Good day, everyone, and welcome to the Equifax Second Quarter 2020 Earnings Conference Call. Today’s conference is being recorded. At this time, I would like to now turn the conference over to Jeff Dodge. Please go ahead, sir.

Thanks and good morning, everyone. Welcome to today’s conference call. I’m Jeff Dodge and with me are Mark Begor, Chief Executive Officer; John Gamble, Chief Financial Officer; and Trevor Burns with Investor Relations. Today’s call is being recorded. An archive of the recording will be available later today in the Investor Relations section in the About Equifax tab of our website at www.equifax.com. During the call today, we will be making reference to certain materials that can also be found in the Investor Relations section of our website under Earnings Calls, Presentations and Webcasts. These materials are labeled Q2 2020 Earnings Release Presentation. 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 filings with the SEC, including our 2019 Form 10-K and subsequent filings. Also, we will be referring to certain non-GAAP financial measures, including adjusted EPS attributable to Equifax and adjusted EBITDA, which will be adjusted for certain items that affect the comparability of our underlying operational performance. These non-GAAP measures are detailed in reconciliation tables which are included with our earnings release and are also posted on our website. Now, I'd like to turn it over to Mark.

Thank you, Jeff and good morning everyone. Thanks for joining our second quarter earnings update. Businesses and consumers around the world continue to face challenges brought on by the COVID-19 pandemic. I hope you and your families are continuing to be safe in managing in this unusual environment. We'd like to once again thank the dedicated and selfless healthcare professionals, first responders, volunteers, and others around the world who are on the frontline fighting this pandemic, and we sympathize with the millions of people in the U.S. and around the world that are been affected. The health impact of the COVID pandemic is devastating, but what is equally challenging to our customers is the unprecedented impact from the COVID pandemic. It is unlike anything in our lifetimes with record unemployment, furloughs, and salary reductions. Data and analytics in this environment is more valuable than ever. During the second quarter, we operated very effectively in our work-from-home mode after COVID restrictions were put in place in late March. After a shelter-in-place orders started to lift in early June, we opened up our offices in markets like Atlanta and began to return to office on a 50% density in Red-Blue team rotational basis. Currently, we have 34 of 51 offices opened and are operating in that mode. We expect to stay in stay in the 50% density in our Red-Blue rotation mode until a vaccine is available. We are operating at a very high level and have realized meaningful productivity and engagement with customers and across our Equifax team through video collaboration, including meeting all of our cloud technology and data transformation milestones. Turning now to slide four, our financial results for the second quarter were very strong and our second consecutive quarter of double-digit revenue growth and margin expansion driven by…

Thanks Mark. I will generally be referring to the results from continuing operations represented on a GAAP basis and on a non-GAAP basis. In the second quarter, general corporate expenses was $122 million, excluding non-recurring costs. Adjusted general corporate expense for the quarter was $75 million, up $8 million from Q2 2019. Corporate functional expenses, such as finance, HR, and legal are down year-to-year, reflecting the cost containment activity Mark discussed in April. The increase in total general corporate expense is primarily due to higher incentive compensation costs in 2020 due to the very strong financial performance as well as increased depreciation and amortization. We continue to exercise disciplined cost management across the business. We are and will continue to invest in our technology transformation, data and analytics, new products and security, and will accelerate investment in these areas as we believe we can deliver accelerated benefits. Outside of these areas, headcount additions are being held at levels below attrition, and discretionary spending has been reduced. Across the company, business travel remains at virtually zero. We're in the process of reviewing our real estate footprint as well as other areas that may allow further structural cost improvements. We expect to begin implementing cost improvement items over the next several quarters. We do not expect meaningful cost improvements in 2020. For Q2 2020, the effective tax rate used in calculating adjusted EPS was 24.4% and about 1% higher than we expected for the quarter. We expect the 3Q 2020 tax rate to be about 21%. Full year effective tax rate used in calculating adjusted EPS is expected to be about 24%. In 2Q 2020 and year-to-date, operating cash flow of $251 million and $282 million respectively were both up $34 million from 2019. Increases in operating cash flow in 2Q 2020…

