Equifax Inc. (EFX) Earnings Call Transcript & Summary

Okay. Let's go ahead and get started. I'm really pleased to be joined by Mark Begor, CEO of Equifax. Yes?

Wrong spelling, but that's okay.

Oh, Begor; and John Gamble, CFO of Equifax. Mark, John, thank you for being here with us.

Great to be here, George. Thanks for having us.

Of course. So a great place to start would be perhaps on the broader macro environment and the state of consumer credit health, given Equifax's position in the credit space. We've seen certainly mixed data points on the macro front. On the positive side, unemployment is low, consumer spending is strong. But on the cautionary side, you have high borrowing costs and elevated inflation. So based on what you're seeing, how would you characterize the overall health of the U.S. consumer from a credit perspective?

Yes. I would say, not a lot of change from what we expected for the fourth quarter or what we saw broadly in the first half of the year. I think as you know, George, and you called this a year ago, last summer, you started to see some pressure on subprime consumers, primarily from inflation. They're working, which is really a positive. And when I think about risks to underwriting, if consumers aren't working, they generally don't pay their bills. When they are working, they do pay their bills. So that's been a positive, that unemployment is so low. And as you know, there's -- I don't know what the number was this morning, 8 million open jobs and 4 million, 5 million people looking for them. So there's still a real balance there. But subprime delinquencies started going up last summer. That's continued, still at fairly manageable levels, but that's driven by inflation, where they were more impacted. And I think as you know, subprime is a small part of our business, a small part of the financial services industry. It's generally fintechs are the ones that are participating in subprime lending. The broader economy and consumer base is really still quite strong, again, because they're working. And then if you look at our customers, customers being -- and I'll focus on FI. As you know, we're much more than FI, whether it's in government or background screening with talent and other verticals that we're in. But in the broader customer set, they're quite strong, too. The banks are strong. It was -- we were all worried about deposits earlier this year. That seems to have organized itself going forward, I think. Things we're watching, I keep a close eye on unemployment. If unemployment goes up, that generally results in delinquencies going up. We don't see that changing in the medium term, meaning through like the first half of next year. It doesn't feel like that's going to change. We also watch -- we've got student lending. The Biden Administration has done all kinds of things to support students that have outstanding debt. Some of that's coming forward. That could put some pressure on the delinquencies. Inflation is coming back down, which is probably a good thing for the marketplace. But when we laid out a guide for the year, early in this year, back in February and actually throughout the year, we put in our guide a slowdown, a moderate slowdown in the second half and in the fourth quarter. And I don't think we're seeing anything different from that. Would you add anything, John?

No, though the big market where that impacts us is hiring, right? We're in a -- we have about a $400 million business that is involved in Talent Solutions and other business that's involved with boarding. And you've certainly seen a slowdown in hiring, okay? It continues to be probably robust based on some historical standards, but it's definitely seen a slowdown since this summer, right? And [ it ] kind of a slowdown a little bit as you move through the quarter. So we're seeing that, that's impacting our business. But overall, as Mark said, the consumer seems relatively good.

Right. And George, I don't know if you're going to get to mortgage, but obviously, last 24 months, we've lived through a mortgage recession like we haven't seen in our lifetime. So I'll leave that and see if you want to touch on it or not.

Yes. We'll definitely get to mortgages later. So maybe let's talk about your financial framework in the context of the broader macro environment. Your long-term revenue growth target is 7% to 10% growth.

Organic.

Organic revenue growth.

8% to 12% overall, including bolt-on M&A, yes.

Right. What kind of macro environment would be supportive of that? What threshold of minimum GDP or maximum threshold for interest rates and inflation would be conducive for you to achieve that target?

