Mark W. Begor
Chief Executive Officer at Equifax
Thanks, Trevor, and good morning. Equifax delivered another very strong quarter to close out 2022 with continuing execution against our EFX 2025 strategic priorities. Fourth quarter reported revenue of $1.2 billion was down about 4.5% and down 4% on an organic constant currency basis, both as expected against an unprecedented mortgage market decline, but above the high end of our October guidance from broad-based strength across Equifax and stronger NPI rollouts. Fourth quarter adjusted Equifax EBITDA totaled $371 million with an EBITDA margin of 31%. Adjusted EPS of $1.52 per share was at the upper end of our October guidance range of $1.45 to $1.55 per share, and John will provide more detail in a few minutes.
Equifax US mortgage revenue was down 41% in the quarter, but outperformed the overall market by 27 percentage points with estimated US mortgage originations down 68%. Our global non-mortgage businesses, which represented about 84% of total revenue in the fourth quarter, were very strong with 12% constant currency and 10% organic constant currency revenue growth, stronger than we expected when we provided guidance in October and at the top end of our 8% to 12% long-term growth framework. This strong growth was driven again by outstanding performance at Workforce Solutions with 17% non-mortgage revenue growth overall and 23% non-mortgage revenue growth in Verifier.
As I'll discuss more later, Government continued very strong in Workforce Solutions with growth at over 40%, and Talent and I-9 boarding delivered over 20% growth but were impacted by slowing US hiring in November and December. Delivering 20% growth in that vertical against a slowing hiring market was a very strong performance. And second, USIS nonmortgage had an outstanding quarter, delivering very strong double-digit B2B non-mortgage growth of 10% total and 19% online, which was much better than our expectations. And last, International delivered another strong quarter with 9% constant dollar and 8% organic constant dollar growth, led by very strong performance in Latin America.
We continue to make strong progress against the final chapter of our EFX cloud data and technology transformation in 2022. Currently, about 70% of North American revenue is delivered from the new Equifax Cloud. During 2022, we made the decision to increase capital spending by approximately $175 million to a total of $625 million to accelerate the completion of our North American cloud transformation. The progress made in 2022 will enable the substantial completion of North America transformation and customer migrations this year, including decommissioning of applications in our major North America data centers.
Capital spending will decline significantly in 2023 due to the strong progress at completing the cloud last year. Our new EFX Cloud infrastructure is delivering always-on capabilities and faster new product innovation with integrated data sets, faster data delivery and industry-leading enterprise-level security. We're convinced that our EFX Cloud and Single Data Fabric will provide a competitive advantage to Equifax for years to come. New product innovation is also executing at a very high level. Our new product Vitality Index of 14% in the quarter is a record and a 500 basis point improvement from the 9% Vitality Index last year and 400 basis points above our 10% long-term new product vitality goal. Our focus on new solutions, leveraging the new Equifax Cloud is paying off.
As a reminder, our Vitality Index is the percentage of Equifax revenue from new products launched in the past three years. As our fourth quarter performance highlights, we continue to execute very well, driving strong non-mortgage growth across Equifax and record levels of new product revenue. In addition to accelerating long-term revenue growth, two critical goals of our EFX 2025 strategic framework are significant and consistent EBITDA margin expansion and the lowering of the capital intensity of our business to drive our free cash flow. In 2023, we are executing a broad operational restructuring across Equifax, reflecting both the acceleration of our cloud transformation and a broader focus on operational process improvements.
We will reduce our total workforce of over 23,500 employees and contractors by over 10% during 2023 as well as delivering cost reductions from the closure of major North American data centers as we complete the cloud and other broader spending controls. Total spending reductions from these actions in 2023 are expected to be about $200 million with about $120 million reduction in expenses and an $80 million reduction in capex. I'll cover our 2023 plan in more detail shortly, but first, we'll provide more detail on our strong performance in the fourth quarter.
Turning to slide five. In the fourth quarter, we continued our strong non-mortgage performance with revenue growth up 12% in constant currency, led by EWS Verification Services non-mortgage revenue, which was up 23%, led by Talent, which was up 19% and Government up 43%; EWS, I-9 and onboarding, which was up over 40%; USIS B2B online mortgage was up almost 20%; and Latin America was up over 30%, all very strong performances. Fourth quarter constant dollar non-mortgage growth of 12% was at the top end of our 8% to 12% long-term revenue framework despite some slowdown in the US hiring activity impacting our Workforce Solutions Talent vertical. Non-mortgage revenue growth continues to be very strong across Equifax.
