Jul 23, 2015
Executives
Jeffrey L. Dodge - Senior Vice President-Investor Relations Richard F.
Smith - Chairman & Chief Executive Officer John W. Gamble - Chief Financial Officer & Vice President
Analysts
Andre Benjamin - Goldman Sachs & Co. Jeff P.
Meuler - Robert W. Baird & Co., Inc.
(Broker) Shlomo H. Rosenbaum - Stifel, Nicolaus & Co., Inc.
Paul L. Ginocchio - Deutsche Bank Securities, Inc.
Gary E. Bisbee - RBC Capital Markets LLC Manav Shiv Patnaik - Barclays Capital, Inc.
William A. Warmington - Wells Fargo Securities LLC Andrew C.
Steinerman - JPMorgan Securities LLC David Mark Togut - Evercore Group LLC Brett Huff - Stephens, Inc.
Operator
Good day, and welcome to the Second Quarter 2015 Earnings Conference Call. Today's conference is being recorded.
At this time, I would like to turn the conference over to Jeff Dodge. Please go ahead, sir.
Jeffrey L. Dodge - Senior Vice President-Investor Relations
Thanks and good morning. Welcome to today's conference call.
I'm Jeff Dodge, Investor Relations. And with me today are Rick Smith, Chairman and Chief Executive Officer, and 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 this call, we'll 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 the filings with the SEC, including our 2014 Form 10-K and subsequent filings. We will be referring to certain non-GAAP financial measures including adjusted EPS attributable to Equifax.
It will be adjusted for certain items, which affect the comparability of the underlying operational performance. Adjusted EPS attributable to Equifax excludes acquisition-related amortization expense and the associated tax effects, an impairment charge related to our cost-method investment in DBS and an income tax benefit generated from a state tax law change.
These measures are detailed in our non-GAAP reconciliation tables included with our earnings release and also posted on our website. Also please refer to our various investor presentations, which are posted in the Investor Relations section of our website, www.investor.equifax.com for further details.
Now, I'd like to turn it over to Rick.
Richard F. Smith - Chairman & Chief Executive Officer
Thanks, Jeff. Good morning, everyone.
Thanks, as always, for joining us this morning. By now, you've seen the results and I think you'd agree, our company continues to benefit from our unique and very diversified business model.
Also benefits from our high-leveled execution costs, all the BUs, and the centers of excellences, and we continue to reap benefits from the new product innovation that we've launched back in 2006. For the quarter, both revenue and adjusted EPS exceeded the upper end of our guidance range for all four business units and they delivered revenue growth ahead of our expectations.
This reflected both our continued execution of new products and market expansions as well as a stronger than expected U.S. mortgage market.
Total revenue for the quarter was $678 million, up 10% on a reported basis and up 14% on a local currency basis from the second quarter of 2014. In the quarter, FX created a $19 million year-on-year headwind, up from the headwind we experienced in the first quarter, up $17 million.
Operating margin for the quarter was 27.8%, up from 27.3% in the second quarter of 2014. Adjusted EPS was $1.15, up 20% from $0.96 a share last year and significantly above the upper end of our guidance range.
As I always do, let me – before John gives you some financial details, I'll go through some of the business unit highlights, as well as some of the corporate highlights. And then, we'll go into the details of the financials with John.
The power of our Decision 360 initiative which you by know are very well aware of, combined with our enterprise selling strategy and our mortgage market success, enabled USIS to once again deliver very strong broad-based 12% growth. Our recently launched data and analytics environment which we've introduced to you and we call it Cambrian has positioned us to develop and deliver new D360 products at speeds that once took weeks, now take us minutes.
This is something you'll recall we've talked about now for probably two years and that is now fully in production in the U.S. and making a big difference.
The primary goal of Cambrian is to source and integrate structured and unstructured data from any industry, anywhere in the world, and proactively deliver actual insights valued by our customers. What is particularly compelling is that we can now create transformational solutions by combining traditional trusted data with other Big Data sources in cutting edge analytical capabilities with greater ease and speed.
Cambrian will help us discover new data assets through our research and/or our partnerships that will further broaden and deepen our portfolio of data assets and fuel new product innovation. Presently for Cambrian, the environment is focused on our U.S.
based data assets and market opportunities, however, as we've talked in the past, we'll be developing significant domain expertise that will enable us to expand into our international geographies over the next 6 months to 12 months. Moving on, and in the auto vertical in the U.S., we recently launched the first of three products in the Power Lead suite which leverages our data assets to help auto dealers be more effective in their marketing activities.
They leverage third-party service providers or connectors as we call them. We help dealers leverage their website performance by turning anonymous borrowers into known high quality leads.
Consumers are now more empowered by getting their credit score online after being authenticated with our eID Verifier services, and all this information is with consumer authorization that's then shared with the dealers. Our partnership with Credit Karma I think we talked to you about that back in the very end of 2013, early 2014.
That continues to be – is that right? 2014 and 2015, yeah, at the very end of 2014, sorry about that.
That continues to be a very important revenue contributor to USIS and is off to a great start this year. We now expect the revenue in the relationship with Credit Karma for 2015 to expect – to exceed our original expectations.
Staying in USIS, in the utility sector, we launched our – the first of our four markets, specific insight tools, leveraging third-party data alongside our credit information and our telco and utility database. These insights will help utilities optimize their deposit strategies to better manage and control portfolio loss rates.
Our Commercial Solutions business within USIS, their product offerings in business unit had a very strong performance in the quarter with both accelerating revenue growth and improved operating margins when compared to the first quarter of the year. Mortgage origination activity exceeded our expectations for the quarter and driven by our strong market position, contributed nicely to USIS's growth and margin expansion.
Our fraud and property valuation product offerings continued to deliver very strong double-digit growth in the mortgage market as well. We'll talk obviously in the Q&A more about mortgage and where we think that's headed.
Finally, our partnership with Jumio which we've talked to you about in the past has secured its first mobile commerce authentication service with a major telco. The application includes validation of an end user's photo ID along with facial biometrics, a first for us.
