Equifax Inc. (EFX) Earnings Call Transcript & Summary

Hi. Good afternoon. This is Heather Balsky, BofA's business and information services analyst. I want to welcome you all to our fireside chat with Equifax's CEO, Mark Begor; and CFO, John Gamble; and as well as the IR team is here. It's a pleasure to have you all. Before we kick off, I just want to let you know, we do have Q&A open. Please take advantage of the Q&A option on your webcast. And I'll start looking about 20 minutes in to see if there are any questions in the queue.

Now to kick things off, I wanted to ask a broader macro question. Can you help assess the operating environment for your business outside of mortgages, we've talked a lot about mortgages, especially as we come out of COVID? Are you still seeing some tailwinds from the recovery? Are we in a more normalized consumer lending environment? What do you think about the health of the consumer amidst inflation and likely higher rates?

Yes. So you pointed out mortgage. Happy to touch on that, Heather. First off, thanks for having us. We appreciate being here. We can talk about mortgage separately. But broadly, I'll separate the consumer versus our customers. The consumer is very healthy. They're working. Wages are up. Obviously, as you point out, there's some impact on inflation, but the fact that unemployment is so low, wage growth is very meaningful. That's a real positive for consumers. And over the last 2 years, the consumers have rebuilt their balance sheets. The government stimulus that was so substantial allowed them to make their minimum payments, pay down some of their debt so they're actually healthier. The average credit scores for consumers are up 20 to 30 points from where it was pre-COVID. So you've got a healthier consumer. Second is the consumer base that has a home has more equity. HPA is up so substantially, there's a lot of value and support. And of course, the stock market is up, so for those that own 401(k)s or have stock. So broadly, you look at a consumer that's very healthy. And then as you point out, post-COVID, there's a lot of demand from the consumers to do things. There were pent-up demand, whether it's from travel, doing work on their home, buying a new car, buying stuff for their home, and that translates into financing, whether it's credit cards, whether it's personal loans, whether it's auto loans, and of course, still mortgage. Refi is still -- while it's down, it's still quite positive. And then, of course, the -- getting into mortgage a bit but the purchase side of mortgage is still quite strong. There's a lot of demand and not enough homes out there. So consumers, from our perspective, are much stronger than they were coming into COVID, which is a positive for our business and for our industry. And then you go to our customers, being the financial institutions, they're stronger, too. And the higher interest rates actually improve their spreads and margins so they're financially stronger. They weathered COVID very, very strong because there weren't the consumer delinquencies we all thought would be in place 2 years ago. And then the challenge for our customers is a lot of their balance sheets have been paid down by that stronger consumer. They weren't doing a lot of lending during COVID and then balance sheets were paid down. So our customers are strong financially. And they're really looking to do more marketing, more originations to grow their consumer books and whatever product lines they're in. So that's a positive catalyst for us going forward. So we look at -- when we came into kind of 2022 and we're laying out our framework late in the year and then when we talked about it a couple of weeks ago, really no change from that. Even inflation feels manageable for the consumer because of the wage growth and the fact they're working. There's some consumer confidence, perhaps challenges there but there's still a lot of demand. And then from our business, inflation isn't a big factor. It's one we watch around our employees, our biggest cost. Our tech costs, which are our second largest cost, actually, our costs are going down as we transition to the cloud. As you know, that's part of our saves that we have going forward. So we feel that's quite manageable also.

Great, thank you. I will ask you about mortgages, but I'll -- we'll wait a little bit to save you some time on that. So next, the company is -- you talked a fair amount at your Investor Day, the company's positioned for faster innovation as it rolls off its cloud investments. How have you been preparing your organization for this new pace of growth?