Thanks, John. I'll wrap up by giving you an update on our cloud transformation -- cloud technology and data transformation and our accelerated focus on new products. First, moving to our EFX 2020 Technology Transformation. During 2020, we focused the bulk of our efforts in the cloud technology data transformation on our North American operations, which represent over 80% of our revenue and even higher percentage of our income. Investments in Europe, Latin America and Asia Pacific and deploying cloud-native data fabric and our Ignite and InterConnect API analytical and decisioning framework are also progressing well. Initial migration to GCP of our major North American data exchange, the U.S. Canadian consumer ACRO list changes, the work number in NTT is principally complete, and we expect to have complete full migration, including all data ingestion processes for the exchanges in place by year-end. It is at this point that these migrated exchanges become our system of record with our customers. These are critical deliverables for 2020, and completing in this plan remains a strategic focus and priority. These exchanges generate about 70% of North American online revenue. We're also making very good progress in the full migration to GCP of our secondary U.S. exchanges, the commercial risk exchanges, IXI, property and DataX exchanges. We expect a number of these exchanges that have completed full migration by year-end, with the remainder completed in the first half of 2021. And the Canadian commercial risk exchange for migration will also occur in early 2021. In April, we discussed with you the initial migration of our eID identity validation systems, which we expect complete in the third quarter. Customer migrations are expected to start in the second half, and we expect to have fully migrated all eID customers by year-end. Our new Luminate cloud identity…

Thank you, sir. [Operator Instructions] And we'll go first to Toni Kaplan, Morgan Stanley.

Congratulations on the quarter. I was hoping you could talk about the trend of non-mortgage USIS, and how it improved significantly in June, but then it looks like it got a little bit weaker in July. So just wanted to understand what you're hearing from customers in terms of what's led to the slower July, and how we should be thinking about going forward?

Yeah. Toni, I'll start and then John can jump in. We were pleased with the kind of sequential improvement in USIS broadly, and then, of course, in non-mortgages we went through the quarter, particularly a shelter in place orders were listed and economic activity improved. So that was a positive. We just wanted to point out there's still real uncertainties in the marketplace. We've seen markets like Florida, and Texas and California that it had some of the recent COVID spikes from our online volumes, seeing some impact on that. It's not meaningful, but it's not continuing the sequential trend. So we really just wanted to point out that we expect some uncertainties going forward. One of the other positives that I pointed out a couple of times is the fact that the USIS new deal pipeline in their win rate continue to grow through the second quarter off of the first quarter and off of last year. And for us, that's probably the most important element. It's quite challenging to forecast the economic outlook. But seeing Workforce Solutions accelerate their new product rollouts, and really winning in the marketplace competitively is quite positive for us as we think about the third quarter.

And Toni, if you're looking at slide 9, right, just as a reminder, as you look at June, June, because of the number of business days in the month, right, was -- there's about a 3% benefit, or a little over 3% that you see in June that doesn't really continue into July. So that can help you understand the trend the trend better between June and July. So, for example, if you look at banking and lending, Mark mentioned banking and lending, there, we adjusted that 3 point, you're probably looking at, banking lending was down 10% to 15% in the June period. And what we have seen is slight weakening as you go into the very end of July -- into June and July and the trends across several USIS verticals. It wasn't substantial, but the substantial improving trends we've seen from April through June flattened and then weakened slightly.

Just -- make one last point Toni is that the biggest challenge right now is when will our customers restart marketing. And we've seen some increased activity from a below 2019. But there's just so much uncertainty for our customers around the consumer and the economy. Many of them have pulled back on marketing. In counter to that, we've seen a significant increase in activity and dialogues around portfolio management, which is typical in an economic downturn. A lot of resource is shift to managing the backlog, managing existing customers, managing credit lines. So we've got that positive going in marketing. When will our customers get comfortable to market again, I think, is the big question, and I think there's a lot of uncertainty on that.

That's very helpful. For my follow-up, just wanted to ask about the really strong margins in Workforce Solutions, Obviously, you had a very strong verifications quarter. So, was that the real driver, or are you also getting some additional leverage from the employer services vertical as well? Just wanted to understand the strength of margins and the sustainability of that?

Yes. You get the two items that are very strong, obviously. UC claims is high incremental margin as is the growth in verification, so both of those are driving our margins. We've got -- as you know, revenue growth broadly in our business and in Workforce Solutions, incremental revenue growth delivers very, very high incremental margins, which is driving that. And the other thing of workforce that we pointed out that we were pleased with is how we outgrew the mortgage market. That really is a reflection of the power and the weakness of the data assets they have and the multiple levers we talked about on the June call with Workforce Solutions.

