Black Knight, Inc.

Greetings and welcome to the Black Knight fourth quarter full year 2020 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Steve Eagerton, Investor Relations with Black Knight, Thank you. You may begin.

Thanks. Good morning, everyone, and thank you for joining us for the Black Knight Fourth Quarter 2020 Earnings Conference Call. Joining me today are Chief Executive Officer Anthony Jabbour and Chief Financial Officer Kirk Larson. Our results were released this morning, and the press release and supplemental slide presentation have been posted to our website. This conference call will include statements related to the expected future results of our company and our, therefore, forward-looking statements. Our actual results may differ materially from our projections due to a number of risks and uncertainties. The risks and uncertainties that forward-looking statements are subject to are described in our earnings release, Form 10-K, and other SEC filings. Today's remarks will also include references to non-GAAP financial measures. Additional information, including reconciliation between non-GAAP financial information to the GAAP financial information, is provided in the press release and supplemental slide presentation. This conference call will be available for replay via webcast through Black Knight's Investor Relations website at investor.blackknightinc.com.

I'll now turn over the call to Anthony. Thank you, Steve. Good morning, everyone, and thank you for joining us for our fourth quarter earnings call. I'd like to take some time today to discuss highlights from 2020 and our plans for 2021. First of all, I want to thank my colleagues for their efforts during 2020. I couldn't be happier with all that we accomplished as a team. Of course, like all businesses, there were challenges that we had to deal with as a result of the pandemic, but our team was relentless in its focus on taking care of our clients, innovation, and setting the stage for growth in 2021 and beyond. In 2020, we completed three acquisitions, including the strategically significant acquisition of Optimal Blue. We also launched several innovative products, completed the implementation of Bank of America onto MSP, and exceeded our sales goal in the midst of a global pandemic, which is nothing short of remarkable. In short, 2020 was a year where we continued to execute against our strategic initiatives to drive long-term sustainable growth and value for our clients and other stakeholders. Throughout 2020, we maintained positive momentum across all lines of business, and finished the year with a very solid fourth quarter, with adjusted revenue growth of 14% and adjusted EBITDA growth of 13%. This performance further demonstrates our ability to deliver for our clients and shareholders, even in the toughest environments. I'll now move on to an update on the performance of each of our businesses, beginning with our industry-leading servicing software business. In the fourth quarter of 2020, we signed four new mid-tier clients to MSP. For the full year, we signed a total of nine new MSP clients, matching last year's count and the most since 2013. These clients, along with the other implementations in process, will add nearly 1.9 million loans and three points of combined first and second lien market share by the end of 2022. This brings our signed first mortgage market share to nearly 64%, and secondly, market share to 30%. These strong sales results are further evidence of the value that servicers see in MSP. In addition to adding new logos, we also pride ourselves on creating long-term trusted relationships with our clients, which are the result of our commitment to delivering exceptional client service and continually investing in our solutions. This client-first culture is a differentiator for Black Knight, and with a key reason, we were able to renew nine MSP clients to long-term contracts in 2020, including Truist and Dovenmule. Our clients and prospects are also drawn to our servicing software because it helps them reduce their overall servicing costs, which have risen 180% since the great financial crisis due to higher delinquencies and consumer protection requirements. While these costs have come down slightly over the last five years, we remain laser-focused on enhancing our clients' profitability by continually delivering innovative solutions. Our clients also select us because they know we understand the critical importance of regulatory compliance and servicing, and we make significant investments to support regulatory requirements. Because of our depth of experience and expertise, along with our continued investments, we believe we are better positioned than any other provider to help servicers meet their compliance requirements, ultimately for the benefit of borrowers. Next, I'm going to provide an update on our origination software business, where we are seeing a high degree of success and significant momentum. As an example, during 2020, we signed 10 new Empower clients, including Carrington Mortgage Services, a top 50 originator. In the fourth quarter alone, we signed five Empower clients and added new channels for two existing Empower clients. Even with this strong sales success, we have significant runway in the loan origination system market, where our assigned client market share is approximately 13% when looking at closed loans across all origination channels. Specifically in the fourth quarter, we signed a top 75 retail originator that is an existing MSP client to a long-term contract to use our loan origination suite of solutions, including Empower, and our origination performance suite that supports the LOS. They will also be using our optimal blue PPE, hedge analytics, and MSR evaluation solutions. As we've talked about previously, our clients can realize significant benefits when they leverage additional Black Knight solutions. We've also seen great momentum in direct sales of our origination performance suite, which includes solutions like point of sale, expedite close, remote online notarization, AVA, and fee services. These solutions