Good day and welcome to the Equifax First Quarter 2016 Earnings Conference Call. Today’s conference is being recorded. At this time, I’d like to turn the conference over to Mr. Jeff Dodge. Please go ahead sir

Thanks and good morning. Welcome to today’s conference call. I’m Jeff Dodge, with Investor Relations. And with me today are Rick Smith, Chairman and Chief Executive Officer; and John Gamble, our Chief Financial Officer. Today’s call is being recorded. An archive of the recording will be available later today at www.equifax.com. During this call, we will be making certain forward-looking statements to help you understand Equifax and its business environment. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from our expectations. Certain risk factors inherent in our business are set forth in our filings with the SEC including the 2015 Form 10-K and our subsequent filings. During this call, we will be referring to certain non-GAAP financial measures including adjusted EPS attributable to Equifax and adjusted EBITDA margin, which will be adjusted for certain items that affect the comparability of the underlying operational performance for the first quarter of 2016. Adjusted EPS excludes acquisition related amortization expense, as well as the transaction and integration expenses associated with our acquisition of Veda. Adjusted EBITDA margin in defined as net income attributable to Equifax adding back income tax expense, interest expense net of interest income, depreciation, amortization and the impact of certain one-time items, including the transaction and integration expenses associated with our acquisition of Veda. These non-GAAP measures are detailed in the reconciliation tables which are included with our earnings release and are also posted on our Web site. Also refer to the investor presentations which are posted in the Investor Relations section of our Web site for further details. Now, I’d like to turn it over to Rick.

Thanks, Jeff, and good morning, everyone. Thanks as always for joining us this morning on the call. Our first quarter performance certainly exceeded our expectations and further underscores the strength and the ability of this management team to consistently deliver results that meet or exceed the commitments we make to you our shareholders. And not only do we have the experienced leadership team, but the entire organizational rhythm is geared to the Management disciplines we’ve created and built together over the last 10 or 11 years. Those disciplines are NPI enterprise growth initiatives, lien, growth playbook, account management etcetera. I could tell you one thing, this team is hungry and competitive to continue the winning streak that they’ve been on now for a number of years. Our first quarter results are noteworthy as they’re compared to a very strong performance in the first quarter of 2015. 2016 first quarter was a record quarter which is on top of a record year in 2015. For the quarter, total revenue was $728 million. That was up 12% on a reported basis and up 15% on a local currency basis from the first quarter of 2015. Organic constant currency revenue growth was very strong, up almost 11% over last year. Also in the quarter, foreign exchange created a $19 million year-over-year headwind. The adjusted EBITDA margin was 34.2% compared to 34.5% in the first quarter of 2015 and that was in line with our expectations when we guided for the full-year during our fourth quarter. [Indiscernible] and John will talk about that in detail, as will I, should you have any questions. Adjusted EPS was $1.23, up 15% from a $1.07 last year and significantly above the upper end of our guidance range. As always, before John gives you the financial details, I’d…

Thanks, Rick, and good morning, everyone. As before, I’ll generally be referring to the financial results from continuing operations represented on a GAAP basis. As we indicated previously, with the Veda acquisition, we’ll start focusing on adjusted EBITDA margin to more consistently present the operating performance of the segments and the Company as a whole. Adjusted EBITDA margin has been defined as adjusted net income plus depreciation, net interest expense and taxes. At the segment level, adjusted EBITDA margin is adjusted operating income plus depreciation plus net equity and other income. Given the change in our reporting structure, this metric will provide an improved understanding of segment performance as well as assessing their progress against our multi-year progress. The GAAP, non-GAAP reconciliation attached to our earnings release provides a more detailed description of what is included in the adjusted EBITDA margin. As you will recall, we’ll be excluding Veda transaction expenses and integration expenses incurred through 1Q ’17, the first year after the Veda acquisition from our adjusted EPS and adjusted EBITDA margin. In 1Q ’16, total Veda transaction and integration pre-tax expense was about $22 million, virtually all of which was transaction related. $16 million of these pretax expenses are reflected as operating expense. Of this $16 million, $12 million are investment banking, legal and accounting advisor transaction fees and impact general corporate expense. The remainder of the operating expense was acquisition related employee compensation expenses at Veda, which is included in the International operating segment. Net FX losses related to Veda financing were approximately $6 million in the first quarter and are reflected as other income. As a reminder, we recognized $5 million in FX gains related to Veda financing in 4Q 2015. Looking forward, the remaining Veda transaction expenses will be incurred in 2Q ’16 and should…

