Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

As used herein, the terms Equifax, the Company, we, our and us refer to Equifax Inc., a Georgia corporation, and its consolidated subsidiaries as a combined entity, except where it is clear that the terms mean only Equifax Inc.

All references to earnings per share data in Management’s Discussion and Analysis, or MD&A, are to diluted earnings per share, or EPS, unless otherwise noted. Diluted EPS is calculated to reflect the potential dilution that would occur if stock options or other contracts to issue common stock were exercised and resulted in additional common shares outstanding.

BUSINESS OVERVIEW

Equifax Inc. is a global data, analytics and technology company. We provide information solutions for businesses, governments and consumers, and we provide human resources business process outsourcing services for employers. We have a large and diversified group of clients, including financial institutions, corporations, government agencies and individuals. Our services are based on comprehensive databases of consumer and business information derived from numerous sources including credit, financial assets, telecommunications and utility payments, employment, income, demographic and marketing data. We use advanced statistical techniques, machine learning and proprietary software tools to analyze available data to create customized insights, decision-making solutions and processing services for our clients. We also provide information, technology and services to support debt collections and recovery management. Additionally, we are a leading provider of payroll-related and human resource management business process outsourcing services in the U.S. For consumers, we provide products and services to help people understand, manage and protect their personal information and make more informed financial decisions.

We currently operate in four global regions: North America (U.S. and Canada), Asia Pacific (Australia, New Zealand and India), Europe (the U.K., Spain and Portugal) and Latin America (Argentina, Chile, Costa Rica, Ecuador, El Salvador, Honduras, Mexico, Paraguay, Peru and Uruguay). We maintain support operations in the Republic of Ireland, Chile, Costa Rica and India. We also offer Equifax branded credit services in Russia through a joint venture, have investments in consumer and/or commercial credit information companies through joint ventures in Cambodia, Malaysia and Singapore and have an investment in a consumer and commercial credit information company in Brazil.

Recent Events and Company Outlook

As further described in our 2020 Form 10-K, we operate in the U.S., which represented 78% of our revenue in 2020, and internationally in more than 20 countries. Our products and services span a wide variety of vertical markets including financial services, mortgage, federal, state and local governments, automotive, telecommunications and many others.

In March 2020, the World Health Organization designated the novel coronavirus disease (“COVID-19”) as a global pandemic. The impact of COVID-19 and related actions to attempt to control its spread began to impact our consolidated operating results in the first quarter of 2020. During 2020, the impact on the operating results in each country in which we operate differed based on the conditions and the vertical markets we serve in that country with the impact of the pandemic experienced most severely by our International business. Details of the impact of COVID-19 to our 2020 results can be found under the heading “Segment Financial Results” in the Management’s Discussion and Analysis of Financial Condition and Results of Operation section of the 2020 Form 10-K. In the third quarter and first nine months of 2021, as efforts to minimize the spread of COVID-19 have been more successful and access to vaccinations has increased, our consolidated revenue grew when compared to 2020, reflecting the U.S. mortgage market demand in 2021 compared to 2020, recovering country

economies, Equifax-initiative growth and, to a lesser extent, revenue from acquired companies. A more thorough discussion of our business unit results are included under the heading “Segment Financial Results” in the Management’s Discussion and Analysis of Financial Condition and Results of Operation section of this Form 10-Q. We are unable to determine the severity or duration of the impact of the COVID-19 pandemic on the individual markets in the countries we serve or how this impact will change with time. Although consolidated revenue has grown during the third quarter and first nine months of 2021 when compared to 2020, due to the uncertain effects on the global economy caused by the impact of COVID-19, the impact on our future results of operations related to the COVID-19 pandemic are unclear.

We expect that the global COVID-19 pandemic will continue to impact our business and results of operations. While the COVID-19 pandemic affects the countries in which we operate, our critical priorities remain as follows:

(i)the health and safety of our employees and their families;

(ii)providing support to consumers;

(iii)helping our customers execute their changing business plans by providing innovative solutions combining our unique data assets and leading analytical and technology capabilities; and

(iv)executing on our cloud technology, data and security transformation per our previously stated plans.

We are generally following the requirements and protocols published by the U.S. Centers for Disease Control and the World Health Organization, and federal, state and local governments. In jurisdictions where local restrictions have been lifted, as is the case at our major U.S. locations, our employees are returning to work to their assigned offices in conjunction with jurisdictional guidance. In jurisdictions where the local restrictions that were implemented to prevent the further spread of the virus allow, our employees can work from their assigned offices or from home. Generally across our facilities, we have undertaken actions to make these sites safer. We have also substantially reduced employee travel. If public health authorities dictate further measures to limit further spread of the virus, we may need to reinstate our business continuity plans in certain countries or regions in which we operate. As of the date of this filing, we do not believe our work from home and return to office protocols have materially adversely impacted our internal controls, financial reporting systems or our operations.

Our data and analytics, product and sales teams are focused on how to refine existing products and services, as well as generate new products and services, to meet the changing needs of our customers in this environment. Our technology teams continue to execute on our cloud technology, data and security transformation, including the continued migration of our technology to cloud native environments. To date, the change to our working environment has not caused material disruptions in the execution of these plans.

As a response to the ongoing COVID-19 pandemic, we implemented plans to manage our costs. We limited the addition of new employees and third party contracted services, limited most travel except where necessary to meet customer or regulatory needs, and acted to limit discretionary spending. The pace of recovery of the global economy from the COVID-19 induced recession remains uncertain and may affect certain markets or regions we serve differently. Any future asset impairment charges, increase in allowance for doubtful accounts, or restructuring charges could be more likely and will be dependent on the severity and duration of the pandemic.

In light of the evolving health, social, economic and business environment, governmental regulations or mandates, and business disruptions that could occur, the potential impact that COVID-19 could have on our financial condition and operating results remains uncertain.

For more information, see “Item 1A. Risk Factors—Our business has been and will continue to be negatively impacted by the recent COVID-19 outbreak,” in our 2020 Form 10-K.

2017 Cybersecurity Incident

In 2017, we experienced a cybersecurity incident following a criminal attack on our systems that involved the theft of certain personally identifiable information of U.S., Canadian and U.K. consumers. Criminals exploited a software vulnerability in a U.S. website application to gain unauthorized access to our network. In March 2017, the U.S. Department of Homeland Security distributed a notice concerning the software vulnerability. We undertook efforts to identify and remediate vulnerable systems; however, the vulnerability in the website application that was exploited was not identified by our security processes. We discovered unusual network activity in late-July 2017 and upon discovery promptly investigated the activity. Once the activity was identified as potential unauthorized access, we acted to stop the intrusion and engaged a leading, independent cybersecurity firm to conduct a forensic investigation to determine the scope of the unauthorized access, including the specific information impacted. Based on our forensic investigation, the unauthorized access occurred from mid-May 2017 through July 2017. No evidence was found that the Company’s core consumer, employment and income, or commercial reporting databases were accessed. On February 10, 2020, the U.S. Department of Justice announced that four members of the Chinese People’s Liberation Army were indicted on criminal charges for their involvement in the 2017 cybersecurity incident.