Well, the current environment. We're doing that in our nonmortgage businesses this year. We did it last year in the environment that we're in. Again, when you have kind of moderate GDP, think about a couple of points of GDP. I think that's in our long-term framework that we would have a couple of points of GDP. That 7% to 10% organic or 8% to 12%, including bolt-on M&A, is something we have a lot of confidence in. And we've delivered that outside of the mortgage market macro in '22 and in '23, and we have a confidence in that in the long term. And then as you know, with that, George, is the 50 bps a year margin expansion that comes from that operating leverage in Workforce Solutions, higher margins coming in because they're growing faster than the rest of Equifax into our P&L. If you take the 8% to 12% or 7% to 10%, we have Workforce Solutions growing substantially above that with their 50% EBITDA margins. And then USIS at 6% to 8% and international at 7% to 9% is how we think about the long term of Equifax. And that's up from our old framework from 3 years ago by 100 basis points on the low end and 200 on the high end.

Right.

And if you think about some nearer-term things that are impacting us, right, again, around the margin area, obviously, with organic growth of 7% to 10%, what we talk about is 50 basis points of margin expansion. We get a little bit of a benefit in 2024 because we've executed some cost reductions and spending reductions. We had $210 million of spending reductions we executed in 2023. That carries over into 2024 because we executed during the year. We've got another $65 million of spending reductions that we'll see in 2024. About 60% of that is probably expense related, 40% capital related. So that additional, say, $35 million-ish, 60% of $65 million is an expense benefit that we should see as we -- helping our margins as we go into next year. Which should be somewhat beneficial to the normal 50 basis points of growth, to the extent we see organic growth of 7% to 10%.

Right.

Some headwinds a little bit year-on-year. Obviously, this year, given the very weak mortgage market. For example, our incentive compensation is lower in 2023. We'll normalize that in 2024. So there's some headwind related to that. But if you think about kind of how our margins should trend, that's the way to think about it.

Got it. Related to next year's outlook and the longer-term outlook, the FHFA last year ruled to go from tri-merge to bi-merge. What's your assessment of what the potential impact could be on the business longer term? And how is that process playing out? What's the base case? What's the downside case with that?

Yes. Just to be clear, they didn't rule on it. They rolled it out as a proposal they're working on. And with it, they also said they wanted to go to FICO plus VantageScore. As you know, today the FHFA requires 3B, and they require the FICO score on all mortgages. Going forward, there's discussions around that. The FHFA hasn't resolved that. They've actually pushed out the implementation date. About a month ago, they said they were going to push that out sometime into 2024. So we don't expect that to happen until maybe the second half of 2024, just given on the process. And I think, as you know, in the mortgage market, the cost of a credit file in the credit score is a pass-through cost to the consumer. So if you've gotten a mortgage, anyone in the room has or you have, George, you'll, on your closing statement, you pay for the credit score and for the credit file. So there's less friction because it's not a COGS to the mortgage originator. So the impact to Equifax, I think we've got to start with, first, on the Vantage plus FICO, that's a good guide for Equifax. We'll be selling 2 credit scores instead of 1 going forward. So that's a positive, if and when it happens, going forward. I think you know FICO is in the marketplace. It's public in some trade press about a large increase in 2023 off a large increase in 2022. They pass that through us. That's how they go to market. We mark it up, so that becomes a positive for us in 2023. On the 3B to 2B, that will be an option to go from 3 to 2. Today, it's a requirement for 3. They're proposing to make a requirement for 2. So we're doing a number of things to try to position to be 1 of the 2. As you know, earlier this year, we rolled out an addition of some cell phone utility trade lines to our mortgage credit file that only Equifax can deliver. So we've got a more -- a richer, more powerful mortgage file. Second is mortgage originators, we believe will likely still pull all 3 because of the differences between the 3 credit files. Today, there's 8 million U.S. consumers that are only on 1 of the 3 credit files, because not every financial institution contributes to all 3. So if you go from 3 to 2, you may not be able to approve that consumer that's only on the third you didn't pick. Second, there's 40 million consumers that have more than a 40-point difference between the 3 credit files for the same reason, because of contributors. So while it might change, we would expect most originators to still pull all 3 because of the predictive nature of all 3. So to your question about the financial impact on Equifax, mortgage is less than 15% of Equifax. Most of our mortgage revenue is EWS. The USIS credit file mortgage piece is smaller. The tri-merge piece is where we would be more impacted. And we think we're positioned, if there is an impact, it would be quite small for sure in 2024.

