Black Knight, Inc. (BKI) Q4 2020 Earnings Call Transcript

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Black Knight, Inc. (BKI)
Q4 2020 Earnings Call
Feb 16, 2021, 8:30 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Greetings, and welcome to the Black Knight Fourth Quarter Full Year 2020 Earnings Call. [Operator Instructions]. A question-and-answer session will follow the formal presentation. [Operator Instructions]. It is now my pleasure to introduce Steve Eagerton, Investor Relations with Black Knight. Thank you. You may begin.

Steven Eagerton -- Vice President of Investor Relations

Thanks. Good morning, everyone, and thank you for joining us for the Black Knight fourth quarter 2020 earnings conference call. Joining me today are Chief Executive Officer, Anthony Jabbour; and Chief Financial Officer, Kirk Larsen. Our results were released this morning, and the press release and supplemental slide presentation have been posted to our website.

This conference call will include statements related to the expected future results of our Company and are therefore forward-looking statements. Our actual results may differ materially from our projections due to a number of risks and uncertainties. The risks and uncertainties that forward-looking statements are subject to are described in our earnings release, Form 10-K and other SEC filings.

Today's remarks will also include references to non-GAAP financial measures. Additional information, including reconciliation between non-GAAP financial information to the GAAP financial information is provided in the press release and supplemental slide presentation. This conference call will be available for replay via webcast through Black Knight's Investor Relations website at investor.blackknightinc.com.

I'll now turn over the call to Anthony.

Anthony Jabbour -- Chief Executive Officer

Thank you, Steve. Good morning, everyone, and thank you for joining us for our fourth quarter earnings call. I'd like to take some time today to discuss highlights from 2020 and our plans for 2021. First of all, I want to thank my colleagues for their efforts during 2020. I couldn't be happier with all that we accomplished as a team.

Of course, like all businesses, there were challenges that we had to deal with as a result of the pandemic, but our team was relentless in its focus on taking care of our clients, innovation and setting the stage for growth in 2021 and beyond. In 2020, we completed three acquisitions, including the strategically significant acquisition of Optimal Blue. We also launched several innovative products, completed the implementation of Bank of America on to MSP, and exceeded our sales goal in the midst of a global pandemic, which is nothing short of remarkable.

In short, 2020 was the year where we continued to execute against our strategic initiatives to drive long-term sustainable growth and value for our clients and other stakeholders. Throughout 2020, we maintained positive momentum across all lines of business and finished the year with a very solid fourth quarter with adjusted revenue growth of 14% and adjusted EBITDA growth of 13%. This performance further demonstrates our ability to deliver for our clients and shareholders even in the toughest environments.

I'll now move on to an update on the performance of each of our businesses, beginning with our industry-leading servicing software business. In the fourth quarter of 2020, we signed four new mid-tier clients to MSP. For the full year, we signed a total of nine new MSP clients, matching last year's count and the most since 2013. These clients, along with the other implementations in process, will add nearly 1.9 million loans and 3 points of combined first and second-lien market share by the end of 2022. This brings our signed first mortgage market share to nearly 64% and second-lien market share to 30%. These strong sales results are further evidence of the value that servicers see in MSP.

In addition to adding new logos, we also pride ourselves on creating long-term trusted relationships with our clients, which are the result of our commitment to delivering exceptional client service and continually investing in our solutions. This client first culture is a differentiator for Black Knight and was the key reason we were able to renew nine MSP clients to long-term contracts in 2020, including Truist and Dovenmuehle.

Our clients and prospects are also drawn to our servicing software because it helps them reduce their overall servicing costs, which have risen 180% since the great financial crisis due to higher delinquencies and consumer protection requirements. While these costs have come down slightly over the last five years, we remain laser-focused on enhancing our clients' profitability by continually delivering innovative solutions.

Our clients also select us because they know we understand the critical importance of regulatory compliance in servicing, and we make significant investments to support regulatory requirements. Because of our depth of experience and expertise, along with our continued investments, we believe we are better positioned than any other provider to help servicers meet their compliance requirements, ultimately for the benefit of borrowers.

Next, I'm going to provide an update on our origination software business, where we are seeing a high degree of success and significant momentum. As an example, during 2020, we signed ten new Empower clients, including Carrington Mortgage Services, a top 50 originator. In the fourth quarter alone, we signed five Empower clients and added new channels for two existing Empower clients.

Even with the strong sales success, we have significant runway in the loan origination system market, where our signed client market share is approximately 13% when looking at closed loans across all origination channels.

Specifically in the fourth quarter, we signed a top 75 retail originator that is an existing MSP client to a long-term contract to use our loan origination suite of solutions, including Empower and our origination performance suite that supports the LOS. They will also be using our Optimal Blue PPE, hedge analytics and MSR valuation solutions.

As we've talked about previously, our clients can realize significant benefits when they leverage additional Black Knight solutions. We've also seen great momentum in direct sales of our origination performance suite, which includes solutions like point-of-sale, Expedite Close, remote online notarization, AIVA and fee services. These solutions augment the LOS, make the origination process more efficient and help lenders perform stronger.

This new team generated three times more direct sales in 2020 than in 2019, which is extraordinary growth. In September, we acquired Optimal Blue and combined that business with our Compass Analytics business. As a result, we now offer the leading product pricing and eligibility or PPE engine as well as the premier hedging capability in the industry.

Combined, this team had a record sales year, adding 199 new PPE clients, 63 new hedging clients and 30 new investors in 2020, to our network. In addition, we cross sold our PPE to six Empower clients in the fourth quarter, further highlighting the benefits of the combination of Black Knight and Optimal Blue.

With the strong sales results and early 2021 momentum, we are very confident in our previous comments around 20%-plus growth for Optimal Blue. For 2021 specifically, we see growth of 25% and expect EBITDA margins to approximate our software solutions EBITDA margins in 2022.

Next, let me touch on our Data and Analytics business. In 2019, we signed four clients to the newly launched Rapid Analytics Platform. By the end of 2020, we had signed 12 more clients to this powerful cloud-based analytics platform. As a result of our recent acquisitions of Compass Analytics, Collateral Analytics and Optimal Blue, we have gained a wealth of data that we can combine with our other market-leading data assets to provide even more valuable data and analytics across the mortgage and real estate life cycles.

