Hello, and welcome to the Equifax Second Quarter 2021 Earnings Conference Call and Webcast. At this time, all participants will be in listen-only mode. [Operator Instructions] A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It’s now my pleasure to turn the call over to Dorian Hare, Senior Vice President, Head of Corporate Investor Relations. Please go ahead.

Thanks, and good morning. Welcome to today’s conference call. I am Dorian Hare. With me today are Mark Begor, Chief Executive Officer; and John Gamble, Chief Financial Officer. Today’s call is being recorded. An archive of the recording will be available later today on the IR Calendar section of the News & Events tab at our IR our website www.investor.equifax.com. During the call today, we will be making references to certain materials that can also be found in the presentation section of the News &Events tab at our IR website. These materials are labeled Q2 2021 Earnings Conference Call. During this call, we will be making certain forward-looking statements including third quarter and full year 2021 guidance 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 expectations. Certain risk factors that may impact our business are set forth in our filings with the SEC, including our 2020 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.

Thanks, Dorian, and good morning. Before I address Equifax's strong second quarter results, I want to recognize our 11,000 associates around the globe for their continued hard work and dedication in these challenging times. Our team members are our most important asset and they play a vital role in helping millions of consumers around the world to get access to credit. On July 1, we opened all of our U.S. offices fully and rolled out our new Equifax flex program, a hybrid working environment that gives our team the opportunity to work from home one day per week. Our four one program recognizes our learnings from the past year around remote work during COVID, but maintains the core of our Equifax culture of collaboration and team work that is optimized by an in-person work environment. We’ve also resumed in-person meetings with our customers and I’ve been energized with the conversations that have taken place so far. It’s great to be moving back to a new normal. We had a very strong second quarter and first half, which built off our strong outperformance in 2020. Our team has executed extremely well against the critical priorities of our new Equifax 2023 strategy, which is shown on Slide 4. We are accelerating new product introductions, beginning to leverage our expanding Equifax cloud capabilities, and our highly differentiated data assets. We continue to expand our differentiated data assets both organically and through acquisition and partnerships. While still in the early days, our new Equifax cloud data and technology capabilities are providing competitive advantages and capabilities that only Equifax can provide. And our Customer First initiatives are deepening our relationships with customers and delivering new products and solutions along with above market Equifax growth. And as always we remain focused on extending our leadership in…

Thanks, Mark. As Mark discussed, our Q2 results were very much stronger than we discussed with you in April, with revenue about $85 million higher than the midpoint of the expectation we shared. For perspective, all we used performed well relative to the expectations we shared. Performance in non-mortgage and our U.S. businesses, Workforce and USIS was very strong in absolute terms and relative to the expectations we shared. Our unemployment claims and employee retention credit businesses and Workforce Solutions declined in the quarter, but much less than expected. International revenue performance was also very strong, again both in absolute terms and relative to our expectations. And although the mortgage market was down 5% versus our expectation of flat, our mortgage revenue principally in Workforce was not impacted to the same degree. This strong revenue drove the upside in adjusted EPS relative to the expectations we shared. Now, turning to mortgage, as shown on Slide 12, U.S. mortgage market credit increase declined 5% in 2Q 2021, weaker than the about flat we had included in our guidance. Our financial guidance for 2021 assumes that the trend in mortgage credit increase we saw in late June and July continues in 3Q 2021 resulting in a decline of mortgage market credit increase of about 23% in 3Q 2021 versus 3Q 2020. Although our second half 2021 market credit inquiry assumptions are down significantly from the second half of 2020, they remain above the average as we saw prior to 2020. As shown in the left-side of Slide 13, mortgage market indicators remain above the peak seen in previous mortgage cycles. Despite the substantial refinance activity that has occurred over the past year, the number of U.S. mortgages that could benefit from a refinancing remains at a relatively strong level of about $12…

Thanks, John. Turning now to Slide 17, as I referenced earlier, pricing power in our technology teams continue to make very strong progress on our new Equifax Cloud Data and Technology Transformation, with the North American technology transformation expected to be principally complete in early 2022 and the remainder of North America transformation and customer migrations completing by the end of next year and our international transformations following North America being principally complete by the end of 2023. Equifax's transformation to a cloud-native environment delivers a host of capabilities that only Equifax can provide as the only cloud-native data and technology company. The Equifax Cloud will deliver always on stability, accelerated response time and built-in industry-leading security. It will provide our customers with real-time access to data and insights that they can rely on to make decisions. The Equifax Cloud through our Ignite analytics platform will allow customers and Equifax data scientists to work together utilizing EFX unique data assets and customer proprietary assets to define attributes and models to improve customer outcomes. And we will continue to accelerate the time from analytics to production to bring new products and solutions to market faster and more efficiently enhancing customer benefits and Equifax revenue. Already the Equifax Cloud has enabled us to produce new products designed and delivered on our Cloud infrastructure four times faster than the past. We began to leverage these cloud benefits in 2020, as we more effectively developed new products and delivered them to market leveraging the new EFX cloud, growing new product introductions by 44% last year - in 2020. These new improvements have been further accelerated in 2021 as we are delivering the highest number of new products in our history and we are realizing higher revenue from new product introductions. Slide 18 provides an…

[Operator Instructions] Our first question today is coming from David Togut from Evercore. Your line is now live.

