Specialist
Former senior executive at Black Knight Inc
Agenda
- Operating environment for Black Knight (NYSE: BKI), highlighting whether rising rates and declining volumes will meaningfully impact revenues or client outsourcing trends
- Intercontinental Exchange's (NYSE: ICE) proposed acquisition of Black Knight and what it may do with the platform
- Competitive dynamics of Black Knight's LOS (loan origination software) and servicing suite, including if anyone can threaten its MSP (mortgage servicing platform) market share
- Competitive landscape, highlighting key competing vendors and up-and-coming players such as Valon and Stavvy
- Outlook for H2 2022 and beyond, assessing potential for additional consolidation and cadence of ongoing digitisation
Questions
1.
What key trends or drivers should we be monitoring across Black Knight’s operating environment?
2.
We’re in a rising interest rate environment, and the mortgage industry is typically very cyclical anyway. How do you think about the sensitivity of Black Knight or ICE [Intercontinental Exchange] as volumes decline and the associated revenue impact?
3.
What was your initial reaction to the proposed ICE-Black Knight deal, and what are the likely implications should it go through?
4.
Obviously, ICE will have the MSP [mortgage servicing platform] component if it acquires Black Knight. What are the other knock-on benefits of having Black Knight under the ICE umbrella? A specialist in a recent Interview suggested they won’t beat each other up as much on price on the LOS [loan origination system] side [see Digitising the Mortgage Process – ICE Mortgage Technologies, Black Knight & Others – 16 May 2022]. Do you view any risks from the transaction?
5.
How should we frame the potential antitrust or regulatory risk and whether this deal is likely to ultimately go through? Obviously, with the two LOSs combined, you could argue they have the lion’s share of the market there, alongside Black Knight’s strong position on the MSP side.
6.
You alluded to Black Knight’s dominant market share on the MSP side. How would you rate the quality of Black Knight’s MSP software vs competitors? Do you think its current market share is sustainable?
7.
How successfully do you think ICE and Black Knight will cross-sell the existing customers with additional modules or value-added services, assuming the deal goes through?
8.
What are your thoughts on other vendors such as Blend, Roostify, SimpleNexus or Cloudvirga? Are there any up-and-coming players that might have outsized performance?
9.
You referenced the ongoing transformation and digitising in the mortgage process. ICE is being very aggressive at acquisitions, and it seems like the company may even be trying to put together a true primary and secondary exchange for mortgages. Where do you think we are in this process? What’s to come, and what do you think investors should pay attention to?
10.
Are there any contrarian views you’d leave us with today, whether something that’s commonly misunderstood by the investment community or areas where you’d challenge the existing management teams and their narratives?
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