BKI - Earnings call transcript Q2 2020

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Operator

Greetings and welcome to the Black Knight Second Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. [Operator Instructions] As a reminder this conference is being recorded. It is now my pleasure to introduce your host Steven Eagerton, Vice President of Investor Relations at Black Knight. may you sir, you begin. Thank

Steven Eagerton

everyone, Thanks. us call. you joining thank the Good Black conference morning for earnings Knight’s for XXXX and second quarter

me and Anthony Larsen. Executive are Financial Officer, Kirk Joining Jabbour; today Chief Chief Officer,

and results the supplemental presentation This expected of and conference future Our press will include our Company posted slide released results and have this the are were statements statements. release to call been therefore website. forward-looking morning, related our to

due subject to differ uncertainties. earnings may materially measures. described other projections Today’s will and risks uncertainties from results SEC in XX-K number actual and financial remarks a our also The that Our of forward-looking to our and references risks include Form non-GAAP filings. statements release, are are to

our for information financial financial through including via Additional Anthony. over slide to the release the between available information, call is to Black information, Investor I This website and reconciliation be replay turn GAAP presentation. will press at now supplemental in investor.blackknightinc.com. provided Relations will webcast Knight’s call the conference non-GAAP

Anthony Jabbour

innovative our we you to Good this another thank quarter which resulting everyone, and demonstrated strong. of quarter and deliver our implement pursue earnings the us We and that business and strategy was joining you, strategic Steve. during our Thank can despite call. for against morning Overall, execute for pandemic solid second solutions continue headwinds COVID-XX from clients, new remain facing acquisitions. the core fundamentals to assign

than non-bank of Caliber, platform loans, our clients beginning including the our our software we sign business, update the let to representing four MSP top Now, servicers selected and me MSP leading continue an business. XX more year At service servicer. on XXX,XXX our provide industry to since

and new success complimentary had client our Empower sizes. tier second evidence are origination solutions in of further add companies quarter These selling list. In business, our sales and a of and we to continued our As software to servicers. origination our companies both client list ability now top all to mature Empower our top of XX XX the includes result, the Now,

As an selected a example, LOS. Empower in April mortgage XX top originator as services, its Carrington

Additionally lenders, origination for MSP the including client two our selected Now platform. Empower current

on sixth the delivering client from specific like renewal reasons able and to commercial we bank Our solutions One in new would of providing is SunTrust continually the clients. was now relentless and superior country. and largest created call support innovative renew BB&T, integrated to merger Truist, which and fundamental focus win the out clients and are existing I the are is

multi addition Lending expanded enterprise, solutions and MSP, offerings. to year the Empower, its our Space, use In a signing our data including and also analytics of renewal several across Truist of

part volume ways embraced Lending our XX to originators Truist platforms. our to of is with of and I’m and has bank current that important note the proud enterprise has will to It origination Empower and BB&T prior As the onto sales its be renewal, environment was engage consolidating the team BB&T leveraged Space clients new a prospects. top merger.

total in double-digits increasing contract new resulted have to sales year. last efforts Our value compared

equity with In remotely. XX implementations, to continue we MSP currently our while home servicing to business, team and in continue have which and conversions progress clients process. also members doing implementations We our of work new five make software many are new

look past successfully of have forward is We working completed another this proof Bank partnerships. Bank manage conversions This of ability largest the our of servicers. America already week. implementation for America We strong and are on to the just also very building pleased with to our point to

to to our additional expand value addressable to and deliver our As part of our ongoing clients. strategy market

with regulatory their few quarters, we serve customers, help solutions and our we the of were Over developing requirements. clients to comply better have the past some increase discussed productivity

we origination Intelligence Actual as Platform. new launched such have Close, For Regulatory and AIVA, clients, the AIP, Expedite solutions Assist

our clients, AIP. enhanced powerful These Loss market. clearly and resonated solutions offerings delivered have continue Mitigation Servicing to our such Solutions, actionable Digital with as we to have add the analytics servicing servicing For and we

clients with We we pleased since significant have the Mitigation Most well pandemic. the a Expedite positive interest an been response very our from resulting the Solution eSign and Solutions, of our of beginning as the in as our adoption seen have and Loss demand. recently, eClose

to plans next Blue. Speaking to of announcements regarding discuss I innovation, our would acquire like our Optimal

excited acquisition, that in our This opportunities long-term leader which deliver cross total. of solutions it provides to client for together originators, industry nearly sell us our support client and combined as this of originations X,XXX participants industry. will secondary will eligibility leaders adding base, acquisition significant a pricing incredibly broadens strategy. and who more it the further engine about by joins positions product the two market all The space than in transform innovative investors industry potential are X,XXX acquisition Optimal integrated as We more and network industry leading, base, in Blue’s XXX our and

