Principally driven by mix. Right. Principally driven by customer mix, which we saw in the first quarter.
Shlomo Rosenbaum: Okay, thank you.
Operator: Thank you. Next question is coming from Faiza Alwy from Deutsche Bank. Your line is now live.
Faiza Alwy: Yes. Hi. Thank you. I wanted to ask about, the third party sales to credit bureaus that you mentioned that was weak and down double digits in the quarter. What exactly is that and what’s driving it? And how should we think about this in the, for the rest of the year?
Mark Begor: Yes, we sell our credit reports to a number of companies that provide credit monitoring to consumers in the U.S. We have our own business, and including the sell to [ph] Experian and TU to lots of others that provide credit monitoring. And we’ve seen some softness, particularly with the other two credit bureaus in the first quarter and actually late in the year. That’s really what we referred to. And I don’t know enough about what’s driving that, whether they’re cutting back on marketing or it’s just a more competitive market. But that was an element that we just sold less credit reports that are passed through in credit monitoring solutions.
John Gamble: Yes. We basically assume it’s going to continue into the second quarter. Right. So we’re seeing it to be at lower run rates. So we’re assuming those run rates are just going to continue.
Faiza Alwy: Okay. Understood. And then just to follow up on the question around EWS revenues. I know you said that you still expect, I think, government revenues to be up 15% for the year. Curious how we should think about the second quarter, sort of where we are in terms of redeterminations. So basically what’s left in 2Q and then if you could also just comment on, I know you’re talking about a recovery in talent. But give us a sense of how we should think about talent revenues for the year.
Mark Begor: Yes. So I think that the number you’re quoting for government we talked about back in February, and what we’re seeing is government is outperforming that. So we feel very good about our government revenue very strong in the first quarter. Yes, redeterminations are technically completed by the end of March. So yes, that revenue should decline, but we’re seeing really good performance across government strength in CMS, strength in other areas, strength within the states. Really good progress as we continue to do, to expand staff both through FDA and then also directly with the states. So we feel good about our ability to continue to grow government at a stronger pace than we had previously expected in talent. But we’re indicating that we expected to get back to growth, right.
I mean, we saw some weakness in January and February, nice recovery in March. We’re expecting that to continue. We’re going to get back to growth as we go through the year. And as I just mentioned, we do feel relatively good about what we’re seeing overall in our non-mortgage financing structure, so that we feel relatively good there as well. So overall, non-mortgage and verification services looks like it’s performing very, very nicely. And again, just like with mortgage, as we move through the year, the substantial growth in records, the tremendous growth that we’re seeing in adding new payroll processors now large and small, is going to add to the strength in all three of those areas that I just talked about. Right. Government directly, talent also, because it not only adds hit rates, it also deepens the historical file that we’re able to deliver to our customers.
So it makes our product even more valuable. And then obviously also in non-mortgage financing.
Operator: Thank you. Next question is coming from Andrew Nicholas from William Blair. Your line is now live.
Andrew Nicholas: Hi good morning. I wanted to ask about the FHFA’s kind of latest timeline for its credit score requirements. I think they put that out at the end of February. Just wondering how you think about kind of now with that out there, the timing of the impact to your business and if a couple months later or even a couple quarters later since I think you last spoke on it, what your expectations are in terms of the impact to Equifax broadly?
Mark Begor: Sure. I think the latest on that, this pushed out to late this year or early next year. It’s still in a comment period. There’s a lot of inputs coming in that don’t support the 3B to 2B, from what we understand is including congressional inputs on that. There’s also, what’s on the table is to add a VantageScore in addition to the FICO score with regards to our view of timing, we don’t expect anything to happen in 2024. And that’s not in our guidance; it’s not in our framework. And everything we see and hear that’s going to be in 2025, if at all.
Andrew Nicholas: Got it. Thank you. And then just for my second question, I wanted to go to Slide 14, I know this isn’t a new slide, and you’ve talked about the 2015 to 2019 inquiry level relative to where we are today. I’m just wondering if there’s any additional color you can give to that average inquiry level from 2015 to 2019 as it relates to kind of a mix between refi and purchase. And I ask because obviously it would seem like refinance after the wave of refinancing in 2020 and 2021 would be potentially subdued for a longer period of time than 2024, 2025, 2026 if we don’t get back to those kind of interest rates. So is there any other context you can, could provide with that number? I guess, more succinctly, how much of that 2015, 2019 inquiry level is purchase versus refi? Thank you.
