Black Knight's earnings up on 7% growth in software revenue
Black Knight reported net earnings of $40 million for the second quarter as adjusted revenue from its servicing and origination software businesses grew by 7% over the previous year.
For the second quarter last year, total net earnings were $29.2 million but only $8.2 million was attributable to Black Knight common stockholders. Fidelity National Financial owned the majority stake in Black Knight until last October, when its shares were distributed to FNF's common stockholders.
Operating income at the software solutions business was $113.4 million on revenue of $238.7 million. For the same quarter last year, the unit had operating income of $103.5 million on revenue of $223 million.
The origination software business saw a 5% year-over-year increase in adjusted revenue, including 35% growth in its loan origination software segment, Black Knight Chief Financial Officer Kirk Larsen noted on the conference call. However, revenue from the lending solutions component was affected by the 20% drop in refinance originations.
The LOS growth was "driven by the implementations for clients that have gone live. Some of the post-production support and professional services, and that will drive growth for the coming quarters, as those annualize. And then of course, there's more implementations coming on," Larsen explained. Going forward, growth in the LOS business should offset the headwinds expected to affect the lending solutions product in the second half of the year.
During the quarter, Black Knight acquired HeavyWater to drive its artificial intelligence offering for the origination sector and that should also help revenue growth going forward, Larsen said.
Its mortgage servicing platform, LoanSphere MSP, had 7% adjusted revenue growth aided by an increase in average revenue per loan.
"Our second-quarter results reflect the consistent execution of our strategy to expand relationships with existing clients and we continue to innovate new solutions and acquire businesses that expand our offering," said CEO Anthony Jabbour in a press release. "Black Knight continues to enhance its leading end-to-end software and data and analytics offering with a focus on helping our clients grow, increase efficiency and remain compliant."