Equifax Inc
NYSE:EFX
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Equifax Inc
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Greetings, and welcome to the Equifax Third Quarter 2021 Earnings Conference Call. [Operator Instructions]. As a reminder, this conference is being recorded.
It is now my pleasure to introduce Dorian Hare, Senior Vice President and Head of Corporate Investor Relations. Thank you. You may begin.
Thanks, and good morning. Welcome to today's conference call. I'm Dorian Hare. 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 on our IR website, www.investor.equifax.com.
During the call today, we will be making reference to certain materials that can be also found in the Presentations section of the News & Events tab at our IR website. These materials are labeled Q3 2021 Earnings Conference Call.
Also, we will be making certain forward-looking statements, including fourth quarter and full year 2021 guidance as well as a framework for 2022, 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 material -- to differ materially from our expectations. Certain risk factors that may impact our business are set forth in our filings with the SEC, including our 2020 Form 10-K and subsequent filings.
Also, we'll be referring to 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. These non-GAAP measures are detailed in reconciliation tables, which are included with our earnings release and also posted on our website.
Now I'd like to turn it over to Mark.
Thanks, Dorian, and good morning. We had a very strong third quarter and first 9 months of 2021, a continuation of our strong outperformance last year with record revenue in the quarter of $1.223 billion, which was up over 14%, with core non-mortgage market and non-UC, ERC claims revenue growth of 20%.
We are executing extremely well against the critical priorities of our EFX2023 strategy, as we highlighted on Slide 4. Our focus on leveraging the new Equifax cloud for innovation, new products and growth is clearly driving our strong financial results.
Our revenue growth has accelerated from 3% in 2019, as we were recovering from the 2017 cyber event and investing heavily in our EFX Cloud transformation to 17% last year. We are on track to deliver 19% core growth this year at the midpoint of our revised 2021 guidance.
More importantly, our core growth, which excludes the impact of the mortgage market, unemployment claims and ERC-related revenues is expected to accelerate to 21% this year, a powerful figure that reflects the strength of our underlying business model and EFX2023 growth strategy. Not only is our core growth accelerating above historical levels during '20 and '21 in challenging COVID markets. And more recently, in a declining mortgage market, we are also expanding EFX beyond our traditional credit bureau routes to a more diverse data analytics and technology company with our investments in the Equifax cloud, new data assets and NPIs, along with reinvesting our outperformance in bolt-on M&A in areas such as talent, government and ID and fraud.
We are quickly pivoting from building the Equifax cloud to leveraging it for innovation of new products that will position the new Equifax for stronger and more diversified growth in the future. Our EFX2023 growth strategy remains our compass for the future and drives all of our top and bottom line growth initiatives as we move towards '22 and beyond.
Turning to Slide 5. Equifax had a very strong quarter. Revenue at $1.22 billion was up 14.5%, with organic constant currency growth up a strong 12%. The almost 15% top line growth was off a strong 19% growth last year in a much stronger mortgage market. This was our seventh consecutive quarter of double-digit revenue growth. More importantly, our core growth was up a strong 20%.
Our U.S. B2B businesses of Workforce Solutions and USIS, which together represent almost 75% of Equifax revenue, again drove our growth, delivering 17% revenue growth despite the 21% decline in the U.S. mortgage market in the quarter. Non-mortgage revenue was up over 30%, and organic non-mortgage revenue was up 24%, strengthening sequentially from the 16% and 20% we saw in the first 2 quarters of the year.
Third quarter Equifax adjusted EBITDA totaled $404 million, up slightly from third quarter last year with margins of 33%. As expected, margins were down versus 2020 due to the inclusion of cloud technology transformation costs of $45 million in our adjusted results in the quarter, which were excluded last year, and redundant cloud transformation systems cost of $15 million. These costs related to cloud tech transformation negatively impacted EBITDA margins by almost 500 basis points.
Adjusted EPS of $1.85 a share was down slightly from last year. Adjusting for the cloud transformation costs of $45 million or $0.27 a share, adjusted EPS would have been up a strong 11%.
We continue to make significant progress executing the EFX Cloud data and technology transformation. In the quarter, we completed 4,000 B2B customer migrations for a total of 15,400 migrations completed so far this year. In September alone, USIS completed over 900 customer migrations. Since the beginning of the transformation, we've completed almost 97,000 B2B migrations, 3.5 million consumer migrations and 1 million data contributor migrations. We remain on track and confident in our plan.
We continue to expect the North American transformation to be principally complete in early '22, with the remaining customer migrations broadly completing by the end of next year. International transformation will follow, being principally completed by the end of 2023, with some customer migrations continuing into 2024.
We're still in the early days of leveraging the cloud but remain confident that will differentiate us commercially, expand our NPI capabilities, accelerate our top line and expand our margins and the growth in cost savings in '22 and beyond. Our NPI performance also continues to accelerate. In the quarter, we released 30 new products. And we still expect our Vitality Index to accelerate from 5% last year to over 8% in 2021.
Given our very strong third quarter performance, we are increasing our full year revenue guidance by approximately 320 basis points or $131 million at the midpoint of a range between $4.9 billion to $4.921 billion, up 19% from last year, and increasing our full year adjusted EPS guidance by $0.22 per share to a midpoint of $7.57 per share, which adjusting for technology transformation cost implies a 23% growth in EPS. This includes our expectation that the U.S. mortgage market as measured by credit inquiries will decline just over 7% this year with the bulk of the return to normalization in the second half, which we expect to be down around 20%.
Roughly 2/3 of the 320 basis point increase in our revenue growth framework to 19% is from organic business performance, with the balance from the acquisition of Appriss, Health e(fx) and Teletrack, which we expect to add about $45 million to revenue in the fourth quarter.
In the third quarter, Equifax core revenue growth, the green sections of the bars on Slide 6, grew a very strong 20%, a third consecutive quarter of core growth at or above 20%. Non-mortgage growth in EWS and USIS and growth in International drove about 900 basis points to the core revenue growth, excluding acquisitions and FX, with mortgage outperformance primarily in Workforce Solutions driving about 800 basis points of organic core growth in the quarter.
As we move through '22 and '23, we expect to continue to see strong and balanced core growth, reflecting the benefits of the new EFX Cloud, accelerated NPIs, continued strong non-mortgage growth, both from organic growth and acquisitions, as well as continued strong outperformance from Workforce Solutions.
Turning to Slide 7. Workforce Solutions had another exceptional quarter, delivering revenue of $508 million, which was up 35%. This is the first quarter Workforce Solutions has delivered over $0.5 billion of revenue in a single quarter, a big milestone. This was against a very strong 57% growth last year. Adjusted EBITDA margins were up over -- were 54%. Non-mortgage revenue at Workforce Solutions was up over 48%, with organic non-mortgage revenue up 41%. The strength of Workforce Solutions and uniqueness of their TWN income and employment data set was clear again in the third quarter.
Workforce's Verification Services revenue of $403 million was up a strong 34%. Verification Services mortgage revenue grew 22% in the quarter despite the 21% decline in the mortgage market, with the EWS outperformance driven by increased records, penetration and new products. Importantly, Verification Services non-mortgage revenue was up 55% in the quarter, consistent with the very strong growth we saw last quarter.
Our government vertical, which provides solutions to federal and state governments in support of assistance programs, including food and rental support, grew over 20% in the quarter. Government remains one of our largest non-mortgage segments with attractive growth potential in the future and represents about 1/3 of non-mortgage verification revenue.
Our new SSA contract went live this quarter at relatively low start-up volumes, and we expect to see it ramp as we move through 2022. We expect new products, the addition of Appriss and expanded federal and state social services to fuel growth in our government vertical in the future.
Talent solutions, which provides income employment verifications as well as other information for the hiring and onboarding processes through our EWS data hub, had another outstanding quarter from customer expansion and NPIs growing over 100%. Talent solutions now represents almost 30% of non-mortgage verification revenue. And as you know, over 75 million people change jobs in the U.S. annually, with the vast majority having some level of screening as a part of the hiring process. The addition of Appriss Insights and our new partnership with the National Student Clearinghouse will fuel growth and new products in this important vertical.
The non-mortgage consumer lending business, principally in banking and auto, showed strong growth as well of about 90% in the quarter, both from deepening penetration with lenders and from some recovery in these markets, although auto has been impacted by inventory shortages.
Employer Services revenue of $105 million was up $30 million in the quarter. This is an important growth engine for Workforce Solutions that also delivers records. Combined, our unemployment claims and employee retention credit businesses had revenue of about $65 million, up about $14 million from last year. Substantial declines in the UC revenue in the quarter were more than offset by ERC, which grew substantially -- sequentially as we support the businesses in obtaining federal employee retention credit payments.
Employer Services non-UC and ERC businesses had revenue of about $40 million, up 60%, with organic growth of about 35%. Our I-9 business, driven by our new I-9 Anywhere product, continue to show very strong growth, up about 80%. Our I-9 business is now almost half of Employer Services non-UC and ERC revenue. Reflecting the growth in I-9 and the return to growth of Workforce Analytics, we expect Employer Services non-UC and ERC businesses to deliver total growth of about 40% and organic growth of about 25% in the year.
