易速傳真 (EFX) 2016 Q1 法說會逐字稿

Good day and welcome to the Equifax first-quarter 2016 earnings conference call.

Today's conference is being recorded.

At this time, I would like to turn the conference over to Mr. Jeff Dodge.

Please go ahead, sir.

Thanks and good morning.

Welcome to today's conference call.

I'm Jeff Dodge with Investor Relations, and with me today are Rick Smith, Chairman and Chief Executive Officer, and John Gamble, our Chief Financial Officer.

Today's call is being recorded; an archive of the recording will be available later today at www.equifax.com.

During this call, we will be making certain forward-looking statements to help you understand Equifax and its business environment.

These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from our expectations.

Certain risk factors inherent in our Business are set forth in our filings with the SEC, including the 2015 Form 10-K and all subsequent filings.

During this call, we will be referring to certain non-GAAP financial measures, including adjusted EPS attributable to Equifax and adjusted EBITDA margin, which will be adjusted for certain items that affect the comparability of the underlying operational performance for the first quarter of 2016.

Adjusted EPS excludes acquisition-related amortization expense, as well as the transaction and integration expenses associated with our acquisition of Veda.

Adjusted EBITDA margin is defined as net income attributable to Equifax, adding back income tax expense, interest expense net of interest income, depreciation, amortization, and the impact of certain one-time items, including the transaction and integration expenses associated with our acquisition of Veda.

These non-GAAP measures are detailed in the reconciliation tables which are included with our earnings release and are also posted on our website.

Also refer to the investor presentations which are posted in the investor relations section of our website for further details.

Now I'd like to turn it over to Rick.

Thanks, Jeff, and good morning, everyone.

Thanks as always for joining us this morning on the call.

Our first-quarter performance certainly exceeded our expectations, and further underscores the strength and the ability of this management team to consistently deliver results that meet or exceed the commitments we make to you, our shareholders.

And not only do we have an experienced leadership team, but the entire organizational rhythm is geared to the management disciplines we've created and built together over the last 10 or 11 years.

Those disciplines are NPI, enterprise growth initiatives, lean, growth playbook, talent management, et cetera.

I can tell you one thing: This team is hungry and competitive to continue the winning streak that they have been on now for a number of years.

Our first-quarter results are noteworthy, as they are compared to a very strong performance in the first-quarter 2015.

2016 first quarter was a record quarter, which is on top of a record year in 2015.

For the quarter, total revenue was $728 million.

That was up 12% on a reported basis, and up 15% on a local-currency basis from the first quarter of 2015.

Organic, constant-currency revenue growth was very strong, up almost 11% over last year.

Also in the quarter, foreign exchange created a $19 million year-over-year headwind.

The adjusted EBITDA margin was 34.2%, compared to 34.5% in the first-quarter 2015, and that was in line with our expectations when we guided for the full year during our fourth-quarter release, and John will talk about that in detail, as will I, should you have any questions.

Adjusted EPS was $1.23, up 15% from $1.07 last year, and significantly above the upper end of our guidance range.

As always, before John gives you the financial details, I would like to briefly cover some of the highlights for the first quarter.

As I always do, I will talk about the business units specifically first, and then transition into some corporate-level highlights, and then John will take the financials.

Starting obviously with USIS, they delivered a solid 4% revenue growth in the quarter.

Double-digit growth in fraud, automotive, commercial and mortgage resellers helped to offset slower growth in Mortgage Solutions, which, as you know, last year first quarter was a really, really strong quarter for us.

New product innovation is expected to have significant impact on USIS's future growth.

While some of this is being driven by Cambrian, the initiatives in USIS, like the Company, are very, very broad based.

Our current estimate, sticking with USIS, for 2016's class of new products are expected to have three-year revenue that is double the estimate of our 2015 class.

We will talk more about NPI at the Company level later in my comments, but it is off to a very, very good start for USIS.

Also, the pipeline of new products is much more robust than prior years.

Our current pipeline is estimated to deliver significantly more revenue -- incremental revenue growth, reflecting both greater market demand and our increasing investments in products.

Cambrian, which you have heard now about for a number of quarters, is having a very positive impact with our customers.

Since launching Cambrian, our mix of projects has shifted significantly towards multi-data sources and deeper insights for many of our customers' traditional decisioning activities.

Data extraction and analysis time have been reduced by well over 50%.

And what that allows us to do is fail fast; and as I've talked before, it shortens the cycle time to bring new products to market.

Initial applications have addressed customer needs across diverse verticals, including banking, auto, telecommunications, that is enabling us to leverage our entire customer base with unified technology and skill sets.

Our work with Fannie Mae on trended data is on track and expected to go live.

As we committed to you earlier in the year, it will go live the end of June, first of July of this year.

IT integration with Fannie Mae and their underwriting platform for trended data is complete, and our global operations team is in the final stages of establishing their support readiness program, again, anticipating an end of June, early July launch.

USIS is expected to have another strong year in 2016, with growth at the lower end of the long-term range of 5% to 7%, despite our continued expectations for a flat to down mortgage market in 2016.

EBITDA margins are expected to be at or above 50% for the year, which is slightly better than what we were expecting as we entered 2016.

On to International -- they delivered 30% local-currency revenue growth, benefiting from broad-based organic growth which was above the upper end of the long-term growth model, which is 8% to 10%.

Their growth was also obviously contributed from the support of the acquisition of Veda, and John will go into a lot of detail on that.

Within International, NPI has been and will continue to be an important growth driver for them; innovation in International is very broad based.

For instance, in the first quarter, over 60% of new product revenue was driven by our customers' core decisioning activities.

The remainder was driven by new solutions for high-value offerings in ID, authentication, data 360, fraud and debt management.

The relationship with the UK government for our Debt Management Services is strong, and the initiative is off to a very good start.

We have five central government agencies operationalized, including the HMRC, which is, as you recall, the equivalent to our IRS.

This represents most of the debt that has been placed for collections.

We have placed over $800 million of debt with various agencies who are performing the analytics and the collections effort.

Our data is fully integrated into the process of segmenting consumer and business accounts to determine which agency is best suited to collect that particular segment.

Revenue in International's four largest verticals, which are financial institutions, telco's, government and SMEs, grew a very strong 12% in the quarter, which is very broad based across verticals and countries.

The decisioning platforms, analytical services and debt management revenue across International grew a very solid 19% in the quarter.

These high-value solutions are deepening our customer relationships, and strengthening our competitive position globally.

Many of you know we've delivered very healthy double-digit local-currency growth in Latin America for a number of years, and we expect to do so again this year.

