Black Knight, Inc. (BKI) CEO Anthony Jabbour on Q1 2020 Results - Earnings Call Transcript

Black Knight, Inc. (BKI) Q1 2020 Results Conference Call May 5, 2020 8:30 AM ET

Company Participants

Steven Eagerton - Vice President of Investor Relations

Anthony Jabbour - Chief Executive Officer

Kirk Larsen - Chief Financial Officer

Conference Call Participants

Bill Warmington - Wells Fargo

John Campbell - Stephens Inc

Andrew Jeffrey - SunTrust

Ashish Sabadra - Deutsche Bank

Tommy McJoynt - KBW

Tien-Tsin Huang - JP Morgan

Stephen Sheldon - William Blair

Glenn Greene - Oppenheimer

Jack Micenko - SIG

Kevin Kaczmarek - Zelman

Operator

Thank you for standing by. This is conference operator. Welcome to the Black Knight First Quarter 2020 Earnings Call. As you reminder, all participants are in a listen-only mode and the conference is now being recorded. After the presentation, there will be a question and answer session. [Operator Instructions]

I would now like to turn the conference over to, Steven Eagerton, the Vice President of Investor Relations at Black Knight. Please go ahead.

Steven Eagerton

Thanks. Good morning everyone, and thank you for joining us for the Black Knight's first quarter 2020 earnings conference call. Joining me today are Chief Executive Officer, Anthony Jabbour; and Chief Financial Officer, Kirk Larsen. 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 are 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.

Anthony Jabbour

Thank you, Steve. Good morning everyone, and thank you for joining us for our first quarter earnings call. In addition to the typical updates, I provide on our calls about how we're executing on our growth strategies and the status of our recent innovations, today I'm also going to discuss the impacts of COVID-19 on our business and on the industries we serve, and how Black Knight is delivering solutions to help our clients respond to today's challenges and position them for success in the future.

It goes without saying that our most important priorities are the health and safety of our colleagues and helping the communities where we work and live. I'm proud to report that more than 99% of Black Knight's workforce quickly and successfully transitioned to working from home. We're able to accomplish this because we have thorough business continuity plans and conduct an annual pandemic exercise as part of our comprehensive risk management culture. I don't typically talk about risk management on these calls, but we have an incredibly strong program that enabled us to react quickly in this situation.

As a company that partners with many of the industry's best lenders and servicers, we believe it's our duty to serve in a leadership role as we manage through this crisis and beyond. As an example, rather than cancel our annual client conference, we made the decision to change it to a virtual conference. To illustrate how productive our employees are in this new norm, within a few weeks, they were able to transition to a virtual event, which included 40 breakout sessions, a product showcase, and a customer lounge.

During our opening session, I spoke with Joseph Otting, Comptroller of the Currency, where we discussed the impact of COVID-19 on the industry and potential next steps. We understand the challenges our clients are facing and this conference gave us an opportunity to discuss how our solutions can help. We have nearly 50% more lender and servicer clients participate in this virtual conference, than we typically have at our in-person event and the feedback we received is that our clients are interested in the solutions we discuss because they see the value they can add to their operations.

From the start of the COVID-19 crisis, we have worked to provide leadership on behalf of our clients and to provide them with actionable intelligence. We have published in-depth white papers, held town hall meetings with our clients and have frequent meetings with senior executives at our clients, government agencies and industry associations. Beyond that, we're leveraging our data and software assets with our analytics capabilities to deliver the right solutions at the right time.

We have an industry-leading servicing system and a mortgage loan contributory data set, representing more than 60% of the market that is modeled to represent the entire market, and we have robust analytics and seamless integration that ties them all together. In fact, we're the only company in the market with real time visibility into the majority of active mortgages in the United States, and the only company that has a holistic view of the home ownership life cycle.

As an example, the depth of our integrated data and technology, allows us to link the delinquency data in McDash and enables clients to easily analyze millions of records to observe the impact of delinquency and forbearance on a daily basis and identify trends by investor type, vintage, geography and other cohorts. Using our integrated data, analytics and technology, our clients can see and quantify what the effect of the pandemic means to their businesses and the industry. Our clients use these robust solutions for modeling, forecasting and reserve settings, which is critical, especially in this current environment.

In our leadership role, we've been actively sharing this data and innovating around these insights. As you may have seen, we recently began publishing forbearance data on the weekly basis. We believe the in-depth data and insights we offer are essential for both mortgage market participants and government entities as we work together to address the economic ramifications of the crisis, and no other company has ability to deliver this insight. Our integrated data and software can also help prevent losses. As an example, our actionable intelligence platform can provide notifications as soon as the lien is filed. So, lenders and servicers can quickly take action to avoid or mitigate a potential loss.

