BKI - Earnings call transcript Q2 2021

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Thank you for standing by. This is the conference operator. Welcome to the Black Knight Second Quarter 2021 Earnings Conference Call. [Operator Instructions] And the conference is being recorded. [Operator Instructions] I would now like to turn the conference over to Steve Eagerton, Investor Relations with Black Knight. sir. ahead, go Please

Steve Eagerton

everyone, Knight you Conference Second morning, for Call. joining the Black Quarter and Good for thank us Thanks. XXXX Earnings

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

expected This results related later and slide results release therefore, on be future our This made presentation the being to is website. to supplemental conference posted available released call company this call been recorded our Our statements and and statements. website. forward-looking press the will morning include have and for our will are,

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

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

Anthony Jabbour

Thank you, for quarter us this growth strong very you execute call. our and Steve. and everyone, against second Knight quarter, quarter our strategic was initiatives. continue morning, Like last exceptional for to deliver thank earnings another for Black joining we Good as financial results

EPS and organic delivered of adjusted XX% we revenue Specifically, growth of adjusted growth XX%, growth XX%. of EBITDA

strength strong our of execution able strategies. these We’re to end-to-end integrated our to achieve and platforms due of results growth the

year. clients year new Starting I’ll you our full for are our quarter, this servicing the new quarter, strong total year to X recent with acquisitions, how our to outlook we X each business. result through the positive another of had guidance and our sales confidence our contributed software X second a the As walk again. signing our in so remainder now clients, of our strong which MSP We businesses results. the raising these far in has of brings performance

wins, new clients that current XX will existing we next clients, and along to With MSP. MSP including X with now loans MSP clients’ more million these add XX have conversions lien than are second implementing implementations These loan over currently the months. the acquisitions XX

XX second retention. We XX also Digital our that their which satisfaction MSP of X/X a signed deepen to in improve clients of as nearly or Servicing will new clients, clients the customer XX our Servicing relationships, increase ultimately quarter, Digital way and use means

offer Servicing also with eligibility to capabilities solutions. a automated Digital give the Together, integrations options. PPE Regulatory solutions We product, with top mitigation, platform workout remains our most and continue electronically digital through to and priority proactively servicing for our the clients customers and add servicers. loss mitigation to mitigation models the ability work compliance valuation their loss or pricing appropriate to loss

In mitigation during fact, we quarter. second signed X loss clients the new

put To our Moving matching quarter. deals on signing end signings, of the signed are in signed Empower sales we second meet business. this mid-tier year. and on quarter, all track Empower already we XXXX contracts new during of commitment so year our XX last software year, the by Empower X we new perspective, clients than have signed far and of to to strong more in this the In our the XX XX in market, with our to origination the first

is quarter. opportunities September, of in multiple Empower Optimal the opportunities, capabilities Blue enhancements also services resulted current upsell In Empower and including Blue for bundling our by creating cross-sales in sold clients. all to last to already addition, acquisition This has X our PPE Optimal the provided breadth second of and with us acquisition clients

new XX new sales pipeline XX added solutions the as XX we’ve and hedging and and to been. added clients, clients XX has is we quarter, second strong and PPE platform. the hedging new to PPE clients our as During Year-to-date, trading clients it our ever

to on X that Rapid continued and and of RAP. first results to off informed quarter. was again coming this business data the clients or cloud-based are achieved Analytics now strong demonstrated Moving analytics a We strong and analytics decisions clients use future another powerful momentum for the growth. business. able strategies set to This new financial Platform, XX There to signed more in second tool quarter make the

enhanced with to RAP success and year success. Black acquisition selling in Collateral had along last provides Collateral The a superior the property team mortgage data cross-sell that continue Knight’s Lenders value mortgage continues leveraging our end-to-end our AVMs. the value our Analytics to solution delivering clients. Analytics’ models, innovative addition technology set, continuum. AVM, servicers of to result integrating to data sales, across are great In of and realize further the behavior we D&A property By

MSP As result, companies this year have to XX signed our implement is the now and solutions. analytics we clients. X agreements as contracts an And signed of enterprise a X that and Empower, leveraging example, each also data

as develop and Our innovative strong customers. their continue that to clients momentum and our deliver solutions extends value for identify, we beyond create sales significant

satisfaction talent for economy. to innovative is representatives service Because that We solution borrower. improve their screens customer enables access use same easy I’ve can see employee they’re borrowers to customer service understand a succeed information clients’ at job, improving so As retaining today’s the truly easily the it their is and they the our in customer information our previously, solution also relevant helps mentioned it and efficiently. to beyond customers next-generation challenge quickly goes can They as enables help all satisfaction. assisting. and service This representatives