Got it. That's helpful. Let's talk a little bit about your transformation program, tech transformation. You're now in your sixth year in your tech journey. What improvements have you noticed in the business as a result of that? What next steps do you have to complete the tech and cloud transformation? What are your next milestones?

Sure. I'm going to correct your math. It ain't 6 years. It's been something like 4.5, 5 years of the tech transformation. So I think everyone knows, after the cyber event, we made a decision to invest in the cloud in 2018. That really launched late in 2018 is when we got started on it. We made a decision to go cloud-native. Number one, we think, in a digital world, being cloud-native is table stakes around being always on, the nine nines of stability that comes from being cloud-native versus legacy. So that was reason number one. Second, with digital at the speed of data transmission, with everything digital with our customers, not only do you have to be always on, you've got to deliver data very quickly to them. Because remember, every time there's a credit card application, mortgage application, auto loan, our customers being a bank, credit union financial institution will hit our database and then we'll deliver back that solution, then it goes through their decisioning engine, there's a lot of latency in there. So the speed of that, where making it very quick is super important. We also, as a part of our cloud transformation, went to a single data fabric. And this is a big move for Equifax. It was a big part of the $1.5 billion cost over the last 4.5, 5 years to go take all our siloed data assets and put it all together. We believe that's going to allow us to innovate more quickly and do solutions we couldn't do before as far as new products, whether it's historical data or data combinations going forward. So going forward, we're about 65% complete as we speak. We're in the throes of finishing our USIS business. EWS is in the cloud. The USIS business will be complete in the next couple of quarters, which will be a big deal to have North America complete. When we get to this conference next year, we'll be 90% complete, somewhere in that range, meaning in the second half of 2024. And that's meaning all the revenue in the cloud on their new applications. And then we'll have some international platforms like Australia to complete in 2025. So we're way down the road on it, and we're super energized about it. We think it's going to really position Equifax to be a preferred partner because of the tech and stability we deliver and the speed of data transmission. And then also to be a preferred partner on our ability to innovate and roll out more new products. And I think as you know, we've ramped up our Vitality Index and our new product rollouts. By being in the cloud with a single data fabric, we can do either data combinations, which drives value and predictability and performance for our customers around a score or a solution we're delivering, or deliver historical data going forward.

Got it. Great. Let's dive a little bit more into some of the revenue trends and going back to a topic we touched on around subprime. So one of your competitors, TransUnion, noticed a pretty big drop off in credit volumes in the month of September and October. Can you talk a little bit about whether you saw a similar type of trend in your business and what the risks are that the subprime weakness could spread to near-prime and prime consumers?

Yes. We didn't see what they saw, and I don't think our other competitors saw it either. We were puzzled by it because we didn't really have that exposure, and we still haven't. It may be that they're more exposed to fintech than we are. They have a larger fintech business. I think that's well known in the industry. They have a great business in that space. And most fintechs are subprime, where they're doing their business. And that's, as I said earlier, kind of old news. That started declining last summer, meaning in 2022, and then continued. And from our perspective, we're kind of comping off low numbers as we go into the fourth quarter from a fintech perspective. On the idea of it spreading, I know that's maybe, I think, one of your theses perhaps, of how you think about it. We don't. Again, is it -- is -- where's unemployment going to go? Is there going to be a broad increase in unemployment? If there is, that's going to put a challenge on both subprime and near prime and perhaps prime. We don't see that happening. Do you think there's going to be a recession, I think, is really the thing you have to think about to have that kind of an impact. John, anything?

No, I think you covered it, Mark. Yes.

Great. And then maybe we could talk a little bit more about the USIS business. You've, in the last quarter, saw the benefits of rate shopping in the high interest rate environment and...

Yes, in our mortgage business.

Yes. And the nonmortgage business, up around about 5% organically. Can you talk about some of the dynamics you're seeing in autos and cards, specifically?

