易速傳真 (EFX) 2020 Q4 法說會逐字稿

Good day and welcome to the Equifax Fourth Quarter 2020 Earnings Conference Call.

Today's conference call is being recorded.

At this time, I would like to turn the conference over to Mr. Dorian Hare, Senior Vice President of Investor Relations.

Please go ahead.

Thanks, and good morning.

Welcome to today's conference call.

I'm 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 in the Investor Relations section in the About Equifax tab of our website at www.equifax.com.

During the call today, we will be making reference to certain materials that also can be found in the Investor Relations section of our website under Events and Presentations.

These materials are labeled Q4 2020 Earnings Release Presentation.

During the call, we will be making certain forward-looking statements, including first 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 our expectations.

Certain risk factors inherent in our business are set forth in filings with the SEC, including our 2019 Form 10-K and subsequent filings.

Also, we will be referring to certain non-GAAP financial measures, including adjusted EPS attributable to Equifax and adjusted EBITDA, which will be adjusted for certain items that affect the comparability of our underlying operational performance.

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

In the fourth quarter, Equifax incurred a $31.9 million restructuring charge related to rightsizing the organization as investments in technology transformation are reduced in 2021 as compared to 2020.

Also in the fourth quarter, Equifax changed its method for accounting for pensions to recognize remeasurements of benefit obligations and plan assets to earnings annually and see delayed recognition of gains or losses caused by changes in discount rates or other actuarial assumptions, such as mortality and plan asset actual versus assumed returns.

All prior period GAAP and adjusted financial information has been revised to reflect the change.

Pension expense in prior years is improved by the elimination of the amortization of accumulated prior losses.

For 2020, excluding the annual remeasurement impact I will reference in a moment, this benefit was approximately $17 million to net income or $0.14 per share.

In the fourth quarter of 2020, this benefit resulted in an improvement to net income of $4.3 million or $0.35 per share.

The annual remeasurement occurs in the fourth quarter of each year and is recorded in other income on the income statement.

This annual remeasurement will be treated as a non-GAAP adjustment as it is nonoperational in nature.

Pretax mark-to-market adjustments resulted in a pretax gain of $4.8 million in 2019 and a pretax loss of $32.2 million in 2020.

Details of this change in pension accounting are included in the fourth quarter 2020 earnings press release on Slide 25 of the 4Q '20 IR slide deck and will also be included in the 2020 report 10-K.

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

Thanks, Dorian.

Before I address Equifax's strong fourth quarter and 2020 results, I want to take a moment to thank our 11,000 employees and the families who supported them for the tremendous dedication they showed under the challenging COVID environment during 2020.

We continue to make the health and safety of our employees the top priority.

And I hope you and those close to you remain safe.

Turning first to Slide 4. I wanted to start with a review of our business model, growth strategy and cloud investments that position us to win in the marketplace.

Our highly unique and diverse data assets are at the core of Equifax's differentiation in the marketplace.

We have data assets of scale that our competitors do not have.

Our acquisition this week of Kount in global identity and fraud and AccountScore for U.K. open banking and data categorization are examples of our accelerating focus on expanding our differentiated data assets and capabilities.

Expanding our differentiated data assets through organic actions, partnerships and M&A continues to be a priority.

We and our customers are benefiting from our investment over the last three years in our new Equifax cloud-native technology footprint, which enabled the creation of our single data fabric and rapid implementation of best-in-class cloud-based tools and capabilities.

We accelerated our new product rollouts and revenue in 2020 by leveraging our new Equifax cloud.

And the Equifax cloud-native footprint has enhanced our ability to integrate new partners and acquisitions and to speed the recognition of synergies as we believe only Equifax can.

Our cloud infrastructure will differentiate Equifax in the marketplace and drive our revenues and margins in the future.

Data security is deeply embedded in our culture.

And we have made tremendous progress towards our goal of being the industry leader in security.

We are relentlessly focused on a customer-first mentality, which moves us closer to our customers with a focus on delivering solutions to help them solve their problems and grow their businesses.

And lastly, with the acquisition of Kount and our investments in the Equifax data fabric, we've taken substantial steps forward towards building a leading identity and fraud business while expanding our market coverage to include retail, e-commerce and transaction-based markets, alongside our traditional FI, telco and insurance markets.

Moving now to Slide 5. We've spoken before about key market macros that we believe are positively impacting the information service industry including Equifax.

First, the dramatic acceleration of the digitization of consumer and commercial customer-facing transactions and our customers' internal infrastructure was clearly accelerated during COVID, which drives rapidly growing requirements for data and insights around identity, authentication and fraud.

Second, accelerating adoption of advanced analytics and machine learning is driving increasingly increasing needs for differentiated data.

Third, fintechs and alternative lenders are driving innovation, growing share and accelerating this digitization macro, which drives data usage.

Fourth, the increased need for robust identity validation and fraud prevention capabilities in digital transactions is also driving data requirements.

And fifth, the explosion of data drives increased requirements for data governance by our customers and control of data by consumers.

These macros clearly accelerate demand for broader differentiated data assets, alternative data sources and increased requirements for data recency and integrated insights.

Equifax is very well positioned to address these trends as we build on the depth of our Equifax cloud data assets and our capabilities to deliver advanced Equifax cloud data management and continue to leverage our Equifax cloud data and technology investments.

In USIS, the depth of our assets across credit, alternative credit with DataX, telco and utilities with NCTUE and consumer asset data with IXI has long been Equifax strength.

Workforce Solutions TWN data is our most differentiated data asset with coverage of 90 million unique individuals in the United States.

EWS is expanding the TWN data set while broadening the TWN focus beyond W-2 income to include 1099 and other income and employment data.

And at the same time, EWS is broadening beyond TWN income and employment data with partnerships to deliver individuals' education, licensure and other data to our customers to use in the hiring process.

With the addition of Kount's broad and massive scale of digital consumer data assets, including phone numbers, e-mail and IP addresses, Equifax data assets expand substantially as do our capabilities across identity and fraud globally.

Moving now to Slide 6. We believe the identity validation and fraud prevention markets will deliver strong long-term growth for Equifax and that a combined Equifax and Kount are very well positioned to deliver new and differentiated solutions to this large and fast-growing marketplace.

E-commerce was up over 20% in 2020 alone while online banking was up 67% and mobile wallet usage increased 56%.

And fraud is a huge and growing issue as our customers' transactions have shifted from cash to digital along with increased real-time payments.

Online credit card fraud hit nearly $6 billion last year with 40% of e-commerce merchants reporting increase in chargeback fraud and over 40% of merchants saying their digital fraud slows their innovation and growth.

The digital market macro clearly accelerated during COVID and we see it continuing to expand.

The combination of Equifax and Kount can protect these new distribution channels while evaluating higher-risk transactions on a real-time basis, balanced fraud with the user experience serves a growth platform for customer e-commerce activities while simultaneously enabling trust and confidence.

Both Kount and Equifax will leverage the expanded predictability of our combined data.

And Kount brings Equifax into the fast-growing e-commerce and e-tail markets.

And last, Equifax brings Kount into the banking, finance, fintech, telco and insurance markets.

The scale of Kount's data assets, including 32 billion annual consumer interactions, 255 million identities, 400 million addresses and 1 billion unique devices, combined with Equifax' scaled data assets is a powerful combination in this fast-growing market.

Advanced data and analytics, AI machine learning capabilities are more quicker than ever before in preventing fraud.

The full suite of Kount products, including its next-generation AI machine-learning model, combined with the cloud-based Equifax Luminate platform, which orchestrates multiple solutions with machine learning, and our patented NDT AI technology will provide risk managers with insights only Equifax can give across the consumer account life cycle.

Kount also provides account takeover protection and transaction risk management, two capabilities which Equifax did not have before, to address heightened cybersecurity and fraud payment activity.

We were energized to close the Kount acquisition yesterday and to have the Kount team joining Equifax and the strong growth potential of the combined Kount and Equifax in the fast-growing identity and fraud marketplace.

As you see on Slide 7, while Kount is clearly our most sizable transaction in recent years as we ramp up our bolt-on M&A focus to expand the strength in Equifax' capabilities, we closed two other transactions in recent days focused on decisioning and alternative data.

We acquired the minority position that we didn't already own at Creditworks in Australia.

Creditworks is a low-cost, flexible modular trade credit decisioning platform that targets the SME segment, which is a key growth driver for our activities in the region.

In the U.K., we acquired AccountScore, our partner in the U.K. open banking Solutions and a provider of bank transaction data categorization analytics and consent technology.

AccountScore also has a license in the U.K., where open banking is accelerating.

Importantly, this capability will be integrated into our InterConnect and Ignite platforms.

Reinvesting our 2020 outperformance and leveraging our strong balance sheet and cash generation with bolt-on M&A is central to our future growth strategy.

And our cloud data and technology platforms allow us to more quickly integrate acquisitions and drive synergies.

Continued expansion of our data assets and capabilities through acquisitions is a priority for Equifax in 2021 and beyond.

Turning now to Slide 8. Equifax performance in 2020 was very strong with sequential improvements in both total and core revenue as we exited the year.

Our business model is resilient and delivering in the challenging COVID recessionary environment.

We are energized about our momentum as we enter 2021.

Revenue in 2020 was $4.1 billion, up 17%, with organic growth of 16.3%.

This is the first time we've delivered over $4 billion in revenue and the highest annual growth and organic revenue growth more specifically in our history.

Adjusted EBITDA was just under $1.5 billion, up 25%.

And EBITDA margin was 36.2%, up 240 basis points.

Adjusted EPS of $6.97 was up 22%.

We delivered double-digit revenue growth in all four quarters of 2020 with 23% total inorganic growth in the fourth quarter, a record for Equifax.

We executed on our investments to accelerate and leverage our Equifax cloud, data and technology transformation, including migrating more than 47,000 customers as of the end of the year onto our new Equifax cloud services.

Leveraging our new cloud infrastructure, we delivered a record 134 new products while decreasing our NPI development time by 1/3.

