What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-10-21 compared with 2024-07-22 · 165 added, 145 removed, 253 unchanged (55% of the section changed)

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MD&A is provided as a supplement to and should be read in conjunction with our consolidated financial statements and the accompanying Notes to Financial Statements in Item 1 of this Form 10-Q.

This section discusses the results of our operations for the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023.

This section discusses the results of our operations for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023.

All percentages have been calculated using unrounded amounts for each of the periods presented.

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Demand is also enhanced by our initiatives to expand our products, capabilities and markets served.

For 2024, our planning assumes that U.S.

economic activity, as measured by GDP, is expected to grow but at a slower rate of growth than experienced in 2023.

Our plan assumes the U.S.

For 2024, we expect that U.S.

economic activity, as measured by GDP, will grow but at a slower rate of growth than experienced in 2023.

Our forecast assumes the U.S.

mortgage market, as measured by credit inquiries, is expected to decline by about 7% in 2024 versus 2023.

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interest rates which impact mortgage rates available to consumers.

In the international markets in which we operate, in particular in Australia and Canada, our planning also assumes economic activity, as measured by GDP, to grow in 2024 but at slower rates than in 2023, and in the U.K.

for GDP to grow nominally.

In Australia, the U.K., Canada, and Brazil, our forecast assumes economic activity, as measured by GDP, to grow in 2024 but at slower rates than in 2023.

Segment and Geographic Information

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We also have investments in consumer and/or commercial credit information companies through joint ventures in Brazil, Cambodia, Malaysia and Singapore.

Approximately 76% and 78% of our revenue was generated in the U.S.

during the three months ended June 30, 2024 and 2023, respectively.

Approximately 76% of our revenue was generated in the U.S.

during the three months ended September 30, 2024 and 2023.

Approximately 76% and 77% of our revenue was generated in the U.S.

during the six months ended June 30, 2024 and 2023, respectively.

during the nine months ended September 30, 2024 and 2023, respectively.

We experience seasonality in certain of our revenue streams.

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These performance indicators include measurements of operating revenue, change in operating revenue, operating income, operating margin, net income, diluted earnings per share, cash provided by operating activities and capital expenditures.

The key performance indicators for the three and six months ended June 30, 2024 and 2023 were as follows:

The key performance indicators for the three and nine months ended September 30, 2024 and 2023 were as follows:

Key Performance Indicators

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

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Operational and Financial Highlights

• We did not repurchase any shares from public market transactions during the first six months of 2024 and 2023.

At June 30, 2024, $520.2 million was available for future purchases of common stock under our share repurchase authorization.

• We paid out $96.4 million or $0.78 per share in dividends to our shareholders during the first six months of 2024.

RESULTS OF OPERATIONS—THREE MONTHS ENDED JUNE 30, 2024 AND 2023

• We did not repurchase any shares from public market transactions during the first nine months of 2024 and 2023.

At September 30, 2024, $520.2 million was available for future purchases of common stock under our share repurchase authorization.

• We paid out $ 144.8 million, or $ 1.17 per share, in dividends to our shareholders during the first nine months of 2024.

RESULTS OF OPERATIONS—THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

Consolidated Financial Results

Operating Revenue

Three Months Ended June 30, Change Six Months Ended June 30, Change

Three Months Ended September 30, Change Nine Months Ended September 30, Change

Consolidated Operating Revenue 2024 2023 $ % 2024 2023 $ %

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Consolidated operating revenue $ 1,441.8 $ 1,319.1 $ 122.7 9 % $ 4,261.7 $ 3,938.7 $ 323.0 8 %

Revenue increased by $112.9 million, or 9%, and increased by $200.3 million, or 8%, for the second quarter and first six months of 2024, respectively, compared to the same periods in 2023.

Total revenue was negatively impacted by foreign exchange rates, which decreased revenue by $32.2 million, or 2%, and $52.3 million, or 2%, for the second quarter and first six months of 2024, compared to the same periods in 2023.

Revenue in both periods increased due to growth in International, USIS, and Workforce Solutions.

International revenue growth for both periods is driven by growth in Latin America primarily from the Boa Vista Serviços S.A.

("BVS") acquisition, completed in August 2023, and local currency growth in Argentina.

Revenue increased by $122.7 million, or 9%, and $323.0 million, or 8%, for the third quarter and first nine months of 2024, respectively, compared to the same periods in 2023.

Total revenue was negatively impacted by foreign exchange rates, which decreased revenue by $26.7 million, or 2%, and $79.0 million, or 2%, for the third quarter and first nine months of 2024, compared to the same periods in 2023.

Revenue in both periods increased due to growth in USIS, International, and Workforce Solutions.

USIS revenue growth in both periods is primarily due to growth in mortgage related online services.

Workforce Solutions revenue growth for both periods is primarily due to growth in non-mortgage verticals within Verification Services, partially offset by declines in mortgage revenue and declines in Employer Services due to lower tax credit revenue.

International revenue growth for both periods is driven by growth in Latin America from the Boa Vista Serviços S.A.

("BVS") acquisition, completed in August 2023, as well as local currency growth in Argentina and growth in Europe.

Workforce Solutions revenue growth for both periods is primarily due to growth in Verification Services, partially offset by declines in Employer Services.

Operating Expenses

Three Months Ended June 30, Change Six Months Ended June 30, Change

Three Months Ended September 30, Change Nine Months Ended September 30, Change

Consolidated Operating Expenses 2024 2023 $ % 2024 2023 $ %

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Consolidated operating expenses $ 1,194.7 $ 1,072.7 $ 122.0 11 % $ 3,507.7 $ 3,250.2 $ 257.5 8 %

Cost of services increased $42.9 million and $90.2 million in the second quarter and first six months of 2024, respectively, compared to the same periods in 2023.

