A €“ Mark Begor: As John pointed out, those will be executed principally the actions of the contractors and attrition in some Equifax FTEs will be executed in the first quarter, so the benefits will accelerate as we go through second, third and fourth. And then as we said, we get a benefit — positive benefit in 2024 from the full year impact of that.
Q €“ Andrew Steinerman: Okay. And then on the $120 million of expense savings, OpEx savings, is this really an acceleration of the original plan, or does this add to total target cost savings of the cloud transformation?
A €“ Mark Begor: Yeah. It’s a combo of the two. We tried to be clear about that, Andrew, in our comments because of the extra efforts and additional work we did in 2022, it’s allowed us to accelerate the cloud savings that we’ve talked to you about for multiple years. So a big piece of the $120 million is the cloud savings, but there’s a meaningful increment to that of just a broader restructuring of the company to improve our efficiencies and how we operate the company. Some of that from the investments of the cloud that are outside of technology just allow us to operate more effectively. So it’s a combo with the two.
Andrew Steinerman: Thank you.
Operator: Thank you. Our next questions come from the line of Kyle Peterson with Needham & Company. Please proceed with your questions.
Kyle Peterson: Great. Good morning guys. Thanks for taking the questions. I wanted to dig into the Talent Solutions piece. It definitely seems like there was some softness there compared to what you guys were expecting. And I know you kind of mentioned that hiring was a headwind and became more challenging. But I guess, was the softer result in that sub-segment of EWS, was that purely a kind of quantity and kind of hiring volume headwind, or did you see any clients like trading down to kind of less expensive products or doing anything else in kind of that area that might have caused some pressure?
Mark Begor: No. Our analysis of it is it’s all Q and when we talk to our customers, meaning there’s just less background screens happening. I think we were watching this as we went through the fourth quarter. I think all of us saw companies as we went through the tail end of the year and they’ve accelerated in the first quarter here, announcing layoffs, announcing hiring freezes. That all is going to impact the hiring market. It’s a bit bifurcated. I think we all know that the hiring at the, call it, the hourly wage area is still very strong. So that really wasn’t impacted. This is more white collar impact, where companies are just tightening their belts and being more cautious around hiring. So we haven’t seen any impact from our new product rollouts, the penetration that we have.
And just as a reminder, this is a $2 billion TAM for us, is Talent. And we have a lot of penetration opportunities, meaning we’re continuing to work in to bring new solutions and convert our customers from their manual work to digital, and that’s what really allows us to outgrow a declining market, which we expect to continue to do in 2023. And then as we also mentioned, that same hiring impact where companies are tightening their belts around adding new resources impacted our onboarding or our I-9 business in the latter part of the year, we expect it to impact in 2022. As we said in the comments earlier, we expect both of those businesses to grow double-digit even with those market declines because of the new product capabilities, the new penetration opportunities that we have and, of course, our normal pricing that we rolled out on a 1/1, on January 1.
Kyle Peterson: Got it. That’s helpful. And then I guess just my kind of follow-up was on pricing. I know kind of last quarter, you guys mentioned that pricing would be a tailwind in 2023 to margins. And I know like the 1Q guide kind of implies a couple of hundred basis points of pressure on EBITDA margins. I get some of that’s seasonality. But is some of this that compared to what you guys saw in 4Q that just volumes in mortgage and some of the other areas are just facing pressure that’s offsetting some of those price effects that went into place on 1/1, or did you got temper in any of those?
Mark Begor: Yes, I’ll let John jump in. No change in what we told you we were going to do in October and price and what we actually did. Obviously, what’s happened is the mortgage market — first off, we have a very challenging comp in the first quarter and the second quarter versus last year. A year ago, the mortgage market was super strong. So you start with that, and that was as expected, although as we talked about, we’ve reduced our mortgage outlook for 2023 from what we thought in October. So that puts pressure on the quarter and on the year, from a margin standpoint. There’s some small pressure from the lower growth in talent and onboarding in I-9 because of the tightening belts around hiring taking place, but the bulk of the first quarter impact is what John described of, really, from a cost standpoint in 2022, our incentive compensation was well below target because of the decline in the mortgage market.
As John said, we expect 2023 to be paying at target. So that’s a higher expense to us. That flows through the year. And then we typically have in the first quarter when we make our retention equity grants to our team, an equity expense that takes place. And there, I don’t know, what else would you add, John?
A €“ John Gamble: No. Just in terms of price and product, you can see the benefit of price and product in the fourth quarter, obviously, in USIS. Very strong performance in online. We saw volume in banking. But we had very strong performance in auto and in banking and lending and cards. So — and some of that was product and some of that was price. And you’re certainly seeing it in the first quarter in EWS, right? As Mark mentioned, pricing increases going in January, and we’re seeing the benefit of both product and price and in EWS with their margins expanding in the first quarter. So no difference, and you’re seeing it in the performance of the business.
A €“ Mark Begor: I think, John, you also said in your comments that if you look at first quarter versus fourth quarter and isolate around these expense items around incentive and equity, our margins are basically flat, which means we’re absorbing a weaker mortgage market than the fourth quarter and still getting the benefits of operating leverage and price and everything else to kind of offset that ex the cost items that we had that we talked about.
Q €“ Kyle Peterson: Thank you.
Operator: Thank you. Our next question is coming from the line of Kevin McVeigh with Credit Suisse. Please proceed with your questions.
Q €“ Kevin McVeigh: Great. Thanks. Obviously, still a lot of volatility in the mortgage market. Is there any way to think about kind of purchase versus refinance? And as you get into 2024, I know 2023 is hard enough, but do you expect a little bit more recovery in refinance off of 2022, or just any way to think about kind of that base level of originations and how it trends over the course of the year?
