Black Knight (BKI) 10-Q 2018 Q3 Quarterly report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2018

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-37394

Black Knight, Inc.

______________________________________________________________________________________________________________________________________________________

(Exact name of registrant as specified in its charter)

Delaware	81-5265638
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
601 Riverside Avenue, Jacksonville, Florida	32204
(Address of principal executive offices)	(Zip Code)

(904) 854-5100

___________________________________________________________________

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES þ NO o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

YES þ NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o
			Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES o NO þ

There were 149,399,633 shares outstanding of the Registrant's common stock as of October 29, 2018.    

FORM 10-Q

QUARTERLY REPORT

Quarter Ended September 30, 2018

TABLE OF CONTENTS

	Page
Part I: FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (Unaudited)
A. Condensed Consolidated Balance Sheets (Unaudited) as of September 30, 2018 and December 31, 2017	1
B. Condensed Consolidated Statements of Earnings and Comprehensive Earnings (Unaudited) for the three and nine months ended September 30, 2018 and 2017	2
C. Condensed Consolidated Statement of Equity (Unaudited) for the nine months ended September 30, 2018	3
D. Condensed Consolidated Statements of Cash Flows (Unaudited) for the nine months ended September 30, 2018 and 2017	4
E. Notes to Condensed Consolidated Financial Statements (Unaudited)	5
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3. Quantitative and Qualitative Disclosure About Market Risk	39
Item 4. Controls and Procedures	40
Part II: OTHER INFORMATION	41
Item 1. Legal Proceedings	41
Item 1A. Risk Factors	41
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	41
Item 3. Defaults Upon Senior Securities	41
Item 4. Mine Safety Disclosures	41
Item 5. Other Information	41
Item 6. Exhibits	41

i

Part I: FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (Unaudited)

BLACK KNIGHT, INC.

Condensed Consolidated Balance Sheets

(Unaudited)

(In millions, except share data)

	September 30, 2018			December 31, 2017
ASSETS
Current assets:
Cash and cash equivalents	$	16.9		$	16.2
Trade receivables, net	170.3			201.8
Prepaid expenses and other current assets	61.2			44.6
Receivables from related parties	11.9			18.1
Total current assets	260.3			280.7
Property and equipment, net	176.1			179.9
Computer software, net	407.0			416.8
Other intangible assets, net	190.0			231.6
Goodwill	2,310.0			2,306.8
Other non-current assets	299.8			240.1
Total assets	$	3,643.2		$	3,655.9
LIABILITIES AND EQUITY
Current liabilities:
Trade accounts payable and other accrued liabilities	$	43.9		$	65.0
Accrued compensation and benefits	52.7			51.9
Current portion of long-term debt	47.0			55.1
Deferred revenues	48.3			59.6
Total current liabilities	191.9			231.6
Deferred revenues	112.9			100.7
Deferred income taxes	235.0			224.6
Long-term debt, net of current portion	1,351.0			1,379.0
Other non-current liabilities	12.8			11.2
Total liabilities	1,903.6			1,947.1
Commitments and contingencies (Note 7)
Equity:
Common stock; $0.0001 par value; 550,000,000 shares authorized; 153,266,360 shares issued and 149,399,633 shares outstanding as of September 30, 2018, and 153,430,030 shares issued and 151,430,030 shares outstanding as of December 31, 2017	—			—
Preferred stock; $0.0001 par value; 25,000,000 shares authorized; issued and outstanding, none as of September 30, 2018 and December 31, 2017	—			—
Additional paid-in capital	1,567.6			1,593.6
Retained earnings	338.3			201.4
Accumulated other comprehensive earnings	13.7			3.9
Treasury stock, at cost, 3,866,727 shares as of September 30, 2018 and 2,000,000 shares as of December 31, 2017	(180.0		)	(90.1		)
Total equity	1,739.6			1,708.8
Total liabilities and equity	$	3,643.2		$	3,655.9

See Notes to Condensed Consolidated Financial Statements (Unaudited).

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BLACK KNIGHT, INC.

Condensed Consolidated Statements of Earnings and Comprehensive Earnings

(Unaudited)

(In millions, except per share data)

	Three months ended September 30,						Nine months ended September 30,
	2018			2017			2018			2017
Revenues	$	281.7		$	263.8		$	828.6		$	784.1
Expenses:
Operating expenses	157.4			140.7			462.2			428.2
Depreciation and amortization	54.0			51.3			159.0			154.2
Transition and integration costs	3.3			4.0			5.8			8.5
Total expenses	214.7			196.0			627.0			590.9
Operating income	67.0			67.8			201.6			193.2
Other income and expense:
Interest expense	(13.2		)	(14.1		)	(39.1		)	(44.8		)
Other expense, net	—			(0.6		)	(6.4		)	(17.1		)
Total other expense, net	(13.2		)	(14.7		)	(45.5		)	(61.9		)
Earnings before income taxes	53.8			53.1			156.1			131.3
Income tax expense	10.8			9.2			30.4			24.3
Net earnings	43.0			43.9			125.7			107.0
Less: Net earnings attributable to noncontrolling interests	—			29.2			—			71.9
Net earnings attributable to Black Knight	$	43.0		$	14.7		$	125.7		$	35.1
Other comprehensive earnings (loss):
Unrealized holding gains, net of tax (1)	3.6			0.3			11.7			0.9
Reclassification adjustments for (gains) losses included in net earnings, net of tax (2)	(0.7		)	—			(1.5		)	0.2
Total unrealized gains on interest rate swaps, net of tax	2.9			0.3			10.2			1.1
Foreign currency translation adjustment (3)	(0.1		)	—			(0.4		)	0.1
Other comprehensive earnings	2.8			0.3			9.8			1.2
Comprehensive earnings attributable to noncontrolling interests	—			29.8			—			74.1
Comprehensive earnings	$	45.8		$	44.8		$	135.5		$	110.4
	Three months ended September 30,						Nine months ended September 30,
	2018			2017			2018			2017
Earnings per share:
Net earnings per share attributable to Black Knight common shareholders:
Basic	$	0.29		$	0.22		$	0.85		$	0.52
Diluted	$	0.29		$	0.21		$	0.85		$	0.51
Weighted average shares of common stock outstanding (Note 2):
Basic	147.2			67.9			147.7			67.7
Diluted	147.8			68.5			148.2			152.7

______________________________

(1) Net of income tax expense of $1.1 million and $3.7 million for the three and nine months ended September 30, 2018, respectively, and $0.2 million and $0.7 million for the three and nine months ended September 30, 2017, respectively.

(2) Amounts reclassified to net earnings relate to (gains) losses on interest rate swaps and are included in Interest expense on the Condensed Consolidated Statements of Earnings and Comprehensive Earnings (Unaudited). Amounts are net of income tax benefit of $0.3 million and $0.6 million for the three and nine months ended September 30, 2018, respectively, and income tax expense of less than $0.1 million and $0.1 million for the three and nine months ended September 30, 2017, respectively.

(3) Net of income tax benefit of less than $0.1 million and $0.2 million for the three and nine months ended September 30, 2018, respectively.

See Notes to Condensed Consolidated Financial Statements (Unaudited).

2

BLACK KNIGHT, INC.

Condensed Consolidated Statement of Equity

(Unaudited)

(In millions)

	Common stock				Additional paid-in capital			Retained earnings		Accumulated other comprehensive earnings			Treasury stock
	Shares		$										Shares		$			Total equity
Balance, December 31, 2017	153.4		$	—	$	1,593.6		$	201.4	$	3.9		2.0		$	(90.1	)	$	1,708.8
Cumulative effect of ASC 606 adoption (Note 8)	—		—		—			11.2		—			—		—			11.2
Adjusted balance at January 1, 2018	153.4		—		1,593.6			212.6		3.9			2.0		(90.1		)	1,720.0
Grant of restricted shares of common stock	—		—		(52.2		)	—		—			(1.1	)	52.2			—
Forfeitures of restricted shares of common stock	—		—		0.6			—		—			—		(0.6		)	—
Tax withholding payments for restricted share vesting	(0.1	)	—		(7.6		)	—		—			—		—			(7.6		)
Purchases of treasury stock	—		—		—			—		—			3.0		(141.5		)	(141.5		)
Equity-based compensation expense	—		—		33.2			—		—			—		—			33.2
Net earnings	—		—		—			125.7		—			—		—			125.7
Foreign currency translation adjustment	—		—		—			—		(0.4		)	—		—			(0.4		)
Unrealized gains on interest rate swaps, net	—		—		—			—		10.2			—		—			10.2
Balance, September 30, 2018	153.3		$	—	$	1,567.6		$	338.3	$	13.7		3.9		$	(180.0	)	$	1,739.6

See Notes to Condensed Consolidated Financial Statements (Unaudited).

3

BLACK KNIGHT, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In millions)

	Nine months ended September 30,
	2018			2017
Cash flows from operating activities:
Net earnings	$	125.7		$	107.0
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	159.0			154.2
Amortization of debt issuance costs, bond premium and original issue discount	2.3			2.5
Loss on extinguishment of debt, net	5.8			12.6
Deferred income taxes, net	1.6			4.8
Equity-based compensation	33.4			14.2
Changes in assets and liabilities, net of acquired assets and liabilities:
Trade and other receivables, including receivables from related parties	38.7			(19.9		)
Prepaid expenses and other assets	(32.6		)	3.1
Deferred contract costs	(35.1		)	(35.6		)
Deferred revenues	(4.1		)	27.6
Trade accounts payable and other liabilities	10.7			(30.7		)
Net cash provided by operating activities	305.4			239.8
Cash flows from investing activities:
Additions to property and equipment	(20.1		)	(5.3		)
Additions to computer software	(53.6		)	(37.1		)
Business acquisition, net of cash acquired	(6.0		)	—
Other investing activities	—			(4.0		)
Net cash used in investing activities	(79.7		)	(46.4		)
Cash flows from financing activities:
Borrowings	781.8			400.0
Debt repayments	(851.9		)	(25.9		)
Senior Notes redemption	—			(390.0		)
Senior Notes redemption fee	—			(18.8		)
Distributions to members	—			(75.3		)
Purchases of treasury stock	(141.5		)	(46.6		)
Capital lease payments	—			(11.6		)
Tax withholding payments for restricted share vesting	(7.6		)	(4.3		)
Debt issuance costs	(5.8		)	(8.6		)
Net cash used in financing activities	(225.0		)	(181.1		)
Net increase in cash and cash equivalents	0.7			12.3
Cash and cash equivalents, beginning of period	16.2			133.9
Cash and cash equivalents, end of period	$	16.9		$	146.2
Supplemental cash flow information:
Interest paid	$	(36.2	)	$	(45.2	)
Income taxes paid	$	(21.6	)	$	(13.6	)

See Notes to Condensed Consolidated Financial Statements (Unaudited).

4

BLACK KNIGHT, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Except as otherwise indicated or unless the context otherwise requires, all references to "Black Knight," the "Company," "we," "us" or "our" (1) prior to the Distribution (as defined in Note 1 — Basis of Presentation), are to Black Knight Financial Services, Inc., a Delaware corporation, and its subsidiaries ("BKFS") and (2) after the Distribution, are to Black Knight, Inc., a Delaware corporation, and its subsidiaries.

(1) Basis of Presentation

The accompanying Condensed Consolidated Financial Statements (Unaudited) were prepared in accordance with U.S. generally accepted accounting principles ("GAAP"), and all adjustments considered necessary for a fair presentation have been included. All significant intercompany accounts and transactions have been eliminated. The preparation of these Condensed Consolidated Financial Statements (Unaudited) in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the Condensed Consolidated Financial Statements (Unaudited), as well as the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. This Quarterly Report on Form 10-Q should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2017 filed with the Securities and Exchange Commission ("SEC") on February 23, 2018 and other filings with the SEC.

As a result of the Distribution and the THL Interest Exchange on September 29, 2017 (each as defined below), Black Knight, Inc. became the new public company and owns 100% of BKFS. There was no change to our underlying business and, for this reason, there was no change in reporting entity in accordance with GAAP.

Description of Business

We are a leading provider of integrated software, data and analytics solutions to the mortgage and consumer loan, real estate and capital market verticals. We believe we differentiate ourselves by the breadth and depth of our comprehensive, integrated solutions and the insight we provide to our clients.

Reporting Segments

We conduct our operations through two reporting segments: (1) Software Solutions and (2) Data and Analytics. See further discussion in Note 10 — Segment Information.

Distribution of FNF's Ownership Interest and Related Transactions

On September 29, 2017, we completed a tax-free plan whereby Fidelity National Financial, Inc. ("FNF") distributed to FNF Group shareholders all 83.3 million shares of BKFS Class B common stock that it owned through a series of transactions (the "Distribution"). Black Knight, Inc. is the public company following the completion of the Distribution.

Shares of Black Knight, Inc. common stock are listed on the New York Stock Exchange under the trading symbol “BKI”, and began trading on October 2, 2017. Under the organizational documents of Black Knight, Inc., the rights of the holders of shares of Black Knight, Inc. common stock are substantially the same as the rights of former holders of BKFS Class A common stock.

Immediately following the completion of the Distribution, certain affiliates of Thomas H. Lee Partners, L.P. ("THL") contributed to Black Knight, Inc. all of their BKFS Class B common stock and all of their membership interests in Black Knight Financial Services, LLC ("BKFS LLC") in exchange for a number of shares of Black Knight, Inc. common stock equal to the number of shares of BKFS Class B common stock contributed (the "THL Interest Exchange"). Following the completion of the Distribution and the THL Interest Exchange, the shares of BKFS Class B common stock were canceled.

Consolidation

Prior to the Distribution, BKFS LLC was subject to the consolidation guidance related to variable interest entities as set forth in Accounting Standards Codification ("ASC") Topic 810, Consolidation ("ASC 810"). As the sole managing member of BKFS LLC, we had the exclusive authority to manage, control and operate the business and affairs of BKFS LLC and its subsidiaries, pursuant to the terms of the Second Amended and Restated Limited Liability Company Agreement ("LLC Agreement"). Under the terms of the LLC Agreement, we were authorized to manage the business of BKFS LLC, including the authority to enter into contracts, manage bank accounts, hire employees and agents, incur and pay debts and expenses, merge or consolidate with other entities and pay taxes. Because we were the primary beneficiary through our sole managing member interest and possessed the rights established in the LLC Agreement, in accordance with the requirements of ASC 810, we controlled BKFS LLC and appropriately consolidated the operations thereof.

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BLACK KNIGHT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)

We account for noncontrolling interests in accordance with ASC 810. Noncontrolling interests represented Black Knight Holdings, Inc. and certain of its affiliates' and THL and certain of THL's affiliates' share of net earnings or loss and of equity in BKFS LLC. BKFS Class A shareholders indirectly controlled BKFS LLC through our managing member interest. BKFS Class B shareholders had a noncontrolling interest in BKFS LLC. Prior to the Distribution, BKFS Class B shareholders' share of net earnings or loss in BKFS LLC was reported in Net earnings attributable to noncontrolling interests in our Condensed Consolidated Statements of Earnings and Comprehensive Earnings (Unaudited). Net earnings attributable to noncontrolling interests did not include expenses incurred directly by us, including income tax expense attributable to us.

