Transcription modifiée de la conférence téléphonique sur les résultats d'EFX ou présente …

ATLANTA 14 février 2020 (Thomson StreetEvents) – Transcription modifiée de la conférence téléphonique ou de la présentation des résultats d'Equifax Inc jeudi 13 février 2020 à 13h30 GMT

* John W. Gamble

Equifax Inc. – Vice-président et directeur financier de l'entreprise

* Mark W. Begor

Equifax Inc. – PDG et administrateur

* Jeffrey P. Meuler

Robert W. Baird & Co. Incorporated, Division de la recherche – Analyste principal de recherche

* Shlomo H. Rosenbaum

Bonjour et bienvenue à la conférence téléphonique sur les résultats du quatrième trimestre 2019 d'Equifax. La conférence d'aujourd'hui est enregistrée.

À ce stade, j'aimerais passer l'appel à John Gamble. Allez-y.

John W. Gamble, Equifax Inc. – Vice-président et directeur financier [2]

Merci et bonjour. Bienvenue à la conférence téléphonique d'aujourd'hui. Je suis John Gamble, directeur financier. Je suis accompagné aujourd'hui de Mark Begor, président-directeur général.

L'appel d'aujourd'hui est enregistré. Des archives de l'enregistrement seront disponibles plus tard dans la journée dans la section Relations avec les investisseurs de l'onglet À propos d'Equifax de notre site Web à www.equifax.com.

Au cours de cet appel, nous ferons certaines déclarations prospectives, y compris des orientations pour l'année 2020 pour vous aider à comprendre Equifax et son environnement commercial. Ces déclarations impliquent un certain nombre de risques, d'incertitudes et d'autres facteurs qui pourraient nous causer – pourraient faire en sorte que les résultats réels diffèrent considérablement de nos attentes. Certains facteurs de risque inhérents à nos activités sont énoncés dans les documents déposés auprès de la SEC, notamment notre formulaire 10-K 2019-2020 et les documents ultérieurs.

De plus, nous ferons référence à certaines mesures financières non conformes aux PCGR, y compris le BPA ajusté attribuable à Equifax et le BAIIA ajusté, qui seront ajustés pour certains éléments qui affectent la comparabilité de notre rendement opérationnel sous-jacent. Pour le quatrième trimestre de 2019, le BPA ajusté attribuable à Equifax exclut les charges à payer pour les questions juridiques liées à l'incident de cybersécurité de 2019-2020, les coûts associés à la charge d'amortissement liée à l'acquisition, les incidences fiscales des attributions d'actions comptabilisées lors de l'acquisition ou du règlement et les pertes de change pour réévaluer les actifs monétaires nets libellés en pesos argentins. Le BPA ajusté attribuable à Equifax comprend également les frais juridiques et professionnels liés à l'incident de cybersécurité de 2019-2020, principalement les frais liés à nos litiges en cours et nos enquêtes gouvernementales ainsi que les coûts différentiels non récurrents du projet conçus pour améliorer notre technologie et la sécurité des données. Cela comprend des projets de mise en œuvre de systèmes et de processus pour améliorer notre technologie et notre infrastructure de sécurité des données ainsi que des projets de remplacement et de consolidation substantielle de nos réseaux et systèmes mondiaux ainsi que les coûts de gestion de ces projets. Ces projets qui transformeront notre infrastructure technologique et amélioreront davantage la sécurité de nos données ont été engagés en 2019-2020 et 2019 et devraient se produire en 2020 et 2021.

Le BAIIA ajusté est défini comme le revenu net attribuable à Equifax, additionné des intérêts débiteurs, déduction faite des intérêts créditeurs, de la charge d'impôt sur le résultat, de la dépréciation et de l'amortissement et également, comme c'est le cas pour le BPA ajusté, excluant les charges à payer pour les questions juridiques liées à l'incident de cybersécurité de 2019-2020 , les coûts liés à l'incident de cybersécurité de 2019-2020 et les pertes de change résultant de la réévaluation des actifs monétaires nets libellés en pesos argentins. Ces mesures non conformes aux PCGR sont détaillées dans les tableaux de rapprochement, qui sont inclus dans notre communiqué de résultats et sont également affichés sur notre site Web.

Je souhaite également la bienvenue à Jeff Dodge, qui nous rejoindra au cours des prochains mois jusqu'à ce que Trevor Burns revienne de son congé de maladie. Mark et moi aimerions remercier Jeff d'être revenu. C'est très apprécié. Et Jeff nous a rejoint aujourd'hui.

J'aimerais maintenant céder la parole à Mark.

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Mark W. Begor, Equifax Inc. – PDG et administrateur [3]

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Merci, John, et bonjour à tous. Si vous avez suivi les nouvelles cette semaine, ce fut une autre semaine chargée ici à Equifax. Avant d'entrer dans les résultats financiers du quatrième trimestre, permettez-moi de consacrer quelques minutes à l'annonce lundi par le ministère de la Justice et le FBI de leur inculpation de 4 responsables militaires chinois pour leur rôle dans la cyberattaque de 2019-2020 contre Equifax.

Nous sommes heureux que le FBI et le DOJ aient réussi à identifier les criminels qui ont attaqué Equifax et les consommateurs américains. L'annonce de lundi est un autre pas en avant positif pour Equifax alors que nous clôturons le chapitre sur l'événement de 2019-2020.

Dans la continuité de l'événement cyber 2019-2020, vous vous souvenez que nous avons prélevé une charge de 700 millions de dollars au premier semestre de 2019 concernant le règlement global des questions juridiques et réglementaires les plus importantes auxquelles Equifax est confrontée. Au quatrième trimestre, nous avons enregistré une charge supplémentaire de 100 millions de dollars liée à la résolution de toutes les procédures judiciaires et enquêtes américaines restantes résultant de l'incident de cybersécurité de 2019-2020. Cette charge comprend les règlements [reached] dans le recours collectif en valeurs mobilières et le litige relatif aux dérivés d'actionnaires, le recours collectif contre les institutions financières et les poursuites intentées par les États de l'Indiana et du Massachusetts, qui ne se sont pas joints au règlement du procureur général de plusieurs États de l'an dernier. L'accusation comprend également une estimation pour résoudre les procédures et enquêtes américaines en cours. Cette charge est nette des produits d'assurance liés à ces questions. Les questions pour lesquelles aucune estimation n'est incluse dans cette charge sont la résolution de l'examen entrepris par la Financial Conduct Authority au Royaume-Uni et le contentieux canadien des recours collectifs. Conformément aux frais de règlement juridique antérieurs liés à l'incident de cybersécurité de 2019-2020, les frais nets de 100 millions de dollars sont exclus de notre BAIIA ajusté et de notre BPA ajusté du quatrième trimestre de 2019.

En janvier, le tribunal a accordé l'approbation finale du règlement du recours collectif multi-district que nous avons conclu en 2019. Le moment où les quelque 360 ​​millions de dollars restants du fonds de restitution aux consommateurs seront payés dépend de la résolution des appels déposés concernant ce cas. Le moment de cette résolution des appels est encore incertain. Des détails sur l'état de toutes les questions juridiques et réglementaires en suspens seront fournis dans notre 10-K qui sera déposé plus tard ce mois-ci. L'inculpation de lundi par le ministère de la Justice et notre résolution des problèmes américains liés au cyberévénement de 2019-2020 permettent à notre équipe de tourner la page et de se concentrer sur la sécurité et la transformation et la croissance de notre technologie EFX2020 à Equifax en tant que leader de l'analyse de données et de la technologie.

Permettez-moi maintenant de passer à nos résultats du quatrième trimestre. Nous sommes très satisfaits de notre performance financière au quatrième trimestre et des progrès importants réalisés en 2019. Les résultats ont été généralisés, ont montré une amélioration séquentielle, ont dépassé les prévisions et ont constitué une autre avancée très positive pour Equifax. Ces résultats sont nos plus forts depuis l'événement de 2019-2020 et reflètent le retour d'Equifax à un mode de croissance plus normal.

Le chiffre d'affaires de 906 millions de dollars a augmenté de 10% en devises constantes et de 8% en devises organiques constantes et au-dessus de l'extrémité supérieure de nos prévisions d'octobre. Nous avons enregistré une forte croissance des revenus tirée par nos 2 activités B2B aux États-Unis, USIS et EWS, qui ont collectivement augmenté de 13% dans l'ensemble avec Workforce Solutions, en hausse de 22% et en hausse aux États-Unis – USIS, en très solide de 8%. La croissance de 22% chez EWS a été sa plus forte depuis 2019-2020 et la performance du deuxième semestre de l'USIS a été la plus forte depuis 2015. Marché américain – Les enquêtes sur le marché hypothécaire américain restent solides avec des demandes en hausse d'un peu moins de 21% et conformes à nos prévisions. International a enregistré une croissance des revenus en devises constantes de 4%, avec une croissance dans toutes les régions au cours du trimestre, mais avec la pression continue du ralentissement en Australie, de l'incertitude liée au Brexit au Royaume-Uni et, plus récemment, des troubles au Chili. Global Consumer a poursuivi son chemin de retour à la croissance avec des revenus en hausse de près de 3,5% et, comme prévu, une amélioration de la croissance des revenus tirée par la reprise de nos activités de consommation aux États-Unis.

Le BPA ajusté de 1,53 $ par action était à l'extrémité supérieure de nos prévisions que nous avons fournies en octobre. La marge d'EBITDA ajusté de 35,2% a bien progressé, en hausse de 200 points de base par rapport à 2019-2020. Bien que nous constations une augmentation des amortissements et des coûts de cloud en double à mesure que nos systèmes transformés entrent en production, ces coûts étaient conformes à nos prévisions fournies en octobre.