Although the significant devaluation of the Argentine peso will have a negative impact on our reported results in 2016, it appears that Argentina's new government is moving in the right direction to restore credibility in the financial markets.

In fact, I just returned from Argentina, and spent some time with our customers, government officials and economists, and the outlook for Argentina in the next two, three, four years is as strong as I've seen it in my 10.5 years here.

Across the region, in Latin America we have a very good management team, a very strong market position, and our strategy continues to resonate well with our customers.

Finally, the integration of Veda is going very well.

Our primary focus at this point is three-fold: one is the thoughtful integration of the backroom processes; two, deploying products and capabilities from around the Company that will add value to our local customers; and three, ensuring that all of our customer-facing teams in that region continue to service our customers well.

We continue to expect International to have a strong 2016.

Organic revenue growth should be above the upper end of their long-term model, again, which is 8% to 10%, with EBITDA margins improving sequentially throughout the course of the year as planned.

On to Workforce Solutions -- they delivered an outstanding 21% revenue growth and over 200 basis points of EBITDA margin expansion in the first quarter.

Workforce Solutions continues to grow well above the upper end of our multi-year model of 9% to 11%.

That's really being driven through strong execution of their core strategic growth initiatives, which are adding records to the database, new product innovation, pursuing new growth opportunities in different verticals such as automotive, credit card, healthcare and government.

The growth continues to be very broad based across many verticals, penetrating new customers and offering new products.

Demand for the Affordable Care Act solutions, known as ACA, with solutions for employers continue to be strong, and our current outlook for the year is now ahead of the expectations we stated earlier in the year.

And you may recall that those expectations earlier in the year expected very significant growth over 2015.

So that strength is getting even stronger as we move through 2016.

We've also identified other interesting opportunities to help employers with their ACA compliance.

That includes things like the IRS Forms 1094 and 1095, and even beyond that.

Workforce Solutions is emerging as a leader in what could be called compliance as a service to help employers solve increasingly complex compliance matters.

A suite of services has expanded, and we continue to look for new opportunities to align our services with these emerging needs.

An example that is an emerging need is new regulation coming out around overtime pay changes, and we are looking at leveraging our ACA analytics platform to solve those problems as well.

EWS's NPI vitality index is expected to be very strong again this year, reaching approximately 13%.

Their growth focus this year is on accelerating record growth in the Work Number database, deepening market penetration in targeted markets, again, such as auto, car and government, and maximizing opportunities to help employers with their compliance needs.

[Fourth], also continuing to solve employers' complex HR compliance challenges.

Workforce Solutions should have another outstanding year in 2016, with revenue growth well above their long-term range of 9% to 11%.

EBITDA margins should be in the high 40%s, just shy of the long-term target we gave to you earlier in the year of 50%.

On to Global Consumer Solutions -- they also had an exceptional quarter with 16% local-currency revenue growth and 100 basis points of EBITDA margin expansion.

Indirect revenue was up over 50%, as the team continues to sign large deals with established companies who seek to deepen and broaden their relationships with consumers.

Our customers and our pipeline is robust across multiple industries, including banking, retail, consumer products and services, as well as our expanding relationship that we established last year with Credit Karma.

Mid-single-digit revenue growth for our direct-to-consumer activities was consistent with our expectations, and largely driven by higher average revenue per subscriber in the US and account acquisition outside the US.

Global Consumer Solutions' first-quarter performance was outstanding, and we now expect that they, too, will comfortably exceed their long-term growth target, comfortably delivering double-digit growth for the year.

The adjusted EBITDA margin for the year is expected to exceed 30%.

Before I go on to John, let me just give you a couple of highlights at the corporate level, and then John will give you the financials.

Our enterprise growth initiatives are off to a very good start this year.

Three of our four transformational initiatives are: one, developing the Work Number into a global exchange; two, disrupting innovation by expanding our Cambrian platform throughout our global footprint; and three, unifying our Global Consumer Solutions business with a single operating platform around the world that we call Renaissance.

Let me jump into each of those for a second.

We've already completed the scope and the timeline for creating an income and employment verification exchange in a select group of our larger markets.

We have a platform, we have a strong customer demand, and we will be moving forward with this effort throughout 2016 and beyond.

The initial focus for globalizing Cambrian will be in Canada, Argentina and Australia.

Canada will be the first, while other geographies will complete their initial assessment and define their requirements.

We will give you an update on other countries as we exit 2016, but that bodes well for growth opportunities in 2017, 2018 and beyond.

Our global IT platform supporting Global Consumer Solutions, again, called Renaissance, is expected to go live this year.

After deployment in our core markets of the US, Canada and UK, we will evaluate other market opportunities, obviously including Australia and Latin America.

Cambrian has substantially enhanced our ability to provide unique, high-value insights to our customers, and it positions us well for the future.

The platform can easily incorporate very contemporary analytic technologies, ie, machine-learning algorithms, analyze all types of unstructured data, and provide customers with dashboards customized to their specific needs.

In fraud, we have applied machine-learning algorithms to increase prediction by over 20% by reducing false positives or know your customer and anti-money laundering, we're incorporating unstructured data to reduce false positives by approximately 60%.

For one of our large customers, we're providing them with access to over 50 metrics on over 3 billion trade lines from their customers.

We have created a dashboard portal that will be updated on a periodic basis.

These types of services uniquely enable us to further deepen our customer relationships, and position us as the premier source of insights on their consumers.

Although we're in the early year, our new product pipeline for 2016 looks very promising.

We expect year-three revenue from our 2016 launches to be up significantly from 2015 product launches and their three-year revenue expectation, which, as most of you may recall, 2015 class was up significantly over 2014.

Two very solid product classes will fuel growth through 2018.

Our work with our customers leveraging our operational experience with lean is creating great client stickiness.

The activities we're helping our clients with are numerous, and include such things as mortgage lending, collections, auto lending, marketing and employee onboarding.

So, again, the activities are far beyond their interaction with us just trying to make there processes more efficient.

We have also extended the program to International now, and have either completed or have projects in the pipeline in countries such as the UK and Canada.

We have a number of clients where we have repeat engagements, including two where we have had five separate engagements at one company since 2014.

Increasingly, client lean is making Equifax a trusted advisor in times of change.

With these relationships, we're able to increase utilization of our products and services across the enterprise, identify new customer opportunities, reaffirm the value of our products and services, and support and strengthen long-term relationships.

Our broad-based performance continues to position us very nicely to exceed the targets we set for ourselves and have committed to our employees, our customers, shareholders and consumers.

