our new identity and fraud products, our identity foundry and really count based products as we got into the fourth quarter growth. There was well over 20% we are going through a little bit of a transition we're transitioning off some of our older legacy based products onto those new products. So you see some choppy growth although hi.

Single digit certainly isn't bad end up, but we're seeing very good growth and account based products and the products that are based on the new identity foundry that we've talked to you about in the past, which is all built on data fabric. So we feel we feel like the 6% that we talked about an organic in the fourth quarter was relatively good performance as we indicated is probably going to be about similar to that in the first but we're.

Expecting to see nice improvement as we go through next year.

They had been out that we're also pleased with.

The traction we're starting to see and we have been seeing around.

Our competitive positioning with the cloud the capabilities of the cloud that we deliver that we think differentiate equifax of course, we think we have data our competitors don't have those discussions around competitive takeaways or competitive wins are continue to pick up momentum by Sid and his team. So we think thats another positive going forward as they get.

Closer to being cloud native in fully delivering those differentiated.

The service levels and capabilities to our customers, we think that's going to be a positive for them going forward.

Got it.

And Mark just on the international workforce expansion.

The new countries that you had announced can you just help us in terms of timeline, what we should be expecting im guessing youre, new tech and cloud infrastructure, perhaps will help it.

Get to a size faster than what we witnessed in the U S.

We'd be thinking differently.

No.

You and I talked before and we've talked with our Investor base Many times about.

Our goal of expanding workforce globally, and we paused international expansions, while we're building out the tech stack and that's now built.

<unk> is our first move their technologies live.

I believe close to ingesting records meeting starting to add contributors.

Contribute into our UK twin database so that's.

Happening as we speak that was kind of built up over the last number of months and as you point out we now have the ability to go into international markets more quickly more economically with <unk>.

Cloud based technology stack.

Of course, this adds to our Australia business, where we are.

Ingesting and actually delivering solutions in the marketplace same in Canada and same in India, and we do have a strategy to expand to other markets globally.

We haven't announced anything yet, but we see that as an opportunity.

Maybe to close that point is that the financial impact of this there'll be de.

De minimis in the scale of workforce in Equifax in 2022, meaning it will be small.

<unk>.

But we expect it to grow over time, where it will be meaningful is going to be a couple of years, probably when you think about those international expansions, but in each of those markets. What it does for our credit file business. Thank UK Australia.

India.

And Canada is it makes them more competitive because we bring a solution now have not only the credit reported in Canada or the U K, but then we can couple in just like we're doing in the United States.

Income and employment verification.

That's another positive.

Going into markets that we're already in and of course as you know in a number of those markets like UK and Australia, we have a very large market positions.

So the addition of the income and employment data is positive for us. So it's a it's clearly a part of workforce solutions growth strategy going forward is to U K is our.

The move we announced a couple of weeks ago, and we will.

Look for other markets to expand our workforce business into because we believe we view it as a global franchise of course, which is.

Anchored quite strongly and are very very large U S business.

Got it thank you very much.

Thank you. Our next question today is coming from Toni Kaplan from Morgan Stanley . Your line is now live.

Hey, Tony.

Good morning.

Workforce margins really step down this quarter and Mark you were clear on the three pieces the acquisition dilution dissipating in cloud transformation transformation being over it that makes sense to me as to why that won't continue.

But around the ramp of new contributors that was really strong this quarter, which is a great thing and it would be great. If that continues so I guess, how much was that.

A record ramp impacting the margins and next year can you still achieve mid fifties.

That ramp sort of continues to grow and I just wanted to make sure also that there isn't anything competitively changing that impact no no no no no no I think we said two or three times in our earlier comments that we have clear expectation that workforce will in 2020 to achieve their kind of historical margins are I think we said it.

Or above it.

Not unusual and you've followed us for some time you may remember.

And I think third quarter of 2020 going back maybe to <unk>.

2019, we also had maybe an instance, like this there's a little bit of that.

Lumpiness when youre, adding a bigger payroll processor and there is a lumpiness in some in quarter costs to complete those integrations, sometimes we help support partner, meaning we help pay for some of those integration costs, we have some incremental costs on our side, but you've seen in the past that those quickly.

Our dissipated.

Dissipated, meaning they are one time and we were.

We are we've factored into what is going to happen and as far as record addition that we can see now in 2022 and kind of the comments, we had earlier around our expectation that workforce margins will kind of return to that.

Mid <unk>.