Intelligence is Actionable twofold: Platform, our origination X create As increase we our are efficiency. that to Within giving and innovative help borrower better tools our business, or new use our part focus deliver while to solutions, easy we experience, recently a as software that AIP. clients them suites of introduced

and suite, fallout. regulatory lending fair to The industry related on focused fair delivers first lending is the which analytics reporting practices standard automates

efficiency. and The to their them they information are These that the Both we second, the and suite, the new have AIP and of launched make By couple report decreasing it, risk of have when our examples combining at a of the recently, increasing the helping officer mortgage suites process production status just the decisions are right suites the reporting operational suites lender clients expertise we in we which while developed. provide being automates other analytics our transform call many operations. technologies, loan time AIP, right results. data helping and and need

solution, work do. enhance to continue our is also to We the at able AI AIVA,

to see levels accuracy volumes increased high from excited support our clients. to AIVA’s and are We ability

synchronization, between Finally, X during loan a could date. Blue which and affect greater very systems for lenders Empower and process, labor-intensive data is continuously up monitors PPE that data we pricing pricing that efficiency added traditionally and quarter, or second the the error-prone integrated monitoring, the changes benefit is Optimal Because automates data pipeline which synchronizes this to enhancement scenario our the eligibility. with from fully always

a automation out is so the strength XXXX. The of to mind already the month, has M&A solution since which Mind when allows innovations, their of send CRM after platform March we Next, regular top the brokers acquisition completed that Last on further compliant I’m that since X update to value is we going platform and refinance and market-leading developed initial why stay them end-to-end provided We our cadence of of Surefire and internal specifically lenders interaction. lender Networks, recent help to the our have during is designed marketing Top Surefire, to a to who purchase or to look they’ll tool process supplement completed to acquisitions buying which our home, provide believe regulatory how continually powerful acquisitions reach value customers for the to integrating great next an industry. buyers communications add a to and of set. mortgage home we’re

the can the to origination major platform, easily With send customers and and milestones prospective educational process. engaging company-branded during and videos Surefire content lenders

application, a are of library Each as experts and on the customers expect. what homebuyers is life. an to first-time relevant completes piece with homeowners mortgage as buying helps buyers for receive business, experience. created well examples. is When when been new to content why the of a appraisals Surefire information generating than system useful are to is is for Or the by who comprehensive process ordered, content create for focus help information lender a have marketing This prospect is building create receive more what outreach while Because to about automated, an X video and few Here allows and repeat about e-mail memorable them decades. a mortgage it necessary. an the its positive appraisal they’ll they’ll appraisal a

and also origination point-of-sale more Black Top to data data and Mind that integrated twice closing efficient. solution broker reported implementing this have Surefire loan CRM was as of for and challenges a being work systems our has use Knight. are did our both with loan as mortgage-specific well of into lenders providing platform. also external that lenders tuck-in most many Top who as help brokers With the perfect significant retention Empower lenders for Mind before integrations and be the tasks they fact, relevant officers, In while as are loans of sets fields acquisition new facing, as customer platform a PPE. one The is

with integrations will we continue course, other Of support technologies. to

agency-backed improve growth, Servicing Mind’s In retention to to lead the agency-backed very critical of to generation mortgage recapture plan near manage to the integrated and portfolios Since performance positive. expand also integrate decisions eMBS, acquisition, enhanced We of more continuum. that been this to both platform provider throughout deliver of their retaining real we we early feedback for help and and platform securities. and the from insights clients’ them Digital to estate our Top data data MLS leading May, better it plan be opportunities into companies Clients future, Then of realtors. clients. opportunities make get will analytics Paragon use the innovative expand clients platform the the acquired has In informed on for into investment securities. this

and cross-selling used We more further value support laser-focused quarter, providing to X.X to delivered which it and turn innovative our sales, today. Mortgage had solutions enhance reports to integrated very the the we have Kirk. now and summary, the has call already foundational clients, the We second made during acquisitions remain have eMBS like I’ll for our over we’ve been your data the Black to clients Monitor. you success. our Knight superior Thank last strong the over time data on to years. had monthly success In

Kirk Larsen

Thanks, everyone. Anthony, and morning, good

our and we businesses. our the With Black of outlook across discussed, that the was strong are of Anthony each I’ll the second encouraged details quarter by quarter you Knight, and for very another said, the raised through As quarter the momentum take for year. second

Diluted Turning X%. $XX Black XX% year X% earnings an basis, margin from to Slide million, $X.XX, GAAP to attributable were On decrease was increase to Knight revenues the X%, $XXX EPS purchase Blue. quarter. the a depreciation Optimal acquisition Net a million, the resulting increase and of Net were of related prior accounting, particularly an amortization X. to of higher to reflecting XX%. of was compared compared earnings

increase the so Turning for quarter. to revenue reported X. applicable, effect margin an results increase an in adjusted was net of to exclude to prior quarter. of no Organic Slide million, made our revenue $XX adjustments EBITDA we increase was of Those the XX.X% Adjusted XX.X% Adjusted on adjustments Adjusted to longer I’ll metric accounting earnings are revenue reporting XX.X%. adjusted purchase an this EBITDA deferred In past, EPS adjusted $X.XX, revenue. not our the now discuss growth we are second quarter. an million, the of $XXX.X was year XX%. and were XX%. compared XX% was

