Q2 2024 Equifax Inc Earnings Call

Operator: Hello, and welcome to the Equifax Inc. Q2 2024 earnings conference call. If anyone should require operator assistance, please press star zero on your telephone keypad.

Speaker Change: Hello and welcome to the Equifax Inc Q2 2024 Earnings Conference Call. If anyone should require operator assistance, please press star zero on your telephone keypad.

Operator: A question and answer session will follow the formal presentation. We ask that you please limit yourselves to one question and one follow-up. You may be placed into the question queue at any time by pressing star 1 on your telephone.

Speaker Change: A question and answer session will follow the formal presentation. We ask that you please limit yourselves to one question and one follow-up. You may be placed into question queue at any time by pressing star 1 on your telephone keypad.

Operator: As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Trevor Burns, Senior Vice President, Head of Corporate Investor Relations. Please go ahead, Trevor.

Speaker Change: As a reminder, this conference is being recorded.

Trevor Burns: It's now my pleasure to turn the call over to Trevor Burns, Senior Vice President, Head of Corporate Investor Relations. Please go ahead, Trevor. Thanks, and good morning. Welcome to today's conference call. I'm Trevor Burns. With me today are Mark Begor, Chief Executive Officer, and John Gamble, Chief Financial Officer.

Trevor Burns: Thanks, and good morning. Welcome to today's conference call. I'm Trevor Burns.

Trevor Burns: With me today are Mark Begor, Chief Executive Officer, and John Gamble, Chief Financial Officer. This call is being recorded. An archive of the recording will be available later today in the IR Calendar section of the News and Events tab on our Investor Relations website. During the call, we've been making reference to certain materials that can also be found in the presentation section of the News and Events tab on our Investor Relations website. These materials are labeled 2Q2024 earnings conference call.

Speaker Change: Today's call is being recorded. An archive of the recording will be available later today in the IR Calendar section of the News and Events tab at our Investor Relations website.

Speaker Change: During the call, we've been making reference to certain materials that can also be found in the presentation section of the News and Events tab at our IR website. These materials are labeled 2Q2024, Earnings Conference Call.

Trevor Burns: Also, we will be making certain forward-looking statements, including third quarter and full year 2024 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 2023 Form 10-K and subsequent filings. We'll also be referring to certain non-GAAP financial measures, including adjusted EPS and adjusted EBITDA, which will be adjusted for certain items that affect the comparability of our underlying operational performance.

Speaker Change: Also, we will be making certain forward-looking statements, including third quarter and full year 2024 guidance.

Speaker Change: to help you understand Equifax and its business environment. These statements involve a number of risks and certainties and other factors that could cause actual results to differ materially from our expectations.

Speaker Change: Certain risk factors that may impact our business are set forth in our filings with the SEC, including our 2023 Form 10-K and subsequent filings.

Speaker Change: who also has been referring to certain non-GAAP financial measures including adjusted EPS, adjusted EBITDA.

Speaker Change: which will be adjusted for certain items that affect the comparability of our underlying operational performance.

Trevor Burns: 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 input tab on our IR website. Now, I'd like to turn it over to Mark.

Speaker Change: These non-GAAP measures are detailed in reconciliation tables, which are included with our earnings release.

Speaker Change: and can be found in the financial results section of the financial info tab at our IR website. Now I'd like to turn it over to Mark.

Mark W. Begor: Before I cover our strong second-quarter results, I want to update you on the significant progress in our cloud transformation. Over the next several weeks, USIS will complete the migration onto the cloud data fabric of all customers and services for their consumer credit and telco and utilities exchanges, which is a huge milestone for Equifax. Along with the EWS work number exchange, which we completed migrating to the Equifax cloud over two years ago, we will have our three largest data exchanges in the new Equifax cloud.

Mark: Before I cover our strong second quarter results, I want to update you on the significant progress in our cloud transformation.

Mark: Over the next several weeks, USIS will complete the migration onto the cloud data fabric of all customers and services for their consumer credit and telco and utilities exchanges, which is a huge milestone for Equifax.

Mark: Along with the EWS work number exchange, which we completed migrating to the Equifax cloud over two years ago, we will have our three largest data exchanges in the new Equifax cloud.

Mark W. Begor: As of the end of July, we expect over 80% of Equifax revenue will be in the Equifax cloud with about 90% of our revenue in the cloud by year end. The cloud migrations have been a huge effort across Equifax over the past four plus years. We expect to have a significant competitive advantage as we pivot from building to leveraging the cloud, which will allow us to fully focus on growth, innovation, new products, and AI going forward.

Mark: As of the end of July , we expect over 80% of Equifax revenue will be in the Equifax cloud with about 90% of our revenue in the cloud by year end.

Mark: The cloud migrations have been a huge effort across Equifax over the past four plus years.

Mark: We expect to have a significant competitive advantage as we pivot from building to leveraging the cloud that will allow us to fully focus on growth, innovation, new products, and AI going forward.

Mark W. Begor: Pleading the USIS cloud and expanding efx.ai, along with continued expansion of our differentiated data assets, will accelerate innovation and new products at USIS that will drive our top and bottom lines. We now have streamlined access to our proprietary data through the Data Fabric, which will accelerate new product development.

Mark: Completing the USIS cloud and expanding EFX.AI along with continued expansion of our differentiated data assets will accelerate innovation and new products at USIS that will drive our top and bottom line.

Mark: We now have streamlined access to our proprietary data through the Data Fabric, which will accelerate new product development.

Mark W. Begor: We also expect to reduce product development times resulting in faster time to market for our new solution. USIS has already begun to see their new product vitality index accelerate. USIS is deploying Equifax proprietary explainable AI along with Google Vertex AI across Ignite, our global analytics platform, and Interconnect, our global decisioning platform. For USIS, Vertex AI enables faster and more predictive model development on our Ignite platform.

Mark: We also expect to reduce product development times, resulting in faster time to market for our new solutions.

Mark: USIS has already begun to see their new product vitality index accelerate.

Mark: USIS is deploying Equifax proprietary explainable AI along with Google Vertex AI across Ignite, our global analytics platform, and InterConnect, our global decisioning platform.

Mark: For USIS, Vertex AI enables faster and more predictive model development on our Ignite platform.

Mark W. Begor: The USIS cloud will deliver always-on stability and faster data transmission that will give Equifax a competitive advantage in today's digital market driving share gains. We're also driving faster data ingestion and analytics with greater processing power with the new Equifax cloud. And most importantly, completing the cloud is going to free up the USIS team to fully focus on growth and expanding innovation, new products, data sets, and markets. With both USIS and EWS in the cloud, we'll also be able to begin the development of new products that integrate twin income and employment data with USIS credit data solutions for mortgage, auto, cards, and P loans that only Equifax can deliver.

Mark: The USIS Cloud will deliver always-on stability and faster data transmission that will give Equifax a competitive advantage in today's digital market, driving share gains.

Mark: We're also driving faster data ingestion and analytics with greater processing power with the new Equifax cloud. And most importantly, completing the cloud is going to free up the USIS team to fully focus on growth and expanding innovation, new products, data sets, and markets.

Mark: With both USIS and EWS in the cloud, we'll also be able to begin development of new products that integrate twin income and employment data with USIS credit data solutions for mortgage, auto, cards, and P-loans that only Equifax can deliver.

Mark W. Begor: Leading the US IS consumer and telco, and utility migrations to the Equifax cloud allows us to start decommissioning legacy on-premise systems in the third quarter, supporting our goal of spending reductions in 2024 that will improve operating margins and lower the capital intensity of our business. In the second quarter, we also made substantial progress on our international cloud transformation activities. Canada is expected to complete its consumer credit exchange customer migrations to DataFabric next month.

Mark: Leading the US-IS consumer and telco and utility migrations to the Equifax cloud allows us to start decommissioning legacy on-prem systems in the third quarter, supporting our goal of spending reductions in 2024 that will improve operating margins and lowering the capital intensity of our business.

Mark: In the second quarter, we also made substantial progress on our international cloud transformation activities.

Mark: Canada is expected to complete their consumer credit exchange customer migrations to DataFabric next month.

Mark W. Begor: Europe continues to make significant progress with the goal of completing Spain's consumer credit exchange migration to the data fabric and decommissioning of their legacy systems by year end, and the UK is on schedule to complete cloud migrations and decommissioning in the first half of 2025. And in Latin America, we've completed the Argentina and Chile cloud migrations and expect to make substantial progress on several additional Latin American countries in the second half of this year.

Mark: Europe continues to make significant progress with the goal of completing Spain's consumer credit exchange migration to the data fabric and decommissioning of their legacy systems by year-end, and the UK is on schedule to complete cloud migrations and decommissioning in the first half of 2025.

Mark: And in Latin America, we've completed the Argentina and Chile cloud migrations and expect to make substantial progress on several additional Latin American countries in the second half of this year.

Mark W. Begor: It's energizing to be approaching the finish line of our cloud transformation. We're entering the next chapter of the new Equifax as we pivot from building the new Equifax cloud to leveraging our new cloud capabilities to drive our top and bottom lines. Now turning to slide four, we had a strong second quarter with reported revenue just over $1.43 billion, up 9%, and just over the top end of our April guidance. Adjusted EBITDA margins at 32% were in line with our expectations, and adjusted EPS at $1.82 per share was well above the high end of our April guidance.

Mark: It's energizing to be approaching the finish line of our cloud transformation.

Speaker Change: We're entering the next chapter of the new Equifax, as we pivot from building the new Equifax cloud. We had a strong second quarter with reported revenue just over $1.43 billion, up 9%, and just over the top end of our April guidance.

Speaker Change: Adjusted EBITDA margins at 32% were in line with our expectations and adjusted EPS at $1.82 per share was well above the high end of our April guidance.

Speaker Change: Our global non-mortgage businesses, which represent about 80% of total Equifax revenue in the quarter, had strong 13% constant currency revenue growth, which is above the top end of our 8 to 12 long-term growth framework.

Mark W. Begor: Our global non-mortgage businesses, which represent about 80% of total Equifax revenue in the quarter, had strong 13% constant currency revenue growth, which is above the top end of our 8 to 12 long-term growth framework. Non-mortgage organic constant currency revenue growth was at 9% in the quarter and also at the top end of our 7 to 10% organic revenue growth framework. This performance was driven by 20% non-mortgage growth in EWS Verifier led by strong 30% growth in government and talent that was up over 13%. International delivered 28% constant dollar revenue growth and strong 12% organic growth, led by strong growth in Latin America and Europe.

Speaker Change: Non-mortgage organic constant currency revenue growth was at 9% in the quarter and also at the top end of our 7 to 10% organic revenue growth framework.

Speaker Change: This performance was driven by 20% non-mortgage growth in EWS Verifier, led by strong 30% growth in government and talent that was up over 13%.

Speaker Change: International delivered 28% constant dollar revenue growth and strong 12% organic growth led by strong growth in Latin America and Europe .

Speaker Change: USIS non-mortgage revenue growth of 1% was in line with last quarter and somewhat weaker than our expectations.

Mark W. Begor: U.S. non-mortgage revenue growth of 1% was in line with last quarter and somewhat weaker than our expectations. We expect to see accelerating growth in USIS non-mortgage revenue as we complete the U.S. consumer cloud migration later this month. Total U.S. mortgage revenue was up 4% in the quarter. The growth in mortgage revenue was driven by USIS, where mortgage revenue was up a strong 27% and consistent with our expectations. The strong growth in USIS Mortgage reflects the continued benefit from strong vendor pass-through pricing actions and performance in our new mortgage pre-qualification products. EWS mortgage revenue was down just under 12%, also consistent with our expectations.

Speaker Change: We expect to see accelerating growth in USIS non-mortgage revenue as we complete the U.S. consumer cloud migration later this month.

Speaker Change: Totally, U.S. mortgage revenue was up 4% in the quarter. The growth in mortgage revenue was driven by USIS, where mortgage revenue was up a strong 27% and consistent with our expectations.

Speaker Change: The strong growth in USIS Mortgage reflects the continued benefit from strong vendor pass-through pricing actions and performance in our new mortgage pre-qual products.

Speaker Change: EWS mortgage revenue was down just under 12% and also consistent with our expectations.

Speaker Change: Equifax also had another strong quarter of new product innovation with a vitality index of almost 13% above our 10% frame for 2024 guidance and our long-term 10% vitality framework.

Mark W. Begor: Equifax also had another strong quarter of new product innovation with a vitality index of almost 13% above our 10% frame for 2024 guidance and our long-term 10% vitality framework. The vitality was up 350 basis points sequentially from broad-based execution across all of our business units, and EWS was particularly strong with a 17% vitality. Turning to slide 5, Workforce Solutions revenue is up 5% and well above our expectations. Non-mortgage verification services revenue delivered very strong 20% growth of 500 basis points sequentially and well above our expectations.

Speaker Change: The vitality was up 350 basis points sequentially from broad-based execution across all of our business units, and EWS was particularly strong with a 17% vitality.

Speaker Change: Turning to slide 5, workforce solutions revenue is up 5% and well above our expectations.

Speaker Change: Non-mortgage verification services level revenue delivered very strong 20% growth of 500 basis points sequentially and well above our expectations.

Speaker Change: Government had another outstanding quarter with very strong 30% revenue growth from continued growth and penetration in their big $5 billion TAM.

Mark W. Begor: The government had another outstanding quarter with very strong 30% revenue growth from continued growth and penetration in their big $5 billion TAM. Government revenue grew sequentially from strong growth in state revenues despite the substantial completion at the end of March of the post-COVID CMS initial redetermination.

Speaker Change: Government revenue grew sequentially from strong growth in state revenues despite the substantial completion at the end of March of post-COVID CMS initial redeterminations.

Speaker Change: We expect continued strong government growth over the medium and long term in workforce solutions.

Mark W. Begor: We expect continued strong government growth over the medium and long term in workforce solutions. Talent Solutions revenue was up a strong 13% in the quarter, up 17 percentage points sequentially and well above our expectations. Talent Solution volumes improved sequentially, and we saw very strong growth in our Insights incarceration data products in the Talent Vertical. Based on data through May, EWS Talent Solutions outperformed the BLS white-collar hiring market by approximately 19 percentage points from new records, new products, and penetration into the vertical.

Speaker Change: Talent Solutions revenue is up a strong 13% in the quarter, up 17 percentage points sequentially, and well above our expectations.

Speaker Change: Talent solution volumes improved sequentially and we saw a very strong growth in our insights and incarceration data products in the talent vertical.

Speaker Change: Based on data through May, EWS Talent Solutions outperformed the BLS white-collar hiring markets by approximately 19 percentage points from new records, new products, and penetration into the vertical.

Speaker Change: EWS mortgage revenue was down just under 12% and in line with our April guidance.

Mark W. Begor: EWS mortgage revenue was down just under 12% and in line with our April guidance. Quinn increases in the second quarter were down 18% and consistent with the down 19% we discussed with you in April. Twin inquiries continue to be weaker than USIS credit inquiries as buyers continue to have difficulty completing home purchases.

Speaker Change: When increase in the second quarter were down 18% and consistent with the down 19% we discussed with you in April .

Speaker Change: Twin Inquiries continue to be weaker than USIS Credit Inquiries as buyers continue to have difficulty completing home purchases.

Speaker Change: EWS total mortgage revenue outperformed twin inquiries by over 6%. We expect EWS mortgage revenue to benefit significantly in the 3rd and 4th quarters from the significant growth in twin records already delivered late in the 2nd quarter and from planned additions in the 3rd and 4th quarter.

Mark W. Begor: EWS total mortgage revenue outperformed twin inquiries by over 6%. We expect EWS mortgage revenue to benefit significantly in the third and fourth quarters from the significant growth in twin records already delivered late in the second quarter and from planned additions in the third and fourth quarters. EWS consumer lending revenue was up 8% from strong double-digit growth in P loans and debt management and high single-digit growth in auto. Employer services revenue was down 11%, principally from lower ERC revenue.

Speaker Change: EWS consumer lending revenue was up 8% from strong double-digit growth in P loans and debt management and high single-digit growth in auto.

Speaker Change: Employer services revenue was down 11% principally from lower ERC revenue. Excluding ERC, revenue was lower than expected at down 2% due to lower WOTC revenue as we talked about in April , partially offset by positive ACA revenue growth.

Mark W. Begor: Excluding ERC, revenue was lower than expected at 2% due to lower WOTC revenue, as we talked about in April, partially offset by positive ACA revenue growth. We expect employer revenue to return to growth in the fourth quarter. Workforce Solutions' EBIT adjusted EBITDA margins of 53% were up 170 basis points sequentially and continue to be very strong from non-mortgage verifier revenue growth and good cost execution, while we continue to invest in new products, expand in high-growth verticals like government and talent, and grow our twin records.

Speaker Change: We expect employer revenue to return to growth in the fourth quarter.

Speaker Change: Workforce Solutions adjusted EBITDA margins of 53%.

Speaker Change: We're up 170 basis points sequentially and continue to be very strong from non-mortgage verifier revenue growth and good cost execution, while we continue to invest in new products, expand in high-growth verticals like government and talent, and grow our twin records.

Speaker Change: Before moving on to USIS, I want to acknowledge the significant contribution of Rudy Ploder made to EWS and Equifax over the last 20 years.

Mark W. Begor: Before moving on to USIS, I want to acknowledge the significant contribution of Rudy Ploder to EWS and Equifax over the last 20 years. Under his leadership, EWS revenue grew from about $900 million in 2019 to $2.3 billion last year, and he has positioned EWS for strong growth above market, leveraging the Equifax cloud. We're super energized to have Chad Borton, who joined us in May, leading Workforce Solutions.

Speaker Change: Under Rudy's leadership, EWS revenue grew from about $900 million in 2019 to $2.3 billion last year, and has positioned EWS for strong, above-market growth, leveraging the Equifax cloud.

Speaker Change: We're super energized to have Chad Borton who joined us in May leading Workforce Solutions.

Speaker Change: Chad's broad financial service experience, proven executive leadership, customer focus and regulatory depth will be a big asset for EWS as they continue to drive above market growth.

Mark W. Begor: Chad's broad financial service experience, proven executive leadership, customer focus, and regulatory depth will be a big asset for EWS as they continue to drive above-market growth. Turning to slide six, we continue to see very strong revenue growth in our EWS government vertical, with 30% growth in the quarter and above our expectations. On the left side of the slide, we provided some of the federal agencies we are supporting with EWS, digital income, employment, and incarceration data that accelerate the time to delivery needed to deliver needed social service benefits to over 90 million Americans and help government agencies ensure program integrity. A win-win for all parties.

Speaker Change: Turning to slide 6, we continue to see very strong revenue growth in our EWS government vertical with 30% growth in the quarter and above our expectations.

Speaker Change: On the left side of the slide, we provided some of the federal agencies we are supporting with EWS, digital income, employment, and incarceration data that accelerate the time to delivery needed to deliver needed social service benefits to over 90 million Americans.

Speaker Change: and Help Government Agencies Ensure Program Integrity, a win-win for all parties.

Speaker Change: In the middle of the slide you see the substantial progress our EWS government vertical has made in a short time frame penetrating that $5 billion TAM with a three year CAGR of over 50%.

Mark W. Begor: In the middle of the slide, you see the substantial progress our EWS government vertical has made in a short time frame, penetrating that $5 billion TAM with a three-year CAGR of over 50%. We expect the EWS government vertical to continue to make significant progress in the government vertical from additional sales resources at the federal and individual state capital levels, strong record growth, new product rollouts, leveraging our differentiated incarcerated data, incarceration data, and system-to-system integrations enabled by our cloud native technology that makes our solutions easier to consume. EWS continues to help federal, state, and local government agencies improve the consumer experience and their own operating efficiency from the application and authentication phases to redetermination and recovery processes.

Speaker Change: We expect EWS government to continue to make significant progress in the government vertical from additional sales resources to federal and individual state capital level.

Speaker Change: Strong Record Growth, New Product Rollouts Leveraging our Differentiated Incarceration Data, and System-to-System Integrations enabled by our cloud-native technology that makes our solutions easier to consume.

Speaker Change: EWS continues to help federal, state, and local government agencies improve the consumer experience and their own operating efficiency from the application and authentication phases to redetermination and recovery processes.

Speaker Change: The strength of the EWS government vertical is again clear in the quarter and we expect strong future revenue growth in this business in 2025 and beyond.

Mark W. Begor: The strength of the EWS government vertical was again clear in the quarter, and we expect strong future revenue growth in this business in 2025 and beyond. Turning to slide 7, EWS had another strong quarter of new record additions, signing agreements with 4 new strategic partners that will contribute over 3 million records collectively to the Twin Database. Our continued success in expanding partnerships is a testament to EWS's ability to deliver the highest levels of client service through technology, data security and accuracy, and operational excellence for our partners and their end customers.

Speaker Change: Turning to slide 7, EWS had another strong quarter of new record additions, signing agreements with 4 new strategic partners that will contribute over 3 million records collectively to the Twin Database.