Thank you. Good morning. Good morning, Mark. Good morning, John. Good to see the strong growth and NPI continuing in the 13% new record growth. Clearly, the first half outperformance versus your guidance continue to come from the strength in Workforce Solutions. So, as we look at the second half guidance, what’s embedded in terms of the outperformance of EWS core mortgage growth versus the mortgage market 62 percentage points in Q2. How are you thinking about the back half in terms of EWS core mortgage outperformance?

Yes. So, David, we don’t give specifics by BU in terms of how we break down core. But as you can see from the detail we gave we are expecting to have very good core growth in the third quarter at 17%. We are expecting EWS with the continued performance extremely well and we are expecting them to continue to substantially outgrow the mortgage market. And as we indicated for the full year, we expect our mortgage revenue to grow 15%, that’s up from what we talked about in April and it’s more than 20 points higher than the 8% decline that we are talking about for the overall mortgage market itself. So, we expect EWS to continue to substantially outperform and to continue to deliver very high core revenue growth. To give you data there is multiple levers by the Workforce Solutions team to drive that outperformance, it’s specifically in mortgage and of course all the other verticals that the record additions help fuel that the new product roll outs that the team did last year and are continuing this year in the mortgage space will drive that. We gave some visibility around our growth in the mortgage market itself. As you know, we don’t see every mortgage. So the team is focused on adding income and employment from Equifax. The large portion of mortgage is we still don’t see. And of course, we are continuing to drive the system-to-system integration. So, all of those libraries that are what Rudy and his team are deploying to continue to drive that outperformance not only the mortgage market, but all of their markets.

Appreciate that. Just as a quick follow-up, looking at the 14% USIS organic non-mortgage growth in Q2, in which verticals are you gaining significant market share? And if you could maybe kind of compare where you are today in kind of non-mortgage USIS versus where you were a year ago?

Yes. I would say, first, we are certainly benefiting from the economic recovery. We’ve seen that in card issuers and really all of the financial institutions are doing more marketing. You’ve seen strong performance there in the consumers back in accessing credit products. So you’ve seen that both in the mortgage side but I think you are focused more on the non-mortgage of course. The new product rollouts are benefiting Sid and his team as they are focused on bringing new products to market. And really broadly, we’ve got a strong focus as we’ve been very clear over the last, really almost 24 months about the focus that the team has on building out their deal pipeline. They are focused on their customers. We’ve rebuilt and enhanced our commercial team with more coverage. We’ve added more resources. We’ve re-levered the commercial team. So, all of those are benefiting from us and we’ve got a lot of confidence in our ability to be competitive in the non-mortgage market in USIS going forward.

Thanks very much. Appreciate all the insights.

Thank you. The next question today is coming from Kevin McVeigh from Credit Suisse. [Operator Instructions] Kevin, your line is now live.

Great. Thanks. I am going to ask one question, because I got a couple parts to it. But, hey Mark, you’ve got EWS’ 40% of revenue today, 53% of EBITDA versus about 23% in 2017, somewhere around there. It feels to me like, what’s happening with the TTI as you are accelerating the shift to EWS. So, can you help us understand kind of the dynamics of how the cloud transition impacts EWS versus the core business? And then, within the context to that, if my math is right, the average client size was about 4000 contributors in terms of employees in 2018 versus about a 100 today. So, how do those dynamics kind of impact EWS? What I am trying to get at is, it feels like, there is going to be structurally higher level of growth looking beyond the volatilities just mortgage overall. And again, it feels like that’s something structural. So, just maybe trying to frame that to the extent you can help us.

Sure. And just broadly, as you know, we are focused on growing all of our businesses, all four business units. And clearly, Workforce Solution is very unique and really driven by the uniqueness of the income and employment data that it has at scale and the value of that. And we’ve talked I think, Kevin, in the past that there was an element of catalyst from our perspective when the dataset got over 50% of non-farm payroll, call it a year ago. And it just made the dataset more valuable. And when you think about someone’s credit history, did they pay their bills is very valuable, but are they working and how much do they make is equally valuable. And really only Equifax has that dataset. The Workforce Solutions business has levers as we talked a couple of times on the call already they are really quite unique. And I think it starts with records. Most data businesses have all the records. Workforce Solutions has shown a history of building out their dataset and as I talked in my comments, we added 14 million – rough 14 million records on a year-over-year basis. So we are continuing to add records. As you know, we got visibility for a significant addition or meaningful addition from a large payroll processor in the second half of the year. And we are out there talking to individual companies to grow the dataset, which we do through our Employer Services business by providing those services. And then of course, the other payroll processors or that we don’t have now with Equifax we are working to add. So records is a very important lever for that business and there is a long runway not only with non-farm payroll, where we are at 91 million unique versus…

Thank you. The next question today is coming from Manav Patnaik from Barclays. Your line is now live.

Thank you. Mark, I apologize, just what you said on the Workforce M&A. Did you say that background screening was an area you are interested in or what was the comment?

No, no. No, I didn’t say that. What I said was that, what’s really interests us and when we talked about it before is, number one, strengthening the core Workforce Solutions. It’s our strongest business. It’s our largest business. It’s our fastest growing business. And doing acquisitions like HIREtech and i2Verify is clearly a priority for Equifax. The other area that we’ve talked before with you and others about is the Talent Solutions Data Hub. We want to be in the data business around the hiring process. We are now, as you know, with our work history. We have an average of 4.5 jobs on the average American in our database and that work history is very valuable in the hiring process. And beyond work history, as you know, other data elements like, where did you go to school. What licenses did you have. Have you ever been incarcerated before. Have you been arrested before. All those data elements are very, very valuable and we are building now our data hub of partnerships. If we could find a good way to M&A in that space, we’d like to do it.

