The paragraph is an introduction to the Equifax Inc. Third Quarter 2024 Earnings Conference Call. Trevor Burns, SVP and Head of Corporate Investor Relations, introduces himself and mentions that the event is recorded and will be archived on their Investor Relations website. He also notes that certain materials related to the call can be found online and specifies that they will discuss forward-looking statements, including guidance for the fourth quarter and full year 2024 and some details for 2025. These statements involve risks and uncertainties that could lead to different outcomes than expected. Additionally, the call will cover non-GAAP financial measures, such as adjusted EPS and EBITDA, with reconciliation tables available on their website.

In the third quarter, Equifax incurred a $42 million restructuring charge aimed at cost reduction following its migration of significant data exchanges and applications to the Equifax Cloud in the United States, Canada, and parts of Latin America. This move is expected to yield over $70 million in annual savings by early 2025. Equifax plans further cloud migrations in Europe, the rest of Latin America, Brazil, and Australasia through 2025 and 2026. Mark Begor highlights that 80% of Equifax's revenue now comes from the cloud, with expectations to reach 90% by year's end, marking significant progress in their cloud transformation journey, which will enhance their competitive edge, customer focus, and innovation from 2025 onward.

The paragraph discusses Equifax's cloud migration progress, highlighting the decommissioning of legacy systems in the US and Canada’s successful migration to the EFX Cloud Data Fabric. These efforts are expected to reduce cloud spending in the future and lower business capital intensity. The international cloud migration in regions like Argentina, Chile, and the Dominican Republic has also seen completion, and the company aims to continue these migrations through 2025 and 2026. Financially, Equifax had a strong third quarter with revenues of $1.42 billion, showing a 9% increase, and adjusted EBITDA margins and EPS meeting or exceeding expectations. Non-mortgage revenue growth was particularly robust, contributing to the strong financial performance.

The paragraph discusses Equifax's financial performance, highlighting significant growth in non-mortgage and mortgage sectors. Non-mortgage performance saw notable growth driven by EWS and EWS Verifier, as well as USIS non-mortgage revenue, with strong contributions from international markets, especially Latin America and Europe. Mortgage revenue increased by 17% in the quarter, exceeding expectations, despite fluctuating mortgage rates affecting inquiry activity and home purchases. The growth was primarily due to USIS, benefiting from strong vendor pricing and new pre-qualification products. The company remains optimistic about future mortgage activity improving towards historical levels as rates decline.

In late September, lower mortgage rates led to a slight increase in mortgage applications, benefiting USIS more than EWS, as USIS sees mortgage activity benefits earlier. EWS mortgage revenue grew by 4%, surpassing expectations, and exceeded inquiry volume by 9.5%, driven by significant twin record growth. Equifax experienced strong new product innovation, with a Vitality Index of 13%, surpassing their 10% guidance. EWS and International saw double-digit product rollout growth, while USIS had a 9% Vitality Index. Equifax is raising its 2024 Vitality Index guidance to 11%, leveraging new EFX Cloud capabilities. Workforce Solutions revenue grew by 7.5%, slightly under July guidance due to lower employer services revenue, but non-mortgage verification services achieved a strong 19% growth.

In the quarter, the government's revenue grew significantly by 29% due to increased penetration in its $5 billion total addressable market, particularly in state and incarceration data solutions. Although growth is expected to remain strong in the fourth quarter, it will likely be lower than the third quarter due to tough year-over-year comparisons. The government vertical is anticipated to continue delivering strong double-digit growth, outperforming Equifax and EWS. Talent Solutions also experienced a solid 9% growth, benefiting from new data hubs and expanding product offerings, although late-September volumes weakened, potentially impacting fourth-quarter results. EWS mortgage revenue grew by 4%, slightly surpassing previous guidance, driven by record growth. Twin inquiries declined by 5.5%, but mortgage revenue still outperformed these inquiries, indicating anticipated continued growth for the fourth quarter.

