Good day, and welcome to the Equifax Fourth Quarter 2020 Earnings Conference Call. Today's conference 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 am Dorian Hare. With me today are Mark Begor, Chief Executive Officer; and John Gamble, Chief Financial Officer. Today's call is being recorded. An archive of the recording will be available later today in the Investor Relations section in the About Equifax tab of our website at www.equifax.com. During the call today, we will be making reference to certain materials that can also be found in the Investor Relations section of our website under Events and Presentation. These materials are labeled Q4 2020 Earnings Release Presentation. During the call, we'll be making certain forward-looking 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'll 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 right sizing the organization as investments in technology transformation are reduced in 2021, as compared to 2020. Also in the fourth quarter, Equifax change its method for accounting for pensions to recognize the measurement of benefit, obligations and plan assets to earnings annually can cease delayed recognition of gains or losses caused by changes in discount rates, or other extra value assumptions such as mortality, and planned 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 non operational in nature. Pretax mark-to-market adjustments resulted in the pretax gain of $4.8 million in 2019 and the pretax loss of $32.2 million in 2020. The details of this change in pension accounting are included in the fourth quarter 2020 earnings press release on slide 25 of the 4Q 2020 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 in 2020 results, I want to take a moment to thank our 11,000 employees and families who have supported them with a tremendous dedication they showed under the challenging COVID environment during 2020. We continue to make the health and safety of our employees a top priority and I hope you and those close to you remain safe. Turning towards to slide 4, I wanted to start with a review of our business model, growth strategy and cloud investments that positions 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 a global identity and fraud and AccountScore for UK open banking and data categorization are examples of accelerating focus and 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 Equifax cloud native footprint is enhanced our ability to integrate new partners and acquisitions into 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 an industry leader in security.…

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're providing are consistent with that view, as are the basic economic and market assumptions underlying them. However the progress with COVID-19 vaccines and expected substantial additional economic stimulus are promising to the 2021 economic recovery. There remain significant uncertainties regarding the timing and pace of economic recovery in the US, as well as internationally. Consistent with our discussion in December, our 2021 guidance assumes US mortgage market are proxy for which is US mortgage credit inquiries will remain strong in the first half of 2021, but declined in the second half. We assumed 2021 credit inquiries overall to be down about 5% versus 2020. The first half credit inquiries up almost 15% and second half inquiries down over 23%. For perspective, US credit inquiries in first half 2021 are assumed to grow about 6% from the strong level we saw in the second half of 2020. January was strong and confirms this trend. Equifax US b2b mortgage revenue, EWS and USIS will continue to significantly outpace the overall mortgage market growth of over 10%. US 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…

Thanks, John. Turning to slide 19; we made significant progress on our cloud data technology transformation in the second half of last year. Progressing through the data product and customer migration stages of our North American technology transformation. The pace of product and customer migrations continues to accelerate and as of year end 2020, USIS completed over 12,000 customer migrations onto cloud based services including our Intertech Ignite and API capabilities. And Workforce Solutions also completed over 26,000 customer migrations and verification services onto its cloud based portals in online fulfillment 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 need to remain on track to have our US 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 US and Canadian consumer risk, the work number and NCTUE exchanges. In 2021, we're accelerating strange migration to the data pack, Europe, LATAM and Asia Pacific. Europe and Latin America I've already made substantial progress in deploying interconnect, ignite in our API frameworks in the cloud. And as of 2020, 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 will 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…

[Operator Instructions] We will take our questions from David Togut with Evercore ISI.

Thank you. Good morning and appreciate the detailed business and guidance update. 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 employers services and verification, and maybe just close on your expectations for record growth in 2021

Yes, we believe in we talked about it that the workforce is clearly our most differentiated business. And when we talked about the strong performance in 2020 that follows from performance in 2017-2018 and 2019. So they've got 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 workforces 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. 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, 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. 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 verifications, clearly they aren't 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 and elements of that business as the market improves, and the economy improves kind of post vaccine. Now we're targeting that 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 the quality I-9 Anywhere that is 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?

I mean government, we expect government to continue to grow very, very nicely, right, we have obviously have a substantial new contract in the government segment and also we continue to build out our suite of solutions that service 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 they're talking about that being at run rate of $40 million or $50 million a year contract, and that's going to ramp during our 2021, then becomes a full vendor in 2022. 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, if you see a ceiling on either down 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 need to 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, over the last three years, and even in 2020, we reinvested that quite substantially in the workforce in the USIS whether it was obviously in the cloud transformation investments, but then new products and new D&A 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 one way of growth potential for Workforce Solutions. I think I talked about what our expectation workforce will becomes, 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 higher accretive nature of its margins.

