Equifax Inc

NYSE:EFX

Earnings Call Transcript 2020-Q3

[Operator]

Good day, and welcome to the Equifax Third Quarter 2020 Earnings Conference Call. Today’s conference is being recorded.

At this time, I would like to turn the conference over to Dorian Hare. Please go ahead.

[Dorian Hare, Senior Vice President, Investor Relations]

Thanks and good morning. Welcome to today’s conference call. I’m Dorian Hare. With me today are Mark Begor, Chief Executive Officer; John Gamble, Chief Financial Officer.

Today’s call is being recorded. An archive of the recording will be available later today in the Investor Relations section in the About Equifax tab of our website at www.equifax.com.

During the call today, we will be making reference to certain materials that can also be found in the Investor Relations section of our website under Events and Presentation. These materials are labelled Q3, 2020 Earnings Release Presentation.

During this call, we will be making certain forward-looking statements 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 differ materially from our expectations. Certain risk factors inherent in our business are set forth in filings with the SEC, including our 2019 Form 10-K and subsequent filings.

Also, we will 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. Certain revenue variances referred to in this call are based on adjusted revenue from the third quarter of 2019.

These non-GAAP measures are detailed in reconciliation tables which are included with our earnings release and are also posted on our website.

Now, I'd like to turn it over to Mark.

[Mark Begor, Chief Executive Officer]

Thanks, Dorain good everyone and thanks for joining our third quarter earnings call. Businesses and consumers around the world continue to face challenges brought on by the COVID-19 pandemic. I hope you and your families are continuing to be safe in managing this unprecedented environment.

At Equifax, we continue to make the health and safety of our 11,000 employees a top priority. Turning first to the slide deck on page number four. Before I cover our very strong third quarter performance, I wanted to recap our focus over the past 3 years to transform Equifax to drive revenue growth, margins and cash in the future.

Today, we saw a unique industry and vertical customer and consumer challenges through our differentiated data assets and best-in-class, advanced analytics. Most of our differentiated and -- our most differentiated and most valuable data asset is our 2020 income and employment data.

We are building an industry leading global native cloud data technology footprint enabled by best-in-class cloud-native tools that will leverage our new cloud based single data fabric. We’ve taken an industry leadership position in data security by changing our culture, our technology solutions and governance to ensure customer and consumer data is safer than it has ever before.

We're relentlessly focused on a customer-first mentality, and we have a market-leading position in 25 countries. In building the new Equifax, we are executing on our $1.5 billion cloud, data and technology transformation that will move our data to a single cloud-native data fabric and into our legacy applications to the Google Cloud.

We’re ramping up our investments in innovation and product resources to drive new product acceleration by leveraging our cloud investments. We’re strengthening our differentiated data portfolio with new unique data assets that complement our view of consumers. We’re leveraging advanced analytics, our patented AI technology and cloud-native technology to deliver multi-data solutions, and we’re differentiating our business portfolio by acquiring new capabilities and entering new areas of growth.

Turning now to slide number five, the COVID pandemic has accelerated key market macros that are positive for Equifax and for the industry. First, in our data driven economy, it's clear that both deeper insights from comprehensive data sources like the U.S. consumer credit database at Equifax and the use of multiple and alternative data types are critical for risk management, customer prospecting, employment, verification, and an array of other activities engaged by our customers.

More differentiated data was a positive macro prior to COVID-19. These economic impacts of the pandemic have only accelerated this trend around differentiated data. Differentiated data and analytics are more valuable than ever to our customers.

Second, providers of credit are increasingly delivering real time and advanced analytics that utilize artificial intelligence and machine learning to deliver incremental insights beyond core data.

This trend has been accelerated during COVID, including instances where fraudsters have expanded efforts around fraud, account takeover or activities such as loan stacking and -- such as loan stacking. Identity and fraud solutions are increasingly valuable.

Third, consumers, especially those from the digital age, have expectations that their financial and workplace interactions function digitally. We’ve seen this trend towards digital accelerate in the current COVID environment as face-to-face interactions have become increasingly rare.

And last, Fintechs and alternative lenders are nimbly taking share of wallet from traditional financial institutions. We’ve seen this trend challenge somewhat the near-term due to economic pressures, including disruptions in capital flows, but we expect it will reaccelerate as we move into 2021.

The Equifax team is laser focused on delivering solutions to help our customers meet the challenging economic demands caused by the COVID-19 pandemic.

Our new cloud-native data and applications are delivering integrated basically data solution that we were unable to execute on and our legacy environment with unprecedented data, currency and speed.

We're applying advanced analytics and alternative data assets towards the creation of trended insights that can better help our customers manage in this COVID environment where the consumer credit profiles are complicated by unemployment, salary reduction, furloughs and lower combinations.

Our new cloud-based Luminate identity and fraud platform that uses these advanced analytics, along with machine learning and data orchestration, providing risk managers with greater insights to better manage fraud.

And our solutions enable our organizations across industries to adopt new realities using digital solutions to interact with their customers, whether it's an automotive dealership looking to convert online browsers, to online purchasers without stepping for dealership or a credit union looking for way to support members while operating with a reduced branch footprint, Equifax solutions help organization of all types to drive new digital interactions.

The COVID recession has accelerated key market macros around the value of broader data assets and real-time decisioning that will benefit Equifax in the future.

Turning to slide six. It highlights how Equifax goes beyond the standard credit report to give lenders, employers, marketers and other service providers a fuller, more complete 360-degree picture of a consumer's financial life to enhance decisioning.

We are working with our customers to leverage the traditional credit file that lenders already rely on to understand the financial profile of candidates for loans and services. Instead of focusing only on financial activity or delinquency over the past three to six months, our trended data and analytics allow lenders to look at delinquencies over an extended period while closely monitoring indicators of financial distress, such as utilization increases and loaning combinations.

We estimate that this deeper view of traditional credit reports may allow nearly 4 million consumers who have recently moved down from prime and super-prime credit categories due to credit policy tightening to move back up. Consumers that may be good candidates for cards or personal loans who may otherwise be overlooked as lenders execute their traditional recession playbook.

Even more importantly, alternative data in the form of Equifax's unique twin income and employment information has become increasingly critical as uncertain job market impacts underwriting and the ability of consumer to repay their loan. Unique data we provide helps lenders and consumers together to verify that a borrower is employed when a credit decision is made. The do-it-yourself alternative requesting hard copy employment and income verifications can lengthen process workflows and cannot be verified.

We estimate that the addition of twin income and employment data into credit decisioning can move more than 7 million consumers up into prime and super-prime categories so they can receive larger loans and other services with renewed lender confidence.

Telco, utility, bank transaction and commercial data are further examples of Equifax's unique and differentiated data sets. Our cloud technology transformation is delivering a single day of fabric that combines our multiple databases into one environment to enable more nimble innovation, insights and analytics, while at the same time, enhancing regulatory compliance.

We have incredible appetite for new and differentiated data, and we believe and commercial data that that more data delivers better decisions for our customers. I hope this gives you a strong sense of our broad range of strategic initiatives as we are transforming Equifax for the future.

Turning now to slide seven, and our third quarter financial results. Equifax continued with very strong performance again in the third quarter. I'm very encouraged by the resiliency and strength of Equifax and how our teams around the world are meeting the challenges of COVID to help our customers, partners and consumers.

We are operating more effectively and efficiently with more energy and momentum than I've seen since I joined Equifax, and I believe we'll be a stronger, more resilient organization when this global pandemic is over.

During the third quarter, we saw very strong revenue performance, particularly at Workforce Solutions and USIS, with broad-based improving revenue trends resulting in strong cash generation in EBITDA margins, while we continue to make incremental investments in technology and product and innovation in security.

Revenue growth of 19% is the highest quarterly growth in our history, and we eclipsed $1 billion of quarterly revenue for the first time in Equifax’s history, all huge milestones. I'll talk more in a minute about our financial results.

We continue to make proactive customer collaboration, a key priority in order to drive engagement, deal pipelines and new product innovation. During the quarter and past several weeks, I've been engaged with our key customers. This is the most challenging environment they've ever faced.

Broadly, data is more valuable today than ever and our unique data assets like TWN and Advanced Analytics are critical to helping our customers navigate through this pandemic. We continue to take advantage of our strong cash generation to accelerate our cloud data technology transformation investments.

Under Bryson Koehler's leadership and with the support of thousands of technology team members, we are making continued strong progress on our $1.5 billion technology transformation, and we are seeing new customers accessing our cloud-native solutions each week as our migrations accelerate.

We're also continuing to expand our investments and resources around innovation in new products that are helping our customers manage today's challenging environment, but also with an eye on -- beyond the pandemic.

Our transformation into a product led organization focused on innovation and enabled by best-in-class cloud-native data assets and world class technology is becoming more real every day and will power our business in 2021 and beyond. Our team’s strong execution and outperformance in the third quarter is another very positive step forward for Equifax.

Turning to slide eight. Our financial results for the third quarter were strong and broad based. Revenue of was $1.07 billion was up 19% on reported in local currency basis, which is well above our expectations in the framework of 10% to 12% that we shared with you in early September.

M&A contributed less than 1% in the quarter. Our growth was again powered by our U.S. B2B businesses, USIS and Workforce Solutions, which had a combined revenue up a very strong 32.5% and combined adjusted EBITDA margins of over 50%.

Workforce Solutions continued their exceptional performance driven by the value of the TWN database with revenues up 57% in the quarter, while generating EBITDA margins of 58%. This marked Workforce Solutions’ second consecutive quarter of 50% plus revenue growth, and USIS also exhibited strong revenue growth of 15%.

Our strong U.S. B2B business performance continues to be powered by our focus on growth and our differentiated data assets. U.S. mortgage revenue was up almost 90% compared to the third quarter of 2019.

U.S. mortgage market inquiries, our proxy for the overall mortgage market growth, were up 51% in the third quarter, driven by strength in both the new purchase and refinancing mortgage volumes.

The driver of our U.S. B2B businesses substantial outperformance versus the market continues to be Workforce Solutions, where mortgage revenue more than doubled for the second consecutive quarter in a row. This was driven by the value that our customers place on our TWN income and employment data, the rollout of new products, the addition of new customers, improved customer penetration and expansion of our TWN data records.

U.S. mortgage revenue growth of 57% also outpaced the market by 600 basis points. Our unemployment insurance claims business grew over 70% in the quarter with revenue of $50 million. In the third quarter, Workforce Solutions processed about $3.4 million initial unemployment claims, which is down from $7.5 million initial claims in the second quarter.

Workforce Solutions continues to process roughly one in five U.S. initial unemployment claims. We expect unemployment claims to continue above 2019 levels in the fourth quarter, but at a reduced level compared with the third quarter.

Excluding the growth from unemployment claims, which we would not expect to report in 2021, Equifax revenue growth was up a very strong 17% in the third quarter and is up over 12% year-to-date.