Permettez-moi maintenant de passer aux unités commerciales individuelles. Tout d'abord, USIS. Leur chiffre d'affaires est en hausse de 8% par rapport au quatrième trimestre 2019-2020 en données publiées et de 5% en organique. Les revenus hypothécaires totaux ont augmenté d'un peu plus de 20%, ce qui correspond à la croissance des enquêtes sur le marché hypothécaire. Les revenus des Solutions hypothécaires ont augmenté de 19% au cours du trimestre, beaucoup plus forts que les trimestres précédents en 2019, car nous avons surmonté l'impact négatif du changement de composition d'un grand détaillant hypothécaire survenu au quatrième trimestre de 2019-2020. Notre croissance des revenus non hypothécaires a augmenté 3% au cours du trimestre, et la croissance organique non hypothécaire a de nouveau été positive mais n'a augmenté que légèrement par rapport à l'année dernière. Ce chiffre était inférieur au troisième trimestre et inférieur à nos attentes et reflète la persistance de la reprise de l'USIS dont nous avons discuté au cours des 2 dernières années. Nous avons assisté à des continuations et à des tendances très positives dans USIS et nous sommes heureux d'accélérer la croissance organique non hypothécaire de USIS en 2020.

Le chiffre d'affaires en ligne dans USIS a augmenté de 7,5% en données publiées et de 4,5% en données organiques. Nous avons enregistré une croissance à deux chiffres dans les domaines de l'hypothèque, de l'identification et de la fraude, de l'assurance et de DataX ainsi que de l'automobile, des services bancaires et des prêts. Ce sont tous des secteurs verticaux très importants pour USIS. Cette croissance a été principalement contrebalancée par la baisse de notre segment des télécommunications et de notre segment des ventes directes aux consommateurs. Direct-to-consumer est le segment dans lequel USIS vend des dossiers de crédit et des scores à d'autres agences d'évaluation du crédit. Cette baisse est due à une vente ponctuelle survenue au quatrième trimestre 2019-2020 qui ne s'est pas répétée. Nous nous attendons à ce que ce segment revienne à la croissance au premier trimestre de 2020. Et telco a vu une baisse – et bien que telco ait vu une baisse au cours du trimestre, nous avons eu un très bon succès avec les récents clients gagnants et reconquérants et attendus – et voir une ligne de vue claire vers la croissance des télécommunications à l'approche de 2020.

Les revenus des services de marketing financier ont augmenté de 3,5% au cours du trimestre par rapport à l'an dernier. Pour l'ensemble de l'année 2019, FMS a enregistré une croissance des revenus de 2,5% par rapport à 2019-2020. Bien que les revenus trimestriels de FMS soient encore saccadés, ils ont enregistré une croissance au cours de 3 des 4 trimestres de 2019, ce que nous considérons comme positif. La croissance des revenus reflète la croissance continue du pipeline dont nous avons discuté au cours des deux derniers trimestres dans cette entreprise.

Sid Singh et l'équipe USIS ont continué de montrer une accélération de l'activité commerciale jusqu'en 2019 avec une bonne dynamique à partir du quatrième trimestre et jusqu'en 2020. Leur portefeuille de nouvelles transactions est en hausse de 15% à la fin de l'année 2019 par rapport à la fin de l'année 2019-2020. Et de nouvelles offres gagnées en 2019 a augmenté de près de 25% par rapport à 2019-2020. Et au quatrième trimestre, la valeur en dollars des nouveaux contrats gagnés était la plus élevée des quatre dernières années. Nous continuons de croire que nos actifs de données différenciés, associés à nos investissements technologiques, ramèneront USIS à son mode de croissance traditionnel. Les résultats du quatrième trimestre et de 2019 montrent qu'ils sont bien dans cette voie.

Les marges du BAIIA ajusté de USIS de 45,1% ont diminué de 240 points de base par rapport au quatrième trimestre 2019-2020, principalement en raison de l'augmentation des frais de redevances ainsi que des dépenses de développement plus élevées et des investissements dans l'analyse des données, les ressources commerciales et les ressources de nouveaux produits.

Passons maintenant aux solutions Workforce. Ils ont connu un très bon trimestre avec un chiffre d'affaires en hausse de 22% par rapport à l'année dernière, ce qui était bien meilleur que nos attentes. Les revenus des services de vérification ont augmenté de 33%, extrêmement solides, tirés par une forte croissance à deux chiffres à grande échelle dans les secteurs de l'hypothèque, des soins de santé, de la gestion de la dette, de l'automobile, du gouvernement et des solutions de talents. La croissance forte et généralisée du chiffre d'affaires des services de vérification reflète la croissance continue du nombre de dossiers actifs ainsi que le déploiement de nouveaux produits, l'expansion dans de nouveaux marchés verticaux et l'ajout de nouveaux clients. La croissance du chiffre d'affaires des services SAP et de vérification, hors bénéfice du marché hypothécaire, a augmenté respectivement de 12% et 19%.

Rudy Ploder et l'équipe EWS ont fait un travail remarquable en 2019 pour développer leur entreprise et étendre la base de données TWN. TWN a près de 105 millions de dossiers actifs à la fin de 2019 et plus de 82 millions de personnes uniques actives, en hausse de 15% par rapport à il y a un an. Ceux-ci se comparent aux quelque 170 millions de personnes, y compris les travailleurs indépendants dans la masse salariale non agricole des États-Unis, ce qui nous donne beaucoup de latitude pour développer notre base de données à l'avenir. Comme vous le savez, ces enregistrements TWN font vraiment grimper nos taux de succès pour nos clients et profitent aux consommateurs américains. Nos intégrations de système à système avec nos clients nous permettent de monétiser les ajouts à la base de données TWN dès qu'ils sont ajoutés en fournissant les taux de réussite plus élevés à nos clients lorsqu'ils accèdent à notre base de données dans leurs applications de système à système.

Les Services aux employeurs ont diminué de 6% au cours du trimestre et conformément à nos attentes, principalement en raison des baisses attendues de Workforce Analytics, de nos activités ACA ainsi que de nos activités d'indemnisation du chômage. La forte croissance des revenus de Verifier s'est traduite par de fortes marges d'EBITDA ajusté de 47%. Les marges ont été inférieures au cours du trimestre par rapport à l'année précédente, principalement en raison des coûts supplémentaires de mise en œuvre par des tiers et des redevances associés à l'expansion des enregistrements TWN et de certains coûts de vente plus élevés. Workforce Solutions est clairement la meilleure entreprise d'Equifax et elle continue de fournir des résultats solides avec un potentiel de croissance futur important.

Passant maintenant à International. Leur chiffre d'affaires est en hausse de 4% en monnaie locale et quasi stable en données publiées, ce qui est plus faible que prévu. La plus grande partie de la faiblesse par rapport à nos attentes était en Amérique latine, en particulier au Chili et, dans une moindre mesure, dans le secteur de la gestion de la dette au Royaume-Uni. Surtout, nous avons enregistré une performance meilleure que prévu en Asie-Pacifique, y compris en Australie. Je suis encouragé par la trajectoire de l'activité internationale compte tenu de la croissance des revenus enregistrée au second semestre 2019 malgré les vents économiques persistants en Australie, au Chili et au Royaume-Uni Asie-Pacifique, qui sont principalement nos activités australienne et néo-zélandaise, en hausse de presque 1% en monnaie locale au quatrième trimestre par rapport au quatrième trimestre '18 et 1,5% au deuxième semestre 2019. Fait important, en Australie, nous avons vu nos revenus en ligne pour les consommateurs et les entreprises, qui, combinés, représentent un peu moins de la moitié des revenus australiens, a augmenté d'environ 5% au cours du trimestre. Nous avons également enregistré une belle croissance dans nos activités Identité et Fraude et nos activités Solutions RH. Nous continuons de voir la faiblesse de notre activité de services marketing, que nous prévoyons de poursuivre, mais dans une moindre mesure, au cours du premier semestre 2020. J'étais en Australie il y a 2 semaines avec notre nouveau leader, Lisa Nelson. Elle et son équipe se concentrent sur le retour à la croissance de l'entreprise en 2020. Nous nous attendons à ce que la croissance des revenus en monnaie locale australienne revienne à la croissance au premier trimestre et se renforce au second semestre 2020.

L'activité australienne continue de très bien progresser avec des données positives, et à la fin du quatrième trimestre, nous avions 80% de données positives des contributeurs, dont 90% des données de carte de crédit et d'hypothèque pour l'Australie. Nous nous attendons à ce que ces données supplémentaires soient un nouveau levier de croissance pour l'entreprise à l'avenir.

Passons maintenant à nos activités européennes, qui étaient en hausse de 1% en monnaie locale au quatrième trimestre et plus faibles que nos attentes, principalement dans notre activité de gestion de la dette. Fait important, notre activité de crédit en Europe a augmenté de 5% en monnaie locale, une amélioration par rapport à la hausse de 1% au troisième trimestre de 2019 et leur plus forte performance en 2019.

La consommation en ligne et par lots, qui représente près de 60% de notre chiffre d'affaires CRA européen, a augmenté de 3% au quatrième trimestre. Nos activités d'analyse et de scores et les revenus d'Ignite InterConnect ont augmenté à deux chiffres au cours du trimestre, et cette croissance a été tirée par la vigueur des technologies financières et des technologies financières. Les revenus de fraude commerciale et d'identité ont été faibles au cours du trimestre. Notre activité européenne de gestion de la dette a reculé de 7% en monnaie locale, principalement en Espagne. Et notre activité de gestion de la dette avec le gouvernement du Royaume-Uni n'est pas revenue à la croissance au quatrième trimestre – je suis désolé, elle est revenue à la croissance au quatrième trimestre, ce qui était positif. Cependant, nous prévoyons que l'activité globale de gestion de la dette restera faible au cours du premier trimestre de 2020, alors que la situation du Brexit se normalise.

Passage à nos activités en Amérique latine. Ils ont enregistré une forte croissance de 10% en monnaie locale au quatrième trimestre 2019 malgré l'impact du Chili en raison des troubles récents. Nous avons enregistré une croissance à deux chiffres à taux de change constant en Argentine, en Équateur, en Uruguay, au Salvador et au Mexique, et nous voyons une croissance s'accélérer alors que nos activités en Amérique latine bénéficient de l'expansion des déploiements de clients Ignite et InterConnect SaaS et des déploiements de NPI solides en 2019-2020 et 2019.

Le Canada a enregistré une forte hausse de 9% en monnaie locale au quatrième trimestre et de 8% pour l'année entière, reflétant un accent continu sur l'innovation client et les nouveaux produits. Le Canada continue d'être un marché de croissance très solide pour Equifax.