We are now entering the second quarter with strong momentum, and in many respects have yet to fully realize the benefit of a number of these strategic initiatives that were expected to make meaningful contributions, not only to this year, but again to 2017 and 2018.

With that, let me turn it over to John for the financials.

Thanks, Rick, and good morning, everyone.

As before, I will generally be referring to the financial results from continuing operations represented on a GAAP basis.

As we indicated previously, with the Veda acquisition, we will start focusing on adjusted EBITDA margin to more consistently present the operating performance of the segments and the Company as a whole.

Adjusted EBITDA margin has been defined as adjusted net income, plus depreciation, net interest expense and taxes.

At the segment level, adjusted EBITDA margin is adjusted operating income, plus depreciation, plus net equity and other income.

Given the change in our reporting structure, this metric will provide an improved understanding of segment performance, as well as assessing their progress against our multi-year targets.

The GAAP/non-GAAP reconciliation attached to our earnings release provides a more detailed description of what is included in the adjusted EBITDA margin.

As you will recall, we will be excluding Veda transaction expenses and integration expenses incurred through 1Q 2017, the first year after the Veda acquisition, from our adjusted EPS and adjusted EBITDA margin.

In 1Q 2016, total Veda transaction and integration pre-tax expense was about $22 million, virtually all of which was transaction related.

$16 million of these pre-tax expenses are reflected as operating expense.

Of this $16 million, $12 million are investment banking, legal and accounting advisor transaction fees, and impact general corporate expense.

The remainder of the operating expense is acquisition-related employee compensation expenses at Veda, which is included in the International operating segment.

Net FX losses related to Veda financing were approximately $6 million in the first quarter, and are reflected as other income.

As a reminder, we recognized $5 million in FX gains related to Veda financing in 4Q 2015.

Looking forward, the remaining Veda transaction expenses will be incurred in 2Q 2016, and should be relatively smaller, principally final legal and financial advisory fees related to completing required government filings and FX losses of approximately $3 million related to completion of the extinguishment of certain Veda debts.

Veda integration expenses will increase in 2Q 2016 as integration activities accelerate.

Total Veda transaction and integration pre-tax expenses in 2Q 2016 are expected to be approximately $7 million, which includes the $3 million in FX losses.

Now let me turn to the business units' financial performance for the first quarter.

US Information Solutions revenue was $295 million, up 4% when compared to the first quarter of 2015, and consistent with our expectation.

Online Information Solutions revenue was $218 million, up 5% when compared to the year-ago period, reflecting double-digit growth in commercial information and fraud.

Mortgage Solutions revenue was $32 million, up 1% compared to Q1 2015.

Total mortgage-related revenue in USIS was up 7% in the quarter, which compares favorably to the Mortgage Bankers Application Index, which was up 1% in the first quarter.

USIS total mortgage revenue growth continues to outpace overall mortgage market growth, consistent with their historical performance.

Although the mortgage market was slightly better than we anticipated for the quarter, our full-year outlook for mortgage origination remains the same as last quarter at flat to down slightly.

On to Financial Marketing Services, in which revenue was $45 million, up 1% when compared to the year-ago quarter.

The adjusted EBITDA margin for US Information Solutions was a strong 48.7%.

As expected, this was down from the very strong 50.8% delivered in the first quarter of 2015, reflecting the very strong mortgage market in 1Q 2015.

In addition, this decline reflects increased legal expenses versus 1Q 2015.

Legal expenses incurred in any given period can be choppy, and excluding this increased legal expense, the adjusted EBITDA margin for 1Q 2016 would have been down only slightly versus the record levels of 1Q 2015.

Workforce Solutions revenue was $180 million for the quarter, up 21% when compared to the first quarter of 2015.

Verification Services revenue of $99.2 million, up 16%, was driven by strong double-digit growth across mortgage, government, auto and pre-employment market segments.

This reflects increased penetration with verifiers, as well as continued growth in records to the database.

Employer Services revenue at $80.9 million was up 29% from last year.

Our traditional Employer Services businesses of unemployment claims, WOTC, I-9 validations and onboarding performed well, with combined revenue growth consistent with our long-term expectations in the mid-single digits.

Workforce analytics had a very strong quarter, as 1Q 2016 and 2Q 2016 represent the first in which employers are providing Form 1095-C to employees as part of their annual tax filings and as required by the ACA.

As these forms are principally delivered in the first half of the year, we expect this strong growth in workforce analytics to continue into 2Q 2016.

The Workforce Solutions adjusted EBITDA margin was 49.5%, up from 47.3% in 1Q 2015.

This reflects the very strong growth of our higher-margin verifier and workforce analytics businesses.

Revenue from our combined USIS and Workforce Solutions businesses, which represent our total US B2B business activities, was $475 million, representing organic growth of over 10%.

International's revenue was $158 million, up 17% on a reported basis, and 30% on a local-currency basis.

Constant-currency organic revenue growth, which excludes Veda revenue, was slightly above our long-term range of 8% to 10%.

By region, Europe's revenue was $61 million, up 10% in US dollars and 15% in local currency.

Latin America's revenue was $43 million, down 11% in US dollars, but up 15% in local currency.

As you probably know, Argentina's average FX rate in 1Q 2016 depreciated almost 40% from 1Q 2015.

Argentina, when combined with the impact on the currency in Uruguay, contributed almost 75% of the negative foreign exchange impact on revenue in Latin America.

Asia-Pacific revenue was $28 million, which is comprised mostly of revenue from Veda, as well as revenue from NettPositive and our TDX debt management operations in Australia.

Our current debt management revenue in Australia is very small.

As a reminder, the Veda transaction closed on February 24, with Veda being a part of Equifax for about 40% of the quarter.

Canada revenue was $28 million, down 10% in US dollars, but flat in local currency.

We saw continuing improvement in Equifax Canada during the second half of 2015, both in terms of revenue growth and, importantly, the pipeline of new products we expect to begin to deliver revenue later in 2016 and 2017.

This flat performance in 1Q 2016 reflects the relative weakness of the Canadian economy we referenced in our last earnings call.

We expect improved performance as new products ramp later this year.

For the first quarter, International's adjusted EBITDA margin was 25.3%, and as expected, down slightly from 1Q 2015.

The slight decline reflects the benefit of adding higher-margin Veda, as well as improved EBITDA margin performance and debt management, which was offset by a decline in EBITDA margin in Latin America.

This decline in Latin America is due to the substantial weakness of local currencies.

A portion of our cost is in US dollars, which does not benefit from the devaluation of the currency.

Over the remainder of 2016 in International, we expect to show EBITDA margin growth reflecting revenue growth in our high-margin countries, coupled with the cost benefits of the regionalization program started last year.