Yes. I think as you know, in November, we increased quite meaningfully our long-term framework, historically is 7% to 10% growth at Equifax, which is a very good growth rate. We took it up to 8% to 12% in our long-term framework. As you know, we've been outgrowing that the last couple of years. And central to that increase in 100 to 200 basis points our top line growth is our cloud transformation, is the Single Data Fabric. And as you know, we're way down the road on the cloud transformation. At the end of last year, we had 50% of Equifax in the cloud. The end of this year, it will be 70% to 80% and then we'll finish international in '23 and '24. And then to your question, we've really been ramping up and scaling up our product capabilities in anticipation of leveraging the new cloud capabilities, in anticipation of leveraging our Single Data Fabric going from siloed data to the Single Data Fabric. So a couple of years ago, 2 years ago, actually, we started ramping up more product resources and really moving to more of a product-led culture. I have now on my leadership team, Chief Product Officer, Cecilia Mao, who came in from Oracle and was at FICO before that. And we've added a lot of new product resources at the business unit and inside of the company. John and I do a weekly -- I'm sorry, weekly -- a monthly deep dive with the product teams around their product focus. And as you know, you've seen us ramp our product capabilities, actually our product results in the last couple of years. Historically, we did 70 to 80 new products per year. That's kind of pre 2018. In 2020 and '21 -- 2020, we did 134 new products versus that 70 to 80. Last year, 151. And then we're also translating that into revenue. We use a measure we call our Vitality Index, which is new products introduced -- revenue from new products introduced in the last 3 years. And that metric was around 5% in 2020. It grew to over 8% and actually to 9% in 2021. And this year, we have a goal of 10%, which is our long-term framework. If you think about a 10% Vitality Index, that's new products introduced in the last 3 years. At 10%, that's $0.5 billion on a $5 billion company of new products being rolled out. And as you know, new products are very high incremental margin but it also drives our top line. And the real leverage we have now is with the cloud, we can introduce products more quickly. We can do products we couldn't do before because we can leverage our historical data. Our Single Data Fabric, where we're bringing together our dozens of siloed data assets into a single means we key and link each data element we have to each individual, allows us to bring those solutions to market more quickly. So new products are very central to our strategy going forward. And it's a big focus of the entire company because we know it's going to drive our top line, which is what was translated into that 8% to 12% long-term growth rate going forward. And as you know, we've been outgrowing that long-term growth rate that we put in place in November in the last 2 years, meaning we're well above that 8% to 12%.

Yes, yes. And you've put a lot of emphasis on being 100% on the cloud. Can you contextualize what that means for your business and why you went with that approach?

Yes. It was a big bet. We believe in our hardware, a data analytics technology company. Data analytics is the core of what we have, our unique data assets. And we believe Equifax has data at scale that our competitors don't have. Of course, we all have the credit bureau, the credit file is a credit bureau. But you look at like our income and employment data that no one else has, our cell phone utility data that no one else has. Our wealth data, some of our identity data that we don't have. And to be a great identity and data company, you have to have great technology. And we believe the most advanced technology is in the cloud. So in 2018, we made the bet to invest in being cloud-native, a big challenge to actually execute that. We're well down the road of doing it. But we believe it's going to transform Equifax and give us a competitive advantage for 5 to 10 years. Our competitors can't do what we've done in the last 3 years. They're going to do it over time probably. It's going to take a long time to do it. We haven't heard our competitors talk about going to a Single Data Fabric. We've had them talk about hybrid cloud, enhancing their legacy capabilities. That's going to take time. But remember, there's 2 elements to our cloud transformation: one is our applications and infrastructure from legacy mainframe servers to the cloud. The other is the Single Data Fabric. And that's really going to give us competitive advantages going forward. Commercially, we're going to be a better partner. We're going to have [ nine nines ] of stability where you can't get that in a legacy environment. Our data is going to move more quickly between Equifax and our customers, meaning that speed of transmission, which is so valuable in a digital environment where everything is online so that response time is critically important. So that's an advantage. It's going to allow our customers to access our data more quickly and in the Single Data Fabric and more transparently, which will be very powerful. And those elements, we believe, are going to drive market share, allow us to go from primary -- I'm sorry, from secondary to primary or tertiary to secondary. And we're seeing evidence of that in the early days of the cloud. Remember, we're only halfway there. Will be a big move in 2022, but we're starting to see the early innings of the leverage from the cloud. The other place where you'll see it, we already talked about it, take hold is our ability to bring more new products to market more quickly. And that's going to really drive our top line. And when you bring those 2 together, that was what really drove our increase in our long-term growth rate to 8% to 12%, up 100, 200 basis points. And then our margin expansion, we laid out the long-term framework to move from 50 basis points per year to 100 basis points per year of margin expansion going forward. And that's a combination of that accelerated top line growth but also the cost benefits that are going to come from the cloud. And a lot of that is front-end loaded in the next 3, 4 years. And we laid out in our Investor Day that our margins will expand 500 basis points between now and 2025. And about half of that is really from the cloud cost savings that we've talked about for the last couple of years that we get from going from legacy environment to cloud, and then the other half is really accelerated margin expansion from the faster top line growth.

