IPO Report: Black Knight Financial Services (BKFS)

Francis Gaskins |


Black Knight Financial Services (BKFS) is a leading provider of integrated technology, workflow automation and data and analytics to the mortgage industry. The company is based in Jacksonville, FL.

Five other companies are scheduled for the week of May 18. The full IPO calendar is available at IPO Premium.

SEC Documents

Manager, Joint-managers: J.P. Morgan, BofA Merrill Lynch, Wells Fargo Securities
Co-managers: Goldman Sachs, Citigroup, Credit Suisse, Deutsche Bank Securities, SunTrust Robinson Humphrey, Dowling & Partners Securities, Keefe, Bruyette & Woods, Mizuho Securities, Piper Jaffray, Stephens

End of lockup (180 days): November 17, 2015
End of 40-day quiet period: Tuesday, June 30, 2015

BKFS scheduled a $400 million IPO with a market capitalization of $3.5 billion at a price range midpoint of $23.50 for Thursday, May 21, 2015 on NYSE.

Black Knight Financial Services Summary

BKFS is a leading provider of integrated technology, workflow automation and data and analytics to the mortgage industry.

BKFS’s solutions facilitate and automate many of the mission-critical business processes across the entire mortgage loan life cycle, from origination until asset disposition.

Black Knight Financial Services Valuation


Accumulated deficit (mm)





Pro forma book value pre-IPO





Valuation Ratios

Mrkt Cap (mm)

Price /Sls

Price /Erngs*

Price /BkVlue

Price /TanBV*

% offered in IPO

Black Knight Financial Services (BKFS)







Adj net earnings




*class A stock


*Q1 annualized


Compare, mentioned in the SEC filing


Fiserv (FISV)







Ellie Mae







Black Knight Financial Services Conclusion

Neutral plus

For Q1 '14

Annualized P/E on net earnings 40

Annualized P/E on adjusted earnings 21

Rev +12.2% to $228mm

Operating earnings -.5% to $132mm

Gross margin +36% to 42%

Adj net earnings +120% to $42mm

Price to tangible book of -1

Black Knight Financial Services Business

BKFS is a leading provider of integrated technology, workflow automation and data and analytics to the mortgage industry.

BKFS’s solutions facilitate and automate many of the mission-critical business processes across the entire mortgage loan life cycle, from origination until asset disposition.

BKFS believes it differentiates itself by the breadth and depth of comprehensive, integrated solutions and the insight BKFS provide to its clients.

Leading Market Positions

BKFS has market leading positions in mortgage processing and technology solutions combined with comprehensive real estate data and extensive analytic capabilities.

BKFS’s solutions are utilized by 23 of the 25 largest U.S. mortgage originators and all of the 25 largest U.S. mortgage servicers as of September 30, 2014 according to the National Mortgage News Report, as well as other financial institutions, investors and real estate professionals, to support mortgage lending and servicing operations, analyze portfolios and properties, operate more efficiently, meet regulatory compliance requirements and mitigate risk.

Black Knight Financial Services Market Change

The US mortgage market is undergoing significant change and mortgage market participants have been subjected to more stringent oversight in recent years.

Regulators have increasingly focused on better disclosure, improved risk mitigation and enhanced oversight.

Mortgage lenders large and small have experienced higher costs in order to comply with this higher level of regulation.

Despite these new regulatory burdens, the mortgage industry remains a competitive marketplace with numerous large lenders and smaller institutions competing for new loan originations.

In order to comply with this increased regulatory burden and compete more effectively, mortgage market participants have continued to outsource mission-critical functions to third-party technology providers that can offer comprehensive and integrated solutions that are also cost effective due to their deep domain expertise and economies of scale.

Black Knight Financial Services Intellectual Property

BKFS relies on a combination of contractual restrictions, internal security practices, and copyright and trade secret laws to establish and protect its software, technology, data and expertise.

Further, BKFS has developed a number of brands that have accumulated goodwill in the marketplace, and BKFS relies on trademark law to protect its rights in that area.

BKFS intends to continue its policy of taking all measures BKFS deems necessary to protect its copyright, trade secret and trademark rights.

Black Knight Financial Services Competition

With respect to its Technology segment, BKFS competes with its customers’ internal technology departments and other providers of similar systems, such as Fiserv, Inc., Fidelity National Information Services, Inc., or FIS, WiPro Gallagher Solutions, and Ellie Mae, Inc.

Competitive factors include the quality of the technology-based application or service, application features and functions, ease of delivery and integration, ability of the provider to maintain, enhance and support the applications or services, and pricing.

BKFS believes that its integrated technology and economies of scale in the mortgage processing business provide BKFS with a competitive advantage in each of these categories.

In its Data and Analytics businesses, BKFS primarily compete with CoreLogic, Inc., First American Financial Corporation, in-house capabilities and certain niche providers.

BKFS competes based on the breadth and depth of its data, the exclusive nature of some of its key data sets and the capabilities to create highly customized reports.

BKFS believes that the quality of the data BKFS offers is distinguished by the broad range of its data sources, including non-public sources, the volume of records BKFS maintains, its ability to integrate its data and analytics with its technology solutions and the ability to leverage its market leading position in the mortgage origination and servicing industries.

5% Shareholders Pre-IPO

Fidelity National Financial, Inc.   100%

Black Knight Financial Services Dividends

No dividends are planned.

Black Knight Financial Services Use of Proceeds

BKFS expects to receive $374 million from its IPO and use it for the following:

To make a cash payment in the amount of $17.3 million to those THL Affiliates that are stockholders of the THL Intermediaries for certain tax attributes BKFS will obtain in connection with the merger of the THL Intermediaries with and into BKFS in the offering Reorganization and to contribute to the equity capital of BKFS Operating LLC $356.2 million in exchange for 17,000,000 Units (or 19,550,000 Units if the underwriters exercise in full their option to purchase additional shares) from BKFS Operating LLC, at a purchase price per Unit equal to the initial public offering price per share of Class A common stock in this offering, net of the underwriting discount and the cash payments to these THL Affiliates that are stockholders of the THL Intermediaries merging with and into us.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer


Symbol Name Price Change % Volume
BKFS Black Knight Financial Services Inc. Class A 38.30 -0.20 -0.52 60,426


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