The 134 NPIs were well in excess of the 100 anticipated coming into 2020 and above the 120 we discussed with you in December.

As we continue to leverage our new cloud capabilities, we expect to accelerate revenue growth from new products in 2021, a key driver to our long-term growth expectations.

We're energized about our 2020 performance.

And we've already seen momentum of our only Equifax model, leveraging our new cloud capabilities as we move into 2021.

Turning to Slide 9. Fourth quarter revenue at $1.12 billion was up 23% on a reported and local currency basis, which is well above our expectations in the framework of 17.5% to 20% that we shared with you in early December.

M&A contributed just under 1% in the quarter.

Our growth was again powered by our U.S. B2B businesses, USIS and Workforce Solutions, with combined revenue of a very strong 36.6% and combined adjusted EBITDA margins of 50%.

As a reminder, EWS and USIS are now over 70% of Equifax revenue and 80% of Equifax business unit EBITDA.

Their combined contribution to Equifax is up 700 basis points in revenue and almost 750 basis points in EBITDA versus 2019, which is very powerful for the future of Equifax.

Importantly, International also had a strong quarter, delivering 3% revenue growth and over 34% adjusted EBITDA margins, outperforming our expectations in revenue while maintaining strong control over costs.

Fourth quarter Equifax adjusted EBITDA totaled $422 million, up 31% with a 215 basis point expansion in our margins to 37.8%.

This margin expansion was delivered while making continued investments in our cloud transformation, new products and data and analytics that will drive future growth.

Adjusted EPS of $2 per share was up a strong 28% versus 2019 despite incurring increased depreciation and amortization and incremental cloud costs of $0.16 a share and increased interest expense of $0.05 a share from our second quarter bond offering.

The $2 per share EPS exceeded our expectation in the framework of $1.75 to $1.85 we shared with you in early December.

USIS revenue of $387 million was up a very strong 17% in the fourth quarter, with M&A contributing less than 0.5%.

Total USIS mortgage revenue of $153 million was up 60% in the quarter while mortgage credit inquiries grew in line with our expectations, increasing 55%.

USIS mortgage revenue outgrew the market by 500 basis points driven by growth in share gains, marketing and new debt monitoring products.

Non-mortgage revenue performing strengthened substantially in the quarter and was just below flat, an improvement from down 6% in the third quarter and down 9% in the second quarter.

Importantly, non-mortgage online revenue grew slightly in the quarter versus the 5% and 11% decline we saw in the third and second quarters, respectively.

Banking, ID and fraud, commercial, insurance and direct-to-consumer all showed growth in fourth quarter, which is a positive sign for the future.

Auto's fourth quarter decline of 5% was an improvement from the third quarter decline of 7%.

Non-mortgage online revenue strengthened further by 5% growth in December and 6% growth in January.

Banking, ID and fraud, insurance and direct-to-consumer drove the growth in December and continued into January.

We also saw auto return to positive growth in January.

Financial marketing services revenue, which is, broadly speaking, our off-line or batch business, was $70 million in the quarter, down about 2%, which was up sharply from the third quarter, which was down 9%.

The relative improvement in the quarter was driven by double-digit growth in identity and fraud-related revenue.

We're also seeing improving trends in marketing-related revenue, which was down under 10% in the quarter.

As a reminder, marketing-related revenue represents about 40% of FMS revenue, identity and fraud about 20% and risk decisioning about 40% million.

USIS team continues to drive growth in their deal pipeline with the fourth quarter up 15% driven by growth in both the volume and size of new opportunities.

Fourth quarter win rates finished the year at [20 25].

Sid Singh and his team are on offense in the USIS and winning in the marketplace.

USIS adjusted EBITDA margins of 43.5% in fourth quarter were down 160 basis points from last year, which was principally driven by the much higher mix of mortgage revenue and mortgage products in the quarter.

Margins were also impacted by redundant systems costs and investments in new products.

Turning now to Workforce Solutions.

They had another exceptional quarter with revenue of $406 million, up a very strong 62%.

EWS finished the year with revenue of $1.4 billion, an extraordinary accomplishment compared to their 2019 revenue of $950 million.

Customers found incredible value in Workforce Solutions' unique TWN income and employment data assets and new products while the team's focus on penetration, pricing, new verticals and record additions drove growth.

EWS remains our most valuable and differentiated business with revenue growth rates far in excess of the rest of Equifax and highly accretive margins.

Verification Services revenue and Workforce Solutions at $330 million was up 70% versus fourth quarter 2019.

Verification Services mortgage revenue more than doubled versus the prior year for the third quarter in a row, growing almost 100 percentage points faster than the 55% growth we saw in mortgage market credit inquiries in the third quarter.

Verification Services non-mortgage revenue was up about 15% in the quarter, up substantially from the 4% growth in third quarter.

During the fourth quarter, we saw a significant growth in talent solutions primarily driven by new products introduced in the second half of the year.

We also saw a strong growth in card and auto.

In cards, we've added two major customers that now use the Work Number broadly in their origination process.

In auto, we're also seeing expansion in the use of the work number in subprime loan approvals.

We again saw a strong growth in government.

Verification Services growth in January continued at the strong levels delivered in the fourth quarter.

Employer Services revenue of $77 million increased 35% in the quarter driven again by unemployment claims business, which had revenue of over $50 million, up 73% compared to last year.

In the fourth quarter, Workforce Solutions processed about 2.6 million initial claims, which is down from the 3.4 million in the third quarter.

EWS continued to process roughly 1 in 5 U.S. initial unemployment claims.

And as a reminder, we expect our UC claims revenue to decline in 2021 as initial employment claims reduce from record 2020 levels.

Employer Services non-UC claims business had revenue down about 6% in the quarter.

Strong revenue growth in I-9 and onboarding services that were driven by the acceleration of our new I-9 Anywhere solutions was more than offset by declines in Workforce Analytics in our tax credit business.

We are seeing a positive shift to our new I-9 Anywhere product suite with new customer wins at much higher price points.

We expect Employer Services non-UC business revenue performance in the first quarter to improve relative to fourth quarter and return to growth in the second quarter as we move towards a more normal environment.

Strong EWS Verifier revenue growth resulted in adjusted EBITDA margins of 56.2%, which was an over 900 basis point expansion from the prior year, which reflects the power and uniqueness of the TWN data set.

Turning now to International.

Their revenue of $242 million was up 3% on a constant currency basis in the quarter, a significant milestone as the business unit returned to growth after very challenging second and third quarters.

This was nicely above our expectations from early December.

Asia Pacific, which is principally our Australian business, had very good performance in the fourth quarter with revenue of $77 million, up about 4% in local currency versus last year and better and yet slightly we expected in early December.

Australia consumer revenue was down about 5% versus last year, a significant improvement from the down 10% we saw in third quarter.

Our commercial businesses combining online and off-line revenue in Australia was up 3% in the quarter, again, a nice improvement from the up about 1% in the third quarter.

And fraud and identity was up almost 20% in the fourth quarter.

European revenues of $79 million were up 4% in local currency in the quarter.

Our European credit business was down about 3%, a significant improvement from the down 7% we saw in the third quarter.

The improvement was driven by Spain, which saw revenue growth of 7% in the quarter.

UK revenue was down about 8% in the quarter, similar to third quarter.

Our European debt management business grew about 20% in local currency in the fourth quarter as the UK government restarted collections activity in late September.

However, following the COVID measures put in place late in the fourth quarter by the UK government to address the pandemic, debt collections were again halted late in the year.

We expect debt management revenue to decline on the order of 10% in the first quarter, reflecting these actions, but to improve once vaccines are more widely distributed and we return to a more normal mode.

Latin American revenues of $46 million declined about 2% in fourth quarter in local currency, in line with what we expected, which was a significant improvement from the down 6% we saw in the third quarter.

Positively, Chile, our largest country in Latin America, delivered revenue growth in the quarter.

Latin America continues to benefit from the expansion of Ignite and the migration of customers to our global cloud-based interconnect SaaS decisioning platform.

And we're also seeing the benefit of the strong new product introductions in the region over the past three years.

Canada revenue of $41 million is up about 3% in local currency in the fourth quarter, which was also a positive.

Consumer online was down just over 5% in the quarter, similar to the third quarter.

Improving growth in Analytics and Decision Solutions ID and Fraud drove the growth in Canadian revenue in the quarter.

International adjusted EBITDA margins of 33.8% were up 150 basis points sequentially but down 260 basis points from last year.

The decline versus fourth quarter last year was principally driven by redundant systems costs from cloud investments and lower income from minority investments.

Global Consumer Solutions revenue at $76.9 million was down 13% on a reported and local currency basis in the quarter as we expected.

Global Consumer Solutions performance was very strong in our Consumer Direct benefits channel and event-based businesses as they collectively grew over 10% on a combined basis in the fourth quarter.

The decline in overall GCS revenue in the fourth quarter was driven by our U.S. lead generation partner businesses.

As we've discussed previously, our U.S. lead generation partner revenue was significantly impacted by the COVID recession that began in the second quarter, the declines in this revenue increasing through the fourth quarter as banking customers cut back on lead gen spending.

Accordingly, we expect declines in total GCS revenue in the first quarter at just over 15%, similar to fourth quarter levels.

We expect a decline in total GCS revenue due to the lead generation declines to moderate substantially as we move into the second quarter.

Our Global Consumer Direct business, the business in which we sell directly to consumers through equifax.com and which represents about half of total GCS revenue, was up a strong 9% in fourth quarter, the highest growth rate since 2017.

Our North American Consumer Direct Business revenue was up a solid 10% versus last year.

And we continue to see sequential subscriber growth in the U.S. and Canada, our 2 largest markets.

Our GCS Consumer Direct business will principally complete migrating the customers onto the new cloud-based platform Renaissance in the first quarter.

This will allow for renewed field focus on new product and service introductions to consumers in the second half of 2021.

Our benefits channel and events-based businesses, which now represent about 10% of global consumer, also delivered about 30% growth in the quarter.