Okay. That makes sense. And just, John, I don’t know if I missed it, but I was hoping you to help us just how to think about what you’ve baked into your guidance, so just the growth in verification and employee services for the back half of the year?

Yes. So, I think what we talked about is we gave a good view, I think what we expect the growth to be for the full year and as we indicated, we expect Workforce Solutions to grow over 30% in the year. So, obviously, that’s up substantially from what we talked about in April. So, it reflects the much stronger performance in the second quarter but also continuing very strong performance in the third and fourth quarters. And we are expecting as I said, as we continue the strong performance across really all the businesses as we talked about I think effectively, we held or increased our expectation for growth in all of our businesses in the full year and therefore in the second half. So, we are feeling very good about the trend.

Alright. Thank you.

Thank you. Next question today is coming from Hamzah Mazari from Jefferies. Your line is now live.

Hi, this is Mario Cortellacci filling in for Hamzah. Just a quick question on your international business and I guess, specifically Australia. Could you just walk us through how margins in that business differ from other international markets? And then, if you could also just talk about your view on the recovery there? I think they did went into lockdown again. So, just want to get your outlook.

Yes. International still is broadly kind of lagging the United States, maybe Canada is quite similar as far as the vaccine rollouts. But other markets, I guess, UK is similar. But that’s been choppier internationally than it has in the United States for sure and as you point out, Australia has got another lockdown, because the vaccines are really lagging there. The market has adjusted lot of international markets like it did in the United States quicker, meaning customers and consumers figure how to live their lives and operate their businesses in more of a virtual environment. And I think that’s what we are seeing in Australia with – and our international markets that are still lagging in some regards, particularly in Latin America around the COVID lockdowns being relapsed. The margins, John, we are not growing dramatically different and on a global basis, I wouldn’t characterize them differently by market. We really don’t talk about on a market basis.

Yes. We don’t talk about them on a market basis, right. But what we’ve indicated historically is, markets that look very much like the U.S., so we talk about Canada tends to run at higher margins than some other businesses. Australia looks probably more like international averages than you think about Canada that would be stronger.

Understood. And then, just my follow-up, could you just comment on the Fraud segment of the business? And how much further scale can you gain there more through more M&A post the Kount deal. Obviously, it’s a highly fragmented market there. And then, any initial views on synergies that you are seeing as you are integrating Kount?

Yes. I commented earlier that we are quite encouraged by that. We are really very energized and pleased with the acquisition in the team that we brought on board from Kount. ID and fraud is a very strategic growth area. It’s also an area as you pointed out, if we could find more M&A, we’d like to do it to broaden. It’s a very big space and as you pointed out, it’s very fragmented. We think we’ve got very unique data assets to play in identity and fraud and kind of really augments that and that’s really the power of the Kount combination and synergies with Equifax. It’s really leveraging their data at scale from the ecommerce world. They have something like 32 billion interactions every year with consumers. They have really scaled data assets around email addresses, IP addresses, cellphone numbers, over 400 million verified elements. And with ecommerce, you are interacting very quickly, because a lot of people are doing ecommerce. So the data is very current. And the combination of that data from Kount with Equifax is really the power. And ID and fraud, we believe starts with data and that’s why we think we have a license to play and if we could find more and we are looking for more M&A in the ID and Fraud space to further strengthen our position is a huge TAM that the market is, I think, close to $18 billion globally for ID and Fraud and it’s growing at 20% with the large digital macro meaning more consumers interacting in really every aspect of their lives, whether it’s financial services, insurance, telco, or of course, ecommerce and retail digitally. And with that digital interaction, the requirement to verify that Mark is really Mark, it’s critically important. And that’s where the data assets come in. And also to do it seamlessly meaning where the consumer doesn’t feel it. And the way to do that is to power it with more data. So, we are quite energized about the integration with Kount. The progress so far and it’s an area we’d like to be bigger in going forward both organically through the products and the synergies of the Kount acquisition, but also inorganically if we could find some M&A that would strengthen us.

Great. Thank you.

Thank you. Next question today is coming from George Mihalos from Cowen. Your line is now live.

Hey, George.

Hey. Good morning, guys. Congrats on another strong quarter. Wanted to ask a broad question to kind of start things off, obviously, there is a lot of debate going on looking at the bond markets and alike. But, to the extent, we enter a more inflationary period going forward, is that’s something that could be a catalyst for you guys both in terms of people relying more on credit and obviously, potentially the help of some of your FI customers in an environment where rates go up. I am just curious how you guys are thinking about that, if you are thinking about that at all?