As an example, we are now providing mortgage market lock data 60 days to 90 days sooner than previously available via our RAP solution. And we'll soon be providing real-time consumer-specific rate quotes through Servicing Digital. I look forward to telling you more about our integrated offerings as well as our ongoing cross-sell successes on future calls.

As you can see, despite a year that brought challenges for all businesses, we continue to win new deals and cross-sell new innovative solutions to our clients at a steady pace. These are just a few examples of how we are integrating our data and technology to deliver critical solutions to our clients and how lenders and servicers are looking to a single, trusted and innovative partner in Black Knight to deliver the solutions they need to be successful.

As I've said before, one of our core tenets is to deliver new innovative solutions with urgency and to integrate these solutions across our ecosystem to help our clients grow revenue, expand margins and support their compliance efforts. Next, let me take a few minutes to talk about some of our new innovations, starting with our servicing solutions. We remain focused on growing our servicing software business, not just from new client sales as we discussed earlier, but also through cross sales of our innovative solutions to our exceptional client base. These cross sells often come from new offerings such as Servicing Digital and through acquiring, enhancing and then commercializing products such as our next-generation customer service solution. These new capabilities, which we're adding regularly, expand our servicing software addressable market every year.

As our clients continue to look for ways to increase customer satisfaction, retention and profitability, we continue to see strong client adoption of our Servicing Digital solution. In 2020, we signed 20 clients to Servicing Digital, representing 12.7 million loans. This means that clients representing 65% of loans on MSP have now signed up to use Servicing Digital, which is remarkable for a new solution and really demonstrates the value both consumers and servicers receive with this offering. Servicers are able to reduce costs and increase customer satisfaction by allowing their customers to self service. Consumers benefit from the strong capabilities in the app that enable them to look at what-if scenarios around paying off their loans to retail for loss mitigation or in a low rate environment like today to start a refinance application.

Our Loss Mitigation solution is another offering we recently introduced that has had great adoption. As in millions of loans that have been on forbearance plans reach their expiration date, servicers need an intuitive, powerful tool that will help to make decisions on these loans. This has led to 23 MSP clients signing up for our Loss Mitigation solution in 2020. So, we now have clients representing 33% of MSP loans signed up for Loss Mitigation.

Moving on to our origination clients. We continue to sell AIVA to originators of all sizes. In fact, we signed another top 50 lender in the fourth quarter for this solution and now have six of the top 50 lenders signed up for this innovative AI solution that is seamlessly integrated with Empower. Most recently, we introduced Seller Digital, which leverages AI and decisioning to help correspondent lenders originate and sell loans and is fully integrated with Empower and our PPE engine.

In 2020, we also introduced our point-of-sale offering as well as our guided eClose solution. We signed several clients to these solutions in 2020 and have a strong pipeline in 2021. In December, we launched our mandatory analytics solution that enables investors to measure the success of their portfolio sales in comparison to overall market performance down to the loan level to help them make more informed decisions. Finally, within the D&A space, we signed eight clients to the unique and innovative McDash Flash data report suite, which we introduced last year.

As we move to 2021, our plan is simple. We will focus on executing on our strategic initiatives to drive organic growth through winning new clients, delivering innovative products at an accelerated pace and cross-selling our solutions to existing clients. We will continue to pursue select acquisitions that will help us further solidify our strong offerings. And above all, we will remain focused on providing exceptional support to our clients.

Thank you for your time today. Now, I'd like to turn the call over to Kirk for a financial update.

Kirk Larsen -- Chief Financial Officer

Thanks Anthony, and good morning, everyone. I'll now discuss our fourth quarter and full year 2020 financial results as well as our outlook for 2021. To summarize the fourth quarter, the underlying performance was very solid. The results came in as we expected with the exception of origination volumes that came in slightly higher. It was another quarter that demonstrated resilience, visibility and predictability of our business. We are also encouraged by the sales momentum that has carried over from 2020 into 2021. With that said, I'll take you through the details and our outlook.

Turning to Slide 3, which shows our GAAP results. On a GAAP basis, full year 2020 revenues were $1,239 million, an increase of 5% compared to 2019. Net earnings attributable to Black Knight were $264 million, an increase of 143%. Diluted earnings per share was $1.73, an increase of 137%. The effect of our investment in Dun & Bradstreet was an increase in net earnings attributable to Black Knight of $62 million or $0.41 per diluted share, primarily related to a non-cash gain as a result of their initial public offering and concurrent private placement compared to a reduction in net earnings attributable to Black Knight $74 million or $0.50 per diluted share. Net earnings margin was 19.8% compared to 9.2%.

Now, moving to the fourth quarter. Revenues were $342 million, an increase of 14% compared to the prior year quarter. Net earnings attributable to Black Knight was $47 million, an increase of 265%. Diluted EPS was $0.30, an increase of 233%. The effect of our investment in Dun & Bradstreet was an increase in net earnings attributable to Black Knight of $1 million or $0.01 per diluted share compared to a reduction in net earnings attributable to Black Knight of $36 million or $0.24 per diluted share. Net earnings margin was 12.3% compared to 4.3%.

Turning to Slide 4. I'll now discuss our adjusted results for the full year and fourth quarter. For the full year 2020, adjusted revenues were $1,239 million, an increase of 5% compared to 2019. Organic revenue growth, a metric that we're introducing due to the acquisition of Optimal Blue was 1%.

Adjusted EBITDA was $610 million, an increase of 5%. Adjusted EBITDA margin was 49.2% compared to 49.5%. Adjusted net earnings was $322 million, an increase of 9%, and adjusted earnings per share was $2.11, an increase of 6%.

For the fourth quarter, adjusted revenues were $342 million, an increase of 14% compared to the prior year quarter. Organic revenue growth was 4.4%. Adjusted EBITDA was $168 million, an increase of 13%. Adjusted EBITDA margin was 49% compared to 49.5%. Adjusted net earnings was $94 million, an increase of 16%, and adjusted EPS was $0.60, an increase of 11%.