Blue’s We By trading with comprehensive data enhance our to of basis making Resitrader a adding the Optimal deal platform, also a which minimal sellers. loan great investments large connects online trading platform. opportunities see investors assets to and

facilitate this MSRs. selling offer as loans servicing We and new will our be seasoned buying to of to able the solution and as well to clients

able our transfer data enhance centric will further be data will between analytics and loans Blue then assets. has those Optimal which will clients. to origination our existing clients, process that We this also streamline easily for

granular insight against revenue. Specifically, others data expansive industry the in lenders trends. products because to their benchmark network and This data, and provide pricing and strategies services validate real-time technology providers market, positioning and competitive of enables the solutions, is their Blue of their into Optimal accurate, to maximize robust able and

and ability integrate deliver we integrate forward comprehensive We to to offerings these clients. greater, are our and into timely, solutions extremely market. more actionable to excited our progress deliver We about our this to to the our even data insights sharing look as

investments Bradstreet. & Lastly, I in on would Dun brief like update to give our a

confident benefit made baseline We we return a when D&B, in generate our Knight shareholders. said, the for our of financial the meet Black time went I was investment met of and the company operational we financial ahead and that goals the assumption fact investment and those were private, would goals the well that D&B would schedule. company As the on set were in performed at strong aggressive

also the of high During the to of created recognize increase has the The of the that the original investors oversubscribed IPO, increase the ahead. book and range. transformation and taken place opportunity that size end above that result significant order lay the offering opportunities significantly price the the

the and that and billion. clients, first $X.X we relationships opportunities solutions to look year we Knight, delivering can back closing, for fundamentals strong our In is expanding and For innovative profile clients, many clear about Few remains the Black the the is an with Black execute strategic on delivers. the outcome continue as it margin business of businesses of investments the our adding by that half strategy worth on existing and prepare Blue core dynamic have Optimal new acquisitions. that ahead, is drive to revenue pursuing Knight growth growth and

you the will give for continue excited opportunities we are us Thank transform together how about industry. the your to will and time today. acquisition this We

Kirk a call over to update. the to I financial Now would for turn like

Kirk Larsen

sales their in demonstrate stronger minutes open business. as another opting costs Anthony families outlook and the updated and results to lower a we the the resilience, planned to came level, and to exceptions. discuss and for next the of volumes came doctor with expected and to quarter in Origination [ET] and that I’m second than favorable morning, couple COVID-XX as going was it up our year Overall, Thank a medical visibility second our Q&A. employees pandemic you, experiences. in predictability hospital limit came to due expenses high result outlook. through everyone. our you good of it before visits quarter will said, and take for the amid I quarter take our few With At of the other we favorable a (Ph) and

On basis. three, walk our Slide to results. will Turning GAAP GAAP I a through

other earnings the of in non-operating $XX million, basis the well accounting, or earnings purchase of increase a an XX%. million, to before $X.XX, earnings and effects XX%. an share per share. diluted year net X% earnings decline diluted a of as was XXX The were amortization increase quarter. quarter. incremental prior year of of D&B investment of Net points as things, $XX reduction the $XX Second compared And of increase XX%. The of Net were was XX.X%, prior margin losses quarter to were an per an the million, charges. revenues million compared to equity other D&B $X.XX of reflect among application indirect related affiliates was increase unconsolidated results $XXX Earnings of our

of For the the affiliates Earnings year, increase million, an revenues year prior were other prior first of unconsolidated quarter XXXX X% an $XXX and XXX $XX basis to to of of margin for million, half of million, earnings compared Net increase equity XX%. the compared the before were points or $X.XX per period. first Net $XXX were in the and net year a was services investment half XX.X%, of favorable losses $X.XX, million earnings diluted an diluted the of diluted share. an reduction period. increase first XX%. the $X.XX share include that of D&B increase earnings half of million, tax the gain to $XX pre-tax earnings Net was earnings included the and per lender effect XX% legacy, The in $XX is was $XX.X in matter or increase income and legal expense. processing per is after relates one-time million share of of resolution

will quarter first results I adjusted X, half. now discuss our second for Slide to Turning the and

points. X.X% Adjusted quarter prior an $XXX Adjusted reflecting rate. earnings margin expense increase tax per was increase lower million, an Adjusted were million, the of earnings decrease EBITDA Second quarter. revenues a was decrease X%. of Adjusted of $XXX basis XX net was increase and of X%, were XX.X%, $XX X.X%. lower to $X.XX million a a year adjusted EBITDA compared share of interest