Subsequent to the Distribution, BKFS LLC is an indirect wholly-owned subsidiary of Black Knight, Inc., and therefore, there are no longer any noncontrolling interests in BKFS LLC.

Share Repurchase Program

There were no share repurchases during the third quarter of 2018. During the nine months ended September 30, 2018, we repurchased 3.0 million shares of our common stock for $141.5 million, or an average of $47.15 per share. As of September 30, 2018, we had approximately 3.8 million shares remaining under our share repurchase authorization.

Cash and Cash Equivalents

Cash and cash equivalents include the following (in millions):

	September 30, 2018		December 31, 2017
Unrestricted:
Cash	$	3.4	$	13.1
Cash equivalents	13.5		1.3
Unrestricted cash and cash equivalents	16.9		14.4
Restricted cash equivalents (1)	—		1.8
Cash and cash equivalents	$	16.9	$	16.2

_______________

(1) Restricted cash equivalents related to our subsidiary, I-Net Reinsurance Limited, were held in trust until the final reinsurance policy expired.

Trade Receivables, Net

A summary of Trade receivables, net of allowance for doubtful accounts is as follows (in millions):

	September 30, 2018			December 31, 2017
Trade receivables — billed	$	131.5		$	159.6
Trade receivables — unbilled	40.1			44.1
Trade receivables	171.6			203.7
Allowance for doubtful accounts	(1.3		)	(1.9		)
Trade receivables, net	$	170.3		$	201.8

In addition to the amounts above, we have unbilled receivables that we do not expect to collect within the next year included in Other non-current assets in our Condensed Consolidated Balance Sheets (Unaudited). Billings for these receivables are based on contractual terms. Refer to Note 4 — Other Non-Current Assets.

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BLACK KNIGHT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consists of the following (in millions):

	September 30, 2018		December 31, 2017
Prepaid expenses	$	39.0	$	36.1
Contract assets	12.9		—
Other current assets	9.3		8.5
Prepaid expenses and other current assets	$	61.2	$	44.6

Contract Assets

A contract asset represents our expectation of receiving consideration in exchange for products or services that we have transferred to our client. Contract assets and liabilities, or deferred revenues, are determined and netted at the contract level since the rights and obligations in a contract with a client are interdependent. In contrast, a receivable is our right to consideration that is unconditional except for the passage of time required before payment of that consideration is due. The difference in timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables, contract assets and deferred revenues from client advances and deposits. We account for receivables in accordance with ASC Topic 310, Receivables (“ASC 310”), and assess both contract assets and receivables for impairment in accordance with ASC 310. There were no impairment charges related to contract assets for the three and nine months ended September 30, 2018.

Our short-term contract assets, including related party contract assets, are included in Prepaid expenses and other current assets in our Condensed Consolidated Balance Sheets (Unaudited). Refer to Note 3 — Related Party Transactions. Our long-term contract assets are included in Other non-current assets in our Condensed Consolidated Balance Sheets (Unaudited). Refer to Note 4 — Other Non-Current Assets.

Capital Leases

We entered into a one-year capital lease agreement commencing January 1, 2017 with a bargain purchase option for certain computer equipment. The leased equipment has a useful life of five years and is depreciating on a straight-line basis over this period. The leased equipment was valued based on the net present value of the minimum lease payments, which was $8.4 million (net of imputed interest of $0.1 million). The non-cash investing and financing activity for the nine months ended September 30, 2017 was $2.2 million and related to the unpaid portion of the capital lease obligation. There was no remaining capital lease obligation as of December 31, 2017.

Deferred Contract Costs

We capitalize incremental contract acquisition costs that relate directly to an existing contract or a specific anticipated contract, and are expected to be recovered. Costs that would have been incurred regardless of whether the contract was obtained are expensed as incurred. As a practical expedient, we expense incremental costs of obtaining a contract if the amortization period of the asset would be one year or less.

We also consider whether to capitalize costs to fulfill a contract that may be incurred before we commence performance on an obligation. These costs represent incremental, recoverable external costs and certain internal costs that are directly related to the contract and are primarily associated with costs of resources involved in installation of systems, processes and data conversion.

Deferred contract costs are amortized on a systematic basis consistent with the transfer to the client of the goods or services to which the asset relates. We consider the explicit term of the contract with the client, expected renewals and the rate of change related to our solutions in determining the amortization period, which ranges from 5 years to 10 years.

In the event indications exist that a deferred contract cost balance related to a particular contract may not be recoverable, undiscounted estimated cash flows of the total period over which economic benefits for providing the related products or services are expected to be received are projected and compared to the unamortized deferred contract cost balance. If the projected cash flows and any unrecognized revenues are not adequate to recover the unamortized cost balance, the balance would be adjusted with a charge to earnings to reduce the carrying amount to the contract's net realizable value, including any termination fees provided for under the contract, in the period such a determination is made.

Our deferred contract costs are included in Other non-current assets in our Condensed Consolidated Balance Sheets (Unaudited). Refer to Note 4 — Other Non-Current Assets. Amortization expense for deferred contract costs is included in

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BLACK KNIGHT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)

Depreciation and amortization in our Condensed Consolidated Statements of Earnings and Comprehensive Earnings (Unaudited). Refer to the "Depreciation and Amortization" section below.

Deferred Revenues

Deferred revenues represent our obligation to transfer products or services to our client for which we have received consideration, or an amount of consideration is due, from the client. During the nine months ended September 30, 2018, revenues recognized related to the amount included in the Deferred revenues balance at January 1, 2018 was $39.4 million.

Revenue Recognition

The following describes our primary types of revenues and our revenue recognition policies as they pertain to the types of contractual arrangements we enter into with our clients to provide products or services either individually or in combination with one another as part of an integrated offering of multiple services. These arrangements occasionally include offerings from more than one segment to the same client.

We recognize revenues primarily relating to software and hosting solutions, professional services and data solutions. In some cases, these services are offered in combination with one another, and in other cases we offer them individually. Revenues from software and hosting solutions are typically volume-based agreements depending on factors such as the number of accounts processed, transactions processed and computer resources utilized.

In accordance with ASC Topic 606, Revenue from Contracts with Customers ("ASC 606"), revenues are recognized when control of the promised goods or services is transferred to our clients, in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods and services. To achieve this core principle, we apply the following five steps:

1. Identify the contract with a client. A contract with a client exists when: (1) we and the client have approved the contract and both parties are committed to perform their respective obligations; (2) we can identify each party’s rights regarding the products or services to be transferred; (3) we can identify the payment terms for the products or services to be transferred; (4) the contract has commercial substance as our future cash flows are expected to change; and (5) it is probable that we will collect substantially all of the consideration to which we are entitled in exchange for the products or services. Any subsequent contract modifications are analyzed to determine the treatment of the contract modification as a separate contract, prospectively or through a cumulative catch-up adjustment.

2. Identify the performance obligations in the contract. Performance obligations are promises to transfer a good or service to the client. Performance obligations may be each individual promise in a contract, or may be groups of promises within a contract that significantly affect one another. To the extent a contract includes multiple promises, we must apply judgment to determine whether promises are capable of being distinct and distinct in the context of the contract. If these criteria are not met, the promises are accounted for as a combined performance obligation. Promises that are often considered distinct include our primary software and hosting solutions, while certain ancillary services are generally not distinct within the context of a contract. Professional services such as training, dedicated teams, and consulting services are generally distinct. Data solutions that support our software products also include licenses and valuation related analytical services that are generally distinct.

3. Determine the transaction price. The transaction price is the total amount of consideration to which we expect to be entitled in exchange for transferring promised products and services to a client. Variable consideration refers to any consideration that changes during or after our performance or is contingent on the outcome of future events. Variable consideration is included in the transaction price if, in our judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. We estimate the amount of variable consideration that should be included in the transaction price utilizing either the most likely amount method or expected value method. The most prevalent form of variable consideration in our arrangements is a volume-based fee, which is generally estimated utilizing the most likely amount method based primarily on historical experience and expectations of future events. The amount of variable consideration is estimated at the contract’s inception and we update the estimates of variable consideration throughout the life of the contract or until the variable feature becomes fixed.

4. Allocate the transaction price to performance obligations in the contract. The allocation of the transaction price to performance obligations is generally done in proportion to their standalone selling prices (“SSP”). SSP is the price that we would sell a distinct product or service separately to a client and is determined at contract inception. At times, there will be observable selling prices for our goods and services, such as for our mortgage servicing software platform. If SSP is not available through the analysis of observable inputs, this step is subject to significant judgment and additional analysis so that we can establish an estimated SSP. The estimated SSP considers all reasonably available information, including

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market conditions, demands, trends, our specific factors and information about the client or class of clients. The adjusted market approach is generally used for new products or solutions or when observable inputs are not available or limited.

5. Recognize revenues when or as the company satisfies a performance obligation. We recognize revenues when, or as, distinct performance obligations are satisfied by transferring control of the product or service to the client. A performance obligation is considered transferred when the client obtains control of the product or service. Transfer of control is typically evaluated from the client's perspective. At contract inception, we determine whether we satisfy the performance obligation over time or at a point in time. Revenues from software and hosting solutions are primarily recognized ratably over time or as fee-bearing usages occur. Revenues from certain licenses that require a significant level of integration, interdependency and interrelation with integral updates are generally recognized ratably over time as services are performed. Distinct professional services revenues are primarily billed on a time and materials basis and revenues are recognized over time as the services are performed. Revenues from data solutions related to a license for historical data or the license portion of certain distinct term licenses are recognized at a point in time upon delivery, while the remaining arrangement consideration allocated to updates is recognized ratably over the period the updates are provided.

Contracts with Multiple Performance Obligations

We are often party to multiple concurrent contracts or contracts pursuant to which a client may purchase a combination of goods and services. At contract inception, we determine whether multiple contracts will be combined and accounted for as a single arrangement. Combination is generally required when the economics of the individual contracts cannot be understood without reference to the whole. While certain contracts may be combined, they are reviewed to determine if the contract has multiple distinct performance obligations. These situations require judgment to determine whether the multiple promises are separate performance obligations. Once we have determined the performance obligations, we determine the transaction price, which includes estimating the amount of variable consideration to be included in the transaction price, if any. We then allocate the transaction price to each performance obligation in the contract based on a relative SSP method unless specific criteria for allocating variable consideration are met. If those criteria are met, which typically is the case for volume-based fees, variable fees are allocated only to the obligation to which they relate. In either case, the corresponding revenues are recognized as the related performance obligations are satisfied.

Depreciation and Amortization

Depreciation and amortization on the Condensed Consolidated Statements of Earnings and Comprehensive Earnings (Unaudited) include the following (in millions):

	Three months ended September 30,				Nine months ended September 30,
	2018		2017		2018		2017
Property and equipment	$	8.3	$	7.3	$	23.7	$	21.7
Computer software	23.3		21.2		68.7		62.4
Other intangible assets	14.2		16.9		42.5		50.9
Deferred contract costs	8.2		5.9		24.1		19.2
Total	$	54.0	$	51.3	$	159.0	$	154.2

Computer software amortization for the nine months ended September 30, 2018 includes accelerated amortization of $1.0 million related to certain internally developed software. Deferred contract costs amortization for the three months ended September 30, 2018 includes accelerated amortization of $0.9 million related to certain deferred implementation costs. Deferred contract costs amortization for the nine months ended September 30, 2018 and 2017 includes accelerated amortization of $3.4 million and $3.3 million, respectively, related to certain deferred implementation costs.

Transition and Integration Costs

Transition and integration costs during the three and nine months ended September 30, 2018 primarily represent costs associated with executive transition and transition-related costs as we transfer certain corporate functions from FNF. Transition and integration costs during the three and nine months ended September 30, 2017 primarily represent legal and professional fees related to the Distribution.

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Recent Accounting Pronouncements

Revenue Recognition (ASC Topic 606, Revenue from Contracts with Customers ("ASC 606"))

On January 1, 2018, we adopted ASC 606 using the modified retrospective method. Under this method, we recognized the cumulative effect of applying the new revenue recognition standard to existing revenue contracts that were active as of the adoption date as an adjustment to the opening balance of Retained earnings. The reported results for the three and nine months ended September 30, 2018 reflect the application of ASC 606, while the comparative information has not been restated and continues to be reported under the related accounting standards in effect for those periods. The adoption of ASC 606 represents a change in accounting principle that is intended to more closely align revenue recognition with the delivery of our services and provides financial statement readers with enhanced disclosures.

The effect of adopting ASC 606 on our Condensed Consolidated Financial Statements (Unaudited) as of September 30, 2018 and for the three and nine months ended September 30, 2018 is disclosed in Note 8 — Revenues.

Leases (ASC Topic 842, Leases ("ASC 842"))

In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-02, Leases (Topic 842). Under this update, lessees will be required to recognize the following for all leases (with the exception of leases with a term of 12 months or less) at the commencement date: (1) a lease liability, which is a lessee's obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) a right-of-use ("ROU") asset, which is an asset that represents the lessee's right to use, or control the use of, a specified asset for the lease term. Leases will be classified as finance or operating, with such classification affecting the pattern and classification of expense recognition in the income statement. Under update, lessor accounting remains largely unchanged. The FASB has also issued other updates since this time that add further clarification.

In preparation for adoption of ASC 842, we have formed a project team that is evaluating the requirements of ASC 842 and assessing the scope of existing lease agreements and other existing service contracts that are not considered leases under the current guidance. We are applying an integrated approach to analyzing the effect of ASC 842, including a review of accounting policies and practices, evaluating differences from applying the requirements of the new standard to our existing agreements and business practices and assessing the need for any changes in our processes, accounting systems and design of relevant internal controls.

During the third quarter of 2018, we continued our assessment with increased focus on identifying a complete population of leases under the new standard, performing detailed contract reviews, developing accounting policies and positions and further identifying data and disclosure requirements, including the effect on our processes and design of internal controls. We also continued our evaluation of the available practical expedients. We plan to elect the practical expedient to combine lease and non-lease components.

During the third quarter of 2018, the FASB also issued ASU 2018-11, Leases (Topic 842): Targeted Improvements. This update provides an alternative transition method that allows entities to apply ASC 842 at the adoption date and recognize a cumulative-effect adjustment to the opening balance of Retained earnings in the period of adoption. We plan to adopt ASC 842 on January 1, 2019 using this transition method. While we continue to assess all of these updates, the primary effect of adopting ASC 842 relates to the recognition of ROU assets and lease liabilities on our Consolidated Balance Sheets for our operating leases and providing additional disclosures about our leasing activities.