Reflecting the uniqueness of the TWN data, strong verifier revenue growth and operating leverage resulted in adjusted Workforce Solutions EBITDA margins of 54.3%. The decline versus last year is driven by investments in the tech transformation as well as redundant systems costs and as well as significant investments in data onboarding, sales and marketing to continue to drive Workforce Solutions growth. Rudy Ploder and the Workforce Solutions team delivered another outstanding quarter and are positioned to deliver a very strong '21, '22 and beyond.
Turning now to USIS. Their revenue of $380 million was up slightly from last year. Total USIS mortgage revenue of $148 million was down 17%, while mortgage credit inquiries were down 21%, slightly better than the down 23% we expected in July. USIS outperformance versus the overall market was driven by growth in marketing and debt monitoring products.
Importantly, non-mortgage revenue of $240 million grew almost 8 -- sorry, 16% with organic growth of over 9%. Year-to-date, non-mortgage revenue was up a strong 17%, and organic non-mortgage revenue growth is over 10%. Banking, insurance, commercial and direct-to-consumer were all up over 10% in the quarter. Fraud was up almost 10% organically and up over 75% in total, with the inclusion of our Kount acquisition. Auto was up mid-single digits despite supply pressures, and telco was down just over 5%.
Financial Marketing Services revenue, which is, broadly speaking, our off-line or batch business, was $55 million in the quarter and up about 20%. The strong performance was driven by marketing-related revenue, which was up over 20%; and ID and fraud revenue, which grew over 15%. In 2021, marketing-related revenue is expected to represent about 40% of FMS revenue; identity and fraud, above 20%; and risk decisioning, about 35%.
The USIS sales team delivered record wins up over 20% versus last year and 40% sequentially in the quarter. The new deal pipeline in USIS remains very strong.
During the quarter, USIS acquired Teletrack, a U.S. leader in alternative credit data. Teletrack is being consolidated with DataX, our specialty finance credit reporting agency that we acquired in 2018, to expand our capabilities in the fast-growing alternative data space serving unbanked and underbanked U.S. consumers.
The USIS adjusted EBITDA margins were 40% in the quarter, flat sequentially with second quarter. Similar to second quarter, the decline in margins in the quarter versus last year was due to both costs related to the cloud transformation, which include the cost of redundant systems and inclusion of our adjusted results of the technology transformation costs which are being excluded in 2020, and the expansion of our investments in sales and marketing as well as new products to leverage both the strengthening U.S. market and accelerate new product introductions to drive revenue growth in '22 and beyond.
Turning to International. Their revenue of $245 million was up 10% on a local currency basis and up 100 basis points sequentially. This was the fourth consecutive quarter of growth in our global markets following the COVID pandemic impacts. Asia Pacific, which is principally our Australia business, performed well in the quarter with revenue of $89 million, up about 7% in local currency. Australia delivered this growth despite the extended COVID lockdowns in many portions of that country. Australia consumer revenue continued to recover, up 3% versus last year and about flat sequentially. Our Commercial businesses combined online and off-line revenue was up 8% in the quarter. Fraud and identity was up 13%, following 22% growth in the first half.
European revenues of $68 million were up 9% in local currency in the quarter and flat sequentially. Our European credit reporting business was up about 5% with continued growth in both the U.K. and Spain. Our European debt management business revenue increased by about 21% in local currency, off the lows we saw last year during the COVID recession.
Canada delivered revenue of $44 million in the quarter, up over 8% in local currency despite a weakening Canadian mortgage market that was down 15%. Canada experienced strong growth in fintech, while supply issues continue to impact our auto business.
Latin American revenues of $45 million grew 16% in the quarter in local currency, which was the third consecutive quarter of growth coming out of COVID. We continue to see the benefit in Lat Am of the strong new product introductions introduced over the past 3 years.
International adjusted EBITDA margins at 26.7% were down slightly from 27.3% in the second quarter. The sequential decline was driven by incremental technology costs in Australia and Canada as they accelerate their cloud transformation programs. The decline in the quarter was principally due to costs related to the cloud transformation, both the cost of redundant systems and inclusion in our adjusted results of the technology transformation costs, which were being excluded last year. Margins were negatively impacted the quarter by -- also negatively impacted the quarter by our increased investments in sales and marketing and new products.
Global Consumer Solutions revenue of $82 million was down 6% on a reported basis and 7% on a local currency basis in the quarter, slightly above our expectations. We saw growth of about 2% in our global consumer direct business, which sells directly to consumers through equifax.com and represents a little over half of GCS revenue.
The decline in GCS revenue in the quarter was again driven by our U.S. lead gen partner business. We expect the GCS partner business and GCS business overall to return to growth in the fourth quarter. GCS adjusted EBITDA margins of 23.4% were up sequentially, reflecting lower operating costs. The decline versus last year was principally driven by revenue declines.
Turning now to Slide 8. Workforce Solutions continues to power Equifax as it's clearly our strongest, fastest-growing and most valuable business, with strong 35% growth in the quarter, up 57% growth a year ago. Core revenue growth was 42%, driven by the uniqueness of the TWN income and employment data, scale of the TWN database and consistent execution by Rudy and his team.
EWS' ability to consistently and substantially outgrow their underlying markets is driven by 3 factors. First, growing the work number database. At the end of the third quarter, TWN reached 125 million active records, an increase of 12% or 13 million records from a year ago and included 97 million unique records. At 97 million uniques, we now have over 60% of nonfarm payroll, which makes our TWN data set more valuable to our customers with higher hit rates. We are now receiving records every pay period from 1.9 million companies, up from 1 million when we started the year and 27,000 contributors a short 2 years ago.
The exclusive agreement with a major payroll processor that we announced on our February call went live in the third quarter and contributed to this growth. Our strong momentum continues as we signed another large payroll processor last week on an exclusive basis that will come online in the coming months. We also expect to add further payroll processors in the coming months.
As a reminder, almost 60% of our records are contributed directly by employers to which EWS provides comprehensive Employer Services like UC claims, W-2 management, I-9, WOTC, ERC, HSA and other HR and compliance solutions.
Our acquisitions of HIREtech, i2verify and Health e(fx) this year strengthened our ability to deliver these unique HR services, particularly through relationships with payroll processors and HR software companies. These partnerships have been built up over the past decade by the Workforce Solutions team. The remaining 40% of our records are contributed through partnerships with payroll providers and HR software companies, most of which are exclusive.
We still have substantial room to grow our income and employment database and expect to continue to add new data contributors as well as reach agreements with several additional payroll processors in the fourth quarter to add their records on an exclusive basis to TWN in 2022.
Beyond the over 50 million nonfarm payroll records not yet in the TWN database, we're focused on data records from the 40 million to 50 million gig workers and around 30 million pension recipients in the U.S. marketplace to further broaden the TWN database. We have plenty of room to grow TWN.
Second, increasing our average revenue transactions -- average revenue per transaction through new products and pricing, our existing products to value, recognizing the depth of information TWN allows us to deliver to customers. Workforce Solutions' new product pipeline is rapidly expanding as our teams leverage the power of our new Equifax Cloud capabilities.
And third, by increasing our penetration in the markets we serve and expanding into new markets. For example, we continue to increase our penetration in the mortgage market. At the end of 2020, Workforce Solutions received an inquiry in almost 60% of completed mortgages, up from 55% in 2019. This 500 basis point increase is a big step forward, but we still have plenty of runway to expand the customers using TWN mortgage. We're also seeing substantial growth in TWN in other credit markets, including card and auto as these verticals take advantage of the unique lift from TWN income and employment data in the 60% hit rates with our database.
Growing system-to-system integrations is another key lever in driving both increased penetration and increasing the number of poll per transaction. During the quarter, about 75% of TWN mortgage transactions were fulfilled system-to-system, up over 2x from 32% in 2019. And again, we still have plenty of growth potential here. Workforce Solutions is performing exceptionally well with attractive above-market and above Equifax growth rates and margins that we expect to continue in the future.
Slide 9 highlights the core growth performance of our U.S. B2B mortgage businesses, Workforce Solutions and USIS. Our combined U.S. B2B businesses delivered 3% revenue growth in mortgage in the third quarter, outperforming the mortgage market by 24 basis points, with the market down 21%. This strong performance -- outperformance was again driven by Workforce Solutions with core mortgage growth of 43%, enabled by the multiple drivers that I just discussed.
Slide 10 provides an update on new product innovation, leveraging the Equifax Cloud and our differentiated data, a key driver of our current and future growth. In the quarter, we delivered 30 new products with 150 new products in the market so far this year, which is up 18% from the 96 we delivered in the same time frame last year. We continue to expect our 2021 Vitality Index defined as a percent of revenue delivered from NPIs launched in the past 3 years to be over 8%.
In the third quarter, we launched significant new products we expect to continue to drive growth in '22 and beyond. The SSA payroll exchange that went live as an EWS product that supports verifications of SSI and SSDI social services delivering critical income and employment status based on program requirements.
OneView with DataX is a new integrated consumer credit report that redefines how we deliver display and provide insights to our customers. It also sets the stage for integrating nontraditional credit data in a single view solution for our customers. Alternative data from DataX, Teletrack, NC+, rental payments and other sources are a critical priority for Equifax, and we expect to continue to drive NPIs in this space in the future.
Digital Identity Trust 2.0 product provides businesses with a comprehensive, passive identity verification service that delivers a trust/do not trust recommendation across both physical and digital identity vectors. This product will leverage Kount data by year-end. MarketMix Premier solution enables the ability for FIs to access market share and size of liquidity across geographics. This provides quick identification of targeted growth markets to deploy spend across branch sales and marketing efforts.