While we expect the mortgage growth to decelerate for the remainder of the year, we expect USIS to end 2015 with double-digit organic revenue growth and operating margins comfortably exceeding 40%. Let's move on to International.
They continue to make very good progress on their critical strategic growth initiatives, including the integration of TDX, implementation of the UK government contract and continue to drive innovation through new products around the globe. Revenue in International's three largest verticals, which are the financial institutions, telcos and SMEs grew 13% for the quarter.
The decisioning platforms, analytics services and debt management revenue grew 17% for the quarter. TDX delivered another quarter of 20% plus revenue growth, a trend we expect to continue as we move into the third quarter.
Also we are in the process of entering the Canadian and Brazilian markets with TDX products and services. We're also meeting all of our operational readiness commitments within TDX or the UK contract that we've talked about in the past.
Equifax data has been integrated into the TDX workflow for developing the consumer insights and appropriate collections strategies. The IT infrastructure build has been completed and security penetration testing is largely completed.
20 debt collection agency contracts have been signed after vetting with the UK government, and as we've mentioned to you in the past, we expect this to be operational late fourth quarter, early fourth quarter, modest revenue this year and ramping up nicely in 2016. Moving on to Latin America, we've identified opportunities to set up exchanges, much like we do in the U.S., where critical data assets are not currently available.
We've already received regulatory approval in one country, and we'll be finalizing our plans by the end of the year. As you know, the exchanges have been very successful in the U.S.
with good margins and good competitive differentiation, helping our customers in ways we couldn't help before. We're really excited about what this might bring us in this one country.
If it's successful there, bring it across to other Latin American countries. In Canada, we launched a six-month pilot for an e-commerce site to provide online delivery for our business and consumer credit product offerings.
This distribution channel will be very attractive to our SME customers, while also addressing a growing market demand in other verticals and potentially other geographies. And we recently signed a global agreement with a large, international telecom to create new analytical insights using telecom usage data.
Ultimately the analytical insights will be sold to financial institutions, retailers, and other customers in our served markets to facilitate decisioning on consumers who have limited or no credit information. This partnership is significant for Equifax as a new source of rich data for consumers in Latin America, which is typically a negative data-only geography.
We're starting with risk scores that are developed from our telecom data to address the pain point of FIN (10:42) file and no-hit at the point of acquisition. Over time, we'll expand this beyond account acquisition to other decisioning needs.
For the full year, we expect the International revenue growth to be solidly in the upper end of their long-term growth range which is 7% to 10%. We continue to grow – invest in their long-term growth initiatives.
On to Workforce Solutions; they again delivered an outstanding broad-based 23% revenue growth and a operating margin of 38.3% and they're doing a great job of executing with precision on their strategic objectives. Revenue from all of our Affordable Care Act initiatives continued to accelerate nicely.
And with the recent Supreme Court decision, we anticipate continued strong demand for our product offerings in this area. Our ACA platform solutions, which enables companies to know the extent of their compliance with the Affordable Care Act, continue to benefit from very strong interest.
We now have contracts with numerous employers, who in aggregate now have 10 million employees on their payroll. In June alone, we signed 62 new customer contracts.
We're uniquely positioned to add value in the healthcare vertical and we will be making important investments to drive further long-term revenue growth and market penetration. The strong growth in Verification Services was driven by – continue to add records, new records to The Work Number database, also double-digit growth in mortgage originations, and continued penetration of non-mortgage market verticals.
In the quarter, our non-mortgage market Verification revenue grew 21%, virtually every vertical were in strong double-digit for the quarter, outstanding performance. Growth in mortgage-related revenues decelerated in the second quarter, a trend that we – will continue – that will continue for the remainder of the year.
However, Workforce Solutions success on many of their strategic initiatives should continue to drive very attractive revenue growth. For the full year, we now expect revenue growth to be in the upper teens with margin expansion over 2014 of at least 400 basis points to approximately 37%.
On to PSOL, PSOLs growth exceeded our expectation, driven by double-digit growth in our indirect channels and our International segments, in addition to winning two breach contracts. Revenue growth for our direct-to-consumer activities in the U.S.
continues to be driven by higher average revenue per subscriber and lower churn. They've done a great job on both ARPU and churn.
PSOL is making good progress on their transformation efforts and we expect full year organic revenue growth to be at the upper end of the long-term range of 4% to 6% and operating margins for the full year solidly in the range of 25% to 30%. So again, before I go to John with the financial details, let me give you some highlights at the corporate level quickly.
Some things we've talked about in the past that are very critical to our sustained organic growth. You've heard me talk about NPI 2.0 and you've heard me talk about EGI as critically important growth initiatives.
In NPI 2.0, we've developed detailed metrics to better manage our pipeline of opportunities to more effectively allocate our resources and track our success on product launches, and to minimize time to revenue. Midway into the year, we are now 10% over our revenue target and so the team is doing a great job of executing again in NPI.
Enterprise Growth Initiatives, we call it EGI, where we're focused on larger, more complex projects that frequently engage multiple parts of the organization but also have a much bigger impact on our revenue growth. EGI is delivering again 1 to 2 points of revenue growth annually for us.
In Global Operations, that COE continues to make important contributions to our bottom line. Within the operations COE, you've heard us talk about LEAN initiatives which traditionally have been used internally.
We've talked a lot about that. However, with the increased level of competition and regulatory requirements in many of our industry verticals, there are many new opportunities for incremental revenue growth when we leverage LEAN within our customers operations.
Our global LEAN teams now are currently engaged with over 20 great customers, helping to drive operational improvements that are critical to their success while adding yet another element of differentiation for our business in the marketplace. So our customers become stronger, more efficient and it helps us differentiate versus competition and secure incremental revenue.
On to our fraud and identity management business, they're presently broadening to incorporate biometrics in mobile device resolution via partnerships. We're also looking to taking on more successful products and launching them in other geographies.