Thanks, John. As I give you guidance for the second quarter and for the balance of the year, just to clarify, that does not assume any additional M&A at this juncture. So it’s obviously the full-year of Veda in the numbers plus organic growth. And as John alluded to in his comments, we’re expecting to do additional tuck-in M&A this year. That’s just not in the guidance I’m about to give you. I wanted to make sure that was clear. For the second quarter, we’re increasing our outlook for both revenues and adjusted EPS. We now expect revenue, including Veda, to be between $795 million and $805 million, reflecting constant currency revenue growth of 20% to 22%. That’s partially offset by 3% of FX headwind. Adjusted EPS is expected to be between $1.34 and $1.36. That’s up 17% to 18% over 2015. Excluding $0.03 per share of negative impact from FX, this reflects constant currency organic EPS growth of 19% to 21%. With our strong first quarter performance and second quarter -- and outlook for the second quarter, we’re also increasing our full-year outlook for the year. We expect revenue, including the impact of Veda, to be between $3.05 billion and $3.15 billion, reflecting constant currency revenue growth of 17% to 20%, again partially offset by 2 to 3 points of FX headwind. This is up from the previous guidance of $3.0 billion to $3.1 billion and will move us nicely above the high-end of our multi-year financial model of 6% to 8% organic growth. And we also, as I mentioned earlier, expect potential additional growth through acquisitions as our pipeline is strong, but not included in that outlook. Adjusted EPS for the year is expected to be between $5.15 and $5.25, which is up 14% to 17% year-on-year. Excluding approximately $0.12 per share of negative impact from FX, this reflects constant currency EPS growth of 17% to 19%. This too is up from the $4.95 to $5.05 that we guided to during the fourth quarter earnings call a few months ago. We also continue to expect as John had mentioned, we expect our adjusted EBITDA margin to continue to expand by approximately 75 basis points for all of 2016. So with that, operator, we’d like to open-up to any questions we may have from our audience.

Thank you. [Operator Instructions] We will the first question from Manav Patnaik from Barclays.

Yes, thank you. Good morning, gentlemen, and congratulations on the strong start to the year. I just wanted to first pick on, I think if I heard you right, you made some comments around trying to expand Workforce Solutions to other regions and you already had some increase in leads. I was hoping you could elaborate a bit more on that and what sort of timeline we should expect for some sort of replication of the data base you have here in those regions?

Sure, Manav. It’s an important part of our multi-year strategy. We -- as I alluded to in the prepared comments, we’ve the technology platform exchange that will be moving to different parts of the world. We’ve strong customer interest. We’re going to be very focused in the countries which we go. That process is already underway. Places like Australia, Canada, the U.K. and India are ones that we’re moving on right now. Think of it as a multi-year kind of contributor versus something where we all wake up tomorrow and there is a dramatic change. This is going to be a nice contributor to us. It is not contemplated -- when I talk to our investors and [indiscernible] and others about kind of multi-year financial outlook for EWS, that revenue was not contemplated, so this would be on top of that growth, which I have met with a number of customers internationally, as did Dan, when Dan was in the role and now as Rudy. And I can tell you the interest is very, very high and we’ve the unique technology to do -- to satisfy those needs in those parts of the world.

Got it. That’s helpful. And I guess it seems like you emphasize the guidance, not including any future tuck-ins. Is that -- am I reading that too much into saying that there is probably a pipeline in the near-term we should see and maybe which areas we should expect that in?

Yes, our pipeline is good. My whole focus to date has been getting Veda integrated properly. The team’s focused on that, bringing products to Australia, New Zealand, and they’re doing that. But at the same time, we’ve a strategy. That strategy has resulted in a pipeline and we’re moving forward on that. So, while it’s not in the guidance, yes, to be very, clear, you should expect that we do a few strategic tuck-ins throughout the balance of the year.

Again, and just last one for me, and it sounds like obviously there is a lot of internal momentum going on at Equifax. A lot of -- your peers are doing pretty well as well. Is there any -- I guess, could you provide some color on how we should maybe try and understand the high growth rates in terms of the extra cent coming from just macro tailwinds or industry tailwinds versus the remaining coming from just pure internal innovation?

I think, our long-term model is 1 or 2 points of kind of market kind of growth. And as you know, the balance of the growth is we call initiatives, which are internal organic stuff. I’d say the markets around the world are consistent with that model. We are not -- you are seeing some areas of good growth like automotive in the U.S but I’d not say there is anything that’s significantly changing the market dynamics of growth beyond the 1 or 2 points we talk about and have talked about for years. So, it continues to be largely driven by internal initiatives, including NPI, EGI, and others.

