The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Andrew Steinerman - J.P. Morgan Securities LLC - Analyst
: Just two questions, one is, could you just give us in the quarter just reported the percentage of US mortgage revenues? And then
the second question has to do with free cash flow. Obviously, this is that great inflection year where free cash flow for the year is
guided to be strong in terms of conversion of free cash flow.
But when I look at the first quarter, it doesn't have that high conversion rate. I surely know it's been a while since we've seen seasonality.
So just help us bridge the free cash flow that we just saw in the first quarter with the strong free cash flow conversion that you're
guiding for the rest of the year. And then I assume that's sort of like the conversion we could expect going forward.
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APRIL 22, 2025 / 12:30PM, EFX.N - Q1 2025 Equifax Inc Earnings Call
Question: Toni Kaplan - Morgan Stanley & Co. LLC - Analyst
: I wanted to ask a follow-up on Government. Just to confirm, I wanted to make sure the low double-digit in Government is for 2Q
that you're expecting? And does that have -- with the SSA amendment that you just signed, like is there a disproportionate amount
in 2Q or is that sort of recognized straight line through the next --
Question: Toni Kaplan - Morgan Stanley & Co. LLC - Analyst
: Okay. Fantastic. And then I think that's better than expected. And then also, if I look at Talent, Talent was better than expected in
1Q. I guess maybe just shifting to Talent. What what were the main sort of drivers that got you to that better spot? And how should
we think about Talent as we sort of go through towards the back half of the year as well.
Question: Shlomo Rosenbaum - Stifel, Nicolaus & Company, Inc. - Analyst
: I just wanted to ask a little bit about like a follow-up on the last question. With your banking and financial customers, are they doing
anything now or is it wait and see, is it a deer in the headlights?
And also, Mark, your whole career, I think, was in financial services, you worked on card. Are they usually ahead of the curve, concurrent
or lagging when something changes over there? Like how should we think about that?
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APRIL 22, 2025 / 12:30PM, EFX.N - Q1 2025 Equifax Inc Earnings Call
Question: Shlomo Rosenbaum - Stifel, Nicolaus & Company, Inc. - Analyst
: Okay. Great. I want to pivot to something completely outside of what's been talked about. One of the smaller competitors to the
work number, Truework, is being sold to Checker. I just wanted to ask you what you made of that transaction and how you think
about it in terms of the talent business in terms of what it says about the industry? I just wanted to get some of your thoughts.
Question: Andrew Nicholas - William Blair & Company, L.L.C. - Analyst
: I wanted to go back to the recession scenario that you outlined and maybe ask about the puts and takes on margins in your framework.
I would imagine incremental margins on mortgage are pretty helpful there, but curious about maybe the offsetting impact in the
other pieces or if that 50 basis point kind of annual margin expansion target from your long-term framework would still apply in
that sort of scenario as well?
Question: Andrew Nicholas - William Blair & Company, L.L.C. - Analyst
: Very helpful. And then switching gears a little bit for my follow-up and maybe a hard question to answer, but I'm going to ask it
anyway. In a choppier macro with the work number, does that competitively get prioritized relative to manual options or maybe
do-it-yourself verifications from like a direct-to-consumer lens just based on how quickly conditions are changing? Or I just wanted
to see like -- from like a relative performance perspective would you might expect that to do better?
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APRIL 22, 2025 / 12:30PM, EFX.N - Q1 2025 Equifax Inc Earnings Call
Question: Jason Haas - Wells Fargo Securities, LLC - Analyst
: Actually, I wanted to follow up on that twin indicator that you just mentioned. I was curious if you could talk about what the reception
has been like? How long does it take mortgage lenders to start to utilize that? Should we think about it as it takes several quarters
for them to make that switch or what's the time frame? And then --
Question: Jason Haas - Wells Fargo Securities, LLC - Analyst
: Is there any risk? Are you seeing any evidence? I know it's early days that there's been any cannibalization of the --
Question: Jason Haas - Wells Fargo Securities, LLC - Analyst
: That's great. And if I could ask a follow-up on the EWS margin outlook? It's good to see that the margins came in better in 1Q, still
down year-over-year, and it looks like the guidance now implies that the year-over-year declines will worsen through the year. So I
was curious if you could talk about the puts and takes there and what's driving the margin decline? And why it could potentially
Question: Kevin McVeigh - UBS Securities LLC - Analyst
: Just given the uncertainty, it's really terrific to see the results, but what gave you confidence to initiate the capital returns, which,
obviously, is a terrific outcome. But was there any particular trigger that said, now is the quarter to do it? Because again, it's a terrific
outcome, but just what gave you the confidence to do with this quarter, particularly given the macro uncertainty that --
Question: Kevin McVeigh - UBS Securities LLC - Analyst
: Got it. Terrific outcome. And then just if I can real quick, is there any way to think about how much some of the pricing dynamics,
was that already in the guidance or was that maybe an incremental benefit that obviously, I think it was really smart to kind of
reaffirm. But the pricing dynamics, were those already in the '25 guidance or --
Question: Kevin McVeigh - UBS Securities LLC - Analyst
: Yes, yes.
