Equifax - Earnings Call - Q4 2020

Transcript

Speaker 2

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.

Speaker 3

Thank you, 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 Sente 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 structuring 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 changed its method for accounting for pensions to recognize remeasurements of benefits, obligations, and plan assets to earnings annually and seeks delayed recognition of gains or losses caused by changes in discount rates or other extraordinary 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 and reamortization 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. Pre-tax mark-to-market adjustments resulted in a pre-tax gain of $4.8 million in 2019 and a pre-tax 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 4Q20 IR slide deck and will also be included in the 2020 report 10-K. Now I'd like to turn it over to Mark.

Speaker 0

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 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 a top priority, and I hope you and those close to you remain safe. Turning first to slide four, I wanted to start with a review of our business model, growth strategy, and cloud investments with 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 at scale that our competitors do not have.

Our acquisitions this week at Account and at 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. 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 an industry leader in security. We're 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. Lastly, with the acquisition of AccountScore 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 five, we've spoken before about key market macros that we believe are positively impacting the information service industry and Equifax.

First, the dramatic acceleration of the digitization of consumer and commercial customer-facing transactions and our customers' internal infrastructure has 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 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, increased need for robust identity validation and fraud prevention capabilities in digital transactions is also driving data requirements. 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 MCTUE, and consumer asset data with IXI has long been an Equifax strength. Workforce Solutions Twin Data is our most differentiated data asset with coverage of 90 million unique individuals in the United States. EWS is expanding the Twin Data set while broadening their Twin focus beyond W-2 income to include 1099 and other income and employment data. At the same time, EWS is broadening beyond Twin 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 AccountScore's broad and massive scale of digital consumer data assets, including phone numbers, email, and IP addresses, Equifax's data assets expand substantially as do our capabilities across identity and fraud globally. Moving now to slide six, we believe the identity validation and fraud prevention markets will deliver strong long-term growth for Equifax and that a combined Equifax and AccountScore 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%. 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 an increase in chargeback fraud.

Over 40% of merchants say their digital fraud shows that 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 Account can protect these new distribution channels while evaluating high-risk transactions on a real-time basis, balance fraud with the user experience, serve as a growth platform for customer e-commerce activities, while simultaneously enabling trust and confidence. Both Account and Equifax will leverage the expanded predictability of our combined data. Encountering Equifax into the fast-growing e-commerce and retail markets. Last, Equifax brings Account into the banking, finance, fintech, telco, and insurance markets. The scale of Account's data assets, including 32 billion annual consumer interactions, 255 million identities, 400 million addresses, and 1 billion unique devices, combined with Equifax's scaled data assets, is a powerful combination in this fast-growing market.

Advanced data and analytics, AI and machine learning capabilities are more crucial than ever before in preventing fraud. The full suite of AccountScore products, including its next-generation AI and machine learning model, combined with the cloud-based Equifax Luminate platform, which orchestrates multiple solutions with machine learning and our patented MVP AI technology, will provide risk managers with insights only Equifax can give across the consumer account lifecycle. AccountScore also provides account takeover protection and transaction dispute management, two capabilities which Equifax did not have before to address heightened cybersecurity and fraud payment activity. We were energized to close the AccountScore acquisition yesterday and to have the AccountScore team joining Equifax and the strong growth potential of a combined AccountScore and Equifax in the fast-growing identity and fraud marketplace.

As you see on slide seven, while AccountScore is clearly our most sizable transaction in recent years as we ramp up our bolt-on M&A focus to expand the strength and Equifax's capabilities, we closed two other transactions in recent days focused on decisioning and alternative data. We acquired the minority position that we did not 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 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, its capabilities 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. 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 eight, Equifax's 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 at the end of 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 organic revenue growth rate 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 and organic 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 one-third. The 134 NPIs were well in excess of the 100 we 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're already seeing the momentum of our OnlyEquifax model, leveraging our new cloud capabilities as we move into 2021. Turning to slide nine, fourth quarter revenue at $1.12 billion was up 23% on a reported and local currency basis, which is well above our expectations and the framework of 17.5-20% that we shared with you in early December. M&A contributed just under 1% in the quarter. Our growth is 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 expectations in the framework of $1.75-$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 half a percent. 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 performance 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% declines we saw in the third and second quarters, respectively. Banking, ID and fraud, commercial, insurance, and direct-to-consumer all showed growth in the 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 offline 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%. The USIS team continued 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 20-20 ties. Sid Singh and his team are on offense in USIS and winning in the marketplace.

