Q1 2022 Equifax Inc Earnings Call

Hello, and welcome to the Equifax first quarter 2022 earnings conference call and webcast. At this time all participants are in a listen only mode.

Question 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.

Now my pleasure to turn the call over to John Gamble, Chief Financial Officer. Please go ahead.

Thanks, and good morning, welcome to today's conference call, John Gamble, Chief Financial Officer with me today are Mark <unk>, Chief Executive Officer, and Trevor Burns head of Investor Relations. Today's call is being recorded an archive of the recording will be available later today on the IR calendar section of the news and events tab at our IR website Www Dot <unk>.

Investor that Equifax Dot com.

During the call today, we will be making reference to certain materials that can also be found in the presentations section.

The news and events tab at our IR website. These materials are labeled Q1 2022 earnings conference call.

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

Are set forth in our filings with the SEC, including our 2021 Form 10-K , and subsequent filings. We will also be referring to certain non-GAAP financial measures, including adjusted EPS attributable to Equifax, and adjusted EBITDA, which will be adjusted for certain items that affect the comparability of 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 as a reminder, in the fourth quarter of 2021, we eliminated our gcs operating segment and moved its lines of business into workforce solutions U S. I S.

And international in Canada, and Europe as a result, Equifax now has three operating segments you can find reconciliations of our 2020 in 2021 prior business unit operating segment results to this new structure in the <unk> 21 earnings release Q&A.

Equifax has a noncontrolling ownership interest and a credit Bureau in Russia, we are providing no operational or financial support to the company in the first quarter, we wrote off our investment and reflected a $19 $5 million, one time charge and beginning with the first quarter of 2022, we are no longer reflecting income.

From the venture.

Also in the first quarter Equifax deposited the remaining balance of $345 million into the restitution fund for the U S consumer class action settlement.

Now I'd like to turn it over to Mark Thanks, John .

Equifax is off to a very strong start in 2022 and delivered a record $1 $3 6 billion of revenue, which was up 12% and well above the levels. We discussed with you in February we continued to execute very well under delivering strong core revenue growth, while delivering on our key FX 2023 strategic initiatives.

However, as we look to the remainder of 2022, we are reducing our full year financial guidance, reflecting a likelihood of a much more substantial decline in the U S mortgage market than we expected in February .

Over the past several months mortgage rates have increased more rapidly than expected with a 30 year mortgage rate, reaching over 5% last week, a 10 year high.

And there is increased expectation for further increases in U S interest rates as we move through 2022 as the fed manages record levels of inflation.

As a result, our guidance now reflects the likelihood of a much more rapid and significant decline in mortgage originations than we expected a few months ago with U S mortgage credit inquiries for the over the last nine months of 'twenty two declining on the order of 37, five or 38%.

Over the last half of 2022, we expect U S mortgage originate credit inquiries to be down, 40%, which we believe is equivalent to mortgage originations being down more than 40% and is in line with most market forecasts, including NBA and Fannie Mae.

This level of mortgage market credit inquiries over the last half of 2022 was approaching 25% below the five year average levels. We saw prior to the beginning of the pandemic in 2020 and also pulls forward the mortgage market declines, where we had expected in 2023 into 2022.

U S mortgage credit inquiries in early April or beginning to show some of this weakening and are at levels somewhat weaker than we saw in the first quarter, but are not anywhere near the levels of decline. We've included in our guidance.

However, given the recent substantial increase in mortgage rates and expectations for further rate increases high inflation in the war in Ukraine, our guidance reflects a much higher likelihood of a more significant decline in U S mortgage market as we move through the second quarter and continued significant sequential declines as we move through the balance of the year.

We felt it was prudent to de risk our guidance for the mortgage market and pull forward from 2023, the normalization of the mortgage market into 'twenty two.

For the full year. This results in U S mortgage credit inquiries being down about 33, 5% for the year, which is almost 10% below the five year average levels. We saw prior to the beginning of the pandemic in 2020 and about 12 percentage points below the 21, 5% decline in our February guidance for.

For the balance of the year. This equates to a 37, 5% reduction versus the same period in 2021 and as I mentioned earlier, our run rate of 40 of minus 40%, which is 25% below the five year pre pandemic levels in the latter parts of 2022.

The impact on our revenue guidance of this additional 12% reduction in the mortgage market is over 350 basis points of over $175 million.

We expect to offset just under half of the mortgage mortgage revenue declined with start stronger core revenue growth that will now exceed 17% from stronger workforce solutions performance in NPI, Rollouts, which is an increase of about 150 basis points or $175 million for the year.

Broadly equifax is operating very well with our first quarter core growth of 21%.

Together this results in a reduction in our full year revenue guidance by $100 million to a midpoint of $5 2 billion, which is still up a solid 6% after absorbing an over $500 million declined from the mortgage market.

The $100 million reduction in revenue and the elimination of income from our Noncontrolling interest in our Russian joint venture of <unk> 12, a share drives our guidance for EBITDA margin expansion in 'twenty two to about 125 basis points increase, but a reduction of 50 basis points from our prior framework.

This also results in guidance for adjusted EPS to a midpoint of $8 15, a share a reduction of <unk> 50 per share.

As I mentioned at these levels, we still deliver solid 22 revenue growth of 6% and adjusted EPS growth of 7%. Despite a significant mortgage market declined impacting our revenue by almost 10 five points or over $500 million.

Our ability to deliver 17% core revenue growth reflects the underlying breadth depth and strength of the equifax business model and is well above our new long term growth framework of 8% to 12%.

John will provide more details on our view of the mortgage market and our guidance shortly.

Turning to slide four the first core in the first quarter, we delivered revenue and adjusted EPS above the high end of our guidance range revenue at $136 billion was up 12% with our organic constant currency growth of 8% and was the highest quarterly revenue in our history and our ninth consecutive quarter of double digit revenue growth. This was delivered despite a U S.

Mortgage market, where credit inquiries were down 24, 5% in the quarter about as expected.

Core revenue growth of 21% and core organic revenue growth at 17% were both very strong and well above our new long term financial framework.

Our growth was again powered by our U S business is workforce solutions and U S. In total workforce solutions and USAA has generated $1 8 billion in revenue almost 80% of Equifax total revenue with 14% total in seven 5% organic revenue growth again, despite the 24, 5% decline in the U S mortgage market.

Worries.

Non mortgage U S revenue represented over 60% of total U S revenue and delivered growth of over 32% total with organic growth of just over 18%.

International also delivered strong revenue growth of 10% in local currency above the high end of their long term framework of 7% to 9%.

First quarter, adjusted Equifax, EBITDA totaled $484 million up 12% and EBITDA margins of 35, 5% were in line with our expectations for the quarter adjusted EPS of $2 22, a share was up a strong 13% from last year and above the guidance of <unk> to $2 18, we provided in February .

Driven by strong revenue growth and progress in realizing the benefits of our cloud technology transformation.

We continue to accelerate our <unk> cloud data and technology transformation in the quarter, including migrating approximately an additional 10700 customers to the cloud in the U S and approximately 500 customers internationally as well as decommissioning two significant data centers. This month.

As you May have also seen we recently issued our second annual Security report, which is another important illustration of our ESG commitment and the power of our FX FX cloud transformation.

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Cloud technology and data transformation.

In 2018, we committed that equifax would become an industry leader in security our latest report highlights our investments in market, leading cyber security capabilities and talent that enable us to detect and respond to threats with more speed and precision we view, our leading security capabilities is another competitive advantage for equifax.

Leveraging our new <unk> cloud infrastructure, we continue to accelerate new product innovations in the first quarter. We released about 30, new products continuing momentum momentum from 2021, where we launched a record 151, new products, we're seeing increasing commercial traction in revenue generation from these new products, leveraging the new Equifax cloud and.

The quarter, our vitality index defined as revenue from new products introduced in the last three years exceeded 12%.

This is over a 300 basis point improvement from our 909% vitality index last year and the highest level for equifax in the last decade.

For 2022, we now expect the vitality index of over 11% up 100 basis points from the 10% guidance. We provided in February we provided in February which will fuel our growth in 2022 2023 and beyond.

In the first quarter, we invested our strong free cash flow in two strategic bolt on acquisitions with a focus on accelerating growth in workforce solutions with the acquisition of efficient higher and expanding our geographic footprint with the acquisition of data credit or the largest credit Bureau in the Dominican Republic.

Bolt on acquisitions that broaden and strengthen equifax are strong lever to accelerate our growth and are central to our long term growth framework to add 100 to 200 basis points to our revenue growth from strategic bolt on acquisitions.

Even facing the macro mortgage market headwinds, we are energized by our strong start to 2022 and are clearly seeing the momentum from our FX 2020 growth strategy, leveraging our new <unk> cloud capabilities.

Turning now to slide five in the first quarter Equifax core revenue growth. The green sections of the borrowers grew a very strong, 21%, which was above our expectations and substantially above our long term framework financial framework of 8% to 12%.

Core organic revenue growth of 17% in the quarter was also substantially above the long term framework.

Non mortgage growth in AWS and international as well as the U S drove about two thirds of our core organic revenue growth in the quarter.

Strong, 2027% core mortgage outperformance in workforce solutions drove the remaining third our first quarter core organic revenue growth.

With our strong 21% core growth in the first quarter and accelerating NPI Rollouts. We now expect 2022 core revenue growth of over 17%, which is up about 150 basis points from our February guidance and 250 basis points from our original 2022 framework.

This was driven by broad based strong performance performance across workforce solutions as well as strength in international count identity, and fraud efforts insights and accelerating npi's.

As detailed on slide six core core core mortgage revenue growth in first quarter was up a very strong 17% driven by workforce solutions with their core mortgage revenue growth of 27% and 2% that you SaaS.

Due to this strong core revenue growth, our first quarter mortgage revenue was down only 7%. Despite the 24, 5% decline in overall U S mortgage market.

Core mortgage growth of 27% at workforce solutions was consistent with our guidance in February and driven by twin record additions new products increased system to system integrations and increased penetration.