Global Consumer Solutions revenue was $95 million, up 14% on a reported basis, and up 16% on a local-currency basis.

Global Personal Solutions showed growth across all channels -- DTC, indirect and direct -- and the strong growth in the quarter driven principally by DTC and, to a lesser extent, our other channels.

For the first quarter, the adjusted EBITDA margin was 30.8%, up 100 basis points from 1Q 2015.

This reflects strong revenue growth and leverage against GCS support costs.

In the first quarter, general corporate expense of $71.6 million was in line with our expectations, and down 9% from last year.

One-time items impacted both 1Q 2016 and 1Q 2015.

As I mentioned earlier, Veda integration expenses impacted corporate expense by just over $12 million in 1Q 2016.

As you will remember, in 1Q 2015 we executed an organizational restructuring which impacted corporate expense by $23 million.

Excluding these items, general corporate expense was approximately $59 million in 1Q 2016, an increase of about $4 million or about 8%.

For the second quarter, we expect general corporate expense to be in the range of $55 million to $60 million, including the Veda integration expenses.

The adjusted EBITDA margin at 34.2% was down from 34.5% in 2015 and consistent with our expectations for the quarter.

The reduction reflects the expected declines in USIS and International that we discussed earlier, partially offset by very strong EBITDA margin performance at both Workforce Solutions and Global Consumer Solutions.

We expect to see year-over-year growth in EBITDA margins in each of the second through fourth quarters, and continue to expect 2016 EBITDA margins to be up approximately 75 basis points from the 34.7% we achieved in 2015.

Our GAAP effective tax rate for the first quarter was 33.5%, which was in line with our expectations.

Our adjusted effective tax rate, excluding the tax impact of the Veda transaction and integration expenses, was 32.7%.

This was consistent with the 33% guidance we had provided.

For the remainder of 2016, we expect our effective tax rate to be slightly below this level, approaching 32%.

Capital expenditures for the quarter were $40 million.

We continue to expect capital expenditures for the year to be at the high end of our long-term range of 5% to 6% of revenue.

This reflects expected spending related to the integration of Veda.

Operating cash flow for the quarter was $90 million and consistent with our expectations.

Operating cash flow was down from 1Q 2015 due to working capital movements.

We continue to expect strong growth in cash flow year over year for 2016.

Total debt in the quarter was $3.08 billion, slightly below our expectations.

Yesterday we filed a Form 8-K with the required Veda financial information, as well as a new shelf registration statement which will give us the flexibly to take advantage of market windows to refinance a portion of the Veda acquisition debt.

As we indicated last quarter, we will suspend our share repurchases during 2016 and focus our very strong cash flow on debt reduction and returning our leverage to a level consistent with our target leverage.

We will, however, continue with acquisitions beyond Veda in 2016, with a goal of delivering 1 to 2 points of additional ongoing revenue growth.

Finally, you'll recall that in our 2016 calendar-year guidance, we had indicated that we expect revenue from Veda of $220 million to $230 million, and that we expected a benefit of Veda to adjusted EPS of $0.10 to $0.15 per share.

In addition, when we provided our outlook for 1Q 2016, we did not include any impact from Veda.

As we indicated at that time, once we had completed the initial integration of Veda into our financial statements and had progressed in the transition of Veda to US GAAP accounting, we would provide an update to these estimates.

Based on the completion of this work to date, we're increasing our full-year expectation for EPS accretion to approximately $0.20 per share.

Our expectation for revenue in 2016 is now $230 million to $235 million, which reflects improved growth expectations, partially offset by a larger negative impact on revenue recognition from the movement to US GAAP accounting.

Veda's performance in 1Q 2016 was consistent on a pro rata basis with these expectations.

Acquisition amortization in 2016 from the Veda acquisition is expected to be approximately $65 million.

Now let me turn it back to Rick.

Thanks, John.

As I give you guidance for the second quarter and for the balance of the year, just to clarify, that does not assume any additional M&A at this juncture.

So it's obviously the full year of Veda in the numbers, plus organic growth.

And as John alluded to in his comments, we are expecting to do additional tuck-in M&A this year.

That is just not in the guidance I am about to give you.

I wanted to make sure that was clear.

For the second quarter, we're increasing our outlook for both revenues and adjusted EPS.

We now expect revenue, including Veda, to be between $795 million and $805 million, reflecting constant-currency revenue growth of 20% to 22%.

That's partially offset by 3% of FX headwind.

Adjusted EPS is expected to be between $1.34 and $1.36.

That is up 17% to 18% over 2015.

Excluding $0.03 per share of negative impact from FX, this reflects constant-currency organic EPS growth of 19% to 21%.

With our strong first-quarter performance and outlook for the second quarter, we are also increasing our full-year outlook.

For the year, we expect revenue, including the impact of Veda, to be between $3.05 billion and $3.15 billion, reflecting constant-currency revenue growth of 17% to 21%, again, partially offset by 2 to 3 points of FX headwind.

This is up from the previous guidance of $3 billion to $3.1 billion, and will move us nicely above the high end of our multi-year financial model of 6% to 8% organic growth.

We also, as I mentioned earlier, expect potential additional growth through acquisitions as our pipeline is strong, but not included in that outlook.

Adjusted EPS for the year is expected to be between $5.15 and $5.25, which is up 14% to 17% year on year.

Excluding approximately $0.12 per share of negative impact from FX, this reflects constant-currency EPS growth of 17% to 19%.

This, too, is up from the $4.95 to $5.05 that we guided to during the fourth-quarter earnings call a few months ago.

We also continue to expect -- as John had mentioned, we expect our adjusted EBITDA margin to continue to expand by approximately 75 basis points for all of 2016.

With that, operator, I would like to open up to any questions we may have from our audience.

(Operator Instructions)

Manav Patnaik, Barclays.

Thank you.

Good morning, gentlemen, and congratulations on the strong start to the year.

I think, if I heard you right, you made some comments around trying to expand Workforce Solutions to other regions and you already had some increase in leads.

I was hoping you could elaborate a bit more on that and what sort of timeline we should expect for some sort of replication of the database you have here in those regions.

Sure, Manav.

It's an important part of our multi-year strategy.

As I alluded to in the prepared comments, we have the technology platform exchange that will be moving to different parts of the world.

We have strong customer interest.

We are going to be very focused in the countries in which we go.

That process is already underway and places like Australia, Canada, the UK and India are ones that we are moving on right now.

Think of it as a multi-year contributor versus something where we all wake up tomorrow and there is a dramatic change.

This is going to be a nice contributor to us.