All right. Thanks a lot, Rick.

Sure. Thank you.

We will hear next from Andre Benjamin from Goldman Sachs.

Thanks. Good morning. I just wanted to talk a bit about Workforce Solutions. Clearly the growth there has been probably surprising, leaving your own expectations. Could you maybe help us frame kind of what the TAM would look like there over, say the next five years? And then where you believe you’re the most penetrated today versus just getting started?

Yes, I continue to talk about EWS as being an unbelievable growth story for us, not just since we bought it nine years ago, but over the next 10 years. And I like to describe it, Andre, as being very early stages of its growth. What I mean by that is, we’ve talked to you and others about our path to 300 million records and we’re well on our way to that. That’s a huge lever for growth. We’ve talked about further penetrating verticals in the United States. And you heard John talk about great growth, broad-based growth in government collections, auto, card, mortgage, with the penetration level there it’s so early, and it was many, many years of growth still to be had there. Third is the analytics. I alluded to that, John has alluded to that. It’s growing dramatically year-on-year. It was a good growth driver last year. That’s got a number of years of growth left in it. And then, we’re now trying to take that platform and take it to other areas I alluded to, overtime pay is an example, IRS, 1094 and 1095. And then, lastly, it’s taking the work number exchange and technology platform we’ve and capabilities globally. So, when you couple that together, there are so many years of growth left in that business. Is it always going to grow with it -- what was it, 21%, John, in the first quarter? But we gave you a very robust multi-year growth, and I clearly expect that business for as long as I can see, to grow within that range that we’re committed to.

And then on the PSOL business, you mentioned you continued to sign more partnerships there. How do you think about the sequential growth rate for that business as the partnerships that you’ve signed recently scale and you continue to add new ones? And then, I guess, based on the list of partners that I’m sure you’ve that you can continue to add to your list of partners, how do we think about how sustainable it is to keep growing above kind of the longer term rate that you’ve laid out?

Yes, I gave you the guidance for this year. It’s going to be a very good year for PSOL. They’ve signed up. As you know, we have a Credit Karma relationship from last year. We’ve got another big player that I think has been publicly announced, they announced it last year in LifeLock. But then we’ve all these other great indirect partners that these guys are signing up. So, I’m very bullish for Global Consumer this year. They will be at or nicely above their multi-year model. And again, Dan is doing a great job now of taking that capability and not just looking at U.K., Canada, our two international platforms, but looking at other opportunities in other parts of our globe that we can take that Renaissance platform we earlier referred to, which is a core platform, and bring it to other markets and grow outside the current footprint.

Thank you.

Thanks.

Brett Huff from Stephens. Please go ahead.

Good morning, Rick, John, Jeff, and congrats on a nice quarter.

Thanks, Brett.

On the USIS, I think you walked through a little bit about why that revenue growth decelerated, but can you just give us more commentary on sort of that core business here in the U.S., both how you’re seeing the macro maybe by vertical or something like that? And then also kind of what your innovations are really focused on there that’s going to maybe reaccelerate that growth in the back half of the year?

Sure. I’ll jump in and John, if I miss something, please add to it. One, I tried to be very direct in my guidance when we wrapped up 2015, when I talk about USIS knowing that 2015 first quarter and really the first couple of months of the second quarter were very, very, very strong. I mean, the growth rate for mortgage in 2015 over 2014 in USIS in the first quarter was extremely strong double-digit. So we knew there was some headwind there. So, when I guided for USIS, or we guided for USIS, I said it would be at the low end, if not below the low-end of a multi-year range. So it came in exactly where we expected it and it’s largely driven by those comps in mortgage. But it just remains very healthy. It’s got those first two quarters of headwind that it’s going to have to get through. The great thing is we’ve got great balance across the portfolio. Number two is, if you think of NPI, it takes a while to gain momentum. And they started building some momentum late last year, late to mid last year. That momentum is continuing now. So the number of products they have, like the rest of the Company, are broad across many verticals. Obviously, the one we’ve talked about with the investors that will pay big dividends in the second half of the year is the launching of trended data for USIS. And that goes live, as I alluded to in the third quarter of this year. So, automotive continues to be a good market for us in USIS; everything else I described is a stable economic environment. I think John did a great job. When you think of the U.S business, USIS, we separate two entities. We call one EWS; we call the other USIS. You think about many of the activities are going on when you compare ourselves to others in the U.S marketplace. A fair way to look at it, I think, for you guys is to compare either all of EWS in with USIS or you take the Verification Services and Analytics, which is healthcare, and look at it that way. When you look at it that way, as John said, you’re getting double-digit growth. And that’s the way we look at the business. We bring all of our products to bear to our customers and it doesn’t matter if it’s an analytics for healthcare company, if it’s a work number record or if its fraud, identity, management or credit file. They’re all solving problems for customers in the U.S, and that’s a strong, healthy, double-digit growth.