Takeda don't snap back to 55% in the first quarter right. So I mean, so we feel very good about the fact that.

Each of those.

Of those three factors that mark talked about.

We can address and we will address them very quickly and and they were all substantial rate. So so you can think about them all being relatively consistent in size.

And significant to what affected us year on year, but but we expect to be back at <unk> 55 in the first quarter.

Okay, that's great.

My follow up is also on workforce.

Hoping you could talk about just competition there if anything has changed with regard to more.

More players coming in or some of your large competitors are looking at this as an area that they can expand in Canada.

And the market.

As market growth going cannot lead to.

You and others being successful or is this really does come down to <unk> to retain market share and just talk about sustainability and exclusivity and stuff like that.

Yes, it's a great question and we've talked about it many times.

Prior calls.

We got a lot we have a lot of confidence in the scale of our underlying business model and as you pointed out there are some others that are trying to enter this space, we think it's going be quite challenging.

To obtain records start with that and think about that.

Tens of thousands of integrations that we have.

Remember the integration.

The income and employment data is a separate integration from the existing credit facility integration. So those have to be built but youll start with records.

19% growth that we had the $135 million 105 million uniques.

We added a large payroll processor last year in the third quarter that was exclusive.

We've added three more that we're adding three more that are all exclusive and of course exclusive means they are only going to work with equifax and workforce solutions. So that is quite challenging.

And remember too that the 60% of our records, we've accumulated over 15 years of <unk>.

Building up those relationships through the very large employer solutions business, we have or providing all those services to HR managers and companies for W. Two nine work opportunity tax credit HCA et cetera, those solutions, that's a very.

Long term scale kind of business too.

Build out so while we know there are others in this space we think.

Our market position is quite strong and we've got a lot of confidence in maintaining that position going forward in.

It really starts with the ability to build out a data set that it looks like equifax as we think thats very very hard to do.

Other thing I'd just add is that if you think about the markets. We're addressing our penetration in those markets still has a long way to run rate as Mark mentioned in his comments on mortgage which is where we're the most highly penetrated it's still just over 60%.

And when you go into talent solutions and government and it's important to remember in both of those segments right. It's not just current record its depth of records. That's extremely important history makes an extremely is extremely important in both our government services and importantly, our talent solutions business. There our penetration is in most cases, well under 25% franked and grow.

Going very rapidly and the reason it's growing rapidly again, it's because of the depth of records. We're now able to provide which we couldnt provide two years ago. So we think there's huge opportunity and in those non mortgage businesses to substantially grow our share.

And right now we're competing against in many cases pay stubs or more manual processes to collect the information. So so we feel very very good about the opportunities to grow within the market segment.

Up.

But basically providing instant verifications within those market segments, where they're not available today.

Tony maybe just add one more point on it we hear we hear more about competitors from these calls than we do in the marketplace.

If you understand that point, meaning we hear that from our investors and so on but we really don't see them in the marketplace. They just don't have the scale to play either on the record additions.

Or on delivering solutions to their.

Our customers we have.

Been in this business for 15 years, we've invested.

<unk> 1 billion actually more than that we're up to like three plus billion probably in the business. Since we owned it when you add M&A and then on the technology side, you know think about it we put.

$300 million into the business incrementally in the last three years.

A massive investment and you have to have real scale to be able to play at the level, we're playing in.

Perfect. Thanks.

Welcome back to Trevor.

Thanks. Thank.

Thank you. Our next question is coming from Kyle Peterson from Needham <unk> Company. Your line is now live.

Hey, good morning. Thanks, guys. Just one quick one for me just wanted to see if you guys could provide a little more color and thoughts on the impact of a buy now pay later now being kind of included in your credit reports do you think the opportunity there is more on the volume side.

Kind of increasing the pool of customers out there that are being scored particularly upgrading kind of thin file customers to more kind of standard file.

Where do you think it's more of an opportunity to potentially have some.

Pricing leverage down the road just as you get more data points in.

Just more data that can be used by some of these potential lenders.

Yes, it's a great question, it's really all of the above.

We have relationships all over the globe with the NPL players as you know they are growing rapidly.

Selling them identity data think count or other identity day, because you got to verify our consumer before you offer that for payment loan for the blue jeans or whatever they are buying we're also <unk>.

Selling them some credit data in different markets, including the United States, particularly as they go to bigger ticket transactions.

If you're financing a pair of blue jeans for 100 Bucks over four payments Theres a credit exposure to that is very different when you're doing a refrigerator.

Dollar refrigerator or something and so.

