Equifax Inc. (EFX) Earnings Call Transcript & Summary

Great. Can everybody hear me. So hello, and welcome to JPMorgan's U.S. All Stars Conference. We are coming into you live from London, and we're very pleased to be joined today by Mark Begor, Equifax's CEO; and John Gamble, Equifax's CFO. So for those of you who don't know me, I'm Alex Hess, a member of the U.S. Business and Information Services Equity Research team which is led by Andrew Steinerman. So welcome, gentlemen.

Thank you. Great to be here. Thanks. So Andrew, we miss him.

We miss him indeed. All right. So we'll kick this off with a high-level question. Equifax just hosted an Investor Day and the core thrust was after spending a number of years and I believe around $3 billion building the Equifax Cloud, the company now sees the opportunity to play offense with I think what you called a durable competitive advantage. So can you unpack for investors why now is a great time to get excited about the trajectory of Equifax?

Yes. I think there's a bunch of reasons. I think everyone knows, we've got an underlying data set that's differentiated from our competitors. We have businesses like Workforce Solutions, we have data sets in USIS that are very differentiated, and over the last 5 years, we've been growing and running the company while doing the massive transformation to the cloud. It was a huge project for the company. It's one that was -- you could argue it was a big distraction to run the company and do a tech transformation of that scale. Now that it's substantially complete with over 90% of our revenue and the bulk of our U.S. revenue in the new cloud environment and our data now in the new single Equifax fabric, we really can't pivot to offense and really have the team fully focused on innovation, around customers and around winning in the marketplace. One of the measures that we look at is our Vitality Index. It's one that we've had for a long time at Equifax, way longer than I've been there. It's a measure of the percent of our revenue from new products introduced in the last 3 years. Historically, that was 5%, 6%, 7% kind of pre-cloud back in '21, we set a goal, knowing the cloud was going to advantage us around innovation in new products of 10%, and we've been outperforming that since then. We've had 12%, 13%. We raised our guidance on innovation again in the end of the second quarter with our second quarter earnings. I think that's an example of our ability to innovate. Another big area is around using AI, using AI to deliver higher-performing scores, models and products. The power of the AI allows us to ingest more data and we have more data than our competitors. We believe we can deliver products that are differentiated versus our competitors because I think everyone in the room knows when you use more data in this decision, you generally get a higher predictive solution. And higher predictability means ROI from our customers and it means either market share or price for Equifax. So that's been another big focus from ours. Fundamentally, the cloud transformation, we felt was table stakes to be a player in the data analytics space. With all of our customers operating digitally with their customers, whether it's a small business or principally consumers, you have to have always on stability. And when you operate in a legacy environment, there's outages. In a cloud environment, we believe we can deliver that 99.9999999 of stability, which is critically important. We think those -- that platform capabilities, the capabilities we deliver to our customers, the fact that we're more innovative, and now after almost 5 years of building the cloud and running the company and now in 2025, only running the company focused on growth, we think we're in a great position to really grow the company coming forward. And one of the messages we attempted to deliver in our June Investor Day in New York was that we have a lot of confidence in our long-term framework. Our long-term framework I'm sure, will want to touch on, but we laid out a long-term framework 4 years ago to grow the company 7% to 10% organic or 8% to 12% with bolt-on M&A, and that was historically 6% to 8%. So we raised it 100 on the low end, 200 on the high end. And then historically, we had a long-term framework of 25 bps of margin expansion per year. We increased that 4 years ago and confirm that in June that our expectation is to grow our margins 50 basis points per year going forward. And so our intention was to really reinforce to investors our confidence about the future of Equifax to deliver on that long-term framework. And importantly, we can deliver that long framework with a mortgage market that doesn't need to recover, right, with a mortgage market that only grows with GDP, say, 2 to 3 points a year, we can deliver that long-term framework. To the extent the mortgage market does recover over time, which I know we believe it will, but you'll all make your own judgments, then that's just upside for us. And that incremental revenue and obviously, variable margin will flow right through to the bottom line.

Right. So let's maybe pause on the variable margin piece because I think some investors saw the margin trajectory that you laid out, both ex mortgage with the mortgage recovery. And there was sort of a -- I wasn't -- couldn't that have been lifted a little bit. And so is that just the level you want to commit to in a market where there are lots of moving pieces, with a business model where different aspects of the business are variable? Is there a reason you guys pick that number? Is that a ceiling on what your business can deliver year in, year out? Or any sort of thoughts around why that's the number you chose to?

