Mark Begor
Chief Executive Officer at Equifax
Before I cover our strong second quarter results, I want to update you on the significant progress in our cloud transformation. Over the next several weeks, USIS will complete the migration onto the cloud data fabric of all customers and services for their consumer credit and telco and utilities exchanges, which is a huge milestone for Equifax. Along with the EWS work number exchange which we completed migrating to the Equifax cloud over two years ago, we will have our three largest data exchanges in the new Equifax cloud. As of the end of July, we expect over 80% of Equifax revenue will be in the Equifax cloud, with about 90% of our revenue in the cloud by year end.
The cloud migrations have been a huge effort across Equifax over the past four plus years. We expect to have a significant competitive advantage as we pivot from building to leveraging the cloud that will allow us to fully focus on growth, innovation, new products and AI going forward.
Completing the USIS cloud and expanding EFX.AI, along with continued expansion of our differentiated data assets, will accelerate innovation and new products at USIS, that will drive our top and bottom line. We now have streamlined access to our proprietary data through the data fabric, which will accelerate new product development. We also expect to reduce product development times resulting in faster time to market for our new solutions. USIS has already begun to see their new product vitality index accelerate.
USIS is deploying Equifax proprietary explainable AI along with Google Vertex AI across Ignite, our global analytics platform and Interconnect, our global decisioning platform. For USIS, Vertex AI enables faster and more predictive model development on our Ignite platform. The USIS cloud will deliver always on stability and faster data transmission that will give Equifax a competitive advantage in today's digital market, driving share gains. We're also driving faster data ingestion analytics with greater processing power with the new Equifax cloud, and most importantly, completing the cloud is going to free up the USIS team to fully focus on growth and expanding innovation, new products, data sets and markets.
With both USIS and EWS in the cloud, we'll also be able to begin development of new products that integrate twin income and employment data with USIS credit data solutions for mortgage, auto cards and P loans that only Equifax can deliver.
Completing the USIS consumer and telco and utility migrations to the Equifax cloud allows us to start decommissioning legacy on prem systems in the third quarter, supporting our goal of spending reductions in 2024 that will improve operating margins and lowering the capital intensity of our business. In the second quarter, we also made substantial progress on our international cloud transformation activities. Canada is expected to complete their consumer credit exchange customer migrations to data fabric next month. Europe continues to make significant progress with the goal of completing Spain's consumer credit exchange migration to the data fabric and decommissioning of their legacy systems by year end, and the U.K. is on schedule to complete cloud migrations and decommissioning in the first half of 2025. And in Latin America, we've completed the Argentina and Chile cloud migrations and expect to make substantial progress on several additional Latin American countries in the second half of this year.
It's energizing to be approaching the finish line of our cloud transformation. We're entering the next chapter of the new Equifax as we pivot from building the new Equifax cloud to leveraging our new cloud capabilities to drive our top and bottom line.
Now, turning to slide 4, we had a strong second quarter with reported revenue just over $1.43 billion, up 9% and just over the top end of our April guidance. Adjusted EBITDA margins at 32% were in line with our expectations, and adjusted EPS at $1.82 per share was well above the high end of our April guidance. Our global non-mortgage businesses, which represent about 80% of total Equifax revenue in the quarter, had strong 13% constant currency revenue growth, which is above the top end of our eight to 12 long-term growth framework. Non-mortgage organic constant currency revenue growth was at 9% in the quarter, and also at the top end of our 7% to 10% organic revenue growth framework. This performance was driven by 20% non-mortgage growth in EWS verifier led by strong 30% growth in government, and talent that was up over 13%. International delivered 28% constant dollar revenue growth and strong 12% organic growth, led by strong growth in Latin America and Europe.
USIS non-mortgage revenue growth of 1% was in line with last quarter and somewhat weaker than our expectations. We expect to see accelerating growth in USIS non-mortgage revenue as we complete the U.S. consumer cloud migration later this month.
Total U.S. mortgage revenue was up 4% in the quarter. The growth in mortgage revenue was driven by USIS where mortgage revenue was up a strong 27% and consistent with our expectations. The strong growth in USIS mortgage reflects the continued benefit from strong vendor pass through pricing actions and performance in our new mortgage pre-qual products. EWS mortgage revenue was down just under 12% and also consistent with our expectations.