USIS adjusted EBITDA margins of 43.5% in the 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 twin income and employment data assets and new products, while the team's focus on penetration, pricing, new verticals, and record-of-risk 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 service revenue in 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 the third quarter. During the fourth quarter, we saw significant growth in Talent Solutions, primarily driven by new products introduced in the second half of the year. We also saw strong growth in Carbonata. In Car, 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 strong growth in government.

Verification services growth in January continued at strong levels delivered in the fourth quarter. Employer services revenue of $77 million increased 35% in the quarter, driven again by our 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 one in five U.S. initial unemployment claims. As a reminder, we expect our UC claims revenue to decline in 2021 as initial unemployment claims reduce from record 2020 levels. Employer services non-UC claims business had revenue down about 6% in the quarter. Strong revenue growth in I9 and onboarding services that were driven by the acceleration of our new I9 Anywhere solutions was more than offset by declines in workforce analytics and our tax credits business.

We're seeing a positive shift to our new i9 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 twin data set. Turning down now to international, their revenue of $242 million is 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 than 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 combined online and offline revenue in Australia was up 3% in the quarter, again a nice improvement from the up about 1% in 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. U.K. 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 U.K. government restarted collections activity in late September. However, following the COVID measures put in place late in the fourth quarter by the U.K. 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 the 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. We are also seeing the benefit of the strong new product introductions in the region over the past three years. Canada revenue of $41 million was 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 analytic and decision solutions and 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 of $76.9 million was down 13% on a recorded in local currency basis in the quarter, as we expected. Global consumer solutions performance was very strong in our consumer direct, benefits channel, and events-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, with 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 of just over 15%, similar to fourth quarter levels. We expect the 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, their 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 two largest markets. Our GCS consumer direct business will principally complete migrating their customers onto the new cloud-based platform Renaissance in the first quarter. This will allow for a new 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, Cantorides 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 these UC 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 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 Solutions mortgage revenue, with core growth of 80% in 2020, which exceeded mortgage market growth rates by an outstanding 80 percentage points during the year. The key drivers of the strong EWS outperformance include 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 continues 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 twin data and the power of the Workforce Solutions business model. Rudy Porter 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 twin income and employment data. Its depth, breadth, and scale of the twin database and over 20,000 customer verification network and value of the Workforce Solutions employer service offerings are driving substantial growth in value.

In 2020, Workforce Solutions reached 114 million active Twin Data 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, Twin Data reached over 1 million employer contributors, a significant milestone. As you know, we have a dedicated team focused on Twin Data 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 The Work Number later this year.

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

The Workforce Solutions new product pipeline is also rapidly expanding with new products across mortgage, talent solutions, government, and I9, and new product revenue expected to increase substantially in 2021 and 2022. 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 twin database, and new product capabilities for this unique and scale twin 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 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 requires 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 of identities and 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. 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 twin income and employment data.

Our ID and fraud prevention solutions, including those acquired from Talent targeting the 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 remain 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, with 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, U.S. 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 confirmed this trend.

Equifax US B2B mortgage revenue, EWS and USIS, will continue to significantly outpace the overall mortgage market with 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's 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. We expect the international economy 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 U.K., and over 5% in Canada. Our international business is also expected to outperform its underlying markets. The US 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 the global recession of 2008. Given the current pace of mortgage refinancing for 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 Q4, 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 the 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%-7.8% versus 2020, with FX possibly impacting revenue by about 1.5%. USIS revenue is expected to be up near the digits in 2020, which includes the benefit of account 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 recovery that I discussed earlier.

GCS revenue will be down mid-single digits in 2021. The revenue decline of 15% plus in Q1 through 2021 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 one-time costs have been excluded from our adjusted operating income, EBITDA, and EPS in 2017 through 2020. In 2021, Equifax will incur one-time 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 this about $145 million in one-time costs will reduce adjusted EPS by about $0.90 per share.

2021 adjusted EPS of $6.20-$6.50 per share, which includes these tech transformation costs, is down approximately 7%-11% from 2020. Excluding these tech transformation costs of $0.90 per share, adjusted EPS in 2021 would show growth of about 2%-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 impact adjusted EPS growth by about 5 percentage points in 2021. Additional assumptions included in 2021 guidance are capital spending in 2020 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 three quarters of the increase from 2020 is driven by the inclusion of technology transformation costs in adjusted operating income, EBITDA, and EPS in 2021. These tech transformation costs are principally for cross-building programs. The remainder of the increase is principally in security and corporate technology. Slide 17 provides our guidance for Q1 through 2021. We expect revenue in the range of $1.105-$1.125 billion, reflecting revenue growth of about 15%-17%, including a 1.9% benefit from foreign exchange.

