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Black Knight, Inc. (BKI)
Q4Â 2019 Earnings Call
Feb 13, 2020, 5:00 p.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Greetings, and welcome to the Black Knight Fourth Quarter 2019 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded.
It is now my pleasure to introduce your host, Steven Eagerton, Vice President of Investor Relations. Please proceed, sir.
Steven Eagerton -- Vice President of Investor Relations
Thanks. Good afternoon, everyone, and thank you for joining us for the Black Knight's fourth quarter 2019 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 M. Jabbour -- Chief Executive Officer
Thank you, Steve. Good morning, everyone, and thank you for joining us for our fourth quarter earnings call. I would like to take some time today to discuss highlights from 2019 and our plans for 2020. 2019 was another solid year for Black Knight, as we continued to execute against our long-term strategic initiatives to drive growth through winning new clients, cross-selling to existing clients, innovating with urgency, and finally, through acquisitions to further enhance our offerings.
From a financial performance perspective, in 2019, we had adjusted revenue growth of 5.5%, adjusted EBITDA growth of 7.5% and adjusted EBITDA margin expansion of 90 basis points. This performance confirms the strength of the core fundamentals of our business and our ongoing ability to deliver for our clients and shareholders over the long-term.
The pace at which we've delivered new solutions underscores our commitment to acting with urgency. As we've said before, we will develop solutions, acquire technologies, and partner with clients, whichever strategy helps us most quickly deliver the solutions, that provide the greatest benefit to our clients. As an example, we recently acquired software from Quicken Loans to serve as a foundation for our next-generation customer service solution. Quicken Loans is a J.D. Power award winner for highest customer satisfaction and mortgage servicing for the past six consecutive years. We will make this software available to all MSP client and Quicken will be one of the first to use this new solution.
Additionally, Quicken Loans further extended their MSP contract with us and will be implementing our new default servicing, fee service solutions, as well as multiple data and analytics offerings. Overall, I'm proud of what we delivered and integrated in 2019, and we will stay the course in 2020.
Moving on to sales. We finished 2019 with very strong sales in the fourth quarter and significant momentum heading into 2020. We signed nine new MSP clients, representing nearly 500,000 loans, which is the most new clients signed in a single year since 2013. We also signed contract renewals with many of our top clients, including Wells Fargo, U.S. Bank, and SPS. In total, in 2019, we renewed over 11 million loans or put another way, more than a third of the loans on MSP were renewed to long-term contracts last year. We also had a very strong year with our origination software sales. We signed 11 new Empower clients, with nine of those clients implementing Empower Now! and we have a strong pipeline going into 2020.
One of our primary growth drivers continues to be cross-selling our offerings to existing clients. In fact, in 2019, about two-thirds of our total contract value sales were the result of cross-selling to existing clients. This includes 15 clients have signed contracts for servicing digital. So we now have 21 clients who will be using this powerful solution, eight of those clients are now in production, which speaks both to the speed of the implementation, as well as to our clients' interest.
Moving from sales to implementation. On the servicing side, we currently have nine MSP implementations and progress, and are implementing home equity portfolios for five MSP clients, which means those companies are joining the ranks of our clients who realize the additional value they gain by having both their first mortgage and home equity portfolios on a single system. On the origination side, we are implementing clients onto Empower for all origination channels: retail, home equity, assumptions, correspondent, and wholesale. The Empower Now! implementations are progressing quickly with the most recent being completed in less than six months.
Next, I'm going to move on to our plans for 2020. We just had our annual sales kickoff meeting. This meeting reinforced our team the opportunity we have as one Black Knight. We have trusted in long-term partnerships with our clients. We have proven and integrated solutions that support the end-to-end mortgage life cycle, and we have forward thinking colleagues with deep domain expertise. In 2020, we will win in the mid-tier and top-tier markets with our industry-leading software, data and analytics. We will also continue our accelerated pace of delivering innovative and integrated solutions to help our clients grow revenue, expand margins, and improve their compliance.
Thank you for your time today. Now, I'd like to turn the call over to Kirk for our financial update.
Kirk T. Larsen -- Chief Financial Officer
Thanks, Anthony, and good afternoon, everyone. I'm now going to discuss our fourth quarter and full-year 2019 financial results and our outlook for 2020.
Turning to Slide three. On a GAAP basis, full-year 2019 revenues were $1,177 million, an increase of 6% compared to 2018. Earnings before equity in losses of unconsolidated affiliates were $183 million compared to $168.5 million. Net earnings were $109 million, or $0.73 per diluted share, compared to $168.5 million, or $1.14 per diluted share. The effect of our indirect investments in Dun & Bradstreet, or D&B, was a reduction in net earnings of $74 million, or $0.50 per diluted share. The D&B results reflect, among other things, the effect of their purchase accounting adjustments, restructuring charges and other non-operating charges. Net earnings margin was 9.2% compared to 15.1%.
