Equifax Inc. (EFX) Earnings Call Transcript & Summary

All right. Good morning, everybody. Thank you for being here with us for day 3 of 20th Annual Global Financial Services Conference. For those of you who don't know me, my name is Manav Patnaik. I'm Barclays' business and information services analyst. But most importantly, we're very happy to have Equifax here with us. To my left, we have John Gamble, the CFO. And I think many of you know that Trevor Burns, who leads IR, is with him to help out with any questions here. So thank you, gentlemen, for being here. Appreciate it.

Thanks for having us.

John, maybe just to start with, we've been doing this with every company at the event. Just obviously, the markets are reacting to heart of inflationary pressures, interest rates. There's a lot of macro recession risks out there. You guys have a unique perspective, at least into the lending environment. You have a lot more data than that, too. But just some high-level thoughts on what you guys are seeing looking ahead from a macro standpoint.

Sure. And I think generally, what we -- when asked that, what we talk about is what we're seeing in terms of the health of consumer, specifically the U.S. consumer. And we talked a little bit about this last week, Mark did. The -- generally speaking, I think the consumer continues to be relatively constructive, right? I mean if you think about the fact that the very high percentage of consumers are prime. We are seeing some weakness in subprime. We've talked about that. You're starting to see some increases in delinquencies in subprime. Probably that's part of this. The segment of the market that is likely the most impacted by inflation. You've seen it a little bit in auto. You've certainly seen some balance increases, and then our customers have talked about that. But overall, if you take a look at the consumer in general across all segments, generally continues to be relatively strong, the consumer. However, there are certainly pockets in subprime where you're seeing some weakness. You're seeing some delinquency increases, and you're seeing obviously balanced movement.

Got it. And I think account acquisition activity is one of the leading indicators that you guys can, I guess, look into. Can you talk a little bit about that or maybe any other leading indicators you guys try and track?

Yes. So what we talked about is we went at our last earnings release, so this would -- is a little dated. It would be late July, right? What we saw is in terms of our online nonmortgage activity, which I think is really what you're getting at, that was relatively good, right? That was, let's call it, mid- to high single-digit type of growth rates. And just as for perspective for people, our long-term model for USIS is growth -- which is our U.S. information services businesses, is for growth of about 6% to 8%, right? So what we saw was nonmortgage online. And for us, nonmortgage online would be driven by that type of account activity, also driven by identity and fraud activity, which was very strong, and also driven in our commercial business, where we've seen good strength. But overall, we saw that growing in the -- growing within that 6% to 8% range. What we did see some weakness in was in financial marketing services, right? And that can be a leading indicator of what's coming. We saw some weakness there broadly. Our -- actually, the marketing portion of that was relatively strong relative to the overall performance of financial marketing services, and we talked quite a bit about the specific area that was weak. But generally speaking, I'd say on online, looked relatively good; on the marketing services portion, a little weaker. Yes.

Got it. If you can just touch on the verticals a little bit. So maybe let's just start with card. A lot of the card issuers here, and I think you guys cited to the activity has been pretty good. But maybe just describe the trends you're seeing there, perhaps any deceleration, if at all.

Yes. So again, we haven't really updated since earnings. But the -- but through earnings, banking and lending, which is the segment for us, which is kind of all of our nonmortgage activity and would include card, which is obviously a big chunk of that, was relatively good. It's actually stronger than our overall online performance. So that was performing okay, right? And we felt fairly good about the way banking and lending looked as we went through the second quarter.

Got it. And then if we move to auto. Obviously, a lot of press around supply chain constraints in that business. How is that playing out in your business?

Yes. So we saw some weaker performance in auto as we through June, and we talked about in July. And that was probably within our overall nonmortgage -- mortgage segment, one of the areas that was a bit weaker. So we're seeing that play out, and we're seeing the weakness from supply chain and other factors negatively impacting auto. Yes.