GCS adjusted EBITDA margins of 20.9% were down about 610 basis points principally reflecting the increased platform spend as they complete their cloud systems migrations, increased marketing spend to drive future direct revenue and the lower lead generation partner revenue we talked about.

Slide 10 provides an updated view of Equifax core revenue growth.

As a reminder, core revenue growth is defined as Equifax revenue growth excluding, number one, the extraordinary revenue growth in our unemployment claims business in 2021; and number two, the impact on revenue from U.S. mortgage market activity as measured by changes in total U.S. mortgage market credit inquiries.

Core revenue growth is our attempt to provide a more normalized view of Equifax revenue growth to you, excluding the GC and U.S. mortgage market factors.

In the fourth quarter, Equifax core revenue growth, the green section on the bars on Slide 10 was up a very strong 11%.

This is up significantly from the 6% core revenue growth we delivered in the third quarter due to strong Workforce Solutions and USIS outperformance, where they continued to deliver mortgage revenue growth rates well in excess of U.S. mortgage market credit inquiries and the significant improvement in revenue performance from our non-mortgage business in the U.S. as well as the return to growth in International.

A critical lever in our ability to deliver high levels of core revenue growth is our deep and broad array of new products and solutions for the U.S. mortgage market and the ability to constantly outgrow -- consistently outgrow the underlying market.

Slide 11 highlights the strong core growth performance in mortgage for our U.S. B2B mortgage businesses Workforce Solutions and USIS.

EWS and USIS outgrew their underlying U.S. mortgage market significantly in 2020 with a combined core growth of 37%.

This outperformance was driven strongly by Workforce Solution mortgage revenue with core growth of 80% in 2020, which exceeded mortgage market growth rates by an outstanding 80 points during the year.

The key drivers of this strong EWS outperformance included increased market penetration, larger fulfillment rates, new products and records.

EWS has a long history of outgrowing their underlying markets.

USIS also delivered strong core revenue growth in mortgage in 2020 with growth exceeding the market by 8% driven primarily by new debt monitoring solutions with further support from marketing.

Our ability to substantially outgrow underlying markets is core to our business model and a substantial strength that should continue to benefit Equifax in 2021 and in the future.

Turning now to Slide 12.

Workforce Solutions continued to deliver outstanding results and is clearly our strongest and most valuable business.

Workforce Solutions total revenue grew sequentially during 2020 to 62% in the fourth quarter and 51% for the year.

More importantly, core revenue growth also accelerated throughout 2020 with core growth of 37% in the fourth quarter, up from 30% in the third quarter and 27% for the year.

This outperformance and sequential improvements reflects the uniqueness of the TWN data and the power of the Workforce Solutions business model.

Rudy Ploder and his team have built a business with strong long-term growth levers.

And they continue to demonstrate the value of their scale and differentiated TWN income and employment data.

This depth, breadth and scale of the TWN database and over 20,000 customer verification network and value of the Workforce Solutions Employer Service offerings are driving substantial growth and value.

In 2020, our Workforce Solutions reached 114 million active TWN records, an increase of 10 million active records during a difficult period of high U.S. unemployment.

Of these 114 million active records, over 60% are contributed directly by employers to Workforce Solutions that the team has built up over the past decade.

The remaining 40% are contributed through partnerships, many of which are exclusive.

Also in 2020, TWN reached over 1 million in core contributors, a significant milestone.

As you know, we have a dedicated team focused on TWN record additions and expect to add records again in 2021.

Just last week, we signed a new exclusive partnership with a major payroll provider that will be integrating their payroll system with Equifax with a work number later this year.

As you know, we are able to monetize record additions instantly from our strong network, over 20,000 verification customers and, of course, the uniqueness of the TWN data.

Rudy and his team continue to rapidly expand the number of mortgage companies and financial institutions with whom we have built real-time system-to-system integrations.

As we talked previously, those drive more usage of our TWN data.

In mortgage, for example, 65% of mortgage transactions are now system-to-system with Workforce Solutions.

These integrations are now extending into card and auto verticals as well as across our growing government business.

We also expect our new verification solution for the Social Security Administration to go online in the first half of this year, which will deliver incremental revenue to Workforce Solutions.

Workforce Solutions new product pipeline is also rapidly expanding with new products across mortgage, talent solutions, government and I-9 and new product revenue expected to increase substantially in '21 and '22.

And in 2021, Workforce Solutions Verification Service infrastructure will be fully cloud native, also providing the industry's leading cloud-native data and technology platform that will further accelerate data ingestion, massive additions of employee contributors to the TWN database and new product capabilities for this unique in scale TWN data asset.

On Slide 13, I'd like to turn to 2021 and discuss some of the favorable market and macro trends that I alluded to earlier.

Before COVID, the macro trends on the left-hand side of the slide had already begun to manifest themselves.

As I discussed earlier, COVID has driven a rapid acceleration of digital and online consumer interactions.

Improved real-time decisioning required more complete and more recent information from a broader set of data assets, including alternative data sets, has become even more critical.

This is required to reduce friction in consumer transactions while ensuring certainty in identities in minimizing credit and fraud risk.

Effectively utilizing these expanded requirements for data decisioning has accelerated the need for advanced analytics, including machine learning as well as the need for effective data governance, including the ability to provide consumers with acquired control.

And seamless delivery of these capabilities continues to advance.

High performance has always been table stakes in the space that we play in.

Given these accelerating and continuing trends, the implications for Equifax are that the demand for our unique data sets and integrated insights has never been stronger, including those involving our powerful TWN income and employment data.

Our ID and Fraud Prevention Solutions and those -- including those acquired from targeting e-commerce and retail space are trust enhancing, thereby improving the overall digital experience for consumers.

I'll now hand it over to John to provide our 2021 guidance.

And I'll come back to wrap up.

Thanks, Mark.

Now let's turn to Slide 14 and our economic and market assumptions for 2021.

In December, we provided you with a framework for revenue and adjusted EPS for 2021 as well as the basic assumptions underlying that framework.

Our current view of 2021 and the 2021 guidance we are providing is consistent with that view as are the basic economic and market assumptions underlying them.

Although the progress with COVID-19 vaccines and expected substantial additional economic stimulus are promising to the 2021 economic recovery, there remains significant uncertainties regarding the timing and pace of economic recovery in the U.S. as well as internationally.

Consistent with our discussion in December, our 2021 guidance assumes the U.S. mortgage market, our proxy for which is U.S. mortgage credit inquiries, will remain strong in the first half of 2021 but decline in the second half.

We assume 2021 credit inquiries overall to be down about 5% versus 2020, with first half credit inquiries up almost 15% and second half inquiries down over 23%.

For perspective, the U.S. credit inquiries in first half '21 are assumed to grow about 6% from the strong level we saw in the second half of '20.

January was strong and confirmed this trend.

Equifax U.S. B2B mortgage revenue, EWS and USIS will continue to significantly outpace the overall mortgage market with growth of over 10%.

The U.S. economic recovery will start early in the second quarter of 2021 with over 3.5% GDP growth for the full year.

We expect USIS and Workforce Solutions non-mortgage businesses to outperform their underlying markets.

EWS Talent Solutions and government businesses should also significantly outperform.

Workforce Solutions unemployment claims business should be down over 35% versus 2020 as unemployment declines with the recovering economy.

And we expect the international economies will also recover in 2021, beginning in the second quarter.

We expect full year GDP growth of about 2.5% in Australia, over 5% in the UK and over 5% in Canada.

Our International business is also expected to outperform its underlying markets.

U.S. mortgage market has continued to be very strong driven by both record refinancings and home purchases.

As shown on the left side of Slide 15, as of December, Black Knight estimates that about 16.5 million U.S. mortgages could still benefit from the refinancing based on the current record-low interest rate environment.

While down from September's record levels, there remains significant runway in the refi market as refinance candidates continue to be markedly higher than the previous peak in refinance activity in 2016 and in the global recession of 2008.

Given the current pace of mortgage refinancings at almost 1 million per month based on data through August, we expect elevated levels of refinancing should continue well into 2021.

As shown on the right side of Slide 15, the pace of existing home purchases further strengthened in 4Q, reaching 6.8 million on an annualized basis as of December, up from 6.5 million in September.

The trend of families seeking more space as work from home persists is continuing, further supported by the continuation of record-low mortgage rates.

Slide 16 provides the specifics of our 2021 guidance, including a bridge between the midpoint of our 2021 revenue and adjusted EPS guidance and our 2020 results.

2021 revenue of between $4.35 billion and $4.45 billion reflects revenue growth of about 5.4% to 7.8% versus 2020 with FX possibly impacting revenue by about 1.5%.

USIS revenue is expected to be up mid-single digits in 2020, which includes the benefit of the Kount acquisition.

EWS will continue to deliver double-digit revenue growth with continued strong growth in Verification Services.

International revenue is expected to deliver constant currency growth in upper single digits with strong strengthening beginning in the second quarter, reflecting the assumed economic recoveries I discussed earlier.

And GCS revenue will be down mid-single digits in 2021.

The revenue decline of 15% plus in 1Q '21 reflects the weakness in U.S. lead gen partner revenue that Mark discussed earlier.

We expect to see improved performance as we move through 2021 driven principally by continued growth in our Consumer Direct business.

As a reminder, in 2021, Equifax will include all cloud technology transformation costs in adjusted operating income, EBITDA and EPS.

These onetime costs have been excluded from our adjusted operating income, EBITDA and EPS in 2017 through 2020.

In 2021, Equifax will incur onetime cloud technology transformation costs of approximately $145 million, a reduction of about 60% from the $358 million incurred in 2020.

The inclusion in 2021 of just about $145 million in onetime costs will reduce adjusted EPS by about $0.90 per share.

2021 adjusted EPS of $6.20 to $6.50 per share, which includes these tech transformation costs, is down approximately 7% to 11% from 2020.

Excluding these tech transformation costs of $0.90 per share, adjusted EPS in 2021 would show growth of about 2% to 6% versus 2020.

2021 is also negatively impacted by redundant system costs of almost $60 million relative to 2020.