As a result of the 2017 cybersecurity incident, we were subject to a significant number of proceedings and investigations as described in Part II, “Item 1. Legal Proceedings” in this Form 10-Q. We did not record any settlement expenses related to the resolution of these proceedings and investigations for the three or nine months ended September 30, 2021 and 2020. To date, we have recorded legal settlement expenses, net of insurance recoveries, of $800.9 million in selling, general, and administrative expenses in our Consolidated Statements of Income (Loss). As of September 30, 2021, $345.0 million is outstanding on the Consolidated Balance Sheet within other current liabilities related to the U.S. Consumer MDL Litigation. The amounts accrued represent our best estimate of the liability related to these matters. The Company will continue to evaluate information as it becomes known and adjust accruals for new information and further developments in accordance with ASC 450-20-25.

Future Costs

We are currently executing substantial initiatives in security and consumer support, and a company-wide transformation of our technology platforms to cloud based technologies, which we refer to as our technology transformation, and incurred substantially increased expenses and capital expenditures in 2018, 2019 and 2020 related to these initiatives. We expect to continue to incur additional expenses and capital expenditures in the remainder of 2021 related to these initiatives, although at reduced levels compared to those incurred in 2020.

We will recognize the expenses and capital expenditures referenced herein as they are incurred.

Segment and Geographic Information

Segments. The Workforce Solutions segment consists of the Verification Services and Employer Services business lines. Verification Services revenue is transaction-based and is derived primarily from employment and income verification. Employer Services revenue is derived from our provision of certain human resources business process outsourcing services that include both transaction and subscription based product offerings. These services include unemployment claims management, employment-based tax credit services and other complementary employment-based transaction services.

The USIS segment consists of three service lines: Online Information Solutions, Mortgage Solutions, and Financial Marketing Services. Online Information Solutions and Mortgage Solutions revenue is principally transaction-based and is derived from our sales of products such as consumer and commercial credit reporting and scoring, identity management, fraud detection and modeling services. USIS also markets certain decisioning software services that facilitate and automate a variety of consumer and commercial credit-oriented decisions. Financial Marketing Services revenue is principally project and subscription based and is derived from our sales of batch credit and consumer wealth information such as those that assist clients in acquiring new customers, cross-selling to existing customers and managing portfolio risk.

The International segment consists of Asia Pacific, Europe, Latin America and Canada. Canada’s services are similar to our USIS offerings. Asia Pacific, Europe and Latin America are made up of varying mixes of service lines that are generally consistent with those in our USIS reportable segment. We also provide information and technology services to support lenders and other creditors in the collections and recovery management process.

GCS revenue is both transaction and subscription based and is derived from the sale of credit monitoring and identity theft protection products, which we deliver electronically to consumers primarily via the internet in the U.S., Canada, and the

U.K. We also sell consumer and credit information to resellers who combine our information with other information to provide direct-to-consumer monitoring, reports and scores.

Geographic Information. We currently have operations in the following countries: Argentina, Australia, Canada, Chile, Costa Rica, Ecuador, El Salvador, Honduras, India, Mexico, New Zealand, Paraguay, Peru, Portugal, the Republic of Ireland, Spain, the U.K., Uruguay and the U.S. We also offer Equifax branded credit services in Russia through a joint venture, have investments in consumer and/or commercial credit information companies through joint ventures in Cambodia, Malaysia and Singapore and have an investment in a consumer and commercial credit information company in Brazil. Approximately 79% and 78% of our revenue was generated in the U.S. during the three months ended September 30, 2021 and 2020, respectively. Approximately 79% and 78% of our revenue was generated in the U.S. during the nine months ended September 30, 2021 and 2020, respectively.

Key Performance Indicators. Management focuses on a variety of key indicators to monitor operating and financial performance. 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 nine months ended September 30, 2021 and 2020 were as follows:

						Key Performance Indicators
						Three Months Ended September 30,												Nine months ended September 30,
						2021						2020						2021						2020
						(In millions, except per share data)												(In millions, except per share data)
Operating revenue						$	1,222.9					$	1,068.3					$	3,670.7					$	3,009.1
Operating revenue change						14		%				22		%				22		%				16		%
Operating income						$	273.2					$	204.4					$	885.8					$	507.2
Operating margin						22.3		%				19.1		%				24.1		%				16.9		%
Net income attributable to Equifax						$	205.4					$	228.5					$	622.1					$	445.7
Diluted earnings per share						$	1.66					$	1.86					$	5.04					$	3.63
Cash provided by operating activities						$	398.4					$	367.0					$	949.5					$	649.0
Capital expenditures*						$	121.0					$	(112.3)					$	345.9					$	(309.6)

*Amounts include accruals for capital expenditures.

Operational and Financial Highlights

• We repurchased 0.4 million shares of our common stock on the open market for $69.9 million during the first nine months of 2021. At September 30, 2021, $520.2 million was available for future purchases of common stock under our share repurchase authorization.

• We paid out $142.6 million or $1.17 per share in dividends to our shareholders during the first nine months of 2021.

RESULTS OF OPERATIONS—THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

Consolidated Financial Results

Operating Revenue

						Three Months Ended September 30,												Change												Nine Months Ended September 30,												Change
Consolidated Operating Revenue						2021						2020						$						%						2021						2020						$						%
						(In millions)																								(In millions)
Workforce Solutions						$	508.0					$	376.8					$	131.2					35		%				$	1,484.5					$	1,031.4					$	453.1					44		%
U.S. Information Solutions						387.8						386.3						1.5						—		%				1,203.0						1,095.1						107.9						10		%
International						245.4						218.0						27.4						13		%				737.7						614.6						123.1						20		%
Global Consumer Solutions						81.7						87.2						(5.5)						(6)		%				245.5						268.0						(22.5)						(8)		%
Consolidated operating revenue						$	1,222.9					$	1,068.3					$	154.6					14		%				$	3,670.7					$	3,009.1					$	661.6					22		%

Revenue increased by $154.6 million, or 14%, and by $661.6 million, or 22%, for the third quarter and first nine months of 2021, respectively, compared to the same periods in 2020. Total revenue was positively impacted by foreign exchange rates, which increased revenue by $6.6 million and $52.1 million, or 1% and 2%, for the third quarter and first nine months of 2021, respectively, compared to the same periods in 2020.