The paragraph discusses the financial performance of EWS, highlighting a 16% increase in consumer lending revenue driven by strong growth in personal loans and moderate growth in debt management and auto sectors. However, Employer Services revenue dropped by 19% due to decreased ERC, I-9, and onboarding revenues, impacted by slower white-collar hiring and the absence of post-COVID project benefits seen last year. Despite this, Workforce Solutions adjusted EBITDA margins were robust at 51.6%, supported by strong Verifier revenue growth and cost control. The EWS government team achieved a 29% revenue increase by enhancing penetration of their VOI and VOE solutions for social services, including securing a significant SSA contract extension worth $500 million. The team is actively expanding in the $5 billion government TAM (Total Addressable Market). Finally, the paragraph notes EWS's record-setting additions in the quarter.

In this paragraph, the company outlines its recent strategic partnership with Workday to offer verification services to its U.S. customers, expecting to add a significant number of new records by 2025. Additionally, they signed agreements with five new strategic partners to contribute over 5 million records to their twin database, with revenue generation beginning late in the fourth quarter and into early 2025. In the third quarter, the company added 2 million active records, reaching 182 million, and now has 3.8 million companies providing records every pay period. Total records increased to over 700 million, with a strong focus on their historical solutions. The company highlights room for growth in their database, aiming for a total addressable market of 225 million income-producing Americans. Moreover, USIS completed the migration of databases to the new Equifax Data Cloud Fabric in the third quarter.

The paragraph discusses Equifax's strong financial performance, with USIS revenue increasing by 12% in the quarter, surpassing expectations despite challenges in the financial and auto markets. The growth was driven by non-mortgage and mortgage revenue, along with strong results in Consumer Solutions and Financial Marketing Services. USIS B2B online revenue experienced slight declines due to weak consumer demand but saw growth in insurance, commercial, telco, banking, and auto sectors. However, there were declines in third-party bureau sales and identity and fraud services, with expectations for flat third-party bureau sales in the next quarter. The weakness in chargeback management volumes contributed to lower-than-expected identity and fraud revenue.

During the quarter, the company experienced growth in various segments. Payment and transactional identity revenue increased due to penetration in large strategic accounts, and the launch of the Kount 360 solutions platform is expected to boost growth by 2025. The financial marketing services segment saw a 14% rise, driven by new wins and customer expansion in banking services, payments, and prescreen marketing with IXI wealth data. The consumer segment reported a 17% increase due to strong growth in direct channels and customer acquisition. Mortgage revenue rose by 36%, surpassing expectations, with credit inquiries up 1%, marking the first growth since Q1 2021. This indicates a potential mortgage market recovery. Mortgage revenue totaled $137 million, nearly 30% of total USIS revenue. The adjusted EBITDA margin was 33.9%, a 70 basis point increase, aligning with expectations despite higher technology costs for cloud migration.

The paragraph discusses the strong international revenue growth for USIS, particularly highlighting successes in Latin America and Europe. Latin America saw a significant 58% increase in local currency revenue, partly due to the acquisition of Boa Vista and strong organic growth. Europe experienced a 9% rise in local currency revenue, with solid performance in credit, data, and debt management businesses. Although Canada's growth was modest at 1%, there is an expectation of future growth after recent data migrations. The Asia-Pacific region's revenue increased by 2%. International adjusted EBITDA margins improved due to strong revenue growth and effective cost management. The paragraph also mentions the launch of 30 new products that contributed to a 13% vitality index, showcasing innovation across all business units. Specific achievements in the government sector and talent solutions by EWS and improvements in USIS's vitality index are highlighted.