Turning now to Slide 5, I'll discuss our Software Solutions segment results. In the fourth quarter, revenue for the Software Solutions segment increased 14% to $291 million. Our servicing software solutions revenue increased by 2% as loan growth from new clients more than offset the previously discussed headwinds, including the effect of the foreclosure moratorium that, in and of itself, reduced revenues by $12 million or 6 percentage points in the fourth quarter. We continue to be very pleased with the underlying performance in our servicing software business and the outlook for growth as we look forward, driven by both new client additions as well as the cross-sell of new innovative solutions.

In origination software solutions, revenue increased 56%, driven primarily by the acquisition of Optimal Blue, new clients and the benefit of higher origination volumes. Fourth quarter EBITDA increased 10% to $167 million, and EBITDA margin was 57.5% compared to 59.3%. The margin decline was driven by revenue mix, which I can summarize in two primary categories. As I mentioned earlier, we had a $12 million headwind from lower foreclosure-related volumes. Those transactions have very little variable expense, so margins are high and [Technical Issues] in those revenues. The second factor is the revenue related to Optimal Blue. The margin on that revenue was over 50%, but still less than the segment average. Full year 2020 revenues increased 3% to $1,040 million, and EBITDA increased 1% to $605 million. EBITDA margin was 58.1% compared to 59.2%.

Turning to Slide 6. In the fourth quarter, revenue for the Data and Analytics segment increased 16% to $51 million, primarily driven by origination volumes, revenue from an acquired business and sales execution. EBITDA increased 30% to $16 million and EBITDA margin was 30.8%, an increase of 310 basis points.

Full year 2020 revenues increased 20% to $199 million, and EBITDA increased 54% to $65 million. EBITDA margin was 32.6%, an increase of 720 basis points. It's worth noting that this is the first year that our Data and Analytics segment exceeded 30% margin. As we've said before, we are focused on achieving 30%, but we will not stop here. Adjusted EBITDA for the Corporate segment in the fourth quarter was a loss of $15.4 million, which was flat to the prior year quarter and $59.5 million for the full year 2020 compared to $58 million in 2019.

Turning to Slide 7, I'll walk through our debt structure. At the end of December, we had cash and cash equivalents of $35 million. Total debt principal as of December 31st was $2,214 million. We had a revolver capacity of $702 million, and our leverage ratio was 3.3 times on a net basis.

Before I walk you through our outlook for 2021, I'll go through the details of our investment in Dun & Bradstreet shares. Turning now to Slide 8. We own 54.8 million shares of Dun & Bradstreet. The market value of this investment was $1,265 million based on the $23.06 closing price of DNB on Wednesday, February 10th. Our invested capital is $493 million. That puts our unrealized pre-tax gain at $772 million, our unrealized after-tax gain at $577 million and the after-tax value of our DNB investment at $1,069 million. It goes without saying that we continue to be very pleased by our investment in Dun & Bradstreet and the performance of the DNB team.

Turning now to Slide 9, I'll walk through our outlook for 2021. GAAP revenues and adjusted revenues are expected to be in the range of $1,394 million to $1,422 million, representing reported growth of approximately 13% to 15% on a reported basis and organic growth of approximately 5% to 7%. Adjusted EBITDA is expected in the range of $689 million to $711 million, and adjusted EPS is expected to be in the range of $2.11 to $2.22.

Additional modeling details underlying our outlook are as follows. With a proposed economic plan from President Biden potentially extending the foreclosure moratorium until September 30th, we are planning for incremental foreclosure volumes to be delayed until at least the first quarter of 2022. That represents a headwind of approximately $11 million in 2021 compared to 2020. Our plan for origination volumes represents a decline of 7% from estimated 2020 volumes of $4.3 trillion, with the first half of the year having elevated volumes from 2020 and a decline starting in the second half of the year. This represents a headwind of approximately $12 million in 2021 compared to 2020.

As we discussed on prior calls, we benefited from a temporary reduction in certain operating expenses in 2020 due to COVID-19, specifically related to lower medical costs and travel and entertainment expenses. For 2021, we are planning for $9 million of costs to come back, particularly related to medical expenses.

In addition, we expect interest expense of approximately $82 million to $85 million; depreciation and amortization expense of $146 million to $150 million, excluding the net incremental depreciation and amortization resulting from purchase accounting; earnings attributable to non-controlling interest of $20 million to $22 million, this relates to a portion of Optimal Blue that we don't own; an adjusted effective tax rate of approximately 23% to 24%; and full year weighted average shares outstanding of approximately 156 million.

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. As a reminder, we plan at the midpoint of our guidance range. In the first quarter of 2021, we expect revenue compared to Q4 to be flat to down slightly due to typical seasonality. We would then expect to see sequential revenue growth over the course of the year from new client revenue, partially offset by origination volume headwinds.

And finally, we expect run rate operating expenses in the first half to be similar to the fourth quarter of 2020 with sequential increases from Q2 to Q3 and Q3 to Q4 due to resource allocation and typical seasonality.

That concludes my remarks. I'll now turn the call over to the operator for Q&A.

Questions and Answers:

Operator

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first questions come from the line of Andrew Jeffrey with Truist. Please proceed with your questions.

Andrew Jeffrey -- Truist Financial -- Analyst

Hey, good morning. I appreciate you taking the questions. It's interesting, Anthony to listen to you enumerate all of the different digital offerings and the success you're having in cross-sell. Can you talk a little bit maybe about new data sets that you think would be critical and could offer commercial opportunities? I'm thinking especially in your D&A business in light of the potential combination of CoStar Group and CoreLogic, which appears increasingly likely, given this morning's announcement?

