Equifax Inc. (EFX) Earnings Call Transcript & Summary

Good morning, everybody. Thank you for being here and in-person as well. It's great to be back. We had a 2-year hiatus, of course, for reasons we all know. But we're very happy to kick it off. This year with Equifax, we have Mark Begor, who's the CEO; and John Gamble, CFO. And I'm sure many of you know that Trevor Burns, who's come back to run IR, is upfront as well. So thank you all for being here. Really appreciate it.

Thanks for having us. It's good to be back.

Yes, absolutely. We have about 40, 45 minutes here. I have a bunch of questions, and then we'll kick off with. And then obviously, towards the end, we will leave some time for Q&A. So if you have anything, please feel free to raise your hands and ask the questions.

So Mark, I wanted to kick off with kind of a broad question around the tech transformation. So when you first joined in 2018, I think one of the first conferences you came to was this one in London.

It was actually.

And at that point, you started talking about how you're going to set the groundwork for the tech transformation and the $1.5 billion-plus spend.

Yes.

So maybe help us fast forward today, just walk us through quick what the journeys look like and you've talked a lot about how that transformation is ready to rumble basically. So maybe just give us an update there.

Sure. And as many of the investors know, I joined after December in 2017, and April of 2018 is when I joined. And as you've pointed out, I was here in May 2018 the first time we came to your conference. And at that time, we started talking about we've been executing over the last 4 years, really a major transformation for Equifax to go from a legacy technology environment to a cloud-based technology environment. We think that's a major change for our company. Obviously, a big project to do over 4 years. As you've pointed out, a $1.5 billion incremental spend over the last 4 years, which is really a doubling of our tech spend. And it's important to point out that it's not only a technology transformation to the cloud, meaning moving all of our legacy applications and multiple versions of the applications to the new cloud-based environment. We'll be decommissioning all of our data centers. So we'll be cloud native when we're complete. But we also went to a Single Data Fabric. As you know, in our hardware data analytics company, we have large, siloed data bases, and we're taking those all through a Single Data Fabric. Those are 2 elements that are really quite transformational. We did it because we knew it was going to give us world-class security. After the cyber event, we had to make sure that we improved our security, and this is going to take us -- it already has the industry-leading security capabilities, which we think is a competitive advantage for Equifax. It's also going to give us a much of cost savings from the legacy environment to the cloud environment, a very meaningful cost savings. And now, as you know, between '22 and '25, we expect to expand our margins 500 basis points. Half of that will be roughly from the cost savings, and those are in flight. We're about halfway through. At the end of the year, 50% of Equifax was cloud native. So we're down the path. We'll have a big step forward in 2023 where we substantially complete North America, which is about 80% of Equifax. So by year-end this year, we'll be 70% to 80% cloud native. And then the finish will come primarily our International operations. As you know, we're about $1 billion outside the U.S. Those will be finishing up in '23 and '24. And really, we believe this is going to give us a 5-, 10-year competitive advantage versus our competitors. They're legacy based, they're hybrid cloud-based. Neither of them are going down the path of cloud native. And we didn't do this for the cost savings. They're very attractive. We certainly did it for the security benefits that I already mentioned, but we really did it for the competitive advantage it's going to allow Equifax. And I think this group is well aware of the digital macro in our industry and how important always on is. Our customers are increasingly interacting with their consumers and small businesses online. And for a data provider like Equifax to service them, we have to be always on because if we're down, they're down. I was with a big customer yesterday, and they were talking a lot about the challenges they have with our competitors around outages. And in a digital environment, they're out of business if the systems are down. And the only way to get to I-9s of stability is through the cloud. So competitive advantages, speed of data transmission is also critically important in a digital environment, meaning the latency of how quickly you're responding when they hit your database, how quickly you come back, that's advantage in the cloud environment. I mean the big overlay for us is the ability to bring new solutions to market that we couldn't do before in our legacy environment and can now do in cloud. Things like trended data, historical data, which was doable and still is in the legacy environment, it's advantaged in a cloud environment that we have a lot of real-time data, but the historical data is very, very important. And we'll talk perhaps more about that. But you've seen us ramp up our new product introductions in the last 12, 24 months. And that's one of the big advantages we believe of our cloud environment and Single Data Fabric is we can bring solutions to market more quickly and we can also do solutions we couldn't do before. And just maybe wrapping this up, I think, as you know, we had an Investor Day in November, our first one since the cyber event. We raised long-term guidance on the top line and on the bottom line. We took our long-term revenue growth rate from 7% to 10% to 8% to 12%, so 100 basis points on the low end, 200 on the high end. One of the big drivers of that is the cloud and new products. And of course, we'll touch on our Workforce Solutions, which is our income and employment business that's growing faster than the rest of Equifax. But you can see the benefits of the cloud. So we're still in the early innings or early chapters of benefiting from the cloud, meaning we're halfway there at the end of the year. We'll be 70%, 80% at the end of this year. So we're starting to see those benefits kick in. And really in '22, '23, '24 is really where those start to come into the Equifax operating profile, meaning when we get cloud native and we're really able to deploy those benefits to our customers, meaning they're on our cloud environment. We're migrating customers every week and then really take advantage of the new product capabilities that will drive our top line.