Revenue growth drove adjusted EBITDA to $391 million, up 29%, with a 270 basis point expansion in our margins to 36.6%. We prudently balance cost controls while making target investments in our cloud transformation, new products and data and analytics.

Adjusted EPS at $1.87 a share was up a strong 26% despite incurring increased depreciation and amortization and incremental cloud cost of $0.15 a share and increased interest expense of $0.06 per share from our second quarter bond offering. This exceeded our expectations in the framework of $1.50 to $1.60 we shared with you in September.

USIS revenue of $386 million was up a very strong 15% in the third quarter with the M&A contribution less than 0.5%. Total USIS mortgage revenue of $179 million, was up 57% in the quarter as both purchase and refi transactions remained strong throughout the quarter and better than our expectations of up about 45% from our call last month.

Non-mortgage revenue also strengthened in USIS sequentially in the quarter at down 6%, up from down 7% in the second quarter. Importantly, we saw a substantial improvement in non-mortgage online revenue, which was down only 5% as compared to almost 10% decline we saw in the second quarter.

We saw a very good sequential improvement in banking, insurance, rental and direct-to-consumer, with insurance turning from down double-digits to up double-digits in the quarter.

We are starting to see signs of customers restarting origination efforts with several major FI's revenue up versus 2019 for the first time in the pandemic, which is a positive sign for the future.

In September, we saw positive growth in both insurance and direct-to-consumer, which although still negative, we saw improvements in banking and auto, both of which had only single digit declines.

Financial Marketing services revenue, which is broadly speaking our off-line or batch business of $46 million was down 9%, consistent with our expectations. Marketing-related revenue, which represents just under 40% of FMS continue to be down significantly, but did show some improvement as we move through the third quarter.

Risk decisioning, which includes portfolio review activities and represents about 40% of FMS revenue was down slightly due to a large onetime project last year. In identity and fraud related revenue, which represents about 20% of FMS was flat.

I'm very encouraged by the progress of Sid Singh in the USIS teams continue to make especially during these challenging economic times. They are competitive commercially and on offense.

We continue to see very strong new deal pipeline growth at USIS, with total pipeline value up over 30% versus last year, driven by growth in the volume and average size of our USIS pipeline opportunities. Larger deal opportunities are very positive sign as we look to accelerate USIS revenue growth.

USIS adjusted EBITDA margins of 46% were up 160 basis points from last year and up 188 basis points sequentially. The improvements both year-to-year and sequentially were driven principally by the significant growth in high-margin online revenue.

Turning now to Workforce Solutions. They had another exceptional quarter with revenue of $377 million up a very strong 57%. Year-to-date revenue is already over $1 billion at Workforce Solutions.

Rudy Ploder and EWS team continue to leverage broad structural growth drivers, including new products, penetration, pricing, new verticals and record additions to fuel their above-market growth. EWS remains our most differentiated business particularly in this unprecedented consumer environment where our TWN income and employment data is immensely valuable.

Verification Service revenues at $301 million was up 63% versus 2019. Verification Services mortgage revenue more than doubled for the second quarter in a row, growing more than 80 percentage points faster than the 51% growth we saw in the mortgage market, credit imposed in the third quarter.

Verification Services non-mortgage revenue was up about 4% in the quarter and slightly outperformed our expectations. Similar to the second quarter we continue to see growth in government and health care as well as in the auto vertical as we increase penetration of TWN.

During the third quarter, we saw a significant recovery in talent solutions, reflecting both increased U.S. hiring and the rollout of new products. Consistent with second quarter, debt management continues to be very soft.

Employer Services revenue of $76 million increased 37% in the quarter, driven by our unemployment claims business, which had revenue of $50 million and was up 70% compared to last year.

Adjusting for the $20 million of incremental UC claims revenue in the quarter, Employer Services was flat with revenue growth in I-9 and onboarding services that was driven by the acceleration of I-9 Anywhere solutions offset by declines in our tax credit business.

Transaction activity in our I-9 and onboarding products improved through the third quarter and sequentially versus the second quarter, driven by new hiring activity with our customers. Many of the large retail shipping and e-commerce companies utilize our I-9 onboarding products.

In addition, we’re seeing a positive shift to our new remote I-9 product suite with new customer wins. Strong EWS Verifier revenue growth resulted in adjusted EBITDA margins in Workforce Solutions of 57.8%, a 900 basis point expansion from the prior year.

Turning now to International. Their revenue of $218 million was down 5% on a constant currency basis, a substantial improvement from the down 15% in second quarter and better than our expectations as shelter-in-place orders were lifted at many markets and economic activity resumed.

Asia Pacific, which is principally our Australia business, had a very good performance in the quarter with revenue of $80 million, about flat in local currency versus last year and better than the down 5% we expected earlier in September.

Australia consumer online revenue was down 5% versus last year, a significant improvement from the down double digits we saw in second quarter.

Our Australian commercial business, combined online and off-line revenue, was up 1% in the quarter, again, a nice improvement from the prior period.

Fraud and Identity was also up over 15% in the third quarter versus the down 12% in second quarter. These areas of improvement offset declines in consumer marketing services, our consumer offline business and HR Solutions. Consistent with second quarter they continue to be down versus last year.

New Zealand revenue was down just over 10% in the quarter, significant improvement to be down 25% in the second quarter. European revenues of $59 million were down 13% in local currency in the third quarter.

Our European credit business was down about 7%, with Spain performing slightly better than the U.K. In the U.K, consumer online revenue was down just over 10%, a significant improvement from the down 20% we saw in second quarter.

Analytical and Decision Solutions revenue was almost flat in the quarter, a significant improvement from about -- down about 20% in second quarter. Combined consumer online and analytical decision solutions represent about 75% of our U.K. CRA business.

Similar to the U.S, our consumer offline business continues to show significant declines due to reductions in economic activity and credit originations. Banking revenue, driven by new wins with top 5 U.K. banks, was up over 25% in the quarter.

Our U.K. banking team is seeing real momentum. Our European debt management business declined 20% in local currency, in line with our expectations, principally driven by government enacted policies that continued to temporarily halt debt collections due to COVID-19.

U.K. government debt placement activities restarted in August. We expect fourth quarter debt management revenue to improve meaningfully as September debt placements were up 5x versus pre-COVID levels.

Turning to Latin America. Their revenue of $40 million decreased 6% in local currency in the third quarter, better than the down 9% we expected earlier in the quarter. Importantly, our Latin America revenues were much better than the down 14% we saw in the second quarter.

In the quarter, Chile our largest country in Latin America, delivered positive revenue growth. And our Argentina, Uruguay, Paraguay businesses showed significant improvements from second quarter, down about 4% in the quarter versus 2019. These markets continue to benefit from the resumption of economic activity expansion of Ignite, the migration of customers to our global cloud-based interconnect SaaS decisioning platform. We're also seeing the benefit of the strong new product introductions over the past 3 years in the region.

Canada revenue of $39 million was flat to local currency in the third quarter, a significant improvement from the down 13% in second quarter and in line with our expectations from our September call.

Consumer online and commercial were both down about 5% in the third quarter, and both were a substantial improvement from almost 20% declines in the second quarter.

Analytical and Decision Solutions were about flat in the quarter against substantial improvement from the second quarter. We delivered nice growth in Canada in our ID and Fraud business and Property Service businesses. It's combined with the improved performance of the other segments allowed us to improve to flat in the third quarter.

International adjusted EBITDA margins of 32.3% were up 130 basis points from last year, despite the decline in revenue, principally reflecting benefits from cost actions taken in 2019 and strong expense management this year.

Turning now to Global Solutions revenue, which was down 2% on a reported and local currency basis in the quarter. Our Global Consumer Direct business was up 6%, their highest growth since 2017. Our North American Consumer Direct business revenue was up a solid 6% versus 2019, while the U.K. Consumer Direct revenue was about flat.

Importantly, we continue to see sequential subscriber growth in the U.S. and Canada, our two largest markets. Based on a continuation of these trends, we expect our Consumer Direct business to show positive revenue growth in the fourth quarter.

Ben Anderson and the GCS team have done a good job returning our Global Direct business to a growth mode. Our remaining GCS business is principally our partner businesses as well as our benefits channel and event-based businesses decreased about 10% in the quarter, in line with our expectations.

We delivered 11% growth in our benefits channel and event based businesses, but this growth was more than offset by declines in our U.S. lead gen partner business as originations continue to be soft in the third quarter.

GCS adjusted EBITDA margins of 24.8% decreased 10 basis points compared to the prior year period due to increased marketing spend to drive future direct revenue and lower lead generation revenue, offset by onetime setup costs incurred during the third quarter of 2019 related to a new multiyear contract.

Slide nine highlights the acceleration of revenue growth over the last several years and quarters, broken down between the growth drivers from the extraordinary UC claims revenue in 2020 from high unemployment and the strong U.S. mortgage revenue market to help you look through the impact of these strong market factors to the underlying Equifax core growth.

As we discussed earlier in the third quarter, Equifax grew 19% overall with 200 basis points of debt [ph] growth from UC claim revenue and 11 points of Equifax revenue growth from the strong U.S. mortgage market.

We are very pleased with the 6% core growth with strong sequential growth versus the minus 2% in second quarter, particularly with the headwinds from the COVID session. Equifax is clearly outperforming U.S. expectations in the COVID recession. The impact of the strong U.S. mortgage market is highlighted in purple and reflects growth driven directly by the strong underlying U.S. mortgage market.

To be clear, this is not the growth of Equifax U.S. mortgage revenue, but is instead only growth directly attributable to the U.S. mortgage market itself that we estimate based on mortgage market credit inputs.

During the third quarter, 11 points of Equifax’s 19% growth was from the strong U.S. mortgage market. The impact of the extraordinary UC claims growth in 2020 is highlighted in blue. We are providing this given the dramatic unusual growth in the year we are seeing in 2020 that we expect to normalize overtime.

Equifax core growth is in green, and reflects the resiliency and breadth of our business performance in the COVID recession. Essentially this is the sum of the growth in our U.S. non-mortgage businesses, our international businesses and GCS and growth in our U.S. mortgage businesses above underlying mortgage market growth.

Excluding the impact of the U.S. mortgage market and UC claims, Equifax core growth has expanded from 2% to 3% in 2018 and 2019 during the global financial crisis to 5% in the first quarter and now 6% in the third quarter while we’re still in the middle of the COVID pandemic. This performance reflects the resiliency and breadth of the Equifax portfolio.

As I will cover on the next slide, it’s important to recognize that in the third quarter a significant portion of the 6% of Equifax core growth is being driven by our outperformance in our U.S. B2B mortgage vertical powered by Workforce Solutions core growth, which was a strong 30% and USIS, which was only down 1% on a core growth basis.

