EFX - NYSE

Hello and welcome to the Equifax Q3 2023 Earnings Conference Call. [Operator Instructions]. A question-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder, this conference is being recorded. It is now my pleasure to turn the call over to Trevor Burns, Senior Vice President, Head of Corporate Investor Relations. Trevor, please go ahead.

Thanks and good morning. Welcome to today's conference call. I'm Trevor Burns. With me today are Mark Begor, Chief Executive Officer; and John Gamble, Chief Financial Officer. Today's call is being recorded. An archive of the recording will be available later today in the IR Calendar section of the News & Events tab at our IR website investor.equifax.com. During the call today we'll be making reference to certain materials that can also be found in the Presentation section of the News & Events tab at our IR website. These materials are labeled 3Q 2023 earnings conference call. Also, we’ll be making certain forward-looking statements, including fourth quarter and full-year 2023 guidance to help you understand Equifax and its business environment. These statements involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from our expectations. Certain Risk Factors that may impact our business are set forth in filings with the SEC, including our 2022 Form 10-K and subsequent filings. We will also be referring certain non-GAAP financial measures, including adjusted EPS attributable to Equifax and adjusted EBITDA, which will be adjusted for certain items that affect the comparability of our underlying operational performance. Recently Equifax reached an agreement with the UK Financial Conduct Authority in relation to the 2017 cyber security incident. In connection with the agreement Equifax taken the charge in the third quarter of $14 million which is excluded from third quarter adjusted EBITDA and adjusted EPS. These non-GAAP financial measures are detailed in reconciliation tables, which are included in our earnings release and can be found in our financial results section of the financial info tab at our IR website. Now, I'd like to turn it over to Mark.

Thanks, John. Wrapping up, Equifax delivered on its earnings guidance in the third quarter with adjusted EBITDA margins and adjusted EPS within our guidance range despite the challenging U.S. mortgage market. While the mortgage market was down significantly again, our non-mortgage businesses delivered strong constant dollar organic growth of 7% and overall growth of 11%, including BVS. Importantly, EWS returned a strong 11% non-mortgage growth and USIS delivered a strong over 8% non-mortgage quarter. We expect our strong third quarter constant dollar non-mortgage revenue of 11% to accelerate in the fourth quarter to about 13%, including EWS, above 15% and international, including BVS at about 20%. The breadth and depth of our non-mortgage businesses, which account for about 81% of Equifax revenue in the third quarter and execution against our 2023 cloud and broader spending reduction program, allowed us to deliver against our earnings guidance despite the decline in the mortgage market. While it's early to provide 2024 guidance, I wanted to give you a perspective on how we plan to operate in 2024 in what could be another challenging year from a macro perspective as we exit 2023 with U.S. mortgage volumes at historically low levels with record mortgage rates. We remain committed to executing against our EFX 2025 strategy with a focus on things we can control. As we move towards 2024, we're focused on: first, continuing above-market non-mortgage growth inside our 8% to 12% long-term framework and outperforming the underlying mortgage market. Second, substantially completing our cloud transformation in 2024 with revenue from our new cloud platforms approaching 90% by the end of the year, which will be a big milestone to allow our team to pivot to fully focus on innovation and growth. Third, as we complete our cloud investments, we expect CAPEX to move towards our long-term goal of 7% of revenue in 2025 and our CAPEX spend to pivot from maintenance and cloud investments to innovation and new products. Aligned with our cloud technology completion, we will continue to execute against the cloud and broader spending reduction program we announced in February, which we expect to deliver $65 million of 2023 carryover next year with additional cost savings next year as we complete the cloud. Our 14% vitality performance in the second half of this year gives us strong momentum as we move towards 2024. We will continue our focus on new product innovation using our single data fabric, cloud capabilities, and AI to bring new models and scores to the market, including a focus on bringing EWS and USIS assets much closer together with a long-term annual vitality goal of 10%. We'll focus on adding new ERB records to further strengthen the TWN data set, including the acquisition of traditional W-2 pension and 1099 records. And last, we'll continue to look for financially attractive bolt-on M&A aligned with our strategic priorities around differentiated data, strengthening EWS, and identity and fraud. Despite the challenges of an unprecedented decline in the U.S. mortgage market, Equifax demonstrated in 2022 and 2023 that we can grow revenue as we outperform our underlying markets over the last two years from above-market non-mortgage growth, outperforming the mortgage market, vertical penetration, new product innovation, adding new records to TWN, and pricing. We are committed to delivering on our long-term framework of 8% to 12% revenue growth and 50 basis points of annual margin expansion as well as our medium-term goal of 39% EBITDA margins. And when the mortgage market recovers, we are poised to generate accelerated above-market growth and margin expansion from investments we have made in our cloud technology, new products, TWN record additions, and expanding our unique data assets. During the next chapter of the new Equifax as we pivot from building the new Equifax cloud to leveraging our new cloud capabilities to drive our top and bottom line. We are convinced that our new Equifax cloud-based technology, differentiated data assets in our new single data fabric, and market-leading businesses will deliver higher growth, expanded margins and free cash flow in the future. And with that, operator, let me open it up for questions.