Only thing I'd add, obviously, is in terms of acquisitions as well, workforce an area where we're focused, as well as obviously other parts of the business but it continues to be a focus area.

I'll take our next question from Andrew Steinerman with J.P. Morgan.

Hi, there. For the sake of clarity, could you just state what the organic revenue growth is assumed for the 2021 guidance at the midpoint and has this estimate of revenue growth for 2021 change since December call, particularly just asking about the Kount revenues, I assumed Kount revenues weren't in the December call and are in it today?

Yes, so slide 18, we indicate that included in the 2021 guidance, there's about 1.2 points from acquisitions. Right, so if you think about Kount, 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 2021 change between the December call and today?

It hasn't, Andrew, 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 to 10.5% in 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, January. So I think that's positive towards that assumption that we have and of course, our assumption is that the mortgage market, while still very strong would 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 can support that 10.5%.

And just if you're asking specifically about the numbers between the frameworks we provided in December, and today, they are up about $75 million right on the top and the bottom end. A chunk of average Kount which we just talked about right continues and then also there were some FX benefit. And it also reflects the fact that we think there's obviously risk and timing of recovery of the US economy and other economies. So that $75 million improvement from both the top and bottom reflects those three factors, and obviously we performed a lot better in 2020. And we have talked about in December. So the actual calculated growth rates look different, obviously, are 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 will take our next question from Kevin McVeigh with Credit Suisse.

Great. Thanks. Any sense of how shift to the cloud is impacting both the pace and cost of new product innovation to dosing end of year to 134. So from the beginning of the year, how should we think about that pace in 2021? And then is there any way to reconcile as to what it can lead to organic growth? Does that have the potential to accelerate the core organic growth as you saw this new product innovation to transact infrastructure higher level and [Indiscernible], 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 we talked throughout 2020, we invested more in product resources to really start driving that leverage of the cloud investments, as we focus, when completing the cloud transformation, but more importantly, leveraging it. And as you point out, 134, is a really big increase from our historical 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 for growth in 2018, and 2019. And actually, up from our historical, kind of pretty, cyber growth rates and NPIs are clearly going to be a big factor in that. In my comment, I mentioned that, I think it was 50% of our NPI during 2020, we're really leveraging the cloud as we move into 2021, that'll 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. And we have been given assumption or a target for the number of new products for 2021. I think we were clear about our vitality index, which really drives the organic growth among products have been quite substantial 7% in 2021. So that's a clear lever for growth for us. And we think this is, as we get out in 2021, 2022, 2023, this is really central to where we're taking the company is really leveraging the cloud transformation to drive revenue growth, and that's going to happen through innovation and new products.

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, which should also be tremendously beneficial if we looked at 2022.

That makes sense. And then just real quick S&P back in the market with restarted buyback.

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 tend to start the buyback quite quickly. And we'll lever 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, that will offset dilution to our employee plans, and again, it reflects our confidence in the future of Equifax and is the first step forward in returning cash to shareholders.

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

Thank you. 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 and 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 capabilities?

I think it's a great question, Tony, I think you have to really separate USIS and EWS. Workforce Solutions for both businesses are taking advantage of new products in the mortgage space and rolling out new products in an up market is positive and rolling up 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 capability there just because the Workforce Solutions data is less used, using mortgage as example than the credit filer, and then workforce has just more leverage 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, 2016, 2017, 2018. And you've also seen it accelerate, they're not, if 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 leverage, and you add records on top of, as you know, adding records in an upper down market is what we do, and we added 10 million records last year, or did 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 a improving economic environment, we would expect to see hiring improved, 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 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 on new products and penetration, new usage, and of course, workforce with records.

And, Tony, you're certainly right, right, that lower market activity does affect growth rates and everything. But again, as Mark said, our performances has been so strong relative to the market overall, we feel very good about what that should work handy for the second half.

That's great. And then I think 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 may be 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? Thank you.

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 operated through the Obama administration, when there was a level of very strong regulation, going into Biden administration, we don't expect meaningful changes, whatever they got 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? And so we don't think that we provide a valuable service. And we're focused on ensuring access to credit through 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.

Good morning. Thank you. 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 patent portfolio, which is pretty strong, could you maybe talk about the opportunity to repurpose some of those standards across your current portfolio?

