Before I address Equifax's strong second quarter results, I want to recognize our 11,000 associates around the globe for their continued hard work and dedication in these challenging times.
Revenue at $1.235 billion was the highest quarterly revenue in our history, breaking the record from last quarter.
Local currency revenue growth of 23% and organic local currency growth of 20% were both very strong in some of the highest growth rates in our history.
Our U.S. B2B businesses, our Workforce Solutions and USIS, which together represent over 70% of our revenue, again drove our overall growth delivering very strong 25% total and 22% organic revenue growth despite the headwinds from the mortgage market that declined about 5%.
The 5% decline in the mortgage market was about 500 basis points more than our flat expectation we shared with you in April.
U.S. B2B organic non-mortgage growth of 20% accelerated sequentially from the 16% we delivered in the first quarter.
The 20% organic growth is also a record and reflects the underlying strength of Workforce Solutions and USIS has returned to a competitive position.
But at a high level, Workforce Solutions again led Equifax growth with revenue up a strong 40%.
And as a reminder, this is off growth of 53% in second quarter last year and the mortgage market that declined 5% in the quarter.
USIS delivered another strong quarter with revenue up 11%, driven by non-mortgage total revenue growth of over 20% and strong organic revenue growth of 14%.
International delivered a very strong quarter of COVID recovery with revenue growth of 25% in local currency and importantly all regions internationally delivered growth about 20%.
Slightly better than expected GCS revenue was down 3% in local currency.
However, our consumer-direct revenue delivered 11% growth in the quarter, its second consecutive quarter in double-digits.
Second quarter Equifax adjusted EBITDA totaled $431 million, up 20% with margins of 34.9%.
Margins were down a 160 basis points versus last year due to the inclusion of the cloud technology transformation costs in our adjusted results in 2021, which were excluded last year.
This negatively impacted second quarter adjusted EBITDA margins by 310 basis points.
Adjusting for cloud transformation costs of $38 million in the quarter, our margins would have been up a strong 150 basis points.
Adjusted earnings per share of $1.98 per share was up a strong 21% from last year.
Again, adjusting for the cloud transformation costs, adjusted earnings per share would have been up a very strong 36%, reflecting the strong performance in operating leverage of Equifax.
During the quarter, we continue to make significant progress with the Equifax Cloud Data and Technology transformation, including an additional 7,700 customer migrations to the Cloud in the United States and more than 900 migrations internationally.
In the second quarter, we released 46 new products, which is up almost 2x from the 24 products we released a year ago in the quarter.
And we continue to expect our vitality index defined as revenue from new products introduced in the last three years to exceed 8%, a big step-up from the 5% last year and a reflection of the strong product focus across EFX.
Based on our strong first half results and confidence in the future, we increased our full year revenue guidance by a $155 million to a midpoint of $4.78 billion, which is up 400 basis points to 16% growth.
We also increased our full year adjusted earnings per share guidance by $0.45 per share to a midpoint of $7.35 per share which adjusting for the technology transformation costs is up 700 basis points to 19% growth.
This includes our expectation that the U.S. mortgage market as measured by credit inquiries will decline approximately 8% in the year, which is consistent with the guidance we provided in April.
In the second quarter, Equifax core revenue growth, the green section of the bars on Slide 6 accelerated to 29%.
This is up significantly from the 20% core revenue contribution we delivered in the first quarter and 11% in the fourth quarter and well above our historical core growth rates.
While our outperformance in the mortgage market continues to drive significant core growth, the contribution from U.S. non-mortgage in International increased significantly in the quarter, reflecting approximately 50% of core revenue growth in the quarter, excluding acquisitions and FX favorability.
Workforce Solutions, our largest business had another exceptional quarter, delivering 40% revenue growth and 58% adjusted EBITDA margins.
Again as a reminder, the 40% revenue growth is on top of 53% growth last year in the second quarter.
EWS is cementing itself is our largest and most valuable business and is powering our results, representing 40% of total Equifax revenue in the quarter.
EWS Verification Services revenue of $395 million was up a strong 57%.
Verification Services mortgage revenue grew 52% in the quarter, despite the 5% decline in the mortgage market from increased records, penetration and new products.
Importantly, Verification Services non-mortgage revenue was up over 60% in the quarter and up over 15% sequentially from the first quarter.
Our government vertical, which provide solutions to federal and state governments in support of assistance programs including food and rental support grew over 10% in the quarter.
We continue to expand our products and solutions in the government vertical and expect our new Social Security Administration contract to go live this quarter with revenue ramping to a $40 million to $50 million run-rate in 2022.