Speaker Change: Our continued success in expanding partnerships is a testament to EWS's ability to deliver the highest levels of client service from technology, data security and accuracy, and operational excellence for our partners and their end customers.

Speaker Change: We expect these new partnerships to come online and begin generating revenue for workforce solutions in the fourth quarter. In the quarter, EWS added 8 million active records to the Twin Database, ending the quarter with 180 million active records, up a strong 12%.

Mark W. Begor: We expect these new partnerships to come online and begin generating revenue for workforce solutions in the fourth quarter. In the quarter, EWS added 8 million active records to the twin database, ending the quarter with 180 million active records, up a strong 12% on 132 million unique individuals.

Speaker Change: on 132 million unique individuals.

Speaker Change: Total records are now 695 million and we're up 10% versus last year.

Mark W. Begor: Total records are now $695 million, and we're up 10% versus last year. At 132 million unique individuals, we have plenty of room to grow the twin database towards the TAM of 225 million income-producing Americans. EWS is also making very good progress building a pipeline of pension and 1099 contributors, as well as with HR software companies in partnerships, and they expect to close partnerships in the second half of the year as we continue to focus on expanding the twin database.

Speaker Change: At 132 million unique individuals, we have plenty of room to grow the twin database towards the TAM of 225 million income-producing Americans.

Speaker Change: EWS is also making very good progress building a pipeline of pension and 1099 contributors.

Speaker Change: As well as with HR software companies in partnerships, and they expect to close partnerships in the second half of the year as we continue focus on expanding the Twin Database.

Speaker Change: Turning to slide 8, USIS revenue was up 7%, solidly within our long-term revenue growth framework of 6-8%.

Mark W. Begor: Turning to slide 8, USIS revenue was up 7%, solidly within our long-term revenue growth framework of 6% to 8%. USIS mortgage revenue grew 27% and was in line with our April guidance. Mortgage Credit Inquiries, while continuing to be down significantly year-over-year at down 13%, are largely in line with our April guidance. Despite the modest reduction in mortgage rates we've seen over the last several weeks, we have not seen an improvement in mortgage market inquiries, likely due to continued low new home inventory levels.

Speaker Change: USIS mortgage revenue grew 27% and was in line with our April April guidance.

Speaker Change: Mortgage credit inquiries, while continuing to be down significantly year over year at down 13%, were largely in line with our April guidance.

Speaker Change: Despite the modest reduction in mortgage rates we've seen over the last several several weeks, we have not seen an improvement in mortgage market inquiries likely due to continued low new home inventory levels.

Speaker Change: Consistent with the first quarter, the strong pricing environment, along with the strength of our pre-qual products, drove the very strong mortgage revenue growth and outperformance.

Mark W. Begor: Consistent with the first quarter, the strong pricing environment, along with the strength of our prequalification products, drove very strong mortgage revenue growth and outperformance. At $143 million, mortgage revenue was about 30% of total USIS revenue in the quarter. However, total non-mortgage revenue, at 1%, was below our expectation of 2% growth.

Speaker Change: At $143 million, mortgage revenue was about 30% of total USIS revenue in the quarter.

Speaker Change: Total non-mortgage revenue at up 1% was below our expectation of 2% growth.

Speaker Change: We saw strong growth in consumer solutions and financial marketing services, which were partially offset by a decline in USIS B2B online revenue.

Mark W. Begor: We saw strong growth in consumer solutions and financial marketing services, which were partially offset by a decline in USIS B2B online revenue. We believe growth in the second quarter was negatively impacted by the US team's broad-based focus on completing customer cloud migrations, which likely dampened some of the new business activity we were expecting. USIS B2B online non-mortgage revenue was down about 4% and below our expectations.

Speaker Change: We believe growth in the second quarter was negatively impacted by the U.S. team's broad-based focus on completing customer cloud migrations, which likely dampened some of the new business activity we were expecting.

Speaker Change: USIS online B2B non-mortgage revenue was down about 4% and below our expectations.

Speaker Change: Consistent with trends from the first quarter, we saw a continuation of tight credit conditions which impacted the auto market as well as the broader FI vertical.

Mark W. Begor: Consistent with trends from the first quarter, we saw a continuation of tight credit conditions, which impacted the auto market as well as the broader FI vertical. Auto was also impacted by a software supplier system outage that we all read about. USIS saw double-digit declines in third-party bureau sales and, to a lesser extent, low single-digit declines in telco and auto.

Speaker Change: Auto was also impacted by a software supplier system outage that we all read about.

Speaker Change: USIS saw double-digit declines in third-party bureau sales and a lesser extent low single-digit declines in telco and auto.

Speaker Change: These declines were partially offset by growth in the broader FI market and in insurance.

Mark W. Begor: These declines were partially offset by growth in the broader FI market and in insurance. ID and fraud were also below our expectations, as was auto. Financial Marketing Services, our B2B offline business, was up 7%. Marketing revenue was up 4%, primarily due to growth in pre-screen marketing. Our pre-screen quarterly trends have been fairly consistent with growth coming from large FIs and fintechs offset by declines in mid-sized banks and credit unions. USIS is seeing growing demand for our suite of Ignite solutions, including Ignite for Prospect.

Speaker Change: I.D. and fraud was also below our expectations, as was auto.

Speaker Change: Financial Marketing Services, our B2B offline business, was up 7%.

Speaker Change: Marketing revenue was up 4% primarily due to growth in pre-screen marketing. Our pre-screen quarterly trends have been fairly consistent with growth coming from large FIs and fintechs offset by declines in mid-sized banks and credit unions.

Speaker Change: USIS is seeing growing demand for our suite of IGNITE solutions, including IGNITE for prospecting.

Speaker Change: Broad revenue is up a very strong 15% from new business wins.

Mark W. Begor: Broad revenue is up a very strong 15% from new business wins. USIS Consumer Solutions D2C business had another very strong quarter of 13% from strong double-digit growth in the consumer direct channel and high single-digit growth in our indirect channel. We expect mid-single digit growth in our D2C business in the second half of this year against strong comps from last year. USIS adjusted EBITDA margins were 33.2% in the quarter and below our expectations, reflecting this lower than expected revenue growth.

Speaker Change: USIS Consumer Solutions D2C business had another very strong quarter of 13% from strong double-digit growth in consumer direct channel and high single-digit growth in our indirect channel.

Speaker Change: We expect mid-single-digit growth in our D2C business in the second half of this year against strong comps from last year.

Speaker Change: USIS adjusted EBITDA margins were 33.2% in the quarter and below our expectations, reflecting this lower-than-expected revenue growth.

Speaker Change: In USIS, the significant efforts across the business to complete the cloud transformation clearly had an impact on USIS consumers.

Mark W. Begor: In USIS, the significant efforts across the business to complete the cloud transformation clearly had an impact on USIS's customer engagement and Non-Mortgage Revenue Growth in the First Half. As the USIS Consumer Cloud Migration is completed in the next few weeks, the USIS team will now be able to fully focus on customer engagement and growth, and we expect USIS non-mortgage revenue to see improved growth in the second half of this year and, of course, in 2025 and beyond.

Speaker Change: Customer Engagement and Non-Mortgage Revenue Growth in the First Half.

Speaker Change: As USIS Consumer Cloud Migration is completed in the next few weeks, USIS team will now be able to fully focus on customer engagement and growth, and we expect USIS non-mortgage revenue to see improved growth in the second half of this year and of course in 25 and beyond.

Speaker Change: Turning to slide 9, international revenue was up a very strong 28% in constant currency and up a strong 12% in organic constant currency in the quarter, excluding the impact of BVS.

Mark W. Begor: Turning to slide 9, international revenue was up a very strong 28% in constant currency and up a strong 12% in organic constant currency in the quarter, excluding the impact of BVS. This was well above the 20% growth we guided to in April due to continued very strong growth in Latin America and Europe. Europe's local currency revenue was up a very strong 12% in the quarter, with continued strong 6% growth in our credit and data businesses, and from a very strong 23% growth in our debt management business.

Speaker Change: And well above the 20% growth we guided to in April due to continued very strong growth in Latin America and Europe .

Speaker Change: Europe local currency revenue was up a very strong 12% in the quarter with continued strong 6% growth in our credit and data businesses and from very strong 23% growth in our debt management business.

Speaker Change: Latin America local currency revenue was up 124%, principally due to the acquisition of Boa Vista, with very strong organic growth of 30%.

Mark W. Begor: Latin America local currency revenue was up 124%, principally due to the acquisition of Boa Vista, with very strong organic growth of 30%. Latin America organic revenue growth was driven by very strong double-digit growth in Argentina, Paraguay, and Central America. Brazil revenue in the quarter on a reported basis was $41 million.

Speaker Change: Latin America organic revenue growth was driven by very strong double digit growth in Argentina, Paraguay, and Central America.

Speaker Change: Brazil revenue in the quarter on a reported basis was $41 million.

Speaker Change: We continue to make good progress on the Brazil integration. Equifax Interconnect solution was launched for small business and medium businesses in the second quarter in Brazil, with full feature release to serve with larger clients in the second half.

Mark W. Begor: We continue to make good progress on the Brazil integration. Equifax Interconnect was launched for small and medium businesses in the second quarter of Brazil, with a full feature release to serve larger clients in the second half. The first apps of Ignite have also been launched.

Speaker Change: The first apps of Ignite have also been launched. Identity and fraud solutions including Count and Mitigator are now available for Brazilian customers. And Brazil is driving accelerated negative data acquisition to add to their database.

Mark W. Begor: Identity and fraud solutions, including Count and Mitigator, are now available for Brazilian customers, and Brazil is driving accelerated negative data acquisition to add to their database. The team's making excellent progress on driving growth and integrating with Equifax. Canada delivered 6% growth in the quarter. As I previously mentioned, we expect Canada to complete its consumer credit exchange customer migrations to the new Equifax cloud in the next few weeks.

Speaker Change: The team is making excellent progress on driving growth and integrating with Equifax.

Speaker Change: Andrew delivered six percent growth in the quarter. As I previously mentioned, we expect Canada to complete their consumer credit exchange customer migrations to the new Equifax cloud in the next few weeks.

Mark W. Begor: And similar to USIS, we're expecting to see accelerated new product rollouts and growth going forward from the Canadian team. And Asia-Pacific revenue was down about 2%, as expected, better than the down 10% in the first quarter. We expect Asia-Pacific to return to revenue growth in the second half. International adjusted EBITDA margins of 25.6% were above our expectations and up 130 basis points sequentially, given their strong revenue growth performance. Turning to slide 10, we continue to make very strong progress driving innovation, with over 30 new products launched in the quarter that delivered a 12.5% vitality index, which was up 350 basis points sequentially and was driven by broad-based performance across all of our business. EWS had a strong second quarter with a vitality index of 17%, up 700 basis points sequentially.

Speaker Change: And similar to USIS, we're expecting to see accelerated new product rollouts and growth going forward from the Canadian team.

Speaker Change: And Asia-Pacific revenue was down about 2% as expected, better than the down 10% in the first quarter. We expect Asia-Pacific to return to revenue growth in the second half.

Speaker Change: International adjusted EBITDA margins of 25.6% were above our expectations and up 130 basis points sequentially, given their strong revenue growth performance.

Speaker Change: According to slide 10, we continue to make very strong progress driving innovation with over 30 new products launched in the quarter that delivered a 12.5% vitality index, which was up 350 basis points sequentially, and was driven by broad-based performance across all of our business units.

Speaker Change: EWS had a strong second quarter with vitality index of 17% up 700 basis points sequentially.

Speaker Change: And we expect EWSBI to remain strong in the second half with new product introductions focused on incarceration data, mortgage prequal or shopping behavior, and I-9 and onboarding solutions.

Mark W. Begor: And we expect EWS VI to remain strong in the second half with new product introductions focused on incarceration data, mortgage prequalification or shopping behavior, and I-9 and onboarding solutions. USIS saw continued sequential improvement with a vitality index of 8%, up 100 basis points sequentially.

Speaker Change: USIS saw continued sequential improvement with a vitality index of 8% up 100 basis points sequentially.

Speaker Change: We expect USIS to continue to show strong VI performance from cloud completion, as they leverage our new cloud-native infrastructure for innovation, new products, and identity and fraud, commercial, and our new mortgage prequal products.

Mark W. Begor: We expect USIS to continue to show strong VI performance from cloud completion as they leverage our new cloud native infrastructure for innovation, new products, and identity and fraud, commercial, and our new mortgage prequalification products. International also had a strong 11% VI in the quarter, up 200 basis points sequentially. We expect strong Equifax double-digit VI in the second half, leveraging our Equifax cloud capabilities to drive new product rollouts with a full year VI for Equifax of over 10%. EFX.ai is one of our key EFX 2026 strategic priorities enabled by our new Equifax cloud. We're energized to have a new AI leader on board who will drive our strategic vision and execution for explainable EFX.AI.

Speaker Change: International also had strong 11% VI in the quarter, up 200 basis points sequentially. We expect strong Equifax double-digit VI in the second half, leveraging our Equifax cloud capabilities to drive new product rollouts with a full-year VI for Equifax of over 10%.

Speaker Change: EFX.AI is one of our key EFX 2026 strategic priorities enabled by our new Equifax cloud. We're energized to have a new AI leader on board who will drive our strategic vision and execution in explainable EFX.AI.

Speaker Change: We are accelerating the pace at which we are developing new Equifax models and scores using AI and ML in areas such as identity and fraud and consumer loan affordability that drive performance and predictability of our solutions.

Mark W. Begor: We are accelerating the pace at which we are developing new Equifax models and scores using AI and ML in areas such as identity and fraud and consumer loan affordability that drive performance and predictability of our solution. In the second quarter, 89% of our new models and scores were built using AI and ML, which is up 400 basis points sequentially and ahead of our 2024 goal of 80% and last year's 70%. Before I turn it over to John, I wanted to provide a few comments on our full year 2024 guidance.

Speaker Change: In the second quarter, 89% of our new models and scores were built using AI and ML, which is up 400 basis points sequentially and ahead of our 2024 goal of 80% and last year's 70%.

Speaker Change: Before I turn it over to John , I wanted to provide a few comments on our full year 2024 guidance.

John: We're maintaining our 2024 guidance midpoint with revenue of $5.72 billion, up 8.6%, and adjusted EPS of $7.35 a share, up 9.5%.

Mark W. Begor: We're maintaining our 2024 guidance midpoint with revenue of $5.72 billion, up 8.6%, and adjusted EPS of $7.35 a share, up 9.5%. This guidance implies a strong second half for Equifax, with revenue at the midpoint of $2.9 billion, up over 9.5%, and adjusted EPS of $4.03 per share, up 13%.

John: This guidance implies a strong second half for Equifax, with revenue at the midpoint of $2.9 billion, up over 9.5%, and adjusted EPS of $4.03 per share, up 13%.

John: Consistent with our practice, this framework assumes mortgage market activity consistent with the levels we saw in June and early July , resulting in an estimated full year USIS credit inquiries at down 11% and consistent with our A4 guidance.

Mark W. Begor: Consistent with our practice, this framework assumes mortgage market activity consistent with the levels we saw in June and early July, resulting in estimated full year USIS credit inquiries down 11% and consistent with our A4 guidance. As you know, we're using current trends to forecast mortgage market activity and have not seen a strengthening in mortgage market activity despite the recent modest decline in rates and have not reflected the impact of any Fed rate cuts in the second half.

Speaker Change: As you know, we're using current trends to forecast mortgage market activity and have not seen a strengthening in the mortgage market activity despite the recent modest decline in rates and have not reflected the impact of any Fed rate cuts in the second half.

Speaker Change: Delivering this level of performance in the second half against the U.S. mortgage market that continues at the levels we saw in the first half, we believe is very strong Equifax performance.

Mark W. Begor: Delivering this level of performance in the second half against the U.S. mortgage market that continues at the levels we saw in the first half, we believe is a very strong Equifax performance. It reflects constant dollar non-mortgage growth of about 10%, again led by very strong non-mortgage growth in our workforce solutions and verification services businesses, and with strong continued growth, organic growth in international, and improving non-mortgage growth in USIS, despite the continuation of the tight credit markets we saw in the first and second quarters in the US, leading to some weakening in the auto market and also impacting the broader While we expect a continued weak mortgage market, we expect mortgage revenue to grow by 18% in the second half.

Speaker Change: It reflects constant dollar non-mortgage growth of about 10%, again led by very strong non-mortgage growth in our workforce solutions verification services businesses.

Speaker Change: and with strong continued growth, organic growth in international and improving non-mortgage growth in USIS.

Speaker Change: Despite the continuation of the tight credit markets we saw in the first and second quarter in the U.S., leading to some weakening in the auto market and also impacting the broader FI market.

Speaker Change: While we expect a continued weak mortgage market, we expect to grow mortgage revenue by 18% in the second half.

Speaker Change: Of course, we continue to expect significant future mortgage market improvements as rates come down and mortgage market activity returns to normal 2015 to 2019 levels.

John W. Gamble: Of course, we continue to expect significant future mortgage market improvements as rates come down and mortgage market activity returns to normal 2015 to 2019 levels. As we've shared previously, we expect to flow the $1.1 billion mortgage revenue recovery through to EBITDA as mortgage market activity improves at our very high mortgage market gross margin, and we're continuing to deliver expanded EBITDA margin growth principally in the fourth quarter as we complete the transformation of our U.S. consumer businesses and our businesses in Canada, Spain, Chile, and Argentina.

Speaker Change: As we've shared previously, we expect to flow the $1.1 billion mortgage revenue recovery through to EBITDA as mortgage market activity improves at our very high mortgage market gross margins.

Speaker Change: And we're continuing to deliver expanded EBITDA margin growth, principally in the fourth quarter as we complete the transformation of our U.S. consumer businesses and our businesses in Canada, Spain, Chile, and Argentina.

Speaker Change: Now I'd like to turn it over to John to provide more detail on our second quarter financial results and to provide our third quarter framework.

John W. Gamble: Now I'd like to turn it over to John to provide more detail on our second quarter financial results and to provide our third quarter framework. Our third quarter guidance builds on our strong second quarter performance in new products, penetration, record growth, and price. Thanks, Mark.

John: Our third quarter guidance builds on our strong second quarter performance from new products, penetration, record growth, and pricing.

John: Thanks, Mark. Turning to slide 11, consistent with our practice from the first half of 2024 and the last several years, our guidance for credit inquiries is based on our current run rates over the last two to four weeks, modified to reflect normal seasonal patterns.

John W. Gamble: Turning to slide 11, consistent with our practice from the first half of 2024 and the last several years, our guidance for credit inquiries is based on our current run rates over the last two to four weeks, modified to reflect normal seasonal patterns. For example, we have seen 30-year mortgage rates just under 7% for the last five weeks. However, we have not seen meaningful improvement in the run rate of either credit or twin increases, although we continue to expect mortgage market activity to improve as rates come down in the future.

Speaker Change: We have seen 30-year mortgage rates just under 7% for the last five weeks. However, we have not seen meaningful improvement in the run rate of either credit or twin increase, although we continue to expect mortgage market activity to improve as rates come down in the future.

Speaker Change: Our guidance reflects mortgage credit inquiries to be down about 7% in 3Q24 and 11% in calendar year 24, which for the full year is consistent with our April guidance.

John W. Gamble: Our guidance reflects mortgage credit inquiries to be down about 7% in 3Q24 and 11% in calendar year 24, which for the full year is consistent with our April guidance. Our guidance also reflects a twin increase in the third quarter to be down over 7% and for the full year down approaching 14%. Second half twin inquiries are down about consistent with the decline in credit inquiries reflecting an expected normalization of the mortgage shopping we saw in the first half of the year as interest rates remain stable or begin to decline.

Speaker Change: Our guidance reflects twin increase in the third quarter to be down over 7% and for the full year down approaching 14%.

Speaker Change: Second half twin inquiries are down about consistent with the decline in credit inquiries reflecting an expected normalization of the mortgage shopping we saw in the first half of the year as interest rates remain stable or begin to decline.

Speaker Change: As a reminder, and as we discussed in April , we expect the level of U.S. mortgage revenue outperformance to moderate as we move through 2024 as we start to lap the growth in new mortgage prequal products.

John W. Gamble: As a reminder, and as we discussed in April, we expect the level of U.S. mortgage revenue outperformance to moderate as we move through 2024, as we start to lap the growth in new mortgage prequalification products. We expect 3Q USIS mortgage revenue outperformance to be over 30%, down from the 40% in the second quarter, with full-year USIS mortgage outperformance expected to be about 40%. We expect twin revenue mortgage outperformance in the second half to increase sequentially from the new records we broke in the second quarter.

Speaker Change: We expect 3Q USIS mortgage revenue outperformance to be over 30%, down from the 40% in the second quarter, with full-year USIS mortgage outperformance expected to be about 40%.