Les marges d'EBITDA ajusté international à 36,4% ont augmenté de 400 points de base par rapport à l'année précédente. La forte reprise de la marge reflète à la fois le retour à la croissance du trimestre et le bénéfice des actions de coûts que nous avons mises en œuvre au quatrième trimestre 2019-2020 et en 2019 ainsi que l'amélioration des revenus des investissements minoritaires.

Passons maintenant aux revenus de Global Consumer Solutions. Cette activité a augmenté de 3,5% en devises publiées et à taux de change constant au quatrième trimestre, une amélioration substantielle par rapport à l'augmentation de 50 points de base au troisième trimestre de 2019. Les revenus directs des consommateurs mondiaux, qui représentent un peu moins de la moitié de nos revenus GCS totaux, n'a baissé que de 1% au cours du trimestre. La croissance à deux chiffres au Royaume-Uni et dans les activités combinées de consommation directe au Canada a été contrebalancée par une baisse de 8% du consommateur américain. Bien qu'une baisse légèrement plus importante aux États-Unis que prévu, cela représente toujours une amélioration substantielle par rapport à la baisse à deux chiffres de la consommation directe aux États-Unis que nous avons constatée au troisième trimestre et plus tôt en 2019.

Nos activités de partenaires GCS ont augmenté de 6% au cours du trimestre en raison de la solide croissance de nos partenaires américains, de notre canal d'avantages sociaux et de nos activités de rupture au Canada. Notre équipe de partenaires GCS continue de fermer de nouveaux logos et leur pipeline s'est bien développé depuis la même période l'an dernier.

La marge d'EBITDA ajusté de GCS de 26,9% a augmenté de 580 points de base par rapport à l'année précédente et a augmenté de 200 points de base séquentiellement par rapport au troisième trimestre de 2019. Comme prévu, au quatrième trimestre, nous avons vu l'effet de la croissance des revenus et l'avantage du coût mesures prises plus tôt en 2019. L'équipe GCS a fait un excellent travail pour redresser cette entreprise et la ramener à la croissance.

Dann Adams, notre chef de GCS, a pris sa retraite d'Equifax à la fin de 2019 après une carrière de 21 ans à Equifax. Je tiens à remercier personnellement Dann pour toutes ses contributions à Equifax, y compris en tant que président de USIS, EWS et GCS au cours de sa carrière. Dann laisse un énorme héritage et nous manquera. Bev Anderson prend la relève de Dann, qui nous a rejoint après plus de 30 ans d'expérience dans les services financiers. Bev nous a rejoint de Wells Fargo, où elle était plus récemment responsable de la croissance et de la transformation de leurs activités et opérations de cartes de crédit à la consommation. Je suis vraiment ravi que Bev rejoigne mon équipe de direction et dirige l'entreprise GCS.

Passons maintenant à notre transformation technologique. Au quatrième trimestre, nous avons franchi des étapes importantes dans notre transformation de 1,25 milliard de dollars de la sécurité et de la technologie EFX2020. Comme vous vous en souvenez, nous avons lancé le programme de 3 ans en 2019-2020 pour migrer nos données et applications vers Google Cloud. Nous avons fait des progrès significatifs dans la mise en œuvre de nos échanges de données aux États-Unis dans le nouveau tissu de données basé sur le cloud en 2019, et nous avons un réel élan à l'approche de 2020. À partir d'aujourd'hui, les premières migrations de The Work Number, NCTUE, auto, la connexion cible et nos échanges de richesses IXI dans des environnements natifs du cloud sont terminés. Nous prévoyons de commencer à livrer en production aux clients à partir de ces échanges migrés dès mars, avec une migration complète de tous les processus d'ingestion de données et la mise hors service des systèmes hérités terminée au cours des 6 à 12 prochains mois. D'ici la fin du deuxième trimestre de 2020, nous prévoyons avoir terminé la migration initiale de nos échanges commerciaux aux États-Unis, de l'échange immobilier et de notre échange DataX. Et d'ici le troisième trimestre 2020, la migration initiale de tous les échanges aux États-Unis, y compris notre échange de propriétés, le marché américain des consommateurs ou Acro, devrait être achevée. Ces migrations de données vers le cloud sont des étapes importantes dans notre programme de transformation technologique.

Notre plate-forme d'analyse et d'apprentissage automatique Ignite, qui comprend une capacité de gestion des attributs et des modèles et intégrée à InterConnect, sera entièrement disponible pour les migrations de nos clients chez EWS d'ici la fin du premier trimestre et chez GCP d'ici la fin du deuxième trimestre de 2020. Cela inclura la possibilité pour les clients d'ingérer et de gérer facilement leurs propres données ainsi que les données d'Equifax dans leur propre instance Ignite. Nous continuons à faire de solides progrès à l'échelle mondiale dans le déploiement de notre plate-forme d'analyse Ignite avec plus de 150 clients qui utilisent désormais Ignite Direct et Marketplace. NDT, notre technologie brevetée de machine learning explicable, est désormais déployée dans le développement Ignite avec plus de 30 modèles clients. Et il y a quelques semaines, nous avons obtenu notre deuxième brevet américain pour le CND.

Nous progressons également à l'international avec notre transformation cloud. La migration initiale de la bourse canadienne des risques pour les consommateurs et de la fraude connue vers GCP et AWS aura lieu d'ici la fin du deuxième trimestre de 2020, avec des progrès similaires au Royaume-Uni, en Australie et en Nouvelle-Zélande sur les échanges de consommateurs attendus d'ici la fin de l'année.

Nous constatons également une accélération des progrès dans la migration de nos clients vers notre infrastructure API InterConnect et Ignite basée sur le cloud. Il s'agit de l'ensemble de services commun sur lequel nous travaillons pour migrer tous les clients USIS, EWS et internationaux. D'ici la fin du premier trimestre de 2020, nous prévoyons avoir migré environ 1000 clients américains, avec un montant similaire à l'international. Ce rythme s'accélérera considérablement jusqu'en 2020, la grande majorité des migrations de clients aux États-Unis étant achevées au début de 2021. Comme nous l'avons vu, les migrations de clients sont certainement la partie la plus difficile de notre transformation technologique à prévoir, mais nous sommes très satisfaits des clients. enthousiasme pour les avantages de notre nouvel environnement cloud natif et l'accélération du rythme des migrations des clients.

J'espère que cela vous donne une idée des progrès significatifs que nous faisons dans notre transformation technologique qui fournira à nos clients une technologie de pointe, native du cloud. Nous nous concentrons sur l'exécution au laser et avons poursuivi sur notre lancée en 2020.

Passons maintenant à de nouveaux produits. Cela reste un élément clé de notre stratégie EFX2020 et un muscle à long terme pour Equifax. Nous avons un pipeline d'innovation actif dans les nouveaux produits, et nous avons lancé plus de 90 nouveaux produits en 2019, en hausse de 50% par rapport à 2019-2020 et par rapport aux conseils que nous vous avons donnés en octobre. Comme vous le savez bien, l'innovation dans les nouveaux produits alimente notre croissance et fait partie intégrante de notre stratégie. Fait important, les lancements de produits USIS ont augmenté de 2 fois en 2019 et sont revenus au niveau que nous observions en 2019-2020. EWS a également connu une très bonne année de nouveaux produits, doublant leurs lancements de nouveaux produits. L'innovation et les nouveaux déploiements de produits bénéficieront d'une attention accrue de notre équipe en 2020 et 21, alors que nous tirons parti des avantages uniques de notre structure de données native du cloud et de nos applications basées sur le cloud pour offrir des capacités – et de nouvelles capacités à nos clients. Il s'agit d'un levier clé pour la croissance d'Equifax à l'avenir.

En 2019, USIS a lancé de nouveaux produits ou des produits améliorés dans le domaine du marketing, notamment l'ajout d'e-mails amélioré, le présélection de DataX et la pré-approbation de One; dans l'identité et la fraude, y compris notre Luminate – nouvelle suite de produits contre la fraude Luminate et Synthetic ID 2.0, et dans plusieurs produits verticaux spécifiques dans le domaine commercial, qui permettent à nos clients de profiter de notre ensemble de données de paiement de location commercial élargi avec l'acquisition de PayNet ; en immobilier, pour le lead scoring, un nouveau Insight Score pour les prêts personnels; et pour le secteur de l'assurance, un nouveau score, le score d'inflexion, que nous avons développé conjointement avec Verisk. EWS a également élargi ses offres de produits en ajoutant de nouveaux actifs de données, y compris des données sur l'éducation, la propriété et d'autres données, pour augmenter leurs données uniques sur le revenu et l'emploi, ce qui fait partie de leur cheminement vers devenir un centre de données centré sur leur revenu et leur emploi uniques ressource de données. Les nouveaux produits d'EWS comprenaient des offres élargies de produits hypothécaires ainsi que de nouveaux rapports sur les talents à déployer pour faciliter l'identification de l'empilement de prêts pour l'industrie des prêts personnels.

International a également connu une année solide avec de nouveaux produits, avec des lancements en hausse de plus de 30%, avec une bonne distribution dans toutes nos zones géographiques. La force des NPI internationaux est tirée par plus de 100 installations Ignite chez nos clients internationaux.

Comme vous pouvez le voir, nous priorisons vraiment notre concentration et nos ressources sur la promotion de l'innovation et du déploiement des NPI en 2019, et nous prévoyons d'investir encore plus dans l'innovation et les nouveaux produits en 2020 et au-delà. Les NPI continuent d'être un levier de plus en plus important pour la croissance d'Equifax, en particulier lorsque nous tirons parti des opportunités de nouveaux produits devant nous depuis la transformation du cloud.

Nous avons également récemment annoncé de nouveaux partenariats avec des plates-formes de déclaration des loyers, notamment Esusu, MoCaFi et Zingo, pour aider à développer une image plus complète du profil financier de notre consommateur à partir des données de location. Ces plateformes de déclaration de loyer permettent aux consommateurs de choisir d'inclure des données de paiement de loyer dans leur rapport de crédit pour donner une image plus complète de leurs antécédents financiers. Dans le cadre de leurs initiatives d'éducation au crédit, les 3 entreprises présenteront également à leurs utilisateurs un point de vue hebdomadaire ou mensuel gratuit afin que les consommateurs puissent suivre les changements de score au fil du temps. Nous croyons que ces partenariats sont une victoire pour les consommateurs et une nouvelle source de données pour Equifax.

