Logo of jester cap with thought bubble.

Image source: The Motley Fool.

Black Knight, Inc. (NYSE:BKI)
Q1 2020 Earnings Call
May 5, 2020, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Thank you for standing by. This is the conference operator. Welcome to the Black Knight First Quarter 2020 Earnings Call. [Operator Instructions].

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

Steve Eagerton -- Vice President of Investor Relations

Thanks. Good morning, everyone, and thank you for joining us for the Black Knight 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 presentation have been posted to our website. This conference call will include statements related to the expected future results for 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 -- Chief Executive Officer

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 move. 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 into 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 had 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 that it 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 are 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 effects of the pandemic mean for their businesses and the industry. Our clients use these robust solutions for modeling, forecasting and reserve setting, 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 a 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 the 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 lean 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 and 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 has 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 a homeowner to upload specific information and photos of their home to an appraiser. The appraiser then uses their professional expertise to deliver a regulatory compliant appraisal without having to enter 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 allows 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 recently launched a new intuitive loss mitigation solution that is tightly integrated with MSP and servicing digital and enable 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 customers' 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 in 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 on to 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 are moving forward at a usual pace with the revised time lines. 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 our 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 remain strong, and we are 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 -- Chief Financial Officer

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 three. 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 investment in Dun & Bradstreet, or D&B, was an increase in net earnings of $6 million or $0.04 per diluted share. Net earnings margin was 17.2% compared to 9.2%. Turning to slide four. 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 was $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 five. I'll discuss our Software Solutions segment results. First quarter revenues for the Software Solutions segment increased 0.5% to $245 million. Our servicing software solutions revenues declined 3%. We continue to see similar growth drivers as in past quarters, such as new clients on the MSP platform, loan growth at existing clients and higher revenue per loan.

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 refinanced origination volumes and revenue from an acquired business. First quarter EBITDA decreased 1% to $139 million, and EBITDA margin was 57%, a decrease of 80 basis points. Turning to slide six. First quarter revenues for the Data and Analytics segment increased 16% to $46 million, primarily driven by strong sales execution across nearly all business lines, higher refinance origination volumes and revenue from an acquired business. EBITDA increased 47% to $14.6 million. EBITDA margin was 31.7%, an increase of 680 basis points. Adjusted EBITDA for the corporate segment in the first quarter was $0.4 million unfavorable compared to the prior year quarter. Turning to slide seven. I'll walk through our capital structure. 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 represents total liquidity of approximately $400 million. Total debt principal as of March 31 was $1.645 billion and a leverage ratio of 2.8 times on a gross basis and 2.7 times on a net basis.

Turning now to slide eight. I'll walk through our updated outlook for full year 2020, and which, as Anthony mentioned, has been revised primarily to reflect the expected lower foreclosure-related volumes as a result of the foreclosure moratorium and the forbearance release as part of the CARES Act, which we are modeling to be about a $39 million headwind in 2020. For the year, GAAP and adjusted revenues are expected in 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 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. Regarding revenue, we expect adjusted revenue in the second quarter to be comparable to the first quarter with the 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 large scheduled implementation in servicing software, and fourth quarter revenues are expected to be slightly higher than the third quarter. As it relates to foreclosure-related revenues, we are not planning for them to recover over the course of the year due 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.

Questions and Answers:

Operator

Thank you. [Operator Instructions] Our first question comes from Bill Warmington with Wells Fargo. Please go ahead.

Bill Warmington -- Wells Fargo -- Analyst

Good morning, everyone.

Anthony Jabbour -- Chief Executive Officer

Good morning, Mike.

Bill Warmington -- Wells Fargo -- Analyst

So the first question I had to you is that the we'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 the origination solutions.

Anthony Jabbour -- Chief Executive Officer

Okay. 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 environment, 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 as talking 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 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 -- Wells Fargo -- Analyst

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 it as a bit of a negative because the economy was improving. That was a bit of a headwind. Maybe you could talk a little bit about those services, loans feared for foreclosure, bankruptcy and the other products that are there. And what kind of activity you're seeing there?