Our clients are also looking for automated software solutions, ways to make remote engagement possible as alternative ways of performing the core functions of their business. Our solutions help our clients overcome these challenges, while increasing efficiency and mitigating risk. Our investment in innovation and digital mortgage technology have made it possible for a majority of the mortgage application, underwriting and closing processes to happen online and remotely. As an example, as part of our recent acquisition of Collateral Analytics, we gained a product called Scout, which allows the homeowner to upload specific information and photos of their home to an appraiser.

The appraiser then uses their professional expertise to deliver a regulatory compliance appraisal without having sent to the home. Interest in this product is growing, especially with the FHFA's recent decision to allow for flexibility and appraisals through May 17, 2020. For loan closing, in addition to the 23 states that currently allow the use of some form of remote communication or online notarization, 20 states recently provided temporary permission for remote online notarization to securely execute documents. As a result, interest in our expedite eClosing platform has increased significantly. This solution makes it possible to close loans anytime, anywhere without buyers, sellers and closing agents being in the same room.

Moving on to servicing, the recently passed CARES Act mandates that lenders must offer forbearance for all government-backed mortgages, when the customer indicates they've been impacted by COVID-19. When this occurs, the MSP system supports the setup and management of the forbearance plan. When a plan reaches its expiration date, it needs to be decisioned in accordance with investor requirements for loss mitigation. We've recently launched the new intuitive loss mitigation solution that is tightly integrated with MSP and servicing digital and enables servicers to communicate with their customers, update the new loan terms, and automate the management of the loss mitigation process.

We know the mortgage industry is working hard to respond as quickly as possible to customer's requests for forbearance plans, and while we're all confident the economy will rebound, history shows us that there will be a percentage of these borrowers that will fall into default. When that occurs, our industry leading specialty servicing technology can assist clients and working through this process.

Next, let me discuss our first quarter and expectations going forward. Starting with our financial results, we exceeded our expectations due to higher origination volumes and continued improvement in our data and analytics sales execution. In March, we completed the acquisition of Collateral Analytics, a leading provider of real estate analytic products and tools to support appraisers, appraisal management companies, lenders, investors and government agencies. The solutions we gained in this acquisition fill white space in our current offerings and augment our existing solutions.

Moving onto sales, our first quarter was in line with our typical first quarter results. I'm also pleased with the pipeline we have going forward. As you would expect, we're monitoring the sales pipeline for shifting client priorities and elongated sales cycles as a result of the pandemic. But we believe the long-term impacts of social distancing that we are seeing today will ultimately accelerate our clients' decisions to move to our innovative platforms in the future. From an implementation perspective, we continue to make progress on implementing our significant sold pipeline. We did see a near term delay in certain cases as clients were adjusting to a work from home model and extremely elevated customer service calls. After adjusting to this new normal, we're moving forward at a usual pace with the revised timelines.

Next, let me give some color around our expected results for the remainder of the year. While our first quarter results exceed our expectations, COVID-19 effects have delayed the timing of certain revenues, which is reflected in a revised outlook for full year 2020. Specifically, we have seen much lower foreclosure related volumes due to the foreclosure moratorium and we expect this to continue with the forbearance plans offered as part of the CARES Act. Additionally, we've seen some near-term implementation delays as I just discussed. As a reminder, both of these effects are associated with timing and not a loss of long-term revenues.

In summary, the fundamentals of our business remained strong and we're focused on supporting our clients and the industry in these unprecedented times. Thank you for your time today. I will now turn the call over to Kirk.

Kirk Larsen

Thank you, Anthony, and good morning everyone. Today, I'm going to discuss our first quarter results and our updated outlook for the full year.

Turning to Slide 3. On a GAAP basis, first quarter revenues were $291 million, an increase of 3% compared to the first quarter last year. Earnings before equity and earnings or losses of unconsolidated affiliates were $45 million, an increase of 13%. Net earnings increased 93% to $50 million or $0.34 per diluted share, compared to $26 million or $0.18 per diluted share. The effect of our indirect investments in Dun & Bradstreet or D&B was an increase in net earnings of $6 million or $0.4 per diluted share. Net earnings margin was 17.2%, compared to 9.2%.

Turning to Slide 4. I'll now discuss our adjusted results for the first quarter. First quarter adjusted revenues were $291 million, an increase of 3%, compared to the first quarter last year. Adjusted EBITDA is $140 million, an increase of 2%. Adjusted EBITDA margin was 48.2%, a decrease of 20 basis points. Adjusted net earnings were $69 million an increase of 5%, and adjusted EPS was $0.47, an increase of 7%.