Yes. Of course Equifax has a sizable identity fraud business. We talked a bunch about the market macro, which we think is very attractive, as digitization increases identity and authentication, really is a critically important thing 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. But we know we knew Kount for four or five years. We've watched them and had the opportunity to acquire them and close the deal yesterday. And what Kount brings is that you're really combining with our differentiated data assets and identity and fraud, really just a massive increase in data capabilities signals. The 32 billion interactions they have per year are 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 ecommerce 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 attracted to us with Kount is it moves Equifax into a new industry vertical, we were never in the retail and ecommerce space and Kount lives there quite strongly. And then as you pointed out, they have some really attractive technology beyond their data. If you combine a lot of their patent and technology capabilities, along with Equifax is 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 now 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 turn it over is just when you look at your core growth, pre breach, I guess it was 8% then 2%, 3% for 2018 and 2019. And then we sort of jumped to 11%. And then you're guiding for 5%. What's the normalized level of core growth? You think you can do consistently for post 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 will 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 a 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 will 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, it needs 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 is we're able to deliver new solutions we couldn't do before and really drive our new products. So those are all positives from our perspective, and 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 will take our next question from Kyle Peterson with Needham.

Hey, good morning, guys. Thanks for taking the questions. So just start off on the EWS segment, you guys have really strong year there. Have you guys noticed in one of your big competitors come out with an offering a few months back and had a partnership with a pretty big payroll provider as well. Have you guys notice any change in either the competitive environment, or new business wins or any momentum in the last few months in that segment?

We've 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 a Workforce Solutions business model, the 20,000 verification customer network that we have, it's 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 had a database that has 350 million total records including inactive and a third, close to a third of our revenue comes from inactive records, which is another characteristic is very unique to workforce solutions. So we've got a 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 between 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, it's a very meaningful with Equifax. And it's more challenged when you're in a start up mode.

Got it. That's something very helpful color. And then just a follow up on the GCS business. I know the partner revenue is kind of in a tough spot. Just what would it take for I think some of your partners to start pumping their marketing and helping that trend kind of improve? Is it the better trends in like cars 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 customer, 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 so 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 gen, lead gen 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'll also show up, for our lead generation customers, and their revenue will grow.

And GCS and global work, we are excited about our Consumer Direct business, right, that 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 will take our next question from Manav Patnaik with Barclays Capital.

Thank you. Good morning. I just had a few there. 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 a reason why you just haven't updated and given the uncertainties, is that correct?

So I'm going to make sure I understand the query, I think you're asking about the difference between the framework we provided in December, and the guidance we just provided, is that correct? You're just coming through that. 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 more than what it was in December?

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 benefits. 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 have 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 we 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 hoping for some color there because why not sign up with others as well and monetize their data multiple times.

Yes, Manav, as you probably know from prior discussions, 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 -- easy example of a 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 their processing payroll for free, so 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 originator, car originators, meaning, we can deliver more value to them than a startup 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 over a decade of providing income and employment verification, the security in debt controls we have around privacy, around how the data is used is also a big part of the discussion for our partners, because they want to make sure they protect their customers data, always 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; I just want to get an update on how you see your partnership with Syco fitting into the scheme of things and how that's going. Thanks.

Yes, so it's gone well, we launched a couple 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 Syco. 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 Syco.

We will take our next question from Shlomo Rosenbaum from Stifel.

Hi, good morning. Thank you for squeezing me in here. Hey, just a few little ones to finish off. John, just as you compare like the framework to the 2021 guidance. People focus a lot on kind of the revenue growth rate change, which you stated has to do more with the outperformance in 2020 than it has to do with expectations for 2021. Redundant system processes that have gone up over 45 million to almost 60 million. I was wondering if you can tell us what's going on over there a little bit.

So was the question, what was -- can you say the end, I think that you were 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 -- $45 million to $58 million. I'm 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 that 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 to within 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 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 costs, in the context of our total cost base, not really a very big number.

Okay, thank you and then just increase 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 upside down more during the year? And also what about the dividend? There hasn't been a change in the dividend in the years, as well?

Yes, I think I hope you caught the characterization that we had. This is a positive step forward. But I would also say that 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 as we talked earlier in 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 but 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 was quite strong and where we believe the company's going which is why we opted to announce this first step in our buyback and as you know like our dividend growth was not part of our long term framework prior to the cyber event and stock buyback was also and we've been quite consistent, but 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, I might just squeeze one more, social security contract is that same one half. Does that slip at all? I kind of -- was under the impression that was going to be starting in the first quarter of this year.

Questions on the timing of this social security contract? That is starting on the technical work in the first quarter and revenue will star, as we get into second. It'll 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'll take our next question from Brett Huff with Stephens Incorporated.