Talent Solutions, which arise income and employment verifications as well as other information for the hiring and on-boarding process through our EWS Data Hub had another outstanding quarter from customer expansion and NPIs, growing over 200%.
Talent Solutions now represents almost 30% of non-mortgage verification revenue.
Over 75 million people changed jobs in the U.S. annually, with the vast majority having some level of screening as a part of that hiring process.
Our non-mortgage consumer business, principally in Banking and Auto showed strong growth of about 50% in the quarter as well, though from deepening penetration with lenders and some recovery in these markets.
Employer Services revenue of a $101 million was about flat in the quarter as expected.
Combined, our unemployment claims and employee retention credit businesses had revenue of about $64 million, down over 15% from last year.
Employer Services non-UC and ERC businesses had revenue up over 50% in the quarter.
Our I-9 business driven by our new I-9 Anywhere product, continue to show very strong growth, up over 50%.
Our I-9 business is now almost half of Employer Services non-UC and ERC revenue.
Reflecting on the growth in I-9 and the return to growth of workforce analytics, we expect Employer Services non-UC and ERC businesses to deliver organic growth of over 20% for the year.
Reflecting the power and uniqueness of between dataset, strong verified revenue growth and operating leverage resulted in adjusted EWS EBITDA margins of 58%, a 160 basis point expansion from last year.
Excluding Technology Transformation expenses, EWS margins would have been up over 240 basis points.
They had another strong quarter with revenue up 11%, driven by strong performance across the business.
Total USIS mortgage revenue of a $160 million was down about 2% in the quarter, while mortgage inquiries were down 5%, a little bit flat expectation we shared in April.
USIS mortgage revenue outgrew the market by over 300 basis points, driven by growth in marketing and debt monitoring products.
Importantly, non-mortgage revenue performance was up 21% with strong organic growth of 14%.
Importantly, organic non-mortgage revenue also delivered strong sequential growth, acceleration of 250 basis points from the first quarter's 11%, an important indicator of the continued strengthening of the USIS business.
Banking and Insurance both grew over 20% in the quarter.
Auto and Direct-to-Consumer were both up over 10% and Telecom and Commercial were just about flat in the quarter.
Financial Marketing Services revenue, which is broadly speaking, our offline or batch business was $59 million in the quarter and up about 14%.
The strong performance was driven by marketing related revenue, which was up over 20% and ID and fraud revenue growth of over 15% as consumer marketing and originations ramped up coming out of COVID.
In 2021, marketing related revenue is expected to represent about 40% of FMS revenue, identity and fraud about 20% and risk decisioning about 35%.
USIS adjusted EBITDA margins were 40.3% in the quarter, the decline of 380 basis points from second quarter last year was principally due to the costs related with Cloud transformation.
Their revenue was up a strong 25% on a local currency basis, which is a third consecutive quarter of growth in our global markets.
Revenue growth was up over 20% in all of our markets in Canada, Asia Pacific, Latin America and Europe.
Asia-Pacific, which is principally our Australia business had a very strong quarter with revenue up $91 million or up about 21% in local currency.
Australia consumer revenue turned positive and was up 23% versus last year and up about 2% sequentially.
Our Commercial business combined online and offline, revenue was up a very strong 26% in the quarter and almost 18%, up almost 18% sequentially.
Fraud and identity was up 30% in the quarter, following 15% growth in the first quarter.
European revenues of $68 million were up 27% in local currency in the quarter.
Our European credit reporting business was up about 20% with strong growth in both the UK and Spain.
In UK, which is our largest European market, we saw growth of over 25% in consumer, data analytics and scores and over 40% growth in commercial.
Our European debt management business revenue increased about 30% in local currency off the lows we saw in the second quarter last year during the COVID recession.
Canada delivered record setting revenue of $47 million in the quarter, up about 26% in local currency.
Consumer online was up about 26% in the quarter, an improvement of 12 percentage points from the first quarter.
Latin American revenues of $44 million, grew 30% in the quarter in local currency, which was the second consecutive quarter of growth coming out of COVID.
International adjusted EBITDA margins of 27.3% were up 540 basis points from last year, driven by leverage on revenue growth and continued very good cost control by the international team.
Excluding the impact of the inclusion of the technology transformation costs in adjusted EBITDA, margins were up over 750 basis points.
Global Consumer Solutions revenue was down 2% on a reported basis and 3% on a local currency basis in the quarter and slightly above our expectations.
Direct-to-Consumer revenue was up a strong 11% in the quarter, their fourth consecutive quarter of growth.
GCS adjusted EBITDA margins of 22.5% were up just about a 170 basis points, which was better than our expectations.
Workforce Solutions revenue grew a very strong 40% in the quarter, with core revenue growth of 46%.