I’ll now discuss to Solutions Slide results. Software segment Turning X. our

revenue Second quarter segment the XX%. Organic for increased Solutions $XXX revenues to XX% was million. Software growth

comparison X%, was software from the new sales. quarter. solutions clients, network Optimal software Optimal a innovation and primarily including XX%. growth growth Blue acquisition the tough driven by increased in new revenues Blue revenue revenues on and servicing higher MSP. was The year prior to In Organic well from usage-based revenue as revenues solutions, effect clients reflecting Our origination XX%, as growth the of increased

XX.X% by mix increased was quarter. EBITDA quarter in margin the support. prior in driven margin to year increased $XXX EBITDA was investments XX.X% innovation Second XX% to and and and client revenue million, The contraction compared

X. Slide to Turning

the Adjusted points. compared sales execution revenues quarter. quarter Analytics XX.X%, prior driven in XXX million, the segment basis $XX Organic quarter to all segment second business from and the an in EBITDA corporate the EBITDA an was increased $XX million Second million. to primarily increase acquired margin revenue $XX strong year nearly of XX% business. growth and $XX EBITDA was revenue of for increased loss for was million by to a Data XX% across XX%. lines

sheet in we end June ratio Turning on $X.XXX to X.Xx The billion. XX. of billion million. Slide balance our basis. equivalents the and our D&B, on had We on Total I’ll and At $XX had or basis $XXX investment of Bradstreet, the as closing was and Dun our leverage was of of a was X, price principal market net a based an capacity $X.XXX cash XX revolver after-tax basis value walk debt highlights. through cash D&B of of on June, million, on & $X billion June pretax

based guidance from I’ll the X, in May gave walk our to year outlook second confidence in strong through and quarter the now raised which Turning for on you full XXXX, have for effect of we we $X million reflects of year. It X EBITDA acquisitions million outlook approximately second of will the the of recent contribute the half also revenue Slide this our that the year. $XX and

range the expected to in reported to range top bottom the to raising end million. approximately the by $XXX range the the $X end is of of represents range range X% growth. as conversion EBITDA to That in raising in of and $X.XX, and revenues revenue-to-EBITDA mix end our is particularly expected by which the $XX of be for The represents the Adjusted XX% translates the organic to billion be and ourselves to million, top and and to position by due which by in of by billion, end of expected approximately For increased of is end the bottom raising $X.XX growth long-term million of to bottom of million EPS X%. $XXX we $X.XX. million the $X.XX top $X.XXX lower $X.XXX range $X in Adjusted which the to range be represents by XX% of the range revenue origination the to businesses, end software $XX year, the are growth million. investments

Slide to X. Turning

to until XXXX. for first revenues quarter continue least of be plan foreclosure the at incremental to delayed We

expect outperformance $XX in a headwind volume year represents first compared million origination market second of the approximately With million. XXXX. now full headwind to of the This half, we a $X half

full million $XX and million, million; adjusted depreciation our of of million $XXX to incremental adjusted expense rate approximately of of XX% excluding guidance of tax higher average expected don’t lower and purchase resulting amortization the portion to the interest In X this $XX credits; shares expect addition, expense than relates we interest which and effective $XX percentage Blue amortization XX%, net $XX to is earnings to million. approximately research noncontrolling adjusted from that million we depreciation XXX prior development weighted point due $XXX Optimal and year of own; approximately an outstanding million, to to accounting; attributable to

quarterly through provide some year. I how to the you we progress as color expect not do with guidance, provide to we Although want to

revenue We client growth the expect offset year revenues, new of the headwinds. sequential to remainder origination over by see partially volume from

are seasonality. services We accelerate comparable approximately growth AIVA teams expect QX we staff from QX concludes over QX turn in slightly to And points then for operating to and will strong in the from net my sequential increase X QX to to we our QX. margins to modestly I’ll remarks. now be to QX be QX due sequential Q&A. to professional to expect QX result compared with seeing. operator expect and the to higher that QX. compared the lower investments by as QX That call step margins small adjusted expenses we demand in a EBITDA QX QX percentage in up from typical to due We The

Operator

question first Inc. Stephens, comes Instructions] Campbell The John from [Operator from

John Campbell

Congrats continued the on client and the results work. board. and the momentum the Great quality across new wins

Kirk Larsen

thank Thanks. you. And John,

Anthony Jabbour

you. Thank

John Campbell

clients. on to touch want enterprise Absolutely. I the

now guys You XX. at

I maybe handful. think had XXXX, you back a in

progress That’s that higher. of years the Xx guys to So the about that you’ve good In several rev you’re enterprise to been touched some client past, you I think that. typically on there. since really said kind X showing drives conversion

since a solutions added lot You’ve then. obviously of

So just a X-part question here.

the still don’t that enterprise? conversion lift on this I just then to X way Xx we first, hand, you So that to And have up you thinking should base about know rev the remaining guys but could is frame secondly, be help if with is what that today? maybe opportunity enterprise

Anthony Jabbour

that, with John. start I’ll Well,

a like integrate And really to to and ways suite pass and the in clients enterprise clients. Black it’s And can enterprise and terms prospects numbers talking being strategy right? clients solutions. Kirk of a more in being the creating executed, dramatically the rate. number Knight more solutions of our it on lot see you’re our the client bus, We we the lot into what them seeing that and side, conversion it market help On suite the demo increased of talked it’s the the about innovation, about as I’ll a has of to reported.