The paragraph discusses the strong performance and future expectations for USIS and Equifax's international segment, highlighting the benefits of their new cloud-native infrastructure in driving innovation and efficiency. USIS is expected to show continued vitality improvement due to freed-up resources and a focus on new products, especially in key areas like identity, fraud, and mortgage pre-qualification. Internationally, there was an 11% increase in vitality for the quarter, especially in identity and fraud solutions. Equifax is raising its full-year Vitality Index guidance from 10% to 11% due to strong innovation. They emphasize the role of AI and ML in enhancing product development and model performance, with all new models now using these technologies. The company is ahead of its 2024 target for AI integration. The paragraph concludes with a transition to financial results, with John providing details on third-quarter performance and fourth-quarter projections.

The paragraph discusses trends in USIS credit inquiries and mortgage activity, noting an improvement in the run rate in late September due to declining mortgage rates, which spurred refinancing. However, new home purchases remain low due to limited inventory and high prices. By early October, mortgage inquiry volumes slowed as rates rose above 6.5%. The guidance assumes current market conditions will persist, forecasting a 9% increase in mortgage credit inquiries for the fourth quarter compared to the previous year, but a 16% sequential decrease. For 2024, a 7% decline in inquiries is expected. Despite market conditions, USIS mortgage revenue is projected to rise over 4% with strong mortgage pre-qual products and vendor pricing actions. Similarly, TWN inquiries are anticipated to increase 6% in the fourth quarter year-over-year but decrease 12% sequentially, with an 11% decline expected for the entire year.

The paragraph outlines expectations for Equifax's financial performance in the fourth quarter of 2024. The company anticipates a 16% increase in EWS mortgage revenue, bolstered by strong growth in 2024 and annual mortgage pricing adjustments. Despite the fourth quarter traditionally being the lowest for credit and TWN inquiries, mortgage credit inquiries are projected to rise over 5% in 2025. Equifax expects total revenue for 4Q '24 to be between $1.438 billion and $1.458 billion, with a 9% increase at the midpoint, and an adjusted EBITDA margin of about 35.5%. This quarter marks the first with an EBITDA over $500 million. Adjusted EPS is predicted to rise 18% compared to 4Q '23. However, the revenue guidance is slightly lower than previously projected, primarily due to revenue declines in EWS and the employer business.

The paragraph discusses the expected business unit performance in the fourth quarter, highlighting projected revenue growth across various sectors. Workforce Solutions is expected to see a 10% revenue growth, with strong non-mortgage and government sector contributions. Verifier non-mortgage growth will continue but at a slower pace than in the previous quarter. EWS adjusted EBITDA margins are anticipated to rise slightly to 52%. USIS revenue is projected to increase over 10% year-to-year, with adjusted EBITDA margins expected to be over 38%. International revenue is expected to grow over 9% in constant currency, with EBITDA margins exceeding 32%. The company's 2024 full-year guidance anticipates constant currency revenue growth of about 10%, aligning with its long-term organic growth framework.

Total mortgage revenue is projected to grow by 12.5% despite a 7% decline in U.S. mortgage credit inquiries. Non-mortgage revenue is expected to see a 10% growth, led mainly by strong performance in Workforce Solutions verification services and international sectors. Adverse foreign exchange effects will negatively impact revenue growth by 180 basis points. The forecasted adjusted EPS is $7.30 per share, with EBITDA margins at 32.4%, both projected to grow by 9% in 2024. Capital expenditures for the third quarter are $123 million, with a reduction expected in the fourth quarter. For 2024, capital expenditures are projected to be around $485 million, marking a yearly reduction. Depreciation and amortization (D&A), excluding acquisition amortization, will increase by $50 million in 2024, with a slight further increase in 2025. The current leverage ratio stands at 2.8x, with expectations of further reductions, maintaining adequate credit ratings. The U.S. mortgage market is considerably below its historic average inquiry levels.