X% increase XX in year $XXX $XXX million second was of period. X% was the basis XX.X%, one-time mention increase the half gain increase first margin I XXXX, compared the were that earlier adjusted included points. quarter earnings adjusted prior Adjusted net of X%. will for not Adjusted an X%. was is results adjusted first the and of share for of decrease million XXXX. Adjusted clarity EBITDA are revenues earnings EBITDA I $X.XX, to For half of and $XXX per discussed of a the that of increase million, an

will discuss Turning now I solutions to segment results. X, our Slide software

for segment revenues decreased quarter $XXX to Second million. the X% Software Solution

declined XX.X% as solutions the of headwinds, of Our effect previously moratorium. a result foreclosure software the Servicing discussed including revenue the

by driven underlying beyond growth refinance as origination an with headwinds. increased for outlook business, the new acquired solutions revenue continue volumes in higher revenues look be We clients, In to and business. we from servicing anomalous the XX% performance software pleased our the software origination

Second to due quarter EBITDA basis margin decreased was to of mix. unfavorable revenue X% and and EBITDA the points XX.X%, $XXX decline XX decrease million,

half revenues For $XXX XX.X%. to in decreased X% the million. XX decreased the segments software while first points and declined solution EBITDA margin EBITDA to basis $XXX million, X%

to Slide Turning X.

revenues EBITDA points increase million. XX% for prior XX% Second origination from strong and increased quarter XX.X% driven and XXX primarily analytics was an million, volumes to to $XX execution, $XX higher of basis margin the business. revenue by from increase EBITDA period. data year an sales the segment acquired

the the to while points. flat was periods. in increase $XX $XX to million, to Adjusted an prior XX% increased million. EBITDA increased revenues basis corporate year in half was XX.X% XX% second effectively EBITDA the compared for half XXX margin segment first the of quarter EBITDA First

principal now equivalents I June cash and structure. of revolver XXth, capital our X, we revolver of was capacity as of billion June, $XXX end At Turning through had we Slide and million. walk of $XXX debt million. will Total cash had remaining to $X.XXX the

ratio basis. times Our times gross X.X X.X a net basis on leverage and was on

XXXX, Before the I will our for shares through I walk details of D&B through investments go our IPO. and after their outlook

we the $X.XXX following on Turning average July now Slide price value to was billion based of X, of closing $XX.XX. IPO investment million XX.X market own in the this shares. The

million D&B $XXX gain cash connection our from at $X.XXX $XXX IPO. total our is pre-tax private million, the with and after-tax gain placement at million, in of million That was billion. $XXX or the Our the at investments investment $XXX after-tax including the value

we important outlook are I our the our of that effect It note the does to Slide after transaction. we include close providing is Turning Blue acquisition, XXXX. will Optimal outlook X, the will the discuss not on we update outlook for to

adjusted $XXX Okay, and earnings in million $X revenues per the Adjusted million now $X.XX. in are in expected billion XX to $XXX to and is to for expected range range expected to of of adjusted range the outlook. the be $X.XXX $X.XXX share to Revenues be EBITDA of the billion. is

underlying details our as follows. Additional outlook are modeling

in the $XX and profit depreciation amortization million accounting. third incremental average million approximately weighted finally, fourth adjusted benefits. interest approximately And quarters, and quarter of $XXX XXX the outstanding average expense $XXX XXX and to rate shares third resulting excluding approximately XX% weighted expense million. And and fourth million. and tax for discrete outstanding of purchase tax We for effective quarter potential $XX million expect net excluding shares million, and Depreciation amortization full-year

Although and progress of through not how you we year. guidance, the provides provide with the quarterly color do remainder we to we expect some

quarter. second step Regarding quarter With to quarter and finally, implementation a quarter from in revenues due revenues to other open please second revenue third software operator, flat fourth that the expected from the quarter be Q&A. operating third quarter we the to the for up we to quarter are to third expect sequentially fourth to expect and increase And due large surfacing grow another the line investments. expenses with sequentially seasonality to

Operator

you. Thank

will Instructions] Thank be We session. [Operator conducting you. now question-and-answer a

question proceed Please your Morgan. with first Huang comes with from line Our of JP the Tien-Tsin question.