Yes. So we -- at the Investor Day, we laid out kind of two metrics. First was we laid out a 5-year plan. What are our goals over the next 5 years, both with and without a mortgage market recovery. On the without mortgage market recovery, we really laid in our 50 basis points of margin expansion per year, and we think that's an attractive company, a company that can get the operating leverage to grow margins that are already quite high, meaning kind of mid-30s or high EBITDA margins, and then expand that at 50 bps per year. And we don't think about 2030 as a ceiling. I use the word ceiling. When we think about the long term, which would beyond the next 5 years, we see our ability to deliver that operating leverage to the bottom line and deliver that 50 basis points per year. We also laid out a case for 2030 if there's a full mortgage market recovery. And we've been talking about that with you for quite some time to our investors that it's had a significant impact on us and our competitors over the last almost 4 years. In 2025, the mortgage market in the United States is down in the neighborhood of 10%. That's about $100 million of negative revenue pressure for us in 2025. Over the last 4 years, that's over $1 billion of revenue pressure that we've had to work through. We've never seen that in our lifetimes. The mortgage market over 20, 30, 40 years moves around a few points. It's never gone down 50%. So as you know, we've laid out for our investors and John talked about it that in our Investor Day, we said we can deliver that kind of 50 basis points in 7% to 10% without a mortgage market recovery with really just GDP growth, which we think is quite strong. And then we also laid out that there's significant leverage if rates come down and mortgage market improves. And we sized that based on 2025 of being $1.2 billion of incremental rev, $700 million of incremental EBITDA and $4 per share of incremental EPS. And that was laid into that 2030 case. What we didn't do, which is, I think, we got some feedback from investors, we didn't grow that mortgage market upside in '26, '27, '28, '29 and '30 based on likely price increases, likely product rollouts that increase our revenue from where it is today by record additions we have in EWS. So we didn't put that in our model. And I think some investors did that themselves and saw that, that 2030 number could likely be higher with a full mortgage market recovery if you assume there's a compounding of what we do around pricing, product and record additions and some share gains that we have in the business. So that was our intention of laying it out. And no, there's no ceiling on how we think about our margins. We think there's a lot of operating leverage in Equifax with a 50 basis points. And then as you know, back in April, we also rolled out a new capital allocation plan. You probably -- maybe you'll touch that in the questions. But important for us was to translate that EBITDA expansion opportunity going forward into free cash generation, and we shared that we expect to have 95% plus cash conversion, which is extremely high. And we rolled out a new dividend buyback program where we're going to grow our dividend in line with earnings. And then we announced a $3 billion share repurchase program where our excess free cash flow is going to go after CapEx, dividends and bolt-on M&A.

Excellent. So you briefly mentioned that we're prospectively about to enter a potential rate cut cycle. It's certainly the...

Let's see what happens tomorrow.

Yes, we'll see what happens tomorrow, but the market is certainly looking for a rate cut.

Yes.

Maybe walk through -- look, we're 3 quarters of the way through 2025 now. So maybe walk us through if we get 25 or 50, whatever, many basis points you might think of what that would mean for your business going into next year, especially?

Yes. Well, it's certainly going to be good news, a rate cut. And I think that obviously, the variable on the rate cut is going to be what happens with inflation and what happens with employment. Those, I think, is well understood in this room, for sure. That's how the Fed in the U.S. looks at how they set rates. Inflation is higher than they'd like it to be. There have been some nervousness in the last 30 days around what's happening with job creation, is that some pressure? So i think those are the two balancing elements. And on the inflation side, the Trump tariffs clarity on where is the closure on that, I think, is a tough one to handicap. When is that going to get resolved, which would likely bring some more clarity to where inflation is going. So I think that's going to be a variable going forward. Maybe, John, you want to touch on, if you look at kind of third quarter run rates on where mortgage is today. Just as a reminder, mortgage activity in 2025 in the U.S. is down 10% versus last year. So that's kind of how we're running in 2025. Your question is '26, maybe I'll let John try to touch on.