These redundant system costs negatively impact adjusted EPS by approximately $0.37 per share and negatively impacts adjusted EPS growth by about five percentage points in 2021.

Additional assumptions included in 2021 guidance are: Capital spending in 2020 is expected to be about $400 million; depreciation and amortization, excluding amortization of acquired intangible assets, is expected to be almost $310 million.

This includes about $10 million of D&A from the acquisitions completed so far in 2021.

Interest and other income net is expected to be slightly negative in 2021 versus 2020.

Our 2021 tax rate is expected to be up from 2020 and slightly above 24%.

2021 combined corporate and corporate technology costs are expected to be approximately $485 million.

About 3/4 of the increase from 2020 is driven by the inclusion of technology transformation costs and adjusted operating income, EBITDA and EPS in 2021.

These tech transformation costs are principally for Cross B programs.

The remainder of the increase is principally in security and corporate technology.

Slide 17 provides our guidance for 1Q '21.

We expect revenue in the range $1.105 to $1.125 billion, reflecting revenue growth of about 15% to 17%, including a 1.9% benefit from foreign exchange.

We are expecting adjusted EPS in 1Q '21 to be $1.45 to $1.55 per share compared to 1Q '20 adjusted EPS of $1.43 per share.

In 1Q '21, technology transformation costs are expected to be just over $45 million or $0.28 per share.

Excluding these costs that were excluded from 1Q '20 adjusted EPS, 1Q '21 adjusted EPS would be $1.73 to $1.83 per share, up 21% to 28% from 1Q '21.

Slide 18 provides a view of Equifax total and core revenue growth from 2019 through 2021.

The data provided for 1Q '21 and full year 2021 reflects the midpoint of the guidance ranges we have provided.

In 2021, we expect core revenue growth of over 10% into strong levels delivered in 4Q '20 and building momentum for 2022.

Slide 18 also provides revenue growth from acquisitions for 4Q '20, calendar year '20 and expected levels for 1Q '21 and calendar '21.

For your reference, in the appendix of this presentation, we have included slides that provide more detail on 2020 performance and 2021 guidance.

They include: 2020 revenue trend details for 2Q '20 through 4Q '20; details on the pension accounting change we completed in 4Q '20; more detail on our 2021 guidance, including both our expected -- our expectation for U.S. mortgage market credit inquiries in 1Q '21, 2Q '21 and second half of '21; and an update to the 2020 through 2022 cloud transformation cost benefits framework we shared with you in December.

And with that, I'll turn it back to Mark.

Thanks, John.

Turning to Slide 19.

We made significant progress on our cloud data and technology transformation in the second half of last year, progressing through the data product and customer migration phases of our North American technology transformation.

The pace of product and customer migration continues to accelerate.

And as of year-end 2020, USIS completed over 12,000 customer migrations onto cloud-based services, including our InterConnect, Ignite and API capabilities.

And Workforce Solutions also completed over 26,000 customer migrations and verification services onto its cloud-based portals and online performing platforms.

This represents over 95% of the Workforce Solution Verification Services customer base.

As we discussed earlier, Global Consumer will complete migration of all Consumer Direct customers onto its transform Renaissance platform over the next several months.

Across North America, we remain on track to have our U.S. customer migrations completed principally during 2021.

Our North American exchange migrations also continue to progress well toward our 2021 goals, including our major North American exchanges of the U.S. and Canadian consumer risk, the work number and NCTUE exchanges.

In 2021, we're accelerating [to range] migration to the data fabric in Europe, LatAm and Asia Pacific.

Europe and Latin America have already made substantial progress in deploying InterConnect, Ignite and our API frameworks in the cloud.

And as of the end of the year, International had migrated over 9,000 customers onto cloud-based services.

In 2021, our focus is on product and customer migration to accelerate the decommissioning of legacy systems and data centers to deliver the customer benefits in Equifax cost savings.

We'll continue to ramp our focus on delivering new products and NPI revenue by leveraging our new cloud-native data and technology infrastructure.

2021 is a critical year as we drive toward completion of our North American transformation.

We remain committed to achieving the substantial top and bottom line benefits from the cloud we discussed with you previously.

The Equifax cloud-native data and tech infrastructure is providing meaningful benefits in the marketplace today.

And that will even further differentiate Equifax as we complete the transformation.

Turning now to Slide 20.

This highlights our continued focus on new product innovation, which is a key component of the next chapter of growth at Equifax as we leverage the Equifax cloud for innovation and new products.

We continue to focus on transforming our company into a product-led organization empowered by the best-in-class cloud-native data and technology to fuel our top line growth.

In 2020, we further invested in NPI resources while leveraging our new Equifax cloud capability to deliver 134 new products above the 120 we discussed in December and our historical 70 to 90 NPIs annually.

Importantly, in 2020, over 50% of the new products were delivered leveraging our cloud-native data and technology.

In our December investor update, we shared with you several products introduced in 2020 that will have the opportunity to drive significant revenue in 2021 and beyond.

Response CONFIDENCE, watched by USIS, offers tools that empower our customers to enable consumers to share alternative data that's currently available in credit reports.

USIS also launched OneView, a configurable consumer report that will allow consumer credit data to be combined with any other Equifax consumer data asset to create an easily consumable and configurable multi data asset report.

In the first quarter, OneView will incorporate TWN income and employment data, along with consumer credit and our other differentiated Equifax data assets.

Workforce Solutions continues to expand its suite of new products focused on the hiring process.

Our new talent select suite of VOE Solutions products provide easy access to all or a subset of Workforce Solutions data on a candidate across varying price points with fulfillment-based pricing.

In mortgage, Workforce Solutions has launched new products that support lenders' needs to combine the TWN employment and income data with tax return data.

The new products simplify lenders' processes by providing individual or multiple borrower information per loan via a single transaction from Equifax.

In Employer Services, our I-9 Anywhere product creates a more efficient and low-touch onboarding experience.

The product allows a new hire to initiate their application from any device such as a phone, tablet or computer.

Via our I-9 app, the new hire then schedules the completion of their application from a nationwide network of over 1,300 locations at a convenient time and location of their choice.

The I-9 Anywhere product improves accessibility for employees at off-site locations, streamlines paperwork and improves and speeds up the onboarding experience for the employee, hiring managers and human resource professionals.

With our strong new product launches in 2020, we expect to accelerate our NPI revenue growth in 2021.

As many of you know, our NPI revenue is defined as the revenue delivered by new products launched over the prior three years.

And our vitality index is defined as the percentage of current year revenue from new products.

In 2021, we expect NPI revenue to increase by over 75% with our vitality index exceeding 7%, which is up substantially from the past three years.

Continued expansion of innovation in new products leveraging the Equifax cloud are central to our strategy and future growth priorities.

Wrapping up on Slide 21.

Equifax finished a challenging 2021 COVID environment with record revenue and earnings and strong momentum as we enter 2021.

Our 11% core growth in the fourth quarter reflects the strength of our business model.

Our estimated 6.6% growth in 2021 at the midpoint of our range, while still in the midst of the COVID recession, reflects the resiliency, strength and momentum of the Equifax business model.

We are delivering this growth in the context of our expectations that we see an economic recovery in the second quarter and that U.S. mortgage market activity decline 5% in the second half.

Core revenue growth of over 10% in 2021 reflects the strength of our business model as new products and expansion of our data assets allow us to outperform in a still uncertain global environment.

Workforce Solutions will continue to power Equifax's operating performance in 2021.

The Work Number is our most differentiated data asset and Workforce Solutions is our most valuable business.

And likely, we will see Workforce Solutions become our largest business in the very near future.

Rudy and his team are driving outsized growth by focusing on their key levers, new records, new products, penetration and expansion into new verticals.

We also expect our USIS mortgage business to continue to outgrow the underlying mortgage market.

And we're energized by the outlook for USIS non-mortgage performance and momentum from the fourth quarter from both organic growth and the new products and the growth we expect from Kount.

USIS is competitive in winning in the marketplace and will deliver in 2021.

International's return to growth in the fourth quarter is a real positive.

And we expect that to continue in 2021 as their underlying markets recover.

We are encouraged by improving conditions across our International portfolio.

And we expect International to outperform these underlying markets.

We're also turning the corner.

We're turning the corner from building our cloud capabilities to leveraging our new Equifax cloud data and technology to drive innovation, new products and growth.

We remain confident in the significant top line cost and cash benefits from our new cloud capabilities.

These financial benefits start to ramp in 2021 and are enabled by our always-on stability, speed to market and the ability to rapidly build and move products around the globe.

Our strong operating performance, strong balance sheet and Equifax cloud data and technology platforms position us to enhance our capability via M&A.

We are building our acquisition pipeline as we pursue accretive bolt-on transactions that will strengthen the core of Equifax and meet our stringent financial criteria.

And given our very strong financial performance, our strong cash generation in 2020 and our strong balance sheet and our confidence in the future of Equifax, we are restarting our share repurchase program at an expected level of over $100 million in 2021 to offset dilution from employee benefit plans.

We view this as a positive step forward in returning cash to shareholders.

While the COVID recession and recovery is still uncertain, we have a lot of confidence in our business model and our ability to perform.

We have strong momentum on all fronts as we move into 2021.

Equifax is outperforming in the challenging COVID recessionary environment.

We are on offense and positioned to leverage the Equifax cloud for innovation and new products to drive future growth, margins and cash generation as a market-leading data analytics and technology company.

With that, operator, let me open it up for questions.

(Operator Instructions) And we will take our question from David Togut with Evercore ISI.

Could you maybe dig into the outlook for EWS a bit more?

You called out double-digit revenue growth expected.

Can you be a little bit more precise there?

Is that approximately 10% or something potentially much higher?

And then if you could drill down a little bit into growth expectations for Employer Services and verification.

And maybe just close on your expectations for record growth in 2021.

Yes.

We believe, and we talked about it, that workforce is clearly our most differentiated business.

And you know we talked about the strong performance in 2020 that follows strong performance in 2017, '18 and '19.

So we had a long history of growth and have a lot of levers for growth.