Et plus tôt ce mois-ci, nous avons finalisé l'acquisition de la participation restante dans nos activités en Inde pour prendre le contrôle à 100% de ces activités. Nous considérons l'Inde comme un marché stratégique à long terme, avec un énorme potentiel grâce à nos actifs et capacités de données uniques.

En terminant et en regardant en arrière en 2019, nous avons fait d'énormes progrès dans l'exécution de notre stratégie EFX2020 que nous sommes convaincus que nous reviendrons Equifax au leadership et à la croissance du marché en tant que société leader en matière de données, d'analyse et de technologie. Nous avons une forte dynamique opérationnelle à partir de 2019, avec une croissance des revenus au deuxième semestre 2019 à près du double du rythme de notre performance au premier semestre. Cette accélération au second semestre, en particulier dans nos activités aux États-Unis, ainsi que le retour à la croissance d'une année à l'autre des marges du BAIIA et du BPA ajusté, nous positionnent bien pour 2020 et au-delà.

L'annonce de lundi de l'acte d'accusation du MJ, ainsi que notre résolution des principaux problèmes juridiques restants liés à l'événement cybernétique, est une autre étape très positive pour Equifax qui nous permet de clore le chapitre sur l'événement 2019-2020 et de nous concentrer pleinement sur l'avenir croissance d'Equifax.

Notre transformation technologique native du cloud EFX2020 de 1,25 milliard de dollars s'accélère et nous mettons actuellement en œuvre, en production, des échanges majeurs ainsi que notre environnement analytique Ignite et notre infrastructure native du cloud. Nous migrons également activement nos clients sur notre plate-forme basée sur l'API InterConnect Ignite basée sur le cloud, et nous sommes également motivés par tout l'apprentissage que nous avons sur la puissance du nouvel environnement cloud natif pour stimuler l'innovation, accélérer la mise sur le marché , de nouveaux produits et solutions toujours sur la stabilité, et les économies de coûts et de liquidités dont nous avons parlé précédemment. Nous restons convaincus que notre investissement dans le cloud sera transformateur pour Equifax et stimulera notre chiffre d'affaires supérieur et inférieur à l'avenir.

Nous avons poursuivi nos efforts en 2019 pour faire progresser nos actifs de données déjà différenciés en ajoutant de nouvelles capacités de données importantes aux États-Unis grâce à notre acquisition PayNet et dans nos partenariats avec FICO, Yodlee et Urjanet. Cette concentration sur l'expansion de nos ressources de données se poursuivra en 2020 et au-delà. Nous continuons à faire de gros investissements dans notre sécurité des données pour atteindre notre objectif d'être un leader de l'industrie en matière de sécurité des données.

Enfin, nous avons la bonne équipe en place pour l'avenir d'Equifax. Au cours des 2 dernières années, nous avons fait appel à de solides talents au sein de mon équipe de direction dans le secteur plus large. Nous sommes tous alignés sur le retour d'Equifax à la croissance et au leadership du marché.

Nous sommes stimulés par tout ce que nous avons accompli en 2019 et par la dynamique de l'entreprise alors que nous entrons dans le premier trimestre de 2020. Nous savons que nous avons encore beaucoup de travail devant nous, mais notre objectif est clair, autour de l'exécution de notre nuage de 1,25 milliard de dollars. la transformation technologique tout en favorisant de nouvelles innovations et de nouveaux produits qui accéléreront notre croissance à l'avenir.

Sur ce, permettez-moi de céder la parole à John.

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John W. Gamble, Equifax Inc. – Vice-président et directeur financier [4]

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Merci, Mark. Je ferai généralement référence aux résultats financiers des activités poursuivies représentés selon les PCGR, mais je ferai également référence aux résultats non conformes aux PCGR.

Au quatrième trimestre, le total des coûts non récurrents ou ponctuels liés à l'incident de cybersécurité et à notre transformation, à l'exclusion des 100 millions de dollars de charges à payer juridiques dont Mark a parlé, étaient de 82 millions de dollars et inférieurs à nos attentes, principalement en raison de la baisse des frais juridiques. Le coût comprend 76 millions de dollars de technologie et de sécurité et 6 millions de dollars pour les frais juridiques et d'enquête. Pour toute l'année 2019, les enquêtes sur le marché hypothécaire américain ont augmenté de plus de 6,5% par rapport à 2019-2020, ce qui correspond à ce que nous attendions en octobre pour les enquêtes 2019. Les enquêtes au 4T '19 ont augmenté de près de 21%, ce qui était conforme à nos attentes en octobre. Au quatrième trimestre, les revenus liés aux prêts hypothécaires représentaient un peu plus de 19% des revenus d'Equifax. Pour rappel, l'estimation que nous fournissons concerne les demandes de crédit du marché hypothécaire 2020. Nous avons basé nos estimations sur de multiples prévisions de tiers concernant les hypothèques en dollars, dont MBA, Fannie et Freddie. Nous pensons que nos origines actuelles, à peu près stables en 2020, ne sont que légèrement plus positives de l'ordre de 50 points de base que les prévisions actuelles de MBA, en baisse de 7%. Inquiries can be vary meaningfully from originations principally due to mortgage tight mix and timing of inquiries versus closed loans.

In the fourth quarter, general corporate expense was $211 million. Excluding nonrecurring costs, adjusted general corporate expense for the quarter was $72 million, down $4 million from 4Q '18.

Adjusted EBITDA margin was 35.2% in 4Q '19, up 200 basis points from 4Q '18 and up 130 basis points from 3Q '19. As we discussed in October, and as covered in Mark's comments, the increase in overall adjusted EBITDA margins year-to-year is driven by positive mix as high-margin USIS and EWS had the highest revenue growth rate in 4Q '19, growth in margins in International and GCS as well as leverage on corporate costs as revenue grows. Margin declines in USIS and EWS from strategic investments partially offset these increases.

For 4Q '19, the effective tax rate used in calculating adjusted EPS was 22.7%, slightly below the approximately 23% we have provided for guidance for 4Q '19 in October. We expect our 2020 effective tax rate to be about 24%.

Full year operating cash flow of positive $314 million was down $358 million from 2019-2020. The decline was more than driven by the following nonrecurring items: Equifax made payments of $341 million in 3Q '19 for the consumer settlement announced in the second quarter, no such payments were made in 2019-2020; and payments related to the $57 million of restructuring charges taken in 4Q '18 and 1Q '19 were $36 million. Capital spending, or the incurred cost of capital projects in 4Q '19 and year-to-date, was $90 million and $376 million, down $28 million and up $8 million, respectively, from 2019-2020. Excluding payments related to settlements of litigation or regulatory actions, full year 2019 free cash flow was above $250 million and was better than our expectations. Now let's take a look at 2020. 2020 is an important turning point for Equifax' 2020 security and technology transformation as we accelerate the move of our data exchanges to data fabric at GCP, our customer transitions to our Ignite InterConnect API framework and our Identity and Fraud customers' transition to using our new systems at AWS. As we put our cloud-native systems into production, we will begin to depreciate these new systems and incur the cloud and other operating costs of running these new cloud-native systems. It will generally take 6 to 12 months from the start of production to fully transition a legacy exchange or decisioning system to a new cloud-native system. During that time period, we will incur both the cloud and other operating costs of the new system as well as the operating costs of the legacy systems. As 2020 is a transition year and the decommissioning of legacy systems is not expected to substantially occur until late 4Q 2020 and 2021, we will incur these additional system transition costs for much of 2020. For 2020, we expect these additional system transition costs to be in the range of $0.40 to $0.50 per share, with increased depreciation representing about 2/3 of this additional costs and cloud costs, net of any legacy system decommissioning savings, representing approximately 1/3 of this cost. As we move into 2021, we expect the savings from the decommissioning of legacy systems to exceed the incremental cloud costs, resulting in a net benefit to the P&L as opposed to the duplicate costs we will be incurring in 2020. As we have said in the past, when this transition is complete, we expect to generate significant cost savings of 15% plus savings in technology costs portion of our cost of goods sold, and the technology costs portion of our cost of goods sold represents just under 15% of our total COGS; and a 25% reduction in our development spend, both in expense and capital. And we expect our new single data fabric and cloud-based applications to accelerate innovation and new products that will be accretive to our growth rate.

Now for 2020 guidance. We expect total revenue to be between $3.65 billion and $3.75 billion, reflecting constant currency revenue growth of 4% to 7%. This assumes the U.S. mortgage market will be about flat in 2020. FX will negatively impact revenue by almost 1% and adjusted EPS by about $0.03. USIS revenue is expected to be up mid-single digits in 2020. EWS revenue will continue to deliver double-digit revenue growth, with very strong growth in Verification Services. Employer Services is expected to be flat to down. International revenue will grow mid-single digits, with growth strengthening in the second half of '20 due to expected economic improvement in Australia and Europe. GCS revenue will also grow mid-single digits in 2020, with continued growth in our partner business at ID Watchdog and in our U.K. and Canada consumer direct businesses. We expect U.S. consumer direct to return to growth late in 2020.

For 2020, we expect adjusted EPS to be $5.60 to $5.80 per share, reflecting constant currency growth of approximately flat to 3.5% versus 2019. As I discussed earlier, impacting adjusted EPS in 2020 is $0.40 to $0.50 per share of increased depreciation and additional system transition costs. This represents approximately 8 percentage points of growth in adjusted EPS. As such, excluding this tech transition impact, adjusted EPS growth is 8% to 11%, which helps give a clear picture of the post-Equifax 2020 earnings power of Equifax.

Due to the substantial increase in depreciation, we will, in 2020, add our — add to our discussion with you more focus on adjusted EBITDA margins, which we believe will better reflect the true earnings power of Equifax. In 2020, adjusted EBITDA margins are expected to expand by approximately 50 to 100 basis points. This includes a drag of about 50 basis points from the additional system transition costs. Excluding this transition cost, adjusted EBITDA margins would expand between 100 to 150 basis points in 2020. As we discussed, the duplicate legacy and cloud costs will be in place during 2020 and 2021 as we migrate customers to the new cloud environments and decommission legacy mainframe and server environments.