We are expecting adjusted EPS in Q1 through 2021 to be $1.45-$1.55 per share, compared to Q1 through 2020 adjusted EPS of $1.43 per share. In Q1 through 2021, technology transformation costs are expected to be just over $45 million or $0.28 per share. Excluding these costs that were excluded from Q1 through 2020 adjusted EPS, Q1 through 2021 adjusted EPS would be $1.73-$1.83 per share, up 21%-28% from Q1 through 2021. Slide 18 provides a view of Equifax total and core revenue growth from 2019 through 2021. The data provided for Q1 through 2021 and full year 2021 reflects the midpoint of the guidance ranges we have provided. In 2021, we expect core revenue growth of over 10%, maintaining the strong levels delivered in Q1 through 2020 and building momentum for 2022.

Slide 18 also provides revenue growth from acquisitions for Q1 through 2020, calendar year 2020, and expected levels for Q1 through 2021 and calendar year 2021. For your reference, in the appendix to this presentation, we have included slides that provide more detail on 2020 performance and 2021 guidance. They include 2020 revenue trend details for Q2 through 2020 through Q1 through 2020, details on the pension accounting change we concluded in Q1 through 2020, more detail on our 2021 guidance, including both our expectation for U.S. mortgage market credit inquiries in Q1 through 2021, Q2 through 2021, and second half 2021, and an update to the 2020 through 2022 cloud transformation cost benefits framework we shared with you in December. 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. Workforce Solutions also completed over 26,000 customer migrations and verification services onto its cloud-based portals and online fulfillment platforms. This represents over 95% of the Workforce Solutions 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 MCTUE exchanges. In 2021, we're accelerating exchange migration for the data fabric in Europe, Latin America, and Asia Pacific. Europe and Latin America have already made substantial progress in deploying Interconnect, Ignite, and our API frameworks in the cloud. 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've discussed with you previously. The Equifax cloud-native data and tech infrastructure is providing meaningful benefits in the marketplace today, and that will 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 70-90 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, launched by USIS, offers tools that empower our customers to enable consumers to share alternative data not 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 twin 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 provides 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' need to combine the twin 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 i9 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 i9 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 i9 Anywhere products 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 and 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 entered 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 declined 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. 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's non-mortgage performance and momentum from the fourth quarter, from both organic growth and the new products and the growth we expect from talent.

USIS is competitive and 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 expecting 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. Given our very strong financial performance, our strong cash generation in 2020, 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.

Speaker 3

Thank you, John. If you'd like to ask a question, please acknowledge pressing Star 1 on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off, so please acknowledge your account. Again, that is Star 1 for questions. We will take our question from David Tobey with Evercore ISI.

Speaker 0

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? 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.

Speaker 4

Yeah. We believe, and we talked about it, that Workforce is clearly our most differentiated business. We talked about the strong performance in 2020. That follows strong performance in 2017, 2018, and 2019. We have 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. As we said, we expect that to be in the double digit. We also said it'll 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. 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. Of course, on a year-over-year basis, those record additions drive revenue growth in 2021. 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. That is going to help drive our record growth going forward. On the verifications, clearly, the strongest and largest part of Equifax and the highest-margin part, but as you point out, Talent Solutions is 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.

We've got some really impressive growth from our i9 solution. We talked about the McCarthy i9 Anywhere that has really got a lot of traction because of the uniqueness of the solution. Of course, it drives a much higher revenue solution for Equifax. Anything else you'd add, John?

Speaker 0

Government. We expect government to continue to grow very, very nicely, right? We have, I would say, a substantial new contract in the government segment. We also continue to build out our suite of solutions that service not only federal but also state and local governments in their benefits system. We feel very good really across the board in EWS, and Talent Solutions is obviously i9 Anywhere, but also substantial new products across the Talent Solutions marketplace in general.

Speaker 4

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 a one-rate, a $40 million-$50 million a year contract. That is going to ramp during 2021 and become the full one-rate in 2022. That is a very attractive addition to the business. It just reflects, again, the uniqueness of the scale of the dataset and the uniqueness of the data itself.

Speaker 0

I appreciate that. Just as a quick follow-up, 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-50%?

Speaker 4

Yeah. 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 reinvested quite substantially into Workforce and USIS, whether it was obviously in the cloud transformation investments, but then in new products and new DNA assets, investing in new record additions. We'll continue to invest. With regard to is there a ceiling on theirs? 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 with our expectation, Workforce will become sometime in the near future our largest business unit, which we think is quite attractive for Equifax and for our shareholders because of its highly accretive nature of its revenue growth as well as the higher accretive nature of its margins.