The paragraph discusses Equifax's financial outlook and strategy for the coming years. With the mortgage market recovering, Equifax anticipates over $1 billion in annual revenue opportunities by 2025, potentially contributing $700 million in EBITDA and $4 per share to its profit and loss. Mark Begor emphasizes the goal of achieving a cash conversion rate of 95% or higher by reducing capital expenditures (CapEx) and leveraging cloud technology savings. Equifax expects its free cash flow to improve significantly post-cloud investments, aiming to reinvest in growth through CapEx, mergers and acquisitions, and return excess cash to shareholders via dividends and share repurchases starting in 2025.

Equifax is focusing on leveraging its new cloud capabilities to drive revenue growth and improve margins. The company projects strong revenue growth of 7% to 10%, led by its largest business, Workforce Solutions, which is expected to achieve 13% to 15% growth. Equifax plans to enhance its core through strategic bolt-on acquisitions, particularly in the identity and fraud sector, while anticipating revenue boosts from mortgage market recovery by 2025. The company aims for operating leverage to expand EBITDA margins annually and achieve a high cash conversion rate of 95% or more. With the completion of its cloud transformation, CapEx is expected to decrease, and financial leverage is targeted to improve by year-end.

The paragraph highlights Equifax's financial outlook and strategic priorities. It states the expectation of accelerated free cash flow, enabling the company to start returning cash to shareholders in 2025 through dividends and a multiyear share buyback program. The company has transitioned from building the Equifax Cloud to using its cloud and EFX.AI capabilities for revenue growth, margin expansion, and free cash flow. Equifax reported strong quarterly results, with 11% revenue growth and significant milestones in transitioning to the Equifax Cloud, with 80% of revenue already there and aiming for 90% by 2025. The future focus is on innovation, customer growth, and achieving 8%-12% revenue growth, margin expansion, lower capital intensity, and expanding free cash flow for investments, dividends, and stock buybacks. The paragraph ends with the operator opening the floor for questions.

In the paragraph, Manav Patnaik questions why the company is lowering its guidance despite an improving mortgage market, suggesting a potential shift in their conservative philosophy or execution issues. Mark Begor responds by affirming that there is no change in their guidance philosophy, emphasizing transparency and consistency in meeting goals. He notes that while the mortgage sector's decline in 2022 and 2023 was unusual, their non-mortgage areas remained consistent. Begor also highlights market volatility affecting certain verticals and explains that the slight reduction in fourth-quarter guidance is mainly due to a decline in the employer services business, influenced by the cessation of employee retention credits by the IRS.

The paragraph discusses the impacts on the Workforce Solutions business, including delays in revenue from changes in federal work opportunity tax credits and state responses. It notes unexpected slowdowns in background screening due to corporations being cautious with hiring ahead of elections. Despite these challenges, the company achieved strong third-quarter performance and forecasts significant EBITDA and earnings per share in the fourth quarter. The company maintains a commitment to transparency and aims to meet and exceed projections.

The paragraph discusses the positive outcomes anticipated from USIS's tech transformation, particularly their cloud migration. Despite challenges throughout 2023, the project is now complete, enabling USIS to enhance innovation and develop new products. This transformation is expected to boost USIS's performance, with an increase in vitality projected for 2025. Cost savings from the initiative have also positively impacted margins. Additionally, the company anticipates share gains from becoming a cloud-native provider, which will start to appear in financial results primarily in 2025.

The paragraph discusses Equifax's ongoing initiative to enhance its credit file by integrating their income and employment data with credit details, making the file more valuable and differentiated in the market. This includes unique data assets from DataX, Teletrack, and NCTUE, and introducing new solutions like flags for mortgage and auto shopping. The company is leveraging its recent cloud migration with USIS to focus more on growth, product development, and AI solutions, having completed a significant technology transformation. The focus for 2025 will be on executing and expanding these initiatives.

In the paragraph, Mark Begor discusses the partnership with Workday and the addition of six new partners, emphasizing its strategic significance. He mentions that Equifax expects to add approximately 5 million records over the coming quarters through these partnerships. The process of integrating these records is complex and involves collaboration with partners who are growing their client base and adding new clients. Many existing client records from previous years have not yet been fully integrated into Equifax's systems, highlighting ongoing opportunities to expand their data collection from both new and existing partnerships.