Speaker Change: We expect twin revenue mortgage outperformance in the second half to increase sequentially from the new records we boarded in the second quarter.

Speaker Change: Slide 12 provides the details of our 3Q24 guidance. In 3Q24, we expect total Equifax revenue to be between $1.425 and $1.445 billion, with revenue up about 9% at the midpoint.

John W. Gamble: Slide 12 provides the details of our 3Q24 guidance. In 3Q24, we expect total Equifax revenue to be between $1.425 and $1.445 billion, with revenue up about 9% at the midpoint. Non-mortgage constant currency revenue growth should be up about 10%. Mortgage revenue in the third quarter is expected to be up over 12%.

Speaker Change: Non-mortgage constant currency revenue growth should be up about 10%. Mortgage revenue in the third quarter is expected to be up over 12%. Mortgage revenue will be just under 20% of total revenue. FX is negative to revenue about 2%.

Speaker Change: Business unit performance in the third quarter is expected to be as follows.

John W. Gamble: Mortgage revenue will be just under 20% of total revenue, and FX is negative to revenue by about 2%. Business Unit performance in the Third Quarter is expected to be as follows. Workforce Solutions revenue growth is expected to be up about 8%, with non-mortgage revenue up about 10%. Non-mortgage verifier revenue should again be very strong in the third quarter, with growth slightly under the 20% we saw in the second quarter, again driven by government and talent solutions.

Speaker Change: Workforce Solutions revenue growth is expected to be up about 8%, with non-mortgage revenue up about 10%.

Speaker Change: Non-mortgage verifier revenue should again be very strong in the third quarter with growth slightly under the 20% we saw in the second quarter, again driven by government and talent solutions.

Speaker Change: EWS mortgage revenue should return to growth and be up slightly in the third quarter. Both verifier mortgage and non-mortgage revenue growth benefit from the strong growth in twin records we are seeing throughout 2024.

John W. Gamble: EWS mortgage revenue should return to growth and be up slightly in the third quarter. Both verifier mortgage and non-mortgage revenue growth benefit from the strong growth in twin records we are seeing throughout 2024. And employer services revenue is expected to decline over 15% in the quarter, principally due to declines in ERC.

Speaker Change: And employer services revenue is expected to decline over 15% in the quarter, principally due to declines in the ERC.

Speaker Change: We expect employer services to return to revenue growth in the fourth quarter of 2024.

John W. Gamble: We expect employer services to return to revenue growth in the fourth quarter of 2024. EWS adjusted EBITDA margins are expected to be about 51.5%, down about 100 basis points sequentially, principally due to product. USIS revenue is expected to be up about 8.5% year-to-year, and mortgage revenue should be up over 25%. Non-mortgage year-to-year revenue growth of over 2% should be up from the up 1% we saw this quarter. Adjusted EBITDA margins are expected to be up about 34%, up sequentially about 100 basis points as USIS begins decommissioning legacy consumer and telco and utility systems.

Speaker Change: USIS revenue is expected to be up about 8.5% year-to-year. Mortgage revenue should be up over 25%.

Speaker Change: [inaudible]

Speaker Change: International revenue is expected to be up about 18% in constant currency, which includes the benefit of the acquisition of BPS that was completed August of 2023. Revenue is expected to be up about 12% in organic constant currency.

John W. Gamble: International revenue is expected to be up about 18% in constant currency, which includes the benefit of the acquisition of DPS that was completed in August of 2023. Revenue is expected to be up about 12% in organic constant currency. EBITDA margins are expected to be about 28%, reflecting revenue. Equifax 3Q24 Adjusted EBITDA margins are expected to be under 33% at the midpoint of our guidance, with a sequential increase reflecting revenue growth and the early stages of decommissioning of legacy consumer and telco and utility assets.

Speaker Change: EBITDA margins are expected to be about 28% reflecting revenue growth.

Speaker Change: Equifax 3Q24 adjusted EBITDA margins are expected to be under 33% at the midpoint of our guidance, with a sequential increase reflecting revenue growth and the early stages of decommissioning of legacy consumer and telco and utility assets.

John W. Gamble: Adjusted EPS in 3Q24 is expected to be $1.75 to $1.85 per share, up 2% versus 3Q23 at the midpoint of. As of the end of the second quarter, our leverage ratio was 3.0 times, with a goal by year end 2024 of about two and a half.

Speaker Change: Adjusted EPS in 3Q24 is expected to be $1.75 to $1.85 per share, up 2% versus 3Q23 at the midpoint.

Speaker Change: As of the end of the second quarter, our leverage ratio was 3.0 times, with a goal by year-end 2024 of about 2.5 times.

Speaker Change: We believe this leverage is nicely within the levels required for our current BBB AA2 credit ratings. As we achieve these levels, we will have significant flexibility to begin to return cash to shareholders through dividend increases and share repurchases, as well as continue to do bolt-on acquisitions in 2025 and beyond.

John W. Gamble: We believe this leverage is nicely within the levels required for our current BBB AA2 credit ratings. As we achieve these levels, we will have significant flexibility to begin to return cash to shareholders through dividend increases and share repurchases, as well as continue to do bolt-on acquisitions in 2025 and beyond. Slide 13 provides the specifics of our 2024 full-year guidance, which is overall unchanged from the full-year revenue and adjusted EPS guidance we provided in April and is centered at the midpoint. Constant currency revenue growth is expected to be about 10.5% with organic constant currency revenue growth of 8.5% at the middle of our 7-10% long-term organic growth framework. Total mortgage revenue is expected to grow over 10% despite the over 10% decline in the U.S.

Speaker Change: Slide 13 provides the specifics of our 2024 full year guidance, which is overall unchanged from the full year revenue and adjusted EPS guidance we provided in April and is centered at the midpoint.

Speaker Change: Constant currency revenue growth is expected to be about 10.5%, with organic constant currency revenue growth of 8.5% at the middle of our 7-10% long-term organic growth framework.

Speaker Change: Total mortgage revenue is expected to grow over 10 percent despite the over 10 percent decline in the U.S. mortgage market.

Speaker Change: Non-mortgage constant dollar revenue should grow over 10%, with organic growth of about 8%, led by very strong non-mortgage growth in our workforce solutions verification services business.

John W. Gamble: Non-mortgage constant dollar revenue should grow over 10%, with organic growth of about 8%, led by very strong non-mortgage growth in our workforce solutions verification services business, with continued strong organic growth in international and improving non-mortgage growth in USIS. This is within our long-term framework. FX is about 180 basis points negative to revenue. As Mark discussed earlier, we are maintaining the midpoint of adjusted EPS at $7.35 per share. EBITDA margins, however, are expected to be 32.6%, down from the over 33% we discussed earlier this year.

Speaker Change: with continued strong organic growth in international and improving non-mortgage growth in USIS. This is within our long-term framework. FX is about 180 basis points negative to revenue.

Speaker Change: As Mark discussed earlier, we are maintaining the midpoint of adjusted EPS at $7.35 per share. EBITDA margins, however, are expected to be 32.6%, down from the over 33% we discussed earlier this year.

Speaker Change: As Mark discussed, we are making very good progress on cloud migrations. However, they are completing up to a quarter later than we had planned. As a result, our cloud cost savings are lower due to timing in 2024, which negatively impacts EBITDA.

John W. Gamble: As Mark discussed, we are making very good progress on cloud migrations. However, they are completing up to a quarter later than we had planned. As a result, our cloud cost savings are lower due to timing in 2024, which negatively impacts EBITDA. Partially offsetting this impact is lower depreciation.

Speaker Change: Partially offsetting this impact is lower depreciation. As these effects are timing of completion, they only impact 2024, and do not impact the cost savings we expect to achieve in 2025 and beyond.

John W. Gamble: As these effects are timing of completion, they only impact 2024 and do not impact the cost savings we expect to achieve in 2025 and beyond. Full year VU guidance is principally consistent with what was shared in April with the exception of the impact on USIS and international EBITDA margins, as discussed in my previous discussion. Workforce Solutions revenue growth is expected to be up about 7%, with non-mortgage revenue up about 10%. Non-mortgage verifier revenue should be up over 15%, driven by government and talent solutions. EWS mortgage revenue should be down 3% for the year.

Speaker Change: Whole year BU guidance is principally consistent with what was shared in April with the exception of the impact on USIS and international EBITDA margins per my previous discussion.

Speaker Change: Workforce Solutions revenue growth is expected to be up about 7%, with non-mortgage revenue up about 10%. Non-mortgage verifier revenue should be up over 15% driven by government and talent solutions.

Speaker Change: EWS mortgage revenue should be down 3% for the year. EWS margins are expected to be about 52%.

John W. Gamble: EWS margins are expected to be about 52%, and USIS revenue is expected to be up 9% year-to-year. Mortgage revenue should be up over 25%, and non-mortgage year-to-year revenue growth of about 2% is expected to be higher than the 1% we saw in the first half of 2024. USIS EBITDA margins should be about 34%, down about 50 basis points from our April guidance, and international revenue is expected to be up over 15% in constant currency, which includes the benefit of the acquisition of BBF. Revenue is expected to be up about 10% in organic constant currency. EBITDA margins are expected to approach 27.5%, down from 28% in our April guide.

Speaker Change: USIS revenue is expected to be up 9% year-to-year. Mortgage revenue should be up over 25%.

Speaker Change: Non-mortgage year-to-year revenue growth of about 2% is expected to be up from the 1% we saw in the first half of 2024. USIS EBITDA margins should be about 34%, down about 50 basis points from our April guidance.

Speaker Change: and international revenue is expected to be up over 15% in constant currency, which includes the benefit of the acquisition of DBS.

Speaker Change: Revenue is expected to be up about 10% in organic constant currency. EBITDA margins are expected to approach 27.5%, down from 28% in our April guidance.

Speaker Change: Using the midpoint of our 3Q24 and FY24 guidance for revenue and adjusted EPS, the implied 4Q24 midpoint for revenue is $1.465 billion, up 10% year-to-year, and $30 million sequentially.

John W. Gamble: Using the midpoint of our 3Q24 and FY24 guidance for revenue and adjusted EPS, the implied 4Q24 midpoint for revenue is $1.465 billion, up 10% year-to-year, and $30 million sequentially, and for adjusted EPS is $2.23 per share, up over 20% year-to-year. The improvement in adjusted EPS in 4Q24 sequentially from 3Q24 is certainly substantial and requires strong execution. The drivers of this improvement are expected to be as follows. About half of the improvement is driven by sequential revenue growth at our very high variable margin.

Speaker Change: And for adjusted EPS, it's $2.23 per share, up over 20% year-to-year.

Speaker Change: The improvement in adjusted EPS in 4q24 sequentially from 3q24 is certainly substantial and requires strong execution.

Speaker Change: The drivers of this improvement are expected to be as follows.

Speaker Change: About half of the improvement is driven by the sequential revenue growth at our very high variable margins.

Speaker Change: Revenue mix also should drive improved margins, as non-mortgage revenue grows strongly sequentially, and mortgage revenue declines sequentially. Mortgage has much lower margins relative to non-mortgage, principally due to much higher royalties and purchase data file costs in mortgage.

John W. Gamble: Revenue mix also should drive improved margins as non-mortgage revenue grows strongly sequentially and mortgage revenue declines sequentially. Mortgage has much lower margins relative to non-mortgage, principally due to much higher royalties and purchase data file costs in mortgage.

Speaker Change: Cost and expense reductions drive about a quarter of the improvement. These cost reductions are principally due to completion of cloud migrations in North America and Europe , resulting in lower COGS and also lower development expense.

John W. Gamble: Cost and expense reductions drive about a quarter of the improvement. These cost reductions are principally due to completion of cloud migrations in North America and Europe, resulting in lower COGS and also lower development. In addition to the cost benefit from completion of cloud migrations, we continue to execute fixed cost and expense reductions, which will also benefit 4Q24. Items below operating profit, principally taxes, represent on the order of 20% of the improvement.

Speaker Change: In addition to the cost benefit from completion of cloud migrations, we continue to execute fixed cost and expense reductions which will also benefit 4Q24.

Speaker Change: Items below operating profit, principally taxes, represent on the order of 20% of the improvement.

Speaker Change: Capital expenditures for 2024 are expected to be about $485 million, which is a year-to-year reduction of about $100 million. This is up from our April guidance reflecting the timing of completion of the migrations to the Equifax cloud that I just referenced.

John W. Gamble: Capital expenditures for 2024 are expected to be about $485 million, which is a year-to-year reduction of about $100 million. This is up from our April guidance reflecting the timing of completion of the migrations to the Equifax cloud that I just recommended. In the first half of 2024, CapEx was $256 million, almost $50 million a year.

Speaker Change: In the first half of 2024, CapEx was $256 million, down almost $50 million year-to-year. We expect capital expenditures in the second half to decline further, as the tech transformation activities I previously discussed complete.

John W. Gamble: We expect capital expenditures in the second half to decline further as the tech transformation activities I previously discussed complete. Turning to slide 14, and as we discussed in April, the U.S. mortgage market is on the order of 50% below its historic average inquiry level. As the mortgage market recovers toward its historic norms, that represents over $1 billion of annual revenue opportunity for Equifax in 2025 and beyond, none of which is reflected in our current 2024 guidance.

Speaker Change: Turning to slide 14, and as we discussed in April , the U.S. mortgage market is on the order of 50% below its historic average inquiry levels.

Speaker Change: As the mortgage market recovers toward its historic norms, that represents over $1 billion of annual revenue opportunity for Equifax in 2025 and beyond, none of which is reflected in our current 2024 guidance.

Speaker Change: At our high mortgage margins, this over $1 billion of mortgage revenue would deliver on the order of $700 million of EBITDA and $4 per share that we would expect to move into our P&L.

John W. Gamble: At our high mortgage margins, this over $1 billion of mortgage revenue would deliver on the order of $700 million of EBITDA and $4 per share that we would expect to move into our P&L. Now, I'd like to turn it back over to you.

Speaker Change: Now I'd like to turn it back over to Mark.

Mark: Thanks, John . Wrapping up on slide 15, Equifax delivered another strong quarter with 11% constant currency revenue growth, which was at the upper end of our 8% to 12% long-term revenue growth framework.

Mark W. Begor: Thanks, John. Wrapping up on slide 15, Equifax delivered another strong quarter with 11% constant currency revenue growth, which was at the upper end of our 8 to 12% long-term revenue growth framework, reflecting the power and breadth of the Equifax business model and strong execution against our EFX 2026 strategic priority. Our very strong 20% EWS non-mortgage verifier revenue growth, 12% EWS active record growth, and strong 12.5% broad-based VI. This will give us momentum as we enter the second half of 2024.

Mark: Reflecting the power and breadth of the Equifax business model and strong execution against our EFX 2026 strategic priorities.

Mark: Our very strong 20% EWS non-mortgage verifier revenue growth.

Mark: 12% EWS active record growth and strong 12.5% broad-based VI, give us momentum as we enter the second half of 2024.

Mark: A big priority for 2024 is to complete our North America cloud transformation, as well as significant portions of our global markets, which will enhance our competitiveness, drive margin expansion, reduce our capital intensity, expand our free cash flow for bolt-on M&A, dividend growth, and share repurchases.

Mark W. Begor: A big priority for 2024 is to complete our North America cloud transformation, as well as significant portions of our global markets, which will enhance our competitiveness, drive margin expansion, reduce our capital intensity, and expand our free cash flow for bolt-on M&A, dividend growth, and share repurchase. Leading the USIS consumer cloud migrations in the next few weeks is a significant milestone for Equifax. We continue to expect CapEx to decrease in 2024 by about $100 million to under 8.5% of revenue, with further reductions in 2025, allowing us to move towards our long-term CapEx goal of 6-7% of revenue as we exit next year.

Mark: Completing the USIS consumer cloud migrations in the next few weeks is a significant milestone for Equifax.

Mark: We continue to expect CapEx to decrease in 2024 by about $100 million to under 8.5% of revenue, with further reductions in 2025, allowing us to move towards our long-term CapEx goal of 6-7% of revenue as we exit next year.

Mark: Entering 2025 with 90% of Equifax revenue in the new Equifax cloud is a big milestone so the Equifax team can move towards fully focusing on growth.

Mark W. Begor: Entering 2025 with 90% of Equifax revenue in the new Equifax cloud is a big milestone, so the Equifax team can move towards fully focusing on growth. Another significant EFX 2026 strategic priority is to drive innovation through our investments in EFX.ai. AI and machine learning are changing the way we develop new products in our single data fabric, the way we build it allows us to build higher performing models, scores, and products, ingest and cleanse data, and operate our consumer care centers more effectively. We're on offense at Equifax with efx.ai.

Mark: Another significant EFX 2026 strategic priority is to drive innovation through our investments in EFX.AI.

Mark: A.I. and machine learning are changing the way we develop new products in our single data fabric and allowing us to build higher performing models, scores, and products.

Mark: ingest and cleanse data and operate our consumer care centers more effectively. We're on offense at Equifax with efx.ai.

Mark: We're entering the next chapter of the new Equifax as we pivot from building the new Equifax cloud to leveraging our new cloud capabilities to drive our top and bottom line.

Mark W. Begor: We're entering the next chapter of the new Equifax as we pivot from building the new Equifax cloud to leveraging our new cloud capabilities to drive our top and bottom lines. We're convinced that our new Equifax cloud differentiated data assets in our new single data fabric, leveraging EFX.ai and machine learning and market-leading businesses, will deliver higher revenue growth, expanded margins, and accelerated free cash flow that will enable us to start returning cash to shareholders in 2025 and beyond.

Mark: We're convinced that our new Equifax cloud differentiated data assets in our new single data fabric leveraging EFX.AI and machine learning.

Mark: and Market Leading Businesses will deliver higher revenue growth, expanded margins, and accelerated free cash flow that will enable us to start returning cash to shareholders in 2025 and beyond.

Mark: We remain focused on executing our long-term model, delivering 8-12% revenue growth with 50-plus basis points of margin expansion annually, on average, over a cycle.

Mark W. Begor: We remain focused on executing our long-term model, delivering 8 to 12 percent revenue growth with 50 plus basis points of margin expansion annually, on average, over a cycle. Before I turn the call over to the operator, I'd like to thank Sam McKinstry on the Investor Relations team for his significant contributions over the past four years. Good news, Sam's staying with Equifax and is taking a position within the USIS business to further his career in finance. He's been a real asset to the IR team and the investor community.

Speaker Change: Before I turn the call over to the operator, I'd like to thank Sam McKinstry on the Investor Relations team for his significant contributions over the past four years.

Speaker Change: Good news, Sam's staying with Equifax and is taking a position within the USIS business to further his career in finance. He's been a real asset to the IR team and the investor community, and joining the investor relations team from USIS is Molly Clegg, and we welcome Molly to the IR team.

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

Mark W. Begor: And joining the investor relations team from USIS is Molly Clegg, and we welcome Molly to the IR team. With that, Operator, let me open it up to questions. Thank you, and now we'll be conducting a question and answer session. If you'd like to be placed in the question queue, please press star 1 on your telephone keypad. We ask that you please ask one question and one follow-up. If you'd like to remove your question from the queue, please press star 2.

Speaker Change: Thank you. And now we'll be conducting a question and answer session. If you'd like to be placed into question queue, please press star 1 on your telephone keypad.

Speaker Change: We ask that you please ask one question and one follow-up. If you'd like to remove your question from the queue, please press star 2. Once again, that's star 1 to be placed in the question queue, and we ask that you please ask one question and one follow-up, then return to the queue. Our first question is coming from Manav Patnaik from Barclays, your line is now live.

Operator: Once again, that's Star 1 to be placed in the question queue, and we ask that you please ask one question and 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, and congratulations on getting close to this tech transformation ending. My first question was about that, which is, you know, how much of the cost savings, I guess, have you baked into the third quarter and fourth quarter, and, I guess, more importantly, just the run rate of what we should think this is now going to help in 2025, just on its own. Yeah, I don't think we're going to get into the 2025 guidance.

Unknown Speaker: But in terms of the third and fourth quarter, now, we've baked in the cost savings related to the North American consumer businesses, completing transformation in the third quarter and beginning their decommissioning. And we've done the same thing with regard to Spain and some other some other movements we've talked about in Mark's script in the fourth quarter. So when I talk about savings, I'm really talking about the fourth quarter, and then we'll get the annualization of that next year.

Manav Patnaik: Thank you. Good morning. And congratulations on getting close to this tech transformation ending. My first question was on that, which is,

Manav Patnaik: You know, how much of the cost savings, I guess, have you baked into the third quarter, fourth quarter, and I guess more importantly, just the run rate of what we should think this is now going to help in 2025, just on its own?

Speaker Change: Yeah, I don't think we're going to get into 2025 guidance. But in terms of third and fourth quarter, now we've we've baked in the cost savings related to the North American consumer businesses.