Other Accounting Pronouncements

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. This update expands and refines hedge accounting for both non-financial and financial risk components and aligns the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. This update also includes certain targeted improvements to ease the application of current guidance related to the assessment of hedge effectiveness. This update is effective for fiscal years beginning after December 15, 2018 with early adoption permitted. We do not expect the adoption of this update to have a material effect on our consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. This update removes, modifies and adds certain disclosure requirements for fair value measurements. This update is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019 with early adoption permitted. We do not expect the adoption of this update to have a material effect on our consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. This

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update more closely aligns the accounting treatment of implementation costs for cloud solutions to the treatment of costs to develop or obtain internal-use software. Costs incurred during the planning and post-implementation stages are typically expensed, while costs incurred during the development stage are typically capitalized. The capitalized implementation costs are to be expensed over the term of the hosting arrangement including renewal options to the extent those options are expected to be utilized.  This update also requires the capitalized implementation costs to be presented in the consolidated financial statements consistent with the presentation of the ongoing fees and payments associated with the cloud arrangement. This update is effective for fiscal years beginning after December 15, 2019 with early adoption permitted. We are currently evaluating the effect the adoption of this update will have on our consolidated financial statements and related disclosures.

(2)    Earnings Per Share

Basic earnings per share is computed by dividing Net earnings attributable to Black Knight by the weighted-average number of shares of common stock outstanding during the period.

For the periods presented, potentially dilutive securities include unvested restricted stock awards and the shares of BKFS Class B common stock prior to the Distribution. For the nine months ended September 30, 2017, the numerator in the diluted net earnings per share calculation was adjusted to reflect our income tax expense at an expected effective tax rate assuming the conversion of the shares of BKFS Class B common stock into shares of BKFS Class A common stock on a one-for-one basis prior to the Distribution. The effective tax rate for the nine months ended September 30, 2017 was 41.1%. The denominator includes approximately 84.4 million shares of BKFS Class B common stock outstanding for the nine months ended September 30, 2017. However, approximately 83.7 million shares of BKFS Class B common stock for the three months ended September 30, 2017 have been excluded in computing diluted net earnings per share because including them on an "if-converted" basis would have an anti-dilutive effect. The denominator also includes the dilutive effect of approximately 0.6 million and 0.5 million shares of unvested restricted shares of common stock for the three and nine months ended September 30, 2018, respectively, and approximately 0.6 million shares for the three and nine months ended September 30, 2017.

The shares of BKFS Class B common stock did not share in the earnings or losses of Black Knight and were, therefore, not participating securities. Accordingly, basic and diluted net earnings per share of BKFS Class B common stock have not been presented.

The following table sets forth the computation of basic and diluted earnings per share (in millions, except per share amounts):

	Three months ended September 30,				Nine months ended September 30,
	2018		2017		2018		2017
Basic:
Net earnings attributable to Black Knight	$	43.0	$	14.7	$	125.7	$	35.1
Shares used for basic net earnings per share:
Weighted average shares of common stock outstanding	147.2		67.9		147.7		67.7
Basic net earnings per share	$	0.29	$	0.22	$	0.85	$	0.52
Diluted:
Earnings before income taxes							$	131.3
Income tax expense excluding the effect of noncontrolling interests							54.0
Net earnings							$	77.3
Net earnings attributable to Black Knight	$	43.0	$	14.7	$	125.7
Shares used for diluted net earnings per share:
Weighted average shares of common stock outstanding	147.2		67.9		147.7		67.7
Dilutive effect of unvested restricted shares of common stock	0.6		0.6		0.5		0.6
Weighted average shares of BKFS Class B common stock outstanding	—		—		—		84.4
Weighted average shares of common stock, diluted	147.8		68.5		148.2		152.7
Diluted net earnings per share	$	0.29	$	0.21	$	0.85	$	0.51

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(3)    Related Party Transactions

We are party to certain related party agreements, including certain agreements with FNF. As a result of the Distribution, as described in Note 1 — Basis of Presentation, FNF no longer has an ownership interest in us; however, FNF is still considered a related party primarily due to the combination of certain shared board members, members of senior management and various agreements.

We were party to certain related party agreements with THL until May 11, 2018, the date of the May 2018 Offering as defined below. As a result of the May 2018 Offering, certain affiliates of THL no longer have an ownership interest in us and are no longer considered related parties.

On February 15, 2018, an underwritten secondary offering of 8.0 million shares of our common stock by affiliates of THL pursuant to a post-effective amendment to the registration statement filed with the SEC on November 20, 2017 closed (the “February 2018 Offering”). We purchased from the underwriter 2.0 million shares of our common stock at a per-share price equal to the price payable by the underwriter to affiliates of THL.

On March 15, 2018, an underwritten secondary offering of 8.0 million shares of our common stock by affiliates of THL pursuant to a post-effective amendment to the registration statement filed with the SEC on November 20, 2017 closed (the "March 2018 Offering"). We purchased from the underwriter 1.0 million shares of our common stock at a per-share price equal to the price payable by the underwriter to affiliates of THL.

On May 11, 2018, an underwritten secondary offering of 13.6 million shares of our common stock by affiliates of THL and certain members of our board of directors and management pursuant to a post-effective amendment to the registration statement filed with SEC on November 20, 2017 closed (the "May 2018 Offering").

We did not sell any shares and did not receive any proceeds related to the February 2018 Offering, March 2018 Offering or May 2018 Offering.

Transactions with FNF and THL are described below.

FNF

We have various agreements with FNF and certain FNF subsidiaries to provide software, data and analytics services, as well as corporate shared services and information technology. We are also a party to certain other agreements under which we incur other expenses or receive revenues from FNF.

A detail of the revenues and expenses, net from FNF is set forth in the table below (in millions):

	Three months ended September 30,				Nine months ended September 30,
	2018		2017		2018		2017
Revenues	$	17.6	$	13.8	$	43.9	$	43.2
Operating expenses	4.5		3.4		9.5		9.8
Guarantee fee	—		—		—		1.2

We paid to FNF a guarantee fee of 1.0% of the outstanding principal of the Senior Notes (as defined in Note 5 — Long-Term Debt) in exchange for the ongoing guarantee by FNF of the Senior Notes. The guarantee fee was included in Interest expense on the Condensed Consolidated Statements of Earnings and Comprehensive Earnings (Unaudited). On April 26, 2017, the Senior Notes were redeemed, and we are no longer required to pay a guarantee fee.

In connection with our Amended and Restated Credit Agreement (as defined in Note 5 — Long-Term Debt), FNF subsidiaries no longer hold any principal amount of our debt. FNF subsidiaries held $48.8 million of principal amount of our Term B Loan (as defined in Note 5 — Long-Term Debt) as of December 31, 2017 from our credit agreement dated May 27, 2015, as amended.

THL

Two managing directors of THL currently serve on our Board of Directors. We purchase software and systems services from certain entities over which THL exercises control. Transactions with THL are summarized through May 11, 2018, the date of the May 2018 Offering described above.

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A detail of the expenses, net from THL is set forth in the table below (in millions):

	Three months ended September 30,				Nine months ended September 30,
	2018		2017		2018		2017
Operating expenses	$	—	$	—	$	—	$	0.2

Revenues and Expenses

A detail of related party items included in Revenues is as follows (in millions):

	Three months ended September 30,				Nine months ended September 30,
	2018		2017		2018		2017
Data and analytics services	$	5.6	$	5.7	$	16.1	$	18.4
Servicing, origination and default software services	12.0		8.1		27.8		24.8
Total related party revenues	$	17.6	$	13.8	$	43.9	$	43.2

A detail of related party items included in Operating expenses (net of expense reimbursements) is as follows (in millions):

	Three months ended September 30,						Nine months ended September 30,
	2018			2017			2018			2017
Data entry, indexing services and other operating expenses	$	3.4		$	1.4		$	6.3		$	3.9
Corporate services	1.3			2.4			4.0			7.4
Technology and corporate services	(0.2		)	(0.4		)	(0.8		)	(1.3		)
Total related party expenses, net	$	4.5		$	3.4		$	9.5		$	10.0

Additionally, related party prepaid fees were $0.1 million as of December 31, 2017. These fees are included in Prepaid expenses and other current assets on the Condensed Consolidated Balance Sheets (Unaudited). As of September 30, 2018, related party contract assets of $4.6 million are also included in Prepaid expenses and other current assets in our Condensed Consolidated Balance Sheets (Unaudited). As of September 30, 2018, related party deferred revenues of $1.1 million are included in current Deferred revenues in our Condensed Consolidated Balance Sheets (Unaudited).

We believe the amounts earned from or charged by us under each of the foregoing arrangements are fair and reasonable. We believe our service arrangements are priced within the range of prices we offer to third parties, except for certain corporate services provided to an FNF subsidiary and certain corporate services provided by FNF, which are at cost. However, the amounts we earned or that were charged under these arrangements were not negotiated at arm's length, and may not represent the terms that we might have obtained from an unrelated third party.

(4)    Other Non-Current Assets

Other non-current assets consists of the following (in millions):

	September 30, 2018		December 31, 2017
Deferred contract costs, net of accumulated amortization	$	160.3	$	136.1
Property records database	59.7		59.7
Prepaid expenses	21.1		4.0
Unrealized gains on interest rate swaps	18.8		6.7
Contract assets	12.1		—
Unbilled receivables	6.6		14.6
Other	21.2		19.0
Other non-current assets	$	299.8	$	240.1

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(5)        Long-Term Debt

Long-term debt consists of the following (in millions):

	September 30, 2018										December 31, 2017
	Principal		Debt Issuance Costs			Discount			Total		Principal		Debt Issuance Costs			Discount			Total
Term A Loan	$	1,242.2	$	(7.3	)	$	—		$	1,234.9	$	1,004.3	$	(7.0	)	$	—		$	997.3
Term B Loan	—		—			—			—		390.0		(2.5		)	(1.4		)	386.1
Revolving Credit Facility	137.0		(5.7		)	—			131.3		55.0		(4.3		)	—			50.7
Other	32.9		—			(1.1		)	31.8		—		—			—			—
Total long-term debt	1,412.1		(13.0		)	(1.1		)	1,398.0		1,449.3		(13.8		)	(1.4		)	1,434.1
Less: Current portion of long-term debt	47.7		(0.2		)	(0.5		)	47.0		55.5		(0.4		)	—			55.1
Long-term debt, net of current portion	$	1,364.4	$	(12.8	)	$	(0.6	)	$	1,351.0	$	1,393.8	$	(13.4	)	$	(1.4	)	$	1,379.0

Principal maturities as of September 30, 2018 for each of the next five years and thereafter are as follows (in millions):

2018 (remaining)	$	7.8
2019	53.2
2020	65.7
2021	62.5
2022	109.4
Thereafter	1,113.5
Total	$	1,412.1

Scheduled maturities noted above exclude the effect of debt issuance costs of $13.0 million and discount of $1.1 million.

Credit Agreement

On May 27, 2015, Black Knight InfoServ, LLC ("BKIS") entered into a credit and guaranty agreement (the "Credit Agreement") with JPMorgan Chase Bank, N.A., as administrative agent, the guarantors party thereto and the other agents and lenders party thereto. On February 27, 2017, BKIS entered into a First Amendment to Credit and Guaranty Agreement (the "Credit Agreement First Amendment") with JPMorgan Chase Bank, N.A. as administrative agent. On April 26, 2017, BKIS entered into a Second Amendment to Credit and Guaranty Agreement (the “Credit Agreement Second Amendment”) with JPMorgan Chase Bank, N.A. as administrative agent, the guarantors party thereto, the other agents party thereto and the lenders party thereto. The Credit Agreement, as amended, provided for (i) a $1,030.0 million term loan A facility (the "Term A Loan"), (ii) a $400.0 million term loan B facility (the "Term B Loan") and (iii) a $500.0 million revolving credit facility (the "Revolving Credit Facility", and collectively with the Term A Loan and Term B Loan, the "Facilities"). The Facilities were guaranteed by substantially all of BKIS's wholly-owned domestic restricted subsidiaries and BKFS LLC, and were secured by associated collateral agreements that pledge a lien on virtually all of BKIS's assets, including fixed assets and intangible assets, and the assets of the guarantors.

Debt Refinancing

On April 30, 2018, BKIS entered into an amended and restated credit and guaranty agreement (the “Amended and Restated Credit Agreement”) with JPMorgan Chase Bank, N.A. as administrative agent, the guarantors party thereto, the other agents party thereto and the lenders party thereto.

The Amended and Restated Credit Agreement provides for (i) a $1,250.0 million term loan A facility (the “New Term A Loan”) and (ii) a $750.0 million revolving credit facility (the “New Revolving Credit Facility” and, together with the New Term A Loan, collectively, the “New Facilities”), the proceeds of which were used to repay in full the Term A Loan, Term B Loan and Revolving Credit Facility outstanding under the Credit Agreement, as amended.

The New Term A Loan and the New Revolving Credit Facility bear interest at rates based upon, at the option of BKIS, either (i) the base rate plus a margin of between 25 and 50 basis points depending on the total leverage ratio of BKFS LLC and its restricted subsidiaries on a consolidated basis (the “Consolidated Leverage Ratio”) or (ii) the Eurodollar rate plus a margin of

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between 125 and 150 basis points depending on the Consolidated Leverage Ratio. In addition, BKIS will pay an unused commitment fee of between 15 and 20 basis points on the undrawn commitments under the New Revolving Credit Facility, also depending on the Consolidated Leverage Ratio.

As of September 30, 2018, the New Term A Loan and the New Revolving Credit Facility bear interest at the Eurodollar rate plus a margin of 150 basis points. As of September 30, 2018, we have $613.0 million capacity on the New Revolving Credit Facility and pay an unused commitment fee of 20 basis points. During the nine months ended September 30, 2018, there were $523.2 million of incremental borrowings and $441.2 million of payments on our New Revolving Credit Facility. During the nine months ended September 30, 2017, there were $100.0 million of incremental borrowings and no payments on our Revolving Credit Facility. As of September 30, 2018, the interest rates on the New Term A Loan and New Revolving Credit Facility were approximately 3.74% and 3.67%, respectively.

The New Facilities are guaranteed by all of BKIS’s wholly-owned domestic restricted subsidiaries and BKFS LLC, a Delaware limited liability company and the direct parent company of BKIS, and are secured by associated collateral agreements that pledge a lien on substantially all of BKIS’s assets, including fixed assets and intangibles, and the assets of the guarantors, in each case, subject to customary exceptions.

The New Term A Loan is subject to amortization of principal, payable in quarterly installments on the last day of each fiscal quarter equal to the percentage set forth below of the initial aggregate principal amount of the term loans for such fiscal quarter:

Payment Dates	Percentage
September 30, 2018 through and including March 31, 2020	0.63%
Commencing on June 30, 2020 through and including March 31, 2022	1.25%
Commencing on June 30, 2022 through and including March 31, 2023	2.50%

The remaining principal balance of the term loans under the New Term A Loan is due upon maturity. Pursuant to the terms of the Amended and Restated Credit Agreement, the loans under the New Term A Loan and the New Revolving Credit Facility mature on April 30, 2023.