The paragraph discusses Equifax's growth strategy, focusing on significant partnerships and direct record additions. It highlights the anticipation of substantial growth through partnerships like Workday, with new records expected in 2020. Additionally, Equifax is expanding its direct approach, adding new clients to its employer business and providing free income and employment verification services. Changes made to their EWS organization now prioritize record additions from various HR sources, showing impressive growth. This strategic focus has led to a 12% increase in record additions, surpassing their historical single-digit growth, allowing for immediate monetization across various verticals due to customer demand for these records.

The paragraph discusses the substantial growth in monetization opportunities across various consumer segments and social service beneficiaries, emphasizing the expansion in the Workforce Solutions government vertical. The focus is on acquiring more records of the 225 million working Americans, as there's significant untapped potential. Kelsey Zhu inquires about the factors driving growth in the consumer lending vertical within Workforce Solutions amidst a challenging market. Mark Begor attributes the growth to the value of the data set, highlighting the importance of comprehensive credit scoring, which includes credit history, employment status, and income data, to predict an individual's future payment behavior.

The paragraph discusses the integration of income and employment data with credit reports, which enhances customer approval rates and lowers loss rates for loans, especially in high APR scenarios like personal loans or credit cards. This combination allows for more confident lending decisions. The text mentions strong performance and growth in certain segments, driven by increased record growth, leading to higher hit rates. It includes a brief mention of a robust quarter, unexpectedly strong due to large transactions with new customers in the payments industry, as noted by John Gamble. Andrew Nicholas of William Blair inquires about the implications of the strong SSN (Social Security Number) performance and whether it signals more aggressive customer marketing or portfolio reviews.

The paragraph discusses a company's strong performance due to successful execution by the team in acquiring new customers and partnerships, especially in the payments industry. Andrew Nicholas and John Gamble discuss the expected 16% growth in the mortgage business within EWS for the fourth quarter, driven by increased inquiries and strong record growth. Despite this growth being slightly lower than earlier expectations, the company has seen consistent quarterly improvements, and the recent partnerships suggest further positive developments are anticipated.

The paragraph discusses expectations for future growth driven by partnerships, aiming for long-term growth of around 10% to outperform the mortgage market at EWS. The conversation shifts to the mortgage market, with Mark Begor explaining that the revenue recovery relies on returning to historical averages, particularly with the purchase market, which has been low due to factors like low inventory and people holding onto low-interest loans. Begor anticipates increased purchase activity and refinancing opportunities as interest rates decrease, mentioning a temporary increase in rate refinancing when rates briefly dropped.

The paragraph discusses the expectation of a strong mortgage market due to pent-up demand and potential rate declines, projecting a significant financial tailwind of $1.1 billion based on current pricing for 2024. It mentions that this figure will likely increase by 2025 as the market adjusts. While the company is not providing precise guidance for 2025, they anticipate price increases for EWS and USIS starting January 1, a practice consistent with previous years due to the value of their data solutions. They emphasize ongoing price increases without specifying exact levels.

The paragraph discusses current conditions in the purchase mortgage market, noting that the high interest rates have significantly impacted purchasing activity. Mark Begor highlights that the rapid increase in rates is unprecedented, making it challenging to predict when the market will improve. A slight decrease in rates has already shown potential to stimulate the market, especially in refinancing, but inventory remains limited. The key question is what rate difference will encourage homeowners with low-rate mortgages (around 3-4%) to upgrade to larger homes, suggesting that a reduction of 50 to 100 basis points might be necessary. The company plans to provide more insights in the future.