Revenue in the third quarter and first nine months of 2021 increased primarily due to growth in Workforce Solutions, International and USIS businesses, partially offset by declines in GCS.

Operating Expenses

						Three Months Ended September 30,												Change												Nine Months Ended September 30,												Change
Consolidated Operating Expenses						2021						2020						$						%						2021						2020						$						%
						(In millions)																								(In millions)
Consolidated cost of services						$	489.0					$	433.2					$	55.8					13		%				$	1,455.3					$	1,256.5					$	198.8					16		%
Consolidated selling, general and administrative expenses						344.2						330.0						14.2						4		%				981.4						955.9						25.5						3		%
Consolidated depreciation and amortization expense						116.5						100.7						15.8						16		%				348.2						289.5						58.7						20		%
Consolidated operating expenses						$	949.7					$	863.9					$	85.8					10		%				$	2,784.9					$	2,501.9					$	283.0					11		%

Cost of services increased $55.8 million and $198.8 million in the third quarter and first nine months of 2021, respectively, compared to the same periods in 2020. The increases for both periods were primarily due to higher royalty costs, production costs, which include third party cloud usage fees, and people costs, partially offset by lower incremental technology and data security costs. The impact of changes in foreign exchange rates on costs of services led to an increase of $4.0 million and $28.3 million in the third quarter and first nine months of 2021, respectively, compared to the same periods in 2020.

Selling, general and administrative expenses increased $14.2 million and $25.5 million for the third quarter and first nine months of 2021, respectively, compared to the same periods in 2020. The increases for both periods were due to increases in people costs, professional fees and advertising costs, partially offset by lower incremental technology and data security costs. The impact of changes in foreign currency exchange rates led to an increase in selling, general and administrative expenses by $1.2 million and $10.9 million in the third quarter and first nine months of 2021, respectively, compared to the same periods in 2020.

Depreciation and amortization expense increased $15.8 million and $58.7 million in the third quarter and first nine months of 2021, respectively, compared to the same periods in 2020. The increases are due to the higher 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 acquisitions completed during 2021.

Operating Income and Operating Margin

						Three Months Ended September 30,												Change												Nine Months Ended September 30,												Change
Consolidated Operating Income						2021						2020						$						%						2021						2020						$						%
						(In millions)																								(In millions)
Consolidated operating revenue						$	1,222.9					$	1,068.3					$	154.6					14		%				$	3,670.7					$	3,009.1					$	661.6					22		%
Consolidated operating expenses						949.7						863.9						85.8						10		%				2,784.9						2,501.9						283.0						11		%
Consolidated operating income						$	273.2					$	204.4					$	68.8					34		%				$	885.8					$	507.2					$	378.6					75		%
Consolidated operating margin						22.3		%				19.1		%										3.2		pts				24.1		%				16.9		%										7.2		pts

Total company operating margin increased by 3.2 percentage points and 7.2 percentage points in the third quarter and first nine months of 2021, respectively, compared to the same periods in 2020. The margin increase is due to the operating income generated by the increased revenue and decreased incremental technology and data security costs offset by the aforementioned increase in amortization expense.

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						2021						2020						$						%						2021						2020						$						%
						(In millions)																								(In millions)
Consolidated interest expense						$	(35.0)					$	(37.4)					$	2.4					(6)		%				$	(107.1)					$	(104.7)					$	(2.4)					2		%
Consolidated other income, net						27.2						139.1						(111.9)						nm						32.3						188.3						(156.0)						nm
Average cost of debt						3.2		%				3.4		%																3.3		%				3.5		%
Total consolidated debt, net, at quarter end						$	5,470.0					$	4,377.4					$	1,092.6					25		%				$	5,470.0					$	4,377.4					$	1,092.6					25		%

nm - not meaningful

Interest expense decreased by $2.4 million and increased by $2.4 million in the third quarter and first nine months of 2021, respectively, compared to the same periods in 2020. The decrease for the third quarter of 2021 is due to the retirement of various senior notes during the second and third quarters of 2021, partially offset by the issuance of the $1.0 billion 2.35% senior notes in August 2021. The increase for the first nine months of 2021 is due to the issuance of $1.0 billion senior notes in April 2020 and $1.0 billion issuance of 2.35% senior notes in August 2021, partially offset by the retirement of various senior notes during the second and third quarters of 2021.

Other income, net, decreased by $111.9 million and decreased by $156.0 million in the third quarter and first nine months of 2021, respectively, compared to the same periods in 2020. The decrease for the third quarter and first nine months of 2021 is due to the $129.9 million gain recorded in the third quarter of 2020 related to a fair value adjustment of our investment in Brazil as a result of the initial public offering of stock of the associated business.

Income Taxes

						Three Months Ended September 30,												Change												Nine Months Ended September 30,												Change
Consolidated Provision for Income Taxes						2021						2020						$						%						2021						2020						$						%
						(In millions)																								(In millions)
Consolidated provision for income taxes						$	(58.8)					$	(76.8)					$	18.0					(23)		%				$	(185.5)					$	(142.2)					$	(43.3)					30		%
Effective income tax rate						22.1		%				25.1		%																22.9		%				24.1		%

Our effective income tax rate was 22.1% for the three months ended September 30, 2021, compared to 25.1% for the three months ended September 30, 2020. Our effective income tax rate was 22.9% for the nine months ended September 30, 2021, compared to 24.1% for the nine months ended September 30, 2020. Our effective tax rate was lower for the third quarter and first nine months of 2021 as compared to 2020 due to a lower foreign income tax rate differential in 2021 due to the changes in fair value of our investment in Brazil.

Net Income

						Three Months Ended September 30,												Change												Nine Months Ended September 30,												Change
Consolidated Net Income						2021						2020						$						%						2021						2020						$						%
						(In millions, except per share amounts)																								(In millions, except per share amounts)
Consolidated operating income						$	273.2					$	204.4					$	68.8					34		%				$	885.8					$	507.2					$	378.6					75		%
Consolidated interest expense and other income, net						(7.8)						101.7						(109.5)						(108)		%				(74.8)						83.6						(158.4)						(189)		%
Consolidated provision for income taxes						(58.8)						(76.8)						18.0						(23)		%				(185.5)						(142.2)						(43.3)						30		%
Consolidated net income						206.6						229.3						(22.7)						(10)		%				625.5						448.6						176.9						39		%
Net income attributable to noncontrolling interests						(1.2)						(0.8)						(0.4)						(50)		%				(3.4)						(2.9)						(0.5)						(15)		%
Net income attributable to Equifax						$	205.4					$	228.5					$	(23.1)					(10)		%				$	622.1					$	445.7					$	176.4					40		%
Diluted earnings per common share:
Net income attributable to Equifax						$	1.66					$	1.86					$	(0.20)					(11)		%				$	5.04					$	3.63					$	1.41					39		%
Weighted-average shares used in computing diluted earnings per share						123.7						123.0																		123.5						122.7

Consolidated net income decreased by $22.7 million and increased by $176.9 million for the third quarter and the first nine months of 2021, respectively, compared to the same periods in 2020. The decrease for the third quarter of 2021 is due to the decrease in other income as a result of the 2020 fair value adjustment of the Brazil investment, partially offset by increased operating income resulting from the increase in revenue from our Workforce Solutions and International business units and lower tax expense. The increase for the first nine months of 2021 is due to the increased operating income, partially offset by the decrease in other income and increase in tax expense.