Got it. I want to touch on those new product capability in a second. But John, I just wanted to ask you around the costs implications, savings of this. Because from the security standpoint, Mark, as you mentioned the call, we hosted the call when Junior was Executive.

Yes.

So that's pretty clear you guys are leading probably the safest place out there right now. We also hosted call with Bryson CTO, and he talked a lot about what you said. So John, I was hoping you could just put that together and help us from a cost side, what does this mean for the underlying margin expansion potential and cost savings, CapEx, OpEx, et cetera?

At a high level, Mark covered it, right, which is we're going to go from 34% margins last year to 39% margins by 2025. And about half of that benefit is driven by the benefits we get from transformation. Near term, right, what we talked about is 2022, our investments in transformations, we're starting to be able to ramp it down. When we said you'd see about $100 million of costs come out in terms of our investment levels in 2022 versus 2021,now we're going to reinvest more than half of that in new products. But you're starting to see the ramp down, right, in the investment in our transformation because it's moving toward completion. On a long-term basis, what we've indicated is we expect to see a 50% reduction in the tech section of our cost of goods sold. And the tech section of our COGS tends to be just under 50% of our total COGS. So as you're going forward, now, again, this is based on a 2017, 2018 cost base. That was on the order of $90 million a year. So -- and we're getting -- in the latter parts of '22 and certainly into 2023, where the savings that we're getting are being -- are larger than the redundancy costs that we've had in the past because we're starting to decommission those systems much faster as customers are starting to migrate. Unfortunately, system decommissioning, as we all know, happens at the very end when that last customer comes off. But we're now getting to the point where we're seeing those occur, and we expect to see net benefits as we move through 2020, but really kicking in, in '23 and then '24 and '25, which is what's laid and what is set to that 39% margin focus. And that's really our focus. We're really focused on looking at our EBITDA margins and driving them higher.

And how much of that cost savings, John, is reliant on the new long-term framework of higher growth? And how much is just irrespective of that basically?

Well, they go together, right? Because as you know, the real way we drive higher margins is we have very high variable profit on our incremental revenue because we're database, right? And we -- depending on the product line, we're looking at 70%, 80% and sometimes 90% variable margins and flow through on incremental revenue. So it's obviously the biggest benefit we get is revenue growth, but we are seeing those cost savings that will bolster that. And that's what's really letting us get to 39% by 2025 is the incremental cost savings on top of the 50-plus basis points of ongoing savings we expect to get in our long-term model just from plain growth.

I would just add to that, Manav, what, on the cost save piece, which think about that as close to half of that 500 basis point expansion, we have in our consensus. We know exactly which data centers we're going to decommission when, when we're going to go from having duplicate cost of legacy plus cloud to just cloud. And a lot of us are thinking about is there economic challenges coming. Those cost savings happening with or without the economic, meaning we know how to execute it, and we haven't lined out which quarter those are going to happen. So there's a lot of visibility for us about that portion, the margin expansion for us going forward.

That's helpful. So Mark, getting back to the new product pipeline that's been impressive, I think it's a kind of 150 new product run way...

Sorry, 151 last year.

151. I think the past number that we were used to hearing from you guys was 50 to 70.

Yes.

So that's more than double there. So let's put Workforce Solutions to the side because that deserves its own section, which we'll touch on. But the first basic question, how do you define these new products? There's a lot of questions we get is, do you really put on 150 new products a year?