Speaker 0

One 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. Appreciate that.

Speaker 4

Thanks.

Speaker 3

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

Speaker 0

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 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.

Speaker 4

Yeah. Slide 18, we indicate that included in the 2021 guidance is about 1.2 points from acquisitions, right? If you think about account revenue, we do not have account revenue for the entire year. It just closed. Because of that, it is about 1.2 points. The inorganic revenue is 1.2%. Is that covered?

Speaker 0

Has your view of organic revenue growth for 2021 changed between the December call and today?

Speaker 4

It hasn't, Andrew. We kind of covered it 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. I think that's positive towards that assumption that we have. Of course, our assumption is that the mortgage market, while still very strong, declines in the second half of 2021. I think we've got the right guidance, and I think the momentum we have from the fourth quarter, we think, supports that 10.5%.

Speaker 0

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 account, which we just talked about, right? There was also some FX benefit. It also reflects the fact that we think there's obviously risk in timing of recovering of the U.S. economy and other economies. That $75 million improvement on both the top and bottom end reflects those three factors. Obviously, we performed a lot better in 2020 than we had talked about in December. The actual calculated growth rates look different, obviously, or somewhat lower. The absolute delivery of revenue in 2021, we think, is about $75 million higher, reflecting the factors that I just referenced. John, that clarifies it. Thank you.

Speaker 3

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

Speaker 4

Great. Thanks. If you could just have a chance to describe the impact of both the pace and cost of new product innovation. It seems obviously the end of the year at 134, as I said, from the beginning of the year. How should we think about that pace in 2021? Is there any way to reconcile that to what it can mean to organic growth? I guess, does it have the potential to accelerate the core organic growth as you scale these new product innovations and conduct it to structurally higher level in a little bit? What do you think? Yeah. It's a great question. 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 in the technology and data side for innovation and new products.

As we saw throughout 2020, we invested more in product resources to really start driving that leverage of the cloud investments as we focus on completing the cloud transformation, but more importantly, leveraging it. As you point out, the 134 is a really big increase from our historical new product rollouts. Of course, those rollouts are in the marketplace now, meaning that commercial teams are starting to take over the market. That is embedded in our core growth assumption for 2021, which is up substantially from where it was, our core growth in 2018 and 2019, and actually up from our historical kind of pre-cyber growth rates. 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 were 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 market. We haven't given an 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 from new products of being quite substantial at 7% in 2021. That is a clear lever for growth for us. We think this is, as we go out in 2021, 2022, 2023, this is really central to where we're taking the company, really leveraging the cloud transformation to drive our revenue growth. That is going to happen through innovation and new products.

Kevin, as we know, right, new products tend to deliver the most revenue for us kind of in year two or three of their life cycle. We are very excited about the fact that we have very strong, obviously, new product introductions in 2020, which benefited, Mark referenced, 2021 vitality index and revenue contribution, which should also be tremendously beneficial as we look to 2022. Just a quick question. How soon can we be back in the market with the restarted buyback? I think your question was about the buyback, but I did not hear the rest of it. What was your question? Sorry about that. How quickly can we be back in the market? We intend to start the buyback quite quickly. We will level load that through the year. We think that is a positive step forward. It reflects our confidence in the future of Equifax.

We think it's a positive step forward to start with a buyback that will offset dilutions in our employee plans. It reflects our confidence in the future of Equifax and is a first step forward in returning cash to shareholders. Thank you.

Speaker 3

We'll take our next question from Kevin 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. 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?

Speaker 4

Yeah. I think it's a great question, Tony. I think you have to really separate USIS and EWS. Workforce Solutions, both businesses are taking advantage of new products in the mortgage space. Rolling out new products in an up market is positive, and rolling out new products in a down market is positive. I think that's one. They both have the ability to grow share, meaning grow new customers. Workforce Solutions has more capability there just because the Workforce Solutions data is less used using mortgage in example than the credit file is. Workforce has just more levers than USIS has in its ability to grow in all markets. You've seen that not only in 2020. You've seen it in 2015, 2016, 2017, 2018. You've also seen it accelerate their core growth, if you will, over the last year.