Turning now to Slide 5. I'll discuss our Software Solutions segment results. First quarter revenues for the Software Solutions segments increased 0.5% to $245 million. Our servicing software solutions revenues declined 3%. We continue to see similar growth drivers in the past quarters, such as new clients on the MSP platform, loan growth at existing clients and higher revenue per loans.

But that growth was more than offset by previously discussed client deconversions, and the effect of lower foreclosure related volumes due to the foreclosure moratorium in the second half of March. In origination Software Solutions, revenues increased 17.5% driven by new clients, higher refinance origination volumes and revenue from an acquired business. First quarter EBITDA decreased 1% to $139 million, and EBITDA margin was 57.0%, a decrease of 80 basis points.

Turning to Slide 6. First quarter revenues for the Data and Analytics segments increased 16% to $46 million, primarily driven by strong sales execution across nearly all business lines, higher refinance origination volumes and revenue from an acquire business. EBITDA increased 47% to $14.6 million. EBITDA margin was 31.7%, an increase of 680 basis points. Adjusted EBITDA for the corporate segments in the first quarter was $0.4 million unfavorable compared to the prior year quarter.

Turning to Slide 7, I'll walk through our capital structures. At the end of March, we had cash and cash equivalents of $66.5 million, which when combined with our borrowing capacity under our revolving line of credit of $334 million represent total liquidity of approximately $400 million. Total debt principle as of March 31st, was $1.645 billion and our leverage ratio was 2.8 times on a gross basis and 2.7 times on net basis.

Turning now to Slide 8, I'll walk through our updated outlook for full year 2014, which as Anthony mentioned, has been revised primarily to reflect the expenses lower foreclosure related volumes as a result of the foreclosure moratorium, and a forbearance relief as part of the CARES Act, which we're modeling to be about a $39 million headwind in 2020.

For the year, GAAP and adjusted revenues are expected the range of 1.164 billion to $1.184 billion. Adjusted EBITDA is expected to be in the range of $568 million to $583 million and adjusted EPS is expected to be in the range of $1.90 to $1.97. Additional modeling details underlying our outlook are as follows, we expect interest expense of approximately $56 million. Depreciation and amortization expense of $137 million to $140 million, excluding the net incremental depreciation and amortization resulting from purchase accounting and an adjusted effective tax rate approximately 24% to 25%.

Although we do not provide quarterly guidance, I want to provide you with some color as to how we expect to progress through the years. Regarding revenue, we expect adjusted revenue in the second quarter to be comparable to the first quarter with a full quarter of the headwind from lower foreclosure related revenues offset by sequential growth in origination software.

We expect third quarter revenues to increase sequentially from the second quarter due to a large scheduled implementation in servicing software and fourth quarter revenues are expecting slightly higher than third quarter. As it relates to foreclosure related revenues, we are not planning for them to recover over the course of the year through the forbearance relief that is available for up to 12 months under the CARES Act.

And finally, we expect operating expenses to be relatively consistent in the first three quarters with a step up in the fourth quarter due to seasonality and other investments.

I'll now turn the call over to the operator for Q&A.

Question-and-Answer Session

Operator

Thank you. We will now begin the question session. [Operator Instructions] Our first question comes from Bill Warmington with Wells Fargo. Please go ahead.

Bill Warmington

So, the first question I have for you is that, you're seeing major capacity problems at the banks trying to originate mortgages, basically turning away business because they can't handle the volumes. Maybe you could talk a little bit about what kind of an opportunity that presents for you in the near-term and then also in the midterm in terms of origination solutions?

Anthony Jabbour

Good morning, Bill. What we've been talking about on these earnings calls for a number of years is really our focus on innovation, on automation, on enabling all these capabilities because they're required in every environment. It's just when you get into these types of heightened environments. It really just highlights the need even more, right. And so, we do feel very good about our capabilities in the space. We do feel very good about conversations that we continue to have with clients and prospects that aren't using our systems on ways that we can help them.

And what we are encouraged with is, I've talked about at our virtual client conference, attendance was up significantly, and we're having webinars on our sales cycle that are attended very heavily. So, at times like this, industry leaders are sought after and we are one, and it's clear we're an industry leader. And so, we're going to do everything that we can to keep helping our clients and prospects out there to minimize any of the challenges they have and to maximize any opportunities in front of them, including loan originations.

Bill Warmington

Then as a follow-up, I wanted to ask about the specialty servicing side, that's part of the business that, remember, we had talked about on the IPO, and at the time, it was actually viewed as a bit of a negative because again the economy is improving. That was a bit of a headwind. Maybe you can talk a little bit about those services, loans fear foreclosure, bankruptcy and the products that are there, and what kind of activity you're seeing there?