And again the 40% growth in the quarter was on top of 53% growth in the second quarter last year.
At the end of the second quarter, TWN reached a 119 million active records, an increase of 13% or 14 million records from a year ago and included 91 million unique records.
At 91 million unique, we now have over 60% of non-farm payrolls, which makes our TWN dataset we're valuable to our customers by delivering higher hit rates.
Beyond focusing on adding the over 50 million non-farm payroll records not in the TWN database yet, we're also focused on adding data records from the 40 million to 50 million gig workers and around 30 million pension recipients in the United States marketplace to further broaden the TWN database.
We are now receiving contributions from 1.2 million companies across the U.S., up from 27,000 employers a short two plus years ago.
And as a reminder, over 60% of our records are contributed directly by employers that EWS provides comprehensive employer services to like unemployment claims, W-2 management, I-9, WOTC, Employee Retention Credit, HSA and other HR in compliance-related solutions.
The remaining 35% are contributed through partnerships with payroll providers in HR software companies, most of which are exclusive.
As of the most recent data available at the end of 2020, Workforce Solutions received an inquiry in almost 60% of completed U.S. mortgages, which is up from 55% in 2019.
This 500 basis point increase shows a continuation of growth in TWN mortgage penetration as well as the substantial opportunity for continued growth at existed mortgage with only 60% of mortgages using TWN data today.
During the quarter, about 75% of TWN mortgage transactions were fulfilled system-to-system, which was up 2x from the 32% in 2019.
We plan to roll-out new products in mortgage Talent Solutions government and I-9 in the second half of the year.
New product revenue will increase in '21 and '22 as we begin to reap the benefits of our new products introduced in the market by Workforce Solutions in the past 18 months.
In 2017, Workforce Solutions revenue and EBITDA made up 23% of Equifax revenue and 27% of business unit EBITDA.
For the first half of '21, Workforce Solutions revenue and EBITDA have increased to 40% of Equifax revenue and over half of Equifax business unit EBITDA.
In a short four years, Workforce Solutions has more than doubled in size and is now almost 50% in the first half versus the same period last year.
It is up almost 50% in the first half versus same period last year.
The strong mortgage market has advantage USIS as shown in the bottom left of the slide, USIS has driven consistent sequential improvement in non-mortgage growth in second quarter last year, with the overall growth in USIS being driven by 18% non-mortgage growth in the first half of 2021.
Our U.S. B2B businesses delivered a combined 25% revenue growth in mortgage in the second quarter, which was 30 point stronger than the 5% mortgage decline we saw in overall mortgage market.
The strong outperformance was again primarily driven by Workforce Solutions with core mortgage growth of 57%.
USIS delivered 4% core mortgage revenue growth in the second quarter, driven primarily by new debt monitoring solutions and further support from marketing.
As Mark discussed, our Q2 results were very much stronger than we discussed with you in April, with revenue about $85 million higher than the midpoint of the expectations we shared.
And although the mortgage market was down 5% versus our expectation of flat, our mortgage revenue principally in Workforce was not impacted to the same degree.
As shown on Slide 12, U.S. mortgage market credit increase declined 5% in 2Q'21, weaker than the about flat we had included in our guidance.
Our financial guidance for 2021 assumes that the trend in mortgage credit increase we saw in late June and July continues in 3Q'21 resulting in a decline of mortgage market credit increase of about 23% in 3Q'21 versus 3Q'20.
Despite the substantial refinance activity that has occurred over the past year, the number of U.S. mortgages that could benefit from a refinancing remains at a relatively strong level of about $12 million.
Based upon our most recent data from January, mortgage refinancings continue to run just under 1 million per month.
We expect revenue in the range of $1.160 billion to $1.180 billion, reflecting revenue growth of about 9% to 11%, including a 1% benefit from FX.
Acquisitions are positively impacting revenue by 1.8%.
We're expecting adjusted earnings per share in 3Q'21 to be $1.62 to $1.72 per share compared to 3Q'20 adjusted earnings per share of $1.91 per share.
In 3Q'21, technology transformation costs are expected to be around $40 million or $0.25 a share.
Excluding these costs, which were excluded from 3Q'20 adjusted EPS, 3Q'21 adjusted earnings per share would be $1.87 to $1.97 per share.
This performance is being delivered in the context of the U.S. mortgage market, which is expected to be down 23% versus 3Q' 20.
Comparing the midpoint of our 3Q'21 guidance sequentially to our very strong 2Q'21 performance, revenue is down about $65 million.
Our guidance for adjusted earnings per share declines about $0.30 per share sequentially.