And lastly, the new Equifax Affordability product in Australia uses bank transaction data and sophisticated categorization to provide an affordability view to customers while removing friction for the consumer.
We're clearly focused on leveraging our new Equifax Cloud capabilities to drive our NPI rollouts and new product revenue in '21 and beyond. Growing the NPI is central to our EFX2023 growth strategy.
As detailed on Slide 11, in 2021, we reinvest our strong outperformance in strategic and accretive bolt-on acquisitions that strengthen our position in existing growth markets and allow us to enter new markets with new capabilities. Our 2021 acquisitions add $300 million plus synergies to our run rate revenue. We are focused on executing acquisitions that are accretive to our long-term revenue growth and margins and deliver attractive shareholder returns.
Our priorities for M&A are clear and aligned around, number one, expanding our differentiated data, which is at the core Equifax. We have scale and unique data sets that we want to expand and leverage with new data elements to drive enhanced decisioning for our customers. All of our acquisitions deliver new and differentiated data, and more data drive better decisions. Second, expanding and widening our largest and fastest-growing business, Workforce Solutions, is a priority for our M&A. The Appriss Insights, HIREtech, Health e(fx) and i2verify acquisitions strengthen Workforce and position EWS for future outperformance. And last, broadening our ID and fraud capabilities in the fast-growing digital and e-commerce space is another M&A priority. Kount strongly advanced our capabilities in this fast-growing space.
We closed the Appriss acquisition on October 1 and are focused on integration, new solutions and growth. Appriss Insights and our new partnership with the National Student Clearinghouse are a big step forward in our strategy to build out an EWS Data Hub centered off our almost 500 million historical TWN data records to address the fast-growing talent and government markets.
As detailed on Slide 12, combining our scale TWN data with Appriss Insights criminal and health care credentialing and sections data, along with other partner data assets, including the exclusive partnership for college and university data we entered into in the third quarter with the National Student Clearinghouse, allows Workforce Solutions to deliver the most complete, real-time, 360-degree view of the prospective employee or applicant for government benefits available in the market.
The talent solutions and government verticals offer large and growing markets for our Workforce Solutions business through the EWS Data Hub. We estimate an addressable market of $5 billion in the U.S. hiring space and onboarding process, with around 75 million new employees onboarded annually in the U.S.
Workforce Solutions government vertical is focused on delivering data and solutions to support federal and state benefit programs as well as law enforcement agencies. This is a substantial and growing sector that we estimate to have an addressable market of about $2 billion.
Appriss Insights strongly accelerates our ability to penetrate these large and fast-growing TAMs. Insights is anticipated to generate $150 million of run rate revenue during 2021 and to grow on a stand-alone basis at over 15% annually. We also anticipate building towards approximately $75 million in revenue synergies by 2025, leveraging the EFX Cloud to integrate Appriss Insights' rich people-based risk intelligence data in the EWS Data Hub to form a new multi-data solutions and through cross-selling efforts.
Acquiring Appriss Insights and partnering with the National Student Clearinghouse provide strong pillars for Workforce Solutions growth and fast-growing markets going forward.
Slide 13 highlights our focus on adding alternative data to our database focused on the 60 million un or underbanked population in the United States. According to a Federal Reserve study, 6% of U.S. adults do not have a checking, savings or money market account, although 2/5 use some form of alternative financial service. Moreover, 16% of adults have a bank account but also use an alternative financial service product generally at much higher costs. Providing services that help bring these underserved populations into the financial mainstream is core to our purpose of helping people live their financial best and is an important priority for our customers.
Our acquisition of Teletrack in September, which we are combining with our DataX business, creates a leading U.S. specialty consumer reporting agency with data on more than 80 million thin-file, unbanked and underbanked and credit rebuilding consumers.
Our National Consumer Telecom & Utilities Exchange partnership is another unique data set focused on this space that has more than 420 million records and 250 million consumers, helping our customers to expand underwriting to no hit or thin-file customers. We are focused on expanding our unique alternative data from sources, including specialty finance companies, alternative lenders, telco companies, cable and satellite TV providers, municipalities and utilities to drive growth in the fast-growing alternative data markets. And we'll continue to look for opportunities to strengthen our alternative databases through partnerships and M&A.
And now I'd like to turn it over to John to discuss our outlook for the rest of the year, our increase in guidance for 2021 as well as our -- share our early read on 2022 assumptions and our financial framework for 2022.
Thanks, Mark. As Mark discussed, our 3Q results were very strong and much stronger than we discussed with you in July, with revenue about $50 million higher than the midpoint of the expectation we shared. For perspective, the strength was driven by our U.S. B2B businesses, principally Workforce Solutions and also USIS.
Workforce Solutions Verification Services was stronger than discussed in July, principally in non-mortgage and talent solutions, card and auto as well as, to a lesser extent, in mortgage. Workforce Solutions employee retention credit and unemployment claims revenue was stronger than we discussed in July. We expect the strength in ERC to continue in the fourth quarter.
USIS was also somewhat stronger than we discussed in July. The strength in mortgage relative to our discussion in July was partially a reflection of the mortgage market being down 21% versus the down 23% we discussed in July. Workforce Solutions' outperformance relative to the mortgage market was also stronger than we expected. This strong revenue drove upside in adjusted EPS relative to the expectations that we shared in July.
Before discussing our increased guidance for 2021 and providing a framework for you to consider for 2022, let's briefly discuss our assumptions for the U.S. mortgage market. As shown on Slide 14, we are expecting the 21% year-to-year decline in U.S. mortgage credit inquiries that we saw in the third quarter to continue in the fourth quarter, with the fourth quarter down about 20%. This results in 2021 U.S. mortgage market credit inquiries being down just over 7% from 2020, slightly better than the down somewhat under 8% we discussed with you in July.
For 2022, based on trends we are seeing in new purchase and refinance that I will discuss shortly, our 2022 framework assumes the U.S. mortgage market as measured by total credit market inquiries will decline about 15% from 2021. The 15% decline versus 2021 is most substantial in the first half of 2022, given the significant slowing we have seen in the U.S. mortgage market already in the second half of '21. Our assumed level of 2022 U.S. mortgage market credit inquiries remains over 10% above the average levels we saw over the 2015 to '19 period.
The left side of Slide 15 provides perspective on the number of homes that would benefit by 75 basis points or more from refinancing their mortgage at current rates. Despite the substantial refinancing activity that's occurred over the past year and current increases in U.S. treasuries, the number of U.S. mortgages that could benefit from a refinancing remains at a relatively strong level of about 12 million. Home prices have appreciated significantly over the past 18 months, which has provided many homeowners with cash-out refinancing opportunities, which in past cycles has led to increased refinancing activity from borrowers. For perspective, based upon our most recent data in April, mortgage refinancings remain at just under 1 million a month.
As shown on the right side of Slide 15, the pace of existing home purchases continues at historically very high levels. This strong new purchase market is expected to continue throughout '21 and '22. Our 2022 assumption for our U.S. mortgage credit inquiries assumes that we see purchase mortgage financings at levels above the levels we saw in 2020, with refinancings declining significantly from the levels we saw in both 2020 and 2021.
Slide 16 provides our guidance for 4Q '21. We expect revenue in the range of $1.23 billion to $1.25 billion, reflecting revenue growth of about 10% to 11.8%, including a 0.1% benefit from FX. Acquisitions are expected to positively impact revenue by 5.4%. We're expecting adjusted EPS in 4Q '21 to be $1.72 to $1.82 per share compared to 4Q '20 adjusted EPS of $2 per share. In 4Q '21, technology transformation costs are expected to be around $45 million or $0.27 per share. Excluding these costs, which were excluded from 4Q '20 adjusted EPS, 4Q '21 adjusted EPS would be $1.99 to $2.09 per share.
Slide 17 provides the specifics on our 2021 full year guidance. We are increasing guidance substantially, reflecting our very strong 3Q '21 performance. The acquisitions of Appriss, Health e(fx) and Teletrack are expected to add about $45 million of revenue in the quarter. 2021 revenue of between $4.901 billion and $4.921 billion reflects growth of about 18.7% to 19.2% versus 2020, including a 1.4% benefit from FX.
Acquisitions are expected to positively impact revenue by about 3.1%. EWS is expected to deliver over 38% revenue growth with continued very strong growth in Verification Services. USIS revenue is expected to be up mid- to high-single digits, driven by growth in non-mortgage. Combined, EWS and USIS mortgage revenue is expected to be up over 18% in 2021, about 25 percentage points stronger than the overall market decline of just over 7%.
International revenue is expected to deliver constant currency growth of about 10%. And GCS revenue is expected to be down mid-single digits in 2021. GCS revenue is expected to be up over 5% in the fourth quarter.
As a reminder, in 2021, Equifax is including all cloud technology transformation costs and adjusted operating income, adjusted EBITDA and adjusted EPS. These onetime costs were excluded from adjusted operating income, adjusted EBITDA and adjusted EPS in 2017 through 2020. In 2021, Equifax expects to incur onetime cloud technology transformation costs of approximately $165 million, a reduction of over 50% from the $358 million incurred in 2020. The inclusion in 2021 of these onetime costs would reduce adjusted EPS by about $1.01 per share.