Anthony Jabbour

Sure. Well, so number one, we're pleased that the government did step in with the foreclosure moratorium and the forbearance plan offered through the CARES Act. Going through this crisis, the safest place for everyone is in their homes, and we're at a human level happy that they were able to do that. What I'd say in terms of the offerings that we have in this space is very significant. We have tremendous market share in the space as we talked about. And, it's an area that we've been investing in.

So, if you were to think of loss mitigation, we've been at record lows in recent history, and we've been investing in this product for the last few years. And so, we're in a position right now with a very strong product, very tightly integrated MSP and so it's not surprising that, again in these challenging times, it's resonating with our clients and our sales are up significantly in loss mitigation and we're positioned well in terms of helping clients, there's like sort of he walked through the process.

The moratorium gets lifted, then you have forbearance and again, we're providing industry status to the GSE, regulators and et cetera. We're really flexing our leadership in the space offering the type of insight that only we can offer, but we need to see what the forbearance looks like. Its early May so we're expecting a spike again, people can't make their payments. Unemployment, numbers will come out again and obviously, they're looking poor obviously.

So, as we look at all the trends in this half of what's happening in this space, there's a lot of uncertainties that we expect that it's hard to imagine we don't come out of this at elevated levels of foreclosure at the end of this, the time is going to be spending on when the moratorium comes up and the forbearance numbers look like what employment is, how many get through loss mitigation, a number of dependencies, but we've got the solutions to help at every step of it, and insights through AIP to track things like delinquencies and minimizing losses, et cetera.

So, I feel very, very strong about the capabilities we have and how we can help our clients and prospects manage through this.

Operator

Our next question comes from John Campbell with Stephens Inc. Please go ahead.

John Campbell

I wanted to -- similar last question, I want to dig in a little bit on the default and foreclosure business. Obviously, in LPS days you guys were, at one point doing over a billion dollars in revenue. I know some of that a lot of that was transactional parts of our software. But what solutions remained today and maybe what was the historical peak of that rev from just those remaining businesses?

Kirk Larsen

John, its Kirk. What I would say is that back in the LPS days, there were transaction services businesses that were part of the default process and those were what went over to the servicing business of FNF. So, what we have today are really the software, the technology behind the process. So, the foreclosure and bankruptcy invoice management, workflow applications as well as loss mitigation claims, and some others that the primary platforms are foreclosure and bankruptcy and invoice management.

Those revenues today, so, in Q1 they were about, the total especially servicing was about 11% of total company revenue and about 4% of total company revenue was related to, I'll say foreclosures generally, and some of the ancillary aspects of the process. So, that is based off of a resident kind of go back in time to, to do a different recession, that's kind of where the business stands today. And coming off of the year of historical lows, the lowest foreclosure starts since 2000, that's just what I have in front of me.

And you can imagine that, if you go back to the timeframe of 2009 or '10, it was a multiple of that. Again a different time, a different recession, but it was much, much larger and so what we're actively watching and those platforms that I just mentioned, foreclosure bankruptcy and invoice management are our transactional businesses. And so as Bill alluded to earlier, for the last several years, we've been talking about that being a minor headwind, not when we made the excuse for it, but one that was factual.

But one that, to the extent that there are elevated foreclosures, there would be incremental revenues related to that process. And so, we are certainly actively watching what's happening with the foreclosure moratorium, which was initially 60 days. We'll see if that is extended, and then what happens in forbearance? As Anthony said, we literally watched the forbearance numbers on a daily basis, because we are the only ones with access to that data on a daily basis.

And so, we're actively watching that and looking certainly based upon the, what the CARES Act provides for from a forbearance perspective, which is up to 6 months and then up to another 6 months. That takes us into next year when those transaction volumes would likely commence and potentially at elevated levels. But, it's something we're certainly watching. We think that, the actions that have been taken, we're the right thing for the industry, for the consumer, and certainly as we go forward, we'll monitor and report out to you all on a frequent basis.

John Campbell

Okay. That's great color, and thanks, Kirk. And then on [Kennington] win, that that was a really good one on the origination side. Remind us again, I don't know if you can talk to this, but they're not currently a customer in MSP, is that right?

Kirk Larsen

No, they're not John.

John Campbell

Okay, great. That's all I've got. Thanks guys.

Kirk Larsen

Thank you, John.

Operator

Our next question comes from Andrew Jeffrey with SunTrust. Please go ahead.

Andrew Jeffrey

Hi. Good morning, John. I appreciate you're taking the question. We're only a couple months into this disruption and you've got a pretty good tech stack. Are there some thoughts about additional pieces you could add? The Collateral Analytics certainly looks interesting, that's that appraisal space is one that seems to be heating up competitively, would love to hear about that too. But is there a technology you think, you could layer on top of AIVA and servicing digital and some of the newer offerings that you think, the current environment suggests might update the level of urgency a bit?