The only thing I'd add is it's also a substantially more secure environment, right? So it's one of the things that allows us to be a leader in our industry in security, which we think benefits not just us but all of our customers.

Great, that's great. So moving on to the other part of your business, which is Workforce Solutions. Rudy Potter and his team have done a fantastic job growing The Work Number database, and you're nearly at 70% of U.S. nonfarm payroll. As the database gets larger, curious what's the view? Is it harder to bring in more records? Is there a sort of -- I guess, how do you maintain the strong core growth that you've delivered in that business going forward and do the drivers of that growth shift? Curious about sort of how the high-value products that you've been launching contribute to the algorithm and pricing as well.

You hit a bunch of the levers and I think quite uniquely. A lot of levers you mentioned are available to any business, right? I think what's unique at Workforce Solutions is that they have so many of those that have so much leverage in them. I'll start with records. As you know, we ended the year at 105 million unique SSNs or 136 million total records, the difference being there's a lot of people with 2 jobs in our database, which is very valuable in all of the jobs. But if you think about the 105 million versus 158 million nonfarm payroll, there's over 50 million more records, which is a 50% increase in the actual number of people actively in our data set that we can go get. And then you add on top of that the gig economy, which is 30 million to 40 million to 50 million individuals that are self-employed, whether it's Uber drivers or self-employed lawyers, there's just a big population outside of the W-2 environment, which is the 50 million. And then pension records, another 20 million to 30 million. So if you look at kind of the universe of the TAM just of records, we can double our data set, go from 105 million to well over 200 million records. And as you know, record additions drive revenue because we have the inquiries coming to our data set. And as we add new records, we're able to monetize. Last year, in 2021, our records were up 19%, which is quite strong. We had a very large payroll processor that joined along with our normal individual corporate additions and some of the other partnership additions that we had. So that was a strong growth rate. That carries forward, meaning we have a year-over-year benefit because it happened throughout the year. There's some carryover benefit to that. But that drives revenue and margins as we grow those records. So records are a really important element for that business. But as you point out, we also have the ability at Workforce Solutions to really drive a lot of the other levers. So pure price is one. We had the ability to bring price up. We brought price up in January. We do it every year, generally around the beginning part of the year in all of our businesses. But there's more pricing power in Workforce Solutions because of the uniqueness of our data set. No one else has the income and employment records that we do. So that's a very valuable lever. You also pointed out product. And with the cloud transformation and Workforce is a little further along than some of the other Equifax businesses, they've really ramped up their new product rollouts. And generally, our new product rollouts in Workforce Solutions are leveraging our historical data. Our bread and butter solution is how much does Mark make today and where does he work with another 48 attributes, a total of 50 attributes? And as you know, we sell that for $30, $40, $50 into mortgage or into the background screening space. Increasingly, because of the cloud transformation, we're now able to do historical information and a lot of mortgages require more historical information. We sell those at higher price points. Instead of $30 or $40 or $50, we're selling for $100, $150, $200, and of course, that's all margin. And what's unique about our data set is not only do we have the 136 million records every pay period but we also keep them all. So we have 0.5 billion total records, which means we have a work history and an income history that's quite extensive that we've accumulated over the last 10 years that we can monetize. The other big levers for Workforce is to really diversify into other market segments. And quite uniquely, we're moving well beyond Financial Services. Workforce Solutions was about $2 billion of revenue last year, as you know, Heather. About half of that is in Financial Services. The other half quite uniquely for a business like Equifax is outside Financial Services, in the government sector where we use the data for delivery of social services. That's a fast-growing space. As you know, social services are all needs-based, meaning you have to verify income, determine what kind of benefits they get, food stamps, rent support vary by income and employment. Employment is also a very important attribute for like unemployment claims. You got to verify you're not working. So our data is used in the government vertical. The hiring vertical of talent is another big growth space for Workforce Solutions. 