I don't think we want to get into specific guidance around Workforce's revenue growth except that we expect it to outgrow their underlying markets again in 2021.

And as we said, we expect that to be in double digit.

And we also said it will be, for sure, the highest-growing business inside of Equifax.

You know the levers that Workforce has in front of it.

And at the top of the list is their ability to add records.

That's a very powerful lever.

And as you know, we added records throughout 2020.

Those are monetized right out of the chute as soon as we add them to our database.

And of course, on a year-over-year basis, those record additions drive revenue growth in 2021.

And I think we also stated that we expect to grow records quite confidently in 2021.

And we added the large agreement we signed just last week with a large payroll processor for an exclusive agreement to contribute their records to Equifax.

So that's going to help drive our record growth going forward.

On the -- verification is clearly the strongest and largest part of Equifax and the highest-margin part.

But as you point out, Talent solutions, it's something we're also excited about.

We expect to see some recovery in elements of that business as the market improves and the economy improves kind of post-vaccine.

Now we're targeting that at kind of second quarter and going into third and fourth.

But underlying there, we've got some really impressive growth from our I-9 solution.

And we talked about on the call the I-9 Anywhere.

That has really got a lot of traction because of the uniqueness of the solution.

And of course, it drives a much higher revenue solution for Equifax.

Anything else you'd add, John?

Government, we expect government to continue to grow very, very nicely, right?

We have obviously a substantial new contract in the government segment.

And also, we continue to build out our suite of solutions that serves not only federal but also state and local governments in their benefit system.

So we feel very good really across the board in EWS.

And talent solutions is obviously I-9 Anywhere but also substantial new products across the talent solutions marketplace in general.

And as a reminder, we've talked many times during 2020 on our calls with you about the new solution that workforce is rolling out with the social security administration and talked about that being at run rate of $40 million to $50 million a year contract.

That's going to ramp during 2021 and become a full run rate in 2022.

But that's a very attractive addition to the business and just reflects, again, the uniqueness of the scale of the data set and the uniqueness of the data itself.

Appreciate that.

Just as a quick follow-up.

Do you see a ceiling on EBITDA margin expansion for EWS?

Can this business get above 60%?

Or are you going to just reinvest at a high rate to keep margins approximately in the mid-50s?

Yes.

I don't think we'd invest just to keep margins at a certain level.

We invest where we see accretive returns for our shareholders when it comes to internal investments.

And we've been doing that quite substantially.

I think you know over the last three years and even in 2020, we were reinvested quite substantially into workforce, into USIS, whether it was obviously in the cloud transformation investments but then in new products and new DNA assets, investing in new record additions.

So we'll continue to invest.

With regards to is there a ceiling on there, I think that's a tough question to answer.

It's one that we see a long runway of growth potential for Workforce Solutions.

I think I talked about it's our expectation Workforce will become, sometime in the near future, our largest business unit, which is we think quite attractive for Equifax and for our shareholders because of its highly accretive nature of its revenue growth as well as higher accretive nature of its margins.

Only thing I'd add obviously is in terms of acquisitions as well.

Workforce is an area where we're focused as well as obviously other parts of the business but it continues to be a focus area.

We'll take our next question from Andrew Steinerman with JPMorgan.

For the sake of clarity, could you just state what the organic revenue growth is assumed for the '21 guidance at the midpoint?

And has this estimate of revenue growth for '21 changed since the December call?

I'm particularly just asking about the account revenues.

I assume the account revenues weren't in the December call and are in it today.

Yes.

So Slide 18, we indicate that included in the 2021 guidance is about 1.2 points from acquisitions, right?

So if you think about Kount revenue, we don't have Kount revenue for the entire year.

It just closed.

And because of that, it's about 1.2 points.

So the inorganic revenue is 1.2%.

Is that covered?

And has your view of organic revenue growth for '21 changed between the December call and today?

It hasn't, Andrew.

The December call is only a few weeks ago.

I think -- we still think that's the right guidance for where Equifax is going to perform the 10.5% organic growth from the business.

There's still -- as you know, a lot of uncertainties in the COVID recovery.

We're betting on it starting in the second quarter.

We've already seen some of it in December and January.

So I think that's positive towards that assumption that we have.

And of course, our assumption is that the mortgage market, while it's still very strong, will decline in the second half of 2021.

So I think we've got the right guidance.

And I think the momentum we have in the fourth quarter, we think, supports that 10.5%.

And if you're asking specifically about the numbers between the framework we provided in December and today, they're up about $75 million, right, on the top and the bottom end.

A chunk of that is Kount, which we just talked about, right?

And then also there was some FX benefit.

And it also reflects the fact that we think there's obviously risk in timing of recovery of the U.S. economy and other economies.

So that $75 million improvement from -- on both the top and bottom end reflects those 3 factors.

And obviously, we performed a lot better in 2020 than we had talked about in December.

So the actual calculated growth rates look different obviously or somewhat lower.

But the absolute delivery of revenue in 2021, we think, is about $75 million higher, reflecting the factors that I just referenced.

We'll take our next question from Kevin McVeigh with Crédit Suisse.

Could you give us a sense of how the shift to the cloud has impacted both the pace and cost of new product innovation?

It seems like from the end of the year, 134, that's from the beginning of the year.

How should we think about that pace in 2021?

And then in terms of ways to reconcile that to what it can mean to organic growth.

I guess does it have the potential to accelerate the core organic growth?

The issue is these new product innovations (inaudible) higher level (inaudible).

What is that?

Yes.

It's a great question and we talked about that.

We really believe fundamental to our strategy is to really leverage our cloud investments, which we think are incredibly powerful both on the technology and data side for innovation and new products.

And as we talked throughout 2020, we invested more in product resources to really start driving that leverage of the cloud investments as we focus around completing the cloud transformation but, more importantly leveraging it.

And as you point out, 134 is a really big increase from our historical new product rollouts.

And of course, those rollouts are in the marketplace now, meaning that our commercial teams are starting to take those to market.

So that's embedded in our core growth assumption for 2021, which is up substantially from where it was core growth in 2018 and '19 and actually up from our historical, kind of pre-cyber growth rates.

And NPIs are clearly going to be a big factor in that.

In my comments, I mentioned that I think it was 50% of our NPIs during 2020.

We're really leveraging the cloud.

As we move into 2021, that will be substantially all of our new products, which -- will speed up our delivery of new products, speed up the time of getting them into the marketplace and then also drive the number of products that we want to bring to the market.

We haven't given an assumption or a target for the number of new products for 2021.

But I think we were clear about our vitality index, which really drives the organic growth from our new products of being quite substantial at 7% in 2021.

So that's a clear lever for growth for us.

And we think this is -- as we go out in '21, '22, '23, this is really central to where we're taking the company.

It's really leveraging the cloud transformation to drive our revenue growth.

And that's going to happen through innovation in new products.

And Kevin, as you know, right, new products tend to deliver the most revenue for us kind of in year two or three of their life cycle.

So we're very excited about the fact that we have very strong obviously new product introductions in 2020, which benefit, as Mark referenced, 2021 vitality index and revenue contribution but should also be tremendously beneficial as we look to 2022.

That makes sense.

And then just real quick.

How soon can you be back in the market with restarted buybacks?

I think your question was about the buyback but I didn't hear the rest of it.

What was your question?

Sorry about that.

How quickly can you be back in the market?

We intend to start the buyback quite quickly.

And we'll level-load that through the year.

We think that's a positive step forward and reflects our confidence in the future of Equifax.

And we think it's a positive step forward to start with a buyback.

It will offset dilution from our employee plans.

And again, it reflects our confidence in the future of Equifax and is a first step forward in returning cash to shareholder base.

We'll take our next question from Toni Kaplan with Morgan Stanley.

Assuming -- once you get to the second half, assuming your mortgage market outlook is correct and that the market slows, I know you're confident in your ability to outperform the market.

But how do you think about the delta between your mortgage performance in the market when the market is slower?

Does that delta change because of the lower activity?

Or does it stay similar just because of your capability there?

Yes.

I think it's a great question, Toni.

I think you have to really separate USIS and EWS.

Workforce Solutions, both businesses are taking advantage of new products in the mortgage space and rolling out new products in an upmarket is positive and rolling out new products in a down market is positive.

So I think that's one.

They both have the ability to grow share, meaning grow new customers.

And Workforce Solutions has more capabilities there just because the Workforce Solutions data is less used, using mortgage as an example, than the credit file is.

And then Workforce has just more levers than USIS has and its ability to grow in all markets.

And you've seen that not only in 2020.

You've seen it in 2015, '16, '17, '18.

And you've also seen it accelerate their non -- their core growth, if you will, over the last year.

And that's driven by a more rapid increase in records.

We think it's driven by the scale of the database.

When you have hit rates that are north of 50% on the TWN data, that becomes increasingly valuable to customers, so that's driving usage of the data.

The value of predictability of income and employment data, there's just a lot more levers there.

So we've got a lot of confidence in both businesses' ability to outgrow the market.

That's underlying what Equifax does.

But I think it's safe to say Workforce just has a lot more levers.

And you add records on top of it.

As you know, adding records in an up or down market is what we do.

And we added 10 million records last year.

But as you know, we had some records leave the database as employment was reduced by some of our contributors.

So that was offset from that.

And in an improving economic environment, we would expect to see hiring improve with lots of our contributors, which is also going to drive records along with actions like the announcement that we shared this morning that we signed another big payroll processor to an exclusive agreement.

So the new products are going to help both businesses.

And we've got a lot of confidence in our ability going forward to outgrow underlying markets because of the uniqueness of our data, new products, penetration, new usage and, of course, Workforce with records.

And Toni, you're certainly right, right?

That lower market activity does affect growth rates and everything.

But again, as Mark said, our performance has been so strong relative to the market overall.

We feel very good about what that should portend even for the second half.

That's great.

And then I've been getting a lot of questions, I think, given the administration's recent appointments on regulators.

And so could you just talk about your view on what's maybe changed from a regulatory perspective this year?

Would you expect any meaningful changes to be implemented quickly?