augment the LOS, make the origination process more efficient, and help lenders perform stronger. This new team generated three times more direct sales in 2020 than in 2019, which is extraordinary growth. In September, we acquired Optimal Blue and combined that business with our Compass Analytics business, As a result, we now offer the leading product pricing and eligibility, or PPE, engine, as well as the premier hedging capability in the industry. Combined, this team had a record sales year, adding 199 new PPE clients, 63 new hedging clients, and 30 new investors in 2020 to our network. We cross-sold our PPE to six Empower clients in the fourth quarter, further highlighting the benefits of the combination of Black Knight and Optimal Blue. With these strong sales results and early 2021 momentum, we are very confident in our previous comments around 20% plus growth for Optimal Blue. For 2021 specifically, we see growth of 25% and expect EBITDA margins to approximate our software solutions EBITDA margins in 2022. Next, let me touch on our data and analytics business. In 2019, we signed four clients to the newly launched Rapid Analytics platform. By the end of 2020, we had signed 12 more clients to this powerful cloud-based analytics platform. As a result of our recent acquisitions of Compass Analytics, Collateral Analytics, and Optimal Blue, we've gained a wealth of data that we can combine with our other market-leading data assets to provide even more valuable data and analytics across the mortgage and real estate life cycles. As an example, we are now providing mortgage market lock data 60 to 90 days sooner than previously available by our WRAP solution. And we'll soon be providing real-time consumer-specific rate quotes through servicing digital. I look forward to telling you more about our integrated offerings as well as our ongoing cross-sell successes on future calls. As you can see, Despite a year that brought challenges for all businesses, we continue to win new deals and cross-sell new innovative solutions to our clients at a steady pace. These are just a few examples of how we are integrating our data and technology to deliver critical solutions to our clients and how lenders and servicers are looking to a single, trusted, and innovative partner in Black Knight to deliver the solutions they need to be successful. As I've said before, One of our core tenants is to deliver new, innovative solutions with urgency, and to integrate these solutions across our ecosystem to help our clients grow revenue, expand margins, and support their compliance efforts. Next, let me take a few minutes to talk about some of our new innovations, starting with our servicing solutions. We remain focused on growing our servicing software business, not just from new client sales as we discussed earlier, but also through cross-sales of our innovative solutions to our exceptional client base. These cross-sales often come from new offerings, such as servicing digital, and through acquiring, enhancing, and then commercializing products, such as our next-generation customer service solution. These new capabilities, which we are adding regularly, expand our servicing software addressable market every year. As our clients continue to look for ways to increase customer satisfaction, retention, and profitability, we continue to see strong client adoption of our servicing digital solution. In 2020, we signed 20 clients to servicing digital, representing 12.7 million loans. This means that clients representing 65% of loans on MSP have now signed up to use servicing digital, which is remarkable for a new solution and really demonstrates the value both consumers and servicers receive with this offering. Servicers are able to reduce costs and increase customer satisfaction by allowing their customers to self-service. Consumers benefit from the strong capabilities in the app that enable them to look at what-if scenarios around paying off their loans, to reach out for loss mitigation, or in a low-rate environment like today, to start a refinance application. Our loss mitigation solution is another offering we recently introduced that has had great adoption. As the millions of loans that have been on forbearance plans reach their expiration date, servicers need an intuitive, powerful tool that will help them make decisions on these loans. This has led to 23 MSP clients signing up for our loss mitigation solution in 2020. So we now have clients representing 33% of MSP loans signed up for loss mitigation. Moving on to our origination clients, we continue to sell AVA to originators of all sizes. In fact, we signed another top 50 lender in the fourth quarter for this solution and now have six of the top 50 lenders signed up for this innovative AI solution that is seamlessly integrated with Empower. Most recently, we introduced Seller Digital, which leverages AI and decisioning to help correspondent lenders originate and sell loans and is fully integrated with Empower and our PPE engine. In 2020, We also introduced our point-of-sale offering as well as our guided e-close solution. We signed several clients to these solutions in 2020 and have a strong pipeline in 2021. In December, we launched our mandatory analytics solution that enables investors to measure the success of their portfolio sales in comparison to overall market performance down to the loan level to help them make more informed decisions. Finally, Within the DNA space, we signed eight clients to the unique and innovative McDash Flash Data Report Suite, which we introduced last year. As we move to 2021, our plan is simple. We'll focus on executing on our strategic initiative to drive organic growth through winning new clients, delivering innovative products at an accelerated pace, and cross-selling our solutions to existing clients. We will continue to pursue select acquisitions that will help us further solidify our strong offerings. And above all, we will remain focused on providing exceptional support to our clients. Thank you for your time today. Now I'd like to turn the call over to Kurt for a financial update.