The increase in both periods is primarily due to higher royalty and revenue share costs, costs from BVS which was acquired in the third quarter of 2023, and higher third party cloud usage fees, partially offset by lower people costs.

The impact of changes in foreign exchange rates on costs of services led to a decrease of $9.6 million and $15.4 million in the second quarter and first six months of 2024, respectively, compared to the same periods in 2023.

Selling, general and administrative expenses increased $9.5 million and $16.0 million for the second quarter and first six months of 2024, respectively, compared to the same periods in 2023.

The increase in both periods is primarily due to costs from BVS which was acquired in the third quarter of 2023, partially offset by a decrease in people costs.

The impact of changes in foreign currency exchange rates led to a decrease in selling, general and administrative expenses of $12.2 million and $20.8 million for the second quarter and first six months of 2024, respectively, compared to the same periods in 2023.

Depreciation and amortization expense increased $15.2 million and $29.4 million for the second quarter and first six months of 2024, respectively, compared to the same periods in 2023.

The increase for both periods is primarily due to increased amortization of capitalized internal-use software and system costs from technology transformation capital spending incurred previously, as well as higher amortization of purchased intangible assets related to the BVS acquisition.

The impact of changes

in foreign currency exchange rates led to a decrease in depreciation and amortization expense of $0.8 million for the second quarter of 2024 and $0.7 million for the first six months of 2024, compared to the same periods in 2023.

Cost of services increased $60.0 million and $150.2 million in the third quarter and first nine months of 2024, respectively, compared to the same periods in 2023.

The increase in both periods is primarily due to higher royalty and revenue share costs.

The increase in the first nine months is also due to costs from BVS, which was acquired in the third quarter of 2023.

The impact of changes in foreign exchange rates on costs of services led to a decrease of $6.1 million and $21.5 million in the third quarter and first nine months of 2024, respectively, compared to the same periods in 2023.

Selling, general and administrative expenses increased $47.3 million and $63.4 million for the third quarter and first nine months of 2024, respectively, compared to the same periods in 2023.

The increase in the third quarter is due to an increase in people costs primarily due to restructuring charges in the third quarter of 2023, partially offset by decreased litigation expense from an accrual in the third quarter of 2023 for a penalty associated with resolution of the investigation of the 2017 cybersecurity incident by the U.K.

Financial Conduct Authority ("U.K.

FCA") that did not recur in the same period of 2024.

The increase in the first nine months is primarily due to increased people costs and costs from BVS which was acquired in the third quarter of 2023.

The increased people costs for the first nine months, excluding the impact of costs from BVS, is primarily due to higher restructuring charges and incentive plan costs.

The impact of changes in foreign currency exchange rates led to a decrease in selling, general and administrative expenses of $8.8 million and $29.6 million for the third quarter and first nine months of 2024, respectively, compared to the same periods in 2023.

Depreciation and amortization expense increased $14.7 million and $43.9 million for the third quarter and first nine months of 2024, respectively, compared to the same periods in 2023.

The increase for both periods is primarily due to increased amortization of capitalized internal-use software costs from technology transformation capital spending incurred previously.

The increase in the first nine months is also due to higher amortization of purchased intangible assets related to the BVS acquisition.

The impact of changes in foreign currency exchange rates led to a decrease in depreciation and amortization expense of $0.7 million for the third quarter of 2024 and $1.3 million for the first nine months of 2024, respectively, compared to the same periods in 2023.

Operating Income and Operating Margin

Three Months Ended June 30, Change Six Months Ended June 30, Change

Three Months Ended September 30, Change Nine Months Ended September 30, Change

Consolidated Operating Income 2024 2023 $ % 2024 2023 $ %

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Consolidated operating margin 17.1 % 18.7 % (1.6) pts 17.7 % 17.5 % 0.2 pts

Total company operating margin increased by 1.7 percentage points and 1.1 percentage points in the second quarter and first six months of 2024, respectively, compared to the same periods in 2023.

The margin increase for both periods is due to the aforementioned higher reported revenue partially offset by the increased operating expenses and amortization expenses during the period.

Interest Expense and Other (Expense) Income, net

Three Months Ended June 30, Change Six Months Ended June 30, Change

Consolidated Interest Expense and Other (Expense) Income, net

Total company operating margin decreased by 1.6 percentage points and increased by 0.2 percentage points in the third quarter and first nine months of 2024, respectively, compared to the same periods in 2023.

The margin decrease for the third quarter is due to increased operating expenses, partially offset by higher reported revenue.

The margin increase for the first nine months is due to the aforementioned higher reported revenue, partially offset by increased operating expenses and amortization expenses during the period.

Interest Expense and Other Income, net

Three Months Ended September 30, Change Nine Months Ended September 30, Change

Consolidated Interest Expense and Other Income, net

2024 2023 $ % 2024 2023 $ %

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Consolidated interest expense $ (56.3) $ (62.8) $ 6.5 (10) % $ (173.4) $ (181.1) $ 7.7 (4) %

Consolidated other (expense) income, net

(0.3) 15.9 (16.2) nm 1.3 20.4 (19.1) (94) %

Consolidated other income, net

3.0 7.1 (4.1) (58) % 4.3 27.7 (23.4) (84) %

Average cost of debt 4.1 % 4.3 % 4.1 % 4.1 %

Total consolidated debt, net, at quarter end $ 5,471.6 $ 6,001.4 $ (529.8) (9) % $ 5,471.6 $ 6,001.4 $ (529.8) (9) %

nm - not meaningful

Interest expense decreased by $3.4 million and $1.2 million in the second quarter and first six months of 2024, respectively, compared to the same periods in 2023.