Got it. And so I left mortgage towards the end intentionally, of course. I mean we've talked about it with other companies, but it's a much bigger mix of your revenue. So can you just set -- just help us out with your latest assumptions? Like what is the underlying assumptions behind that, the inquiry guidance that you have given us?

Absolutely. So just a little background, right? So when we provide a perspective on the mortgage market, we provide it using our inquiry data, which is the number of credit inquiries we're seeing. And it's because we and our peers see virtually for all the mortgages that are executed all originations, there's generally a tri-merge fold. Now that can be different than originations, and I'll get into why in just a minute. But what we indicated as we came out of the second quarter where we saw inquiries down about 33%, which was pretty much consistent with the guidance we've given when we entered the second quarter, we were expecting a substantial decline as we went into the third and fourth quarter, not just year-on-year, but also sequentially in mortgage. And what we've indicated is we expect the credit increase to be down over 46% in the second half. And we actually indicated we expected originations to be down more than that. So I think on the order of 50%. Reason why you tend to see credit inquiries in a period of rising interest rates perform better than originations is, generally, shopping, right? People will enter the process of trying to get a mortgage, and they just won't complete it. Sometimes it's because they don't like the rate environment that they're seeing. Sometimes it's because you're seeing an increased number of transactions of homes and not closing late in the process. So to us that we get a credit inquiry upfront, but we don't see the origination. So our inquiries look better. And that's what we saw in the first half of the year, where we saw credit increase significantly outperformed originations in the first half. Guidance we gave was we expected that to start to narrow so that the gap between shopping and originations would start to narrow. Our USIS business, which is the smaller portion of our mortgage business, tracks credit inquiries. EWS, the Workforce Solutions business, which is the larger portion of the mortgage business, obviously, they look a lot more like originations, right, because The Work Number is pulled later in the process, not pulled nearly as often early in the shopping process. So we -- they'd be impacted by the greater impact on originations.

Got it. And we'll get to Workforce in a second. But some of the other offsets outside of just shopping I think you've called out before are pricing and then, I think, share gains in the tri-merge business maybe. Just -- can you just talk a little bit about that?

Absolutely. I was talking about a number of transactions, right? So yes. So in terms of revenue, the drivers on -- in USIS, absolutely, are pricing. Generally, there's pricing in the mortgage market every year in credit. We also have a tri-merge business. We're the only one of the major credit bureaus that actually sells the tri-merge report, and we can see some share gains there where we win more tri-merge share. We also have new products. We launched new products in mortgage, like we do launch new products in other places. I'm sure we'll talk about new products more in a minute as well. And then that's an opportunity for us outperform. So generally speaking, USIS tends to outperform the mortgage market by somewhere between 2 and 5 points per year, and it's driven by those 3 items. So we jump into Workforce Solutions?

Sure. Why not?