2021 adjusted EPS of $7.52 to $7.62 per share, which includes these tech transformation costs, is up 7.8% to 9.3% from 2020. Excluding the impact of tech transformation cost of $1.01 per share, adjusted EPS in 2021 would show growth of about 22% to 24% versus 2020.
2021 is also negatively impacted by redundant system costs of about $80 million relative to 2020. These redundant system costs are expected to negatively impact adjusted EPS by approximately $0.50 per share and negatively impact adjusted EPS growth by about 7 percentage points in '21. We remain confident in our cloud transformation plan and the savings in 2022 and beyond that we have discussed previously with you.
Now let's turn to a discussion of an early framework for 2022. Slide 18 provides the macro assumptions behind our 2022 framework. Given the continued significant uncertainties in the overall U.S. and global economy as well as in the U.S. mortgage market, we wanted to provide you with the assumptions we've been using at this stage in developing our framework for 2022. As I discussed previously, we expect the U.S. mortgage market, our proxy for which is U.S. mortgage credit inquiries, to decline about 15% in 2022 relative to 2021. Equifax's U.S. B2B mortgage revenue is expected to continue to significantly outperform the overall mortgage market and show growth in 2022 relative to 2021.
Our overall framework is based on a continued U.S. economic recovery that is 2022 GDP growth of about 4% for the full year. We expect our USIS and Workforce Solutions non-mortgage businesses to outperform their underlying markets. We expect Workforce Solutions' UC and ERC businesses to decline by almost 30% in 2022. We also expect that International economies will continue to recover in 2022. Our International businesses are also expected to outperform their underlying markets.
Slide 19 provides a view of Equifax's total and core revenue growth from 2017 through 2022 -- through the 2022 framework. In 4Q 2021, Equifax core revenue growth is expected to be a strong 17%, with core organic revenue growth of about 12%. Almost 2/3 of that core organic growth is driven by non-mortgage growth across all 4 BUs. In 2022, based on the assumptions I just shared, Equifax's total revenue is expected to be up about 8%. We anticipate delivering strong core revenue growth of 14%, reflecting organic growth of 11% -- organic core growth of 11% and a 3% benefit from acquisitions completed in 2021, which will more than offset the significant headwinds from the assumed declines in the U.S. mortgage market and the UC and ERC businesses.
Slide 20 provides a revenue walk detailing the drivers of the 8% revenue growth in 2022 from the midpoint of our 2021 revenue guidance to the midpoint of our 2022 revenue framework, 2022 revenue of $5.3 billion. The 15% decline in the U.S. mortgage market and the expected declines in the Workforce Solutions unemployment claims and ERC businesses are expected to negatively impact revenue in 2022 by 5.75 percentage points. Core organic revenue growth is anticipated to be over 11%. Non-mortgage core organic growth is expected to drive about 2/3 of the growth. The largest contributor is Workforce Solutions with strong organic growth in talent solutions, government and employee boarding solutions, including I-9. USIS non-mortgage, International and GCS are also expected to drive core growth.
Mortgage revenue outperformance relative to the overall mortgage market is expected to drive the remaining about 1/3 of the organic core growth. This is driven by strong outperformance in Workforce Solutions. The acquisitions completed in 2021 are expected to contribute about 3 percentage points of growth to 2022.
Slide 21 provides an adjusted EPS walk, detailing the drivers of the expected 14% growth from the midpoint of the 2021 guidance of $7.57 per share to the midpoint of our 2022 framework of $8.65 per share. Revenue growth of 8% at our 2021 EBITDA margins of about 33.8% would deliver 11% growth in adjusted EPS. In 2022, we expect to deliver EBITDA margin expansion of about 200 basis points. This margin expansion is expected to drive 9% growth in adjusted EPS. This margin expansion is expected to be delivered by the actions we have discussed with you throughout 2021.
Our transformation investments will be reduced by about $100 million in 2022, with about half of this reduction or about $50 million being reinvested in new product and other development. We will begin to see net cloud cost savings in 2022 defined as the savings from improving production costs, driven by the decommissioning of our legacy on-prem systems and other improvements in our operations exceeding the cost of running our new cloud-native systems.
Margins will also be enhanced by leverage on corporate and G&A. Partly offsetting these benefits to EBITDA are cost increases, particularly in salaries and contracted services as the tight labor market drives cost higher as well as lower EBITDA margins in 2022 from the 2021 acquisitions as we will just be ramping synergies during 2022.
Depreciation and amortization is expected to increase by about $45 million in 2022, which will negatively impact adjusted EPS by about 4%. D&A is increasing in 2022 as we accelerate putting cloud-native systems into production.
The combined increase in interest expense and tax expense in 2022 is expected to negatively impact adjusted EPS by about 2 percentage points. The increase in interest expense reflects the increased debt from our 2021 acquisitions. Our estimated tax rate used in this framework of 24.5% does not assume any changes in the U.S. federal tax rate. Should that occur, we will let you know the estimated impact on our 2022 results.
As there remains significant uncertainty in underlying market drivers, including the pace of normalization of the U.S. mortgage market and the pace of economic growth worldwide, what we provided today for 2022 is a framework for you to consider. We'll provide formal guidance for 2022 in connection with our 4Q '21 earnings release early next year.
Now I would like to turn it back over to Mark.
Thanks, John. We hope this early view of our framework for 2022 is helpful and reinforces the power of the new Equifax to deliver 14% growth and 8% total growth at the midpoint of our range of thinking, assuming the mortgage market and UC and ERC declines impact our revenue growth by almost 6% in 2022.
Stepping back and reviewing the macro trends outlined on Slide 22. These macros have been driving information services for the last decade. Over the last 24 months, we believe most of the macro factors have substantially accelerated. And through our 2021 acquisitions of Appriss, Kount and Teletrack and our EFX Cloud investments advantaged Equifax to benefit from these macro trends.
We believe we also have unique levers at Equifax to deliver strong future growth, including Workforce Solutions above market and EFX growth and margins and our expanded focus on new data assets like Appriss Insights, the USIS recovery and non-mortgage growth and Kount ID and fraud growth; the new Equifax Cloud, which is driving our competitiveness NPIs top line and cost savings; and NPIs leveraging Equifax Cloud and our expanded resources and focus on new products; and then, of course, M&A to broaden strength in Equifax. These attractive market macros along with the broad Equifax growth levers and our strong core outperformance in the past few years give us the confidence in our ability to deliver above-market growth in the future.
Wrapping up on Slide 23. Equifax delivered another strong and broad-based quarter. We had strong momentum as we move into the fourth quarter to 2022. We now delivered 7 consecutive quarters of strong, above-market, double-digit growth, reflecting the power of the new Equifax business model and our execution against our EFX2023 strategic priorities. Equifax is on offense.
We remain confident in our outlook for 2021 and raised our full year midpoint revenue growth rate by approximately 300 basis points to 19% growth for the year. And we also raised our midpoint EPS by $0.22 to $7.57 per share.
Workforce Solutions had another outstanding quarter, powering our results, delivering 35% revenue growth and 54% EBITDA margins. EWS is our largest, fastest-growing and most valuable business, and Rudy and his team remain focused on delivering outsized growth.
USIS also delivered a strong quarter with 16% non-mortgage growth and 9% organic non-mortgage growth, offsetting the impact of a sharp over 20% decline in the mortgage market. Sid Singh and his USIS team remain competitive and are winning in the marketplace.
International grew for the fourth consecutive quarter with 10% growth in local currency as economies reopen and business activity resumes outside the United States. We have high expectations for International as we move into 2022.
We spent the past 3 years building the Equifax Cloud and are now in the early days of leveraging the new and uniquely Equifax Cloud capabilities. As we move into '22 and beyond, we will increasingly realize the top line cost and cash benefits from these new only Equifax Cloud capabilities.
As I mentioned earlier, our 2021 M&A has added $300 million of run rate revenue to Equifax. Reinvesting our strong cash flow in accretive and strategic bolt-on M&A is central to our EFX2023 growth strategy. We're now focused on integrating these acquisitions and executing our synergy and growth plans in order to leverage our new data products and capabilities.
Our early look at a 2022 financial framework calls for 8% revenue growth and adjusted EPS growth of 14%, assuming a 15% decline in the mortgage market. More importantly, the framework includes strong 14% EFX growth -- core EFX growth. 2022 will be a pivotal year for Equifax as we shift towards leveraging the Equifax Cloud for innovation, new products and growth.
And lastly, turning to Slide 24. Many of you have been closely following Equifax for many years and know we've been speaking to you about -- for some time about our plan to have our first Investor Day, which will be our first Investor Day since 2012 and the cyber event. It's been a long time.
Let me now turn it over to Dorian, who will give you the details on our November 10 meeting focused on the new Equifax, and then we'll take some questions.
Thanks, Mark. I'm energized to announce that our Investor Day will take place on November 10 at 8:30 a.m. Eastern Time and will be held virtually. We've opened up online registration as of today, and the link to do so on Slide 24 is live. We are very excited to have the opportunity to update you on the progress we have made in making and executing our EFX2023 growth strategy; share with you our long-term financial framework and also our capital allocation plan; speak with you about how we are and will continue to leverage our EFX Cloud capabilities, including by continuing to accelerate our new product innovations; and provide you with overviews of the state of affairs of our business units relayed by their respective leaders. Investor Day will be an important day for our company and stakeholders, and we look forward to speaking with you then.
With that, operator, let me open it up for questions.