The other thing I would mention is that this is happening in a period when we have strong cost controls in place. So, you're seeing costs are being managed very, very tightly while they're seeing very high revenue growth.

Makes sense. Thanks a lot.

Next up, from Credit Suisse is Kevin McVeigh.

Great. Thanks.

Hey Kevin.

Hey, how are you? It not a really nice detail in terms of how EWS positively impacts mortgage. Can you kind of help us frame how it impacts the rest of the credit products that you kind of offer right now? And as we think about that into 2021 as income start to tick up the core USIS, more broadly, first mortgage in that EWS?

Yes. We've talked, Kevin, before. I think you're talking about the fact that we go to market as one Equifax with our customers. And as you know, USIS sells to all of our financial institutions, the USIS credit products as well as the Workforce Solutions' verification product. So that kind of bundled approach to our customers, we think is a smart way to go-to-market. It gives us the ability to incent our commercial team to sell a full Equifax solution. It gives us the ability to leverage product positions on both the credit and verification side when we're in discussions with customers. And so we're clearly seeing the ability seeing the ability to approach customers with a broad Equifax solution that would include credit data, wealth, and employment data, our NTT data and then, of course, our verification data from Workforce Solutions and bundled solutions in many cases, which we think is attractive for Equifax.

Got it. And then just real quick, you talked about kind of 100 new NTIs and part of that being just positively impacted by your cloud transformation. In the cloud transformation, is it the expense benefit that allows you to do that, or do they become more seamless through the cloud, or just could you just help us frame that a little bit more from an NPI perspective?

Yes. We've been consistently talking about this, Kevin, for the last couple of years. That was our expectation that the cloud transformation would allow us to accelerate the ability to get more new products to market and also getting the product to market more quickly and we're starting to see that. The good news is we're already -- really in the last six months as we've gotten deep into the cloud transformation, we've been able to roll out new products and we talked about this on the April call. We're putting new products in the marketplace that we couldn't do two years ago because of the single-data fabric, our ability to combine data assets, our ability to ingest new solutions, having a simpler application infrastructure, speeding up our ability to bring products to market. And we're excited about starting to see the early benefits of that. And we do believe those benefits will accelerate, meaning our ability to do more new products in the future. And you're seeing that as we go from 60 products to 90 last year to over 100 this year. And our goal, and we're putting resources around it to really leverage our massive investment in the cloud transformation for both data and our technology to accelerate our new products rollouts in 2021 and 2022. I think as you know, that's a real fuel for growth in our industry and for Equifax. So we've got a really big focus on it, we've brought some great new talent in, we're going to add resources and people against it in the second half, because we really look at new products as being the next chapter for Equifax around driving our growth and really leveraging our cloud, data and technology transformation.

And our next question comes from Manav Patnaik of Jefferies.

Hey, it's actually [indiscernible] hey guys. The first question I have for you is the commercial. You mentioned that you talked about typically in the USIS business. I was just wondering you could give us some color. Is that pipelines and win that you talked about coming from your competitive, or is it stuff that maybe was just, kind of, put on hold or independent box till you got back the way you left to do? I was just hoping for a little bit more color on some of the mix there?

Yeah. It's all of the above. I think you've got -- we've got not a new leader anymore, but since he’s been on the ground now for 18 months. He really remade the commercial organization that's been in place for six months. There's a real increased focus commercially in the marketplace. So I think that's positive number one. The pipelines are a combination of new products. When you go from 60 to 90 and then towards 100, there's just more opportunities for his team to bring new solutions to our customers. The pipeline growth, we also believe that is from the COVID response products that we've rolled out. This is a -- we tried to highlight on the call earlier; this is a really unprecedented time for our customers. And the value of data broadly for all of us in the industry is even more valuable. And actually, if you go back to 2008-2009, they're just more options for our customers to use data and manage in recession. So I think that's driving all of our capabilities in our conversations with our customers. And then there's no question, we talked about our win rates being up on a year-over-year basis. We're clearly more competitive in the marketplace. There's -- the overhang that was perhaps here a year ago from the cyber event, we believe, is way behind us. And we're really just focused on a normal node, that I would call it a fairly aggressive mode in the marketplace to really support our customers in this challenging time.