It's a practice we've done in other parts of the business. Now we're intentionally taking fraud and ID products from one part of the world to other geographies where it makes sense.
In summary, the business is off to a solid start this year with high levels of execution across many of our strategic initiatives and we're well down the path of changing Equifax from a credit bureau into a truly diversified information solutions company. Our domain expertise and analytics and technology enables us to increasingly deliver powerful insights to our customers and enhance their decision making.
All of our business units continue to work hard to deliver on their commitments to the company, our customers, employees and shareholders. And as we move into the second half of 2015 and start to look at 2016, I strongly believe the prospects for consumer credit and the developed markets in which we operate, especially the U.S.
look very good. The dynamics are shaping up as a sweet spot now for consumer credit growth.
And with that, let me turn over to John for the financials. John?
John W. Gamble - Chief Financial Officer & Vice President
Thanks, Rick, and good morning, everyone. As before I'll be referring to the financial results from continuing operations generally presented on a GAAP basis.
During the quarter we recorded an impairment charge of $14.8 million or $9.8 million after-tax related to our cost method investment in DBS. The impairment is in general a result of the weakened economic situation in Brazil.
We also recorded an $8.6 million after-tax gain due to a state income tax benefit resulting from a state tax law change enacted during the quarter. The net of these two unusual items was negative $0.01 per share.
Consistent with our past practice for treating unusual or infrequent items, we've excluded these items from our adjusted EPS in order to provide investors with a more consistent period to period operating comparison. Now let me turn to the business unit's financial performance for the second quarter.
U.S. Information Solutions revenue was $360 million up 12% when compared to the second quarter of 2014.
Online Information Solutions revenue was $233 million up 13% when compared to the year-ago period. Mortgage Solutions revenue was $33 million up 20% compared to Q2 of 2014, this compares favorably to the mortgage bankers application index which was up 16% in the second quarter.
Financial Marketing Services revenue was $50 million up 4% when compared to the year-ago quarter and the operating margin for U.S. Information Solutions was 42.1% up from 39.5% in the second quarter of 2014.
International revenue was $148 million down 1% on a reported basis, but up 11% on a local currency basis. By region, Europe's revenue was $63 million down 1% in U.S.
dollars but up 12% in local currency. Latin America's revenue was $51 million up 6% in U.S.
dollars and 18% in local currency. Canada revenue was $35 million down 10% in U.S.
dollars, but up 2% in local currency. For the second quarter, International's operating margin was 19.9% down from 21.9% in the second quarter of 2014.
Although the operating margin fell short of our expectations, we have a number of very exciting growth opportunities Rick has discussed that were an incremental investment and management focus. Workforce Solutions revenue was $146 million for the quarter up 23% when compared to the second quarter of 2014.
Verification Services with revenue of $94 million was up 30% when compared to the same quarter of last year. Employer Services revenue was $52 million up 11% compared to last year, growth was aided by our ACA analytical solution and further progress with Compliance Center.
The Workforce Solutions operating margin was 38.3%, compared to 33.9% in Q2 of 2014. Personal solutions revenue was $68 million, up 7% on a reported basis and up 8% on a local currency basis.
For the second quarter, operating margin was 27.6% compared to 30.9% in Q2 of 2014. This margin is consistent with our longer term expectation for this business, as we primarily driven by increased marketing expense during the quarter.
In the second quarter, general corporate expense at $48.5 million was slightly over the guidance we gave last year. The increase versus our guidance, and from the $36.6 million in 2Q of 2014, was principally due to increased incentive compensation expense due to our very strong performance in 2015.
We also had increased salaries and benefits, and other investment expense, primarily related to our key strategic initiatives. Looking at the third and fourth quarter, we expect general corporate expense to be approximately $45 million per quarter, consistent with 2014 levels.
Operating margin at 27.8% was very strong. Operating cash flow was $187 million in the quarter.
We continued our aggressive stock buyback activity, repurchasing 0.9 million shares for $92 million and paying $34 million in dividends to our shareholders. With that I'll turn it back to Rick.
Richard F. Smith - Chairman & Chief Executive Officer
Thanks, John. Consistent with our guidance last quarter, we expect continued favorable economic conditions in the U.S.
span the majority of our non-mortgage verticals. I'll talk about mortgage in a second.
Internationally, we continue to expect uneven economic conditions across Europe and Latin America. Our view of the U.S.
mortgage market in the second half of 2015 is roughly consistent with our prior guidance as we expect U.S. mortgage market originations to be up slightly in the second half of 2015 versus the same period of 2014.
We are, however, increasing our full-year view for 2015 mortgage originations to be up somewhere between 11% and 13% versus 2014. The U.S.
mortgage market was stronger than our expectations in the first half of the year with originations up approximately 20% versus last year. And again, we'll talk about the nuances and the impact of moving from a refinancing mortgage market to a purchase market, which we are in the process of doing, the benefits that has for our company.
For the third quarter, we expect organic revenue to be between $655 million and $670 million, reflecting constant currency organic growth between 10% and 12%, partially offset by about 3% FX headwind. Adjusted EPS is expected to be between $1.08 and $1.11 a share, which is up 7% to 10%, excluding $0.03 per share of negative impact from FX.
This reflects constant currency organic EPS growth of 10% to 13%. We also expect operating margin to be in the range of 27% to 27.5% for the quarter.
For the full year, we've again increased our guidance for revenue and adjusted EPS. We expect now 2015 revenue to be between $2.645 billion and $2.67 billion, up from our previous guidance which was $2.585 billion to $2.635 billion and reflects constant currency organic revenue growth of 11% to 12% for the year.
This strong revenue growth is partially offset, again, by approximately 3% negative FX impact. And as before, this is all organic revenue growth.
2015 adjusted EPS is now expected to be in the range of $4.38 to $4.42 a share, also up from our previous guidance and this reflects 13% to 14% EPS growth for the year. On a constant currency basis excluding $0.10 per share negative impact of FX at current rates, this reflects 15% to 16% growth for the year compared to 11% growth in 2011.