Yes. We think about it and so, obviously, something that is hard to forecast. But when you think about interest rates going up, or inflation going up I think you got to step back and look at the consumer itself. The consumer coming out of COVID is very strong. But at the same time they are coming out of COVID with some pent-up demand. When we think that bodes well for the credit environment, meaning that the consumers are healthier, meaning they can access more credit and there is an underlying desire to going vacations, expand your home, buy new car, all those elements I think are a catalyst for the economy which we are already seeing and obviously quite strong. And for the credit bureaus in Equifax, that means our customers are going to be spending more in marketing, spending more on originations and looking for new solutions to identify the consumers. If you think about our customers, they are very healthy. They really managed the pandemic much more strongly because their consumer was stronger. Their losses were not anywhere near what were anticipated. So, our customers are strong and they are looking to grow. And if you got a consumer that’s been paying down balances in lots of areas like cards and others during the pandemic because the stimulus and their broad financial strengths. Our customers need to build up their balance sheets by getting more loans on their books, whether it’s credit card or personal loan, an auto loan or a mortgage and of course, the other area that we watch is what impact higher interest rates may have in the future on the mortgage market. The one counter to that is there is still at least in current rates, a loan pipeline and John talked about it of consumers that will still benefit from a refi. And then, the other element that we are watching is, home price appreciation is up dramatically. And that home price appreciation is an asset for consumers that historically they will access through either home equity loans or a refi of their mortgage to cash out refi. So that’s another catalyst that there we keep an eye on. So, there is a lot of variables there which, - but when we think about our guidance for the second half, we got a lot of confidence in the underlying Equifax business, our ability to perform, which is why we raise guidance.

Okay. Great. Appreciate that color. Obviously, there are lot of puts and takes there. And then, John, just a housekeeping question and forgive me if you have answered this, I maybe missed it. But the margins in USIS, I think you called out several factors, some related to the inclusion of some of the tech expenses and then some additional sales and marketing as you would invest more in the segment. Is there a way to think about what the margins would have been in the year-over-year basis, apples-to-apples, so basically excluding what the contribution to expenses were from increased tech costs?

Yes. I think, what we said is that, the biggest driver were the tech-related costs and the decline of about I think it was 380 basis points year-on-year. We’ve also definitely invested more in marketing and sales given new NPI rollouts in the improving economy. And that’s certainly impacted year-on-year and that would have been more impactful if you think about sequential. But we didn’t give specifics. But we did indicate that the biggest driver of year-on-year decline is the tech-related cost.

Thank you. Our next question today is coming from Andrew Steinerman from JPMorgan. Your line is now live.

Hey, Andrew.

Hi, it’s Andrew. So, two questions. One, John, could you tell us the percentage of revenues in mortgage for just the second quarter just reported? And the second question is, I wanted to get back to a comment in Mark’s prepared remarks about growth in Employer Services. I am pretty sure, Mark, that you said 20% growth this year outside of UC and ERC. Just again, correct me if I heard it right. And is that organic number and how much would we think that UC and ERC would change that number when thinking about ES growth for the whole year?

Andrew, mortgage was about 32% of revenue in the quarter.

Thank you.

And on the Employer Services, we did say that we expect it to be up 20% for the year. And that’s really driven by a lot of the new product roll outs that we have, the I-9 Anywhere solutions. We are just seeing real traction in the hiring process that’s really driving that.

Thank you. Next question today is coming from Simon Clinch from Atlantic Equities. Your line is now live.

Hi. Thanks for taking my question. I wanted to follow-up again with Verification Service in particular. I’ve been quite excited by the step-up in growth rates for the non-mortgage portion in the second quarter. And this is before you’ve got the Social Security Contract before you’ve got the new record coming in. So, I was wondering if you help me understand or give me some color around how to think about that pace of growth as we move through the next year or two, because I am struggling to work a wide or such a big step-up in the fourth quarter.

Yes. There is an element of COVID recovery in there in some of the markets like cards and in auto and P loans, so that there is an element to that. Records are a piece of it for sure. As you add records, our hit rates go up. So that’s clearly an element. Our real focus on new products in that space and as you point out, SSA contract that will go live in the second half will really ramp in – somewhat in the second half of the year. But it’s really a 2022 benefit as it gets to full – the full runrate. There is just a lot of opportunities for us in the non-mortgage space. In Talent Solutions, we talked about a very strong growth there. And then, some of the other non-mortgage financial verticals are performing well.

Yes. Mark mentioned huge growth in Talent Solutions and government, which are the two biggest segments by far in Verification Services.

Okay. Understood. Thank you. And just a follow-up. I was wondering just more broadly, with some of the fin-tech startups growing in the market today, that are effectively using multiple or alternative datasets just like you are, yourselves. But it’ also using the credit reports in data as well to sort of improve models for risk assessments and decision-making in the credit process. As that where you have gone today, but it’s not kind of market opportunity grows. You become – I am assuming you become more competitive along with. And I was wondering if you could talk about that that’s the longer term competitive dynamic and how you are planning to navigate that?

Yes. I wouldn’t think about them as competitors. They are customers and partners. The bulk of the data they use in their processes comes from us or our competitors. They have some of their own data from historical interactions with consumers. But whether that’s going to be broad data to verify, their consumers who they say they are in a BNPL transaction or a lot of the fin-techs are in P loans and sub-prime auto and mortgage and of course in cards, they are using our credit file. They are using our MC Plus data. We sell quite a bit of in fin-tech of our TWN income and employment data that’s used in some of the larger ticket transactions there. So, they are very data savvy. Very data sophisticated and as you point out, they look for more data to enhance the crediting decision, which plays well for us, because as we continue to build out our differentiated datasets, we can bring real value in enhancing the credit decision or the decision they are making with the addition of more data. So, we view it as a positive. I think as you know, we weren’t focused on fin-tech three, four years ago. We changed that and really expanded our resources and capabilities there and we think our cloud investment plays well for fin-tech. Our differentiated data plays well for fin-tech. And our new product focus plays well for fin-tech. So it’s a place we want to be larger in.

Thank you. Our next question is coming from Andrew Nicholas from William Blair. Your line is now live. Nicholas, please go ahead sir.