Okay. So Workforce Solutions tends to significantly outperform the mortgage market and naturally driven by the dynamics of the Workforce Solutions business in general, right? So when you think about our Workforce Solutions business for The Work Number, for our employment income database, we currently have on the order of 144 million current records, 110 million individuals. Some people have 2 jobs. This is W-2 based income. So I think somewhere between 65% and 70% of U.S. nonfarm payroll. So one of the ways Workforce Solutions is able to substantially outperform the mortgage market itself is because of the fact that they can continually add records, and we grew our record base in the second quarter year-on-year by about 20%. Obviously, also, they -- as they continue to grow out the record base, what that means is they not only get more current records. They also build their historical database of record. So we not only have 144 million current jobs. We have over 550 million -- or on the order of 550 million total jobs in the database. So what that means is we're able to provide trended information or historical information, and that provides the opportunity to drive new products. And those new products that have historical or trended information generally sell at better price points. So not only are we able to drive more -- outperform in the mortgage market based on just adding records by being able to respond more often. We're also able to outperform the mortgage market by launching new products that have better price points that are more valuable to our customers. And you're seeing that. We've done that very consistently over the past several years. The other thing we're able to continually do is add share. So for example, in mortgage, we see about 6 in 10 mortgages had a Work Number pull. And that's an inquiry. It doesn't mean we're able to respond. About 6 in 10 mortgages had a request, right, for a Work Number so -- for a Work Number response. And we're able to continue to drive that higher. One of the ways we do that is by building out system-to-system integrations. So on the order of 75% of the revenue we generate, for example, in mortgage is driven by transactions that are integrated system-to-system into the workflow of the mortgage underwriter. We believe we're the only one of our competitors that has those level of system-to-system integrations. And when we get those integrations, we tend to see a higher percentage of the customer's volume. They tend to hit us very frequently as they're going through their approval process. So by driving more records, by driving new products based on those new records, and especially those historic records, increasing our percentage of the market that we see and which -- for example, in mortgage, it's gone up about 5 points over the past 2 to 3 years. And then also by the opportunity to take some price because, obviously, it's a unique database, The Work Number, we're able to significantly outperform the mortgage market. So for example, in the second quarter, we outperformed USIS credit inquiries by 20 points. And if -- and we outperformed originations by substantially more than that because, obviously, originations performance was weaker than we saw for USIS credit inquiries. So The Work Number is a very unique asset, a very valuable asset. And because of those dynamics, which we'll talk about with other segments as well, we're able to significantly outperform the underlying mortgage market as well as other markets that we serve.

Got it. Just to wrap up the mortgage USIS section, you mentioned new products as one of the offsets. Can you just give us an example of what some of these noncredit report products are in the mortgage business?

Sure. So the one that's most frequently talked about is we have something called Undisclosed Debt Monitoring, right? So a mortgage underwriter can sign up for a product. Well, they'll get an alert to the extent that you, during the process -- during the application process, substantially increase a -- put a new loan in place or substantially increase the balance on an existing loan. So that way, they'll understand that your credit standing may have changed, and it will give them an opportunity to rereview the mortgage, right? So it's those types of products that help an underwriter understand how things are progressing. And we also have products in the -- in our tri-merge business where to the extent that the underwriter sees an issue with the credit of one of the parties that they're trying to approve of a consumer that will, on an accelerated basis, try to work with them to try to clear those issues that they're seeing on a rapid basis. And for that, they'll also pay a fee.

Got it. And then just broadly on USIS, I think we just passed the 5-year anniversary from when the breach happen. But just high-level thoughts on are we past this kind of breach-type conversation with the clients. Where do you think USIS is? Like is there more room to kind of get back -- improve or get back what you might have lost along the way?

So again, we think USIS is well past the discussions from 2017. And we really think where we're headed with USIS right now is how do we take advantage, right, of the tremendous opportunities that are being driven by the transformation. So we started a tech transformation in 2018 to move our entire infrastructure to the cloud to become cloud native principally running on GCP, running on a common data fabric with common data ingestion, which we think is tremendously beneficial to new product generation but also very beneficial to response time and uptime. And EWS has made -- is principally complete through the bulk of that for The Work Number, and we can see the benefits that are being generated in Workforce Solutions from that completion. USIS is making very good progress, and they're in the process now with the U.S. credit file and some of the other major databases that we have like NCTUE of -- those are now residents in GCP. They're operating in GCP. We're in the process of migrating customers in -- through that process. And we think that it's that migration and transition that will let us show better operating performance, meaning better response time, better uptime, not only than we've had historically, but also than our peers we think can deliver. And then also, we think we're going to see substantial improved cadence in new products. And for us, new products tends to be combinations of alternative data assets with the credit file. And we expect that we'll be able to drive that very substantially. So we really think the next leg for us is there, and we think that's what's going to allow USIS to perform very, very well. Again, in the context of that 6% to 8% long-term model that we put in place at our Analyst Day last year.