Sure. And if you take a look at -- obviously, rates have come down a little bit here recently, right? If you take a look at kind of the volume that we're seeing and spread it across the third quarter, you might see that going into next year, we could be seeing rates -- we could be seeing mortgage activity that was, say, flattish, maybe up slightly given current third quarter type of volume levels we're seeing in '26 versus 2025. So that would get us back toward that flat to up slightly type of mortgage market, which, again, is what we indicated we need, right, what we'd like to see, so we can deliver our long-term framework, right? And again, for us, so long as we're not seeing declines in the mortgage market, we feel very good about delivering that long-term framework and current third quarter type of volume levels might give us some comfort that, that might occur next year.

Maybe two other points, Alex, on this, just to kind of wrap up the mortgage market comment. Number 1 is that there's been -- you've followed -- maybe we follow it very closely, but there's been some movements in mortgage rates throughout 2025. And when we say we see mortgage rates come down something like 25 basis points that happened at the end of the first quarter, we see an uptick in activity, marginal, but you know there's a sensitivity there. Same thing that happened this summer, there was a movement in rates. So we know that there's a consumer that's watching that. And the other thing that's happened is, I think everyone in the room knows that the U.S. mortgage market is a combination of purchase activity, people buying new homes, and then people refining existing mortgages. So it's a very active refi market. And in the refi market, because of where rates have been over the last really 4 years at over 5%, 6%, 7%, we're building a large backlog or portfolio of what you could characterize as high single digits if there's a rate reduction of 25 bps to 50 bps to 75 bps to 100 bps, it generate a meaningful refi activity. So I think that's an element to think about going forward, what does it take to get that full recovery? In our opinion it's a combination of rates coming down likely meaningfully. So we don't think rates are going to go back to where they were at [indiscernible] versus the combination of bringing those consumers buy a large or smaller home and [Technical Difficulty]. Importantly John and I said quite [indiscernible] based on, it's not going to come down think about it that way that we're investing the right amount in people, in products, in CapEx, in bolt-on M&A and technology to continue to grow the company with or without a mortgage market recovery. And again, we've got a lot of confidence in that 7% to 10% organic without a mortgage market recovery and along with that 50 bps of margin expansion, we think that's a pretty good Equifax, a very attractive company.

And as a reminder, when we talk about the mortgage market, we're talking about USIS mortgage hard credit inquiries that's what we tend to be talking about.

Yes. So just to discuss how you are running the company, maybe we'll pivot to Workforce Solutions, Verifier is your biggest and great business. So one thing you laid out at your Investor Day was a $15 billion addressable market, and you're looking at sort of, call it, $2.5 billion, somewhere in that ballpark this year for revenue. So most of the market is unvended. Uniquely some portion of that market, in fact, possibly a very large portion is manual. So it's not like you're competing against somebody, you're competing against entirely different process.

Correct.

So help investors understand because you have a 13% to 15% organic revenue growth target implies a meaningful, I would say, step-up in penetration of that TAM. So help investors understand what the next legs are for penetrating your TAM?

I'm just going to broaden the question a little bit because you linked it to 13% to 15%, and you see a meaningful step-up in penetration. We don't think about it that way. We think that we've got really 4 legs on the stool of the growth engine and Workforce Solutions and that business has really 2 legs our other businesses don't have. Every business we have, we increase price every year. And we have more pricing power in Workforce Solutions because of the uniqueness of the data asset, but that's one where we take price up every year. So that's something that's a growth lever for us. We also have the ability to roll out new products. So new products are a big part of our engine. We've already talked about our vitality index, how we've invested in the new product capabilities and workforce to use the example. We rolled out a trended mortgage solution 3 years ago. It's now half our revenue. We sell that for twice what we sell just marks income today. We sell a higher cost because we're delivering more value. So that's a way to grow revenue by rolling out new products, and I'm sure we'll get to that in the conversation a little bit later. The 2 legs on the stool we don't have in any other business, number 1 is records. The ability to add more payroll records. We're already getting the inquiries from our customers because we're fully integrated with them in mortgage, in auto, in cards and P loans, in background screening, doing background screening, employment history checks or in government doing social service income verifications. We're getting every inquiry from our customer, then we fulfill the records that we have. When we grow our records, our revenue goes up. So very unique. We don't have that in other businesses, we'll perhaps come back to records. And then penetration, I've never been around a business that has the kind of penetration opportunities that Workforce Solutions has. And as you pointed out, roughly, we're a little north of $2.5 billion, but $15 billion TAM. We just have really big TAMs, and we're principally competing in those TAMs against manual income verifications or manual employment verifications that take place. And we can get into some of the verticals, but like government where we have an $800 million business, and that's where our data is used by federal and state government in the U.S. to deliver social services. And as you know, there's about 100 million people in the U.S. that get some form of social services, whether it's medical support, rent support, food support, child care support, income support, unemployment support various services. They're all needs-based and income verified. That TAM is about $5 billion and were $800 million. And the difference between the $800 million to $5 billion is principally states and federal agencies that are still fully manual. So that's a very unique lever for us. And we don't think about having to step up the penetration to deliver the 13% to 15%. If you look at over the last, actually, almost decade, Workforce Solutions has been growing at that rate. This year has been challenged, principally because of government where there was an air pocket from some budget reimbursement changes made by the prior administration to some of the states. Going forward, we expect Workforce Solutions to be our fastest-growing business over the long term because of the strength of those 4 levers we have around growth.