Thank you for taking my question. My first one, I wanted to ask another one on international. You mentioned in your prepared remarks and it’s noted on a few of the slides that you are outgrowing underlying markets. So, I was wondering if there is any region in particular, or countries in particular where your share gains are outsized internationally? And then, to the extent that’s the case, what is specifically driving your gains in those markets?

Yes. Our – all the markets really were quite strong in the second quarter with every region really up over 20%. So, with broad base, there is definitely an element that’s meaningful in the quarter from the COVID recovery. I think all the international markets after a year of COVID it really figured out how to operate. Because they all have a different flavor of COVID challenges and they are still operating with – like the Australia lockdown or UK opened up on Monday. But there is still some hesitancy, I think for some consumers to go out. But they don’t have operates. I think that’s a big driver. I wouldn’t really highlight any market differently than the other. We have a very strong market position in Australia. In Canada, we have a very strong market position. We do it in Latin America in a lot of the markets that we operate in. I think broadly, our international markets are very NPI focused. They always have been by really leveraging new products created in the United States or unique to their markets and in getting those out. Those are a big fuel for growth going forward. And in a lot of our markets, we are continuing to grow our data assets. You’ve heard, I think, one or two of the new products I highlighted are our new solutions in our international markets.

Got it. Thank you. And then, for my follow-up, I know it’s been touched on a few times already, but to flush out Talent Solutions a little bit further, I think you said 200% plus growth there. Is there any additional color you could give on specific products that are contributing? And maybe more importantly, from my perspective, how should I think about how much of that strength is tied to better hiring volumes to the extent that it is, particularly relative to the second quarter of last year? Thank you.

Yes. So, there has been a really substantial focus on new products in Talent Solutions and they are generally built around for allowing the party that’s purchasing the product, right. Whether it be a background screen or somebody else, to buy specifically the information they need for the duration they require it. And we’ve launched a series of products that allow them to do that in ways and they tend to be at very attractive price points for Equifax. So, - so, we are seeing very good improvement in NPI in Talent Solutions. Really it’s a real strength for EWS. But obviously, we’ve also seen very substantial increase in hiring as we get into the second quarter relative to last year. So, I think it gives you a break down. But what I can say is and I think we’ve been talking about this consistently since at least the third quarter that new products have driven a substantial amount of growth in Talent Solutions really starting about midway through last year.

Thanks. Our next question today is coming from Kyle Peterson from Needham. Your line is now live.

Hey. Good morning. Thanks guys for taking the questions. Just want to start on EWS picked any Employer Services. It looks like the momentum has been really stronger on the Talent side. How should we think about some of the puts and takes in that business as things open up between growth on that side of the business versus like some of the excess UC claims kind of declining as long as things keep improving?

Yes. We’ve been very clear that we expect UC claims to decline from their extraordinary levels of a year ago and that’s a part of our guidance and when you think about some of the other solutions we have, the hiring process is generally good news for a lot of those. Whether it’s I-9s onboarding an employee. The employer resource credit is one that’s really still a COVID benefit that we expect to benefit through the rest of the year. But that’s an area that we are focused on expanding and as you know, we did two acquisitions, particularly HIREtech that we acquired in the first quarter is helping us get stronger and work opportunity tax credits, which is a space that we’ve been growing going forward.

Yes. The only thing the Employer Services excluding UC and ERC, right, which is what we exclude from core growth. The two biggest businesses there are I-9 and our business that supports ACA and our I-9 business as we talk to is growing very fast, right. And that’s new solutions and new – using our new commerce platform to get the much smaller customers. So they can access us more quickly and directly and then also obviously with the changes in what’s occurring in the ACA we are seeing that return to growth. So, I think those two factors are been very beneficial in the growth of the businesses excluding obviously UC and ERC, which Mark already talked about.

It’s super helpful. And then, maybe just a follow-up. You guys have mentioned the large payroll partnership that’s planned going live later in the year. Maybe if you could give us any color on potential size and the rate of monetization once that goes live and how that could influence the back half of the year?

Yes. I don’t think we want to get into the exact size on it. But we’ve been trying to be clear, it was one of the top payroll processors and we are pleased to be adding them to the TWN database and we factor this into our framework or guidance for the second half. And obviously, if it’s added, it will benefit us in 2022, benefit Workforce Solutions as those records are added. Those turn into revenue in our system integrations.

Thanks guys.

Thanks. Our next question is coming from Toni Kaplan from Morgan Stanley. Your line is now live.

Thanks very much and good morning. You mentioned the final pay leader in a recent question and that’s seeing a lot of growth right now. Can you just talk about your position in that market? Any sort of current revenue contributions and growth rates you are seeing there? And how you view the opportunity little bit more generally like in terms of future potential for that market?

Yes. We are participating in the BNPL space in the states and other markets around the globe where Australia and UK and Canada I think our markets also have – we have the BNPL relationships. We provide identity to them after verify who the consumer is and some of the BNPL players are starting to move to larger ticket transactions and looking to do more of an underwriting of the consumer. If you are doing a BNPL on a $100 pair of blue jeans, there is a risk profile that you can do less underwriting, if you will. Maybe just verify the identity of the consumer to make sure it’s not a fraudster when you start doing a refrigerator or a couch or a larger ticket transaction. So, in all of our BNPL discussions we are talking to them about their desire to move into bigger ticket transactions and leveraging Equifax data to do that including the credit trial, some of our alternative data like NC Plus or incremental employment data from Workforce Solutions.