[Operator Instructions]. Our first questions come from the line of David Togut with Evercore.
I appreciate the helpful detail in the initial 2022 framework. It appears that you're guiding above consensus for fourth quarter 2021 revenue and for 2022 revenue but somewhat below consensus on earnings per share for both the fourth quarter and for next year. John, you walked through some of the sources of pressure on margin for 2022. But I'm wondering if you could talk more broadly about headwinds and tailwinds so we can understand the variance. Is it really the $50 million, for example, of tech transformation savings that you're reinvesting in the business next year?
Yes. Happy to. So again, as a reminder, right, we're talking about increasing EBITDA margins by -- on the order of 200 basis points, so a substantial increase in 2022 versus 2021, yes. And I think the drivers are what we've been talking about all year, as I mentioned in my prepared remarks. We are reducing substantially tech transformation costs, but we are taking a significant amount of that in the order of $50 million and reinvesting it in NPI and other initiatives to drive growth and to deliver the higher revenue growth you're talking about, that you referenced in your question.
Also, we do expect now to start seeing benefits, so net reductions in costs from decoms exceeding our cloud costs, and that will ramp as we go through 2022. And then -- but we are seeing some increased costs related to -- related -- in our COGS, as you would normally expect, related to increased costs for people and increased cost for some systems costs that are reducing 2021 EBITDA margins to a degree. That's not actually that unusual, generally speaking. Generally speaking, we see increased cost every year that we manage through high growth. Next year, part of what's happening, obviously, right, is we're seeing substantial negative impacts on our revenue from the weaker mortgage market as well as the reductions in EC -- sorry, in the UC and ERC markets. So that negative drive in revenue is also somewhat negatively impacting our margin expansion.
But overall, 200 basis points of margin expansion next year, we think, is really an outstanding performance, especially given the fact that we're seeing such large declines in the mortgage market and then also the declines in the UC and ERC revenue that we talked about on the order of 30%.
Just as a quick follow-up. In your initial 2022 financial framework, you're guiding to 11.3% core organic revenue growth. Within that number, what is your expectation for EWS organic growth? And how do you think about headwinds and tailwinds for EWS next year?
Yes. So I think in terms of the details around how the BUs are going to perform next year, we're going to have to ask you to wait until November 10. But Obviously, we expect EWS to continue to perform extremely well.
You should obviously -- we've been quite clear that we expect Workforce Solutions to grow above the rest of Equifax. So I think you should think about it that way in 2022. I went through -- we've been through many, many times, the multiple levers that Workforce, for example, has as they finish up the year and go into 2022, and records starts at the top of that list. Adding substantial records in the third quarter, those become a benefit through the next year, their new product introductions, continued penetration. There's a lot of levers in that business. USIS, their new deal pipeline is a positive lever going forward. But Workforce is clearly going to be above that -- the rest of Equifax for really as long as we can see in the future from a growth rate standpoint.
Our next questions come from the line of Kevin McVeigh with Crédit Suisse.
Great. Mark, you talked about the vitality index up over 8%. Any sense of where you think that can go to? I mean, obviously, there's been a really significant step-up in the new product innovation. And what that can mean to the organic growth longer term?
It's clearly a priority, Kevin. As you know, since I joined almost 4 years ago and really in the last, call it, 24 months, we've really stepped up our focus on new products. As you know, we've expanded the team. John and I both talked about it in our comments this morning about continuing to invest there. And of course, the cloud transformation is central to that. That's really -- we're going to get great benefits from the cloud around cost, but we really did it to change our competitiveness. And the big piece of that is the ability to bring new products to market that we couldn't do before through multi-data solutions. And that's really where our focus is, and we're in the early days of really leveraging that. So we see real opportunities going forward.
We'll certainly talk in depth in our Investor Day in a couple of weeks around our longer-term outlook for new products. But it's an area that we've invested heavily, foundationally in the cloud. You add to that our existing differentiated data assets, which we've expanded substantially this year with the addition of new data solutions from Appriss, from Kount, from Teletrack and then our focus on new products. We believe it's an important lever for delivering strong future growth going forward, and we'll give you much more detail during our Investor Day.
And then just real quick on the customer migrations, it seems like you made a lot of progress on that. Where are you in that process? And then are you seeing any incremental step-up in revenue as these customers have cut over? Like is there any way to think about what the revenue impact has been? Just -- I know it's a hard question, but just like what percentage step-up you're seeing as these customers have converted?
Yes. First on the progress, this is a big undertaking. I think you know that. We talk to you about it every quarter. We try to be quite transparent about the efforts. 2018, '19 and parts of '20 were building the technology. In '20 and '21, we've been heavily focused on implementing that with our customers, the migration. You've seen the great progress. We still got more to do. And we were clear that we expect North America, which is Canada, U.S. and EWS and USIS and, of course, TCS to be substantially complete as we get in 2022 and really complete the migrations next year. So we can see the finish line, but there's still plenty of work to do in the coming months to complete that.
With regards to our impact commercially, there's a number of layers on that. And this is another area -- our intent is to go in substantial detail about how we think about that, what we're seeing during our Investor Day. We'll have our Chief Technology leader and product leader, Bryson Koehler, as well as the business unit leaders will talk about that. But you're starting to see some of the early days of that, in our view. The strong core growth, the ability to roll out new products are driving our competitiveness and driving our ability to drive our core growth.
And there's no question, when we sit down with customers, we believe we're advantaged having a new tech stack that's in the cloud that can deliver 9-9s of stability, meaning very high, always-on stability, deliver data more quickly to our customers. We can deliver new products to them more quickly. It just changes who we are as a company, and it allows us to be a different company. So it's quite central to how we think about the new Equifax going forward, and it will be central to our long-term growth framework that we'll share with you in a couple of weeks.
Our next questions come from the line of Kyle Peterson with Needham & Company.
Just wanted to touch on the U.S. auto market. I know there's been a lot of concerns over chip shortages and supply constraints potentially impacting auto credit. Thinking out [indiscernible] that it's been a little bit of a headwind to Canada, but what are you guys seeing in the U.S., particularly in the USIS segment for auto credit?
Yes, similar, we could have and should have commented on that in the U.S. also. There's no question that the supply shortages are impacting the ability for consumers to identify cars or get cars, new and used and then, of course, the financing that comes with that and the business we get from that. What's been offsetting that to some regard, not fully, but is our continued penetration of new products and new solutions, like Workforce Solutions continuing to grow the use of TWN data in the auto space has been a positive. Would you add anything, John?
No, I'd say that covers it. And we're -- the good news is we're continuing to grow in USIS and auto on an organic basis even in the headwinds of the difficult market. But yes, it certainly isn't at the pace that we expected when we started the year.
Got it. That's helpful. And then I guess just a follow-up on EWS. Obviously, good to see really strong record growth in TWN and continued share gains. Moving forward, how should we think about records growth? I know you guys mentioned a few additional payroll processing partnerships in the pipeline. But how should we think about records and kind of a greenfield between some of these alternative data sources like gig workers and pension versus traditional W-2 records that you guys are going to see as prospects?
Yes. It's obviously an important focus of Rudy and the Workforce Solutions team. You've seen continued success there. And remember, we've got 2, really, levers for growth. First, our Employer Services business, which is large and comprehensive as we've delivered new solutions to HR managers around I-9 or HSA or W-2 or WOTC, all the other services. We access payroll records. So that's a very powerful engine for us to go to individual companies to obtain records. And of course, we feel like we have some real momentum in adding the payroll processors that are not with us and going after the traditional nonfarm payroll.
There's still 60 million-plus consumers or individuals that are available for us in the traditional nonfarm, and we're chasing that. So that's one. And of course, with records being up 12% in the quarter, that is a very strong lever for growth that translates pretty directly into revenue because of higher hit rates.
As you point out, there's also a larger universe, the nonfarm payroll, the 160 million, 170 million that are in nonfarm payroll, the gig workers as well as pension recipients. Those are 2 big areas. There's 40 million to 50 million gig workers. So we're working different strategies to obtain those records and then the same with pension recipients. So there's a long runway from our roughly 60% of nonfarm payroll. If you include self-employed and gig in there, it's much less than the 60% to continue to grow our records, which is a very unique business growth lever for our business to continue to add new data assets because, as you know, in our system-to-system integrations in Workforce Solutions, we're getting the inquiries.
We can only fulfill those that we have records on. And as we grow our records, they become monetized tomorrow afternoon. So that's very powerful. And the scale of Workforce gives us the ability to have large, dedicated teams both on the partnership side and on the direct side through Employer Services to continue to grow our records. And we'll likely talk a little bit at Investor Day about our International expansion, which, as you know, we're already in Canada, Australia and India. And those businesses are also growing their records, leveraging the core tech stack that we have from Workforce Solutions in the U.S. but also relationships that we have, either with multinationals or with payroll processors and, of course, growing those records locally. So big, big focus and big opportunity going forward.
When you think about records, I think about us being in kind of middle innings still as far as the opportunity for Workforce Solutions. And these take time. The payroll processor we signed last week, we were probably talking to them for 3 years. It takes time to get organized around that. But there's real momentum particularly in that area of acquisition because so many others have signed up with Equifax and are having a positive experience. We're seeing real momentum there in adding other processors.
Our next questions come from the line of George Mihalos with Cowen and Company.