Anthony Jabbour -- Chief Executive Officer

Sure. Yeah, I'd say, we're obviously very pleased, not just with the new digital offerings, Andrew, but also the data sets. Like I said, we launched this year the McDash Flash, which was very entrepreneurial of the team in term -- in the midst of the forbearance crisis rising up, getting daily feeds, integrating into MSP, looking at prepayment schedules on a daily basis and really creating capabilities that never existed before, and again, very unique to Black Knight because of all the assets that we have. So, we'll certainly stay very focused on that space. We've got some great momentum in our Data and Analytics business. But more so, as the team working together and finding ways that our data can benefit our clients. So, we're starting to see more and more of that, and again, leveraging our existing relationships with our clients, leveraging our existing solution set with our clients to really embed this data and make it more actionable, make it more relevant for them.

So, it's an area that we're excited about. And we're going to continue executing against this game plan. It's a winning game plan that we feel. It's driving real positive momentum. And oftentimes, as we talk about what the underlying engine is producing in our Company, it's really to show you what we see going on really under the covers. And we've got some great momentum right now that we're going to continue to execute against.

Andrew Jeffrey -- Truist Financial -- Analyst

Okay. I appreciate that. And then, could you just touch briefly, as a follow-up on pricing opportunities in Optimal Blue? Is it really just a function of new end market customers and cross-sell, or is there an opportunity to actually explicitly price to value in that business?

Anthony Jabbour -- Chief Executive Officer

Yeah. No, there absolutely is opportunity price to value with Optimal Blue, we're doing that. And like we're doing, and we talk about constantly, it's really getting value pricing. We're driving tremendous value for our clients and just benefiting by some of that. So, that work is under way. It's going well. We're fortunate, obviously, that in that space our clients are doing exceptionally well in the origination space. So, that's really not proving to be a challenge for us right now.

Andrew Jeffrey -- Truist Financial -- Analyst

Appreciate it. Thanks.

Anthony Jabbour -- Chief Executive Officer

Thank you, Andrew.

Operator

Thank you. Our next question is from the line of John Campbell with Stephens. Please proceed with your question.

John Campbell -- Stephens Inc. -- Analyst

Hey guys, good morning.

Anthony Jabbour -- Chief Executive Officer

Hey, John.

John Campbell -- Stephens Inc. -- Analyst

Hey, On Servicing Digital, that's been a real home run for you guys. I just want to focus on that. So -- and just, I guess, some of the newer innovations that it seems like they kind of helping deepen the competitive mode over the last couple of years. But first on the sharp adoption gain was first for some digital, you guys ever considered, I guess, folding that into the standard offering and then raising the base price? And then secondly, if you guys can maybe just kind of talk to newer competitive landscape. It just seems like there's a newbie out there that kind of got a recent round of funding. Why it might be hard for up and comers to break through in the channel, what you guys kind of see as your key competitive moats?

Anthony Jabbour -- Chief Executive Officer

Sure. Yeah, I'll start with -- on the Servicing Digital side, we're very excited there, obviously, with the adoption that we have. And when you look at the pace that we're ripping through our base, it really -- I don't know if it would be much different than folding it actually into the product and raising pricing. And pricing is always a sensitive thing with clients as well. So, it's always great when they have the choice. And we're certainly pleased at the pace that it's growing and running. And clients choosing to come on, choosing to pay the additional fees and the client satisfaction is really off the charts with it. So, it absolutely is a winner for us.

And look, we're going to -- it's like a broken record, I apologize. We're going to integrate all the other capabilities that we have in the Company through Servicing Digital, right, like our point-of-sale to be right in the middle of a client's experience in getting a refinance offering because as we looked at our Data and Analytics, we saw that the client was prime for refinance and presenting it to them at that time. So, doing more and more of that things, leveraging what the exact rate so that they can get through our PPP -- PPE engine, sorry, we'll certainly do more and more of that because it's a winner for us. It's what our clients need. It's a win-win-win, like for us, for our clients, for their customers. And we're going to continue to innovate on that. We're doing more and more of that.

In terms of new competitors coming in, I'm aware as well of some of the rates, some money recently. What I'd say is, this is a very complex business in terms of really understanding the needs and the needs of our clients and how do we make them better. What I'd share with you is for everything that they promised they can do, we're already there. We're already there plus. And so, we're going to continue to focus. What I'm proud of our team here is that we've got great market share, we focus on our clients, like they're the only client we have, and we innovate like a hungry start-up.

We've got that culture here. We believe in it, every one of us does. If you can walk the halls, you could feel it. And it's resulting in momentum that we have in this business. We saw it growing in 2020. We're excited. We're off to a great start in 2021. So, we'll always be mindful of competitors in any parts of our business. But we really, really have conviction in our strategy and our game plan. And we're staying very focused executing against it. We've got a lot of confidence it's going to be the winner.

John Campbell -- Stephens Inc. -- Analyst

That's a great answer [Phonetic]. Thanks guys.

Anthony Jabbour -- Chief Executive Officer

Thanks, John.

Steven Eagerton -- Vice President of Investor Relations

Thank you.

Operator

Thank you. 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

Thank you. Thank you, good morning. Really solid results like you guys went through. Anthony, I wanted to ask on the pipeline again, as always. Just you talked a lot about integrated sales, cross-selling, a lot of good examples. I'm just curious, the pipeline going into 2021 versus what it was this time last year pre-pandemic, given all the activity with -- it seems like more energy around selling in general. Do you see a pickup here?

Anthony Jabbour -- Chief Executive Officer

Yes. Tien-Tsin, thank you for that. No, without question, like I said, we've got some great momentum. It really feels like we're firing on all cylinders. Sales were growing. Our pipeline is growing. The speed at which we're going to market with new capabilities and enthusiasm, it really, really feels like we've got just some great momentum here that we're really excited about.

Tien-tsin Huang -- J.P. Morgan -- Analyst

And then, just as a quick follow-up, I think, Andrew asked it, but just given your time at Dun & Bradstreet and what you talked about on the data analytics side, I mean, is there a lot more to do? Is there another gear to grow faster within data analytics, given some of the learnings and of course, the synergies you talked about as well? I'm just curious where we are going into '21.