Great. And then, for my follow-up, consumer indirect has got slightly better in the quarter. But it’s still down. I know you said you expected it to return to growth in 4Q. But we did see that one of your clients – one of the larger players in the space reported a very strong quarter. Just wondering is there just sort of a lag to get to – basically to get to you? Or I guess, why isn’t that better yet?

Yes. I don’t know which competitor you are referring to. But as you might imagine, we all don’t have the same customer relationships and there is a different level of COVID recovery I think with that space. And when you think about lead gen players, if you are a bank, you are going to restart your own lead gen first before you start buying third-party leads from a lead gen player. So, I think there is some lag in that that we expect improve as we go through the second half.

Thank you. Our next question is coming from Andrew Jeffrey from Truist. Your line is now live.

Hi. Good morning. Lots of terrific information here. Appreciate it. Mark, I am wondering if you can talk a little bit about within EWS verifier in particular. The volume which I assume is being driven nicely by NPI, as well as the TWN database but also price and I am thinking about price to value around some of your newer solutions but also the impact of more digital verifications in mortgage for example. Is there a dynamic you can call out sort of between price and unit, so we can think about yield in that business?

Yes. We don’t talk about specific price, but we try to exercise price in all of our businesses. So, as you might imagine, through our uniqueness of the solution or the dataset and of course Workforce Solutions is for sure our most differentiated data asset. So, we do use price, but product is also a very strong way to enhance revenues. We talked in the past about historically, we have a single whole solution that we might sell for $15, $20, $25, $30 of Workforce Solutions and some of the newer products we’ve rolled out in the last 12 to 18 months deliver more value to our customers whether it’s more historical data at a $150 price point or it’s allowing a co-borrower solution called, we call it Mortgage Duo where you can pull a husband and wife that are both applying for a mortgage in a single pool, that’s priced at more of the $150 solution. Multiple pool alternatives in order to incent the usage out of those, you can decide, define it whether you want to call it price or product, but it all results in higher revenue and higher margins. And that’s definitely influence the strategy is to leverage the new cloud capabilities around the use of our data in Workforce Solutions to bring new solutions to market. And then as you referenced earlier, records are obviously result in higher hit rates. Remember, we are getting in system-to-system integrations. We get a hit on our database on every customer where we consumer that our customer has and now we are in that kind of 60% hit range on the non-farm payroll as we add records and go to 61%, 62%, 63%, that drives revenue of course. And the systems – system integrations that we have, which are growing, we are now at 75% at mortgage, continuing to grow that. We only see 60% of mortgages meaning there is a lot of customers out there that we still have to add to our relationships. So that’s another growth lever. So there is just a lot of place here in growing that business which is why I said the outsized growth is you’ve seen for really a decade that the stronger growth in the last couple of years from the scale of the dataset where it just becomes more valuable to integrate into our customers’ workflows because of the higher hit rates that it delivers.

Thank you. I appreciate that.

Thank you. Our next question today is coming from Craig Huber from Huber Research Partners. Your line is now live.

Yes, good morning. My first question on Fraud and ID, can you potentially size that for us in the U.S.? I am just – I know it’s across multiple products you have there and then just, what the growth rate is if you could break that out for us please?

Yes. I think we’ve talked about this in the past, right that as we look at 2021, we are expecting to see our total Fraud and IT business, even that’s when I break out the U.S. separately to be over $200 million. so, that includes the addition of Kount. But in total, we are expecting our Fraud and ID business to exceed $200 million in 2021.

And that’s a space as you know we want to grow. That’s why we did the Kount acquisition and we are still in the early days of that integration and really driving the synergies and combining the data assets and rolling out the new solutions that the combination of Equifax data and Kount data is going to deliver principally in the U.S. but Kount also got global capabilities. so, it will benefit us at some of our global markets too.

And what sort of revenue growth and what would that imply for the full year? And then my follow-up question if I could ask please? In USIS, can you just hit on a little bit on autos, credit card, personal loans in your core credit card – credit bureau business? How well that did in the last quarter and what’s your sort of outlook more importantly for the second half of the year? Thank you.

Yes, I don’t think we’ve given in Identity and Fraud a growth rate. But I think we have shared broadly and you know this – the market itself is growing 20%. So, that’s underlying why we invested in Kount and why we are still very open in looking – it’s a priority of us to do more M&A because the size of the TAM is $18 billion growing at 20%. The digital macro of more consumers doing things online on their phone, on their tablets, on their computers is really driving us which is why we want to be bigger in it. As far as in USIS, auto has been impacted by some of the inventory issues. So that’s clearly dampened some of their growth. We’ve seen strong growth in card as marketing and broadly originations, if we come back and same with P loans.

And as Mark mentioned in his comments, right, FI grew over 20% and auto grew double-digits – so, in the quarter.

Thanks. And our next question is coming from George Tong from Goldman Sachs. Your line is now live.

Hi. Thanks. Good morning. Two questions. Within your non-mortgage USIS business, how does revenue in 2Q 2021 approximately compare with 2Q 2019 levels? And then secondly, how is your non-mortgage USIS business performing relative to the broader industry from a growth perspective?

Hey, George, go with the first question, I am sorry.

How did we compare to – how does our second quarter in USIS compare to 2019?

Yes. So, we haven’t given the specific detail. But what we have indicated is we are seeing growth relative to 2019 really across most of the businesses, right?