75 million people per year in the United States get new jobs. Virtually all of them have some depth of background check done and we're becoming the data provider. We have a virtual resume on the average American where we have the -- average 5.5 jobs on the average American in our data set. So we can deliver that to the background screeners. So that's a fast-growing space, a $5 billion data TAM. Government is about a $2 billion data TAM, and those are all growing strong double digits. And then the other nonfinancial vertical for us where we've been investing in organically and inorganically is around the Employer Services business we have where we provide regulatory services, really for the most part, to HR managers and think about unemployment claims management, I-9 verification and the hiring process, Work Opportunity Tax Credit, employee retention credit, W-2 tax management. So all those services are businesses that we provide to HR managers. In return, we get records, which grows our verification business but it's also a very good business for Equifax. And I think as you know, we've done 4 acquisitions in that space in the last 15 months to strengthen our capabilities to deliver those employer services. So you've got a lot of new verticals Equifax is playing in. And then the other play is really penetration. Even -- we talk a lot about mortgage, it's our largest vertical in Workforce Solutions, but we only see 60% of mortgages. The other 40% are still underwritten with paper paystubs. And I get the question a lot, Heather, about, well, why don't you see 100%? And as you know, 100% of mortgages pull a credit file. So actually all 3. So the credit file was 100% penetrated. Why? It's been around for 70 years. So it's a credit source that's been around, a data element that's been around for a long time. Our income and employment data is only 15 years old. Its scale, meaning north of 50% of nonfarm payroll, it's only 2 years old. So over time, we believe we'll get to 100% penetration on mortgage. And we grow it every year. We have a dedicated commercial team that's out working with the mortgage brokers and originators that don't use our data set. Another one, and I don't mean to go too far, but there's a lot of levers, is system and system integrations. And it's the same analogy. The credit file is virtually 100% system-to-system. It's been around so long. It's integrated into the workflows of credit cards, of mortgages, of auto loans, of personal loans. They're running their process on an automated basis and they automatically hit the credit file. Increasingly, we'll move to 100% system to system. But today, I'll use mortgage as an example, that's over 25% of our revenue comes from customers, think a mortgage originator, that are coming to our website, credentialing in because they have to be authorized to get into the business, to get into our website. And then putting in my name, social, date of birth to pull down that income and employment report. There's a lot of friction involved in that. And actually, we don't pick up every application with those customers. When we move a customer from manual, kind of web access is a better term, to system-to-system integration access, we get a 20%, 25% lift in pull. So another opportunity for Workforce Solutions. So that the uniqueness of that business, as you know, now it's our largest business. It was over 40% of Equifax last year. We expect it to grow to be 50% or more of Equifax going forward because as you know, its long-term growth rate at 13% to 15% is well above our 8% to 12%, so it's going to be accretive to our top line. And of course, its margins are in the mid-50s versus Equifax's in the kind of high 30s so it's highly accretive to our margins. So it's a very powerful part of Equifax and it's clearly our most valuable business, and it's one we're investing in. Technology. I talked about the M&A that we did in the last 15 months around Employer Services. As you know, we also bought a company called Appriss Insights that brought incarceration data to our talent and government verticals where that incarceration data is a data set that's used in those kind of applications. And 1 of our 3 top M&A priorities is Workforce Solutions. What other M&A can we do to strengthen the core workforce or allow it to be stronger in some of the other verticals that it's in outside of Financial Services? And then the other positive workforce, you see it growing faster outside of Financial Services. So our TAM as a company has changed quite dramatically. Historically, we addressed about a $17 billion TAM that was growing at, call it, 8%, which is kind of the credit bureau space. Now with the growth in Workforce Solutions and getting into talent, into government, into Employer Services and then add identity and fraud, you've got another $25 billion of TAM that's growing 2x what the credit bureau can grow. So a lot of focus by Equifax to be more than a credit bureau, which we think is a real positive from a diversification standpoint, but we're also playing in faster-growing markets. And again, the credit bureau market is a great market to grow in, 8% kind of industry growth over the long term is a great space to play. We're going to be -- continue to be very strong and get stronger in that space. But we're really diversifying Equifax quite substantially into other markets that are growing, kind of 2x that 8% growth rate.