That is driven by a more rapid increase in records. We think it is driven by the scale of the database. When you have hit rates that are north of 50% on the twin data, that becomes increasingly valuable to customers. That is driving usage of the data. The value of predictability of income and employment data, there are just a lot more levers there. We have a lot of confidence in both businesses' ability to outgrow the market. That is underlying what Equifax does. I think it is 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. We added 10 million records last year. As you know, we had some records leave the database as employment was reduced by some of our contributors.

That was offset from that. 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. New products are going to help both businesses. We have a lot of confidence in our ability going forward to outgrow underlying markets because of the uniqueness of our data, new products, new penetration, new usage, and of course, workforce with records.

Speaker 0

Tony, you're certainly right, right? That lower market activity does affect growth rates in everything. Again, as Mark said, our performance has been so strong relative to the market overall. We feel very good about what that should forehand even for the second half.

That's great. I have been getting a lot of questions, I think, given the administration's recent appointments on regulators. 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? Are there any areas in particular that you'd expect to see greater focus from regulators? Thank you.

Speaker 4

Yeah. Yeah. 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. There was a level of very strong regulation. Going into the Biden administration, we do not expect meaningful changes. Whatever they are, we will respond to them. We play an important role in the marketplace. We have been highly regulated for a long time, and we know what it takes to operate in a regulated environment. I think that is an important characteristic that we have to respond to. We believe we will be able to respond to the interests that the regulators have. There is another question on the legislative side of is there going to be any changes legislatively around credit bureaus? We do not think so.

We 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. We think we have a strong response to that.

Thank you.

Speaker 3

We'll take our next question from Hamza Mazzari 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? Specifically, as it relates to accounts, backing portfolio, which is pretty strong. Could you maybe talk about the opportunity to repurpose some of those patterns across your current portfolio?

Speaker 4

Yeah. First off, Equifax has a sizable identity and fraud business. We talked a bunch about the market macro, which we think is very attractive. As digitization increases, identity and 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. We like the macro space, which is why we've been in it for quite some time. The idea of adding Count has been on our radar for quite some time. We knew Count for four or five years. We've watched them and had the opportunity to acquire them and close the deal yesterday. What Count brings is 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 is just massive.

The number of addresses, IP addresses, email addresses, phone numbers, physical addresses just enhances the capability to provide higher predictability. The combination of Count data with Equifax data is going to enhance Count in the retail and e-commerce space and also enhance Equifax in our traditional spaces. This week, we're already off to the races of bringing Count solutions to our banking and lending customers, for example. The other thing attractive to us with Count is it moves Equifax into a new industry vertical. We were never in the retail and e-commerce space, and Count lives there quite strongly. 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, NVT, we think that's another powerful combination.

We're very energized about the acquisition, excited to have it closed yesterday. We're off to the races as of yesterday afternoon of integrating and really moving to the market and driving the synergy that were part of our acquisition model as we get the business up and rolling as an Equifax company.

Great. 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% for 2018 and 2019, and then you sort of jumped to 11% and 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.

Yeah. 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. I hope you get a sense that our confidence in the Equifax model is quite high. 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. We'll be ready to share our long-term framework sometime in 2021.

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 investment that we've made will not only drive our margins and cash, but will also drive our top line as we're able to deliver new solutions we couldn't do before, and it will drive our new products. Those are all positives from our perspective in how we think of the long-term growth rate of the company. We'll be ready to share that with you in the coming future.

Great. Thank you so much.

Speaker 3

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

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

Speaker 4

We have not. We haven't seen any kind of commercial traction on that yet. We expect there will be. 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. 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. Close to a third of our revenue comes from inactive records, which is another characteristic that's very unique to Workforce Solutions.

We have high confidence in our business model. As we shared on this call, we signed an exclusive arrangement with another large payroll processor just last week that is going to be coming to Twin. They came to Twin because of the scale of our capabilities and what we can deliver for them and what they can deliver to their customers. Of course, the revenue share opportunity was very meaningful with Equifax and is more challenged when you are in a startup mode.

Got it. That's definitely very helpful, Kolar. Just to 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 better trends in card and auto markets, or just 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, P1 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. 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. 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.

It is 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 are starting to see that in the latter part of 2020 for sure in our non-mortgage businesses and continuing in January, that that will also show up for our lead generation customers, and their revenue will grow.

GCS in total, we're excited about our consumer direct business. It continues to grow, and we've seen the first growth out of it in quite a while in the third and fourth quarter. We think that's a very positive outcome.

Got it. That's very helpful. Thanks, guys.