In summary, we're also more intently focused now on strategic inorganic growth as we have developed a more robust pipeline of potential opportunities, now that we have fully integrated TDX into our operations. So as we've talked to you in the past, intent was to be more focused on that as we exit 2015 and into 2016, we're ready to do just that.
So that's all the prepared comments. So, operator, if you could please open up for Q&A for John and I, that would be great.
Operator
Certainly. We'll go first to Andre Benjamin at Goldman Sachs.
Andre Benjamin - Goldman Sachs & Co.
Hi. Good morning.
Richard F. Smith - Chairman & Chief Executive Officer
Good morning.
John W. Gamble - Chief Financial Officer & Vice President
Good morning.
Andre Benjamin - Goldman Sachs & Co.
I was hoping to maybe dig a little bit more into Verification. I didn't know if you would be able to provide any color on how much of the revenue is coming from your success penetrating autos versus the ACA contract which has been ramping nicely versus other verticals?
And if there are any others, maybe a little bit of color on where you're seeing the most traction?
Richard F. Smith - Chairman & Chief Executive Officer
Sure. As I briefly alluded to in my comments, the trends we saw emerging in 2014 and clearly into the first quarter of 2015 are continuing.
It is extremely broad-based. So think about the growth, first and foremost on the Verification side being, as we continue to add records, that's all incremental revenue right there and they've been adding records for a long time now.
Secondly, Mortgage obviously is strong. Third as I alluded to in my comments, almost every – in fact I think it is every non-mortgage vertical is growing strong, strong double digits.
That's pre-employment, that's collections, that's automotive, that's card, I can go on and on and on, extremely strong. And then as you mentioned the Workforce Analytics, we continue to add customers there, I said 10 million.
Consumers are now being or employees are now being monitored and 62 clients alone in the month of June. So it is as broad-based a performance of growth as you could hope for in EWS.
It is just spectacular.
Andre Benjamin - Goldman Sachs & Co.
And then in the indirect channel you mentioned the Credit Karma relationship continues to ramp and contribute nicely. One, are you willing to disclose any amount that that is actually contributing?
And two, as that seems to be performing a little bit better than you expected, how are you thinking about the potential to aggressively push to work with other partners?
Richard F. Smith - Chairman & Chief Executive Officer
Great question. It's still early, so we gave you a number earlier in the year, it's ahead of that right at this juncture, but we still have 6 months in the year to go.
So it's hard to say where that goes for the full year at this time. It's been very successful.
We like the model and as we've talked to you in the past, we look at that deed to see be it through a business to a consumer or direct-to-consumer as one unified strategy. So in this particular case we have our PSOL unit and USIS working together strategically to make sure this makes sense not just short-term but long-term.
And, yes, there's nothing to prevent us from looking at taking the success we've had with Credit Karma and either doing it ourselves directly or doing it with other indirect players.
Andre Benjamin - Goldman Sachs & Co.
Thank you.
Richard F. Smith - Chairman & Chief Executive Officer
Sure.
Operator
And we'll go next to Jeff Meuler at Baird.
Jeff P. Meuler - Robert W. Baird & Co., Inc. (Broker)
Yeah. Thank you.
I guess one of the things that jumped out to me, Rick, is even getting out to Q3 as you start anniversarying the mortgage weakness, still guiding to 10% to 12% constant currency growth. And as you talk about the business, it sounds like almost every business unit is at or above the long-term guidance ranges.
So is there anything that is unsustainable in the growth rate? Or said another way, when you're in the sweet spot of the consumer credit cycle in some of the larger developed markets, can you sustainably grow above the longer-term targets?
Richard F. Smith - Chairman & Chief Executive Officer
That's obviously something we'll develop over time. It's something we keep a close eye on, Jeff.
It depends on the horizon you're looking at. It's specific to the third quarter guidance, maybe the second half guidance.
You're right, it's not just every business unit, it's the sub-business units within those business units, and the sub-sub. So that could be the auto vertical within International, but also the auto vertical within all the countries in International performing extremely well is very, very broad-based and their executions at extremely high level.
Let me use your question to respond to something I briefly alluded to in my comments, which is the nuances of mortgage and how mortgage impacts our thinking for the balance of the year and next year. And you guys know this as well as we do, the world is going, the U.S.
market is going from a heavily refinancing distribution to now back to more the normal distribution, which is heavily skewed towards purchases and less and less towards refinancing. And while the overall mortgaging market will soften, I think it clearly is going to soften second half of this year versus the first half, 2016 will be less than – maybe modestly up from 2015.
The nuance that's positive for us is that when you go from a refinancing market to a home-purchase market, it's actually a benefit. In many cases, individual bank policies may not require them to pull a VOE/VOI: verification of employment, verification of income.
When you do a purchase, they pull a VOE/VOI. Secondly, when you go to a refinancing, from refinancing to purchase, you're going to pull, as we've told you in the past, far more credit files.
Your broker may pull the credit file; you, as a consumer, may shop the four different banks, five different banks, each time pulling a file. In refinancing, you don't do that.
They may pull one file. So even though the mortgage market growth rates will slow as we go forward, including in third quarter, we think there's some hidden gems in there for us as you rebalance to a purchase market.
John W. Gamble - Chief Financial Officer & Vice President
Also, as you do the math on the full year, since we've given you full-year guidance and guidance for the third quarter, as you back into the fourth quarter, what you see is our revenue growth rates, on a constant-currency basis, are moving back down toward our long-term averages. Right?
Jeff P. Meuler - Robert W. Baird & Co., Inc. (Broker)
Fair enough. And then I know NPI 2.0 is still a little bit early, but are you seeing signs that you're going to get more, call it, extra-base hits out of the NPI 2.0 products?
Richard F. Smith - Chairman & Chief Executive Officer
Clearly. I alluded to that, I think, in my comments that we had exceeded our budget by 10% for the quarter.