Kirk Larsen

Yes, on client significant than that is it that. Xx be multiplier their and effect some the the But origination upwards specific of certainly could greater John. versus opportunity it of perspective, cases, revenue in depends that, From and a servicing. a mix with

significant So opportunity. a it is

is significant for client Empower, be enterprise As from as because that there channels. are white of perspective, a far for using left not what’s may even space example, it instances an all --

much clients revenue more. think me, exact transition I opportunity significant. to quantified is today, and But is a part But client -- of increase you’d with enterprise the channels space the the stages the to -- don’t very the MSP significant that we’re here the adding and more it opportunity. Empower so is we it I was that that but white it’s client. sell And And can it’s and more clients that have value, an was early a seeing are them see important

front one both that at is signing us the an value the time, of created of a the both that at client be our proof to to and we can up value, time, demonstrating tremendous signing job back. fact a the we’re is think, that being same doing team from value Now enterprise using that sales they’re terrific point seeing as and that to

John Campbell

is maybe down Okay. That’s guidance missed on the helpful. mix just back in And you’ve pegged what today? drilling -- then rev for what I the And have but might overall this, origination, transactional on overall the half?

Kirk Larsen

Yes.

mix quarter revenue last as is the -- to X%. QX, year It’s It to So was we today was the sensitive XX% volumes. overall X% we to project it total of in QX. origination going rev. think it’s forward now at exit And

talked moderate a smaller smaller high material rates as bit. just get not it’s continue to these and to we’ve we going a about sell being deals So it volumes that and new little and have driver, subscription

continues things. less new So the about to story and much, transactional of selling growth, be revenue about the the clients subscription more the side much

see numbers. so the you’ll that in And

John Campbell

to just And be that talking -- just overall? you’re origination? is clear, Okay. Or that’s

Kirk Larsen

total That revenue. Total revenue. is Yes.

Operator

from comes Tomasello Ryan KBW. question from next The

Ryan Tomasello

them. on acceleration I you’re of how normalized that expense you Kirk, Just products? to the with the year, step growth about business investing point the quarter of you’re us basis, opportunity terms how year? few walk a of half go-forward maybe revenue And you up guiding in that you’re expenses a on thinking these the second And and specific in on that second finer you’re certain on in. margin perhaps half expansion areas the know in through the the spend beyond really and behind and growth the of framing of the for can ROI of the put a touched

Anthony Jabbour

for The you module, loan with further the second we’re confidence of I’ll further Sure. a I’ll rate, correspondent Kirk return. what of the when confidence terms out artificial they growth momentum, having to all high it have question. in in new you the on of investing based pass the Anthony. areas and our part we’re intelligence, you looking the in the luxury investments our make a lending, start. can are get of It’s capture, things that, broker

Kirk, at we’ve of going winners These confidence And that be strong see. the that so we We’ve now, for where great what where got right a that’s conviction us. doing. lot we’re answer the they’re in let second I’ll just But we’re got are you part. areas to

Kirk Larsen

parts Yes, that. to Ryan, I’ll answer a couple of

our kind was then QX QX. The merit of from go and a our to for to QX that from model. QX a QX, the longer-term first to some it, get granular, little QX to From step-up have just employees increases of we

but But second of we the this the the XX year, and areas in incentive making around investments we look The then that So described well in as the bit to just that we’re over only growth looking -- we characterize business or prospects. expense step-up into hiring half that ‘XX, expenses. year growth carries of beyond looking quarter. a -- not the the and viewing as compensation ‘XX, I’d year investments think we’re A around have a based this how these little have upon Anthony long-term outperformance bit XXXX well. little we’re of second

that And are so be not step-ups annual. these would expect to I investments

So costs revenue. they’re They investments in longer-term are not with come that growth. variable

sales et of cetera. in implementations, so some otherwise, resources, -- And that and is

will our expansion the We year. long-term that, basis about to as would towards so changed. each it of model that end hasn’t points higher expect guidance if still of long-term higher XXX end the We you the to target is be think range. And XX at margin growth

that giving drive So the a to higher-than-expected sustainable is as will prospects is growth. model the Anthony the period that we now long-term of is But confidence a remains where and in invest around us the conviction this said, same. time areas year, think growth the