This ability to substantially outgrow the underlying market is core to our business model and a substantial strength that should continue to provide significant benefits through the balance of 2020 and into 2021.

Equifax is dramatically stronger in 2020 versus the 2008, 2009 recession with revenue up 19% in the quarter and 12% in second quarter versus down 6% during the global financial crisis, again, reflecting the strength of today's Equifax portfolio.

A continued strategic focus and strength of Equifax is our deep and broad array of products and solutions for the U.S. mortgage market and ability to consistently outgrow the underlying market.

Slide 10 highlights this through our U.S. B2B businesses, Workforce Solutions and USIS. Both Workforce Solutions and USIS have consistently outgrown the underlying U.S. mortgage market. The driver of the acceleration of this outperformance over the past several years has been a tremendous growth in Workforce Solutions mortgage revenue, which exceeded mortgage market growth rates by over 20 points in 2019, accelerating to about 80 points of our performance this year.

The key drivers of the strong Workforce Solutions performance includes increased market penetration, which, by this, we mean both an increase in the percentage of mortgage applications for which the underwriter requests an income and employment verification from Equifax and an increase in the number of times a mortgage underwriter requested income and employment verification during the application process. Both of these drive increased TWN inquiries.

As we view U.S. mortgage marketing -- we view U.S. mortgage inquiries as a proxy for the overall market, an important metric we track is TWN inquiries as a percent of USIS credit inquiries.

In third quarter, this metric for the first time exceeded 50%, where we had one TWN mortgage market inquiry for every two USIS credit mortgage marketing inquiries. This metric has been growing substantially over the past three years and has more than doubled since early 2018. However, at only 50%, it shows that we have a lot of runway ahead of us to reach the same utilization for TWN as a credit file.

We are actively working with our customers to continue to drive penetration through both expanded selling efforts across our customer ecosystem and increasing customer system-to-system integrations.

Second is increased fulfillment rate. This is the percentage of times we receive a mortgage inquiry that we can’t fulfill and is driven by -- that we can fulfill and is driven by growth in the TWN database. While we have real scale at over 50% of the non-farm payroll database, we only fulfill roughly for 50% of our inquiries. As we add records via our immediately monetized, which provides real leverage for Workforce Solutions. Adding new TWN contributors and records is a priority for the EWS team.

And third is new products. We continue to introduce new Workforce Solutions products that provide greater value to our customers in terms of depth of data and frequency of polls with higher price points in margins. We expect NPIs to accelerated Workforce Solutions from addition of new product resources and leverage from the cloud transformation. Workforce Solutions is clearly almost powerful business.

Slide 11 shows their above market strong performance, which is highly accretive to Equifax revenue growth, margins and cash flow. Through third quarter, overall Workforce revenue growth of $332 million or 48% through 13 points of Equifax revenue growth and Workforce core revenue growth of $163 million contributed six points of Equifax core revenue growth versus last year.

The impact on Equifax EBITDA was even more powerful with Workforce Solutions delivering $572 million of Equifax EBITDA or 44% of our total EBITDA through the third quarter. Equifax is the powerful business and important driver of Equifax results in 2020 and in the future.

As shown on Slide 12, you can see the continuing growth in our TWN database, which has been a significant driver of value to our customers and the growth in Workforce Solutions. In the third quarter, we continue to add TWN records and delivered new TWN record growth of 6 million active records in the quarter, even in the high end unemployment environment, which grow TWN database over 111 million records, up from 105 million, we had at the end of first quarter and second quarter.

TWN records are up has grown 20% versus 2019. We also had significant milestone in the third quarter with contributors surpassing the 1 million level, this is our million company in the United States that are contributing to payroll records at Equifax up from 64,000 a year ago, which has moved the TWN database deeply into small ended market companies.

With the TWN database now providing information on over 88 million unique individuals, firmly over half of the U.S. non-farm payroll, we view this as a catalyst for Workforce Solutions, given the increasing hit rates and uniqueness of the data.

As we discussed previously, the Workforce Solutions team is expanding their focus on records beyond just W-2 payroll into areas like 1099 employees to give economy and pension income. The increasing depth of the TWN database was now over 415 million total records had the additional benefit of increasing the completeness of an individual job history that we have in the database. This also significantly increases the value of the unique TWN data for both credit decisioning as well as in Talent Solutions and other applications.

As a reminder, we generated almost 20% of our verification services revenue from inactive records that we built up over the past decade, which helps to provide a full picture of individual employment history. This also expands the uniqueness and value of TWN, which is other sources of income for employment data.

And what has been the most challenging economic and health environment we faced in our lifetime, Equifax delivered exceptionally strong performance again in the third quarter, while investing in our cloud transformation and new products. We are focused on finishing 2020 strong, while investing for 2021 and beyond.

I will now turn the discussion over to John to discuss recent trends in revenue in our growing markets as results -- as well as reducing other financial items. After John’s discussion, I will come back and review our progress on the tech transformation and new products.

[John Gamble, Chief Financial Officer]

Thanks Mark. I’ll generally be referring to the financial results from continuing operations represented on a GAAP basis, but we will refer to non-GAAP results as well. In the third quarter, general corporate expense was $155 million. Excluding non-recurring cost adjusted general corporate expense for the quarter was $109 million, up $38 million from 3Q 2019.

Corporate function expenses, such as, finance, HR and legal were down year-to-year, reflecting the cost containment activities we outlined in April. The increase in total general corporate expense is primarily due to higher incentive compensation costs in 2020 due to our strong and improving financial performance.

We continue to exercise disciplined cost management across the business, while also continuing to invest in our technology transformation, data and analytics, new products and securities. We will accelerate investments in these areas in 2020 as we believe this will deliver accelerated benefits.

Outside of these areas, head count additions remain at levels below attrition, and discretionary spending has been reduced. Across the company, business travel remains at very low levels. For 3Q 2020, the effective tax rate used in calculating adjusted EPS was 21.2% and in line with our expectations. We expect the 4Q 2020 tax rate and full year effective tax rate used in calculating adjusted EPS to be around 24%.

In 3Q, 2020 and year-to-date, operating cash flow of $367 million and $645 million were up $532 million and $566 million, respectively from 2019. The increases reflect the substantial improvements and operating performance in 2020 as well as lower payments for litigation settlements in 3Q 2020 and year-to-date of $341 million and $246 million, respectively.

The timing of payment of the remaining $347 million to the U.S. consumer restitution fund is principally dependent on the resolution of the appeals filed related to this case. At this time, we do not expect to fund the remainder of the settlement until early 2021.

Our liquidity and balance sheet remain very strong. At September 30, we had $1.5 billion in cash, and available borrowing capacity on our bank credit facility of $1.1 billion. As Mark mentioned, our 3Q results were substantially stronger than the implication of the trends through August that we discussed in our September 8 Investor Call.

The improved results were predominately on our U.S. B2B business. Importantly, the improvement was in our U.S. online revenue, with significant improvement in non-mortgage revenue as well as in mortgage. We also had stronger results in international in Australia and Canada. The strength in adjusted EPS reflects the margin impact from the stronger revenue in September.

Slide 13 through 15 show details of revenue trends on a local currency basis that we saw in 2Q and 3Q, as well as monthly data for July, August and September. We are also providing the view of the trends so far during the month of October, and their implications on 4Q 2020 if they were to continue throughout the quarter.

For line items, for which daily trends are not available or not relevant, we did not provide monthly actuals, but did provide 2Q, 2020 and 3Q, 2020 data as well as an estimate for 4Q 2020. The monthly actuals data provided should be viewed as directional.

Looking at slide 13, starting at the bottom of slide, U.S. B2B revenue growth trended very positively in September, growth into August and in 3Q 220 relative to Q2 2020 with U.S B2B revenue up 32% in 3Q 2020 year-to-year as compared to the 28% year-to-year growth we saw in 2Q 2020. This was driven by improved year-to-year growth in U.S. B2B online revenue.

Mortgage year-to-year revenue growth strengthened significantly in September versus August and in 3Q 2020 year-to-year in both USIS and EWS. The stronger growth was in the context of a stronger mortgage market we saw in 3Q 2019 which grew 20% from 3Q 2018.

Importantly, online non-mortgage revenue growth trends also improved meaningfully in both September and 3Q 2020. USIS non-mortgage revenue was down only 3% in September and 5% in 3Q 2020, year-to-year and EWS saw year-to-year growth and online non mortgage revenue in both September and third quarter 2020.

Workforce Solutions unemployment insurance claims business grew substantially year-to-year again in the third quarter of 2020, we expect strong growth in UC again in 4Q 2020, up about 30% year-to-year.

The column on the far right of slide 13 provides a view on year to year revenue growth trends through mid-October and the implications on 4Q 2020 revenue that those trends should continue. A few reminders as we look at those trends.

Fourth quarter and seasonally the lowest quarter for mortgage revenue, reducing the relative mix of mortgage revenue and overall Equifax revenue. 4Q 2019 saw a very strong growth in the US B2B online, about 18% driven by very strong 4Q 2019 online mortgage revenue growth of 34%.

Again, starting at the bottom of the slide 13, implication of the revenue trends through mid-October continuing throughout 4Q 2020, U.S. B2B online year-to-year revenue continues to be extremely strong. The growth rate is just under 30%. Both USIS online and EWS online verification services growth rates will be very strong, but it levels slightly below what we saw in 3Q 2020.

Mortgage revenue growth rates will be slightly weaker than in 3Q 2020, reflecting the strength in 4Q 2019 mortgage revenue, particularly in EWS. USIS non mortgage year-to-year growth rates would be about flat with 3Q 2020 and workforce non mortgage is expected to decline slightly versus a slight growth we saw in 3Q 2020.

Workforce Solutions employment services year-to-year revenue would be up under 15%, but the unemployment insurance payments business continues to grow, but at levels lower than 3Q 2020.

Financial Marketing Services revenue would be down consistent with the levels we saw in the third quarter.

Turning to slide 14 as Mark discussed earlier, international saw significant improvements in all regions in 3Q 2020 with constant currency year-to-year revenue down that only 5%. Trends from mid-October international continues to improve and so the implementation of the revenue trends through mid-October and continuing throughout 4Q 2020, we expect International revenue to be down only slightly in the fourth quarter.

GCS October trends reflect the continuation of those that Mark discussed earlier. In Consumer Direct growing total subscribers are expected to lead the second consecutive quarter of global direct revenue growth in 4Q.

As we referenced last quarter, the declining partner revenue we saw in 3Q 2020 is expected to increase significantly in 4Q due to decline in the lead gen related partner business. We expect the weakness in partner revenue to continue into the first half of 2021.

As with our prior two earnings calls and due to the continuing uncertainties in forecasting the direction, depth and duration of the recession related to the actions to combat COVID-19, we are not going to provide fourth quarter guidance. However, the perspective on total Equifax 4Q 2020 performance, we will again provide an illustrative fourth quarter framework to help you think about our performance.