Now, moving to the fourth quarter. Revenues were $300 million, an increase of 5% compared to the prior year quarter. Earnings before equity in losses of unconsolidated affiliates were $49 million compared to $43 million. Net earnings were $13 million, or $0.09 per diluted share, compared to $43 million, or $0.29 per diluted share. The effect of our indirect investment in D&B was a reduction in net earnings of $36 million, or $0.24 per diluted share. Net earnings margin was 4.3% compared to 15%.
Turning to Slide four, I'll now discuss our adjusted results for the full year and fourth quarter. Adjusted revenues were $1,178 million, an increase of 5.5% compared to 2018. Adjusted EBITDA was $583 million, an increase of 7.5%. Adjusted EBITDA margin was 49.5%, an increase of 90 basis points. Adjusted net earnings was $295 million, an increase of 6%. Adjusted net earnings per share was $1.99, also an increase of 6%.
For the fourth quarter adjusted revenues were $300 million, an increase of 5% compared to the prior year quarter. Adjusted EBITDA was $149 million, an increase of 6%. Adjusted EBITDA margin was 49.5%, an increase of 50 basis points. Adjusted net earnings was $80 million, an increase of 8%. Adjusted net earnings per share was $0.54, also an increase of 8%. Adjusted net earnings per share reflects a $0.05 benefit related to a lower-than-planned tax rate, primarily as a result of two factors: a reduction in our blended state rate that affected both our ongoing tax rate, as well as a deferred tax revaluation adjustment and discrete tax benefits as a result of filing our state and federal tax returns in the fourth quarter.
Turning now to Slide five, I'll discuss our Software Solutions segment results. In the fourth quarter, adjusted revenues for the Software Solutions segment increased 4% to $256 million. Our servicing software solutions adjusted revenues declined by 3%. We saw the same growth drivers as in past quarters, such as new clients on the MSP platform, organic loan growth at existing clients, and higher revenue per loan, but that growth was more than offset by previously discussed client deconversions.
In origination software solutions, adjusted revenues increased 3% driven by new clients, revenue from acquired businesses, and higher transaction volumes in lending solutions.
Fourth quarter adjusted EBITDA increased 5% to $152 million and adjusted EBITDA margin was 59.3%, an increase of 70 basis points.
Full-year 2019 adjusted revenues increased 5% to $1,012 million and adjusted EBITDA increased 6% to $600 million. Adjusted EBITDA margin was 59.2%, an increase of 20 basis points.
Turning to Slide six. In the fourth quarter, adjusted revenues for the Data and Analytics segment increased 11% to $44 million, primarily driven by strong sales execution across nearly all business lines and higher refinance volumes. Adjusted EBITDA increased 8% to $12 million and adjusted EBITDA margin was 27.7% compared to 28.4% in the prior year quarter.
Full-year 2019 adjusted revenues increased 7% to $165 million and adjusted EBITDA increased 6% to $42 million. Adjusted EBITDA margin was 25.4% compared to 25.6% in 2018. Adjusted EBITDA for the Corporate segment in the fourth quarter was $15.4 million compared to $15.3 million in the prior quarter and $58 million for the full-year 2019, compared to $64 million in 2018.
Turning to Slide seven, I'll walk through our capital structure. At the end of December, we had cash and cash equivalents of $15 million. Total debt principal, as of December 31 was $1,555 million. We had revolver borrowings outstanding of $310 million and $440 million of borrowing capacity remaining under our revolver. Our leverage ratio was 2.7 times on a gross basis and 2.6 times on a net basis.
Turning now to Slide eight, I'll walk through our outlook for 2020, which is consistent with the details I provided on last quarter's call. GAAP revenues and adjusted revenues are expected to be in the range of $1,190 million to $1,214 million. Adjusted EBITDA is expected to be in the range of $589 million to $607 million. Adjusted EPS is expected to be in the range of $1.97 to $2.06.
Additional modeling details underlying our outlook are as follows. We expect interest expense of approximately $60 million to $63 million. Depreciation and amortization expense of $141 million to $144 million excluding the net incremental depreciation and amortization resulting from purchase accounting. And finally, an adjusted effective tax rate of 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 year. We expect adjusted revenue growth in the first half to be at the low-end of our 2020 guidance range with growth accelerating to the high-end of our range in the second half of the year due to timing of implementation and the previously discussed headwinds. Adjusted EBITDA is expected to be flat in the first half with growth accelerating to slightly above the high-end of our guidance range in the second half of the year.