I appreciate you're willing to go out to 2022 in this environment. Very helpful as always. I guess, first question for me, John, if we can kind of circle back to the first question, just as it relates around margins for '22. I think you had said previously savings from redundancies and obviously, the tech transformation, we're going to be about, call it, $150 million. You're reinvesting $50 million of that now, it sounds like, so net $100 million. That roughly, by my math, gets us to kind of the 36% margin at sort of the high end, the 200 basis point increase. Is the reason why margins aren't expected to be higher than that, that the natural margin expansion within the business is being offset by some dilution from M&A and just sort of higher inflation-related expenses as it relates to wages? Is that roughly the way to think about it?
Yes. So George, as I walked through in my comments, right, so you're absolutely right. So we indicated we were going to -- we would improve our cost structure by -- on the order of $100 million by taking down transformation costs. And then we also said we'd improve our cost structure as we drove net savings, right, as decom and other cost reduction efforts drove us -- or exceeded cloud. And so we absolutely have indicated we're going to deliver on those savings, and we're still committed to delivering substantial savings in both of those areas in 2022 and beyond.
But you are correct. Also, as I mentioned in my comments, we're reinvesting a substantial portion of that $50 million in new development and new development-related activities. Also, if you think about what's going on, given the fact that we're seeing a 600 basis point headwind, like the natural growth that you'd see in our underlying business that has the very high variable margins, that's somewhat lower than you would see in a period in which mortgage is not as negative as you're talking about. And you're correct, right, we're getting a nice bump from growth in acquisitions next year. But the EBITDA margins on those acquisitions in their first year is substantially lower than the contribution margin we get by growing our internal data assets.
So when you kind of line all that stuff up and you include the fact that we are seeing cost increases as we do every year, right, that's certainly something we see every year, but there is a tighter labor market, so there's an expectation that some of those cost increases will be greater. When you line all those items up, you end up at about a 200 basis point increase is where we're comfortable talking about right now. Also, I just want to remind everybody, 200 basis points, right, and again, a 6% reduction in mortgage and UC, ERC is really a substantial improvement. We feel very good about delivering that. And so hopefully, the investment community can look at it in that vein.
And George, I would add to that, we'll obviously talk about a long-term framework for revenue and margins in a couple of weeks. And we've been quite clear that we see a lot of ability to grow the top line -- or we're confident in our ability to grow our top line long term at above-market level as well as expand our margins. And we've also been very clear that while we have the ability to expand margins over the long-term basis, we're also going to invest in the business. We have the ability to invest in new products. And obviously, the tech transformation, which we're completing, it has really high leverage in driving the top line. So we'll continue to have that balance going forward of expanding margins while investing in the future of Equifax.
Okay. Great. I appreciate that because I think that's what's weighing on the stock this morning. So really, really appreciate you are breaking it down like that. And then just quickly, Mark, I think if I caught it correctly, you talked about as it relates to record growth going after some more of these -- what I think of as more unbanked individuals, gig workers and the like. Can you talk about the challenges or how you go about sourcing data from that constituency as opposed to traditional W-2 worker and the like? Is it going to require sort of a different effort in terms of going after like fintechs to partner with? Or how are you thinking about that?
Yes. First, our primary focus is to continue to grow W-2 income kind of payroll records, and you see that we've had strong success in that over the last couple of years. And certainly again in the quarter, we're continuing to add to that. There's still a long runway there. When you think about 60 million, 70 million of additional individuals that are not in our data set that are inside of that, so that's kind of a primary focus.
And then as you point out, we're expanding into gig. Some of the same relationships we have, companies process on their own contractor payroll, we'll be able to pick that up. Some payroll processors have kind of self-employed solutions where there's an ability to pick up data that way. There's other HR software providers that will help us through partnerships lead to some of those kind of records. And of course, the pensioner income at 20 million to 30 million comes from individual companies that process their own pension income or other companies that do that for companies. So we've got a multifaceted approach on that.
Really, the point we make in identifying that is that our lens is wider now, and there's still a long runway of this important lever to grow records Workforce Solutions. As you know, we don't talk about adding data assets in our other businesses. What's unique about Workforce is that it's only a decade old, and it only has 60% of nonfarm payroll, so there's a ton of room to grow. And then that gets bigger, as we both pointed out, as you add gig and pension into that space.
Our next questions come from the line of Toni Kaplan with Morgan Stanley.
I wanted to start with Appriss. At the time of the acquisition, you had talked about strong accretion in '22 from that deal along with the Health e(fx) and Teletrack acquisitions. I guess, how much is embedded in your '22 EPS expectations from the deals? And maybe you could help with some of the assumptions behind the significant accretion because I think some investors and myself were getting a little bit more neutral.
So it's absolutely accretive in 2022. Certainly, I'm not going to give a specific number for the level of accretion for the acquisitions. But kind of similar to the response I just gave with regard to margin movements, so we do expect good EBITDA margins from those acquisitions. And the level of margin that we're generating from that certainly exceeds the cost of the interest expense, which we also detailed in our revenue book. So we're seeing nice accretion, and so -- which would be consistent with strong from what we talked about back in August.
But just in general, right, the level of margins we look at from an acquired company like Appriss or anybody else in the first year out, the incremental margin we generate from those companies isn't anywhere near the level of incremental margin we generate from incremental organic sales at Equifax. So the reason why they're somewhat dilutive to our EBITDA margin in total is because of the fact that the variable margin we achieved on our direct sales is certainly substantially higher than the level of margin we generate from the acquired company in its first year out.
Got it. And then just looking at the revenue trends in the appendix, look like non-mortgage online info in U.S. was good at positive 15%, but it did decelerate relative to last quarter. Is that because of the auto softness? Or are there other verticals that are impacting that as well? And it does seem like the banks are talking about the lending environment getting better. Are you expecting that in the fourth quarter or next year? It did look like in your levers page, your macro levers page that maybe it gets better. But I'm just trying to understand sort of how much that is going to be a driver and what you're seeing in the lending environment.
I think the biggest driver of the growth rates that you're looking at really is the fact that in 2020, we saw a meaningful improvement in the third quarter relative to the second, right? So the growth rate in the second quarter of 2020, as we talked about when we did the release, was elevated partially because of the fact that it was such a weak quarter and we saw some improvements in the third quarter last year, right? So that's part of what's driving the fact that the -- that's a significant driver of what's driving the growth rates to be down.
But in terms of overall performance, I think as Mark referenced, we feel good about banking and lending. We have a nice growth there in the quarter, again, as we -- we had nice growth in insurance, nice growth in commercial. Identity and fraud was strong. And importantly, Financial Marketing Services was very strong, right? So -- but again, as you look into the fourth quarter, similarly to what I just talked about the fourth quarter of last year was a nice improvement from the third quarter. So we'll have some of the grow-over effects that we talked about in the third quarter. But we continue to believe we're going to see nice non-mortgage growth in USIS in the fourth quarter.
Our next questions come from the line of Andrew Nicholas with William Blair.
My first question was just going to be on the talent solutions business. Obviously, as it gets to become a bigger and bigger piece of Workforce Solutions, I think you said 30% of non-mortgage. Just wondering how you think about the cyclicality of that business. We've talked about the tight labor market. But as you're thinking about '22 in particular and embedding that type of growth or some level of growth for that business, how do you think about new product innovation relative to existing client growth or hiring activity and how that impacts performance in that business over a shorter time frame?
Yes. First, I think the underlying macro of 75 million people changing jobs every year, that macro doesn't really change much over time, meaning lots of people change jobs, and that may go up or down at some. But underlying that is that there's some level of data used in each of those job moves. So that's a macro that's quite good.
The other thing that's changing that we think is going to be a permanent change is the desire by companies to complete that process more quickly. Meaning they've made an offer to someone getting them on the floor in the warehouse or the factory or in the retail establishment or in the restaurant in hours or days versus weeks. And the only way to do that is through instant decisioning. So I think that's the fundamental structural change in the business, the ability to use data to speed up the processes.
For us, what we're really having the growth in is building out this data hub, which remember is only a year old or whatever. We're starting to leverage the 4.5, 5 jobs we have in the average American from our TWN database. Remember 0.5 billion of historical records and then adding to it new data elements like Appriss Insights, like medical credentialing, the National Student Clearinghouse of Education, that's all new turf for Equifax. As we combine those, you're going to see products coming out. You already are. We're rolling out new products quite rapidly for talent solutions where we have different solutions of more or less historical data.
And we'll move to, in the coming year, solutions that are more targeted to specific jobs, a job that requires what was your last employer, what was your last 2 employers, verifying your licenses, verifying where did you go to school. Some jobs require that, some don't. So we'll come up with solutions that will be packaged to speed up that process for the background screeners and the hiring managers in order to speed up the ability to hire that individual more quickly. So we see a lot of opportunity for growth in that. That's a $5 billion TAM. Our business is quite small when you think about $5 billion worth of data. And that's why we're investing through new products and through innovation and, of course, through the acquisitions that we've made or the new partnerships like the National Student Clearinghouse.
Great. That's helpful. And then just 2 quick modeling questions. The first was, I think the legacy system savings that you had outlined in prior investor presentations was $85 million year-over-year. I just want to make sure that's still the number to think about. And then also, if you wouldn't mind speaking to whether or not the SSA contract was fully ramped this quarter.