Yes. And I don't know if you want to come back to it, but just as a reminder, our USIS business is much more than just the FI and autos, cards, mortgages. We have a commercial business that's almost $200 million in USIS that was up double digit in the quarter. It was up 20% last year. We have an identity fraud business that sits in USIS that was up double digits. So...

That was a big tailwind, identity. Yes.

Yes, yes. And we expect that to continue to be one going forward. As well as the commercial business, we expect to outperform USIS because of the differentiated data that they have in the marketplace. So back to your question on, I guess, it was specifically around auto? Or the other verticals?

Auto, cards, personal loans.

Yes. No real change, I would characterize it, that's different than the year, John, would you say?

Yes, we talked about it in the third quarter, right? We talked about the fact that banking and lending performed relatively well. Part of that was around strong commercial. Some of that does flow through identity as well. And as you said, identity, fraud and commercial were very strong for us. Auto, again, was okay in the third quarter, right? I think you've seen some discussion in the industry around some slowing auto sales. So obviously, we're impacted by that, if that were to occur. But overall, I'd say our performance in those businesses has been fine this year, right? I mean, generally speaking, we've seen auto will be a little stronger than banking and lending. But our real strength has been around identity, fraud, commercial, right? Those have been the things that have grown really nicely for us as we've gone through this year.

Right. Well, let's talk a little bit more about mortgage. So you updated your guide, trimmed it last quarter because of weakness in the mortgage market.

So we trimmed it again. [ Fair ].

Yes. And you're looking for overall industry mortgage inquiries to go down [ about ] 34% full year. Can you talk about what assumptions you're making around mortgage rates, whether you think that we've established a bottom in terms of mortgage expectations at this point?

Yes. I think it's challenging for us to call the bottom. We're not good at forecasting where the inflation was going to go and where the Fed was going to go. It feels like we're getting real close to a bottom, is from our perspective, on how the market is performing. And you've seen the 10 year come in, which has brought mortgage rates down, which we think is impacted. And I think just to size it, I think, is very helpful. We've never seen in our lifetimes a mortgage market contraction like the one we've seen in the last 24 months. And when I say mortgage market contraction, it's principally in the purchase side of mortgage. There's really 2 types of mortgages: there's refis and then there's purchase. There's some level of refis that happen all the time. I think as you know, in '20 and '21, when rates came down, there was a refi boom in 2021. We benefited from that, and our revenue went up meaningfully. When we look at where we are in the fourth quarter, really from a run rate standpoint versus what we would call a normal mortgage market, meaning without a refi element in it, of 2015 and '19. That, for us, is we think about more normal. You can agree or disagree, but that's how we think about a normal market, that kind of rates were steady, there wasn't a big refi element. We're 50% below that today. And that's kind of the exit rate we have going into 2024. On the call a few weeks ago, when we had our third quarter earnings, we talked about if you take fourth quarter run rates and run them through 2024, that would be a 15% decline year-over-year, as mortgage came down from -- through the year by a quarterly basis. I think, as you know, we outperform the underlying mortgage markets. And we do all of our markets from price, from product, from penetration, new customers, et cetera. In the third quarter, our USIS business was 33 points of outperformance. So if you think about a market that's down 15%, and we have some level of outperformance, we should be able to outgrow that negative 15% next year. And then in USIS -- I'm sorry, in EWS, we were up 20 points versus the market. So when we think about a market that's flattening out versus 2015 to '19 -- and we're not giving guidance for 2024, we just, illustrative of what fourth quarter run rate looks like for 2024, if you believe it's going to be flat. But at some point, the mortgage market will return, we believe, to normal, which is that 2015 to '19. And that's, again, we're 50% below that. So directionally, you're looking at $1 billion of mortgage revenue as it comes back towards normal. Now whether that's '24, '25, '26 or '27, somewhere in that time frame, we believe that will happen. And then second is, I think, as you know, if you believe that rates are going to come down at some point. I think your bank, I don't know if they're recommending rates are coming down in the second half, I don't know what your -- Goldman's prediction is, but many banks are saying that there'll be a rate decline in the second half. We're not economists. We're not making that call. But when that happens, there'll be some element of refi, meaning people that took out mortgages over the last couple of years at 5%, 6%, 7%. At some point, when the Fed takes rates down, there will be a refi positive for Equifax coming forward in the mortgage business.