Turning to slide six. Workforce Solutions delivered another outstanding quarter. Mortgage revenue outperformed the overall mortgage market as measured by originations by about 30% in the fourth quarter and 38% for the full year. And verifier non-mortgage revenue was again very strong with organic growth of 23% in the quarter and 40% for the total year. During 2022, we signed 10 new agreements with US payroll processors, including four in the quarter that will be added to the TWN database during 2023. Recently, we also signed a substantial direct relationship that added over 2 million new TWN records. These new partnerships, along with continued growth in existing partner records and the new direct contributors through our Employer Services business.
Are delivering continuing strong growth in our TWN database with current records of 6 million record sequentially, reaching 142 million records -- 152 million records with 114 million unique and over 600 million total current historical records from over 2.6 million employers. Industry-leading data security and operational processes as well as our ability to provide substantial value to our direct contributors and revenue share to our payroll partners are delivering exceptional record growth for Workforce Solutions. 114 million unique individuals in TWN deliver high hit rates and represent almost 70% of the 165 million US non-farm payroll. Adding gig and pension records, we have the ability to almost double our TWN records in the future, which is a big driver of EWS revenue and margins.
As a reminder, about 50% of our records are contributed directly by individual employers, with the remaining contributed through partnerships principally with payroll companies. Workforce Solutions also continues to lead Equifax and new products, delivering a Vitality Index at over two times of our long-term 10% vitality goal, which is a great proof point for the power of the Equifax Cloud to drive innovation in new products. Workforce Solutions Vitality Index has expanded from low single digits a short four years ago to over 20% vitality in 2022. Workforce Solutions, as you know, was the first Equifax business to be substantially complete with their cloud transformation over a year ago, allowing the team to fully focus on innovation and NPIs, leveraging their new cloud capabilities.
The Work Number is also seeing accelerated expansion outside the United States in the UK, Canada and Australia. In January, Workforce Solutions signed an agreement with a leading UK payroll technology partner, obtaining access to over 40% of UK private sector employees. Workforce Solutions now has access to over 20 million active and historical records in Australia, Canada and the UK in addition to over 40 million active and historical alternative income records, including pension data and tax returns. Turning to slide seven. Workforce Solutions delivered revenue of $508 million, down 4% in the fourth quarter. Revenue was slightly weaker than expected driven by slower growth in talent and onboarding businesses from declines we saw in US hiring in November and December.
Verification Services revenue of $399 million was down 7%, driven by the unprecedented 68% decline in US mortgage originations. As mentioned earlier, EWS mortgage revenue outperformed the overall market by a very strong 30 percentage points, driven by strong TWN record additions, penetration, pricing and new product revenue growth with the strong adoption of our new mortgage 36 solution that was rolled out late last year. Verification Services non-mortgage revenue, which now represents almost 70% of Verifier revenue, delivered strong 23% growth in the quarter. We saw continued very strong 43% growth in the Government vertical, which is almost 45% of Verifier non-mortgage revenue, driven by strong growth in our Center for Medicare and Medicaid Services volumes.
The EWS government vertical is benefiting from penetration, pricing, record growth and leveraging a strong new product portfolio, including our new insights data at the federal state and local level. We expect to continue this strong growth in our government vertical in 2023 in a big $2 billion TAM. Talent Solutions delivered strong 19% growth in the quarter despite the impact of the weakening overall hiring, which is estimated to be down about 8% in the quarter. We outgrew this market decline by over 25 percentage points and delivered 19% growth, a very strong performance, driven by continued penetration of our digital solutions and background screening, strong new product growth, continued expansion of TWN records and favorable pricing.
In the first quarter, we will launch new products in the talent space targeted at the staffing and hourly segments designed to meet specific needs of background screeners in these high-volume segments, which will drive Talent growth. Employer Services revenue of $110 million was up 4.5% in the quarter due to strong growth in our I-9 onboarding and healthy FX businesses, which were up 17%. Our I-9 and onboarding businesses remained strong at 20% growth but were also negatively impacted by the declines in US hiring late in 2022. Our unemployment claims and employee retention credit businesses were down 11%, driven by lower jobless claims and lower ERC transactions as the COVID federal tax program expires. Despite the slowdown in hiring, we have not seen a meaningful increase in UC transactions yet.