Got it. And then just to wrap up USIS, we often get a lot of questions around regulatory pressures perhaps. Just anything new with the CFPB or anything on the horizon that -- outside of just the normal course of the business since the CFPB is informed?

So we have a -- obviously, we have a -- an ongoing relationship with the CFPB, right? They're a principal regulator. They're a tough regulator. They have been for a long time. We expect they will continue to be one. And we work very hard to be very open, very collaborative to do everything we can to respond to the CFPB as well as we can. So we think we're continuing to operate in that vein, and we expect to do that going forward.

Got it. And so let's then move to Workforce Solutions. And first, maybe just to set the stage, if you could just help just break out the different components of that business, verification employers, and we'll take it from there.

Absolutely. So Verification Services is the bulk of the revenue. It's approaching $2 billion of revenue in Verification Services. And what -- that's the business where we provide income and employment verifications and some other verifications as well, which we'll get to as we get to other market segments, where we provide a real-time response to our customers that you're working, the job you're in, and importantly, with The Work Number, which is the trademark name of the database that we used for verifications. When a payroll processor or a company contributes records to us directly, we get a substantial amount of information about the role, not just the fact that you're employed and the level of income. There's -- it's gross pay. It's net pay. It's the details between gross and net pay. It tends to be a lot of information on the job itself, job title, et cetera. So we have a lot of information that is useful to a lender or in -- if not a lender, in some of the other verticals, in understanding your employment situation and your income. So the Verification Services is obviously the largest and highest margin business and the one that's growing very quickly. When we hit employer, then we'll come back to the way we get records. So we also have a business called Employer Services. And with Employer Services, that's a business where we provide unemployment in terms of claims processing services for customers directly. We provide Work Opportunity Tax Credit services. We provide I-9 validation services. We provide services to help you ensure that you're in compliance with the Affordable Care Act. We'll deliver your W-2s to your employees for you digitally, right? So a broad swath of services, and we may have missed some in there, but a broad swath of services to HR departments that the common denominator across all of them is that in order for us to deliver them effectively for you as a customer, you need to give us your payroll file, right? Even for I-9 validations, we offer a service where we'll validate that I am indeed a citizen when you're trying to hire me, but we'll also provide a service where if you provide us with your payroll file, that will provide you with reporting that validates that you're in compliance with the I-9 rules because we can see who's received an I-9 validation, how often and compare it against your employee base. So by providing those Employer Services, it gives us the opportunity to then go work with that HR department and ask them to integrate their records onto The Work Number for employment -- for income verification. And for those customers, we'll provide those employment and income verifications for free, right? So back to Verification Services, about half of the records that we get are contributed directly from employers through those Employer Services relationships. They're not contractually exclusive, but they're practically exclusive. I mean generally speaking, customers and companies don't want to contribute those records to multiple parties. The other place we -- and that's about half the record. The other place that we get records, and is again about half the records, is through partnerships. The bulk of those partnerships are with payroll processes, although some are with software vendors. And we'll have a relationship with those payroll processors. In some cases, we're also providing Employer Services to them. So we provide UC capabilities, WOTC capabilities and some other capabilities, white labeled, to some of those payroll processors so they can offer them to their customers. But in terms of Verification Services, when they contribute records to The Work Number, they're able to offer to their customers the free service of employment and income verification. So it's a great benefit to their customers. And then to the payroll processor, they get a royalty. So any time a verification is requested on a record that they contribute, we'll pay them a royalty or a revenue share. And because of the fact that the database we have is now so large, right, so we have about 144 million current records, about 110 million individuals, so 65% to 70% of U.S. nonfarm payroll, I think I covered this already, sorry, about 550 million total records, because of the depth of the database, we have a very strong network effect, right? So what's occurring is mortgage underwriters, card participants, auto lenders, people involved in personal loans, background screeners, government space, we get inquiries broadly onto The Work Number because of its depth. And so anyone looking for a digital instant response in employment and income, because of the depth of The Work Number, they likely come there first. Can't say it's universally coming there first, but it's the place you're most