Anthony Jabbour

adding that sales invest ago, and analytics saw when you high probably an and I’d data our tell we’re in results when, know, it, don’t conviction, just the it our months to I to from as And had well. opportunity was we Maybe business. on and Yes. again, seeing XX

and get on visibility can got that we expect. would can we’ve returns where we we the investments great where make So

Ryan Tomasello

touch on you. Blue the existing Digital opportunity Great. secondly, other opportunities the and And both up, response that your to the potential there you announcements made from revenue of Empower, these that thorough I a integration open Optimal way perhaps several particularly regarding is X with and for products, appreciate for quantify Servicing Optimal direct if uplift clients Blue with Blue. example, you quantify revenue the or hypothetical For on from to Empower Digital there’s could Servicing side guess, on however side those you integrations? cross-selling from Empower? pricing I maybe Optimal would And it the any

Anthony Jabbour

way that Probably Ryan, integration describe to we have results. the best it, drive is will the of strategy

seeing We’re that.

so like examples, pipeline of prepared its And of -- we the the kind. monitoring many in first and given the about it’s talked remarks, my

We’re opportunities creating, say, I’ll greenfield here.

opportunity quarter see existing all capabilities to one leave the so -- Optimal to it, quantify we we’ve the And the bundled sales Empower of had. an into but an PPE in wins -- Blue that Optimal all Empower was Blue our I’ll Kirk we the it had that into clearly PPE sorry, to client. we And

it’s the the opportunity seeing integration know to than that benefit don’t I a after. quantify coming see So through very there’s anything we’re go out can other of we if large way. that just there you Kirk,

Kirk Larsen

I yes. it, characterize the would That’s way

Operator

Huang from Tien-Tsin next from The JP question Morgan. comes

Tien-Tsin Huang

better some conversion. mix versus understand how the that making. you’re also -- ask contributing on that much Any is margin? trying Just investments wanted versus to here. tied totally the to it’s it’s to of are the margin But investments lower surprise offensive that acquisitions there? I’m I to also the just of understand

Kirk Larsen

Great question, Tien-Tsin.

has I margins. If area. an attractive acquisition, into spring, about pre-revenue. was having a the It’s mean, you It’s we’ve actually X effect that margins. -- And think the the It coming definitely year, next totality, investment. very an done, growth in the eMBS very, on

to a with any we margins Mind dilutive right lot a opportunity. not that is about And of of Top margin So business have. XX% now

be scales, us. fast to a grower it’s it As going for

scales, to enterprise to time. the it get be the over margins As will relative attractive

that guidance, So half think that part is our know change out that as they’re do is bringing do those over to all at element those time, to definitely a you it we versus a going That’s fill to those of about them, the it. product look the and of that prior and revenue that definitely going you margins. on an But portfolio, scale margins of deals we’re attractive will know that part second the day the know we’ll but that be it. and grow will

Tien-Tsin Huang

Perfect. And with just then M&A the the subject. it. on staying -- Got

think is one some of dilutive or season, a this to whatnot. themes standard deals players I do the the little more right, given a digital freedom players earnings different modern the of and and margins bit have traditional have creative

organic deals doing the -- front? investments that you curious could tuck-ins and enhance little to to can digital So if things to on been I’m your appetite, do Or Anthony, mind? with do larger or your changed the the maybe growth. that you you’ve do feel creative get or a more in Is has you like what do

Anthony Jabbour

and got and this and case real in. innovation here, make Well, think out certainly here a in Knight, great investments capability really grow to results these And investments. we’re them. the want the record with achieve managing that knowing And we’re from They tuck-ins, case opportunity that come around So come they on Black here. to large to always small, making an I Certainly, see right? from conviction, it’s We’ve got business leverage. conviction, be we’re heavy opportunity quarter-to-quarter, continue do to we to we’re them you’ve we’re company, at say and seen and do the to both. see going company, continuing agenda that agenda, the going a roll right, of to an not every focused we technologies. in in new to this We we also we’ve perspective, this

is feel growth the see So mean very, well come from exceptionally It’s strong it very capabilities. from our is clients. to in The overall, organic on to the of metal choosing win to majority strategy selling we our in pedal our platform, the coming as clients rates. us. I for innovations to new we look, here. We working existing new us our

Operator

from Bhatia Mihir of Bank from comes question next The America.

Mihir Bhatia

I Just start. the could increase first, this missed but I think I closed if of script, how did from I the maybe acquisitions? give is I apologize just the in guidance the number, if you -- much

Kirk Larsen

$XX to Top million of is eMBS. we -- So related Mind and

Mihir Bhatia

Okay. revenue, And that’s right?

Kirk Larsen

revenue, That’s yes.

Mihir Bhatia

Yes.