The paragraph discusses the company's strategy for returning capital to shareholders, emphasizing their ongoing commitment to this goal. Mark Begor explains that as the company's significant investment in cloud transformation via CapEx nears completion, more excess free cash flow will become available for shareholder returns. He highlights their disciplined approach to bolt-on mergers and acquisitions (M&A), aimed at enhancing their strategic focus areas such as differentiated data and identity and fraud management. The company plans to continue these acquisitions, which they expect to contribute 1 to 2 percentage points of annual revenue growth, citing the recent acquisition of Boa Vista as an example.

The paragraph discusses Equifax's financial strategy, emphasizing the use of free cash flow for growth and shareholder returns. The company plans to allocate approximately $500 million annually for bolt-on mergers and acquisitions. As their free cash flow is projected to accelerate beyond capital expenditures by 2025-2027, they aim to grow dividends consistently with earnings and utilize excess cash for stock buybacks. The overarching strategy includes completing their cloud transformation and improving margins, providing a framework for cash conversion and shareholder value enhancement.

The paragraph discusses Equifax's strategic plan to generate and use excess free cash flow for investments and shareholder returns. John Gamble mentions that Equifax's free cash flow is strong, enabling both investment and deleveraging due to significant growth in EBITDA. The conversation then shifts to Kevin McVeigh from UBS asking about Equifax's mortgage revenue opportunities, particularly regarding the impact of increased records from 71 million to 182 million on revenue yield and the necessary interest rate levels for achieving revenue targets. Mark Begor responds by acknowledging the unprecedented nature of recent interest rate changes, making it challenging to model predictions. He references the 2015 to 2019 period as a baseline for normal levels.

The paragraph discusses the mortgage market trends and the company's growth strategy. It highlights the past mortgage environment during the global financial crisis, characterized by underwriting issues, contrasting with current trends driven by consumer movements like upgrading homes or downsizing during retirement. The U.S. housing market is vast, and despite fluctuations, it hasn't seen a drastic 50% decline. The company anticipates growth opportunities as mortgage rates decline, projecting a market opportunity of $1.2 billion or more which will benefit their financial performance. Their long-term growth framework includes 8% to 12% revenue growth, driven by market expansion. They expect high incremental margins as the market recovers without needing to reinvest heavily in additional staffing, enhancing both profit margins and shareholder returns. The exchange concludes with a query about the Employee Retention Tax Credit's impact on revenue.

The paragraph discusses Equifax's changing revenue landscape, highlighting a significant decline in the employer vertical's revenue, dropping from around $10 million per quarter to about $1 million. In contrast, the government vertical sees growth potential, with Mark Begor noting its increasing importance as their largest vertical in Workforce Solutions. Despite a current $800 million run rate, there's a substantial $5 billion total addressable market (TAM) for social service verifications, largely untapped at state agencies. The focus is on increasing penetration by replacing manual processes with their services, and Equifax is investing in resources and personnel to capitalize on this opportunity.

The paragraph discusses the company's strategy to expand its presence in state-level social service markets by investing in new products and technology. This investment aims to help state agencies improve the accuracy and efficiency of service delivery, such as verifying eligibility for programs like food stamps and health support. While the company already has significant federal contracts, the larger growth opportunity lies in state-level markets, with a $4 billion untapped total addressable market (TAM). The company is focusing on building local partnerships and leveraging new data acquisitions to enhance its offerings and expects its government sector to grow faster than its general Workforce Solutions segment over the long term.

The paragraph discusses observations and insights from a discussion involving Scott Wurtzel, John Gamble, and Mark Begor about trends in the mortgage industry and talent verifications. They address potential discrepancies in USIS mortgage inquiries and application data, suggesting no significant changes in hard inquiries or market share. They highlight strong growth in EWS and the importance of pre-qualifications in their business. Jason Haas from Wells Fargo inquires about hiring slowdowns in specific industries and potential competition from in-sourcing by large background screeners. Mark Begor notes that background screening customers reported a slowdown in white-collar hiring starting in mid to late September.