Anthony Jabbour -- Chief Executive Officer

Well, what I'd say with our data analytics and certainly with us being more knowledgeable of the space in D&A in general, you could see the great results that we've been having on revenue growth and margin expansion. And I actually do think that there's a lot more that we can do. There's -- it's really, I'd say, a limitless area for us in terms of not just the data that we can create and procure, but when I look -- where it really, really matters the most is how it's integrated into our other applications and how we can drive actionable outcomes from the data.

The data in and of itself, it's kind of -- it's nice to have, it's interesting. But as I talk to CEOs, I know what they want is what I would want. I want something that drives an action. And so, leveraging that data more and more into our systems, sending actionable alerts out to our clients is really what's going to continue to make it more marketable and more valuable for them and really be a direct linkage between what they're spending on it and the total results that they're getting from it.

So, absolutely, I continue to have a lot of passion around that. I'm very excited with what's in front of us and the team that we have to execute against it.

Tien-tsin Huang -- J.P. Morgan -- Analyst

Yeah. That's good stuff. Just feel like there's a halo effect there. Thank you.

Anthony Jabbour -- Chief Executive Officer

Thank you, Tien-tsin.

Operator

Thank you. Our next question comes from the line of Ryan Tomasello with KBW. Please proceed with your question.

Ryan Tomasello -- KBW -- Analyst

Hi, good morning everyone, thanks for taking the questions. I missed some of the prepared remarks. So, sorry if this was already drawn. But was wondering if you can give us your thoughts on some of the noticeable activity we saw in the private markets recently for digital POS providers with pretty significant valuation. So, maybe you can give us additional color on the trends you're seeing in your offering there and perhaps frame the size and growth of that business today?

Anthony Jabbour -- Chief Executive Officer

Sure. Ryan, look, point-of-sale is an area that we're excited about really because if you think of what we're adding, we're adding just a thin layer on top of an existing LOS system that our clients are already using, back-end systems that they're already using. And so, this is just a -- think of it as a simple veneer compared to a separate stand-alone application where there's two different data sets to keep in sync and more complexity around that process.

And also the fact that we own all these systems, it really gives us an ability to create an integrated value proposition for our clients and their customers that I really think is unrivaled. And so, some of these start-ups, I'd say, came out of the gate early and fast prior to us really getting on our innovation focus. And if you look at the pace at which we've gone up to speed with it, it's been dramatic. And if I look in front from what a client needs, I'll tell you, in every LOS implementation, the hardest part of the implementation is always connecting in the point-of-sale. It doesn't matter what point-of-sale it is. That's always the longest pole in the tent. And for us, it being, like I said, just a veneer that we put on top of our LOS, it really is -- really a non-issue as part of our implementations.

And so, from our client's point of view, I think on the returns that they can get, just the overall ease of doing business, the additional value that we can drive through integration to our other products, I really think it's a no-brainer for them. And we're having those conversations with many clients right now.

Ryan Tomasello -- KBW -- Analyst

Great. And then, I was hoping you can give us an update on capital allocation, particularly considering the lock-up exploration on Dun & Bradstreet. Is bolt-on M&A still an attractive area for capital deployment? And if so, maybe what areas of the business do you see as most complementary for that area? And then, more broadly, are there business line extensions that management could consider, particularly on the real estate side as opposed to the mortgage side? Thanks.

Anthony Jabbour -- Chief Executive Officer

Sure. Kirk will keep me honest here if I forget any of those questions. But, so, I'll start with DNB. Obviously, our Board is extremely happy with the investments that we've made and how it's performing. And we constantly evaluate all of our capital allocation opportunities during our Board meetings.

But, from a bolt-on perspective, from a strategy perspective, it really remains unchanged. We're going to -- our first focus will be on internal investments and innovation. We're very pleased with the traction that we have there. It's going to contribute around 2% of growth in '21. So, the work that we're doing, the investments we're making, we're seeing them pay off. We're seeing them pay off with our client satisfaction as well as revenue growth.

We're going to continue to focus on these bolt-on acquisitions. Again, we've got this great opportunity, this great engine here, where you could take in a small acquisition; it comes through engine and comes out much larger on the other end. So, both of those are really no-brainer investments for us to make from a capital allocation perspective, because the risk is, like I said, very low for both of them.

With the recent acquisition of Optimal Blue, our consolidated leverage is 3.3 times. So, we'll have a near-term focus on delevering. But they'll happen quickly, right, with the growth we're having in EBITDA as well as our significant cash generation. But I'd also say, if we saw something that was large and very exciting to us, we'd find a creative way to make it happen. So, that's kind of the priorities, I'd say, around the bolt-on and capital allocation in general.

The last part, would we look for business line extensions in real estate versus just mortgage? Look, we're -- our approach here is really an openness to really any M&A. And it doesn't matter if it's in real estate or in mortgage or what parts of it, but more what's the natural adjacency that it has to what we're already doing. So, I would think of it, what's our birthright if we acquired this company for us to cross-sell it into more of our clients. And again, we're always looking at having low-risk acquisitions, right, going into it, knowing that we can cross-sell it and drive the top line and really take whatever acquisition we make a low-risk acquisition for us and drive shareholder return.

And we're really, really pleased with the progress that we've made and the track record that we've got. And we just want to keep that going.

Kirk Larsen -- Chief Financial Officer

Ryan, one thing I'll add is we saw last summer, I'll say, maybe a little bit before the activity levels pick up with the kind of tuck-in acquisitions that we typically look at. We saw the number of targets increase dramatically. And so, I would say that over that time, from last summer into today, we've probably been busier than ever looking at opportunities.

Our criteria are very rigorous and tight around what kind of assets we would want to acquire, as Anthony just spoke of. And so, we have a team that has a playbook. We execute against that playbook, but it is certainly a very active market out there. And so, we'll be very discerning as we always have been. But know that there are a lot of opportunities. But we have ample liquidity to do any and all of what we would fit through our filters. And we'll continue to evaluate and be active there.

Ryan Tomasello -- KBW -- Analyst

Thanks. Appreciate all that commentary.

Kirk Larsen -- Chief Financial Officer

Thank you, Ryan. Thanks Ryan.

Operator

Thank you. Our next questions is coming from the line of Ashish Sabadra of Deutsche Bank. Please proceed with your questions.