Turning to slide seven workforce solutions continues to deliver outstanding core revenue growth delivering over 40% growth for the fourth time in the last five quarters. This is very strong performance is driven this very strong performance is driven by workforce solutions consistent execution across our key growth levers.

First growing the work number database as we mentioned in February we signed three new exclusive arrangements with large payroll processors late last year that we expect to implement starting in the second quarter and we signed another new exclusive payroll processor agreement last month that we expect to also bring onboard in 2022.

We ended the quarter with $135 million total current records, which was up 19% from last year.

104 million unique individuals deliver high hit rates and represent about 65% of U S nonfarm payroll.

Flat sequential performance from year end was also very strong as we offset reductions of approximately 3 million records from the normal seasoning higher declines from the fourth quarter with new record additions.

As of today, we are already back to over 136 million records as we have begun boarding records from one of the new exclusive payroll processor agreements, we signed late last year.

And as a reminder, almost 50% 55% of our records are contributed directly by individual employers.

AWS is increasing penetration in their key verticals of mortgage talent government and consumer finance with all four verticals, having significant opportunity for continued expansion by leveraging our expanded data hub strategy for the fast growing talent and government markets driving over 80% core growth in these verticals.

Third AWS is delivering increased average revenue per transaction through both higher value, new product, rollouts, and increasing the value or pricing of existing products by expanding the depth and breadth of our data coverage and finally workforce solutions is expanding their system to system integrations currently more than 75% of our <unk>.

Mortgage transactions our system to system up over two <unk> from 2019.

As you know, we get a 20% plus lift in mortgage pools, when we convert our customers from the web to system integrations and.

And talent solutions system system, now represents more than 80% of our transactions.

And last workforce solutions continues to add capabilities and records through strategic bolt on acquisitions over the past two years, we've completed five bolt on acquisitions supporting AWS growth, including efforts insights last fall and efficient higher a few weeks ago.

The strength of workforce solutions, and uniqueness and value of their twin income and employment data was clear again in the first quarter Rudy <unk> and the AWS team delivered another outstanding quarter with 33% revenue growth well above their 13% to 15% long term framework and are positioned to deliver a very strong 22 and continue above market growth in the few.

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Turning to more details on workforce solutions on slide slide five they had another exceptional quarter delivering record revenue of $649 million, the first quarter above $600 million.

Revenue growth was up a very strong 33% with organic revenue growth of 20%. Despite the significant cline decline in the U S mortgage market.

Core revenue growth was a very strong 45% in the quarter with core organic revenue growth of 34%.

Non mortgage is now 60% of workforce solutions revenue delivering organic growth of over 30%.

Verification services. It services revenue was over 500 million for the first time with strong growth driven by non mortgage verticals that represent almost 50% of verifier revenue and delivered 90% total and 50% organic growth.

The inorganic growth was driven by the acquisition of Arris incisive insight that performed very well during the quarter driven by higher volumes product penetration and new customer wins.

Talents in government solutions, which now represents 30% and almost 40% of verify or non mortgage respectively. Both had outstanding quarters and combined were up a very strong 100% total and over 55% organic growth the.

The continued expansion of the workforce solutions data hub in the fast growing $5 billion talent and $2 billion government terms is driving strong double digit organic growth in both verticals leveraging workforce solutions over 540 million historical records for new products the.

The introduction of the unique adverse insights national student clearinghouse data and other talent related data assets strengthens our ability to deliver new solutions leveraging the AWS data hub the.

The non mortgage consumer lending business, principally in banking and auto showed strong growth as well up 40% in the quarter, increasing records penetration system to system integrations are driving growth in auto card and consumer finance and debt management grew over 25% in the quarter.

As mentioned earlier mortgage revenue for workforce solutions was up 3% versus last year 27 points stronger than the overall U S mortgage market decline and consistent with our expectations. The dws would outperform the mortgage market by approaching 30 points in 2022.

Employer services revenue of $136 million was up a strong 33% in the quarter.

Combined our unemployment claims and employee retention credit businesses had revenue of $50 million up 6% last year, but down 7% sequentially as expected we.

We expect total UC and ERC revenue to be down about 25% for all of 2022, driven by lower jobless claims and ERC as the Covid Federal tax program runs out.

Employer services, non UC and ERC businesses had revenue of $86 million up over 55% versus last year with strong organic growth of over 15%.

Our <unk> business driven by our new <unk> anywhere product continued to show very strong growth up over 55% in.

In the first quarter, our I nine and Onboarding business made up over over made up almost 25% of employer services non UC and ERC revenue.

Our combined healthy FX business, which is the combination of equifax workforce analytics and our healthy FX acquisition that we acquired in the third quarter last year represented about 45% of employer services non U C and ERC revenue in the quarter and delivered total growth of just under 70% with organic growth of <unk>.

1% is expected as we discussed the seasonality of ACA revenue is concentrated in the first half of the year.

Workforce solutions adjusted EBITDA margins were 54, 6% consistent with the guidance, we provided February and very strong.

The decline in margins versus last year was principally driven by the addition of adverse insights and healthy FX and as expect expected initial margins from these acquisitions are dilutive to workforce solutions as we move through 2022 and drive synergies this dilutive impact will be mitigated.

As shown on slide nine continued expansion of the workforce solutions data hub is a key strategic focus for workforce solutions in the engine driving future growth in the fast growing talent and government solution markets town.

Talent solutions delivered 145% total and 80% organic growth in the quarter.

And we began introducing new multi data talent products in the quarter with new product introductions expected to accelerate as we move through 2022, leveraging the equifax cloud.

We also saw strong growth in the government vertical with revenue up 89% total and 39% organic with significant new wins at the state level and continued growth of our large SSA contract.

As I mentioned earlier <unk> insights performed very well delivering 20% growth in the quarter from increased volumes, new customers and success with existing products.

More broadly we expect revenues from <unk> to increase as the integration of <unk> insights continues in the back half of 2022.

Shifting now to slide 10, and <unk> their revenue of $433 million was down 6% compared to first quarter last year and slightly below our expectations.

The decline was delivered driven by the reduction in <unk> mortgage revenue, which had $140 million is about 30% of total <unk> revenue when it was down 21% for the quarter.

Positively this was about 300 basis points stronger than the overall mortgage market decline of 24, 5%.

Importantly, usia's delivered their fifth consecutive quarter of growth in <unk> non mortgage revenue with 242 million, which represents over 55% of total <unk> revenue and was up 4% with organic revenue growth of 2%.

This was somewhat lower than the mid single digit organic growth. We discussed in February due to the timing of deal closures in their financial marketing services business <unk>.

Importantly, <unk> non mortgage online revenue growth, which excludes Fms was strong at up 10% with 6% organic growth.

During the quarter, we saw double digit growth in insurance commercial in identity and fraud and auto and direct to consumer both showed high single digit growth.

And telco and banking and lending grew in the mid single digits.

<unk> had an outstanding quarter with organic revenue growth approaching 50% account teams now delivered two consecutive quarters of very strong Neil new deal bookings and along with the monetization of synergies between accounting equifax customer and product base and continued vertical expansion.

Our core new product growth continues to be very strong in count and the team continues to execute on the development of joint solutions, leveraging both count and Equifax data that we believe will drive strong growth in 'twenty two and beyond.

Financial marketing services, our <unk> offline business had revenue of $46 million down 14% from last year's 12% growth.

Importantly, we continued to see growth in marketing related projects, but our batch business was below our expectations as we discussed in the batch in the past our batch or portfolio review project business can be choppy as the revenue is often driven by larger onetime offline data licensing projects, we expect to return to growth in.

Second quarter, driven by growth in marketing pre screen and in the portfolio review solutions inside of Fms.

<unk> consumer solutions business the U S DTC business from Gcs. It was combined with USA in the fourth quarter had revenue of $51 million up 2% year over year, which was below our expectations with their cloud transformation complete. The team is now focused on delivering best in class consumer experiences leveraging the cloud to rollout new products.

And leveraging <unk> relationships in traditional financial services credit unions, new Fintech players to return the business to growth.

The U S. <unk> sales team had a strong quarter with a number of key wins, resulting in a healthy win rate the new deal pipeline remains very strong with the overall pipeline slightly higher than the fourth quarter.

In <unk> adjusted EBITDA margins were 39, 3% in the quarter about flat with fourth quarter and slightly better than our expectations.

Turning to slide 11, our investments in acquisitions of unique data assets are positioning us for sustainable long term non mortgage growth.

Our unique data goes far beyond traditional credit data and contains alternative data covering telco payment history specialty finance transactions cash flow and bank transaction wealth data e-commerce transactions and unique commercial business data. These unique and only equifax datasets provide scores analytics and insights that allow lenders to increase approval rates.

Expand credit lines, and reduce losses, particularly with under bank consumers.

These differentiated alternative data assets are important growth lever for us is to deliver new select new solutions that will help expand access to credit in the over $60 million on an underbanked population in the United States.

Earlier, this week Equifax announced a new data partnership with Pfizer, a leading global provider of payments and financial services technology solutions to leverage their unique data assets and combinations with in combination with equifax data to deliver new solutions to the market, we intend to co innovate with Pfizer to develop solutions that will help financial institutions and other businesses.

<unk> embraced the power of expanded data and real time data insights to drive speed account acquisition mitigate risk and improve overall customer experience with an initial focus on small business commercial solutions.

We're very energized about our new partnership with Fiserv.

Shifting now to international on Slide 12, there revenue of $281 million was up a very strong 10% on a local currency basis Europe revenue was up 6%, 16% driven principally by our UK debt management business, we've seen significant increases in debt placements from the UK government over the past several quarters that we.

Expect to continue.

As you recall in December Equifax was awarded a four year extension with the U K on their government debt resolution contract with an estimated value of $136 million with an incremental $90 million of potential incremental sales from analytics and other CRA related solutions.

Our European CRA business was up 2% in the quarter driven by growth in identity and fraud insurance and telco and partially offset by the UK direct to consumer business, which was below our expectations.

Asia Pacific revenue was up 6% driven by strong growth in our Australia commercial business verification services and identity and fraud.