We also expect our U.S. mortgage business to grow about 15% in 2021 over 20 points faster than we expected approximately 8% decline in the U.S. mortgage market.
2021 revenue of between $4.76 billion and $4.8 billion reflects revenue growth of about 15% to 16% versus 2020, including the 1.5% benefit from FX.
Acquisitions are positively impacting revenue by 1.9%.
EWS is expected to deliver about 30% revenue growth with continued very strong growth in Verification Services.
International revenue is expected to deliver constant currency growth of about 10% and GCS revenue is expected to be down mid single-digits in 2021.
In 2021, Equifax expects to incur one-time Cloud technology transformation costs of approximately a $155 million, a reduction of over 55% from the $358 million incurred in 2020.
The inclusion in 2021 of this about a $155 million and one-time costs would reduce adjusted earnings per share by about $0.97 per share.
This estimate of one-time technology transformation costs is up $10 million from a $145 million we guided in April.
2021 adjusted earnings per share of $7.25 to $7.45 per share which includes these tech transformation costs is up 4% to 7% from 2020.
Excluding the impact of the tech transformation cost of $0.97 per share, adjusted earnings per share in 2021 which show growth of about 18% to 21% versus 2020.
2021 is also negatively impacted by the redundant system costs of $79 million related to 2020.
These redundant system costs are expected to negatively impact adjusted earnings per share by about $0.49 per share and negatively impact adjusted earnings per share growth by about 7 percentage points.
In 1Q'21 and 2Q'21, we delivered very strong core revenue growth of 20% and 29% respectively.
We continue to deliver strong core revenue growth in 3Q'21 of 17% and 19% for all of 2021 in our expectations.
We began to leverage these cloud benefits in 2020, as we more effectively developed new products and delivered them to market leveraging the new EFX cloud, growing new product introductions by 44% last year, in 2020.
As I discussed earlier in the second quarter, we delivered 46 new products, which is up about almost 2x from the 24 we delivered last year.
Year-to-date, we've rolled out 85 new products, which is up 44% from the 59 that we delivered in the first half last year.
Workforce Solution launched a new mortgage 36 product in May.
In April, we increased our vitality index outlook for 2021 from 7% to 8% and we remain confident in this framework for 2021.
As you can see from the left of the slide, our 8% vitality outlook for 2021 is a big step forward from the 5% vitality we delivered last year.
We have unique market-leading differentiated data at scale that includes our 228 million ACRO credit records, 119 million TWN income and employment records and additional data at scale that comes from our alternative datasets, including Kount and CTUE, PayNet, IXI and others.
Our team of 320 data scientists located around the world are leveraging our advanced analytics in Equifax Cloud native infrastructure to define and deploy cloud native products and solutions.
Our 26% overall and 29% core revenue growth in the quarter reflects the strength and breadth of our business model and early benefits from our Equifax Cloud investments and of course it's enhanced focus on new products.
As we discussed earlier, we're confident in our outlook for 2021 and we raised our full year midpoint revenue guidance to $4.78 billion, increasing our 2021 growth rate by over 370 basis points, almost 16%.
We also raised our midpoint earnings per share guidance to $7.35, increasing the growth rate by over 640 basis points.
As we discussed earlier, Workforce Solutions had another outstanding quarter, delivering 40% revenue growth and 58% EBITDA margins.
During the quarter, Workforce Solutions delivered 40% of Equifax revenue and we expect EWS to continue to drive Equifax's operating performance throughout 2021 and beyond, as consumers recognize the value of our growing TWN database.
USIS also delivered another strong quarter of 11% growth, driven by their 14% non-mortgage organic growth.
International grew for the third consecutive quarter, accelerating to 25% in local currency in the second quarter as economies reopened and business activity resumes.
We're beginning to see the benefits of our new product focus and resources leveraging the EFX cloud with the 85 NPIs completed in the first half, pacing well ahead of the record 134 we delivered last year.
We have reinvested our strong cash flow in five bolt-on acquisitions so far this year, that will add a 170 basis points to our revenue in the second half.

Summary:
Adjusted earnings per share of $1.98 per share was up a strong 21% from last year.
Based on our strong first half results and confidence in the future, we increased our full year revenue guidance by a $155 million to a midpoint of $4.78 billion, which is up 400 basis points to 16% growth.
Consumer online was up about 26% in the quarter, an improvement of 12 percentage points from the first quarter.
We're expecting adjusted earnings per share in 3Q'21 to be $1.62 to $1.72 per share compared to 3Q'20 adjusted earnings per share of $1.91 per share.
2021 adjusted earnings per share of $7.25 to $7.45 per share which includes these tech transformation costs is up 4% to 7% from 2020.