Thank you. [Operator Instructions]. Our first question is coming from Manav Patnaik from Barclays. Your line is now live.

Thank you and good morning. Mark, I just had a question, I think the negative 15%, I guess potential decline in mortgage increase next year based on I guess, your current run rate, seasonality, etcetera. If that is the case, you've obviously been outperforming the market consistently this year, but are there other initiatives you can put in place to potentially outperform further, or just curious on what the strategy in a longer -- weaker for longer, I guess, mortgage market would be?

Yes, Manav, we believe that we have multiple levers in both mortgage and non-mortgage. I'll focus on mortgage because that's your question, to continue to outperform the underlying market. And you've seen us do that over an extended period of time. And we'll talk about USIS and EWS, if you want, because that's a mortgage. In USIS, they obviously have the ability to deliver price, and we expect price to be a part of the levers for 2024. There's new product rollouts inside of USIS. For example, if you recall earlier this year, we rolled out our new mortgage credit report that includes those NC+ attributes. That's going to be a positive for us to outperform the underlying market. And then if you go to EWS, you've got the same two levers there plus more, obviously. Price is an opportunity as we have more records, and we can deliver more value to the mortgage customers. We've got a big focus in more leverage in EWS around new products. You've seen us roll out new solutions like a year ago, mortgage 36 with 36 months' worth of history. So new products will be a continued lever for us in the mortgage space. And of course, records growing records double digit in the quarter, the new payroll processors that we're adding in the fourth quarter and next year that we signed up during the quarter, and of course, our pipeline of new records those drive higher hit rates in the EWS mortgage business, which we expect that to continue going forward. And then the last for EWS quite uniquely, is ability to drive penetration, meaning more usage of the income and employment data inside the mortgage process. And as we've talked before, we don't have -- every customer doesn't use our solutions. Some still use manual verifications and we're driving them to using our verified solution. So yes, we've got confidence about our ability. I wouldn't characterize that we have new levers, but we've got a lot of focus around them. And I think -- when you think about EWS and USIS, and we mentioned it earlier in our prepared comments, as USIS completes the cloud, and of course, EWS is already there, we think the ability to have each business bring new products to market will continue, but the ability to bring solutions that combine the two businesses, data assets for mortgage and non-mortgage with USIS getting into the cloud is another year for us in the future.

Okay. Got it. And then just on the margin front, the 34% for the fourth quarter, is that a right run rate to think about as you exit the year, I know you have a lot of, obviously, mortgage headwinds and then cost savings coming in to offset that. And if you could just remind us versus the 39% target that you had, how much of that is going to be a mortgage shortfall in terms of getting to that 39%?

Thank you. Next question is from Andrew Steinerman from J.P. Morgan. Your line is now live.

Hi, two quickies. Well, actually, we'll see if it is quick. The first one is, for third quarter, what was mortgage as a percentage of total revenues? And then the second question has to do with, could you just review with us the cadence of Equifax government revenues from the Medicaid redetermination fourth quarter to second quarter. I'm also assuming that it might be higher in total now because you talked about additional state penetration?

Perfect, thank you.

Thank you. Next question is coming from Kelsey

Hey, good morning. Thanks for taking my questions. I think on the talent vertical, you talked about 20 percentage point outperformance if I heard that correctly. I was wondering, between the different factors that was driving that 20 percentage outperformance what is the biggest factor and how durable is this 20 percentage point outperformance over the next few quarters?