And as you've seen us do it last year. Obviously, we're on pace to do something similar as far as a number of good products. So the number of new products, I think, is really important. And I think I'll just touch for a minute on the kind of things we're bringing to market now that were harder for us to do before. I mentioned earlier around our historical data. So understanding someone's credit score today is very valuable. But understanding their historical credit score is, meaning, has it been consistent? Did it recently improve? Did it recently decline? So that trended data is very, very valuable. So that's one element of the new products from the Single Data Fabric we're able to do much more easily around trended data. The other is multi-data solutions. And as you know, we have very large databases. I mentioned that in the United States, we have upwards of 80 different data sets. Historically, they would be and our competitors have them in siloed data assets. So combining them together is doable, but challenging. Now we have all that data in a Single Data Fabric, so we're able to really pick those data elements. And as you know, as you combine data, remember, your stats class way back in university, when you add data to an existing data element, it drives predictability and drives ROI. So using an example, if you take the credit score out of the credit file, that credit data using the example really defines someone's propensity to pay, meaning did they pay their bills historically, their financial bills? And using the example, if you combine that with our income and employment data, that is capacity to pay, meaning are they working? How much are they making? So combining those data elements together drives that decision so you have higher approval rates, lower losses, you can give out a larger line, perhaps with a lower interest rate, which drives approval rate. So that multi-data assets is the second element of focus for us around NPIs. And you talked about a number of NPIs, which is important. We really -- this is not new to our industry, if you follow this space. Our competitors do it, too. They're always looking for new solutions to market that help our customers solve their problems. Two things are changing for Equifax. One is we talked about the cloud capabilities in the Single Data Fabric. The other is really our focus. We've added resources in the last couple of years. We started in 2019, ramping up our new product resources to invest knowing that we're going to have this leverage from the cloud and Single Data Fabric capabilities. We added for the first time at Equifax a Chief Product Officer, a part of my leadership team, so really built out that organization. And Manav, you've seen us increasing new products over the last 24 months that we expect that to continue to grow once we get fully cloud capable. So when you think about new products at Equifax, the number of new products is important. What's more important is the revenue. And we've had for quite some time in our space, a Vitality Index, we call it, which is new products introduced in the last 3 years. And new for us is new. It's not an existing product with a tweak. It's really a new solution, and we're very organized around how we report that. And at the beginning of this year -- so last year, we had a new product Vitality Index of about 9%. In our long-term framework that we put out in November, we said we want to get 10% long term. And if you think about Equifax in 2022, we'll be about $5.2 billion of revenue at the midpoint of our current guide. So 10% vitality means, we have $0.5 billion of that $5.2 billion is from new products introduced in the last 3 years. So a very vibrant kind of innovative culture is what we're building at Equifax, leveraging the cloud in -- a couple of weeks ago in our -- after our first quarter earnings release, we took the guide for this year from 10%, which is our long-term framework, up to 11%, so above the long-term framework. So 11% on vitality. Of course, every year, the products we introduced 3 years ago come into the mainstream and fall out of that Vitality Index and then new ones get added to it. But the idea of a company like Equifax that has 10% this year or 11% vitality, new products introduced in the last 3 years, I think, is a very powerful element. And that was part of our guide up in the long-term frame, which we talked about from competitiveness from cloud, new products and Workforce, which I know we'll get to, but that new product is a really important element. So we're really driving a product-centric culture at Equifax. As I said earlier, we're just in the early chapters of leveraging the cloud because we're not complete yet. So when we think about '22, '23, '24, those are where that we're really kick in for new product capabilities going forward.

Got it. Maybe just to hone in on that and then transition towards the macro risk that everyone was worried about. But in USIS specifically because that's where everyone is worried about the U.S. credit exposure. But I believe most of the NPI has been focused on Workforce and we did more towards Workforce and USIS is not being the primary. So is that one of the areas that's going to start kicking in, which could help offset macro pressures? Is that how we should think about it?

It's part of their growth framework. It's not -- I wouldn't say it's fair to say that it's been Workforce oriented. I think Workforce has been further along in NPIs because they're further along in cloud. Remember, Workforce Solutions is a business that's only a decade old. Meaning, it hasn't really been around at scale. It's only a couple of years old, and their infrastructure is complicated. It's simpler than USIS. So they're further down the path in cloud, so they're able to benefit from that. But USIS is a -- has a very active new product program underway. I think, as you know, we've been quite acquisitive in -- across Equifax. But even in USIS, adding new data solutions like the account data and identity and fraud is a part of USIS, a big initiative for us to get bigger in identity. In combining the account data with the Equifax data really drives new products and new solutions for the identity space. Another area we've been investing in, in USIS is around alternative data that's outside the credit file. We bought a company called DataX in 2018. And then we bought Teletrack and CoreLogic last year. We now have the largest alternative data set for near and subprime consumers with 80 million active records that are outside the credit file. So this data that is really valuable to add to the credit file to really score and underwrite those consumers. So those are some of the areas whether it's identity, some of the trended data, some of the alternative data, multi-data solutions. We're actually now combining USIS credit data with income and employment data from Workforce Solutions to Branded Solutions to market. So those are some of the areas from USIS. And yes, we do expect USIS to ramp their new product capabilities going forward as they get further down the cloud capability. So you should look for more announcements out of USIS as far as new products in the second half of this year, and that should continue to grow in '23.