Okay. really in The And sharp to the servicing there. I anything there business increase was There about Was the will, a sharp well. did growth, if wanted you ask then increase. client that worth anything a know -- or I from there’s -- getting worth calling increase. some clients some large add-on calling adding out, out don’t services, maybe coming on or if

Kirk Larsen

new servicing The came XX% of to Sure. client was that Bank largest in Yes. Yes, on the single new clients. America. related growth was

on the third quarter they of last So year. came in

full So growth other quarter of focus of were I’d things to we came the growth a the are that we last innovative on there that compared drivers well. on, which would other sales. things the year, we say are clients in but servicing expect, that would as comparison we that had --

our cross-sell did base. So Servicing Digital their to to Digital the X/X existing clients of MSP gotten then tremendous the on has signed traction. Servicing use to and loans up are continuing

new and the revenues usage-based of a clients noncore of the we it The grows the doing tremendous on, would that remarks, recurring kind We call I’ll have I thing bit one piece prepared revenues, there which well. was that’s expected that is as or revenue. -- in MSP, has a what job been than processing was come revenue team a transaction-based better as its add, and

and the adding they’re That using on. in increase winning quarter. to portfolios, bring are they’re those help the portfolios clients in was an our us market, them As

drove the So year-to-date not that that that period. the outpaced growth, was really quarter both frankly what our in -- expectations but only and part of drove

over So business growth, all the year I testament this those think that -- a we has quarter happier strength last of was outlook servicing very a the questioned great the or to in so, robust with have year. couldn’t be for and that for

Mihir Bhatia

expansion XXX you’re to Yes. that. understand back guess, margins. And sounds XX wanted I to appreciate I term. like I last But the points -- just maybe just is confident going I basis question, -- so then favorable. very again, the margin achieving environment longer in it to

XX And then when points? these variable not, how currently back be the of in you we out, of XXX be early than You’re making long pointed are much -- takes? on snap higher won’t as and the your Because lot will now. investments expectations a snap to terms basis are increasing. back that What

away XXXX? XXXX just some in like of these maybe So or go

Kirk Larsen

go wouldn’t same to in AIVA that away we’re may and pace just going year. resources continue be adding AI, as we the did this invest anticipate at to the they would I because We we invest. not

to investing goal continue away. this we is the to as necessarily make a see so costs that This go as continue anticipate growth. if for or because quarter forward are want wouldn’t we investments They And Anthony won’t long particular to we margins we’re a because is necessarily And for to not, a the make. to I going sustainable go investments long-term a for said, can year. on basis maximum the expand term, snapback

place. And so is But to think year I have will invest. think initiatives elevated this of the continue in I we we somewhat because

Operator

Barclays. from question comes Manav from Patnaik The next

Manav Patnaik

you curious talk little and talked hoping bit. environment if a win you just I of was clients, could there. I could about lot know the rates, new I you’re was a you so out seeing what about address just competitive

Anthony Jabbour

products, our to our one paying clients all Thanks proud can creating for our Knight, we’re been Manav. There’s a great with clients, sales and imagine. lot Knight has performance of But Sure, I’m very is as proud team, our Black as and and my obviously, listening how exceptional, you of, market really of competitors, the dividends. question. to Black I’m working going colleagues at

I areas, think is in, these I’ll where the have just of competitors each integration we -- the significant. of So if say, power you

Mind, about of our talked with origination that platform. Top integrating PPE integrations some we’re capabilities. of we the into the With So

to going into integrate PPE. also our We’re

driving out their we of are a exist innovations I’d And just can And really many that examples level functionality so clients’ that can And we compliance. there. doesn’t driving that only are revenue, say their point things expenses affecting to our ultimately where there do. and

it competitors of that’s but innovation it’s we market, really position think competitively. and it lack our strategy for creating a the a and in is that putting I strong urgently it’s and urgently in of so it integrating why such And us delivering selling feel not

Manav Patnaik

the growth different Kirk, calculate companies. way it. Got than other is And you I our organic think

over mean, can to acquisitions give months help you contribution from the last us, just the So all to exact us the quarter? XX I M&A this

Kirk Larsen

points. is, single But somewhere contributed if Blue, that were points I specifically, what to X.X that I was at would it to think X you in is say area, which I it lower, the look largest X.X that, don’t have Optimal growth, or handy. acquisition the without so to points

it’s deal, largest, area. in the is I that somewhere X.X%, So think far which by without that

Operator

comes Gabriele The next from question Dominick from Oppenheimer.