Please turn to slide 15. To the extent, total Equifax revenue continues at the pace I described earlier, 4Q 2020 revenue would be up about 9.5% to 11.5%, or $84 million to $104 million year-to-year, resulting in 4Q 2020 revenue of $990 million to $1.01 billion.

Adjusted EPS in 4Q 2020, these revenue levels could be in the range of $1.40 to $1.50 a share down slightly from 4Q 2019.

Slide 15 also provides a walkthrough explaining the translation versus 4Q 2019 of the revenue increase to the increase in pre-tax income and adjusted EPS. Importantly, these adjusted EPS level, Equifax to deliver over $350 million in adjusted EBITDA in the quarter.

[Indiscernible] guidance, there is still much uncertainty as to what impact the pandemic will have on the economy, our customers business activities, and therefore our revenue and earnings. This range provided reflects current variability and trends not a view of potential or outcomes.

As I referenced earlier, trends in Equifax mortgage inquiry volume remain at record levels in the third quarter consistent with a very strong market data on originations. In addition to very strong refinancing activity, new purchase volume has been at record levels and the change was a period of 20% from last year.

And as we referenced last quarter, for Black Knight estimates approximately 18 million household still benefits from refinancing at current average 30 in mortgage rates of under 2.9%. For perspective, current estimates of refinance originations in 2Q 2020 were under $1 million per month.

As Mark referenced earlier, we continue to look to accelerate the completion of our tech transformation, including increasing investment levels in 2020. At present, we expect 2020 onetime cost related to the Equifax 2020 Technology and Data Security Transformation to be about $340 million. We expect capital spending to be about $410 million for the full year.

As a reminder in 2021, we will no longer be adjusting our financial results for one-time costs related to the cloud technology transformation. The one time technology transportation costs are expected to decline substantially in 2021 and will likely be largest in 1Q 2021 decreasing throughout the remainder of 2021.

These one-time technology transformation costs will impact development expense, G&A and COGS. We will continue to disclose these one-time tech transformation costs to allow you to have comparability with our financial results from 2017 through 2020.

And with that I'll turn it back over to Mark.

[Mark Begor, Chief Executive Officer]

Thanks, John. I’ll wrap up with an update on our cloud technology and data transformation and our accelerated focus on new products.

Turning to slide 16. Equifax continues to make very meaningful progress on our cloud data technology transformation. We’re energized by the revenue, cost margin and cash benefits we expect from our cloud investments. Through a single cloud native data fabric and common cloud -- global cloud based infrastructure, to be able to innovate, to develop more robust Product Solutions and multi-data insights that are portable around the world enabled by our differentiated cloud data technology to be able to unlock new use cases and verticals, with our solutions for new and existing customers.

Our cloud based infrastructure will also enable us to accelerate the velocity at which we can develop new products from months to weeks. Accelerating the benefits our customers receive from these products in driving our revenue growth.

We’re already starting to see increased system availability as we move from our legacy technology into the cloud and we expect this trend to continue. All the non-capability are table stakes and global technology company we believe that as more customers moved to the cloud -- the cloud operability will deliver best-in-class systems availability, and customer interaction seamless and faster.

And lastly, we’re continuing on our path to being industry leader in data security. Our security is core to everything we do that by advancements in data governance. We know that data security is a battle that we must fight alongside our industry peers and our customers every day.

Starting to slide 17, we moved in the final phase of our North America technology transformation with a focus on customer migrations. We continue our progress to migrate our customers into our new cloud based systems, including our InterConnect Ignite and API capabilities.

As a reminder this is the common set of services on which we are working to migrate all USIS, EWS and International customers.

At the end -- as of the end of the third quarter, USIS has migrated over 4800 U.S. customers, and Internationals completed migrations of about 6500 customers. For USIS it is up about 4x from the about 1200 customers migrated at the end of June.

We continue to expect this pace of migration to accelerate in the fourth quarter with over 10,000 U.S. customer migrations expected by year end with the remaining U.S. customer migrations completed during 2021.

We continue to adapt our development priorities at platform capabilities to use our customer’s ability to easily migrate to our new platforms. Our progress on the transformation since our last earnings call in July is positive.

Initial and draft migration to GCP of our major North American exchange data to U.S. and Canadian consumer agro [ph] risk exchanges, the world’s number in [Indiscernible] is principally complete, and we expect to have completed full migration including all data ingestion processes for these exchanges by year end.

This distinct milestone with this exchange is generating about 70% of North America Online revenue. We’re also making very good progress in the full migration to GDP, our secondary U.S. exchanges, the U.S. and Canadian commercial risk exchanges, property and data exchanges.

These exchanges are expected to be to complete full migration as we move through 2021. Investments in Europe by TAM and Australia in deploying cloud native Data Fabric and our Ignite Interconnect API analytical decisioning framework are also progressing well.

Data Fabric is live in six global cloud regions globally. We completed the initial migration of our eID identity validation system in the third quarter and started customer migrations, which we expect to complete by year-end.

In our Luminate Cloud Identity [Indiscernible] it is now available to customers in the U.S. and Canada. And in eID cloud-native service is also available for U.S. as part of our newly transformed cloud Luminate offering.

Additional data sources will continue to be integrated on a regular basis as we move forward. We still have plenty of work in front of us, but we are making strong progress in our cloud data and technology transformation. We remain energized about the future top and bottom line benefits. Our cloud-native data and infrastructure will differentiate Equifax in the marketplace today, and be even more valuable as we complete the transformation.

Planning [ph] team highlights our expanded new product innovation focus, which is a key component of our EFS 2020 strategy in the next chapter at Equifax. As I mentioned earlier, we are focused on transforming our company to a product led organization and powered by best-in-class cloud-native data and technology to fuel growth.

As we progress through 2020, we continue to make strong progress on our goals to expand our NPI rollouts, and are on track to deliver about 110 new products in 2020. Through September, we launched about 85 new products, and we have an active pipeline in various stages of the funnel.

In the third quarter, we continued our strong focus on recession based product launches, including our response recovery, product offering, which provide lenders and service providers, the data and analytics they need to both care for their customers and ensure the long-term health of their portfolios.

Response recovery enabled by our night market intelligence sandbox provides lenders access to point in time and trend to consumer insights in order to make better underwriting decisions during a period of economic instability, as well as get the information they need to reach out and support their existing customers already in a combination situation and other institutions.

In USIS, we continue to build on our strengthening commercial business. In the third quarter, USIS launch B2B Connect, designed to help enterprises better prospect, segment and retain key business clients with intelligence on more than 150 million global companies, including 53 million U.S. businesses and 80 million B2B contracts.

B2B Connects is providing an extended omni-channel view of businesses, businesses companies need to better qualified commercial prospects and improve engagement with existing customers. The commercial B2B product will be further enhanced by data from our recent acquisition of Ansonia, which brings unique commercial leasing data to our already robust set of commercial assets

At Workforce Solutions, we continue to focus on the hiring process. This is as a significant growth opportunity for our business, as there are more than 70 million new hires per year in the United States.

In the third quarter, Workforce Solutions launched the first -- the industry’s first I-9 management service designed specifically as an e-commerce platform in the small and mid-sized business owners aligned.

For years, large enterprise businesses have put their trust in the market leading I-9 management solution from Equifax. Now with the e-commerce launches of our I-9 starter and our I-9 standard packages, Equifax makes it easier than ever for businesses of any size to be manage their I-9 requirements. With an automated I-9 platform, organizations can have more confidence in their onboarding and I-9 compliance and deliver better onboarding experience for the new hires.

Workforce Solutions also continue to innovate and uses new solutions to both support their financial and mortgage verticals in 2020, including our new mortgage trended income, employment and multi-borrower products.

NPI continue to be an important lever for Equifax growth and a priority for me and the team. We’ve expanded our focus and resources on driving NPI loss in 2020 and more recently, with a global focus on products that support our customers during the COVID recession. We will continue to prioritize new products and innovations as we move into 2021 to leverage our cloud data and technology transformation for future growth.

Wrapping up on slide 19, as John outlined earlier, we’re still unable to provide guidance for the fourth quarter. We still see meaningful uncertainty from the impacts from the COVID pandemic as cases rise and many markets impacting shelter in place orders, consumer confidence and economic activity. There’s also a real risk of the second COVID wave and potential increased lockdowns. We also expect further impacts from our employment, furloughs and salary reductions.

But even in this challenging COVID environment, Equifax is operating exceptionally well. Our strong business model is resilient in delivering while investing in the future. As we look forward to the rest of 2020 and towards 2021 and beyond, we are confident in the drivers of our business model into our growth strategy.

Our strong 19% growth in the third quarter affects the breath and resiliency of the Equifax business model. The strong U.S. mortgage market and UC Claims revenue was delivering incremental revenue, margin in cash that allows Equifax to continue to be aggressive about investing our cloud transformation, while expanding new investment in innovation, new products in D&A.

Our strong results also strengthen our balance sheet to allow us to focus on accretive M&A. Our third quarter closed 6% revenue growth exclude the impact of U.S. mortgage market and US Claims revenue, a very strong performance in the COVID environment, with our non-mortgage in international business is still pressure from the COVID recession.

We expect those markets to recover in the future with the roll-out of a broad based COVID vaccine as markets recover and economic activity improves.

Workforce Solutions is clearly a franchise Equifax business that is strongly outperforming with multiple structural growth levers from new records, new product, improving product mix with new motor multiples and incremental poles driven by the growth in system and system integrations.

While the mortgage market is a positive tailwind this year for Workforce Solutions, they underlined 27% core growth year-to-date excluding the impact of UC Claims and the mortgage market reflects the power and breath of the Workforce Solutions business model.

Their multiple structural growth levers give us confidence in our ability to drive future incremental value for our customers and future revenue growth for Equifax. And the addition of 6 million records in the third quarter will drive revenue growth in the future.

Our new SSA contract, Social Security Administration contracts that will begin generating $40 million to $50 million of annualized revenue starting next year is another feature of Workflow Solution growth driver. We are also seeing enhanced and broadened value of unique twin income and employment data given the scale and depth of the database.

Turning it to USIS, they also have a strong quarter lead by growth mortgage. USIS has done offense in winning in the marketplace. USIS revenue is outperforming in the COVID recession with total third quarter growth improving to down 1%, excluding growth in the U.S. mortgage market.

The USIS mortgage business continues to outgrow the market with nine points to core growth in third quarter, up from six points in the second quarter. Importantly, USIS pipelines remains our highest levels since 2017 from a new commercial focus and rollout of new products.

As we look out beyond the impacts of the COVID pandemic, we believe that our non-mortgage revenues, which historically represent about 70% of USIS revenue are poised to growth, USIS is competitive in winning in the marketplace.