Equifax also had another strong quarter of new product innovation with a Vitality index of almost 13% above our 10% frame for 2024 guidance, and our long-term 10% Vitality framework. The Vitality was up 350 basis points sequentially from broad based execution across all of our business units, and EWS was particularly strong with a 17% vitality.
Turning to slide 5, workforce solutions revenue was up 5% and well above our expectations. Non-mortgage verification services revenue delivered very strong 20% growth of 500 basis points sequentially and well above our expectations. Government had another outstanding quarter with very strong 30% revenue growth from continued growth in penetration in their big $5 billion TAM. Government revenue grew sequentially from strong growth in state revenues, despite the substantial completion at the end of March of post COVID CMS initial redeterminations. We expect continued strong government growth over the medium and long term in workforce solutions.
Talent Solutions revenue was up a strong 13% in the quarter, up 17 percentage points sequentially and well above our expectations. Talent Solution volumes improved sequentially, and we saw a very strong growth in our Insights incarceration data products in the Talent vertical. Based on data through May, EWS Talent Solutions outperformed the BLS white collar hiring markets by approximately 19 percentage points from new records, new products and penetration into the vertical.
EWS mortgage revenue was down just under 12% and in line with our April guidance, Twin increase in the second quarter were down 18% and consistent with the down 19% we discussed with you in April. Twin inquiries continue to be weaker than USIS credit inquiries as buyers continue to have difficulty completing home purchases. EWS total mortgage revenue outperformed Twin inquiries by over 6%. We expect EWS mortgage revenue to benefit significantly in the third and fourth quarters from the significant growth in Twin records already delivered late in the second quarter and from planned additions in the third and fourth quarter.
EWS consumer lending revenue was up 8% from strong double-digit growth in P loans and debt management, and high single digit growth in auto. Employer services revenue was down 11%, principally from lower ERC revenue. Excluding ERC, revenue was lower than expected at down 2% due to lower WOTC revenue as we talked about in April, partially offset by positive ACA revenue growth. We expect employer revenue to return to growth in the fourth quarter.
Workforce solutions adjusted EBITDA margins of 53%, were up 170 basis points sequentially and continued to be very strong from non-mortgage verifier revenue growth and good cost execution, while we continue to invest in new products, expand in high growth verticals like government and Talent, and grow our Twin records.
Before moving on to USIS, I want to acknowledge the significant contribution of Rudy Ploder made to EWS and Equifax over the last 20 years. Under Rudy's leadership, EWS revenue grew from about $900 million in $2019 to $2.3 billion last year, and has positioned EWS for strong above market growth, leveraging the Equifax cloud. We're super energized to have Chad Borton, who joined us in May leading workforce solutions. Chad's broad financial service experience, proven executive leadership, customer focus and regulatory depth will be a big asset for EWS as they continue to drive above market growth.
Turning to slide 6, we continue to see very strong revenue growth in our EWS government vertical with 30% growth in the quarter and above our expectations. On the left side of the slide, we provided some of the federal agencies we are supporting with EWS digital income, employment and incarceration data, that accelerate the time to delivery needed -- to deliver needed social service benefits to over 90 million Americans, and help government agencies ensure program integrity, a win-win for all parties. In the middle of the slide, you see the substantial progress our EWS government vertical has made in a short time frame, penetrating that $5 billion TAM with a three-year CAGR over 50%. We expect EWS government to continue to make significant progress in the government vertical from additional sales resources, the federal and individual state capital level, strong record growth, new product rollouts, leveraging our differentiated and incarcerated data -- incarceration data and system to system integrations enabled by our cloud native technology that makes our solutions easier to consume.
EWS continues to help federal, state and local government agencies improve the consumer experience, and their own operating efficiency, from the application and authentication phases to redetermination and recovery processes. The strength of the EWS government vertical was again clear in the quarter, and we expect strong future revenue growth in this business in '25 and beyond.
Turning to slide 7, EWS had another strong quarter of new record additions, signing agreements with four new strategic partners that will contribute over 3 million records collectively to the Twin database. Our continued success in expanding partnerships is a testament to EWS' ability to deliver the highest levels of client service from technology, data security and accuracy and operational excellence for our partners and their end customers. We expect these new partnerships to come online and begin generating revenue for workforce solutions in the fourth quarter.