The other future growth lever for Workforce Solutions is international. So we're starting to now expand outside the U.S. and not so much this year but a little bit more in '23 and then beyond that, you'll see more growth driven by the expansion into Canada, expansion into U.K., expansion into Australia and then -- and we've also started investing and expanding into India.

I'm just curious, internationally when you think about records, are they housed similarly to the -- as they are in the U.S.? Would it be a similar process in terms of growing your database?

They are.

Yes, so there's a couple of levers. I think you know we announced a few weeks ago that we have a credit bureau -- I'm sorry, we have an income employment business operating in the U.K. We really took our cloud tech stack, now that it's cloud-based, and we could easily move it to the U.K. Prior to our cloud work, we had businesses that we were building an income and employment in Australia, Canada and India. So we're in 4 markets now. And real leverage points for us around going global with Workforce Solutions is, number one, the cloud tech stack. We've invested hundreds of millions of dollars in our technology and now we can just move it over in the cloud quite easily. So that's a real positive to get into a market quickly. Second is, as you point out, is the relationships we have with records. And we can start with corporates. Some of the big multinationals that are contributing their data at Equifax today because we deliver a lot of employer services to them, they want us to do income and employment in the other markets where they operate around the globe. So that's kind of an easy addition. And then the secondary is payroll processors, where they are global. They like the relationship they have with Equifax now, the idea of getting it out of the markets is quite natural. And then there's individual corporates in a lot of those markets that we go after. And then there are local payroll processors. And them understanding the model we have in the United States of a partnership around the payroll data makes it easy for us to do that in other markets. And so we're landing relationships in those markets that we talked about with corporates and adding those data elements and then also adding payroll processors in kind of the same fashion.

Great. Thank you. I wanted to touch on mortgages. I mean, you guys gave a very detailed outlook on your 4Q call regarding sort of your thoughts around where the market goes. But curious if you can just talk about your confidence level and your current outlook. What's going into that? And how do you think of the upside/downside risk depending on how rates move? The environment is kind of touch and go. We've had a lot of geopolitical sort of changes...

An understatement.

Beginning of the year, yes. So I'm just curious. And we're also hearing home inventories right now are very low. So just in terms of how you're thinking about the overall market and new home buying as well or existing home buying.

John, do you want to start on that one and I'll tag team with you?

Absolutely, right. So I mean, so what we indicated is we expect the market to be down about 21.5% for the year. I think we indicated around 24% in the first quarter. Built into that obviously was our expectation with regard to interest rates at the time, right? I think if you go back to when we did the earnings release, again, it was only say, 3, 4 weeks ago. We were expecting rates to be probably end up in the mid-2s, somewhere between [ 2 25 ] and [ 2 50 ] on the 10-year as you went through the rest of 2022, I don't know that the expectations have really changed from that materially. Obviously, there's been a ton of volatility over the past month. But interestingly, it's kind of starting -- from where it started when we did our earnings release to where it is today isn't really that much different. What's built into our expectation for 2022 is continued strong purchase market and accepting the comment around inventories. I still think there's an expectation that the purchase market is going to stay very strong, and that we'll continue to have levels of purchase activity so mortgage activity that exceed the levels we've seen in the past couple of years in purchase. And with the 21% decline in total inquiries, right, where we would expect that we're going to see, obviously, very substantial declines in refinance as we go through this year. Down 21.5% for the full year puts us within 5 points or less of what you -- what we were calling average. We pulled -- we took a look at the average mortgage inquiries. And again, as a reminder, when we size the mortgage market, we do it based on USIS credit inquiry numbers because as Mark said, we see the entire market there and that's something we can measure every day, right? Understanding actual mortgage originations tends to lag materially in time so we can see inquiries immediately. So our expectation is that, that will be within 5% or less of normal, which we define to say the average of 2015 to 2019 in terms of mortgage inquiries. And what that would mean is obviously, you move through the year and you get towards the back half of the year, you're looking to be at levels that are much more similar to what we would have seen during those average periods, with refinance down substantially. So we still think it's a reasonable view. We also accept mortgage is very hard to forecast. So that's why we're just really careful about explaining where we are. We give a lot of detail about the assumptions we built into the guidance that we gave by quarter and by half of year so that you can do your own analysis and adjust as BV. One thing we do remind people is, as you take a look at what happened between October and when we gave our guidance in February, mortgage market deteriorated in our estimate by 6.5 points for 2021 -- 2022 from down 15% to down 21.5%. And given the fact that we've seen such strong performance, particularly in Workforce Solutions, in terms of adding records and adding new products and then signing new data providers that -- and payroll providers that we expect to board during 2022, we were able to cover the weakening market. So we run a robust opportunities and risk process and we'll continue to do that as we move through the year. We continue to try to build opportunities to the extent that you start to see the market weaken from where we are today. But we still think what we talked about is reasonable.