So theres a trend there where youre seeing more credit data being used for BNP players as customers on the data side. It really follows our focus on just building out our data assets and there are a lot of data elements as you point out and BHP NPL players and actually with all credit bands. It's very popular for example, with millennials, which typically have.

Thinner credit files, they may be good credit, but they are thin credit files, meaning they only have one bank harder to bank cards or whatever so that the NPL data will be very valuable. We're also going down the path of adding rental data. So we're accumulating rental payment data that's another valuable asset and of course, you know in the alternative data side, you're meaning outside the.

Credit file we have really scaled data assets at Equifax.

We're putting in our single data fabric and bringing to market as new solutions like our <unk> cell phone utility payment data, which is very valuable and other trade line.

Thinner or no thin file or no hit customers and then on the pure alternative data you know we bought data X.

A couple of years ago in 2018, and then we acquired last year Tele track and we will now have the largest data set at something like 80 million Americans outside of the credit file their data from rent to own companies their payment data there.

Payment data from auto lender subprime auto lenders sales finance companies furniture companies pay day lenders. So a very very rich data set that's additive to the credit file just like this the NPL data just like our NC plus data just like rental data. So it's a broad focus for us in the cloud capabilities, we have in the <unk>.

<unk> data fabric really allow us to bring these new data sources into our environment into our database and of course, you know we have.

We built out and now we're adding to our single data fabric, where we're going to have data keyed in linked to.

For an individual every data element that we have will be put together that way, which is again is a part of.

The benefits of our.

Big cloud investments that we're making.

Great that's really helpful. Thanks, guys.

Thank you. Our next question is coming from Ashish <unk> from RBC capital markets. Your line is now live.

Thanks for taking my question I, just wanted to follow up on an earlier comment.

<unk>.

The expansion of workforce solution into non mortgage I was wondering if you could.

Give some color on the pipeline for new clients and government sector talent solution as well as auto personal consumer loans.

Any color on those fronts on the pipeline how does that look for new clients.

Yes, as you heard from our comments earlier, that's a very fast growing space for us, which I think you were broadly talking about our non mortgage portion of workforce solutions, which is growing very very strongly.

Government is a big vertical for us we've been expanding their app, which makes us stronger.

We signed and launched the FSA contract last year, that's ramping so that's another new solution.

See a lot of potential in government.

Talent is a very big space for us with big potential and.

In my comments earlier I shared the point that we only today see one in 10.

Inquiries around the hiring process, so big runway in that business has been growing strong.

Strong strong double digits in the hiring space and we see big potential when you combine some of the <unk> data the national student Clearinghouse education data and of course as John mentioned the work history, we have we have.

Our history on individuals' because we've been.

Accumulating records over the last 10, plus years, and we average something like $5 five jobs for every American so that work history is extremely valuable in that hiring process were 75 million people a year are higher so that's a big growth area for us, we talked about employer services or employer solutions.

Where we're delivering HR compliance generally solutions to HR managers to do that work for them a lot of those a lot of that work today is in sourced we pick up the outsourcing of it either directly or through our partners.

That's another area that's been growing and of course, we've done a bunch of M&A there that strengthen us in the three bolt on acquisitions last year of <unk>.

<unk> IQ verify and healthy effects.

And then the.

Acquisition, we announced and closed this week of efficient higher those strengthen us in that space of delivering those W. Two nine verification.

Work opportunity tax credit all those other solutions to HR managers and of course, they bring records to us which is very.

A very valuable so we see a really a very attractive.

Growth potential and then in financial services to your question, we've been growing very strongly outside of mortgage auto is a space that's growing for us.

Using our income and employment data along with credit data personal loans, we have very strong penetration there.

Using our income and employment data and then in cards. We've got a couple of big issuers now that are combining our income and employment.

Data with the credit file at origination and we expect that to grow also so that's a new opportunity for us so a lot of potential for workforce solutions and of course <unk>.

Most of the verticals, we just talked about.

Way different than our traditional credit Bureau verticals, meaning we're in spaces that are growing.

Growing faster than our core credit Bureau space, but they also diversify equifax.

Very very broadly from being.

Historically more traditional financial services, we're now much more diversified and we will be in the future as we grow.

That's great color congrats on that and maybe if I can just ask kind of follow up question you mentioned <unk>.

Significant competitive wins on the core credit Bureau side as well I was wondering if you could provide any color on that front.