I'll now turn the call over to the operator for Q&A.
Questions and Answers:
Operator
Thank you. At this time, we will be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of John Campbell with Stephens. Please proceed with your question.
John Campbell -- Stephens Inc. -- Analyst
Hey, guys. Good afternoon.
Anthony M. Jabbour -- Chief Executive Officer
Hey, John.
Kirk T. Larsen -- Chief Financial Officer
Hey, John.
John Campbell -- Stephens Inc. -- Analyst
Hey. So as far as the pipeline or kind of go-live rev at this point, I mean, you guys had once -- Kirk, I think, you'd called out 35% of the $160 million maybe coming on in 2020. That was a while ago. So I'm sure things have probably changed. But what's the best way to think about that as you kind of layered on? I mean, it looks like from the phasing of your guidance, it's maybe a little bit more back-end loaded, especially as you get past those headwinds. But is there a way to frame up kind of a range or meter out how much is kind of coming out of that pipeline this year?
Kirk T. Larsen -- Chief Financial Officer
Yeah, John. It actually really is coming in squarely in the midpoint of that 30% to 40% range. Really as we expected. Admittedly, things have moved around a little bit within that. Some things have moved up, some things have pushed out a little bit, new deals have come in, but really it's coming in right at the midpoint of that range that we've been talking about for the past year or so.
John Campbell -- Stephens Inc. -- Analyst
Okay. That's helpful. And then, could you just give us an update on -- I know you can't talk to the PennyMac legal situation. But maybe if you could tell us what you ended the year or ended the quarter at as far as the loan count on MSP and how much came off of PennyMac?
Kirk T. Larsen -- Chief Financial Officer
The loans came off of PennyMac, that was 1.6 million or 1.7 million loans. The total number of loans on MSP, including first and seconds is almost 34 million.
John Campbell -- Stephens Inc. -- Analyst
Okay. Excellent. Thank you, guys.
Anthony M. Jabbour -- Chief Executive Officer
Thanks, John.
Operator
Our next question come from the line of Bose George of KBW. Please proceed with your question.
Thomas McJoynt-Griffith -- Keefe, Bruyette & Woods -- Analyst
Hey, guys. This is Tommy McJoynt on for Bose. I wanted to ask. So with the PennyMac, that's obviously a large revenue headwind next year, yet the midpoint of your guidance still implies some modest margin expansion in 2020. So, have you just been able to take out costs pretty quickly? Or what's able to you to kind of preserve that margin and even expand it a little?
Kirk T. Larsen -- Chief Financial Officer
Yeah, Tommy. We did -- like I said on the Q3 call, we're planning for it. From an expense perspective and actions that we've been planning for throughout the year. And so, we have been able to manage our expenses in line and also grow. So, as we look at revenue coming off, I'd start with saying our typical revenue drivers are still growing. So we're still growing average revenue per loan, we're still adding new clients onto the system, still cross-selling some of our new innovations into the system. And so, we're getting margin expansion from those as well. And this is just one of the offsets.
Thomas McJoynt-Griffith -- Keefe, Bruyette & Woods -- Analyst
Okay. And then you guys also announced the buyback authorization. Do you consider that more of an opportunistic tool to deploy when shares are weak? Or do you plan to be somewhat programmatic with it?
Anthony M. Jabbour -- Chief Executive Officer
What I would say Tommy is, our capital allocation strategy hasn't changed. It's still going to be focused on investing in growth, whether that's internal development or that's tuck-in acquisitions like we've done. And then if there is capital left, we'll look at whether we pay down debt or we buy back shares. That we put the authorization in place because our prior authorization expired in early February. And so, really from this point forward if we were to go in the market, I think it'd be more regular way, meaning we'd be in the market as opposed to overly opportunistic. But fundamentally, the important message is, capital allocation really hasn't changed. We're going to focus on growth.
Thomas McJoynt-Griffith -- Keefe, Bruyette & Woods -- Analyst
And remind me where you're comfortable with your leverage being. Is it right now around the 2.7 times?
Anthony M. Jabbour -- Chief Executive Officer
Yeah. We are -- we target 3 times. But I would say, our comfort level is -- certainly, it could go above that if we find an opportunity for investment. We've been as low as 2.5 times in the past year or two. So anywhere in that range I think is very manageable. And I think it's good for us. There is no spot level we want to be at, but anywhere in that range I think is very comfortable
Thomas McJoynt-Griffith -- Keefe, Bruyette & Woods -- Analyst
Got it. Thank you.