Question: Kelsey Zhu - Autonomous Research - Analyst
: I found the recession scenario analysis super helpful. And I was wondering if you can talk through your expectations for growth
outlook for each of these components under a stagflation scenario?
Question: Kelsey Zhu - Autonomous Research - Analyst
: I was wondering how you expect each of these components to grow under a stagflation environment, meaning muted growth and
no rate cuts?
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APRIL 22, 2025 / 12:30PM, EFX.N - Q1 2025 Equifax Inc Earnings Call
Question: Kelsey Zhu - Autonomous Research - Analyst
: Got it. And then my second question is on the vertical. So last quarter, you've talked about the funding practice changes at the CMS
and USDA. I was wondering what level of impact have you seen from those two contracts? And how much of the low double-digit
growth in Government's in Q2 and 10% growth in the second half is really driven by the FSA contracts?
Question: Simon Clinch - Redburn Atlantic - Analyst
: Can I just start with a bit of a housekeeping one, please? In terms of the EWS, the Verifier mortgage revenue growth and the Talent
growth, could you give us the figures for the revenue outgrowth for both segments this quarter versus underlying volumes? And
then how to think about how -- what you're implying for in your guidance for that revenue outgrowth through the year?
Question: Simon Clinch - Redburn Atlantic - Analyst
: Okay. Yes, well, sorry for asking the question. Maybe I could turn on to something slightly longer term. I was just wondering if you
could give us an update, please, around the international records you have building in EWS? And when we -- how to think about
your strategy for that business longer-term monetization of those records and sort of when that might be something we start to
talk about a bit more prominently?
Question: Scott Wurtzel - Wolfe Research, LLC - Analyst
: Just wanted to go to the outlook on employer and US hiring. I think I know last quarter, you guys were guiding to hiring being down
8% for the year. Has that changed at all?
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APRIL 22, 2025 / 12:30PM, EFX.N - Q1 2025 Equifax Inc Earnings Call
Question: Scott Wurtzel - Wolfe Research, LLC - Analyst
: Got it, got it. That's helpful. And then just going back to the inquiries outlook as well. I mean in the context of the outperformance
that you had in the first quarter and keeping the guidance for 2025 inquiries, pretty steady.
I mean was it kind of taking a more kind of conservative approach to 2Q, the whole year or more so weighted in the second half
relative to --
Question: Matt O'Neill - FT Partners - Analyst
: Most have been asked and answered here. I guess quickly, just following up on the employer service question just now. Any indication,
I guess, that in the important sort of white collar hiring environment, there's been more of a sit on the hands approach from large
employers in the last couple of weeks here? And I guess, just as a follow-up around now having the share repurchase at your disposal,
any thoughts on how to balance being aggressive there versus the tuck-in acquisitions or just continue to be opportunistic?
Question: Matt O'Neill - FT Partners - Analyst
: Appreciate the rundown. And yes, I meant Talent.
Question: Arthur Truslove - Citi Investment Research - Analyst
: A couple of questions for me, if I may. First one, please. If you think about what you did in your USIS non-mortgage business, clearly,
it's accelerated meaningfully in the first quarter of the year from where it was in the fourth quarter of last year, and in particular,
within the B2B non-mortgage.
How much of that acceleration related to better market conditions of lending in particular? And how much relates to what you've
done in terms of getting back to market following your cloud transformation?
And second question on a similar vein around the cloud. Are you able to just confirm that the first quarter fully benefited from the
cloud transformation in USIS? And are you able to say year-over-year, how much the cloud transformation benefited the cost side
in that division, please?
Question: George Tong - Goldman Sachs & Company, Inc. - Analyst
: You talked about the performance of cards, P loans and auto volumes in 1Q. Can you talk about how trends in each of these categories
performed exiting the quarter and in the first three weeks of April?
Question: George Tong - Goldman Sachs & Company, Inc. - Analyst
: Okay. Got it. And then in your long-term growth framework that you provided, are you assuming a return of mortgage volumes to
historical levels pre-COVID?
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APRIL 22, 2025 / 12:30PM, EFX.N - Q1 2025 Equifax Inc Earnings Call
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