Segment Financial Results

Workforce Solutions

						Three Months Ended September 30,												Change												Nine Months Ended September 30,												Change
Workforce Solutions						2021						2020						$						%						2021						2020						$						%
						(In millions)																								(In millions)
Operating revenue:
Verification Services						$	402.7					$	301.1					$	101.6					34		%				$	1,182.3					$	773.2					$	409.1					53		%
Employer Services						105.3						75.7						29.6						39		%				302.2						258.2						44.0						17		%
Total operating revenue						$	508.0					$	376.8					$	131.2					35		%				$	1,484.5					$	1,031.4					$	453.1					44		%
% of consolidated revenue						42		%				35		%																40		%				34		%
Total operating income						$	253.1					$	193.2					$	59.9					31		%				$	783.0					$	500.8					$	282.2					56		%
Operating margin						49.8		%				51.3		%										(1.5)		pts				52.7		%				48.6		%										4.1		pts

Workforce Solutions revenue increased by 35% and 44% in the third quarter and the first nine months of 2021, respectively, compared to the same periods in 2020. The increases for both periods were due to strong growth in Verification Services driven by growth in both mortgage and non-mortgage verticals. Employer Services revenue also increased for the third quarter and first nine months of 2021 due to acquisition related growth and employee services, partially offset by a decline in our unemployment claims business.

Verification Services

Revenue increased by 34% and 53% in the third quarter and the first nine months of 2021, respectively, compared to the same periods in 2020. The increase for both periods is due to strong growth in the mortgage vertical despite a reduction in mortgage inquiries that began in the second quarter and continued through the third quarter of 2021, and also due to growth in the talent solutions and government verticals. Revenue growth for both mortgage and non-mortgage verticals are supported by continued addition of new records to The Work Number database.

Employer Services

Revenue increased by 39% and 17% in the third quarter and the first nine months of 2021, compared to the same periods in 2020. The increase for both periods was due to acquisition revenue and growth in employee services, partially offset by a decrease in unemployment claims revenue as the number of claims has greatly reduced in 2021 after having been significantly higher in 2020 due to the economic impact of COVID-19 on the U.S. economy.

Workforce Solutions Operating Margin

Operating margin decreased to 49.8% for the third quarter of 2021 from 51.3% for the third quarter of 2020 and increased to 52.7% for the first nine months of 2021 from 48.6% for the first nine months of 2020. The decreased margin for the third quarter of 2021 was due to increased royalty, production and people costs, partially offset by the increase in revenue. The increased margin for the first nine months of 2021 was due to the increase in revenue, partially offset by increases in royalty, production and people costs.

USIS

						Three Months Ended September 30,												Change												Nine Months Ended September 30,												Change
U.S. Information Solutions						2021						2020						$						%						2021						2020						$						%
						(In millions)																								(In millions)
Operating revenue:
Online Information Solutions						$	286.3					$	284.7					$	1.6					1		%				$	886.2					$	800.3					$	85.9					11		%
Mortgage Solutions						46.2						55.4						(9.2)						(17)		%				149.7						149.4						0.3						—		%
Financial Marketing Services						55.3						46.2						9.1						20		%				167.1						145.4						21.7						15		%
Total operating revenue						$	387.8					$	386.3					$	1.5					—		%				$	1,203.0					$	1,095.1					$	107.9					10		%
% of consolidated revenue						32		%				36		%																33		%				36		%
Total operating income						$	116.7					$	128.6					$	(11.9)					(9)		%				$	382.5					$	349.3					$	33.2					10		%
Operating margin						30.1		%				33.3		%										(3.2)		pts				31.8		%				31.9		%										(0.1)		pts

USIS revenue was flat for the third quarter and up 10% for the first nine months of 2021, compared to the same periods in 2020. For the third quarter of 2021, increases in acquisition-related revenue, non-mortgage online services and financial marketing services were offset by decreases in mortgage online services and mortgage solutions due to declining mortgage inquiry volumes. The increase for the first nine months of 2021 is due to overall improvements in our core credit decisioning services, acquisition-related revenue and financial marketing services.

Online Information Solutions

Revenue increased by 1% and 11% in the third quarter and the first nine months of 2021, respectively, compared to the same periods in 2020. The increase in the third quarter of 2021 was due to revenue from acquisitions and continued growth of our non-mortgage online services, partially offset by a decrease in mortgage online services due to declining mortgage origination volume compared to 2020. The increase for the first nine months of 2021 was due to growth in both mortgage and non-mortgage online services, as well as revenue from acquisitions.

Mortgage Solutions

Revenue decreased by 17% in the third quarter of 2021 and was flat for the first nine months of 2021, compared to the same periods in 2020. Mortgage origination transaction volumes declined in the third quarter and are slightly down on the year for the first nine months, as compared to the prior year.

Financial Marketing Services

Revenue increased by 20% and 15% in the third quarter and the first nine months of 2021, respectively, compared to the same periods in 2020. The increase in both periods is due to increased marketing activities by customers as the U.S. economy continues its recovery from the economic impact of COVID-19.

USIS Operating Margin

USIS operating margin decreased to 30.1% for the third quarter of 2021 from 33.3% for the third quarter of 2020 and to 31.8% for the first nine months of 2021 from 31.9% for the first nine months of 2020. The margin decreases for the third quarter and first nine months of 2021 were due to the increase in royalty costs, depreciation expense and production costs, partially offset by increased revenue and a decrease in incremental technology and data security costs.