Latin America was up a strong 23% driven by double digit growth in Chile, Argentina, Mexico, and Central America. The team's strong new product introduced introductions over the past three years and pricing actions continue to benefit growth across the region. This is the fifth consecutive quarter of growth for Latin America.

Canada, Canada was up 2% and below our expectations driven by lower volumes in consumer direct and mortgage market declines from higher interest rates and auto was flat for the quarter.

International adjusted EBITDA margins at 25, 4% were down 150 basis points, primarily due to the elimination of equity income from our Russian joint venture that John discussed.

Excluding this impact EBITDA margins would have been about flat with last year and slightly and up slightly from our expectations.

As shown on slide 13, we're off to a very strong start with our new product vitality index over 12% in the first quarter, which is above our 10% goal for the year and the highest vitality index. Since we began tracking this measure over 10 years ago.

Building on the record 151, new product introduction introductions last year, we delivered about 30, new products. So far in 2022, which is on a similar strong pace to the fourth quarter.

Some of the more significant new product launches are detailed on the slide.

Leveraging our new <unk> cloud capabilities to drive new product Rollouts, we expect to deliver vitality index in 2022 of over 11%, which equates to over $550 million of new product revenue this year the.

11% vitality is up 100 basis points from our February guidance and up 200 basis points from our strong 2021 results.

<unk> are central to our long term growth framework and driving FX topline growth.

As detailed on slide 14, reinvesting, our strong cash flow and accretive and strategic bolt on M&A is central to our FX 2023 growth strategy and our new long term growth framework.

We expect to add one to two 1% to 2% of revenue growth each year from strategic bolt on M&A.

And we're starting 'twenty two are strong with two strategic and accretive bolt on acquisitions efficient <unk> and data <unk>.

Efficient higher further strengthens workforce solutions by bringing expanded employer services to hospitality building services and senior living markets. The acquisition also allows workforce solutions to better compete and penetrate the hourly and high volume of hiring market and of course provides us with incremental twin records.

Data <unk> is the largest consumer credit reporting agency in the Dominican Republic that adds to our strong market presence across Latin America.

Since the beginning of 2021, we've completed 10 strategic bolt on acquisitions that strengthen and broaden the FX in that fit our M&A priorities number one to expand and strengthen our strongest and fastest growing business workforce solutions number two to add unique data assets.

Three to expand in the fast growing $19 billion identity and fraud space and number four to look to expand our global credit Bureau footprint.

We're well down the path of integrating the acquisitions into the FX cloud and driving synergies to accelerate our growth.

With that I'll turn it over to Jon to provide more detail on our second quarter and our full year 2022 guidance.

Mark as Mark discussed earlier, we have updated our view of the U S mortgage market, reflecting the significant changes in current and expected future levels of U S interest rates as shown on slide 15. In 2022, we are now expecting declines in U S mortgage credit inquiries, a 33% in the second quarter and 40% in the third and fourth quarters of 2022.

Which we believe is consistent with mortgage originations being down over 40% and is consistent with market forecast as we saw in the first quarter. The decline in mortgage inquiries was less than the expected mortgage originations. We believe driven by increased shopping by consumers as rates began to rapidly rise we expect to see some of the same.

Behavior, but at lower levels as we move through the remainder of the year.

As we have shared in prior quarters Slide 16 provides a view of both the number of home mortgages that would have a rate benefit from refinancing on the left and the view of the levels of home purchases on the right.

Our updated assumptions for U S mortgage market credit inquiries, we believe are consistent with the trends these charts reflect that.

The left side.

On the left side of the slide provides a perspective on the number of home mortgages for which a refinancing would provide a rate benefit the in the money population of mortgages in.

And the money population as of mid April when the 30 year fixed rate was about 5% is about $3 3 million homes down about 80% from the levels. We saw in January when rates were three 6% as the the money population declines mortgage refi is increasingly driven by cash out refis that are often executed with no rate benefit or.

Our rate increase for perspective for Black Knight data from February 2022, about 25% of refinancings, where by borrowers that had an increase in our borrowing rate.

As shown on the right side of slide 16, the pace of existing home purchases continues at historically high levels about consistent with the levels. We saw in 2021.

Our assumptions for the U S mortgage market over the last nine months of 2022 are consistent with the trends just discussed we have assumed that U S mortgage purchase market volume stays strong but declines in the second half by 5% to 10% from the levels. We saw in 2021, we're assuming that the U S refinance market volume declined substantially with volume <unk>.

<unk> driven by cash out Refis, we expect refi volume to be down over 50% in <unk> and over 60% by <unk> with significant sequential declines in each quarter refinance will be about one third of total mortgage volume in the second half at the lowest levels, we've seen over the last 10 years.

Slide 17 provides our revenue walk detailing the drivers of the six 2% constant currency and five 6% total revenue growth to the midpoint of our 2022 revenue guidance of $5 2 billion.

The 33, 5% decline in the U S mortgage market is negatively impacting 2022 growth by about 10, 4% over 350 basis points and $175 million more negative than the levels. We discussed in February when combined with the expected declines in the workforce solutions unemployment claims and ERC business that we have discussed with you in February .

Fury total headwinds in 2022 revenue growth or about 11 five percentage points.

As Mark discussed earlier core revenue growth is expected to be over 17% and up 150 basis points from the levels discussed in February core organic revenue growth is up 120 basis points with the remainder coming from the acquisition of data for detail.

This stronger core revenue growth drives about <unk> about $75 million in revenue benefit offsetting just under half of the impact of the weaker mortgage market now.

Non mortgage organic growth is driving almost 60% of the growth. The largest contributor continues to be workforce solutions was strong organic growth and talent solutions government and employee boarding solutions, including <unk> International and U S. <unk> non mortgage are also expected to drive core growth.

Slide 18 provides an adjusted EPS walk detailing the drivers of the expected 7% growth to the midpoint of our 2022 adjusted EPS guidance of $8 15 per share revenue growth of five 6% at our 2021 EBITDA margins of about 33, 9% will deliver 8% growth in adjusted <unk>.

EBITA margin EBIT margin expansion of about 125 basis points is expected to drive about 6% growth in adjusted EPS. The reduction in EBITDA margin expansion by over 50 basis points from our prior guidance is driven by both the elimination of equity income from our Russian JV, which.

Reducing margins by over 30 basis points as well as from the negative margin impact of the net loss of $100 million of high margin online revenue.

We are on track to deliver the reductions in tech transformation expenses and savings from migration to our cloud systems that we discussed with you in February .

Consistent with our guidance from February depreciation and amortization is expected to negatively impact adjusted EPS by about 3%.

D&A 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 four percentage points interest expenses higher in 2022 by about $26 million and higher than our expectation in February by about $6 million.

Our estimated tax rate used in this framework of 24, 7% does not assume any changes in the U S federal tax rate.

Slide 19 provides the specifics on our 2022 full year guidance, which I also would just discussed at Bu level, our updated view of U S mortgage impacted both AWS and USS.

AWS is expected to deliver revenue growth of about 15% as stronger non mortgage growth expected to be over 35%, partially offsets the impact of the weaker mortgage market.

<unk> EBITDA margins are expected to be about 54%.

<unk> revenue is expected to be down 6% to 7%, reflecting the greater 33, 5% assumed decline in the U S mortgage market consistent with February non mortgage revenue is expected to be up 6% to 8%.

<unk> EBITDA margins are expected to be about 38%, reflecting the impact of the weaker mortgage market.

Insistent with our February guidance, combined AWS and Usia's mortgage revenue is expected to outperform the overall market by almost 20 percentage points in international revenue is expected to deliver constant currency growth of about 7%, 9% International EBITDA margins are expected to be up over 50 basis points. The decline from our February guidance is due to the.

Fact of the loss of income from our Russian JV absent this item our guidance for international EBITDA margins is unchanged.

Slide 20 provides our guidance for <unk> 'twenty two we expect revenue in the range of $1 three 1% to 133 billion.

Acquisitions are expected to positively impact revenue by four 4%.

<unk> 22, EBITDA margins are expected to be flat to down sequentially.

Looking at business units in the second quarter workforce solutions revenue growth is expected to be up almost 20% year to year with mortgage down mid single digits and very strong non mortgage growth continuing EBITDA margins are expected to be about flat sequentially.

<unk> revenue is expected to be down about 6% non mortgage is expected to be up 6% to 7%, partially offsetting mortgage revenue down just over 30% EBITDA margins are expected to be about 38%, reflecting the lower mortgage revenue.

International revenue is expected to be up about 10% year to year in constant currency and EBITDA margins are expected to be up slightly sequentially corporate expense is expected to be about flat sequentially. We're expecting adjusted EPS in <unk> 'twenty two to be $1 98 to $2 eight per share compared to <unk> 21, adjusted EPS of a one.

98.

We believe both our second quarter and full year 2022 guidance are centered at the midpoint of the revenue and adjusted EPS ranges we provided.

Now I'd like to turn it back over to Mark Thanks, John .

On slide 21, we remain laser focused on our FX 2023 growth strategy to leverage new <unk> cloud for innovation new products.

Next 2023 is the foundation for our new 8% to 12% long term growth framework we.

We continue to make significant progress executing the FX data cloud and technology transformation and we now have over 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 American cloud migrations, we completed over 120000, <unk> migrations over $10 million consumer migration.

And $1 million data contributor migrations in North America, our principal consumers exchanges are in production on our new cloud based single data fabric and delivering to our customers. Our international transformation is also progressing as expected to be principally complete by the end of 2023, some migrations being completed in 2024.

And we're in the early days of leveraging our new <unk> cloud capabilities and 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 we remain we remain on track and confident in our plan to become the only cloud native data analytics technology.

Company.

As shown on the next slide Equifax is increasingly much more than a credit Bureau, and focused on faster growing identity and fraud talent employer and government verticals.

The consistent execution of our strategy over the past four years and the strategic bolt on acquisitions, we completed in 'twenty, one and so far in 2022 are all aligned with our strategy and in faster growing markets in.

In 2020 to over 50% of Equifax revenue is expected to be outside our traditional.