Speaker Change: Completing transformation in the third quarter and beginning their decommissioning and we've done the same thing with regard to stain and some other some other movements we talked about in Mark's script.

Speaker Change: In the fourth quarter, so...

Speaker Change: When I talk about the savings are really in the fourth quarter, and then we'll get the annualization of that next year absolutely, as we talked about in the bridge from third to fourth quarter a significant portion of those savings as Mark said really gets in the fourth quarter because the Transformations and the completion of the transformations and begin to get decommissioning don't start until later in the third

Unknown Speaker: Absolutely. As we talked about in the bridge from third to fourth quarter, a significant portion of those savings, as Mark said, really gets in the fourth quarter because the transformations and the completion of the transformations and beginning to get decommissioning don't start until later in the third. USIS in Canada in the next couple weeks, and then, you know, really go into 2025 in a very, very strong position. Okay, fine.

Speaker Change: Manav, I think as you know, I appreciate you pointing it out. This has been a long road. We started this five years ago and to be

Manav Patnaik: Close to this finish line with 80% of our rev in the cloud in the next month or two and 90% in the fourth quarter.

Manav Patnaik: It's really a huge milestone. It's been a huge effort by the entire organization to run the company.

Manav Patnaik: Over the last number of years, but also do the cloud work, and we're super energized to really be pivoting to leveraging that cloud, you know, in the second half as we complete USIS in Canada in the next couple weeks, and then, you know, really go into 2025 in a very, very strong position.

Speaker Change: Okay, fine. And then just broadly, you know, I think just from the first half results, it looks like there's a lot of, you know, pluses and minuses across the segment. Like, I'm just curious in terms of the way you set the second half guidance, like where would you say you've perhaps left some room for error or being conservative on it?

Unknown Speaker: And then just broadly, you know, I think just from the first half results, it looks like there's a lot of, you know, pluses and minuses across the segment. I'm just curious in terms of the way you set the second half guidance, like, where would you say you've perhaps left some room for error by being conservative? Yeah, we try to be balanced.

Manav Patnaik: Yeah, we try to be balanced. I think you know that. You know, we want to put forecasts out that we know how to meet and we feel, you know, a lot of confidence in the forecasts we put out. I think John and I, in our prepared comments, talked about some of the

Unknown Speaker: I think you know that, you know, we want to put forecasts out that we know how to meet. And we feel, you know, a lot of confidence in the forecast we put out. I think John and I in our prepared comments talked about some of the, you know, positives we have, we've had some challenges, you're always doing a business, you know. I think we highlighted USIS, which has seen, you know, some softening in the first quarter and some of their end markets, and also in the second quarter; mortgage hasn't really come back. And, you know, short of rate cuts, we don't expect that to happen in our guide.

John: positives we have. We've had some challenges. You're always doing a business. I think we highlighted USIS.

Speaker Change: you know, has seen, you know, some softening in the first quarter and some of their end markets and also in the second quarter. Mortgage hasn't really come back and, you know, short of rate cuts, we don't expect that to happen in our guide.

Unknown Speaker: You know, we've seen, you know, some impacts, likely from the big focus in the first half on USIS and cloud transformation; we expect those to obviously mitigate so the commercial team can, you know, be fully focused on just commercial conversations versus also commercial and cloud. You know, EWS is performing exceptionally well, you know, you look at the government performance talent at a very strong quarter. Obviously, we talked about employers impacted by WOTC and, you know, some other kind of macros that will solve themselves, but likely later in the year that will benefit 2025.

Speaker Change: You know, we've seen, you know, some impacts likely from the big focus in the first half in USIS and cloud transformation. We expect those to obviously.

Speaker Change: Mitigate so the commercial team can you know be fully focused on just commercial conversations versus also commercial and cloud

Speaker Change: EWS is performing exceptionally well. You look at the government performance, talent at a very strong quarter. Obviously, we talked about employer impacted by WOTC.

Speaker Change: You know, some other kind of macros that, you know, will solve themselves, but likely later in the year that will benefit 2025.

Unknown Speaker: But, you know, putting that all together, and maybe just finishing with international, you know, strong momentum there, you know, and all the businesses performing above our expectations, you know, when we put that all together, we felt like we had the right the right framework and holding the year, you know, in in the second half. Okay, thank. Your next question today is coming from Andrew Steinerman from J.P. Morgan. Your line is now live. Hi there.

Speaker Change: But, you know, putting that all together and maybe just finishing with international, you know, strong momentum there, you know, in all the businesses.

Speaker Change: performing above our expectations. You know, when we put that all together, we felt like we had the right framework in holding the year, you know, in the second half.

Speaker Change: Okay, thank you.

Speaker Change: Thank you. Next question today is coming from Andrew Steinerman from J.P. Morgan. Your line is now live.

Unknown Speaker: First, I just want to confirm that the second quarter revenue percentage for mortgages was 20%. I know the word about was, And then the second question is, I want to focus just more on the third quarter guide. And Mark, I know you really talked about the second half there, and I want to focus specifically on USIS. I surely heard you highlighting that the cloud migration, let's call it multitasking, will be behind us at the end of this month for USIS, so revenue acceleration there into August. And then I also heard the comment about CDK, which was a drag on auto revenues and auto dealers in the second quarter. That also seems behind us.

Andrew Charles Steinerman: Hi there. First, I just want to confirm that second quarter revenue percentage for mortgage was 20%. I know the word about was used.

Andrew Charles Steinerman: And then the second question is, I want to focus just more on the third quarter guide, and Mark, I know you really talked about the second half there, and I want to focus specifically on USIS. I surely heard you highlighting that the cloud migration, let's call it multitasking, will be behind us at the end of this month for USIS, so revenue acceleration there into August , and then I also heard the comment about CDK, which was a drag to auto revenues and auto dealers in the second quarter. That also seems behind us, so what other kind of maybe drags?

Unknown Speaker: So what other kind of maybe drags have you assumed on USIS in the third quarter guide? Because the third quarter revenue guide for USIS, to me, looks a little conservative. And did you change any assumptions about the health of the US consumer outside of mortgage when thinking about that third quarter USIS guide? Andrew, to your specific question, it's 21% was the exact... And to your question on USIS, I think we, you know, in our prepared comments, Andrew, I know you heard them, we've seen some softening in some of the end markets in USIS late in the first quarter, certainly continued in the second quarter. You talked about the CDK impact, which obviously was a negative late in the second quarter.

Speaker Change: have you assumed on USIS in the third quarter guide because the third quarter review guide for USIS to me

Speaker Change: Transcripts provided by Transcription Outsourcing, LLC.

Speaker Change: Andrew, to your specific question, it's 21% was the exact number. Thank you.

Speaker Change: And to your question on USIS, I think we, you know, in our prepared comments, Andrew, I know you heard them. You know, we've seen some softening in some of the end markets in USIS.

Speaker Change: Late in the first quarter, certainly continued in the second quarter. You talked about the CDK impact, obviously, you know, was a...

Speaker Change: [inaudible]

Unknown Speaker: That's obviously behind us. But the end market softening, for example, in auto, you know, while the mortgage has been impacted by higher rates, we're seeing some impact in the auto industry where the payments for new and used cars are very high with the higher rates that are being charged. And, you know, we've seen some impact in just consumer demand for loans, you know, in the auto sector, and then a broader, I would call it, slight softening in the second quarter. And we carried that forward in the second half. So that's reflected in the USIS guide. And if you had anything else, John?

Speaker Change: you know for new and used cars are very high with the higher rates that are being charged and you know we've seen some impact in just consumer demand for loans.

Speaker Change: Mark Begor, John Gamble, Mark Begor, Mark Begor, Mark Begor, Mark Begor, Mark Begor, [inaudible]

Unknown Speaker: No, just Mark's already talked quite a bit about the distraction from transformation that does recover in the third quarter. We start to come out of that, right. But again, we're just finishing transformation for the quarter. So you're not going to see a lot of benefit in the third quarter; you don't start to see that till the fourth quarter. And really, next year, you will start to see NPI improvements in USIS. But again, those are not going to really accelerate till you get to the fourth quarter. Thank you. Thank you. The next question is coming from Heather Balsky from Bank of America. Your line is now active.

Speaker Change: Makes sense. Thank you.

Speaker Change: Thank you. Next question is coming from Heather Balsky from Bank of America. Your line is now live.

Heather Balsky: Hi, thank you for taking my question. I wanted to start off with...

Unknown Speaker: Hi, thank you for taking my question. I wanted to start off with EWS verification or verification and EWS broadly into the back half and think about the sequential trend from 3Q and what's implied into the fourth quarter. Especially for 4Q, there seems to be some implied material acceleration and recognizing that the mortgage market. Unknown Attendee, Keen Tong, Equifax Inc. Yeah, so just as an overarching statement, right, it's important to remember that EWS verifiers are benefiting in the second half, really significantly related to record editions, right?

Speaker Change: EWS verification or verification and EWS broadly into the back half and thinking about

Speaker Change: [inaudible]

Speaker Change: can you just walk us through the building block to kind of what gets you to the trends in 3Q and what's implied for 4Q and where you're seeing the biggest tailwind?

Speaker Change: Yeah, so just as an overarching statement, right, it's important to remember that EWS Verifier is benefiting in the second half.

John W. Gamble: Really significantly related to record edition. They've done an outstanding job with adding new partners. We had a significant partner come on line very late in the quarter, and we, as Mark said, we added four more. We added a substantial number in the first half. Those records are coming online, and that drives a substantial amount of revenue in the second half. Maybe adding to the records point, John , is that we have real visibility as we are in July now and in the third quarter.

Unknown Speaker: They've done an outstanding job with adding new partners. We had a significant partner come online very late in the quarter, and we had, Mark said, we added four more. We added a substantial number in the first half.

Unknown Speaker: Those records are coming online, and that drives a substantial amount of revenue in the second half. Maybe adding to the records point, John, is that we have real visibility as we are in July now and in the third quarter, and as we look out to the fourth quarter of meaningful record editions that we're working on when we haven't closed those yet, so we haven't added them to our discussions with you. But as you know, records, when we add them, when they come online, they turn into revenue that day because we're already getting That's the beauty of the system we have. Sorry, John, go ahead.

John W. Gamble: And as we look out to the fourth quarter of, you know, meaningful record editions that we're working on, you know, and we haven't closed those yet, so we haven't added them into, you know, our discussions with you. But as you know, records, when we add them, when they come online, they turn into revenue that day.

John W. Gamble: [inaudible]

Unknown Speaker: No problem. And as you get into the fourth quarter, obviously, what you're seeing from third to fourth quarter is there's some traditional strength, generally from third to fourth quarter in talent, right? Just because of seasonal hiring, and I-9 because of seasonal hiring where we do onboarding for companies. We generally see some strength in banking and card around CLIs, and then importantly, in CMS, ACA sign-ups start in the fourth quarter, so we generally see nice growth in government going into the fourth quarter.

Speaker Change: Right, just because of seasonal hiring and I-9 because of seasonal hiring where we do onboarding for companies. We generally see some strength in banking and card around CLIs.

Speaker Change: And then, importantly...

Speaker Change: In CMS, ACA sign-ups start in the fourth quarter, so we generally see nice growth in government going into the fourth quarter. And then you layer on top of that the strength in records, and that's what gives us confidence that we're going to see good performance as we go through the back half of the year.

Unknown Speaker: And then you layer on top of that the strength in records, and that's what gives us confidence that we're gonna see good performance as we go through the back half of the year in verifier non-mortgage. Mortgage, we've talked about. I think that's been covered.

Speaker Change: in Verifier Non-Mortgage. Mortgage we've talked about. I think that's been covered. And employer, what we're seeing is as we get into the fourth quarter, the significant impact of ERC that we saw through the first nine months of the year, we wrap around the decline that occurred in the fourth quarter of last year.

Unknown Speaker: And employers, what we're seeing is as we get into the fourth quarter, the significant impact of ERC that we saw through the first nine months of the year will wrap around the decline that occurred in the fourth quarter of last year. So employer revenue, on a year-over-year basis, the growth rate will be substantially better. As we said, we expect to be flat to slightly up relative to the declines that we've been seeing, and that's principally driven by the fact that we saw a big decline in ERC in the fourth quarter of 23. So I'd say that's why we feel good about the way EWS is trending and the opportunities to drive revenue growth. Thank you.

Speaker Change: So, employer revenue on a year-over-year basis.

Speaker Change: The growth rate will be substantially better as we said we expect to be flat to slightly up relative to the declines that we've been seeing and that's principally driven by the fact that we saw a big decline in ERC in the fourth quarter of 23. So I'd say that's why we feel good about the way EWS is trending and the opportunities to drive the revenue growth we're talking about.

Speaker Change: At it. Thank you. And I know you've gotten questions about where there might be a little bit of caution in the guidance and room for upside. There's been a couple of surprises the past few quarters, the WOTC, the transition taking a little bit longer. Do you feel like for the back half, you've given yourself some room for some things that might occur like that, some of the stuff that may be kind of out of your control?

Unknown Speaker: And I know you've gotten questions about where there might be a little bit of caution in the guidance and room for upside. There have been a couple of surprises in the past few quarters, you know, the WOTC, the transition taking a little bit longer. Do you feel like, for the back half, you've given yourself some room for some things that might occur like that, some of the stuff that may be kind of out of your control?

Speaker Change: Yeah, we're always trying to do that, as you know, and it's...

Unknown Speaker: Yeah, we're always trying to do that, as you know, and it's not always easy, like the WOTC change that went in place last year, which we just thought would be implemented by the states more quickly. You know, government bureaucracies sometimes move at different paces. But we think we have good visibility. You know, we talked earlier about the records, that's one where we have high visibility on, you know, we know we've signed, we know when they're coming on, we have kind of those schedules. So that gives you a lot of visibility.

Speaker Change: Often not easy, you know, like the WOTC change that took, went in place last year, we just thought would be implemented by the states more quickly, you know, government bureaucracies sometimes move at different paces.

Speaker Change: But we think we have good visibility. You know, we talked earlier about the records. That's one where we have high visibility on. You know, we know what we've signed. We know when they're coming on. We have kind of those schedules, so that gives you a lot of visibility.

Unknown Speaker: And, you know, we do what you would, what we would suggest, or what Rick would think we do is, you know, we handicap different macro elements and try to put our best forecast together. And because, you know, on mortgage, you know, while there's Unknown Attendee, Keen Tong, Equifax Inc., Jeff Begor, Kevin McVeigh, Simon Clinch, Kelsey [inaudible] And it's Mark's reference, and we talked about it in the script, right? I mean, obviously, we know the third to fourth quarter requires a lot of execution, but we have a lot of confidence in the way the teams are executing right now.

Speaker Change: you know, we, you know, do what you would what we would suggest or what we would, you know, think we do is, you know, we handicapped, you know, different, you know, macro elements and try to put our best forecast together. And because, you know, on mortgage, you know, while there's...

Speaker Change: [inaudible]

Speaker Change: As you know, we expect rates over the medium term, call it into 25 and 26, to come down and that's going to be a real tailwind for us on the mortgage side. So yeah, we've put pluses and minuses that we think we know about into the forecast and that's why we put it in front of you.

Speaker Change: And as Mark referenced, and we talked about in the script, right, I mean obviously we know third to fourth quarter requires a lot of execution, but we have a lot of confidence in the way the teams are executing right now and it's around completing the transformations. We think we have very good visibility into how that's going to complete and the timing.

Unknown Speaker: And it's around completing the transformations. We think we have very good visibility into how that's going to happen in time. Appreciate it.

Speaker Change: Appreciate it. Thank you.

Speaker Change: Thank you. Next question today is coming from Kelsey Zhu from Autonomous Research. Your line is now live.

Unknown Speaker: Thank you. Your next question today is coming from Kelsey Zhu from Autonomous Research. Your line is now live. Hi, good morning.

Kelsey Zhu: Hi, good morning. Thanks for taking my questions.

Unknown Speaker: Thanks for taking my question. My first question is on talent. Obviously, we've seen really strong growth this quarter. I was wondering... Tell us a little bit more about the new product. Unknown Attendee, Keen Tong, Equifax Inc. Yeah, and in talent, you have to add to it, you know, also penetration.

Kelsey Zhu: My first question is on talent. Obviously, we've seen really strong growth this quarter. I was wondering if you can tell us a little bit more about the new products you've introduced here today, how much they have contributed to growth, as well as kind of upcoming product pipelines.

Speaker Change: We expect them to contribute to growth.

Speaker Change: Yeah, and in talent you have to add to it, you know, also the penetration. Remember, that's a large TAM that we have a big position in, but there's a lot of runway for growth of just converting

Unknown Speaker: Remember, that's a large TAM that we have a big position in, but there's a lot of runway for growth of just converting, you know, manual, let's use just employment verification processes. As you know, we have incarceration, we have education data, and other data elements, like medical credentialing data. But just the penetration is just a huge opportunity, just like government, you know, the, you know, when you've got, you know, a $450, $500 million kind of run rate business in talent, you know, operating in a, you know, $3 billion plus TAM, there's just a lot of penetration opportunity.

Speaker Change: manual, let's use just employment verification processes. As you know, we have incarceration, we have education data, and other data elements.

Speaker Change: [inaudible]

Unknown Speaker: Product is a big lever also, you know; we've got a lot of focus around new products, you know, on incarceration, on education, on different depths of employment data. We rolled out an hourly solution, you know, for hourly background screens that don't require as much employment history. So there's a big focus there. And I know the team's working on the next chapter of combining those data elements, with our goal being to have a single transaction to deliver all the data that's required for a background screen, which would include employment history, incarceration, education, etc.

Speaker Change: There's just a lot of penetration opportunity.

Speaker Change: Product is a big lever also. You know, we've got a lot of focus around new products, you know, on incarceration, on education.

Speaker Change: on

Speaker Change: different depth of employment data, we rolled out an hourly solution, you know, for hourly background screens that don't require as much employment history. So, there's a big focus there, and I know the team's working on the next chapter of combining those data elements, you know, with our goal being to have a single transaction.

Unknown Speaker: We signed and announced a new partnership in education that goes beyond college degrees and into high school and vocational schools. So that's another depth of element that's, you know, a part of our second half focus on talent. And in the second quarter, we saw very nice growth out of the insights portfolio, incarceration, as Mark referenced, helping us drive the talent growth rate. So that was a nice, that was a good growth area for us in the second quarter. I got it.

Speaker Change: To deliver all the data that's required for a background screen, which would include employment history.

Speaker Change: would include incarceration, education.

Speaker Change: etc. We we signed and announced a new partnership.

Speaker Change: An education that goes beyond college degrees and into high school and vocational schools. So that's another depth of element that's a part of our second half focus on talent.

Speaker Change: And in the second quarter, we saw very nice growth out of the Insights portfolio, incarceration as Mark referenced, helping us drive the talent growth rate. So that was a nice, that was a nice growth area for us in the second quarter.

Speaker Change: Got it, super helpful.

Unknown Speaker: Super helpful. And then my second question is about government. We also saw really strong growth this quarter. How much of that is driven by the CMS contract expansion? And are there any one-off factors that contributed to growth this quarter? And how should we think about, Unknown Attendee, Keen Tong, Equifax Inc.? Yeah, that's a heavy question. Let me take a few parts of that. You know, when you think about government, I think, John and I both mentioned in our comments that the biggest driver in government is penetration into that big $5 billion TAM. You know, that's really at the state agency level.

Speaker Change: My second question is on government. We also saw really strong growth this quarter. How much of that is driven by the CMS contract expansion and are there any one-off factors that contributed to growth this quarter and how should we think about, you know,

Speaker Change: a sustainable growth rate going forward.

Speaker Change: That's a heavy question. Let me take a few parts of that. When you think about government, I think John and I both mentioned in our comments, the biggest driver in government is penetration into that big $5 billion TAM.

Unknown Speaker: And as you know, we've continued to add resources to our government team in the states in order to drive that penetration. And remember, you know, you've got multiple agencies that are using our data, and in most cases, they are not using our data; they're still doing it manually, whether it's for health care benefits, food support, rent support, childcare support, education support, income support, there are, you know, about a dozen different social services. And I think, you know, the scale of the US consumer base, that our household base that receives these services, is about 90 million Americans receiving those services.

Speaker Change: You know, that's really at the state agency level.

Speaker Change: And as you know, we've continued to add resources in our government team, you know, in, at the states in order to drive that penetration. And remember,

Speaker Change: You've got multiple agencies that are using our data, and in most cases are not using our data. They're still doing it manually.

Speaker Change: whether it's for health care benefits, food support, rent support, child care support, education support.

Unknown Speaker: And, you know, when you think about our business, they'd call it roughly $800 million run rate today, you know, against that $5 billion TAM. You've got over $4 billion in really manual processing of principally income verification, you know, that we're penetrating into. So state penetration is a big driver. And we think about that as very sustainable. You know, there's not anyone awesome there; you get embedded in their workflows, and then you become, you know, a part of that process.