Ashish Sabadra -- Deutsche Bank -- Analyst

Thanks for taking my question. So, question focused on the origination software. Obviously, solid momentum there, driven by new product innovation. My question there was where are -- like how should we think about that momentum in the midterm? Where are the lenders in terms of digitization of origination? And then, you talked about 13% market share in Empower, I believe. What's your market share in the eClosing product and the cross-sell, not only onto the eClosing customer, but also any incremental color on cross-selling to the Optimal Blue customer base? Thanks.

Anthony Jabbour -- Chief Executive Officer

Sure. Great question there, Ashish. Yeah. No, the momentum we have with our LOS system power is really exciting. We're probably going to sign two times to three times as many Empower clients in '21 as we did in 2020. So, again, when I talk about momentum, we've got great confidence in that area as well.

I don't have an exact number on market share for eClosing. What I'd say is it's lower than the 13% that we talked about though for LOS. And so, lots of room for us to run. Like I said, the technology and the messaging and the integration is all resonating.

Ashish Sabadra -- Deutsche Bank -- Analyst

That's very helpful color. And maybe, Kirk, if I can ask a clarifying question on the Optimal Blue contribution in the quarter. I think based on the organic growth, I get like a $29 million for fourth quarter. I wasn't sure if I was doing the math right, if you can confirm that. And then as we think about the contribution in 2021, any incremental color that you can provide? Thanks.

Kirk Larsen -- Chief Financial Officer

Sure. It was a little higher than your $29 million. It was about $32 million in the fourth quarter. And we talked about a strong growth. It grew over 30% in 2020, which we -- it came in right where we expected it to be. So, everything that they delivered was what we expected and maybe a little bit more if you think more qualitatively. We've been very, very pleased with how that acquisition has gone so far and the outlook for the future.

As we look to 2021, continued strong performance. And frankly, they had a very good Q4 from a sales perspective. And that's really the precursor to the first quarter and the second quarter for that business because of the short implementation time lines. But, we're expecting -- we talked about 20%-plus growth on prior calls for Optimal Blue for -- and when I say Optimal Blue, Optimal Blue proper, the business that we acquired. We've since combined this with Compass. But the business that we acquired, we would expect would be growing 25% in 2021.

So, continued very strong performance driven by continuing the sales and new client additions as well as some of the price-to-value mechanics that were discussed earlier on this call. So, very pleased with the team, very pleased how they've become a part of Black Knight and how actually -- how we've become one broader team. And the integration of them with our sales team on our biweekly calls, the integration of the executive team to the broader team and just really how that has gone, couldn't be happier.

I mean, the fact that we're able to find an asset like that and action it and have it fit so well culturally has really been terrific and great to see. So we're excited about 2021 with Optimal Blue and frankly the years to come.

Ashish Sabadra -- Deutsche Bank -- Analyst

That's great. Thanks again for the color.

Anthony Jabbour -- Chief Executive Officer

Thank you, Ashish.

Operator

Thank you. Our next questions is coming from the line of Kevin Kaczmarek with Zelman & Associates. Please proceed with your questions.

Kevin Kaczmarek -- Zelman & Associates -- Analyst

Hey guys. I was kind of wondering with originators being a lot more profitable than they've been in the recent years, do you have a sense on a per client basis, how much their spending has grown across other products over the past, call it, year or two? And as a follow-up, if their profitability does wane as origination volumes fall, how might you help counter that if they try to trim their spending growth and/or reduce it over the next couple of years?

Anthony Jabbour -- Chief Executive Officer

Sure, Kevin. So with us, our focus is always around how do we drive value for our clients and for their customers, right? And so, it's either through automation of certain steps, which allows them to be more efficient or giving them compliance capability, which in this new administration we think will be probably a little more of a priority for all our clients than the previous administration or certainly the same, if not more, and what we can provide to our client customers in terms of functionality.

So, in the origination space, we've had a -- just a lot of innovation in that area that we've developed or that we've acquired. And we've seen great momentum in that space with our clients. As I mentioned, at the beginning of 2020, we organized our origination performance team. That was a team that was selling our innovations to the whole market share, not just to Empower clients. And like we said, the TCV from that area tripled in 2020 compared to what we did in 2019.

So again, I think, the key message here is our innovations are really resonating with the market. There's lots of value that we're being able to create for them. And I think the fact that they're profitable, I'm sure, helps on the sales cycle. But, I really feel even in a few years' time when maybe they're not as focused -- sorry, not as profitable, when refis shift, I think, what's going to happen is there'll be a more intense focus on other things that we can do to help them lower their costs and help them on the profitability line.

So, we're looking at what our innovations are doing to benefit them today. And I think in a few years from now, there will be more of a shift to efficiency as well as innovation. Innovation will always be top of mind for them, right, those needs for them. But I think it will shift to a lot of things that we can do for clients to be more profitable in a few years' time from now.

Kevin Kaczmarek -- Zelman & Associates -- Analyst

Okay, great, thanks. That's very helpful. And with one quarter under your belt with Optimal Blue, you guys mentioned perhaps finding some extra value in one of their servicing exchange platforms. I guess, can you give us some updated thoughts on the opportunity there?

Anthony Jabbour -- Chief Executive Officer

Sure. Yeah. So really, what we're -- again, we're constantly looking at with the assets that we have, how can we integrate them and create a compelling value proposition that really can't be replicated and can drive real, unique value for our clients. And so, one of them was tying it to our servicing platform and looking at how we can -- we've got, like I said, strong market share on our MSP servicing platform.

And really, what we're looking at was as clients want to buy or sell loans, buy or sell MSRs, how can we help facilitate that through Optimal Blue? And more than just the actual transfer, how could we also shift, move it from one client's instance of MSP to another client's instance of MSP to really make it easy for more of that volume to flow through the system because that just doesn't exist today, right? It's Wall Street back in the day with a group of folks under a tree trading and building a capability where we could accelerate the speed and growth in that area by providing a capability that doesn't otherwise exist. So, yes, so that's absolutely an opportunity that we're looking at and working on right now.