Anthony Jabbour -- Chief Executive Officer

Sure. Well, so number one, we're pleased that the government did step in with the foreclosure moratorium and the forbearance plans 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're able to do that. What I'd say in terms of the offerings that we have in this space, they're 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 think of loss mitigation, we've been at record lows in recent history, and we've been investing in these products 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 because like I said, if you're lost during the process, the moratorium gets lifted, then you have enough forbearance. And again, we're providing industry stats to the GSEs, regulators, etc. We're really flexing our leadership in this space, offering the type of insights that only we can offer.

But we need to see what the forbearance looks like. It's 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 and the path of what's happening in this space, there's a lot of uncertainties, but 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 timing is going to be dependent 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 this, and insights, through AIP, to track things like delinquencies and minimizing losses, etc. So I feel very, very strong about the capabilities we have and how we can help our clients and prospects manage through this.

Bill Warmington -- Wells Fargo -- Analyst

Thank you very much for the insight.

Anthony Jabbour -- Chief Executive Officer

Thank you, Bill.

Operator

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

John Campbell -- Stephens, Inc -- Analyst

Hey guys, congrats on a great quarter and good job kind of navigating COVID thus far.

Anthony Jabbour -- Chief Executive Officer

Thanks, John.

Kirk Larsen -- Chief Financial Officer

Thank you, John.

John Campbell -- Stephens, Inc -- Analyst

I wanted to similar to the last question, I want to dig in a little bit on the default and foreclosure business. Obviously, in the LPS days, you guys were, at one point, doing over $1 billion of revenue. I know some of that a lot of that was transactional, parts of that were software. But what solutions remain today? And maybe what was the historical peak of that rev from just those remaining businesses?

Kirk Larsen -- Chief Financial Officer

John, it's Kirk. What I would say is 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 ServiceLink 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, but the primary platforms are foreclosure and bankruptcy and invoice management. Those revenues today, so in Q1, they were about the total specialty 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 on a resident kind of go back in time to a different recession. That's kind of where the business stands today, coming off of a year of historical low, the lowest foreclosure start since 2000 is just what I have in front of me. And you can imagine that you go back to the time frame 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, those platforms that I just mentioned, foreclosure bankruptcy and invoice management are 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 one we made an excuse for, but one that was actual. 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 watch 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 six months and up to another six months, that takes us into next year for those when those transactional 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 were the right thing for the industry, for the consumer. And certainly, as we go forward, we'll monitor as much as we can and report out to you all on a frequent basis.

John Campbell -- Stephens, Inc -- Analyst

Okay. That's great color. And then on the Kennington win, that was a really good win on 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?

Anthony Jabbour -- Chief Executive Officer

No, they're not, John.

John Campbell -- Stephens, Inc -- Analyst

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

Anthony Jabbour -- Chief Executive Officer

Thank you, John.

Operator

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

Andrew Jeffrey -- SunTrust -- Analyst

Hi, good morning gentlemen. Appreciate you taking the question. We're only a couple of 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 appraisal space is one that seems to be heating up competitively. We 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 up the level of urgency a bit?

Anthony Jabbour -- Chief Executive Officer

Sure, Andrew, and it's a great question. What we're seeing I've been asked the question a lot. There are trends that happen in an industry, like, a move to digital is a trend, right? But what's happening in the times of crisis is 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 a data and analytics perspective. Really allowing us, with McDash, to have insights on forbearance, on daily delinquencies, tracking who which consumers were current, but now they 30 days late or 30 days late, 60 days late or opposite. They were 30 days late, now they're current again. By really tracking it so you can have great insight into your portfolio to drive capability. I think on the origination software side, we had a movement and traction with our eClose solution that we talked about on this call. But again, sales of that in the first quarter have really jumped significantly. We've been having webinars with 1,000 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 webinars that help solve industry problems and really moving capabilities quickly. We talked about loss mitigation and capabilities in that space. And even in regards to foreclosure bankruptcy, we continue to sell to new clients ancillary solutions in this space, such as bankruptcy ledger, bankruptcy, trustee payment processing. As a leader, as you what we encourage in the sales cycle is spend more time to a prospect, get deeper and deeper because we're going to shine brighter and brighter the more time you spend through the cycle. It's in a lot 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 confirmation when call centers are being flooded with calls, bringing capability that we already had, but more integrating it together to really drive 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 -- SunTrust -- Analyst

That's helpful. 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 -- Chief Executive Officer

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 and 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 it should benefit us. And our pipeline gives us confidence that 2020 will be another strong sales year.