For the nine months ended September 30, 2018, the amount included in Other expense, net on the Condensed Consolidated Statement of Earnings and Comprehensive Earnings (Unaudited) related to the April 30, 2018 refinancing was $5.8 million. For the nine months ended September 30, 2017, the amount included in Other expense, net on the Condensed Consolidated Statement of Earnings and Comprehensive Earnings (Unaudited) related to 2017 Term B Loan repricing, Term A Loan and Revolving Credit Facility refinancing was $4.4 million.

Other Debt

On April 1, 2018, we entered into a financing agreement for $32.9 million, with an imputed interest rate of 3.44%, primarily related to certain data processing and maintenance services. Quarterly payments are due beginning January 1, 2019 through April 1, 2020. As of September 30, 2018, $15.9 million is included in the Current portion of long-term debt in our Condensed Consolidated Balance Sheets (Unaudited).

Senior Notes

Through April 25, 2017, BKIS had 5.75% Senior Notes, interest paid semi-annually, which were scheduled to mature on April 15, 2023 (the "Senior Notes"). The Senior Notes were senior unsecured obligations, registered under the Securities Act and contained customary affirmative, negative and financial covenants, and events of default for indebtedness of this type (with grace periods, as applicable, and lender remedies). On April 26, 2017, we redeemed the outstanding Senior Notes at a price of 104.825% (the "Redemption") and paid $0.7 million in accrued interest. The amount included in Other expense, net on the Condensed Consolidated Statements of Earnings and Comprehensive Earnings (Unaudited) related to the Senior Notes redemption was $8.2 million.

Fair Value of Long-Term Debt

The fair value of our New Facilities approximates their carrying value at September 30, 2018. The fair value of our New Facilities is based upon established market prices for the securities using level 2 inputs.

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Interest Rate Swaps

We have entered into interest rate swap agreements to hedge forecasted monthly interest rate payments on our floating rate debt. On April 11, 2018, we entered into a new interest rate swap agreement with a start date of April 30, 2018. On May 29, 2018, we entered into an interest rate swap agreement with a forward starting date on January 31, 2019. As of September 30, 2018, we have the following interest rate swap agreements (collectively, the "Swap Agreements") (in millions):

Effective Dates	Notional Amount		Fixed Rates
February 1, 2016 through January 31, 2019	$	200.0	1.01%
February 1, 2016 through January 31, 2019	$	200.0	1.01%
March 31, 2017 through March 31, 2022	$	200.0	2.08%
September 29, 2017 through September 30, 2021	$	200.0	1.69%
April 30, 2018 through April 30, 2023	$	250.0	2.61%
January 31, 2019 through January 31, 2023	$	300.0	2.65%

Under the terms of the Swap Agreements, we receive payments based on the 1-month LIBOR rate (approximately 2.24% as of September 30, 2018).

We entered into the Swap Agreements to convert a portion of the interest rate exposure on our floating rate debt from variable to fixed. We designated these Swap Agreements as cash flow hedges. A portion of the amount included in Accumulated other comprehensive earnings is reclassified into Interest expense as a yield adjustment as interest payments are made on the hedged debt. The fair value of our Swap Agreements is based upon level 2 inputs. We have considered our own credit risk and the credit risk of the counterparties when determining the fair value of our Swap Agreements.

It is our policy to execute such instruments with credit-worthy banks and not to enter into derivative financial instruments for speculative purposes. As of September 30, 2018, we believe our interest rate swap counterparties will be able to fulfill their obligations under our agreements, and we believe we will have debt outstanding through the various expiration dates of the swaps such that the occurrence of future cash flow hedges remains probable.

The estimated fair values of our Swap Agreements are as follows (in millions):    

Balance Sheet Accounts	September 30, 2018		December 31, 2017
Prepaid expenses and other current assets	$	1.8	$	—
Other non-current assets	$	18.8	$	6.7

As of September 30, 2018, a cumulative gain of $20.6 million ($15.3 million net of tax) related to our interest rate swaps is reflected in Accumulated other comprehensive earnings. As of December 31, 2017, a cumulative gain of $6.7 million ($3.9 million net of tax) is reflected in Accumulated other comprehensive earnings. Below is a summary of the effect of derivative instruments on amounts recognized in Other comprehensive earnings (loss) ("OCE") on the accompanying Condensed Consolidated Statements of Earnings and Comprehensive Earnings (Unaudited) for the three months ended September 30, 2018 and 2017 (in millions):

	Three months ended September 30, 2018				Three months ended September 30, 2017
	Amount of Gain Recognized in OCE		Amount of Gain Reclassified from Accumulated OCE into Net earnings		Amount of Gain Recognized in OCE		Amount of Loss Reclassified from Accumulated OCE into Net earnings
Swap agreements
Attributable to noncontrolling interests	$	—	$	—	$	0.5	$	0.1
Attributable to Black Knight	3.6		0.7		0.3		—
Total	$	3.6	$	0.7	$	0.8	$	0.1

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Below is a summary of the effect of derivative instruments on amounts recognized in OCE on the accompanying Condensed Consolidated Statements of Earnings and Comprehensive Earnings (Unaudited) for the nine months ended September 30, 2018 and 2017 (in millions):

	Nine months ended September 30, 2018				Nine months ended September 30, 2017
	Amount of Gain Recognized in OCE		Amount of Gain Reclassified from Accumulated OCE into Net earnings		Amount of Gain Recognized in OCE		Amount of Loss Reclassified from Accumulated OCE into Net earnings
Swap agreements
Attributable to noncontrolling interests	$	—	$	—	$	1.7	$	0.5
Attributable to Black Knight	11.7		1.5		0.9		0.2
Total	$	11.7	$	1.5	$	2.6	$	0.7

Approximately $4.9 million ($3.6 million net of tax) of the balance in Accumulated other comprehensive earnings as of September 30, 2018 is expected to be reclassified into Interest expense over the next 12 months.

(6)        Income Taxes

Our effective tax rate for the three months ended September 30, 2018 and 2017 was 20.1% and 17.3%, respectively. Our effective tax rate for the nine months ended September 30, 2018 and 2017 was 19.5% and 18.5%, respectively. Our effective tax rate for the nine months ended September 30, 2018 includes the effect of a deferred tax revaluation adjustment as a result of a reduction in our blended state tax rate, higher than expected tax credits and excess tax benefits related to the vesting of restricted shares of our common stock. The effective tax rates for the three and nine months ended September 30, 2017 were lower than the typical federal and state statutory rate because of the effect of our noncontrolling interests prior to the Distribution, partially offset by the effect of certain discrete items recorded during the 2017 period.

A reconciliation of the federal statutory income tax rate to our effective income tax rate for each period presented is as follows:

	Three months ended September 30,				Nine months ended September 30,
	2018		2017		2018		2017
Federal statutory rate	21.0	%	35.0	%	21.0	%	35.0	%
State income taxes, net of federal benefit	5.0		4.1		5.0		2.9
Noncontrolling interests	—		(19.0	)	—		(19.0	)
Tax credits	(2.6	)	(0.9	)	(1.7	)	(0.6	)
Restricted share vesting	—		—		(1.1	)	(0.4	)
Effect of deferred revaluation related to lower blended state tax rate	—		—		(2.7	)	—
State net operating losses	(2.3	)	—		(0.8	)	—
Resolution of a legacy tax matter	—		—		—		1.9
Other	(1.0	)	(1.9	)	(0.2	)	(1.3	)
Effective tax rate	20.1	%	17.3	%	19.5	%	18.5	%

Tax Distributions

Prior to the Distribution, the taxable income of BKFS LLC was allocated to its members, including BKFS, and the members were required to reflect on their own income tax returns the items of income, gain, deduction and loss and other tax items of BKFS LLC that were allocated to them. BKFS LLC made tax distributions to its members for their allocable share of BKFS LLC's taxable income. Tax distributions are calculated based on allocations of income to a member for a particular taxable year without taking into account any losses allocated to the member in a prior taxable year. This practice is consistent with IRS regulations. Subject to certain reductions, tax distributions are generally made based on an assumed tax rate equal to the highest combined marginal federal, state and local income tax rate applicable to a U.S. corporation. BKFS LLC made tax distributions of $75.3 million during the nine months ended September 30, 2017. The 2017 tax distributions were for the 2016 tax year and 2017 tax year relating to the period before the Distribution. Additional tax distributions may be made for any tax distribution adjustments as a result of the final partnership returns relating to the period before the Distribution, the timing and amount of which will be dependent upon the taxable income allocable to such holders.

17

BLACK KNIGHT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)

(7)        Commitments and Contingencies

Legal and Regulatory Matters

In the ordinary course of business, we are involved in various pending and threatened litigation and regulatory matters related to our operations, some of which include claims for punitive or exemplary damages. Our ordinary course litigation may include class action lawsuits, which make allegations related to various aspects of our business. From time to time, we also receive requests for information from various state and federal regulatory authorities, some of which take the form of civil investigative demands or subpoenas. Some of these regulatory inquiries may result in the assessment of fines for violations of regulations or settlements with such authorities requiring a variety of remedies. We believe that none of these actions depart from customary litigation or regulatory inquiries incidental to our business.

We review lawsuits and other legal and regulatory matters (collectively “legal proceedings”) on an ongoing basis when making accrual and disclosure decisions. When assessing reasonably possible and probable outcomes, management bases its decision on its assessment of the ultimate outcome assuming all appeals have been exhausted. For legal proceedings where it has been determined that a loss is both probable and reasonably estimable, a liability based on known facts and which represents our best estimate has been recorded. Actual losses may materially differ from the amounts recorded and the ultimate outcome of our pending cases is generally not yet determinable. While some of these matters could be material to our operating results or cash flows for any particular period if an unfavorable outcome results, at present we do not believe the ultimate resolution of currently pending legal proceedings, either individually or in the aggregate, will have a material adverse effect on our financial condition.

Indemnifications and Warranties

We often agree to indemnify our clients against damages and costs resulting from claims of patent, copyright, trademark infringement or breaches of confidentiality associated with use of our software through software licensing agreements. Historically, we have not made any payments under such indemnifications, but continue to monitor the conditions that are subject to the indemnifications to identify whether a loss has occurred that is both probable and estimable that would require recognition. In addition, we warrant to clients that our software operates substantially in accordance with the software specifications. Historically, no costs have been incurred related to software warranties and none are expected in the future, and as such, no accruals for warranty costs have been made.

Indemnification Agreement

We are party to a cross-indemnity agreement dated December 22, 2014 with ServiceLink Holdings, LLC ("ServiceLink"). Pursuant to this agreement, ServiceLink indemnifies us from liabilities relating to, arising out of or resulting from the conduct of ServiceLink's business or any action, suit or proceeding in which we or any of our subsidiaries are named by reason of being a successor to the business of Lender Processing Services, Inc. and the cause of such action, suit or proceeding relates to the business of ServiceLink. In return, we indemnify ServiceLink for liabilities relating to, arising out of or resulting from the conduct of our business.

Data Processing and Maintenance Services Agreements

We have various data processing and maintenance services agreements with vendors, which expire through 2021, for portions of our computer data processing operations and related functions.

As of September 30, 2018, payments for data processing and maintenance services agreements with initial or remaining terms greater than one year are as follows (in millions):

2018 (remaining)	$	13.9
2019	54.0
2020	53.2
2021	29.8
Total	$	150.9

_______________

Note: The amounts above include the effect of a related financing agreement entered into on April 1, 2018 primarily for a certain data processing and maintenance services agreement. Refer to Note 5 — Long-Term Debt.

These amounts could be more or less depending on various factors such as the inflation rate, the introduction of significant new technologies or changes in our data processing needs.

18

BLACK KNIGHT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)

(8)     Revenues

Disaggregation of Revenues

The following tables summarize revenues from contracts with clients (in millions):

	Three months ended September 30, 2018
	Servicing Software		Origination Software		Software Solutions		Data and Analytics		Corporate and Other				Total
Software and hosting solutions	$	180.4	$	29.8	$	210.2	$	7.7	$	—			$	217.9
Professional services	20.0		11.7		31.7		0.3		(0.6		)	(1)	31.4
Data solutions	—		—		—		29.7		—				29.7
Other	—		2.0		2.0		0.7		—				2.7
Revenues	$	200.4	$	43.5	$	243.9	$	38.4	$	(0.6	)		$	281.7

	Nine months ended September 30, 2018
	Servicing Software		Origination Software		Software Solutions		Data and Analytics		Corporate and Other				Total
Software and hosting solutions	$	534.8	$	82.2	$	617.0	$	22.7	$	—			$	639.7
Professional services	57.1		34.4		91.5		1.0		(2.3		)	(1)	90.2
Data solutions	—		—		—		88.8		—				88.8
Other	0.5		7.2		7.7		2.2		—				9.9
Revenues	$	592.4	$	123.8	$	716.2	$	114.7	$	(2.3	)		$	828.6

_______________________________________________________

(1) Revenues for Corporate and Other represent deferred revenue purchase accounting adjustments recorded in accordance with GAAP.

Our Software Solutions segment offers leading software and hosting solutions that facilitate and automate many of the mission critical business processes across the homeownership lifecycle. These solutions primarily consist of processing and workflow management software applications. Our servicing software business primarily includes our core servicing software solution that automates loan servicing, including loan setup and ongoing processing, customer service, accounting, reporting to the secondary mortgage market and investors and web-based workflow information systems. Our origination software business primarily includes our solutions that automate and facilitate the origination of mortgage loans and provide an interconnected network allowing the various parties and systems associated with lending transactions to exchange data quickly and efficiently. Professional services consists of pre-implementation and post-implementation support and services and are primarily billed on a time and materials basis. Professional services may also include dedicated teams provided as part of agreements with software and hosting solutions clients.

Our Data and Analytics segment offers data and analytics solutions to the mortgage, real estate and capital markets verticals. These solutions include property ownership data, lien data, servicing data, automated valuation models, collateral risk scores, behavioral models, multiple listing service software solution and other data solutions.

Effect of Adopting ASC 606

The primary effect of adopting ASC 606 relates to the timing of revenue recognition for professional services, certain distinct term license arrangements and timing differences related to the effect of straight-line revenue recognition due to escalating billings related to contractual minimums. We identified timing differences related to revenue recognition for distinct professional services performed during implementation of certain solutions within our origination software business, which will be recognized in the period the professional services are performed compared to deferred and recognized over the remaining contract term under the previous standard. Moreover, fees for certain post-implementation professional services related to minor customization of hosted software solutions that are determined not to be distinct from the hosted software solutions will be deferred and recognized over the remaining hosted software contract term compared to over the period the professional services are performed under the previous standard. Further, we identified timing differences related to recognizing the license portion of certain distinct term license arrangements within our Data and Analytics segment upon delivery rather than ratably over the license term. Finally, certain agreements within our origination software business with distinct services that are substantially the same and provided ratably over the agreement term will result in straight-line revenue recognition due to escalating billings related to contractual minimums.