Our international business has a well balanced portfolio of global businesses representing over 20% of Equifax revenues that have historically driven top line revenue growth through new products and analytics.

Unlike our U.S. B2B businesses, most of our international markets do not have mortgage businesses, and therefore not have seen a larger decline in revenue growth in 2020. From the deeper COVID recessions in more severe GDP declines that have also impacted growth.

We began to see recovery and International markets in the third quarter with Australia and Canada flat versus last year, and expect to see continued improvement as economic activity resume forward.

And last, our GCS Direct business is poised for continued growth behind our disciplined investments. Our B2C [ph] businesses are improving as we invest in new products and marketing and we surpassed 7 million My Equifax members in the quarter, which is a sizable base to cross-sell financial products.

Since I summarize, we're making very good progress on our cloud transformation and data transformation, with significant milestones being achieved on customer migration accelerate. We are energized about the significant top line cost and cash benefits that will come from this transformation, including always on stability, speed to market, ability to rapidly move products around the globe, which we expect will help us improve our position in the marketplace.

And last, our balance sheet is strengthened in 2020 from our strong performance, allowing us to be aggressive about investing in our index 2020 Cloud Data and Technology Transformation, new products and data security, while looking for creative bolt on acquisitions that will add to our strategy.

As we continue to deliver above market results in the COVID recession and focus on investing for future growth, I'm more excited than ever about our future as a market leading data, analytics and technology company.

With that operator, let me open it up for questions.

[Operator]

Thank you. [Operator Instructions] We will take our first question from Kyle Peterson with Needham.

[Kyle Peterson, Needham]

Hey, good morning, and thanks for taking the question. Just wanted to start on the margins. It looks really strong this quarter, especially within EWS and others have been kind of marking up over time. Do you think what we saw on the margin side could be sustainable in monolized environment? Or is there anything like one-time that we should be thinking about from this quarter?

[Mark Begor, Chief Executive Officer]

Yes. It's a great question. You've seen over the last several years, and certainly in 2020, strong top line performance from Workforce Solutions and that has certainly translated into margin growth. As you know, in our industry, internet business in particular, but in all our businesses incremental revenue growth drives very attractive incremental margins. We've seen a very strong performance in 2020. We expect that this is to continue to perform in the future. And I think we're prepared to give a guidance around margins for the future, because we can't do that broadly. But we've got a lot of confidence in the Workforce Solutions business, given the multiple levers that they have to drive future growth.

[Kyle Peterson, Needham]

Got it. That's helpful. And then just one follow-up. I know you mentioned the [Indiscernible] increase, now that you're talking about one inquiry in twin for every two or just like mortgage origination inquiries. What do you guys find is the biggest gating factor to getting that moving that ratio higher. Is that more like lender awareness of those database or is it just that you just need to keep pushing the snowball down the hill and adding more employers and records onto the network?

[Mark Begor, Chief Executive Officer]

Yes. It's less about the employers and records. It's really what you pointed out. It's really getting into one of our customers and showing them the value of the product. It's also driven by new products. We talked about in the last couple of calls that Workforce Solutions is rolling out new products that provide multiple polls and a package for mortgage application as one purchase from Equifax. And we see that driving some of the polls. We also see the system and system integrations being a real driver, where we're getting embedded in our customer workflows. And we've got a dedicated team that works on that with our customers to show them the value of the income employment data.

And then, as you pointed out just getting in front of customers, so they understand, the lift they're getting in predictability. If you're a mortgage originator, and you're going to spend, call it $4,000 in a mortgage application. When you start that application process, you want to make sure that you're working with a customer that is going to be able to be approved. Part of that is historically pulling the credit file upfront to understand what the credit profile of that customer. And that's kind of a common practice today, increasingly, the more sophisticated mortgage originators are starting to pull upfront, the income employment data, particularly in this environment, understanding where are people still employed and then pulling it multiple times.

So those are just multiple opportunities that the team has in using mortgage as an example. And, of course, the same holds in other verticals where we're seeing, particularly the database becomes almost a catalyst, it's over -- well over 50% of the non-farm payroll, it's becoming an asset that the hit rates are very valuable in multiple verticals beyond mortgage.

[Operator]

We'll now take our next question from Manav Patnaik with Barclays.

[Manav Patnaik, Barclays]

Good morning. Maybe I can just follow-up there. The mortgage digitalization, I guess, is the big team out there. And we're seeing a lot of acquisitions for my Equifax. There's a whole bunch of stuff going on out there. And I just, besides, trying to get more penetration, the way you just described it, like how do you look at the opportunity with that team? And do you have plans with other solutions, and the name. Would you just talk there would be helpful?

[Mark Begor, Chief Executive Officer]

Manav, I apologize, I miss the first portion of the question. Can you give us a quick reference?

[Manav Patnaik, Barclays]

Sure. It was tied to the team around mortgage digitization, I guess, and there's a lot of opportunity striving from that. And I was just wondering if you had broader plan for your mortgage business outside of just kind of seen a little bit more penetration that you just talked about?

[Mark Begor, Chief Executive Officer]

Yes. Obviously, we have a large mortgage business. We're benefiting from the market tailwinds. We've got a real focus on rolling out new products, in particularly Workforce Solutions, but also in the USIS, our UDM products, are another growth area for us. And I think what we're pleased with is the fact that both USIS and Workforce Solutions are outgrowing the mortgage market. Now, how do you do that? Will you do that with new products, new solutions, blogging more usage of your products, in particular, that's around the twin income employment database were pulled more frequently.

And then just the system, the system integrations where we still have a lot of one way to work with our customers to convert them from dialing in and keying into the system on an individual applicant basis to pull the income employment data to go into system integrations, which is as you know is more on the credit file side. But it's one that's an opportunity on the income employment side. And that really we've seen big lifts in utilization, when we are embedded in the workflows and the income employment data. We've had great progress in adding those in the third quarter in 2020.

[Manav Patnaik, Barclays]

Got it. And then just a check on the Tech Transformation. When you started the program, you're talking about $1.25 billion is the number and it's a pretty big number you talk maybe you left some buffer room in there. But last time you said 1.4, and I think you said, it was a 1.5 billion program. So I was just curious, that incremental 250 million like, I guess where did we go over budget? Or where's that extra spend are being required today?

[Mark Begor, Chief Executive Officer]

Yes. And that's been an area that we've been clear that we're going to invest more. We see opportunities to do that to accelerate the transformation. And just to be clear, and I know you notice, but $1.5 billion we now talk about is the incremental spend in 2018, 2019 and 2020. So that's going to be behind us. And that's how much we're going to spend through the end of the year. We'll obviously be spending money on our technology as we go into 2021 and beyond that, that's going to be in our one rate spend versus the incremental spend that we talked about. And with our strong financial performance in the second half of 2019, we started investing more in the Tech Transformation. And as we continued in 2020, and performed so strongly during the COVID recession, we've made strategic decisions to accelerate our spend in order to drive it more rapidly. We think that's the right thing to do, because of the sizeable benefits that we expect to get from the transformation.

[Operator]

Our next question comes from Andrew Steinerman with JPMorgan.

[Andrew Steinerman, JPMorgan]

Good morning. Just two questions. The first one I didn't catch if you gave the total Equifax third quarter revenues related to mortgage. So, I'd like that if you could. And6 then looking at slide 13, under EWS, non-mortgage, September stood out to me how it jumped forward. And then, sort of October kind of normalized back to July, August rates. Could just talked a little bit about that September come forward?

[Mark Begor, Chief Executive Officer]

So, in terms of total mortgage revenue, total mortgage revenues are little over a third of Equifax total revenue. So that's the best way we'll estimate that. In terms of September non-mortgage for EWS, we have substantial business with government and other participants. And so it can just be a little choppy. And obviously, the underlying revenue base isn't that large. So just movements between months can result in different growth rates between the months quite understood, so that's why we indicate that when you're looking at those numbers you can consider them indicative. And that's why we focus a lot more on the quarterly numbers.

[Andrew Steinerman, JPMorgan]

Thank you.

[Operator]

We'll take our next question from Toni Kaplan with Morgan Stanley.

[Toni Kaplan]

Thanks so much for taking my question. Just wanted to ask broadly about how you're thinking about the trends in consumer credit. On one hand, we've heard some lenders talking about borrowers, more borrowers exiting forbearance, and defaulting, which could impact the appetite for lending. But on the other hand, you have recovery trends taking hold and the economy with things opening up. So wanted to hear broadly about that? And specifically, also just wanted to ask about the sort of better September non-mortgage number within USIS. And then October getting a little bit more in between like, where September and the other months of the third quarter are?

[John Gamble, Chief Financial Officer]

The first half of the question, Toni, it’s obviously complicated. It’s a -- economic event, a health event, like we've never seen before. Kind of broadly, the consumer is still fairly strong. Obviously, there's high-end employment, but some of the stimulus benefits that help the consumer. When we talk to our customers, their delinquencies, they are not increasing yet, because they're making minimum payments, and they're not behind in credit card payments, et cetera, kind of I'm talking broadly. So I think that's kind of what's happening so far. I think what we're all watching, is what happens as stimulus dollars one out. Are they're going to be using dollars, either pre or post the election in a few weeks, its tough to see. Where's unemployment going to go? Yes. And on top of that, what's the timing of vaccine? How quickly will it be deployed across the population, which obviously will drive economic activity. It's just a lot of challenging messages there we try to work through.

What's underlying that, from our perspective, is that data is more valuable than ever for our customers. And that's what we're seeing. Obviously, our performance is quite strong. Data is being used to try to look through to who are the customers, the consumers that are still working. Who are the consumers that can take a line increase or having a mortgage refi or what is the data? So I think that's a positive for our industry. But you point out, which is why, we struggled providing guidance for the fourth quarter of 2021. At this stage, it's still quite uncertain about where that consumer is going.

[Mark Begor, Chief Executive Officer]

In terms of your question on September at minus three and in the quarter minus five and our discussion around mid-October at above minus five. Again, the above minus five and above minus three to us are very similar numbers, right? And September's monthly data. So I think the important fact is we are seeing an improvement trend. We expect that we're seeing our business improve in non-mortgage, and we're very happy with that trend. But as we look through the rest of the fourth quarter, above 5% is can be a little bit on either side of 5%.

[Operator]

Our next question comes from David Togut with Evercore ISI.

[David Togut, Evercore ISI]

Thank you. Good morning. And appreciate all the helpful disclosure in the deck. The number one investor question I receive on Equifax is whether revenue and earnings growth is peaking given this extraordinary mortgage market expansion, which clearly benefits both USIS and EWS, along with the increased appetite for TWN employment and income data during the COVID pandemic. And clearly there are a number of positives that will sustain, the 20% growth and TWN records, the growth in NPI, the growth in the pipeline. But as you start to think about a 2021 framework, you want people to start with that 6% core growth from the third quarter. What are some of the parameters that you're starting to think about as you frame your own views for 2021?