Dominick Gabriele

But versus lot the is when the the client or asked just new you your where sales my about about where think of some the boots of been of and sales when have talent? I about team, you’re you success existing ground are of guess sales we questions if lot in -- had talent we that sales you’re acquisition, ramp expense again, answered. given A new for think a I for the building competition expenses, out new guess the seeing you’re putting much on professionals, how And think the and products? you’ve your new

Anthony Jabbour

Dominick. Sure,

we all, First is a in implementation to large what sales tied terms resources. of investments small And just of additional strong products talked in additional our very from investments had to the relative about backlog in expense sales. continued and we

help so obviously, part And the on it. of people implementation side to is adding

have us, I our roll for it’s more And of coming to talked you’ll expense of separate say, like in So the we’ll are I of having and just and continue new But non-Black I we’ve into sales areas. small I’d overall selling the number the that’s confidence actually that’s our well a across on see out Like just with. and the expenses adding said, majority portion was intelligence, to on market. a or the each in our we’ve don’t explain it it. areas up worked we’re like -- got -- And not, lending a focused you that results dedicated ramped clients, it really, solution is out see the those that about broker the correspondent areas. and as Knight results team we’re success relatively And said, know expenses artificial larger sales where past. expense. capabilities We if we expense those but how open adding selling that, out I’d from thought

Dominick Gabriele

Great. Great. the way. the And changed and on then hopefully underlying you -- your answered think I maybe turning kind I a -- this corner but can of really how expectations the we I and all basically made from these acquisitions tie post-COVID as into need appreciate that. how different When from COVID -- different -- ask made they changed? that their acquisitions does you in how about of this are client client have you’ve changed? think that conversations your guess When and about ahead? during turning question you’ve enhancing And in how their what ways, you that you demands have pre-COVID the -- been your look what some and positioning And capabilities, of

Anthony Jabbour

and path started I’d Sure. modernizing creating on all our strategy off strategy number the of our say years capabilities, What innovation of was we of of capabilities. Digital a right Servicing is when ago our

loans, to the sitting the had. strength great And capabilities made we modern when so during the Loss help solutions, is in strong are of the everyone of obviously, we’ve very which, in impact, trying investments to and got lot them. the we’ve our Mitigation and that as with to digital, remote the a pandemic world led capability And we’ve a rework their went that position went COVID,

when can the one AI again, a it’s I’d the the and what to rise the going being our journey, we’re key said, less And in that is at they like AI, them with have that time our So with going at I early the just from Certainly, bought servicing that’s that’s point. more be their right? example, say of they all with we’ll our in and seeing ways during. there’s help with expenses. of looked the looked clients as excited clients momentum having be ones, capabilities, it comes, rates we’re with think They’ll And we’re that They’re technology, the now investments work us ago. and we that clients. I shift the more all of some we’re kind to the maybe at our for Black -- seeing making help. and very post-COVID, from less the pre Knight, did they as momentum volumes, as was excited day, about right, And there. lower Knight decade of doing we’re revenue. help new us us a more with And the there’s first time more something and volume, every efficient Black conversations that

of are. really in we And terms what feel about in to with So lockstep what’s we’re good come. them needs their

Dominick Gabriele

just Is of Excellent. average the think little company color. the you margin, workforce And maybe to typically one it of own? just below guess appreciate Knight the any a think you Is average? does that your company that to the perhaps on that are long Black that about and bring up done up about How scale usually acquisitions more. how assimilate margin really into within that to the I margin some because are that? general those get kind does you the I all lower new combination? it side in or When acquisitions to of to ones the either your or those businesses? average, a take it because you Is segment bringing perhaps

Anthony Jabbour

of Dominick. we’re the look we acquisition, really you, it we company. it at When an bring Thank terms at it how in integrate do and looking into

large. part we’ll certainly, going additional some in small, will layer their But some get staffing they’re going that expense so And times, out acquisition. out. side come synergies on we’ll corporate have side, of going be with volume at or to our to bring layer, go the the the maybe comes from key They’re obviously, there we’re where that to that

contribution the are of majority these very the And margin businesses so on high.

And ramp the to those also of going EBITDA businesses. we’re revenues, so we ramp up as the up

these acquisitions. that’s So looking we’re at and modeling -- it and how all

of term bring and very We’re very about it it thoughtful short long disciplined, we we but the and looks term terms plan who in what -- in. also acquire how absorb like long

if any know don’t differs exact there’s it’s -- have unless think But I on perspective, if color... number, it timing I the a from acquisition. Kirk, an the So based you

Kirk Larsen

It them. we on when are acquire they Yes. really where depends

as to segment segment So don’t the MSP for supremely same want in opposed focus We Optimal high average. average. penalize the the at the being average margins. company the Blue as is company has effectively that We on to business

it So relative to look at we would total the company.

so just like Anthony grow. Optimal described, significant Blue And margins there virtually as as with and opportunity expand something based, they was to

and we and company And some buy others few which growth, to close years we’ve going expect to what average, acquired and pretty rapid something in and very our to were businesses in would a that’s buy if they is from we we so very of the It’s order, take pre-revenue. there other short instance. were were that it

were cost are. So it opposed it’s capabilities as much businesses were where on revenue almost prospects could opposed growth are, much board, -- they cost to take as depends plays across more we clients plays. we out. acquired, But the about and they They to how to definitely have really our they’re the about they growth the bring --