That's super helpful. Just to maybe dive into the government business real quick. I think you recently disclosed that it's about 65% state revenue and then 35% federal. But of course, the program is administered -- sorry, funded at the federal level, administered by the states sort of the standard go-to-market. And I believe, correct me if I'm wrong, on rank ordering, the biggest business for you guys is with CMS, then it's Social Security and then USDA.

And it would be Social Security, it would be USDA food stamps and then all the other programs at large.

That makes a lot of sense. I think sometimes when people look at, hey, what could come next, you look at treasury...

Income tax credit, unemployment insurance, there's a lot of other programs I think to frame it, I mean, this is public knowledge, and you can go on the web to look at it, you can look at our data. But the U.S. federal government has identified, there is in the neighborhood of $160 billion a year, $160 billion of improper social service payments. And these are generally someone who qualified for social services because their income was low, and then they solved their life event, maybe went back to work, but are still getting the social services and shouldn't. That's generally what the $160 billion is, and that's really what our solution offers. Our solution in social services delivers speed. So if someone needs social services, we can deliver it instantly by that income verification versus in a manual process they generally have to go back and get more paper pay steps. And if you think about a family that's trying to get food stamps and food support, if they have to go back and get it, they can't get food that they need with our instant verification. So we deliver speed. We also deliver productivity. It's a very manual effort by each of the states at each of the agencies. They have thousands of people that are adjudicating on a 1-person basis the eligibility by looking at those paper documents, and we can deliver an instant verification. So for $5, which is in the neighborhood of what we charge for our instant verification in the government vertical versus a $30 an hour case worker, we deliver productivity. And then really importantly, we deliver integrity because it's verified, right? I think that room probably knows, at the end of the second quarter, we have 100 million people in our data set that we're getting payroll records every 2 weeks. So it's very current from 4.6 million U.S. companies are contributing that data to us. So a lot of scale. And the integrity one is really what's changed in Washington in the current administration is you go back to kind of Musk and DOGE and the focus by President Trump around smaller government looking at waste and abuse and the view of the $160 billion of improper payments is something they wanted to address. And I think the room may know there was a large bill passed on July 4, and called OB3, One, Big, Better -- One Big Beautiful Bill. Many call it OB3. That has a lot of new requirements in it for the states that are more stringent about their delivery of social services. And we think that's a good thing for Equifax. What we've seen in the last 90 days since that was signed on July 4 is an increase in activity of commercial conversations with the roughly 500 agencies that would be what you'd call customers around using our solution. So it gives us confidence going forward about the growth trajectory of growing from $800 million into that $5 billion TAM. We believe our government vertical in EWS will be our fastest-growing Workforce Solutions business over the long term, meaning outgrowing that 13% plus kind of growth rate, and clearly will be our largest vertical very quickly, meaning larger than mortgage in a fairly quick time frame, short of a rapid mortgage market recovery. We have a lot of resources around product and commercial. We have people at the state capitals in the U.S., which is where the agencies are. If you think about it, each state basically does it all independently based on the guidelines from the federal government. And really what changed, which is increasing the activity of this OB3 bill put a lot more teeth into what the states have to do to comply, and there's some penalties if they don't. Today, the vast majority of social services are paid for by the federal government, as you said, Alex, but delivered at the states. And if they have high error rates going forward, which many of the states currently do because they don't use a verified source of income, the federal government is going to force them to pay for a portion of the benefits. So if you think about tens of billions of dollars in each state is going to come their way unless they really strengthen their income verification requirement. So it's one that we're adding product resources, commercial resources. As I said, I'm going to be in Washington tomorrow. I spend a lot of time there working not only on current programs, but there's many significant new opportunities for Equifax. I'll maybe just hit on one, if I could, Alex. In the United States, there's a program called The Earned Income Tax Credit that the IRS, which is our revenue agency like HRMC (sic) [ HMRC ] here in the U.K., administers it. And if you make less than roughly $25,000 a year, you get a payment every year when you file your tax return of $2,000. It's not a tax credit. It's a payment. The IRS has characterized that as being $16 billion a year of fraud just on that program. And really, the issue is they don't check the income before they pay the refund. So our proposal, and we've been working on it for 5 years. We want to continue collaborating is to really do an income check to our database before you pay the refund of does Mark make $25,000. And if Mark makes $30,000 based on our data goes to audit. If Mark makes $25,000 or $20,000, pay that earned income tax credit. So those are some of the new opportunities that this current administration has a really big focus on giving social services to those that qualify. And then if they don't, they shouldn't get them. And that's the $160 billion that they're focused on. So we're pretty bullish on it, and we're plowing a lot of resources into it.