Operator
Our next question is from the line of Bill Warmington of Wells Fargo. Please proceed with your question.
William Warmington -- Wells Fargo Securities -- Analyst
Good afternoon, everyone. So, I do want to ask about the origination software growth. I know you'd put in at 21% for the full-year 2019. Just wanted to ask, how the growth was specifically in the fourth quarter and some color around the puts and takes.
Kirk T. Larsen -- Chief Financial Officer
Sure. The origination business grew 43% in the quarter. And frankly, I begin by saying, that's a business that has performed very well and we expect for it to continue to be -- to perform well and we're pleased with how it's doing. The growth there was new clients, Bill, the acquisition -- the tuck-in acquisitions that we did, as well as higher refinance volumes in our exchange and eLending businesses. It was a particularly strong quarter for implementations for Empower Now!. We had quite a few that went into production in the fourth quarter and we had some non-recurring items that were about $4 million in the quarter, as well.
William Warmington -- Wells Fargo Securities -- Analyst
Got it. And then for my follow-up question, just wanted to check and see whether there were any share repurchases built into the guidance.
Kirk T. Larsen -- Chief Financial Officer
There are not.
William Warmington -- Wells Fargo Securities -- Analyst
Excellent. All right. Thank you very much.
Kirk T. Larsen -- Chief Financial Officer
Thank you.
Anthony M. Jabbour -- Chief Executive Officer
You're welcome.
Operator
[Operator Instructions] Our next question come from the line of Stephen Sheldon of William Blair. Please proceed with your question.
Stephen Sheldon -- William Blair & Company -- Analyst
Hi, thanks. So first, great to see the strong pace of renewals on the servicing side this year. It sounds like you renewed close to a third of the overall portfolio. So I just wanted to ask, as you've gone through that process, has there been any notable trends or changes in contract terms as you've renewed those MSP clients?
Anthony M. Jabbour -- Chief Executive Officer
No, there is nothing been changed that comes to mind. The renewals are very strong. I'd say the strength of our relationships with our clients has never been stronger and it continues to grow as we've delivered more and more capabilities into the market. And our clients are looking at us as thought leaders and innovators, focused on their success.
Stephen Sheldon -- William Blair & Company -- Analyst
Okay. And then on the continued strong growth trends in Data and Analytics. I think you ramped sales resources there in late 2018 that you talked about having a positive impact in 2019. Did you do anything similar there this year in terms of adding the sales resources? Or would you expect growth to potentially slow some as you lap those sales resource investments?
Anthony M. Jabbour -- Chief Executive Officer
Well, you're right, Stephen, we did hire them and we did get the results that we had anticipated in terms of the increased growth. We've not hired additional ones this year. And like anything, we look for having the right equilibrium of resources, whatever the function is in terms of what we see the opportunity being. So we feel real good about that. Like I said, our sales -- sorry, our revenue growth has been very strong in Q3 and in Q4, good part of that was sales. Some of it was timing, as Kirk talked on the Q3 call. And certainly, on this one.
Stephen Sheldon -- William Blair & Company -- Analyst
Great. Thank you.
Anthony M. Jabbour -- Chief Executive Officer
Thank you.
Kirk T. Larsen -- Chief Financial Officer
Thank you.
Operator
Our next question come from the line of Andrew Jeffrey of SunTrust. Please proceed with your question.
Andrew Jeffrey -- SunTrust Robinson Humphrey, Inc. -- Analyst
Hi, guys. Good afternoon. First question is just -- is about AIVA and specifically, can you speak to the uptake you've seen by function MSP versus LOS? Do you see clients who are on both platforms or use both technologies implementing AIVA on both sides of the business? Or is it -- how does that generally work?
Anthony M. Jabbour -- Chief Executive Officer
The market demand from AIVA has been very strong. We're very excited about that. And I wouldn't say, in particular -- so I'll start off saying a number of the use cases where we've developed skills for AIVA have been around the origination process. So we started with that. And what we're seeing with clients is, as they see interest in AIVA, depending on where they are in their life cycle, AIVA has been the tip of the spear in terms of creating new relationships with clients. Sometimes it's dragged Empower sales and other times it's dragged MSP sales. So, it's doing the role that we had hoped for.
As we talked about innovation, it was really building more and more capability that we can cross-sell to our, I'll say, core clients of MSP and Empower. But what we're seeing is the interest on some of the new innovations, such as AIVA, such as Servicing Digital are also pulling in clients and creating new core relationships with them.