Good morning. Thanks for all the details guys. I'll just -- just one question. So the bigger picture one, as you guys think about the analytics market versus the unique data market, you're playing in both. And 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 of the cross sell? Or do we lead with the analytics products and then use the data as a cross sell? Or am I thinking about that paradigm, kind of incorrectly? Thank you.

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 analytic 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 and the scores, new solutions, they really they can plug in as opposed to try to create themselves. And that's why the capabilities we have, first and foremost, continuing 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, and 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 like going forward. And you're starting to see that, ramp and 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 office of the enterprise data? Is there a data and analytics czar at? I don't know medium, large enterprises? And are they doing buying there? Or are we still selling into 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's again depends on the size of the company. There's a lot of companies leverage their sourcing relationships to try to package everything they do, which from our case, we view is advantageous in most cases, because of the particularly the strength of TWN. If you're bringing in 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 institution than we are to the auto or card or P loan. So it does vary on what we're bringing from analytics as well as product capability. So it is varied by customer.

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

Hi, good morning. You spent $32 million on organizational right sizing in the quarter sounds like it was necessary to enable some of that deceleration and tech transformation spend you expected this year. I'm just wondering if there are additional costs of this type of this nature you'd expect to incur in 2021. And if so, are those included in the $145 million of one time transformation expense you've outlined for the year?

So I think when we talk 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 if we get into talking to more fully about 2022, we can talk about whether there could be additional right sizing costs that could come. But there would be nothing included in our guidance.

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, is it your expectation that your AccountScore acquisition could benefit other capabilities or provide other capabilities that you can pull over to other regions? Or is that primarily a European business? Thank you.

Yes, great question. Open banking is as you know is really getting some traction in many markets, like the UK and Australia. And in all of our markets, we have partnerships like in the United States, we have a partnership like with Yodlee, around consented data, and we've got a partnership in Canada, we got another one in Australia and our partner in the UK with AccountScore, and there was an opportunity to acquire them, which we thought was very strategic, and very strategic for our UK business. And we also believe, as you point out that there's going to be some capabilities around categorization, assets that they have and capability and some of their technology that we may be able to use in other markets on a global basis.

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

Hey, guys, lots to digest here. Appreciate the insights. I have a question Mark, just specifically on EWS unemployment, I realized it's a relatively small business in the grand scheme of things, but the guidance is here, can you unpack that a little bit in terms of whether that's purely returned to something like full employment in the US, or if there was any transitory benefit from pandemic in terms of employers that might have come to you for assistance in automation that they perhaps no longer need as the economy recovers just a little more color, that would be helpful.

So 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 to macro, when a company is struggling, they look for ways to improve their efficiencies, and by outsourcing to Equifax, some of those activities to workforce solutions, there's a positive there for them. So that was clearly part of our focus in 2020 it will continue in 2021. And then, of course, the big macro is less employees or reducing employees, generally is lower activity for our broader services business. And as we seen some pickup, we expect that to continue in 2021, as the COVID recovery unfolds, that'll be a positive for that business. And then on top of that, we talked about some of the products stuff that we're doing like the I-9 Anywhere is really a very, very strong growth just because the uniqueness of the solution, allowing a prospective employee to complete that process remotely, 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 so many different locations, that really drives speed and 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 an assumed economic recovery and substantial reduction in unemployment claims. So there's no -- there's nothing 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 report platforming savings you anticipate next year are likely to be reinvested in the business?

I think we gave some decent framework in 2022; you've seen and what we expect the savings to be, we haven't -- we're not ready to give 2022 guidance. I think we were clear in December. We have been all year that we expect the tax savings to enhance our margin but we also expect to continue to invest in Equifax going forward, whether it's a new products or other priorities. And when we're -- when we share our long-term growth framework, we'll get a real framework on that, on the long-term basis, and will certainly walk you from 2021 to 2022 to long-term growth framework that we will be putting back in place.

Our next question comes from George Mihalos with Cowen.

Hey, good morning, guys. Thanks for taking my questions. Just wanted to ask at a high level Mark, as you see some of this newest 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 meeting more of your services for them to compete?

Yes, it's a latter, we're talking to all of them and providing dating services to them, they still have to do a level of underwriting is anyone who would if you're going to extend credit. And for us, we view it as a positive, macro meaning that there's more lending in essence this is a buy now pay later is a lending. Now that's positive for Equifax because we can help them it's authentication as a part of that you have to verify to the individuals who they say they are, and there's an element of underwriting that takes place. And then there's another piece around that 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 dilution 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 do it that way by Equifax, as a step forward in our confidence in the future.