Speaker Change: [inaudible]

Speaker Change: And, you know, when you think about our business, I'd call it roughly $800 million run rate today.

Speaker Change: you know, against that $5 billion TAM, you've got over a $4 billion

Unknown Speaker: As you point out, we did expand and extend our CMS contract last September. So we're still, you know, taking the benefit of the price increase that was built in there. And as you know, that's a five-year contract with annual escalators. So that's one with a lot of visibility. So, you know, there's not any kind of one-offs in there.

Speaker Change: Unknown Attendee Really manual processing of

Speaker Change: principally income verification that we're penetrating into so state penetration is a big driver and we think about that as very sustainable. You know, there's not there's no one awesome there you get embedded in their workflows and then you become, you know, a part of that process.

Speaker Change: As you point out, we did extend our CMS contract last September , so we're still...

Speaker Change: You know, taking the benefit of the price increase that was built in there.

Unknown Speaker: Anything else you'd add, John, in government, you know, you can tell we're quite an energized government last quarter and now again this quarter. Government is, you know, we think the largest vertical in workforce solutions. And it's the business with, you know, we think the largest, you know, runway. Your question about the long-term growth rate is obviously outgrowing. In the last three years, it's had a 50% CAGR, and it was up 30% in the quarter, I think 35 in the last quarter, you know, so it's had very strong growth above, you know, kind of framework growth for workforce solutions, you know, in the 13 to 15%, you know, total growth. We've been clear that we expect government to outgrow our 13 to 15 framework for EWS over the long term. So that We haven't given any guidance for 25.

Speaker Change: And as you know, that's a five-year contract with annual escalators, so that's one with a lot of visibility. So, you know, there's not any kind of one-offs in there. Anything else you'd add, John , in government? You know, you can tell we're quite energized.

John W. Gamble: Last quarter and now again this quarter is the largest vertical in workforce solutions and it's the business with, you know, we think the largest, you know, runway. Your question about the long-term growth rate.

John W. Gamble: It's obviously outgrowing.

John W. Gamble: In the last three years, it's had a 50% CAGR. It was up 30% in the quarter. I think 35% last quarter.

Speaker Change: Very strong above, you know, kind of framework growth for workforce solutions, you know, in the 13 to 15 percent, you know, total growth. We've been clear that we expect government to outgrow our 13 to 15 framework for EWS over the long term.

Speaker Change: So that's clearly a business we have a lot of confidence in and we're investing a lot in because of the opportunity there. We haven't given any guidance for 25, we'll do that as we get through this year, but we've been clear that we expect it to grow faster than the rest of Equifax and faster than the rest of EWS.

Unknown Speaker: We'll do that as we get, you know, through this year. But we've been clear that we expect it to grow faster than the rest of Equifax and faster than the rest of EWS. Unknown Attendee, Keen Tong, Equifax Inc. Thank you so much.

Speaker Change: In terms of 2024, just looking at sequential trends, right, I think the sequential trends we're seeing in the second quarter were good and strong and third and fourth quarter, I think, are very consistent with what we've seen in the past, and specifically, as we referenced, the growth we're expecting into the fourth quarter is heavily driven by CMS and the fact that ACA starts in the fourth quarter and every year we see a pop-up.

Speaker Change: In revenue from that agreement with CMS in 4Q and then again in 1Q.

Speaker Change: Thank you so much.

Speaker Change: Your next question is coming from Faiza Alwy from Deutsche Bank. Your line is now live.

Unknown Speaker: Thank you. The next question is coming from Faiza Alwy from Deutsche Bank. Your line is now live. Faiza, we can't hear you.

Speaker Change: Faiza, we can't hear you. Yeah, we got you now, I think.

Faiza Alwy: Oh, is this OK?

Unknown Speaker: Yeah, we got you now, I think. Oh, is this okay? Yep, that's better. Okay. Okay. Sorry about that.

Faiza Alwy: Yep, that's better. Okay. Okay. Sorry about that. So wanted to ask about the USIS acceleration that you're expecting on the revenue line just from cloud completion. Talk a little bit about your confidence in that. Maybe what type of new products are

Unknown Speaker: So I wanted to ask about the USIS acceleration that you're expecting on the revenue line just from cloud completion. Talk a little bit about your confidence in that. Maybe what type of new products they are, Unknown Attendee, Keen Tong, Equifax Inc. Yeah, and as John said earlier, in one of the questions, we expect to see some benefits, perhaps later in the year, but that's really going to be in 25, 26, and 27. There's no question that there's been some distraction for that team.

Faiza Alwy: Talked about, you know, potential market share gains. So just give us a bit more color and confidence around that acceleration.

Faiza Alwy: Yeah, and as John said earlier in one of the questions, you know, we expect to see some benefits, you know, perhaps later in the year, but that's really going to be in 25, 26, and 27. You know, there's no question that there's been some distraction for that team. This has been our most complex cloud transformation of the 40-year-old.

Unknown Speaker: This has been our most complex cloud transformation of the 40-year-old kind of consumer credit. We call it Acro, a platform that we had to be finishing in the next couple weeks. It's just been a huge accomplishment, and it's just taken so much bandwidth from the team to complete that.

Faiza Alwy: you know, kind of consumer credit, we call it Acro, a platform that we had to be finishing it, you know, in the next couple weeks is just a huge accomplishment and it's just taken so much.

Faiza Alwy: Bandwidth from the team to complete that so

Faiza Alwy: you know kind of the the focus of the team is one positive that we'll have in the second half but you should think about that really benefiting as we get into 25 and beyond.

Unknown Speaker: So, you know, kind of the focus of the team is one positive that we'll have in the second half, but you should think about that really benefiting as we get into 25 and beyond. You point out a number of really important levers; we believe the always-on stability, the ability to roll out new products more quickly, just make us a more valuable partner to our customers. And we do expect to have share gains, you know, going forward.

Speaker Change: You point out a number of really important levers. We believe the always-on stability, the ability to roll out new products more quickly just make us a more valuable partner.

Speaker Change: to our customers, and we do expect to have share gains.

Unknown Speaker: We've got some of those in flight, and a lot of conversations going on. The feedback from our customers that we've moved, you know, 99% of our customers to the cloud, or I think it's even higher than 99% as I speak today, has been outstanding.

Speaker Change: going forward. We've got some of those in flight and a lot of conversations going on. The feedback from our customers.

Speaker Change: that we've moved 99% of our customers to the cloud.

Speaker Change: I think it's even higher than 99 as I speak today, has been outstanding.

Unknown Speaker: You know, the performance, the speed, the acceleration of moving the data, just the feedback is super positive, and as you know, that's one of the reasons we invested this substantial amount of money in the cloud four plus years ago because we believed it was going to give us a stronger competitive position with our customers. So you and we should start to see those benefits, you know, really in 25, but the momentum, you know, there should be some good guys as we get into the second half of that. New products are another big deal.

Speaker Change: You know, the performance, the speed, acceleration of moving the data, just the feedback is super positive. And as you know, that's one of the reasons we invested.

Speaker Change: You know, the substantial amount of money in the cloud, you know, four plus years ago was we believed it was going to give us a stronger competitive position with our customers. So you and we should start to see those benefits.

Speaker Change: Really in 25, but the momentum, there should be some good guys as we get into the second half on that.

Speaker Change: New products is another big deal. As you know, their vitality has been below our 10% goal for a number of years as they've been working on the cloud transformation. We've seen some positive acceleration in the quarter. I think they were 8% vitality and up 100 bps.

Unknown Speaker: As you know, their vitality has been below our 10% goal for a number of years as they've been working on the cloud transformation. We've seen some positive acceleration in the quarter. I think there was 8% vitality and up 100 bips, which is positive.

Speaker Change: which is positive, so the team is starting to create some bandwidth for new products.

Speaker Change: and you'll see new products really from every element of USIS. A lot of stuff coming out from Identity.

Unknown Speaker: So the team is starting to create some bandwidth for new products. And you'll see new products really from every element of USIS. A lot of stuff coming out from identity and compliance, which we're excited about. A lot of risk-based solutions, data combination solutions, given that we have such really unique data in USIS versus our competitors, particularly in the alternative data with NC+, DataX, and Teletrack. So a lot of traction there.

Speaker Change: and Compliance, which we're excited about.

Speaker Change: A lot of risk-based solutions, data combination solutions given, you know, we have such really unique data in USIS versus our competitors.

Speaker Change: particularly in the alternative data with NC+.

Speaker Change: Mark Begor, John Gamble, Mark Begor, Mark Begor, John Gamble, Mark Begor, Mark Begor,

Unknown Speaker: Some products in marketing, leveraging our IXI wealth data, you know, have been coming out. Then the last one I'd comment on is, and I used it in my comments, I mentioned in my comments, is, you know, with the cloud complete in EWS and now the cloud complete in USIS, we've got a big focus on delivering products that really combine our income and employment data with the credit file. You know, we think there are a lot of opportunities to put a flag on the credit file, for example, in mortgage, auto, and P loans. So when one of our customers is pulling a credit file, they'll know that there's an individual there that's also working.

Speaker Change: We've got a big focus on delivering products that really combine twin, our income and employment data, with the credit file.

Speaker Change: We think there's a lot of opportunities to put a flag on the credit file, for example, in mortgage, auto, P-loans.

Speaker Change: So when one of our customers is pulling a credit file, they'll know that there's an individual there that's also working. That adds to the underwriting capabilities of that consumer and adds to the value of our credit file and our solution.

Unknown Speaker: That adds to the underwriting capabilities of that consumer and adds to the value of our credit file and our solution. And we're really energized about the kind of solutions that combine USIS and EWS products that, you know, will benefit both businesses but we think make our credit file more valuable, which should drive credit file share. So that's a second half focus on the product side, likely a 2025, you know, implementation. So we're really energized around the always-on stability.

Speaker Change: We're really energized about those kind of...

Speaker Change: solutions that combine USIS and EWS products that, you know, will benefit both businesses, but we think...

Speaker Change: Make Our Credit File More Valuable, which should drive credit file share, so that's a...

Unknown Speaker: It'll drive our competitive advantage. And then, as you point out, the ability to roll out more new products, leveraging the USIS data, but then also bridging between USIS and EWS going forward. The only thing I'd add is we're also seeing nice growth in the use of Ignite and Freescreen and Ignite by our customers. That's important because that's also the platform on which we're deploying our proprietary and then also Vertex AI.

Speaker Change: Second half focus on the product side, likely a 2025.

Speaker Change: You know, implementation. So we're really energized around the always-on stability that'll drive our competitive advantage. And then, as you point out, the ability to roll out more new products leveraging the USIS data, but then also bridging between USIS and EWS going forward.

Speaker Change: The only thing I'd add is we're also seeing nice growth in the use of Ignite and Freescreen, and Ignite by our customers.

Unknown Speaker: So we're making that available to our customers, and it allows us to substantially expand the use that we have substantially. So we feel very, very good about the fact that we're seeing accelerating adoption of Ignite in the marketplace, with our customers using it directly and with us developing products internally. Great. Thank you so much.

Speaker Change: That's important because that's also the platform in which we're deploying our proprietary and then also Vertex AI. So we're making that available to our customers and it allows us to expand and expand the use that we have substantially. So we feel very, very good about the fact that we're seeing...

Speaker Change: Accelerating adoption of Ignite in the marketplace with our customers using it directly and with us developing products internally.

Speaker Change: Great, thank you so much. And then my second question is on EWS mortgage side. Obviously, we've had a lot of conversations over the last few quarters, even years about

Unknown Speaker: And then my second question is on the EWS mortgage side. Obviously, we've had a lot of conversations over the last few quarters, even years about, you know, twin inquiries versus outperformance. So just give us, you know, the lay of the land in terms of how you're thinking about outperformance from here. And then I know you talked about twin inquiries sort of stabilizing maybe or being more in line with the credit inquiries. And I'm sure you saw the HMDA data came out last week. I'm just curious if you reflected on that and any incremental thoughts around just EWS mortgages.

Speaker Change: Twin Inquiries vs. Outperformance

Speaker Change: So just give us, you know, the lay of the land in terms of how you're thinking about outperformance from here. And then I know you talked about twin inquiries sort of stabilizing maybe or being more in line with the credit inquiries. And I'm sure you saw the HMDA data came out last week. I'm just curious if you reflected on that and any incremental thoughts around.

Speaker Change: Just eat up the U.S. meat, we're good.

Speaker Change: But just in terms of how we expect EWS mortgages to perform relative to inquiries, right?

Unknown Speaker: Just in terms of how we expect EWS Mortgage to perform relative to inquiries, as we talked about, a lot of our improvement in the second half is driven, again, by records, right? So Mark talked a lot about the fact that we've done a really nice job of adding new partners, and we're adding a significant number of records, a lot of them boarded late in the second quarter. So we are expecting to see revenue benefits in EWS from record additions, from the records that were added at the end of the second quarter and also the records we're going to add throughout the rest of this year.

Speaker Change: As we talked about, a lot of our improvement in the second half is driven, again, by records.

Speaker Change: Mark talked a lot about the fact that we've done a really nice job of adding new partners and we're adding a significant number of records, a lot of them boarded late.

Mark W. Begor: in the second quarter. So we are expecting to see revenue benefits in EWS from record additions.

Speaker Change: Unknown Speaker ... from the records that were added at the end of the second quarter and also the records we're gonna add throughout the rest of this year. And that's really the big driver. Unknown Speaker And then I'll just add again. I mentioned it earlier in one of the earlier comments. I think you know this but record existence, we already have the inquiries coming.

Unknown Speaker: And that's really the big driver. I'll just add again, I mentioned it earlier in one of the earlier comments. I think you know this, but record additions. We already have the inquiries coming. When we add the records, they turn into revenue. So it's such a powerful lever for us. And as you know, we've had really strong momentum there on records. And we've signaled that we have strong momentum in the second half and also good visibility.

Speaker Change: When we add the records, they turn into revenue. So it's such a powerful lever for us, and as you know, we've had really strong momentum there on records, and we've signaled we have strong momentum in the second half, and also good visibility.

Speaker Change: We don't have to do anything else but get the records in our data set and they become revenue because we already have the inquiries coming in from our customers, we just have higher hit rates.

Unknown Speaker: You know, we don't have to do anything else but get the records in our data set, and they become revenue because we already have inquiries coming in from our customers. We just have higher hit rates.

Speaker Change: We're also expecting some benefits from new products.

Unknown Speaker: We're also expecting some benefits from new products, as we've mentioned in the past, some marketing products that we're trying to put in place earlier in the approval funnel. So we're going to continue to work on NPI in EWS mortgage, but the big driver, certainly in the second half of 2024, is driven by the strong performance and record in the first half of 2024, as well as what we expect to continue to do in the rest of this year. Great! Thank you so much.

Speaker Change: We've mentioned in the past some marketing products that we're trying to put in place earlier in the approval funnel, so we're going to continue to work on NPI.

Speaker Change: in the EWS mortgage, but the big driver, certainly in the second half of 2024, is driven by the strong performance of records in the first half of 2024, as well as what we expect to continue to do in the rest of this year.

Speaker Change: Great, thank you so much.

Speaker Change: Thank you. Next question is coming from Surinder Thind from Jeffreys. Your line is now live.

Unknown Speaker: Thank you. The next question is coming from Surinder Thind from Jeffrey's. Your line is now live. Unknown Speaker Thank you.

Speaker Change: Thank you.

Unknown Speaker: I'd like to start with a question just about the innovation cycle. When we think about all of the commentary that you've kind of provided, is the idea that we should be entering a period of, especially within USIS, of accelerated innovation, and how quickly will those products come out, and then should we expect what I would call well above normal in the near term, or should we just help us work through that cycle, I guess? Yeah, it's a great question.

Surinder Thind: I'd like to start with a question just about the innovation cycle. When we think about all of the commentary that you've kind of provided, is the idea that we should be entering a period, especially within USIS, of accelerated innovation, and how quickly will those products come out, and then should we expect...

Speaker Change: what I would call well above normal in the near term or

Speaker Change: help us work us through that cycle I guess.

Speaker Change: Yeah, it's a great question. You know, as I commented on the last question, you know, they've clearly been dampened with all the focus on, you know, completing the cloud. We were really energized with the momentum that they even had in the second quarter in the midst of a very heavy quarter of cloud migrations that

Unknown Speaker: You know, as I commented on the last question, they've clearly been dampened by all the focus on, you know, completing the cloud. But we were really energized by the momentum that they even had in the second quarter, in the midst of a very heavy quarter of cloud migrations, so that, you know, their vitality was up 100 bps to 8%. They've been below our 10% goal for five years, you know, six years, you know, pick the timeframe when we increase that goal, you know, from five to seven to 10% for Equifax. And we expect USIS to move, you know, to that 10% as we get into 25. And, you know, the latter part of 25, meaning they've got really good momentum there.

Speaker Change: Unknown Attendee Their vitality was up 100 gifts to 8%. They've been below our 10% goal.

Speaker Change: for five years, you know, six years, you know, pick the timeframe. When we increase that goal, you know, from five to seven to 10% for Equifax.

Speaker Change: And we expect USIS to move, you know, to that 10%, you know, as we get into 25 and, you know, the latter part of 25, meaning they've got really good momentum there. I rattled off a whole bunch of, you know, solutions that they're working on and that they expect to roll out in the second half.

Unknown Speaker: I rattled off a whole bunch of, you know, solutions that they're working on and that they expect to roll out in the second half. But, you know, these new products take time, and they were clearly hampered by the cloud transformation. And we expect that with the cloud completion in the next couple weeks, you know, to see some increased focus. And then, as I mentioned, on the other, the last question, we actually have a dedicated leader in a team, you know, working on the EWS USIS products, meaning that product combinations, which we've never done before, and we think will be quite powerful, and kind of the only Equifax solutions that we can bring to market. We've got a dedicated team, you know, in USIS.

Speaker Change: You know, these new products take time, and they were clearly hampered, you know, by the cloud transformation, and we expect that with the cloud completion in the next couple weeks.

Speaker Change: You know, to see some increased focus.

Speaker Change: And then as I mentioned on the other, the last question.

Speaker Change: You know, we're also have a big focus.

Speaker Change: We actually have a dedicated, you know, leader and team.

Speaker Change: You know, working on the EWS USIS products, meaning the product combinations, which we've never done before.

Speaker Change: and we think will be quite powerful and kind of only Equifax solutions that we can bring to market.

Speaker Change: We've got a dedicated team, you know, in.

Speaker Change: Unknown Attendee in USIS and you know they're going to be you know really putting a pedal to the metal.

Unknown Speaker: And, you know, they're going to be, you know, really putting the pedal to the metal, you know, as we finish the year. To your question about when you'll see a lot of benefit, you know, I think that acceleration will happen in 2025, you know, versus the second half, but you're going to see, you know, positive momentum from products coming out. They may not be revenue in the fourth quarter, but they'll turn into revenue in the 25th and beyond.

Speaker Change: You know, as we finish the year.

Speaker Change: to your question about when you'll see a lot of the benefit, you know, I think that acceleration will happen in 2025, you know, versus the second half, but you're going to see, you know, positive momentum of products coming out. They may not be revenue in the fourth quarter, but they'll turn into revenue in 25 and beyond.

Speaker Change: Thank you. And on the implied 4Q margins, it sounds like there's a tax benefit in there as well. If we adjust that out, is that the right run rate for the firm on a go-forward basis from beyond 4Q?

Unknown Speaker: Thank you, and I'm. The implied 4Q margins, it sounds like there's a tax benefit in there as well. If we adjust that out, is that the right run rate for the firm on a go-forward basis from beyond 4Q?

Speaker Change: Yeah, so in terms of 2025 EBITDA margins, we'll give you guidance on that as we get into 2025.

Unknown Speaker: Yeah, so in terms of 2025 EBITDA margins, I will give you guidance on that as we get into 2025. But as we've been talking about, and Mark talked about the fact that we expect on a long-term model 50 basis points of improvement per year. And we do expect to see nice improvement margins as we get into 2025. In terms of an exact level,

Mark W. Begor: But, as we've been talking about, and Mark talked about the fact that we expect on a long-term model 50 basis points of improvement per year, and we do expect to see nice improvement in margins as we get into 2025, in terms of an exact level, we'll talk more about that as we get into next year.

Mark W. Begor: And maybe I just add, John , I think we're all...

Speaker Change: watching to see when the Fed's going to change rates and we believe the positive impact that'll have on mortgage activity. We've been very clear that...

Speaker Change: As that starts rolling in, that's going to be accretive to our margins.

Speaker Change: In a very positive way.

Speaker Change: Meaning it's going to drop through and at very high incremental EBIT levels, 70 plus, when that happens, likely in 25 and beyond as rates move down to some more normal level.

Speaker Change: Thank you.

Speaker Change: Thank you. Next question is coming from Andrew Nicholas from William Blair. Your line is now live.