Kirk Larsen -- Chief Financial Officer

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

Andrew Jeffrey -- SunTrust -- Analyst

Thanks. Appreciate it.

Kirk Larsen -- Chief Financial Officer

Thank you.

Operator

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

Ashish Sabadra -- Deutsche Bank -- Analyst

Thanks for taking my question and congrats on a solid quarter. My question was on the Data and Analytics strength. You called out the innovation integration with software, and it 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 a pretty material acceleration there.

Kirk Larsen -- Chief Financial Officer

Yes. It was Ashish, thank you. It actually was across the board within the business. So there really were there really were two primary components of the growth that was it was the elevated origination volumes benefited the quarter. And then it was sales execution, which we've been talking about now for probably three quarters, which really has been if you go back 18 months or so, we made investments 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 three or four 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 within MSP. I can tell you that, that is, if you just look at the attendance of our monthly mortgage monitor call, which is with clients and prospects, etc., 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 four times from where it was a month or two ago to where it is today. And those things lead to credibility. They lead to sales, they lead to growth in that business. And frankly, you can 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, like I said, across really across the board. We're excited to bring in the Collateral Analytics team to our Data and Analytics business. We think that, that team brings tremendous capabilities. And we think it's we expect the strong performance to continue.

Anthony Jabbour -- Chief Executive Officer

If I could add on to that just in terms of with McDash and other capabilities that we're integrating. And I mentioned the delinquency, that 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, we're 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, it 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 -- Deutsche Bank -- Analyst

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

Kirk Larsen -- Chief Financial Officer

Yes. I would say things have largely gone we started monitoring it as really people 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 time line. 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 one point of revenue to the year. So against that amount that we thought would come in during this year. There's about one point of headwind that is delay, and I would emphasize the word delay. We expect them to go live in the timelines that we talked about now going forward. And frankly, things continue to progress. And so if you kind of marry those two that, along with the foreclosure revenue affected the moratorium and the forbearance, it's a $39 million of timing related to the foreclosure volumes and then about one point of timing related to the implementations.

Ashish Sabadra -- Deutsche Bank -- Analyst

That's very helpful. Congrats once again on a solid quarter.

Anthony Jabbour -- Chief Executive Officer

Thank you, Ashish. We appreciate it.

Operator

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

Tommy McJoynt -- KBW -- Analyst

Hey guys, this is Tommy McJoynt on for Bose. I wanted to ask about obviously, we've seen a surge in refinance volume applications. Did you quantify how much of a benefit that was? And then how that breaks down between Data and Analytics versus software solutions?

Kirk Larsen -- Chief Financial Officer

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

Tommy McJoynt -- KBW -- Analyst

Okay, great. And then just looking out at the segment margin. Obviously, Data and Analytics had a great quarter with the top line number, and its margin came in pretty tremendously well coming in over nearly 32%. While servicing or the software solutions side, came in a little bit weaker then on a year-over-year basis, 8% to 7%. Was there anything kind of unique in the first quarter that kind of drove that divergence there?

Kirk Larsen -- Chief Financial Officer

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 could come on at incremental margins. So doing a really good job there. In software solutions, it's really a mixed story and not anything unique to Q1 necessarily. We have the revenue from the anomalous headwinds we talked about over the last couple of quarters. That comes off with 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 talked about on prior calls. And then the revenue that's coming on is in areas like origination that has some has higher degrees of variable cost with it as it comes on compared to servicing, as well as the acquisition of Compass Analytics, which doesn't have margins that are at the level of the Software Solutions segment. So it's really a mix shift. I would say, over time, we continue to be confident in driving margin expansion in both segments. And so really, 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.

Tommy McJoynt -- KBW -- Analyst

Great, thank you.

Kirk Larsen -- Chief Financial Officer

You're welcome.