Anthony Jabbour

Sure, Andrew, and it's a great question. What we're seeing -- I've been asked this question a lot. There are trends that happened in an industry like moves to digital is a trend, right? But what's happening in the times of crisis, it's accelerating the adoption. And so, where we have a lot of great capabilities in place, to some degree it's maybe integrating some of that data, tying it together.

So, we've been tying, for example, delinquency data from MSP into our McDash solutions from the Data and Analytics perspective, really allowing us with McDash to have insights on forbearance, on daily delinquencies tracking, which consumers were current, but now they've been 30 days late or 30 days late and 60 days late or opposite. They were 30 days late, now they're current again, but really tracking it, so you can have great insight into your portfolio to drive capability.

Think on the origination software side, we had movement and traction with our eClose solution that we've talked about on this call. But again, sales of that in first quarter had really jumped significantly. We've been having webinars with thousand attendees and it's really different and we're selling differently than we had before where it was one demo to one client at one time, having more of a webinar to help solve industry problems and really, moving capabilities quickly.

We talked about lost mitigations and capabilities in that space and even in regards to corporate bankruptcy. We continue to sell new clients and ancillary solutions in this space as a bankruptcy ledger bankruptcy trustee payment processing. As a leader, you will be encouraged in the sales cycles to spend more time so our prospects, get deeper and deeper because we're going to shine brighter and brighter the more time you spend to the cycle.

It's in all of the ancillary capabilities, and how it can all be integrated together, such as on servicing digital, having capabilities to request forbearance from servicing digital, having it set up on MSP in an automated way and getting confirmations when call centers are being flooded with calls, bringing capability that we already had, but more integrating together to really derive an end user value proposition that is really differentiated. We see lots of opportunities in this space and we're very focused on, helping our clients and helping our prospects out there with this capability.

Andrew Jeffrey

I mean, can I extrapolate from those comments and infer that this type of environment is on balance good for a leader like Black Knight and can potentially pressure some of your smaller competitors?

Anthony Jabbour

I always think that's the case in terms of everyday, but certainly in an environment like this, again what was obvious to me with these webinars we're hosting in the attendance at our conference being up, even though it was a virtual conference in these times of stress, that's when people are looking for leaders and Black Knight is a leader. We've got great capabilities. We're intensely focused on providing excellent client service and helping clients and being there, answering the call whenever it comes. So, I really do think that it should benefit us. And our pipeline gives us confidence that 2020 will be another strong sales here.

Kirk Larsen

Andrew, one thing I would add is, to answer your question about do times like this, is the current flowing in the direction of leaders like Black Knight. I think the answer is, as Anthony said, clearly, yes, and you can you can see it with who are various folks in government agencies looking to, who are the GSEs is looking to, who are the CEOs of our clients looking to. They're looking to Black Knights because we have data because we have insights at a scale that no one else has. And I think that is quite evident in time like this. So, I think its further evidence of the position that we built here that I think is differentiated from others.

Operator

Our next question comes from Ashish Sabadra with Deutsche Bank. Please go ahead.

Ashish Sabadra

My question was on the data and analytics strength, you called out the innovation, integration with software and looks like it was pretty broad based, but just wanted to better understand were there certain products in particular, that was driving the strength in the data and analytics because that there was some pretty material acceleration there?

Anthony Jabbour

Yes, it was -- Ashish, thank you. It actually was across the board within the business, so they really were two primary components of the growth that was -- it was the elevated origination volumes of benefited the quarter and then it was sales execution, which we've been talking about now for probably three quarters, which really has been -- you go back about 18 months or so. We made investments in the sales, in the sales team. We brought in leadership and frankly as a team, they are executing at a very high level and they have frankly for now 3 or 4 quarters consecutively.

And as I said, largely across the board on a sales execution basis, and so, the focus there is continues to be integrating both from an effort perspective with the broader sales team. So cross selling to the base as well as innovation like the rapid analytics platform for example. And frankly, finding new ways to use the data that we have, as Anthony mentioned before, the delinquency data with MSP, I can tell you that that is.

If you just looked at the attendance of our monthly mortgage monitor call, which is with clients and prospects, et cetera, and other folks in the industry, and you look at how, again, this goes to Andrew's question as well, how we're using data and how people are looking to us for the data. Those monthly calls have increased in attendance by 4 times, from where it was a month or two ago to where it is today. And those things lead to credibility. They lead to a sale. They lead to growth in that business.

And frankly, you will see Black Knight all over being referenced as well as interviewed as someone who has insight and data that no one else has. And so, those things contribute to further data sales, and I think we'll see that going forward. But business is performing at a high level, as I said really across the board. We're excited to bring in the Collateral Analytics team to our data and analytics business. We think that team brings tremendous capabilities and we think we expected the strong performance to continue.