We saw great growth in identity and fraud all last year and again in the first quarter of this year, very good growth in commercial last year, and again in the first quarter of this year. So, as Rick said, very broad-based and not forgetting very high EBITDA margins. Last year’s EBITDA margins were 51%, adjusting for legal, almost at that level this year. So, very, very strong performance.

Good point.

Great. That’s helpful. And just one other question from me. You gave us sort of the $800 million, I think, of debt from the U.K. that you’ve been working through. Can you -- any more insight on sort of the ultimate size of that if you’ve more line of sight to that? And any broad thoughts on economics to you all and how that revenue model might work as it evolves? Thank you.

It’s going well, Brett. So, overall the debt management platform, which, as you guys know by now, was TDX and it was this business we call Inffinix, which we bought in Mexico. So we are combining those capabilities; we are taking up those offerings global. So the growth rate is beyond just the government contract in the U.K. and we are gaining traction around the world. Hopefully we’ll have some nice wins to report later on in the year outside of the traditional footprint. But specific to the government contract, it’s ramping up as expected. And as John alluded to and I have alluded to in the past, as that revenue continues to ramp, the international EBITDA margins will continue to expand nicely. So it’s on track as expected. It will be a nice contributor this year to the topline and profits.

And we just continue to caution people that given it’s our first big contract with the U.K. government like this, that in terms of the level of growth rate, we’re just going to have to tell you what the growth rate is going to look like as it occurs, because this is the first contract of this size we’ve had with the government like this.

Okay. Thank you.

We will hear next from Otto Garrett from Deutsche Bank.

Hi. Congrats on the great quarter. Just one quick clarification on your guidance for Veda. You increased the guidance for the year there to $230 million, $235 million. That’s for the balance of the year? That doesn’t include your contribution in the first quarter?

Now that’s for the full-year. $230 million and $235 million is for the full-year.

Okay, great. And then also just looking at your relationship with Fannie Mae, saw a release earlier in the quarter that you guys expanded your relationship there to provide a monthly credit updates for their Connecticut Avenue risk securities? Can you just give us the size in there, like what the contribution of that might be?

Small.

Small, okay. That’s all for me. Thank you.

Great. Thank you.

David Togut from Evercore ISI. Please go ahead.

Thank you. Good morning, and congrats on the superior performance in the quarter. Just a quick question on the Employer Services business, I’m used to thinking about this business as being countercyclical and typically a slower growth business than the verification business at this point in the cycle? Is this because of the contribution you are now seeing from Workforce Analytics that you are getting this high 20s growth or are there other big drivers that would tend to, let’s say, modulate the countercyclicality of that business?

That’s a good question and there is no doubt about it that the analytics push that we’ve had is fueling great growth there and will continue to fuel great growth for the next couple of years, but it’s also changing mindset. We used to always assume that the employer business was there to feed records into the verification side and it would be countercyclical. So if unemployment claims rise, that business would grow as it did in 2009, 2010. We’ve changed our views there. We’ve been investing over the years fairly heavily in platforms and capabilities. We changed the mindset of the leadership team there to think of it as a growth business. So, what you’re getting is clear growth in analytics, but also growth in the core non-analytics businesses with an employer. Not at the same rate as analytics, but when you put the two together, you get really good growth.

And just specific to the first quarter, as we mentioned, right, excluding analytics, the other businesses grew mid single-digit, which is consistent with our expectation. So, great growth from Workforce Analytics. Please do remember, in general, Employer Services is stronger in the first quarter, because of work opportunity tax credits. The revenue there is skewed toward the front half of the year.

Understood. Thank you. Congrats on the strong quarter.

Thanks, David.

We will hear next from Gary Bisbee from RBC Capital Markets.

If I could first follow-up on that last one. So, you mentioned the forms related to the Affordable Care Act hitting in the first and second quarter. Is that -- How does the revenue model work for the Workforce Analytics? Is there a separate billing for that so the revenue would then fall off in the second quarter? And should that -- should we think about that as within the year-to-year growth calculation, or is the seasonality of that going to change a lot?

Let me jump in. It’s not the analytics that was unusual in the first quarter, it was the tax credits.

Okay.