Yes, the 20% we were pleased with the market -- the business is up 6%, the talent vertical and from our measure, the BLS market was down 10%. We think the white collar market was down double that. So that's how you get close to double that. So that's how you get to the 20 points of outperformance. And there isn't really -- I wouldn't characterize a single lever that's really driving that outperformance. It's really similar in all our businesses. In talent, we've got the ability to drive price, which we do every year. We expect to do that as we go into 2024 in the talent vertical like our others because of the value we're delivering. In talent, quite uniquely, we have the ability to drive penetration. That's a big multibillion dollar TAM in a business that's roughly $400 million at run rate. So there's a lot of customers in talent that are still doing manual verifications of employment history that our 640 million jobs that we have in our database are just immensely valuable from a speed and productivity standpoint. So that's a lever in talent that we think is quite durable along with price. Product is another big one. You've seen us roll out almost every quarter, a couple of new products from EWS and the talent vertical really to get more narrowly focused around products that match kind of job categories. We rolled out an hourly solution, I think, last quarter for hourly workers to try to drive some growth there. So new products are clearly a growth. And then the addition of records. And as you know, with the 50 attributes we get every pay period, we get job title and 75 million people a year or roughly that number change jobs in the United States. So having those new jobs from our record additions every pay period is a very valuable asset that just drives higher hit rates, which drives revenue going forward. So we have a lot of confidence in our ability to outperform the underlying talent market, just like we do with the rest of our markets because of those levers.

Got it. That's super helpful. Thanks so much. My second question is on mortgage. I was wondering if you can talk a little bit about the spread between kind of the increased trend versus origination and how you calculate the mortgage outperformance for EWS?

Maybe just one more point, John, as a reminder, as you know, we get mortgage originations because we have the credit file on every consumer. So we see the actual new mortgage originations, but they're typically on a what five to six-month lag. So between that five to six-month lag, we're forecasting based on MBA data, based on our own tracking, based on our own run rates, we use multiple inputs to try to forecast those originations. We obviously have been challenged by that in this current environment with interest rates increasing. But we have a lot of data around mortgage originations.

Got it, thanks so much.

Thank you. Your next question is coming from Andrew Jeffrey from Truist Securities. Your line is now live.

Hi, good morning. Appreciate you taking my questions this morning. Mark, I mean, I get there a lot of moving pieces here outside of mortgage, especially I'm thinking about EWS verifier government, a little bit weaker maybe than you thought and you enumerated the reasons. I guess my question overall is do you think that, that EWS non-verifier -- sorry, non-mortgage verifier business has perhaps gotten a little more difficult to forecast as you do more business with the government and all these different programs, appreciating the new contract wins and do you think you're going to take that into account when you start to think about guiding for 2024?

Yes, for sure. There's no question. Look, it's a big business. It's dealing in multiple verticals. In some regards, these -- like talent in government or I would still characterize them as fairly new verticals for us at scale, we've only been large in those verticals in the last couple of years. And you've got some macro impacts certainly in talent, leave mortgage side, which we talked about a bunch, but the hiring market is obviously under some pressure, particularly in white collar in the U.S. And we've tried to forecast that, and we're going to try to be more conservative or more balanced whatever word you want to use around that vertical. Same with government. There's a lot of moving parts there. I would say the most complex for us or the one we've been challenged by is the redeterminations. Outside of that, we have pretty clear visibility about adding new customers, adding new clients, new product rollouts, pricing actions and government, that is pretty dialed in. And I think the other -- if you think about 2023, both of those businesses had really, really, really strong 2022. So we're comping off very strong years, which is great because we're driving more penetration, more product, more price, and we had to look forward to where we're going to take those businesses. And while we've been off a little bit, we're really pleased with the growth of those businesses. Those are -- they both delivered strong growth in the quarter. You've seen accelerated growth in non-mortgage and EWS from second quarter. We expect that non-mortgage verifier growth to accelerate again in fourth quarter, which gives us really positive momentum going into 2024. But short answer to your question about, are we going to be more balanced around how we forecast there, for sure.

Okay. Yes, I think the market would welcome that. And then if I could just ask, it feels like obligatory competitive question in EWS. There are a couple of pieces of business that you characterize as manual and low margin that kind of let go last quarter. Can you just sort of reiterate your thinking, especially in mortgage Verifier in terms of the competitiveness of your solution?