19

BLACK KNIGHT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)

In addition, based on our analysis of contract acquisition and fulfillment costs, we did not identify a material change to our current practice for capitalizing such costs; however, we will amortize certain capitalized contract costs over a longer time period for certain contracts. Based on the requirements of the new standard, we consider the explicit term of the contract with the client, expected renewals and the rate of change related to our solutions in determining the amortization period of our deferred contract costs.

Opening Balance Sheet Adjustment on January 1, 2018

As a result of applying the modified retrospective method to adopt ASC 606, the following amounts on our Condensed Consolidated Balance Sheet (Unaudited) were adjusted as of January 1, 2018 to reflect the cumulative effect adjustment to the opening balance of Retained earnings (in millions):

	As reported December 31, 2017		Adjustments for ASC 606 adoption			Adjusted January 1, 2018
Trade receivables, net	$	201.8	$	(6.2	)	$	195.6
Prepaid expenses and other current assets	44.6		11.8			56.4
Receivables from related parties	18.1		(3.7		)	14.4
Computer software, net	416.8		1.8			418.6
Other non-current assets	240.1		16.6			256.7
Total assets	3,655.9		20.3			3,676.2
Deferred revenues (current)	59.6		(1.9		)	57.7
Deferred revenues (non-current)	100.7		6.8			107.5
Deferred income taxes	224.6		4.2			228.8
Total liabilities	1,947.1		9.1			1,956.2
Retained earnings	201.4		11.2			212.6
Total equity	1,708.8		11.2			1,720.0
Total liabilities and equity	3,655.9		20.3			3,676.2

Effect of ASC 606 as of September 30, 2018 and for the Three and Nine Months Ended September 30, 2018

The following table summarizes the effect of adopting ASC 606 on our Condensed Consolidated Balance Sheet (Unaudited) (in millions):

	As reported September 30, 2018		Effect of ASC 606 adoption			Amounts without adoption of ASC 606 September 30, 2018
Trade receivables, net	$	170.3	$	6.3		$	176.6
Prepaid expenses and other current assets	61.2		(12.9		)	48.3
Receivables from related parties	11.9		4.9			16.8
Computer software, net	407.0		(3.9		)	403.1
Other non-current assets	299.8		(21.0		)	278.8
Total assets	3,643.2		(26.6		)	3,616.6
Deferred revenues (current)	48.3		3.0			51.3
Deferred revenues (non-current)	112.9		(5.0		)	107.9
Deferred income taxes	235.0		(6.6		)	228.4
Total liabilities	1,903.6		(8.6		)	1,895.0
Retained earnings	338.3		(18.0		)	320.3
Total equity	1,739.6		(18.0		)	1,721.6
Total liabilities and equity	3,643.2		(26.6		)	3,616.6

20

BLACK KNIGHT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)

The following tables summarize the effect of adopting ASC 606 on our Condensed Consolidated Statement of Earnings and Comprehensive Earnings (Unaudited) (in millions):

	Three months ended September 30, 2018
	As reported		Effect of ASC 606 adoption			Amounts without adoption of ASC 606
Revenues	$	281.7	$	(2.8	)	$	278.9
Operating expenses	157.4		0.6			158.0
Depreciation and amortization	54.0		(0.4		)	53.6
Income tax expense	10.8		(0.9		)	9.9
Net earnings	43.0		(2.1		)	40.9
Earnings per share:
Basic	$	0.29	$	(0.01	)	$	0.28
Diluted	$	0.29	$	(0.01	)	$	0.28

	Nine months ended September 30, 2018
	As reported		Effect of ASC 606 adoption			Amounts without adoption of ASC 606
Revenues	$	828.6	$	(6.3	)	$	822.3
Operating expenses	462.2		3.3			465.5
Depreciation and amortization	159.0		(0.4		)	158.6
Income tax expense	30.4		(2.4		)	28.0
Net earnings	125.7		(6.8		)	118.9
Earnings per share:
Basic	$	0.85	$	(0.04	)	$	0.81
Diluted	$	0.85	$	(0.05	)	$	0.80

21

BLACK KNIGHT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)

The following table summarizes the effect of adopting ASC 606 on our Condensed Consolidated Statement of Cash Flow (in millions):

	Nine months ended September 30, 2018
	As reported			Effect of ASC 606 adoption			Amounts without adoption of ASC 606
Cash flows from operating activities:
Net earnings	$	125.7		$	(6.8	)	$	118.9
Certain adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	159.0			(0.4		)	158.6
Deferred income taxes, net	1.6			(2.4		)	(0.8		)
Changes in assets and liabilities:
Trade and other receivables, including receivables from related parties	38.7			(1.3		)	37.4
Prepaid expenses and other assets	(32.6		)	2.4			(30.2		)
Deferred contract costs	(35.1		)	3.3			(31.8		)
Deferred revenues	(4.1		)	2.9			(1.2		)
Net cash provided by operating activities	$	305.4		$	(2.3	)	$	303.1
Cash flows from investing activities:
Additions to computer software	$	(53.6	)	$	2.3		$	(51.3	)
Net cash used in investing activities	$	(79.7	)	$	2.3		$	(77.4	)

Transaction Price Allocated to Future Performance Obligation

ASC 606 allows for the use of certain practical expedients, which we have elected and applied to measure our future performance obligations as of September 30, 2018. As a result, our disclosure of transaction price allocated to these future performance obligations excludes the following:

• Volume-based fees in excess of contractual minimums and other usage-based fees to the extent they are part of a single performance obligation and meet the variable allocation criteria in ASC 606;

• Performance obligations that are part of a contract with an original expected duration of one year or less; and

• Transactional fees based on a fixed fee per transaction when we have the right to invoice once we have completed the performance obligation.

As of September 30, 2018, the aggregate amount of the transaction price that is allocated to our future performance obligations was approximately $2.1 billion and is expected to be recognized as follows: 6% by December 31, 2018, 51% by December 31, 2020, 80% by December 31, 2022 and the rest thereafter.

(9)        Equity-Based Compensation

On February 9, 2018, we granted 772,642 restricted shares of our common stock from our treasury shares with a grant date fair value of $45.85 per share, which was based on the closing price of our common stock on the date of grant. The restricted shares vest over a three-year period; vesting is also based on certain operating performance criteria.

On April 2, 2018, we granted 360,342 restricted shares of our common stock from our treasury shares with a grant date fair value of $46.90 per share, which was based on the closing price of our common stock on the date of grant. Of the 360,342 restricted shares granted, 159,915 restricted shares vest over a three-year period; vesting is also based on certain operating performance criteria. The other 200,427 restricted shares vest over a 27-month period.

22

BLACK KNIGHT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)

Restricted stock transactions in 2018 are as follows:

	Shares		Weighted Average Grant Date Fair Value
Balance, December 31, 2017	1,581,711		$	34.48
Granted	1,146,586		$	46.27
Forfeited	(22,515	)	$	42.71
Vested	(494,141	)	$	34.14
Balance, September 30, 2018	2,211,641		$	40.58

Equity-based compensation expense was $13.5 million and $4.1 million for the three months ended September 30, 2018 and 2017, respectively. Equity-based compensation expense was $33.4 million and $14.2 million for the nine months ended September 30, 2018 and 2017, respectively. These expenses are included in Operating expenses in the Condensed Consolidated Statements of Earnings and Comprehensive Earnings (Unaudited).

Total unrecognized compensation cost was $58.4 million as of September 30, 2018 and is expected to be recognized over a weighted average period of approximately 1.7 years.

(10)    Segment Information

ASC Topic 280, Segment Reporting ("ASC 280")establishes standards for reporting information about segments and requires that a public business enterprise reports financial and descriptive information about its segments. Segments are components of an enterprise for which separate financial information is available and are evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing performance. Our chief executive officer is identified as the CODM as defined by ASC 280. To align with the internal management of our business operations based on service offerings, our business is organized into two segments:

• Software Solutions - offers software and hosting solutions that support loan servicing, loan origination and settlement services.

• Data and Analytics - offers data and analytics solutions to the mortgage, real estate and capital markets verticals. These solutions include property ownership data, lien data, servicing data, automated valuation models, collateral risk scores, behavioral models, multiple listing service software solution and other data solutions.

Separate discrete financial information is available for these two segments and the operating results of each segment are regularly evaluated by the CODM in order to assess performance and allocate resources. We use EBITDA as the primary profitability measure for making decisions regarding ongoing operations. EBITDA is earnings before Interest expense, Income tax expense and Depreciation and amortization. We do not allocate Interest expense, Other expense, net, Income tax expense, equity-based compensation and certain other items, such as purchase accounting adjustments and acquisition-related costs to the segments, since these items are not considered in evaluating the segments' overall operating performance.

23

BLACK KNIGHT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)

On January 1, 2018, we realigned the composition of our two reportable segments. Certain enterprise business intelligence offerings in our Data and Analytics segment were moved to our Software Solutions segment. This change aligns with our go-to-market strategy and with the internal management of our business operations, including the allocation of resources and assessment of performance. Prior period results have been reclassified to conform to the current segment presentation.

Summarized financial information concerning our segments is shown in the tables below (in millions):

	Three months ended September 30, 2018
	Software Solutions		Data and Analytics		Corporate and Other				Total
Revenues	$	243.9	$	38.4	$	(0.6	)	(1)	$	281.7
Expenses:
Operating expenses	99.3		28.6		29.5				157.4
Transition and integration costs	—		—		3.3				3.3
EBITDA	144.6		9.8		(33.4		)		121.0
Depreciation and amortization	27.9		3.4		22.7			(2)	54.0
Operating income (loss)	116.7		6.4		(56.1		)		67.0
Interest expense									(13.2		)
Earnings before income taxes									53.8
Income tax expense									10.8
Net earnings									$	43.0

_______________________________________________________

(1) Revenues for Corporate and Other represent deferred revenue purchase accounting adjustments recorded in accordance with GAAP.

(2) Depreciation and amortization for Corporate and Other primarily represents net incremental depreciation and amortization adjustments associated with the application of purchase accounting recorded in accordance with GAAP.

	Three months ended September 30, 2017
	Software Solutions		Data and Analytics		Corporate and Other				Total
Revenues	$	227.2	$	37.6	$	(1.0	)	(1)	$	263.8
Expenses:
Operating expenses	97.7		28.0		15.0				140.7
Transition and integration costs	—		—		4.0				4.0
EBITDA	129.5		9.6		(20.0		)		119.1
Depreciation and amortization	24.8		3.2		23.3			(2)	51.3
Operating income (loss)	104.7		6.4		(43.3		)		67.8
Interest expense									(14.1		)
Other expense, net									(0.6		)
Earnings before income taxes									53.1
Income tax expense									9.2
Net earnings									$	43.9

_______________________________________________________

(1) Revenues for Corporate and Other represent deferred revenue purchase accounting adjustments recorded in accordance with GAAP.

(2) Depreciation and amortization for Corporate and Other primarily represents net incremental depreciation and amortization adjustments associated with the application of purchase accounting recorded in accordance with GAAP.

24

BLACK KNIGHT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)

	Nine months ended September 30, 2018
	Software Solutions		Data and Analytics		Corporate and Other				Total
Revenues	$	716.2	$	114.7	$	(2.3	)	(1)	$	828.6
Expenses:
Operating expenses	293.0		86.5		82.7				462.2
Transition and integration costs	—		—		5.8				5.8
EBITDA	423.2		28.2		(90.8		)		360.6
Depreciation and amortization	83.0		10.1		65.9			(2)	159.0
Operating income (loss)	340.2		18.1		(156.7		)		201.6
Interest expense									(39.1		)
Other expense, net									(6.4		)
Earnings before income taxes									156.1
Income tax expense									30.4
Net earnings									$	125.7
Balance sheet data:
Total assets	$	3,197.9	$	309.5	$	135.8		(3)	$	3,643.2
Goodwill	$	2,137.9	$	172.1	$	—			$	2,310.0

_______________________________________________________

(1) Revenues for Corporate and Other represent deferred revenue purchase accounting adjustments recorded in accordance with GAAP.

(2) Depreciation and amortization for Corporate and Other primarily represents net incremental depreciation and amortization adjustments associated with the application of purchase accounting recorded in accordance with GAAP.

(3) Receivables from related parties is included in Corporate and Other.

	Nine months ended September 30, 2017
	Software Solutions		Data and Analytics		Corporate and Other				Total
Revenues	$	673.3	$	114.4	$	(3.6	)	(1)	$	784.1
Expenses:
Operating expenses	290.9		86.0		51.3				428.2
Transition and integration costs	—		—		8.5				8.5
EBITDA	382.4		28.4		(63.4		)		347.4
Depreciation and amortization	76.4		9.5		68.3			(2)	154.2
Operating income (loss)	306.0		18.9		(131.7		)		193.2
Interest expense									(44.8		)
Other expense, net									(17.1		)
Earnings before income taxes									131.3
Income tax expense									24.3
Net earnings									$	107.0
Balance sheet data:
Total assets	$	3,200.8	$	304.6	$	244.6		(3)	$	3,750.0
Goodwill	$	2,134.7	$	172.1	$	—			$	2,306.8

_______________________________________________________

(1) Revenues for Corporate and Other represent deferred revenue purchase accounting adjustments recorded in accordance with GAAP.

(2) Depreciation and amortization for Corporate and Other primarily represents net incremental depreciation and amortization adjustments associated with the application of purchase accounting recorded in accordance with GAAP.

(3) Receivables from related parties is included in Corporate and Other.

25

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Except as otherwise indicated or unless the context otherwise requires, all references to "Black Knight," the "Company," "we," "us" or "our" (1) prior to the Distribution (as defined in Note 1 — Basis of Presentation), are to Black Knight Financial Services, Inc., a Delaware corporation, and its subsidiaries and (2) after the Distribution, are to Black Knight, Inc., a Delaware corporation, and its subsidiaries.

The statements contained in this Quarterly Report on Form 10-Q that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, including statements regarding expectations, hopes, intentions or strategies regarding the future. Forward-looking statements are based on Black Knight management's beliefs, as well as assumptions made by, and information currently available to, them. Because such statements are based on expectations as to future financial and operating results and are not statements of fact, actual results may differ materially from those projected. Black Knight, Inc. ("Black Knight," the "Company," "we," "us" or "our") undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. The risks and uncertainties that forward-looking statements are subject to include, but are not limited to:

• security breaches against our information systems;

• our ability to maintain and grow our relationships with our customers;

• changes to the laws, rules and regulations that affect our and our customers' businesses;

• our ability to adapt our services to changes in technology or the marketplace;

• the effect of any potential defects, development delays, installation difficulties or system failures on our business and reputation;

• changes in general economic, business, regulatory and political conditions, particularly as they affect the mortgage industry;

• risks associated with the availability of data;

• the effects of our existing leverage on our ability to make acquisitions and invest in our business;

• our ability to successfully integrate strategic acquisitions;

• risks associated with our spin-off from FNF, including limitations on our strategic and operating flexibility as a result of the tax-free nature of the spin-off; and

• other risks and uncertainties detailed in the "Statement Regarding Forward-Looking Information," "Risk Factors" and other sections of our Annual Report on Form 10-K for the year ended December 31, 2017 and other filings with the Securities and Exchange Commission ("SEC").