In the quarter, EWS added 8 million active records to the Twin database, ending the quarter with 180 million active records, up a strong 12% on 132 million unique individuals. Total records are now 695 million, and were up 10% versus last year. At 132 million unique individuals, we have plenty of room to grow the Twin database towards the TAM of 225 million income producing Americans.
EWS is also making very good progress, building a pipeline of pension and 1099 contributors as well as with HR software companies in partnerships, and they expect to close partnerships in the second half of the year as we continue focus on expanding the Twin database.
Turning to slide 8, USIS revenue was up 7%, solidly within our long-term revenue growth framework of 6% to 8%. USIS mortgage revenue grew 27% and was in line with our April guidance. Mortgage credit inquiries, while continuing to be down significantly year over year, down 13%, were largely in line with our April guidance. Despite the modest reduction in mortgage rates we've seen over the last several weeks, we have not seen an improvement in mortgage market inquiries, likely due to continued low new home inventory levels. Consistent with the first quarter, the strong pricing environment, along with the strength of our pre-qual products drove the very strong mortgage revenue growth and outperformance. At $143 million, mortgage revenue was about 30% of total USIS revenue in the quarter. Total non-mortgage revenue at up 1% was below our expectation of 2% growth. We saw strong growth in consumer solutions and financial marketing services, which were partially offset by a decline in USIS B2B online revenue.
We believe growth in the second quarter was negatively impacted by the U.S. team's broad-based focus on completing customer cloud migrations, which likely dampened some of the new business activity we were expecting. USIS Online B2B non-mortgage revenue was down about 4% and below our expectations. Consistent with trends from the first quarter, we saw a continuation of tight credit conditions which impacted the auto market as well as the broader FI vertical. Auto was also impacted by a software supplier system outage that we all read about. USIS saw double digit declines in third party bureau sales and a lesser extent, low digit -- low single digit declines in telco and auto. These declines were partially offset by growth in the broader FI market and in insurance. ID and fraud was also below our expectations, as was auto.
Financial marketing services, our B2B offline business was up 7%. Marketing revenue was up 4%, primarily due to growth in pre-screen marketing. Our pre-screen quarterly trends have been fairly consistent with growth coming from large FIs and fintechs, offset by declines in midsize banks and credit unions. USIS is seeing growing demand for our suite of Ignite solutions, including Ignite for prospecting.
Broad revenue was up a very strong 15% from new business wins. USIS consumer solutions D2C business had another very strong quarter, up 13%, from strong double-digit growth in consumer direct channel and high single digit growth in our indirect channel. We expect mid-single digit growth in our D2C business in the second half of this year against strong comps from last year.
USIS adjusted EBITDA margins were 33.2% in the quarter and below our expectations, reflecting this lower-than-expected revenue growth. In USIS, with significant efforts across the business to complete the cloud transformation clearly had an impact on USIS customer engagement and non-mortgage revenue growth in the first half. As USIS consumer cloud migration is completed in the next few weeks, the USIS team will now be able to fully focus on customer engagement and growth, and we expect USIS non-mortgage revenue to see improved growth in the second half of this year and of course in '25 and beyond.
Turning to slide 9, international revenue was up a very strong 28% in constant currency, and up a strong 12% in organic constant currency in the quarter excluding the impact of BVS, and well above the 20% growth we guided to in April due to continued very strong growth in Latin America and Europe. Europe local currency revenue was up a very strong 12% in the quarter with continued strong 6% growth in our credit and data businesses, and from very strong 23% growth in our debt management business. Latin America local currency revenue was up 124%, principally due to the acquisition of Boa Vista with very strong organic growth of 30%. Latin America organic revenue growth was driven by very strong double-digit growth in Argentina, Paraguay and Central America.
Brazil revenue in the quarter on a reported basis was $41 million. We continue to make good progress on the Brazil integration. Equifax Interconnect Solution was launched for small business and medium businesses in the second quarter in Brazil, with full feature release to service larger clients in the second half. The first apps of Ignite have also been launched. Identity and fraud solutions including Kount and Midigator are now available for Brazilian customers, and Brazil is driving accelerated negative data acquisition to add to their database. The team is making excellent progress on driving growth and integrating with Equifax.