Consumer and commercial credit Bureau market segments, principally in workforce solutions, and our identity and fraud businesses.

<unk> businesses represent about two thirds of our $45 billion addressable markets in identity and fraud talent government and HR services as well as the employment and income portions of our credit businesses with growth rates twice as fast as our traditional credit markets. As we move forward. These businesses will increasingly become larger portions of equifax.

And drive our topline growth.

As shown on slide 23, very strong, 17% core revenue growth and 22.

And 22% growth core growth last year is driven by our outperformance in higher growth vertical markets.

We are a different company today with over 40% of Equifax revenue delivering over 10% growth.

And even more powerful or the business is delivering over 20% growth in fast growing markets, including workforce solutions, which was up 30% and 33% in the first quarter with their talent business is approaching 150% their government business up about 90% the consumer lending business up 40% and <unk> anywhere over <unk>.

50%.

Our account business in the identity and fraud space delivered almost 50% growth in the fast growing market.

Our <unk> business was up over 20% and our 11% NPI vitality index is fueling our growth.

These faster growing verticals in new markets like talent government in identity and fraud are driving our topline and allow us to.

Outgrow underlying Mac market macros.

Wrapping up on slide 24, Equifax delivered another strong and broad based quarter with 12% overall growth in 'twenty, 1% core growth more than offsetting the 25% decline in the mortgage market with broad based performance, which was above your and our expectations. We are operating very well with strong momentum and now have delivered nine consecutive.

You have quarters of strong above market double digit growth, reflecting the power of the new Equifax business model and our execution against our FX 2023 strategic priorities Equifax is resilient and on offense we.

We have strong momentum and are delivering the strongest results since the 2017 2017 cyber event and arguably the strongest results in the past 10 years at Equifax.

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

And as you know we introduced the new long term.

<unk> framework with total revenue growth of 8% to 12%, including a 100 to 200 basis points of growth from bolt on acquisitions.

We also expect to deliver margin expansion 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 total return to shareholders of 13% to 18%.

The rapidly changing and unprecedented environment makes forecasting the impacts of the U S market mortgage market incredibly challenging.

We do not take guidance changes lightly, but we felt it was prudent to derisk the year by reducing our U S mortgage market credit inquiry outlook to down 37, 5% for the balance of the year, resulting in a full year decline of 33, 5% and our mortgage market.

This includes a decline in the mortgage market of 40% in the back half of 'twenty, two which is approaching 25% below the five year run rate levels from prior to 2020 and pull forward the market declines we had expected in 2023 into 2022.

We also believe this equates to a mortgage originations being down more than 40% in the back half of 2022, which is aligned with most market estimates.

We feel this is a prudent and balanced framework given the unprecedented macro environment.

Against the declining mortgage market Equifax is resilient and continues to deliver strong results, our updated outlook deliver 6% growth offsetting more than $500 million over 10% of mortgage market decline with strong core revenue growth of 17% in 2022, which is up 150 basis points from our February .

<unk> and over 250 basis points from the framework, we shared with you at our Investor Day in November .

Our ability to offset the 33, 5% decline in the mortgage market and deliver 6% total growth driven by 17% core growth is powerful.

Looking back at the <unk> Global financial crisis, which is the last time, we saw a macro event like this impacting the mortgage market Equifax revenue was down 6% versus the 6% growth we will deliver our 2022 framework.

We're different company today are more diverse resilient faster growing higher margin higher fashion at a higher free cash flow company, a new equifax with stronger growth levers.

Workforce solutions is our strongest and fast growing business it will be north of 45% of our revenue in 2022 with a run rate runway to move past, 50% of Equifax revenue in the near future.

There are 33% growth in the first quarter is over <unk> the growth rate of the rest of equifax and they're 55% EBITDA margins are over 15 points above our average and highly accretive to equifax.

Workforce solutions has multiple levers to deliver their 13% to 15% long term growth rate, which is highly accretive to equifax.

Our core non mortgage market growth is very strong at 21% in the first quarter and 17% and our new 2022 guidance.

And above our new 8% to 12% long term framework, we think about core revenue growth is a strong indicator of the breadth depth and strength of the underlying equifax business model.

We expect our mortgage teams will continue to outperform the market declined by almost 20 percentage points in 2022, consistent with our February guide with workforce solutions outperforming by approximately 30 points from pricing NPI, New twin records, new customers and system to system integrations.

And as you know we are in the early days of leveraging the 50% of Equifax. That's now in the Equifax cloud environment, and we're just starting to realize the top and bottom line benefits from the cloud as.

As we move over the coming months and quarters to be fully cloud native the top and bottom line benefits will really kick in over the next two to three years and drive our top line, while enabling us to achieve our 2025 margin goal of 39%.

And as we talked on the call. This morning, we are ramping our new product capabilities, leveraging our differentiated data fact data assets and the Equifax cloud our vitality index in 2022 will now be 11% over $500 million, which is up 9% last year and 100 basis points from our start in 2021 Ntis are fueling our growth and last.

Our 10 bolt on acquisitions in the last 15 months are adding $375 million to our run rate revenue, but more importantly, the M&A synergies will be kicking in during 2022 and 2023 as we complete our integrations and drive our NPI rollouts.

To be clear, we believe equifax continues to operate at a very high level. There is no change in our long term outlook for Equifax the change in our mortgage market framework simply pulled forward the market normalization into 2022, we remain confident in our 8% to 12% long term growth framework and 50 basis points a year of long term margin.

Expansion that we rolled out at our Investor day in November and there is no change to our 2025 goal of $7 billion of revenue and 500 basis points of margin expansion to reach EBITDA margins of 39%.

We are a new equifax are more resilient more diverse higher growth and higher margin company I'm energized by our strong first quarter performance, but even more energized about the future of the new Equifax.

I'd like to close by welcoming Trevor Burns back to the Equifax leadership Senior leadership team, we announced earlier this week that Dorian Hare has taken another position outside of Equifax, and we wish him well and wed like to thank Dorian for a service leading investor relations for the past two years Trevor will now reassumed the lead responsibility for Investor relations effective immediately and with that operator.

Let me open it up for questions.

Thank you, we'll now be conducting a question and answer session. We ask you. Please ask one question and one follow up then return to the queue. If you have.

That can be placed in the question queue. Please press star one on your telephone keypad.

<unk> tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick comprehensive before pressing star one and once again. Please ask one question. One follow up then return to the queue. Our first question is coming from Manav Patnaik from Barclays.

Your line is now live.

Good morning.

I appreciate and I applaud the de risking of the mortgage I just had a question around the incremental or decremental margins John maybe after safety.

EPS reduction it sounds like 12 to answers from the Russia write down so is the remaining on the mortgage side I was just hoping you could help us understand that a bit.

Yes, so the remaining revenue decline of $100 million right as is the revenue decline offset by $75 million of non mortgage growth, but its all online revenue decline and when obviously you know that we have very high mortgage and mortgage but as you know we have very we have very high variable margins across online online mortgage.

As well so so it flows through and you can just do the math right. It flows through it's something on the order of 60% is the what we brought forward.

Okay got it that's helpful.

And then Mark maybe just on the talent side, some pretty impressive growth there can.

Can you just help us appreciate the.

The volume or a cyclicality to that business, obviously, the labor market is hot and so.

<unk> on that kind of data is good do you anticipate that slowing down or how should we think about the.

The sensitivity there.

Yes, it's a great question Manav I think as you know seven.

75 million people a year change jobs every year.

It's one that that has.

Some cyclicality, but theres an underlying base that is very very high the growth that we're getting now is really from our penetration in the market. The new products. We're rolling out leveraging the work history, we have in the $540 million Records, where we have.

Resume for Manav of all the jobs you've had so that work history is very valuable in the kind of the macro change in talent is around speed, which we don't think is going to change, meaning hiring managers want to get that individual on the floor more quickly that's always the case, even pre pandemic.

Instant data that you can get from Equifax.

Work history data and now with incarceration data, we have medical Credentialing data, we have the education data and we're adding more datasets. There allows the background screeners, which are our customers.

Other hiring.

Businesses to really speed up their decisioning for the hiring manager so the bulk of the growth that we have there and it's obviously very very strong and we expect to continue is really putting these solutions together and we've got more new products in the pipeline that we plan to bring out we've talked with you before and others.

Last year, we rolled out solutions that had more work history versus where it is mark work today at Equifax, where do you work over the last.

10 years, so those solutions, we rolled out last year were bringing those to the market. Those are really driving a lot of the topline growth and then in 2022 will start combining some of the solutions like incarceration data with the work history.

With education data to have a one click solution and then we will customize those around job categories, because as you know in each high.

Tiring process.

<unk>, it's used as different dependent upon who you hire a white collar worker versus a banking employee versus a warehouse worker versus a truck driver a dentist or a doctor those are all different data requirements, which is where we want to work towards product timing around families of.

Of jobs, which again will make it easier for our customers to pull the data and then also results in higher revenue for Equifax, because we're bringing more value.

To the space. The other point I would make out is we are increasingly driving system to system integrations here you go back a couple of years ago like mortgage the talent space was accessing a lot of our data through the web through a manual web interface meeting king into the web and putting marks name in there and pulling down the data.

Moving to system a system, we get the same lift going forward. So there's a lot of runway still with that going forward. So it's a space that we like it's a big space.

One that we see a lot of potential going forward just one thing to add you can see the power of the historical records because if you look at twin revenue, excluding mortgage take mortgage out of the mix. We're now seeing over 50% of the revenue include historical records.

Got it thank you.

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

Great. Thanks, so much.

Hey.

I know you've talked about this a lot, but clearly youre outperforming the mortgage mortgage mortgage market pretty dramatically.

John can you bracket because it looks like you are.

I guess, it will be down about 6% to 7% versus mortgage down 33 is there any way to think about just a couple of buckets of what's driving that relative outperformance just trying to frame it on a percentage basis.

Contextualize that a little bit more.

And Kevin your questions around <unk> in particular versus AWS.

Yes, <unk>, if you want to open it up the AWS as well its fine.