But it's that combined with the topic we've talked about now for a few quarters, which is Cambrian. You can't underestimate; this has been a multi-year heavy investment that now gives us the ability to partner with our customers and build products in seconds, where it used to take weeks or months, and that fuels NPI as well.
Jeff P. Meuler - Robert W. Baird & Co., Inc. (Broker)
Got it. Thank you and hats off to you and the broader team.
Richard F. Smith - Chairman & Chief Executive Officer
Thank you very much.
Operator
We'll take our next question from Shlomo Rosenbaum at Stifel.
Shlomo H. Rosenbaum - Stifel, Nicolaus & Co., Inc.
Hi. Good morning.
Thank you very much for taking my questions. Hey, Rick, I was wondering if you could, if not quantitatively, maybe qualitatively talk a little bit about the volume, the growth that's in USIS.
Maybe where you're getting tailwinds or how much you can attribute to tailwind from the end markets, which you've talked about, is getting better? And how much more just some of the initiatives that you've been very aggressive about for like, besides the Credit Karma, there is also things like fraud initiatives, ID identification and other things out there?
So I guess how much is market versus how much is you guys just trying to anticipate where the best places are to be?
Richard F. Smith - Chairman & Chief Executive Officer
Good question. I think there's no single answer.
I'd say, generically, in the U.S. and I think I said this somewhere in my comments, we're expecting improved economic environments.
I talked about moving to a sweet spot in consumer credit as you exit this year and go into 2016. It's not robust yet in the U.S.; it's improving.
The nuance or the difference there would be the automotive, obviously very strong and we've benefited from that. But we've also benefited – we're growing at rates multiples of the automotive growth rates as you know, Shlomo, through our Connector Strategy, which we're partners, and new product introduction.
Card, we're seeing pre-screen pick up, which is encouraging, and that should lead to more card revenue going forward. Insurance is strong, retail banking is strong.
So it's fairly broad-based. But the heart of your question is other than automotive, the majority of the USIS growth that we're experiencing is not – some of it's economically driven, but more of it's driven by new product innovation, more spend with our customers, leveraging D360, things like that, versus the market itself.
Shlomo H. Rosenbaum - Stifel, Nicolaus & Co., Inc.
Okay. That's what I'm getting at.
So your sense is that it's being in the right places and the initiatives that you guys have put forward versus just the rising tide lifting all boats?
Richard F. Smith - Chairman & Chief Executive Officer
And I think the rising tide will lift all boats eventually, but yes. We've been at D360, for god's sake I think it's in 2007, so eight years.
And all the things we've done by leveraging D360, then building Cambrian, building NPI, it's those things by and large that are driving more of our core organic growth in the U.S. than it is the economic environment.
Shlomo H. Rosenbaum - Stifel, Nicolaus & Co., Inc.
Okay, great. And then just turning to International, clearly top line growth and the ability to drive the top line is the key.
Can you talk about the things that impacted the margin that are really longer term efforts that you're making towards driving that top line growth?
Richard F. Smith - Chairman & Chief Executive Officer
Yeah, absolutely. It's consistent with what we've talked about before.
There's two big things we're doing. And one, the beauty is, Shlomo, before I give you the two things we're doing, is John and I have the luxury to invest in areas where we need to invest, and PSOL is one of them.
We've been investing in that for a couple of years as an example. We told you we'll accelerate the growth there from our competitors, but the margins will come down 25% to 30%.
We also told you we're going to invest in International for long-term growth and profitability. We can do those things and still give you – we've told you what we're going to do, which is a 25 basis point to 50 basis point corporate margin expansion.
We've done that and I think margins were up 120 basis points in the first quarter and 50 basis points in the second quarter. Specific to your question, though, there are two things we're investing in, in International, which I firmly believe benefit us long term.
One is the government contract we talked about in the UK. That is a large, complicated investment that we've had to make that's required resources from around the globe to stand up this environment to be ready to go live end of the third quarter, early fourth quarter.
And I think we've talked to you about that now as a group for a few quarters. So that's one.
The other has been with our ability now to standardize platforms, we're now going to regional centers in International, and there's a cost associated with moving from replicating processes in every country to regionalizing those processes in fewer countries. So there's an investment required to get this.
Those are two things we're investing in now as well as NPI, but we always do that. That will bode well long-term, but create some headwinds in margin short-term.
John W. Gamble - Chief Financial Officer & Vice President
And just near-term, what you're seeing in the first half of this year is we just have a revenue mix change, right? We talked about Canada being a little weaker, a lot of it because of FX.
There's an FX impact, but also, Canada is a very high-margin country for us, similar to USIS. So when Canada is weaker, it affects our International margins.
Richard F. Smith - Chairman & Chief Executive Officer
Great point.
Shlomo H. Rosenbaum - Stifel, Nicolaus & Co., Inc.
Got it. Last one, just if I can squeeze in.
Hey John, how much more can you squeeze out of these DSOs? You have pretty healthy DSO.
They continue to trend down. Is there really room to go over there when I think about cash flow, or how should I think about that?
John W. Gamble - Chief Financial Officer & Vice President
That continues to be an area of focus. Obviously, a lot of that's driven by mix as well.
DSOs internationally are a bit higher, and since you've seen pretty good local currency growth internationally, that does negatively impact DSOs. But it's something we continue to focus on and, obviously, we'll hope to squeeze them down over time.
Shlomo H. Rosenbaum - Stifel, Nicolaus & Co., Inc.
Thank you.
Operator
We'll go next to Paul Ginocchio at Deutsche Bank.
Paul L. Ginocchio - Deutsche Bank Securities, Inc.
Thanks for taking my question. Just the 62 contracts in ACA analytics, how does that relate to the total contracts?
And then just on the acquisitions, I would assume you're focused on more consumer data than, say, industrial data. Are you looking for tuck-ins, or you're thinking about doing – is there something larger out there or are you ready for larger deals if they're available?
Richard F. Smith - Chairman & Chief Executive Officer
Hi, Paul. Thank you.