Right. That makes sense. If we shift gears and talk about Workforce Solutions.

Yes, finally.

Last quarter, you stated your revenue outlook to be up about 0.5% from 4% previously for this year. Can you talk about some of the trends, both positive and negative, you're seeing in workforce? Certainly, mortgage was a headwind. The government was certainly a big tailwind.

Positive, yes.

Yes. So some of the puts and takes that you're seeing in that business.

Yes. And so maybe just for the rest of the group, I'll just frame workforce, I think as you know, our income and employment business. It's a very unique data set for Equifax. It's a business that we expect to grow north of our 8% to 12% or 7% to 10% organic, in the 13% to 15% range over the long term, 50% EBITDA margin. So its revenue growth and its margin is highly accretive to Equifax. About $1 billion of the $1.5 billion is in FI. About $1.5 billion is outside of FI. And I'll hit the -- so we already talked about mortgage. That's clearly been a headwind for the business. Auto, cards, P loans have been performing kind of normally, I would characterize, in 2023, and I would expect that to be in 2024. When you think about -- if you think mortgage is going to be down 15% next year, meaning off of the current run rates, and we're able to deliver mortgage outperformance, that will offset a lot of that decline inside of that business. We have a $400 million business, almost $500 million that does employer services, regulated and compliance services that companies outsource to Equifax. So we do unemployment claims management, I-9 verification, work opportunity tax credit, employee retention credit, HCA benefits, W-2 management. Those kind of services are outsourced to Equifax, and that's a $400 million, almost $500 million business for us. That business has been growing kind of low to mid-single digits. And as a part of that relationship with the company, we have payroll records that we can then monetize across the rest of the platform. We have a $400 million business in the talent vertical, that is what we call it, but where we're selling our work history to background screeners. We collect every record for the last 20 years. We have 164 million active records every pay period, so we're getting those records from all the different sources. We have 640 million total records. Think about that as jobs and people. So that work history is a very valuable instant data solution we can deliver to background screeners. That's a $400 million business that was up almost 2x last year. It's been impacted by the hiring market this year. That is kind of comping out, although we're not sure where that's going to go, where do we think -- primarily, we're more impacted with our customers on white collar background screens than blue collar. But that's one where we've been outgrowing the market through price, product, more records, higher hit rates and penetration in the vertical. That's a $3-plus billion TAM for the background screeners of the manual effort they do around verifying employment. We've got a $400 million business. So there's room -- white space to grow in converting manual to our instant solution. And then the last vertical that we're very positive about is government. That's where we're -- our data, our instant data on income is used to verify social services eligibility, whether it's food stamps, rent support, child care support, student lending support, all those social services require you to verify income. Because if you make less, you get more social services. That's a $500 million business for us. It was up 50% last year. It will be up strong double digit again this year. It's one that is about a $3 billion TAM of manual efforts. This all happens at the states. Each of the agencies are delivered -- and those social services, I think, as you know, are delivered at the state level by each agency. So we've been developing the connections to those different states to convert them from manual to using our instant solution. And we deliver speed and productivity, which is what we really do in every vertical in Workforce Solutions, is we're converting a manual income verification or employment verification to an instant verification using our data set. And you remember, George, from the third quarter call a couple of weeks ago, we announced 2 big contracts in government. We extended our contract with CMS, which is $1.2 billion over 5 years, so you see the scale of that business. And we added a new contract with USDA for SNAP-TANF, which is food stamps, it's $190 million over 5 years. So government is one of the many verticals that we're quite high on. But the power of workforce is those diversity of those verticals we're participating in, the penetration opportunities of converting manual to our instant solution. In every vertical, the majority of the income or employment or both, verification is done manually. And then the last one is the ability to add records, very unique in this business because we're getting inquiries from our customers for every applicant. As I said earlier, we have 164 million active records, 122 million of those are individuals. The delta is people having 2 jobs or 3 jobs in our data set. And if you think about 122 million individuals in the third quarter, that was up 10% year-over-year. That translates into revenue growth because we have higher hit rates. And we have a long runway to add records. There's about 220 million income-producing Americans. So there's directionally another 100 million records to go for us. And we have dedicated teams in each of the different record verticals to grow those. So it's a very powerful lever for the business, along with price, product and penetration, to add records and monetize them.