likely to get an answer. So if you're a contributor, well, the place you want to contribute your records is to the place where the inquiries exist, right, because that allows you to no longer have to provide those yourselves. To the extent that you're needing the information, then you also obviously want a query on the database that's the most complete. So as we continue to build out the database, we think the multisided model just continues to strengthen, and we think it's one of the things that's really accelerated the growth of The Work Number over the past 4 to 5 years. As it continues to get bigger, it kind of itself -- strengthens itself. So we feel very good about the position we have in terms of to be able to continue to grow The Work Number. Verification Services, it's an outstanding business, and it's broadened substantially over the past 5 years. Certainly, mortgage is a significant part of our Workforce Solutions business. It's on the order of 40% of revenue now. What we're seeing is very, very strong growth and much stronger growth outside of mortgage than we're seeing inside of mortgage. We have a large and very fast-growing talent solutions business. That talent solutions business is where we provide income -- sorry, employment verifications to background screeners. But we also -- because of some acquisitions we've completed, we cannot only -- we provide not only employment, but also educational history through our relationship we have with the National Student Clearinghouse. We can provide criminal background through the acquisition of Appriss Insights that we did last year. We have medical sanctions data and medical licensure data that we can provide as well. And we're continuing to build out what we call the data hub so that we can deliver more and more job-specific or industry-specific data packages to background screeners. And we think that we're increasingly being able to provide them with an instant response, which we think is a value to them because they can respond to their customer instantly, which we think is an opportunity for price on new products. And so that business has been growing extremely fast. You've seen us grow growth north of 50% in many quarters, north of 100% over the past year. We also have a large and growing government services business, where we provide services to states, large municipalities and, in some cases, the federal government to help them board citizens on to benefit programs principally. So think if you're signing up for health care on the Affordable Care Act, you're going to get a subsidy, they hit The Work Number to determine the level of subsidy that you should be provided. If you're a person -- if you need food assistance or rental systems, generally, that's a means-based test. So we're working with states across the U.S. to integrate them into The Work Number so that the states and municipalities can get those benefits to their citizens faster. And it's really about provisioning of benefits more quickly. Increasingly, we're also being able to provide services to help states and municipalities determine whether or not there's fraud occurring so that we can help them understand whether someone should be receiving those benefits with some of the data that's on The Work Number and some of the other information we have. We're also seeing very nice growth in nonmortgage-based financial services. We're growing our card business very substantially. We're growing our auto business very substantially. And personal loans, we've already -- we've historically been fairly well penetrated. Nice thing about The Work Number is, obviously, if you're pulling a mortgage file or you're pulling a background screen, very rich data, historical data, substantial amount of information. It's an expensive product, right? If you're in card, right, you don't need all that information. And you can't justify it based on the cost -- on the value that you're -- the profitability of the product you're selling. But what you do want to know is whether or not someone is working or perhaps some information about -- general information about tenure or general information about level of income. And we're able to sell small pieces of information at a price point which is absolutely digestible by a card provider so that they can use that in their approval process. And we're seeing nice growth in card as we continue to roll out those type of products. So again, building out The Work Number, growing the database, we think, is driving tremendous opportunities for us to deliver these new products, which are allowing us to get into new segments, which is really helping us strengthen the business. There's 2 other sources of records, which we're starting to grow. Still early days. One would be 1099-based employment, so think gig workers, part-time workers. We're working -- trying to grow that segment. And then we're also working to grow our contributions from defined benefit pension plans. So those are people that have current predictable incomes. And again, if that's proposed on The Work Number, then it's beneficial to those pensioners because they can instantly access credit more easily because their information is on The Work Number, and it's often pulled for credit decisioning. And we're making some progress there as we begin to add contributions in 1099 and pensions. Very early days, but there's opportunities. So we think we have opportunities to -- we're at 110 million individuals. There's probably north of 200 million individuals that have some type of consistent income. And we're working hard to try to determine how do we keep growing that 110 million consistently over time.