Yes, maybe I'll start John but there's a number of levers that we have to outperform all our underlying markets and you can use mortgage in particular, obviously that gets more challenging when you talk about a mortgage market.

In the second half that's going to be down 40%, but we've had strong outperformance for for a long history workforce has more leverage than <unk>, but both businesses and I'll talk about <unk> one are there levers that.

Outperform underlying markets as price, increasing the price of the solution or the credit file and <unk>.

Both workforce solutions and <unk>.

And <unk> have regular price increases that help them offset or or increase their revenue dependent upon where the market's going the other is new products.

Both businesses rollout new solutions.

Workforce solutions has a lot more.

Product opportunities in <unk>, but <unk> had some new product rollouts to help them outgrow the underlying or in this case in 2022 declining market third is going to be new customers.

In <unk> case, that's really in their tri merge business growing some share there will grow their revenue.

Workforce solutions.

As you know.

We only see 60 plus percent of mortgages still 40% are done with manual paper pay stubs, we've been growing that.

Adding customers is a lever or usage, if you will as a lever.

One both businesses have as the number of pulse that happen in a transaction and that's been growing in both U S and in workforce solutions.

Particularly as you see more digital interactions with consumers.

Which we would characterize as shopping meeting consumers are shopping for mortgages, and deciding which mortgage originator to work with in that shopping process, which is fairly new and more utilized in the last couple of years and it's here to stay in our view there is some data pulled.

Qualify the customers so in the shopping process that mortgage originator can respond with some framework about the offer so that's a place where number of polls is another opportunity for the business.

System to system integrations and U S. I S. It's virtually 100% fully system a system in workforce solutions, we've talked many times that.

Of the 60% of mortgages, we see about.

70, plus percent our system the system, we've been growing that that's up I think 50% from where it was.

Three or four years ago, So there's still opportunities versus web access and system to system, we get a 20% lift in the number of pulls and then the last one that I touch on its really unique to workforce solutions is growing records.

As you grow records, we have higher hit rates remember in our system to system integration already been a web access.

Our customers are coming to us for all of their mortgage applications or.

In their process and when they do that when we grow our records, which were up 19% year over year in the fourth and the first quarter for workforce solutions that becomes revenue, we're able to monetize those additional records, which is why we're so focused on records hey, Kevin If youre, specifically, just talking about <unk> being down 6% to 7% relative to the market being down 33.

<unk> again, 6% to <unk>, our total revenue on the order of two thirds of their revenue is non mortgage.

And we're seeing 6% to 8% growth in <unk> revenue, which is over half of their revenue, which is consistent with our long term framework for U S. And we're also expecting to see growth at a somewhat lower level, but but growth in the consumer business that came over from gcs. So it's those two to two thirds of the business Thats showing nice growth thats offsetting the weaker mortgage mark.

And then as Mark said <unk> also outperforming the mortgage market.

That helps and then just real quick on what percentage of total Equifax is mortgage.

In Q1, and then where do we think it will end.

<unk> 2022.

Yes, So Q1 was about 29, 5%.

And then as we move through the year I think we'll get down to the point, where we're just we're in the neighborhood of 21% to 22% as we get into the fourth quarter.

Thank you.

Thank you. Our next question today is coming from Andrew Steinman from Jpmorgan. Your line is now live Hot Hi, John on the mortgage percentages just gave was that the U S mortgage revenue or total mortgage revenues I heard you mentioned mortgage.

Today. My second question is I know you like to look at core growth rates I am going to ask a question that's total.

Could you tell us what the first quarter organic non mortgage growth rate wise.

Okay. So the first question. The 2096 is total but Canada is very small.

It's really U S. It's really driven by very very small and we will validate that to make sure but I believe that's correct.

And then in terms of core organic.

I don't want to walk through our I, just one first quarter organic non mortgage total company.

First quarter organic number so I don't think Thats a number we've disclosed rate we gave core organic right.

We gave organic for the business units and we get a total and we give total.

But certainly one that we probably don't have in front of us here Andrew.

We can we can look at getting that for you. Okay. Thanks, so much I appreciate it.

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

Thanks, so much.

Mark I was hoping you could talk about what youre seeing in Europe . It seemed like this was a good quarter in the first quarter, but was that more front end weighted and just trying to think about how you're viewing it for the rest of the year.

Yes, we haven't seen any different.

Europe for US as you know is UK, and Spain, which is really where we participate there.

We're seeing a positive as the government and companies in the U K.

Following the pandemic start to focus on some of the collections that were suspended during the pandemic timeframe. So that's kind of a positive for the business, which we expect to continue through 2022, and the underlying kind of credit businesses.

We don't have kind of the mortgage issue if you want the mortgage market macro in in Europe .

Two countries, because we really don't participate in mortgage there.

It's really operating what you'd see in the non mortgage business here in the states where it's.

Pretty steady and we see elements of kind of post pandemic recovery.

Card issuers wanting to do marketing wanting to rebuild their balance sheets.

Similar discussion around consumers being fairly strong meaning employment is the high unemployment is low which is kind of a good macro in those markets same in Canada, Australia, and frankly in Latin America around the globe people are working.

So.

Outside of the interest rate environment, and then you can as a result the inflation.

Environment, that's the higher interest rates are going to attempt to offset.

You see consumers that are working low unemployment.

Have better balance sheets than they had coming into the COVID-19 pandemic because.

<unk>.

Got some stimulus spending and of course, they are working so we're pretty optimistic.

For kind of the core core portions of the business and we're delivering that it when you see the results.

Okay perfect very helpful.

Just thinking about mortgage in 2023, you talked about some of the decline that you were expecting in 'twenty three youre pulling it forward into 'twenty two guidance.

Are you thinking that 2023, sorry go for it turns to.

Normal level like we've been seeing.

Of that we saw in 2017 in 2019 or is there sort of more to go even beyond.

This year, just given the massive outperformance from prior the prior to year.

I think as John and I, both mentioned, we tried to really stress.

The mortgage market outlook.

Let me be.

Obviously transparent this is a hard thing to forecast, we don't know where interest rates are going to go it's pretty clear they're going to go higher we've never seen a fed navigate.

Eight 5% inflation environment with full employment.

A very tricky thing to do so it's probably hard to forecast, but what gave us comfort in derisking.

The outlook for 2022, which as you point out and I did too that it pulls forward what we thought would have been a more gradual return to normalization.

Bill inflation heated up.

We think that Thats, a pretty strong stress scenario from from the way we looked at it and as John pointed out when you go back the past five years to 10 years.

Covid, meaning in pre Covid, many as pre the refi run up when interest rates were slashed because of the COVID-19 environment and Refis really exploded.

25% below kind of a normal market when we exit the year.

And really in the second half.

That we think is kind of as low as it can go because when you think about the mortgage market Theres a steady.

Purchase volume even in a recession.

I don't know how to talk about what environment. This is it's certainly not a recession, but even in a recession people move 40 million people a year move they are buying houses. So there is a steady level of purchase volume and then.

Even in a rising interest rate environment.

<unk> do refis.

Particularly when they have some level of equity in their homes and thats another calculus.

Looking at the way we tried to.

Stress the mortgage environment and came up with our kind of down 40% in the second half is theres still a lot of home equity out there that's untapped.

Cash out Refis, even at higher interest rates is something that you could see consumers do and we've seen them do before so a bit long winded, but what we tried to do was really stress. This in this uncertain environment.

As dark a mortgage environment as we could see.

Thanks, so much helpful.

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

Okay.

Good morning, guys. Thanks for taking the questions.

To touch on.

The outperformance in the non mortgage business.

Really impressive, especially given the mortgage headwinds.

What do you guys think is the biggest driver behind that.

Other credit products.

Better than expected or is it share gain story or kind of what do you think is driving the upside in the non mortgage side.

Yes, how much time do we have.

We went through a lot of factors.

I would start first with workforce solutions workforce solutions. When we went through in real detail in our comments non mortgage businesses are very strong and then.

I know you asked about non mortgage but even their ability start with growing records records up 19% and the ability to continue to grow records and their history of growing records that puts.

An element in the business, both mortgage and non mortgage your question was around non mortgage so as we grow records and what's unique about workforce is we don't have all the records.

And up 19% in the first quarter, we've got three now for larger.

Chunkier.

Additions of course, we're doing M&A to add records through our employer services business. So I would say that's one unique element that workforce, certainly our pricing power and workforce into a lesser degree in the U S. I S allows us to outperform and drive non mortgage growth, but then as I talked about.

The back half of my comments some of the new verticals we're in.

Where we're making acquisitions or leveraging.

The cloud to rollout new products like the talent space or the government space. It was a really strong growth rates that we're delivering there and then more broadly so workforce I think is one which I talked about a bunch.

The second is new products, our new products are primarily in non mortgage because thats, where most of our businesses and thats where were rolling them out and a lot of our new products. As you know are really leveraging our historical or multi data solutions.

Whether it's.

In the talent space instead of having a solution thats, where it is mark work today, which is what historically we had now we have worded mark work over the last 24 months.

<unk> 36 months. The last 48 months last 60 months and we are going to add more different solutions. There. Those are all at higher price points. So thats driving the business and yes, we have commercial activity, where we're out there winning share in <unk> and of course in AWS, where we're displacing paper pay stubs that drives it we talked about.

System, a system integrations I think the power of Equifax as we go through 2022 and into 'twenty, three and 'twenty four is our.

Differentiated data assets.

The fact that we're really ramping NPI, but we havent finished the cloud. So we're only in the FERC early innings of really leveraging the cloud thats going to come in the latter parts of 'twenty, two and 'twenty three that's where we're really going to be able to drive that going forward and I think you've got a sense that.

Taking up our guidance really for the second time this year around core growth with most of that being driven by non mortgage core growth.

Shows our confidence in the underlying strength of the company, which is our ability to bring new solutions to market.

Executing on our cloud transformation.

And really driving into some of these new markets like identity and fraud like talent like government.

Have higher underlying growth rates than traditional credit Bureau kind of markets.