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

Thank you. Good morning, Mark, you gave some good commentary on EWS record count 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 would love any correction if I am wrong. So the exclusivity ask is from Equifax, with 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 are there some other benefits to contributors to sign exclusivity with Equifax?

I think I shared that with 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 called payroll processor and their customer meaning accompany the HR manager, and there's a lot of trust around that. So there's also an element of who you're 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 they're just 60% of the data assets that we have, we've gone to company by company to collect 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, 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 if a mortgage company calling that HR manager at that small company to verify the income and employment of one of their employees? We do that a lot for them, so it's a very important relationship. So the value added service and the idea of having two companies do it versus one our conversation with our partners is there's not a lot of interest in that, for the economic reasons you raise, 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. But I asked for couple additional color for me. And then just a definitional question is core growth, organic constant currency or this core growth includes 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, yes. We always break them down every quarter.

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

Hi, thanks for taking my question. I know we're coming quite long into this call. I was wondering if we could just go back to USIS margins in the quarter. 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 2021. And specifically, if we're modeling mortgage revenue declines or headwinds in the second half, does that mean you should expect higher incremental margins and vice versa?

Yes, so you're specifically referencing USIS, yes, and as we've 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 cost some 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 the margin percentage is obviously very profitable, right. But negative to margin percentage for USIS and as mortgage declines, it's somewhat of positive. Obviously, that isn't the only factor that moves that affects margin. So I can't tell you that that's the only thing that will move them around. But as you're thinking about it, yes, that's correct

Okay, all right. Thanks. And just follow up. Maybe we could jump back to the EWS and the payroll processor agreement you have in placed. In terms of the -- well, I guess, I'm taking a step back and think bigger picture here. Is there any reason to think that say in 10 years time this market would become -- would have removed from these sort of exclusive relationships to maybe dual sourcing in any way, as it has done in other parts of 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 delivered to our customers, and then also how a contributor meaning whether it's a company or a partnership, like 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, they will 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 that I think as you know is that we're going beyond that W2, we want to expand to 1099 and self employed and gig employees. So there's a lot of work on that by Equifax there that it's just another vertical data records for us, that we think is quite attractive. And we talked also about even moving beyond our attention to move beyond income employment and look for other data records that are a part of that hiring process. As whether it's licensure or other data records.

I understand, yes. So to just 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 future data becomes more automated and easier to collect, and so easier for new entrants to start chipping away at those individual relationships.

No, these are companies that are highly automated. We 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 we'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. In 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 a relationship.

Our next question from George Tong with Goldman Sachs.

Hi, thanks, good morning. Do you expect core revenue growth to be 10.5% in 2021? Can you discuss how much of 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 get a lot more detailed in the 10.5% that we provided but what could happen as we move through the year right, as 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 to follow up on that first question, before on the business update call, you did say that you expected outperformance to 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 comment on the December 7 call?

Yes.

So I think what we expect is what I just said, right, is we're expecting to see very nice improvement in our non mortgage revenue, not just in the US, not just EWS and USIS but also internationally. And I think that will provide substantially more contribution to core revenue growth in 2021.

Got it, that's helpful. And then Mark, do you expect the US mortgage market to increase 15% in the first half of 2021 and decline 23% in the second half of the year? How would you handicap the upside downside potential to your forecasts based on the refinancing opportunity out there? And also home purchase terms?

That's a tough one, we're not economists obviously. And we're certainly not build to forecast that we tried to be really transparent with you and our investors in all throughout 2020, in the December call just went through and, tried to take all the forecasts that are out there from NBA 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. you 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 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 is we think about guidance for Equifax.

Our next question from Gary Bisbee with Bank of America.

Hi, good morning. 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 five in December and up to six in January, was that right or was the up five and six something else? And if so, what's driven that sequential improvement in trend in recent months? Thank you.

So just to be clear, I think the commentary was specific around online. Okay, not around total. And if 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 of that sort of consumer credit activity? Or is it new products or other things that you're going to deliver that? Thank you.

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 talked about that in third quarter result 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.

Right. And then just a quick follow up to just a level set for us. Can you tell us what percent of 2020 revenue and both uses and Workforce is mortgage related?

So we will post shortly in five minutes updated views of revenue by vertical for every business, you get an echo back, so if it's okay, if I could ask you to wait five minutes, you'll see it post on the website.

And that concludes today's question-and-answer session. I would like to turn the profits 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 looking forward to engaging with you in different forum 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.