International

						Three Months Ended September 30,												Change												Nine Months Ended September 30,												Change
International						2021						2020						$						%						2021						2020						$						%
						(In millions)																								(In millions)
Operating revenue:
Asia Pacific						$	88.7					$	80.2					$	8.5					11		%				$	267.0					$	215.1					$	51.9					24		%
Europe						67.7						58.7						9.0						15		%				204.8						173.2						31.6						18		%
Latin America						44.6						40.4						4.2						11		%				130.3						117.8						12.5						11		%
Canada						44.4						38.7						5.7						15		%				135.6						108.5						27.1						25		%
Total operating revenue						$	245.4					$	218.0					$	27.4					13		%				$	737.7					$	614.6					$	123.1					20		%
% of consolidated revenue						20		%				21		%																20		%				21		%
Total operating income						$	27.9					$	25.4					$	2.5					10		%				$	85.1					$	34.5					$	50.6					147		%
Operating margin						11.4		%				11.6		%										(0.2)		pts				11.5		%				5.6		%										5.9		pts

International revenue increased by 13% and 20% in the third quarter and the first nine months of 2021, respectively, compared to the same periods in 2020. On a local currency basis, revenue increased by 10% and 12% in the third quarter and the first nine months of 2021, respectively, driven by increases in all geographies as local economies continue to recover from negative impacts of COVID-19 despite the continued lockdown measures within various regions. Local currency fluctuations against the U.S. dollar positively impacted revenue by $6.0 million, or 3%, for the third quarter of 2021 and by $49.4 million, or 8%, for the first nine months of 2021.

Asia Pacific

On a local currency basis, revenue increased by 7% and 11% in the third quarter and the first nine months of 2021, respectively, compared to the same periods in 2020. The increases in both periods were driven by growth in our commercial, background check verifications and identity and fraud businesses in Australia. Additionally, the increase in revenue for both the third quarter and first nine months of 2021 is also attributable to growth in India due to higher consumer volumes related to economic recovery from the impacts of COVID-19. Local currency fluctuations against the U.S. dollar positively impacted revenue by $2.5 million, or 4%, and $27.8 million, or 13% for the third quarter and the first nine months of 2021, respectively. Reported revenue increased by 11% and 24% in the third quarter and the first nine months of 2021, respectively, compared to the same periods in 2020.

Europe

On a local currency basis, revenue increased by 9% in both the third quarter and first nine months of 2021, compared to the same periods in 2020. The increases in both periods were driven by growth in the consumer and commercial verticals for the U.K. and Spain due to improving economic conditions in the third quarter of 2021, as well as growth in the debt management vertical driven by higher volumes within the private sector. Local currency fluctuations against the U.S. dollar positively impacted revenue by $3.5 million, or 6%, and $16.0 million, or 9% for the third quarter and the first nine months of 2021, respectively. Reported revenue increased by 15% and 18% in the third quarter and the first nine months of 2021, respectively, compared to the same periods in 2020.

Latin America

On a local currency basis, revenue increased by 16% and 15% in the third quarter and the first nine months of 2021, respectively, compared to the same periods in 2020. The increases in both periods were driven by price increases in Argentina and growth in the consumer vertical primarily for Chile, Argentina and Ecuador due to economic recovery from the impacts of COVID-19 across the region despite extended lockdowns in some of the countries. Local currency fluctuations against the U.S. dollar negatively impacted revenue by $2.4 million, or 5%, and $4.9 million, or 4% for the third quarter and the first nine months of 2021, respectively. The negative foreign currency impacts in both periods were driven by negative impacts from Argentina and Peru, partially offset by positive impacts from Chile and Mexico. Reported revenue increased by 11% for both the third quarter and the first nine months of 2021, compared to the same periods in 2020.

Canada

On a local currency basis, revenue increased by 8% and 15% in the third quarter and the first nine months of 2021, respectively, compared to the same periods in 2020. The increases in both periods were driven by growth in the consumer, commercial, identity and fraud, and analytics businesses, mainly within the mortgage and fintech verticals, as Canada continues to recover from the negative impacts of COVID-19 despite continued lockdown measures in several Canadian provinces. Local currency fluctuations against the U.S. dollar positively impacted revenue by $2.4 million, or 7%, and $10.4 million, or 10% for the third quarter and the first nine months of 2021, respectively. Reported revenue increased by 15% and 25% in the third quarter and the first nine months of 2021, respectively, compared to the same periods in 2020.

International Operating Margin

Operating margin decreased slightly to 11.4% for the third quarter of 2021 from 11.6% for the third quarter of 2020 and increased to 11.5% for the first nine months of 2021 from 5.6% for the same period in 2020. The decreased margin for the third quarter of 2021 is due to increased people, royalty and production costs and higher depreciation expense related to the technology transformation, partially offset by the increased revenue and lower purchased intangible asset amortization costs in Australia. The increased margin for the first nine months of 2021 is due to the increased revenue and lower purchased intangible asset amortization costs mentioned above, lower technology and data security costs and discretionary expense control, partially offset by increased people costs, royalty costs, production costs and depreciation expense.

GCS

						Three Months Ended September 30,												Change												Nine Months Ended September 30,												Change
Global Consumer Solutions						2021						2020						$						%						2021						2020						$						%
						(In millions)																								(In millions)
Total operating revenue						$	81.7					$	87.2					$	(5.5)					(6)		%				$	245.5					$	268.0					$	(22.5)					(8)		%
% of consolidated revenue						6		%				8		%																7		%				9		%
Total operating income						$	11.8					$	12.5					$	(0.7)					(6)		%				$	37.7					$	33.4					$	4.3					13		%
Operating margin						14.4		%				14.4		%										—		pts				15.3		%				12.5		%										2.8		pts

Revenue decreased by 6% and 8% in the third quarter and the first nine months of 2021, respectively, compared to the same periods in 2020. On a local currency basis, revenue decreased by 7% and 9% for the third quarter and the first nine months of 2021, respectively. The reduction in revenue for both periods was driven by decreases in partner revenue, partially offset by growth in the direct to consumer business due to strong consumer subscription performance in North America. Local currency fluctuations against the U.S. dollar positively impacted revenue by $0.7 million, or 1%, and $2.7 million, or 1% for the third quarter and the first nine months of 2021, respectively.

GCS Operating Margin

Operating margin of 14.4% for the third quarter of 2021 was consistent with the third quarter of 2020 and increased to 15.3% for the first nine months of 2021 from 12.5% for the first nine months of 2020. The margin for the third quarter of 2021 remained constant as the decrease in revenue was offset by a reduction in operating expenses, primarily partner royalty and technology development costs. The increased margin for the first nine months of 2021 is due to a reduction in partner royalty costs and a decrease in technology development costs, partially offset by an increase in depreciation expense and advertising costs, as well as the decrease in revenue.

General Corporate Expense

						Three Months Ended September 30,												Change												Nine Months Ended September 30,												Change
General Corporate Expense						2021						2020						$						%						2021						2020						$						%
						(In millions)																								(In millions)
General corporate expense						$	136.3					$	155.3					$	(19.0)					(12)		%				$	402.5					$	410.8					$	(8.3)					(2)		%

Our general corporate expenses are unallocated costs that are incurred at the corporate level and include those expenses impacted by corporate direction, including shared services, 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 $19.0 million and $8.3 million for the third quarter and the first nine months of 2021, respectively, compared to the same periods in 2020. The decrease in both periods was due to a decrease in incremental technology and data security costs, partially offset by increased depreciation and amortization expense.