Great. I wanted to touch on fraud, and you spoke about that earlier, just because it's a big opportunity. A fair number of companies in info services are tackling that market. I'm curious if you could talk about Equifax's competitive advantage in that area. What you guys are doing that's differentiated and what your go-to-market strategy is around that?

Yes, it's a great question. It's a big priority of ours. When we think about priorities for M&A, we already talked about Workforce is number one. Number 2 is differentiated data, which puts identity and fraud and number 3 is just broadly identity and fraud, meaning we want to be bigger in it. It's a big TAM. It's a $20 billion-plus TAM. It plays, as you know, Heather, to the digital macro, meaning more and more consumers doing everything digitally. And when you have those interactions digitally, you need lots of data to verify seamlessly, meaning the consumer doesn't feel it that it's really them when they're applying for a credit card. It's really them when they're accessing their bank account. It's really them where they're doing online e-commerce shopping. So that's the macro play. And as you point out, a lot of people in. We think we have the license to play around differentiated data, and we think the differentiated data is really kind of where you want to play as a data analytics company. We already have a ton of data from the Equifax side. Think about it, every time you pay one of your bills on your credit card, your loans, your mortgage, your auto loan, your P loan, we see that in the credit file, and it verifies you're you in that transaction. Every time you pay your cell phone bill, we have that unique data asset. Every time you get paid every 2 weeks, we're verifying that's you because it's another signal it's really you. And then as you know, we acquired Kount in the first quarter last year, which plays in the e-commerce space. Really attractive business, 20% growth. And scale, differentiated data assets, 32 billion interactions per year, over 0.5 billion verified e-mail addresses, cell phone numbers, IP addresses, but at frequency. And where in financial services, you're seeing kind of biweekly monthly verifications of an individual. In e-commerce, you're seeing that really on a multiple times per week, people are shopping all the time. So the scale of those interactions and combining those data elements was our strategy around acquiring Kount. And where Kount is going to be stronger in e-commerce with the Equifax data added to it, we're going to be stronger in Financial Services, insurance, telco, with the Kount data added to the Equifax data. So that's the play there. And we're rolling out new products, combining those data solutions using our new product capabilities. We're putting that data into the Equifax Cloud in a single data, identity foundry, if you want to call it, meaning using the identity elements to really drive predictability. And if you have more signals, meaning more frequency of around Mark Begor interactions digitally, it drives the predictability that's really me coming back next time. And as you know, what a bank wants to do, a telco, a retailer, they want to verify it's me without me feeling it and doing it seamlessly. And that requires data. And so that's the differentiator we have. So we want to do more on the product side. And as I said earlier, it's 1 of our 3 priorities for M&A and you should look for us to do more M&A around identity to strengthen Kount, strengthen our Equifax identity and fraud capabilities. And again, this is a TAM that's growing 20%, and our business -- Kount was growing 20% when we brought it. When we acquired it, it grew in that neighborhood of 20% last year. So it's a fast-growing space that, of course, is accretive to Equifax's core growth rate, which is why we like the space. And again, we have a license to play around data.

And importantly, Kount goes to market directly to e-commerce players, to retailers. They go to market through payment card processors as well as to our -- we go to market through our traditional channels through Financial Services channels like we would go through to market through credit. So acquiring Kount provided lots of signals but also substantial expansion of the TAM and the way we go to market and access to new customers that we didn't have before.

Great, that's helpful. I'm going to squeeze in, as our last question, a capital allocation question. And you've given 2 of your top M&A priorities so I'll let you give the third. And then just as we move through the next few years, your priorities. You've recently done a lot of M&A and sort of how acquisitive you remain going forward and then thoughts around share buybacks as well.