It is not contemplated -- when I talk to our investors and to [Uminov] and others about multi-year financial outlook for EWS, that revenue was not contemplated, so this would be on top of that growth.

I have met with a number of customers internationally, as did Dan when Dan was in the role and now as has Rudy, and I can tell you, the interest is very, very high; and we have the unique technology to satisfy those needs in those parts of the world.

Got it; that's helpful.

And I guess it seems like you emphasize the guidance, not including any future tuck-ins.

Is that -- am I reading that too much into saying there is probably a pipeline in the near term we should see and maybe which areas we should expect that in?

Yes, our pipeline's good.

My whole focus to date has been getting Veda integrated properly.

The team's focused on that.

Bringing products to Australia, New Zealand, and they are doing that.

But at the same time, we have a strategy.

That strategy has resulted in a pipeline and we are moving forward on that.

So while it is not in the guidance, yes, to be very, clear, you should expect that we do a few strategic tuck-ins throughout the balance of the year.

Last one for me, and it sounds like, obviously, there's a lot of internal momentum going on at Equifax.

Your peers are doing pretty well as well.

Could you provide some color on how we should maybe try and understand the high growth rates in terms of [extra send] coming from macro tailwinds or industry tailwinds versus the remaining coming from pure internal innovation?

Our long-term model is 1 or 2 points of market kind of growth.

And, as you know, the balance of the growth is what we call initiatives which are internal organic stuff.

I would say the markets around the world are consistent with that model.

You are seeing some areas of good growth like automotive in the US, but I would not say there's anything that is significantly changing the market dynamics of growth beyond the 1 or 2 points that we talk about and have talked about for years.

So it continues to be largely driven by internal initiatives, including NPI, EGI and others.

Andre Benjamin, Goldman Sachs.

I wanted to talk a bit about Workforce Solutions.

Clearly the growth there has been positively surprising, [exceeding] your own expectations.

Could you maybe help us frame what the TAM would look like there over, say, the next five years?

And then where you believe you are the most penetrated today versus just getting started?

I continue to talk about [EWS] as being an unbelievable growth story for us, not just since we bought it nine years ago, but over the next 10 years.

And I like to describe it, Andre, as being very early stages of its growth.

What I mean by that is, we have talked to you and others about our path to 300 million records and we are well on our way to that.

That is a huge lever for growth.

We have talked about further penetrating verticals in the United States.

And you heard John talk about great growth, broad-based growth in government collections, auto, car, mortgage, with the penetration level there's so early, it was many, many years of growth still to be had there.

Third is the analytics.

I alluded to that, John has alluded to that.

It's growing dramatically year on year.

It was a good growth driver last year.

That has a number of years of growth left in it, and now we're now trying to take that platform and take it to other areas I alluded to, overtime pay as an example, and IRS and 1094 and 1095.

Lastly, is taking the work number exchange and technology platform we have and capabilities globally.

So when you couple that together, there are so many years of growth left in that business.

Is it always going to grow with -- what was it, 21%, John, in the first quarter?

But we gave you a very robust multi-year growth, and I clearly expect that business, for as long as I can see, to grow within that range that we are committed to.

On the [Peesal] business, you mentioned you continued to sign more partnerships there.

How do you think about the sequential growth rate for that business as the partnerships that you've signed recently scale and you continue to add new ones?

And then based on the list of partners that I am sure you have that you can continue to add to your list of partners, how do we think about how sustainable it is to keep growing above the longer term rate that you have laid out?

I gave you guidance for this year.

It's going to be a very good year for Peesal.

They've signed up.

As you know, we have a Credit Karma relationship from last year.

We've got another big player that has been publicly announced, they announced it last year in LifeLock.

But then we have all these other great indirect partners that these guys are signing up.

So I'm very bullish for Global Consumer this year, they will be at or nicely above their multi-year model.

And, again, Dan is doing a great job now of taking that capability and not just looking at UK, Canada, our two international platforms, but looking at other opportunities in other parts of our globe that we can take that Renaissance platform we earlier referred to, which is a core platform, and bring it to other markets and grow that side of the current footprint.

Brett Huff, Stephens.

Good morning, and congrats on a nice quarter.

On the USIS, I think you walked through a little bit about why that revenue growth decelerated, but can you give us more commentary on that core business here in the US, both how you are seeing the macro maybe by vertical or something like that?

And also what your innovations are really focused on there that is going to maybe reaccelerate that growth the back half of the year?

Sure.

I will jump in and, John, if I miss something, please add to it.

One, I tried to be very direct in my guidance when we wrapped up 2015 when I talk about USIS knowing that 2015, first quarter and really the first couple of months of the second quarter were very, very, very strong.

The growth rate for mortgage in 2015 over 2014 in USIS in the first quarter was extremely strong double digit.

We knew there was some headwind there.

So when I guided for USIS, or we guided for USIS, I said it would be at the low end, if not below the low end of a multi-year range.

So it came in exactly where we expected it and it is largely driven by those comps in mortgage.

But it remains very healthy; got those first two quarters of headwind that it's going to have to get through.

The great thing is we've got great balance across the portfolio.

Number two is if you think of NPI, it takes a while to gain momentum.

And they started building some momentum late last year, late to mid last year.

That momentum is continuing now, so the number of products they have, like the rest of the Company, are broad but across many verticals.

Obviously the one we've talked about with the investors that will pay big dividends in the second half of the year is the launching of trended data for USIS.

And that goes live, as I alluded to, in the third quarter of this year.

Automotive continues to be a good market for us in USIS; everything else I described is a stable economic environment.

I think John did a great job.

When you think of the US business, USIS, we separate two entities.

We call one EWS; we call the other USIS.

You think about many of the activities going on when you compare ourselves to others in the US marketplace.

A fair way to look at it, I think, for you guys is to compare either all of EWS in with USIS or you take the Verification Services and Analytics, which is healthcare, and look at it that way.

When you look at it that way, as John said, you are getting double-digit growth.

And that's the way we look at the business.

We bring all of our products to bear to our customers and it doesn't matter if it is an analytics for healthcare company, if it is a work number record or if it is fraud, identity, management or credit file.

They are all solving problems for customers in the US, and that is a strong, healthy, double-digit growth.

We saw great growth in identity and fraud all last year and again in the first quarter of this year.

Very good growth in commercial last year, and again in the first quarter of this year.

As Rick said, very broad-based and not forgetting at very high EBITDA margins.

Last year's EBITDA margins were 51%, adjusting for legal, almost at that level this year.

Very, very strong performance.

Great; that's helpful.

One other question from me.

You gave us the $800 million of debt from the UK that you've been working through.