LIQUIDITY AND FINANCIAL CONDITION

Management assesses liquidity in terms of our ability to generate cash to fund operating, investing and financing activities. We continue to generate substantial cash from operating activities, remain in a strong financial position, and manage our capital structure to meet short and long-term objectives including reinvestment in existing businesses and strategic acquisitions.

Sources and Uses of Cash

Funds generated by operating activities, our Revolver and related commercial paper program, more fully described below, are our most significant sources of liquidity. At September 30, 2021, we had $2.0 billion in cash balances, as well as $1.0 billion available to borrow under our Revolver.

The Company has and expects to make payments to resolve certain legal proceedings and investigations related to the 2017 cybersecurity incident, described more fully in Part II, “Item 1. Legal Proceedings” in this Form 10-Q. Through September 30, 2021, the Company has made payments of $443.6 million for legal settlements related to the 2017 cybersecurity incident. The remaining $345.0 million to be paid to the Consumer Restitution Fund will be made after a final adjudication affirming the U.S. Consumer MDL Litigation settlement or dismissal of the pending appeals. Although we expect this payment and the remaining settlement payments to be made later in 2021 or early 2022, we can give no assurance that these payments will occur in 2021 or early 2022 due to pending appeals. As a result of the possible payments that could be made in 2021 or early 2022 related to the losses associated with certain legal proceedings and government investigations related to the 2017 cybersecurity incident and other requirements, funds generated by operating activities may not be sufficient to fund working capital and other cash requirements, including for acquisitions and share repurchases, through September 30, 2022. Our plan is to finance the payments with existing cash balances and borrowing capacity, as necessary. In the event that additional financing is needed, we would finance using the public and private corporate bond markets and/or syndicated loan markets, if available.

Fund Transfer Limitations. The ability of certain of our subsidiaries and associated companies to transfer funds to the U.S. may be limited, in some cases, by certain restrictions imposed by foreign governments. 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 September 30, 2021, we held $186.2 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 nine months ended September 30, 2021 and 2020:

						Nine Months Ended September 30,												Change
Net cash provided by (used in):						2021						2020						2021 vs. 2020
						(In millions)
Operating activities						$	949.5					$	649.0					$	300.5
Investing activities						$	(1,440.3)					$	(380.9)					$	(1,059.4)
Financing activities						$	842.4					$	865.3					$	(22.9)

Operating Activities

Cash provided by operating activities in the nine months ended September 30, 2021 increased by $300.5 million compared the prior year period due to increased net income.

Investing Activities

Capital Expenditures

						Nine Months Ended September 30,												Change
Net cash used in:						2021						2020						2021 vs. 2020
						(In millions)
Capital expenditures*						$	(332.9)					$	(309.5)					$	(23.4)

*Amounts above are total cash outflows for capital expenditures.

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 nine months of 2021 increased by $23.4 million from the same period in 2020. We are continuing to invest in enhanced technology systems and infrastructure as part of our technology transformation.

Acquisitions, Divestitures and Investments

						Nine Months Ended September 30,												Change
Net cash used in:						2021						2020						2021 vs. 2020
						(In millions)
Acquisitions, net of cash acquired						$	(1,108.9)					$	(61.4)					$	(1,047.5)
Cash received from divestiture						$	1.5					$	—					$	1.5
Investment in unconsolidated affiliates, net						$	—					$	(10.0)					$	10.0

During the first nine months of 2021 we acquired Kount and Teletrack within our USIS segment, and HIREtech, i2Verify and Health e(fx) within our Workforce Solutions segment, as well as a small tuck-in acquisition within our International segment. In addition, we also sold a small business within our International segment. During the first nine months of 2020, we acquired the remaining interest in our India joint venture within the International segment and a tuck-in acquisition within our USIS segment.

Financing Activities

Borrowings and Credit Facility Availability

						Nine Months Ended September 30,												Change
Net cash provided by (used in):						2021						2020						2021 vs. 2020
						(In millions)
Net short-term borrowings						$	499.2					$	0.3					$	498.9
Payments on long-term debt						$	(1,100.2)					$	(125.0)					$	(975.2)
Borrowings on long-term debt						$	1,697.3					$	1,123.3					$	574.0

Credit Facilities Availability

In August 2021, the Company refinanced the existing unsecured revolving credit facility of $1.1 billion set to expire September 2023, and entered into a new $1.5 billion five-year unsecured Revolver and a new $700.0 million delayed draw Term Loan, collectively known as the “Senior Credit Facilities,” both which mature in August 2026. Borrowings under the Senior Credit Facilities may be used for working capital, for capital expenditures, to refinance existing debt, to finance acquisitions, including the acquisition of Appriss Insights, 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. Availability of the Revolver is reduced by the outstanding principal balance of our commercial paper notes and by any letters of credit issued under the Revolver.

In the third quarter of 2021, we increased the size of our commercial paper (“CP”) program from $1.1 billion to $1.5 billion, consistent with the increase in our Revolver. Our $1.5 billion CP program has been established to allow for borrowing through the private placement of CP with maturities ranging from overnight to 397 days. We may use the proceeds of CP for general corporate purposes. The CP program is supported by our Revolver and the total amount of CP which may be issued is reduced by the amount of any outstanding borrowings under our Revolver.

As of September 30, 2021, there were $0.7 million of letters of credit outstanding, no outstanding borrowings under the Revolver, $700.0 million outstanding under the Term Loan and $500.0 million of outstanding CP notes. Availability under the Revolver was $1.0 billion at September 30, 2021.

At September 30, 2021, 78% of our debt was fixed-rate debt and 22% was effectively variable debt. Our variable-rate debt consists of our outstanding term loan and CP. The interest rates reset periodically, depending on the terms of the respective financing agreements. At September 30, 2021, the interest rate on our variable-rate debt ranged from 0.20% to 1.31%.

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 borrowings or repayments of outstanding amounts under our CP program.

Payments on long-term debt reflect $1.1 billion payments related to senior notes in the first nine months of 2021 and $125.0 million payments made related to the now-terminated Receivables Facility in the first nine months of 2020.

Borrowings on long-term debt represent the net proceeds received from the issuance of the $1.0 billion 2031 Notes and $700.0 million Term Loan in the first nine months of 2021 and the net proceeds received from issuance of the 2025 and 2030 senior notes, as well as the net proceeds received from draw downs on the now-terminated Receivables Facility during the first nine months of 2020.