Operator

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

Tien-Tsin Huang -- JPMorgan -- Analyst

Okay, great. Thanks so much of you guys. Hope you are safe and well. Just on to Andrew's question, just on the long-term impact, accelerating decisions to move to your platform, etc., like you suggested. I'm just curious, does that apply to downmarket clients as well? And can we think about maybe some of the stubborn holdouts 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 -- Chief Executive Officer

I think it is 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 timing 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 cylinder balance sheet that they want to run down a bit, etc., etc. But we continue to walk away feeling like we can help. And I do think it goes downmarket as well because that's where integration even plays a bigger role in terms of bringing like what we're seeing is we're having more success going more downmarket as we brought more capability integrated. It enabled a 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 -- JPMorgan -- Analyst

No, it makes sense. Just looking back, it seems like always, in times of crisis or changes 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 the $39 million headwind from the forbearance. You mentioned the refi is a little under one point each for help as well. You had the acquisition. I'm just trying to tie together the change in the guidance. I think it was a $30 million change. So what are the other factors that contributed, if you don't mind going through that again?

Kirk Larsen -- Chief Financial Officer

Not at all. It's a great question. I actually net it out very simply for the year and just say we had a $39 million headwind from the timing of foreclosure volumes. And then we expect somewhere short of one point, just call it, $9 million or so of refi benefit. So netted out, it's $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 foreclosure volumes, partially offset by refi that I would consider to be what cause the guidance to change.

Tien-Tsin Huang -- JPMorgan -- Analyst

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

Kirk Larsen -- Chief Financial Officer

I will yes, I would I don't have a 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 that the investor that we are focused on. There are other things 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 nonoperational in nature. But I would say, Anthony can certainly expand upon this, but I'd say we're we continue to be very pleased with the performance of D&B.

Anthony Jabbour -- Chief Executive Officer

Yes, absolutely. We second half of last year, we had an 8.5% growth in the third quarter that we normalized to around 4%, 5%. Q4 was at 6%, and Q1 was at 3%. So EBITDA growth was 17%, margin is 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 work in hand at hand with the 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 bring aid to those businesses that need it.

Tien-Tsin Huang -- JPMorgan -- Analyst

Well then, thanks.

Kirk Larsen -- Chief Financial Officer

Thanks. Tien-Tsin.

Operator

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

Stephen Sheldon -- William Blair -- Analyst

Good morning. Thanks. 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 face 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 -- Chief Executive Officer

Sure, Stephen. First of all, we're in frequent contact, as you can imagine, with our clients on a variety of topics related to the current environment. And if we look at the health of them, I'd probably start by saying you've got bank versus nonbank. And as a reminder, banks, as a category, have substantial liquidity and access to capital through the fed, so not as risk the the nonbanks. And probably more than 2/3 of our mortgages are serviced by banks. So and if we look at the nonbanks, we've took a lot of good work that's 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 have 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 it's well managed then and again, in cases where there's an issue with one of our clients, again, with the market share that we have, feel good about our win rate should any portfolios transfer.

Stephen Sheldon -- William Blair -- Analyst

Great, thank you.

Anthony Jabbour -- Chief Executive Officer

Thank you, Stephen.

Operator

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

Glenn Greene -- Oppenheimer -- Analyst

Thanks, good morning. I just want to follow-up on Tien-Tsin's questions on D&B. I mean the quarter obviously sounded fine. But are there any sort of forward business impacts, either positive or negative that are relevant for D&B? And any implications for IPO timing consideration, given what's happened?

Anthony Jabbour -- Chief Executive Officer

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 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 one that they are good defensive growth plays as well. And so we're seeing if you look at D&B in the last recession, where S&P 500 companies had revenues declined 13%, D&B's declined only 2%, primarily tied to a business that's no longer there. So we feel very good about the health of the business on a go-forward basis.

Glenn Greene -- Oppenheimer -- Analyst

Okay. And then Kirk, the expectance of the 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, the '08, '09, '10 time frame where sort of business exploded back in that time frame, are you as sort of volume sensitive? Or 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 you see going forward in terms of foreclosure activity and whatnot.