Unknown Speaker: We'll talk more about that as we get into next year. Meaning it's going to drop through and very high, incremental EBITDA levels of 70 plus when that happens, and, you know, likely in 25 and beyond as rates move down to some, you know, more normal level. Thank you. Thank you. Next question is coming from Andrew Nicholas from William Blair. Your line is now live. Hi, good morning.

Andrew Owen Nicholas: Hi, good morning. Thanks for taking my questions. A lot of talk about record count, obviously a really strong number.

Unknown Speaker: Thanks for taking my questions. A lot of talk about the record count, obviously, a really strong number, both year over year and sequentially. I just kind of wanted to ask about, Unknown Attendee, Keen Tong, Equifax Inc. I'm just trying to figure out if... Unknown Attendee, Kevin McVeigh, Simon Clinch, Kyle Peterson, Faiza Alwy, Heather Balsky, Yeah, it's a whole, it's a whole range, as you might imagine, you know, use pensions. There are pension administrators that, you know, manage to find benefit pension payments, almost like a payroll processor.

Andrew Owen Nicholas: both year-over-year and sequentially. I just kind of wanted to ask about...

Andrew Owen Nicholas: the gig 1099 and pension opportunity there and more specifically how chunky or how big can those kind of record ads be on a on a one-by-one basis and part of why I ask is

Speaker Change: I'm just trying to figure out if it's maybe more expensive from like a sales staffing perspective to acquire those deals, or if they can be comparable to some of the HR technology, software, and payroll relationships that you've fostered over the years.

Speaker Change: Yeah, it's a whole, it's a whole range as you might imagine, you know, use pension, there are pension administrators that, you know, manage defined benefit pension payments, almost like a payroll processor for companies, you know, we've signed

Unknown Speaker: For companies, you know, we've signed one or two of those kind of relationships. So you think about those like a payroll processor. Those can be called more chunky, meaning larger. We have direct, you know, kind of relationships around pension records and just a long runway for pensions. And then there are a lot of pension records, as you might imagine, in federal, state, and local government organizations, fire departments, police departments, government agencies.

Speaker Change: One or two of those kind of relationships. So you think about those like a payroll processor those can be call it more chunky meaning larger We have direct You know kind of relationships around pension records and you know Just a long runway in pension and then there's a lot of pension records as you might imagine

Speaker Change: in federal, state, and local government organizations, fire departments, police departments, government agencies.

Speaker Change: Still Have Defined Benefit Pensions. Most corporations do not, like the vast majority.

Unknown Speaker: Unknown Attendee, Keen Tong, Equifax Inc. Unknown Attendee, Keen Tong, Equifax Inc. Unknown Attendee, Keen Tong, Equifax Inc. Unknown Attendee, Keen Tong, Equifax Inc. On 1099, we have a dedicated team. It's a different path. It's going to some of the big gig operators. But remember, 1099 income producing Americans include doctors, dentists, and lawyers that are self-employed and earn very high incomes. So you've got to go to tax prep services that do their quarterly estimated taxes as a way to get some indication of their income.

Speaker Change: but some of the legacy corporations still have that.

Speaker Change: You know, that's how we're going after pension. We have a dedicated group. First off, we have a dedicated leader that works for

Speaker Change: presenters, and our EWS leader that all they work on is records. And you may remember that's a change we made in December to put a full-time dedicated leader. At the time, he had other tasks in EWS.

Speaker Change: We just saw an opportunity to really continue to drive records, so we asked him to, you know, fully focus on records. So there's a dedicated team on pension. We have a dedicated team on 1099. We have a dedicated team on, call it, W-2 or non-farm payroll partnerships.

Speaker Change: you know, which would be payroll processors, HR software companies, and others like that. And then also remember that half of our records come from our direct relationships that we get through our employer business.

Speaker Change: So that's another important focus of ours is we're continuing to invest in new products and capabilities to have those direct record relationships.

Speaker Change: On 1099, we have a dedicated team. It's a different path. It's going to some of the big gig operators.

Speaker Change: Remember, 1099 income-producing Americans include doctors, dentists, lawyers that are self-employed and very high income, so you've got to go to tax prep services that do their quarterly estimated taxes as a way to get some indication of their income.

Speaker Change: Lots of different...

Speaker Change: avenues that, you know, I would say your question about are some chunky and some, you know, more granular. The answer is, yeah, it's a mix of all of the above across, you know, really all three kind of areas for focus on records.

Unknown Speaker: So lots of different avenues that, you know, I would say your question about is some chunky and some, you know, more granular. The answer is, yeah, it's a mix of all of the above across, you know, really all three kinds of areas for focusing on records. The positive we have is our scale. So we can focus on, you know, really going after those in so many different places.

Speaker Change: Unknown Speaker The positive we have is our scale so we can focus on, you know, really going after those in so many different places. And, and we've got a, you know, a big, a big focus on it for the obvious reason because of the benefit we get, we're already receiving the inquiries.

Unknown Speaker: And we've got a, you know, big, big focus on it for the obvious reason, because of the benefit we get. We're already receiving inquiries. So as we add records, we're able to translate those into revenue and give higher hit rates for our customers, which is what they're after. Very helpful.

Speaker Change: So as we add records, we're able to translate those into revenue and give higher hit rates for our customers, which is what they're after.

Speaker Change: Very helpful. Thank you. And then for a very quick follow-up for John , I believe, on the, you talked about the outperformance in mortgage for EWS.

Unknown Attendee: Thank you, and then for a very quick follow-up for John, I believe, on the, you talked about the health performance in mortgage for EWS. Maybe kind of underlying that is the expectation that the EWS is an inquiry number, more closely tracked, kind of the overall mortgage inquiry number in the back half, or is your expectation that that gap persists, as I guess mortgage lenders and buyers don't get all the way through the final stages of the purchase process. Now, in the second half, we've assumed it narrows and that they tend to, they're going to trend together.

Unknown Speaker: Thank you. And then for a very quick follow up for John, I believe on the you talked about the outperformance in mortgages for EWS. Unknown Attendee, Kevin McVeigh, Simon Clinch, Kevin McVeigh, Simon Clinch, Kevin McVeigh, Unknown Attendee, Keen Tong, Equifax Inc. And the second half, we've assumed it narrows and that they tend to trend together. Now, again, that's based on our expectation. It's also based on the trends we're seeing today, right?

Speaker Change: Maybe kind of underlying that is the expectation that the EWS inquiry number

Speaker Change: more closely tracks kind of the overall mortgage inquiry number in the back half or is your expectation that that gap persists as I guess mortgage lenders and buyers don't get all the way through to the final stages of the the purchase process?

Speaker Change: And the second half, we've assumed it narrows and that they're going to trend together. Now, again, that's...

John Gamble: Now, again, that's based on our expectation; it's also based on the trend we're seeing today, right? So, as we just, as we just run out the trends for the rest of the year and apply seasonality, separately, it looks like the movement in U.S. IS credit inquiries and in twin inquiries should move on a percentage basis year on year similarly, right? So, we'll have to see, right? I mean, we have been surprised in the past where sometimes the shopping behavior continues longer than we expect, but right now it looks like it's starting to narrow, and we can, and we can also see it analytically.

Speaker Change #100: Based on our expectation, it's also based on the trends we're seeing today, right? So as we just run out the trends for the rest of the year and apply seasonality,

Speaker Change: Separately, it looks like...

Unknown Speaker: So as we just run out the trends for the rest of the year and apply seasonality, separately, it looks like the movement in USIS credit inquiries and in twin inquiries should move on a percentage basis year on year similarly, right? So we'll have to see, right? I mean, we have been surprised in the past.

Speaker Change: The Movement in USIS Credit Inquiries and in Twin Inquiries.

Speaker Change: should move on a percentage basis year-on-year similarly, right? So, we'll have to see, right? We have been surprised in the past.

Speaker Change: where sometimes the shopping behavior continues longer than we expect, but right now it looks like it's starting to narrow, and we can also see it analytically.

Unknown Attendee: Great, thank you. Thank you.

Speaker Change: Your next question today is coming from Jeff Mueller from Baird. Your line is now live.

Unknown Speaker: Sometimes the shopping behavior continues longer than we expect. But right now, it looks like it's starting to narrow, and we can, and we can also see it analytically. Great, thank you. Your next question today is coming from Jeff Mueller from Baird. Your line is now live. Yeah, thank you. Good morning.

Unknown Attendee: That's question today is coming from Jeff Muller from Bear. Good line is our live.

Speaker Change: When you had an investor day a few years ago, there was going to be kind of like an outsized margin expansion period after the cloud transition was complete. What's the current thinking on flowing through the tech transformation?

Unknown Speaker: So just when you had an investor day a few years ago, there was going to be kind of like an outsized margin expansion period after the cloud transition was complete. I just what's the current thinking on flowing through the tech transformation? Unknown Attendee, Keen Tong, Equifax Inc. Yeah, no change, Jeff, we're gonna flow that through.

Unknown Attendee: Yeah, thank you.

Jeff Meuler: Good morning. So, just when you had it Investor Day a few years ago, there was going to be kind of like an outsized margin expansion period after the cloud transition was complete. I just, what's the current thinking on flowing through the tech transformation savings into margin versus any change in thinking on reinvesting that to, I guess, best harvest increased revenue opportunity from the cloud transition?

Speaker Change #101: savings into margin versus any change in thinking on reinvesting that to I guess best harvest the increased revenue opportunity from the cloud transition.

Speaker Change: Yeah, no change, Jeff. We're going to flow that through. We're investing, and we have been, and you followed us for a long time. You know us well, you know, while we were doing the cloud and putting

Unknown Speaker: We're investing, and we have been, and you followed us for a long time, you know, as well, while we were doing the cloud and putting, you know, outsized investment in our tech transformation for obvious long-term strategic reasons and competitive reasons. We've been making the right investments in 21, 22, 23, 24, you know, in new products and other resources, commercial resources, etc. So, you know, we're investing the right amount to grow Equifax today.

Mark Begor: Yeah, no change, Jeff. We're going to flow that through. We're investing, and we had been in it. You followed us for a long time.

Mark Begor: You know, as well, you know, while we were doing the cloud and putting, you know, outsized investment in our tech transformation for the obvious long-term strategic reasons and competitive reasons, we've been making the right investments in 2021, 2022, 2023, 2024, you know, in new products and other resources, commercial resources, et cetera. So, you know, we're investing the right amount to grow Echo Facts today. And those incremental savings from the cloud will flow through to expand our margins. Same way that we've talked about is, you know, when the mortgage market returns, we'll let that flow through.

Speaker Change: you know, outsized investment in our tech transformation for the obvious long-term strategic reasons and competitive reasons.

Speaker Change: We've been making the right investments in 21, 22, 23, 24, you know, in new products and other resources, commercial resources, etc. So, you know, we're investing the right amount to grow Equifax today, and those incremental savings from the cloud will flow through to expand our margins.

Unknown Speaker: And those incremental savings from the cloud will flow through to expand our margins. The same way that we've talked about is, you know, when the mortgage market returns, we'll let that flow through. We're not going to reinvest that we're investing the right amounts to grow Equifax at 8 to 12 and deliver that 50 bps of kind of what I'll call ongoing operating leverage from running the company. So as we have, like the mortgage market recovery or, as you point out, the cloud cost savings, those are going to flow through, and they're going to allow us to not only expand our margins, but as John pointed out, with our leverage coming down, we're getting closer to that stage, which we've been after for, as you know, quite some time, to start returning cash to shareholders.

Speaker Change: Same way that we've talked about is, you know, when the mortgage market returns, we'll let that flow through. You know, we're not going to reinvest that, we're investing the right amounts to

Mark Begor: You know, we're not going to reinvest that. We're investing the right amounts to grow Echo Facts. It's 8 to 12 and deliver that 50 bips of kind of what I'll call ongoing operating leverage from running the company. So, as we have like mortgage market recovery or, as you point out, the cloud cost savings, those are going to flow through. And they're going to allow us to not only expand our margins, but, as John pointed out, you know, with our leverage coming down.

Speaker Change: Grow Equifax at 8 to 12 and deliver that 50 bips of kind of what I'll call ongoing operating leverage from running the company.

Speaker Change: So as we have like mortgage market recovery, or as you point out, the cloud cost savings, those are going to flow through and they're going to allow us to

Speaker Change: Not only expand our margins, but as John pointed out, you know, with our leverage coming down, you know, we're getting closer to that stage, which we've been after for, as you know, quite some time to start returning cash to shareholders.

Mark Begor: You know, we're getting closer to that stage, which we've been after for, as you know, quite some time, to start returning cash to shareholders.

Speaker Change #102: And then when you were describing, I think it was OIS, you mentioned the ID and fraud softness this quarter, so I'm guessing that's count and mitigator, correct me if I'm wrong, but what drove that, how quickly can it recover, and how is international doing for count and mitigator?

Unknown Attendee: Got it.

Unknown Speaker: Got it. And then when you were describing, I think it was OIS, you mentioned the ID and fraud softness this quarter, so I'm guessing that's count and mitigator. Correct me if I'm wrong, but what drove that? How quickly can it recover?

Unknown Attendee: And then when you were describing, I think it was OIS. You mentioned the idea in fraud, softness, this quarter, some guessing that's count in mitigator, correct me if I'm wrong.

Unknown Attendee: But what's wrote that, how quickly can it recover and how is international doing for count in mitigator?

Speaker Change #105: Yeah, so if we take a look at CountMedicator together, what we saw actually was...

Unknown Speaker: And how is international doing for count and mitigator? Yeah, so if we take a look at count and mitigator together, what we saw actually was, let's call it the fraud part of the business perform better, we continue to see growth, we saw a little bit of weakness in chargeback management, which is what's called the mitigator part of the business, right? So, we're expecting, we've launched a lot of new products and platforms now in count. Right, count 360 is now live. We're expecting to see that platform take hold.

Speaker Change #108: Let's call it the fraud portion of the business, perform better.

Speaker Change #103: Unknown Attendee We continue to see growth. We saw a little bit of weakness in chargeback management, which is called the mitigator part of the business, right? So

Speaker Change: So, um, we're expecting...

Speaker Change: We've launched a lot of new products and platforms now in COUNT, right? COUNT360 is now live. We're expecting to see that platform take hold. So we're expecting to see improved performance as we move through the rest of this year around COUNT.

Speaker Change: And then around chargeback management, as we integrate chargeback management into the COUNT360 platform, we would expect to see some improvement there as well. So, but I'd say that what we're seeing, and it's good news on the margin front, because the...

Unknown Speaker: So we're expecting to see improved performance as we move through the rest of this year around count. And then around chargeback management, as we integrate chargeback management into the count 360 platform, we would expect to see some improvement there as well. So, but I'd say that what we're seeing, and it's good news on the margin front because the fraud business has better margins, we're seeing a little bit of performance and fraud. And given the launch of new products, our expectation is that we'll see improved performance first as we go through the rest of the year. Thank you.

Speaker Change: The fraud business has better margins. We're seeing a little better performance in fraud. And given the launch of new products, our expectation is that CRE will see improved performance first as we go through the rest of the year.

Speaker Change #104: Okay, thank you.

Speaker Change #106: Thank you. Our next question is coming from Scott Wurtzel from Wolfe Research whose line is now live.

Unknown Speaker: Your next question is coming from Scott Wurtzel from Wolf Research; her line is now live. Great, good morning guys, and thanks for taking my questions here. I just wanted to go back first to the Vitality Index in EWS and, you know, pretty notable sequential acceleration there. It seems like there is a decent amount of contribution there from talent, but I was wondering if there were any other, you know, kind of notable positive outliers there that were contributing to the sequential acceleration.

Scott Wurtzel: Great. Good morning, guys, and thanks for taking my questions here. I just wanted to go back first to the Vitality Index in EWS, and pretty notable sequential acceleration there. It seems like there was a decent amount of contribution there from talent, but just wondering if there were any other kind of notable positive outliers there that were contributing to the sequential acceleration and growth. Thanks.

Speaker Change #109: Yeah, you know, as you know, EWS has been really outperforming our 10% kind of vitality goal for, gosh, almost three years now, principally after they completed the cloud, and it was a real step up. So they've had really broad based in all their verticals focused on innovation and new products.

Unknown Speaker: Yeah, you know, as you know, EWS has been really outperforming our 10% kind of vitality goal for gosh, almost three years now, principally after they completed the cloud, and it was a real step up. So they've had a really broad base in all their verticals focused on innovation and new products. You point out talent, you know, where they've rolled out some products, and they've got more in the pipeline.

Speaker Change #110: You point out talent.

Speaker Change #110: you know, where they've rolled out some products and they've got more in the pipeline and so there was clearly some benefit there from products that

Speaker Change #110: Yeah. We're put in place late last year and in the first half of this year. Um, Mortgage has got products that, uh, they've rolled out. So there's probably some benefit to there. We, while we lapped Mortgage 36, they've got some other solutions that they're bringing in, employer.

Unknown Speaker: And so there was clearly some benefit there from products that, you know, were put in place late last year. And in the first half of this year, mortgages got products that they've rolled out. So there's probably some benefit to there we have while we left mortgage 36. They've got some other solutions that they're bringing in employer. We've got a new i9 solution called i9 virtual that's in the marketplace.

Speaker Change #110: We've got a new i9 solution called i9 virtual that's in the marketplace so you know that vertical is focused on new products and government is is also you know got some focus there so we've been quite energized about

Unknown Speaker: So, you know, that vertical is focused on new products, and government is also, you know, got some focus there. So we've been quite energized about EWS's kind of, call it the above framework, ability to execute on innovation. You know, we'd expect them, over time, to move back towards the 10, but they've been, you know, well above it for the last three years. And as we talked about, International had a good quarter on innovation, and so did USIS, even in the midst of their cloud work. Got it, that's helpful.

Speaker Change #111: EWS is kind of call it above framework.

Speaker Change #111: You know, ability to execute on innovation.

Speaker Change #111: We'd expect them over time to move back towards the 10, but they've been well above it for the last three years.

Speaker Change #111: As we talked about, International had a good quarter on innovation, and so did USIS, even in the midst of their cloud work.

Speaker Change #112: Got it. That's helpful. And just as a quick follow-up on the international side, I mean, you know, one of your peers recently had called out some headwinds to growth in Brazil during the past quarter as a result of some flooding. And, you know, just wondering if you guys had, you know, any impact from that at all in the second quarter here.

Unknown Speaker: And just as a quick follow-up on the international side, I mean, you know, one of your peers recently called out some headwinds to growth in Brazil during the past quarter as a result of some flooding. And, you know, just wondering if you guys had, you know, any impact from that at all on the second quarter here? Unknown Attendee We did. It was in Brazil, right?

Speaker Change #113: We did, we have the...

Speaker Change #114: Unknown Attendee It was in Brazil, right, and there's a substantial flooding in the south of Brazil, and it certainly impacted our business, although our Brazil business has actually performed...

Unknown Speaker: There's been substantial flooding in the south of Brazil, and it certainly impacted our business, although our Brazilian business has actually performed fairly consistently with the plans we put in place when we started the year. Unknown Attendee Yeah, we're pleased with Boa Vista's performance. We talked about a bunch of the solutions that we're bringing there now that should benefit the second half and 25 as we complete the integration. We're just getting close to lapping the 12-month mark from acquiring the business, but we're well down the path on integration and rolling in our new products and bringing in our platforms like Ignite and Interconnect and some of the other new product solutions.

Speaker Change #115: fairly consistently with the plan we put in place when we started the year.

Speaker Change #116: We talked about a bunch of the solutions that we're bringing there now that should benefit the second half and 25 as we complete the integration.

Speaker Change #116: Lapping, you know getting close to lapping the 12-month mark from acquiring the business, but we're well down the path on

Speaker Change #116: You know, integration and rolling in our new products and bringing in our platforms, you know, like Ignite and Interconnect and some of the other, you know, new product solutions. So we're quite optimistic, you know, about our Boa Vista acquisition and the opportunity for growth going forward.

Speaker Change #116: Great, thank you guys.

Speaker Change #117: Thank you. Next question today is coming from Kyle Peterson from Needham & Company. Your line is now live.

Unknown Speaker: We're quite optimistic about our Boa Vista acquisition and the opportunity for growth going forward. Great, thank you guys. Thank you. The next question today is coming from Kyle Peterson from the Edelman Company. Your line is now live.

Kyle Peterson: Thanks, and good morning guys. I wanted to start off on the records growth. It seems to be strong there. I just wanted to see if you guys could unpack what drove some of the new additions. I know you guys have been talking about Gig.

Unknown Speaker: Great. Thanks. And good morning, guys.

Speaker Change #119: and Touch, as well as some of these HR software partnerships. So I guess, like, if you kind of rank order what some of the bigger contributors were to the NetNew Records this quarter, that'll be really helpful.