That's helpful. And then just a quick follow up on kind of your updated thoughts on capital allocation you guys have given some pretty detailed thoughts that the analyst day in November .

But I guess, just given the higher rate environment have any priorities.

In the near term change between debt reduction or potential M&A or new product launches that will kind of help you diversify away from mortgage faster I just wanted to see how you guys are thinking about it in this current environment.

Yes, so there's a couple of different questions. There first on our capital allocation, we were pretty clear on Investor Day, We talked about are really in every earnings call no change in that.

First we believe our free cash flow will continue to accelerate meaningfully through 'twenty two into 'twenty three 'twenty four and there is no change in what our free cash generation will be in 2022.

We're still confident in that and that free cash flow gives us a lot of flexibility certainly around M&A and as you know we've done well over $3 billion of.

M&A in the last 15 months.

All of that M&A has been oriented in kind of non mortgage if you wanted to use that term, but really kind of core areas of workforce solutions differentiated data.

That's really been clearly our focus is to broaden equifax and you saw the slide that we put in the deck again that we had an investor day about.

Our broader focus.

Into faster growing markets, we don't have.

Competitors that talk about growing into $2 billion government Tam, we don't have competitors. They really talk about growing in the $4 billion talent Tam I think they have focused on the identity and fraud Tam that we're playing in but really a clear focus there and as our cash flow continues to accelerate our priorities are certainly investing in equifax.

Which we're doing through the cloud transformation as you know we're going to complete that.

And then that will free up.

Cash for us to invest more in new products going forward, which should drive our topline but outside of investing in capex, we still view M&A as an important way to do bolt on acquisitions to strengthen the core of Equifax really disciplined around where we want to do with the strength in the core of workforce differentiated data or identity and fraud.

But then there is going to be excess free cash flow from equifax and as our EBITDA continues to grow as we go through 'twenty three 'twenty four we're going to Delever the company and at the right time, we will certainly look at returning.

Some of that cash to shareholders through buyback or through increasing our dividend, we're not ready to do that today, but we are clear on investor day that that's kind of that balance of how we think about our capital allocation framework going forward against the backdrop.

A significant increase in both our.

Free cash flow going forward and our leverage.

Available cash flow available for Leverages, we grow our EBITDA.

Okay. That's helpful. Thanks, guys.

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

From RBC capital markets. Your line is now live.

Thanks for taking my question Mark I, just wanted to go back to the comments that you've made about the <unk>.

Consumer balance sheet, being really healthy, which makes sense, but one of the concerns is that the higher fuel prices inflation. There may be some cracks in the local media income consumers, which could potentially be on consumer lending maybe in the back half of the year I was just wondering based on your conversations with the banks have they indicated any slow down there.

Any color on that Frank around the state of the FTC, but itself.

Yes, we haven't seen it in our looks or we don't expect to see it based on what we see 2022 unfolding.

Certainly inflation is a real challenge fuel prices food prices et cetera, eight 5% is very very high inflation. Some states in the U S are above 10, but at the same time people are working wages are up meaningfully for a lot of wage categories.

So that's a positive and and what I talk about their balance sheets, it's really over the last two years. They couldnt spend much because we were in the Covid pandemic Lockdown and there was a lot of stimulus which is still out there.

A lot of stimulus coming from and again I'm talking about the U S government.

While they are not individual payments a lot of the social services payments.

Some of the some of their requirements have been suspended.

You've seen the administration talking about.

Pausing on student debt collections that helps balance sheets for a lot of consumers that are working out there and a very low unemployment and then when we talk to the banks and you've seen some of their numbers in the last couple of weeks like used credit card originations up 10% Im sorry credit card usage up 10% and.

The bank's balance sheets declined during COVID-19 , so you've got very strong.

Customers, meaning in our financial institutions that need to grow their balance sheets and you've got what I would still argue is.

Fairly strong consumer.

Because of the wage.

Inflation and the fact, they are working and you add the stimulus.

Is balancing out the inflation, but it's certainly something we'll continue to watch going forward.

That's very helpful color Marc.

And then maybe just on the USAA is non <unk> business. The improvement that is expected from the first quarter to second quarter. Obviously provided a lot of the color I was just wondering if you can how much of it is coming from just volume growth that you had existing customers, but also from customers.

Saudi accessing alternative data sets.

As well as potential new wins I was wondering if you could comment on those two the new wins the pipeline that has been as the demand. Obviously, we've continued to see decent demand sort of ultimate data are you seeing more of that.

In the near term.

Yes for sure.

Again on <unk>, we were quite pleased with their core online business was up really slightly above or at our expectations on the online piece, which as you know comes from either market share gains or new solutions that we're delivering that deliver the online the piece that <unk>.

<unk> didn't deliver on was in their batch or.

<unk> management.

Review business there was really just some timing in in March and some of those deals closed in April and so we expect <unk> to.

Continue moving their growth going forward in the second quarter through the rest of the year in non mortgage and we are seeing some.

Good wins in the marketplace, both with the market share gains, we expect from being cloud native providing stronger stability those are going to continue to.

There will be a positive for the <unk> commercial team going forward and as you point out.

Our increasing focus on alternative data in our single data cloud fabric.

As another positive and we're seeing definite traction around the use of alternative data all of our customers are looking for new data solutions to help them drive originations and when you add some of the unique data assets that we have which we believe we are at scale.

Much more than our competitors those are the kind of solutions that the <unk> team are bringing to market through our new products that we're rolling out and just so just some color on just usia's online in the first quarter non mortgage or our <unk> business was up over 10%. So that was good growth.

We saw auto and insurance up high single digits again, very good growth and as Mark mentioned in the script count was up almost 50%, which is identity and fraud. So so we feel good about the way the online business is trending.

And the weakness was in MMS fantastic covered yet.

Sorry about that.

Thanks.

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

Good morning. Thank you. My first question is just on workforce solutions, maybe if you could update us or just.

Walk us through the ability to fix some of the products, we have in the U S and bring them into international markets.

Every international market sort of.

Available to you to penetrate around workforce solutions or sort of just walk us through which markets are more penetrated versus others is that early innings today.

Yes, its definitely early innings, we see kind.

Kind of global market opportunity as you may recall.

Our cloud transformation, we launched workforce solutions businesses in Australia, Canada and in India, We paused on doing any more international Rollouts until we got our cloud stack in place for workforce and then.

About a few months ago actually a month and a half ago, we announced.

Our entry into the U K, where we have our cloud stack in there and we're starting to onboard.

Records from companies and partners in the U K. So those are the four markets we're in today.

We're definitely intending and looking to grow in other markets in the future.

And even in markets, where we don't do business, meaning we don't have credit Bureau businesses as you know we're in 'twenty.

25 countries outside the United States, but we see the opportunity and you think about some of the leverage points. We have number one is our cloud stack, meaning our infrastructure. We spent hundreds of millions of dollars building. This and now we can just move it very easily into a new market.

<unk> is our existing customer or contributor relationships. If you are a big multinational company.

Like a GE and IBM Pik Pik.

A big Industrial company, a bank Thats doing global business and there's a bunch of those in the United States.

We're doing the income and employment verification for them here they like the idea of us doing it for them and all of their global markets. So that's a kind of an opportunity to load records and add add in those different markets and then lastly payroll partners that we have as you know we've got a substantial number of them on exclusive basis. Most of them are exclusive and same thing a handful.

All of those in the U S. Our global and we already have the connections the pipes the relationships with them here in the states. So the ability to do the same thing globally as a leverage point for us. So you should look for us to do more.

And in the scheme of Equifax our workforce.

What's going to move the needle as more of the U S levers that workforce has.

Over the next 2345 years, but you would expect us to and we are investing in some of these longer term opportunities outside the United States like the U K expansion that we did a few weeks ago.

Got it and just my follow up question is just around the cloud transformation I think you said half of your revenues on the cloud maybe if you could talk about.

Maybe you mentioned this already but just timing of when the other 50% of revenue comes on on the cloud and.

And just related to the cloud.

Cost savings are baked into your 2022 guide what does that number again, that's baked in their own cost savings broker.

Sure I'll start and let John jump in.

At year end, we had about 50% of Equifax revenue in the new Equifax cloud, we talked about that in our February call.

By the end of this year 2022, we expect to have substantially completed North America, which is U S and Canada all of the clouds, so that'll be a big jump for us and as you know.

The United States for US revenue wise is approaching 80% of Equifax and then international some of the international markets, we won't complete.

<unk> 23, and there might be some migrations that will complete in 2024, so thats really our runway around completing the cloud and I'll, let John jump in the actual cost savings, but as you know we had some cost saves last year, a bigger number this year. They continue in 'twenty, three and there'll likely be some in 2024, but they are.

Were all embedded in our 500 basis point margin expansion between now and 2025 I think on Investor day, we talked about.

Are those roughly being from the cloud because any change in that and John can talk a little bit about the actual numbers.

Yes, so what we've talked about in the past right is that in.

In terms of transformation investments as you went from 21 to 'twenty two that you would see savings.

On investments net of new product development reinvestment of on the order of 40% to $50 million. That's still correct were still moving forward with that and we also indicated that we would see net cloud savings as we move through 2022 and as Mark said those are embedded in the margin guidance. We gave we didn't give specific dollar values.

But the net cloud savings will be delivering this year as more and more moves onto the cloud our cloud native infrastructure is embedded in the guidance that we gave the updated guidance today is were up a 125 basis points in 2022 relative to 2021.

Got it thank you.

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

Yes. Good morning. Thank you. My first question, maybe you can give us a flavor of the new products that you've rolled out that youre excited about here in the U S. Let's start there please.

So much time do we have we talk about them every every call we have theres, a bunch and I would really.

Focus them in a couple of buckets first as workforce solutions.

<unk> talked about this before if you go back a couple of years workforce solutions.

<unk> they delivered to market were generally around a snapshot of where does someone work today and how much do they make a bunch of attributes, but they were really.

<unk> based in current and so one of the big changes, we've been able to do as a result of the cloud is really leveraged those historical records and whether it's <unk>.

Looking at someone's income and employment over a long timeframe and a mortgage application.