In 2020, we expect to incur approximately $255 million in nonrecurring expenses, comprised of $250 million in nonrecurring security and technology transformation expenses and less than $5 million in legal and regulatory expenses. This does not include the cost of any potential judgments or other regulatory outcomes should they occur. In 2020, as we have stated previously, we will no longer exclude — sorry, in 2021, as we have stated previously, we will no longer exclude these nonrecurring expenses from our adjusted EPS.

Capital spending in 2020 is expected to be approximately $335 million. There are several important assumptions impacting 2020 in total as well as the individual quarters. U.S. mortgage market inquiries for all of 2020 are expected to be flat. However, 1Q '20 inquiries are expected to remain strong, up over 21% year-to-year. 2Q '20 inquiries are expected to be about flat, and we expect inquiries to decline about 10% in each of the third and fourth quarters. 2020 corporate costs are expected to increase approximately $45 million versus 2019. Depreciation expense within the corporate cost line is expected to increase over $15 million. 2020 corporate costs, excluding depreciation, are expected to increase year-over-year by about $30 million. The increases are principally in security and technology as well as equity compensation. The higher security and technology costs are partially a result of the system transitions in 2020 as we invest to ensure we maintain high levels of security in both the new cloud-native and legacy systems. As we decommission legacy systems at a more rapid pace beginning in late 2020, we would expect these security and technology costs to moderate. Over half of the 2020 total increase of $45 million in corporate costs will occur in 1Q '20. Interest expense is expected to increase about $30 million or $0.08 per share in 2020, reflecting the incremental borrowings to fund the legal settlement payments in 3Q '19 and 1Q '20. About 2/3 of this increase will occur in the first half of 2020. Note that our guidance does not reflect any incremental borrowings associated with approximately $355 million remaining in consumer legal settlements as the timing of that payment is still not known.

Our 2020 tax rate is expected to be slightly higher than the 2019 tax rate at 24%. We continue to expect our normal seasonal pattern for reported revenue and adjusted EPS, with 1Q being the lowest and 3Q and 4Q being the highest in dollar terms. However, in terms of year-over-year growth rates, we would expect 1Q to have the highest growth rates for revenue and adjusted EPS. For 1Q '20, we expect revenue in the range of $915 million to $930 million, reflecting constant currency revenue growth of 9% to 11%. We are expecting adjusted EPS to be $1.29 to $1.34 per share. FX is expected to negatively impact revenue by over 1% in 1Q '20 and negatively impact adjusted EPS by $0.01 per share. Higher interest expense negatively impacts adjusted EPS by $0.03 per share versus 1Q '19. The tax rate in 1Q '20 is expected to be about 25%.

And with that, operator, please open it up for questions.

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Questions et réponses

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Opérateur [1]

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(Operator Instructions) And our first question will come from Andrew Steinerman with JPMorgan.

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Andrew Charles Steinerman, JP Morgan Chase & Co, Research Division – MD [2]

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I just wanted to understand how you're using the word mortgage inquiries, like to be flat in 2020, as your team's expectation, is that supposed to be a proxy for Equifax' revenues in 2020 for that part of the business which you said was about 19%? And if so, a 4% to 7% constant currency revenue growth would mean kind of high-single-digit non-mortgage revenue growth, right?

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John W. Gamble, Equifax Inc. – Corporate VP & CFO [3]

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Yes. So the credit inquiries is exactly as it sounds, right? It's with each mortgage transaction, we get an inquiry. And we're simply trying to let you know what we forecast those increase to be for the year. And as I said, we estimate that based on the information we have in terms of the number of inquiries that we get per closed mortgage loan, and then we use the forecast provided by MBA and Freddie and Fannie to do an overall originations forecast, and then we translate it into credit inquiries. So it does reflect the increase we received. It isn't necessarily a proxy for our revenue because, obviously, there's pricing changes in a year. We also get new records in Workforce Solutions, so we get growth from that. And we also launched new products in mortgage, which drives our growth higher.

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Mark W. Begor, Equifax Inc. – CEO & Director [4]

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And we also get some penetration with some mortgage customers where they're using our either credit reports or the twin records 2x, 3x, 4x in their mortgage process. So that's another part of our revenue model.

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John W. Gamble, Equifax Inc. – Corporate VP & CFO [5]

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Yes, absolutely. So — and as you know, historically, we've tended to outperform the inquiry index. So it is to give you a view as to what we think the market is going to do in terms of the number of times the market will request information from the credit bureaus.

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Andrew Charles Steinerman, JP Morgan Chase & Co, Research Division – MD [6]

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Droite. And then, John, the second part was to do 4% to 7% constant currency revenue growth, you're assuming that 19% of your revenues is a headwind. So you would have to do kind of high-single-digit constant currency revenue growth in the non-mortgage segment, right?

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John W. Gamble, Equifax Inc. – Corporate VP & CFO [7]

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So certainly, our guidance indicates that non-mortgage is going to be higher, right? Is going to do better. Now again, but you have to keep in mind, we'll outperform that EWS, for example, as they continue to grow records, will certainly outperform in the mortgage segment the revenue they generate versus that inquiry index. So you can't just use the credit inquiries of the proxy directly for revenue because certainly, we do perform differently than that in certain circumstances.

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Opérateur [8]

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Next question will come from Kevin McVeigh with Crédit Suisse.

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Kevin Damien McVeigh, Crédit Suisse AG, Research Division – MD [9]

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So John, if I heard you right, it seems like if you added back the depreciation, the EPS would $6 to $6.20. That's a lot better than where The Street is on revenue, which is pretty much in line. Is that the mix in EWS? Or where else is that leverage coming through in the model?

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John W. Gamble, Equifax Inc. – Corporate VP & CFO [10]

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Just ask the question one more time. I didn't fully follow. Je suis désolé.

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Kevin Damien McVeigh, Crédit Suisse AG, Research Division – MD [11]

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Yes. So it looks like there's — the depreciation, if I heard you right, it was kind of a $0.40 to $0.50 headwind, the duplicative depreciation, which would imply $6 to $6.20 versus — or your guidance would be $6 to $6.20 versus The Street at $5.80. That's a lot better than kind of where The Street, the adjusted EPS versus kind of where the revenue guidance is relative to The Street. Is that just the mix that's driving it? And I guess, I'm assuming there's some margin outperformance there. Is that margin outperformance in Workforce Solutions, or am I just not thinking about that right?

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John W. Gamble, Equifax Inc. – Corporate VP & CFO [12]

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So what we indicated was it was $0.40 to $0.50 per share for both the increase in depreciation, and the duplicate costs were occurring because we're running both cloud systems and our legacy systems until those legacy systems are decommissioned. So that is 40% to 50%. And yes, we did say that's about 8 points of growth in the year. So relative to where The Street was, I can't specifically address that. But I can indicate that we did, in the third quarter, give pretty specific guidance as to how much we thought our depreciation would go up, right? So I think there was a pretty good understanding generally prior to the fourth quarter beginning, following our third quarter earnings call, that we were going to see significantly increased appreciation in 2020. And we are also going to see significant increases in cloud costs in 2020. So I think that information was broadly out there before.

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Kevin Damien McVeigh, Crédit Suisse AG, Research Division – MD [13]

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That's helpful. And then, just with the indictments, does that open the potential that maybe you can recover some of those costs you have incurred already, the [outcome] insurance? Or does that change the outcome in terms of what you've already incurred?

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Mark W. Begor, Equifax Inc. – CEO & Director [14]

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I think we've fully taken advantage of our insurance coverage there as far as any recovery. So our expectation is that the charges that we took last year and the charge we took in the fourth quarter will be Equifax-funded. These are all net — the numbers we shared with you are net of insurance.

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Opérateur [15]

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Next question will come from Manav Patnaik with Barclays.

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Manav Shiv Patnaik, Barclays Bank PLC, Research Division – Director & Lead Research Analyst [16]

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Mark, you've — over the course of the year, talked a lot about how the pipelines will be improving, new products and all the progress you've made. But at the same time, I think it's been a few quarters where you said the ex-mortgage, USIS, has been short of your expectations. So I was just curious if you could just help us bridge that gap? And maybe what is your expectation for USIS ex-mortgage for 2020?

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Mark W. Begor, Equifax Inc. – CEO & Director [17]

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Yes, I think that John talked about, we expect that USIS overall to be in the mid-single digits. With regards to expectations, we've got a high bar here. That's how I operate. I think that's — Manav, you know that we want that business to return to its historical growth rates. It's making great progress. I think you know, a year ago, when we were on this call with fourth quarter of 2019-2020, that business was in the flat-to-negative mode and was just getting out of the penalty box with our customers. And we're now 4 quarters or so into that recovery. We're making great progress as far as their pipeline is building and their win rates, and we see some really positive momentum as we move into 2020. We expect that business to continue to improve as we go through the year and expect it to return to its historical growth rate. It's just a matter of time. It's still one that — the non-mortgage growth, there's a lot of variables there as far as pipelines being rebuilt and the timing of closing deals that we've talked about virtually every quarter that since the cybersecurity incident. But we're just seeing deeper pipelines and better win rates, which gives us confidence as we go into 2020.

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John W. Gamble, Equifax Inc. – Corporate VP & CFO [18]

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I just want to make sure — to Andrew's initial question, just to make sure I was clear, right? So Equifax has historically performed better than the mortgage index in terms of our revenue. So again, as you're doing your analysis on the implications of our mortgage market guidance in terms of its implication to our non-mortgage revenue growth, you need to please recognize and take a look at history of the fact that we've generally significantly outperformed the mortgage index in terms of our own mortgage revenue growth.

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Manav Shiv Patnaik, Barclays Bank PLC, Research Division – Director & Lead Research Analyst [19]

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Je l'ai. John, just 2 clarifications on the guidance. So one, could you just — is there any M&A baked into it, whether that's India or any of the other areas you did from this prior year? And then I lost you a little bit on the $0.40 to $0.50 that you're incurring this year and how that — the savings that you said was 1/3 of the cloud cost is something. I was hoping if you could just help me with that in '21?