Kevin Kaczmarek -- Zelman & Associates -- Analyst

Okay, great, thanks a lot. That's all I had.

Anthony Jabbour -- Chief Executive Officer

Thank you, Kevin.

Operator

Thank you. [Operator Instructions] Our next questions come from the line of Mihir Bhatia of Bank of America. Please proceed with your question.

Mihir Bhatia -- Bank of America Merrill Lynch -- Analyst

Good morning, thanks for taking my question. Maybe I'll just start with your guidance. And I was curious, in terms of your range from the low end to the high end, maybe can you talk a little bit about some of the puts and takes? And particularly, I guess, what I'm curious on is, how much of the -- where you end up in that range is driven by external factors versus just your own implementation now?

Obviously, a baseline assumption that you'll implement at a certain level, but is it like a little bit more success cross-selling will move you further up, or is that likely -- just given implementation time lines, is that less likely to benefit 2021, whereas for the 2021 guide, it's more driven by external factors, whether it's foreclosure revenues coming back, origination markets being stronger than you anticipated? Just trying to understand that, how much of execution versus external?

Kirk Larsen -- Chief Financial Officer

Sure, Mihir. A great question. What don't I walk through the bridge? And as I mentioned on the call, in the prepared remarks, we planned at the midpoint. So, I'll kind of walk you down where revenue growth comes from at the midpoint of our range. So, it's really very much the same algorithm as we've had in the past, which is price will give us about a point of growth. Loan growth and MSP will give us about half a point. The single biggest driver, and I'll come back to the details of this, would be, I would say, within our control, which is sales. So sales will drive, call it, 9.5% or so of growth within that number. And within that, you have platform and cross-sell driving most of that. But, innovation is driving a couple of percent. And that's interesting from a perspective of if you go back several years, two, three years, that innovation line would really be virtually zero. And our long-term algorithm sort of counts on that as 1% to 2% of growth per year. And for 2021, we're expecting 2% from that. So, we think that's terrific to see.

Attrition is about 2%, which is our long-term range. We'd say, 1% to 2%. But it certainly is -- it's back to the high end of our normal but still normal, and certainly much better than last year where we had the anomalous headwinds and call it 7% or so of attrition. The next step in the bridge is really volumes, and it really is the external factor that you described. So, foreclosure volumes, about an $11 million headwind. That's a first quarter issue. If you think about when the moratorium went in place last year, it was in mid-March. And so, we have virtually another quarter of that. And we're really not assuming that there's a return to normal volumes at all next -- at all in 2021.

And then, the other piece is the origination volume headwind, again, extraneous. We're assuming 7%. The only thing I can promise you is we'll be wrong at least by $1. But that's, call it, another rough point or so of headwinds. So, a couple of points from what I would consider truly extraneous factors. And then, there's about another point of miscellaneous other things that are a headwind to 2021. So, that all nets out to that, call it, 6% or so organic at the midpoint.

So, just peeling back and unpacking that sales number a little bit. What's interesting about it is, as you would typically expect from us is about 70% of that is already signed. And so, you can then put signed in two buckets of what's already implemented versus what is to be implemented. And about 70% of that signed amount or half of our sales goal is actually already implemented. And so, a lot of progress has been made against what is the largest step in that revenue growth bridge. And so, what you're left with is, basically, about 3% is true go get.

And so, if you then say, OK, to get back to your original question, which is what would make us be higher or lower in the range, there is really three things I'd point to. One is origination volumes. They could be better or worse than our 7%. Foreclosure volumes could be different than our assumption. Maybe some could come back this year. But based upon what we think is coming out of Washington, it's going to be still very borrower friendly.

And so, we pushed those -- we've delayed those revenues out to next year, again, not lost revenues, delayed revenues to the future. So origination volumes is one. I would say that sell and deliver revenue, that 3% go get, we could do better than that. We could come up with a short of that. So that could be a variable within our range. And then, of what we sell, there is a component of some of those ancillary solutions that Anthony was describing that we sell within origination that are transactional in nature, and there's a ramp. And so, the ramp of those ancillary solutions can be better or worse than we're expecting as well.

So, it's really a lot of the same things that we've talked about in the past. But, just I want to give you some context for magnitude, so you can kind of see what it is. Still, we're a 90%-plus, low-90% recurring revenue business. There is just -- there's only so much we have to go get in any given year because of the long-term nature of what we do.

Mihir Bhatia -- Bank of America Merrill Lynch -- Analyst

Great. That is very helpful. Thank you for that. One other question -- I actually did want to talk a little bit about some of these cross-selling initiatives you mentioned, whether it's Servicing Digital, Loss Mitigation. Can you maybe just help us parse out some of the -- not so much the revenue impact, but just do clients pay more as they implement these on a per loan basis? Is it part of the contract where you really get the benefit when the contract is renewed? You've talked about you guys increased price for all the additional things you do for the contract when you renew the contract. Is it that way? And just help us dimensionalize maybe just what are some of the more exciting things? Is it just Servicing Digital and the Loss Mitigation activities? Is there something else that you're particularly excited about within that product innovation suite, if you will? Thank you.

Anthony Jabbour -- Chief Executive Officer

Sure, Mihir. A couple of things. On the new products that we're launching, yes, we are charging for them. So, they're all chargeable services, separate from a price increase that we talked about around kind of existing solutions that we have.

And again, we're very thoughtful on these in terms of making sure we've got very strong client relationships. So, on the renewals, our clients are renewing with us. Our renewal rate is off the charts high. So, we're very focused on keeping our clients satisfied as we bring more innovation to them and take great care of them.

From a -- areas which have probably a lot of excitement for us, there's a lot, obviously. Servicing Digital, we talked a lot about. Loss Mitigation is red hot. As many of these loans and forbearance come off forbearance, they're going need to be modified. Again, that integrated tightly into MSP. We understand all the rules, regulations around it. We bring in -- again, one of the benefits we have all these large sophisticated clients that we all bring together on the interpretation of the regulation. So, we've got lots of confidence of being in compliance as we make it easier for them to modify the loans.