Speaker 3

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

Thank you. Good morning. I just have a few here. Firstly, just on the organic growth, I just wanted to confirm that. In December, the entire organic growth was close to 6%. Now it is 2.5%-5%. I guess what you are saying is basically the toughest comp that was created in Q4 is the reason why you just have not updated it given the uncertainties. Is that correct?

Yeah. Let me try and understand. I think you're asking about the difference between the framework we provided in December and the guidance we just provided. Is that correct?

Yeah.

Sorry, you're just coming through, guys. I apologize.

Yeah, that's right. Just on the pure organic growth, right? Because today's guidance implies 2.5-5% organic, which is more than what it was in December.

Yeah. We performed much better in December than we expected, right? Our revenue came in very strong. I understand that you're talking about a growth rate off of our much stronger 2020 performance. Our view of 2021, right, is actually slightly better than it was when we talked to you in December. We increased the bottom and top end of our range by $75 million. That reflects count. It reflects some FX benefit. It also reflects the fact that we continue to believe there's substantial risk in the timing of the recovery. That's really what it is. Yes, we had a stronger December than we expected. 2020 was very, very good. Our view of 2021 is actually slightly better than it was when we talked to you in December.

Okay. Fine. In terms of the exclusive partnership you have with the payroll provider, I understand why the large provider would want to come to Equifax. 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?

Speaker 4

Yeah. Manav, you probably know from our discussions that the bulk of our relationships are exclusive. We think that's the right arrangement between us and our partners. The partners really think having one relationship is the way to operate. They believe that brings more value to their customer base. Remember, if you're a—this is an example of a payroll processor—this is not a core activity for you. By providing the incoming 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. It becomes more valuable.

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 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 of over a decade of providing incoming employment verification, the security and 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. All those play into why the bulk of our relationships are exclusive and why this one is too.

Okay. If I could just squeeze in one quick one. You have talked about a lot of things, but I just wanted to get an update on how you see your partnership with FICO fitting into your scheme of things and how that is going. Thanks.

Yeah. 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. We still believe that that's going to be positive for Equifax and for FICO. We are very committed to it. We're continuing to look for more solutions that we might do together that would leverage both Equifax and FICO.

Speaker 3

We'll take our next question from Sean Rogers at Barnwood, Keith Hall.

Hi. Good morning. Thank you for squeezing me in here. Hey, just a few little ones to finish off. Sean, just as you compare the framework to the 2021 guidance, people have focused 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. But the redundancy, it's impossible to have gone up a little bit from 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.

The question was—can you say the end? You were a little garbled. I did not hear exactly what the end question was.

Sure. The redundant systems costs seem to have gone up from $48 million or $45 million to $58 million. I'm just wondering what's going on over there.

Sure. 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 drives the incremental costs that we're incurring. That continues to progress really well. As we continue to move forward, we're able to better view how those costs are going to be incurred. That gives us a view as to when decommissioning will occur. Just as you looked at within 2020, we have a very nice pace of new systems moving into the cloud, which should drive the very good 2022 performance that we've talked about and we talked about during the framework.

We're just refining the model and continuing to work forward, slightly higher depreciation than 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. Just, you increased the share repurchase program. It does not seem like it is that aggressive given the company's kind of return to growth. Is there potential to kind of upsize that more during the year? Also, what about the dividend? There has not been any change in the dividend in years as well.

Yeah. I hope you caught the characterization that we had, and this is a positive step forward. 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. As we talked earlier, I think, Karl, 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. Our confidence is quite strong on where we believe the company's going, which is why we opted to announce this first step in our buyback. 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. Keep in mind, I'm squeezing you one more. Social Security contract is yet certainly one half. Does that slip at all? I kind of was under the impression that it was going to be started in the first quarter of this year.

Speaker 4

The question's on the timing of the Social Security contract. That is starting on the technical work in the first quarter, and revenue will start as we get into second. It'll continue to ramp through the year. I think we talked about the run rate when fully deployed, which will be in 2022. Full run rate is $40 million-$50 million a year of revenue.

Great. Thank you so much.

Speaker 3

We will take our next question from Brett Hut with Stevens Incorporated.

Good morning. Thanks for all the details, guys. I'll just—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 as a cross-sell, or am I thinking about that paradigm kind of incorrectly? Thank you.

No, I think you are thinking about 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 is scores or models for them. They do a lot of that themselves, so they would be more of a data consumer. We are the supplement of the analytics from Equifax. 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. That would be new products, new scores, new solutions. They really can plug in as opposed to try to create themselves.