Yes, so Workforce Analytics, which is part of Employer, the general seasonality of their revenue will be higher in the first quarter and second quarter and then lower in the back half, specifically because the revenue model -- the revenue is generated based on the level of activity executed. And it’s a deferred revenue model, right. So any revenue that -- any work that’s done upfront prior to delivery of the product had to be put on the balance sheet and amortized over the period in which the product is delivered. So you end up seeing more revenue during the period of delivery, which is the first half of the year and less revenue in the back half. Was that the question you were getting to?

Yes. So, I understand that mechanic historically, is that different now, because I think you referenced ….?

No, it’s just bigger. It’s just way bigger, right. So the business is growing dramatically, so that dynamic is just bigger in the overall growth rate of the Employer Services segment.

Great, thanks. And then, the bigger question, so you referenced the second straight year of sharply higher expected revenue from the innovation pipeline. Are there a couple of factors that have led to such robust improvement for the last few years and, I guess, what are they? I mean it seems like you’ve had such strength, I don’t know if it’s just the culmination of years of focus -- focusing on and talking about innovation or technologies changed or more places where you’re selling multiple services. What are the key factors that have driven this? And is it sustainable or is it -- do you think you’ve just hit a spot that’s great, but then will normalize at some point?

I think if you think about it, one, it’s the maturation process. We’ve been in NPI in the Company, I think, since 2006, so as you mature it just becomes more effective. Two, we launched, as you recall, NPI 2.0 maybe two years ago. We kind of revamped the enthusiasm, the approach towards NPI. Clearly, that’s paying dividends as you get other -- more businesses into the game in a broader way. We talked that USIS now ramping up. We’ve talked about Canada ramping up in NPI. And lastly, you can’t ignore the fact that the technology platforms we’ve invested in that facilitate the ability to build products faster, like Cambrian, building platforms like TotalView which allow our customers to consume multiple products quicker. So the combination of maturation NPI 2.0 plus the technology platforms like Cambrian and TotalView that we’ve invested in, are all facilitating unbelievable strength in innovation around the world.

And just one last one, how much of that also is the vertical expansion? Is that technology and what you just described more important or do you say today versus two years ago having a lot more progress?

Yes it’s great -- that’s a great question, Gary. I’d say, that’s a really good question. What you end up doing when you verticalize the Company as we’ve done in the last five or six years is you now have domain expertise in the vertical, so you’re building specific products with great insight and knowledge to solve the problems in those verticals and we couldn’t do that before. So, there is no doubt that having domain expertise in verticals facilitates greater knowledge and has faster or more NPI.

Great. Thank you.

Sure.

Tim McHugh from William Blair & Company. Your line is open.

Most of my questions have been asked, but just quickly, I guess, the ACA related revenue after this first year push, how optimistic are you about being able to continue to grow on top of that or is this kind of a one-time step up as you look at it?

No, Tim, it’s not a one-time step up. It’s -- and I tried to give you some text around that in the prepared comments, but it is a great growth this year. We’re going to continue to expand the capabilities. I talked about 1094 and 1095 with the IRS. We talked about bringing the platform to overtime pay compliance; we’ve talked about bringing once we get the work number up and running internationally, bringing the analytics platform we built for ACA in other parts of the world. So, now it’s an integral part of our growth strategy for EWS globally.

And the customer base that we can apply the core ACA capability to is broader than we currently want. So there is more customers just within the core application.

Okay. And are you at this point, with -- I know there was a number of companies that provided ACA solutions for basically rushing to try and get fully implemented with all their clients in time. Were you able to do that or is there still even a backlog of clients you haven’t, I guess, weren’t fully implemented with that will continue to help drive the growth as well?

Yes, there is no doubt there are other players in the marketplace. We think we’ve a unique value proposition versus many of them, but there is some good competitors. Number two is the pipeline continues to grow. Number three is when the fine start to be levied to these companies later on this year, that can create an awareness and concern that’s going to facilitate even a stronger pipeline as we exit this year and go into 2018.

Okay, thanks.

Sure.

Toni Kaplan from Morgan Stanley. Your line is open.

Good morning. You mentioned that the Veda integration is on track. Just trying to think about how would you expect to see opportunity of building out the products in Australia will take, like basically cross-selling some of your products that you’ve in other regions? I imagine it might be in multi-year endeavors, so just -- how should we think about sort of the incremental growth in the outer years?