How much of that is being driven by the differentiated income verification that you have using that as a London expense strategy and any other color that you have seen this conflict has been traditionally <unk> fintech any color will be helpful. Thanks.

Yes, we didn't talk about specific wins, but we did talk about what I use the term momentum by our U S team competitively.

And Thats really driven by the areas that you talked about it's our differentiated data which of course, we're expanding.

Build out of the single data fabric, which makes our data more accessible we have more data than our competitors and then we haven't had a weighted we're easily utilized and then the cloud capabilities and cloud functionality that is increasingly in the marketplace. We're seeing that give us a leg up in those competitive discussions.

That we view as positive going forward.

For <unk> and for Equifax.

Thanks, and congrats once again on the strong quarter.

Thank you. Our next question today is coming from Andrew Nicholas from William Blair. Your line is now live.

Hi, good morning.

First question I wanted to follow up again on talent solutions, Mark you mentioned, a few times now that you get an inquiry on <unk>.

One in 10 hires in the United States I guess I'm wondering what drives that number higher and are the factors that could drive that higher is it primarily adding client relationships is it adding records and increasing hit rates are or is there a component of that that is dependent on employers themselves increasingly including.

<unk> income and employment verification screens and their onboarding process, just trying to get a sense for where drivers and maybe what falls within Equifax is control.

Yes, just to clarify we don't do income verification to truly employment history.

We deliver there and yes I wanted to tell we just wanted to point out there's a lot of runway in this.

We have a large business, it's growing very rapidly and the talent solutions space as we continue to grow and the drivers are really driven by <unk>.

Our work history that we have we have well over a half a billion total records, which is think about that five five jobs than the average American.

If you don't come to Equifax, you've Gotta go manually to each of those companies in order to verify that so the one click instant kind of data element for Equifax workforce solutions is what's driving the growth were also prototyping it.

We're in the early stages of bringing new solutions to market that really solve our customers. In this case, it's either a background screener typically but it could also be an individual company, but it's really how do we help them complete their job more quickly and speed is really important it always has been in the in the hiring process.

Think about it when someone's being hired for a new job. There's typically an open job there and the hiring manager wants them to start quickly because there is work to be done whether it's in a fast food restaurant or in a warehouse or a white collar job speed is very important and if we're able to deliver that instant decision that shorten that time.

Between offer of employment and start of work.

Really a big opportunity. So we're going to in 2022 and bring new solutions that will likely be more job category based meaning we will combine our work history, which is the foundation of that meaning wherever you worked in the past.

Adding to an educational data that we now have from national student clearinghouse.

You have the criminal Justice data, that's typically used in a background screen, we can package that up in individual solutions. So.

It's really a very attractive growth opportunity for us.

What really drove it.

The solution is it starts with our big database, having that 5 billion records in network history gives us something that's incredibly unique that no one else has and as we product ties it with some of the other data elements that will be a way to continue to grow and we'd like to do more M&A <unk> is a big example of that that brought.

Our criminal Justice incarceration data and also medical Credentialing data. There is other data elements that wed like to either partner or add to and of course, we mentioned a couple of times that we added the education data, which a lot of white collar jobs.

There is a requirement to verify where do you go to school and we can do that instantly now and will will product ties that in combining multiple data elements. We have to help speed up the decisioning for our customers. So we see big growth potential here.

Happening in talent feels a lot like what happened in mortgage if you look back over time and mortgage as the depth of the database.

Increased substantially our penetration went up very very rapidly and thats, what drove a lot of growth and as Mark described the depth of twin but also all of these other data assets is now made our ability to respond with a more complete response and talent, which is obviously harder because theres more information there.

Has improved dramatically over the past two to three years and so that's why even before acquiring efforts. We were talking about organic growth rates that were that were on the order of 100% right. So so we feel like we've hit an inflection point in talent as well.

That's helpful. Thank you and then.

For my follow up just on an international opportunity within workforce solutions. I know you asked your question was asked on that earlier I just wanted to ask on kind of the mix between organic and inorganic growth.

They're I know to this point, it's been limited in terms of M&A, but is that part of the strategy or in the near to medium term is that primarily an organic effort.

Adding to kind of the U K and Australia capabilities.

Thanks.

Definitely inorganic focus we'd love to do some M&A, but theres really nothing out there there are others that do this that we've seen are found and that's why we're leveraging.

Our core technology is now cloud based we also have.

Relationships with multinationals, where were doing your income and employment verification here in the United States and they have operations in other countries. So they want us to do it there. So thats a kind of a base load that we can add to the dataset organically and then same thing.