Unknown Speaker: You know, want to start off, you know, the record growth seems strong there. Just want to see if you guys could unpack kind of what drove some of the new additions. You guys have been talking about, you know, the gig and, Unknown Attendee, Keen Tong, Equifax Inc. Yeah, I would say a similar earlier question. It's broad. You know, I think you're seeing the benefits of having a fully dedicated team and leader reporting to the leader of EWS reporting into Chad. Joe Munchnick is the leader who's driving that.

Speaker Change #120: Yeah, I would say a similar earlier question. It's broad-based.

Unknown Speaker: And I think, you know, we made that change in December, and you've seen just the ability to, you know, just drive more of those strategic partnerships, which has, you know, really been, you know, quite positive. It is broad-based; we add records from individual relationships when we're doing employer solutions like I-9, UC, WOTC, and other things with them. You know, we've, as we point out, we added four new partnerships in the quarter. We see a pipeline of those, and those partnerships are, you know, with pension administrators, they're with HR software companies, as you point out, and they're with, you know, traditional payroll processors.

Speaker Change #121: You know, I think you're seeing the benefits of having a fully dedicated team and leader.

Chad: Reporting to the leader of EWS, reporting in to Chad, Joe Munchnick is the leader who's driving that. And I think, you know, we made that change in December and you've seen...

Chad: Just the ability to, you know, just drive more of those strategic partnerships, which is, you know, really been, you know, quite positive. It is broad-based, you know, we add records from individual relationships when we're doing employer solutions like I-9, UC.

Unknown Speaker: And remember, when you think about the, you know, the TAM, if you will, you know, for records, there's, you know, roughly, the way we think about it, 225 million working Americans, you know, we're north of 132 million individuals in our data set. There's a long runway for growth, you know, going forward. And, you know, we've clearly, gosh, over the last three, five, six, seven years, been outgrowing our framework for records over the long term, which is, you know, kind of three, four points of record growth per year. That's what we think about over the long term.

Speaker Change #120: Watse and other things with them. You know, we've, as we point out, we added four new partnerships.

Speaker Change #120: In the in the quarter we see a pipeline of those and those partnerships are, you know, with pension administrators, they're with HR software companies, as you point out, and they're with, you know, traditional payroll processors.

Speaker Change #120: And remember, when you think about the, you know, the TAM, if you will, you know, for records, there's, you know, roughly, you know, the way we think about it, 225 million working Americans.

Speaker Change #120: You know, we're north of 132 million individuals in our data set. This is a long runway for growth, you know, going forward. And you know, we've clearly

Speaker Change #120: Gosh, over the last three, five, six, seven years, been outgrowing our framework for records over the long term, which is, you know, kind of three, four points of record growth per year is what we think about over the long term. But there's just been a lot of momentum, given our focus and resources we've been putting on it.

Speaker Change #126: That's really helpful. And, you know, I just want to follow up, you know, on auto, some of the moving pieces that you guys have seen there. I know, I guess called out kind of the the CDK issue. Seems like that's, I guess, largely resolved itself. But I guess, should we think of that as kind of a

Unknown Speaker: But there's just been a lot of momentum, given our focus and resources we've been putting on. That's really helpful. And, you know, I just want to follow up on auto, some of the moving pieces that you guys have seen there. I know you guys called out kind of the CDK issue.

Speaker Change #123: Late 2Q, maybe first week or so of 3Q impact, and I guess, if so, how are you guys thinking about Auto X, that impact, at least for the balance of the year?

Unknown Speaker: Seems like that's, I guess, largely resolved itself. But I guess, should we think of that as kind of a late 2Q, maybe first week or so of 3Q impact? And I guess, if so, how are you guys, Unknown Attendee, Keen Tong, Equifax Inc., at least for the balance. Yeah, I think we tried to highlight that, you know, we've seen, really, for the last couple of quarters, some impact from higher interest rates on auto loans dampening some of the auto credit underwriting, you know, so in, I would say we don't expect that to change And we've reflected that in our framework, you know, until rates come down. Got it.

Speaker Change #125: Yeah, I think we tried to highlight that, you know, we've seen really for the last couple of quarters, you know, some impact from higher interest rates.

Speaker Change #129: on auto loans dampening some of the auto credit underwriting, you know, so that in, I would say we don't expect that to change in the second half, and we've reflected that in our framework, you know, until rates come down.

Speaker Change #124: Got it. That's helpful. Thank you.

Speaker Change #124: Thank you. Next question today is coming from Shlomo Rosenbaum from Steeple. Your line is now live.

Unknown Speaker: That's helpful. Thank you. Your next question today is coming from Shlomo Rosenbaum from Steeple. Your line is now live. Hi, good morning.

Shlomo H. Rosenbaum: Hi, good morning. Thank you for taking my questions. Hey, Mark, I just want to get a little beat on the overall consumer credit environment. I mean, it sounds from your comments that there's some deterioration sequentially.

Unknown Attendee: Hi, good morning, and thank you for taking my questions. Hey Mark, I just want to get a little beat on the overall consumer credit environment. I mean, it sounds from your comments that there's some deterioration sequentially. And what I'm trying to understand is deterioration from the bank side of things. Is it deterioration from the consumers just saying, "Hey, I can't afford some of the loans." And you know, what are you seeing over there? And you know, some of the financial marketing area, you know, the area that has portfolio review, are you seeing some impact over there, you know, with the growth and revenue moving up to 7%.

Unknown Speaker: Thank you for taking my questions. Hey, Mark, I just want to get a little beat on the overall consumer credit environment. I mean, it sounds from your comments that there's some deterioration sequentially. And what I'm trying to understand is it deterioration on the bank side of things? Is it deterioration on the consumer side of things? You know, what are you seeing over there?

Speaker Change #124: And what I'm trying to understand, is it deterioration from the bank side of things? Is it deterioration from the consumers just saying, hey, I can't afford some of the loans? And, you know, what are you seeing over there? And, you know, some of the financial...

Unknown Speaker: And, you know, some of the financial marketing area, you know, the area that has portfolio review, are you seeing some impact over there, you know, with with the growth in revenue moving up to 7%? If you could just give us a little bit of color and then I have a follow. Yeah, I think there's been some slight softening of, I would call it consumer demand, like the consumer is still strong, you know, outside of the subprime consumer, which we know, has been impacted by inflation, which, you know, while it's coming down on a two year basis, what they're buying is still a bigger part of their disposable income, you know, whether it's groceries or fuel, you know, it's clearly impacted the subprime consumer.

Speaker Change #124: marketing area, you know, the area that has portfolio review, are you seeing some impact over there, you know, with the growth in revenue moving up to 7%. If you could just give us a little bit of color and then I have a follow-up.

Mark W. Begor: You could just give us a little bit of color, and then I have a follow-up. Yeah, I think there's been some slight softening of, I would call it consumer demand, like the consumer is still strong. You know, outside of the subprime consumer, which we know is impacted by inflation, which, you know, while it's coming down on a two-year basis, what they're buying is still a bigger part of the disposable income, you know, whether it's groceries or fuel. You know, clearly impacted the subprime consumer. It's really around the rates, you know. We saw it mortgage, obviously mortgage, you know, we've seen the impact of higher rates, you know, really impacting the mortgage market, meaningfully, you know, over the last couple of years.

Speaker Change #128: Yeah, I think there's been some slight softening of, I would call it consumer demand, like the consumer is still strong, you know, outside of the subprime consumer, which we know has been impacted by inflation, which, you know, while it's coming down on a two year basis, what they're buying is still a bigger part of their disposable income, you know, whether it's groceries or fuel, you know, it's clearly impacted the subprime consumer. It's really around the rates, you know, we saw it mortgage, obviously mortgage, you know, we've seen the impact of

Unknown Speaker: It's really around the rates, you know, we saw it in mortgage, obviously mortgage, you know, we've seen the impact of higher rates, you know, really impacting the mortgage market meaningfully over the last couple of years. And, you know, I think in the last six months, we've seen that flow to a much lesser degree, but obviously a negative impact on auto where you've got payments on a car, you know, with the higher rates, you know, are just substantially higher than they were a couple years ago. And that's, you know, impacting some level of auto purchases.

Speaker Change #128: higher rates, you know, really impacting the mortgage market meaningfully.

Speaker Change #128: You know, over the last couple of years.

Speaker Change #128: you know, I think in the last six months, we've seen that flow to a less much lesser degree, but obviously a negative impact in auto where you've got

Mark Begor: And, you know, I think in the last six months, we've seen that flow with less much lesser degree, but obviously a negative impact in auto, where you've got payments on a car, you know, with the higher rates, you know, are just substantially higher than they were a couple years ago. And that's, you know, impacting some level of auto purchases. I think you've seen, you know, inventories by the car dealers increase, you know, which is probably an indicator of, you know, consumer demand there because of higher rates. And, you know, until we see, you know, some reduction in rates, you know, I would expect that auto would, you know, be somewhat dampened. You know, it's probably the one that we've seen the most of. You know, outside of that, I think the other verticals, you know, are kind of continuing to move along.

Speaker Change #128: payments on a car, you know, with the higher rates, you know, are just substantially higher than they were a couple years ago. And that's...

Speaker Change #128: You know, impacting some level of

Speaker Change #128: of auto purchases. I think you've seen, you know, inventories by the car dealers increase, you know, which is probably an indicator.

Unknown Speaker: I think you've seen inventories by the car dealers increase, which is probably an indicator of, you know, consumer demand there because of higher rates. And, you know, until we see, you know, some reduction in rates, you know, I would expect that auto would, you know, be somewhat dampened. It's, it's, it's probably the one that we've seen the most of. Outside of that, I think the other verticals are kind of continuing to move along. It's not an impact on customers; our customers are still strong; our customers are so focused on growing their businesses. I think it's more of an end user demand on the consumer side. Okay, great. Thanks.

Speaker Change #128: of consumer demand there because of higher rates.

Speaker Change #128: you know, until we see some reduction.

Speaker Change #128: In rates, you know, I would expect that auto would...

Speaker Change #128: you know, be somewhat dampened, you know, it's, it's, it's, uh,

Speaker Change #128: It's probably the one that we've seen the most of. Outside of that, I think the other verticals are continuing to move along. It's not a customer impact. Our customers are still strong. Our customers are still focused on growing their businesses. I think it's more of an end-user demand on the consumer side.

Mark Begor: It's not a customer impact. Our customers are still strong; our customers are so focused on growing their businesses. I think it's more of an end-user demand on the consumer side.

Speaker Change #130: Okay, great, thanks. And then you made a comment about, you know, the impact to margins, the reason margin guidance is lowered.

Unknown Attendee: Okay, great. Thanks.

Unknown Speaker: And then made a comment about, you know, the impact on margins, the reason margin guidance is lowered, was just the timing of the cutover and some of the transition, but shouldn't impact the 2025 outlook to try to understand if things go out a quarter, why doesn't that snowball into 2025. Why wouldn't I kind of think about that as a 2025 number, you know, also being kind of a quarter? Yeah, so I think John commented that, you know, we're at the finish line with a lot of these transformations.

John Gamble: And then you get a comment about, you know, the impact to margins. The reason margin guidance is lowered was just the timing of the cut over and some of the transition. But, um, should impact 2025 outlook, to try to understand if things go out of quarter, why doesn't that snowball into 2025? Why wouldn't I kind of think about that as a 2025 number, you know, also being kind of a quarter behind. Yeah, I think John commented that, you know, we're at the finish line with a lot of these transformations. But when we move all our customers, there's a couple of months of overlap before we shut down the legacy infrastructure, you know, as we complete, you know, the commissioning those infrastructures.

Speaker Change #131: was just the timing of the cutover and some of the transition.

Speaker Change #132: but shouldn't impact 2025 outlook. Just trying to understand, if things go out a quarter, why doesn't that snowball into 2025? Why wouldn't I kind of think about that as a 2025 number, you know, also being kind of a quarter behind?

Speaker Change #132: Yeah, so I think John commented that, you know, we're at the finish line with a lot of these transformations. But when we move all our customers, there's a couple of months of overlap before we shut down the legacy infrastructure, you know, as we complete, you know, decommissioning those infrastructures. And, you know, that's still in our run rate, meaning we're still paying for those

Unknown Speaker: But when we move all our customers, there's a couple of months of overlap before we shut down the legacy infrastructure, you know, as we complete, you know, decommissioning those infrastructures, and, you know, that's still in our run rate, meaning we're still paying for those Unknown Attendee, Keen Tong, Unknown Attendee, Unknown Attendee, Unknown Attendee, Unknown Attendee Good morning, and thank you for taking my question.

John Gamble: And, you know, that's still in our run rate, meaning we're still paying for those duplicate infrastructures. The new cloud and the, in the legacy infrastructure, that will come out of 24, so we'll have full run rate in 2025, but it's delayed a couple of months because of some of the final work we're doing, you know, to complete principally USIS and, you know, I would say Canada, you know, is the other one that, you know, we're a few weeks behind and that pushes out those savings. So we have less benefit in 24, but we get the full benefit in 25.

Speaker Change #132: Duplicate infrastructures, the new cloud, and the...

Speaker Change #133: in the legacy infrastructure. That will come out of 2024, so we'll have a full-run rate in 2025, but it's delayed a couple of months because of some of the final work we're doing to complete principally USIS, and I would say Canada's the other one that we're a few weeks behind, and that pushes out those savings.

Speaker Change #133: So we have less benefit in 24, but we get the full benefit in 25.

Speaker Change #133: Okay, thank you.

Speaker Change #134: Thank you. Next question is coming from Owen Lau from Oppenheimer. Your line is now live.

Owen Lau: Good morning and thank you for taking my question. So going back to Mark's earlier comments about weight cut, the market currently expects the weight to cut weight by I think 50 to 75 basis point this year and it may even start in September .

Unknown Speaker: So going back to Mark's earlier comments about weight cuts, the market currently expects the weight to cut by I think 50 to 75 basis points this year, and it may even start in September. Let's say if the Fed cuts by 50 basis points, how much incremental benefit do you think Equifax can capture? And how do you think about all this?

Speaker Change #136: Let's say if the Fed cuts by 50 basis points, how much incremental benefit do you think Equifax can capture, and how do you think about all this for this year? Thank you.

Speaker Change #137: Yeah, that's a tough one to actually...

Unknown Speaker: Yeah, that's a tough one to actually put a point estimate on there. It's obviously going to be good news, you know, when the Fed cuts rates. Cutting rates, principally, you know, in our mortgage vertical. I think you saw the chart in the deck, you know, that inquiries are down 50% from what we would call normal levels. We would expect that activity to recover as rates come down. And, you know, you've got the kind of macro challenges of consumers, homeowners, a better term, you know, in a home, at a three or 4% mortgage and likely want to upgrade or change, but, you know, are waiting to see rates come down from kind of the high sixes or, you know, that kind of range before they make that move. So there's not a lot of inventory on the market.

Speaker Change #138: Put a point estimate on there. It's obviously going to be good news, you know when the Fed cut rate cuts rates principally

Speaker Change #139: you know, in our mortgage vertical. I think you saw the chart in the deck, you know, that inquiries are down 50% from what we would call normal levels.

Speaker Change #139: We would expect that activity to recover as rates come down.

Speaker Change #139: You know, you've got the kind of the macro challenges of consumers.

Speaker Change #139: Mark Begor, John Gamble, Mark Begor, Mark Begor, Mark Begor, Mark Begor, Mark Begor,

Unknown Speaker: We would expect that to be positive going forward. And, you know, we've tried to frame for you, you know, that if you look at where we are today versus what we characterize as normal, you know, that's a billion dollars of incremental revenue, which is a huge number. There's that, you know; we would expect over time that activity to go back towards normal. We'll see how it goes. And, of course, you know, how does the Fed move rates? The interest rates in the United States from the Fed are the highest I think. Unknown Attendee, Kevin McVeigh, Simon Clinch, Kelsey Zhu, Arthur Truslove, Kevin McVeigh, Unknown Attendee Got it, that's helpful.

Speaker Change #139: That kind of range, you know, before they make that move. So there's not a lot of inventory on the market.

Speaker Change #139: We would expect that to be positive going forward, and we've tried to frame for you.

Speaker Change #139: You know, that if you look at where we are today versus what we characterize as normal.

Speaker Change #139: You know, that's a billion one of incremental revenue.

Speaker Change #139: which is a huge number that, you know, we would expect over time that activity to go back towards normal, you know, we'll see how it goes and, of course, you know, how does the Fed move rates, you know, the interest rates in the United States from the Fed are the highest, I think,

Speaker Change #139: pretty much in the globe today. And their 25-year high, you know, for the United States, you know, it's, it's, you know, we all believe or we certainly believe that they will come down over time and then we'll have a big positive.

Speaker Change #140: from the Mortgage Market Recovery that we've been clear that will flow through our P&L and drive our margin expansion and free cash generation, substantially, as that comes back into our financials.

Johnny: Toni, that's helpful.

Speaker Change #142: And then I remember last quarter, talent revenue was down 4%, and you saw some recovery in March and continued in April . In the second quarter, it was up 13%. Was it because of some kind of demand from January or February , or high market has actually improved that you see the growth will be more sustainable? Thanks.

Unknown Speaker: And then I remember last quarter, talent revenue was down 4%, and you saw some recovery in March and continued in April. In the second quarter, it was up 13%. Was it because of some kind of demand from January or February, or because the market has actually improved, that you see the growth will be more sustainable? I think the biggest driver, John, you can jump in also, you know, in talent, is just continued penetration in that TAM, you know, meaning customer wins, you know, getting to, you know, the top of the waterfall, meaning they're using our solution first in the kind of position, some of the new What would you add to that, John, for talent?

Speaker Change #143: I think the biggest driver, John , you can jump in also, you know, in talent is just continued penetration in that TAM, you know, meaning customer wins, you know, getting to, you know, top of waterfall, meaning they're using our solution first.

John W. Gamble: Kind of position some of the new products.

John W. Gamble: What would you add on that, John , for talent? Well, we also saw a really nice performance.

Unknown Speaker: Well, we also saw a really nice performance in some insights products, meaning incarceration that's used in background checks. And we also started to see some growth around some education products. So generally speaking, as we talked about last quarter, January and February, very weak in terms of hiring, you know, what we saw was weaker than normal. And then we saw recovery in March, and we got a little better performance in the second quarter, because of that recovery in our normal income and employment products, but also because we saw nice performance from some of the other products that we use that support the health care system. All right. Thanks a lot.

John W. Gamble: in some Insights product, meaning incarceration that's used in background checks.

Speaker Change #144: And we also started to see some growth around some education products. So, generally speaking, as we talked about last quarter, January and February are very weak in terms of hiring.

Speaker Change #145: What we saw was weaker than normal, and then we saw recovery in March, and we got a little better performance in the second quarter because of that recovery also in our normal income and employment products, but also because we saw nice performance from some of the other products that we use that support the talent market.

Mark Begor: Mark. All right, thanks a lot. I appreciate it.

Speaker Change #146: Alright, thanks a lot. I appreciate it.

Unknown Speaker: I appreciate it. Your next question is coming from Craig Huber from Huber Research Partners. Your line is now live. Great. Thank you.

Speaker Change #147: Thank you. Next question is coming from Craig Huber from Huber Research Partners. Your line is now live.

Craig Huber: Thank you. Next question is coming from Craig Huber from Cuba Research Partner; your line is now live. Craig, thank you. Keep discussing that you would your AI spending here. I'm just curious; the dollars you're spending on that and going for here. Are you doing that within the context of, say, your normal technology budget, put aside the cloud and stuff? With inside your normal technology budget here, we're just displaced in other spending that you normally would do on the technology side. No, no, there's a, there's a, there's a mental, yeah, that it's actually hurting.

Craig Anthony Huber: Great, thank you. Can you discuss, if you would, your AI spending here? I'm just curious, the dollars you're spending on that and going forward here, are you doing that within the context of, say, your normal technology budget, putting aside the cloud and stuff?

Unknown Speaker: [inaudible] Unknown Attendee, Keen Tong, Equifax Inc, Technology Budget, put aside the cloud. Unknown Attendee, Kevin McVeigh, Simon Clinch, Kyle Peterson, Faiza Alwy, Heather Balsky, Yeah, it's, well, I don't know, I don't think about it as hurting our margins, but we're investing for obvious reasons, in what we believe is a very important, you know, growth lever for us of enhancing our scores, models and products, using AI and ML, you know, this isn't new at Equifax, but, you know, we've been consistently increasing our focus and spend, you know, around resources and capabilities for AI.

Speaker Change #149: Inside your normal technology budget here, where it's just displaced and other spending that you normally would do on the technology side? No, no, there's, yeah. That it's actually hurting the origin.

Speaker Change #148: Yeah, it's, well, I don't know.