And are there any areas in particular that you'd expect to see greater focus from regulators?

Yes.

We would argue that regulators have been quite strong for a long time, including during the Trump administration.

Equifax, of course, and our competitors has operated through the Obama administration, when there was a level of very strong regulation.

Going into the Biden administration, we don't expect meaningful changes.

And whatever they are, we'll respond to them.

We play an important role in the marketplace.

We've been highly regulated for a long time.

And we know what it takes to operate in a regulated environment.

I think that's an important characteristic that we have to respond to.

And we believe we'll be able to respond to the interest that the regulators have.

There's another question on the legislative side.

Is there going to be any changes legislatively around credit bureaus?

We don't think so.

We think that we provide a valuable service.

And we're focused on ensuring access to credit, the alternative data, which is a big priority of the current administration.

And we think we have a strong response to that.

We'll take our next question from Hamzah Mazari with Jefferies.

My question is around the fraud business.

Could you maybe just talk about what's differentiated in your offering?

And specifically as it relates to Kount's packing portfolio, which is pretty strong, could you maybe talk about the opportunity to repurpose some of those patents across your current portfolio?

Yes.

First off, Equifax has a sizable identity and fraud business.

We've talked a bunch about the market macro, which we think is very attractive.

As digitization increases, identity authentication really is critically important.

That was happening pre-COVID.

It was accelerated during COVID.

We think it's only going to continue to grow.

So we like the macro space, which is why we've been in it for quite some time.

And the idea of adding Kount has been on our radar for quite some time, where we knew Kount for four or five years.

We've watched them and had the opportunity to acquire them and closed the deal yesterday.

And what Kount brings is really combining with our differentiated data assets in identity and fraud really just a massive increase in data capabilities, signals.

The 32 billion interactions they have per year is just massive.

And the number of addresses, IP addresses, email addresses, phone numbers, physical addresses, just enhances the capabilities to provide higher predictability.

And so the combination of Kount data with Equifax data is going to enhance Kount in the retail and e-commerce space and also enhance Equifax in our traditional spaces.

And we'll -- this week, we're already off to the races of bringing Kount solutions to our banking and lending customers, for example.

The other thing attractive to us with Kount is it moves Equifax into a new industry vertical.

We were never in the retail and e-commerce space and Kount lives there quite strongly.

And then as you point out, they have some really attractive technology beyond their data.

If you combine a lot of their patents and technology capabilities along with Equifax's, including our patented AI technology, NDT, we think that's another powerful combination.

So we're very energized about the acquisition, excited to have it closed yesterday.

And we're off to the races as of yesterday afternoon of integrating and really moving to the market and driving the synergies that were part of our acquisition model as we get the business up and rolling as an Equifax company.

Great and very helpful.

Just my follow-up question and I'll turn it over is just when you look at your core growth pre-breach, I guess it was 8% then 2%, 3% sort of 2018 and '19.

And then we sort of jumped to 11% and guiding 14%.

What's the normalized level of core growth you think you can do consistently post the tech transformation?

Is it sort of an 8% number?

Or is it sort of 6%?

Any thoughts?

I know 2020 was a different year with sort of the Workforce Solutions business.

Yes.

We're not ready to put our long-term framework back in place.

But I can tell you we're getting to that stage.

I would expect it would be something we certainly want to do in 2021.

We'd like to see a little more -- a few more months under our belt of this COVID recovery to make sure we see that.

But I hope you get a sense that our confidence in the Equifax model is quite high.

When we look at the core growth in 2020 and the core growth expectation we have for 2021, that's a very meaningful number for us.

It's one that we have a lot of confidence in.

And we'll be ready to share our long-term framework sometime in 2021.

But I hope you get a sense that the power of Workforce Solutions obviously, as it moves to be a larger part of Equifax, is a positive for our core growth.

The new product focus that we have, we've been very consistent with you over the past couple of years, is that it's our expectation that the cloud investments that we've made will not only drive our margins and cash but will also drive our top line as we were able to deliver new solutions we couldn't do before and really drive our new products.

So those are all positives from our perspective in how we think of the long-term growth rate of the company.

And we'll be ready to share that with you in the coming future.

We'll take our next question from Kyle Peterson with Needham.

I just wanted to start off on the EWS segment.

You guys had really strong year there.

Have you guys noticed -- and one of your big competitors came out with an offering a few months back ahead of partnership with pretty big payroll provider as well.

Have you guys noticed any change in either the competitive environment or new business wins or any momentum over the last few months in that segment?

We have not.

We haven't seen any kind of commercial traction on that yet.

We expect there will be.

But at the same time, we've got a lot of confidence in the scale of the Workforce Solutions business model.

The 20,000 verification customer network that we have has taken a decade to build.

Our database is multiples of what we believe our competitors will ever be able to access given the scale of our additions.

And as a reminder, of the 114 million actives we have, 60% of those we've done with individual companies over a decade.

It takes a long time to build that database.

We also have a database that has 350 million total records, including inactive.

And 1/3 -- close to 1/3 of our revenue comes from inactive records, which is another characteristic that's very unique to Workforce Solutions.

So we've got high confidence in our business model.

And as we shared on this call, we signed an exclusive arrangement with another large payroll processor just last week.

That's going to be coming to TWN.

And they came to TWN because of the scale of our capabilities and what we can deliver for them and what they can deliver to their customers.

And then, of course, the revenue share opportunity is very meaningful with Equifax and is more challenged when you're in a start-up mode.

Got it.

That's definitely a very helpful color.

And then just a follow-up on the GCS business.

I know the partner revenue has kind of been in a tough spot.

Just what would it take for, I think, some of your partners to start upping their marketing and helping that trend kind of improve?

Is it is it better trends in like card and auto markets?

Or just like how should we kind of think about that business as the economy hopefully bounces back here in 2021?

You nailed it.

It's really the economic recovery.

It's their customers who are primarily card issuers, P loan originators having more confidence in building their originations.

What we believe many big card companies are doing is using their own modeling to generate new customers now.

And I would characterize more cautiously and we're seeing that in our revenue directly with card companies.

While it's improving, they're still cautious in this uncertain economic environment.

And when you're cautious, I ran a credit card business for 10 years, you're going to be careful about who you use for lead generating and generally focus on your own versus buying leads from someone else.

So it's our expectation that as the economy improves and as we move past the COVID pandemic to whatever the new normal is, our view is that we're starting to see that in the latter part of 2020 for sure in our non-mortgage businesses and continuing in January.

But that will also show up in -- for our lead generation customers and their revenue will grow.

And on GCS and so we're excited about our Consumer Direct business, right?

It continues to grow.

And we've seen the first growth out of it in quite a while, in the third and fourth quarter.

So we think that's a very positive outcome.

We'll take our next question from Manav Patnaik with Barclays.

I just have a few here.

So firstly, just on the organic growth.

I just wanted to confirm, right?

So in December, the implied organic growth is close to 6%.

Now it's 2.5% to 5%.

And I guess what you're saying is basically, the toughest comp that was created in 4Q is the reason why you just haven't updated it given the uncertainties.

Is that correct?

Yes.

So I'm going to make sure I understand the question.

I think you're asking about the difference between the framework we provided in December and the guidance we just provided.

Is that correct?

Yes.

Sorry.

You're just coming through -- I apologize.

That's all right.

Just on the core organic growth, right, because today's guidance implies 2.5% to 5% organic, which is lower than what it was in December.

Yes.

So we performed much better in December than we expected, right?

So our revenue came in very strong.

So I understand that you're talking about a growth rate off of our much stronger 2020 performance.

But our view of 2021, right, is actually slightly better than it was when we talked to you in December.

And we took -- we increased the bottom and top end of our range by $75 million.

And that reflects Kount.

It reflects some FX benefit.

But it also reflects the fact that we continue to believe there's substantial risk in the timing of the recovery.

So that's really what it is.

So yes, we had a stronger December than we expected.

So 2020 was very, very good.

But our view of 2021 is actually slightly better than it was when we talked to you in December.

Okay.

Fine.

And then in terms of the exclusive partnerships you have with the payroll provider, I understand why the large provider would want to come to Equifax.

But I'm just curious why did they sign exclusive?

I was just hoping for some color there because why not sign up with others as well and monetize their data multiple times.

Yes.

And Manav, you probably know from prior discussions that the bulk of our relationships are exclusive.

And we think that's the right arrangement between us and our partners.

The partners really think having one relationship is the way to operate.

And they believe that brings more value to their customer base.

Remember, if you're a -- use the example of the payroll processor.

This is not a core activity for you.

But by providing the income and employment verification services to their customers, they're providing a new value-added service from a company like Equifax.

They deliver that service to their customers, which are primarily they're processing payroll for, for free.

So it becomes more valuable.

And in our case, we just have more scale for their employees, meaning we can access 20,000 different mortgage originators, auto originators, card originators, meaning we can deliver more value to them than a start-up could, which is why their desire around exclusive is more important.

I think the scale of Equifax and Workforce Solutions also plays into it.

The history we have of over a decade of providing income and employment verification, the security and controls we have around privacy, around how the data is used is also a big part the discussion for our partners because they want to make sure they protect their customers' data.

All those play into why the bulk of our relationships are exclusive and why this one is, too.

Okay.

And if I could just squeeze in one quick one.

You talked about a lot of things.

But I just wanted to get an update on how you see your partnership with FICO fitting into the scheme of things and how that's doing.

Yes.

I'd say it's going well.

We launched it a couple of years ago.

We've got a couple of products in the marketplace.

We're still building out some of the technology.

But Will and I have a monthly call with the team to talk about progress.

And we still believe that, that's going to be positive for Equifax and for FICO.

So we're very committed to it.

And we're continuing to look for more solutions that we might do together that would leverage both Equifax and FICO.

We'll take our next question from Shlomo Rosenbaum with Stifel.

Just a few little ones to finish off.

John, just as you compare like the framework to the 2021 guidance, people are focused a lot on kind of the revenue growth rate change, which you stated has to do more with the outperformance in '20 than it has to do with expectations for '21.