That's super helpful, Mark. So that's -- I think you have a total -- we'll peel back for a second and say you have a $50 billion addressable market across the whole firm effect. And we just gave a lot of detail on a very important vary of the moment, timely $5 billion of that, but maybe we can flesh out the biggest piece of that is an area where I think a lot of people don't think of Equifax, which is in the credit bureau business in the identity and fraud space. Obviously, one of your large competitors, 2022 made a very -- '21, excuse me, made a very sizable acquisition. Another one has sort of made it identity and fraud part of their software play.

We made 2 acquisitions Kount and Midigator.

Midigator, yes. How do you sort of think about what's next for the identity and fraud piece of the business at USIS?

Yes. So why is identity and fraud a priority for us and for our competitors, as you point out. And we're investing in it through product through capital. We have a lot of unique data assets. The acquisitions we've made really bring unique identity signals to us. The Kount acquisition was one that they were a market leader in retail, e-commerce identity validation. So someone who's shopping online, there's a lot of fraud there. So they had a large business there. What was powerful for us to get those data signals is that they're kind of daily and hourly and weekly, meaning people shop more frequently than they pay their credit card bill, which we have a lot of identity signals on. So we're putting all those data together. We would like to do more acquisitions in the identity and fraud space. We think we have a competitive advantage around the scale of our data, particularly with the Kount acquisition. We have something like 700,000 -- 700 million verified e-mail addresses. We have verified cell phone numbers. We have verified IP addresses. Those are all the signals that are important in identity and fraud. Now why is identity and fraud important is because our customers are going fully digital. And as you know, that's been a phenomenon that's been happening. It accelerated during COVID. No one goes in, no one. Virtually no one goes into a bank to apply for a financial product, it's all done online. That identity validation is a huge issue. And every time I meet with a CEO here in London or anywhere around the world or in the United States, their #1 issue is identity and fraud. And so that's why we're investing so heavily. So what are you going to see from Equifax is more combinations of the data to really integrate like with credit data and identity check in government, for example. Government is a great example where there's a lot of identity fraud. People apply for social service benefits, but they're not the person implying. And then they get the social service benefits using your name or someone else's. So we want to integrate with our income validation that identity check kind of upfront in one transaction. We think that will be a real opportunity. you mentioned USIS and kind of another place. I don't know if it's on your list of questions. But another place where we're using multiple data sources like identity is in our credit file. The credit file is more commoditized between TU, Experian and Equifax. Our credit file looks a lot like theirs. We think ours is better, but they would argue the same. We're working for how do we differentiate our credit file. So we're rolling out, as we speak, we started early this year in mortgage, auto, card and P loans. We're adding an income flag or indicator on our credit file. So today, when you think about what is a credit file and a credit score, it's really a reflection of your propensity to repay your bills in the future based on your past behavior. That's what a credit score is. So likely, will you pay it back. It's a risk score if you want to use it that. Income and employment is your capacity to repay. So in a mortgage, in an auto loan, in a P loan, you verify credit and you verify income and employment capacity to repay. What we want to do is bring up in that shopping process for those products, more visibility for our customers in a digital environment to say, okay, Mark's credit score is 800 and he's working. Today, you're blind. You don't know if that individual was laid off or if their income went up down or sideways. So we're rolling that out. We think that's going to be a share gain opportunity for Equifax in credit files that if our credit file has more information on it than our competitors and really important information that's used in a lot of verticals about verifying income and employment, if we're giving an indicator that really helps the customer in their marketing process and the mortgage shopping process, the auto shopping process of better positioning the company with that consumer around the right product, the right price, the right credit line to close that loan, we think it makes our credit file more important. So that's another really powerful, we believe, product that we're expecting to get some benefits from as we roll into '26 and beyond.