Got it.

One other area also is commercial.

Yes, very good.

Commercial is going very nicely, and we're adding a lot of new products. One of the products we talked about in the last earnings call was specific in commercial as they're broadening the data assets. They have access to provide commercial scoring and just information around commercial customers to our customers.

Got it. All right. That makes sense. So maybe just transitioning to the macro fears that everyone has out there. You just talked about it, Mark. But from your vantage point, maybe just broader, you mentioned the consumer is in good shape. It's in different categories, might have different views. So maybe just based on what you guys see, what's your take on how strong the consumer is?

Sure. And I suspect we'll come back to the mortgage macro...

Yes, of course.

So I'll leave that one aside and talk about the consumer in the United States, but it's not dissimilar here in the U.K. and most markets around the globe. The -- well, first, maybe start with our B2B customers are very strong, meaning the banks are strong. They have strong balance sheets. They weathered the COVID environment. Going into COVID 2 years ago, there was a view that there would be an increase in delinquencies that consumers would be able to pay back their credit card bills and all that. That didn't happen. Our B2B customers also deleverage their balance sheets, meaning consumers paid down balances because they really couldn't spend money during the COVID environment. So when we think about our B2B customers, they're very strong. And they need to grow their balance sheets, whether it's from cards, auto, Q loan, et cetera, because they delevered during the last 2 years. The consumer is very strong. In the United States and most markets around the globe, they're working. Their wages are up quite dramatically. If they lose their job, they get another one quickly. And as you know, in the United States, there's more open jobs than they've ever been -- have been in history in the United States. Unemployment is at a very, very low level. So that's a real positive. They also have delevered their balance sheets in the last 2 years. All the stimulus that came from the U.S. government, I'll focus on the U.S., allowed consumers to keep making -- particularly at the medium and low end, continue to make their minimum payments through this period, even when they were on furlough or laid off. So the stimulus was so strong, they could make their payments. Delinquencies really never came up during this COVID environment. And if you look at credit scores, pre-COVID versus today, the average consumer in the United States is up 20 to 30 points on credit score, meaning they're healthier. And we haven't really seen that coming out of an environment like the last 2 years of COVID. The last point is, if you look at the homeowners in the United States, they have more equity than they've ever had. Home price appreciation in the United States has gone up over the last 24 months, like 30%. And there's a massive amount of untapped equity there that consumers typically will tap over time through cash-out refis in order to access that equity, either to pay down a higher-priced credit card loan, pay down a higher-priced auto loan, use it for sending someone to college or student lending. So broad-based consumer is very strong. Now where are they challenged? Inflation. Inflation is clearly challenging, more at the low end, meaning think subprime consumers where wages are up, but inflation is also up. And in some cases, that balance is more challenging. What's helping that low-end consumer in the U.S. is stimulus is still quite strong, meaning there's a lot of financial support coming out of the federal and state governments in the United States at that lower-end consumer. And the last point I would make is that you've seen this in the bank's earnings over the last couple of weeks when they reported their first quarter results. Like consumers are spending, meaning they're still out there, I think credit card spend at most financial institutions was up double digit, 10%, 15%, 18% kind of credit card spend, so consumers are out there. So going into what is going to be some kind of an economic event, whether it's a slowdown or some say recession, I don't personally see that, but I'm not an economist. The consumer is going into that quite strong from everything I talked about.

All right. So maybe since you brought up credit card, just to trying to understand pre-COVID levels versus today, maybe just on credit card and auto, where are we versus that? Like a lot of our spend, if you talk about the banks has been more marketing, right? But just on the origination side they -- because one of the questions we get is, if there is, obviously, a recession slowdown, like what starting point are we before it falls...

Yes. From our perspective, the banks still need to build their balance sheets. That's why they're marketing. And as you know, if you've been around the economic cycles in our space before, and you may know I ran a credit card business for 10 years in the United States before coming to Equifax. So I know it quite well. I actually ran it through the '08, '09 recession. And what a bank will do is when they see an economic event coming, they'll typically dial down originations. So that is less spend with the credit bureaus and the data companies, but then they dial up account management and collections management. So there's some counter cyclicality to our industry that is quite helpful. What we see is the bank is still spending on marketing because they still see opportunities because the consumer is strong, they haven't seen that downturn in the consumer, except maybe at the kind of the deepest subprime, which is a very small portion of the ecosystem in financial services. So we still see our customers marketing and growing because they really have to build, auto is very similar. Auto is impacted in the states. There's a lot of demand, like you probably see around consumers that want to buy cars, you can't get them. There's still that pent-up demand because of supply chain issues. So auto is very good. We expect that to continue to stay strong because of that demand element where consumers can't get the car they want. Now do those supply chain issues improved somewhat in the second half? Likely they're going to get fixed at some point. So there's a demand on the auto side.