Ashish Sabadra

Got it.

Anthony Jabbour

I could add on to that. Just in terms of with McDash and other capabilities that we're integrating, and I mentioned the delinquency, we're bringing pipeline hedging from Compass Analytics, daily real estate listings and sales metrics from our Paragon and Compass Analytics platform. So, we've been saying for a long time, about innovation, about integration and urgency and the integration. We just keep coming up with capabilities we already have somewhere and if we can integrate it, they can drive tremendous value. And we're seeing a lot of momentum and excitement from our clients and prospects because of that excitement.

Ashish Sabadra

That's great, very helpful, very helpful color. Maybe just real quick color on a question on the intimidation timeline, Kirk, you mentioned maybe a modest delay there but when you talked about the sequential cadence, you talked about the large schedule servicing implementation going live and helping accelerate the growth in the back half or starting first quarter. Just wondering, if you could provide any other color like when you had provided earlier implementation pipeline 30% to 40% going live in 2020. Is there any delays or how should we think about implementation pipeline going live this year? Thanks.

Kirk Larsen

Yes. I would say things have largely gone -- we started monitoring it as really folks started working from home back in March and trying to make sure that we were doing everything we could to keep the implementations on the original timeline. Admittedly with the change to work from home at our clients, we did see some delays that Anthony mentioned in his remarks. To quantify that, I'd say it’s about a point to revenue to the year.

So, against that amount that we thought would come in during this year. There's not a point of headwind that is, that is the way and I would emphasize the word delay. We expect them to live in the timelines that that we, that we talked about now going forward, and frankly things continue to progress. And so, you kind of marry those two that that along with the foreclosures revenue effective, the moratorium and the forbearance, exactly $39 million of timing related to the foreclosure volumes and then about a point of timing related to the implementation.

Operator

Our next question comes from Bose George with KBW. Please go ahead.

Tommy McJoynt

This is Tommy McJoynt on for Bose. I want to ask about that. Obviously, we've seen a surge in refinance loan applications. Did you quantify how much of a benefit that was and then how that breaks down between data and analytics versus software solution?

Kirk Larsen

It was about equal in both of them and it was roughly a little under a point related. So, a little under, there was 1 to 2 percentage points of the total company was the refi benefits split equally between origination and data and analytics.

Tommy McJoynt

And then just looking at the segment margin, obviously, data and analytics had a great quarter with the top number. And its margin came in pretty tremendous as well coming in over nearly 32% while servicing or the software solution side, came in a little bit weaker than on a year-over-year basis at 8% to 7%. Was anything kind of unique in the first quarter that kind of drove that diversion there?

Anthony Jabbour

What I would say is in data and analytics, first of all I would say, we're very, very pleased that we got over the 30% mark with our margins in data and analytics. Not only is the team driving growth, but also they are very actively managing expenses such that the revenue comes on at high incremental margin, so doing a really good job there. In Software Solutions, it's really a mixed story, and not anything you need to Q1 necessarily. We have the revenue from the anomalous headwinds we talked about. The last couple of quarters, that comes off with very little, very little incremental cost.

So, it really comes down at a very high margin and then we are offsetting that with cost actions that we largely took last year that we that we talked about on prior calls. And then the revenue that's coming on is in areas like origination that that has had some higher degrees of variable cost with it as it comes on compared to servicing, as well as the acquisition of competent analytics, which doesn't have margins that are at the level of the Software Solution segment.

So, it's really a mix shift. I would say overtime we continue to be confident in driving margin expansion in both segments and so really that the results in the first quarter were absolutely in line with what we were expecting from a margin rate perspective, but we're certainly very pleased with data and analytics.

Operator

Our next question comes from Tien-Tsin Huang with JP Morgan. Please go ahead.

Tien-Tsin Huang

Just on the long-term impact, accelerating decisions to move your platform et cetera, like you suggested and I'm just curious. Does that apply to down market clients as well? And can we think about maybe some of the stubborn hold-outs that are still in house that might finally budge and consider outsourcing? Just curious, how broad that comment applies here to the client base?

Anthony Jabbour

I think it is a broadly-based Tien-Tsin. We understand the market well. We understand the needs of our clients and have lots of capability to help. And at some point along the curve, the lines intersect and the time is right for them to make a move. So, we continue to feel, we're respectful of the prospects that we speak to who aren't on our solutions, and there are a lot of factors that go into decisions everyone makes in terms of other initiatives they have going on or investments that they may have their in balance sheets that they want to run down a bit, et cetera, et cetera.

