Specialist
Former VP at Black Knight Inc
Agenda
- Outlook for Black Knight (NYSE: BKI), including impact from rising interest rate environment
- Competitive landscape between Black Knight and other MSPs (mortgage servicing providers)
- Proposed acquisition by ICE (Intercontinental Exchange; NYSE: ICE) and potential synergies with Ellie Mae
- Outlook for 2023 and beyond, including potential growth areas
Questions
1.
What are your thoughts on the current operating environment for Black Knight, pulling out 2-3 key trends or drivers you think we should be paying attention to?
2.
How might the rising rate environment impact the mortgage servicing industry?
3.
Looking at stability of Black Knight’s revenue, the loan origination side obviously depends on originating loans, but from the servicing side, people will continue to have to pay their mortgages and have their mortgages serviced. How would you summarise the stability of the company’s revenues, especially in the current market, where home purchases are slowing down?
4.
How should we look at the ability to resell MSRs [mortgage servicing rights]? Is it a somewhat liquid market or is it pretty non-liquid and people might have to take discounts on it?
5.
You mentioned Black Knight has 72% market share in the MSP [mortgage servicing provider] space. How dominant is this position? Is this something that an up-and-comer could possibly take market share from or is the company pretty much the dominant provider and able to defend its market share pretty easily?
6.
How automated are Black Knight’s services and how much automation can the company reach? Has its automation somewhat reached maturity or is there more room to grow?
7.
What are your thoughts on Sagent and Mr Cooper’s announcement that they’re building a cloud-first servicing solution? The agreement was completed in March 2022. Do you think Black Knight will be able to fend off an upstart product such as this one or others such as Valon’s? What are your thoughts on that?
8.
What do you think of Black Knight’s ability to defend from fintechs? Would the company have to improve the product to match? Would it have to lower the sales price? What could Black Knight do to defend against these up-and-coming fintech competitors?
9.
What are your thoughts on the May 2022 announcement that Black Knight will be acquired by ICE [Intercontinental Exchange] and combined with Ellie Mae?
10.
ICE and Black Knight are obviously two of the larger players in this space and the combination is getting some regulatory scrutiny. Do you have any thoughts on whether this might go through or if one might have to divest some assets?
11.
Assuming ICE’s acquisition of Black Knight is approved and there aren’t any divestitures, what do you think the final products look like? Are they going to combine everything into one Ellie Mae product, or do you think they’ll keep the separate entities and just combine the data on the back end?
12.
What are your thoughts on the amount of loans that Black Knight might lose during the FTC [Federal Trade Commission] review process? Black Knight mentioned that its sales cycles are elongating because people are unsure about what’s going to happen. Do you think the company would lose a significant number of clients due to this unsure future?
13.
Looking at the pricing model for ICE’s data and analytics, it seems it’s more of a subscription-based product, whereas Black Knight is more transactional in nature. Could you discuss the similarities and differences between these businesses and why the pricing varies?
14.
Once ICE and Black Knight have combined, do you think they will keep their separate pricing models because that’s what the clients expect? Will ICE implement the subscription model?
15.
It seems ICE had some interesting products that Black Knight is looking to fill. Do you believe ICE has the skill to succeed in overhauling the mortgage market with Ellie and Black Knight under the same roof and create a true end-to-end process?
16.
What type of pricing power do you expect ICE to have after its acquisition of Black Knight has been completed?
17.
What is your outlook for the ICE-Black Knight combined entity over the next 1-2 years?
18.
What might a bull case and a bear case look like for the ICE-Black Knight combined entity?
19.
Is there anything that you think is worth noting around Black Knight?