The following discussion should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2017 filed with the SEC on February 23, 2018 and other filings with the SEC.

History

We are a leading provider of software, data and analytics solutions to the mortgage and consumer loan, real estate and capital market verticals. Our solutions facilitate and automate many of the mission-critical business processes across the homeownership lifecycle, from origination until asset disposition. We believe we differentiate ourselves by the breadth and depth of our comprehensive, integrated solutions and the insight we provide to our clients.

Overview

We have market-leading software solutions combined with comprehensive real estate data and extensive analytic capabilities. Our solutions are utilized by U.S. mortgage originators and servicers, as well as other financial institutions, investors and real estate professionals, to support mortgage lending and servicing operations, analyze portfolios and properties, operate more efficiently, meet regulatory compliance requirements and mitigate risk.

The U.S. mortgage market has undergone significant change, and market participants have been subjected to more stringent oversight in recent years. Regulators have increasingly focused on better disclosure, improved risk mitigation and enhanced oversight. Lenders large and small have experienced higher costs in order to comply with this higher level of regulation. Despite these new regulatory requirements, the mortgage industry remains a competitive marketplace with numerous large lenders and smaller institutions competing for new loan originations. In order to comply with the increased regulatory requirements and compete more effectively, market participants have continued to outsource mission-critical functions to third party technology providers that can offer comprehensive and integrated solutions, which are also cost-effective, due to their deep domain expertise and economies of scale.

We believe our comprehensive end-to-end, integrated solutions differentiate us from other software providers and position us particularly well for evolving opportunities. We have served the mortgage and real estate industries for over 50 years and utilize

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this experience to design and develop solutions that fit the industry's ever-evolving needs. The cost of origination and servicing are at historically high levels according to the Mortgage Bankers Association ("MBA"). Our proprietary software solutions and data and analytics capabilities reduce manual processes, improve compliance and quality, mitigate risk, deliver significant cost savings to our clients and allows our clients to invest more in retaining their customers and gaining new ones. Our scale allows us to continually and cost-effectively invest in our business in order to meet evolving industry requirements and maintain our position as an industry-standard platform for mortgage market participants.

The table below summarizes active first and second lien mortgages on our mortgage servicing software solution and the related market data, reflecting our leadership in the mortgage servicing software solutions market (in millions):

	First lien mortgages						Second lien mortgages						Total first and second lien mortgages
	as of September 30,						as of September 30,						as of September 30,
	2018			2017			2018			2017			2018	2017
Active loans	32.0			31.5			2.5			1.9			34.5	33.4
Market size	51.6	(1	)	51.0	(1	)	14.3	(2	)	15.4	(2	)	65.9	66.4
Market share	62%			62%			17%			12%			52%	50%

_______________________________________________________

Note: Percentages above may not recalculate due to rounding.

(1) According to the Black Knight Mortgage Monitor Report as of August 31, 2018 and 2017 for U.S. first lien mortgages.

(2) According to the August 2018 and July 2017 Equifax National Consumer Credit Trends Report as of June 30, 2018 and June 30, 2017 for U.S. second lien mortgages.

Our business is organized into two segments:

• Software Solutions-offers software and hosting solutions that support loan servicing, loan origination and settlement services.

• Data and Analytics-offers data and analytics solutions to the mortgage, real estate and capital markets verticals. These solutions include property ownership data, lien data, servicing data, automated valuation models, collateral risk scores, behavioral models, multiple listing service software solution, and other data solutions.

We offer our solutions to a wide range of clients across the mortgage and consumer loan, real estate and capital markets verticals. The quality and breadth of our solutions contribute to the long-standing nature of our relationships with our clients, the majority of whom enter into long-term contracts across multiple products that are embedded in their mission critical workflow and decision processes, particularly in the Software Solutions segment. Given the contractual nature of our revenues and stickiness of our client relationships, our revenues are highly visible and recurring in nature. Due to our integrated suite of solutions and our scale, we are able to drive significant operating leverage, which we believe enables our clients to operate more efficiently while allowing us to generate strong margins and cash flows.

Business Trends and Conditions

General

The U.S. mortgage market is large, and the loan lifecycle is complex and consists of several stages. The mortgage loan lifecycle includes origination, servicing and default. Mortgages are originated to finance home purchases or refinance existing mortgages. Once a mortgage is originated, it is serviced on a periodic basis by mortgage servicers, which may not be the lenders that originated the mortgage. Furthermore, if a mortgage experiences default, it triggers a set of multifaceted processes with an assortment of potential outcomes depending on a mix of variables.

Underlying the three major components of the mortgage loan lifecycle are the software, data and analytics support behind each process, which have become increasingly critical to industry participants due to the complexity of regulatory requirements. As the industry has grown in complexity, participants have responded by outsourcing to large scale specialty providers, automating manual processes and seeking end-to-end solutions that support the processes required to manage the entire mortgage loan lifecycle.

The U.S. mortgage market has seen significant change since the financial crisis and is expected to continue to evolve going forward. Key regulatory actions arising from the financial crisis, such as the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank Act") and the establishment of the Bureau of Consumer Financial Protection ("BCFP"), imposed new and evolving standards for market participants. These regulatory changes have spurred lenders and servicers to seek software solutions that facilitate the meeting of compliance obligations in the face of a changing regulatory environment while remaining efficient and profitable.

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• Evolving regulation. Most U.S. mortgage market participants have become subject to increased regulatory oversight and regulatory requirements as federal and state governments have enacted various new laws, rules and regulations. One example of such legislation is the Dodd-Frank Act, which contained broad changes for many sectors of the financial services and lending industries and established the BCFP, the federal regulatory agency responsible for regulating consumer financial protection within the United States. It is our experience that mortgage lenders have become more focused on minimizing the risk of non-compliance with these evolving regulations and are looking toward technologies and solutions that help them to comply with the increased regulatory oversight and requirements.

• Lenders increasingly focused on core operations. As a result of greater regulatory scrutiny and the higher cost of doing business, we believe lenders have become more focused on their core operations and customers. The effects of lower refinance volumes and a shift to a purchase-driven market also necessitate the need for a more efficient operating model. We believe that lenders are increasingly shifting from in-house technologies to solutions with third-party providers who can provide better technology and services more efficiently. Lenders require these vendors to provide best-in-class technology and deep domain expertise and to assist them in maintaining regulatory compliance.

• Growing role of technology in the U.S. mortgage industry. Banks and other lenders and servicers have become increasingly focused on technology automation and workflow management to operate more efficiently and meet their regulatory guidelines. We believe that vendors must be able to support the complexity of the market, display extensive industry knowledge and possess the financial resources to make the necessary investments in technology to support lenders.

• Increased demand for enhanced transparency and analytic insight. As U.S. mortgage market participants work to minimize the risk in lending, servicing and capital markets, they rely on the integration of data and analytics with technologies that enhance the decision making process. These industry participants rely on large comprehensive third party databases coupled with enhanced analytics to achieve these goals.

Mortgage Market

The largest component of our business, servicing software, is predicated on the number of active loans outstanding on our system, which has been very stable and growing. Our servicing software business has some exposure to defaulted loan volumes; however, outside of the most recent financial crisis, the number of loans that fall into seriously delinquent status has been quite stable.

For our origination software business, our loan origination system ("LOS") revenues are based on closed loan volumes; however, it has a minimum base software fee that is contractually obligated. This limits our exposure to origination volumes in our origination software business. Our lending solutions business is exposed to variances in origination volumes, primarily related to refinance volumes due to the nature of the services it provides.

Finally, our data and analytics business is predominantly based on longer-term strategic data licenses, other data licenses and subscription-based revenues. Our data and analytics business has some exposure related to origination volumes as it provides data related to title insurance and other settlement service-related activities.

Distribution of FNF's Ownership Interest and Related Transactions

On September 29, 2017, we completed a tax-free plan whereby FNF distributed to FNF Group shareholders all 83.3 million shares of BKFS common stock that it owned through a series of transactions (the "Distribution") as described in Note 1 of the Notes to Condensed Consolidated Financial Statements.

Following the closing of the transactions, shares of Black Knight, Inc. common stock are listed on the New York Stock Exchange under the trading symbol “BKI”, and began trading on October 2, 2017. Under the organizational documents of Black Knight, Inc., the rights of the holders of shares of Black Knight, Inc. common stock are substantially the same as the rights of former holders of BKFS Class A common stock.

Segment Realignment

On January 1, 2018, we realigned the composition of our two reportable segments. Certain enterprise business intelligence offerings in our Data and Analytics segment were moved to our Software Solutions segment. This change aligns with our go-to-market strategy and with the internal management of our business operations, including the allocation of resources and assessment of performance. Prior period results have been reclassified to conform to the current segment presentation.

Share Repurchase Program

There were no share repurchases during the third quarter of 2018. During the nine months ended September 30, 2018, we repurchased 3.0 million shares of our common stock for $141.5 million, or an average of $47.15 per share. As of September 30, 2018, we had approximately 3.8 million shares remaining under our share repurchase authorization.

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Debt Refinancing

On April 30, 2018, we entered into an Amended and Restated Credit Agreement, as described in Note 5 to the Notes to Condensed Consolidated Financial Statements (Unaudited). Refer to Note 5 to the Notes to Condensed Consolidated Financial Statements (Unaudited) for additional information related to the debt refinancing.

Results of Operations

ASC 606

On January 1, 2018, we adopted ASC Topic 606, Revenue from Contracts with Customers ("ASC 606"), using the modified retrospective method. Under this method, we recognized the cumulative effect of applying the new revenue recognition standard to existing revenue contracts that were active as of the adoption date as an adjustment to the opening balance of Retained earnings. The reported results for the three and nine months ended September 30, 2018 reflect the application of ASC 606, while the comparative information has not been restated and continues to be reported under the related accounting standards in effect for those periods. Refer to Note 8 to the Notes to Condensed Consolidated Financial Statements (Unaudited) for additional information related to the effect of the adoption of ASC 606 as of September 30, 2018 and for the three and nine months ended September 30, 2018.

Non-GAAP Financial Measures

We use Adjusted Revenues, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Earnings and Adjusted Net Earnings Per Share for financial and operational decision making and as a means to evaluate period-to-period comparisons. Adjusted Revenues, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Earnings and Adjusted Net Earnings Per Share are non-GAAP financial measures, which we believe are useful for investors in evaluating our overall financial performance. We believe these measures provide useful information about operating results, enhance the overall understanding of past financial performance and future prospects and allow for greater transparency with respect to key metrics used by management in its financial and operational decision making, including determining a portion of executive compensation. We also present these non-GAAP financial performance measures because we believe investors, analysts and rating agencies consider them useful in measuring our ability to meet our debt service obligations. By disclosing these non-GAAP financial performance measures, we believe we offer investors a greater understanding of, and an enhanced level of transparency into, the means by which our management operates the company. These non-GAAP financial measures are not measures presented in accordance with GAAP, and our use of these terms may vary from that of others in our industry. These non-GAAP financial measures should not be considered as an alternative to revenues, operating income, net earnings, cash provided by operating activities or any other measures derived in accordance with GAAP as measures of operating performance or liquidity.

Adjusted Revenues, Adjusted EBITDA and Adjusted EBITDA Margin for the Software Solutions and Data and Analytics segments are presented in conformity with Accounting Standards Codification Topic 280, Segment Reporting. These measures are reported to the chief operating decision maker for purposes of making decisions about allocating resources to the segments and assessing their performance. For these reasons, these measures are excluded from the definition of non-GAAP financial measures under the Securities and Exchange Commission's ("SEC") Regulation G and Item 10(e) of Regulation S-K.

• Adjusted Revenues - We define Adjusted Revenues as Revenues adjusted to include the revenues that were not recorded by us during the periods presented due to the deferred revenue purchase accounting adjustment recorded in accordance with GAAP. These adjustments are reflected in Corporate and Other.

• Adjusted EBITDA - We define Adjusted EBITDA as Net earnings, with adjustments to reflect the addition or elimination of certain statement of earnings items including, but not limited to:

• Depreciation and amortization;

• Interest expense;

• Income tax expense;

• Other expense, net;

• deferred revenue purchase accounting adjustment;

• equity-based compensation, including related payroll taxes;

• costs associated with debt and/or equity offerings, including the Distribution;

• spin-off related transition costs;

• acquisition-related costs, including ongoing costs pursuant to a purchase agreement; and

• costs associated with executive transition.

These adjustments are reflected in Corporate and Other.

• Adjusted EBITDA Margin - Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by Adjusted Revenues.

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• Adjusted Net Earnings - We define Adjusted Net Earnings as Net earnings with adjustments to reflect the addition or elimination of certain statement of earnings items including, but not limited to:

• the net incremental depreciation and amortization adjustments associated with the application of purchase accounting;

• deferred revenue purchase accounting adjustment;

• equity-based compensation, including related payroll taxes;

• costs associated with debt and/or equity offerings, including the Distribution;

• spin-off related transition costs;

• acquisition-related costs, including ongoing costs pursuant to a purchase agreement;

• costs associated with executive transition;

• significant legal and regulatory matters; and

• adjustment for income tax expense primarily related to assuming the conversion of all the shares of Class B common stock into shares of Class A common stock prior to the Distribution, the tax effect of the non-GAAP adjustments and the revaluation of our net deferred tax liability related to purchase accounting, equity-based compensation and debt modifications.

• Adjusted Net Earnings Per Share- For the periods prior to the Distribution, we calculate per share amounts assuming the exchange of all shares of Class B common stock into shares of Class A common stock at the beginning of the respective period. We also include the dilutive effect of any unvested restricted shares of common stock.