Yes. No change from what we talked about in July. In July, we tried to talk about the manual work we were doing for customers when we didn't have records. And that got I think somewhat misconstrued in the marketplace. We're not seeing an impact from competition in our mortgage business or any other businesses. We tried to be clear about that in July, and I'll be clear again today. We're well aware of what our competitors' data records that they have and what they don't have. To me, a big proof point about our competitiveness is our ability to continue to add new partnerships. We added four in the quarter. We added, I think, 27 in the last couple of years. We're growing our records. That's really, I think, a proof point of the strength of our ability to deliver solutions to our partners and execute for them. And they want to be partnered with Equifax. So I think that's a really important metric for us going forward.

Thank you. Your next question is coming from Kyle Peterson from Needham & Company. Your line is now live.

Great, thanks, good morning guys. And appreciate you taking the questions. I wanted to touch on the consumer lending volumes within EWS. Looks like that was down a bit year-on-year. Just wanted to see, is that fairly broad based or was there any more concentration, whether it's card or personal loan or auto, just any more color would be helpful?

Got it. That's really helpful. And then just a follow-up, I know you guys have talked a bit about some of the previous spending reductions and kind of the benefits that will be in the 2024 numbers based on the actions taken this year. I just want to see, are there any other funding plans or things you guys are looking at if you guys are -- if we're going to be in kind of a lower-for-longer kind of mortgage inquiry market, I just want to see, are there any more levers you guys can push on the cost side of things if volumes don't come back next year?

Yes. I think as John mentioned, and we did earlier, we had the $65 million of carryover from our $275 million program this year. The bulk of that, as you know, is from cloud completion and cloud cost savings. And as we go through 2024 we mentioned, and we'll give guidance in Feb on that, but we'll have additional cloud cost savings as we complete migrations next year. As we said, we expect to complete USIS and Canada and other of our international platforms. And as a reminder, we're carrying double cost today in those environments where we have a cloud environment we're paying for, and then we also have a legacy environment. When we complete the migrations, we shut down the legacy. So that will be the incremental savings which we expect to have in 2024 and 2025, and we'll give guidance on that. Beyond those kind of savings, we're going to keep our belt tight in 2024. We're going to want to continue to invest in the right places, but I'd characterize that as we're going to be balanced around it given the environment.

Thank you. Our next question today is coming from Simon Clinch from Redburn. Your line is now live.

Hi, thanks for taking my questions. A lot of my questions have been asked already, but maybe we could zero in again on EWS mortgage. And I just wanted to -- just going back to your -- the way you're measuring the outperformance this time and the implied decline in origination volumes this quarter that you've seen versus what the sort of industry forecasts have been for third quarter. And there's quite a wide gap. And I just wanted to make sure that there's nothing else at play here in terms of I don't know, maybe sort of just you're not seeing all the volumes that you would otherwise be seeing or for any sort of color you can give around that sort of divergence would be useful?

Great, thanks. And just as a follow-up. I mean if we want to talk about or think about a tougher mortgage market for longer sort of current levels, does that in any way change the I guess the pricing power, the competitive dynamics for EWS and mortgage going through a period like that, a prolonged period like that. Just wondering if you could help us think about the puts and takes in that regard?

We don't think so. The power of instant data, and in this case, we're talking about income and employment data is super valuable to every mortgage originator. They want to make sure that they have accurate data. We get it directly from the company every two weeks on the consumer. We deliver it instantly. In this environment of more shopping, a mortgage originator that's investing in a consumer, they want to make sure that they close that loan as they get down the path of delivering it. So we don't see a change in our ability to deliver new solutions, meaning products to the industry. Obviously, with more records, we're going to drive higher hit rates that happens really because we're getting the inquiries from our customers for all their applicants. And then we still believe that we have pricing power going forward because of the uniqueness of our data set, the alternative for our customers is to do it -- the mortgage customers to do the verification manually, which is very challenging, meaning getting a company on the phone to verify the income is very hard to do and it takes time, and that's labor and also time. So speed and productivity and accuracy is the value we deliver.

Thank you. Next question is coming from Shlomo Rosenbaum from Stifel. Your line is now live.