Got it. So then let's touch on mortgage. Of course, it's obviously 30% of your revenues. Maybe just start with in the last call...

It's, Manav, 25% now.

No, yes, correct. So -- but I think you guys did a good job in at least attempting to derisk it, but can we've just a flavor because -- if I remember correctly, I think you assume refi would be down about 60% and purchases maybe up 3% to 5% in your broadcasting. Do you think given -- it sounds like given what you're saying that could be a conservative approach, but maybe just some flavor on how you got then why that seems derisked to you guys?

Yes, first off, it's very hard to forecast right? We don't know where the Fed's going to go, except up, but how far is up on interest rates. And then the backdrop of that is a consumer that's quite strong. Housing market, that's still quite strong in the U.S. As you read about it and we see it, house comes on a market, there's still multiple offers, meaning there's still demand there. But we really took the approach because of the uncertainty of what the Fed is going to do around interest rates. So as usually, your words were our words that we use on the call to derisk the mortgage outlook. So we took it down dramatically for the second half of the year. Just from a run rate standpoint, we looked at where mortgage was in a normal market, meaning free to run up in '20 and '21 from refis and looked at the kind of 5 to 10 years before 2019. So we kind of went from '09 to 2019 and took that normal level and said we're going to derisk below that in the second half by 20% to 25% lower than that, meaning a market that we've never seen before. And we all know there's a normal mortgage market, meaning even in a recession '08, '09, consumers still move, right? And they're still going to buy a new home. So it's a level of purchase volume. There's also a level of refi volume we talked about earlier, particularly the cash out refi stayed there because the consumer will change or will trade a 5% mortgage for a 30% credit card. Meaning if they have an outstanding balance on their credit cards or an auto loan, that's a higher interest rate, they'll do a higher-priced refi in order to get to their cash equity that they have there. So that was the balance that we took in derisking the year. We think it was the right way to really take a stress scenario and put it into our outlook. At the same time, the core Equifax, which I'm sure we'll touch on and off, is operating exceptionally well. So if you look at our non-mortgage and the non-mortgage elements of our business, which, as you point out, is 75% of Equifax, it's never been stronger. And we took our growth rate for the non-mortgage portions of Equifax up 100 basis points in February when we have our year-end earnings, and we took them up another 100 basis points in -- a few weeks ago when we did our second quarter earnings because the core of Equifax from Workforce Solutions, from new products, from our competitiveness is exceptionally strong. So if you think about the core portion of Equifax, it's non-mortgage. We're going to be up 17% in our current guide, which is exceptionally strong and well above our 8% to 12% long-term framework. So we're outperforming that. And of course, as you know, we outperformed that 8% to 12% in 2021 and in 2020. So the Equifax is performing exceptionally well. And we more than offset that mortgage decline. We started the year with a guide to grow the company 80%. Our new guide with mortgage down sharply and the core mortgage up 17% is that we'll grow 6%. And we think that's quite strong for the power of Equifax. And when we think about kind of the core growth of the company, the mortgage macro will normalize. And in some regards, we believe some of the mortgage normalization that we thought would happen next year is now pulled into this year. But the underlying strength of our new products, the Workforce Solutions and the core growth of the company, that's how we think about the company growing long term. And to be delivering 17%, we think it's pretty powerful as we look forward to '23, '24, '25.

Makes sense. So one of the big drivers of that core growth is the Workforce Solutions business.

Yes.

A lot of people are familiar with the business. So what I wanted to focus on was the non-mortgage piece of the business. This past quarter, I believe, it's about 60% of the mix, but grew 50%, 5-0 percent. So can you just help us walk through, I think everyone's familiar with mortgage and what gets done there. But can you just tell us the different elements of non-mortgage?

Sure.

And have we hit an inflection point? Or help us appreciate that 50% and the sustainability there.