Andrew Jeffrey -- SunTrust Robinson Humphrey, Inc. -- Analyst
Okay. So it's sticky is what it sounds like, or adds to the stickiness of the overall relationship.
Anthony M. Jabbour -- Chief Executive Officer
It really -- it adds and excitement. And you know what, I -- sales we finished second half of the year, in particularly Q4, very strong, from a selling perspective. And what I think it is, is the momentum that we've been building in terms of the energy we're putting into the market with our innovations, while retaining our focus on our clients is really resonating. Our frontline sales people have a lot to talk about with clients and prospects with, which is driving energy and engagement. But look, I expect everyone at Black Knight to be selling, not just the sales team. I seek, Kirk sells, our President sell, the entire executive team sells. So we're -- one of the side benefits of innovation is creating excitement and it's fun -- it creates a fun selling environment because of that.
Andrew Jeffrey -- SunTrust Robinson Humphrey, Inc. -- Analyst
Okay. And as a follow-up, I appreciate that. In D&A, it looks like that business is starting to gain some traction. I know Kirk you mentioned strong sales execution. Is there anything else to add, share shift? I can't think the market's growing as fast as your revenue.
Kirk T. Larsen -- Chief Financial Officer
Sure. What I would say is, it's sales execution, which is taking share, which results in taking share. So there definitely is an element of that of winning in the market. I would say that in the fourth quarter, we did see a benefit from higher refinance volumes that added a few points. And then we -- frankly, the cross-sell, we've talked about this on prior calls, the cross-sell continues to accelerate in D&A and in the fourth quarter, we had some extraordinary cross-sales related to new client deals, as well as renewals. And so that added a few points, as well. So that can ebb and flow a bit, but it's a business where we have the confidence that we were talking low- to mid-single digits a year ago, we're now talking, for 2020, we're looking at a solid mid-single-digit growth rate in Data and Analytics, around those areas. And that's without assuming anything around refinance volume. So that's really the core growth.
Andrew Jeffrey -- SunTrust Robinson Humphrey, Inc. -- Analyst
Thank you.
Operator
Our next question comes from the line of Ashish Sabadra of Deutsche Bank. Please proceed with your question.
Ashish Sabadra -- Deutsche Bank -- Analyst
Hi. Thanks for taking my question. So, a question on the Cyclops acquisition. I just wanted to better understand, is it the right way to think about it? Is it buy versus build decision? And as we think about it, does it also make a much better push for integrating or cross-selling Empower into your MSP customer base because it essentially helps agents to look at the software and then sell refinancing and home equity solution? Thanks.
Anthony M. Jabbour -- Chief Executive Officer
Yeah. Thanks, Ashish. What I'd say, in general with all of our innovations that we bring to market it is for it to drive cross-sales of all products and create a macro Black Knight environment for our clients, that just helps them. So, everything we're doing is really focused, we've said many times, helping our clients drive revenue, drive margin expansion, and drive compliance. And with Cyclops, the future of customer service is changing with the proliferation of digital and how clients interact the access to data. So, Cyclops is a great starting point, like I said, the proof point is obvious, right, Quicken Loans has been a J.D. Power number one winner for six years solid in servicing.
And so, starting with that, we thought it'd be a good foundation for us to build on. And like anything, good customer service was one of the key elements for client retention. And when you have clients, obviously, you can cross-sell more products and solutions to them, such as origination. So, we do see that it will help. We think it will help them retain their clients. We think it will help cross-sell number of our other products, which will in turn help our clients retain their customers and grow their customer base, as well.
Ashish Sabadra -- Deutsche Bank -- Analyst
That's very helpful. And maybe just a quick question on the digital POS. Any early feedback on the digital POS solution? Thanks.
Anthony M. Jabbour -- Chief Executive Officer
Yeah. The -- there has been lots of interest in it from our clients. The power of it is the tight integration. So, as often as we've talked about innovation with you, we've talked about integration and that being so important. So, looking at any of the other point of sales in the marketplace, there is multiple databases that you've got to keep in sync between the point of sale and the loan origination system and for us, it's very focused on Empower, our digital point of sale. And so, there is one database. There is nothing to keep in sync. But, in fact, everything else that we're building around it is integrating to all the other back-office capabilities.
So when we talk about AIVA and the excitement around AIVA in terms of recognizing documents, classifying documents automatically. We take a picture with your mobile phone, they could be wrinkled, you could have your thumb covering part of the document, it still recognizes what type it is, it classifies it appropriately, it integrates with the rest of the LOS environment, and that's the part where integration really drives value for our clients because it drives efficiency for our clients, employees, and it drives feature functionality for our clients customers.