The decrease for both periods is due to lower debt balances in the 2024 when compared to the same periods of 2023 due to repayments of commercial paper.

Other (expense) income, net, decreased by $16.2 million and $19.1 million in the second quarter of 2024 and in the first six months of 2024, respectively, as compared to the same periods in 2023.

The decrease for both periods is primarily due to the gain on fair market value adjustment of our investment in BVS in the second quarter and first six months of 2023 that did not recur in the same periods of 2024 due to our acquisition of BVS in the third quarter of 2023, as well as the sale of an investment in 2023 that did not recur in 2024.

Three Months Ended June 30, Change Six Months Ended June 30, Change

Interest expense decreased by $6.5 million and $7.7 million in the third quarter and first nine months of 2024, respectively, compared to the same periods in 2023.

The decrease for both periods is due to lower debt balances in 2024 when compared to the same periods of 2023 due to repayments of commercial paper during 2024.

The decrease for the third quarter is also due to a lower weighted average cost of debt when compared to the third quarter of 2023.

Other income, net, decreased by $4.1 million and $23.4 million in the third quarter of 2024 and in the first nine months of 2024, respectively, as compared to the same periods in 2023.

The decrease for the third quarter is primarily due to lower interest income from investments and a loss on foreign currency transactions.

The decrease for the first nine months is primarily due to the gain on fair market value adjustment of our investment in BVS due to our acquisition of BVS in the third quarter of 2023 that did not recur in the same period of 2024, as well as the sale of an investment in 2023 that did not recur in 2024 and a loss on foreign currency transactions.

Three Months Ended September 30, Change Nine Months Ended September 30, Change

Consolidated Provision for Income Taxes 2024 2023 $ % 2024 2023 $ %

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Effective income tax rate 26.4 % 13.9 % 25.8 % 22.0 %

Our effective income tax rate was 26.4% for the three months ended June 30, 2024, compared to 27.4% for the three months ended June 30, 2023.

Our effective income tax rate was 25.5% for the six months ended June 30, 2024, compared to 26.6% for the six months ended June 30, 2023.

Our effective tax rate was lower for the three and six months ended June 30, 2024 as compared to the same periods in 2023 due to more favorable discrete benefits in the current year primarily due to the expiration of the statute of limitations related to uncertain tax positions.

Three Months Ended June 30, Change Six Months Ended June 30, Change

Our effective income tax rate was 26.4% for the three months ended September 30, 2024, compared to 13.9% for the three months ended September 30, 2023.

Our effective income tax rate was 25.8% for the nine months ended September 30, 2024, compared to 22.0% for the nine months ended September 30, 2023.

Our effective tax rate was higher for the three and nine months ended September 30, 2024 as compared to the same periods in 2023 due to the write off in the third quarter of 2023 of a deferred tax liability related to our original investment in BVS which was no longer necessary given the acquisition of BVS in August 2023.

Three Months Ended September 30, Change Nine Months Ended September 30, Change

Consolidated Net Income 2024 2023 $ % 2024 2023 $ %

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Consolidated operating income $ 247.1 $ 246.4 $ 0.7 — % $ 754.0 $ 688.5 $ 65.5 10 %

Consolidated interest expense and other income (expense), net (57.6) (44.8) (12.8) 29 % (115.8) (97.9) (17.9) 18 %

Consolidated interest expense and other income, net (53.3) (55.7) 2.4 (4) % (169.1) (153.4) (15.7) 10 %

Consolidated provision for income taxes (51.1) (26.4) (24.7) 94 % (151.0) (117.9) (33.1) 28 %

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Weighted-average shares used in computing diluted earnings per share 125.2 123.9 124.9 123.6

Consolidated net income increased by $25.8 million and $38.3 million for the second quarter and first six months of 2024, respectively, compared to the same periods in 2023.

The increase in both periods is due to higher levels of operating income from increased revenue, partially offset by increased operating expenses, lower levels of other income, net, and higher income tax expense.

Consolidated net income decreased by $21.6 million and increased by $16.7 million for the third quarter and first nine months of 2024, respectively, compared to the same periods in 2023.

The decrease in the third quarter is primarily due to higher income tax expense.

The increase in the first nine months is due to higher levels of operating income, partially offset by higher income tax expense and lower levels of other income, net.

Segment Financial Results

Workforce Solutions

Three Months Ended June 30, Change Six Months Ended June 30, Change

Three Months Ended September 30, Change Nine Months Ended September 30, Change

Workforce Solutions 2024 2023 $ % 2024 2023 $ %

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Operating margin 43.2 % 41.8 % 1.4 pts 43.3 % 41.8 % 1.5 pts

Workforce Solutions revenue increased by 5% and increased by 3% in the second quarter and first six months of 2024, respectively, compared to the same periods in 2023.

The increase in revenue for both periods is due to an increase in non-mortgage verticals within Verification Services, partially offset by declines in mortgage revenue and declines in Employer Services due to lower tax credit revenue.

Workforce Solutions revenue increased by 7% and 5% in the third quarter and first nine months of 2024, respectively, compared to the same periods in 2023.

The increase in revenue for the third quarter is due to an increase in both non-mortgage and mortgage verticals within Verification Services.

The increase for the first nine months is due to an increase in non-mortgage verticals within Verification Services, partially offset by declines in mortgage revenue.