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. 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 August 2021, we entered into our new Senior Credit Facilities as noted above in anticipation of the Appriss Insights acquisition, which provides additional financial flexibility. The Senior Credit Facilities include a maximum leverage ratio, defined as consolidated funded debt divided by consolidated EBITDA for the preceding four quarters, of (i) 3.75 to 1.0 initially, (ii) 4.25 to 1.0 for the first fiscal quarter ending after the consummation of the Company’s acquisition of Appriss Insights on October 1, 2021 (the “Appriss Closing Date”), until the fourth fiscal quarter ending after the Appriss Closing Date, (iii) 4.0 to 1.0 for the fifth fiscal quarter ending after the Appriss Closing Date until the sixth fiscal quarter ending after the Appriss Closing Date and (iv) 3.75 to 1.0 for the seventh fiscal quarter ending after the Appriss Closing Date and through the remaining term of the Revolver. We may also elect to increase the maximum leverage ratio by 0.5 to 1.0 (subject to a maximum leverage ratio of 4.75 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 September 30, 2021, 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 3.3% senior notes due 2022, 3.95% senior notes due 2023, 2.6% senior notes due 2024, 2.6% senior notes due 2025, 3.25% senior notes due 2026, term loan due 2026, 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 the Company’s 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. As of September 30, 2021, our S&P credit rating was BBB with a stable outlook and our Moody’s credit rating was Baa2 with a stable outlook. These ratings are subject to change as events and circumstances change.

For additional information about our debt, including the terms of our financing arrangements, basis for floating interest rates and debt covenants, see Note 5 of the Notes to Consolidated Financial Statements in our 2020 Form 10-K.

Equity Transactions

						Nine Months Ended September 30,												Change
Net cash provided by (used in):						2021						2020						2021 vs. 2020
						(In millions)
Treasury stock repurchases						$	(69.9)					$	—					$	(69.9)
Dividends paid to Equifax shareholders						$	(142.6)					$	(142.1)					$	(0.5)
Dividends paid to noncontrolling interests						$	(6.5)					$	(2.6)					$	(3.9)
Proceeds from exercise of stock options and employee stock purchase plan						$	33.4					$	29.9					$	3.5
Purchase of noncontrolling interests						$	(11.2)					$	(9.0)					$	(2.2)

Sources and uses of cash related to equity during the nine months ended September 30, 2021 and 2020 were as follows:

- During the first nine months of 2021, we repurchased 0.4 shares of our common stock on the open market for $69.9 million. During the first nine months of 2020, we did not repurchase any shares of our stock.

- We maintained our quarterly dividend of $0.39 per share in the third quarter of 2021. We paid cash dividends to Equifax shareholders of $142.6 million and $142.1 million, or $1.17 per share, during the nine months ended September 30, 2021 and 2020, respectively.

- We received cash of $33.4 million and $29.9 million during the first nine months of 2021 and 2020, respectively, from the exercise of stock options and the employee stock purchase plan.

At September 30, 2021, 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

Our contractual obligations have not changed materially from those reported in our 2020 Form 10-K. For additional information about certain obligations and contingencies, see Note 6 of the Notes to Consolidated Financial Statements in this Form 10-Q.

Off-Balance Sheet Arrangements

There have been no material changes with respect to our off-balance sheet arrangements from those presented in our 2020 Form 10-K.

Benefit Plans

At December 31, 2020, our U.S. Retirement Income Plan met or exceeded ERISA’s minimum funding requirements. In the future, we expect to make minimum funding contributions as required and may make discretionary contributions, depending on certain circumstances, including market conditions and our liquidity needs. We believe additional funding contributions, if any, would not prevent us from continuing to meet our liquidity needs, which are primarily funded from cash flows generated by operating activities, available cash and cash equivalents, our CP program and our Revolver.

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. GAAP.

For additional information about our benefit plans, see Note 9 of the Notes to Consolidated Financial Statements in our 2020 Form 10-K.

Seasonality

Traditionally we experience seasonality in certain of our revenue streams. Revenue generated by the online consumer information services component of our USIS operating segment is typically the lowest during the first quarter, when consumer lending activity is at a seasonal low. Revenue generated from the Employer Services business unit within the Workforce Solutions operating segment is generally higher in the first quarter due primarily to the provision of Form W-2, 1094, and 1095 preparation services which occur in the first quarter each year. Revenue generated from our financial wealth asset products and data management services in our Financial Marketing Services business are generally higher in the fourth quarter each year. Mortgage related revenue is generally higher in the second and third quarters of the year due to the increase in consumer home purchasing during the summer in the U.S. Due to the COVID-19 pandemic, as described above within “Recent Events and Company Outlook,” we are unsure of how future results will compare to historic seasonality trends.

Foreign Currency

Argentina experienced multiple periods of increasing inflation rates, devaluation of the peso, and increasing borrowing rates. 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 highly inflationary which resulted in the recognition of a $0.1 million and $0.2 million foreign currency loss that was recorded in other income, net in our Consolidated Statements of Income during the three and nine months ended September 30, 2021, respectively.

RECENT ACCOUNTING PRONOUNCEMENTS

For information about new accounting pronouncements and the potential impact on our Consolidated Financial Statements, see Note 1 of the Notes to Consolidated Financial Statements in this Form 10-Q and Note 1 of the Notes to Consolidated Financial Statements in our 2020 Form 10-K.

APPLICATION OF CRITICAL ACCOUNTING POLICIES

The Company’s Consolidated Financial Statements are prepared in conformity with U.S. GAAP. This requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and related disclosures of contingent assets and liabilities in our Consolidated Financial Statements and the Notes to Consolidated Financial Statements. We believe the most complex and sensitive judgments, because of their significance to the Consolidated Financial Statements, result primarily from the need to make estimates and assumptions about the effects of matters that are inherently uncertain. The “Application of Critical Accounting Policies and Estimates” section in the MD&A, and Note 1 of the Notes to Consolidated Financial Statements, in our 2020 Form 10-K describe the significant accounting estimates and policies used in the preparation of our Consolidated Financial Statements. Although we believe that our estimates, assumptions and judgments are reasonable, they are based upon information available at the time. Actual results may differ significantly from these estimates under different assumptions, judgments or conditions.

Goodwill

We review goodwill for impairment annually (as of September 30) and whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. These events or circumstances could include a significant change in the business climate, legal factors, operating performance or trends, competition, or sale or disposition of a significant portion of a reporting unit. We have seven reporting units comprised of Workforce Solutions (which includes Verification Services and Employer Services), USIS (which includes Online Information Solutions, Mortgage Solutions and Financial Marketing Services), Asia Pacific, Europe, Latin America, Canada and GCS.