Okay. A lot to unpack there. So let's start. So on the Employer Services side, it sounds like it is revenue-generating, but you're in there primarily to get more records. So when you're providing those services, like what's the competitive landscape? Like who are you displacing? Like why are they willing to use you guys and then give you the records?

So in many cases, what you're displacing is an internal service, right, because they're trying to do it on their own. So oftentimes, you're trying to get them to effectively outsource the service. And they're all -- there are point providers of these services around the country. And in many cases, some of these providers have been small, right? So many of the acquisitions we've done over the past few years in Workforce Solutions have been of these small regional providers of services. So for example, we bought a company called HIREtech earlier last year. They provided WOTC services, some UC services, and they tended to be clustered in a certain region of the U.S. So we were able to acquire them. They had an interesting delivery model. They went through the channel, right? So that gave us more channel capabilities with those types of services. And they had some Work Number records, which we could -- they had -- sorry, employment and income records, which we could immediately board down to The Work Number, which gives us instant synergies, right? So I think with the Employer Services business, they tend to be dispersed, right? You've seen some of the companies coming in and trying to compete with us in Workforce Solutions. They've done some acquisitions in this area, but we just think our Employer Services business is dramatically bigger and stronger. And the fact that we've invested heavily in tech transformation, we think that the technology asset that our Employer Services business is sitting on top of is market leading.

Got it. And the conversation with the employer and getting their records, is that -- you're building a relationship by providing I-9, WOTC, et cetera. And then you're saying, give me your data and I'll do your checks for free. Is that how it works? Or is there more relationship between the services being provided, too?

I think the conversations happen together, right? So as we're winning I-9 or winning UC or working to win WOTC, at the same time, we're talking to them about, by the way, in addition, for free, we'll provide you with this employment and income verification service, which is a benefit to them, right? If you're a relatively large organization, you're having to provide that service via some call center or some other method, right? The reason it's a little bit difficult for an employer is providing the information we're talking about is governed under the Fair Credit Reporting Act, right? So you, as a company, are not supposed to release that information until you validate that the party that's calling you, if it's a phone call, right, actually is a lender and that you've -- the employee or consumer has actually applied for a loan, right? And so that's the responsibility. We do that through The Work Number. We do it through the work we do on the credit side. So we have ability to credential parties, validate and audit. And we provide that, again, service to anyone who contributes to The Work Number for free.

Got it. And then one last one on Employer. Does The Work Number database that you keep increasing, does that then help your Employer Services products? Or are they just independent? Like does that data have...

They're fairly independent. Yes.

Okay. All right. Good. So then on the Verification Services side, you mentioned competition. We heard from Experian. People call it Truework. There's a lot of fintech. Can you just talk about from your standpoint? I mean you hear a lot in the investor meetings, but are you seeing that competitive dynamic on the field as well?