The paragraph discusses the recent slowdown in white-collar sectors and how it has impacted business operations, with the expectation that this trend might continue due to economic uncertainties like the upcoming election. It highlights differences in mortgage pull rates between credit files and income/employment verifications, noting that consumer behavior has shifted toward more mortgage shopping due to rising interest rates. This results in more credit file pulls as consumers seek better loan rates, though the historical trend of more credit pulls per closed loan than income/employment verifications has remained consistent. The expectation is that this pattern will continue into the next year without significant convergence between the two metrics.

The paragraph discusses Equifax's efforts to innovate the credit shopping process by piloting a credit file with an income and employment flag, which could give them a competitive edge by indicating a consumer's job status. The company doesn't expect convergence with competitors and has observed consistent credit shopping patterns from 2023 to 2024, noting that anticipated slowdowns haven't occurred. During a Q&A, a query from Jeff Meuler of Baird highlights a discrepancy in Equifax's Q4 guidance, pointing out that a significant adjustment seems warranted given the better-than-expected mortgage market assumption impacting revenue, aside from general hiring volumes.

The paragraph discusses the factors affecting the revenue guidance for a company, particularly focusing on mortgage and non-mortgage revenue. Mark Begor and John Gamble explain that there wasn't a significant change in mortgage revenue guidance from July to October. The discussion also emphasizes that while credit inquiries slightly increased, boosting USIS revenue, this doesn't impact EWS because it's related to shopping, not closing behavior. The main driver of revenue change is attributed to non-mortgage factors, particularly employer-related activity, and some impact from a decline in talent observed in September, which was factored into the company's guidance. Jeff Meuler further inquires about how the company is projecting future mortgage revenue given recent volatility, noting improvements in late September that subsequently returned to earlier levels by October.

In the paragraph, Mark Begor discusses the methodology for forecasting, stating there is no change in their approach—they evaluate trends up to the current week to guide quarterly predictions. He notes the impact of mortgage and hiring trends observed from late September through October. They assess trends from the last several weeks to inform their guidance. John Gamble adds that inquiries decreased in October and stabilized, forming the basis for their projections. Regarding the insurance and commercial verticals, Begor highlights strong growth, especially in their small business data segment, which has seen substantial increases over recent years. He expects this segment to continue growing at the high end of the USIS range due to their unique data offerings.

The paragraph discusses the growth and strategic initiatives of a company following its PayNet acquisition and cloud migration efforts. The PayNet acquisition aims to enhance small business data, while the cloud transformation is expected to boost innovation and share gains in the USIS and international markets. The company has seen positive growth in its insurance vertical, especially online, and anticipates continued top-line revenue growth attributable to cloud investments and innovations in AI. Additionally, the paragraph mentions expected benefits from the cloud including improved stability and market positioning.

The paragraph discusses a company's strong growth in its vitality index, with a current performance of 11% and an international index at 9%. The company is optimistic about reaching a 10% vitality target and highlights success in various international markets like Canada, especially through cloud initiatives. They are excited about new identity solutions and alternative data products both in the U.S. and internationally, which enhance credit files and differentiate their offerings. Specific innovations include solutions combining cell phone utility and alternative data to improve performance in credit scoring. Overall, the company is encouraged by these developments and views them as beneficial for long-term growth.

The paragraph involves a discussion among John Gamble, Craig Huber, and Mark Begor about cost outlooks and investments related to a company's cloud transformation and operational strategy. John Gamble highlights the use of USIS solutions and analytics driven by a system called Ignite to bolster marketing and conversion. Craig Huber questions future costs in light of expected savings from cloud transformation, which is 90% complete. Mark Begor clarifies that while some cost benefits will be realized this year, additional decommissioning of legacy infrastructure will extend cost benefits into 2025 and 2026. He also notes that depreciation costs will increase next year as new platforms are activated, but this is expected to peak in 2025, with capital expenditures decreasing thereafter.