Got it. And just on the new products, 70 to 100 the new products a year. I know all the creditors have actually had the cadence revive and just been impressive. But I was just wondering, how do you define what a new product is? And I think in the past that has actually talked about how you would expect the NPI to contribute, kind of, 10% of revenues in a two-year time frame or something. Do you have any such goals of that to provide some perspective?

Yeah. We have a very standard rigorous process around what is the new product, it's got to be new. And we've been -- had a consistent process. John, I think, for five-plus years…

It's five years.

…on how we define new products and we try to be transparent with you and others about our new product rollouts because of the importance to our future growth. We think they're quite accretive to the future. And that's why we're doubling down on people and resources to really leverage the cloud transformation. I know there was a framework in the past in our financial framework around the contribution of new products to our revenue growth. As you know, we don't have a financial framework in place today. So, we probably don't want to talk about how we think about that. But I hope you appreciate the focus that I have and we have around new products because we believe it's a really important lever for growth that is going to be accelerated by our call transformation. When you think about why did we do the cloud transformation, there's a lot of reasons. One for sure is to accelerate our topline and the way to accelerate your topline from the cloud transformation is to bring new solutions to market more quickly and more creatively and we believe more uniquely than our competitors. And that's the focus that we have with the cloud. And of course, you get all the cost and cash benefits that John talked about that will start rolling in, in 2021 and 2022 as we complete the execution of the cloud transformation.

Got it. Thank you, guys.

Next up is Hamzah Mazari, Jefferies.

Good morning. Thank you. Just a question on the international business. Specifically, just margins in the international business. How much of the gap between the USIS business and international? Do you think is just structural and how much can be closed over time, especially as you complete the tech transformation?

Yes. There's no question. Our international margins are lower than our U.S. margins. We have just so much scale in Workforce Solutions in USIS, as you know, versus many of our smaller markets. And some of that is going to be structural, just given the scale of those businesses. We do believe the cloud transformation is going to be accretive to that, improve those margins. And of course, we're focused on other actions and we have been. This isn't new on other actions and we have been. This isn't new to improve those margins, whether it's from new products or incremental growth. And the biggest way to improve margins internationally is topline growth because of the incremental margin impact that comes from that topline growth. And of course, they were impacted most significantly in the second quarter because of the depth and breadth and how severe the lockdowns were. And of course, many of our international markets are still in lockdown.

And another meaningful difference is at this point, we don't have Workforce Solutions outside the U.S., and it's a very high-margin business. So, it negatively impacts the margins relative to the U.S. -- outside the U.S.

Got it. Very helpful. And just a follow-up question and I'll turn it over. Could you maybe comment on your exposure to Fintech and how that compares to maybe some of your peers, whether that's an opportunity for you going forward? Thank you.

Yes, I think as you know we talked about this many times, our competitors are much stronger in Fintech. That's been a priority focus of our team since I joined two years and change ago. We had two years a handful of people covering Fintech. And today, we've got, I think, 15 or 16. So, it's a clear focus. We've more than tripled our commercial resources in the last couple of years. We see it as an opportunity. We're having wins there. I talked about in my notes that we had two U.S. Fintech customers at Ignite in the second quarter. So, we're actively engaged with Fintech. And Fintech is a couple of hundred million dollars space in the U.S., growing faster than the core market. It's actually a bit more impacted in COVID recession right now than the broader market, but it's a space that we want to be bigger in, and we're focused on.

Great. Thank you.

Our next question today is David Togut, Evercore ISI.

Thank you. Good morning. I would appreciate your thoughts on Joe Biden's plan to mandate that federal agencies use a new public credit bureau. Could you just walk through your exposures to, kind of, government revenue, and over what time frame this new bureau might be developed?

Yes. You have two different questions there, David. First on the government revenues, from our perspective are unrelated to Vice President Biden's and Senator Sanders proposal. And our government revenues are really at for social services, so our government revenues won't be impacted. And as you might imagine, we think the current credit bureau system in the U. S. well serves consumers and publishers. There's plenty of competition between the large three credit bureaus. We don't see a need for what was outlined in that proposal. We would suspect it's perhaps more positioning in an election cycle versus something that would have broad bipartisan support. And if you look around the globe, the few global markets where there is a government credit bureau, over time, either they've been privatized or private credit bureaus have operated against next to them. So we think the system in the United States today serves the market extremely well in a very competitive way.

Got it. And to the extent the government and credit bureau were to be developed, how long do you think it would take to build it? Just trying to assess the overall risk to Equifax?