Got it. So let me maybe suggest a proposition for you, and you tell me why this is or is not correct. If I look at your product plans in identity and fraud as well as through the Twin flag and the other data that you're adding into your credit file, and I say, how can I benchmark Equifax' success on both those items noting that it's conflated with other things, I'm going to say, oh, organic revenue growth non-mortgage that you disclose each quarter. You think...

Mortgage too...

Well, of course -- let's just say I'm trying to isolate for the fact that...

Maybe where the rubber hits the road in new products is revenue growth and as you know, we have the 7% to 10%, 8% to 12%, I'll use 8% to 12% because that includes a bolt-on M&A long-term framework. In USIS, we expect 6% to 8%. In international, we expect 7% to 9% As you pointed out, in EWS, we expect 13% to 15% in. And as those products, use USIS as an example, that's at the lower end of the 6% to 8%, primarily because of mortgage market. If they're able to move into the 6% to 8% and move into the middle of the 6% to 8% over time because of Twin Indicator is driving credit file market share, that should be proof to you, and that's where we would expect it to show up in how we deliver on our revenue.

And also look at Vitality index. We disclosed Vitality Index every quarter, right? And operating above the 10% target that we have. So Vitality Index again, is the amount of revenue we generate new revenue from new products over the products that were launched over the last 3 years. If we deliver it over 10%, I think we're delivering well against our long-term plan.

So maybe we can unpack the share gain concept a little bit that you guys have talked to. Not say, okay, like what the number is, that indicates share gain, but like more conceptually, what does share gain look like? Our understanding is that most major financial institutions sort of have a primary draw, and then I don't know what percentage of volume goes to the primary, but let's say, a polarity growth...

Well over 50%.

Well over 50%, and then the other two bureaus in the U.S. sort of compete on use cases. Is the share gain winning more primaries? Is it winning more a bigger pie of the secondary use case? Is it both?

All of the above.

All of the above?

Leave mortgage aside because principally outside of shopping. We can talk shopping, if you want, but it's principally a 3. But yes, it's moving into primary. So we think what are the -- what are the levers Equifax has to be driving share gains? #1 we think is cloud. The fact we're cloud native. We're delivering faster data transmission for digital. We're always on because of our $3 billion investment, we think that positions us to move up from third to second, second to first. And like we're first with a lot of people our competitors are first with a lot of people, too, right? So it's obviously, there's opportunities there. Second is innovation, new products. We believe we have the tools and now the D&A and capabilities to be more innovative than our peers. We believe that our customers look for an innovative partner, bringing new ideas to grow, how do you help reduce their fraud losses, how do you help them grow their originations. We believe we're better built for that today. We have more data, Twin Indicator is a great example and then also a D&A of how we run the company. So those really combine together in the share gains. And then some of the product execution like the Twin Indicator is just in a test mode now. right? And the feedback from customers, super positive. And I didn't mention that I should have, we're offering it for free. So if our credit file is x, we're adding in the Twin Indicator on no additional charge because we want to differentiate our file versus TU and Experian. And if you go outside of mortgage, I think this room knows that. I know you do, Alex, is that in the other verticals, they are principally a one credit file pull. The most sophisticated originators in the U.S. still pull 3 on non-mortgage products, but most of the industry will pull a TU, Equifax, Experian file. We want to be the file they pull and drive some market share. And that's why we're investing in stuff like the Twin Indicator.

Got it. That's super helpful. I would like to actually talk on the international for a quick second. We are in the U.K. obviously. So any comment what you're presently seeing here in the U.K., what the business sort of any unique dynamics that investors here might be aware of and what you're seeing presently?