The increase for both periods is partially offset by declines in Employer Services.

Verification Services

Revenue increased by 9% and increased 7% for the second quarter and first six months of 2024, respectively, compared to the same periods in 2023.

The increase in revenue for both periods is primarily due to growth in the government and talent verticals, partially offset by declines in the mortgage vertical.

Revenue increased by 14% and 9% for the third quarter and first nine months of 2024, respectively, compared to the same periods in 2023.

The increase in revenue for both periods is primarily due to growth in the government and talent verticals.

The increase in the first nine months of 2024 is partially offset by declines in the mortgage vertical.

Employer Services

Revenue decreased by 11% and 10% in the second quarter and first six months of 2024, respectively, compared to the same periods in 2023.

The decrease in revenue for both periods is primarily due to lower Employee Retention Credit ("ERC")

The ERC revenue decrease is driven by the wind down of the program, accelerated by the IRS pausing new claims processing in the third quarter of 2023.

Revenue decreased by 19% and 13% in the third quarter and first nine months of 2024, respectively, compared to the same periods in 2023.

The decrease in revenue for both periods is primarily due to lower Employee Retention Credit ("ERC") revenue and declines in I-9 and onboarding services.

The ERC revenue decrease is driven by the wind down of the program, accelerated by the IRS pausing new claims processing during the third quarter of 2023.

Workforce Solutions Operating Margin

Operating margin increased to 44.5% for the second quarter of 2024 from 42.0% for the second quarter of 2023, and increased to 43.4% for the first six months of 2024 from 41.8% for the first six months of 2023.

Operating margin increased to 43.2% for the third quarter of 2024 from 41.8% for the third quarter of 2023, and increased to 43.3% for the first nine months of 2024 from 41.8% for the first nine months of 2023.

The increased margin for both periods is due to the aforementioned increase in revenue.

Three Months Ended June 30, Change Six Months Ended June 30, Change

Three Months Ended September 30, Change Nine Months Ended September 30, Change

Information Solutions 2024 2023 $ % 2024 2023 $ %

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Operating margin 20.6 % 21.1 % (0.5) pts 20.4 % 21.0 % (0.6) pts

USIS revenue increased by 7% and 9% for the second quarter and first six months of 2024, respectively, compared to the same periods in 2023.

The increase for both periods is due to growth in mortgage related online services, as well as growth in Mortgage Solutions and consumer solutions revenue.

Growth in mortgage related online revenue and Mortgage Solutions was due to both increased product prices and increased mortgage prequalification credit inquiry revenue.

USIS revenue increased by 12% and 10% for the third quarter and first nine months of 2024, respectively, compared to the same periods in 2023.

The increase for both periods is due to growth in mortgage related online services, as well as growth in Mortgage Solutions, consumer solutions revenue, and Financial Marketing Services.

Growth in mortgage related online services and Mortgage Solutions is due to both product pricing as well as higher mortgage credit inquiries.

Online Information Solutions

Revenue increased by 5% and 8% for the second quarter and first six months of 2024, respectively, compared to the same periods in 2023.

The increase for both periods is driven by higher mortgage revenue due to increased product prices and higher mortgage prequalification credit inquiry revenue, as well as continued growth of consumer solutions revenue.

Revenue increased by 9% for both the third quarter and first nine months of 2024 compared to the same periods in 2023.

The increase for both periods is driven by higher mortgage related online services due to product pricing and higher mortgage credit inquiries, as well as continued growth of consumer solutions revenue.

Mortgage Solutions

Revenue increased by 33% and 23% in the second quarter and first six months of 2024, respectively, compared to the same periods in 2023.

The increase in both periods is due to both increased product prices and higher mortgage prequalification credit inquiry revenue.

Revenue increased by 39% and 28% in the third quarter and first nine months of 2024, respectively, compared to the same periods in 2023.

The increase in both periods is due to both product pricing and higher mortgage credit inquiries.

Financial Marketing Services

Revenue increased by 7% and 3% for the second quarter and first six months of 2024, respectively, compared to the same periods in 2023.

The increase for both periods is driven by growth in credit marketing services.

Revenue increased by 14% and 7% for the third quarter and first nine months of 2024, respectively, compared to the same periods in 2023.

The increase for both periods is driven by growth in credit marketing services and risk and data services.

USIS Operating Margin

USIS operating margin decreased to 20.6% for the second quarter of 2024 from 23.1% for the second quarter of 2023 and decreased to 20.3% for the first six months of 2024 from 20.9% for the first six months of 2023.

USIS operating margin decreased to 20.6% for the third quarter of 2024 from 21.1% for the third quarter of 2023 and decreased to 20.4% for the first nine months of 2024 from 21.0% for the first nine months of 2023.

The margin decrease for both periods is due to an increase in operating expenses, partially offset by an increase in revenue.

The increase in operating expenses in both periods is primarily due to increased royalty expenses, particularly in the mortgage vertical, increased amortization of capitalized internal-use software and system costs from technology transformation capital spending incurred previously, and third party cloud usage fees.

The increase in operating expenses in both periods is primarily due to increased royalty expenses, particularly in the mortgage vertical, higher costs of purchased data, and increased amortization of capitalized internal-use software from technology transformation capital spending incurred previously.

International

Three Months Ended June 30, Change Six Months Ended June 30, Change

Three Months Ended September 30, Change Nine Months Ended September 30, Change

International 2024 2023 $ % 2024 2023 $ %

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Operating margin 13.9 % 12.7 % 1.2 pts 12.0 % 12.0 % — pts

International revenue increased by 17% and 15% in the second quarter and the first six months of 2024, respectively, compared to the same periods in 2023.