Yeah. I think that's a tough question, too, David. Equifax, we're spending $1 billion a year in technology in 2020, and we have for a long time to go to the industry. This is an extremely complex set. There's trillions of records, there's thousands and thousands of contributors. It will be a very long road. And again, from our perspective, that may be a reason why there wouldn't be bipartisan support for it. I think the broader perspective on why there would be bipartisan support as the system works today. It services the industry well, it services consumers well, there's great transparency. And if you look at the increase in alternative data, there's just more opportunities to support consumers, which is really what I believe Vice President Biden is focused on is how do you ensure that credit access to those that need it is available in the marketplace. And we believe the bureau today provides great support and great focus on that.

Understood. Greatly appreciate your insights.

And next, we'll go to Bill Warmington, Wells Fargo.

Hi, Bill.

Good morning, everyone.

Morning.

So first question for you. What percent -- what was total mortgage exposure as a percent of total Equifax revenue in Q2?

Actually off the top of my head, I don't know, Bill, it's up substantially. I think it's on the order of 30%. But if you take a look at slide 9 and slide 10, I think we give plenty of data there for you to come up with that number yet.

Got it. Okay. And then it sounds like the new product pipeline is pretty full. I know you guys were the first bureau to do the beta test on the FICO Resilience index. I wanted to ask if there was a way to tie the work number more closely into the FICO score.

It's a good question. I think we talked, Bill, broadly about our focus on one of the benefits we expect from our cloud-native transformation, as you know, it's a technology transformation and a data transformation, but the single-data fabric that we're going to, we believe, is going to allow we're going to, we believe, is going to allow us to do many more data combinations then we're able to do easily today. And that's one of the many reasons we're doing the cloud transformation. That would be an example of using income employment data with some of our other our other data assets to bring unique solutions that are on the Equifax because of our Workforce Solutions business to the marketplace. And we have those not in our current pipeline, but those kind of things on our to-do list in our pipeline in the future. And it's another reason, Bill; why I'm expanding our product resources across Equifax in the second quarter, and we're going to expand them further in the second half is really to really fuel up that new product engine, not only for the second half, but for 2021 and 2022. That's a big focus of mine is to take advantage of the single data fabric in the cloud, in the cloud technology we're going to have to really accelerate our new product rollouts.

Got it. Thank you very much.

And Andrew Nicholas from William Blair is up next.

Hi good morning. Thanks for taking my questions. Just wanted to first talk about operating expenses. I think now we're a few months into this, I want to understand that you already committed to; I believe it was $90 million of cost cuts. I was just wondering if you could speak a bit more about how you're thinking about that line in the medium to long-term. And I guess I'm wondering to what extent you've identified additional areas for cost rationalization over the past couple of months as the Workforce gets more and more comfortable working from home, whether it be on the real estate side, TME, so on and so forth?

Yes, I hope you got the tone of our conversation. We're keeping a tight belt here because we still see meaningful uncertainty in the second half about the pandemic. At the same time, I hope you got our tone that we're making targeted investments. With our financial strength, we want to make sure we're making those investments for the future. But we are accruing kind of net benefits on a year-over-year basis on our cost structure. And certainly, during our plan we had in place early in the year, from some of the belt tightening we've done. You point out P&L travel. When you think about the near-term, no one's traveling at Equifax. And so that's a clear savings on a year-over-year basis. On a long-term run rate, I suspect the way we use video will meaningfully change our travel spend going forward. We spend -- about half of our P&L is spent in internal travel, meaning between Equifax sites. My view is post-COVID, that will go to zero. We just won't need to do it because we're so much more a depth at working together and collaborating through the use of Google Hangouts and other video tools. So, I think that's kind of a change that will be permitting. I think our business travel to customers will likely be lower just because of the efficiency of video. Instead of making three trips to a customer to work on a new product, you might make one post-COVID. And then have four or five video calls and do the whole project quicker just because of how we're working. So, I think there's the efficiency and collaboration on video, I do think will have a significant change. On the real estate side, we're going to go through -- we've got a handful of small offices that really got highlighted for us in the COVID recession. We're going to close those. It just doesn't make sense to have 20, 30, 40-person offices. Those seems to either work-from-home or be consolidated in other sites. So there'll be some real estate benefit there. We haven't gone off the next step of deciding whether we change our broader real estate footprint, so I suspect we'll look at that as the year progresses. But as you point out, we're -- we operated very effectively in a work-from-home mode, and we're still operating with our Red-Blue teams in a 50%, we're actually higher work-from-home mode, meaning we only have less than half of the team in our offices every week and the other house working from home, and Equifax is operating extremely well. So that will be something that we'll look at in the second half. Do you have anything to add?