Our eClose has been red hot for us. Our Regulatory Assist automation in Empower has been a big seller in our Data and Analytics space. The McDash Flash, taking the daily views of what's going on in the market, unlike ever before, has been really powerful. And maybe lastly, our RAP application where we're taking our data, our clients' data in the cloud, co-collaborating with them has been really powerful. And probably the last one I'd highlight would be our next-generation customer service is really getting some great traction.

And so, we keep pushing forward on these innovations. And candidly, what I'm really, really excited about is our hit rate is so high on all of these innovations that we're bringing to market. It's not common to have these many new products catch fire like these are catching fire. So, that's what again just gives me confidence we're on the right track. We're doing the right things, all with our clients in mind and with strong client relationships, adding on to our market share, staying focused on our clients and innovating. It's a formula that's working really well.

Mihir Bhatia -- Bank of America Merrill Lynch -- Analyst

Great. No, certainly sounds like it. One last question from me and then I'll get off, is just can you just give us a quick update on the PennyMac situation? Thank you.

Anthony Jabbour -- Chief Executive Officer

There really isn't any new news on that to report at this stage. These things take a while to work through, I guess, the legal route. But, there isn't anything. As soon as there is, obviously, we'll share it with you.

Mihir Bhatia -- Bank of America Merrill Lynch -- Analyst

Understood. Thank you.

Anthony Jabbour -- Chief Executive Officer

Thank you, Mihir.

Operator

Thank you. Our next question is coming from the line of Manav Patnaik of Barclays. Please proceed with your question.

Manav Patnaik -- Barclays -- Analyst

Thank you. Good morning, gentlemen. I was just hoping you could give us the organic growth numbers by segment for this quarter, and perhaps just what the assumptions are for 2021 by segment as well?

Kirk Larsen -- Chief Financial Officer

Sure. Let me just quick grab that. I mean, most of the acquired revenue was in -- which I think we disclosed what the dollar amounts are in our release. Most of it is in the Software Solutions segment. And so, that's really where most of the adjustment will be. There's a few million dollars in D&A.

And so, if you look at organically in origination, if you kind of just parse that out, so all of it's in origination. There is no acquired revenue in servicing. So, in origination, on an organic basis, it would be a little lower than we have been growing. But, it's the reason why we had, Manav, just for your context, $4 million or $5 million of non-recurring revenues in the fourth quarter last year. So, it would have been, call it, high-single-digit excluding that.

And Data and Analytics organic would have been -- and I'll even say, if you were to adjust for the -- we had about $3 million of volume benefit in the fourth quarter as well. And so, if you look at that, it would be kind of in the low-single-digit area, but that's due to a tough compare in that segment to the fourth quarter of last year.

So, I think that's -- and then, as far as 2021, organically, again, it's -- I'm just looking at it by segment, I'll say you've got servicing that I said is going to be mid-single-digit grower, strong underlying performance. Engine is growing -- is doing very well in servicing. We have that little bit of headwind of a quarter from the foreclosure volumes.

In origination, it's going to be a very high reported growth rate because of Optimal Blue, but organic, it's going to be low-double-digits. And then in Data and Analytics, organically, it'd be mid-single digits. So really, where we would expect it to be, getting through 2020 and growing through some of the historical anomalous headwinds that we've talked about and the foreclosure effect, we're really back to that more -- largely more normal growth rate. Of course, for 2021, we're talking about organic 6% in the face of a couple of points of foreclosure and origination volume. So, we look at it more really a couple of points higher than that is really what the underlying engine is doing. But, that's really what we see.

Manav Patnaik -- Barclays -- Analyst

Got it. That's super helpful. And then, just on the Data and Analytics side, I mean, mid-single-digit is obviously still a healthy number. But, given all of the different things going on in real estate today, do you guys need another several acquisitions to try and get that growth to a higher number? Is there some other dynamics going on in that segment? Why it can't be higher, more like in the double-digit range?

Anthony Jabbour -- Chief Executive Officer

Well, no, I think, in our Data and Analytics business, where it serves a number of areas, real estate being one of them, our immediate focus had been on solutions that we could provide out of our D&A business. That would be -- support our integrated value proposition, right, because of the wound and tighter, integrated, cross-sold, etc.

And we think that there are other opportunities obviously in just real estate stand-alone. And what we'd look at is what's an adjacency to what we currently do. We're -- again, we're always from a risk mitigation perspective, that's always the less -- the least risky acquisition, unless there's something again that we saw out there that we got really excited about that we thought could really lift the capabilities and the growth rate of that business.

But we're certainly looking in that space as well. And again, we're disciplined buyers. And I'd say, we've got a really strong team, we've got a lot of confidence in that are doing really well. And so, it's an area that we'd love to do more M&A in.

Manav Patnaik -- Barclays -- Analyst

All right. Thanks a lot guys.

Anthony Jabbour -- Chief Executive Officer

Thank you, Manav.

Operator

Thank you. There are no further questions at this time. I would like to turn the call back over to Anthony Jabbour for any closing comments.

Anthony Jabbour -- Chief Executive Officer

Thank you. In closing, we're well-positioned to continue the momentum we had in 2020. 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 I'd like to thank my colleagues for their extraordinary work and commitment as they met the challenges 2020 presented. And I'd also like to thank our clients for their trust and partnership, and obviously thank our shareholders for their ongoing support. Please stay safe. Have a great day.

Operator

[Operator Closing Remarks].

Duration: 65 minutes

Call participants:

Steven Eagerton -- Vice President of Investor Relations

Anthony Jabbour -- Chief Executive Officer

Kirk Larsen -- Chief Financial Officer

Andrew Jeffrey -- Truist Financial -- Analyst

John Campbell -- Stephens Inc. -- Analyst

Tien-tsin Huang -- J.P. Morgan -- Analyst

Ryan Tomasello -- KBW -- Analyst

Ashish Sabadra -- Deutsche Bank -- Analyst

Kevin Kaczmarek -- Zelman & Associates -- Analyst

Mihir Bhatia -- Bank of America Merrill Lynch -- Analyst

Manav Patnaik -- Barclays -- Analyst

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