On a local currency basis, revenue increased by 28% and 24% in the second quarter and first six months of 2024, respectively, compared to the same periods in 2023.

The increase in both periods is driven by Latin America, primarily due to revenue from the BVS acquisition and local currency growth in Argentina, as well as growth in Europe and Canada, partially offset by a decline in Australia.

International revenue increased by 9% and 13% in the third quarter and the first nine months of 2024, respectively, compared to the same periods in 2023.

On a local currency basis, revenue increased by 18% and 22% in the third quarter and first nine months of 2024, respectively, compared to the same periods in 2023.

The increase in both periods is driven by Latin America, primarily due to revenue from the BVS acquisition and local currency growth in Argentina, as well as growth in Europe.

The increase in the first nine months of 2024 is also due to growth in Canada, partially offset by a decline in Australia.

Local currency fluctuations against the U.S.

dollar negatively impacted revenue by $32.2 million, or 11%, for the second quarter of 2024, and by $52.3 million, or 9%, for the first six months of 2024.

dollar negatively impacted revenue by $26.7 million, or 9%, for the third quarter of 2024, and by $79.0 million, or 9%, for the first nine months of 2024.

Latin America

On a local currency basis, revenue increased by 124% and 113% for the second quarter and first six months of 2024, respectively, compared to the same periods in 2023.

The increase in both periods is primarily due to revenue from the BVS acquisition, which was $41.2 million and $82.4 million in the second quarter and first six months of 2024 , respectively, as well as from local currency growth in Argentina.

Local currency fluctuations against the U.S.

dollar negatively impacted revenue by $30.1 million, or 53%, and $50.6 million, or 45%, for the second quarter and first six months of 2024, respectively, primarily in Argentina and Chile.

Reported revenue increased by 71% and 68% for the second quarter and first six months of 2024, respectively, compared to the same periods in 2023.

On a local currency basis, revenue increased by 12% and 11% for the second quarter and first six months of 2024, respectively, compared to the same periods in 2023 .

The increase in both periods is primarily due to growth in the debt services and credit reporting businesses in the U.K.

On a local currency basis, revenue increased by 58% and 90% for the third quarter and first nine months of 2024, respectively, compared to the same periods in 2023 .

The increase in both periods is primarily due to revenue from the BVS acquisition, which occurred in August of 2023, as well as local currency growth in Argentina.

Revenue from the BVS acquisition was $38.1 million and $120.4 million in the third quarter and first nine months of 2024, respectively, compared to $23.4 million in the third quarter and first nine months of 2023.

Local currency fluctuations against the U.S.

dollar positively impacted revenue by $0.4 million, or less than 1%, and $3.6 million, or 2%, for the second quarter and first six months of 2024, respectively.

Reported revenue increased by 12% and 13% for the second quarter and first six months of 2024, respectively, compared to the same periods in 2023.

On a local currency basis, revenue decreased by 2% and 6% for the second quarter and first six months of 2024, respectively, compared to the same periods in 2023.

The decrease in both periods is primarily driven by Australia due to declines in the commercial and consumer credit reporting businesses.

dollar negatively impacted revenue by $29.6 million, or 37%, and $80.1 million, or 42%, for the third quarter and first nine months of 2024, respective ly, primarily in Argentina and Brazil.

Reported revenue increased by 21% and 48% for the third quarter and first nine months of 2024, respectively, compared to the same periods in 2023.

On a local currency basis, revenue increased by 9% and 10% for the third quarter and first nine months of 2024, respectively, compared to the same periods in 2023 .

The increase for both periods is primarily due to growth in the debt services and credit reporting businesses in the U.

Local currency fluctuations against the U.S.

dollar negatively impacted revenue by $1.2 million, or 2%, and $4.2 million, or 2%, for the second quarter and first six months of 2024, respectively.

Reported revenue decreased by 4% and 8% for the second quarter and first six months of 2024, respectively, compared to the same periods in 2023.

On a local currency basis, revenue increased by 6% and 5% in the second quarter and first six months of 2024, respectively, compared to the same periods in 2023.

Revenue growth in both periods is driven by growth in the direct to consumer and the consumer credit reporting businesses.

dollar positively impacted revenue by $2.4 million, or 2%, and $5.9 million, or 2%, for the third quarter and first nine months of 2024, respectively.

Reported revenue increased by 11% and 12% for the third quarter and first nine months of 2024, respectively, compared to the same periods in 2023.

On a local currency basis, revenue increased by 2% and decreased by 3% for the third quarter and first nine months of 2024, respectively, compared to the same periods in 2023.

The increase in the third quarter is primarily driven by growth in the Australia commercial and consumer credit reporting businesses.

The decrease in the first nine months is primarily driven by Australia due to declines in the commercial, direct to consumer, and consumer credit reporting businesses in the first half of the year.

Local currency fluctuations against the U.S.

dollar negatively i mpacted revenue by $1.3 million, or 2%, and $1.1 million or 1%, for the second quarter and first six months of 2024, respectively.

Reported revenue increased by 4% for both the second quarter and first six months of 2024 compared to the same periods in 2023.

dollar positively impacted revenue by $1.6 million, or 2% for the third quarter, and negatively impacted revenue by $2.6 million, or 1%, for the first nine months of 2024, respectively.

Reported revenue increased by 4% and decreased by 4% for the third quarter and first nine months of 2024, respectively, compared to the same periods in 2023.