So I'm going to put them in 2 buckets, right? So one is Experian and Truework's people that are trying to, let's say, build a Work Number. And then there's another group that are trying to do something through some type of consumer permission service, right? So the general statement is certainly, we hear a lot about them in investor meetings. And certainly, they're in the market trying to sell, right? But the fact is, is that the level of penetration they have is still very, very small. What we remind people, right, is that we currently have, as I said, on the order of 65% to 70% of U.S. nonfarm payrolls for individuals. So if you're a mortgage underwriter or you're a background screener or you're somebody trying to go get a digital response on a record and you hit The Work Number, we can't always respond, right? So those parties are already going out trying to find, right, another answer. So they may go to one of our competitors to see, gee, do they have the record, or they'll end up having to do it manually themselves. They'll get a pay stub, and they'll have to validate it themselves. Now again, Equifax, for example, we offer a service called Mortgage Complete where if you buy that service from us, we'll either give you a digital response or we'll go get a response for you manually. But again -- so we certainly know our competitors talk about having relationships with other customers -- with some of our customers, and we would say it certainly must be the case, right, because we don't have every record, and those customers need to fulfill their mortgage underwriting requirement, et cetera, by getting income and employment verification. So they can't get them from us. They get them from someplace else. So we just think the strength of the database, we think the breadth of the database, we think the fact that we have such -- so many records and the fact that increasingly, what's being looked for is not just current income and employment information, but also historical information, just puts us in a very, very strong position to continue to stay in primary position and continue to have such strong growth across Verification Services. So we feel very good about where we sit. But we are -- obviously, we're very focused on understanding what our competitors are trying to do and where they're trying to grow. I'd say similar commentary around the consumer permission methodology. I'd say the additional difficulty with consumer permission -- and again, we have services to pull consumer permission information, but the additional difficulty, obviously, is it just adds a lot of friction to the application process, right? The consumer needs to provide credentials, right, and then allow those credentials to be used to pull information from a bank account or to pull information from a payroll process, which we think is very difficult. So we think that level of friction is just not necessarily beneficial, right, in the workflow of a customer. So we think as long as The Work Number continues to grow and become more complete, again, it becomes increasingly compelling to be able to go to one place and get a response, a high percentage of the time.

Got it. And on the consumer permission side, I mean, you guys have capabilities to do the same thing should you need it. So do you get a lot of requests to do something on that?

Very, very little. It's not -- it's out there. It's something we do. It's something actually we do in USIS as well. And the level of activity is very small.

Got it. And then the one thing you mentioned was if you don't have it in a database, you can go do it manually. When you go do it manually, does that allow you to then collect that data and put it in your historical archive? Or how does that work?

Generally, no, right? Generally, if you're going out and you're -- someone provided a pay stub, and you're just validating the pay stub or validating with an employer, it's a onetime event.

Got it. I definitely have a few more, but we have a few minutes left. I don't know if anybody in the audience has a question. I just want to pause and see if there was anybody who wanted to. Okay. I'll continue. So I wanted to touch on international real quickly. And maybe as a segue, I know you've talked about planting the seeds, if anything, on workforce in international. I think it was Canada, U.K., maybe Brazil. I forget which countries. But any update there?

Sure. So just starting with international. So international has been performing very well for us. We've seen a really nice first half, growth around 10%. We indicated we expected a very strong third quarter, even stronger than we've seen in the first half. So when we think about Equifax' total nonmortgage growth, right, it's -- we're seeing very good performance, not just in Workforce Solutions, right, but also a very nice contribution from international, which is a $1 billion business for us now. So that's very helpful and really helps diversify, right, the overall Equifax footprint, right, where I think we're, as we talked about last week, much more than a credit bureau, right? We're a broad information services company. In terms of driving The Work Number internationally, yes, we have -- The Work Number is up and running in Canada. It's -- there's Work Number implementations in Australia, in India and then also now starting in the U.K. And those generally start with just how do you build out record contribution, and that tends to be the phase we're in. In Canada and in some other of those 4 countries, we do have some revenue. It's small, right? And it'll take time to build out records. So we don't expect to see a significant revenue contribution in the next couple of years. But as we look out, we've been talking about a 2025 model. As we look out to 2025, could we see those international locations adding a little bit of nice growth to Workforce Solutions? Sure. Absolutely. Yes.

Got it. Maybe we can shift to capital allocation. There's been a lot of M&A that you guys have done over the last 18 months, call it. Part of it might have just been catch-up because you guys are busy with the tech transformation. But just how should we think about the cadence, appetite, desire to do M&A?

