Operator: Thank you. Our next question is coming from the line of David Togut with Evercore. Please proceed with your questions.
Q €“ David Togut: Thank you. Good morning. Looking at Slide 13 with the $250 million total spending reduction for 2024, how much of that is a CapEx reduction versus OpEx? And then of those two numbers, particularly the OpEx reduction, how much will flow through to earnings versus being offset by additional expenses?
A €“ John Gamble: So in terms of the split of capital and expense, we didn’t give specifics, but it’s probably reasonable just to use the same split that you have in 2023. And I think I’m going to have to ask you to wait until 2024 before we talk about — we give — we talk about 2024 guidance. But what we did talk about, right, is there’s substantial expense savings that we expect to see not just from this but also from continuing to execute on our transformation. And we do expect our margins to grow, right? So we’re going to get margin enhancement through revenue growth because it’s obviously — we have obviously a high — very high variable margins as the mortgage market even just normalizes at these levels, our revenue growth starts to accelerate.
And then also, we’ll get cost savings. So how do you decide to decide what goes where? It’s up to you. But we do expect to see margin enhancement with a better revenue growth environment and a more stable mortgage market.
Q €“ David Togut: Got it. And just as a quick follow-up, if you could quantify the EWS price increase at the beginning of this year?
A €“ Mark Begor: Yeah. I think you know, we don’t — for competitive reasons and commercial reasons, we don’t talk about any price increases. I think we’ve been clear that we have more pricing leverage in EWS than our other businesses. We’ve also been clear that we generally do our price increases effective 1/1 and roll them out in the fall or fourth quarter to our customers. And so price for EWS, USIS, International, we got real clarity because it’s in the marketplace and already negotiated with our customers. So that gives us a lot of confidence in that element of our margin and revenue levers for the year.
Q €“ David Togut: Understood. Thank you.
Operator: Thank you. Our next question is coming from the line of Ashish Sabadra with RBC. Please proceed with your questions.
Q €“ John Mazzoni: Hi. This is John Mazzoni fill up for Ashish. Thanks for taking the question. Maybe just building more on this new Equifax theme and in terms of the kind of restructuring efforts, could these tech layoffs benefit the company in terms of hiring engineering talent? Your comments suggest that kind of the white collar layoffs are really concentrated in that type of kind of high-growth, high-tech area and maybe that had to go into investor session could actually help you in-source tech talent. Any color there would be appreciated. Thanks.
Mark Begor: Yes, I’m not sure I understand the question. Could you just clarify that? About — tech is an important function for Equifax for sure. As you know, we’re a data analytics technology company. It’s actually our largest number of employees and, by far, the largest number of contractors. Most of the cost savings have always been planned, and that’s what we’re executing in 2023 come from completing the cloud and then exiting the plan — the contractors that we’re working on that are principally contractors and exiting those out. Go ahead.
John Gamble: Were you asking if the tech layoffs by some other large tech companies may benefit us in hiring?
John Mazzoni: Correct, yes. So if you could in-source those jobs that might have been done by contractors.
Mark Begor: Yes. We’re always looking to improve our talent and upgrade it. I think we’ve got a very strong technology team today, but for sure. Maybe I’ll answer the question a little bit differently. If you asked the question a year ago about what’s it like to hire tech talent a year ago, 18 months ago, 24 months ago, it was very hard. Today, when we’re hiring tech talent, which we do all the time with — in the environment as you described, where a lot of tech companies are pulling back, that is a positive for Equifax. We’re able to get great talent and it’s just shorter time frames between opening a job and finding great people to come onboard in this current environment. So for sure.
John Mazzoni: Great. Very helpful. And then maybe just building a little bit on that question but in a different lens. Layoffs are broadening out across different industries that are non-tech in nature. Is any of that baked into the unemployment claims assumptions in 2023? And maybe due to the lag effect of severance, could there be a potential upside in the back half of the year as these unemployment claims could pick up?
Mark Begor: I think you’ve seen before at Equifax, if you follow it closely, that in a rising unemployment environment like in 2020, we get substantial upside from our unemployment claims business. Today, we don’t have that really baked in, in 2023 because we just haven’t seen that yet. But if it comes forward, that will certainly be a positive.
John Mazzoni: Great color. Thanks again.
Operator: Thank you. Our next questions come from the line of George Tong with Goldman Sachs. Please proceed with your questions.
George Tong: Hi. Thanks. Good morning. You provided assumptions for industry mortgage volumes for 2023. Can you discuss your expectations for card and auto origination volumes for this year as well?
Mark Begor: Yes. We haven’t disclosed those in the past, George. As you know, we’ve — in the past, we’ve been very transparent around mortgage just because of the volatility, if you will, in that space and the impact it’s had in Equifax.
John Gamble: I think what we have talked about is we were seeing — we saw a nice growth in card in the fourth quarter in terms of volumes, not just — our revenue was very good in banking, but also we saw a nice growth in banking and volumes in general. So that trend continues to be positive. Auto was kind of flattish, right? We think we performed well because of product, pricing and some penetration gains. So we think we did very well in online auto. We didn’t see substantial market growth in auto in terms of transactions in the fourth quarter. So — and as Mark said, as we go through next year, we’ve assumed a general weakening of the economy relative to where we are today.