Tien-Tsin Huang

D&B and that on lot so work IPO of on for sure. much, congrats Thanks the a

once So okay, bit are as how revenue can on think guidance that let integration you us little Optimal as costs putting we of might JV on updating for is me a help ask know But closes? the Blue if in well here. I about give not synergies it on you

Anthony Jabbour

thank Tien-Tsin, Sure. Good Yes. you. morning,

with think that there. of we Optimal opportunities are excited Blue, there We very lot are a obviously

present our base. and those client excited In are up-selling their addition sticky acquire together. And we really them opportunities originators to to into of investors their got a effect in in a the that they where marketplace, of we self reasons bring base to in client of to terms have see cross capabilities, network some they and lot sell capabilities mortgage our

loans always perspective, look you and a trading of tremendous for they you and we on facilitating well that, see acquisition, trading. we it, is with obvious while always we have, that of insight into been gems, about always have then loans can we hidden our as from as data platform, talking top and for we for, at as that as that of adding our has and all any the So, those season think find look the imagine well analytics loans, those and our some there as

see synergy that we synergy of areas a So lot revenue of Kirk. perspective from perspective. And a from

Kirk Larsen

Tien-Tsin. Sure

I and a But synergies as with I relatively scale, and well. give Form to integrate as they relatively you just doing they XXX overlaps, Blue, an The kind is, year, you immigration think think will sense opportunity EBITDA. will business cost of what are is mean, I fall to bucket, going would functional guidance, perspective there it well can is they they into about XX do be going I of are of product where where so about it would revenue will we tremendous this integration create like. to Empower, million of that costs be where think, in regarding modest. we a of be imagine and what type I revenue that business if modest for million which say what the are, tightly about the you PPE, preview will Optimal look think

scale it subscription. growth perspective, a high XX% XX% so from business, business a is a attractive almost subscription very very it So growing perspective, in is year-to-date, from

in transactional XX% model, with a fast very a So business our it could that and have consistent have, cyclicality very that it is businesses area. and really is that business origination margins will not some

rate, businesses we Optimal them find as our of have we that that this growth adding an is those attractive achieve can it be that the things can again, we So Blue make energy about more is accretive company to grow are our cost long-term cost efficient. very family. to rare we accretive able But proven when business growth to is in it are combination where the is to margins, not a play, we past, And a well as play. which synergies, to

Tien-Tsin Huang

color. That mentioned all up you Maybe just on is great for I that double-digit. Thanks sharing asked, that. was new sales a follow-up, TCB my

and obviously demands, a how so home lot curious I We work of good I’m banks their on stuff. weird and lenders, and with in low the people all top market are struggling detect that is rates a from shaping struggling up. with imagine from work pipeline the home remotely, demand of are would with the

quarter the gone we that has can up since larger outsourcing? So demand pipeline for and has gotten last say

Anthony Jabbour

not question pipeline us and that for in I we without strong another confidence seen to would years Tien-Tsin, you is early, XXXX regard. and year-over-year Yes, performance us. results But sales have see growth that QX double-digit know gives real going we just be say that strong for

doing. excited the through look We very faster home. there that in working you from with what quarter, grateful at in hard But this we is I’m pandemic pushing nothing at all have. my really for results and getting COVID-XX company, again, colleagues the down are are faster are we the slowing momentum And this and we anything, if all is

So really for clients innovation. just focused our on that our excited are passion

for these of about many right digital We we The driving benefits mortgage that now. solutions all are to the been we are times them. have need accelerated a has world the pandemic in reaping that calls, this on talking the

now. just So spot we right in are a great

Tien-Tsin Huang

you. hear thank to Great

Anthony Jabbour

Yes, thank you.

Kirk Larsen

Thank you Tien-Tsin.

Operator

with from question. Stephens. comes proceed next with Our line your question Campbell Please of John

John Campbell

touch was And stuff. Congrats on morning. follow-up both seemed don’t and it guys pretty live, obviously, and an I first kind there, of Bank just getting that they good bid to Ellie But exciting wins they sought the up. the that mean, the think asset. I Optimal chasing Blue like then Hey then you Mae America question recent mean, pair that. I win quarter think I good for ICE great on to was there in of guys. wanted is deal was after of a aggressively I kind then and it

So I on of look what just they level any what and curious for then now Mae Ellie was co? side? their about on like ICE kind with looking might high thoughts maybe And were

Anthony Jabbour

to ability and those to have Ellie some that I moves from to buy Well, as thing weren’t And it And question, as the the I ours. because believe in just technology the it, in together is to acquisition that for more also, I obvious for businesses look they and It be what looking those are said, ask ICE think them think, perspective, an and they perspective, publicly more the elements would Optimal have really bringing I looking which going said of network that effect, I there Ellie replicating innovation like in make. they the terms say marketplace, MERS. think just one terms simplified as are the is just that ICE are than and creating. they would as say, at its with lenders that they selling have excited companies from what are they of that seeing Blue, about that but solutions growing fact. at to of some It I the not revenue the that the drive which us may the of implementing demonstrating. looking in integrate, and are complexity obviously, my just them would And, at forward hard, of from that so there investors was we the many for. had that But technology, was, I’m margins look looking marketplaces I’m margins in years be good is Kirk for well. well will the as those things they stickiness the of as mate is from are sure that were growth acquisition, and heart it, being, are and And faster is of