Canada delivered 6% growth in the quarter. As I previously mentioned, we expect Canada to complete their consumer credit exchange customer migrations to the new Equifax cloud in the next few weeks, and similar to USIS, we're expecting to see accelerated new product rollouts and growth going forward from the Canadian team.
In Asia Pacific, revenue was down about 2% as expected, better than the down 10% in the first quarter. We expect Asia Pacific to return to revenue growth in the second half. International adjusted EBITDA margins of 25.6% were above our expectations and up 130 basis points sequentially, given their strong revenue growth performance.
Turning to slide 10, we continue to make very strong progress driving innovation, with over 30 new products launched in the quarter that delivered a 12.5% Vitality index which was up 350 basis points sequentially and was driven by broad based performance across all of our business units. EWS had a strong second quarter with Vitality index of 17%, up 700 basis points sequentially, and we expect EWS VI to remain strong in the second half with new product introductions focused on incarceration data, mortgage pre-qual or shopping behavior, in I-9 and onboarding solutions.
USIS saw continued sequential improvement with a vitality index of 8%, up 100 basis points sequentially. We expect USIS to continue to show strong VI performance from cloud completion as they leverage our new cloud native infrastructure for innovation new products in identity and fraud, commercial, and our new mortgage pre-qual products.
International also had strong 11% VI in the quarter, up 200 basis points sequentially. We expect strong Equifax double digit VI in the second half, leveraging our Equifax cloud capabilities to drive new product rollouts with a full year VI for Equifax of over 10%.
EFX.AI is one of our key EFX 2026 strategic priorities enabled by our new Equifax cloud. We're energized to have a new AI leader on board who will drive our strategic vision and execution in explainable EFX.AI. We are accelerating the pace at which we are developing new Equifax models and scores using AI and ML in areas such as identity and fraud and consumer loan affordability that drive performance and predictability of our solutions. In the second quarter, 89% of our new models and scores were built using AI and ML, which is up 400 basis points sequentially and ahead of our 2024 goal of 80% and last year's 70%.
Before I turn it over to John, I wanted to provide a few comments on our full year 2024 guidance. We're maintaining our 2024 guidance midpoint with revenue of $5.72 billion, up 8.6% and adjusted EPS of $7.35 a share, up 9.5%. This guidance implies a strong second half for Equifax with revenue at the midpoint of $2.9 billion, up over 9.5% and adjusted EPS of $4.03 per share, up 13%. Consistent with our practice, this framework assumes mortgage market activity consistent with the levels we saw in June and early July, resulting in an estimated full year USIS credit inquiries at down 11%, and consistent with our April guidance.
As you know, we're using current trends to forecast mortgage market activity, and have not seen a strengthening in the mortgage market activity despite the recent modest decline in rates, and have not reflected the impact of any fed rate cuts in the second half. Delivering this level of performance in the second half against the U.S. mortgage market that continues at the levels we saw in the first half, we believe is very strong Equifax performance. It reflects constant dollar non-mortgage growth of about 10%, again led by very strong non-mortgage growth in our workforce solutions verification services businesses, and with strong continued growth -- organic growth in International and improving non-mortgage growth in USIS, despite the continuation of the tight credit markets we saw in the first and second quarter in the US, leading to some weakening in the auto market and also impacting the broader Fi market.
While we expect a continued weak mortgage market, we expect to grow mortgage revenue by 18% in the second half. Of course, we continue to expect significant future mortgage market improvements as rates come down and mortgage market activity returns to normal 2015 to '19 levels. As we've shared previously, we expect to flow the $1.1 billion mortgage revenue recovery through to EBITDA as mortgage market activity improves at our very high mortgage market gross margins, and we're continuing to deliver expanded EBITDA margin growth, principally in the fourth quarter as we complete the transformation of our U.S. consumer businesses and our businesses in Canada, Spain, Chile and Argentina.
Now I'd like to turn it over to John to provide more detail on our second quarter financial results and to provide our third quarter framework. Our third quarter guidance builds on our strong second quarter performance from new products, penetration, record growth and pricing.