Yes, Toni, we think about the Company as being a very well-run Company, an established Company, a Company that’s respected in the regions in which it play. So we’re buying really good assets that’s got good growth. We’ve already given the Company a multi-year model for that which is at or above all multi-year organic growth model. Two, there will be some M&A opportunities as we get to know that part of the world better which add to the growth. Number three is bringing products like our fraud products, Cambrian, *TotalView, Interconnect and others, Work Number, PSOL, to Australia will help grow. Right now it’s all about making sure we keep this asset focused on customers, get the backroom integrated properly, build a multi-year plan. It’s not going to be a big bang on the transfer of products or knowledge. It will rather be a very thoughtful transfer of those capabilities over many years to continue to grow that business nicely.

Okay, great. And just a big picture question, on the consumer monitoring space, how do you see that evolving over the coming years?

Are you talking about the PSOL, the direct-to-consumer business?

Yes.

Yes, I think it’s evolving as we expected and communicated in the past that’s there will be a world of free and there will be a world of pay. Those two will coexist together. I think long-term the growth is going to be greater in the free, which means the paid model around the world will be slower growth, but still viable, still profitable, still growing.

Thank you.

Sure.

We will move on to Andrew Jeffrey from SunTrust.

Thanks. Good morning, guys. I appreciate taking the question.

Hi, Andrew.

Rick, you certainly have a laundry list that’s impressive of new growth initiatives. I wonder if you could just kind of rank order, perhaps -- I know you probably love all of your children equally, but if you could kind of rank order where you think the greatest or most potent levers are to maintain this nice above trend performance you’ve been putting up.

Thank you for the compliment. If I had to think about it over a multi-year kind of landscape versus a quarter …

Yes, that would be helpful.

EWS, clearly. I mean, my god, that is -- I don't know how else to describe it other than it has many, many, many years of very solid topline, bottom line growth. And we talked about it getting up to 50% EBITDA margins over some time and high growth that is just unbelievable. Number two, the other growth lever I love and Gary asked about it is NPI. And its refreshing that NPI combination with the maturation and the technology bodes very well for the next five years. Number three, EGI. We are really clicking. Andy and his team are on our enterprise growth initiatives, large complicated multi-business in multi-country growth objectives. That’s got a lot of growth left in it. I’m really, over multiple years, very optimistic about taking the Veda platform and growing it. With Work Number going global, I think it’s going to give us -- as I said before, when I bought the Company, it will give us access to other parts of that world with great scale. We already have great scale. We’ve people in that part of the region, so we will do some acquisitions there. Trended data is going to be important to us, not just for Fannie, we’ve been doing a lot of analytics around the KS list; we are getting by different verticals. So, I think that bodes well for us. And then maybe lastly is continuing to look at different geographies around the world we want to expand.

Okay. And is the Employer information -- pardon me, the Employer information exchange, is that an important potential subset within EWS when you think about that broadly?

Absolutely.

Okay.

Again, bringing that to other parts of the world is going to be a nice catalyst for multi-year growth.

Okay. And if I may, on trended data, you’ve got a lot of really nicely differentiated solutions. That’s one area where perhaps some of your competitors are citing pretty good growth. Can you talk about whether your trended data is materially differentiated from the competition?

Yes, I think so, because our assets are different. If you talk about the ability to trend utility database, who else can do that? If you talk about the ability to trend [indiscernible], who else can do that? If you talk about the ability to trend employment data, who else can do that? If you talk about the ability to trend income data? So, is the solutions we’re providing for Fannie different than what TU is doing today? No, it’s virtually the same. But the future is trending far beyond just Credit File, and that’s where I think we are uniquely positioned.

Terrific. All right. Thank you. I appreciate it.

Sure.

Judah Focal from JPMorgan. Please go ahead.

Hi. Thank you for taking my call. A couple of quick bookkeeping questions. How much were the precise revenues from Veda in the first quarter? A - John Gamble About $25 million.

Great. And how much was the tax credit contribution and how does that compare to last year in the first quarter?

Are you -- Watsi, you’re referring to an EWS?

Yes, Watsi, exactly.

I don’t remember that.

I don’t have that specific detail. So, Watsi was very strong last year as well.

Year-on-year, I don’t believe it was much different.

Okay, fine. So it didn’t necessarily contribute to the growth that much?

By far the biggest contributor to Employer Services Growth was ACA WFA.

And then verification.

Yes.

Okay, perfect. And then, just one final question just on Global Consumer Solutions. Has something -- what would you say beyond adding new partners? What would you say is driving this massive revolution in this space? This was a turnaround going back a year or so ago and we’ve seen now tremendous strength in this. And not just you, but some of your peers as well. So, how would you characterize the change maybe perhaps amongst consumer awareness and willingness to buy some of your solutions? Thank you.