Any more insight on the ultimate size of that if you have more line of sight to that?

And any broad thoughts on economics to you all and how that revenue model might work as it evolves?

It's going well, Brett.

So overall the debt management platform, which, as you guys know by now, was TDX and it was this business we call [Infinix], which we bought in Mexico.

So we're combining those capabilities; we're taking up those offerings global.

So the growth rate is beyond just the government contract in the UK and we're gaining traction around the world.

And hopefully we will have some nice wins to report later on in the year outside of the traditional footprint.

But specific to the government contract, it is ramping up as expected.

As John alluded to, and I have alluded to in the past, as that revenue continues to ramp, the international EBITDA margins will continue to expand nicely.

It is on track as expected and will be a nice contributor this year to top line and profits.

We just continue to caution people that given it's our first big contract with the UK government like this, that in terms of the level of growth rate, we're just going to have to tell you what the growth rate is going to look like as it occurs.

Because this is the first contract of this size we've had with the government like this.

Otto Garrett, Deutsche Bank.

Hi, congrats on the great quarter.

One quick clarification on your guidance for Veda.

You increased the guidance for the year there to $230 million, $235 million.

That is for the balance of the year -- that does not include your contribution in the first quarter?

That is for the full year.

$235 million is for the full year.

Also looking at your relationship with Fannie Mae, saw a release earlier in the quarter that you guys expanded your relationship there to provide a monthly credit updates for their Connecticut Avenue risk securities?

Can you give us the size in there, what the contribution of that might be?

Small.

David Togut, Evercore ISI.

Good morning, and congrats on the superior performance in the quarter.

A quick question on the Employer Services business.

I am used to thinking about this business as being countercyclical and typically a slower growth business than the verification business at this point in the cycle.

Is this because of the contribution you're now seeing from Workforce Analytics that you're getting this high 20%s growth or are there other big drivers that would tend to modulate the counter cyclicality of that business?

That is a good question and there's no doubt about it that the analytics push that we have had is fueling great growth there and will continue to fuel great growth for the next couple of years.

It is also changing mindset.

We used to always assume that the employer business was there to feed records into the verification side and it would be countercyclical, so if unemployment claims rise, that business would grow as it did in 2009, 2010.

We've changed our views there.

We've been investing over the years fairly heavily in platforms and capabilities.

We changed the mindset of the leadership team there to think of it as a growth business.

So what you are getting is clear growth in analytics, but also growth in the core and non-analytics businesses with an employer.

Not at the same rate as analytics, but when you put the two together, you get really good growth.

Just specific to the first quarter, as we mentioned, right?

Excluding analytics, the other businesses grew mid single-digit, which is consistent with our expectations.

So great growth from Workforce Analytics.

Please do remember, in general, Employer Services is stronger in the first quarter because of work opportunity tax credits.

The revenue there is skewed toward the front half of the year.

Understood.

Thank you.

Congrats on the strong quarter.

Gary Bisbee, RBC Capital Markets.

If I could first follow up on that last one, you mentioned the forms related to the Affordable Care Act hitting in the first and second quarter.

How does the revenue model work for the Workforce Analytics?

Is there a separate billing for that, so the revenue would then fall off in the second quarter?

And should we think about that as within the year-to-year growth calculation or is the seasonality of that going to change a lot?

Let me jump in.

It was not the analytics that was unusual in the first quarter, it was the tax credits.

Workforce Analytics, which is part of employer, the general seasonality of their revenue will be higher in the first quarter and second quarter and then lower in the back half, specifically because the revenue model, the revenue is generated based on the level of activity executed.

And it is a deferred revenue model, right?

So any revenue that -- any work that is done upfront prior to delivery of the product had to be put on the balance sheet and amortized over the period in which the product is delivered.

So you end up seeing more revenue during the period of delivery, which is the first half of the year and less revenue in the back half.

Was that the question you were getting to?

Yes.

So I understand that mechanic historically, is that different now?

Because I think you referenced --

No, it is just bigger.

It is just way bigger, right?

The business is growing dramatically, so that dynamic is just bigger in the overall growth rate of the Employer Services segment.

Great; thanks.

The bigger question, you referenced the second straight year of sharply higher expected revenue from the innovation pipeline.

Are there a couple of factors that have led to such robust improvement for the last few years and what are they?

It seems like you have had such strength.

I don't know if it's just the culmination of years of focus -- focusing on and talking about innovation or technology has changed or more places where you are selling multiple services.

What are the key factors that have driven this?

And is it sustainable or do you think you have just hit a spot that is great but then will normalize at some point?

I think if you think about it, one, it is the maturation process.

We have been in NPI in the Company, I think, since 2006, so as you mature, it just becomes more effective.

Two, we launched, as you recall, NPI 2.0 maybe two years ago.

We revamped [the enthusiasm] approach towards NPI.

Clearly that's paying dividends as you get other -- more businesses into the game in a broader way.

We talked that USIS now ramping up.

We've talked about Canada ramping up in NPI.

And lastly, you can't ignore the fact that the technology platforms we've invested in that facilitate the ability to build products faster, like Cambrian, building platforms like TotalView which allow our customers to consume multiple products quicker.

So the combination of maturation NPI 2.0, plus the technology platforms like Cambrian and TotalView that we've invested in, are all facilitating unbelievable strength in innovation around the world.

One last one, how much of that also is the vertical expansion?

Is that technology and what you just described more important or do you say today versus two years ago having a lot more progress?

That is a great question, Gary.

What you end up doing when you verticalize the Company as we have done in the last five or six years is you now have domain expertise in the vertical, so you are building specific products with great insight and knowledge to solve the problems in those verticals and we couldn't do that before.

There is no doubt that having domain expertise in verticals facilitates greater knowledge and has faster or more NPI.

Tim McHugh, William Blair & Company.

Most of my questions have been asked, but just quickly, the ACA relay to revenue, after this first year push, how optimistic are you about being able to continue to grow on top of that?

Or is this a one-time step-up as you look at it?

Tim, it is not a one-time step-up.

I tried to give you some text around that in the prepared comments, but it is a great growth this year.

We are going to continue to expand the capabilities.

I talked about 1094 and 1095 with the IRS.

We talked about bringing the platform to overtime pay compliance; we've talked about bringing -- once we get the work number up and running internationally, bring in the [inwurst] platform we built for ACA in other parts of the world.

It is an integral part of our growth strategy for EWS globally.

The customer base that we can apply the core ACA capability to is broader than we currently want, so there are more customers just within the core application.

Are you, at this point, with -- I know there was a number of companies that provided ACA solutions for basically rushing to try and get fully implemented with all their clients in time.