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John W. Gamble, Equifax Inc. – Corporate VP & CFO [20]

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Yes. So in terms — the only thing we include in our guidance is acquisitions that have actually closed, so there'll be no new acquisitions included.

In terms of the — I think you're asking about the $0.40 to $0.50 per share in transition costs and system transition costs?

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Manav Shiv Patnaik, Barclays Bank PLC, Research Division – Director & Lead Research Analyst [21]

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Yes.

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John W. Gamble, Equifax Inc. – Corporate VP & CFO [22]

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That $0.40 to $0.50 per share is made up of 2 things. We said about 2/3 of it is incremental depreciation, right? So we've been investing heavily over the past several years, building new production systems, cloud-native production systems in the cloud. And as they go into production, obviously, we start to depreciate them. So of that $0.40 to $0.50, we've said about 2/3 of it will be substantial increase in depreciation in 2020 versus 2019. And that's — and then about 1/3 of the incremental costs is related to duplicate costs in operations because we're running cloud systems as well as our legacy systems in parallel for an extended period of time while we migrate customers. So we're incurring effectively double cost, the cost of the existing legacy premise system as well as the cost of the cloud system during the transition period. And we said that transition cost, a period of running 2 sets of systems, would be about 1/3 of that $0.40 to $0.50 per share. And the final comment I made is on that specific cost, the duplicate cost of running 2 sets of systems, we had said as we move into 2021, as we move through the year, we expect that to actually become a positive, where the savings related to shutting down legacy systems will exceed cloud costs, and that will start to become a positive for the company.

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Mark W. Begor, Equifax Inc. – CEO & Director [23]

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And Manav, just to add to that. It's Mark. I think as you know, a lot of our investors have asked for some transparency around that because number one, on the second point John raised and the duplicate cloud costs, as you know, those aren't going to be here forever. And those are going to start as we decommission systems, they will turn into being a positive. There will be some of that 2020. That's in our guidance now and the numbers John talked about, and that only accelerate in 2021, and we'll get to a fully migrated basis sometime in the future, and we'll give you guidance on that. So that was that element. And then on the increased amortization, same thing. That's a temporary element, if you will, which will be there for a number of years of that increased amortization, which is a noncash item, and that's going to work its way down as we amortize off our investments in the cloud costs. And as you know, our intention is to reduce our CapEx spending in 2021 as we complete the cloud migration. So our intention is to be clear about our guidance, which John gave you, but also give the additional visibility of what's inside that guidance so you can be aware and think about what Equifax looks like on the other side.

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Manav Shiv Patnaik, Barclays Bank PLC, Research Division – Director & Lead Research Analyst [24]

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And just what was the M&A contribution, John? I know you assume only deals closed. So what is that in 2020?

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John W. Gamble, Equifax Inc. – Corporate VP & CFO [25]

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It's relatively small, right? If you think about — we closed PayNet in the — I think, in the second quarter of 2019, and that was the largest acquisition for the year. So there — in the fourth quarter, we gave some indication. Total — the total amount of acquisition revenue was just over 1% of revenue, so not a significant number, and it should decline as we move through 2020. Well, it's moved through 2020.

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Opérateur [26]

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Next question will come from George Mihalos with Cowen.

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Allison Michelle Jordan, Cowen and Company, LLC, Research Division – Associate [27]

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This is Allison on for George. I wanted to follow up on the comments made about Workforce Solutions margins in the quarter. I think I heard that the year-over-year decline was driven by third-party implementation royalty costs. I'm just curious if there's anything else to call out there, maybe mix? And how we should think about segment margins going forward in 2020?

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Mark W. Begor, Equifax Inc. – CEO & Director [28]

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Yes, I also mentioned, Allison, that there was some additional sales costs in the fourth quarter in that business, which puts some pressure on margins. I think John also said that we expect that business to expand margins in 2020. And we don't see any change in that, but they're high growth in their inherent margins. That's a business that we expect expanding margins going forward.

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John W. Gamble, Equifax Inc. – Corporate VP & CFO [29]

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And just to make sure you were clear. The royalty costs are actually separate from the third-party implementation costs, right? So those are 2 different cost items that affected us in the quarter. As well as, obviously, increased sales expense.

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Allison Michelle Jordan, Cowen and Company, LLC, Research Division – Associate [30]

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Okay, great. That's super helpful. And then just one quick follow-up. Mark, I heard you mention the solid progress being made with positive data in Australia. I'm curious if we should expect any impact from this in 2020?

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Mark W. Begor, Equifax Inc. – CEO & Director [31]

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Yes, we hope it will be accretive as we go through the year. We've seen in all the markets where positive data comes in. It obviously first takes a lot of time to get that data from the contributors into Equifax and the other credit bureaus and then turning that into usable information that we can take to the marketplace has a lag to it. The good news is we have the data now, which we've been working to get there. So we expect it will be a positive element for that team in 2020.

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Opérateur [32]

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Next question will come from Hamzah Mazari with Jefferies.

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Hamzah Mazari, Jefferies LLC, Research Division – Equity Analyst [33]

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My first question is just if you could just talk about how long your sales cycle today is on new products currently? And maybe how much they're contributing to growth today versus sort of pre-breach, just to give us a sense?

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Mark W. Begor, Equifax Inc. – CEO & Director [34]

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Aller. Take it, John.

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John W. Gamble, Equifax Inc. – Corporate VP & CFO [35]

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Perfect. So sales cycle, it really depends on the product, right? So if it's a batch product, something that we've sold historically, that's effectively reselling. It's something that can sometimes be initiated and transacted within a period. For implementing a new online service with the customer, the implementation period can be over a year, right? And it really depends on the service. In terms of NPI contribution and new product contribution in 2019 versus prior years, I think what we try to be clear on is the level of acceleration we're seeing in new product launches, which we think is very beneficial as we go forward into 2020 and 2021. Obviously, the level of new product revenue we generated in 2019 and 2019-2020 was certainly down from what we saw historically because of the fact that we didn't have the same level of product generation over the 2019-2020-28 (sic) [2019-2020] period. So that was the — so we're seeing a period of lower new product revenue generation, but we see very good signs that, that will start to recover as we move into 2020 and then certainly, 2021.

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Mark W. Begor, Equifax Inc. – CEO & Director [36]

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If you heard my comments, just to add on that. New product innovation is a real priority of ours, and it's one that obviously, we had some pressures on following the cybersecurity incident with all our focus on security and remediation and everything else. And I'm pleased that our efforts in 2019 to make this a priority central to Equifax' strategy. And you saw the performance of us rolling out the highest new products in a number of years in 2019, and that emphasis is going to continue. We really believe that our cloud transformation and having our single data fabric and our having our products in the cloud is going to allow us to even accelerate that going forward. And this is an area that we're going to continue to invest resources, time and money on because of the positive impact it will have in the future around our top line by investing in more new products.

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Hamzah Mazari, Jefferies LLC, Research Division – Equity Analyst [37]

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Très utile. Just a follow-up question, I'll turn it over. Could you give us a sense of how much of your portfolio is sort of directly linked to the credit cycle versus how much of the portfolio is just data similar to sort of an info services company? Any sense of rough percentage? Or qualitatively, anything — any comments there?

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John W. Gamble, Equifax Inc. – Corporate VP & CFO [38]

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I think the best thing I can suggest is if you take a look at the earnings deck that we published, we published obviously last quarter, and there'll be one published today. In it, we show revenue by market segment for Equifax and for the — for each of the business units. And that's probably the best place to take a look to — so you can judge based on where we sell and how you think that is impacted by the credit cycle. I think that's the best source for you.

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Mark W. Begor, Equifax Inc. – CEO & Director [39]

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I think the other thing that you should be aware of is that our business and our industry, during a credit cycle, obviously, expenditures by our customers on new originations may come down, but then there's a shift in the focus to the back book to managing credit lines. So there's an element of counter cyclicality to it. And then the other element that's quite different at Equifax today versus the last economic cycle is the mix of our businesses. We're obviously larger internationally than we were in the last economic cycle. And then second, Workforce Solutions is a very different scale in our business in size. And Workforce Solutions has that additional lever in a credit cycle of the ability to continue to add new data records that are monetizable. So that's another element of — that's how we think about ourselves if there is a credit cycle. We're very different, in a positive way, than we were in the last credit cycle.

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Opérateur [40]

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Our next question will come from Barry — Gary Bisbee with Bank of America.

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Gary Elftman Bisbee, BofA Merrill Lynch, Research Division – MD & Research Analyst [41]

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I was hoping to dig in a little bit more to the USIS growth organic ex-mortgage slowing from, I guess, it was 3% to slightly positive. Part of it, clearly, I understand financial marketing and an outsized growth quarter last quarter and maybe a more normalized trend number this quarter. And so that's part of it. And you called out a couple of the end markets that were a little weaker. But can you give us any other color just to understand this, and maybe how we think about the cadence of that into Q1? That would be helpful.

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Mark W. Begor, Equifax Inc. – CEO & Director [42]

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Go, John.

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John W. Gamble, Equifax Inc. – Corporate VP & CFO [43]

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Sûr. So the — yes, I think in Mark's script, right, he talked specifically about direct — our D2C business, which is the transactions we do with our competitors. And part of the reason that was down obviously was because we had a transaction that occurred in a sale that occurred in the fourth quarter of '18, that was one-time that didn't recur, and that directly impacted the organic growth in the period.

And then also, we talked about telco, and yes, it was down, but we think we see very nice path to growth as we get into second quarter and beyond in 2020. So I think overall, we're expecting to see nice improvement in our level of organic non-mortgage growth as we move into 2020 and beyond. So we do like the trend, right? We said it would be choppy, so that doesn't mean the trend is always straight up. But we do like the trend, we do see continuing improvement, that the sales metrics are very good, the level of growth in pipeline is outstanding and we're very happy with our performance. So I think overall, we're expecting to see nice improvement in 2020 relative to 2019 in total and certainly relative to where we ended the year.