Operator

& from question Kevin Zelman The Kaczmarek comes from Associates. next

Kevin Kaczmarek

large innovate are as acquisition technology originators on and an guys? past proprietary ability own MSP any of And their over have viewing their proprietary Has you them capabilities of versus conversations originators incorporate but view and their had tech servicers proprietary how client, they Wondering changed? if X And with changed solutions ask rapidly you’ve are can that their tone to you the their color to want provide general? platforms. to conversations about in additional any that how and on using so? provider’s as there’s the I an months XX the incoming servicers obviously, or

Anthony Jabbour

I’d continues for No, and it continues -- as probably to they us, right? well. different Yes. classes build momentum change As there’s to and X say think I

I servicing then think there first on originations. people get on would second and

investments if leverage with well. capabilities this being we’re market making very believe market, in it that doing see got we’re us obviously, we that the on our look to say, is back aggressively. a the we’re the from after that attention our volumes perspective, as and after. everyone could like. to we’re you making We’ve it we and And or opportunity where And clients prospects out sells. And any how are client leveraging it. I’d where go what there a could here day, we’re as there focused culture out going there great prospect can -- any with side, again, origination the feel what I for got just that because that’s we’re our change them, not they we’ve sharing sales But hesitant to every and So on certainly in go and and technology

So...

Kevin Kaczmarek

Okay.

the start are a On perhaps to a likely so the origination busy and environment? kind this platform that less side, because it everyone’s high, in so volumes they’re sounded be -- like, switch of big

Anthony Jabbour

that. no, no, imply didn’t I No,

Kevin. you thank correcting, So for

we They’ll sales what be Our did are year. up. X Xx last to originations

You’ve QX. seen QX, numbers the

the quarter. X already in think I deals Empower we’ve signed

of think So lot in to is build -- of lots But origination we’ve But that off a they’d that more I a the hand there’d than to you we’ve perspective, be around momentum from if there’s of look, someone a servicing going wins got point was originations. had proprietary what sooner just us there. space. think the

record If recently, track we it’s look the at you had been significant.

lending say, we both. in just I to them in be So if And you, bit didn’t trying the I like, we a that. see like was opportunities rank making but investments for believe wouldn’t we said, correspondent

Operator

from Instructions] KBW. Ryan from question next comes [Operator The Tomasello

Ryan Tomasello

you’ve it the gems spoken with like that is one Just making, on platform, circling you’re the acquired past the in trading investments Optimal the Resitrader. and of loan seems back to that hidden Blue you’ve

and quantify there could over terms plans whole the loans rates can hoping and opportunities in MSP you’re platform over on making are there that was there that to front. sort MSRs Maybe what it time. what about I of today investments with for talk so ultimately maybe time, exchange-like that and of types make of integrate you And revenues strength or generally platform and platform to you some create growth scale of

Anthony Jabbour

things see have there with look road to that I that Sure, lot Ryan. down a and opportunity the of -- Like we at this. is change. mean a large

at that trying at this won’t with I we’re things as that investments, market think we control. we can look one, also to there’s looking the effects And So we’re control.

So opportunity and of certainly our we’re are. not work believe being mindful their our an control. It’s is what as understand clients we within we that there that there. But XXX% with needs

be the positioned have, now, additional we et or believe we’re valuation just for And continue an there And there trading so for capabilities that it’s capability, platform, we’re the of could the making with hedging, us. investments opportunities with isn’t making to that of as a on investment the one market we’re well the in. investment that with right one that clarity MSR But significant client unfolds cetera. really we relationships, that them

gives that the you’re looking you hope So for. color I

Ryan Tomasello

but really change Resitrader does, to just control. market by maybe mean accelerate it can your you platform think needs Anthony, what of in an What out being you It somewhat the do clarify, adoption? you structurally for a like to

Anthony Jabbour

Well, like create. made a that that’s it’s practice to effect to Blue. said, built acquired we existing thing the create. had, Technology to why, like existing I we harder it. never one difficult we is And practices. at time, I changing decision Optimal There’s Optimal with and think And is very a effect why, just easier a to The capability, the Blue and client -- why it’s the to it’s easy with that’s said, they change acquire market I change market harder.

to is a that’s staying down flashing look, there’s to opportunity immediately. areas. us that required. opportunity, still my it. it’s it. a pet and believe the project something I some see lesser go jokes other doubling I there for the with not But extent, We flashing Everyone loan at platform, trading that opportunity after company. so do It’s just And close And effect we’re that’s market like we’re think, inside to

Operator

This the Jabbour would question-and-answer over like for Mr. any conference remarks. turn back Anthony to I to concludes session. the closing

Anthony Jabbour

thank partnership the Knight again, and support trusted and for my clients call interest with I’d our joining the us Black today’s clients Thank you. day. strong for great our your we’re Yes. pleased and the we’re our for you for of Once Enjoy year. for and confident strong outlook Thank dedicated in in of their Knight. results, rest our and colleagues for company. our the Black of updated like your to remainder

Operator

today’s conference This concludes call.

lines. and participating, your Thank have day. disconnect for may You a you pleasant

Black Knight (BKI) 8 Aug 212021 Q2 Earnings call transcript