this got our building here have plan really capability a And terms we back that been that space. been we for have on we is years us, to number game doing. of in Form of really in have digital, a what front

our You we of consumer digital then to I understanding know engaging very loan, home, have with working to the journey, the clients conference, I year loan, realtor the capital way all working find and servicer with originate we a And a to with of demonstrated a at like lender on you, a a think industry. this our kind got markets. deep full updated working last of

full And very the so of is we comprehensive. integration are lifecycle across the level loan functionality that and pursuing

resonating, is And to executing in so, have the are that it combination ICE pleased on been the we Ellie us, are doing. of for plan, we against we see it as path game terms and and what working a of our is validation is

John Campbell

guys Yes, kind that know shot, is XQ but these very Anthony. to margins. the you hate follow Kirk, helpful. up you up, what have coming think guidance of of MAC you is Bank roughly Thank I put I of the you. the for I or end have for of loss. have high so you half, offset America XX% The north and margins? that XX% on, shoot pinning in for you, think is I kind is percent I the back mean, probably implied your of got questions,

as to long falling kind explains of originations half? in kind step As the back aren’t cliff, off what a margin of down

Kirk Larsen

part in costs mentioned lower that just and is their because are But be And things then our doctors good to COVID. and families my than quarter, And in chunk which - favorable the of for we is of second had that half. Sure, things going not hospitals there the first think second couple a we remarks terrific. experience, part non-essential in and a is medical this that that employees I can fleeting. is I the expected

are we the planning half. for is so not And something in that second

it half. could But And the Bank was with are on cap come deferred for, is trends. in what on and And just second because as so would a expense planning that that we have platform. then there there really that far the then below work is we a always a client not similar are is there a experience uptick on certainly I say in of so that net investments possibility And quarter. there little to as holidays. of balance large basis because sheet the is fourth unusual, is less America the goes And quarter in brining because

said, being us that for very a long have known John, time. So you

We will today certainly to brunt push also are aren’t spending. we peaking bear in the for it business But that margin future. in and this can, the long-term, to the perspective as then from hard the using we of we so a opportunity as invest margins discipline around and continue the business

a of but So for in we the things continue we are push are those second couple will to half. it, that planning

John Campbell

Okay. Very you Thank Kirk. helpful.

Kirk Larsen

Okay.

Operator

question comes proceed Jeffrey Please next with Our from question. line with your Andrew Robinson of Humphrey. SunTrust

Andrew Jeffrey

actually, new exciting Thank you. the securities truest times. morning, good

first I really if with new in solutions? quarter the is shift that row in business? solutions are you And things growth some what row those second in and are maybe elaborate I to bit in you the of accelerate a much what wonder, now, of some noticed business, on acceleration the momentum. that are a allowing How that versus strong share that a three of quarters could One very D&A seeing in half. little

Kirk Larsen

different. little a unpack I would that Andrew growth

really records above to this was very execution we In continues quarter sales sales from growth The all, business. our XX% good. be XX%. and a with of particular are quarter, public in another it perspective, obviously pleased it First solidly was

leg expectations that quarter performing our above remarks, have talked analytics So is did we in already, licensing benefit is in volumes if so data being acquisitions then very just strong you for from in at had origination as three that about little kind quarter the as a frankly acquisition on and that better be full this as our saw of the analytics I we quarter, quarter. the which was of third business more expected underlying collateral with talked we the look benefited the and XX%, business and would last then the my data volumes in consistent done. We where And within sales well that in side. a business, and quarter. that analytics certainly we but about records I particular than the the the And execution bit this the public that data

that, it our components, in driving is mid-single-digits, the growing frankly, still be sustained are where back based where kind out underlying which of would we the on execution other on sales we a been, So expectations. is is, we have basis,

we performance. do is that saw quarter. The But continues great our this a to job. pleased So we in are with team particular what

Andrew Jeffrey

where Okay. get Encouraging, given little Do the of thank point bit and can pricing savings few Blue approaching just customers really a you. a explicitly And over then therefore Black to it years? maybe tailwind in quantify digitization. to and acceleration Optimal is this more a like Knight broadly, begin especially feel for next you price value and