Yes, sure. Thank you. Good question, Judah. So, one is we are -- we bought a company a number of years ago, TrustedID, and it takes a while to ramp up an indirect business. We’ve done that now nicely. It took a while to get some momentum. Number two is we are partnering with some pretty good partners who are out there spending a lot of money, trying to advertise the product to the consumer. And obviously that builds over time; as they gain traction, we gain traction. So, it’s a combination of multiple factors kind of coming together at one time.

On your first question, Work Opportunity tax credit revenue was slightly higher, the growth rate in first quarter ’16 and first quarter ’15. It wasn’t a major driver, but it was slightly higher.

Okay, great. Thank you.

Up next we have Shlomo Rosenbaum from Stifel.

Hi, guys. Thank you very much for squeezing me in here. John, can you just walk through again the reason why the international margins were low? How much of the year-over-year difference was due to the currency impact by having your expenses in the U.S with the revenue and other currencies and how much were from some of the other things?

Yes. So, we didn’t give exact numbers, right. But effectively the drivers were -- biggest driver was Latin -- in terms of reduction, was Latin America. So Latin America, because of the really substantial devaluation of currencies, which is much larger than we’ve seen in the last several years. We saw a margin impact there that was planned, it was expected to occur. And that is specifically related to the fact that we do have non-local currency expenses and all local currency revenues, so that the margins just don’t benefit on both the top and bottom line in the same way. Canada margins were slightly down as well, because you saw Canada revenue was flat on a local currency basis, expenses were up slightly. So you had Canada marking down slightly, but the big driver was Latin America. And the positive side in terms of international margins that partially offset those declines were obviously the adding of Veda, because they had very good EBITDA margins. And then also, as Rick mentioned during his prepared comments and after, debt management grew and performed better. We took out some costs and we saw some better performance in overall margins in debt management. So, that -- those were the drivers of why you saw basically flat EBITDA margins in International.

Okay. And so, the growth you’re expecting in the EBITDA margins through the rest of the year is a -- basically a revenue leverage item? Is that the way we should think of it?

So we will get some revenue leverage. We will also obviously get Veda for an entire quarter in the second quarter where we only had them for 40% of a quarter in the first quarter. And as we’ve said, we are expecting to see some leverage in improved revenue performance in Canada as we move through the year. We are expecting to see also continued improved performance in Europe as we move through the year. So, generally speaking, the continued good revenue performance in International if you had for multiple years, we think it’s going to drive some improved performance in EBITDA margin, as well as we are expecting cost performance improvements because of the regionalizations we started last year and we’ve been talking about for the past year.

Hey, Shlomo, Rick here. Just one other thing. [Indiscernible] back to 5,000 feet on margins, if you think of EBITDA margins. Just two points. One, I think you will agree, our EBITDA margin is starting -- this is for the Company now, at a very high level. But I think we are in the top 25% of the S&P 500 or so for EBITDA margin. Secondly, we’ve committed to approximately 75 basis points on top of what is already very high margin for the year. We reaffirmed we will deliver that this year. All the way we deliver that for the Company is if the individual components, including International, continue to improve and increase. So it’s important we keep that in context.

Got it. I’m just trying to understand where it’s coming from. Also are you having success in getting the ACA clients to put the income data into the TALX database? It seems like a huge opportunity to in the longer term?

That’s a great question, Shlomo. The answer is yes. And that success -- I’ll give you some numbers in the past on these calls and that success will be further enhanced very shortly as we build a technology link that makes the transition from ACA into the Work Number database easier for our customers. So, that technology link and capability will go live in July of this year. Said another way, it’s been a more manual, grind-it-out population of the [indiscernible] database from ACA clients. It will be far easier, more seamless for our customers starting in the third quarter.

Shlomo, just to make sure we are clear, since we are using acronyms, I was referring to EBITDA margin and that was the answer I was giving was around EBITDA margin.

Got it. Okay. But -- and so the ACA, we should start to see more automated process of porting income data into the TALX database in July? And is that going to become kind of a regular part of your contracting for the ACA stuff to be able to put that into the TALX database as a default?

Absolutely.

Okay. Very good. Thank you very much.

Thank you.

We will hear next from Jeff Mueller from Baird.

Yes, thank you. So, I guess to continue the analogy from earlier, Rick, it sounds like you’ve a lot of children and you love them all a lot. So you’re sticking to the 6% to 8% longer term for now, operating above it this year, but it sounds like there is a lot of line-of-sight factors into ’17 and ’18 that you listed out. How do you think about sticking to 6% to 8% and within that framework, could you operate above it for several years at least?