Yes. So really important, we laid this out on the Investor Day back in November. So 3 priorities are really, really clear: strength in Workforce Solutions, get bigger in identity and fraud. This is M&A priorities, get bigger in identity and fraud and add differentiated data. So those are the 3 priorities we have. And I'll just touch on a couple of them. I think in Workforce, we did 4 acquisitions in the last 15 months, including 1 already in the first quarter, Efficient Hire, to strengthen our Employer Services business, which is those capabilities we're delivering to HR managers but then that brings records in. So we would like to do more M&A there. We also did Appriss Insights, the incarceration criminal justice data acquisition. Big acquisition at $1.8 billion in the third quarter -- sorry, in the fourth quarter last year. That makes us stronger in talent and government when you combine with our work history. So those -- and of course, those all check the boxes of differentiated data. We talked about Kount in identity and fraud. And then kind of pure differentiated data, we bought a company called Teletrack last year that we're combining with our DataX acquisition we did in 2018. That really gets us bigger and differentiated data. We also bought a company called PayNet a couple of years ago. So those are the kind of acquisitions, unique data assets no one else has. Those are the kind of priorities for M&A. We laid out in the Investor Day that we want to add to our top line 100 to 200 basis points of top line growth from M&A. As you point out, we were way above that last year. We saw some unique opportunities really with Kount and with Appriss. But we did over -- or close to $3 billion of M&A last year that added over $300 million of kind of run rate revenue. I would think about that as how we're going to grow going forward. We're going to be more in the 100 to 200 basis points, which you should think about 100, 200 basis points is going to be something like $500 million to $1 billion of our free cash flow on bolt-on M&A. So really disciplined about what we're doing in M&A and really focused in those 3 priorities. And as I said, our long-term framework, the 8% to 12% includes 100 to 200 basis points, so think about $50 million to $100 million of revenue from M&A. And as you know, we've already done 2 acquisitions this year that we've announced. One this week, we announced we bought the leading credit bureau in Dominican Republic, a small bolt-on, but it adds to our strong leading market position in Central and Latin America. And of course, I mentioned we bought Efficient Hire. So M&A is clearly our priority of ours. We think we can generate really meaningful return on capital and shareholder returns through disciplined bolt-on M&A. And as you know, our financial criteria is quite rigorous. We want to buy businesses that are growing faster than Equifax, so are accretive to our top line, but then also who are going to be accretive to our margins. So really strong focus for us around M&A. We were clear on Investor Day that we're also focused on returning cash to shareholders at the right time. After the Appriss acquisition, we took a pause on any large M&A so we could focus on integration. Of course, we've added 2 bolt-ons in the last month or so. But we want to get those integrated. And as we look forward, at the right time, our intention is to return cash to shareholders while still investing in strategic and bolt-on M&A. And we'll figure out the right time to do that with our strong top line growth, our strong margin expansion and a framework of 100 to 200 basis points of revenue addition through M&A in our long-term framework. There's still going to be ample free cash flow available to Equifax, both from our margin expansion and revenue growth but also from the delevering of the company as we grow our EBITDA, that will give us the ability to return cash to shareholders either through starting to grow our dividend again or doing a buyback. And at the right time, that will clearly be a part of our long-term framework, which we talked about during the Investor Day. John, would you add anything maybe on our leverage or how that's going to give us the ability to expand our capital allocation going forward?

For sure. As we continue to grow EBITDA aggressively, right, it obviously adds substantially to the amount of leverage we can add and stay within our current credit ratings. So as Mark mentioned, not only we're generating substantial free cash flow, right, we talked about at the Investor Day that by 2025, we'd be able to add significant additional debt capacity just because of the leverage expansion. And so you'll see a significant increase in what we can expand to either share buybacks or acquisitions, through growth in EBITDA as well as growth in free cash flow. And by 2025, we're looking at numbers that are close to $2 billion a year.

Great. Thank you, both, also for the extra time. Thank you. We appreciate it, and we look forward to speaking to you soon in the future. So have a good rest of the day. Thanks, everybody.

Thanks for having us, Heather.

Thank you.

See you.

Bye.