But we continue to walk away feeling like we can help. And I do think, it goes down market as well because that's where integration you can place, a bigger role in terms of bringing, like what we're seeing driving more success going more down market as we've brought more capability integrated. It enabled us to go more down market than we had been historically. So, long answer to a short question, but yes, I do believe that.

Tien-Tsin Huang

That makes sense. Just looking back, it seems like always, times of crisis or change is when you usually see things open up, so just trying to think about the back end of this, that's helpful. Just on the guidance, maybe just on the guidance, you mentioned that $39 million headwind from the forbearance. You mentioned the refi is a little under a point each for help as well. You have the acquisition. I'm trying to tie together the change in the guidance. I think it was a $30 million change. So, what are the other factors that that contributed, if you don't mind going through that again?

Kirk Larsen

No, not at all, it's a great question. I actually net it out very simply for the year and just say a $39 million headwind from the timing of foreclosure volumes, and then we expect somewhere short of a point, just call it $9 million or so of refi benefits. So net it out, its $30 million. The other puts and takes happen each and every year. So, the implementation delays are offset roughly by Collateral Analytics, and really all the puts and takes, other things that happen over the course of the year. But I would say, it's really those two things. It's the foreclosure volumes partially offset by refi that I would consider to be what caused the guidance to change.

Tien-Tsin Huang

Understood. One last one, if you guys don't mind. I know it's like more of a GAAP question, but I saw the nice turnaround on the D&B, so well done there, Anthony with $0.04. Is there anything to consider for the rest of the year on that line? I realized its GAAP, not non-GAAP.

Kirk Larsen

Yes. I would, I don't have the GAAP forecast in front of me. But suffice to say, the performance at Dun & Bradstreet has improved materially over the past year that we've invested in it. Anthony and the team have done a tremendous job, growing the business as well as expanding margins through significant cost reductions. And as we look -- so those are the things as investor that we are focused on, there's other things that that happened like under the CARES Act. There were some tax things that are going on around deductibility of interest expense and some other things that are not operational in nature. But I would say, Anthony can certainly expand upon this, but I'd say, we continue to be very pleased with the performance of these days.

Anthony Jabbour

Yes, absolutely in second half of last year, we had an 8.5% percent growth in the third quarter that we normalized to around 4% to 5%, Q4 that's 6% and Q1 with a 3%. So, EBITDA growth was 17%, margins in the high 30s. So, in Q1, so a lot of great work that's been done by the team and similar to how Black Knight has been helping in working hand-in-hand with GSEs and other regulators providing another real time data no one else can. At D&B, we're doing the same thing working with FEMA, the Small Business Administration, White House National Economic Council, some other governments internationally in terms of trying to leverage our data that we have there for use in terms of how to aid to those businesses that needed.

Operator

Our next question comes from Stephen Sheldon with William Blair. Please go ahead.

Stephen Sheldon

Most of my questions have been asked, but just wanted to ask. I guess how you're thinking about risk to your business related to the underlying health of your servicing client base? Have you seen them faced increasing pressure here? And what could the potential ramifications be to Black Knight from that, if we had to look out over the next year or so?

Anthony Jabbour

Sure, Stephen. First of all, we're in frequent contact as you can imagine with our clients on the variety of topics related to the current environment. And if we look at the health of them, I probably start by saying, you need a bank versus non-bank and as a reminder bank for the category has substantial liquidity and access to capital through the fed, so not as risk the as the non-banks.

And probably, more than two thirds of our mortgages are serviced by banks. So, if we look at the non-banks, we've talked a lot of good work is going on in the industry to solve their liquidity issues and again, that's why we've been working hand in hand with GSEs and regulators to try and help facilitate this.

The GSEs has limited the servicing advances to four months, and we've not seen any collection issues so far. So I feel very good I think from a risk perspective that is well managed. And again, in cases where there's an issue with one of our clients and with the market share that we have, feel good about our win rate should any portfolios transfer.

Operator

Our next question comes from Glenn Greene with Oppenheimer. Please go ahead.

Glenn Greene

I just want to follow up on Tien-Tsin questions on D&B. In the quarter obviously sounded fine. But are there any sort of forward business impacts either positive or negative that are relevant for doing D&B and any implications for IPO timing considerations, given this happened?

Anthony Jabbour

Sure. Well, certainly, the IPO timing is impacted by this and we'll watch market conditions and see when it makes sense. And current plan is to just to go back when the market has opened up, but D&B is a similar to Black Knight and I think to Bill Foley's credit in terms of identifying winning businesses are ones that, they are good sense of growth place as well. And so, we're seeing if you looked at D&B in the last recession, where S&P 500 companies had revenues declined 13%, D&B's declined only 2%, primarily the types of business that's no longer there. So, we feel very good about the health of the business on a go forward basis.