Either leveraging our existing payroll partnerships here in the United States are working with new HR.

Providers or.

Payroll processors in those markets to add records. That's all the approach so definitely organic.

Great. Thank you.

Thank you. Our next question today is coming from Simon.

From Atlantic Equities. Your line is now live.

Hi, everyone.

Thanks for taking.

My question today.

Just on that last question I wanted to follow on with the international community workforce solutions.

Could you talk about the.

Ability.

The necessity for you to sort of establish the same kind of strength competitive moat you have in the U S and international markets to make this work or is it is the environment sort of different in terms of how you. These buildings.

Well.

Goal would be to have a similar similar competitive strength globally. We think that we have a lot of opportunities to do that.

And many of our markets that we're in today.

We're really the only one doing it.

Markets.

I believe in the U K Experian has talked about trying to do something like what we're doing.

But not in other markets, but we think we have a lot of competitive strengths. We got a technology stack that we've invested hundreds of millions of dollars and it's now cloud base, we have the relationships that I talked about and we have the knowhow.

So we're going to approach it does take time to build it takes time to build out the records in the record contributors remember it took us over a decade.

Workforce solutions to some level of scale in a big market like the United States will likely be able to do that more quickly in these other markets because of the.

Leverage we have in our technology and relationships in the marketplace, but.

It will definitely be a buildout.

We will likely do other markets beyond the four that were in that that'll be a part of our growth strategy.

Understood Okay.

Just as a follow up just going back to the mortgage market. The outlook provided I guess I'm quite interested in what.

Maybe you could explore the levers you have to pull within your mortgage franchise.

In periods.

If the mortgage market would be significantly weaker than you anticipated in your guidance. What are the things you can do to try and mitigate some of that downside within.

Yes, sure I would argue would already at least our outlook are significantly weaker we a few months ago thought it would be down 15% for 2022, and now were down 21 and a half.

Meaningfully different.

I think it's quite powerful that equifax has the momentum from the fourth quarter and the strength to offset that we're very pleased with that it shows the strength of the underlying business. We finished.

The fourth quarter.

Quite strongly and had momentum coming into the year.

We would look to continue to.

Outperform going forward, we can't predict that at this stage because we are working with the down 21, five but when you combine the down 21, and a half with the decline in 2020.

The mortgage market has moved substantially at least in our forecast.

Towards the normalization.

And then.

I think a lot and I'm sure you do too about.

There is obviously the interest rate impact, which is primarily what factored into our reset of the mortgage market, but still offsetting that is a very sizable home price appreciation that we've never seen.

<unk> kind of.

The last 20 years that.

As a positive.

We think could dampen at.

At least further to clients, it's hard to forecast, what's going to happen with interest rates, but there is a lot of equity for consumers to access and historically when consumers have that ability to do cash out refis.

They will do that to do home improvements to do vacations or other things, they're going to do so those are some of the elements that we think about but just on.

So called updated guidance with mortgage down meaningfully from where we thought a few months ago and then the ability to offset that we.

We think that shows the strength and breadth of the underlying equifax business.

And we're like most companies, we rerun a broad group of risks and opportunities against our plans and we wouldnt, we try to cover our risks across the entire company right and obviously mortgage market is a risk that everyone's dealing with in our industry and we work across equifax to drive growth through more NPI everything Mark's already talked about.

Give us opportunities to cover additional risks.

That's great thanks very much.

Thanks, Kevin.

Thank you. Our next question today is coming from Hamzah <unk> from Jefferies. Your line is now live.

Hi, This is mario quarter largely on for Hamzah.

My first question I know you guys already talked about some of the competition within.

But we're also hearing that new entrants are getting into that verification space and just wanted to get your thoughts on.

I guess other competitors getting <unk> certification and maybe then getting access to record that cheaper cost does that hold any water from from your perspective, and then also could you just talk about the consent mechanisms.

How you're different your business.

Could be different from some of those new entrants.

Then around consent.

Yes, I think youre talking about.

What you would call our traditional competitors I think youre talking more about some of the fintech.

We're doing consented data.

Kind of acquisitions, and we have solutions there too we have a partnership with Yodlee here in United States, we have in other markets, where we do consented data.

A lot of friction involved in consented data and it starts with you have to disrupt the process.

Our mortgage process, our credit card processor in auto process to ask the consumer to give their user I'd and password for their bank account or their user I'd and password for their payroll processor or their user I'd and password for their employee benefits site at their company.