Yes. So in terms of modeling, again, for 2022, what I'd ask you to focus on is the guidance we just gave, right? So what we try to do is give you a fairly detailed walk from this year to next year. And obviously, there's a lot of moving parts in what's driving our EBITDA margin movement, which was some of the questions we had earlier. So I ask would be a focus on the walk we gave in the 200 basis points of margin expansion when you think about 2022 relative to 2021.
And on SSA in our comments, we -- I noted that we launched the program. We started delivering data to them at kind of early levels. And we expect that to ramp as we go through the fourth quarter and into 2022 and get to run rate sometime in 2022. It's a substantial and positive contract for us, but it's in the start-up mode now, which is positive to have it started after a lot of years of building this new solution and getting it integrated with SSA.
Our next questions come from the line of Hamzah Mazari with Jefferies.
My question is just around the integration of the M&A you've done. You kind of talked about 2022 seeing synergies roll through. Could you just give us examples maybe what integration is yet to come? What's behind you? And then when do you reengage in the M&A market? Is it more of a -- can you do that next year? Or is sort of we wait until this integration is done and then you get back more aggressive on M&A? Just any thoughts on that.
Yes. No. We're actively -- as you know, we have completed 8 acquisitions this year and a couple of them substantial, particularly Kount and Appriss. We're much further along on integrating Kount, as you might imagine, because we completed that deal in the first quarter. Appriss was only completed a couple of weeks ago, so we're still early days of starting that integration.
The cloud allows us to integrate more quickly. And as you know, our focus is to bring their unique data into our single data fabric. So that's underway with all of the acquisitions in order to drive their growth going forward. And we're seeing in Kount early positive days of top line synergies and very pleased with the plan on that acquisition. And we're very energized about Appriss and, of course, all the other acquisitions that we completed.
The synergies from these acquisitions, I think we've been very clear when we announced the acquisitions, come in over multiple years. They start in year 1, like in 2021, there's some early synergies, they build. And year 2, in this case, 2022 for those 2 acquisitions and then they'll continue. And we've talked about kind of year 5 synergies in some of the acquisitions being quite substantial, and those build over time as you roll out the new solutions, the new products and fully integrate the business into our cloud capabilities and our single data fabric.
With regards to your second question, we were clear when we announced Appriss a couple of months ago that we were going to pause on substantial M&A for a number of quarters, number one, to focus on integration; and number two, to bring our leverage back in line. So to answer your question, we would expect to be back doing M&A in the latter half of 2022 or somewhere in that time frame. We haven't stopped our corporate dev team of continuing to be in the market to look for M&A that would be a meaningful and accretive.
And I hope you get a sense that we're quite disciplined about the kind of M&A we want to do. We've been very clear for a number of years about acquisitions we want to do around differentiated data, identity and fraud and broadening and strengthening Workforce Solutions. And the deals we've done this year have checked all those boxes, and you should expect the deals going forward to do the same.
And also with the financial discipline that over the long term, they're accretive to our long-term growth rates and into our margins. We want to do deals that strengthen Equifax, broaden Equifax, but also enhance our financials and drive shareholder value.
That's very helpful. And just a follow-up question. Just on the International business. I know you flagged your expectation of Australia GDP for 2022. But any -- do you expect to see benefits from the tech transformation on the International business as early as next year? Or does that come a bit later?
Most of it comes later, although Canada is well down the path of their tech transformation. They should get some benefits in '22. And there's some early benefits in U.K. and Spain and Australia as we get into 2022. But the bulk of that is going to really come particularly in Latin America in the latter parts of the year as we get into 2023.
Our next questions come from the line of Andrew Steinerman with JPMorgan.
Two questions. The first one, could you just tell us how much mortgage revenues as a percentage of total third quarter Equifax revenues there was? My second question is about tech transformation expense. I want to know if you can indicate what the tech transformation expense drag on '22 EPS is compared to the $1.01, the $1.01 for '21, which is referenced on Slide 7, Footnote 5.
Yes. So in terms of the mortgage as a percent of total, it's just under 32%, and that's obviously down significantly from where it was last year, and it will go down again in the fourth quarter.
So in terms of tech transformation expense, I think what we've indicated is that this year, we expect to incur about $165 million, and that's how you get to the $1.01. And we've indicated that we expect to reduce by about $100 million. It's not a perfect number, right, but by about $100 million next year. So that would be on the order to -- on the order of $60 million to $65 million next year. But obviously, we'll refine that as we move through the fourth quarter and give you a really formal guidance as we get into early next year.
Our next questions come from the line of George Tong with Goldman Sachs.
Your 3Q revenues beat guidance by about $50 million, while your full year guidance increased by about $130 million at the midpoint. I know Appriss is adding $150 million in annual revenue. But how much of the increase in the guide above the 3Q outperformance is due to contributions from Appriss and other acquisitions versus improved assumed performance in 4Q with the underlying business?
Yes. I think we indicated in our prepared remarks, it's about $45 million.
In the fourth quarter.
In the fourth quarter. Sorry.
Acquisitions, George.
Okay. Got it. And the remainder from performance -- outperformance in the underlying business?
Correct.
Okay. And then in your slides, you mentioned that USIS non-mortgage is expected to outperform the underlying margins in 2022. How much of that outperformance is due to M&A? And how much is due to organic outperformance versus underlying markets?
You're breaking up, but I think your question, George, was in 2022, our mortgage outperformance, how much is from M&A versus the core business. Is that right?
Yes, versus organic. Yes.
Yes, it's substantially all organic.
Yes. So if the question was non-mortgage in USIS, then our statement was intended to be organic, right? So we're expecting them to outperform their core market on an organic basis.
And the Workforce Solutions acquisitions are -- really don't have an impact on their outperformance in mortgage.
Our next questions come from the line of Jeffrey Meuler with Baird.
Yes. On '22 margins, are you viewing '22 as a year where it's still pretty depressed by onetime expenses? Or are you viewing it as a good kind of underlying baseline where there's always going to be some puts and takes? I guess there's still $65 million of TTI on top of that. I think even though the net cloud costs are going down, there's still probably some fairly material duplicative systems cost that you can work down over time. Not trying to ask if you're at peak margin because I know you can increase margins at the acquired businesses, you have good incrementals on organic. But just trying to understand if you're viewing '22 as still a fairly depressed figure or if it's a good underlying for us to consider how we go forward from thereon.
Well, I'll start on that one, and John can jump in. We'll -- in a couple of weeks in our Investor Day presentation, we'll certainly give you our long-term framework around top line and margin growth. And we've been very clear, you should expect that to include our ability to grow our margins going forward. And '22 is clearly -- I don't know if you want to call it still a transitionary year. There's -- you've got the mortgage market impact, obviously. And then as you point out, we still have substantial cloud transformation costs in 2022. So we're not at a normal run rate in 2022. John?
No, you covered it, right? So we just -- I think we just had an earlier question about how much transformation expense was still -- investment was still in 2022, and we gave a number of -- we're at $165 million this year, and we said we'd reduce by about $100 million, so that's still in the P&L next year. And then also, we are delivering cloud savings. So our net cloud cost over decommissioning is a positive next year. But we've given a long-term model where we expect to deliver substantial savings when the cloud transformation is complete. We're still committed to that, right?
So the exact timing as you move through any given year, obviously, moves around a lot based on decommissionings and the pace of ramp of individual systems. So it's hard to be specific in any -- about any specific number as far as 15 months out. But we are absolutely committed to delivering a net savings next year versus the net cost this year. And then also there's substantial savings still to come as we get through 2022 and then -- and into '23 and '24. Obviously, those don't complete until we complete the International transformation.
Very helpful. And then we get asked a lot about BNPL and if it's cannibalistic to card, including from a bureau transaction or underwriting perspective. I would expect you to have a pretty unique view into that given Australia is a more developed BNPL market, plus you obviously have a nice bureau share there. So would just love your thoughts on BNPL and over time, if you'd expect it to be cannibalistic to card or not.
That's a different question about cannibalistic card. As far as a card issuer, I think some card issuers are probably seeing some pressure from BNPL, meaning consumers are using that instead of using their credit card to make purchases. When it comes to Equifax and our industry is providing data, BNPL, we sell a bunch of identity data to BNPL players around the globe. And increasingly, they're starting to use alternative data as a part of their underwriting, even in some -- many cases, credit data, meaning credit file data going forward.
So I think if you look at the total pie on consumers using cash or debit versus BNPL and credit, the pie is growing, meaning consumers are using this as another way to finance their purchases, which from an Equifax perspective, we view as a good thing. And we've got discussions with all of the BNPL players about using our data and our identity data because you have to verify the identity of the consumer before you offer them financing even on a pair of jeans, so going forward. So we view it as a net positive for the credit bureaus and Equifax.
Our next questions come from the line of Manav Patnaik with Barclays.
John, I agree the 200 basis point margin expansion is obviously strong given all the headwinds. But I was hoping you could just help us maybe with some order of magnitude. I heard 3 things that are the tight labor market and that increase in cost, the acquisition impact and then the 600 basis point decline in EC and UC revenues or whatever. So like how much of a headwind were each of those?
I would start with number one is that, Manav, we're continuing to invest more next year than this year. We're intending to around new products innovation, DNA, customer growth. We see real leverage in doing that. So John talked about that. Go ahead, John.