Absolutely. So our long-term model again is for 7% to 10% organic, 8% to 12% total, which includes 1% to 2% of acquisition -- of revenue from acquisitions each year, and we'd like to operate in that range, right? So clearly, 2021, much more than that. I think what you're seeing in 2022 is kind of more consistent with that long-term model. And I think you should expect that that's what you'll see us doing, right? In terms of capital allocation, look, we like the credit rating profile we have, right? And so we'd like to maintain this level of credit rating. What we're seeing happening as we move through '22 but then into '23, '24 and '25 as we see continued growth in the business, margin enhancement, right, that we're expecting to deliver by 2025. Our level of free cash flow, we think, grows very significantly as we move through not just this year but into next year and the year after. And we think what we'll have is a significant amount of both free cash flow and then available leverage from EBITDA growth to allow us to not only execute that 1% to 2% of acquisitions but also now start thinking a lot more specifically about how we return more capital to shareholders. And that would be either through -- starting to grow the dividend or through share repurchases. And I think that's something we'll talk a lot more about as we get into next year.

Got it. And the focus areas for M&A, I mean, if you look at what you've done so far, a lot of the small Employer Services guys to give you access to records. There's been data acquisitions like Appriss, fraud and ID. Are those the 3 main areas? Or are there other capabilities or areas that you want to target?

I covered it pretty well, right? So generally, the umbrella tends to be around data. And it will be hard for you to find an acquisition of ours that doesn't have a significant data accretive element. And it's because it's -- when we have incremental data assets, the incremental margin we generate is just so very, very high. It really justifies the acquisitions. A big focus continuing on growing out the Workforce Solutions business, continuing to grow Employer Services, and we'll continue to do that. But also continuing to broaden data assets and verification services around the data hub as we continue to strengthen, for example, our talent business and our government business. That tends to widen the opportunities for different data assets that are useful in those industries, and you'll continue to see us looking at those, and we expect to continue to find opportunities there. Also obviously data in USIS, but also international around some type of alternative data assets, assets that aren't necessarily contributed to the credit file but then would be accretive to a credit decision. But also very specifically around identity and fraud, right? We bought Kount about 18 months ago. We just bought Midigator in August. And we're very focused in identity and fraud in terms of trying to start at that transaction start, helping our customers validate that you are indeed who you say you are. And again, backing up for a second, sorry, Kount is in the e-commerce space, right? So not necessarily in our traditional FI space, but they're in the e-commerce space, and they offer identity and chargeback management services through e-commerce directly and then also through card processors. And so we think there's a real opportunity there to continue to grow out the capabilities that Kount provides domestically but also internationally with nice growth. We're not as focused around marketing, right? We think Equifax has a lot of strength in helping people do identity verification and manage through the execution process. We do have some marketing assets. We have IXI, which helps people understand wealth, which is an anonymized database. And we certainly package that in with our Kount sale processes, but we're really focused on growing identity and fraud in the transaction base. We think we have a real opportunity to do that. We think the addition of Midigator's capabilities, which helps e-commerce players manage chargebacks more effectively, will really strengthen that portfolio and help the Kount business continue to grow very strongly, and it's been growing very strong double digits for quite some time.

Got it. And maybe last question just to wrap up. How about geographically? You bought Veda in Australia a while back. A lot of the geographic assets don't come up a lot. Are there opportunities there? And maybe particularly in Brazil, you own a stake in the #2 bureau. So how should we think about that?

So generally speaking, in international, those properties are very rare to come up. So if a substantial property becomes available, we'll certainly look. But that tends to not happen very often. In terms of Brazil, that's a property, I think, we've talked about for quite some time that we have a 10% -- approximately 10% stake. We certainly like the business. We're interested in the business. It just hasn't worked out that we've been able to find a way to take a bigger position. And at this point, difficult to tell how that might progress. It's been an interest of ours for a very long time, and we continue to talk to our partners.

Got it. All right. Well, we'll leave it there then in the interest of time. So thank you, John and Trevor, for being here. And thanks, everyone, as well. Thank you.

Thank you.