Yes. So first I would go back to the comment I made earlier is that Workforce is our largest. Now it's approaching kind of mid-40s. It will be 50% of Equifax in the next 12, 24 months to take a time frame. It's growing well above Equifax's 8% to 12% long-term growth rate. We laid out in November a long-term growth rate for Workforce Solutions of 13% to 15%. We're way outgrowing that. First quarter, 32%. So we're way out growing at 13% to 15% versus the 8% to 12%. And then as you know, Workforce Solutions' margins are highly accretive to Equifax. John talked about our 34% margins. Workforce is 55% margins. So very profitable business because of the uniqueness of the income, employment data and the scale of our data set. So what's driving our non-mortgage growth in Workforce Solutions, first, it starts with records or data. Very uniquely, most data businesses have all the data. Workforce Solutions is income and employment data that we get from individual companies and from partners like payroll processors, and we get it every pay period. We now, at the end of the first quarter, have 136 million active records every pay period that we're getting. So it's very current and it's very deep and accurate around 136 million consumers in the United States. And the ability to grow those records translates into revenue because we have system-to-system integrations with our customers where every application they have for a credit card or an auto loan, for a background screener, for a government solution or for a mortgage comes to Equifax. And as we grow our records, we monetize those day 2. So that record growth is a big deal. In the first quarter, we were up 19% year-over-year on records. And just if you think about records of the 136 million, there's 105 million unique SSN, social security numbers, in that 136 million, so think individuals. And if you think about the population of working Americans in the United States, it's over 200 million. So we have the ability to grow our records from the 105 million to 200 million in change, including gig economy, pension income. So if you think about just the revenue ability from records, we can take what will be in the neighborhood of $2.4 billion business this year. And over the next, call it, 10 years, growing records steadily every year, we can double the business just on revenue. So that's kind of a base that's very unique to Workforce Solutions is the ability to grow their revenue through records. Now we follow price, product, penetration, new verticals, all the things you would think about. So maybe jumping over. So if you think about up 19% in records, which we were in the first quarter than we were last year, we announced in the -- so far this year that we've got 4 more of the larger payroll processors coming online in 2022. So we have visibility to grow records. So record growth is something that translates into revenue and margin across Workforce. And then the other thing that's really unique about Workforce is if you go back 4, 5 years ago, mortgage was a much larger piece of the business. We've now diversified the business away from mortgage into other Financial Services products. We're in now credit cards, where they're using income and employment data to originate credit cards. One of the major credit card issuers is now on every credit card origination, pulling a credit file and also income and employment data and getting higher hit rates. We expect that to expand in credit cards. In auto loans historically was used in subprime, pull a credit file, verify income and employment from Equifax in a subprime consumer, that's moving up to near prime. We expect that to expand. Personal loans is an area where there's pretty high penetration of using it. And then if you go outside of Financial Services, that's where some of the big growth is coming from. And I'll hit 3 areas outside of Financial Services. Number one is the -- we call it the talent space. But in the United States, in most markets around the globe, when you go to get a new job, a background screen is done. And we have in our data set, I talked about the 136 million or 105 million individuals in our data set. The fact that 30 million have 2 jobs is incredibly valuable. And the fact that we've been maintaining every one of those records for the last decade, we now have 550 million records. So we have a digital resume on the average American, where we have an average of 5.5 jobs on the average American that can be used in the background screening space. And if you're familiar with the background screeners, they're typically a BPO shop, meaning they've people on the phones calling around to find out where did Mark work less. We're now able to deliver a digital resume to them as a new product solution and that's growing strong, strong double digits. It was up over 50% in the first quarter as they drive both productivity from hitting our database and getting that full resume. And second is they drive speed. Speed is so valuable to them because, as you know, our background screen is done when a job is offered to someone, but they can't start until it's complete. So there's an open share in that warehouse in that job as a technology code or whatever it is, that they can shorten that they're more valuable. So the hiring space is about a $5 billion data TAM. Today, we have a big growth potential there. While we have a sizable couple of hundred million dollar business there, we only -- our data is only used in 1 in 10 background screens. So that growth potential to go to 1 and 5 and grow the penetration there like we have in others, and we think that's just a matter of time. The secondary is government, both at the federal and state government. As you know, social services in the U.S. are a very big program. They're only getting larger, meaning the U.S. government is giving more social services. And think about unemployment claims when you lose your job, you get paid by the government as a stipend in order to get unemployment claims. Think about rental support. At certain income levels, you get support on your rent. Think about food support. At certain income levels, you get food support. Student lending. At certain levels, you get your student loan deferred or reduced. And it's all income and employment base. And that's also about a $2 billion TAM of data. It's primarily manually-based, meaning if you go into a state office in the United States looking for unemployment claims, you bring a lot of documentation with you to try to make the case, here's why I'm unemployed and give me the unemployment claims payment. We're increasingly digitizing that with the state and federal level, and they're using our data to instantly provide that service. So that's another couple of hundred million dollar business that's growing quite rapidly at the state level. Actually, in the United States, some cities and counties also provide social services and in the federal level. And all those social services are income based, meaning there's tiers based on your eligibility. So that's another big one. The third one that I just want to touch on is really at the heart of Workforce Solutions is our Employer Services business. So very uniquely at Equifax, we provide services to HR managers in the United States around regulatory and compliance services. And most of these services are done in-house, and they outsource to Equifax for productivity, accuracy and reliability. So I think unemployment claims management for a company, they have to provide the paperwork that goes to the state. We do that for them, tax management, tax record management, W-2 in the United States is the reference, work opportunity tax credit, HCA management, employee retention credit. So all services that we provide, and we actually do that using our technology and data to provide that to those HR managers. That's another business that's growing quite strongly for us. But what comes with that along with providing these services is we provide income and employment verification to that company for free, and we get records. So that's another way that we grow our records in the business. So very big effort. And if you think about our M&A, as you know, in the last 15 months, we've ramped up our bolt-on M&A focus. One of our priority areas is around strengthening Workforce Solutions. Both in the Employer Services business, we've done 4 acquisitions to make us stronger in unemployment claims, work opportunity tax credit and some of those other benefits. And then on the talent side, we bought a company in October last year called Appriss Insights that brings incarceration, criminal justice data that's used by background screeners. So a background screener will check your work history, but they also check that you've been in jail before as a part of that background screen. So we now have the only data set for that. It's also used in the government vertical. So a big focus of ours around widening and diversifying Workforce Solutions. At the heart of it, is our income and employment data that's used both for instant, how much does Mark make today, how much does Mark make historically. And then the job history that digital resume is really how we're broadening and strengthening Workforce Solutions.