That is why the capability we have of, first and foremost, continuing to expand our differentiated data assets is clearly at the heart of what we want to do. 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 analytics solutions that are just much more sophisticated and have multi-data elements to it that we think will be quite powerful going forward. You are starting to see that in our ramp in NPI 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 to that. From a buying behavior point of view, are we getting more kind of office of the enterprise data? Is there a data 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? Maybe the left hand and the right hand don't know that they're both buying from you guys or another analytics company.

Speaker 4

It 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 as advantageous in most cases because of particularly the strength of Twin. 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. It does vary on what we're bringing from an analytics as well as product capability. It is varied by customer.

Great. Thanks for your help there.

Speaker 3

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

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

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 you go through the year. You can see that because the $45 million in the first quarter is obviously more than 25% of the total that we gave. You'll see a decline in our tech transformation expense as we go through the year. I think if we get into talking to you more fully about 2022, we can talk about whether there could be additional right-sizing costs that could come. There would be nothing included in our guidance.

Got it. Got it. 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. Lastly, is it your expectation that the AccountScore acquisition could benefit other capabilities or provide other capabilities that you could port over to other regions, or is that primarily a European business? Thank you.

Yeah. It's a great question. Open banking, as you know, is really getting some traction in many markets like the U.K. and Australia. 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've got another one in Australia. Our partner in the U.K. was AccountScore, and there was an opportunity to acquire them, which we thought was very strategic and very strategic for our U.K. business. We also believe, as you point out, that there's maybe some capabilities around categorization 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 Trista Charities.

Speaker 0

Hey, guys. Lots to digest here. Appreciate the insights. I have a question mark just specifically on EWS on employment. I realize 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 a return to something like full employment in the U.S., or if there was any transitory benefit from the 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.

Yeah. Sure. Yeah. We, as you might imagine, were adding customers during 2020 as we normally do in Workforce Solutions and employer services. And we have a lot of value-added services that are beneficial. Some of ours have been natural 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 is a positive there for them. That was clearly a part of our focus in 2020. It will continue in 2021. Of course, the big macro is less employees or reducing employees generally is lower activity for our employer services business. 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.

On top of that, we talked about some of the product stuff we're doing. Like the i9 Anywhere is really a very, very strong growth just because of 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 that just is faster. They don't have to come to the HR office, and we can do that at 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. Just specific to 2021, guys, it's the decline in the unemployment insurance claims revenue that we gave was specifically just related to the assumed economic recovery and substantial reduction in unemployment claims. There's nothing else behind it.

Okay. That's helpful, John. Just as a quick follow-up, can you just speak to, at a high level, how much, if any, of the tech report platforming or savings do you anticipate next year are likely to be reinvested in the business?

I think when we gave some framework in 2022 that you've seen on what we expected savings to be, we're not ready to do 2022 guidance. I think we were 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. 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 2021 and 2022 to that long-term growth framework that we will be putting back in place.

Speaker 3

We will take our next question from George Mahal with Kellen.

Speaker 0

Hey. Good morning, guys. Thanks for taking my questions. 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 cost growth or positive in terms of needing more of your services for them to compete?

Yeah. It's the latter. We're talking to all of them and 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. For us, we view it as a positive macro, meaning if there's more lending, in essence, this is a buy now, pay later as a 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 individual is who they say they are, and there's an element of underwriting that takes place. Then there's another piece around that data. 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. Just a quick follow-up on the buyback. We should be thinking that this is designed to offset the lease, 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. The first step in our buyback program was to offset share dilution from employee plans. 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.

Speaker 3

We will take our next question from Jeff Mueller with Baird.

Speaker 0

Yeah. Thank you. Good morning. Mark, you gave some good commentary on EWS records, 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. We'd love any correction if I'm wrong. The exclusivity ask is from Equifax. The common contractual relationship for the partner channel is revenue share. It's a dual-sided network, and you have the biggest network of verifiers. 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 signing exclusivity with Equifax?

Yeah. I'm sure we got an earlier question. I don't know if you caught that. You hit obviously very important points for the partnership. 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. There's a lot of trust around that. 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 that 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. There's also the scale to the employee.

Remember, this is a real benefit for a company's employee to help them with their financial lives, how they access credit. If you look at the alternative, that payroll processor's 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 all for them. It is a very important relationship. It is a value-added service. The idea of having two companies do it versus one, our conversations with our partners, there's not a lot of interest in that for the economic reasons you raised.

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 was helpful, additional color for me. Just a definitional question. Is core growth organic constant currency, or does core growth include the impacts of acquisitions in FX?

It includes the impact of acquisitions and FX. Although on that slide, we did give you what those impacts are, right?

Right.