Ashish Sabadra -- Deutsche Bank -- Analyst
That's very helpful. Thanks.
Anthony M. Jabbour -- Chief Executive Officer
Thank you, Ashish.
Operator
[Operator Instructions] Our next question comes from the line of Glenn Greene of Oppenheimer. Please proceed with your question.
Glenn Greene -- Oppenheimer & Co. Inc. -- Analyst
Thanks. Good afternoon. Just on the PennyMac situation, just clarify some things. Did you observe a full quarter drag this quarter? And then is there any way you could sort of maybe just give us an update on sort of what's happening with the lawsuit? I don't know if you can talk about that at all, but sort of looking for an update on the situation.
Anthony M. Jabbour -- Chief Executive Officer
I think the -- it was hard to hear you, Glenn, on the first part. But I think you're asking about what the drag was in the fourth quarter? It was $5 million in the fourth quarter.
And as far as an update on the situation, really there is -- you see motions going back and forth, but it's really going to -- it needs to play its way through the courts and we'll provide updates as they come. But there is no new updates at this time.
Glenn Greene -- Oppenheimer & Co. Inc. -- Analyst
Okay. And then, in the -- on the third quarter call you had called out, including PennyMac, 500 basis points of known headwinds to revenue growth. Is that still kind of the number that sort of baked into your outlook for '20 at this point?
Anthony M. Jabbour -- Chief Executive Officer
Yes, that is the number.
Glenn Greene -- Oppenheimer & Co. Inc. -- Analyst
Okay. And then just a final one, how much was the refi benefits to OS in the quarter?
Kirk T. Larsen -- Chief Financial Officer
It was 4 percentage points to origination in the quarter.
Glenn Greene -- Oppenheimer & Co. Inc. -- Analyst
Okay, great. Thanks a lot.
Anthony M. Jabbour -- Chief Executive Officer
Thanks, Glenn.
Operator
Our next question comes from the line of Geoffrey Dunn of Dowling & Partners. Please proceed with your question.
Geoffrey Dunn -- Dowling & Partners Securities -- Analyst
Thanks. Good evening. Kirk, I wanted to follow-up on your comment about the extraordinary cross-sell success in Q4 for D&A. Can you give any more color on the cross-sell success rate you're seeing? It seems to me that at some point D&A is almost going to be an automatic add-on, the way the banking world and technology are going. So what percent of your MSP sales now are -- including some sort of D&A addition, anything you can share on that front?
Kirk T. Larsen -- Chief Financial Officer
I would say that there is D&A in virtually all platform sales, so MSP, in particular. There will be some D&A component to those deals. And certainly, there is more white space as we go forward for that, particularly some of the more innovative solutions like the Rapid Analytics Platform.
Geoffrey Dunn -- Dowling & Partners Securities -- Analyst
How about in terms of a -- there is some aspect of it. Is there any kind of metric on broad adoption of a lot of the D&A offerings? Or how do you look at it in terms of extraordinary cross-sale versus regular cross-sell, I guess?
Kirk T. Larsen -- Chief Financial Officer
Sure. I would say, these were three renewals or new client sales that were just -- that were a little outside of the norm with what was recognized in the quarter versus kind of regular way-type deal. So that's why I brought that up. The truth is, we are embedding them in all deals and it's becoming standard equipment for some of the things like some analytics like Lien Alert and other things that become just a part of every deal. But it's -- the white space is significant for sure. It's not a metric that I have at my fingertips as we sit here right now, though, Geoff.
Geoffrey Dunn -- Dowling & Partners Securities -- Analyst
Okay. Thanks.
Operator
Our next question comes from the line of Tien-Tsin Huang of J.P. Morgan. Please proceed with your question.
Tien-Tsin Huang -- J.P. Morgan -- Analyst
Hi, thanks. I think a lot of the stuff has been covered. But just curious, in general for both of you just -- we've heard from some of the core processors about how does a lot of modernization going on at the banks and financial institutions and embracing digital. I'm just curious if that's -- if you're seeing that and if that's changing some of the buying behavior or the implementation cycles of the work that you're doing or even if some of the other digital players are being considered a little bit more -- just a bigger picture question about how digital might be influencing your conversations with buyers and existing clients.
Anthony M. Jabbour -- Chief Executive Officer
Sure. No. Thank you, Tien-Tsin, for the question. It absolutely is. We've signed 21 clients with our digital offering today, and as we go to lead in any of our selling or any of our capabilities, we always start with that. It's something very current, very much in demand by our clients and their customers that typically is where we start. And when you can see all the different use cases that can pivot from digital, there is a lot.