I can't recall – does anyone here recall the number of contracts we signed in EWS? Hold on, I'm looking at the guys; we're getting different -we have – Jeff, what's the number?
Jeffrey L. Dodge - Senior Vice President-Investor Relations
Over 200.
Richard F. Smith - Chairman & Chief Executive Officer
462.
Jeffrey L. Dodge - Senior Vice President-Investor Relations
462 by the end of the year.
Richard F. Smith - Chairman & Chief Executive Officer
And 62 signed, and he's saying – how many contracts have we already signed year-to-date? Okay.
I'm being told, Paul, because I don't have it off the top of my head, over 200. So 62 in one month is a big number.
Paul L. Ginocchio - Deutsche Bank Securities, Inc.
Yes.
Richard F. Smith - Chairman & Chief Executive Officer
And the second question on acquisitions, thank you, team, for your great work there. On acquisitions, yeah, probably not sure I can disclose the details, but yeah, we do a good job of tuck-ins.
So it would fit our strategy, which is data analytics, geographical expansion, and I'll leave it at that.
Paul L. Ginocchio - Deutsche Bank Securities, Inc.
Okay.
Richard F. Smith - Chairman & Chief Executive Officer
Okay. Thank you.
Operator
We'll move next to Gary Bisbee at RBC Capital Markets.
Gary E. Bisbee - RBC Capital Markets LLC
Hi, guys. Good morning.
Just a question on Workforce Solutions, and particularly the work number. It's obviously been a terrific asset as you've built out the database and expanded the end markets that that data's used in.
How much runway's left on each of those strategies? And I guess, looking at the – outside of mortgage, which can move around, you've seen pretty steady acceleration in that over the last year.
What could slow the non-mortgage growth there as we think over the next year?
Richard F. Smith - Chairman & Chief Executive Officer
Thanks, Gary. Let me regress for a second, since I think we now have the actual data for Paul's question.
Paul, on the Workforce Analytics, contracts signed last year was 244 for the total year 2014, ramping up nicely. It'll probably be more than that this year and 62 within the month of June alone.
Gary, back to your question, what's driving and how sustainable is the non-mortgage growth in EWS, was that the heart of your question?
Gary E. Bisbee - RBC Capital Markets LLC
Yeah, just the work numbers seem to have gained a lot of momentum in the last year, that...
Richard F. Smith - Chairman & Chief Executive Officer
Okay.
Gary E. Bisbee - RBC Capital Markets LLC
...and what's the runway on that? How sustainable is it?
Richard F. Smith - Chairman & Chief Executive Officer
Very sustainable. Dann has done a hell of a job taking a very good business and bringing it to a new level.
When we told you, we talked about this for quite some time, we have a path to get the records up to 300 million and every time you add a record, you get multiple bites of the apple, it becomes more valuable for more verticals. You have revenue added just incrementally for that record being added.
So that's one. Two, Workforce Analytics are in the very early stages.
The IRS piece of the Workforce Analytics goes live in February of 2016. So we haven't even experienced that revenue growth yet.
The non-verification piece of EWS, we've got a great leader in there doing a great job of thinking. That business no longer is just protecting the work number but innovating, investing in efficiency for our customers and making the customer experience better, taking that business from virtually a no growth to a nicely growing business.
So as I look, Gary, at the portfolio of assets we have, I have told our investors this time and time again, I think they're all really well positioned for long term multi-year growth. The one that's got I think the most significant growth opportunities over a multi-year period of time is in fact EWS.
Gary E. Bisbee - RBC Capital Markets LLC
And given that, I guess, what are the prospects to try to begin to build something like the Work Number in other countries? It seems like it's been such a home run that I realize it probably would take years, but is that something that's on your radar?
Richard F. Smith - Chairman & Chief Executive Officer
Clearly.
Gary E. Bisbee - RBC Capital Markets LLC
Okay. Thank you.
Richard F. Smith - Chairman & Chief Executive Officer
Yep. Thank you.
Operator
We'll go next to Manav Patnaik of Barclays.
Manav Shiv Patnaik - Barclays Capital, Inc.
Hey, good morning, guys. Obviously there's a lot of good internal initiatives, like you said, driving a lot of that organic growth.
I just wanted to touch on your comments on we're entering the sweet spot of the credit cycle. Can you give us some reference from your experience how long that cycle can last?
What are some of the signs to look for in terms of how well that's progressing? Maybe just a little bit of color on that.
Richard F. Smith - Chairman & Chief Executive Officer
Yeah, sure. I'll give you my view, but there's others, economists that we obviously deal with that could give you their view, banks will give you their view.
But here's why I described it that way. I intentionally described it in our larger developed markets, so the UK, Canada and U.S.
I underlined or underscored particularly the U.S. What you've got is the emergence of obviously higher employment rates or unemployment rates starting to see wage growth, starting to see home price growth, continued home price growth, consumer confidence is growing.
The banks are stronger now than they have ever been, so their ability to lend to those that want to borrow is as strong now, is becoming as strong now as it's been since maybe the 2005, 2006, 2007 timeframe. So that's why I'm saying I feel like in those countries specifically we're moving into what I view as a sweet spot for consumer credit.
Obviously that benefits us.
Manav Shiv Patnaik - Barclays Capital, Inc.
Okay. And then just in terms of – Rick, we always talk about the NPI and the aspirations have obviously continued to push that goal up.
It sounded like obviously even though this quarter at least significantly exceeded your expectations. Can you – I think in one of the previous questions you said momentum looks like it should continue.
But, real preliminary looking into 2016, do you still think you guys will continue this momentum and do the above average growth you guys have been doing?
Richard F. Smith - Chairman & Chief Executive Officer
Emphatically, yes, and it's not just NPI 2.0, but it's something I think we introduced to you and I alluded to today, can't remember when we introduced it, Jeff, but the EGI, Enterprise Growth Initiatives, you can't underestimate that as well. And that's adding one or two points of growth annually for us on top of what we get from NPI.