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Consolidated Results of Operations
The following table presents certain financial data for the periods indicated (in millions):
	Three months ended September 30,						Nine months ended September 30,
	2018			2017			2018			2017
Revenues	$	281.7		$	263.8		$	828.6		$	784.1
Expenses:
Operating expenses	157.4			140.7			462.2			428.2
Depreciation and amortization	54.0			51.3			159.0			154.2
Transition and integration costs	3.3			4.0			5.8			8.5
Total expenses	214.7			196.0			627.0			590.9
Operating income	67.0			67.8			201.6			193.2
Operating margin	23.8		%	25.7		%	24.3		%	24.6		%
Interest expense	(13.2		)	(14.1		)	(39.1		)	(44.8		)
Other expense, net	—			(0.6		)	(6.4		)	(17.1		)
Earnings before income taxes	53.8			53.1			156.1			131.3
Income tax expense	10.8			9.2			30.4			24.3
Net earnings	$	43.0		$	43.9		$	125.7		$	107.0
Earnings per share:
Net earnings per share attributable to Black Knight common shareholders:
Diluted	$	0.29		$	0.21		$	0.85		$	0.51
Weighted average shares of common stock outstanding:
Diluted	147.8			68.5			148.2			152.7
Non-GAAP Financial Measures
Adjusted Revenues	$	282.3		$	264.8		$	830.9		$	787.7
Adjusted EBITDA	$	138.4		$	128.2		$	402.5		$	373.9
Adjusted EBITDA Margin	49.0		%	48.4		%	48.4		%	47.5		%
Adjusted Net Earnings	$	71.3		$	54.3		$	203.8		$	153.0
Adjusted Net Earnings Per Share	$	0.48		$	0.36		$	1.38		$	1.00

Reconciliations of the above non-GAAP financial measures to the most directly comparable GAAP financial measures are presented in the tables below (in millions):

	Three months ended September 30,				Nine months ended September 30,
	2018		2017		2018		2017
Revenues	$	281.7	$	263.8	$	828.6	$	784.1
Deferred revenue purchase accounting adjustment	0.6		1.0		2.3		3.6
Adjusted Revenues	$	282.3	$	264.8	$	830.9	$	787.7

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	Three months ended September 30,						Nine months ended September 30,
	2018			2017			2018			2017
Net earnings	$	43.0		$	43.9		$	125.7		$	107.0
Depreciation and amortization	54.0			51.3			159.0			154.2
Interest expense	13.2			14.1			39.1			44.8
Income tax expense	10.8			9.2			30.4			24.3
Other expense, net	—			0.6			6.4			17.1
EBITDA	121.0			119.1			360.6			347.4
Deferred revenue purchase accounting adjustment	0.6			1.0			2.3			3.6
Equity-based compensation	13.5			4.1			33.8			14.4
Debt and/or equity offering expenses	—			2.4			0.7			5.8
Spin-off related transition costs	0.5			1.6			2.2			2.7
Acquisition-related costs	0.5			—			0.6			—
Executive transition costs	2.3			—			2.3			—
Adjusted EBITDA	$	138.4		$	128.2		$	402.5		$	373.9
Adjusted EBITDA Margin	49.0		%	48.4		%	48.4		%	47.5		%

	Three months ended September 30,						Nine months ended September 30,
	2018			2017			2018			2017
Net earnings	$	43.0		$	43.9		$	125.7		$	107.0
Depreciation and amortization purchase accounting adjustment	22.7			23.3			66.1			68.2
Deferred revenue purchase accounting adjustment	0.6			1.0			2.3			3.6
Equity-based compensation	13.5			4.1			33.8			14.4
Debt and/or equity offering expenses	—			2.4			6.5			18.5
Spin-off related transition costs	0.5			1.6			2.4			2.7
Acquisition-related costs	0.5			—			0.6			—
Executive transition costs	2.3			—			2.3			—
Legal and regulatory matters	0.1			0.5			0.5			4.0
Income tax expense adjustment	(11.9		)	(22.5		)	(36.4		)	(65.4		)
Adjusted Net Earnings	$	71.3		$	54.3		$	203.8		$	153.0
Adjusted Net Earnings Per Share	$	0.48		$	0.36		$	1.38		$	1.00
Weighted Average Adjusted Shares Outstanding	147.8			152.2			148.2			152.7

Revenues

Consolidated Revenues were $281.7 million in the three months ended September 30, 2018 compared to $263.8 million in the 2017 period, an increase of $17.9 million, or 7%. Consolidated Revenues were $828.6 million in the nine months ended September 30, 2018 compared to $784.1 million in the 2017 period, an increase of $44.5 million, or 6%. The change in revenues is discussed further at the segment level below.

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The following table sets forth revenues by segment for the periods presented (in millions):

	Three months ended September 30,						Nine months ended September 30,
	2018			2017			2018			2017
Software Solutions	$	243.9		$	227.2		$	716.2		$	673.3
Data and Analytics	38.4			37.6			114.7			114.4
Corporate and Other (1)	(0.6		)	(1.0		)	(2.3		)	(3.6		)
Total	$	281.7		$	263.8		$	828.6		$	784.1

_______________________________________________________

(1) Revenues for Corporate and Other represent deferred revenue purchase accounting adjustments recorded in accordance with GAAP.

Software Solutions

Revenues were $243.9 million in the three months ended September 30, 2018 compared to $227.2 million in the 2017 period, an increase of $16.7 million, or 7%. Our servicing software business increased 7%, or $13.4 million, driven by loan growth on our core servicing software solution from new and existing clients, which increased 3.0% to 34.4 million average loans, an increase in our average revenue per loan and cross-sales to existing clients. Our origination software business increased 8%, or $3.3 million, driven by 30% growth in our loan origination system business and a software license fee in our Lending Solutions business, partially offset by lower Exchange revenues primarily as a result of the 28% decline in refinancing originations as reported by the Mortgage Bankers Association.

Revenues were $716.2 million in the nine months ended September 30, 2018 compared to $673.3 million in the 2017 period, an increase of $42.9 million, or 6%. Our servicing software business increased 7%, or $39.3 million, primarily driven by strong loan growth on our core servicing software solution from new and existing clients, which increased 4.6% to 34.4 million average loans, an increase in our average revenue per loan and cross-sales to existing clients. Our origination software business increased 3%, or $3.6 million, primarily driven by new client implementations, increased professional services in our loan origination system business and a software license fee in our Lending Solutions business, partially offset by client contract termination fees in the prior period and lower Exchange revenues primarily as a result of the 20% decline in refinancing originations as reported by the Mortgage Bankers Association.

Data and Analytics

Revenues were $38.4 million in the three months ended September 30, 2018 compared to $37.6 million in the 2017 period, an increase of $0.8 million, or 2%. The increase was primarily driven by growth in our property data and multiple listing service businesses.

Revenues were $114.7 million in the nine months ended September 30, 2018 compared to $114.4 million in the 2017 period, an increase of $0.3 million. The increase was driven by growth in our title data and multiple listing service businesses that were partially offset by upfront revenues of $3.8 million from long-term strategic license deals in the 2017 period.

Operating Expenses

Consolidated Operating expenses were $157.4 million in the three months ended September 30, 2018 compared to $140.7 million in the 2017 period, an increase of $16.7 million, or 12%. Consolidated Operating expenses were $462.2 million in the nine months ended September 30, 2018 compared to $428.2 million in the 2017 period, an increase of $34.0 million, or 8%. The changes in operating expenses are discussed further at the segment level below.

The following table sets forth operating expenses by segment for the periods presented (in millions):

	Three months ended September 30,				Nine months ended September 30,
	2018		2017		2018		2017
Software Solutions	$	99.3	$	97.7	$	293.0	$	290.9
Data and Analytics	28.6		28.0		86.5		86.0
Corporate and Other	29.5		15.0		82.7		51.3
Total	$	157.4	$	140.7	$	462.2	$	428.2

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Software Solutions

Operating expenses were $99.3 million in the three months ended September 30, 2018 compared to $97.7 million in the 2017 period, an increase of $1.6 million, or 2%. The increase was primarily due to hardware and software related costs in support of business growth, partially offset by increased software capitalization.

Operating expenses were $293.0 million in the nine months ended September 30, 2018 compared to $290.9 million in the 2017 period, an increase of $2.1 million, or 1%. The increase was primarily due to hardware and software related costs in support of business growth, partially offset by increased software capitalization.

Data and Analytics

Operating expenses were $28.6 million in the three months ended September 30, 2018 compared to $28.0 million in the 2017 period, an increase of $0.6 million, or 2%. The increase was primarily driven by higher net personnel costs.

Operating expenses were $86.5 million in the nine months ended September 30, 2018 compared to $86.0 million in the 2017 period, an increase of $0.5 million, or 1%. The increase was primarily driven by the cost of acquiring data.

Corporate and Other

Operating expenses were $29.5 million in the three months ended September 30, 2018 compared to $15.0 million in the 2017 period, an increase of $14.5 million, or 97%. The increase was primarily driven by $9.5 million of higher equity-based compensation, $3.5 million of higher incentive bonus expense and incremental costs following the Distribution.

Operating expenses were $82.7 million in the nine months ended September 30, 2018 compared to $51.3 million in the 2017 period, an increase of $31.4 million, or 61%. The increase was primarily driven by $19.5 million of higher equity-based compensation, $7.2 million of higher incentive bonus expense and incremental costs following the Distribution.

Depreciation and Amortization

Consolidated Depreciation and amortization was $54.0 million in the three months ended September 30, 2018 compared to $51.3 million in the 2017 period, an increase of $2.7 million, or 5%. Consolidated Depreciation and amortization was $159.0 million in the nine months ended September 30, 2018 compared to $154.2 million in the 2017 period, an increase of $4.8 million, or 3%. The changes in depreciation and amortization are discussed further at the segment level below.

The following table sets forth depreciation and amortization by segment for the periods presented (in millions):

	Three months ended September 30,				Nine months ended September 30,
	2018		2017		2018		2017
Software Solutions	$	27.9	$	24.8	$	83.0	$	76.4
Data and Analytics	3.4		3.2		10.1		9.5
Corporate and Other (1)	22.7		23.3		65.9		68.3
Total	$	54.0	$	51.3	$	159.0	$	154.2

_______________________________________________________

(1) Depreciation and amortization for Corporate and Other primarily represents net incremental depreciation and amortization adjustments associated with the application of purchase accounting recorded in accordance with GAAP.

Software Solutions

Depreciation and amortization was $27.9 million in the three months ended September 30, 2018 compared to $24.8 million in the 2017 period, an increase of $3.1 million, or 13%. The increase is primarily due to amortization of implementation expense related to new client wins, new hardware and software placed in service and accelerated amortization related to certain deferred implementation costs.

Depreciation and amortization was $83.0 million in the nine months ended September 30, 2018 compared to $76.4 million in the 2017 period, an increase of $6.6 million, or 9%. The increase is primarily due to amortization of implementation expense related to new client wins and new hardware and software placed in service.

Data and Analytics

Depreciation and amortization was $3.4 million in the three months ended September 30, 2018 compared to $3.2 million in the 2017 period, an increase of $0.2 million, or 6%. The increase is primarily due to higher software amortization.

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Depreciation and amortization was $10.1 million in the nine months ended September 30, 2018 compared to $9.5 million in the 2017 period, an increase of $0.6 million, or 6%. The increase is primarily due to higher software amortization.

Corporate and Other

Depreciation and amortization was $22.7 million in the three months ended September 30, 2018 compared to $23.3 million in the 2017 period, a decrease of $0.6 million, or 3%.

Depreciation and amortization was $65.9 million in the nine months ended September 30, 2018 compared to $68.3 million in the 2017 period, a decrease of $2.4 million, or 4%.

Transition and Integration Costs

Consolidated Transition and integration costs were $3.3 million in the three months ended September 30, 2018 compared to $4.0 million in the 2017 period. Consolidated Transition and integration costs were $5.8 million in the nine months ended September 30, 2018 compared to $8.5 million in the 2017 period. Transition and integration costs for the 2018 period primarily represent costs associated with executive transition and transition-related costs as we transfer certain corporate functions from FNF. Transition and integration costs for the 2017 period primarily represent legal and professional fees related to the Distribution.

Operating Income (Loss)

Consolidated Operating income was $67.0 million in the three months ended September 30, 2018 compared to $67.8 million in the 2017 period, a decrease of $0.8 million, or 1%. Consolidated Operating income was $201.6 million in the nine months ended September 30, 2018 compared to $193.2 million in the 2017 period, an increase of $8.4 million, or 4%. The changes in operating income (loss) are discussed further at the segment level below.

The following table sets forth operating income (loss) by segment for the periods presented (in millions):

	Three months ended September 30,						Nine months ended September 30,
	2018			2017			2018			2017
Software Solutions	$	116.7		$	104.7		$	340.2		$	306.0
Data and Analytics	6.4			6.4			18.1			18.9
Corporate and Other	(56.1		)	(43.3		)	(156.7		)	(131.7		)
Total	$	67.0		$	67.8		$	201.6		$	193.2

Software Solutions

Operating income was $116.7 million in the three months ended September 30, 2018 compared to $104.7 million in the 2017 period, an increase of $12.0 million, or 11%. Operating margin was 47.8% in the three months ended September 30, 2018 compared to 46.1% in the 2017 period. The increase in operating income is primarily due to revenue growth within servicing software, partially offset by higher depreciation and amortization.

Operating income was $340.2 million in the nine months ended September 30, 2018 compared to $306.0 million in the 2017 period, an increase of $34.2 million, or 11%. Operating margin was 47.5% in the nine months ended September 30, 2018 compared to 45.4% in the 2017 period. The increase in operating income is primarily due to revenue growth within servicing software, partially offset by higher depreciation and amortization.

Data and Analytics

Operating income was $6.4 million in the three months ended September 30, 2018 and 2017. Operating margin was 16.7% in the three months ended September 30, 2018 compared to 17.0% in 2017. The decrease in operating margin is primarily due to higher net personnel costs and higher software amortization.

Operating income was $18.1 million in the nine months ended September 30, 2018 compared to $18.9 million in the 2017 period, a decrease of $0.8 million, or 4%. Operating margin was 15.8% in the nine months ended September 30, 2018 compared to 16.5% in 2017. The decrease in operating income is primarily due to the cost of acquiring data and higher software amortization.

Corporate and Other

Operating loss was $56.1 million in the three months ended September 30, 2018 compared to $43.3 million in the 2017 period, an increase of $12.8 million, or 30%. The increase in loss amount was primarily driven by higher equity-based compensation and incentive bonus accruals.

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Operating loss was $156.7 million in the nine months ended September 30, 2018 compared to $131.7 million in the 2017 period, an increase of $25.0 million, or 19%. The increase in loss amount was primarily driven by higher equity-based compensation, incentive bonus accruals and incremental costs following the Distribution, partially offset by lower depreciation and amortization.

Interest Expense

Consolidated Interest expense was $13.2 million in the three months ended September 30, 2018 compared to $14.1 million in the 2017 period, a decrease of $0.9 million, or 6%. Consolidated Interest expense was $39.1 million in the nine months ended September 30, 2018 compared to $44.8 million in the 2017 period, a decrease of $5.7 million, or 13%. The decrease for the nine months ended September 30, 2018 is primarily driven by the lower outstanding debt balance in 2018 and interest savings from the Senior Notes redemption in April 2017.

Other Expense, Net

Consolidated Other expense, net was less than $0.1 million in the three months ended September 30, 2018 compared to $0.6 million in the 2017 period. Consolidated Other expense, net was $6.4 million in the nine months ended September 30, 2018 compared to $17.1 million in the 2017 period. The 2018 amounts were primarily related to the New Term A Loan and New Revolving Credit Facility, as described in Note 5 to the Notes to Condensed Consolidated Financial Statements (Unaudited). The 2017 amounts were primarily related to the Senior Notes redemption, Term A Loan and Revolving Credit Facility refinancing, as described in Note 5 to the Notes to Condensed Consolidated Financial Statements (Unaudited), and the resolution of a legacy legal matter.