Absolutely. Look, Manav, I'm not going to size them specifically, right? But we referenced them because they're all meaningful to us, right? So they're all impacting margins. But again, 200 basis points increase in a market where there's 600 basis points of headwinds from mortgage and then obviously UC and ERC, which is we think is a very good outcome. So we think we're delivering substantial savings from reduction in transformation. And as we indicated, we will start delivering savings on net -- sorry, net cloud relative to decom and other cost savings. So we feel good about the direction we're headed, and we feel good about delivering 200 basis points of growth.
Got it. Okay. And then maybe just some modeling items, just so that we get the directional numbers right. Could you just give us what the 2021 EC and UC revenues were so that we can model that 30% decline? And then the same thing, I guess, the D&A, interest expense and CapEx, please?
For the third quarter? I think we gave it in the script. I think we...
No, for 2021, like what is the number? Just so that we can do the 2022 modeling, you gave us some changes.
So I understand the question. So we'll think about that. Obviously, we're going to be together again in a little over 2 weeks, and perhaps we can provide a bridge. But we gave -- I think we gave details on a 30% reduction. We said the 30% reduction was 1.25% of revenue. so I think between those 2 numbers, you'll get pretty close to the exact number, but we haven't disclosed it yet. But -- and I apologize, I don't have it at my fingertips. But I think with those 2 pieces of information, you can get really close to the UC and ERC revenue in '21 and 2022.
Our next questions come from the line of Ashish Sabadra with RBC Capital.
Two questions. First one is on pricing. You obviously have a very strong pricing power, and there were some pretty good pricing increases in the verification business. How do we think about pricing increases going forward? And then just second one, on the $50 million of investment, how do we think about that investment? I know you talked a lot about it. But is this like a onetime investment? Or should we think about having this like $50 million investment every year over the next several years? So color on both fronts.
Yes. And so on the investment one, we will continue to balance as we have, since I've been here, balance growing our margins while investing in the business. And the $50 million that was referenced is areas where we see opportunities to continue to grow our investments in new products and DNA in order to drive our top line, and that's really around leveraging the cloud. I'll leave the long-term discussion until a couple of weeks on November 10 during Investor Day, where we can talk in more detail about that balance. But we've been very clear that we expect our margin -- we expect to expand our margins going forward while investing in Equifax. And there'll be a balance there that we think is the right thing for Equifax and for our shareholders over the long term. John, do you want to take the first question? Your first question was around verification revenue, and you want...
That's right, the pricing power.
Pricing, yes, yes. The pricing is one lever that we use across Equifax. Workforce clearly has more pricing power than our other businesses. And we expect to have price be a positive for us in 2022, and that's inside our early framework. And of course, we've got many, many other levers that we focus even more strongly on. New products is a big one in verification. Of course, the number of polls penetration, those will all drive the business and, of course, records underlie driving verification.
Our next questions come from the line of Craig Huber with Huber Research Partners.
Maybe if you could touch on your personal finance area and the credit cards area within your traditional credit bureau business. How did that do in the quarter? What's your near-term outlook for that, please?
Yes. I don't think we gave any real specific details on it. I can give you some color is that as we expected coming out of COVID, we expected cards and P loans to see some positive momentum, which we have, particularly around marketing. As you know, the card issuers and P loan issuers in 2020 really stopped a lot of the marketing because of the uncertainty around where the consumer was going to be. And now as you got into 2021 and certainly through the third quarter, we've seen an increase in marketing. You've seen that in our numbers. A lot of our marketing performance in USIS is from cards and some from P loans. And we expect to see issuers continue to try to acquire more customers and build up their balance sheets, which have come down as consumers have been paying down a lot of balances. So there's quite a bit of marketing activity going on, and we expect that to continue in the future.
The bulk of our -- the bulk of that business for us, obviously, is in banking and lending. And Mark talked about the growth we're seeing in banking in the third quarter and second quarter, right? So we've seen double-digit growth both quarters.
I appreciate that. My follow-up question on the Global Consumer Solutions area, maybe just touch on your outlook there, the next couple of quarters, if you could, in the direct versus the indirect side. I think you just sort of touched on a little bit right there but just go a little further detail on that.
Yes. I think we talked in our comments that we expect the partner business to return to growth in the fourth quarter. It was clearly impacted by the tightening of originations by a lot of their customers, and on the direct business, we expect the same.
Our next questions come from the line of Gary Bisbee with Bank of America.
I wanted to go back to records growth for a minute, and you've had tremendous success with the payroll channel. And it sounds like you've got maybe at this point, the three major players. I know there's some reasonably chunky players after that, but then it fragments my understanding pretty quickly. Is that enough to continue to deliver double-digit records growth? And I guess, how meaningful at the moment or over the next 12 to 24 months or some of these other opportunities like the 1099 workers or pensions? And are there other sort of types of players beyond payroll that have data that could further -- you could do deals with to further support growth of records? Look, we get why it's been unbelievable. I guess I'm just not certain if payroll being a big piece of that can drive the next few years like it has the last few.
So Gary, as we've talked about, we get the bulk of our records through our Employer Services business, and that's a steady increase in records, and 60% of our records come from that. So that's clearly a base area of focus where we have a dedicated team on the partnership side. They can be a little bit lumpy when you bring in a larger payroll processor. But there's still a lot of runway in that vertical, if you want to call it that, of continuing to expand those partnerships. And as we said, we've got continued momentum there and very active dialogues about them wanting to join.
Another area for records is around HR software partnerships where they have access to records because of the software being embedded in an individual company. Both companies, as you know, process their own payroll. Some use their own systems, but most use some third-party systems. So that's another avenue for us in order to access records. And then we talked about our focus on gig and pension to go even further as far as our record addition. So we see a lot of runway in our ability to continue to grow records, which is, as you know, is a very valuable lever for top and bottom line growth at Workforce Solutions.
And then just one more on that topic. You mentioned new products a lot. And I know a few times in the past, you've talked about substantially higher-priced products like $100, $150, $200 versus $10 and $20 or whatever the typical. But can you give us just maybe an example of one that is in the market driving revenue, what the price point is or what is unique about the new offering versus the traditional levels of income and employment? I just would love...
Yes, sure. There's a bunch of them. I'll give you a couple in mortgage. In mortgage, our typical solution is a report that shows current income and employment, and it verifies that. And that might sell for $20 to $40, somewhere in that range. And as you know, because we have the 0.5 billion of historical records, in some mortgage applications, the complexity of the consumers' income, let's say, that they've changed jobs recently, so they don't have a lot of job history. Or let's say, that they get a lot of incentive-based income, he's either a salesperson or some other incentive-based income, meaning it's lumpy when the income comes in. They get it at the end of the year. And many of those solutions, you require more history.
So we have it. So instead of selling that, call it, $20 to $40 solution, we'll sell a solution that has 24 months or 36 months or even 48 months, all different products, and those price points are in the $100, $150, $200 range, meaning substantially higher, and again, leveraging our historical data.
Another mortgage solution is Mortgage Duo, which we rolled out in the last couple of months. Some mortgage applications have 2 income owners on it, a husband and wife using that example. And in the old solution, and it's still used, the originator would pull on the husband for $20 to $40 and then on the wife for $20 to $40 using that kind of a couple. We have a solution now that's priced between, I think, $175 and $200. It provides both reports at the same time. It also allows, I think, in that solution, a second poll somewhere in the mortgage application process. So substantially above the price point and again, delivering value to the originator because they're looking for speed and looking to complete it quickly. That's really the solution there.
Turning to I-9, we've got an I-9 solution that typically, John, the I-9 traditional is in the $10 to $20 range?
More like $30 to $40.
$30 to $40.
I-9, sorry, you're right, $10 to $20.
$10 to $20 range is I-9, and we've got a new solution we've talked about the last couple of quarters that we rolled out that's an I-9 anywhere that allows the applicant to complete it on an Equifax app, the I-9 process, and then go verify it at a couple of thousand different sites across the United States that we do through our partnership. And that solution instead of being in, call it, that $10 range is in the $75 to $100 range, providing real value. Now the value is to that applicant and the employer to speed up the I-9 process so that individual can get on the job, on the floor, in the factory, in the restaurant.
So a couple of different solutions in talent, same thing. We're starting to have solutions instead of just pulling a where does Mark work now solution, having more history because some employers want that. Some employers want where is Mark working now or the job that he's leaving. They want to verify that. Others will want to verify employment for the last 2 or 3 or 4 jobs. And as we mentioned earlier, we're going to be productizing a more comprehensive solutions that combine not only work history from our TWN database to 0.5 billion records that we have or the average 4.5 jobs on the average American.
That work history, we're going to be adding to it incarceration data from Appriss, medical licensing and credentialing data from Appriss, university, secondary education college degrees from National Student Clearinghouse. Those will all be productized in a solution that will deliver more value, deliver more speed and at a higher price point than the individual solutions because of the value that it adds in speeding up that process. So those are all some examples of where we're focused on. And these are all driven by the new Equifax Cloud. These are things that would have been very challenging to do with the pace that we're doing it. In this case, we're talking mostly about Workforce Solutions, but the same across Equifax.
There are no further questions at this time. I would like to turn the call back over to Dorian Hare for any closing remarks.
Thank you for joining today's call. Looking forward to joining you again for a robust discussion when we have our Investor Day on November 10. Once again, the registration is currently open, and there is a link to the Slide 24 where you can register for our Investor Day. We'll also be releasing a press release later today with those details. This does conclude the call.
Thank you for your participation. This does conclude today's teleconference. You may disconnect your lines at this time. Have a great day.