Were you able to do that or is there still even a backlog of clients you haven't, I guess, weren't fully implemented with that will continue to help drive the growth as well?

There is no doubt there are other players in the marketplace.

We think we have a unique value proposition versus many of them, but there's some good competitors.

Number two is the pipeline continues to grow.

Number three is when the fines start to be levied to these companies later on this year, that's incurring an awareness and concern that's going to facilitate even a stronger pipeline as we exit this year and go to 2018.

Toni Kaplan, Morgan Stanley.

You mentioned that the Veda integration is on track.

Just trying to think about how would you expect the opportunity of building out the products in Australia will take basically cross-selling some of your products that you have in other regions?

I imagine it might be in multi-year endeavors, so how should we think about the incremental growth in the outer years?

Toni, we think about the Company as being a very well-run Company an established Company, a Company that's respected in the regions in which they play.

So we're buying really good assets that's got good growth.

We have already given a multi-year model for that which is at or above all multi-year organic growth model.

Two, there will be some M&A opportunities as we get to know that part of the world better which will add to the growth.

Number three is bringing products like our fraud products, Cambrian, TotalView, Interconnect and others, Work Number, Peesal, to Australia will help grow.

Right now it's all about making sure we keep this asset focused on customers, get the backroom integrated properly, build a multi-year plan.

It's not going to be a big bang on the transfer of products or knowledge.

It will rather be a very thoughtful transfer of those capabilities over many years to continue to grow that business nicely.

Just a big-picture question, on the consumer monitoring space, how do you see that evolving over the coming years?

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

Yes.

I think it is evolving as we expected and communicate in the past, that is there will be a world of free and there'll be a world of pay.

Those two will coexist together.

I think long-term the growth is going to be greater in the free, which means the paid model around the world will be slower growth, but still viable, still profitable, still growing.

Andrew Jeffrey, SunTrust.

Rick, you certainly have a laundry list that is impressive of new growth initiatives.

I wonder if you could just rank order, perhaps -- I know you probably love all of your children equally, but if you could kind of rank order where you think the greatest or most potent levers are to maintain this nice above trend performance you have been putting up?

Thank you for the compliment.

If I had to think about it over a multi-year landscape versus a quarter --

That would be helpful.

EWS, clearly.

My god, that is -- I don't know how else to describe it other than it has many, many, many years of very solid top-line/bottom-line growth.

And we talked about it getting up to 50% EBITDA margins over some time and high growth that is just unbelievable.

Number two, the other growth lever I love, and Gary asked about it, is NPI.

And its refreshing the NPI combination with the maturation and the technology bodes very well for the next five years.

Number three, EGI.

We're really clicking.

Andy and his team are on our enterprise growth initiatives, large complicated multi-business in multi-country growth objectives.

That has got a lot of growth left in it.

I am really, over multiple years, very optimistic about taking the Veda platform and growing it.

With Work Number going global, I think it's going to give us -- as I said before when I bought the Company, it will give us access to other parts of that world with great scale.

We already have great scale.

We have people in that part of the region, so we'll do some acquisitions there.

Trended data is going to be important to us, not just for Fannie, we've been doing a lot of analytics around the KS list and we're getting by different verticals, so I think that bodes well for us.

Then maybe lastly is continuing to look at different geographies around the world we want to expand.

Is the employer information exchange, is that an important potential subset within EWS when you think about that broadly?

Absolutely.

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

If I may, on trended data, you have got a lot of really nicely differentiated solutions.

That is one area where perhaps some of your competitors are citing pretty good growth.

Can you talk about whether your trended data is materially differentiated from the competition?

Yes, I think so, because our assets are different.

If you talk about the ability to trend utility database, who else can do that?

If you talk about the ability to trend wealth data, who else can do that?

If you talk about the ability to trend employment data, who else can do that?

If you talk about the ability to trend income data?

So is the solutions we are providing for Fannie different than what TU is doing today?

No, it is virtually the same.

But the future is trending far beyond just Credit File, and that is where I think we're uniquely positioned.

Judah Sokel, JPMorgan.

A couple of quick bookkeeping questions.

How much were the precise revenues from Veda in the first quarter?

About $25 million.

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

Are you referring to an EWS?

Yes, Watsi, exactly.

I don't remember.

I don't have that specific detail.

Watsi was very strong last year as well.

Year on year, I do not believe it was much different.

Okay, fine.

So it did not necessarily contribute to the growth that much.

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

And then verification.

Perfect.

One final question on Global Consumer Solutions.

Has something -- beyond adding new partners what would you say is driving this massive revolution in this space?

This was a turnaround going back a year or so ago and we've seen now tremendous strength in this.

And not just you, but some of your peers as well.

So how would you characterize the change maybe perhaps amongst consumer awareness and willingness to buy some of your solutions?

Thank you.

Good question.

One is, we bought a company a number of years ago, TrustedID, and it takes a while to ramp up an indirect business.

We've done that now nicely.

It took a while to get some momentum.

Number two is, we're partnering with some pretty good partners who are out there spending a lot of money, trying to advertise the product to the consumer.

And obviously that builds over time; as they gain traction, we gain traction.

So it is a combination of multiple factors coming together at one time.

On your first question, Work Opportunity tax credit revenue was slightly higher, the growth rate in first quarter 2016 than first quarter 2015.

It wasn't a major driver, but it was slightly higher.

Shlomo Rosenbaum, Stifel.

Thank you very much for squeezing me in here.

John, can you walk through again the reason why the international margins were low?

How much of the year-over-year difference was due to the currency impact by having your expenses in the US with the revenue and other currencies and how much were from some of the other things?

We didn't give exact numbers, right?

But effectively the drivers were -- biggest driver was Latin -- in terms of reduction, was Latin America.

So Latin America because of the really substantial devaluation of currencies, which is much larger than we have seen in the last several years.

We saw a margin impact there that was planned, it was expected to occur.

That is specifically related to the fact that we do have nonlocal currency expenses and all local currency revenues, so that the margins just don't benefit on both the top and bottom line in the same way.

Canada margins were slightly down as well, because you saw Canada revenue was flat on a local currency basis, expenses were up slightly.

So you had Canada marking down slightly, but the big driver was Latin America.

And the positive side in terms of international margins that partially offset those declines were obviously the adding of Veda, because they had very good EBITDA margins.

And then also, as Rick mentioned during his prepared comments and after, debt management grew and performed better.

We took out some costs and we saw some better performance in overall margins in debt management.

Those were the drivers of why you saw basically flat EBITDA margins in International.