Total nonmortgage grew very nicely in the third quarter, like good growth, up over 10%. Substantially outperformed the talent market that we serve, right, which was down significantly. We saw our talent business grow again. And as Mark said, government very strong, up north of 20%. A little bit of weakness, obviously, in card, right, because -- card, property, and auto because we probably skew towards subprime there. Also on income validation...

Yes. We're also under penetrated there.

We're underpenetrated, but really, overall, very nice nonmortgage growth at double digits, which we expect to actually strengthen in the fourth quarter.

Right. Competitors, TransUnion and Experian, have been incrementally expanding into the verification space, albeit at much smaller scale. Can you talk a little bit about the -- what your assessment is of the competitive landscape and competitive threats in Workforce Solutions?

Yes. We watch what Experian, and you said, TransUnion. I don't think TransUnion is in the space. They have an investment in Truework. So I don't think they're participating directly, but maybe they are, and we're not aware of it. I think they announced 3 years ago they were going to get in the space. They didn't really do much, and now they've made an investment in a fintech to try to participate. We're aware of what they're doing. Our 122 million records, the scale of our technology, the scale of our distribution, the scale of our capabilities around security, privacy, everything else, and our ability to add new records. We added 10 million records year-over-year in the third quarter. If you go over the third quarter in 2022, that's more records than the 2 of them have combined, as far as unique records. So we're well aware of a strong company like Experian that's focused on the space. We're focused on making sure we continue to drive growth, and we feel like we've been quite successful in it.

Got it. Let's talk about Boa Vista, you closed on the acquisition of the stake in the third quarter. How is the integration going? And how do you view the Brazilian overall credit opportunity?

Yes. So for the rest of the group, I think you're well aware that there's -- Experian has a very large position with Serasa in Brazil. They've been very successful at it. We've got a lot of respect for what they've delivered in growing a large business inside the Brazilian market. They bought it, I don't know, 15 years ago, something like that. We've wanted to participate in Brazil because it's a big market, a fast-growing middle class, and there really wasn't a second player. Boa Vista was a privately -- private equity-owned company that we've been watching for a number of years. We had a small investment in it. And we saw a window of opportunity last December to buy it. It was publicly traded, it wasn't performing well. So we bought it at very good value. We closed on it in July, as you know. And we're going to bring in -- they were down the path of going into the Google Cloud. We're in the Google Cloud, so we're moving them into our tech stack. We're going to bring our tech capabilities to Brazil. We're going to add our product capabilities from our global platform. And we hear from customers are very positive about having a second global player in a large Brazilian market. The market itself is growing, by our measure, kind of high single digits, low double digit. So we like the macros of the Brazilian consumer market, a lot of unbanked consumers moving into the formal financial environment. And then Boa Vista also comes with a unique data set that's unique to Equifax and Boa Vista from retailers in the Brazilian state -- I'm sorry, in the São Paulo state, which is the largest state in Brazil, is a very unique data set that's quite additive to the bank transaction data we have, which we think will differentiate us. So we're down the path of the tech integration. We've got people down on the ground there. We've got -- we're integrating the business, and we're quite energized about the acquisition for the future.

That's great. Let's talk a little bit about margins. Previously, you had targeted 39% EBITDA margins by 2025, but that's likely not viable because of the mortgage environment. What would mortgage volumes need to be for you to achieve high 30s EBITDA margins?