On a local currency basis, revenue increased by 1% and 4% in the third quarter and first nine months of 2024, respectively, compared to the same periods in 2023.

Revenue growth in both periods is driven by growth in the direct to consumer business.

Local currency fluctuations agai nst the U.S.

dollar negatively impacted revenue by $1.1 million, or 1%, and $2.2 million or 1%, for the third quarter and first nine months of 2024, respectively.

Reported revenue was flat and increased by 3% for the third quarter and first nine months of 2024, respectively, compared to the same periods in 2023.

International Operating Margin

Operating margin was flat at 11.9% for both the second quarter of 2024 and the second quarter of 2023 and decreased to 10.9% for the first six months o f 2024 from 11.7% for the first six months of 2023.

The margin decrease for the first six months of 2024 compared to the first six months of 2023 is due to higher amortization costs, principally due to higher amortization of purchased intangible assets related to the BVS acquisition.

Operating margin increased to 13.9% for the third quarter of 2024 from 12.7% for the third quarter of 2023 and was flat at 12.0% for the first nine months of 2024 and 2023.

The increased margin for the third quarter is due to the aforementioned increase in revenue.

Margin was flat for the first nine months due to the aforementioned increase in revenue, offset by amortization costs, principally due to higher amortization of purchased intangible assets related to the BVS acquisition.

General Corporate Expense

Three Months Ended June 30, Change Six Months Ended June 30, Change

Three Months Ended September 30, Change Nine Months Ended September 30, Change

General Corporate Expense 2024 2023 $ % 2024 2023 $ %

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General corporate expense $ 166.7 $ 124.7 $ 42.0 34 % $ 451.1 $ 424.4 $ 26.7 6 %

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Our general corporate expenses are unallocated costs that are incurred at the corporate level and include those expenses impacted by the overall management and strategic choices of the company, including shared services overhead, technology, security, data and analytics, administrative, legal, restructuring, and the portion of management incentive compensation determined by total company-wide performance.

General corporate expense decreased by $15.4 million and $15.2 million for the second quarter and first six months of 2024, respectively, compared to the same periods in 2023.

The decrease for both periods is primarily due to a decrease in people costs and consulting services.

The decrease in people costs is primarily due to lower salary costs, temporary labor costs, and restructuring charges recorded in 2023, partially offset by higher incentive plans.

General corporate expense increased by $42.0 million and $26.7 million for the third quarter and first nine months of 2024, respectively, compared to the same periods in 2023.

The increase for both periods is primarily due to an increase in people costs, partially offset by a decrease in consulting services and lower litigation expense as a result of a penalty associated with resolution of the investigation of the 2017 cybersecurity incident by the U.K.

FCA that was accrued in the third quarter of 2023.

The increase in people costs for both periods is primarily due to restructuring charges and higher incentive plan costs.

LIQUIDITY AND FINANCIAL CONDITION

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Funds generated by operating activities, our $1.5 billion five-year unsecured revolving credit facility ("Revolver") and related commercial paper ("CP") program, more fully described below, are our most significant sources of liquidity.

At June 30, 2024, we had $181.9 million in cash and cash equivalents, as well as $1,499.6 million available to borrow under our Revolver.

September 30, 2024, we had $468.2 million in cash and cash equivalents, as well as $1,498.6 million available to borrow under our Revolver.

Sources and Uses of Cash

We believe that our existing cash balance, liquidity available from our CP and Revolver, cash generated from ongoing operations and continued access to public or private debt markets will be sufficient to satisfy cash requirements over the next 12 months and beyond.

While there was no significant change in our cash requirements as of June 30, 2024 compared to December 31, 2023, we have utilized cash from operating activities to meet our current obligations.

While there was no significant change in our cash requirements as of September 30, 2024 compared to December 31, 2023, we have utilized cash from operating activities to meet our current obligations.

Fund Transfer Limitations.

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These restrictions do not, individually or in the aggregate, materially limit our ability to service our indebtedness, meet our current obligations or pay dividends.

As of June 30, 2024, we held $157.6 million of cash in our foreign subsidiaries.

As of September 30, 2024, we held $180.5 million of cash in our foreign subsidiaries.

Information about our cash flows, by category, is presented in the Consolidated Statements of Cash Flows.

The following table summarizes our cash flows for the six months ended June 30, 2024 and 2023:

Six Months Ended June 30, Change

The following table summarizes our cash flows for the nine months ended September 30, 2024 and 2023:

Nine Months Ended September 30, Change

Net cash provided by (used in):

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Operating Activities

Cash provided by operating activities in the six months ended June 30, 2024 increased by $107.2 million compared to the prior year period primarily due to improved net income and changes in our working capital position.

Cash provided by operating activities in the nine months ended September 30, 2024 increased by $205.0 million compared to the prior year period primarily due to changes in our working capital position.

Investing Activities

Capital Expenditures

Six Months Ended June 30, Change

Nine Months Ended September 30, Change

Net cash used in:

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Our capital expenditures are used for developing, enhancing and deploying new and existing software in support of our expanding product set, replacing or adding equipment, updating systems for regulatory compliance, the licensing of certain software applications, investing in system reliability, security and disaster recovery enhancements, and updating or expanding our office facilities.

Capital expenditures paid in the first six months of 2024 decreased by $52.7 million from the same period in 2023 due to lower capitalized software costs and lower spending on technology infrastructure as compared to the first six months of 2023 as we continue to make progress toward completion of our technology transformation.

Capital expenditures paid in the first nine months of 2024 decreased by $63.0 million from the same period in 2023 due to lower capitalized software costs and lower spending on technology infrastructure as compared to the first nine months of 2023 as we continue to make progress toward completion of our technology transformation.