I'd say, virtually every business and we get insight as well from the Dun & Bradstreet side on -- everyone's looking at transformation, right? And they're looking at how to leverage data and how to leverage digital for that transformation. So, certainly, with Black Knight and to Geoffrey's previous question on the use of data and the cross-selling of it, and our expectation of it, we do want it bundled in every renewal. We do want it more and more an automatic part of a renewal that we do or a new sale that we do because it's the underlying foundation of the transformation and some of the products that we build such as AIP leverages that data to help our clients run more efficiently to achieve their goals. And with digital, it's also very powerful, like we said before, because of the retention efforts from it.
And if you think in the past, the stickiness factor of digital will improve customer service dramatically is what we believe and that's what our clients are believing as the world pivots more and more to purely digital versus having physical locations. So, driving long interactions on the digital channel is really critical and we've seen it from some of our largest clients who are very measured on, including some of the largest banks where they're very focused on the power of that engagement with their customers.
Tien-Tsin Huang -- J.P. Morgan -- Analyst
No. That makes sense, Anthony. So, just as a quick follow-on to what you just said there, is it -- I know you have the buyback plan, and that all makes great sense. Just -- does it change your willingness or your -- maybe what you're willing to pay for acquisitions of digital assets or digital content? Has it changed your thinking in the last several months or quarters? And your willingness to want to try and do that more?
Anthony M. Jabbour -- Chief Executive Officer
Well, what I'd say is, if there is anything that out there of size or price that we thought could add value and facilitate our objectives, we'd be open to it. So, it was an asset that required a tremendous amount of integration and transformation to get the results out of it, we wouldn't shy away from that. The first step is that, we've got to be confident and what it can do for our clients and what it would do for our business. And that's the bigger, I'd say, deciding factor for us versus the price or the size.
Tien-Tsin Huang -- J.P. Morgan -- Analyst
Got it. Thanks for the color.
Kirk T. Larsen -- Chief Financial Officer
Thank you.
Anthony M. Jabbour -- Chief Executive Officer
Thank you, Tien-Tsin.
Operator
Our next question comes from the line of Chris Gamaitoni of Compass Point. Please proceed with your question.
Chris Gamaitoni -- Compass Point -- Analyst
Thanks for taking my call. Most have been asked already, but wondering if you could, in any way, identify the potential materiality of the deal with Quicken. I don't know if it's on a per loan basis or potential, how it adds into the growth rate. Just unclear to me how material that can be moving forward.
Anthony M. Jabbour -- Chief Executive Officer
The way I would characterize it, Chris is, we really put it in the innovation bucket. And I would say that it would be -- it will be something that we would look to cross-sell to the entire MSP client base. It is something that you would contribute over the medium-term, frankly, something that's monetized sooner versus later because we think we'll do some work on it. We're using it as a foundation and then building upon it to make it something that is really world-class for our clients. And then I think we'll go out, there's already interest in it as we sit here today. So I don't think it will take a long time to rollout. But it's really going to be part and parcel to that innovation growth that we've talked about being part of the 6% to 8%. And I don't think that we've talked about it in aggregate. But I think it's probably 1% to 2% of growth each year that innovation is going to bring, and we certainly push for it to be at the higher end of that versus the lower end. And this is something that would contribute toward that.
Chris Gamaitoni -- Compass Point -- Analyst
Okay. And is it a per loan type fee or is it a standard contract? And just which business would it fall in per [Speech Overlap]?
Anthony M. Jabbour -- Chief Executive Officer
It will be in servicing. And it would end up being bundled within on a per loan basis.
Chris Gamaitoni -- Compass Point -- Analyst
Okay. Thank you.
Anthony M. Jabbour -- Chief Executive Officer
Thank you.
Kirk T. Larsen -- Chief Financial Officer
Thank you.
Operator
Our next question comes from the line of Kevin Kaczmarek of Zelman & Associates. Please proceed with your question.
Kevin Kaczmarek -- Zelman & Associates -- Analyst
Hey, guys. Thanks for taking my question. I wanted to understand your comments on the 2020 revenue guidance, combined with the comments on quarterly cadence. You mentioned the lower growth in the front half and accelerating toward the back half of the year. Are you talking year-over-year growth or sequential? Because there was a big step up in revenue in the second quarter of '19. So it can kind of make a difference in how we think about it.