Got it.

One other area in employer would be I-9 onboarding.

Yes, very good.

I-9 is a sort of validation citizenship and then onboarding is probably the fastest-growing part of our Employer Services in an area where we get to get on the very front end of the record generation, which helps flow all the way through the Employer Services process.

Got it. And I'm going to ask, John, one more question. But if anybody has any questions, please raise your hand after that. But just back to the growth algorithm, right, so 50% on the non-mortgage side on the Workforce, can you just help us -- we don't want to get -- 2 category in that, is that sustainable? And also on the mortgage side, I mean, obviously, mortgage was down 27% or something and you still grew 3% there. So just help us appreciate that if those are sustainable levels or if there are onetime guidance that we should be considering?

So no real onetime items, right? But what's happening, we have a long-term growth algorithm of 30% to 50%. We've been substantial work -- for Workforce, sorry. We've been substantially outperforming that as of late. A lot of it driven by the stuff Mark talked about, right, really outstanding growth in records, which we think we can do on an ongoing basis. Substantial improvements and continuing to add more system-to-system integrations, not just in mortgage, but also in talent, in government with our I-9 system so that we're able to make sure we increase our penetration in all those segments that continues to allow us to continue to grow, right? And those are probably the 3 biggest drivers along with products as well as obviously pricing in these segments where we have really unique value that we can get price for. So those areas allow us to drive outsized growth and, obviously, currently well above our long-term growth algorithm across Workforce Solutions really in almost every vertical. As you mentioned, in mortgage, still outgrowing the market by 27 points in the first quarter, which is outstanding, right? And we've indicated we expect to grow by on that order relative to the markets as we move through the second quarter into the rest of this year.

Got it. Does anybody -- John?

Sorry, I have a question. [Technical Difficulty] penetration we have on the non-mortgage product. It seems they are just scratching the surface...

You're taking about our background data...

Correct. And so how can you get more comfortable? What work can we do as investors look like measures and market potential along their journey?