We always break those down every quarter for you.

Got it. Thank you.

Speaker 3

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

Speaker 0

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 and quarter. John, I believe you talked about mix issues or the mix impact on margins. 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. 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. Specifically, with reference to USIS and as we've talked about in the past. The margins on mortgage, specifically because of mortgage solutions, are lower, right? The two factors are obviously in mortgage solutions, we buy and resell the trended file from our competitors. Also, the score costs of mortgage are just higher than they are in any other vertical. Those two factors negatively impact our gross margin on mortgage. Yes, as mortgage grows substantially, it's a negative to margin percentage. It's obviously very profitable, right? Negative to margin percentage for USIS. As mortgage declines, it's somewhat of a positive. Obviously, that isn't the only factor that affects margins. I can't tell you that that's the only thing that will move them around. As you're thinking about it, yes, that's correct.

Okay. All right. Thanks. 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 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 the credit market, for example? If not, why wouldn't that be the case?

Yeah. We do not think so, given the scale of our capabilities. Remember, it is 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 have added over a decade. 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 are adding companies every week individually at the same time as we are working on these larger partnerships with payroll processors. That scale really gives, we believe, Equifax a real advantage in what we deliver to our customers. Also, how a contributor, meaning whether it is a company or a partnership like a payroll processor, thinks about working with someone like Equifax just because of the scale of our capabilities.

We are showing pretty clearly that we are 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 was real momentum there for the business going forward. The other element, I think, as you know, is that we are going beyond W-2. We want to expand to 1099 and self-employed and gig employees. There is a lot of work going on by Equifax there that is just another vertical of data records for us that we think is quite attractive. 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 is licensure or other data records.

I understand. Yeah. 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 future that that becomes more automated and easier to collect and so easier for new entrants to start chipping away at those individual relationships.

These are tech companies that are highly automated. 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. 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 it's going to be done securely with real privacy. Of course, we've been in this business for a decade. 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. It becomes an advantage in that relationship.

That's great. Thanks so much.

Thanks.

Speaker 3

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

Hi. Thanks. Good morning. You expect core 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? Can you break out where you expect the remaining growth to come from in detail if you have it?

Yeah. I do not think we are going to give a lot more detail than the 10.5% that we provided. What we would expect to happen as we move through the year, right? We have talked about the fact that we expect underlying economies to improve. We expect our non-mortgage revenue growth to improve meaningfully as we go through 2021. You will see non-mortgage be a substantially larger contributor to core revenue growth as you move through the year. We do expect that to occur. We think that is one of the contributors to the fact that we will be able to deliver very nice core revenue growth even in a declining mortgage market.

Just to follow up on that first question, before we were 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?

You're talking about a comment on the December 7th call?

Yep.

Yeah. 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 at EWS and USIS, but also internationally. I think that will provide substantially more contribution to core revenue growth in 2021.

Got it. Got it. That's helpful. Mark, you expect the U.S. 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 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 tried to be really transparent, George, with you and our investors all throughout 2020 and in the December call on this one too, 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. 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 guidance for 2021.

We still feel good about that framework, which is why we shared it in December and we have not really changed it. We sit here now in February, and we still think it is the right way to start the year as we think about guidance for Equifax.

We will take our next question from Gary Biskie 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 5 in December and up 6 in January. Was that right, or was the up 5 and 6 something else? If so, what's driven that sequential improvement in trend in recent months? Thank you.

Just to be clear, I think the commentary was specific around online, okay, not around total. All it was trying to indicate is that basically the trend was improving through the fourth quarter, and we saw a nice performance in December. Effectively, it's continuing in January. That's all.

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 that you're doing to deliver that? Thank you.

is no question that there is an element of economic improvement or consumer activity by our customers. There is no question there. We talked about that in third quarter. We saw kind of steps forward in the fourth quarter, and that is really continuing. On top of that, we are in the marketplace. Whether we are trying to gain share or roll out new products, that is a positive element on that also. Certainly, underlying that is economic activity.

Just a quick follow-up. Just a level set for us. Can you tell us what % of 2020 revenue in both USIS and workforce is mortgage-related?

We will post shortly, in five minutes, updated views of revenue by vertical for every business unit in Equifax. If it's okay, if I could ask you to wait five minutes, you'll see it posted on the website.

That's great. Thank you.

Thanks a lot.

That concludes today's question and answer session. I would like to turn the topic back to Mr. Hare for any additional enclosing 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 before we conclude our conference call. Thank you.

That concludes today's presentation. Thank you for your participation. You may now disconnect.