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Gary Elftman Bisbee, BofA Merrill Lynch, Research Division – MD & Research Analyst [44]

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And then a follow-up, just on the pipeline, you've referred to improvement in growth, but in absolute terms, is like the — is the pipeline back to where it was in mid-2019-2020? Are you still below that? And as part of that, historically, with NPI, you guys talked about a 3-year build to sort of mature revenues. '17 and '18, you had a lot less product development in NPI or new products as you were trying to fix some of the challenges. Is the fact that you had those product launches in '19, should we think it's a 3-year process to really get a lot of that stuff, particularly in USIS, getting the business back churning the way one might expect it to on a normalized basis?

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Mark W. Begor, Equifax Inc. – CEO & Director [45]

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You hit a lot of the challenges that we've had following the cyber event. First was we had a pipeline in place the day before the cyber event happened, and that pipeline went virtually to 0 for the balance of 2019-2020 through the bulk of 2019-2020. As you know, we were on security freeze for much of 2019-2020. And as we finished '18 and moved into '19, we're able to start getting into a more commercial mode when customers grew quite comfortable about our security protocols and our investments, and that pipeline has been building rapidly through 2019. And John, I don't know if it's — I believe it's actually back or above where it was pre 2019-2020, and we've seen real growth in that. We've also got a different leader in the business, who's got a real commercial cadence to them, and so there's a real intensity around pulling that forward. I wouldn't think about a new product, taking a full 3 years to get to revenue. I think we've talked about before that there's a maturity element in that. But each of these new products have a different cycle depending upon the customer. You've got a customer that the operations team or the marketing team or the risk team really likes the product and then they want to test it, and then they go — we go through a contracting process with their sourcing team many times. And then, of course, then you go in the implementation mode, which sometimes includes their IT team. And that creates some unpredictability in a pipeline that, maybe to your point, is less mature, meaning you don't have 2-year-old deals in there, 3-year-old deals, 1-year-old, 6-months, you don't have that layering. Our pipeline today is more of a, call it, a 12-month kind of build versus a historical would have 2, 3 and — 2- and 3-year kind of deals in there that sometimes take that amount of time. So I think that layering creates some of the choppiness. But the fact that the pipeline is building, we're seeing better win rates out of the pipeline in the second half of the year than the first half, which tells us that we've got a better pipeline. And that commercial activity gives us the enthusiasm about the continued progress of USIS going forward as we get into first quarter in 2020.

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John W. Gamble, Equifax Inc. – Corporate VP & CFO [46]

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Mark specifically referenced new deals, 1 in his script. And yes, that is — that's up higher than we saw prior to 2019-2020.

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Mark W. Begor, Equifax Inc. – CEO & Director [47]

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Droite.

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John W. Gamble, Equifax Inc. – Corporate VP & CFO [48]

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So we think the momentum is good.

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Opérateur [49]

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Next question will come from Toni Kaplan with Morgan Stanley.

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Toni Michele Kaplan, Morgan Stanley, Research Division – Senior Analyst [50]

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In an interview the other day, Mark, you mentioned that you're about 2/3 of the way through the tech transformation. And you mentioned some color earlier in terms of what you've done and what you have left to do. I guess, my question is can you just give some color on how much risk is left in terms of execution? Like have a lot of the difficult items been done already, or is there still a lot to come? And just any color on that would be helpful.

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Mark W. Begor, Equifax Inc. – CEO & Director [51]

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Sûr. And I talked a bunch of my comments earlier, Toni, about that. And I think, first off, as you know, these kind of tech transformations are not for the faint of heart, meaning that you use the term risk, but there's a lot to do and a lot to work on. We're 2 years into it, call it that, whatever, that kind of time frame. And the milestones we're achieving around this — when I think about the tech transformation like this, and I've done them before, obviously, not at this scale, but I've done them before. First off, you have to make sure does the technology work? Meaning, can we get our databases from our legacy applications into the cloud. And I think we're making this big move of going from siloed databases to a single data fabric. And that's in place. We did that in 2019. We've started moving our exchanges. As you know, we have — I don't know what the number is, but probably a couple of hundred exchanges around the globe, close to 50 here in the U.S., where we have some big ones. And we're moving big ones into that new Google Cloud fabric, and it's working. We have customers accessing it. So that's kind of risk #1 is, will the technology work. And I think we're over that hurdle. The second one is you've got to migrate your customers. And we've been very clear with you that the feedback from customers is extremely positive. If you think about it, if you're a customer, do you want to do business with a company that has the very latest technology, that's going to deliver always-on capabilities, that's going to deliver a latency and speed that is not possible in the industry today, and with security that's second to none given the focus on data security. And so customers all want to do it. The wildcard or that one complexity that I talked about in my comments earlier is getting into their schedule. And every one of our customers has an IT team, they've got their own priorities for 2019, '20 and '21, and we just have to make sure we fit into that. So that's, that scheduling or forecasting element that I talked about earlier. But as you also heard in the comments, we're really rolling, meaning we're moving thousands of customers. And so there's real progress there, but it just takes time. And of course, we need to move all our customers off each of our different mainframe or server environments at different data centers we have in order to decommission those and get the savings that we're looking for from the technology transformation. So to me, it's really around execution. And you've heard our transparency around the technology element, and we feel very good about that. And we're making real progress around the customer migrations, but there's still work to be done there.

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Toni Michele Kaplan, Morgan Stanley, Research Division – Senior Analyst [52]

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Génial. And then with the legal settlement almost behind you, pending of final payment, I guess, any new thoughts around capital allocation, notably, like when we could start seeing share repurchases?

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Mark W. Begor, Equifax Inc. – CEO & Director [53]

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Yes, I think you're leading me towards our financial framework, which, as you know, we pulled in 2019-2020. We've been clear with you that we want to put that back in place. We're getting closer to that time frame. We've been very consistent. We talked about 3 areas that we wanted to make sure we had clarity on before we put that framework back in place, which will include our capital allocation model. One was real clarity on the legal settlements. And with today's announcement of the finalization of the U.S. issues, we're at that stage with that first item.

Number two is the tech transformation. We already talked about that. Really having some clarity about timetable, our execution, our confidence in that. And I'd say every day and week, we get closer to completing that one.

And number three is USIS. And we're way further along than we were a year ago, and even in the fourth quarter with our confidence in USIS. And so just a long-winded answer that it's our expectation with the way we're pacing that we're looking to put that framework back in place for sure in 2020.

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Opérateur [54]

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Thank next question will come from Bill Warmington with Wells Fargo.

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William Arthur Warmington, Wells Fargo Securities, LLC, Research Division – MD & Senior Equity Analyst [55]

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So first off, a tip of the hat to Jeff Dodge. It's one of those, just when I thought I was out, they called me back in situations, I think.

So my question is, you gave some strong new stats on the new deals won in the fourth quarter. I was just hoping to get some color there. You mentioned some on telco, some wins and win backs. But for the new wins, how many are going to new customers? How many are share gains? How many are just additional sales into the same customers?

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Mark W. Begor, Equifax Inc. – CEO & Director [56]

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Yes, Bill, it's probably hard to split. I would just tell you that it's all of the above. First off, new wins, as you know, a competitive takeaway is hard, and it's one that we all work on, but we've had a handful of those. So that's in that bucket. New products are really a fuel for us, whether it's InstaTouch or Ignite rollouts or some of the new products and scores that we talked about that we've got in the marketplace. Those are bread and butter, really helping our customers grow their originations, solving on fraud. So that's a positive. And then share gains, we've had a handful of those, too. And I think you're talking mostly about USIS in your comments or that's where your question is directed. But of course, broadly, that's the fuel for our growth in Equifax is to look for expanding either new customers, new verticals, penetration and share gains with existing customers. New products are really a big fuel for growth. And I hope you get a sense of the focus we have around the new products. It's a real priority of mine. It's one that I think our tech transformation is going to leverage. It's going to give us real fuel in '20 and '21 and beyond as we go forward to really be more aggressive around funding new products, investing in new products and then bring them into the marketplace.

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William Arthur Warmington, Wells Fargo Securities, LLC, Research Division – MD & Senior Equity Analyst [57]

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And for a follow-up question. Just wanted to see if we could get an update on the FICO partnership, how that's been going? And maybe some comments on the inflection score that you're putting together with Verisk?

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Mark W. Begor, Equifax Inc. – CEO & Director [58]

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Yes, first on the FICO partnership, as you know, we announced that last March. We're in the marketplace with our integrated decisioning system inside of FICO with our data piped in there. And we're in with a handful of customer POCs. We've had a handful of customer wins around the globe. So we're pleased with that performance with FICO. And I think you know, we're rolling out some other products, including an AML/KYC here in the United States that's going to be in market in the first quarter. And we've got some other opportunities there. So there's a great collaboration between Equifax and FICO around how we can leverage our respective capabilities in the marketplace, and we'll look forward to that growth going forward.

The score with Verisk is new. It's just in the marketplace. We've had good response from customers so far. I think it's another example of what we — what I like to do and we like to do is really collaborating with strong partners like FICO or Verisk to really leverage our respective assets and market capabilities to bring new solutions to the marketplace, and that's just another example. So that one's just newly launched in the marketplace.

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Opérateur [59]

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Next question will come from Jeff Meuler with Baird.

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Jeffrey P. Meuler, Robert W. Baird & Co. Incorporated, Research Division – Senior Research Analyst [60]

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Yes, it sounds like, given the CapEx guidance for 2020, that depreciation is going to continue to build in '21. So can you give us some sense of once you're through EFX2020, and I know there's some spillover into '21, what does CapEx go to as a percentage of revenue on an ongoing basis? Because I think the 25% development savings are both OpEx and CapEx. So that would be part one of the question, so we can get to EBITDA less CapEx.

And then part two, on the 15%-plus of tax savings within COGS, do you get the substantial majority of that on a gross basis in 2022? And I understood there could be some reinvestment. Just trying to figure out the timing of when you'll get the step-up on that?