From an economy standpoint, this has been kind of on the weaker kind of slower growth sides that we have versus many other international markets. Our performance has been very good here. And I think everyone knows this is Experian's backyard. They have the predominant market share they're headquartered here. I think it's very well known. We've been very pleased over the last 2 years about our performance versus Experian and TU, meaning we're outperforming both of them. So innovation, new products, data combinations, cloud complete, we have the cloud technology complete. We think it's been paying off here in the U.K. And we like the U.K. market. We also have a debt management business here in the U.K. that's unique to Equifax. Our competitors don't have that. Our competitors have big D2C businesses here in the U.K., Experian has a very large one to use smaller, ours is smaller than the other two. But we like the market. I get over here a couple of times a year to meet with customers and we've been pleased with our performance the last couple of years.

That's helpful. That's helpful. So maybe one country over, Ireland, has recently announced that you guys are opening an AI innovation lab in Ireland. Would like to maybe drill in on that? Like what will that lab in Ireland be doing? And what's exciting and...

Just another example of our investment in AI. We think Dublin is a good market for technology in AI, and we wanted to have a center there. We got some incentives from the government, which we're pleased about. But it really is just a building block of the many investments we're making around AI. And when we talk AI at Equifax, I think one thing to be clear about, and it's the same with our competitors, is what's unique about our data is it's proprietary, meaning we can't be disintermediated. We're the only ones that can use our data. And for over a decade, we've been investing in AI capabilities around explainability, like ChatGPT is really hard. Obviously, there's billions of dollars being invested in it principally around using in public market data. The explainability of AI is even more complex. And here in the U.K., in the U.S., in most developed markets, there's regulations that require you to explain a decision that's made in financial services. And that explainability is super complex, like which data element is the reason you didn't approve someone. And when you're using a ton of different data elements, which AI powers, that explainability is a big deal. So that's where we've been investing. We have over 300 patents, which is double our competitors kind of individually, including FICO around Explainable AI. We added 12 more in the first half of the year around Explainable AI. So we're investing around the explainability tools around AI, and now we're deploying that in our products. And because we have more data than our competitors in each market, we're able to deliver higher performing products that have higher predictability using AI. And what that translates into share gains. Using your prior comment, it translates into revenue. It translates into higher prices for our products because we deliver higher ROI with the AI. So that's a big, big focus of ours is around using our D&A teams and our technology and product and commercial teams to use AI and more data to deliver more predictive solutions. The other area for AI for us is what we call AI inside of Equifax or AI for Equifax. We're really just starting to ramp AI tools in our operation centers. We have thousands of call center people that are fielding calls from consumers in each market around questions on their credit file. We get tons of paper when someone wants a copy of their credit report or wants to put a freeze on their credit report. We're adding AI there. We think we're going to deliver a bunch of productivity in our operations centers. But principal focus is higher-performing products powered by our data in order to drive our growth with our customers.

I'm going to ask one high-level question on this, and then we'll get back to sort of the more timely matters. But it seems to me that one of the great things about the way that regulation and the way the market is structured in the U.S. is that it's deterministic. You have to be able to repeat and arrive at the same outcome...

On a consistent basis and explain it.

And I think that a lot of people when they're looking at who are AI losers, they don't necessarily think you guys but to think about why you guys aren't is because, look, you can't run this in ChatGPT and have it come up with differences in models and scores and...

It's that and you can't get access to the data, that's proprietary. Yes, that's the principal element is that no one else can get our data. Like no third party can get access to it. We're the only ones that will use it. And as you know, we aggregate the data. Like in the United States, somewhere in the neighborhood of 30,000 financial institutions contribute credit data to us every month. That's proprietary. It's proprietary on their site. It's not available on the web. And then, in our case, it's not available. And I already mentioned in income and employment, 4.6 million companies deliver payroll data to us. There's no way to get to that through the worldwide web and we're the only ones that aggregated. So that moat, if you will, or aggregation of the data means only we can apply AI to it.

Right.

What we can do though with AI agents, and we are doing now is JPMorgan obviously has a huge D&A team that can run their own analytics. We can make using AI agents, our analytics available to small and midsize financial institutions much more seamlessly. So they can end up with much better outcomes using our technology, while a large financial institution like yourself can obviously do it yourself.

I want to end with a question on capital allocation. And obviously, Equifax has sort of with the Equifax Cloud now being live and rolled out the free cash flow profile of the firm.