The goodwill balance at September 30, 2021, for our seven reporting units was as follows:

			September 30,
			2021
			(In millions)
Workforce Solutions			$	1,234.5
U.S. Information Solutions			1,774.6
Asia Pacific			1,511.7
Europe			185.5
Latin America			217.1
Canada			53.8
Global Consumer Solutions			192.0
Total goodwill			$	5,169.2

We performed a qualitative assessment to determine whether further impairment testing was necessary for our Workforce Solutions, USIS, Europe, Canada and GCS reporting units. In this qualitative assessment, we considered the following items for each of the reporting units: macroeconomic conditions, industry and market conditions, overall financial performance and other entity specific events. In addition, for each of these reporting units, the most recent fair value determination resulted in an amount that significantly exceeded the carrying amount of the reporting units. Based on these assessments, we determined the likelihood that a current fair value determination would be less than the current carrying amount of the reporting unit is not more likely than not. As a result of our conclusions, no further testing was required for these reporting units.

Valuation Techniques

We performed a quantitative assessment for our Asia Pacific and Latin America reporting units to determine whether impairment exists from the most recent valuation dates due to the size of the cushion and overall uncertainty in these reporting units due to the negative impacts of COVID-19. In determining the fair value of the reporting unit, we used a combination of the income and market approaches to estimate the reporting unit’s business enterprise value.

Under the income approach, we calculate the fair value of a reporting unit based on estimated future discounted cash flows which require assumptions about short and long-term revenue growth rates, operating margins for each reporting unit, discount rates, foreign currency exchange rates and estimates of capital expenditures. The assumptions we use are based on what we believe a hypothetical marketplace participant would use in estimating fair value. Under the market approach, we estimate the fair value based on market multiples of revenue or earnings before income taxes, depreciation and amortization, for

benchmark companies or guideline transactions. We believe the benchmark companies used for our Asia Pacific and Latin America reporting units serve as an appropriate input for calculating a fair value for the reporting unit as those benchmark companies have similar risks, participate in similar markets, provide similar services for their customers and compete with us directly. The companies we use as benchmarks are principally outlined in our discussion of Competition in our 2020 Form 10-K and have not significantly changed since the date of our last annual impairment test. Competition for our Asia Pacific and Latin America reporting units generally includes global consumer credit reporting companies, such as Experian, which offer a product suite similar to the reporting unit's credit reporting solutions.

The values separately derived from each of the income and market approach valuation techniques were used to develop an overall estimate of a reporting unit’s fair value. We use a consistent approach across all reporting units when considering the weight of the income and market approaches for calculating the fair value of each of our reporting units. This approach relies more heavily on the calculated fair value derived from the income approach with 70% of the value coming from the income approach. We believe this approach is consistent with that of a market participant in valuing prospective purchase business combinations. The selection and weighting of the various fair value techniques may result in a higher or lower fair value. Judgment is applied in determining the weightings that are most representative of fair value.

We have not made any material changes to the valuation methodology we use to assess goodwill impairment since the date of our last annual impairment test.

Growth Assumptions

The assumptions for our future cash flows begin with our historical operating performance, the details of which are described in our Management’s Discussion & Analysis of operating performance. Additionally, we consider the impact that known economic, industry and market trends, including the impact and anticipated recovery related to the COVID-19 global pandemic, will have on our future forecasts, as well as the impact that we expect from planned business initiatives including new product initiatives, client service and retention standards, and cost management programs. At the end of the forecast period, the long-term growth rate we used to determine the terminal value of our Asia Pacific and Latin American reporting units were between 3.0% and 4.0% based on management’s assessment of the minimum expected terminal growth rate of the reporting unit, as well as broader economic considerations such as GDP, inflation and the maturity of the markets we serve.

We projected revenue growth in 2022 for our Asia Pacific and Latin America reporting units in completing our 2021 impairment testing based on expected economic recovery from the negative impact the COVID-19 pandemic has had on these regions in 2021 and planned business initiatives and prevailing trends exhibited by these reporting units. The anticipated revenue growth in these reporting units, however, is partially offset by assumed increases in expenses and capital expenditures for the reporting unit which reflects the additional level of investment needed in order to achieve the planned revenue growth and completion of our technology transformation initiatives.

Discount Rate Assumptions

We utilize a weighted average cost of capital, or WACC, in our impairment analysis that makes assumptions about the capital structure that we believe a market participant would make and include a risk premium based on an assessment of risks related to the projected cash flows for the reporting unit. We believe this approach yields a discount rate that is consistent with an implied rate of return that a market participant would require for an investment in a company having similar risks and business characteristics to the reporting unit being assessed. To calculate the WACC, the cost of equity and cost of debt are multiplied by the assumed capital structure of the reporting unit as compared to industry trends and relevant benchmark company structures. The cost of equity was computed using the Capital Asset Pricing Model which considers the risk-free interest rate, beta, equity risk premium and specific company risk premium related to a particular reporting unit. The cost of debt was computed using a benchmark rate and the Company’s tax rate. For the 2021 annual goodwill impairment evaluation, the discount rates used to develop the estimated fair value of the Asia Pacific and Latin America reporting units were between 9.0% and 13.0%.

Estimated Fair Value and Sensitivities

The estimated fair value of the reporting units is derived from the valuation techniques described above incorporating the related projections and assumptions. Impairment occurs when the estimated fair value of the reporting unit is below the carrying value of its equity. The estimated fair value for our Asia Pacific and Latin America reporting units exceeded their related carrying values as of September 30, 2021. As a result, no goodwill impairment was recorded.

The estimated fair value of the reporting unit is highly sensitive to changes in these projections and assumptions; therefore, in some instances changes in these assumptions could impact whether the fair value of a reporting unit is greater than its carrying value. For example, an increase in the discount rate and decline in the projected cumulative cash flow of a reporting unit could cause the fair value of certain reporting units to be below its carrying value. We perform sensitivity analyses around these assumptions in order to assess the reasonableness of the assumptions and the resulting estimated fair values. Ultimately, future potential changes in these assumptions may impact the estimated fair value of a reporting unit and cause the fair value of the reporting unit to be below its carrying value. Due to the lower cushions when compared to other reporting units, Asia Pacific and Latin America are more sensitive to changes in the assumptions noted above that could result in a fair value that is less than its carrying value. The excess of fair value over carrying value for the Asia Pacific reporting unit was greater than 10% and the excess fair value over carrying value for the Latin America reporting unit was greater than 50% as of September 30, 2021.

Given the relatively smaller excess of fair value over carrying value for the Asia Pacific reporting unit, we believe that it is at risk of a possible future goodwill impairment. Although we experienced growth in this reporting unit for the nine months ended September 30, 2021 in comparison to the estimates used in the 2020 goodwill impairment testing, the COVID-19 pandemic has had a substantial negative impact on our results. Avoidance of a future impairment will be dependent on continued economic recovery from the negative impact caused by COVID-19 and our ability to execute on initiatives to grow revenue and manage expenses prudently. We will continue to monitor the performance of this reporting unit to ensure no interim indications of possible impairment have occurred before our next annual goodwill impairment assessment in September 2022.