Mark Begor: Yeah, yeah, it's, well, I don't know, I don't think about it hurting our margins, but we're investing for obvious reasons in what we believe is a very important, you know, growth lever for us, of enhancing our scores, models and products using AI and ML. You know, this isn't new with Equifax, but, you know, we've been consistently increasing our focus and spend, you know, around resources and capabilities for AI. The tech transformation provides a big lever there, you know, with our own AI capabilities and then leveraging that with Google's Vertex AI. So, you know, being in the cloud is a big positive for us, and then we've been investing in more resources and people. I mentioned that we brought on, you know, a really strong leader from the industry, was actually from one of our customers that we're excited to have, you know, in the business, to lead AI and ML for us. You see, you know, the use of AI expanding. We had a goal of 80% of our models and scores this year to be using our new AI and ML, and I think we're at 89 and a quarter, so north of our goal, which is a good thing. You know, as we move forward, we will move to 100%, right? You know, that's where we're heading.

Unknown Speaker: The tech transformation provides a big lever there, you know, with our own AI capabilities and then leveraging that with Google's Vertex AI. So, you know, being in the cloud is a big positive for us. And then we've been investing in more resources, and people mentioned that we brought on, you know, a really strong leader from the industry who was actually from one of our customers that we're excited to have in the business to lead AI and ML for us.

Speaker Change #150: I don't think about it as hurting our margins, but we're investing for obvious reasons in what we believe is a very important growth lever for us of enhancing our scores, models, and products.

Speaker Change #150: using AI and ML. You know, this isn't new at Equifax, but you know, we've been

Speaker Change #150: consistently increasing our focus and spend.

Speaker Change #150: around resources and capabilities for AI, the tech transformation.

Speaker Change #150: Provides a big lever there, you know, with...

Speaker Change #150: are our own AI capabilities and then leveraging that with Google's Vertex AI. So, you know, being in the cloud is a big positive for us. And then we've been investing in more resources and people. I mentioned that we

Speaker Change #150: Brought on, you know, a really...

Speaker Change #150: Strong leader from the industry was actually from one of our customers that we're excited to have.

Speaker Change #150: you know, in the business.

Speaker Change #150: to lead AI and ML for us. You've seen, you know, the use of AI expanding. We had a goal of 80% of our models and scores.

Speaker Change #150: This year to be using our new AI and ML, and I think we're at 89 and a quarter, so north of our goal, which is a good thing. You know, as we move forward, we will move to 100%, right? You know, that's...

Unknown Speaker: You've seen, you know, the use of AI expanding; we had a goal of 80% of our models and scores this year to be using our new AI and ML, and I think we're at 89 and a quarter. So, north of our goal, which is a good thing.

Speaker Change #150: This is a big lever and it's one of the pillars of our EFX 2026 strategic priorities is to really leverage. What it's going to deliver for our customers is just higher performing solutions.

Mark Begor: So this is a big lever, and it's one of the pillars of our EFX. You know, 26 strategic priorities is to really leverage. And what is going to deliver for our customers is just higher performing solutions; they're going to be more predictable. They'll help them drive higher approval rates at lower losses or higher identity, you know, validations. You know, in our identity businesses, we're super energized and, you know, big, big opportunities to really take our product capabilities and, you know, really charge them, you know, with AI and ML. So we're super excited about this. This is a priority going forward.

Speaker Change #150: They're going to be more predictable. They'll help them drive higher approval rates at lower losses.

Unknown Speaker: You know, as we move forward, we will move to 100%. Right, you know, that's where we're heading. So this is a big lever.

Speaker Change #150: or Higher Identity.

Speaker Change #150: you know, validations, you know, in our identity businesses.

Speaker Change #150: We're super energized and, you know, the ability to have all of our data in a single data fabric.

Speaker Change #150: And to have the Equifax cloud, you know, substantially complete, you know, as we...

Speaker Change #150: finish up in the next number of weeks in the USIS.

Speaker Change #150: You know, that gives us big, big opportunities to really...

Unknown Speaker: And it's one of the pillars of our EFX, you know, 2026 strategic priorities to really leverage, and what it's going to deliver for our customers is just higher-performing solutions. They're going to be more predictable, they'll help them drive higher approval rates at lower losses, or higher identity, you know, validations, you know, in our identity businesses, we're super energized. And, you know, the ability to have all of our data in a single data fabric and to have the Equifax cloud, you know, substantially complete, you know, as we finish up in the next number of weeks on the USIS, you know, that gives us big, big opportunities to really take our product capabilities and, you know, really charge them with AI and ML.

Speaker Change #150: take our product capabilities and really charge them with AI and ML. So we're super excited about this as a priority going forward.

Speaker Change #150: And when you think about spending, like if you...

Unknown Speaker: So we're super excited about this as a priority going forward. And when you think about spending, a significant amount of our capital spending is around getting data into fabric to make it available easily across all of our businesses, which dramatically accelerates AI and ML.

Mark Begor: And what you think about spending, like the significant amount of our capital spending is around getting data into fabric to make it available easily across all of our businesses, which dramatically accelerates AI and ML. So compare our spending to what other companies talk about in AI and ML; you would probably probably need to include a bunch of the transformations spending we're doing, because we're doing data normalization in a way that other companies have to do, but we're doing it as part of our ongoing, our ongoing process and program. So we're spending substantially on AI and ML.

Speaker Change #150: [inaudible]

Unknown Speaker: So when you compare our spending to what other companies talk about in AI and ML, you would probably probably need to include a bunch of the transformation spending we're doing, because we're doing data normalization in a way that other companies have to do, but we're doing it as part of our ongoing, our ongoing process improvement. So we're spending substantially on AI and ML. And then my follow-up question, please.

Speaker Change #150: in a way that other companies have to do, but we're doing it as part of our ongoing process improvements. So we're spending substantially on AI and ML.

Speaker Change #153: And then my follow-up question, please, on credit cards, just touch on your outlook there for the rest of the year on a year-over-year basis and just refresh us what happened again in the first and second quarter there.

Unknown Attendee: And then my fall of question, please, on credit cards, just touch on your outlook there for the rest of the year on a year-over-year basis and just refresh this look what happened again. David Bethelple, thank you.

Unknown Speaker: On credit cards, just touch on your outlook there for the rest of the year on a year-over-year basis. Yeah, no change in the second half from the first quarter, you know. As you know, there's a small portion of the credit card space that's in subprime that went through a cycle in really 22 and 23, where there was some dampening there because of, you know, credit risk exposure with the subprime consumer that's flattened out, meaning, you know, they're kind of at a run rate level. So that is behind us. And then in the near prime, you know, it's still a good business for us. And we don't see any, you know, real changes there.

Speaker Change #152: Yeah, no change in the second half from the first quarter. As you know, there's a small portion of the credit card space that's in subprime.

Speaker Change #154: went through a cycle in really 22 and 23 where there was some dampening there because of

Speaker Change #156: you know credit risk exposure with the subprime consumer that's flattened out meaning you know they're kind of at a run rate level so that is behind us

Speaker Change #152: And then in the prime, near prime, you know, it's still a good business for us, and we don't see any, you know, real changes there. Banking and lending, we said, has been growing kind of mid-single digits, a little higher in the first, a little lower in the second, but it's what it's looked like in the first half, so we think relatively good performance there.

Unknown Speaker: Yeah, banking and lending, we said, has been growing kind of in the mid single digits, a little higher, a little lower for a second, but that's what it looked like in the first half. So we think relatively good performance there. I expected it to continue like that for a second.

Speaker Change #155: You expect it to continue like that the second half, you're saying?

Speaker Change #152: We do. Again, you go from, you know, kind of take second half, take 2025, you know, the consumers.

Unknown Speaker: We do. Again, you go from, you know, take second half, take 2025, you know, the consumers strong, you know, they're working, if you think about prime, near prime consumers, you know, they're, you know, have they have wage growth, and, you know, they have balance sheet growth from the equity markets, you know, we've all seen, you know, the spending behavior from broadly the US consumer base, you know, kind of post COVID is very strong.

Speaker Change #152: Strong. You know, they're working. If you think about Prime.

Speaker Change #152: Neoprime consumers, you know, they have wage growth and, you know, they have balance sheet growth from the equity markets. You know, we've all seen, you know, the spending behavior from broadly the U.S. consumer base, you know, kind of post-COVID is very strong. You know, so that's a good outlook, and our customers are strong.

Unknown Speaker: You know, so that's a good outlook, and our customers are strong. You know, they have strong balance sheets. And, you know, these are important businesses for them that they want to keep growing. So they're spending, you know, money on marketing, and, you know, they want to originate.

Speaker Change #152: you know, they have strong balance sheets and, you know, these are important businesses for them that they want to keep growing. So they're spending, you know, money on marketing and, you know, they want to originate. And then for us,

Unknown Speaker: And then for us, you know, if we can continue to deliver differentiated solutions that help them grow their businesses faster, that's going to be a good thing for USIS, you know, in the card spaces along the rest of Fi. Great, thank you. Your next question today is coming from Toni Kaplan from Morgan Stanley. Your line is now live. Thanks so much.

Speaker Change #152: You know, if we can continue to deliver differentiated solutions that help them grow their businesses faster, you know, that's going to be a good thing for USIS, you know, in the, in the card space and along the rest of FI.

Speaker Change #152: Thank you. Next question today is coming from Toni Kaplan from Morgan Stanley . Your line is now live.

Toni Kaplan: Thanks so much. I wanted to go back to the mortgage outperformance and verifier

Unknown Speaker: I wanted to go back to the mortgage outperformance and verifier. I think it was just slightly lower than last quarter, and I know you had expected it to be up slightly. Could you just give a little bit more color on what's going on there?

Toni Kaplan: I think it was just slightly lower than last quarter and I know you had expected it to

Speaker Change #158: be up slightly. You know, could you just give a little bit more color on, you know, what's going on there? Is there a mixed component like last quarter that was unfavorable? Any sort of drivers that maybe led to a little bit of a worse expectation, than expectation?

Unknown Speaker: Is there a mixed component like last quarter that was unfavorable, just any sort of drivers that maybe led to a little bit of a worse expectation? Tony, we would characterize it as pretty much consistent with the guidance we gave, right? Slight up to slight down is pretty close to the same thing.

Speaker Change #158: Yeah, Toni, we would characterize it as pretty much consistent with the guidance we gave, right? Slight up to slight down is...

Toni Kaplan: is pretty close to the same thing, so we think we were very consistent with the guidance we gave.

Unknown Speaker: So we think we were very consistent with the guidance we gave. I can't point to anything specific, right, as to why there would be those small variances between where it came in and what we said. But overall, it was fairly consistent with what we expected, which is what gives us some comfort that as we go through into the second half of the year that we're going to see the improved performance that we expect because, again, we talked about it multiple times, because of records, right? So we feel good about that. Great.

Toni Kaplan: As to why there would be those small variances between where it came in and what we said, but overall it was fairly consistent with what we expected, which is what gives us some comfort that as we go through into the second half of the year that we're going to see the improved performance that we expect because, again, we've talked about it multiple times because of records, right?

Toni Kaplan: So, we feel good about that.

Speaker Change #159: Okay, great. And then, you know, I wanted to ask another on international, just very strong organic growth this quarter. It looked like LATAM was really the standout there with 30% organic growth.

Unknown Speaker: And then, you know, I wanted to ask another question on international growth. Looked like LATAM was really the standout there with 30% organic growth. Have you seen share gains there, or is it still a little bit too early? And, you know, just how are you thinking about LATAM for the rest of the year?

Speaker Change #160: Have you seen share gains there or is it still a little bit too early? And just how are you thinking about LATAM for the rest of the year?

Speaker Change #161: Yeah, and...

Unknown Speaker: Yeah, and Latam, you know, the principal driver there is outside of Brazil. Brazil had a good quarter. And, you know, we do expect, over the medium and long term, to continue to grow that business well, but, you know, it's still early days, you know, in Brazil, but strong performance in, you know, really most of the markets in Latin America driven by new products and innovation, Argentina, Chile, you know, a lot of the markets where we have strong leadership positions in those markets. But if you go across, you know, the rest of international, UK CRA was very strong. UK debt management has been very strong.

Speaker Change #162: Unknown Attendee Let's end, you know, the principal driver in there is outside of Brazil, you know, Brazil had a good quarter. And, you know, we do expect over the medium and long term to continue to grow that business well, but, you know, it's still early days.

Speaker Change #162: in Brazil, but strong performance in really most of the markets in Latin America, driven by new products and innovation, Argentina, Chile.

Speaker Change #162: a lot of the markets where we have strong leadership positions in those markets. But if you go across, you know, the rest of international...

Unknown Speaker: You know, those are growing kind of above market in the UK, particularly CRA had another very good quarter and, you know, likely some share gains in that market. Canada, you know, was just above mid single digits, which was a very good performance. Australia was below where we would like them to be.

Speaker Change #163: UKCRA was very strong, UK Debt Management was very strong.

Speaker Change #163: you know, those are growing kind of above market in UK, particularly CRA had a

Speaker Change #163: Another very good quarter.

Speaker Change #163: Canada is just above mid single digits which was a very good performance, Australia below where we would like them to be.

Speaker Change #163: But we expect them to, you know, recover as it moves forward. But new products, you know, a very positive driver, you know, across international as they're driving innovation.

Unknown Speaker: But we expect them to, you know, recover as it moves forward. But new products, you know, a very positive driver, you know, across international as they're driving innovation. We gave full-year guidance, so again, I think we gave a perspective on where we expect the year to come in. We expect International to perform well. We expect LATAM to perform well. Not quite as strong as in the second quarter, but still, the rest of the year should be good.

Speaker Change #163: And we gave full year guidance. So, you know, again, I think we gave a perspective on where we expect the year to come in. We expect International to perform well. We expect LATAM to perform well. Not quite as strong as the second quarter, but still the rest of the year should be good.

Speaker Change #164: Thank you.

Speaker Change #164: Thank you. Next question is coming from George Tong from Goldman Sachs. Your line is now live.

Unknown Speaker: Thank you. The next question is coming from George Tong from Goldman Sachs. Your line is now live. Hi, thanks. Good morning.

Speaker Change #164: Hi, thanks. Good morning. I wanted to go back to an earlier point, which was in the U.S. non-mortgage business, you saw a continuation of tight credit conditions that impacted the auto market and the... That's actually not what I said. That's not what I said, George. But go ahead.

Unknown Speaker: I wanted to go back to an earlier point, which was in the USIS non-mortgage business. You saw a continuation of tight credit conditions that impacted the auto market and... That's actually not what I said. That's not what I said, George. Go ahead. Yeah, I guess. How are you thinking about the broader credit conditions in the second half? Just to clarify, I did not say that there were tight credit conditions in the auto industry. There are in the subprime, but that's old news, right? That happened, you know, a year ago, two years ago, in 22 and 23.

George K. Tong: Yeah, I guess, how are you thinking about the broader credit conditions in the second half of the year?

Speaker Change #166: Just to clarify, I did not say that there were tight credit conditions in auto.

Speaker Change #167: there are in subprime, but that's old news, right? That happened a year ago, two years ago in 22 and 23, as I think you know. What I talked about was our view that the high rates in auto are impacting end user demand for the rating.

Unknown Speaker: As I think you know, what I talked about was our view that the high rates in the auto industry are impacting end user demand, you know, for. In the second half of the year, how are you thinking about broader credit conditions, not just in auto but just broadly? Yeah, so credit conditions, we see the consumer continuing to be strong, you know, employment is high, unemployment is low, that's always a positive for underwriting. You know, when consumers are working, broadly, credit scores are still, you know, strong.

Speaker Change #167: Financing automobiles, meaning buying automobiles, in the last couple of quarters.

Speaker Change #167: It's really a follow-on of what we've seen in mortgage, you know, the payment levels now for a new car for someone who's financing it are substantially higher than they were a couple of years ago. So we think that's impacted consumer demand, not credit underwriting. So just to clarify that, and I'm sorry, the second half of your question was what?

Speaker Change #168: In the second half of the year, how are you thinking about broader credit conditions, not just in auto, but just broadly?

Speaker Change #169: Yeah, so for credit conditions, we see the consumer continuing to be strong.

Unknown Speaker: I think we've talked before with you and others about the impact of subprime, but that's kind of flattened out, you know, from the declines we saw in 22 and in 23. And, you know, another thing that we think a lot about in terms of credit conditions is the strength of your customers, meaning the financial institutions, and they're broadly very strong. So those elements are very good.

Speaker Change #169: Employment is high, unemployment is low. That's always a positive for underwriting when the consumers are working. Broadly, credit scores are still strong. I think we've talked before with you and others about.

Speaker Change #169: The impact of subprime, but that's kind of flattened out, you know, from the declines we saw in 22 and in 23.

Speaker Change #171: And, you know, another thing that we think a lot about on credit conditions is the strength of your customers, meaning the financial institutions, and they're broadly very strong. So those elements are very good. The one area, two areas, obviously, we're seeing impact on consumer demand.

Unknown Speaker: The one area, two areas, obviously, we're seeing an impact on consumer demand because of rates, clearly mortgage has been substantial, which we've talked at length about, and then we're seeing some impact in auto. Got it. And then in EWS non-mortgage, a lot of the growth is coming from record additions and volumes. Can you talk a bit about how much pricing is contributing to growth, particularly in verification?

Speaker Change #169: Because of rates is clearly mortgage has been substantial which we've talked at length about and then we're seeing some impact in auto

Speaker Change #170: Got it. And then in EWS non-mortgage, a lot of the growth is coming from records additions and volumes. Can you talk a bit about how much pricing is contributing to growth, particularly in verifications?

George K. Tong: Yeah, as you know, we have four really principal levers in EWS. Records is one, and as you point out, it's been very strong, which we're pleased with. Price is one. As you know, we don't disclose price, but it's one lever. You should think about, George, that we have substantial benefits from penetration.

Unknown Speaker: Yeah, as you know, we have four really principal levers in EWS. Records is one. And as you point out, it's been very strong, which we're pleased with. Price is one. As you know, we don't disclose price, but it's one lever.

George K. Tong: Meaning penetrating into new verticals. I think we've talked about that in government and talent and others

George K. Tong: And then product is a big deal, you know, bringing new solutions that deliver.

George K. Tong: [inaudible]

Unknown Speaker: You should think about George, that we have substantial benefits from penetration, meaning penetrating into new verticals. I think we've talked about that in government and talent and others. And then product is a big deal, you know, bringing new solutions that deliver more value to our customers, meaning whether it's multiple data solutions or more historical data, those are generally at a higher price point because they're bringing more value. But those four levers, you know, over the long term, we think about them as being equally weighted, you know, in the 13 to 15, and then add some market weight on top of that, meaning market growth. That's how you get to the 13 to 15.

George K. Tong: Over the long term, we think about as being equally weighted.

George K. Tong: On top of that, meaning market growth, that's how you get to the 13 to 15. So, we're really energized to have those four strong levers. When you think about EWS...

Unknown Speaker: So, you know, we're really energized to have, you know, those four strong levers. When you think about EWS, you know, clearly, the records, ability to add records, is very unique to that business and most data businesses. So it's a lever that we don't have in other businesses. I would argue that penetration is also one that we don't have in other businesses. You know, we don't compete with manual in other businesses. We generally compete with competitors like Q and Experian. Competing with manual is one that gives us the opportunity to add real value from a productivity standpoint, you know, as well as the speed and accuracy standpoint of instant data that comes from EWS.

George K. Tong: Clearly, the ability to add records is very unique to that business and most data businesses.

George K. Tong: So it's a lever that we don't have in other businesses.

George K. Tong: I would argue that penetration is also one that we don't have in other businesses.

George K. Tong: [inaudible]

George K. Tong: Competing with manual is one that gives us the opportunity to add real value from a productivity standpoint, as well as the speed and accuracy standpoint of instant data that comes from EWS.

Speaker Change #173: Got it. That's helpful. Thank you.

Unknown Speaker: Got it. That's helpful. Thank you. Thanks, George.

George K. Tong: Thanks George. Thank you. We reached the end of our question and answer session. I'd like to turn the floor back over to Trevor Burns for any further closing comments.

Unknown Attendee: Thanks, George. Thank you.

Operator: Thank you. We have reached the end of our question and answer session. I'd like to turn the floor back over to Trevor Burns for any further closing. Yes, thanks everybody for their time today. And if you have any follow-up questions, just reach out to me or Molly. I look forward to catching up with you throughout the quarter. Thank you. Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation.

Unknown Attendee: We reached out to our question and answer session.

Trevor Burns: I'd like to turn the floor back over to Trevor Burns for any further closing comments. Hi, yep, thanks everybody for their time today, and if you have any follow-up questions, just reach out to me and Molly. I'll look forward to catching up throughout the quarter. Thank you.

Trevor Burns: Yep, thanks everybody for their time today, and if you have any follow-up questions, just reach out to me or Molly. I look forward to catching up throughout the quarter. Thank you.

Speaker Change #172: Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.

Unknown Attendee: That does conclude today's telecom for the webcast.

Unknown Attendee: Let me disconnect your line out this time and have a wonderful day. We thank you for your participation.

Unknown Attendee: Everyone else has left a call. Thank you.