Glenn Greene

Okay. And then Kirk, just back to sort of a default services business or the 11% of revenue that you called out. Just trying to understand, given the business mix today versus back in the LPS days '08, '09, '10 timeframe, where sort of business exploded back in on that timeframe. Are you are sort of volume sensitive? It sounds like you're not nearly as volume sensitive today as you were a decade or so ago, but just trying to understand how sensitive that business could move based on what we see going forward in terms of foreclosure activity and whatnot?

Kirk Larsen

Sure. So, I would say, first of all, it's not as big of a business as it was back then. So that's step one. I'd say the second piece would be, it likely is not as sensitive as the as back then because there is a greater percentage of dedicated professional services and contracts that are not volume sensitive and those types of things. So, that's where you kind of get to that 4% that's really tied to foreclosure related volumes and those are transaction related.

So to the extent that, there is an increase in foreclosure volumes following the forbearance period and moratorium, that would flow through, we have 80% or so market share. So, what happens in the market will happen to us. And so, you certainly have the possibility when you get through the forbearance period and you get through loss mitigation, then we could see significantly elevated volumes, so that's 4% of that on our foreclosure bankruptcy and invoice management platforms.

Operator

Our next question comes from Jack Micenko with SIG. Please go ahead.

Jack Micenko

You talked about the forbearance workout functionality in your prepared comments. Is forbearance part of the standard bundle? Or is what's happened in the last two months in incremental revenue piece already?

Kirk Larsen

There is a basic functionality within MSP for forbearance periods so that was in, which I think is an important point that you're making Jack that. The industry-leading platform has capabilities that I'm sure there are platforms out there that weren't ready for it. That, if it were in-house proprietary platform or a very custom platform may not have had the functionality that the MSP had that we are prepared. I can tell you that, the moment that any of these topics arose early in the process again, folks were looking to us, and we were hosting town halls for clients and writing white papers and really we're the thought leaders around these topics.

And yes, the functionality is in, is in MSP, where the incremental opportunity is, where Anthony was talking about loss mitigation, where our pipeline has more than doubled, and more than double in a matter of a couple of weeks where a thousand people got onto a variety of webinars that we were hosting. Servicing digital is much more interesting. It already was very interesting, but it certainly has capabilities that are more valuable in a time like this are incrementally valuable, I'll say.

And so there's that's where that's where the incremental, that's where the incremental demand comes from, as well as just coming back to the beginning where you want to be on a platform where you have the thought leaders where you have the capabilities that are that are native and ready to go and we're ready to support to any of these changes. If there's investor reporting changes that come out of the GSEs, you want to be on MSP because those are always significant. And so, those are the things that I think could or will drive incremental demand in the future.

Jack Micenko

And then obviously, you guys are weighted towards banks, banks don't have the issues that I'm talking about the servicing side. You don't do business with two of the largest non-bank services already. On the revenue side or you -- my assumption is your servicing revenue is a standard subscription, and it's either annualized or paid quarterly, you're servicing to the non-banks revenue that's not tied to the advance in any way, is it?

Anthony Jabbour

No, it's not. We get most of the revenues based on a per loan basis paid monthly and then there's an activity based fees, which is some of that activity actually the levels could have took rise in times like this, because there's just more activity around it alone, if it's in forbearance, for example so that most of the revenue related to relate to the core servicing platform with MSP.

Operator

Our next question comes from Kevin Kaczmarek with Zelman. Please go ahead.

Kevin Kaczmarek

I have one more question on the COVID-related delinquencies. I wanted to ask about the economics for Black Knight on modifications versus for closers, either in specialty servicing revenue or other areas. For instance, if a lot of the COVID-impacted loans are eventually modified. Would you get revenue from there? And if so, how much of the loss of closer revenues could that offset?

Anthony Jabbour

It's a great question and that was come through the loss mitigation platform is where the loan loss would take place. And so, it would be with the client contract attendance, as to exactly how that activity would work. But there certainly is that incremental revenue that we wouldn't have had a couple of years ago, we didn't have a loss mitigation platform. But it would be as significant as whatever closure with the way that their price.

Kevin Kaczmarek

Okay, I guess one last one. Can you disclose how much revenue came from Collateral Analytics in the quarter? Or how much is it baked in for the rest of the year?

Anthony Jabbour

To the total company, it's about a point of revenue. In the first quarter, it was -- we only owned this for a part of a month, so it was $1 million or so.

Operator

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

Anthony Jabbour

Thank you. As always, I'd like to thank our clients for their strong partnerships and my Black Knight colleagues for their exceptional efforts and dedication to delivering innovative solutions and superior customer support, especially during this challenging period.

Thank you for joining us on the call today and for your interest in our great companies. Please stay healthy and safe, and enjoy the rest of your day.

Operator

This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.