And there's just a lot of fallout of consumers that aren't willing to do that and we've just seen.

It's certainly a niche that we're playing in.

But it's one that we haven't seen.

Real traction in and then second is the fact that most of our customers actually all of them want instant verifications, meaning just pinging, our database and we send back the element you don't have that.

No friction in time, it could take hours days.

Who knows dependent upon a digital process.

That consent process take place so that the instant verification is when we're in a workflow.

With our customer meeting their processing a mortgage it gets to a certain point they ping our database and we deliver in milliseconds.

Verification of that so I think it is.

It's a niche, but we really don't view them as competitors as John pointed out earlier in the conversation, we still think about our biggest competitor being paper based cups.

The one that we continue to displace through instant again, there is friction with paper pay sub someone's got to go get them, there's a lot of fraud involved.

We do that instant verification.

You asked a question about.

Access our records at a lower price, we've said many times and including the three new relationships. We signed late in the year that our relationships are exclusive and exclusive bean's exclusive.

Meaning they're not accessible.

By others, which is.

The way, we want to have those relationships kind of broadly and our partners do also and then remember 60% of our records come from individual companies.

Those are very hard to to access even through our consumer consented process and then I'll just and I think with your question about our consent process as you know we.

Authenticate anyone who uses our data and we require anyone who uses our data to follow fair credit reporting act processes, where the individual to consumer.

He has to consent to access to their data. So no data is used without a consumer consenting in.

Workforce solutions of course or in our credit file business and that's inherent in the security and privacy processes that we have and on top of that we're credentialing or authenticating. The company that's using the data which is another element in ensuring that they follow.

The fair credit reporting act processes.

Understood and then.

It sounds like these new Fintech entrants are I can say more of a niche.

But.

Guys are also pursuing M&A opportunities either the efficient higher deal as well and I guess, just maybe you could talk about some of the other workforce solution.

M&A deal that you could pursue.

Those new Fintech entrants pose any competition that could help that that could drive up valuation for those deals.

We don't think.

Consumer consented income and employment verification as an M&A target for us.

We already have the ability to do it ourselves through other partnerships, we have and we view it as a niche although we bought.

Consumer consented business in the UK really because of open data, but that was one that really is more U K centric.

The other acquisitions, we've done were really to strengthen our employer services or solutions business, where we provide compliance and regulatory services to HR managers.

That's a big business for us, it's one where they typically do that themselves and then outsource to someone like equifax, because we can do it with a higher degree of accuracy privacy efficiency.

And that's W. Two management, it's <unk> verification, it's work opportunity tax credit employer research.

Resource credit.

HCA et cetera, those compliant services <unk> verification. So we provide those services in the three and now four acquisitions, we've done with <unk>.

Fishing hire that we did this week really strengthen us in those services elements to the HR manager and then as a part of that solution. We also get twin records. So it's another way for us to obtain records. So thats really our M&A focus there there are a lot of those opportunities of course, we acquired another very attractive one this week inefficient.

Higher and of course, three last year as we pointed out and then the other M&A focus for US is around our talent data hub and that's the <unk> acquisition that we.

Closeout in October really attractive team and business that we brought in and brought in unique.

<unk> at scale around incarceration and criminal Justice and also some medical Credentialing data and Thats, an area, where we've been very clear that wed like to do more M&A bolt in employer services like efficient higher this week.

Would also like to do more M&A around data that's used in the hiring process like efforts to build out the equifax.

Data hub.

Thank you very much.

Thank you. Your next question is coming from George Tong from Goldman Sachs. Your line is now.

Hey, George Hi, Thanks, Good morning.

As you think about your twin database approximately what portion of records there are covered by exclusive relationships with.

Payroll processors and software providers, just trying to get a sense for if a competitive we're trying to.

Replicate a portion of your scale.

In verification could they quickly scale, but also partnering with some of the.

<unk> processors or software providers that you partner with.

Yes, George I would add to the question maybe to completed also the records we obtained directly through individual companies to come kind of complete the equation now you can decide how you define those we think of those as they.

They're not exclusive meaning individual companies, which is 60% of our records, but they're very sticky to equifax and our view is HR managers aren't going to share those records with two companies and remember we generally obtain individual company records, because we're providing unique services to that HR manager, whether it's unemployment claims.

W. Two management et cetera, with regards to the 40 plus percent from partners. We've been very clear that the vast vast I'll save asked twice majority of those relationships are exclusive and exclusive means exclusive there and our intention is to have them all be exclusive overtime.