Hi, good morning. Thank you for taking my questions. Hey Mark, just my first question, I just wanted to talk a little bit more like how we should be thinking about the future with some of the items that you were talking about, the increase in subprime delinquencies. We talked about auto for a while, we're talking about credit cards, cash being used up, like how does that impact the business over the next 12 months, I mean I know the employment has been fairly good at the lower end of the spectrum, but like there's a lot of parts of the spectrum where there's open jobs. They're not really filling those open jobs. And so I guess the first question is, how are you thinking about this on a go-forward basis? And then I have a follow-up.

Yes. Go forward, you got to kind of talk time frames. When you think out the next couple of quarters, it doesn't feel to us or to me like there's going to be a lot of change, meaning it's a fairly -- outside of the mortgage market, obviously, let's leave that aside. That's obviously super challenging and really unprecedented what's happening with interest rates. But when you have people working and very low unemployment rates, generally, they're able to pay their bills. When they pay their bills, delinquencies stay generally low, and then you have the ability -- our customers have confidence in continuing to extend credit through loans and other solutions to those consumers. Subprime has been challenged for a year. That's generally subprime is with the fintechs. Most of the big banks don't do subprime business. And that's been challenged for a year. And we're actually, as I mentioned earlier, starting to comp against fairly low levels. I would expect subprime to stay high as we go through 2024 because those consumers are really more challenged, not around being unemployed, but around inflation is still pressuring them. But the big metric that I always think about and you should, too, in my view, is unemployment. So back to your question about 2024, give me your forecast for unemployment next year. Is it going to go up, down or sideways, if you think unemployment is going to spike or go up, which I don't think it will in this environment with 10 million open jobs and only 5 million people looking right now, that's a pretty good environment to go into 2024 in kind of the core elements of our business outside of mortgage.

Okay, thank you. And then just going back to those government redeterminations, can you talk about like how does that work exactly, like once they get done, let’s say they get done by June of next year. Is this something that the government is going to be doing annually or is this kind of a big onetime bang and then we're going to end up with tough comps on that after we're done with it?

Thank you. Next question is coming from Jeff Meuler from Baird. Your line is now live.

Yeah, thank you. Sorry to keep pulling you back to this, but just given that it's a new metric you're going to be providing on an ongoing basis. So on the footnote and you said this as well, you're looking at internal data and then you're doing a Calcon [ph] records product, price and mix. It's not clear to me, like I know you said you don't think there's any change in share dynamics relative to a quarter ago. But if there are share shifts, is that accounted for in your market estimate, is it accounted for an outperformance, it's just -- it's not clear to me if you're looking at internal data based upon what volumes you're seeing how you would account first year...?

Thank you. Your next question is coming from Andrew Nicholas from William Blair. Your line is now live.

Hi, good morning. Thanks for taking my questions. First, wanted to touch on Boa Vista. I know you had given originally like $165 million revenue run rate. I think it was $160 million when you cited it in the second quarter, and you're holding that here today post close. Just kind of curious if you could bridge the performance there over the past nine months with how that end market is doing, how the business is doing, just kind of an update as it's now under your official ownership?

Yes. We're only, I don't know, 60 days in of having it under the ownership, but pleased to have it in. The market from our perspective is growing kind of high single digit. That's why we like the market down there in Brazil. We're very active in driving the integration of getting our new products and solutions there. We're going to move them to the Equifax Cloud over the next number of quarters to get them on our new cloud environment. We're going to bring down our large platforms like Interconnect, which they don't really have a version of that as well as Ignite, our analytics platform, which will really drive some strong competitiveness with Serasa Experian in the marketplace. The business performance, I would say, is probably lagging a bit that market performance, primarily through the integration. This is -- it was a complex integration for a small publicly traded company to go through the process. It was a long process to go through. Gosh, it was almost seven to eight months of the process to do the take private, but we're energized around the future of the business and focused on getting this integration complete and getting into new solutions and to help them drive their top line.

Great, thank you. And then if I could ask just a clarifying question for my follow-up. In terms of the mortgage market outperformance in EWS, I think, first, I want to clarify that the 15% decline for 2024 that you talked about if conditions persist. I want to make sure that I understood that that's an inquiry estimate, or is that an origination estimate? And then also, when we think about the gap between those two numbers, is there any reason to believe that, that gap would -- and this is just kind of a question around the market itself, not your guys' performance. Any reason of that gap to narrow or widen in a prolonged weak environment, just kind of thinking about the different levels, levers if you can?