But the redundant system cost has gone up a little bit, like $45 million to almost $60 million.

I was wondering if you can tell us what's just going on over there a little bit.

So was the question -- can you say the end?

You're a little garbled.

I didn't hear exactly what the end question was.

Sure.

Redundant system cost seems to have gone up from $48 million -- from $45 million to $58 million.

I was just wondering what's going on over there.

Sure.

So just as we continue to move through time, right, we get more clarity on the pace at which we're able to bring new systems to the cloud, which then drives the incremental costs that we're incurring.

And that continues to progress really well.

So as we continue to move forward, we're able to better view how those costs are going to be incurred.

And then that gives us a view as to when decommissioning will occur.

And just as you look toward in 2020, we have a very nice pace of new systems moving into the cloud, which will -- which should drive the very good 2022 performance that we've talked about and we talked about during the framework.

So we're just refining the model and continuing to work forward, slightly higher depreciation, I think we talked to you about before and slightly higher cloud cost.

In the context of our total cost base, not really a very big number.

Okay.

And then just -- you increased the share repurchase program.

It doesn't seem like it's that aggressive given the company's kind of return to growth.

Is there potential to kind of upsize that more during the year?

And also what about the dividend?

There hasn't been any change in the dividend in years as well.

Yes.

I think I hope you caught the characterization that we had is this is a positive step forward but I would also say it's not the last step for Equifax.

But we thought it was timely to at least start to return cash to shareholders and offset employee plan dilution.

And as we talked earlier on this call and we've talked for quite some time, it's our expectation that we'll be rolling out our long-term financial framework that will also include our capital allocation plan later in 2021.

We want to see a few more months of the COVID recovery before we put that in place.

But our confidence is quite strong on where we believe the company is going, which is why we opted to announce this first step in our buyback.

And as you know, our dividend growth was part of our long-term framework prior to the cyber event.

The stock buyback was also -- and we've been quite consistent that it's our expectation that both of those will be a part of our long-term framework and capital allocation in the future.

Okay.

If you don't mind me squeezing one more.

Social Security contract, is that same at 1/2?

Does that slip at all?

I kind of was under the impression that it was going to be starting in the first quarter of this year.

Your question is on the timing of the Social Security contract.

You're right, that is starting on the technical work in the first quarter.

And revenue will start -- as we get into second, it will continue to ramp through the year.

And I think we talked about the run-rate when fully deployed, which will be in 2022 full run-rate, is $40 million to $50 million a year of revenue.

We will take our next question from Brett Huff with Stephens, Inc.

Just one question.

It's a little bit bigger picture one.

As you guys think about the analytics market versus the unique data market, you're playing in both.

Can you talk about how you're thinking you attack that market?

Is it more do we lead with the data and back into the analytics as a cross-sell?

Or do we lead with the analytics products and then use the data to cross-sell?

Or am I thinking about that paradigm kind of incorrectly?

No.

I think you are thinking about it the right way.

And it really depends on the customer.

If you think about the larger, more sophisticated customers, they have very sophisticated typically analytics teams.

We still help them with analytics solutions, whether it's scores or models for them.

But they do a lot of that themselves so that they would be more of a data consumer but with a supplement of advanced analytics from Equifax.

And as you go down in the scale of customers, you quickly get into customers that are really looking for more turnkey solutions from us, meaning a full product.

And that would be new products, new scores, new solutions that really they can plug in as opposed to try to create themselves.

And that's why the capabilities we have, first and foremost, continue to expand our differentiated data assets is clearly at the heart of what we want to do.

And now that we have that data in the cloud in a single data fabric, it allows us and our customers to more easily access that data, in our case, to deliver analytic solutions that are just much more sophisticated and have multi-data elements to it that we think will be quite powerful going forward.

And you're starting to see that in our ramp in NPIs last year.

The 134 we delivered is really a good example of our focus on bringing those solutions to market.

Just a quick follow-up.

From a buying behavior point of view, are we getting more kind of offers of the enterprise data?

Is there data analytic bar at I don't know, medium, large enterprises?

And are they doing buying there?

Or are we still selling individual business units and maybe the left hand and the right hand don't know that they're both buying from you guys or another analytics company.

It, again, depends on the size of the company.

There's a lot of companies that leverage their sourcing relationships to try to package everything they do, which from our case, we view as advantageous in most cases because of the -- particularly the strength of TWN.

If you're bringing that in the commercial relationship, it's just a very valuable data asset.

There are still a lot of customers that buy by product line.

That's who we interact with and that's who we're working and bringing solutions to.

We're bringing different solutions to the mortgage business unit inside of a financial institute in regard of the auto or card or P loan.

So it does vary on what we're bringing from analytics as well as product capabilities.

So it is varied by customer.

We'll take our next question from Andrew Nicholas with William Blair.

You spent $32 million on organizational rightsizing in the quarter.

It sounds like it was necessary to enable some of the deceleration in tech transformation spend you expect this year.

I'm just wondering if there are additional costs of this type or this nature you'd expect to incur in 2021.

And if so, are those included in the $145 million of onetime transformation expense you've outlined for the year?

So I think when we talked in December, right, we indicated that we would expect to see some decline in tech transformation expense by quarter as we go through the year.

And you can see that because the $45 million in the first quarter is obviously more than 25% of the total that we gave.

So we will -- you'll see a decline in our tech transformation expense as we go through the year.

And I think as we get into talking to more fully about '22, we can talk about whether there could be additional rightsizing costs that could come.

But there would be nothing included in our guidance.

Got it.

Got it.

And then switching gears a little bit.

I was hoping you could refresh us on the open banking opportunity abroad.

Maybe provide a bit more color on how AccountScore addresses this opportunity specifically.

And then lastly, your expectation that the AccountScore acquisition could benefit other capabilities or provide other capabilities that you can port over to other regions.

Or is that primarily a European business?

Yes.

It's a great question.

Open banking, as you know, is really gaining some traction in many markets like the U.K. and Australia.

And in all of our markets, we have partnerships.

Like in the United States, we have a partnership with Yodlee around consented data.

And we've got a partnership in Canada.

We got another one in Australia and our partner in the U.K. with AccountScore.

And there was an opportunity to acquire them, which we thought was very strategic and -- very strategic for our U.K. business.

And we also believe, as you point out, that there's going to be some capabilities around categorization from assets that they have and capabilities and some of their technology that we may be able to use in other markets on a global basis.

We will take our next question from Andrew Jeffrey with Truist Securities.

I have a question, Mark, just specifically on EWS unemployment.

I realize it's a relatively small business in the grand scheme of things.

But the guidance this year, can you unpack that a little bit in terms of whether that's purely a return to something like full employment in the U.S. or if there was any transitory benefit from pandemic in terms of employers that might have come to you for assistance and automation that they perhaps no longer need as the economy recovers?

Just a little more color there would be helpful.

Yes.

Sure.

We -- as you might imagine, we're adding customers during 2020 as we normally do in Workforce Solutions and Employer Services.

And we provide -- we have a lot of value-added services that are beneficial.

In some regards, the macro, when a company is struggling, they look for ways to improve their efficiencies.

And by outsourcing Equifax, some of those activities to Workforce Solutions, there's a positive there for them.

So that was clearly a part of our focus in 2020.

It will continue in 2021.

And then, of course, the big macro was less employees or reducing employees generally is lower activity for our Employer Services business.

And as we have seen some pickup and we expect that to continue in 2021 as the COVID recovery unfolds, that will be a positive for that business.

And then on top of that, we talked about some of the product stuff we're doing.

Like the I-9 Anywhere really had very, very strong growth just give the uniqueness of the solution, allowing a prospective employee to complete that process remotely.

It was a positive during COVID but it's also positive longer term.

It just is faster.

They don't have to come to the HR office.

And we can do that with so many different locations that really drives speed.

A lot of employers want to get employees on the floor or into the warehouse quickly.

And this capability really helps drive that speed element.

And just specific to 2021 guidance, the decline in the unemployment insurance claims revenue that we gave was specifically just related to the -- to an assumed economic recovery and substantial reduction in unemployment claims.

So there's no -- there's nothing else behind it.

Okay.

That's helpful, John.

And then just as a quick follow-up.

Can you just speak to, at a high level, how much, if any, of the tech replatforming savings you anticipate next year are likely to be reinvested in the business?

I think where we gave some framework on 2022 that you've seen on what we expect the savings to be.

We haven't -- we're not ready to give 2022 guidance.

I think we're clear in December, we have been all year, that we expect the tech savings to enhance our margins.

But we also expect to continue to invest in Equifax going forward, whether it's in new products or other priorities.

And when we share our long-term growth framework, we'll give a real framework on that on the long-term basis.

And we'll certainly walk you from '21 and '22 to that long-term growth framework that we'll be putting back in place.

We will take our next question from George Mihalos with Cowen.

Just wanted to ask at a high level, Mark, as you see some of these newer sort of payment products, buy now pay later and the like, can you talk a little bit about the conversations that you're having with your FI issuer customers?

How are they thinking about that from a competitive standpoint?

Is that something you think can have an impact on your business, either negative in terms of lower card growth or positive in terms of needing more of your services for them to compete?

Yes.

It's the latter.

We're talking to all of them.

We're providing data and services to them.

They still have to do a level of underwriting as anyone would if you're going to extend credit.

And for us, we view it as a positive macro, meaning if there's more lending -- in essence, this is a buy now, pay later of lending.

That's positive for Equifax because we can help them.

It's authentication.

As a part of that, you have to verify that the individuals are who they say they are.

And there's an element of underwriting that takes place.

And then there's another piece around that at data.

And we're working with that ecosystem to collect that data so we can add it to our existing data in order to help them in their processes.

Okay.

That's helpful.

And just a quick follow-up on the buyback.

We should be thinking that this is designed to offset that you should not to actually reduce share count.

Is that the right way to be thinking about it from a modeling standpoint?

Correct.

That's our intention with this first step in our buyback program was to offset share dilution from employee plans.

And we think it's a show of confidence.