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Mark W. Begor, Equifax Inc. – CEO & Director [61]

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Jeff, you're leading us quite tactfully into a financial framework, so let me give you my best response to that. I think they're very good questions. And first, on the CapEx, we're not ready to give '21 guidance, but — or a financial framework for our capital allocation in the future. But we've been clear with you that we expect: number one, the incremental spend that we've had in '18, '19 and '20, to fund the EFX2020 cloud transformation. We've been very clear that, that's going to come down in '21 and will continue at a more normal rate going forward, meaning versus this incremental rate that we've had in '18, '19 and '20. And we've really shown you what the incremental dollars are. So I think you can think about what it looks like on the other side. And then as you pointed out, we've also been clear that we expect to see development savings, meaning with a new tech stack with a single standardized set of products, we expect to see savings in the future. So that will be a part of that CapEx benefit in the future post-2020. And where we get the full run rate will be something we'll come to you when we put the financial framework in place.

On the operating cost savings, we've also been clear that we expect to see inside of our cost structure for technology real savings from going from legacy to cloud. That is — we have some of that feathering in our guidance. It's in our numbers for 2019 — I'm sorry, for 2020. That will continue to accelerate through the year as we decommission legacy environments, and that will continue into 2021. And we're not ready to give a run rate on that, but we tried to give you both by sharing what we view is the duplicate costs as well as that guidance around our expectation of 15% to 20% operating cost savings from technology going forward so you can think about what Equifax looks like in the future. And as you know, those 2 benefits, along with — we expect some accretion to our top line from ability to roll out more new products from the new technology investments are the 3 benefits that we're driving to is a part of this big tech investment.

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Jeffrey P. Meuler, Robert W. Baird & Co. Incorporated, Research Division – Senior Research Analyst [62]

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D'accord. And then just how meaningful is this EWS data hub concept like the new data sources beyond implemented income data? Just any additional color on that or how meaningful it is.

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Mark W. Begor, Equifax Inc. – CEO & Director [63]

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Yes. It's another element, Jeff. I think we've been very clear that we think more data results in better decisions for our customers. And EWS has a very unique position in a lot of verticals with their income and employment data that they provide. As you know, it's really the only place to go to get that data set, and a lot of our customers have to go to other data sets to get other data. And either us building that out, us partnering on it or making acquisitions to add those data sets we think is another lever for growth for EWS. It's part of that theme that I've used with the team internally and with you and others in the investment community that while Workforce Solutions is clearly our best business, it's performing way above the rest of Equifax. We think about it being in the second inning with the opportunities in front of it, both in its core business, but also in what it can do around things like leveraging its market position and its unique data assets with other capabilities in order to bring more value to our customers.

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Opérateur [64]

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Our next question will come from Andrew Nicholas with William Blair.

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Andrew Owen Nicholas, William Blair & Company L.L.C., Research Division – Analyst [65]

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You touched briefly on your decision to increase your ownership stake to 100% in ECIS in India, which is obviously a fast-growing market. Can you talk a little bit more about your business in India today, how you think about the opportunity set there? And then any color on ECIS' competitive positioning? That would be helpful.

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Mark W. Begor, Equifax Inc. – CEO & Director [66]

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Yes. It's a business that, as you know, we've been in for a long time. We like the market a lot. We had the opportunity and strategically owning 100% of the business makes it easier to operate, easier to control, and then we kind of own our whole destiny. So we're very pleased to move forward on that. I think it's a market we want to be in. It's a market that we want to grow. You may know that we're doing a build of workforce solutions in India, as an example. We started that a couple of years ago, and that's got some traction on it. We just think it's a market that we want to play in. And one that's a big market great.

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Andrew Owen Nicholas, William Blair & Company L.L.C., Research Division – Analyst [67]

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Génial. And then just back on organic revenue growth guidance, just to ask it another way. Can you just walk us through what you consider to be the primary factors that would drive you to the top and bottom ends of that guide outside of any changes to mortgage inquiry volumes?

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Mark W. Begor, Equifax Inc. – CEO & Director [68]

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Yes, I'll give you a few thoughts. I don't want to go too far in this. But obviously, USIS is still not back to where it was before the cyber event. And we're convinced — I've been very clear. It's not a matter of if, it's only when. But their recovery, which we see great momentum in if that accelerates, that's a real positive for us near term and long term, so that's a very positive one.

International, I think as you know, we gave guidance on where we expect the year to be, but we're still battling some economic headwinds. Brexit, while it's resolved, there's still some uncertainty on implementation and what it's going to do to the economy over there, so I think that's a little bit of a headwind. Latin America seems to have settled down, but that tends to be temporary. There's always issues and challenges down there. And of course, Australia, we've seen some positive momentum, but the recent wildfires there, some are saying could have an economic impact there. So I think that's another factor in there.

And then the real positive is, obviously, Workforce Solutions has some great momentum, is performing extremely well, and that's kind of a bedrock inside of Equifax that we've got a lot of confidence in, that they continue to perform. And they performed last year above our expectations quite significantly. And we expect them to continue to perform very, very well in 20 — 2020.

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John W. Gamble, Equifax Inc. – Corporate VP & CFO [69]

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Just want to be clear, right? So we provided overall guidance, and we provided mortgage market inquiry guidance, right? We didn't give mortgage guide — mortgage revenue guidance or non-mortgage revenue guidance. And again, just to repeat where we started, right? So we did say flat for the total mortgage inquiry market, but people should keep in mind that historically, we have performed — our revenue has performed better than the overall mortgage inquiry market, in some cases, substantially. So that's a judgment you're going to have to make for yourself.

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Opérateur [70]

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Next question will come from George Tong with Goldman Sachs.

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Unidentified Analyst, [71]

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Yes, Brian on for George. So I was just looking at your 2020 revenue guidance, which I know comes below your prior long-term target of 6% to 8%. I know you haven't reinstated financial targets yet. But based on customer conversation, to what degree do you believe long-term organic growth potential of the business isn't halted?

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Mark W. Begor, Equifax Inc. – CEO & Director [72]

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Yes. Again, you got a similar question earlier, Brian, on long-term guidance, we clearly gave you our guidance for 2020. We're not ready to put a long-term financial framework back in place. Although we're working towards that in 2020. We talked about the things we want to see, and we're getting really close to that. So I think I'll just leave it at that.

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Unidentified Analyst, [73]

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D'accord. And then for your revenue guidance, what level of price increases are baked into that?

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John W. Gamble, Equifax Inc. – Corporate VP & CFO [74]

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Yes. So we didn't give specific information on price increases, right? So generally speaking, there's some level of price increase in the market. However, for credit reports, in general, if you think about those, they tend to go down in price over time. So we haven't given specific price increase guidance as part of this process.

And operator, we have time for one more.

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Opérateur [75]

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And our final question will come from Shlomo Rosenbaum with Stifel.

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Shlomo H. Rosenbaum, Stifel, Nicolaus & Company, Incorporated, Research Division – MD [76]

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The company used to just give straight-out organic growth, excluding mortgage. And I was just wondering, there's a lot of positivity in terms of the sales momentum. That's not a number, though, that you're providing now. And I was wondering if you could give us a little bit more just clarity — just as the rubber meets the road, the organic growth of the business, excluding the mortgage, just so that we can track. Was it a little bit up? Was it a little bit down? Where are we doing in terms of actual sales and things coming into revenue?

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John W. Gamble, Equifax Inc. – Corporate VP & CFO [77]

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So we actually are giving that — we gave that number, I think, each quarter last year, right, in terms of organic non-mortgage growth. We indicated this quarter, it was up slightly. Last quarter, I think it was just under 3%. And I think we gave it each of the first 2 quarters as well. So we are trying to give that indication. And we're also trying to separately give a view of just what the market did so you can have some perspective. So I think the depth of information is actually quite good in terms of how USIS is performing to let you kind of disaggregate the performance by piece.

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Shlomo H. Rosenbaum, Stifel, Nicolaus & Company, Incorporated, Research Division – MD [78]

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So this — I'm talking about for the whole company. So that net number — the numbers you're referring to for the whole company?

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John W. Gamble, Equifax Inc. – Corporate VP & CFO [79]

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That's for USIS.

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Shlomo H. Rosenbaum, Stifel, Nicolaus & Company, Incorporated, Research Division – MD [80]

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D'accord. And just — if I took the whole company together just in mortgage, and should I look at it as like 8.5% growth, minus 4% that would be implied by inquiries?

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John W. Gamble, Equifax Inc. – Corporate VP & CFO [81]

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So Shlomo, we do give mortgages, what percentage of the total company mortgage revenue is, right? So I think from that, you can get a good view as what mortgage revenue is for the entire company and how it's changing. And that's information we also provide.

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Shlomo H. Rosenbaum, Stifel, Nicolaus & Company, Incorporated, Research Division – MD [82]

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So is it going up or down? I mean, just — it's just a question. If I look at it, is the mortgage, the non-mortgage revenue organically up or down? And just — I know it's choppy. I'm just trying to see if I can do the calculation the way I used to do it.

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John W. Gamble, Equifax Inc. – Corporate VP & CFO [83]

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So that isn't something specifically we disclose, right? So — but I'll kind of walk you through what we do disclose, and that I think the information is available for you to do whatever analytics you'd like, okay?

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Shlomo H. Rosenbaum, Stifel, Nicolaus & Company, Incorporated, Research Division – MD [84]

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D'accord. And then what drove the strong EBITDA margins in international?

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John W. Gamble, Equifax Inc. – Corporate VP & CFO [85]

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Yes. So I think Mark walked through that in his discussion, right? So we got back to growth. They did some very significant cost reduction actions. As you take a look at fourth quarter of '18 and 2019 through that entire period. So their cost structure got nicely better. And as they return to growth, they got a lot of leverage from that in the fourth quarter. And they also had some benefit from income from some minority investments. So those 3 things drove their higher EBITDA margin.

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Shlomo H. Rosenbaum, Stifel, Nicolaus & Company, Incorporated, Research Division – MD [86]

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So is that where the cost takeouts a way that we can look at them kind of establishing a base here? Is that ramps that we should be ramping from this kind of level?

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John W. Gamble, Equifax Inc. – Corporate VP & CFO [87]

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Yes. So the significant majority of the cost actions, I think, that they plan to take has been executed. So yes, this is kind of the base of cost that we're starting from. The base that we ended with in 4Q '19.

D'accord. We'd like to thank everybody for participating, and we'll talk to you again soon.

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Opérateur [88]

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And that does conclude our call for today. Thank you for your participation. You may now disconnect.

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