Workforce Solutions adjusted EBITDA margins of 46.8% were lower than our October guidance, principally due to lower revenue growth in talent and onboarding related to the slowdown in US hiring. We expect EWS margins to return to about 50% in the first quarter and will be above 50% for all of 2023. The strength of EWS and uniqueness in value of their TWN income and employment data in Employer Services businesses were clear again in 2022. Rudy Ploder and the EWS team delivered another outstanding quarter, outperforming the mortgage originations by 30 points and delivering strong 17% non-mortgage revenue growth. EWS is expected to deliver a strong 2023 and continue above market growth in the future.
As shown on slide eight, USIS revenue of $406 million was down 6.5% and slightly better than our expectations. USIS mortgage revenue was down about 46% and was in line with our expectations against an unprecedented 54% decline in credit inquiries compared to the 50-plus percent in our October guidance -- 50-plus percent decline that we had in our October guidance. Revenue outperformance relative to credit inquiries was strong at 8%, driven by favorable new mortgage business penetration, new mortgage products and new mortgage pricing. Credit inquiry performance continues to be less negative than estimated originations, reflecting higher relative levels of mortgage shopping behavior that we talked about before. At $67 million, mortgage revenue is now about 15% of total USIS revenue.
B2B non-mortgage revenue of $280 million -- $288 million, which represents over 70% [Phonetic] of total USIS revenue was up 10%, with organic revenue growth of about 6.5%. This was a significant sequential increase and much stronger than the levels we expected in October. Importantly, B2B non-mortgage online revenue growth was very strong at up 19% total and up over 13% organically, reflecting pricing and product rollouts as well as stronger volumes in banking as lenders continue to drive new originations. During the quarter, we saw strong double-digit revenue growth in commercial, identity and fraud and auto with banking at just under 10% growth.
Financial Marketing Services, our B2B offline business had revenue of $72 million that was down 9% and slightly above our expectations. As we discussed during the year, we expect FMS to return to growth in 2023 with revenue up low single digits in the first quarter. USIS Consumer Solutions business had revenue of $50 million in the fourth quarter, up 8% from penetration and new product introductions. In 2023, we expect low single-digit growth from our US consumer direct business. USIS adjusted EBITDA margins were 35.3% in the quarter, up 120 basis points sequentially due to very strong double-digit B2B online non-mortgage revenue growth. EBITDA margins were down 400 basis points compared to prior year to declines in high-margin mortgage revenue.
International revenue, as shown on slide nine, was $284 million, up a strong 9% in constant currency and 8% organically. We're seeing broad-based execution from our international businesses with particular strength in Latin America NPI rollouts. Europe local currency revenue was up 3%, principally driven by 9% growth in our debt management business. We continue to see strong debt placements from the UK government as we have over the past several quarters. Our UK and Spain CRA business revenue was about flat in the fourth quarter and below our expectations principally due to lower new business penetration. Asia Pacific, which is our Australia business, delivered local currency revenue of 6%, driven by growth in our commercial, consumer, identity and fraud and HR identification businesses.
Latin America, local currency revenue was up a strong 31% driven by very strong double-digit growth in Argentina, Uruguay, Paraguay and Central America from new product introductions and pricing actions. This is the fifth consecutive quarter of strong double-digit growth for the Latin American team. Canada local currency revenue was up 7% and above our expectations. Growth in consumer, commercial, analytical solutions and identity and fraud revenue were partially offset by mortgage volume declines and lower direct-to-consumer revenue. International adjusted EBITDA margins at 25.8% were down 100 basis points sequentially and below our expectations due to a greater mix of lower-margin debt services revenue and higher costs principally from purchase data.
Turning to slide 10. 2022 was an outstanding year for new product innovation, and as you know, NPIs are central to our EFX 2025 growth strategy. We delivered over 100 new products for the third year in a row and a record full year Vitality Index of over 13% and a fourth quarter Vitality Index of 14%. The 13% Vitality Index in 2022 was up over 400 basis points above our strong 2021 results and over 300 basis points higher than our 10% long-term growth framework goal for new products and our vitality. New product revenue in 2022 was $650 million, up over 50% from about $420 million in 2021. And in 2022, over 90% of new product revenue was from non-mortgage products.
Leveraging our new Equifax Cloud capabilities to drive new product rollouts, we expect to deliver a Vitality Index in 2023 at levels similar to the 13% we delivered in 2022 which is well above our 10% long-term NPI Vitality Index goal. And this equates to over $700 million of revenue in 2023 from new products introduced in the past three years. New products leveraging our differentiated data, our new EFX Cloud capabilities and Single-Data Fabric are central to our long-term growth framework and are driving Equifax top line growth and margins.