Kirk Larsen -- Chief Financial Officer

Sure. So I would say it's not first of all, it's not as big of a business as it was back then, so that's step 1. I'd say the second piece would be it likely is not as sensitive 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 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, that we could see significantly elevated volumes. For that's 4% of that debt is on our foreclosure bankruptcy and invoice management platforms.

Glenn Greene -- Oppenheimer -- Analyst

Okay, great, that's helpful, thanks guys.

Kirk Larsen -- Chief Financial Officer

Thanks.

Operator

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

Jack Micenko -- SIG -- Analyst

Hi, good morning. A couple of relevant questions. You talked about the forbearance workout functionality in the prepared comments. Is forbearance part of the standard bundle? Or is there is what happened in the last two months an incremental revenue piece already?

Kirk Larsen -- Chief Financial Officer

There's 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 an in-house proprietary platform or a very constant platform, may not have had the functionality that MSP had, that we were 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 MSP. Where the incremental opportunity is, where one where Anthony is talking about loss mitigation, where our pipeline has more than doubled and where that would matter in a couple of weeks, where 1,000 people got on to a variety of webinars that we were hosting. Servicing digital is much more interesting it already was very interesting that it certainly has capabilities that are more valuable in a time like this or incrementally valuable, I'll say. And so there's 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 native and ready to go, and we're ready to support you as in any of these changes. If there's investor-reported changes that come out with GSES, you want to be on MSP because those are always significant. And so those are the things that I think will, could or will drive incremental demand in the future.

Jack Micenko -- SIG -- Analyst

Perfect. Without asking about. And then obviously, you guys are weighted toward banks, banks who don't have the issues, so I'm talking about servicing side. You don't do business with two of the largest nonbank services already. On the revenue side, are you my assumption is your servicing revenue as a standard subscription, and it's either annualized or quarterly, you're servicing to the nonbanks revenue. That's not tied to the advance in any way, is it?

Kirk Larsen -- Chief Financial Officer

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

Jack Micenko -- SIG -- Analyst

Great, thanks for taking my questions.

Kirk Larsen -- Chief Financial Officer

Thank you.

Operator

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

Kevin Kaczmarek -- Zelman -- Analyst

Yes. I have one more question on the COVID-related delinquencies. I wanted about to ask about the economics for Black Knight on modifications versus foreclosures, 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 that? And if so, how much of the lost foreclosure revenues could that offset?

Anthony Jabbour -- Chief Executive Officer

There it's a great question. I mean, that would come through the loss mitigation platform is where the loan loss would take place. And so it would be client contract dependent as to exactly how that activity will work. But there's certainly that is incremental revenue that we wouldn't have had a couple of years ago when we didn't have a loss mitigation platform. But it would be it would not be as significant as what a foreclosure would be the way that they're priced.

Kevin Kaczmarek -- Zelman -- Analyst

Okay. And 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?

Kirk Larsen -- Chief Financial Officer

It was I mean it's about to the total company, it's about one point of revenue. In the first quarter, it was we only owned it for a part of the month, so it was $1 million or so.

Kevin Kaczmarek -- Zelman -- Analyst

All right, great, thanks. That's all I had.

Kirk Larsen -- Chief Financial Officer

Thank you.

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 -- Chief Executive Officer

Thank you. As always, I'd like to thank our clients for their strong partnership 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 company. Please stay healthy and safe and enjoy the rest of your day.

Operator

[Operator Closing Remarks]

Duration: 57 minutes

Call participants:

Steve Eagerton -- Vice President of Investor Relations

Anthony Jabbour -- Chief Executive Officer

Kirk Larsen -- Chief Financial Officer

Bill Warmington -- Wells Fargo -- Analyst

John Campbell -- Stephens, Inc -- Analyst

Andrew Jeffrey -- SunTrust -- Analyst

Ashish Sabadra -- Deutsche Bank -- Analyst

Tommy McJoynt -- KBW -- Analyst

Tien-Tsin Huang -- JPMorgan -- Analyst

Stephen Sheldon -- William Blair -- Analyst

Glenn Greene -- Oppenheimer -- Analyst

Jack Micenko -- SIG -- Analyst

Kevin Kaczmarek -- Zelman -- Analyst

More BKI analysis

All earnings call transcripts

AlphaStreet Logo