Anthony Jabbour

those think, are I Andrew. points Well, great ones,

it have. measuring that process the we shifting where how say would that I of, we is the everything industry and we is is the terms sales and In certainly are it of part do,

very much on are we value. So focused

those clients, are has it to doing are how to we has that compliance. lines revenue through. is have disciplined to of our expansion process it drive up drive or goals and very we one we the our it margin has on innovating, are clients part And for what to and As that hold focused of need. And it drive we and

and a with of with part slide that an out of down slide quick go we sales showing look review. we the process, at are our from example, as cost terms what origination to of of the in And very close - the looking a back of we it the detailed mentioned a you it MSP So implements if sale, doing slow Again, actually operational a from in, we into not detail have sales are will say for that that for or skills, the loan. really few operational what calls the $XXX, review. Eva, results part do all solutions above sort of having the with with be we that four

and do very our so motions natural that we to sales are continue are And on going part of as we Andrew. to focused that

more, lot in space, And of So excited. all us are our and lots momentum us do of the thing here energized really that, feel I to here it great just one has getting to clients. is and more we a help ways really of for

Kirk Larsen

thing business, with origination the from capabilities Andrew internal capabilities. the would as our I would added we have network. core was we the through an development And gone one that that acquisition exchange adding we as all with have over both the well provider add keep and be years that LOS and being

so loan it And we the per per because capabilities is basis, price all before, higher. we price are on today, that where we significantly charging the versus a of loan additional when were

We capabilities. about just been add there lot think addressable Certainly we doubling, as than also we is conservative but it have of have to more a we value I the with said, is additional more all probably these Anthony room market go, would capturing are to solutions talked as able add. say I

Andrew Jeffrey

you much. Thank very

Kirk Larsen

Thanks Andrew.

Anthony Jabbour

Andrew. Thanks

Operator

KBW. question your from Our proceed with Please Ryan with next liner comes Tomasello question.

Ryan Tomasello

synergy next that think to organic a What growth this they products can currently customer me Good over the which growth you cross opportunity parts growth about bit the might Thanks. the of be you to perhaps opportunity believe I help of really And think mentioned. think to achievable accretive of Optimal the the Blue business morning. Optimal to rate Blue. is on you you you rate morning, the driving then there is XX% type are in in everyone. relative five terms Thanks some level call on And Do achieving? do that Also sustainable? And color side, say overlap? sell ask of are for XX% maybe having that that? wanted years around that that if three frame

Anthony Jabbour

Sure. said, I would pricing years is it. would the We to growth Ryan, that data forward, products opportunities the contributing that as number that right over is rate such and of the what jewels like analytics component with model I we platform. pursuing few it. onto as trading some with a that momentum looking say now, in and as have with key see And solutions we that engine building their are and the see we the business to hidden next add their of a XX% product And

Form is us, from the obviously, helping is, which that solution, it will sell fruit also hanging do, terms the a rent in first adjacent piece is is look, sooner. but lowest our the is perspective, by lowest the we realize clients what generation. we about it in place cross excited It we us, help right integrating terms of the fruit that. revenue them benefit it are hanging of And of next

product cross So we the they have cross treating pleased highly business. the with sell. very number How focused of they And are that we a in are really that be and always base. things their we great What are capabilities are able Are clients? got as of us pleased a Are into believe are and They selling that them? of base. doing to so will run very the you to capabilities. status obviously lead of team, I able relationships. management cross those Optimal we right they by should sell to on trusted lead their sales the we Those Black terms lead into are industry. things taking with was are or the their to will Blue they in strong Like doing are to thought say, And that want state the doing critical continuing is at to same, they Are Knight, their we be continue things them? care they gives confidence them? we sell our we client to a

Kirk Larsen

add would XX empower I overlap product be Blue’s have things from and Optimal we perspective, them use of pricing none couple Ryan would clients an engine. A eligibility

origination So that one base. origination, we is can that sell. is our that other X,XXX They area in lenders ancillary cross whether to their PPE, we it go or go certainly to system with, on have loan solutions can

for there whitespace think to the capitalize on. And for to just gives really opportunity. of context so try a is little us And that I you a there lot

Ryan Tomasello

interest is you us, where what the structure what THL. how your decision on leverage the forma that you leverage And the terms minority maybe in thoughts syndicate are assuming are drove after can just the and done Great, helpful. And then, and balancing this And integration to out give this M&A with see super that Kirk Cannae of the and of deal, pro closes? you broadly, acquisition? deal shaking after of gets deal

Kirk Larsen

Sure.

As stakeholders things you last all at well. from for and past, of over look look since have frankly, five years. We the seen we things as been our at have every the public angle. We

and can worked who trust at we syndicating we known that where And it deal, we long was and us know so work and Frankly, very partners price up. were the time, partners portion and balancing ended really very of Cannae well with. a a very, with THL that for and It as have risk. are financial the looking with this

was clients, be and keep that leverage the it under our times. they wanted our the everybody markets, So whether the our would agencies, way thought stakeholders, each to really lenders, it. we equity looking where at would our We of at leverage look four rating

And we our closing down at an quickly And high paying through EBITDA go well so will threes growth delever through very estimate. leverage debt. can actually as as as be

get And so accelerated very three we can a below a pretty basis or times. being target down our on it back target and - to on that do

partners a very bring operators. very, was And we really in willing only financial because to strong before have as it said a I risk play. frankly, known we so do time the long able were why are And it to reason was are that

And for this so Cannae actually us THL we really, are transaction. to and pleased really have alongside

Ryan Tomasello

taking questions. the for Great. Thanks

Kirk Larsen

Thank you.