Mark Begor: Yes. So if you look at originations during that time period. Right. Because obviously that in historical periods that details available, it was like average $7.5 million a year. And it was something like, something under 60% would have been purchase and something over 40% on average would have been refi. That was kind of the mix that you saw during that period, on average.
Andrew Nicholas: That’s helpful. Thank you.
Operator: Thank you. Next question today is coming from Surinder Thind from Jefferies. Your line is now live.
Surinder Thind: Thank you. Just a bigger picture question here. You talked about elevated activity in terms of rate shopping. Is that universal across, like cards, auto, mortgage, and then how much of an incremental benefit is it at this point in the cycle relative to maybe historical? So just some color would be helpful to understand as we think about longer term trends here.
Mark Begor: Yes. The place we’ve seen that is really in mortgage. I suspect there’s some level in auto, but it’s probably harder to see. And as you know, the phenomenon that changed if you go back five years ago, is just digital consumers. Five years ago, there was more face-to-face activity around a lot of big ticket transactions like a mortgage, and now it’s virtually all digital. So it’s easy for a consumer to shop around. So we have seen the increase in the shopping behavior as we went into COVID. That still continued. We believe that that’s just an element that will continue going forward that consumers have the ability to easily look at alternatives kind of digitally. And I think that’s going to be an underlying element of the mortgage market going forward, which maybe to your question, if you look back to 2015 to 2019 [ph], there were some elements of shopping in there, but it’s clearly increased.
We don’t think it’s going to decrease as rates go down in a meaningful way. And rates aren’t going down to where they were before, right? During the COVID time frame, it’s hard to imagine that rates are going to go that low. So let’s say rates go from seven towards six then towards five and maybe they end up at four or something, that’s still a significantly higher rate from what people perhaps were used to during the COVID time frame when rates were so low, there will be an element of shopping going forward.
Surinder Thind: That’s helpful. And then it sounded like marketing spend, I realize this is not a large part of your business, but just conceptually seems to be down a little bit more than you were anticipating relative to last quarter. Any color you can provide there? And should that be concerning in the sense that if marketing spend is down that potentially is a negative for volumes down the road?
Mark Begor: Yes. I would say that was de minimis. The change – the way we think about it on a sequential basis, again, we – our customers are still kind of operating what I would call normally. So there’s that – like they’re not pulling back because they’re worried about the economy or the consumer. And that’s where you would see marketing or prescreens or digital marketing to consumers around financial products, which is where most of our businesses cut back. We just haven’t seen it.
Operator: Thank you. Next question is coming from Kelsey Zhu from Autonomous Research. Your line is now live.
Kelsey Zhu: Hi, good morning. Thanks for taking my question. On mortgage Verifier, Fannie announced last month that lenders will now be able to use a single 12-month as that report to validate income, employment and assets, only one stack utilizing bank data. So just curious to get your view on whether this will have any impact on mortgage Verifier volume?
Mark Begor: We don’t think so. And we haven’t seen it. There has been – there’s various alternatives that can be used in a mortgage process. They generally have more friction, and they typically have less data. And the mortgage originators are – work hard to make sure that they’re getting the full picture of the consumer. And then the other element is the instant nature of our data. So we haven’t seen a change there, and we don’t expect one going forward. We saw a very wide utilization of our TWN income and employment data in the mortgage vertical, and we expect that to continue. And then as we add records, we’re already getting the inquiries from our customers, we’re going to have higher hit rates as we continue to grow our records.
Kelsey Zhu: Got it. Thanks. And my second question is still in EWS. I was wondering if you can remind us when renewals are coming up for most of your exclusive contracts with payroll providers? Correct me if I’m wrong, I was under the impression that a lot of these contracts had a three- to five-year term, and they were mostly signed around 2021. So I was just wondering if that means they’re up on renewals this year or next year?