So it's a combination of those two is truly in our DNA and doesn't mean we've become complacent about it, but now we've got to continue to make sure we reinvigorate it, reinvent it, that's why we took a timeout and introduced 2.0, and that's why we introduced EGI maybe three or four years ago is we've always got to challenge ourselves of finding different ways to innovate for our customers.
John W. Gamble - Chief Financial Officer & Vice President
And with that success that helps us be confident in the 6% to 8% organic growth model that we continue to focus on.
Richard F. Smith - Chairman & Chief Executive Officer
That's a lot.
Manav Shiv Patnaik - Barclays Capital, Inc.
Again, just last one. Is there any update to the TDX UK contract?
Richard F. Smith - Chairman & Chief Executive Officer
Yes, I gave a few brief highlights. It's moving along very well.
We still have the technical environment. We've cleared almost every operational hurdle that the government has asked for and we expect to go live – I think our first data feed is this week, next week, and really start going live late third quarter and into early fourth quarter.
Really consistent with what we talked about maybe nine months ago, modest revenue in the fourth quarter and ramping up nicely in the first quarter 2016.
Manav Shiv Patnaik - Barclays Capital, Inc.
All right. Thanks a lot, guys.
Richard F. Smith - Chairman & Chief Executive Officer
Thank you.
Operator
And we'll go next to Bill Warmington at Wells Fargo.
William A. Warmington - Wells Fargo Securities LLC
Good morning, everyone.
Richard F. Smith - Chairman & Chief Executive Officer
Good morning.
John W. Gamble - Chief Financial Officer & Vice President
Good morning.
William A. Warmington - Wells Fargo Securities LLC
So for PSOL, what's going on in the affinity business? And that market's been quiet for years, but now it's coming back to life.
Why is that and are you guys participating in that?
Richard F. Smith - Chairman & Chief Executive Officer
I'm looking at it. It's starting to come back.
It's a – we're not as heavily focused in the affinity market as others are. We're heavily focused in the indirect market and I think I alluded to in my earnings notes that that's growing strong double digits for us, but we're not a heavy player in the affinity market.
William A. Warmington - Wells Fargo Securities LLC
Yeah? Well then in – back in April you announced a new version of the FICO score that you see.
NCTUE data helped generate a FICO score for consumers that didn't have sufficient data in their credit files to do a traditional FICO score. So how is that pilot going and does it have a chance to become a meaningful contributor to revenue for you some day?
Richard F. Smith - Chairman & Chief Executive Officer
Yeah, I think so. It's early days, but I think any time we can help our customers, be it banks or telcos, get transparency and better insights into the under-banked they win, the under-banked win and we win.
I alluded to the fact, in one of the Latin American countries we're building capabilities with an exchange at transparency in that exact segment. There is nothing to do with the FICO score that you're talking about, leveraging on utility database.
But it's the same concept, how to get transparency to the under-banked? And I think if we do that smartly, and the FICO score is one way to do that, again that's a win-win-win.
William A. Warmington - Wells Fargo Securities LLC
Excellent. Thank you very much.
Richard F. Smith - Chairman & Chief Executive Officer
Thank you.
Operator
We'll go next to Andrew Steinerman at JPMorgan.
Andrew C. Steinerman - JPMorgan Securities LLC
Hey, Rick, you chose to highlight you feel good about 2016. I just wanted to make sure I got the revenue movers, the needles that you could see right now at this point that influence 2016?
So what I picked up was your view on the strengthening consumer credit application environment, the UK government contract ramping with in-depth placement and obviously the multiyear pass for Workforce Solutions. Are there any other drivers that you see today that influences your 2016 view?
Richard F. Smith - Chairman & Chief Executive Officer
No, I'll give you – so, it's a continuation of all things we do, which is NPI, EGI, LEAN operational excellence of execution, blah, blah, blah. But the macro things, yes.
a healing U.S. economy moving us into the sweet spot of consumer credit, and same with the UK, same with Canada, the TDX contract as you alluded to as well, and then EWS continue to go through ACA.
Andrew C. Steinerman - JPMorgan Securities LLC
All right. And if you would just call out a vertical for 2016 that you feel like is strengthening, what vertical do you feel has the ability to break out in 2016?
Richard F. Smith - Chairman & Chief Executive Officer
I'd say that management obviously with the addition of a government contract in UK and I'd say Workforce Analytics clearly will be another big step up. Auto, I think the market in the U.S.
auto market will be modestly up versus this year, but I think there's still another year of great growth prospects for us as we continue to mature with our strategy there. So those are a couple.
Andrew C. Steinerman - JPMorgan Securities LLC
Thank you. I appreciate it.
Richard F. Smith - Chairman & Chief Executive Officer
Sure.
Operator
Next we'll go to David Togut at Evercore ISI.
David Mark Togut - Evercore Group LLC
Thank you. Good morning, Rick and John.
Richard F. Smith - Chairman & Chief Executive Officer
Hello, David.
John W. Gamble - Chief Financial Officer & Vice President
Hello.
David Mark Togut - Evercore Group LLC
I apologize. I joined the call a few minutes late.
But, did you disclose, Rick, the number of active Work Number records?
Richard F. Smith - Chairman & Chief Executive Officer
No. I did not.
I talked – someone asked the question, David, I can't recall who it was. I apologize for that, but – about Work Number, and I talked about long-term growth and we have a path and a strategy to get our total records to 300 million, David, maybe about a year or two ago.
I've intentionally talked less about the active – that's growing nicely by the way. It's growing very nicely and on path to do everything we want it to do.
But I'm talking more about this path, the 300 million records, because there was a misnomer that I feel maybe eight years ago with EWS in that there was more value or perceived value in active versus total. We derive a lot of value from the historical records as well.
So in an attempt to make sure everyone understood that, we're really talking about getting the total database up to 300 million. We're on our way.
David Mark Togut - Evercore Group LLC
Understood. And then just shifting gears, you talked about Credit Karma a little bit.
What experience have you had in up selling from the indirect channel, higher value-added Equifax services?