Operator

Instructions]. [Operator

Bank. with question of Sabadra from proceed Ashish next question. line comes Deutsche with Please your Our

Ashish Sabadra

quarter the Thanks good as question congrats a well the for Blue as D&B taking Optimal IPO my acquisition. and on

for lost of was enhance And the POS digitization if indication. wondering origination? thanks mortgage can about on and as on opportunities the digital providing mortgages Thanks. I there close Just on well. the think wondering to the more comment you digital Antony you as are was end-to-end. I

Anthony Jabbour

there we that sale, on is, specifically of Blue blueprint color will more yes, what of the bring can your market I you think the process. that to Sure, we be Optimal just give help that and questions and capabilities part there bring digital point to streamline on are And some more to the solution. to to continue

of to you applying with are forward for what sale, Optimal the can your a point is. loan product Blue imagine having and access So for or rate pull now, pricing We capabilities.

are at pulling that the database. exact loan. straight its to same for on from from you Ernst as time, your now will what you a mortgage, being the is, own pulling with from And fees we present So rate our the are exact that pay close applying you able acquisitions what actually

we applying, up powerful right in would what as start rate that we be you would momentum cost front before and differentiate. about what So, is space, create more proposition looking a are could be. to this ways at capability total the is of excited really you and the and drive It we your compelling type keep know the value really think

Ashish Sabadra

help origination helpful was can growth volume if came business? is I wondering much business. the the the maybe of the the underlying just Kirk and clarification on parse Thanks. from And refinancing acquisition a That in color. growth a you quick how

Kirk Larsen

a origination, the of the company The refi couple was points of dollars and quarter. growth and it a total in million added up benefit about for acquisition to was the Sure.

Ashish Sabadra

once That again. helpful. is very Thanks. Congrats

Kirk Larsen

Thank you Ashish.

Anthony Jabbour

Thanks.

Operator

proceed question from Wells next line Our with with your comes question. Please Fargo. of Jake Williams

Jake Williams

everyone. morning, Good

Anthony Jabbour

morning. Good

Kirk Larsen

morning. Good

Jake Williams

of in would that run Quick off with some? that expenses going rate be we just on live? those relationship? expect question America steady related Can of up a maintaining to kind Or step the the tickler to Bank

Kirk Larsen

costs. - That be you noticed for will

certainly we so infinite. talked the client client already on. a about being And an margins cost there very as that bring, is when we incremental they ongoing are bring We high on, but

is costs. in clients that client, that costs is support are decade. goes servicing of single element talking known of computing an as last And clients element with the we there of There about conversion largest when particularly so the

to certainly we a to everything structure certainly them So thrilled are the about cost cost but is have on support.

Jake Williams

Got you. Thank it. helpful. Very

Anthony Jabbour

Jake. Thanks

Operator

question William next comes proceed Our with with Sheldon Blair. your Stephen Please line question. from of

Stephen Sheldon

Thanks. Good morning.

are far new update started any this in are this guess against far AIVA, to origination revenue And more? any in drive your there service meaningful year? year about worth growth costs others out? from the between financial that have how really to you calling thinking expanding down And First move capabilities needle I the so even how product additionally on AIVA these and digital AIP, so

Kirk Larsen

Sure. I start, Stephen. will

First with the innovation. contribution from

we of to X% I solutions. more getting half say I of X% recently X% aren’t considered an a think do innovated per that for growth aggregate we a we first So talked of year expect X% on about revenue ongoing long-term that basis to X%. driving to kind guideposts, to, was the in nor an would that

was So point recently we this are and X.X probably a of innovated solutions? between point quarter growth our from

Anthony Jabbour

as Yes, only the I these thing that is. innovations of are products. would to other lot add A well drive helping

best it new here, I XXXX. know year since MSP, think sales nine You so we signed last was clients, with the

like this And them. for year, have so signed of far, four we

this just question, innovation brings to inherent A is didn’t on there your we lost platform I this. our this products in for be well. as that AIVA. also value Steven So But all want as are selling second of

with country, help the We so can and we are again, us. in Feeding origination to across of parts clients loan their skills, our continuing costs it more on the the us it more of And, continue more great clients. of will forms and to obviously for more, our the which learn AIVA working that process. great continue learns of different once build automation different documents many helps has up this, great focused lower momentum got team the partnership for to with