In the paragraph, John Gamble discusses the company's plan to reduce capital investment in 2024 compared to 2023 and continue this trend into 2025, aiming for a long-term framework of 6% to 7% capital expenditure as a percentage of revenue. Toni Kaplan from Morgan Stanley asks whether this decrease will be a significant step down by 2021 or more gradual, given the recent substantial investments, particularly with USIS's move to the cloud. Mark Begor responds that while specific guidance for 2025 isn't provided, capital expenditure will decrease next year as cloud transitions near completion. Remaining tasks include projects outside the U.S., in Australia, parts of Latin America, and the U.K., with some countries like Spain anticipated to complete by year-end.

The paragraph discusses the company's expectations for capital expenditure (CapEx) as a percentage of revenue, predicting a reduction in 2016. They anticipate using CapEx more for innovation in new products rather than cloud transformation or maintaining legacy infrastructure, expecting this shift to result in growth by 2025-2027. John Gamble mentions that by 2026, depreciation might surpass capital spending, enhancing cash conversion. Toni Kaplan inquires about optimism in the consumer credit environment for 2025. Mark Begor notes some softening in consumer demand, such as in the auto industry, but remains optimistic, highlighting recovery in the fintech sector and the potential for positive developments through rate reductions.

The paragraph discusses the potential benefits of reduced interest rates, particularly in the mortgage and auto loan markets, while noting that consumers tend to be less sensitive to changes in credit card interest rates. The speaker suggests that if the Federal Reserve lowers rates, it could positively impact various end-user markets. The conversation then shifts to a Q&A session, where Ashish Sabadra from RBC Capital Markets asks about projected cost savings of $70 million by 2025, which includes both OpEx and CapEx savings. Additionally, there's clarification on the projected 5% growth in inquiries for 2025, explaining that it is not official guidance, but rather based on current trends and assumptions about future conditions, including potential rate cuts.

The paragraph discusses the outlook on the mortgage market and consumer credit health. Mark Begor states that while they provide perspective on current mortgage run rates, they do not forecast rate changes. In response to a question from George Tong of Goldman Sachs, Begor mentions that delinquency rates are increasing year-over-year, but there is no significant concern among customers due to strong employment rates. Most customers think these rates are manageable, although subprime lending has tightened previously. As long as employment remains high, Begor doesn't foresee a major impact on volumes in the near future.

The paragraph features a discussion led by George Tong and John Gamble about the updated EBITDA margin outlook, which is slightly lower at 32.4% compared to a previous 32.6%. John explains that strong improvements in EBITDA margin are expected in the fourth quarter due to cost reductions and the completion of cloud transformation and customer migrations. The strong fourth-quarter performance is reflected in record-level adjusted EPS and EBITDA, over $500 million. The paragraph also shifts to Andrew Stein of FT Partners, who inquires about the international segment, particularly the impact of the Boa Vista acquisition in Latin America. Mark Begor responds, indicating optimism and continued integration efforts with Boa Vista, while acknowledging Serasa Experian’s strong market presence.

The paragraph discusses positive feedback from banks and customers regarding a global competitor's presence and outlines expectations for continued strong performance and market share gains for Boa Vista through 2025. Although full deployment of Equifax technologies is still pending, Latin America has had a successful quarter with a focus on innovation and new products. There are strong prospects for international margin expansion in LATAM and Europe due to cloud transformation efforts. Continued revenue growth is expected to drive further margin improvements through 2025, particularly as cloud transformation completes in regions like the U.K., Australia, New Zealand, and Latin America.

Mark Begor mentioned that they recently completed cloud operations in Canada, which will provide benefits in the fourth quarter and into 2025. They plan to finish similar work in Spain and some Latin American countries by the end of the year. The remaining 10% of their cloud transition will mainly benefit their international operations. Trevor Burns then thanked participants for attending and invited them to reach out with any follow-up questions, before the operator concluded the event.

This summary was generated with AI and may contain some inaccuracies.