Hopefully, you view it that way by Equifax as a step forward in our confidence in the future.

We'll take our next question from Jeff Meuler with Baird.

Mark, you gave some good commentary on EWS record contributor relationships and incentives.

I want to try to simplify it.

But obviously, there's a risk that I'm going to miss something important in that.

But -- so I would love correction if I'm wrong.

So the exclusivity ask is from Equifax.

The common contractual relationship with a partner channel is revenue share.

It's a dual-sided network and you have the biggest network of verifiers.

So there's a better revenue opportunity for your partners by partnering with Equifax.

Is that the primary motivation of the two sides?

Or is there some other benefit to contributors to sign an exclusivity with Equifax?

Yes.

I think I shared that earlier question.

I don't know if you caught that.

So you hit obviously very important points for the partnership.

But it's also really important, Jeff, to understand that this is a very important relationship because it's a relationship between the partner, call it, a payroll processor and their customer, meaning a company, the HR manager.

And there's a lot of trust around that.

So there's also an element that who are you going to partner with and what's their history of being in the space.

The fact that we have a million companies contributing to us and that 60% of the data assets that we have, we've gone to -- company-by-company to collect, now that history plays in that conversation very, very strongly, meaning that we've done it.

We do it well.

We protect the privacy.

And then there's also the scale to the employee.

Remember, this is a real benefit for a company's employees to help them with their financial lives and how they access credit.

And if you look at the alternative, that payroll processors companies today, their customers, they're doing that verification individually by the HR manager.

There's a lack of privacy.

There's a lot of work involved.

How do you know it's a mortgage company calling that HR manager, that small company to verify the income and employment of one of their employees?

We do that all for them.

So it's a very important relationship.

So it's a value-added service.

And the idea of having two companies do it versus 1, our conversations with our partners is there's not a lot of interest in that for the economic reasons you raised.

But I would argue more importantly because of the scale of Equifax, the scale of Workforce Solutions, the scale of our privacy and data capabilities, our business model and how we operate.

That is as important or more important than the revenue share, which, of course, we believe it's very hard to compete with Equifax from a revenue share standpoint.

Got it.

Glad I asked that helpful additional color for me.

And then just a definitional question.

Is core growth organic constant currency?

Or does core growth include the impacts of acquisitions and FX?

It includes the impact of acquisitions and FX.

Although on that slide, we did give you what those impacts are, right?

So we always break those out every quarter (inaudible).

We'll take our next question from Simon Clinch with Atlantic Equities.

I was wondering if we could just go back to USIS margins in the quarter.

And John, I believe you talked about mix issues or the mix impact on margins there.

And I was wondering if you could help us think about -- how to think about the incremental margins, excluding the tech transition costs as we go forward through '21.

And specifically, if we're modeling mortgage revenue declines or headwinds in the second half, does that mean we should expect higher incremental margins and vice versa?

Yes.

So specifically, we're referencing USIS.

And as we talked about in the past, so the margins on mortgage, specifically because of Mortgage Solutions, are lower, right?

So the two factors are obviously in Mortgage Solutions, we buy and resell the trended file from our competitors.

And then also the score costs and mortgage are just higher than they are in any other vertical.

So those two factors negatively impact our gross margin on mortgage.

So yes, as mortgage grows substantially, it's a negative to margin percentage, it's obviously very profitable, right, but negative to margin percentage for USIS.

And as mortgage declines, it's somewhat of a positive.

Obviously, that isn't the only factor that moves -- that affects margins.

So I can't tell you that, that's the only thing that we'll move them around.

But as you're thinking about it, yes, that's correct.

Okay.

All right.

And just a follow-up.

Maybe we could jump back to the EWS and the payroll processor agreements you have in place.

In terms of the -- well, I guess I'm taking a step back and thinking bigger picture here.

Is there any reason to think that, say, in 10 years' time, this market will become -- would move from these sort of exclusive relationships to maybe dual sourcing in any way as it has done in sort of other parts of, say, the credit market, for example?

And if not, why wouldn't that be the case?

Yes.

We don't think so, given the scale of our capability.

Remember, it's quite important that only 40% of our data records, and of course, it is 40%, come through this partnership model.

60% are individual companies that we've added over a decade.

And that takes a lot of effort to add those, going into a company, convincing them you have the capabilities.

And of course, we do it every day.

We're adding companies every week individually at the same time as we're working on these larger partnerships with payroll processors.

So that scale really gives, we believe, Equifax a real advantage in what we deliver to our customers.

And then also how a contributor, meaning whether it's a company or a partnership like a payroll processor, thinks about working with someone like Equifax just because of the scale of our capabilities.

And we're showing pretty clearly that we're expanding that scale.

10 million record additions last year.

The conversation we had earlier about a very large payroll processor moving forward with us on an exclusive basis later this year.

There's a real momentum there for the business going forward.

And then the other element, I think, as you know, is that we're going beyond the W-2.

We want to expand to 1099 in self-employed and gig employees.

So there's a lot of work going on by Equifax there.

It's just another vertical data records for us that we think is quite attractive.

And we talked also about even moving beyond -- our intention is to move beyond income and employment and look for other data records that are a part of that hiring process, whether it's licensure or other data records.

I understand.

So just to follow up quickly there.

In terms of the companies that provide the data, is that invariably a highly labor-intensive collection or arrangement there?

I'm just wondering if there's some way in the future that, that becomes more automated and easier to collect and so easier for new entrants to start chipping away at those individual relationships.

No.

There are big tech companies that are highly automated.

And we've talked in a couple of questions on this call about the sensitivity they have.

They're in the business of processing payroll and other services for the HR manager.

That's their core business.

And they want to make sure that if they're going to partner with someone on income and employment verification, that they're doing it with someone who's going to deliver real value to their customers, that's going to be done securely with real privacy.

And of course, we've been in this business for a decade.

And then also, the idea of a revenue share because of our scale, we can monetize those records quite broadly across the 20,000 verification customers we have.

That becomes an advantage in that relationship.

We'll take our next question from George Tong with Goldman Sachs.

You expect more revenue growth to be 10.5% in 2021.

Can you discuss how much of the 10.5% you expect from outperformance to the mortgage market and then break out where you expect the remaining growth to come from in detail, if you have it?

Yes.

So I don't think we're going to give a lot more detail than the 10.5% that we provided.

But what we would expect to happen as we move through the year, right, is we've talked about the fact that we expect underlying economies to improve.

So we expect our non-mortgage revenue growth to improve meaningfully as we go through 2021.

So you'll see non-mortgage be a substantially larger contributor to core revenue growth as you move through the year.

So that is -- we do expect that to occur.

And we think that's one of the contributors to the fact that we'll be able to deliver very nice core revenue growth even in a declining mortgage market.

And just a follow-up on that first question.

Before, on the business update call, you did say that you expected outperformance of the non-mortgage market to be less than half of the core growth this upcoming year.

Is that still the case here?

So you're talking about a comment on the December 7 call?

Yes.

Yes.

So I think what we expect is what I just said, right?

We're expecting to see very nice improvement in our non-mortgage revenue, not just in the U.S., not just in EWS and USIS but also internationally.

And I think that will provide substantially more contribution to core revenue growth in 2021.

Got it.

Got it.

That's helpful.

And then Mark, you expect the U.S. mortgage market to increase 15% in the first half of 2021 and then decline 23% in the second half of the year.

How would you handicap the upside/downside potential to your forecast based on the refinancing opportunity out there and also home purchase trends?

That's a tough one.

We're not economists, obviously, and we're certainly not built to forecast that.

We try to be really transparent, George, with you and our investors in -- all throughout 2020 in the December call and this one, too, and try to take all the forecasts that are out there from MBA and Black Knight and others and bring it together in something that felt reasonable.

We still think that feels reasonable that there will be a decline certainly at some point.

We could spend a long time on this call talking about the positives and negatives that might drive that.

Obviously, low interest rates are positive.

I think the Fed's position is positive.

Where the COVID recovery is going, it feels a little more uncertain, which is obviously a part of our forecast for -- and guidance for 2021.

And we still feel good about that framework, which is why we shared it in December and we haven't really changed it as we sit here now in February.

And we still think it's the right way to start the year as we think about guidance for Equifax.

We will take our next question from Gary Bisbee with Bank of America.

Mark, I just wanted to clarify something from your prepared remarks.

I believe I heard you say USIS non-mortgage revenue was flattish in Q4, which is improvement obviously from the prior quarter but then up 5 in December and up 6 in January.

Was that right?

Or was the up 5 and 6 something else?

And if so, what's driven that sequential improvement in trend in recent months?

So just to be clear, I think the commentary was specific around online, okay, not around total.

And all I was trying to indicate is that basically the trend was improving through the fourth quarter and we saw a nice performance in December.

And effectively, it's continuing in January.

That's all.

And what are the key underlying drivers of that?

Is it more the sort of consumer credit activity?

Or is it new products or other things you're doing to deliver that?

Well, there's no question that there's an element of economic improvement or consumer activity by our customers.

There's no question there.

And we've talked about that in third quarter, we saw kind of steps forward in the fourth quarter and that's really continuing.

And then on top of that, we're in the marketplace.

Whether we're trying to gain share or roll out new products, that's a positive element on that also but certainly underlying that is economic activity.

All right.

And then just a quick follow-up.

Just a level set for us, can you tell us what percent of 2020 revenue in both USIS and Wrkforce is mortgage related?

So we will post, shortly in five minutes, updated views of revenue by vertical for every business we get in Equifax.

So if it's okay, if I could ask you to wait five minutes, you'll see it you'll see it posted on the website.

And that concludes today's question-and-answer session.

I would like to turn the conference back to Mr. Hare for any additional and closing remarks.

Thanks, everybody, for joining today's conference call.

We look forward to engaging with you again in April, when we release our first quarter of 2021 results.

In the interim, myself, Mark as well as John look forward to engaging with you in different forums throughout the quarter.

This does conclude our conference call.

Thank you.

That concludes today's presentation.

Thank you for your participation.

You may now disconnect.