Or looking at their work history in the hiring of talent space.

That trend.

Trended or time based data historical data is incredibly valuable and was.

Very difficult to do pre the cloud transformation. So that's been a that's been a big change in.

Those products are really.

Solving a lot of our customers problems our customers need.

Needed more than just where it is mark work today for certain consumers.

If they have a.

If you're a sales commissioned employee.

My income today might not reflect my annual income because I get my bonus in February .

So having that 12 months data is incredibly valuable and we can sell it at a higher price point using the example of workforce solutions that we would sell at $30 $40 $50 per pole for kind of where does mark work today that historical data, we're able to bring to the marketplace because of its value to our.

Or is it a 150 <unk> hundred 75, $200. So I would say that's a very powerful element of the cloud transformation that allows us to bring new solutions to market and more broadly workforce solutions, because they're further down the path in the cloud they're really taking advantage of that are rolling new products out and I think we talked like in the talent space we.

Added.

2012 month 24.

48 month work history for some jobs the hiring manager wants to see more history, those who are at higher price points, but we're now going to move to product timing around job category.

Meaning if you are a warehouse worker.

Going to need certain types of data, we're going to we're going to develop a one click solution to deliver all of that data for that kind of job and that employee and then someone who has a white collar worker is going to have more education data that has to be a part of that Paul and other data elements. So that's kind of where we're going product wise.

The other bucket I would say that we're excited about is multi data solutions.

And that's really driven by our single data fabric, which is very unique to equifax. We had siloed datasets are competitors. If siloed data sets, we're going to a single data fabric and the ability to combine data and think about the credit file combined with our cell phone utility payment data our wealth data different data.

Elements the cloud allows us to do that and Thats something that our customers want that alternative data because it drives higher predictability.

But it's difficult for them to absorb in pieces and Thats why were going to serve it up in a single data fabric and then in product solutions, where we combine it together so I'd say that's the other bus.

Bucket of solutions and then the last is just we're just different verticals. Today you go back a couple three years ago, we were primarily in financial services, bringing new solutions like <unk> anywhere.

Our employer services business, where we're delivering solutions compliant solutions to HR managers.

As we talked about in talent or government.

Or just faster growing markets and.

Very different than our core.

Our credit Bureau space that really energizing and of course, the focus we have on it we've added a bunch of resources in really 19, 2020 one I have a direct report to my leadership team.

My leadership team as our Chief product Officer, and then the cloud really gives us a lot of leverage to it.

Bring those new products to market.

That's great. My other question is what is embedded in your outlook for the rest of the year for all for the U S for autos credit cards and personal loans I mean, you gave us some good data there how it did in the first quarter.

Second half significantly slow the rest of the year, given the higher interest rate environment.

Think about those three categories the rest of the year. Thank you.

Yes, we don't see any change in those categories.

In 2022 already had some comments around the consumer and we don't think the higher interest rates will impact that.

In cards autos impacted today by supply shortages.

We're dealing with that and the market is I am not sure when thats going to be resolved that's more of an inventory.

Issue, but the underlying consumer in the underlying.

Customer of ours.

And to grow their financing businesses, we don't see any change from where we were a few months ago.

That's it thank you.

Thank you. Our next question today is coming from Simon <unk> from Atlantic Equities. Your line is now live.

Hi, Thanks for taking my question, it's kind of maybe a difficult one to answer.

But.

I was thinking about the pace of outperformance that we've seen from the mortgage revenues in AWS over the last several years.

Can we learn anything from that and use that as a guide to how we should think about the outperformance of the growth.

Non mortgage verification services business really start to take off as in should we expect a much faster pace of growth initially at the outset, maybe even fast because you've got even more records now and then perhaps a foster normalization.

I guess, a more compressed cycle before you get to a more normal level without alcohol.

Yes, that's a complex question Simon.

Let me talk about a couple of things you know the one thing that I.

Always start with and I know you do too is very unique about workforce solutions is the ability to grow their assets their data assets, meaning there are twin records and drive revenue growth and we've talked before when you think about 19% revenue growth in the first quarter.

They were up roughly 19% for the year last year, we've already got a pipeline of additional records those records translate into revenue just because we have the system to system integrations and it just takes our hit rates up so.

That's kind of a base element of their ability to outperform their underlying markets because youre, adding records and then you add on top of that the ability.

To rollout new products drive system to system integrations all of those that we've talked about drive penetration drive usage, those all become levers for them to drive their top line growth.

Top of that when you talk non mortgage as you know they're operating in some underlying macro markets, whether it's talent or.

The government space that are just growing strongly these are kind of 20% type high double digit growth type markets.

Help fuel their non mortgage growth of workforce solutions and I think you know in Investor day, we talked about a 13% to 15% long term revenue growth rate for the business obviously there.

Outgrew that in the first quarter.

Theyre going to outgrow that in 2022, they outgrew that in 'twenty in 2021.

So we see a lot of momentum in the business going forward a lot of levers for growth.

Going forward.

Okay. That's helpful.

And just as a follow up I mean, just getting back to mortgages.

Just kind of curious to the comments made.

You are now bringing your inquiry.

The guidance kind of in line with the outlook provided by the MBA and Fannie Mae.

Previously.

Assume that you weren't doing that.

I was just kind of curious as to the reasons why you werent using those sort of more public forecast. What you saw in your numbers that made you more.

Positive outlooks and and why now.

The time to go to the more extreme outlooks.

When you said yourself that you are nowhere near those trends at this point.

Yes. So just two things first I think what you would have seen over the past several months is obviously MBA Fannie Freddie have also substantially changed their outlooks given that.

<unk> taken them down given the given the significant increase in interest rates and what we've been doing over the past several years I think we've been very open about is we've been we've been taking a look at the markets based on the run rate trends that we have in our own business because we can see inquiries.

And what we started to see and the reason we made the change we did is because we're starting to see that the that the inquiry trends that we were that we can measure we're starting to decline more rapidly. So as we took a look at the information we had and the analysis. We can do we believe we're headed towards the type of down 40% that we talked about which as we do that.

Analysis, we now see is consistent with with where NBA and Fannie are but we think the analysis, we've done and the analysis <unk> done or just more consistent at this point in time I would add the point that we talked about it a couple of times. This morning, but that kind of second half fourth quarter run rate for the mortgage market underlying our new guide 20.

5% below the kind of normal markets Pri.

<unk>.

The Covid pandemic and Thats, a pretty strong stress and that was our intent was to.

Put something that it's very uncertain, how far interest rates going to go how is the fed really going to tame inflation, which they've never done before at this level with employment at this level.

And that's why we decided to do.

Really strong de risk of the underlying mortgage market. But then also have a lot of transparency about how the rest of equifax is operating our strong core growth and actually stronger.

We took our guidance up for the rest of Equifax for the second time this year.

Okay.

Okay.

Well, thanks very much.

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

Hi, Thank you and good morning.

Wanted to spend my two questions on some updates in terms of recent M&A.

Maybe I'll start with accounts I think twice now you mentioned, 50%.

Plus our 50% ish growth.

In that business.

Pretty pretty meaningfully higher than I think the 20% growth that was originally expected when you announced the deal.

Early last year. So if you could spend some time kind of talking about what's going right in that business, where the momentum is and to the extent to which that growth is is based on synergies from from the equifax relationships or the equifax business or if it's just continued momentum in that in that area broadly both both of those would be into.

Two topics I think to cover.

Yes, so we're very bullish about the space first.

Any fraud.

We're really energized about the team the leader that we brought in.

Driving that business.

It's in a space that is growing rapidly. It's the digital macro is very very strong.

There are underlying growth is a big part of that there is some element of synergies, but I would say that those are more on the come meaning some of the product solutions of combining counts in equifax data are more second half oriented.

Just real.

Strong execution and they have a great product.

We've added more resources in the business I think the head count and the business is up something like 20%, 30%, maybe it's more like 30% since we acquired the business. So we're putting more feet on the street, we've got a new commercial leader.

Thats really partnering with the CEO that was the founder of the business that we really like a lot.

We've also given the.

The CEO responsibility for a full identity and fraud business.

So.

He was running count during the 2021 early this year. He has now got responsibility for the whole business and we think it will have a big impact there and really drive the synergies going forward. So we're quite bullish about their market position there.

Pipeline, but it really starts with a.

A space that's very good and we bought a very attractive business that we are making stronger.

That's helpful. Thank you and then maybe a similar question on accuracy.

I think mark in your prepared remarks, you mentioned new.

New customer wins as being part of the growth driver in the first quarter.

Same sort of question is that from equifax relationships or existing momentum at the business and then maybe relatedly are there any kind of big picture learnings from kind of having integrated that business are beginning to integrate that business over the past couple of months that youre already applying within talent solutions market or.

Sure the sectors in which it exists thank you.

Yes, so great questions first on the <unk> business another great business that was there.

Last week in Louisville, where they are headquartered with with the team we've got a great leader, there and a great team.

The growth there do really delivering as primarily from their own momentum.

We only acquired in mid October . So there are only a few months in we're in the throes of integrating and bringing them.

Into our <unk>.

<unk> <unk>.

Technology, and our cloud data fabric in the other elements on it and it's another space. So they are winning new state contracts. They didn't have that were in their pipeline when we acquired them and just executing the synergies that we're counting on.

Really start kicking in in the second half in 'twenty, three and probably likely into 2024, and we really like the unique data that criminal justice data that they have is very very unique.

The instant decisioning from the talent space.

Plays in their World and then of course in social services.

It's also used as far as with regards to lessons learned.

I sure wouldn't want to be doing these a number of acquisitions, if we werent the cloud.

It would be very hard to.

To integrate these with the pace that we're going to be doing it. If we were still on our legacy environment and that gives us a lot of confidence around doing acquisitions, and we're always learning about how we can do the integrations more effectively.

But we've got some pretty good muscle around that because it's not new for us we've been doing acquisitions for a long time long before I joined four years ago.

At Equifax.

We're getting better at it I think it always looking to improve it but the cloud gives us a lot of confidence.