And then against that, and we'll give guidance in February. But against that down 15%, we would have our levers in both businesses around price, product penetration to deliver the outperformance against that market.

Thank you. Your next question is coming from Craig Huber from Huber Research Partners. Your line is now live.

Hi, good morning. First question, can you quantify for us the revenue performance in the U.S. for credit cards and autos and what the outlook is there for the fourth quarter?

So is your argument then with the much higher interest rates out there, obviously impacting mortgages, as you've talked quite a bit about here. You're not seeing significant impact to the rest of your business with a much higher rate. Obviously, the 10-year rate is approaching 5% here, has been at that level for many, many years are you not seeing an impact from much higher rates anywhere else in your business?

We haven't. But again, let me just be a little more deliberate for example, like in subprime auto, there's been some pressure there from originations because they're more deliberate around that subprime consumer being challenged. And then that subprime consumer at that higher interest rate even in parts is sometimes challenged to qualify for that. But broadly, no, when you think sometimes a small portion of the financial services industry, most of it is near in prime. And higher interest rates have not impacted auto originations or card originations in the near prime and prime space like they have in mortgage. Mortgage is just a big ticket item that had a massive impact on the rates over such a short time frame.

Great, thank you.

Thank you. Next question is coming from Faiza Alwy from Deutsche Bank. Your line is now live.

Okay. Understood. And then maybe just give us some perspective, again, on this inquiry question sort of where we were maybe pre-pandemic and what happened during the pandemic in terms of number of inquiries per whether it's application or for origination sort of how far ahead are we, was it three or four inquiries back in 2019, did that fall down, are we at seven or eight now. Just some perspective on how much higher inquiries are now would be helpful?

Okay, understood. Thank you.

Thank you. Your next question is coming from Toni Kaplan from Morgan Stanley. Your line is now live.

Thanks for taking my question. Historically, pricing wasn't really a big contributor to growth for the bureaus overall, but it seems like it's more of a driver in recent years for you and especially now. Obviously, work number has been an area you've been able to increase price. I think you've also talked about introducing new products at higher price points in other parts of the business, too. So I guess when we think about like a 7% to 10% normalized organic growth rate for Equifax, how much of that should come from price increases and maybe help us out with regard to like the segments as well?

Yes, terrific. And then if I caught your comments earlier correctly, you mentioned that 50% of your revenue is coming -- within EWS is coming from products containing historical records. Has that mix meaningfully changed versus like a year ago, just wanting to understand?

Thank you. Our next question is coming from Ashish Sabadra from RBC Capital Markets. Your line is now live.

Thank you. Next question is coming from Seth Weber from Wells Fargo. Your line is now live.

No, that's fair. I just -- I thought that the acquisition, the margins were high 30s. That was the frame and spirit of the question. But -- and then just another follow-up. Sorry if I missed this, but are there any more details on this, the new $1.2 billion contract, when that starts, how that rolls in, is that ratable over the term of the contract or just how we should start thinking about filtering that into our forecasts? Thanks.

Got it, okay. Thank you guys, I appreciate it.

Thank you. The next question is coming from George Tong from Goldman Sachs. Your line is now live.

Hi, thanks. Good morning. You've previously seen evidence of mortgage insourcing of their verification needs within EWS. Can you provide an update on some of those trends and in-sourcing activity outside of the mortgage vertical?

So George, I'm not sure what you mean by in-sourcing or I think you used the terms we provided evidence. Are you referring to our comments in July about the manual work we were doing for customers that was where we did not have records?

No, it's where mortgage originators because volumes are down so much and because they apparently had so much time on their hands they were just doing it themselves rather than...

And that was the discussion we had back in July, and it was around where we were doing the manual efforts for our customers and a very small operation in Iowa, where we did not have the records. And we talked about the fact that I was moving in house. We haven't seen any evidence of mortgage originators shifting from using our instant solution to doing it themselves. So that has not been a dialogue from Equifax.

Got it. And assuming that the same holds true outside of the mortgage vertical.

Yes, for sure. That's how we're growing our business because they're using more of our solutions. We deliver productivity and we deliver speed and accuracy. So that's fundamental. We see no trends in any of the verticals of where they're going back to manual what you're seeing in the business. That's how we're delivering the double-digit growth in the quarter and the double-digit growth we expect in the fourth quarter of -- one of those levers is more conversions of existing manual effort to using our instant solution.