And then, second one is versus the – I think your second question, George, is versus the industry, which I assume needs versus our competitors. One of our competitors hasn’t reported yet and I think versus the other that did, I think we are in line and quite pleased with our performance in competitiveness in the marketplace and we are seeing that with the kind of core growth that we are delivering in non-mortgage.

Got it. Thank you.

Thank you. Our next question today is coming from Jeff Meuler from Baird. Your line is now live.

Yes. Thank you. For Employment and Income Verification, do you have a sense of how often the cost are borne out of the profit pool of the originator versus pass-through because the consumer and their closing costs. And on the 60% metric that you gave us, any sense if you over or under index to the purchase first refi market relative to broader enquiries, specific on the verification services?

Yes. And I think you are talking about mortgage, Jeff. In mortgage, you know, the credit file that was used in virtually a 100% in mortgage and that’s a pass-through clause for the consumer. We are starting to have some originators move the income and employment data as a closing statement in I guess, early days on that and we think that’s an opportunity going forward it’s going to take some time.

Yes. In terms of whether our penetrates is different in refi versus purchase, we don’t think so. We think it’s relatively consistent. It’s basically driven more by the underwriter or the provider of the mortgage than it is by the refi versus new purchase.

Got it.

I think, Jeff, you know the difference in number of polls on the credit side versus the income and employment, we’ve been closing that gap on income and employment with there is an average of four to five credit polls for a mortgage and now we were in kind of the two plus range on income and employment data which is up from a number of years ago or closer to one and that’s when we want to continue to grow and we think there is opportunity there.

Yes. I hear you. And then on Slide 11, the mortgage outgrowth within verify relative to end-market inquiries, where do you expect it to level off in coming years? And maybe at least you’d say, do you expect it to be higher than this kind of 11% to 21% range it was in pre-2020 because of all of the structural growth drivers you are talking about?

Well, I don’t think we want to get into guidance that level given it’s outside of 2021. If you think about the opportunities we’ve laid out and what the cloud benefits are, we believe there is a lot of opportunity for Workforce Solutions broadly and in mortgage. When you are adding records, obviously it allows you to grow the market whether it’s up, down or sideways. So, and that’s a big focus for us and we start a lot of runway on records and the scale of the dataset, more system to system integrations, we get a 25% lift in polls in our system to system integration versus coming to our website. The number of polls, closing that gap with the 4 to 5 on the credit file. New products is another way to continue to outgrowth the market which we are focused on pure price. Obviously, it allows you to outperform the market. So, we are confident in the scale of the levers there, but I don’t think we want to give any guidance on what it’s going to look like over the long-term.

But those levers are increasing relative to prior periods, correct? That’s the right interpretation?

100%.

Okay. Thank you.

Thank you. Our next question today is coming from Ashish Sabadra from RBC Capital Markets. Your line is now live.

Thanks for taking the question. Just a quick – wondering if you can provide a quick update on your FICO partnership and the data decisions cloud. Have you seen better traction there, particularly as consumer marketing and consumer lending picks up? Thanks.

Yes. It’s an important relationship for us. I do a quarterly review with Will Lansing the CEO of FICO and myself and the team. We – actually, it’s not quarterly, it’s monthly. So we are excited about that and decide the data decisions cloud which is the integration of their solution with Ignite. We are also in market with a joint solution on AMLKYC that we are very pleased with and we are looking for other solutions going forward. So, we are pleased with the progress. We are in the market commercially and looking to benefit both of what makes sense and of course we go to market independently where it makes sense to.

Actually helpful color. That’s great. And then, maybe just a quick question on any update on the regulatory front? Again, I know you’ve spoken about this in the past. But just there was a financial services committee hearing in June. And then, there were certainly things around regulators are talking about the changing the CRA. I was just wondering if you can talk about how that can potentially, any impact to the business, but also how we think about increased demand for alternate data as there is more focus on non-bank and under bank customer? Thanks.

Yes. I think there is a couple of net questioning. I think maybe the first one you are focused on is that some discussions around a public credit bureau. We don’t think there is a lot of traction on that. There never was and we don’t think that there is a real path to that. It doesn’t make sense. There is three large credit bureaus. There is another 30 CRAs underneath the three large credit bureaus. So I think there is plenty of competition in investments to support consumers. The second half of your question around real desire in Washington and with – we’ve heard the CFPB talk about it around access to credit for those that are challenged in getting to credit and really drive around alternative data. That’s clearly a big focus of ours. You’ve heard us talk about it on this call and others around expanding our alternative data, using the Equifax cloud to combine our differentiated data assets and really open up credit using things like utility bills, payment records, cellphone payment records, income and employment data to expand access to the credit. It’s clearly a focus of ours and it is of our customers, the financial institutions and banks and that is aligned with the push that Washington has.

That’s very helpful. Congrats again on the solid results.

Thank you. The next question today is coming from Shlomo Rosenbaum from Stifel. Your line is now live.

Hi, good morning. Thank you for taking my questions. Maybe John, maybe you could help me out there is just a little bit of just sequentially on the Online Information Services, it was down about $4 million despite the fact that we are getting more opening up a little bit of Kount in there. Is the whole difference will be the impact of mortgage just the decline sequentially in mortgage applications and how that hit or is there anything else I should be thinking about there?

No. I mean, as we talked about the fact that we saw very good organic and total growth obviously, which includes the acquisitions in our non-mortgage business. Actually, non-mortgage growth was a little bit stronger. And so, obviously because of the acquisitions in online and so what you are seeing obviously is the negative impact on mortgage – from the decline in mortgage and that would be the negative impact that you are seeing in OIS. So I don’t think there is anything more complicated in that.