The growth you are expecting in the EBITDA margins through the rest of the year is a -- basically a revenue leverage item?

Is that the way we should think at it?

We will get some revenue leverage.

We will also obviously get Veda for an entire quarter in the second quarter where we only had them for 40% of a quarter in the first quarter.

And as we've said, we're expecting to see some leverage in improved revenue performance in Canada as we move through the year.

We're expecting to see also continued improved performance in Europe as we move through the year.

Generally speaking, the continued good revenue performance in International that you have for multiple years, we think is going to drive some improved performance in EBITDA margin; as well as we're expecting cost performance improvements because of the regionalizations we started last year and we've been talking about for the past year.

Shlomo, Rick here.

One other thing.

You're back to 5,000 feet on margins, if you think of EBITDA margins.

Just two points.

One, I think you will agree, our EBITDA margin is starting -- this is for the Company now, at a very high level, but I think we're in the top 25% of the S&P 500 or so for EBITDA margin.

Secondly, we have committed to approximately 75 basis points on top of what is already very high margin for the year.

We reaffirmed we will deliver that this year.

Only way we deliver that for the Company is if the individual components, including International, continue to improve and increase.

So it's important we keep that in context

Understand.

I'm just trying to understand where it is coming from.

Also are you having success in getting the ACA clients to put the income data into the TALX database?

It seems like a huge opportunity to in the longer term.

That is a great question.

The answer is yes.

And that success -- I'll give you some numbers in the past on these calls and that success will be further enhanced very shortly as we built a technology link that makes the transition from ACA into the Work Number database easier for our customers.

That technology link and capability will go live in July of this year.

Said another way, it has been a more manual, grind-it-out population of the [ordinal] database from ACA clients.

It will be far easier, more seamless for our customers starting in the third quarter.

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

Got it.

And so the ACA, we should start to see more a automated process of porting income data into the TALX database in July?

And is that going to become a regular part of your contracting for the ACA stuff to be able to put that into the TALX database as a default?

Absolutely.

Jeff Mueler, Baird.

I guess to continue the analogy from earlier, Rick, it sounds like you have a lot of children and you love them all a lot.

So you're sticking to the 6% to 8% longer term for now, operating above it this year, but it sounds like there's a lot of line-of-sight factors into 2017 and 2018 that you listed out.

How do you think about sticking to 6% to 8% and within that framework, could you operate above it for several years at least?

I feel good about it.

That's why we gave it.

As we get back into this year, if there is something from a macro perspective or internally that would drive me to reconsider a different range above that, we will do that at that time.

But at this juncture, I think if we can consistently, year in and year out, deliver 6% to 8% top line organically, another point or two inorganically, and give you some capital structure leverage, operating leverage, and a nice dividend and give 13% to 15% return to our shareholders, I think that is a pretty damn good model, year in and year out.

And you will find years where we outperform as we did last year, as we are on track to do this year, but multi-unit's a pretty doggone good model, I think, and hope you agree.

I absolutely agree.

On the relationships with the Credit Karma and the like, how are you expecting them to impact the market for credit card marketing or financial marketing?

And is that an incremental revenue opportunity for you or is that within the existing revenue relationship?

I never quite thought of it that way.

I think anytime they're out there in the marketplace getting consumers to be interested about their credit and that results in a product that we sell through Credit Karma or LifeLock or something else a consumer buys, that is contemplated in today's model and tomorrow's model.

I don't think it changes the financial representation of the relationship terribly.

But, to be honest, I've not given it a lot of thought.

Finally, are you willing to provide the verifications revenue growth split between mortgage and ex-mortgage?

No, we don't break out that level of detail.

But as John said, I think I may have said too, the verification growth -- which I think was 16%, is that right -- for the quarter was broad based.

And selling verticals, I think John [mentioned] auto, car, government, mortgage and others.

And not only that, it is so early days of penetrating those markets, so there's many years of growth beyond mortgage.

The guidance we gave for EWS assumes a flat to slightly down mortgage market for the full year.

So it's going to have really good growth with mortgage decline over the balance of the year.

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

Bill Warmington, Wells Fargo.

Good morning, everyone, and congratulations on the strong quarter.

Question for you on one of the other growers there that was growing double digits, which is commercial.

And we haven't really heard much about commercial since it was absorbed into USIS and I wanted to ask what was going on there?

Is it specific to what you guys are doing or is it something overall in the market or mix?

I would say it is a strong testament to leadership.

And I mean that seriously.

When we -- Brian, Tom, Madison, who is a seasoned executive for us and gave them, in addition to many other things, commercial and (inaudible) in his past life when he ran USI, those two guys rejuvenated the people, rejuvenated NPI within commercial.

Strategically had a much different outreach, SPFE and/or customers and leadership of those two guys and their teams have done a remarkable job of reinstating a growth mindset into a business.

One more question on the FICO [XD] score.

That's one where you are partnering with FICO and LEXIS-NEXIS and combining the utility data from NCTUE and the rental data from LEXIS-NEXIS.

If you could talk a little bit about the revenue potential there for you.

It sounds like it is potentially a premium-priced score, so --

Bill, when you think of all the growth levers that your peers have referenced in past commentary, and if I were to list 10 of them, maybe 15 of them, maybe 20 of them, I don't think that FICO score would make the list.

There are so many other great things we're doing that you and I should focus on and others should focus on.

And this is, obviously, important to us, that particular FICO score with [LND] data and our data is de minimis when you think of moving the needle for us.

George Mihalos from Cowen.

Thanks for squeezing me in, guys, and let me add my congrats on a very strong quarter.

Rick, wanted to ask you, you spoke, obviously, positively about trended data, but ground zero for that is going to be the mortgage market.

Looking beyond that, what are the verticals or the areas that you think could be potential early adopters or really make a big push for the product?

Three come to mind: Automotive, card, and marketing are three that we're working on right now.

Just a quick follow-up.

The ACA analytics, as we look beyond 2016, given your comments on the strong pipeline, is it safe to say that from an absolute dollar perspective you could have a similar increase in 2017 versus what you are adding on in 2016?

I don't know about that, but here's what you should know is -- and I know what I said, it's the pipeline is really strong; two is when the fines come out, that pipeline is going to strengthen.

Three is we're going to take it to different areas like 1095 -- 1094 and 1095 for IRS.

And four, we are going to take that product to different areas we haven't even thought about before as we become a compliance center expert.

Thank you.

Sure.

Thanks, everyone, for your questions.

Operator, I think that is it.

We want to thank everybody for their interest and the time today and with that, operator, we will terminate the call.

That does conclude today's teleconference.

We thank you all for your participation.