CapEx coming down.

Yes, free cash flow of the firm -- profile of the firm. is very attractive. A lot of ways you can deploy that. You've touched briefly on there's some appetite for M&A dividend increase, as you sort of said in line with your...

Buyback.

And buyback. As you sort of look ahead how should investors think about your relative appetite for each of these three and then also how flexible should they be and hold you to being on each of them?

Sure. John will jump in, too. So when we think about our capital allocation strategy, I think you want us to do because of our growth profile and our margin profile and expansion profile invest in Equifax because you want to keep that machine going. We've overinvested over the last 5 years because we did the cloud transformation. So CapEx is coming down. But going forward, we expect to spend somewhere between 6% and 7% of revenue in CapEx. And for the last 5 years, that spend was higher than that, in some cases, almost double and that was principally in building the cloud. Our CapEx going forward, while we have some cloud to finish is going to be predominantly on new products. So really powerful for us that we can feed the engine around investing sizable amounts. We're talking about $0.5 billion roughly of CapEx that grows with revenue. So that's our first priority. We -- every product investment we make we cost justify. We do a cost return analysis at each one. John's team has a very rigorous process, meaning we're generating very high ROI on our CapEx investments that has very high returns on capital. So that's kind of priority 1 for us is to invest in Equifax in a disciplined way. And you can kind of model in that $500 million growing forward. Second is around bolt-on M&A. So we think about in our framework, we have a 7% to 10% organic, 8% to 12% total. So the difference between 100 to 200 basis points of revenue growth annually from bolt-on M&A. And if you look at the last 5 years, we're in that ZIP code of what we've done, that range. I use the U.S. term, that range of 1 to 2 points of revenue growth. And that's not a limit. We've had years when we've been higher. Last year, we didn't do any. So we'll go up or down based on the opportunities, super disciplined financially and strategically around bolt-on M&A. To be crystal clear, we're not doing anything big, no transformational M&A, no big M&A. We're going to do tuck-ins. I very deliberately, John and I use the term bolt-on M&A. And these are acquisitions to make Equifax stronger at the core. And they principally are around unique data assets, strengthening Workforce Solutions, our fastest-growing, highest-margin business. Identity and fraud, which we've done a couple because of that big TAM and that big growth rate. And then last would be international platforms. And we've done -- those have been where our acquisitions would be. We've done 20 acquisitions in the last 5 years. We spent $4.5 billion TEV of our cash flow and leverage, but obviously, paying that down to keep our investment grade leverage on those acquisitions. You would expect that to go forward. I have a corp dev leader that works for me. John and I meet with them every month. We go through the pipeline. So strategically, very disciplined. And financially, we have a very high bar on what we're going to do. We want to buy businesses that are accretive to our revenue growth rate and accretive to our margins, and that's going to create shareholder value. So if we can't meet the strategic criteria or the financial criteria, we don't do M&A. And then if we're not doing M&A, we're going to do more buyback. And then in between, obviously, is the dividend. We rolled out, as I mentioned earlier, the new capital allocation plan. We plan to grow our earnings -- our dividend in line with earnings going forward. So we think that's a very attractive dividend growth rate. And then the balance of our free cash flow going to buyback. And in our Investor Day, we laid out for you with that margin expansion and growth of the company, the buyback really grows as you get out in the out years because that's really where we're going to spend our excess free cash flow. And if we're not doing M&A, we're going to do more buyback or vice versa. And when you get out to 2030, with or without a mortgage market recovery, there's a lot of free cash flow beyond CapEx, beyond bolt-on M&A, beyond the dividend that we're paying that's going to end up in buyback. And then just to make one more point on it because it's in that investor deck from Investor Day, is the incremental cash flow from mortgage market recovery when it comes, we could say if it comes. But when it comes, we'll show up in buyback. We're not going to spend more on people. We're spending the right amount today. We're not going to spend more on CapEx. We're spending the right amount today. We're not going to spend more on M&A. We're spending the right amount. Our EPS will grow up, the dividend will be larger, but it will be principally in the buyback. We think that's a great balance of investing in Equifax and then returning cash to our shareholders.

Great. Well, Mark, John and the Equifax team is here as well, thank you so much for joining us today. This has been a pleasure.

Thanks for having us.

Thanks a lot.