Doing M&A and I hope you agree that we're being very disciplined around the kind of businesses, we want to buy.

Our criteria and M&A is very clear we want to grow we want to buy businesses that are growing faster than equifax. So they are accretive to our growth rates, we want to buy businesses that are going to.

Deliver margin accretion with Equifax and most importantly, we want to buy businesses that strengthened the core of equifax, whether it's around differentiated data or around the employer services business as you point out.

Look at all of our acquisitions. They are checking those boxes, and then of course identity and fraud around counters, just a space, we'd like to get larger in.

If you look at our acquisitions so far this year.

Efficient higher it makes us stronger in that employer solutions space.

We want to be bigger in but also delivers more records to the workforce solutions business as they add new customers.

Very helpful. Thank you.

Thank you. Our next question is coming from George <unk> from Cowen. Your line is now live.

Great. Thanks for taking my questions guys, two quick ones and I'll ask them upfront just first a point of clarification.

John on.

Fms It sounds again like it was just sort of a timing issue you've got good visibility now into the second quarter. Your outlook has not changed at all for the year within that segment can you, maybe just kind of remind us.

How you were thinking about that growth.

Fms on a full year basis.

And then secondarily.

$75 million of outperformance if you will from the core that's offsetting some of these mortgage headwinds.

That essentially all <unk>.

AWS I know you talked about some NPI benefits as well coming in but is there any part of that outperformance that ties into USAF and if so what verticals or areas are performing ahead of your expectations. Thanks guys.

So I'll do the second one John if you can take.

The first one on Fms, which is.

Easy one but on the $75 million the bulk of that for sure is workforce solutions, but international is also a piece of that international is performing exception, while usia's I think is.

Kind of aligned with where we started the year, we don't see any change there other performing very very well the outperformance.

As a piece of that is from international but the bulk is workforce and it's all the levers we talked about on the call. This morning.

And in terms of non mortgage really in USAF and.

And we still expect them to perform and 6% to 8% right. So we believe in total non mortgage which is both the online and the Fms portions should still delivering that 6% to 8% range George.

Thank you. Our next question is coming from Heather <unk> from Bank of America. Your line is now live.

Hi, Thank you for taking my question.

Back to AWS.

You maintained your outlook for 30% outperformance versus the mortgage market.

I'd love to get your thoughts.

And that's sort of I guess, the worse than expected mortgage market environment sort of your confidence in sort of that outperformance.

And kind of why not.

One for one.

Also.

Your ability to take price.

Premium products.

Okay.

Yes, there is a number of lever there is levers there that drives the workforce solutions outperformance broadly.

All of their markets, but we'll focus your question on mortgage so start with records.

We have pretty good visibility around our record growth in.

We've talked about the fact that we were up 19 in the first quarter, we talked about we've got.

Three now for.

Larger payroll processors coming online in 2022, so and as you know that record growth translates into.

Higher hit rates and revenue. So that's kind of a big piece of that second is price, we did or we do our pricing actions late in the year. They go into effect in January and their effect through the year. So we know what our prices on a year over year basis, that's pretty well.

Nailed down.

The new product Rollouts, you saw our momentum in workforce solutions with our mortgage products that we rolled out in 2021.

Those were rolled out during the year, we get the full year benefit of those.

Many of them were rolled out in the third and fourth quarter. So we have kind of visibility on the take rate and the usage of those because they are solving specific solution. So we have pretty good visibility around that.

There is visibility around customer wins that were bringing online remember 60% of mortgages are still.

Done in paper pay stubs.

We have visibility around Sis.

System to system integrations that we're working with customers that are not system to system. Their web based so it's another element of our visibility.

Around that element.

And then we have trended data around how often that the.

Twin datasets being pulled.

As you know Thats increased in recent years to two Poles, we don't see any change in that.

So that's kind of a deal and what did I Miss John as far as.

And so our visibility I think you've covered it.

Because we were down market was down 25% in the first quarter and they outperformed by approaching 30% or 27% rate. So so we feel like even in a down market. We have already seen similar to the down markets. We saw late last year. They performed very very well we know it's much deeper as we go forward, but as Mark said, the big driver is records and penetration, which they continue.

To deliver on.

Great. Thank you and then as a follow up on the immigration you mention how much of your revenue is coming from.

I'm curious.

On a penetration basis on the mortgage business.

Kind of where you are in the customer base.

Yeah.

And Thats. Your question is around what portion of our mortgage customers are in the cloud environment I'm not sure I heard it right.

Sorry, this incentive system integration.

Sorry, yes, yes.

Hey, Heather I think actually what we're gonna posted deck here in about an hour or two and on that there'll be an update to that number so great.

Yes, 11 o'clock, sorry about that yes.

Great.

Thanks.

Thank you. Our next question is coming from Jeff Mueller from Baird. Your line is now live.

Yes. Thank you just one.

Wanted to see if youre willing to share any data around NPI uptake for clients that have completed their migration to your data cloud. It sounds like you have enough of the client base migrated at this point that we would start.

I have some data.

Seeing an explicit acceleration in NPI uptake or not so would love any data points on it. Thank you.

That's a great question, Jeff one that I don't have John is shaking. His head also that he doesn't have but it's one that I am going to run down.

I definitely want to understand it I think intuitively, we find that there is some lift there.

But let us run it down.

And given that the percentage of the percentage of products that we're delivering.

Substantially above half as we've talked about that are running on the new cloud infrastructure I would expect it's probably a pretty good number.

Thank you.

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

Hi, Thank you very much for squeezing me in over here.

Mark you had mentioned when there was a question about some of the levers in U S. I has to offset mortgage one of the things you mentioned was price I don't usually hear that too much in U S. I S. I hear that much more about.

The work number and things like that is there.

Is that a consistent.

Pricing uplift every year like you can get in other parts of the market.

Of your business or is there pushback from clients over there maybe you can just kind of touch on that a little bit.

I would say, there's always pushback from clients when it comes to price.

But we've been very clear and we probably more often talk about price at workforce solutions, because they just have more pricing power.

More unique data asset and our credit file, but <unk> pretty regularly does price increases meaning.

Meaning on an annual basis and there is some element of price there, but it's not at the same scale or leverages our workforce.

Okay. So there is there is consistent price lift even though even on the on the basic credit file type stuff is what youre, saying.

In particularly in mortgage that's a place where we have.

Historically done kind of consistent price increases in U S.

And some of the other verticals.

We may take price up, but then have concessions that happened. So the pricing power is not as strong in some of the other verticals.

Got it and then.

One of the things that.

<unk>.

This is kind of a competitive type question, but.

One of the things that have occurred out in the market is that theres competitors trying to get in in terms of building their own databases.

Susan for income information, but you are incentive clients to keep.

Equifax at the top of the waterfall and I'm wondering like how do you go about doing that if someone else is coming in with a lower price point.

Yes.

Your question is more around customers versus obtaining records or is it both.

Well, it's really like if you are a customer that can potentially use.

Much less effective database, but at a much lower price point like you said the strategy from the competitor is to go ahead and say use US first and then if you can't get it at the lower price then move on to Equifax. So.

I've heard from some customers that equifax is aware of that obviously has some kind of strategy, where you can incent the customer to keep equifax at the top of the waterfall and I was just wondering how that works.

I guess, our view of the marketplaces that our solution in the verticals, we participate in for income and employment data is.

Just competitively, meaning there there are what we see in posted market prices. We don't see prices that are lower than equifax. So I don't think theres a price advantage there what we do with some customers when.

When we talk top of waterfall, it's really to have them hit our database.

In our system to system basis versus doing manual effort. So we've had some commercial incentives to move customers from doing manual searches around income and employment data to hit Equifax first and part of that is is that we've really had a very significant increase in our coverage over the last couple.

Three years you go back three years ago, we were below 50% now we're at 65 approaching 70%. So it was really more some commercial incentives to get customers to understand that they can get a hit very quickly from equifax, but we haven't seen.

What you described is.

US having to commercially get in front of someone else, who has a different solution to equifax.

Okay, because there really aren't any other solutions at scale.

Alright very good.

Small.

I know they are small, but I mean, some of those that's what I was talking about some of them being out there and they are very small, but thats, how theyre trying to get a tested into the marketplace and so I was wondering about that.

And again, we haven't we haven't seen any commercial pressure from that.

Very very small.

It would surprise us that a customer would want to change a waterfall, but given the system effort involved in the <unk>.

Low hit rates and again, there is not a pricing advantage our cost advantage for them.

Okay, great. Thank you very much.

Thank you. Our next question is coming from Faiza <unk> from Deutsche Bank. Your line is now online.

Great. Thank you and good morning.

I just I know, we've covered a lot of ground, but I just wanted to ask about AWS EBITDA margins, just given the strong growth that youre seeing on the top line I would've expected a little bit more flow through on the margin side and I know you've talked about acquisitions, but I was hoping for a bit more.

Color, maybe you can give us what organic margins were in that business.

Or is there like a mix impact as it relates to various vertical like are the new products at a lower margin just a little bit more color around how we should think about the drivers.

Margins there.

Yeah. So we had really nice margin improvement right from fourth to first.

And we are and we are certainly.

<unk> some of the impact from the recent acquisitions, which the acquired businesses generally just want to have margins that are as accretive as ours. So you are seeing that in the first quarter and we don't really disclose on inorganic and organic EBITDA margin, but when.

We feel very good about the almost 55% margins that we're seeing.

And we think it's really an outstanding performance, we indicated I think we expect them to be 54% for.

For the full year. So we feel very good about about the trend in AWS margins and obviously they are investing in new products to drive faster growth. So we certainly encourage that but but we think operating at this range of $54 to 55% margins is outstanding.

Okay. So there is no mix impact that we should think about by vertical.

Alright.

We certainly have different margin levels for different products generally speaking most of the verify our products have relatively similar margins there are different margin profiles between and verify or an employer, but.

But again I think generally speaking 54% to 55% margin is very very strong we feel very good about them.

Understood. Thank you.

Okay.

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

We just wanted to thank everyone for participating if you have more questions. Please reach out to Investor relations.

Thank you very much.

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.