They're not all exclusive.

As you know the relationships.

All of the relationships we've added in the last two years have been exclusive including the three that we signed in December and it's our intention for them to be exclusive as we sign up going forward.

Does that help.

Yes very helpful. Thank you and then secondly on margins Youre expecting up to 200 bps of margin expansion this year.

And part of the flow through.

On margin performance assumes reinvestments back into the business. So you talked a lot about new product innovation any other areas of investment maybe specific areas around cloud or tech or or infrastructure et cetera that you are putting money back into the business.

To support the growth.

Yes.

He is making investments I think you pointed out one is clearly a priority of ours is to continue to invest in product capabilities and resources.

And new products require some investment and of course. The 200 that you mentioned is net of those reinvestments that we're making this year, which we're continuing and you know that we've been investing in product capability is really for the last couple of years as we've been.

Growing out that capability of data analytics is another area that we're investing in whether it's new data being contributed like the NPL data that.

That requires some investment or new contributors to twin rental data et cetera. So that's our.

A priority of ours as well.

We're investing we've got some commercial footprint investments that we're making in in 2022 as you would expect to continue to grow our commercial coverage, which is quite strong but are intended to make us stronger and then of course, we're continuing to complete the cloud transformation that underlies.

That investment in also.

Received the net benefits as we decommission some of our legacy infrastructure during 2022, which will be a positive for us and reflected in that 200 bps anything John Mcdonald Okay.

Thanks very much.

Thank you. Our next question today is coming from Shlomo Rosenbaum from Stifel. Your line is now live.

Hi, Good morning, Thank you for taking my questions.

Two questions I think one probably for Jon.

Four.

You.

Maybe just starting with John just.

In terms of the growth.

There was an improvement in the expectation from the core non mortgage from the <unk> the <unk> and its very helpful.

In terms of maintaining the guidance I wanted to ask is there a part of the non mortgage business that accelerated materially over the last three five months or so or is it that we're kind of further into.

Closer to delivering on the 2022 numbers.

Already getting into the year. So you have more visibility so you feel more comfortable with that.

Maybe you could comment on that first.

Sure. So I think mark talked about it and we saw real acceleration and record additions.

And product launches right at AWS, specifically right. So.

So I think Thats, where we saw acceleration certainly as we get closer to a period rates you get more visibility and thats part of it but we really did see very nice improvement in growth.

As it relates to record editions and things that would be very beneficial in 2022 and workforce solutions that affects not only mortgage but also all the other non mortgage areas that we talked about and also those three substantial payroll providers that we indicated we signed that have not gone into production yet so gives us more comfort in the pace of.

New record edition as well, which also adds to new products right I mean.

As we get deeper datasets more history, new product launches accelerate so all of those things work together to give us confidence that we can.

That we can we can cover that six 5% incremental decline in the mortgage market.

Great. Thank you.

And then just overall how are you.

I was thinking about inflation impact beyond the very near term.

The impact on the consumer in terms of.

Higher cost of living for just basic staples and things like that.

How do you think thats going to interact with kind of the view of the banks in credits and their willingness to lend right now things are pretty loose but.

Kind of continues for the.

Two or three more quarters do you think that thats going to have a longer term impact in terms of just kind of the credit cycle on the consumer side, and how that would impact that side of the business.

I think you've got you've got to kind of layer another leg on that.

How might it impact the economy.

As you know while inflation's up wages are up also.

Job growth is up people are working.

During the last 24 months, they strengthened broadly their credit position.

Meaning that a lot of the stimulus money has been used to make men pays and pay down credit card balances. So.

As we enter 2022, you've got a consumer that broadly is much better positioned than they were two years ago. When we entered COVID-19 . So I think that is a positive.

For our customers in a positive for us.

The other thing that again going beyond the consumer is that a lot of our customers have experienced deleveraging, meaning customers paying down balances.

They are focused and you've seen that in our Fms.

Marketing revenue they are focused on going after new customers that generally are more credit worthy I think over.

Over the last two years credit scores have gone up something like 20 points on average.

Because of the <unk>.

Stimulus money and now increasingly people are working so.

That's how I would think about it that we're still in a pretty attractive environment now.

How long is inflation hold up what what happens with the fed do with interest rates beyond what they've kind of indicated I think those are all different factors, but.

My expectation is 2022 should be pretty good for the consumer meaning there are strong and then good for us because our customers are going to be looking to grow their business with those consumers.

Great. Thank you.