Richard F. Smith - Chairman & Chief Executive Officer
Within PSOL or within Credit Karma?
David Mark Togut - Evercore Group LLC
Well, from the Credit Karma relationship specifically.
Richard F. Smith - Chairman & Chief Executive Officer
Very little.
David Mark Togut - Evercore Group LLC
Okay. Is that – yeah...
Richard F. Smith - Chairman & Chief Executive Officer
That's an opportunity long-term.
David Mark Togut - Evercore Group LLC
Okay. Is that difficult to do?
Richard F. Smith - Chairman & Chief Executive Officer
No, it just hasn't been a priority yet. It's just getting the relationship understood, stood up and running, but it's something the team can look at long-term.
David Mark Togut - Evercore Group LLC
Understood. And a quick final question.
Longer term thoughts on Brazil and how your relationship with Boa Vista will evolve?
Richard F. Smith - Chairman & Chief Executive Officer
Good question. Thank you for asking that.
Medium term, I know your question was long-term, medium-term, whatever the hell that means, I'm bearish on Brazil. Politically, economically, it's in a down cycle.
I'm not sure if that's another two years, three years, but it's tough. Secondly, there's – I think everyone knows there was a law passed a couple years ago to include positive data, which we thought was a positive, no pun intended there.
There's a cloud over that possibility. It is likely or possible that the positive bureau was in fact controlled and built by the banks, much like Serasa – if you remember Serasa of old, on the negative data it was built.
So I'm not sure strategically what that does to the Brazilian market long-term. So right now, I've always said before I get aggressive in doing this, step up my – our ownership in Brazil, I've got to really understand what the economy is going to do and how long is it going to be in this downtrodden environment, and where does the positive bureau go.
And I think we have clarity on the latter, the positive bureau, probably in the next 12 months, and we'll make a decision at that point in time. In the meantime, they're good partners.
TMG is a good partner, Boa Vista is a good partner. We continue to work with them to make sure they are as successful as possible.
David Mark Togut - Evercore Group LLC
Understood. Thank you very much.
Richard F. Smith - Chairman & Chief Executive Officer
Thank you.
Operator
We'll take our next question from Brett Huff at Stephens Inc.
Brett Huff - Stephens, Inc.
Good morning. Thanks for taking my question.
Richard F. Smith - Chairman & Chief Executive Officer
Sure.
Brett Huff - Stephens, Inc.
You talked a little bit about EGI and I think it's the first time you've called out maybe 1 or 2 points of growth from that. And I was – it seems like that that was more than in my mind, that that might be contributing.
And I guess I have a two-part question. One is, when you're sort of duking it out for wallet share with the other bureaus and the other relevant players, what's helping you win in that relationship?
Is it just the long-term relationship? Is it the incremental unique datasets you have, et cetera?
And then, number two, what takes that to the next level? Is it just execution and going through just systematically each of your top 50 customers or whatever it is?
Or is there another gear in EGI that helps us even accelerate from 1 to 2 points.
Richard F. Smith - Chairman & Chief Executive Officer
Thanks, Brett. I'd say, one, we've got good competitors and I respect our competitors.
They do a good job in the marketplace and we got D&B (53:20) or Experian or local competitors in local countries. Two, you can't underestimate the power of having good people and we've been blessed to have some really good, talented, committed people.
Then beyond that, I'd say there's no doubt that innovation, be it through EGI or NPI really leveraged by unique data assets has been a huge differentiator over the years. And I tell people that the growth in that area of innovation isn't always or even largely share gain.
It is, in some cases, clearly, Brett. But it is solving problems that no one else can solve.
So if they used to spend $100 in the ecosystem, if they're now spending $110, we get the incremental $10 spend. That's really where the great leverage is.
And then, the other thing is – where was I going to go. Cameron (54:20) obviously will be an enabler long-term for us, so beyond that, how do you sustain that?
I think it's sustainable mid-term and long-term, as I mentioned to someone else's question earlier. We've got to continue to reinvent ourselves, remain contemporary.
I think we've also got to say what is the next asset we need that adds value to our customers that are our competition or the marketplace is not adding today. So in our strategic planning process, we always think about what is next.
Obviously, I would not allude to that here, but that's something we think about.
Brett Huff - Stephens, Inc.
Great. That's what I needed.
Thanks for your time.
Richard F. Smith - Chairman & Chief Executive Officer
Thanks, Brett.
Operator
And we'll move next to Gary Bisbee at RBC Capital Markets.
Gary E. Bisbee - RBC Capital Markets LLC
Hi, just one quick follow-up. Given the momentum in the ACA compliance offering, do you feel like all companies, or the vast majority of companies, you are trying to get that together this year and then you've got a much tougher comp for that next year?
Or is this going to be a multi-year thing where you broaden out the analytics and are able to sell into that customer base?
Richard F. Smith - Chairman & Chief Executive Officer
Well, clearly multi-year. I mean, people are going to get – I can promise you this, the majority of companies, when we talk to CEOs, we've talked to the chief HR officers, they're thinking about this today and they're either looking to us or someone else in the marketplace to solve those problems or they're trying to build their own homegrown solutions, and if they're out of compliance, they're going to get fined.
As those fines start to mount their need for solutions go up and the urgency for the solutions go up. Secondly, I alluded, Gary in my comments that the IRS piece of the compliance goes live February of next year, so we haven't even monetized that yet to its fullest extent.
So I think if it's a baseball analogy, the Workforce analytics potential is in the very early innings of its growth.
Gary E. Bisbee - RBC Capital Markets LLC
Great. Thank you.
Richard F. Smith - Chairman & Chief Executive Officer
Thank you.
Operator
And that does conclude today's question-and-answer session. At this time, I will turn it back over to management for any closing remarks.
Jeffrey L. Dodge - Senior Vice President-Investor Relations
I want to thank everybody for their time and their interest and their support of Equifax. And with that, we'll conclude the call.
Have a good day.
Operator
And that does conclude today's conference. Again, thank you for your participation.