Acquisitions, Divestitures and Investments

Nine Months Ended September 30, Change

Net cash (used in) provided by:

2024 2023 2024 vs.

(In millions)

Acquisitions, net of cash acquired $ — $ (276.0) $ 276.0

Cash received from divestitures $ — $ 6.9 $ (6.9)

During the first nine months of 2024, we did not complete any acquisitions.

During the first nine months of 2023, we completed the acquisition of BVS and a Canadian company within our International segment and completed the sale of an equity investment.

Financing Activities

Borrowings and Credit Facility Availability

Six Months Ended June 30, Change

Nine Months Ended September 30, Change

Net cash (used in) provided by:

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Payments on long-term debt $ (695.6) $ (575.0) $ (120.6)

Borrowings on long-term debt $ — $ 872.9 $ (872.9)

Credit Facilities Availability

We have access to a $1.5 billion five-year unsecured revolving credit facility (Revolver), which matures in August 2027, and a $700.0 million delayed draw term loan ("Term Loan"), which matures in August 2026, collectively known as the “Senior Credit Facilities.” Borrowings under the Senior Credit Facilities may be used for working capital, for capital expenditures, to refinance existing debt, to finance acquisitions and for other general corporate purposes.

Proceeds from issuance of long-term debt $ 649.8 $ 872.9 $ (223.1)

Credit Facility Availability

We have access to a $1.5 billion five-year unsecured revolving credit facility ("Revolver"), which matures in August 2027.

Borrowings under the Revolver may be used for working capital, for capital expenditures, to refinance existing debt, to finance acquisitions and for other general corporate purposes.

The Revolver includes an option to request a maximum of three one-year extensions of the maturity date any time after the first anniversary of the closing date of the Revolver.

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The CP program is supported by our Revolver and the total amount of CP that may be issued is reduced by the amount of any outstanding borrowings under our Revolver and by any letters of credit issued under the facility.

As of June 30, 2024, there were $0.4 million of letters of credit outstanding, no outstanding borrowings under the Revolver, $686.9 million outstanding under the Term Loan, and no outstanding CP notes.

Availability under the Revolver was $1,499.6 million at June 30, 2024.

At June 30, 2024, 88% of our debt was fixed-rate debt and 12% was effectively variable-rate debt.

Our variable-rate debt consists of our outstanding amounts under our Term Loan and CP program.

The interest rates reset periodically, depending on the terms of the respective financing agreements.

At June 30, 2024, the interest rate on our variable-rate debt was 6.69%.

As of September 30, 2024, there were no outstanding CP notes, $1.4 million of letters of credit outstanding, and no outstanding borrowings under the Revolver.

Availability under the Revolver was $1,498.6 million at September 30, 2024.

At September 30, 2024, 100% of our debt was fixed-rate debt.

Our variable-rate debt consists of outstanding amounts under the Revolver and CP program, both of which were undrawn at September 30, 2024.

Borrowing and Repayment Activity

We primarily borrow under our CP program and Revolver as needed and as availability allows.

Net short-term borrowings primarily represent net borrowings or repayments of outstanding amounts under our CP program.

There were no borrowings on long-term debt for the first six months of 2024.

Borrowings on long-term debt represent $175.0 million of borrowings on our Revolver during the first quarter of 2023 and the issuance of $700.0 million of 5.1% Senior Notes in the second quarter of 2023.

Payments on long-term debt in 2024 represent $8.8 million of payments on the Term Loan during the first six months of 2024.

Net short-term payments primarily represent net borrowings or repayments of outstanding amounts under our CP program.

Borrowings on long-term debt in 2024 represent the issuance of $650.0 million of 4.8% senior notes in the third quarter of 2024.

Borrowings on long-term debt in 2023 represent $175.0 million of borrowings on our Revolver during the first quarter of 2023 and the issuance of $700.0 million of 5.1% senior notes in the second quarter of 2023.

Payments on long-term debt in 2024 represent $695.6 million of payments on the Term Loan during the first nine months of 2024.

Payments on long-term debt in 2023 represent $175.0 million of repayments on our Revolver and repayment of our $400.0 million 3.95% senior notes during the second quarter of 2023.

Debt Covenants.

A downgrade in our credit ratings would increase the cost of borrowings under our CP program, Revolver and Term Loan, and could limit or, in the case of a significant downgrade, preclude our ability to issue CP.

A downgrade in our credit ratings would increase the cost of borrowings under our CP program and our Revolver, and could limit or, in the case of a significant downgrade, preclude our ability to issue CP.

Our outstanding indentures and comparable instruments also contain customary covenants including, for example, limits on mortgages, liens, sale/leaseback transactions, mergers and sales of assets.

In March 2023, we amended the Senior Credit Facilities, resulting in a modification of our required maximum leverage ratio, among other changes.

As amended, the Senior Credit Facilities require a maximum leverage ratio, defined as consolidated funded debt divided by consolidated EBITDA, of (i) 4.25 to 1.0 for the fourth quarter of 2022 through the fourth quarter of 2023 and (ii) 3.75 to 1.0 for the first quarter of 2024 and for each fiscal quarter ending thereafter through the remaining term of the Senior Credit Facilities.

The Revolver requires a maximum leverage ratio, defined as consolidated funded debt divided by consolidated EBITDA, of 3.75 to 1.0.

We may also elect to increase the maximum leverage ratio by 0.5 to 1.0 (subject to a maximum leverage ratio of 4.25 to 1.0) in connection with certain material acquisitions if we satisfy certain requirements.