Thank you. Our next question is coming from George Gregory from BNP Paribas. Your line is now live.

Thank you very much taking my question.

I wanted to take a minute.

Please to the verification.

Mortgage trend.

Please I think.

You called out Q.

Q4, non mortgage organic growth of around 13%.

Alright.

Second quarter I think in the second quarter.

Total growth of around 65%.

I don't think there was a great deal of all kind of normal organic growth in that.

What I think.

Scott.

That would seem to suggest.

Maybe a little bit.

A deceleration.

Despite.

Presumably the SSA contract, which has been ramping up into the fourth quarter in D. C.

And then <unk> just wondering if you could.

Maybe elaborate on.

That's almost a sequential trend and if there was anything that would have held their fourth quarter back relative to that very strong second quarter. Please. Thank you.

Let me just I know Mark will jump in but let me just give you some some background rates.

So I think we're seeing very very good growth in talent solutions and government organic and inorganic and part of what Youre seeing is just a year over year effect. If you went back and looked at our our results last year, you started seeing accelerated growth and talent solutions as you got into late third quarter and really fourth quarter of last year as my recollection. So I think part of what Youre seeing is just a year over year.

<unk>.

And it was we started to see really see the acceleration in the growth of some of those non mortgage businesses as records grew its kind of all everything we talked about before so we feel very good about the growth of non mortgage across verification services and its direction and pace.

I'd add these numbers are quite exceptional right that those kind of growth rates.

As we look at quarter over year over year kind of growth on a quarterly basis, they're growing over kind of exceptional performance.

Just adding to it clearly outperforming the long term framework, we put in place in November for workforce solutions of 13% to 15%, which is kind of how that their piece of our 8% to 12 going forward. They are clearly outperforming that and theres a lot of factors there whether its records.

And attrition.

New product Rollouts.

They have been performing very very strongly and we expect that to continue to have a very strong 2022 from workforce.

Thank you Tim I'm thinking about it.

Thank you. Our next question is coming from Craig Huber from Huber Research Partners. Your line is now live.

Thank you first of all on the questions you have.

Apologize if you already covered this.

The outlook for your business for credit cards, autos and personal loans and we could given the higher rates. This year inflation would you say your outlook for those three segments for you guys.

You are talking about the market growth versus our growth.

I wanted to talk about them a couple of your growth.

Credit card loans.

Loans ticked up.

This year, yes.

Yes, we typically don't give actual segment growth like that as a part of our guidance, but let me just give some color about how we think about those verticals.

There's a couple of questions ago, I talked about the cards and so on that we think card growth will be positive.

For us and for the industry in 2022.

As you know.

Card issuers are looking to rebuild their balance sheets after they've come down.

Loans is another one that should be positive in the industry in 2022, and there was some real tightening in 2020.

As we went into Covid that started to relax as we got into the mid parts of 2021, so that should be a benefit.

Auto is broadly strong from a consumer demand standpoint, but you've got the supply chain issues, meaning there arent available autos, which has dampened some of that whether those supply chain issues sort out is hard to see.

That my strength, but there is underlying consumer demand there.

Quite strong.

The only thing we did say is in our 2022 guidance for USAA's non mortgage which includes more than the three segments. You just referenced it includes identity and fraud nickels commercial and some other segments. We had said basically high single digits up 6% to 8% so consistent with our long term framework.

And my follow up question, because you guys have obviously talked a lot about.

New business as you guys keep rolling out here to your credit.

How do you think about margins for those businesses when you roll them out of the almost at the segment level.

Soon given your infrastructure you have in place with data you already have or said differently. How long does it generally take we rule in rule out new products for it to get to the segment level margins and how should we still generally generally we think about new products is generally being quite accretive to our margins because theyre generally think about our our vitale.

<unk> index of $500 million of growth over the last three years those are generally incremental revenue and they have high incremental margins. So.

Kind of how we think about it so they deliver margin pretty quickly.

They are accretive to our historical growth rates.

That's why we're so focused on new products, because they drive our top line and then the incremental nature of that growth.

Expanding our margins.

Great. Thank you guys.

Thanks. Thank you we reached end of our question and answer session I would like to turn the floor back over to Dorian for any further or closing comments.

Thank you for joining today's call.

To engaging with you further and meetings and conferences during the quarter and then of course, we look forward to convenient again, when we report our Q1 earnings in April This does conclude the call.

Thank you that does conclude today's teleconference and webcast you may disconnect. Your lines at this time and have a wonderful day, we thank you for your participation today.