[Mark Begor, Chief Executive Officer]

David, I think we're going to try to avoid getting you to 2021 guidance, but we were quite intentional because we're getting the same questions you're getting about what -- how do we look through Equifax is very strong performance in the year, particularly from the incremental UC claims revenue, which is meaningful, that we've highlighted will likely normalize in 2021 with unemployment, presumably coming down our unemployment claims not continuing. And then, of course, the U.S. mortgage market. U.S. mortgage market, that's one that is difficult for us to -- John talk a little bit about that one. We can't forecast what's going to happen in 2021 on the mortgage market, but the fundamentals are still quite positive for 2021 in the U.S. mortgage market with the Fed stating pretty strongly that they're going to keep interest rates at the record lows through 2021. That's a positive for refinancings and for purchase volume. We've seen purchase volume really accelerate in the last 90 days in the United States. Consumers are going out to buy homes or upgrade to get larger homes or move to the suburbs. And again, we're not forecasting, but it feels like there's some legs on that macro. And then of course, the refinance side, there's still a very sizable population, as John pointed out by consumers that have not refinance their mortgages yet, that there's multiple quarters of that benefit.

With regards to 2021, you highlight some of the positives for Equifax. You can start with a lot of businesses are still challenged by the COVID pandemic and we're not forecasting 2021. But if you believe that there's going to be a vaccine, and the vaccine is going to result in more normal recovery of some sort, that's going to be good news for Equifax. International, our non-mortgage businesses in the United States, more RTGS business. So that's a positive as we go forward. You point out the power of Workforce Solutions. As we entered the pandemic USIS within a recovery mode following a cyber-event, we believe USIS is performing quite strongly on a mortgage and non-mortgage basis during the pandemic. But as we get into more of an economic recovery, we expect that to accelerating as exhibited by the deal pipelines are growing and the needs increased commercial activity.

And of course, Workforce Solutions, we tested to really highlight how important that business is, how important is performance is. They've got a long list of structural levers, that they can -- that they're bit pulling and will continue to pull and you pointed our records, 6 million addition in the quarter is going to serve them well with higher hit rates and drives higher revenue in the fourth quarter and into 2021. And of course, the other elements of the business. So out attempt in providing the additional disclosures this quarter was to help you and our investors, see through the underlying performance in the COVID recession. And again, we're still in a COVID recession, Equifax delivering 6% core growth is really quite strong. And the tail winds, if you add on top of that, the benefits from the Tech Transformation as we talked about the very clear will begin really kicking in 2021, which would be another positive for us on both our top line margins and cash generation.

[David Togut, Evercore ISI]

Appreciate that. Just a quick follow up on capital return. Will you be in a position to do more in terms of capital return as we approach 2021 in terms of dividend growth by that more M&A?

[John Gamble, Chief Financial Officer]

Yes. We've been clear that, again, I don't want to give guidance. And as you know, we don't have a financial framework in place. But we've been pretty clear that our goal to get back to that. We've been investing heavily in our Tech Transformation. And we're getting the big spend in our Tech Transformation, certainly behind us in 2020. And our three-year plan. And we believe that our cash generation will accelerate as we go through 2021, 2022, 2023, which is going to provide free cash flow for us to invest in M&A, which we talked about earlier in the call. It's our intention to have more focus there. And we don't want to give any guidance around. Our intent to do a buyback or reads a dividend growth. But we've had that framework in place before. And we'll certainly consider its a right time when we put our financial framework and capital allocation plan back in place in the future.

[Operator]

Next question comes from Kevin McVeigh with Credit Suisse.

[Kevin McVeigh, Credit Suisse]

Great. Thank you. I just want to spend a minute on the progression of the client in EWS. Ultimately, it looks like the average client size was about 4,000 back in 2008. And that number is closer to 110, based on just specific next kind of client versus records in the work number. Do the needs of the smaller clients kind of increase? And is there any way to frame what the opportunity is as you kind of triangulate from the dollar perspective, kind of the work number with the core USIS as you look at a little bit. So just trying to get a sense of, again, the market opportunities as you build more down market, and then what that can meets the enterprise overall?

[Mark Begor, Chief Executive Officer]

Yes. First off on, more records is more value, right? And more contributors is doing, they are moving up 6 million records this quarter. We think is a big milestone where we were flat in the second quarter. But there's some bumpiness to when records come in, and we had a very strong order of execution there. We're up 20% in records year-over-year. As you know, that's going to drive hit rates and revenue growth going forward. And then to your point, you did see really the addition of some more companies. There's all kinds of numbers out there on how many companies there are in the United States, whether it's three or four or five million, but going from 69,000, a year ago to a million companies really does increase the breadth and depth of the database. So that's very, very positive for Equifax and for our customers.

As you know, one area where the database is huge, is what I would call, the near-prime or sub-prime customers, and you see those customers and all kinds of companies, but adding more companies, million companies just brings more value to the database. And we're really intently focused on continuing to grow the database. We also mentioned earlier in the comments that getting to this level of scale, having 88 million uniques, or 107 million active, as well as inactive, really takes the database almost as a catalyst of being very, very valuable just because they hit rates go up. And the other thing I've commented on is that the team is expanding their focus. We've had a W2 focus on non-farm payrolls for a long, long time. And in the last year, we started to expand that focus around the gig economy 1099 that we're actually ingesting now into our database, 1099 income data. Pension data is another one that we've got our sights set on for those. We're going to hit towards non-farm payroll, that's going to take time. But we've expanded our focus to go well beyond that to get all levels of employment or other income that consumers are having. So it will become really one stop shop for all that data.

[Kevin McVeigh, Credit Suisse]

Got it. And then just to follow-up on that real quick. I know, obviously, the focus been on the mortgage side, seems like there's a opportunity to flush that out across other credit instruments as well? Is that so?

[Mark Begor, Chief Executive Officer]

It is. That's a big focus for us and we talk on prior calls that the values always been there. And we shared with you and others that if you take credit data, and add income employment data to what the predictability or the chaos for from that decision goes up dramatically. So that's always in the back, it's one that we've been sharing with our customers for years. The COVID crisis has created a catalyst for that. And we talked about in the last call. On the second quarter call that we're seeing, for example, credit card customers. We've got a couple of major credit card customers that are now embedding the work number data into their origination workflows, so adding it to the credit file. So that's a big deal for us to get into that space.

In the auto space it’s been used in closing for sub-prime customers, and now we're seeing it used more broadly because it increases the predictability of that underwriting decision. And so, it's really around our focus on differentiated data. But of course, the twin income and employment data is just very, very unique in that scale, which provide real value and of course, we didn't talk about it in this call, that government is also was very fast growing vertical for us. I talked about the new social security administration contract that extend in 2021. That's an example of how we're expanding the use cases of the twin data. And then of course, another growth area for us around the data is in employment decisions. When you're hiring someone, we call it talent solutions. So that's another area that we see future growth. So there's just a lot of levers for growth in that business.

[Operator]

Our next question comes from Ashish Sabadra with Deutsche Bank.

[Ashish Sabadra, Deutsche Bank]

Well, thanks for taking my question. And thanks for the clarification on the FMS. My question -- follow up question there was, when does that difficult comps form a big client and last year anniversary and when do you start seeing FMS get back to a more normalized growth profile? Thanks.

[Mark Begor, Chief Executive Officer]

Sorry. You're breaking up a little bit. Could you repeat that question.

[Ashish Sabadra, Deutsche Bank]

Oh, sorry. Sorry about that. My question is on FMS. There was a difficult comp there. I was just wondering when does that difficult comp anniversary? And when do we get back to a more normalized growth in the FMS business?

[Mark Begor, Chief Executive Officer]

Yes. So your questions about the FMS business. First off, we're still in the COVID recession. And you know, that business provides data for both portfolio management and marketing. And as I pointed out my kind of say, John did too, lot of our customers have curtailed or slowed down, do account originations which affect their business. And so, when you talk about normalized growth, the first thing, or the biggest factor that's going to drive that will be a resumption of originations, which we started to see. We kind of did that. And we had a couple of customers in the quarter in September that started to originate -- started origination, and actually had origination volumes without -- revenue with us that were above last year.

So we're starting to see signs those originations. John pointed out, we also add some a couple of larger deals if you will in 2019. And I would attribute that some part of the USIS recovery that haven't repeated in 2020. I would characterize most of that is driven by the COVID recession and the impact decisions our customers are making around assumption on originations. But we all know that our customers will start originating again, once their confidence grows, they have to -- that's a part of your business. You have to continue to add new customers. So it's just a matter of when they start doing that. And we would expect the business to grow there.

On the portfolio management side, that's one where we've seen some increased activity. As customers are focused on managing the back book, we would expect that to continue to be a positive tailwind as we move into fourth quarter of 2021. Its typical as you're coming out of the recession, or in a recession, there's a lot of focus around managing your existing portfolio.

[Ashish Sabadra, Deutsche Bank]

That's very helpful color. And maybe just a quick follow up on the cost savings. Thanks for those details. I was wondering could you have a timeline by which we should start seeing those savings flow to the bottom line? And any incremental thoughts on how should we think about investments going forward? Thanks.

[Mark Begor, Chief Executive Officer]

That's one that we're not ready to get 2021 guidance, we're not giving guidance on. It is our plan to provide some visibility in the future -- in the near future around what we expect some of the benefits to be in 2021 as we have some level of framework for 2021. We're not sure we're going to be able to provide guidance. But we'll definitely do that. We're not ready to do that today. That said, we have been quite clear around what we expect the benefits to be, the sizing of the cost benefits that we're going to get from the cloud transformation, the cash benefits we expect to generate, which we believe are sizable. We haven't framed yet. We expect the revenue benefits to be -- those will all be firmly embedded in a long term framework when we put it back in place.

[Operator]

The next question comes from George Mihalos with Cowen.

[George Mihalos, Cowen]

Great. Good morning, guys. And thanks for taking my questions. I guess first to kick things off. Mark, I think you said that about 20% of verification revenues coming from inactive accounts. And I'm just curious, how long can an inactive account could be monetized? What's sort of the lifespan of an inactive account? And then, does that really skew to one vertical within EWS more than any other? So for example, mortgage where you're bundling services or something like that?

[Mark Begor, Chief Executive Officer]

That's great question. One, we haven't talked a lot about, 20% is a big percentage of our revenue. It's really going to -- every vertical has different use cases were having a multi-year period, multi-year history of someone’s employment is quite valuable. There’s a use case, which is someone working today, and how much did they make. And then there’s other use cases as well, that they’ve been working for the last 12 months, they have been working for the last two years.