Okay. Great. And then, just as a follow-up, I am not sure if there is a qualitative way to ask this, but maybe quantitatively, particularly in international and maybe some of the other locations very strong growth. But there has been generally a very good difference in terms of the reopening. And is there any way for you or how do you view this internally in terms of how much are you getting from Equifax really returning to being on offense with all the efforts you’ve made versus just, hey the markets are opening up. Is there some way for us to think about that?

Yes. It’s challenging. I would say, we are still cautious in the second half around some of those recoveries and even in the United States the delta concerns is that getting impact things is something obviously we watch. I think the thing that John and I keep an eye on is kind of deal pipelines. Where are winning in the marketplace. Where are we adding new customers. Where are we rolling out new products. Those are kind of the above market kind of growth that we are pleased with the momentum. We talked a bunch about the USIS and Workforce, but also what the teams are doing internationally on that front.

And we are accelerating NPI. As Mark talked about in his comments, the new product rollouts really, as you know, we are doing as to bring new solutions to our customers, but we are also doing it to grow our top-line and new product rollouts generate revenue as they come into market in a very positive way.

Okay. Thank you.

Thank you. Our next question today is coming from Caroline Conway from AllianceBernstein. Your line is now live.

Great. Thanks for taking my questions. So, I wanted to ask about the spread of new product introductions between USIS and EWS at the stage and specifically when we might expect to see USIS revenue contribution from NPIs that are on par with EWS? And then, my second separate question is on capital allocation. I just noted that there is a few decisions that are being made based on the business outperformance to accelerate the tech transition. There seems to be a hint that share repurchases could exceed $100 million. So just wanted to get an update on the prioritization of different capital allocation choices as we see that excess strength?

Sure. On your first question about NPIs, all our teams – all four business units are intently focused on NPIs. It’s a priority that’s really central to our EFX2023 strategy. So, I don’t think there is real difference of activity that the pipelines that John and I have a monthly review with the teams on – with the product teams around how they are working to leverage our new client capabilities to bring new solutions to market and they all have very robust pipelines and we are seeing revenues. I don’t think – we don’t disclose the vitality index by business unit. But it’s a broad based as far as everyone’s focus. As far as capital allocation, we are clearly committed to completing the cloud. We are obviously spending the dollars there and we’ve been quite consistent. Those dollars are coming down as we go through and into 2022. But we are quite significant to last three years and we are starting to really pivot – leveraging the cloud and getting the benefits from the cloud, which are quite meaningful. And there was no intended hints around changing our stock buyback. So, I don’t know you picked that up in the comments. But that wasn’t an intent. We are quite clear in launching a buyback earlier this year to offset solution from employee plans that that was a step forward, but nothing more than that. The third leg on capital allocation that you didn’t mention is M&A and we try to be very clear that we see meaningful opportunities to enhance Equifax through M&A whether it’s in differentiated data solutions which Kount check that box, Identity and Fraud, if that’s growing space that we want to be bigger in and we think we’ve got to check at the play there because of our data. Kount that check that one. Second is or third really is, strengthening our Workforce Solutions. It’s our fastest and strongest – fastest growing and strongest business and strengthening the core Workforce through HIREtech and i2Verify is key to our strategy and as we mentioned earlier, we are really focused on widening Workforce Solutions really in the Talent Solution space through data assets. Data that would be additive to our income and employment work history that we have in the database. And then, I mentioned earlier differentiated data assets, we are always looking for unique data assets that we can combine to existing Equifax data assets. So, M&A is a priority of ours and as we mentioned earlier, we’ve done five transactions this year, Kount being quite significant. But we are on the lookout for acquisitions. What I would characterize as bolt-ons that I will really check those three areas of differentiated data, identity and fraud and strengthening and broadening Workforce Solutions.

That makes sense and thank you for the clarification.

Sure.

Thanks. Our next question today is coming from Gary Bisbee from Bank of America Securities. Your line is now live.

Yes. Thanks. Thanks for the patience and staying this long. Just one quick clarification question if I could. Mark, you commented when talking about employer about the employee retention credits which I see in your Slide 23, I think it was you lumped in with the unemployment. And so, did I hear right that effectively those are credits that you are getting that you think will end at the end of this year? And is it right to think that that sort of pushes off a little bit when you’ll face the real severe declines from unemployment normalizing? Or is it – was there something else this quarter that allowed the combination of that in the unemployment claims to do exceptionally well relative to the brutally tough comp you had? Thank you.

Yes. It’s actually this quarter, but ERC was a little stronger than we thought obviously with the new credits. So difficult to forecast. And you see it was a little stronger than we thought, right? So, the unemployment claims filings were a little higher than we expected when we gave guidance initially. And you have to – as you move through the rest of this year, ERC does tend to offset a little bit via declining UC. But as we said, the ERC credits will be something that we’ll only see this year and it will be gone as we get into next year.

Alright. Thank you.

Thank you. We’ve reached the end of our question and answer session. I would like to turn the floor back over to Dorian for any further or closing comments.

Thank you for joining today. Mark, John and I look forward to engaging with you in individual meetings and in conferences and other forums throughout the summer. This conclude today’s call. Operator Thank you. We’ve reached the end of our call. Thank you. You may disconnect and have a wonderful day. We thank you for your participation today.