Income Tax Expense

Consolidated Income tax expense was $10.8 million in the three months ended September 30, 2018 compared to $9.2 million in the 2017 period. Consolidated Income tax expense was $30.4 million in the nine months ended September 30, 2018 compared to $24.3 million in the 2017 period. Our effective tax rate was 20.1% in the three months ended September 30, 2018 compared to 17.3% in the 2017 period. Our effective tax rate was 19.5% in the nine months ended September 30, 2018 compared to 18.5% in the 2017 period. Our effective tax rate for the nine months ended September 30, 2018 includes the effect of a deferred tax revaluation adjustment as a result of a reduction in our blended state tax rate, higher than expected tax credits and excess tax benefits related to the vesting of restricted shares of our common stock. The effective tax rates for the three and nine months ended September 30, 2017 were lower than the typical federal and state statutory rate because of the effect of our noncontrolling interests prior to the Distribution, partially offset by the effect of certain discrete items recorded during the 2017 period.

Adjusted Revenues

Consolidated Adjusted Revenues were $282.3 million in the three months ended September 30, 2018 compared to $264.8 million in the 2017 period, an increase of $17.5 million, or 7%. The increase was primarily driven by growth in our servicing software business.

Consolidated Adjusted Revenues were $830.9 million in the nine months ended September 30, 2018 compared to $787.7 million in the 2017 period, an increase of $43.2 million, or 5%. The increase was primarily driven by growth in our servicing software business.

Adjusted EBITDA and Adjusted EBITDA Margin

Consolidated Adjusted EBITDA was $138.4 million in the three months ended September 30, 2018 compared to $128.2 million in the 2017 period, an increase of $10.2 million, or 8%. Consolidated Adjusted EBITDA was $402.5 million in the nine months ended September 30, 2018 compared to $373.9 million in the 2017 period, an increase of $28.6 million, or 8%. The changes in Adjusted EBITDA are discussed further at the segment level below.

Consolidated Adjusted EBITDA Margin was 49.0% in the three months ended September 30, 2018 compared to 48.4% in the 2017 period, an increase of 60 basis points. Consolidated Adjusted EBITDA Margin was 48.4% in the nine months ended September 30, 2018 compared to 47.5% in the 2017 period, an increase of 90 basis points. The changes in Adjusted EBITDA Margin are discussed further at the segment level below.

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The following tables set forth Adjusted EBITDA (in millions) and Adjusted EBITDA Margin by segment for the periods presented (in millions):

	Three months ended September 30,						Nine months ended September 30,
	2018			2017			2018			2017
Software Solutions	$	144.6		$	129.5		$	423.2		$	382.4
Data and Analytics	9.8			9.6			28.2			28.4
Corporate and Other	(16.0		)	(10.9		)	(48.9		)	(36.9		)
Total	$	138.4		$	128.2		$	402.5		$	373.9

	Three months ended September 30,				Nine months ended September 30,
	2018		2017		2018		2017
Software Solutions	59.3	%	57.0	%	59.1	%	56.8	%
Data and Analytics	25.5	%	25.5	%	24.6	%	24.8	%
Corporate and Other	N/A		N/A		N/A		N/A
Total	49.0	%	48.4	%	48.4	%	47.5	%

Software Solutions

Adjusted EBITDA was $144.6 million in the three months ended September 30, 2018 compared to $129.5 million in the 2017 period, an increase of $15.1 million, or 12%, with an Adjusted EBITDA Margin of 59.3%, an increase of 230 basis points from the 2017 period. The increase was primarily driven by incremental margins on revenue growth and disciplined cost management.

Adjusted EBITDA was $423.2 million in the nine months ended September 30, 2018 compared to $382.4 million in the 2017 period, an increase of $40.8 million, or 11%, with an Adjusted EBITDA Margin of 59.1%, an increase of 230 basis points from the 2017 period. The increase was primarily driven by incremental margins on revenue growth.

Data and Analytics

Adjusted EBITDA was $9.8 million in the three months ended September 30, 2018 compared to $9.6 million in the 2017 period, an increase of $0.2 million, or 2%, with an Adjusted EBITDA Margin of 25.5% in both periods.

Adjusted EBITDA was $28.2 million in the nine months ended September 30, 2018 compared to $28.4 million in the 2017 period, a decrease of $0.2 million, or 1%, with an Adjusted EBITDA Margin of 24.6% compared to 24.8% in the 2017 period. The Adjusted EBITDA Margin decrease was primarily due to an increase in cost of goods sold.

Adjusted Net Earnings and Adjusted Net Earnings Per Share

Adjusted Net Earnings was $71.3 million in the three months ended September 30, 2018 compared to $54.3 million in the 2017 period, an increase of $17.0 million, or 31%. Adjusted Net Earnings Per Share was $0.48 in the three months ended September 30, 2018 compared to $0.36 in the 2017 period, an increase of $0.12, or 33%. The increase was primarily driven by increased earnings from revenue growth and lower income tax expense.

Adjusted Net Earnings was $203.8 million in the nine months ended September 30, 2018 compared to $153.0 million in the 2017 period, an increase of $50.8 million, or 33%. Adjusted Net Earnings Per Share was $1.38 in the nine months ended September 30, 2018 compared to $1.00 in the 2017 period, an increase of $0.38, or 38%. The increase was primarily driven by increased earnings from revenue growth and lower income tax expense and interest expense.

Liquidity and Capital Resources

Cash Requirements

Our primary sources of liquidity are our existing cash balances, cash flows from operations and borrowings on our New Revolving Credit Facility.

Our primary cash requirements include operating expenses, debt service payments (principal and interest), capital expenditures (including property, equipment and computer software expenditures) and income tax payments and may include share repurchases and business acquisitions. Our cash requirements may also include tax distributions to former holders of membership interests in Black Knight Financial Services, LLC ("BKFS LLC") for any tax distribution adjustments as a result of the final partnership

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returns relating to the period before the Distribution, the timing and amount of which will be dependent upon the taxable income allocable to such holders.

As of September 30, 2018, we had cash and cash equivalents of $16.9 million and debt principal of $1,412.1 million. We believe that our cash flows from operations and available cash and cash equivalents are sufficient to meet our liquidity needs, including the repayment of our outstanding debt, for at least the next 12 months. We anticipate that to the extent we require additional liquidity, it will be funded through borrowings on our New Revolving Credit Facility, the incurrence of other indebtedness, equity issuance or a combination thereof. We cannot be assured that we will be able to obtain this additional liquidity on reasonable terms, or at all. The loss of the largest lender on our New Revolving Credit Facility would reduce our borrowing capacity by $68.0 million. Additionally, our liquidity and our ability to meet our obligations and fund our capital requirements are also dependent on our future financial performance, which is subject to general economic, financial and other factors that are beyond our control. Accordingly, we cannot be assured that our business will generate sufficient cash flows from operations or that future borrowings will be available from additional indebtedness or otherwise to meet our liquidity needs. Although we have no specific current plans to do so, if we decide to pursue one or more significant acquisitions, we may incur additional debt or sell additional equity to finance such acquisitions.

Cash Flows

The following table provides a summary of cash flows from operating, investing and financing activities for the periods presented (in millions):

	Nine months ended September 30,
	2018			2017
Cash flows provided by operating activities	$	305.4		$	239.8
Cash flows used in investing activities	(79.7		)	(46.4		)
Cash flows used in financing activities	(225.0		)	(181.1		)
Net increase in cash and cash equivalents	$	0.7		$	12.3

Operating Activities

Cash provided by operating activities was $305.4 million and $239.8 million for the nine months ended September 30, 2018 and 2017, respectively. The increase in cash provided by operating activities in the nine months ended September 30, 2018 compared to the 2017 period is primarily related to increased earnings and the timing and amount of cash receipts for Trade receivables, net.

Investing Activities

Cash used in investing activities was $79.7 million and $46.4 million for the nine months ended September 30, 2018 and 2017, respectively. The increase in cash used in investing activities in the nine months ended September 30, 2018 compared to the 2017 period is primarily related to higher capital expenditures in 2018.

Financing Activities

Cash used in financing activities was $225.0 million and $181.1 million for the nine months ended September 30, 2018 and 2017, respectively. The increase in cash used in financing activities in the nine months ended September 30, 2018 compared to the 2017 period is primarily related to incremental purchases of treasury stock and net debt-related payments, partially offset by cash outflows in the 2017 period related to tax distributions to BKFS LLC members and the Senior Notes redemption fee.

Financing

For a description of our financing arrangements, see Note 5 — Long-Term Debt in the Notes to Condensed Consolidated Financial Statements (Unaudited) included in Item 1 of Part 1 of this Report, which is incorporated by reference into this Part I Item 2.

Contractual Obligations

Our long-term contractual obligations generally include our debt and related interest payments, data processing and maintenance commitments and operating lease payments on certain computer equipment. Other than the items described below, there were no significant changes to contractual obligations from those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2017.

In March 2018, we entered into a multi-year data processing and maintenance agreement for portions of our computer data processing operations and related functions. Payments for data processing and maintenance services agreements with initial or

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remaining terms greater than one year are described in Note 7 to the Notes to Condensed Consolidated Financial Statements (Unaudited).

On April 1, 2018, we entered into a financing agreement primarily related to certain data processing and maintenance services. On April 30, 2018, we entered into an Amended and Restated Credit Agreement, as described in Note 5 to the Notes to Condensed Consolidated Financial Statements (Unaudited). Refer to Note 5 to the Notes to Condensed Consolidated Financial Statements (Unaudited) for additional information.

Share Repurchase Program

There were no share repurchases during the third quarter of 2018. During the nine months ended September 30, 2018, we repurchased 3.0 million shares of our common stock for $141.5 million, or an average of $47.15 per share. As of September 30, 2018, we had approximately 3.8 million shares remaining under our share repurchase authorization.

Indemnifications and Warranties

We often agree to indemnify our clients against damages and costs resulting from claims of patent, copyright, trademark infringement or breaches of confidentiality associated with use of our software through software licensing agreements. Historically, we have not made any payments under such indemnifications, but continue to monitor the conditions that are subject to the indemnifications to identify whether a loss has occurred that is both probable and estimable that would require recognition. In addition, we warrant to clients that our software operates substantially in accordance with the software specifications. Historically, no costs have been incurred related to software warranties and none are expected in the future, and as such no accruals for warranty costs have been made.

Off-Balance Sheet Arrangements

We do not have any material off-balance sheet arrangements other than operating leases and interest rate swaps.

Critical Accounting Policies

There have been no material changes to our critical accounting policies and estimates described in our Annual Report on Form 10-K for the year ended December 31, 2017, except for the adoption of ASC 606 as described in Note 1 to the Notes to Condensed Consolidated Financial Statements (Unaudited). Refer to Note 1 and Note 8 to the Notes to Condensed Consolidated Financial Statements (Unaudited) for additional information related to the adoption of ASC 606, including a description of the related accounting policies and estimates.

Item 3. Quantitative and Qualitative Disclosure about Market Risk

Market Risk

We regularly assess market risks and have established policies and business practices designed to protect against the adverse effects of these exposures. We are exposed to market risks primarily from changes in interest rates. We use interest rate swaps to manage interest rate risk. We do not use interest rate swaps for trading purposes, to generate income or to engage in speculative activity.

Interest Rate Risk

In addition to existing cash balances and cash provided by operating activities, we use variable rate debt to finance our operations. We are exposed to interest rate risk on these debt obligations and related interest rate swaps. We had $1,379.2 million in long-term debt principal outstanding as of September 30, 2018 from our New Facilities, as described in Note 5 of the Notes to Condensed Consolidated Financial Statements (Unaudited), all of which is variable rate debt.

The New Facilities represent our long-term debt obligations as of September 30, 2018 exposed to interest rate risk. We performed a sensitivity analysis on the principal amount of debt as of September 30, 2018. This sensitivity analysis is based on the principal amount of our debt as of September 30, 2018, as well as the effect of our interest rate swaps. Further, in this sensitivity analysis, the change in interest rates is assumed to be applicable for an entire year. An increase of 100 basis points in the applicable interest rate would cause an increase in interest expense of $13.8 million on an annual basis ($3.3 million including the effect of our current interest rate swaps). A decrease of 100 basis points in the applicable rate would cause a decrease in interest expense of $13.8 million on an annual basis ($3.3 million including the effect of our current interest rate swaps) as the 1-month LIBOR rate was 2.24% as of September 30, 2018.

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We have entered into interest rate swap agreements to hedge forecasted monthly interest rate payments on our floating rate debt. On April 11, 2018, we entered into a new interest rate swap agreement with a start date on April 30, 2018. On May 29, 2018, we entered into an interest rate swap agreement with a forward starting date on January 31, 2019. As of September 30, 2018, we have the following interest rate swap agreements (collectively, the "Swap Agreements") (in millions):

Effective Dates	Notional Amount		Fixed Rates
February 1, 2016 through January 31, 2019	$	200.0	1.01%
February 1, 2016 through January 31, 2019	$	200.0	1.01%
March 31, 2017 through March 31, 2022	$	200.0	2.08%
September 29, 2017 through September 30, 2021	$	200.0	1.69%
April 30, 2018 through April 30, 2023	$	250.0	2.61%
January 31, 2019 through January 31, 2023	$	300.0	2.65%

Under the terms of the Swap Agreements, we receive payments based on the 1-month LIBOR rate (approximately 2.24% as of September 30, 2018).

The Swap Agreements were designated as cash flow hedging instruments. A portion of the amount included in Accumulated other comprehensive earnings is reclassified into Interest expense as a yield adjustment as interest payments are made on the hedged debt. In accordance with the authoritative guidance for fair value measurements, the inputs used to determine the estimated fair value of our interest rate swaps are level 2 inputs. We have considered our own credit risk and the credit risk of the counterparties when determining the fair value of our Swap Agreements.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of September 30, 2018, under the supervision and with the participation of our Chief Executive Officer ("CEO") and Executive Vice President and Chief Financial Officer ("CFO"), management has evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this Quarterly Report on Form 10-Q.

There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their control objectives.

Based on that evaluation, our CEO and CFO concluded that as of September 30, 2018, our disclosure controls and procedures were effective to provide reasonable assurance that the information required to be disclosed by us in the reports we file or submit with the SEC are recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and is accumulated and communicated to our management, including the principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended September 30, 2018 covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Part II: OTHER INFORMATION

Item 1. Legal Proceedings

See discussion of legal proceedings in Note 7 — Commitments and Contingencies in the Notes to Condensed Consolidated Financial Statements (Unaudited) included in Item 1 of Part I of this Quarterly Report on Form 10-Q, which is incorporated by reference into this Item 1 of Part II.

Item 1A. Risk Factors

There have been no material changes in our risk factors since the filing of our Annual Report on Form 10-K for the year ended December 31, 2017.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

     (a) Exhibits

Exhibit
No.	Description
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification by Chief Executive Officer of Periodic Financial Reports pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.
32.2	Certification by Chief Financial Officer of Periodic Financial Reports pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.
101	Interactive data files.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date:	October 30, 2018	BLACK KNIGHT, INC. (registrant)
		By:	/s/ Kirk T. Larsen
			Kirk T. Larsen
			Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)

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