Yes. I gave you some of the TAMs. If you think about like talent, we see as a big opportunity over the next decade as we really go from what I would call manual operations by our customers, the background screeners using our digital data. And I use the example of today, we're roughly 1 in 10 background screens and there's 75 million people a year in the United States get a new job. So there's roughly 75 million background screens done. And I don't know what the background screener charges to that a couple of hundred dollars per background screen. The data element of that is $5 billion that either they do manually today by calling around with the companies or hit our database in the 1 in 10. So we'll keep reporting to you the growth from 1 in 10 to 2 in 110, 3 in 10 as we grow that. So that's a big TAM when you think about a $5 billion data talent, where we're a couple of hundred million dollars. Government is another one, $2 billion TAM. We're 10% of that. We see real growth potential to really digitize what's done at the federal, state and local level around the verification of income and employment solutions there. If you go into some of the non-mortgage Financial Services verticals, in auto, our penetration is fairly small, we see potential to grow that. We're in mortgage, actually in mortgage, I should use it the example, which would be surprising to you that even in mortgage, we only see 60% of mortgages today. The other 40% are still done in paper-based sets where there's manual work doing. And think about all our verticals that way, if they're not buying from us and they're doing some level of income and employment verification, they're doing it manual and the productivity -- but I think about an environment where wage inflation is going up or maybe there's an economic event, all of those customers are going to look for productivity. And if we can deliver productivity with an instant decision instead of having someone work at $20, $25 per hour, you can buy the instant decision from Equifax for $25, $30 or $40. There's a big play there. In credit cards, still really early days. And why is scale? The credit card issuers want to have higher hit rates. And if you go back just 2 years ago, it was somewhat of an inflection point where we got to approaching 50% of the data set of the available records. So it became a data set when it was 20% and 30%, it wasn't as valuable to put in their workflows. Now that you're approaching 50%. Now they want 100%, right? They want us to do everyone. We will over time. It's going to take a long time to get to 100% coverage. But with 50% coverage in the predictability lift you get with it, we're getting more penetration there. So we have one of the large card issuers fully integrated with us. We have another one that's integrating to us. And I expect in cards the rest of them really showing non-mortgage, there's a lot of potential. And as a reminder, if you think about the credit file, which is the kind of the bedrock of our business, that's been around for 70 years. And we have virtually every consumer's credit file in every market. Income and employment data has only been around for a decade. At scale, it's only 2 years and we're only just north of 50% coverage. So the ability to really drive that coverage means that there's going to be more penetration in all these. And then the income and employment data is just more versatile, meaning it's used in more applications like government, like talent that's very valuable to us. So we see big growth potential. As we pointed out, longer term, we have a 13% to 15% growth rate on Workforce Solutions, which is well above Equifax growth rate, which is why it's going to approach 50% of Equifax and go beyond it. We've been outgrowing that for the last 3 years.

Just on average, that pricing [Technical Difficulty]?

No, yes. So the question is how much of the 13% to 15% was price? And that's a portion. And if you think about the drivers for Workforce Solutions and there's not one that's disproportionate. Records are very important. So if you think about 19% record growth in the first quarter of last year, you should think about that translating directionally into revenue, right, because we already have the orders coming in, the inquiries coming in. We do pricing increases in the business every year. And so pure price being a product last year, we increase next year. We typically do that in December. So we have visibility for this year on what our price realization is. We'll do another price increase at the end of this year. So that's an element for Workforce and the rest of Equifax. We have more pricing power in the Workforce Solutions business than we do the rest of Equifax, which makes common sense. Product is another big one, which we didn't talk about this morning. So it's really those new solutions across Equifax, but also Workforce Solutions, particularly leveraging our historical data. And I'll just give you one example. If you want to buy how much does Mark make today from Equifax either from a mortgage or a credit card or a background screen, in mortgage, that might be $30 or $40 for a static look, a snapshot of how much does Mark make. When we sell the historical data like -- and it's used in a lot of applications, if you think about a consumer, they get a bonus payments once a year or every quarter. If you're looking at my income today, that doesn't capture my full income. So that historical data, we have a 24-month, a 36-month, a 60-month solution. We sell those instead of, call it, $30 or $40 or $150 to $200. And those are new solutions that drive margin and product. So product is another one. New vertical penetration used the mortgage example. We only see 60% of mortgages as we go to 61, 62 and displace paper paystubs, that's revenue growth for us. And then the last one is systems -- system integration, which I think Manav touched on. A lot of our applications, our customers come to us manually to our website in order to pull the report down. So the key to our website credential in, then they'll put my name, social, date of birth in, find the report, pull it down, print it, scan it or whatever. That's about 25% of our revenue comes manually as we call it through manually interaction with our website. 75% were system to system in their workflows. So as they're processing something that automatically hits our database, we get a 25% lift in system to system. And that's an area we've been increasing to system to system. Just use the comparison of that 75-year-old credit file, it's been around forever. That's virtually 100% system to system. That's how it's utilizing the space. Over time, we'll get to 100% system to system. So there's a whole bunch of levers in Workforce Solutions, and I think we've got over.

Yes, we're getting to...

Getting to flat things right here...

We'll stop there. Thank you so much, Mark and John, for being here. Thanks, everyone, for coming in-person as well.

Thanks.

Thank you.

All right. Thank you.