Nothing. You covered all.

Okay. Does that cover where you were heading?

Yeah -- no, that's really helpful. Thank you. And then just one more for my follow-up. It looks like in the case of Canada and Asia Pacific, you had a little bit of a spike in growth in June, or at least less abrupt decline in June before slowing down again in July. Any color on what might be driving that spike? And then how you're thinking about International recovery timeline more broadly in the second half? Thank you.

Yeah, it's tough, as you know, to predict. I think what we've seen pretty consistently in all markets. If you look at April and May, fairly severe lockdowns, not a lot of economic activity, as you got into May and June, in most markets, our customers figured out how to operate in a lockdown environment. And we're having commercial activity. Selling cars without showrooms being open and that's happening around the globe, so that, kind of, adaptability to a lockdown. I think the challenging international is their lockdown. We've seen U.S. lockdowns, kind of, relax in the last four, five weeks in many, many markets. Of course, you've seen some tightening or consumer confidence issues around the spikes in the last couple of weeks in many markets. But international lockdowns have just been extended. It is just much longer. We have markets like Australia. I think Melbourne -- in our Melbourne market is not going to open until late August. So those delays, we believe, and the depth of the lockdowns in many international markets really dampened their economic activity, which impacted our revenue. As those markets open up, we would expect to see improvements, but we just can't predict when and how much. So we would expect to see those improve as companies adapt and as actually restrictions are lifted, and there's some level of kind of COVID normalcy.

If you're looking at slide 10, also, just looking at APAC, it was a positive number. But as Mark said in his comments, there was a one-time sale to a government entity there that resulted in that positive step. So excluding that, it was down single digits. And then again, just as a reminder, looking at June, right, there's probably a three to four point benefit from the fact that the number of business days in June is higher. So when you compare June to July, that's something you have to take into account.

Yeah. I must have missed it. Thank you.

Next question is George Milhalos of Cowen.

Hey, George.

Hey, good morning guys. Congrats and thanks for taking my question. Mark, just wanted to talk a little bit about Workforce Solutions, and obviously, tremendous momentum there, particularly this year, within mortgage and on the unemployment side, and you talked about it being still in, sort of, the second or third inning, if we're looking at longer term from a growth perspective. I'm just curious, if we would have thought of Workforce as at least being a high single digit top line growing, probably low double digit top line grower. Should we be thinking that as we look out over the next year or two that some of that growth or a substantial part of that growth has been kind of pulled forward now in 2020, so that it may be sort of a sub-trend for a year or two before sort of normalizing longer term for the growth perspective?

Yes. I don't -- we don't want to get into giving 2021 or 2022 guidance, but we've talked at length on the June 8th call and more this morning about the multiple levers Workforce Solutions has. And as you know, one of the very unique levers they have versus most of our businesses, and I think most of the industry is the ability to grow their revenue by driving hit rate through increased records. And I think that's a very unique element to that business. And if you think quite simply, which sometimes I do, the business will be over $1 billion this year and it has, call it, roughly 50% of the non-farm payroll in a database. Now, our long-term goal is to get all of non-farm payroll in our database. And we've shown a pretty consistent ability to add those records. If we get from half to all of the non-farm payroll, you double the size of that business over a timeframe, extended for sure, but that's a lever that's unique. There's no question that there'll be -- we're in the middle of middle -- I don't know what portion we're in of the U.S. mortgage refi and purchase market that is exceptionally strong. There's going to be a grow over challenge on that for Equifax in 2021, as you point out. But if you saw in our comments, Workforce Solutions, in particular, significantly outgrew the mortgage market because of new products, because of new records, because of new customers, they have all those levers in new verticals that they can get into outside of mortgage, those give us a lot of confidence in Workforce Solutions' long-term growth, which is why I characterize it as being in early innings, meaning this is a mature business, it's a well operating business, but it just has a lot of runway for growth opportunities.