Got it, thank you for that. And then sticking with EWS. Workforce Solutions, non-mortgage, nongovernment, can you discuss some of the trends that you're seeing there and the sensitivity of customers to pricing trends in the Verifications business?

Yes. Do you want to talk about talent or exclude talent from that, too?

Focus on verifications.

Well, okay. So you're talking about like in -- and you want to leave mortgage out and focus on card and P loans and auto or do you want to talk mortgage to, I'm just trying to figure out which part of verification you want to cover.

Yes, non-mortgage, non-government.

Non-mortgage, nongovernment talent.

Yes. Talent, I guess.

Got it, thank you.

Thank you. Your next question is coming from Heather Balsky from Bank of America. Your line is now live.

Hi, thank you for taking my question. I wanted to touch on the cloud migration. So first part, it sounds like it's lagging a little bit from what you said last quarter. I'm curious if you can help us kind of understand what's going on with that transition and where, I guess, the headwinds have been? And then with regards to your plans with the transition, when do you think we could start seeing the benefits of that on the USIS side? Thanks.

Yes. Look, cloud transformations are hard. This has been super complex and the most complex cloud transformation that we're executing is in USIS given the age of the legacy infrastructure and formats that we had. And we're clearly a few months behind, but we can see the finish line in completing it. As we said earlier, we're migrating large customers, as we speak, in the fourth quarter. Those will continue in the first quarter, and we'd expect to be complete with USIS as well as many of our international platforms in the early parts or first half of 2024. And that's a big pivot point, as you point out. When are we going to start seeing the benefits? We're starting to see it. And what we saw in EWS is what we would expect to see in USIS. And we talked earlier about EWS' ability to drive new product rollouts at a very rapid pace, well above our 10% goal at the 20% plus. We would expect USIS to grow their vitality index, which today is south of 10 and move towards 10. And I think we mentioned they've grown their vitality about 100 basis points. We also mentioned, and we've talked about it on calls really for the last four years, but in the last couple of calls, that in USIS in particular, because of the ability to deliver always-on stability, the ability to have faster data transmission and then obviously leveraging our differentiated data, we do expect in USIS to get some share gains. And that really comes forward, where we move from a tertiary position to a second or primary position. And we had one large FI in the U.S., which is where USIS is, obviously, that's making that move with us because of the cloud. So we would expect more of those to come forward as we complete the cloud in 2024 and then really between share gains and new product rollouts that to help drive USIS' growth rates in 2024 and 2025 and beyond.

And can I ask a follow-up. Just when you talk about share gains, how should we think about it, are you taking business from other creditors or is it expanding the wallet and benefiting that way?

No. When you talk about share gains, it's what you would think a share gain is, is where we're moving from secondary to primary or tertiary to secondary because of the cloud. And having the most advanced technology, we think, is an advantage. That's one of the reasons we embarked on this is at our gut, we believe, to be a great data analytics company, a great technology company. And when you overlay the digital macro of our customers doing the vast majority of their transactions with their consumers online, you have to delivered 99 [ph] to stability. You can't do that in the legacy environment. You can only do with cloud, and you have to have that for data transmission. So we think that's going to advantage Equifax going forward. And then you lay on top of it, you'd be able to roll out new solutions more quickly and more of them. That's going to be advantaged to Equifax to become a more important partner that will drive us up from those secondary positions that could be 20% or 30% of the volume to the primary positions, which could be 60%, 70%, 80%. And that's really what we have in front of us from the cloud investment, and we would expect those benefits to roll the USIS. And one last point that we mentioned is getting USIS cloud native will also allow us to do more between EWS and USIS. That was hard pre-cloud in two legacy environments with different data sets that are in different data environments. As you know, we went to a single data fabric and having them both in the cloud, that's going to be another gear for us going forward to have data combination solutions between USIS and EWS that was really hard to do before. And of course, only we can do that between credit data and the other differentiated data in USIS in combination with the income and employment data that's really only Equifax.

Thank you. We reached the end of our question-and-answer session. I'd like to turn the floor back over for any further or closing comments.

Yes, it's Trevor Burns. If you have any follow-up questions, please reach out to me and Sam. Otherwise, have a great day. Thank you.