Yes. So maybe a little framework, and I'll let John jump in also. You said not viable. What we said on the third quarter call is it's not going to happen in 2025, but we're still committed to the 39%. So just to be clear on that. We would disagree on the not viable point. When you think about our margin expansion from where we are in '23 towards that 39%, we've been very clear that with our 8% to 12% growth, we expect to have operating leverage that delivers something like 50 bps per year of margin expansion from the core business, operating leverage, and that's up from 25 historically. As you know, we increased that in our long-term framework. You get that from workforce as a bigger piece of those 50% EBITDA margins. That math just delivers a meaningful chunk of that 50 basis points, and then you get operating leverage from the rest of the business as well as our new product rollouts. And then the lift on top of the 50 as we complete the cloud is the cloud cost savings. Earlier this year, we announced a $270 -- $275 million of cost CapEx reductions this year, $65 million of carryover in 2024. There will be additional cloud cost savings in '24 from us completing USIS in some of our international platforms, as well as in 2025. And those are the 2 steps that move you towards that 39%. And as you point out, when we made the 39% commitment for 2025, that was in a normal mortgage market, and mortgage is now 50% below. And John, if you want to take kind of the path from here to there as far as timing, we haven't made a commitment around when 39% happens, but we made a commitment. We're still going to deliver it.

Right. So when we made the original commitment back in 2021, it was kind of linked to $7 billion in revenue and 39% margins. And we had said we expected to be able to get to $7 billion in revenue, given a more normal mortgage market. We said a normal mortgage market at the time, which, as Mark's already said, we're 50% below, by 2025, right? Obviously, that's not going to happen. But we still look at being able to deliver 39% margins at some level of revenue. It will be above $7 billion, right? Because you're going to have normal cost increases that occur as you go beyond 2025. So we'll need to have revenue higher than $7 billion. But as we cross $7 billion in revenue, obviously driven mostly by organic growth. Because our organic growth is where we generate the greatest margin leverage. Then that's how we'll drive our path to 39% margins. And we continue to see the opportunity to do that as we drive leverage -- sorry, drive our revenue higher and drive it above $7 billion.

So the positive on the top line is that our nonmortgage businesses, which is 85% of Equifax in the fourth quarter, have been outperforming that framework, meaning they're growing faster. So that's a real positive. And obviously, mortgage has been dramatically different when it's down 50% than what we anticipated. So we would expect our nonmortgage businesses to continue to perform well. And then we still have the goal to get to 39% EBITDA margins. And along the way, our CapEx is coming down as we complete the cloud. And as those margins expand, our free cash flow will expand beyond what we believe we're going to use for CapEx to invest in the company or bolt-on M&A. And at the right time, and whether it's '25 or '26 in the future, our intention is to return that excess free cash flow to investors through dividend growth and buyback.

As we complete the cloud, you should see CapEx go down towards 7% of revenue.

Right. And maybe last question on the topic of free cash flow. Over the past 6 years, the free cash flow conversion from EBITDA has been around 30%. What do you see as a viable longer-term target or run rate for cash flow conversion? And maybe a little bit more on your capital allocation priorities.

So sure. Around capital allocation, right, we continue to be focused, obviously, on internal investments, and we're continue to be focused there first.

Completing the cloud.

Completing the cloud, right, let's get that done. And then once we go beyond that, obviously, we continue to be focused on executing on the dividend that we've already committed to. Executing acquisitions so that we can try to drive 1% to 2% of incremental revenue, obviously very accretive acquisitions is what we're focused on, trying to execute them. But then we think given the strong cash we're going to generate as we go forward, we should be able to start to return capital to shareholders, and we'll determine the timing of that as we move through next year, through share repurchase and dividend increases. And you should see us be talking about that in 2024 as we go forward. As we move through 2024, we'll give you more -- as we give guidance on 2024, we'll give you a better view of where we expect our long-term cash flow to settle out and to settle out relative to our adjusted net income.

Great. Well, Mark, John, thank you so much for the insights. Please join me in thanking management.

Thanks, George.

Thank you.

Appreciate it. Thanks for having us.

Of course. Thank you.