And as you know, people change jobs. So having a, multi-year, or a multi-job work history for someone is quite valuable. We have something like an average of 4.5 jobs per unique individual in the database, which makes sense. There’s a lot of people that change more often over a five-year period, six-year period, two-year period than others, and then some that are in the same job. But that history of data is incredibly valuable. And there’s some use cases where you have to have the history. So not only having what someone is doing today is less valuable, which really go down the path of like a someone who’s going to provide a pay stub, that might work in some situation, most of our customers don’t take those anymore. But would you have a use case, if someone wants to know, where did you work for the last two years, the only way to really prove that, and get it quickly and completely and accurately is to come to Workforce Solutions.

So that’s a wide data and if you go around verticals, it’s really in every vertical, it’s mortgages got a lot of use cases where it’s very, very important to have a history of work, employment and income, auto has it, card, less so, all of those use cases where some card issuers are looking at that. In the government space, it's valuable, both today as well as history, and it just reflects the value of the business. It’s taken as a decade to build up that 450 million records on individuals, it’s just very, very valuable.

[George Mihalos, Cowen]

Okay. That’s super helpful color. Really appreciate it. And then just as a quick follow-up, I think obviously, within GTS partner is under increased pressure. And yes, I think if I caught the comments, you were suggesting that it will stay weak through the first half of next year. I’m just curious if you could talk a little bit about the visibility that you have in that channel of the business going forward?

[Mark Begor, Chief Executive Officer]

Yes. I think we said during the first half of last year, I think we said we expected it to stay soft through the fourth quarter. We don’t have visibility, just to be clear. But in our discussions with customers in that space, which is really in the lead generation space, it goes back to the origination point I had earlier around our USIS FMS business, customers, originators, whether your bank card or personal loan, clearly curtailed in the COVID recession, their origination.

So that impacts our business and also impacts some of our partners to use our data in that Lead-gen space. So that'll come back over time. We don’t know what it is. It’s hard to forecast. As we look out to the fourth quarter, we expect it still to be weaken the fourth quarter on the Lead-gen side, just because we don’t see signs. We see signs of improvement, but not to where it was a year ago.

[George Mihalos, Cowen]

Okay, great. Thank you. I misheard that one.

[Operator]

Our next question comes from Hamzah Mazari with Jefferies.

[Hamzah Mazari, Jefferies]

Hey, good morning. Thank you. My first question is just on the tech transformation timeline. Anyway to think about the risk that that timeline bleeds into sort of 2022 with COVID?

[Mark Begor, Chief Executive Officer]

Yes, we’ve been pretty clear on all of our calls during the COVID recession that, we’ve been meeting our milestones. And we think that don't change our plans. And we talked a bunch on the call this already this morning around -- etcetera being in the cloud.

So we’re very pleased with our milestones. We’re also very pleased with our migrations, remember just two people detect transpiration. One is getting the technology right and getting our data assets and application to the cloud. And then second is migrating our customers to waiting. So you saw that we’re making good progress in the third quarter. And we expect to make good progress in the fourth quarter. So, we’re pleased with our progress, and there's still a lot of work to do, but we are meeting our internal milestones that we’re trying to share with you transparently.

[John Gamble, Chief Financial Officer]

And we compare that the focus is on North America, which is like 80% of the revenue. And we have indicated that some smaller properties or smaller business would trail out further into the future. But that will just become normal spend.

[Hamzah Mazari, Jefferies]

Great. That’s very helpful. And you just want to follow-up on the mortgage market, specifically. Just on Fannie and Freddie any potential changes there, under either administration either more autonomy, new capital rules, privatization. Just any chatter on Fannie and Freddie and how that may impact you? Or is that not really a big deal? Thank you so much.

[Mark Begor, Chief Executive Officer]

Yes. We don’t -- that there’s a lot in that question. You get into what can happen, the elections versus Democratic versus Republican that you got to get into all that set in etcetera. I think that’s probably a longer question. But I would say more broadly, specifically to Fannie and Freddie, we don’t see any change in impacting Equifax if administration changes or not with Fannie and Freddie. Frankly, more broadly we don’t see that how Equifax operates. We provide a very valuable service to U.S. consumers and to our customers. And we don’t expect them to change whatever happens in November.

[Operator]

We’ll take our next question from Bill Warmington with Wells Fargo.

[Bill Warmington, Wells Fargo]

Good morning, everyone. So this new I-9 product you guys introduced last week that takes the I-9 Management Suite down market to the small and midsize businesses. I realized that’s part of the Employer Services, but and non-verification services. But is a strategy to use the I-9 product as a source of new leads for the work number?

[Mark Begor, Chief Executive Officer]

We like our talent solutions and Employer Services business is a compliment to our verification services business. And for us the idea of having more connections and services, with the HR manager who was providing us in making a decision to provide us their payroll records for the verification side of the business we think is positive.

So, there’s no question, we want to continue to expand, the services and products that we provide. On the I-9 side, we introduced a number of I-9 products that we’re really pleased with in their performance on an I-9 anywhere that allows the expected employee to complete that process remotely, using a digital solution and in some of the smaller company products that we’ve introduced. It’s just examples of our focus on innovation and new products, hope to drive the business but to expand our relationship as I would characterize it with the HR manager. So we have more connections for the broader ecosystem that were for solutions.

[Bill Warmington, Wells Fargo]

Got it. And as a follow-up question. Just wanted to ask on the social security contract, that’s starting up next year, the 40 million to 50 million in revenue, any additional color on the timing of the start of that revenue beginning of the year, middle of the year, something?

[Mark Begor, Chief Executive Officer]

Yes. Too early on that one. We certainly expect revenue in 2020, which is why we’ve talked about it that way. A full run rate is going to be to $40 million to $50 million. It likely won’t be full run rate for sure in 2021. But we’re actively working on the technology elements with our customer and driving it forward. We talk about this contract just because of the size of it. It’s unusual to have a contract of that size get landed. But it’s just a reflection of the value of the Workforce Solutions data in so many different verticals and use cases in this case and the government space with the Social Security administration.

[Operator]

Our next question comes from Andrew Jeffrey with Truist Securities. Andrew, you may have us on mute.

[Andrew Jeffrey, Truist Securities]

Hi, guys. Appreciate you taking the question. It’s been a long call, full of good information. Mark, I just wonder if you could address Equifax’s position in Fintech. I know it's one of the areas in COVID that’s maybe been a little bit weaker than some of the structural growth areas that you enumerated, but maybe a cyclical outlook there and also market share plans and outlook would be helpful.

[Mark Begor, Chief Executive Officer]

So, I think, we’ve been clear, it’s a space that we refocused on and started building out resources in the latter part of 2018. We added resources in 2019. I think from commercial resources, we’re up probably between 2x and 3x what we had two years ago. So it’s a space we want to be bigger in. We think we are well positioned to be bigger in it. We have pretty strong market position with most of the Fintechs with our TWN data where it’s used, and of course, it’s expanding usage during COVID. And we are working to take advantage of that relationship to move some of our credit data in.

We’ve had some positive wins. It’s, I don’t know, $250 million market in the United States. I think you know our competitors are much stronger than we are. But we think there’s room for Equifax to grow. Many of those are single-sourced in the Fintech from starting out that way, and they’re getting to scale where they could be dual source, which prevents an opportunity for Equifax, particularly when we’re already in the door with our TWN data.

They have been more impacted than how we characterized an FI, particularly because of their funding requirements. They typically aren’t balance sheet funded. So they’ve been more impacted on originations. But we stayed supporting them, and we’re continuing to have some commercial wins during the last couple of quarters in that space. And it’s an area that, since saying in the USIS team we are focused on, for growth in the future. We see it as a strategic market for us going forward.

[Andrew Jeffrey, Truist Securities]

Thank you. Appreciate it.

[Operator]

We'll take our next question from Andrew Nicholas with William Blair.

[Andrew Nicholas, William Blair]

Hi. Good morning. Can you speak to the potential for competitors to replicate certain aspects of the work number database in the U.S. over a longer time frame? It certainly seem unlikely that they’ve had the same level of integration with employers and the same number of employers. But are there other ways to gather some of the same data aspects, whether it be through some of the payroll processors or analyzing demand deposit accounts? I guess, I’m just wondering, how you protect your moat there and whether alternative approaches to gathering income and employment data could result in alternatives for your customers down the road?

[Mark Begor, Chief Executive Officer]

Yes. We think we have real scale in the business, which provides a competitive advantage for us at Workforce Solutions. We’ve owned this business for over a decade. And we’ve invested between the acquisition of business and what we’ve invested in technology and resources, a couple billion dollars over the last 10 years. And the scale of the business, we think provides some real strength in the competitive advantage.

We talked about the history of the data, which is really hard to get, on an individual, worried about people or work the last two years or here at Equifax, where do you work the two years before that or the two years before that, collecting that data is quite challenging. We’re participating in some of the other ways to collect data, you pointed out, bank transaction data and trying to impute it in, the net pay in someone’s bank account that’s a data source, but very difficult to get, the consumer have to consent to give the data. So we think that -- quite challenging.

So we think there’s just a lot of strengths around the business, we’re always looking at who our competitors are in every business. And but this is one where we think we have similar market strength, given the scale of it. Maybe as you point out, the network of connections we have with so many customers. And then of course, we’re now having a billion companies to deliver data to us on a fee per unit basis. And that makes this data set very, very valuable and tough to replicate.

And if you’re a company, you’re likely not going to give the data to two companies. You’re going to give it to the company that’s been here for a long time. And we think that’s another important element for Equifax, our strength of the business, our proprietary and security around it, the fact that we authenticate anyone who uses the data before they’re able to use it. There’s just a lot of security and protection around that, which is very important to those actually to own the data and contributed to us.

[Andrew Nicholas, William Blair]

Got it. Yes. That makes sense. Thank you. And then switching gears a little bit on my follow up. So maybe you can speak to the margin performance in the international business in the third quarter? Margin expanded quite nicely year-over-year, despite the revenue decline. So I was just wondering if there’s anything you point to specifically on the cost front in that segment, and they are now permanent [ph] some of those savings could potentially be?

[Mark Begor, Chief Executive Officer]

Yes, we did some costs work in International in 2019 that we’re getting benefits from. And then there’s been some tightening during 2020, during the COVID pandemic, as you point out, with pretty strong performance on margins. Given the revenue declines, which are still quite substantial in International because of the COVID pandemic. So, we expect those -- the COVID pandemic to get behind us economic activity improves that obviously, revenue should go with that and improve it, should be positive for the margins of that business going forward.

[Operator]

We will take our next question from Jeff Meuler with Baird.

[Jeff Meuler, Baird]

Thank you. Good morning. So, John, I think you tried to print this question with the bridge you gave us on the slides. On the Q4 illustrative framework, EPS being down slightly on low double-digit revenue growth, it looks like a lot of the headwind factors are calling out in your bridge have been with you kind of all year. Yet, you had good EPS growth year-over-year, the first three quarter, so anything else to call out on Q4 EPS in the framework?