Turning to slide 11. 2022 was also a strong year for bolt-on acquisitions as we continue to focus on our strategic M&A priorities and growing our non-mortgage revenue. Since 2021, we've completed 13 acquisitions that are delivering $450 million of principally non-mortgage run rate revenue. Our 8% to 12% long-term growth framework includes one to two points of annual revenue growth from strategic bolt-on M&A aligned around our three strategic priorities: number one, expanding and strengthening Workforce Solutions, our fastest-growing and most profitable business; number two, building out our identity and fraud capabilities; and number three, adding unique data assets.
We expect these strategic acquisitions to deliver growth synergies in 2023 and 2024 as we complete their technology and product integrations. Last week, we announced the acquisition of the Food Industry Credit Bureau, leading provider of credit information for the Canadian food industry, with over 90% commercial data coverage. This acquisition expands our commercial product offerings in Canada. We also continue to work closely with the Board of Directors of Boa Vista Servicos, the second largest credit bureau in Brazil on the proposed acquisition we announced in December. When completed, the BVS acquisition will add $160 million of run rate revenue in the fast-growing Brazilian market.
The transaction is subject to Boa Vista shareholder approval and other customary closing conditions. To the extent we're able to finalize terms with the Boa Vista Board, we expect the transaction to close in mid-2023. Turning to 2023 guidance on slide 12. We ended the year with significant momentum in the underlying growth of our businesses and in the execution of our EFX 2025 strategic priorities. However, we also entered 2023 with a continuing decline in the mortgage market and broader economic uncertainty impacting our underlying markets.
Our assumption for US mortgage market originations is a further decline of 30% in 2023, which is more than 30% below the lowest level of originations in the past 10 years. For perspective, MBA is currently forecasting 2023 origination units down about 22% versus our 30% assumption -- minus 30% assumption. Fannie and Freddie do not forecast units but are forecasting origination dollar volumes down 30% and 25%, respectively. In our planning, we've assumed the bulk of the mortgage declines in the first half with first quarter originations down about 55%.
Secondly, in 2022, we saw hiring freezes and headcount constraints impact our background screening volume in November and December, and we expect these conditions to continue in 2023 with hiring down over 10% impacting our Talent Solutions and I-9 employee onboarding businesses. Even with these market impacts or market declines, we expect both businesses to grow over 10%. Finally, in our planning, we're expecting to see weakening in our key markets in the US, Canada, UK and Canada in 2023. We're assuming slowing growth in the US as we move through the year, although at this point, we have not assumed the US recession.
Similarly, we are expecting to see economic slowdowns in Australia and Canada with perhaps a more significant slowdown in the UK. The slow growth in these markets compares to the 2% to 2.5% underlying economic growth, we assume in our long-term growth model. As we enter 2023, we have strong underlying growth across our businesses with execution of our EFX 2025 growth strategies. Despite the significant decline in the US mortgage market and slower economic growth across our major markets, we expect to deliver revenue growth at the midpoint of 4% in 2023. Total mortgage revenue should decline about 8%, over 20 points better than the 30% reduction in mortgage originations, and non-mortgage revenue should grow over 8%, which is within our long-term growth framework despite the slower economic growth in our major markets.
We expect Workforce Solutions to deliver revenue growth of about 6% in 2023. This reflects a mortgage revenue decline of about 8% or over 20 points stronger than the expected 30% decline in mortgage originations. EWS non-mortgage verticals are expected to grow about 13% overcoming the expected 10% plus decline in US hiring and about 15% decline in our ERC businesses as that COVID program winds down. TWN record growth, strong new product rollouts and continued strong growth in both pricing and penetration will continue to drive Workforce Solutions outperformance. We expect USIS to deliver revenue growth of about 2% this year.
Mortgage revenue is expected to decline about 7%, more than 20% -- 20 points stronger than the expected 30% decline in mortgage originations. In 2023, USIS will begin to benefit from their new mortgage credit file that was rolled out late last year that includes telecommunications, pay TV and utilities attributes to help streamline the mortgage underwriting process and support loans with the secondary mortgage market. Equifax is the first and only in the industry to provide these insights, which will be available to Equifax customers in the first quarter and can help create greater home opportunities for consumers across the US. We're also seeing the impact of pricing increases from one of our largest mortgage vendors that we pass on to customers at levels to maintain consistent margins.