Okay, that's very helpful. I appreciate that color. And then just a quick question for you, John, as it relates to corporate expense and the outlook there. I mean those numbers came in a little bit better than what we were looking for. Is this sort of 2Q corporate expense run rate a good way to think about 3Q, absent, I think, a $5 million increase in redundant system costs relative to 2Q?

Yes. So, I think we're going to continue to perform well, relatively speaking, against corporate expenses. Within corporate expenses, there obviously some things that are a little more variable, like incentive compensation and things that drive movement period-to-period. So, I'm not going to really give a forecast for 3Q and 4Q. But in terms of the cost reduction actions we have in place, I think those are going to stay very firm in place around corporate, so you should see improving performance on our corporate expenses pretty consistently.

Okay, great. Thank you guys.

Thanks.

Next up is Andrew Steinerman, JPMorgan.

Hi. I just wanted to clarify a quick thing on International. I definitely collect that you're saying stricter and longer lockdowns in some key international geographies like Australia. My thought was that Europe went into lockdown earlier and started reopening earlier. And so when I look on slide 10 on the European CRA line for Equifax, is that what you're seeing, or are you saying something about lockdowns that I'm not catching about Europe?

Yes. From our perspective, Andrew, like the U.K. is still in lockdown, meaning our office is not open. Our customers' offices aren't open. They're still working from home. Economic activity, we believe, is depressed because of that versus if you look at like Georgia, which is opened, and other markets in the United States. Spain opened just a couple of weeks ago. Canada is particularly a Toronto market is still in lockdown, meaning they're not open. For most commercial activity in Australia is still in lockdown. So our experience is that -- and our perspective is that the international markets lockdown sooner, and they lockdown longer, and of course, we don't see business in Italy, which, as you know, lockdown opens up quicker, but the markets that we're in are the ones I'm referencing.

I got it.

And we're heavily U.K. based, right? So for us, the bulk of the CRA is U.K.

Right. I know. Okay. Thank you.

Next up is Jeff Meuler, Baird.

Hi, Jeff.

Yeah. Thanks. Good morning. Just a follow-up, Mark, on that answer you just recently gave on the ability to consistently add records -- TWN records. Just how is the pipeline there? Is it being positively or negatively impacted by the current environment? And then on -- there was a comment in the prepared remarks about active records. I think being more flattish than much. I tried to kind of initial top of claims and unemployment. Is that a headwind that is at all a headwind that is at all meaningful, or are the individuals that are rolling off active records, just not particularly active, I guess, from a credit application perspective, so it doesn't really impact you. Thanks.

Yeah. First, on the pipeline, we have -- as you know, we have a dedicated team. We talked about that at June 8. This is all they do is focused on records at either as I would call it, going door-to-door to companies that they are not a part of our database or working on partnerships with payroll processors and others that we do revenue share with. And they have a very active pipeline. We -- what I would characterize is put them on offense in the second quarter. They were before, but we're deliberately leaning in. And on both sides, if you think about your company and you're under some financial pressure, today, you do that yourself in many cases, meaning you're taking calls from mortgage originators into the HR department and you've got a handful of people staffing a call center to respond to your employee calls on that. If we go in and can share our value prop, where we'll do it for free for them, we'll do it securely, it becomes a productivity improvement for that company. So that's a positive. So from a climate standpoint, it's always a good discussion. It's maybe better now. And then in the partnerships, the idea of getting an incremental revenue share from Equifax from a -- to a payroll processor. Those conversations are positive, too. So we like the pipeline. As you know, it's a bit choppy sometimes. We added a large processor last September. We're benefiting from that now. Those can be clunky or chunky. But we have a consistent focus on adding records, and we've shown a pretty good trend of adding them. On your question about the impact of unemployment is something we're watching. We expect there to be some pressure on actives in there. We had some decline in the latter half of the second quarter that were offset by additions that we have with new contributors and new employees or records coming in, and we expect to keep that focus going in the third quarter, but we’re definitely watching it. And I think lastly, I think, as you know, we not only sell active records, meaning those that are working, but we also have a pretty large portion of our revenue Workforce Solutions is inactive records, meaning where with someone working two weeks ago, two months ago, three weeks ago, because people change jobs. And if we don't have an active, many times, we're able to sell the inactive, meaning what they were doing six months ago before they change jobs, and that becomes -- that's another part of our revenue.

We'll go next to George Tong, Goldman Sachs.