StephenSheldon

some Blue you the selling more some Got it. That guess ask And Optimal to you I realize helps. can about opportunities after close. to start quickly wanted cross of an how then the

but product side, Sounds maybe database like integration not on and there some needed burdensome. could overly the be

hit ground cross quickly efforts to it on So closes? running some be after the of would go pretty market able the to you and selling

Anthony Jabbour

have ever will they we Optimal have hit like Blue couple No, with on, with obviously acquisitions. a were relationships me trusted they definitely had And going our so I always acquiring us out the of running do to clients. to come we heard and once of we that, clients reach ground

It And parts expect that expects on of of take that year that sale we an integrate good to the certainly will ground probably very will we the us. running our side. so the hit the from running ground perspective. perspective, I And hit from us we this integration comprehensive, of client close but once detailed, really it to will certainly level the rest

Stephen Sheldon

Thank you. Great.

Anthony Jabbour

Thank Steve. you

Kirk Larsen

Thank you Stephen.

Operator

question. comes of with Kevin next Please your with proceed Kaczmarek Our from question line Zelman.

Kevin Kaczmarek

fee enable rate Optimal it pieces time missing the perhaps for of to to auto and guess along and you a pieces Blue, on that was get Knight the exact potential what the Black know the guys, Empower say allow and clients start being processing borrowers where the you the there? like could that MSP cost angle Hey missing I to for of gives loan, are mentioned What capability timeline are weeks. and of hours instead are is something Don’t refi. it the an mortgage. bigger of something

Anthony Jabbour

compares. on is the in and parts perspective, Well, process the and from a stare lot Kevin, of origination the

that what we takes and is with lot to the are of a So that process AIVA that still help in of certainly having a the is automate to in that. documents doing streamline regard you application said prove true. That part us long your work

recognizing fly, you, them and the apply incorrect So getting if on and a from back was able if pictures to your sent of one mortgage are mobile AIVA being you data forms the of to on from. that take really streamlining documents, process the for extract device fly, these you you an

if the sent of two sequential bank a example, For statements months. two bank statements, versus you same

where getting is in questions I say. It in the lot loans, of consumers So breakdown. typically to a on document, is lot there that should a of the on process, that is times back a

think to savings biggest we is all the that really probably mortgage front, you in the process. streamlining of being up right do And able find will one so that now

we fidelity a strong eClose got now agents. have Financial, are to that largest, build continue capabilities. capability, are Right we So, industry’s we we settlement National guided closed launching the

everyone systems. get that always a recognize think it to perspective, right really will -. pop which it help, talk and a actual help we Again, ability workflow, to your the it there away, document is the quickly, And about biggest parts into ancillary obviously can lot back origination part, we extract to want I is the is so, loan data bring from the always that of but to granted, have we of Empower we terms where as is get processing in shouldn’t. what details, really take I the it exceptions. into for with is that how you occurs. itself we as automated just is mean, help so world-class like but that drives out that really We and And able that and is system see of being well. the differentiation the kind streamline process

Kevin Kaczmarek

one is you. of helpful. on then forward timing That of quick, one thank given America. And Okay, very the the guidance, Bank

expect well would I a offsetting that fourth revenue. third you the services an downtick correct? FICO what uptick and else as is so I fourth the there the in Although in you quarter, there is mentioned guess in Is quarter the quarter, think quarter? something because that in came on

Kirk Larsen

it exactly of Kevin, fourth holidays always a if professional as because No, planning is it right. the typical that like, and year. less services has we quarter is just are

differently. We be of because that or behavior COVID adjusting are would not anything any

will holidays professional and will that QX like the there be that assuming shutdown such and are we and versus QX. So in vacations services lower be

Kevin Kaczmarek

had. you. thank is great, Okay, I That all

Anthony Jabbour

Thanks Kevin.

Operator

turn to over we appears would comments. the Instructions] It Jabbour. you further like Thank closing I back questions have no you. [Operator for at Mr. time. this to now floor

Anthony Jabbour

for environment, Black to Wonderful, innovative you client thank challenge. efforts. to our rise exceptional deliver interest like solutions implementations not colleagues today I for our and and for the your their sales, to further which thank to members us strong Company. our for call Thank in on great their partnerships, would my Knight and clients joining our has ability this any talented unprecedented demonstrates ability renewals, team wavered, Despite you. new

Operator

gentlemen, this teleconference. and Ladies does conclude today’s

have a You time. and may this you your for day. at your lines wonderful Thank disconnect participation

Black Knight (BKI) 10 Aug 202020 Q2 Earnings call transcript