Yes, I feel good about it. That’s why we gave it. As we get into -- back into this year, if there is something from a macro perspective or internally that would drive me to reconsider a different range above that, we will do that at that time. But at this juncture, I think if we can consistently, year in, year out, deliver 6% to 8% topline organically, another point or two inorganically, and give you some capital structure leverage, operating leverage, and a nice dividend and give 13% to 15% return to our shareholders, I think that’s a pretty damn good model, year in and year out. And you will find years move up [indiscernible] as we did last year, as we’re on track to do this year, but multi-unit's a pretty doggone good model, I think, and hope you agree.

I absolutely agree. And then, on the relationships with the Credit Karma and the like, how are you expecting them to impact the market for credit card marketing or financial marketing? And is that an incremental revenue opportunity for you or is that within kind of the existing revenue relationship?

I never quite thought of it that way. I think anytime they are out there in the marketplace getting consumers to be interested about their credit and that results in a product that we sell-through Credit Karma or LifeLock or something else a consumer buys, that’s kind of contemplated in today’s model and tomorrow’s model. I don’t think it changes the financial representation of the relationship terribly. But, to be honest, I’ve not given it a lot of thought.

Okay. And then just finally, do you guys -- are you willing to provide the verifications revenue growth split between mortgage and ex-mortgage?

No, we don’t break out that level of detail. But as John said, I think I may have said too, the verification growth, which I think was 16%, is that right, for the quarter was broad based. And selling verticals, I think John [indiscernible] auto, car, government, mortgage and others. And not only that, it’s so early days of penetrating those markets, so there is many years of growth beyond mortgage. And guidance we gave for EWS assumes a flat to slightly down mortgage market for the full-year. So it’s going to have really good growth with mortgage decline over the balance of the year.

Yes, we indicated mortgage, government, auto, pre-employment, all grew double-digit.

Great. Thank you, guys.

Thank you.

Bill Warmington from Wells Fargo. Please go ahead.

Good morning, everyone, and congratulations on the strong quarter. A question for you on one of the other growers there that was growing double digits, which is commercial. And we haven’t really heard much about commercial since it was absorbed into USIS and I wanted to ask what was going on there? Is it specific to what you guys are doing or is it something overall in the market or mix?

I would say it’s a strong testament to leadership. And I mean that seriously. When we -- Brian, Tom, Madison, who is a seasoned executive for us and gave them, in addition to many other things, commercial and [indiscernible] in his past life when he ran USIS, those two guys rejuvenated the people, rejuvenated NPI within commercial. Strategically had a much different outreach, SPFE and/or customers and leadership of those two guys and their teams have done a remarkable job of restating -- reinstating a growth mindset into a business.

And one more question on the FICO XD score. That’s one where you’re partnering with FICO and LEXIS-NEXIS and combining the utility data from NCTUE and the rental data from LEXIS-NEXIS. If you could talk a little bit about the revenue potential there for you. It sounds like it’s potentially a premium-priced score.

Yes, Bill, when you think of all the growth levers that your peers have referenced in past commentary, and if I were to list 10 of them, maybe 15 of them, maybe 20 of them, I don’t think that FICO score would make the list. There are so many other great things that we are doing that you and I should focus on and others should focus on. And this is obviously important to us, that particular FICO score with LN data and our data is de minimus when you think of moving the needle for us.

Got it. All right. Thank you very much.

Sure.

Your final question today will come from George Mihalos from Cowen.

Hey, thanks for squeezing me in, guys, and let me add my congrats on a very strong quarter. Rick, wanted to ask you, you spoke, obviously, positively about trended data, but ground zero for that is going to be the mortgage market. Looking beyond that, what are the verticals or the areas that you think could be potential early adopters or really make a big push for the product?

Three come to mind, automotive, card, and marketing, are the three that we’re working on right now.

Okay. That’s helpful. And then, just a quick follow-up. The ACA analytics, as we look beyond 2016, given your comments on the strong pipeline, is it sort of safe to say that from an absolute dollar perspective you could have a similar increase in ’17 versus what you are adding on in ’16?

I don’t know about that. But here is what you should know is -- and no one has said it, , it’s the pipeline is really strong; two is when the fines come out, that pipeline is going to strengthen. Three is we are going to take it to different areas like 1095 -- 1094 and 1095 for IRS. And, four, we are going to take that product to different areas we haven’t even thought about before as we become a compliance center expert.

Great. Thank you.

Sure. Thanks, everyone, for your questions. Operator, I think that’s it. Again, we thank everybody for their interest and the time today and with that, operator, we will terminate the call.

And that does conclude today’s teleconference. We thank you all for your participation.