[John Gamble, Chief Financial Officer]

Yes. The only other thing you see, you see although it’s a little bigger than it’s been in some of the other quarters, right? And that’s really driven by the fact that the comment I made around corporate expenses, you’re seeing a significant increase in incentive compensation because of the fact that the business has performed so incredibly well over the past two quarters. Our expected performance has improved quite significantly, and you’re seeing that across different areas of incentives, including sales comp, etcetera, and that’s affecting the fourth quarter because of the very, very strong performance. We continue that -- we continue to be spending related to the tech transformation and some of that’s flowing through on tech expense, but those are the biggest drivers.

The other thing that you’ll see, and it’s a footnote on the chart, right, is tax rate is actually higher in the fourth quarter, right, year-on-year. So that negatively affects -- that negatively affects the comparison as well by $0.03 or $0.04 a share. So those factors together are what drives the difference between the revenue growth and the EPS performance.

[Jeff Meuler, Baird]

Okay. And then I’m struggling to understand the magnitude of the change in trends in the Q4 outlook for the GCS partner channel. Is this all about kind of activity at the lead-gens and member count not being backfilled yet on the churn side? Or was there any loss of partners or any changes of terms with sizable partners pricing or how they use you?

[Mark Begor, Chief Executive Officer]

Yes. There's a number of things in there, Jeff. And there certainly is – we’re always working with our customers to help support them in tough economic events. So I think you can attribute that to changes in perhaps pricing and things like that. But then there’s also the underlying volume is quite challenging, which is also a contributor as their customers and, of course, in our case, with our FMS business, still are not anywhere near pre-COVID levels with regards to originations.

[Jeff Meuler, Baird]

Okay. Thank you.

[Operator]

And we’ll take our next question from George Tong with Goldman Sachs.

[George Tong, Goldman Sachs]

Hi. Thanks. Good morning. Mark, you mentioned that core revenue growth was 6% in the quarter, excluding benefits from unemployment claims in the mortgage market. Can you talk a little bit about what may be driving the difference between the 6% core revenue growth and non-mortgage B2B revenue performance in the quarter that was roughly flatted down?

[Mark Begor, Chief Executive Officer]

I think if I follow your question, it's really going to be the outperformance of our mortgage businesses, which is Workforce Solutions is growing -- obviously, the mortgage market is up. As we highlighted on couple of slides in our comments, they’ve got core growth in the mortgage business. So that’s going to drive that. And the same with USIS at 600 basis points of growth in mortgage from core versus the mortgage market and Workforce Solutions multiples that from new records and new products, everything else. So that’s really what’s driving it now, which we think is very positive in a COVID recession. And of course, the rest of the non-mortgage businesses at Equifax that are still negative in many markets and verticals because of the COVID recession, those surely will recover as economic activity comes back in the future, as we get through and past the COVID market effect.

[John Gamble, Chief Financial Officer]

As Mark indicated, you’re right, George, I mean it’s our strategic focus to try to make sure we dramatically outgrow the mortgage market. And what that’s showing is that we’re achieving that very successfully even though the non-mortgage businesses are weaker because of COVID.

[George Tong, Goldman Sachs]

Got it. And looking at monthly trends, specifically in the non-mortgage business, USIS revenue has been largely consistent at down roughly 5% year-over-year moving through the quarter, and the non-mortgage EWS also consistently down about low single-digit if you exclude that jump that we saw in September. So, could you talk about some of the puts and takes around that to our non-mortgage revenue performance in 3Q that didn’t seem to improve moving through the quarter. But the trend seemed relatively stable, so just some picture on that.

[Mark Begor, Chief Executive Officer]

I think it’s really about those verticals really still not recovering and we expect they will. I think our competitors are seeing similar challenges with -- whether it’s card originations or personal loan volume. The financial institutions are being quite conservative and that should be until they have some clarity around where the economy is going. When they do, they’re going to start originating again and that will be positive for us as we go forward in our non-mortgage businesses.

[John Gamble, Chief Financial Officer]

But to be clear, we did see improvement in September in the USIS non-mortgage relative to what we saw over the July, August period. It certainly did better. And we saw that improvement. We talked a little bit about that in the script. And the same is true in EWS. I think it did better. When I asked the question, I was simply trying to indicate don’t expect 16% to continue, right. But we did see an improving trend both in USIS non-mortgage and EWS non-mortgage during the period.

[Operator]

And we'll take our next question from Gary Bisbee with Bank of America Securities.

[Gary Bisbee, Bank of America Securities]

Hi. Good morning. Thanks. So I guess just to partner on innovation if I could. You have actually talked at the beginning of the tech transformation about the opportunity to decelerate innovation. I would love to just get a sense where you are with that and have you made enough progress that that is happening and if it is more of a for future opportunity, what is the timeline?

And I guess the second part of that, the previous Equifax talked a lot about the concept of vitality and even use to talk annual classes of new products and sort of how the three year company forecasts for revenue on those were doing. Could you just help us think through that as well? Obviously went down from [Indiscernible] growing again is that a meaningful acceleration of innovation really that vitality going forward? Thank you.

[Mark Begor, Chief Executive Officer]

As you know, for the last couple of quarters you’ve heard me talk about it because I really view it in the next chapter with Equifax really, accelerate our new product innovation. It’s really levers the cloud investments that we’re making. We believe that this is going to be a real catalyst for us to drive topline growth. You’re seeing an EDS about the timing and you know it’s really happening in 2019. We did it on the chart, we put in the in the early slides, we did 90 new products out from 16 in 2018.

And that’s up from in the 70 to 80, range, kind of pre cyber events. So in 2019, we’re operating at higher level. And of course, we’ve gone to 90 last year to around 110 in 2020. So there’s clearly a renewed focus on it, you saw a few months ago, we brought in a new Chief Product Officer. We’re adding new product talent resources to really scale up our ability to bring new products to market.

And remember, one of the reasons we’re making this cloud investments that we talked so much about it, because we’re going to put all our data assets into a single data fabric. And we believe that’s going to accelerate our ability to do data combinations and renew solutions to the marketplace. So that’s what this new product team is going to be focused on is really leveraging the cloud investments that we’re making.

So what you're going to see benefits of it, you're seeing it today, you saw this quarter and we talked about some of the new products we're rolling out in the marketplace. That gives our commercial team more things to sell, and more solutions to bring to our customers. So going from 90 last year to 110 and my goal is to grow beyond the 110 in 2021, as we continue to invest in resources, and really leverage the cloud transformation.

With regards to the vitality index, that’s something that we've talked about before, I guess pre the cyber event. I think it’s likely something we’ll bring back to the dialogue with our investors. We already have plenty to talk about. But if there’s interest in that, you will certainly bring that back. But new products are a key priority of ours. As I characterize it, it’s the next chapter with Equifax, it’s really going to drive our top line growth.

[John Gamble, Chief Financial Officer]

And I mentioned this before, but absolutely our products that are launched on the new infrastructure that are benefiting us already. And Mark talked about Luminate in his script and other fraud products. That's certainly the case, eID we talked about. So, kind of the broad fraud suit is running on new infrastructure. And then we also talked about effect of the COVID response products that were built specifically on the new infrastructure, and then we couldn’t have done otherwise. So, those are some examples. There are certainly more. And we are seeing benefits from it and we expected to dramatically accelerate as we get into the first quarter.

[Gary Bisbee, Bank of America Securities]

Thank you.

[John Gamble, Chief Financial Officer]

Thanks.

[Operator]

Our next question comes from Brett Huff with Stephens.

[Brett Huff, Stephens]

Hey, thanks. This is a long call. So I’ll just be quick. You talked a little bit about the analytics as one strategy and then unique data is another strategy. And I think we talked a lot about unique data today with EWS. Can you give us an update on sort of the next major phase of the analytics development you guys are thinking about, as we think about the economic recovery, not a position Equifax for that next phase of growth?

[Mark Begor, Chief Executive Officer]

Yes, there's a number of drivers there Brett that we’ve talked about over the past couple of quarters. It starts with our Ignite, an analytics sandbox, I think, we've invested heavily in that, and we’re rolling out in the marketplace. And that’s a tool for our customers to access our data as well their own and really drive analytics and solution that will result in use of more of our data. So that’s very, very positive for us.

And of course, we have a large DNA team that is focused on creating new solutions. And we talked about some of those that really are from our analytics about combining data assets that increase the predictability in some of our COVID response products, to help our customers look at using trended data to understand how our customer outperformed in the past, to use that to create predictability to how they’re going to perform in the future, adding income and employment data. Those are all part of our analytics to deliver a solution. And they result in more usage of our data or specific revenue opportunities and new scores or other ways that we deliver the analytics to drive the predictability of the decision for our customers. And we believe the cloud investments are really going to advantage us in more opportunities to bring new solutions from our DNA to the marketplace.

[Brett Huff, Stephens]

Great. Thank you.

[Operator]

And our next question comes from Shlomo Rosenbaum from Stifel.

[Shlomo Rosenbaum, Stifel]

Hi, guys. Thank you for squeezing me in over here. Wanted to talk a little bit about the competitive environment, how you guys are doing outside of the mortgage markets in terms of like win rates and pipelines?

I know John you comment about the pipeline being strong, is this kind of void space where you're able to go into it’s like unique data, like the work number and credit card, or straight out and compensation are you guys kind of winning more outside the mortgage. Can you just kind of comment on that and if there’s anything quantitative you can share?

[Mark Begor, Chief Executive Officer]

Yes. John shared some comments around our deal pipeline in USIS, which is your focus in orders that EWS pipeline is quite rich, as you might imagine it is an international DTH. But there is a lot of focus by our investors and/on Equifax, which is why we talk about the USIS deal pipeline in particular, the desktop dramatically over what it was last year and the year before, we're seeing increasing mid rates, you know, when I've used the term did – the USIS is a competitive marketplace now. In the COVID recession, that's harder to see, because you’ve got the pressures of the economic impacts from our customers, on Equifax and on USIS, but we see the deal winds coming into the global recession, you saw the kind of strength of USIS revenue, non-mortgage numbers, using that in particular in the second half of 2019 and coming into the first quarter of 2020.

And we seen competitively, during the recession -- the COVID recession impacts of the second quarter, third quarter, the USIS is performing quite well. So we still got a lot of confidence in that business and its recovery.

[Shlomo Rosenbaum, Stifel]

Okay, thank you.

[Operator]

And that concludes today’s question and answer session. I would like to now turn the conference back to Mr. Hare for any additional closing remarks.

[Dorian Hare, Senior Vice President, Investor Relations]

I just want to thank everybody for joining the call and for their interest in Equifax. I just also want to let everybody know that we will be around today and in the days and weeks ahead to answer any follow up questions that you might have. So once again, thanks for joining and this does conclude the call.

[Operator]

And this concludes today's presentation. Thank you for your participation. You may now disconnect.