Kirk T. Larsen -- Chief Financial Officer
Sure. No, it's year-over-year. So it was really a year-over-year comment in relative to the guidance range for 2020. And if you think about what's driving growth and how -- and what that cadence is going to be, it's really a function of timing. It's a function of timing of the 5 points of anomalous headwinds that we've talked about. So at the midpoint of our guidance range, which is a couple of percent, but for that 5%, we'd be looking at 7% growth for the year. So it's the timing of that, which is more of a back half thing. And then it's a timing of implementations, which are heavier toward the middle part of the year than they are the early part. So to summarize, year-over-year relative to our -- in your guidance range, and then it's those couple of factors that are driving the timing.
Kevin Kaczmarek -- Zelman & Associates -- Analyst
Okay. So if we're thinking about the first quarter revenue will have -- and you had the $4 million one-timer that will go away. I mean, do you guys assume in your -- embedded in your guidance, are you assuming refi is going to fall off pretty quickly on the exchange and other products that have that component?
Kirk T. Larsen -- Chief Financial Officer
I don't think it's going to fall off that quickly. I think rates have actually held relatively well. And so, volumes are still pretty good. But if you look at from Q4 to Q1, it's more a function of -- you have the PennyMac fully coming off, you have those one-timer as we talked about or non-recurring items in the fourth quarter as being kind of a sequentially, a couple of those big things. Frankly, there is a bit of timing relative to our expectation on some Empower Now! deals, which implement go into production faster and recognize revenue faster than enterprise Empower. So there's a few of those things that would step you down from that Q4 rate down to where we expect Q1 to be, which is like we said at that low-end of the full-year range.
Kevin Kaczmarek -- Zelman & Associates -- Analyst
Okay. Was there a PennyMac revenue in the fourth quarter? I was -- I think maybe I was thinking all of it was gone in the third quarter.
Kirk T. Larsen -- Chief Financial Officer
Yeah. They deconverted at the end of one month.
Kevin Kaczmarek -- Zelman & Associates -- Analyst
Oh, one month. Okay. Okay.
Anthony M. Jabbour -- Chief Executive Officer
And then the other thing --. Yes, yes. Go ahead.
Kevin Kaczmarek -- Zelman & Associates -- Analyst
Oh, no. Go ahead. I was just going to move on to a follow-up question.
Anthony M. Jabbour -- Chief Executive Officer
No, go on ahead with the follow-up.
Kevin Kaczmarek -- Zelman & Associates -- Analyst
Okay. And just broadly speaking, professional services heading into 2020, any major shifts relative to 2019?
Anthony M. Jabbour -- Chief Executive Officer
Can you repeat that question?
Kevin Kaczmarek -- Zelman & Associates -- Analyst
In terms of professional services revenue in 2020, any broad trends you would point out for guidance purposes?
Anthony M. Jabbour -- Chief Executive Officer
No. It'll be the -- the typical things that drive professional services are timing of implementation. So they'll go from working on the implementation and being deferred to actually be ongoing more consulting-type services. So there is elements of that. So that can cause ebbs and flows. But no broad-based trends around demand for professional services.
Kevin Kaczmarek -- Zelman & Associates -- Analyst
Okay. Thanks a lot.
Kirk T. Larsen -- Chief Financial Officer
Thank you.
Operator
At this time, I would like to turn the call back over to Mr. Anthony Jabbour for closing comments.
Anthony M. Jabbour -- Chief Executive Officer
Thank you. In closing, I'm confident in our ability to grow market share and continue delivering significant value to our clients through our powerful and integrated solutions, and by acting with urgency to support their success. These efforts will drive long-term growth and create value for our shareholders.
Finally, I'd like to thank my colleagues for their extraordinary work and commitment to our clients. I'd like to thank our clients for their trust and partnership. Lastly, I'd like to thank our shareholders for their ongoing support. Have a great night.
Operator
[Operator Closing Remarks]
Duration: 43 minutes
Call participants:
Steven Eagerton -- Vice President of Investor Relations
Anthony M. Jabbour -- Chief Executive Officer
Kirk T. Larsen -- Chief Financial Officer
John Campbell -- Stephens Inc. -- Analyst
Thomas McJoynt-Griffith -- Keefe, Bruyette & Woods -- Analyst
William Warmington -- Wells Fargo Securities -- Analyst
Stephen Sheldon -- William Blair & Company -- Analyst
Andrew Jeffrey -- SunTrust Robinson Humphrey, Inc. -- Analyst
Ashish Sabadra -- Deutsche Bank -- Analyst
Glenn Greene -- Oppenheimer & Co. Inc. -- Analyst
Geoffrey Dunn -- Dowling & Partners Securities -- Analyst
Tien-Tsin Huang -- J.P. Morgan -- Analyst
Chris Gamaitoni -- Compass Point -- Analyst
Kevin Kaczmarek -- Zelman & Associates -- Analyst