Mark Begor: Yes. We’ve never talked about the term of any of our contracts with our partners. Those are confidential for obvious reasons. We have said, and it’s the way they’re structured, they’re generally structured with auto renewals and they auto renew. And those are happening as we speak. There’s none that are like – there’s not like a cliff of these coming. If you remember our dialogues over the last one year, two years, three years, four years, five years, we’re adding partnerships every quarter. As you add those, those have a term to them, but they’re on auto renewal, and we deliver so much value to that partner. And the – not only from the integration, which is very complex. It’s not a simple integration.
As you heard earlier, we signed a large partner in the quarter that’s going to add those 6 million records, it’s going to take us two, three, four months of very intense technology and data work in order to bring those records into our environment so then they can be normalized to be delivered in our TWN report. So there’s a lot of work that goes into that integration that makes our relationships quite sticky. And then, of course, from a monetization standpoint, as we keep growing our business, our partners’ monetization grows every quarter. So there’s a very strong relationship there. And as you may know, beyond just income employment with partners like payroll processors, we’re increasingly doing our other services like I-9 unemployment claims and WOTC in partnership with those kind of companies.
So we have multiple relationships. So maybe said differently, we’ve got a lot of confidence in the long-term nature of our partnerships around TWN records.
Operator: Thank you. Our next question today is coming from Jeff Meuler from Baird. Your line is now live.
Jeff Meuler: Yes, thank you. You addressed the customer mix headwinds in TWN mortgage, but I think you also said there were some product headwinds, and it wasn’t clear to me. Is that just lapping kind of the Mortgage 36 adoption and losing that tailwind? Or is there some trade-down effect if you can?
Mark Begor: Yes, you got it, Jeff. That’s the Mortgage 36. We’ve got for the second half some other innovation coming out of mortgage in EWS that we would hope will benefit the second half or certainly in 2025. So we’re always focusing on kind of new solutions that will add value. But Mortgage 36 was just a very powerful solution. And as you point out, we are lapping past that.
Jeff Meuler: Okay. And then can you just comment to kind of share dynamics on the nonexclusive records for TWN mortgage? And just remind us how you monitor that? Thank you.
Mark Begor: Yes. So just as a reminder for everybody that’s still on the call, half of our records come from individual relationships through our employer vertical where we have delivered those regulatory services like UC I-9 unemployment, et cetera. So we or you, I say you tend to talk about our partner records, but a reminder that half of our records are individual relationships. And we’re growing those every month as we grow our employer business. And as you point out, we’ve got partnerships. And we tend to talk or you tend to talk about payroll processors, but they’re HR software companies. Software platforms is another way for us to partner. We’ve got a number of relationships there and a pipeline of additional relationships.
We have pension administrators is another one, which is like a payroll processor but for the pension space. As you know, we’re chasing that 20 million to 30 million of defined benefit pensioners is a big pool of data assets that we have. And those are all multiyear in nature, and we have strong relationships with all of those partners that we have.
Operator: Thank you. Our next question today is coming from Craig Huber from Huber Research Partners. Your line is now live.
Craig Huber: Thank you. First question, in your U.S. Online Information Solutions area, can you size for us in dollars your credit card and your auto exposure there? And I’m curious also what your outlook is again for revenues this year reach?
John Gamble: Yes. So we haven’t broken down all of the different markets that we have in USIS. FI and auto are two of our largest segments. So certainly the case, but we haven’t specifically given dollar values within our online services for auto and card. But they’re large within our total OIS revenue.
Craig Huber: And how about the outlook there for the revenues for each of those auto and credit card for this year, please?
John Gamble: I think what we did is we’ve given a view specifically as it relates to total non-mortgage for USIS. And we talked about that in the call, both for the second quarter and for the year, right? And I think that’s the level of granular we’re going to talk about. We did indicate that we expect to see very nice performance in U.S. consumer, very nice continued growth above our long-term averages, right, with commercial, good performance also within ID and fraud right? Those we expect to continue to perform very, very well. We had very good performance in FI in the first quarter. We gave specifics on that as well. But in terms of specifics by segment, no, we don’t give guidance at that level.
Operator: Thank you. Next question is coming from Simon Clinch from Redburn Partners. Your line is now live.