Hi thanks. Good morning. So, USIS online mortgage revenue growth moderated from 62% in June to 35% in July, and then EWS mortgage growth went from over 100% in June to 70% in July. Presumably, this is all due to tougher comps. Any other factors that you might point out that could have contributed to the slowing growth? And if it was due truly to tougher comps, can you help frame how comps will evolve over the next two to three quarters?

You want to take it John?

Sure. It's principally tougher comps. A little bit of a seasonality, right? I take a look at the way the mortgage market tends to run. You tend to see a weaker mortgage market as you get towards the back half of the year. But in terms of tougher comps, the mortgage market really started to strengthen in 2019 August and was very strong in September and was very strong in the fourth quarter. So, you're going to see those tougher comps run through third quarter and fourth quarter and then obviously, you know how strong the mortgage market was in the first quarter and second quarter of 2020.

Got it. That's helpful. And then on the technology transformation program, could you provide a timeline on when you expect to sunset your legacy systems, and perhaps frame the timing of when you systems, and perhaps frame the timing of when you expect to fully realize your cost savings that you outlined in the presentation?

Yes, I think for today, we're not ready to do that. We tried to give indications on it. That's really probably getting more into our long-term framework as well as our outlook for 2021 or something, which, as you know, we're not providing guidance. But I think we try to be clear about -- we've got a lot of confidence in the benefits. We tried to talk about when we're bringing applications online and databases into the cloud and then how we're progressing on customer migrations because, as you know, we've got to complete migrations in order to sunset our legacy infrastructure. So, I think we're going to hold off in much more detail than we already have until we get closer to 2021 and we're putting our long-term financial framework back in place.

Got it. Thank you.

Next is Gary Bisbee, Bank of America Securities.

Hey Gary.

Hi. Thank you. So, I understand you're not giving guidance, and there's a lot of uncertainty around mortgage trends it's trends in general. But if we think about, at some point, the mortgage business softening and obviously, unemployment claims as well, can you help us think through how the decremental margins would be on softer sales from those two end markets?

So Gary, again, I think that's kind of getting into kind of a longer term view in the 2021 outlook, and we're just not ready to do that yet. We've given a fair amount of commentary even in this discussion around the fact that our margins in mortgage are obviously not nearly as strong as they are in the normal online business, principally because of mortgage solutions, right, because mortgage solutions, we purchase files from our two competitors. So, there's -- those margins are still good in our mortgage business on average, but not nearly as high as we'd see in a normal online poll. And -- but there's a lot of moving parts that are going to go into what 2021 and 2022 look like. So, I think we're all going to have to see how the markets evolve and we'll give you a lot more view as to what we expect for that as we get toward the end of the year.

Let me take another cut at that and if you can't answer, that's fine. But as I look at the incremental margin on revenue growth in the last five years at Workforce Solutions, it's obviously been terrific and it's been relatively stable within a range, including the last few quarters, where there's been a major benefit to revenue. Is there any reason -- and I'm not asking you when, and asking about 2021, but any reason to think when revenue -- if revenue were to weaken in that business temporarily that you would see a very different incremental margin on the downside than you've seen on the upside?

So again, I don't think we're really going to answer that in detail, right? But what also goes into that is what actions we would take to manage the cost of the business that we have across the entire portfolio, not just specific to Workforce Solutions. So again, I think we're, kind of, getting into more of a long-term outlook here. And at this point, we're going to -- I think we're going to have to ask you to wait until we get toward the end of the year.

All right. Fair enough. If I could just sneak in one then on the pipeline, encouraging commentary on the win rates as well. Can you just level set for us, is the pipeline back to the pre-breach levels, or are you still in the process of rebuilding that? And same question for win rates. Thank you.

So I think with the pipeline, what we're seeing is it improved a lot over the past three years. Comparing pre and post-breach pipelines is a little bit difficult, right. But I think the really promising things that we're seeing is the pipeline is growing consistently. And then the win rate we're seeing against the pipeline is continuing to grow as well. Again, we're speaking about us is here, right. So I'd say that's what it looks like, and I think we feel good about that trending.

Thanks.

And that's all the time we have for questions today at this time. I'll hand things back to Jeff Dodge for any additional or closing remarks.

I'd like to thank everybody for their time today. And I think with that, operator, we can terminate the call. Operator: Ladies and gentlemen, that does conclude today's conference. Thank you all for your participation today. You may now disconnect.