Non-mortgage revenue is expected to grow about 5% despite the slowing growth. Non-mortgage revenue growth of about 5% will be driven by strong commercial, identity and fraud banking and auto growth. And Financial Marketing Services expect to return to growth in 2023 after a disappointing 2022. International had a very strong 2022 with revenue up 12% in constant dollars, but we saw some weakening end markets late in the year, particularly in debt services. We expect International growth of 5% in constant currency in 2023. This is below our long-term growth framework for International of 7% to 9%, principally due to the expected weakening economic conditions in our major markets of the UK, Canada and Australia and also a decline in debt services off a very strong 2022.
As we discussed last year, debt services revenue in 2022 was somewhat of a catch-up year as the UK government collections were put on hold during the COVID pandemic. We continue to expect international to operate within their 7% to 9% growth framework over the mid and long-term. NPIs will again be very strong, which is -- and consistent with last year's 13% Vitality Index, well above our 10% long-term vitality goal, and this will be led by Workforce Solutions in Latin America. As USIS and Canada complete their cloud transformation, we expect their NPI rollouts to accelerate as we exit 2023. As we complete our North American cloud transformation 2023, we will pivot to leveraging our differentiated data assets and new cloud infrastructure to drive new product rollouts and top line growth.
Workforce Solutions will accelerate its focus on leveraging their new cloud capabilities, and USIS and Canada will complete their consumer credit, alternative data and IFS transformation this year. These are big milestones in completing the cloud that we've been building towards for almost five years. We're on track to deliver the cost and capital spending reductions from the cloud transformation that are central to our long-term growth framework. As I referenced earlier and as shown on slide 13, our accelerated cloud transformation cost reductions and broader cost restructuring will deliver $200 million of cost and capex savings in 2023 that will expand our margins and free cash flow in the future.
During 2023, we plan to reduce our total workforce of about 23,500 employees and contractors by over 10%. As we complete our North American cloud transformation in 2023, we expect to close about 15 data centers, consolidate development centers and continue to reduce our software application footprint, and we'll closely manage discretionary spending, including professional services. We expect these actions to deliver $200 million in spending reductions in 2023, representing $120 million cost and expense reductions or about $0.75 per share and $80 million in capital spending reductions. The savings in the first quarter are limited and accelerate in the second quarter and through the second half of 2023.
In 2024, the run rate benefit of these actions will reduce our spending by over $250 million. The lower cost and capital spending accelerates as we move through 2023 from cloud transformation cost benefits and other costs and restructuring actions planned throughout the year. As shown on slide 14, adjusted EBITDA margins and adjusted EPS improved significantly as we moved through 2023. In the first quarter, revenue is expected to be down 6% due to the about 55% reduction in mortgage originations. EBITDA margins and adjusted EPS are at their lowest levels in 2023 in the first quarter, principally due to the higher incremental margins from the declining mortgage revenue and the timing of the recognition of the majority of our annual equity incentive plan expense in the quarter.
Normalizing for this timing compared to the fourth quarter, first quarter EBITDA margins are slightly below fourth quarter margins of 31%. As revenue growth improve throughout 2023 and cloud and broader cost reductions accelerate, EBITDA margins and adjusted EPS improve sequentially with EBITDA margins expected to exceed 36% and adjusted EPS exceeding $2 per share in the fourth quarter. For the full year, EBITDA will be up 4% or $70 million, in line with revenue growth, with margins flat to the 33.6% we delivered last year. Adjusted EPS is expected to be about $7.20 per share, down about 5% from 2022, principally reflecting higher depreciation and amortization of about $50 million as North American cloud system implementations principally completes, also from higher interest and other expense of about $60 million and a higher tax rate.
Capital spending will decline by $65 million to about $545 million in the year, or about 10% of revenue as we move closer to completing our cloud transportation. We expect capex to decline again in 2024. We have a clear line of sight to executing these proactive actions that will expand our margins and drive our free cash flow. In addition to cost benefits, completing our North American cloud transformation will enable significant commercial benefits to drive market share and revenue growth, including our always-on capabilities, better data quality, faster data delivery and faster new product innovation. And we're beginning to see meaningful commercial benefits from our new Equifax Cloud technology transformation.
And now I'd like to turn it over to John to provide more detail on our 2023 assumptions and guidance and also provide our guidance for the first quarter. Our 2023 guidance builds on our strong 2022 non-mortgage growth from new products, record growth, pricing and acquisition synergies. John?
