Top mortgage lending software and analytics provider Black Knight is exploring a sale following takeover interest from several private equity firms, according to a report from Bloomberg.
The Jacksonville, Florida-headquartered firm hasn’t decided whether it would be sold or remain independent, unnamed sources told the financial news publication.
Black Knight’s stock, like many in the mortgage space, has struggled in the last year, losing 21% of its value. But on the news of a potential sale, it surged 12% on Tuesday, closing the day with a market cap of $10.3 billion.
According to the company’s most recent earnings report, net earnings in 2021 reached $207.9 million, down from $264.1 million in 2020. That’s down 21%, which executives largely attributed to bookkeeping associated with the 2020 investment of Dun & Bradstreet Holdings. Black Knight said that in 2020 it recorded a $62.1 million non-cash gain because of DNB’s public offering and private placement.
Business was good for Black Knight in the fourth quarter due to strong sales of Empower and MSP, Black Knight’s originations and servicing platforms. Profits in Q4 totaled $60.7 million, up 29% from the same period in 2020.
Revenue reached $386.2 million from October to December, an increase of 13% compared to the same quarter of 2020. Black Knight recorded $1.48 billion in revenue in 2021, an increase of 19% compared to 2020.
Software solutions represented 84.7% of the revenues last year, with an operating margin of 46.6%, compared to 46.5% in the previous year. The remaining revenue came from data and analytics, a segment with an operating margin of 28.7% in 2021, compared to 25% in 2020.
In February, Black Knight announced changes in its C-suite: Anthony Jabbour will assume the role of executive chairman of the board; Joe Nackashi, the current president, will be the CEO; Kirk Larsen, the chief financial officer, will take the role of president.
Black Knight has a number of well-capitalized rivals in the mortgage lending software and analytics space, including ICE Mortgage Technology, which in 2020 bought Ellie Mae in a deal valued at $11 billion.
Heard on the ‘Street’: Black Knight Inc. (NYSE:BKI) may be valued at $80-$85/share in a takeout it is exploring. BKI may be worth 20x-22x C22E EBITDA, or $80-$85, on a potential takeover. 2021 Revenues were $1,475 million, an increase of 13%; Organic revenue growth of Adjusted EBITDA were $724 million. Where does this leave the Dun & Bradstreet Corporation? BKI is a major shareholder of Dun & Bradstreet and it played a leading role in transferring Dun & Bradstreet’s headquarter to Jacksonville.