Equifax (EFX) Baird 2024 Global Consumer, Technology & Services Conference summary

Workforce solutions growth and strategy

• Workforce Solutions segment represents about half of revenue, with $2.3 billion last year and 50% EBITDA margins, expected to grow 13–15% long term, outpacing overall company growth.

• Growth is driven by expanding employment and income records through direct employer relationships and partnerships with HR software, payroll processors, and pension administrators.

• Record additions in Q1 were up 10%, with recent growth mainly from new partnerships, including a large partner added in Q2.

• Monetization per record has faced headwinds, with product and penetration factors contributing less in the most recent quarter, but new mortgage products are planned for H2.

• Penetration remains a key lever, as many mortgage originators still rely on manual verifications, offering room for further growth.

Mortgage and government verticals

• Mortgage outperformance was high in 2022–2023 due to the Mortgage 36 product, but normalized to high single digits in Q1; new products like Mortgage 24 and Mortgage 90 are set for H2 rollout.

• Government is now the largest vertical, surpassing mortgage, with 35% growth in Q1 and a 50% CAGR over three years, driven by state and federal contracts for social service verifications.

• Major new federal contracts include a $1.2 billion CMS extension and a $190 million USDA contract, both with annual price escalators.

• Government vertical expected to outgrow the 13–15% company target due to a $5 billion TAM and ongoing shift from manual to digital verifications.

• Additional data assets, such as incarceration and criminal records, are being added to government offerings.

Talent and pre-employment screening

• Talent screening TAM is estimated at $3 billion, with current business at a $400 million run rate, leaving significant room for penetration.

• White-collar hiring softened more than expected in early Q1, but March improved; run rate for the year is based on March trends.

• Product innovation includes new hourly solutions and job-specific data bundles, aiming to digitize and streamline background screening.

• Record additions and higher hit rates are key growth drivers, with a data set of 700 million jobs and people accumulated over 20 years.

• No expected impact from pending background screening company consolidations.