The Senior Credit Facilities also permit cash in excess of $175 million to be netted against debt in the calculation of the leverage ratio, subject to certain restrictions.

As of June 30, 2024, we were in compliance with all of our debt covenants.

The Revolver also permits cash in excess of $175 million to be netted against debt in the calculation of the leverage ratio, subject to certain restrictions.

As of September 30, 2024, we were in compliance with all of our debt covenants.

We do not have any credit rating triggers that would accelerate the maturity of a material amount of the outstanding debt;

however, our 2.6% senior notes due 2024, 2.6% senior notes due 2025, 3.25% senior notes due 2026, 5.1% senior notes due 2027, 5.1% senior notes due 2028, 3.1% senior notes due 2030, 2.35% senior notes due 2031 and 7.0% senior notes due

2037 (collectively, the “Senior Notes”) contain change in control provisions.

however, our 2.6% senior notes due 2024, 2.6% senior notes due 2025, 3.25% senior notes due 2026, 5.1% senior notes due 2027, 5.1% senior notes due 2028, 4.8% senior notes due 2029, 3.1% senior notes due 2030, 2.35% senior notes due 2031 and 7.0% senior notes due 2037 (collectively, the “Senior Notes”) contain change in control provisions.

If the Company experiences a change of control or publicly announces an intention to effect a change of control and the rating on the Senior Notes is lowered by Standard & Poor’s (“S&P”) and Moody’s Investors Service (“Moody’s”) below an investment grade rating within 60 days of such change of control or notice thereof, then the Company will be required to offer to repurchase the Senior Notes at a price equal to 101% of the aggregate principal amount of the Senior Notes plus accrued and unpaid interest.

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Equity Transactions

Six Months Ended June 30, Change

Nine Months Ended September 30, Change

Net cash (used in) provided by:

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Dividends paid to Equifax shareholders $ (144.8) $ (143.7) $ (1.1)

Distributions paid to noncontrolling interests $ (4.4) $ (2.8) $ (1.6)

Proceeds from exercise of stock options and employee stock purchase plan $ 67.5 $ 18.6 $ 48.9

Payment of taxes related to settlement of equity awards $ (16.4) $ (16.9) $ 0.5

Sources and uses of cash related to equity during the six months ended June 30, 2024 and 2023 were as follows:

- During the first six months of 2024 and 2023, we did not repurchase any shares of our common stock on the open market.

- We maintained our quarterly dividend of $0.39 per share in the second quarter of 2024.

We paid cash dividends to Equifax shareholders of $96.4 million and $95.6 million, or $0.78 per share, during the six months ended June 30, 2024 and 2023, respectively.

- We received cash of $38.1 million and $16.5 million during the first six months of 2024 and 2023, respectively, from the exercise of stock options and the employee stock purchase plan.

- We paid taxes of $16.0 million and $16.9 million related to the settlement of equity awards during the first six months of 2024 and 2023, respectively.

At June 30, 2024, the Company had $520.2 million remaining for stock repurchases under the existing authorization from the board of directors.

Sources and uses of cash related to equity during the nine months ended September 30, 2024 and 2023 were as follows:

- During the first nine months of 2024 and 2023, we did not repurchase any shares of our common stock on the open market.

- We maintained our quarterly dividend of $0.39 per share in the third quarter of 2024.

We paid cash dividends to Equifax shareholders of $144.8 million and $143.7 million, or $1.17 per share, during the nine months ended September 30, 2024 and 2023, respectively.

- We received cash of $67.5 million and $18.6 million during the first nine months of 2024 and 2023, respectively, from the exercise of stock options and the employee stock purchase plan.

- We paid taxes of $16.4 million and $16.9 million related to the settlement of equity awards during the first nine months of 2024 and 2023, respectively.

At September 30, 2024, the Company had $520.2 million remaining for stock repurchases under the existing authorization from the board of directors.

Contractual Obligations, Commercial Commitments and Other Contingencies

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For our non-U.S., tax-qualified retirement plans, we fund an amount sufficient to meet minimum funding requirements but no more than allowed as a tax deduction pursuant to applicable tax regulations.

For our non-qualified supplementary

retirement plans, we fund the benefits as they are paid to retired participants, but accrue the associated expense and liabilities in accordance with U.S.

For our non-qualified supplementary retirement plans, we fund the benefits as they are paid to retired participants, but accrue the associated expense and liabilities in accordance with U.S.

For additional information about our benefit plans, see Note 9 of the Notes to Consolidated Financial Statements in our 2023 Form 10-K.

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As such, Argentina was deemed a highly inflationary economy by accounting policymakers.

Beginning in the third quarter of 2018, we have accounted for Argentina as a highly inflationary economy which resulted in the recognition of a $0.1 million foreign currency loss that was recorded in other income, net in our Consolidated Statements of Income during both the three months ended June 30, 2024 and 2023.

Beginning in the third quarter of 2018, we have accounted for Argentina as a highly inflationary economy which resulted in the recognition of a foreign currency loss of $0.3 million and $0.4 million that was recorded in Other income, net in our Consolidated Statements of Income during the three months ended September 30, 2024 and 2023, respectively.

RECENT ACCOUNTING PRONOUNCEMENTS

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For information regarding our exposure to certain market risks, see “Quantitative and Qualitative Disclosures about Market Risk,” in Part II, Item 7A of our 2023 Form 10-K.

There were no material changes to our market risk exposure during the three and six months ended June 30, 2024.

There were no material changes to our market risk exposure during the three and nine months ended September 30, 2024.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis