BLACK KNIGHT, INC.

Condensed Consolidated Statements of Earnings and Comprehensive Earnings

(In millions, except per share data)

(Unaudited)


	Three months ended March 31,
	2022		2021
Revenues	$	387.2	$	349.7
Expenses:
Operating expenses		207.9		186.2
Depreciation and amortization		91.5		87.8
Transition and integration costs		7.6		7.9
Total expenses		307.0		281.9
Operating income		80.2		67.8
Other income and expense:
Interest expense, net		(21.1)		(20.3)
Other expense, net		(1.2)		(3.2)
Total other expense, net		(22.3)		(23.5)
Earnings before income taxes and equity in earnings of unconsolidated affiliates		57.9		44.3
Income tax (benefit) expense		(1.1)		5.2
Earnings before equity in earnings of unconsolidated affiliates		59.0		39.1
Equity in earnings of unconsolidated affiliates, net of tax		303.1		6.4
Net earnings		362.1		45.5
Net losses attributable to redeemable noncontrolling interests		2.5		8.6
Net earnings attributable to Black Knight	$	364.6	$	54.1
Other comprehensive earnings:
Unrealized holding gains, net of tax⁽¹⁾		4.3		0.5
Reclassification adjustments for losses included in net earnings, net of tax⁽²⁾		3.2		3.9
Total unrealized gains on interest rate swaps, net of tax		7.5		4.4
Foreign currency translation adjustment, net of tax ⁽³⁾		(0.2)		(0.3)
Unrealized gains (losses) on investments in unconsolidated affiliates, net of tax⁽⁴⁾		3.2		(3.1)
Other comprehensive earnings		10.5		1.0
Comprehensive earnings		372.6		46.5
Net losses attributable to redeemable noncontrolling interests		2.5		8.6
Comprehensive earnings attributable to Black Knight	$	375.1	$	55.1
Net earnings per share attributable to Black Knight common shareholders:
Basic	$	2.36	$	0.35
Diluted	$	2.35	$	0.35
Weighted average shares of common stock outstanding (see Note 5):
Basic		154.2		155.6
Diluted		155.4		155.9

Three months ended September 30,

Nine months ended September 30,


2021

2020

2021

2020
Revenues

$
378.0

$
312.6

$
1,089.0

$
896.4
Expenses:








Operating expenses

203.0

167.2

586.2

485.1
Depreciation and amortization

93.6

64.0

271.8

180.3
Transition and integration costs

(1.3)

21.9

10.9

26.8
Total expenses

295.3

253.1

868.9

692.2
Operating income

82.7

59.5

220.1

204.2
Other income and expense:








Interest expense, net

(21.6)

(14.7)

(62.8)

(42.4)
Other (expense) income, net

(1.1)

(0.9)

(5.3)

17.1
Total other expense, net

(22.7)

(15.6)

(68.1)

(25.3)
Earnings before income taxes and equity in earnings of unconsolidated affiliates

60.0

43.9

152.0

178.9
Income tax expense

15.3

15.9

31.0

41.3
Earnings before equity in earnings of unconsolidated affiliates

44.7

28.0

121.0

137.6
Equity in earnings of unconsolidated affiliates, net of tax

1.6

86.6

3.0

66.2
Net earnings

46.3

114.6

124.0

203.8
Net losses attributable to redeemable noncontrolling interests

7.1

13.2

23.2

13.2
Net earnings attributable to Black Knight

$
53.4

$
127.8

$
147.2

$
217.0
Other comprehensive earnings (loss):








Unrealized holding (losses) gains, net of tax⁽¹⁾

(0.2)

0.1

0.1

(24.1)
Reclassification adjustments for losses included in net earnings, net of tax⁽²⁾

4.0

3.9

11.9

8.3
Total unrealized gains (losses) on interest rate swaps, net of tax

3.8

4.0

12.0

(15.8)
Foreign currency translation adjustment, net of tax ⁽³⁾

—

0.1

(0.4)

(0.1)
Unrealized (losses) gains on investments in unconsolidated affiliates⁽⁴⁾

(2.9)

4.7

(4.5)

3.0
Other comprehensive earnings (loss)

0.9

8.8

7.1

(12.9)
Comprehensive earnings

47.2

123.4

131.1

190.9
Net losses attributable to redeemable noncontrolling interests

7.1

13.2

23.2

13.2
Comprehensive earnings attributable to Black Knight

$
54.3

$
136.6

$
154.3

$
204.1
Net earnings per share attributable to Black Knight common shareholders:








Basic

$
0.34

$
0.82

$
0.95

$
1.44
Diluted

$
0.34

$
0.82

$
0.94

$
1.43
Weighted average shares of common stock outstanding (see Note 5):




Basic

155.2

155.4

155.4

150.9
Diluted

156.2

156.3

155.9

151.7

(1)

Net of income tax ~~benefit~~expense of ~~$0.1~~$1.4 million and ~~income tax expense~~ of ~~less than $0.1~~$0.2 million for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~respectively, and income tax expense of less than $0.1 million and income tax benefit of $8.2 million for the three and nine months ended September 30, 2020,~~ respectively.

(2)

Amounts reclassified to net earnings relate to losses on interest rate swaps and are included in Interest expense, net above. Amounts are net of income tax benefit of ~~$1.3~~$1.1 million and ~~$4.0~~$1.3 million for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~respectively, and~~ ~~$1.3 million and $2.8 million for the three and nine months ended September 30, 2020, respectively~~.respectively.

(3)

Net of income tax benefit of less than $0.1 million for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 and ~~income tax expense of less than~~ ~~$0.1 million and income tax benefit of less than $0.1 million for the three and nine months ended September 30, 2020, respectively~~.2021.

(4)

Net of income tax ~~benefit~~expense of ~~$1.0~~$1.1 million ~~and $1.5 million for the three and nine months ended September 30, 2021, respectively,~~ and income tax ~~expense~~benefit of~~$1.6 million and~~ $1.0 million for the three ~~and nine~~ months ended ~~September 30, 2020, respectively~~.March 31, 2022 and 2021, respectively.

See Notes to Condensed Consolidated Financial Statements (Unaudited).

Table of Contents

BLACK KNIGHT, INC.

Condensed Consolidated Statements of Equity

(In millions)

(Unaudited)

Three months ended September 30, 2021

Accumulated

Additional

other

Total

Redeemable

Common stock

paid-in

Retained

comprehensive

Treasury stock

shareholders’

noncontrolling


Shares

$

capital

earnings

loss

Shares

$

equity

interests
Balance, June 30, 2021

160.0

$
—

$
2,021.0

$
852.4

$
(32.6)

3.4

$
(176.6)

$
2,664.2

$
578.0
Fair value adjustment to redeemable noncontrolling interests in Optimal Blue Holdco, LLC

—

—

(376.2)

—

—

—

—

(376.2)

376.2
Grant of restricted shares of common stock

—

—

(2.6)

—

—

(0.1)

2.6

—

—
Forfeitures of restricted shares of common stock

—

—

1.1

—

—

—

(1.1)

—

—
Equity-based compensation expense

—

—

9.9

—

—

—

—

9.9

—
Net earnings (losses)

—

—

—

53.4

—

—

—

53.4

(7.1)
Equity-based compensation expense of unconsolidated affiliates

—

—

—

0.8

—

—

—

0.8

—
Purchases of treasury stock

—

—

—

—

—

1.4

(100.0)

(100.0)

—
Unrealized gains on interest rate swaps, net

—

—

—

—

3.8

—

—

3.8

—
Other comprehensive loss on investments in unconsolidated affiliates

—

—

—

—

(2.9)

—

—

(2.9)

—
Balance, September 30, 2021

160.0

$
—

$
1,653.2

$
906.6

$
(31.7)

4.7

$
(275.1)

$
2,253.0

$
947.1

Three months ended September 30, 2020

Accumulated

Additional

other

Total

Redeemable

Common stock

paid-in

Retained

comprehensive

Treasury stock

shareholders’

noncontrolling


Shares

$

capital

earnings

loss

Shares

$

equity

interests
Balance June 30, 2020

160.1

$
—

$
2,055.9

$
582.3

$
(41.9)

3.0

$
(143.1)

$
2,453.2

$
—
Grant of restricted shares of common stock

—

—

(0.2)

—

—

—

0.2

—

—
Forfeitures of restricted shares of common stock

—

—

0.2

—

—

—

(0.2)

—

—
Tax withholding payments for restricted share vesting

—

—

(1.2)

—

—

—

—

(1.2)

—
Vesting of restricted shares granted from treasury stock

—

—

0.8

—

—

0.1

(0.8)

—

—
Equity-based compensation expense

—

—

9.2

—

—

—

—

9.2

—
Contributions received for redeemable noncontrolling interests in Optimal Blue Holdco, LLC

—

—

—

—

—

—

—

—

578.0
Fair value adjustment to redeemable noncontrolling interests in Optimal Blue Holdco, LLC

—

—

(13.2)

—

—

—

—

(13.2)

13.2
Deferred income taxes recognized related to the contribution of Compass Analytics to Optimal Blue Holdco, LLC

—

—

(1.9)

—

—

—

—

(1.9)

—
Net earnings (losses)

—

—

—

127.8

—

—

—

127.8

(13.2)
Equity-based compensation expense of unconsolidated affiliates

—

—

—

(0.4)

—

—

—

(0.4)

—
Foreign currency translation adjustment

—

—

—

—

0.1

—

—

0.1

—
Unrealized gains on interest rate swaps, net

—

—

—

—

4.0

—

—

4.0

—
Other comprehensive gains on investments in unconsolidated affiliates

—

—

—

—

4.7

—

—

4.7

—
Balance, September 30, 2020

160.1

$
—

$
2,049.6

$
709.7

$
(33.1)

3.1

$
(143.9)

$
2,582.3

$
578.0

~~See Notes to Condensed Consolidated Financial Statements (Unaudited).~~

~~Table of Contents~~

~~BLACK KNIGHT, INC.~~

~~Condensed Consolidated Statements of Equity (Continued)~~

~~(In millions)~~

~~(Unaudited)~~


	Nine months ended September 30, 2021																Three months ended March 31, 2022
								Accumulated																Accumulated
				Additional				other					Total		Redeemable					Additional				other					Total		Redeemable
	Common stock			paid-in		Retained		comprehensive		Treasury stock			shareholders’		noncontrolling		Common stock			paid-in		Retained		comprehensive		Treasury stock			shareholders’		noncontrolling
	Shares	$		capital		earnings		loss		Shares	$		equity		interests		Shares	$		capital		earnings		loss		Shares	$		equity		interests
Balance, December 31, 2020	160.1	$	—	$	2,053.7	$	757.4	$	(38.8)	3.1	$	(144.6)	$	2,627.7	$	578.0
Balance, December 31, 2021																	160.0	$	—	$	1,410.9	$	968.2	$	(17.5)	4.7	$	(271.2)	$	2,090.4	$	1,188.8
Fair value adjustment to redeemable noncontrolling interests in Optimal Blue Holdco, LLC	—		—		(392.3)		—		—	—		—		(392.3)		392.3	—		—		(9.9)		—		—	—		—		(9.9)		9.9
Acquisition of remaining redeemable noncontroling interests in Optimal Blue Holdco, LLC																	—		—		—		—		—	—		—		—		(1,156.0)
Grant of restricted shares of common stock	—		—		(29.2)		—		—	(0.6)		29.2		—		—	—		—		(46.6)		—		—	(0.8)		46.6		—		—
Forfeitures of restricted shares of common stock	—		—		1.6		—		—	—		(1.6)		—		—	—		—		1.0		—		—	—		(1.0)		—		—
Tax withholding payments for restricted share vesting	(0.1)		—		(24.4)		—		—	—		—		(24.4)		—	—		—		(10.7)		—		—	—		—		(10.7)		—
Vesting of restricted shares granted from treasury stock	—		—		11.4		—		—	0.2		(11.4)		—		—	—		—		8.6		—		—	0.2		(8.6)		—		—
Equity-based compensation expense	—		—		32.4		—		—	—		—		32.4		—	—		—		10.7		—		—	—		—		10.7		—
Net earnings (losses)	—		—		—		147.2		—	—		—		147.2		(23.2)	—		—		—		364.6		—	—		—		364.6		(2.5)
Equity-based compensation expense of unconsolidated affiliates	—		—		—		2.0		—	—		—		2.0		—	—		—		—		(5.4)		—	—		—		(5.4)		—
Purchases of treasury stock	—		—		—		—		—	2.0		(146.7)		(146.7)		—
Foreign currency translation adjustment	—		—		—		—		(0.4)	—		—		(0.4)		—	—		—		—		—		(0.2)	—		—		(0.2)		—
Unrealized gains on interest rate swaps, net	—		—		—		—		12.0	—		—		12.0		—	—		—		—		—		7.5	—		—		7.5		—
Other comprehensive loss on investments in unconsolidated affiliates	—		—		—		—		(4.5)	—		—		(4.5)		—
Balance, September 30, 2021	160.0	$	—	$	1,653.2	$	906.6	$	(31.7)	4.7	$	(275.1)	$	2,253.0	$	947.1
Other comprehensive gains on investments in unconsolidated affiliates																	—		—		—		—		3.2	—		—		3.2		—
Other																	—		—		0.8		—		—	—		—		0.8		—
Balance, March 31, 2022																	160.0	$	—	$	1,364.8	$	1,327.4	$	(7.0)	4.1	$	(234.2)	$	2,451.0	$	40.2


	Nine months ended September 30, 2020																Three months ended March 31, 2021
								Accumulated																Accumulated
				Additional				other						Total	Redeemable					Additional				other						Total	Redeemable
	Common stock			paid-in		Retained		comprehensive		Treasury stock			shareholders’		noncontrolling		Common stock			paid-in		Retained		comprehensive		Treasury stock			shareholders’		noncontrolling
	Shares	$		capital		earnings		loss		Shares	$		equity		interests		Shares	$		capital		earnings		loss		Shares	$		equity		interests
Balance December 31, 2019	153.1	$	—	$	1,586.8	$	490.6	$	(20.2)	3.4	$	(158.7)	$	1,898.5	$	—
Effect of CECL adoption	—		—		—		(1.1)		—	—		—		(1.1)		—
Adjusted balance at January 1, 2020	153.1		—		1,586.8		489.5		(20.2)	3.4		(158.7)		1,897.4		—
Issuance of common stock, net of underwriters' discount and issuance costs	7.1		—		484.2		—		—	—		—		484.2		—
Balance, December 31, 2020																	160.1	$	—	$	2,053.7	$	757.4	$	(38.8)	3.1	$	(144.6)	$	2,627.7	$	578.0
Fair value adjustment to redeemable noncontrolling interests in Optimal Blue Holdco, LLC																	—		—		(8.6)		—		—	—		—		(8.6)		8.6
Grant of restricted shares of common stock	—		—		(24.8)		—		—	(0.5)		24.8		—		—	—		—		(25.3)		—		—	(0.5)		25.3		—		—
Forfeitures of restricted shares of common stock	—		—		0.5		—		—	—		(0.5)		—		—	—		—		0.1		—		—	—		(0.1)		—		—
Tax withholding payments for restricted share vesting	(0.1)		—		(20.9)		—		—	—		—		(20.9)		—	(0.1)		—		(22.7)		—		—	—		—		(22.7)		—
Vesting of restricted shares granted from treasury stock	—		—		9.5		—		—	0.2		(9.5)		—		—	—		—		10.4		—		—	0.2		(10.4)		—		—
Equity-based compensation expense	—		—		29.4		—		—	—		—		29.4		—	—		—		9.4		—		—	—		—		9.4		—
Contributions received for redeemable noncontrolling interests in Optimal Blue Holdco, LLC	—		—		—		—		—	—		—		—		578.0
Fair value adjustment to redeemable noncontrolling interests in Optimal Blue Holdco, LLC	—		—		(13.2)		—		—	—		—		(13.2)		13.2
Deferred income taxes recognized related to the contribution of Compass Analytics to Optimal Blue Holdco, LLC	—		—		(1.9)		—		—	—		—		(1.9)		—
Net earnings (losses)	—		—		—		217.0		—	—		—		217.0		(13.2)	—		—		—		54.1		—	—		—		54.1		(8.6)
Equity-based compensation expense of unconsolidated affiliates	—		—		—		3.2		—	—		—		3.2		—	—		—		—		0.5		—	—		—		0.5		—
Purchases of treasury stock																	—		—		—		—		—	0.6		(46.7)		(46.7)		—
Foreign currency translation adjustment	—		—		—		—		(0.1)	—		—		(0.1)		—	—		—		—		—		(0.3)	—		—		(0.3)		—
Unrealized losses on interest rate swaps, net	—		—		—		—		(15.8)	—		—		(15.8)		—
Other comprehensive gains on investments in unconsolidated affiliates	—		—		—		—		3.0	—		—		3.0		—
Balance, September 30, 2020	160.1	$	—	$	2,049.6	$	709.7	$	(33.1)	3.1	$	(143.9)	$	2,582.3	$	578.0
Unrealized gains on interest rate swaps, net																	—		—		—		—		4.4	—		—		4.4		—
Other comprehensive losses on investments in unconsolidated affiliates																	—		—		—		—		(3.1)	—		—		(3.1)		—
Balance, March 31, 2021																	160.0	$	—	$	2,017.0	$	812.0	$	(37.8)	3.4	$	(176.5)	$	2,614.7	$	578.0

See Notes to Condensed Consolidated Financial Statements (Unaudited).

Table of Contents

BLACK KNIGHT, INC.

Condensed Consolidated Statements of Cash Flows

(In millions)

(Unaudited)


	Nine months ended September 30,				Three months ended March 31,
	2021		2020		2022		2021
Cash flows from operating activities:
Net earnings	$	124.0	$	203.8	$	362.1	$	45.5
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		271.8		180.3		91.5		87.8
Amortization of debt issuance costs and original issue discount		2.9		2.4		0.9		1.0
Loss on extinguishment of debt		2.5		—		0		2.5
Deferred income taxes, net		(6.0)		(0.9)		(135.8)		(1.8)
Equity in earnings of unconsolidated affiliates, net of tax		(3.0)		(66.2)		(303.1)		(6.4)
Equity-based compensation		32.4		29.4		10.7		9.4
Changes in assets and liabilities, net of acquired assets and liabilities:
Trade receivables, including receivables from related parties		0		(5.2)		(2.5)		0.1
Prepaid expenses and other assets		(43.4)		(12.5)		(11.9)		(35.1)
Deferred contract costs		(36.6)		(36.9)		(12.3)		(11.0)
Deferred revenues		(6.5)		(17.0)		(3.8)		6.4
Trade accounts payable and other liabilities		(6.7)		(11.3)		89.3		(21.0)
Net cash provided by operating activities		331.4		265.9		85.1		77.4
Cash flows from investing activities:
Additions to property and equipment		(17.8)		(19.5)		(6.6)		(5.2)
Additions to computer software		(65.9)		(63.2)
Additions to software						(20.8)		(24.7)
Business acquisitions, net of cash acquired		(302.5)		(1,869.2)		0		(20.0)
Investment in Dun & Bradstreet Holdings, Inc. ("DNB")		0		(100.0)
Asset acquisitions		(10.0)		(15.0)		0		(10.0)
Other investing activities		(1.2)		8.4
Net cash used in investing activities		(397.4)		(2,058.5)		(27.4)		(59.9)
Cash flows from financing activities:
Net proceeds from issuance of common stock, before offering expenses		0		484.6
Costs directly associated with issuance of common stock		0		(0.4)
Issuance of senior unsecured notes, net of original issue discount		0		990.0
Revolver borrowings		613.9		574.6		460.1		167.8
Revolver payments		(324.6)		(746.6)		(115.1)		(98.5)
Term loan borrowings		1.6		—		0		1.6
Term loan payments		0		(39.1)		(7.2)		—
Contributions received for redeemable noncontrolling interests		0		578.0
Payments made for redeemable noncontrolling interests						(433.5)		—
Purchases of treasury stock		(146.7)		—		0		(46.7)
Tax withholding payments for restricted share vesting		(24.4)		(20.9)		(10.7)		(22.7)
Finance lease payments		(2.8)		(9.4)		(0.8)		(1.2)
Debt issuance costs paid		(7.6)		(2.4)		0		(7.6)
Net cash provided by financing activities		109.4		1,808.4
Net increase in cash and cash equivalents		43.4		15.8
Net cash used in financing activities						(107.2)		(7.3)
Net (decrease) increase in cash and cash equivalents						(49.5)		10.2
Cash and cash equivalents, beginning of period		34.7		15.4		77.1		34.7
Cash and cash equivalents, end of period	$	78.1	$	31.2	$	27.6	$	44.9
Supplemental cash flow information:
Interest paid, net	$	(69.7)	$	(36.4)	$	(29.3)	$	(29.1)
Income taxes paid, net	$	(42.6)	$	(48.1)	$	(0.3)	$	(0.9)

See Notes to Condensed Consolidated Financial Statements (Unaudited).

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BLACK KNIGHT, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(1)Basis of Presentation and Overview

The accompanying Condensed Consolidated Financial Statements (Unaudited) of Black Knight, Inc. (“BKI”) and its subsidiaries ("Black Knight," the "Company," "we," "us" or "our") were prepared in accordance with U.S. generally accepted accounting principles ("GAAP"), and all adjustments considered necessary for a fair presentation have been included. All significant intercompany accounts and transactions have been eliminated.

The preparation of these Condensed Consolidated Financial Statements (Unaudited) in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the Condensed Consolidated Financial Statements (Unaudited), as well as the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

This Quarterly Report on Form 10-Q should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 filed with the Securities and Exchange Commission ("SEC") on February ~~26, 2021~~25, 2022 and other filings with the SEC.

Description of Business

We are a ~~leading~~premier provider of integrated, innovative, mission-critical, high-performance software solutions, data and analytics ~~solutions~~ to the U.S. mortgage and ~~consumer loan,~~ real estate ~~and capital~~markets. Our mission is to transform the markets ~~verticals. Our~~we serve by delivering innovative solutions ~~facilitate and automate many of the mission-critical business processes~~that are integrated across the homeownership ~~lifecycle. We are committed~~lifecycle and that result in realized efficiencies, reduced risk and new opportunities for our clients to ~~being a premier business partner that clients rely on to~~help them achieve ~~their strategic goals, realize~~ greater ~~success and better serve their customers by delivering best-in-class software, services and insights with a relentless commitment to excellence, innovation, integrity and leadership.~~levels of success.

Principles of Consolidation

The Condensed Consolidated Financial Statements (Unaudited) include the accounts of BKI, its wholly-owned subsidiaries and non-wholly owned subsidiaries in which we have a controlling financial interest either through voting rights or means other than voting rights. Intercompany transactions and balances have been eliminated in consolidation. Where our ownership interest in a consolidated subsidiary is less than 100%, the noncontrolling interests’ share of these non-wholly owned subsidiaries is reported in our Condensed Consolidated Balance Sheets (Unaudited) as a separate component of equity or within temporary equity. The noncontrolling interests’ share of the net earnings (loss) of these non-wholly owned subsidiaries is reported in our Condensed Consolidated Statements of Earnings and Comprehensive Earnings (Unaudited) as an adjustment to our net earnings to arrive at Net earnings attributable to Black Knight.

~~We consolidate variable interest entities (“VIEs”) if we are considered the primary beneficiary because we have (a) the power~~Redeemable Noncontrolling Interests

Prior to direct matters that most significantly impact the VIE’s economic performance and (b) the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE.

February 15, 2022, Optimal Blue Holdco, LLC (“Optimal Blue Holdco”), was a non-wholly owned subsidiary isand considered a ~~VIE.~~variable interest entity. We ~~are~~were the primary beneficiary of Optimal Blue Holdco through our controlling interest and our rights established in the Second Amended and Restated Limited Liability Company Agreement of Optimal Blue Holdco dated November 24, 2020 (the “OB Holdco LLC Agreement”). As such, we ~~control~~controlled Optimal Blue Holdco and its subsidiaries, and ~~consolidate~~we consolidated its financial position and results of operations. ~~As of September 30, 2021 and December 31, 2020,~~Prior to February 15, 2022, we ~~own~~owned 60% of Optimal Blue Holdco. Redeemable noncontrolling interests ~~represent~~represented the collective 40% equity interest in Optimal Blue Holdco owned by Cannae Holdings, LLC ("Cannae") and affiliates of Thomas H. Lee Partners, L.P. ("THL"). As these redeemable noncontrolling interests ~~provide~~provided for redemption features not solely within our control, they ~~are~~were presented outside of shareholders' equity.

~~Reporting Segments~~

~~We conduct~~On February 15, 2022, we entered into a purchase agreement with Cannae and THL and acquired all of their issued and outstanding Class A units of Optimal Blue Holdco through Optimal Blue I, LLC (“Optimal Blue I”), a Delaware limited liability company and our ~~operations through 2 reporting segments: (1) Software Solutions~~wholly-owned subsidiary, in exchange for aggregate consideration of 36.4 million shares of Dun & Bradstreet Holdings, Inc. (“DNB”) common stock valued at $722.5 million and ~~(2) Data~~$433.5 million in cash, included as a financing cash outflow on the Condensed Consolidated Statements of Cash Flows (Unaudited), funded with borrowings under our revolving credit facility. The aggregate consideration of $1.156 billion and ~~Analytics. See further discussion in Note 16 —~~ ~~Segment Information~~.number of shares of DNB common stock paid to Cannae and THL was based on the 20-day volume-weighted average trading price of DNB for the period ended on February 14, 2022. As of February 15, 2022, we own 100% of the Class A units of Optimal Blue Holdco.

Table of Contents

BLACK KNIGHT, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

Reporting Segments

We conduct our operations through 2 reporting segments: (1) Software Solutions and (2) Data and Analytics. See further discussion in Note 13 — Segment Information.

Reclassifications

Certain reclassifications have been made to the prior year amounts to conform to the classifications used in ~~2021.~~2022. Certain receivables previously included in Trade and other receivables, including receivables from related parties on our Condensed Consolidated Statements of Cash Flows (Unaudited) are now included in Prepaid expenses and other assets. We also reclassified certain deferred compensation plan assets and liabilities between Prepaid expenses and other assets and Trade accounts payable and other liabilities on our Condensed Consolidated Statements of Cash Flows (Unaudited).

Merger Agreement

On May 4, 2022, we entered into a definitive agreement to be acquired by Intercontinental Exchange, Inc. (“ICE”), a leading global provider of data, technology, and market infrastructure, in a transaction valued at approximately $13.1 billion, or $85 per share, with consideration in the form of a mix of cash (80%) and stock (20%) (the “Transaction”). The aggregate cash consideration in the Transaction consists of approximately $10.5 billion and the aggregate stock consideration is valued at approximately $2.6 billion based on ICE’s 10-day volume weighted average price as of May 2, 2022 of $118.09. Black Knight shareholders can elect to receive either cash or stock, subject to proration, with the value of the cash election and the stock election equalized at closing. The Transaction is expected to close in the first half of 2023, following the receipt of regulatory approvals, Black Knight shareholder approval and the satisfaction of customary closing conditions. The Transaction has been approved by the Boards of Directors of Black Knight and ICE.

(2)Condensed Consolidated Financial Statement Details

Cash and Cash Equivalents

Cash and cash equivalents are unrestricted and include the following (in millions):



	September 30, 2021		December 31, 2020		March 31, 2022		December 31, 2021
Cash	$	28.3	$	27.1	$	21.1	$	24.0
Cash equivalents		49.8		7.6		6.5		53.1
Cash and cash equivalents	$	78.1	$	34.7	$	27.6	$	77.1

Trade Receivables, Net

A summary of Trade receivables, net of allowance for credit losses is as follows (in millions):

September 30, 2021

December 31, 2020
Trade receivables — billed

$
139.9

$
136.4
Trade receivables — unbilled

49.1

47.9
Trade receivables

189.0

184.3
Allowance for credit losses

(2.8)

(2.1)
Trade receivables, net

$
186.2

$
182.2

~~Prepaid Expenses and Other Current Assets~~

~~Prepaid expenses and other current assets consist of the following (in millions):~~

September 30, 2021

December 31, 2020
Prepaid expenses

$
48.7

$
39.7
Contract assets, net

23.3

20.9
Income tax receivables

7.8

2.1
Other current assets

8.8

7.7
Prepaid expenses and other current assets

$
88.6

$
70.4



	March 31, 2022		December 31, 2021
Trade receivables — billed	$	149.4	$	147.4
Trade receivables — unbilled		47.8		47.1
Trade receivables		197.2		194.5
Allowance for credit losses		(2.9)		(2.7)
Trade receivables, net	$	194.3	$	191.8

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BLACK KNIGHT, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following (in millions):



	March 31, 2022		December 31, 2021
Prepaid expenses	$	52.4	$	44.7
Contract assets, net		21.6		23.0
Income tax receivables		0.9		6.5
Other current assets		10.2		8.8
Prepaid expenses and other current assets	$	85.1	$	83.0

Other Non-Current Assets

Other non-current assets consist of the following (in millions):

September 30, 2021

December 31, 2020
Contract assets, net

$
69.4

$
56.5
Property records database

60.6

60.5
Right-of-use assets⁽¹⁾

33.9

41.1
Deferred compensation plan related assets

24.9

19.5
Contract credits

23.1

5.0
Prepaid expenses

5.6

4.9
Other

3.1

5.8
Other non-current assets

$
220.6

$
193.3

~~(1)~~

~~Includes non-cash additions for right-of-use assets obtained in exchange for lease liabilities of $1.4 million and $4.9 million for the nine months ended September 30, 2021 and 2020, respectively.~~


	March 31, 2022		December 31, 2021
Contract assets, net	$	90.3	$	80.2
Property records database		60.6		60.6
Right-of-use assets		30.7		32.9
Deferred compensation plan related assets		26.5		25.2
Contract credits		23.1		23.6
Prepaid expenses		6.2		4.5
Other		2.4		3.3
Other non-current assets	$	239.8	$	230.3

Trade Accounts Payable and Other Accrued Liabilities

Trade accounts payable and other accrued liabilities consist of the following (in millions):


	September 30, 2021		December 31, 2020
Income taxes payable	$	12.0	$	13.6
					March 31, 2022		December 31, 2021
Accrued interest					$	3.1	$	12.3
Lease liabilities, current		9.6		13.5		10.3		10.8
Trade accounts payable		9.2		8.9		10.1		7.9
Other taxes payable and accrued		6.2		10.7		5.7		4.8
Accrued client liabilities		4.8		6.4		3.7		3.8
Accrued interest		3.1		12.8
Other		35.0		22.2		22.5		24.9
Trade accounts payable and accrued liabilities	$	79.9	$	88.1	$	55.4	$	64.5

Deferred Revenues

During the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ revenues recognized related to the amount included in the Deferred revenues balance at the beginning of each year were ~~$10.3~~$20.9 million and ~~$11.6~~$17.7 million, ~~respectively, and $40.1 million and $39.9 million during the nine months ended September 30, 2021 and 2020,~~ respectively.

~~Depreciation and Amortization~~

~~Depreciation and amortization includes the following (in millions):~~

Three months ended September 30,

Nine months ended September 30,


2021

2020

2021

2020
Other intangible assets

$
41.7

$
17.9

$
119.6

$
44.3
Computer software

33.4

27.5

96.7

79.7
Property and equipment

10.1

9.8

30.3

29.9
Deferred contract costs

8.4

8.8

25.2

26.4
Total

$
93.6

$
64.0

$
271.8

$
180.3

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BLACK KNIGHT, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

Depreciation and Amortization

Depreciation and amortization includes the following (in millions):


	Three months ended March 31,
	2022		2021
Other intangible assets	$	36.8	$	38.8
Software		35.5		30.6
Property and equipment		9.9		10.2
Deferred contract costs		9.3		8.2
Total	$	91.5	$	87.8

Other Non-Current Liabilities

Other non-current liabilities consist of the following (in millions):



	March 31, 2022		December 31, 2021
Lease liabilities, non-current	$	22.9	$	26.4
Deferred compensation plan		24.8		24.4
Unrealized losses on interest rate swaps (Note 7)		2.1		13.9
Other		13.5		14.0
Other non-current liabilities	$	63.3	$	78.7

(3)Business Acquisitions

2021 Acquisitions

On March 16, 2021, we completed the acquisition of the technology assets and business of NexSpring Financial, LLC (“NexSpring”), which is reported within our Software Solutions segment, and is expected to broaden our ability to serve mortgage brokers.

On May 17, 2021, we completed the acquisition of 100% of the equity interests in eMBS, Inc. (“eMBS”), a leading data and analytics aggregator for residential mortgage-backed securities, which is reported within our Data & Analytics segment, and is expected to solidify and further expand our market leadership in solutions and data for agency-backed securities.

On July 7, 2021, we completed the acquisition of 100% of the equity interests in TOMN Holdings, Inc. and its subsidiaries (“Top of Mind”), which is reported within our Software Solutions segment. Top of Mind is the developer of Surefire^SM, a leading customer relationship management and marketing automation system for the mortgage industry.

~~2020 Optimal Blue Acquisition~~We did not record any measurement period adjustments related to our prior year acquisitions during the three months ended March 31, 2022. The estimates related to our 2021 acquisitions of eMBS and Top of Mind are preliminary and subject to adjustments as we complete our valuation process with respect to certain assumed liabilities, including estimated liabilities for pre-acquisition tax exposure.

(4)Investments in Unconsolidated Affiliates

DNB is a leading global provider of business decisioning data and analytics. On January 8, 2021, DNB completed its acquisition of Bisnode Business Information Group AB (the “Bisnode acquisition”). In connection with the Bisnode acquisition, DNB issued 6.2 million shares of common stock, which resulted in a decrease in our ownership interest in DNB from 13.0% to 12.8% at that time.

On ~~September~~February 15, ~~2020,~~2022, we ~~completed the acquisition~~exchanged 36.4 million shares of ~~100%~~DNB common stock in connection for a portion of the ~~equity interests~~remaining Class A units in Optimal Blue ~~and certain affiliates, a leading provider of secondary market solutions and actionable data services, funded with cash on hand, debt financing and investments~~Holdco we acquired from ~~co-investors~~ Cannae and THL. ~~Optimal Blue is reported within our Software Solutions segment because it enhances our robust set~~The number of ~~software solutions and includes additional product, pricing and eligibility capabilities.~~

~~The following table summarizes~~shares of DNB common stock was valued at $722.5 million based on the ~~total purchase~~20-day volume-weighted average trading price ~~consideration and the fair value amounts recognized~~of DNB for the ~~assets acquired and liabilities assumed (in millions):~~period ended on February 14, 2022. We recognized a

Table of Contents

BLACK KNIGHT, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

2021

2020

Acquisitions⁽²⁾

Optimal Blue⁽³⁾
Cash paid
$
307.5

$
1,828.3
Contingent consideration⁽¹⁾

4.4

—
Less: cash acquired

(5.0)

(29.3)
Total consideration, net
$
306.9

$
1,799.0

Trade receivables
$
2.9

$
11.3
Computer software

34.8

79.7
Other intangible assets

80.1

610.8
Goodwill

210.4

1,197.9
Other current and non-current assets

1.4

13.5
Total assets acquired

329.6

1,913.2
Deferred income taxes

16.3

93.5
Current and other non-current liabilities

6.4

20.7
Total liabilities assumed

22.7

114.2
Net assets acquired
$
306.9

$
1,799.0

~~(1)~~

~~The estimated contingent consideration is to be paid in cash based on NexSpring revenues recognized over the three-year period subsequent to the acquisition. Refer to Note 11 –~~ ~~Fair Value Measurement~~ ~~for additional information.~~

~~(2)~~

Includes the NexSpring, eMBS and Top of Mind acquisitions. These estimates are preliminary and subject to adjustments as we complete our valuation process with respect to certain acquired assets, including Computer software, Other intangible assets, including client relationship assets, and Goodwill and certain assumed liabilities, including estimated liabilities for pre-acquisition tax exposure, and contingent consideration. During the three and nine months ended September 30, 2021, we recorded a measurement period adjustment of $0.6

gain of $305.4 million, net of tax of $102.6 million, ~~for certain pre-acquisition tax assets and liabilities related to the eMBS acquisition.~~

~~(3)~~

During the nine months ended September 30, 2021, we recorded a measurement period adjustment of $8.1 million primarily reducing deferred income taxes for certain book and tax basis differences as we completed the tax return filings for the pre-acquisition period.

~~For the three and nine months ended September 30, 2021, we incurred transaction costs of $2.9 million and $3.8 million, respectively,~~ related to ~~our 2021 acquisitions. Transaction costs are included in Transition and integration costs on~~this transaction. As of March 31, 2022, we own approximately 4.3% of DNB’s outstanding common stock.

We hold less than 20% of the ~~Condensed Consolidated Statements~~outstanding common equity of ~~Earnings and Comprehensive Earnings (Unaudited).~~

~~The preliminary amounts assigned~~DNB, but we continue to ~~intangible assets by type~~account for our ~~2021 acquisitions are summarized~~investment under the equity method because we continue to have significant influence over DNB primarily through a combination of an agreement with certain other DNB investors pursuant to which we agreed to collectively vote together on matters related to the election of DNB directors for a period of three years following the initial public offering of DNB, our shared Chief Executive Officer and our investment.

As of March 31, 2022, DNB’s closing share price was $17.52, and the fair value of our investment in ~~the table~~DNB was $323.7 million before tax.

Summarized consolidated financial information for DNB is presented below (in millions):

Weighted average

Gross

estimated life


carrying value

(in years)
Computer software

$
34.8

5
Other intangible assets:




Client relationships

76.3

10
Trade names

2.5

5
Non-compete agreements

1.3

3
Other intangible assets

80.1


Total gross carrying value

$
114.9


	March 31, 2022		December 31, 2021
Current assets	$	732.3	$	718.0
Non-current assets		9,124.9		9,279.2
Total assets	$	9,857.2	$	9,997.2

Current liabilities, including short-term debt	$	973.4	$	1,004.9
Non-current liabilities		5,174.9		5,247.0
Total liabilities		6,148.3		6,251.9
Total equity		3,708.9		3,745.3
Total liabilities and shareholders' equity	$	9,857.2	$	9,997.2


	Three months ended March 31,
	2022		2021

Revenues	$	536.0	$	504.5
Loss before provision for income taxes and equity in net income of affiliates		(39.8)		(33.7)
Net loss		(29.8)		(23.3)
Net loss attributable to DNB		(31.3)		(25.0)

Equity in earnings of unconsolidated affiliates, net of tax consists of the following (in millions):


	Three months ended March 31,
	2022		2021
Equity in losses of unconsolidated affiliates, net of tax	$	(2.3)	$	(3.5)
Non-cash gain related to DNB's issuance of common stock, net of tax		—		9.9
Gain related to DNB investment, net of tax		305.4		—
Equity in earnings of unconsolidated affiliates, net of tax	$	303.1	$	6.4

~~(4)~~(5)~~Investments in Unconsolidated Affiliates~~Earnings Per Share

DNB is a global leader in commercial data and analytics that provides various services helping companies improve their operational performance. On July 6, 2020, DNB, previously a wholly-owned subsidiaryDiluted net earnings per share includes the effect of ~~Star Parent, L.P., a Delaware limited partnership~~unvested restricted stock awards, restricted stock unit awards (“~~Star Parent”), closed its initial public offering (the “DNB IPO”~~RSUs”) and ~~concurrent private placement (the “DNB Private Placement”~~Optimal Blue Holdco profits interests units (“OB PIUs”). ~~In connection with~~For the ~~DNB IPO and DNB Private Placement, our limited partner interests in Star Parent~~three months ended March 31, 2021, the OB PIUs were ~~exchanged for 54.8 million shares of DNB common stock, which represented ownership of 13.0% of DNB.~~excluded from the diluted

109

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BLACK KNIGHT, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

We hold less than 20% of the outstanding common equity of DNB, but we continue to account for our investment under the equity method because we continue to have significant influence over DNB primarily through a combination of our investment, an agreement with certain other DNB investors pursuant to which we agreed to collectively vote together on matters related to the election of DNB directors for a period of three years following the initial public offering of DNB and our shared Chief Executive Officer.

On January 8, 2021, DNB completed its acquisition of Bisnode Business Information Group AB (the “Bisnode acquisition”). In connection with the Bisnode acquisition, DNB issued 6.2 million shares of common stock, which resulted in a decrease in our ownership interest in DNB to 12.8%.

~~As of September 30, 2021, we have invested an aggregate of $492.6 million in DNB. As of September 30, 2021, DNB’s closing~~earnings per share ~~price was $16.81, and the fair value of our investment in DNB was $922.0 million before tax.~~

~~Summarized consolidated financial information for DNB is presented below (in millions):~~

September 30, 2021

December 31, 2020
Current assets

$
649.0

$
874.4
Non-current assets

9,098.3

8,345.9
Total assets

$
9,747.3

$
9,220.3

Current liabilities, including short-term debt

$
919.6

$
828.1
Non-current liabilities

5,182.4

4,808.3
Total liabilities

6,102.0

5,636.4
Total equity

3,645.3

3,583.9
Total liabilities and shareholders' equity

$
9,747.3

$
9,220.3

Three months ended September 30,

Nine months ended September 30,

2021

2020

2021

2020
Revenues

$
541.9

$
444.4

$
1,567.3

$
1,258.8
Income (loss) before provision for income taxes and equity in net income of affiliates

14.7

(24.0)

(27.5)

(227.6)
Net income (loss)

18.2

(14.3)

(55.9)

(114.7)
Net income (loss) attributable to DNB

16.6

(16.3)

(60.1)

(182.4)

Effective January 1, 2021, DNB eliminated the one-month reporting lag for its subsidiaries outside North America and aligned the year-end for all of its subsidiaries to December 31. DNB applied this change in their accounting policy retrospectively. The effect of this change in accounting policy did not have a material impact to our results of operations or financial condition and was included in our current period accounting for our investment in DNB. The summarized consolidated financial information above was derived from DNB’s most recently available unaudited consolidated financial information and includescalculation because the effect of their ~~change in accounting policy.~~

~~Equity in earnings of unconsolidated affiliates, net of tax consists of the following (in millions):~~

Three months ended September 30,

Nine months ended September 30,


2021

2020

2021

2020
Equity in earnings (losses) of unconsolidated affiliates, net of tax

$
1.6

$
(1.6)

$
(6.9)

$
(27.0)
Non-cash gain related to DNB's issuance of common stock, net of tax

—

88.2

9.9

88.2
Sale of an equity method investment, net of tax

—

—

—

5.0
Equity in earnings of unconsolidated affiliates, net of tax

$
1.6

$
86.6

$
3.0

$
66.2

~~Table of Contents~~

~~BLACK KNIGHT, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)~~

~~(5)~~~~Earnings Per Share~~

~~Diluted net earnings per share includes the effect of unvested restricted stock awards, restricted stock unit awards (“RSUs”) and Optimal Blue Holdco profits interests units (“OB PIUs”).~~inclusion would have been antidilutive. The following table sets forth the computation of basic and diluted net earnings per share (in millions, except per share amounts):


	Three months ended September 30,				Nine months ended September 30,				Three months ended March 31,
	2021		2020		2021		2020		2022		2021
Basic:
Net earnings attributable to Black Knight	$	53.4	$	127.8	$	147.2	$	217.0	$	364.6	$	54.1
Shares used for basic net earnings per share:
Weighted average shares of common stock outstanding		155.2		155.4		155.4		150.9		154.2		155.6
Basic net earnings per share	$	0.34	$	0.82	$	0.95	$	1.44	$	2.36	$	0.35

Diluted:
Net earnings attributable to Black Knight	$	53.4	$	127.8	$	147.2	$	217.0	$	364.6	$	54.1
Shares used for diluted net earnings per share:
Weighted average shares of common stock outstanding		155.2		155.4		155.4		150.9		154.2		155.6
Dilutive effect of unvested restricted shares of common stock and OB PIUs		1.0		0.9		0.5		0.8		1.2		0.3
Weighted average shares of common stock, diluted		156.2		156.3		155.9		151.7		155.4		155.9
Diluted net earnings per share	$	0.34	$	0.82	$	0.94	$	1.43	$	2.35	$	0.35

(6)Related Party Transactions

Our service arrangements with related parties are priced within the range of prices we offer to third parties. We believe the amounts earned from or charged by us under each of the following arrangements are fair and reasonable. ~~The~~However, the amounts we earned or that were charged under these arrangements were not negotiated at arm's length and may not represent the terms that we might have obtained from an unrelated third party.

DNB

DNB is considered to be a related party primarily due to the combination of our investment in DNB and our shared Chief Executive Officer. Refer to Note 4 — Investments in Unconsolidated Affiliates for additional details.

In June 2021, we entered into a five-year agreement with DNB to provide them with certain products and data over the term of the agreement, as well as professional services, for an aggregate fee of approximately $34 million over the term of the agreement. As of ~~September 30, 2021,~~March 31, 2022, related party deferred revenues ~~were $8.8~~of $6.6 million ~~and~~ are included in Deferred revenues (current) in our Condensed Consolidated Balance Sheets (Unaudited). As of December 31, 2021, related party deferred revenues were $7.6 million, of which $6.2 million was included in Deferred revenues (current) and $1.4 million was included in Deferred revenues (non-current). During the three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022, revenues from related parties of ~~$1.6~~$1.0 million are included in our Condensed Consolidated Statements of Earnings and Comprehensive Earnings (Unaudited).

In June 2021, we also entered into an agreement with DNB for access to certain of their data assets for an aggregate fee of approximately $24 million over the term of the agreement. In addition, we will jointly market certain solutions and data. ~~Related~~As of March 31, 2022 and December 31, 2021, related party prepaid fees were ~~$3.4~~$1.1 million ~~as of September 30, 2021,~~and $2.3 million, respectively, which are included in Prepaid expenses and other current assets on the Condensed Consolidated Balance Sheets (Unaudited). During the three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022, expenses from related parties of $1.1 million are included in Operating expenses in our Condensed Consolidated Statements of Earnings and Comprehensive Earnings (Unaudited).

~~In 2020,~~As of March 31, 2022 and December 31, 2021, we ~~entered into a services agreement with DNB. The agreement is cancellable upon mutual agreement. Pursuant to the agreement, we provide~~had related party receivables from DNB ~~certain support services in exchange for fees in an amount~~ of ~~our cost plus a 10% markup. During the nine months ended September 30, 2021, the services provided were~~ $0.1 ~~million.~~million and $0.2 million, respectively.

~~Table of Contents~~

~~BLACK KNIGHT, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)~~

Trasimene

Prior to June 16, 2021, Trasimene Capital Management, LLC ("Trasimene") was considered a related party because the former Chairman of our Board of Directors (the “Board”) owns a controlling interest in Trasimene. As of June 16, 2021, our former Chairman retired from

Table of Contents

BLACK KNIGHT, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

the Board and became our Chairman Emeritus, and Trasimene is no longer considered a related party. ~~During~~For the ~~period January 1, 2021 through June 16,~~three months ended March 31, 2021, we recognized ~~$0.5~~$0.3 million in fees paid to Trasimene ~~for assistance with acquisitions,~~related to our acquisition of NexSpring, which are included in Transition and integration costs in our Condensed Consolidated Statements of Earnings and Comprehensive Earnings (Unaudited).

~~(7)~~~~Computer Software~~

~~Computer software, net consists of the following (in millions):~~

September 30, 2021

December 31, 2020
Internally developed software

$
1,104.8

$
998.5
Purchased software

94.1

89.8
Computer software

1,198.9

1,088.3
Accumulated amortization

(686.6)

(590.0)
Computer software, net

$
512.3

$
498.3

~~Internally developed software and purchased software include assets acquired through business acquisitions. Refer to Note 3 –~~ ~~Business Acquisitions~~.

~~(8)~~(7)~~Other Intangible Assets~~

~~Other intangible assets consist of the following (in millions):~~

September 30, 2021

December 31, 2020

Gross carrying

Accumulated

Net carrying

Gross carrying

Accumulated

Net carrying

amount

amortization

amount

amount

amortization

amount
Client relationships

$
1,282.2

$
(642.3)

$
639.9

$
1,206.0

$
(525.9)

$
680.1
Other

23.0

(10.1)

12.9

19.2

(7.0)

12.2
Total intangible assets

$
1,305.2

$
(652.4)

$
652.8

$
1,225.2

$
(532.9)

$
692.3

~~Client relationships and other intangible assets include assets acquired through business acquisitions. Refer to Note 3 –~~ ~~Business Acquisitions~~.

~~(9)~~~~Goodwill~~

~~Goodwill consists of the following (in millions):~~

Software

Data and


Solutions

Analytics

Total
Balance, December 31, 2020

$
3,415.8

$
197.6

$
3,613.4
Top of Mind acquisition (Note 3)

174.9

0

174.9
NexSpring acquisition (Note 3)

18.2

0

18.2
eMBS acquisition (Note 3)

0

17.3

17.3
Optimal Blue acquisition (Note 3)

(8.1)

0

(8.1)
Balance, September 30, 2021

$
3,600.8

$
214.9

$
3,815.7

The increases in Goodwill related to our NexSpring and eMBS acquisitions and a portion of the increase related to our Top of Mind acquisition are deductible for tax purposes. The decrease in Goodwill related to a measurement period adjustment for deferred income taxes related to the acquisition of Optimal Blue. Refer to Note 3 – ~~Business Acquisitions~~.

~~Table of Contents~~

~~BLACK KNIGHT, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)~~

~~(10)~~Long-Term Debt

Long-term debt consists of the following (in millions):

September 30, 2021

December 31, 2020
Term A Loan

$
1,150.0

$
1,148.4
Revolving Credit Facility

337.0

47.7
Senior Notes

1,000.0

1,000.0
Other

9.7

17.6
Total long-term debt principal

2,496.7

2,213.7
Less: current portion of long-term debt

(26.2)

(73.0)
Long-term debt before debt issuance costs and discount

2,470.5

2,140.7
Less: debt issuance costs and discount

(20.7)

(18.8)
Long-term debt, net of current portion

$
2,449.8

$
2,121.9

~~As of September 30, 2021, principal maturities, including payments related to our finance leases, are as follows (in millions):~~

2021

$
0.8
2022

32.7
2023

33.7
2024

57.5
2025

57.5
Thereafter

2,314.5
Total

$
2,496.7

~~Credit Agreement~~

On April 30, 2018, our indirect subsidiary BKIS entered into an amended and restated credit and guaranty agreement (the “2018 Credit Agreement”) with JPMorgan Chase Bank, N.A. as administrative agent, the guarantors party thereto, the other agents party thereto and the lenders party thereto. The 2018 Credit Agreement provided for (i) a $1,250.0 million term loan A facility and (ii) a $750.0 million revolving credit facility.

~~Debt Refinancing~~

~~On March 10, 2021, BKIS entered into a second amended and restated credit and guaranty agreement (the “2021 Credit Agreement”) with~~ ~~JPMorgan Chase Bank, N.A., as administrative agent, the guarantors party thereto, the other agents party thereto and the lenders party thereto~~.

~~The Facilities b~~ear interest at rates based upon, at the option of BKIS, either (i) the base rate plus a margin of between 25 and 50 basis points depending on the total net leverage ratio of Black Knight Financial Services, LLC (“BKFS”), a Delaware limited liability company and the direct parent company of BKIS, and its restricted subsidiaries on a consolidated basis (the “Consolidated Leverage Ratio”) and (ii) the Eurodollar rate plus a margin of between 125 and 150 basis points depending on the Consolidated Leverage Ratio. In addition, BKIS pays an unused commitment fee of between 15 and 20 basis points on the undrawn commitments under the Revolving Credit Facility, also depending on the Consolidated Leverage Ratio. The above unused commitment fee and margins are consistent with the 2018 Credit Agreement. ~~The 2021 Credit Agreement also provides us with an option to choose an alternative rate of interest on or before the cessation of the London Interbank Offered Rate (“LIBOR”) at our election.~~

~~Table of Contents~~

~~BLACK KNIGHT, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)~~

As of September 30, 2021, the interest rate for the Facilities was based on the Eurodollar rate plus a margin of 150 basis points and was approximately 1.6%. As of September 30, 2021, we had $663.0 million capacity on the Revolving Credit Facility, and the unused commitment fee was 20 basis points.

The Facilities are guaranteed by BKIS’s wholly-owned domestic restricted subsidiaries, as defined by the 2021 Credit Agreement, and BKFS, and are secured by associated collateral agreements that pledge a lien on the majority of BKIS’s assets and the assets of the guarantors, in each case, subject to customary exceptions.

The Term A Loan is subject to amortization of principal, payable in quarterly installments on the last day of each fiscal quarter equal to the percentage set forth below of the initial aggregate principal amount of the term loans for such fiscal quarter:


~~Payment Dates~~	~~Percentage~~
~~Commencing on March 31, 2022 through and including December 31, 2023~~	~~0.625~~	%
~~Commencing on March 31, 2024 through and including December 31, 2025~~	~~1.250~~	%

~~The remaining principal balance of the Term A Loan and any outstanding loans under the Revolving Credit Facility are due upon maturity on March 10, 2026.~~

As a result of the refinancing, we recognized $2.5 million of expense during the nine months ended September 30, 2021 in Other expense, net on the Condensed Consolidated Statement of Earnings and Comprehensive Earnings (Unaudited).

March 31, 2022

December 31, 2021

Term A Loan

1,142.8

1,150.0

Revolving Credit Facility

601.0

256.0

Senior Notes

On August 26, 2020, BKIS completed the issuance and sale of $1.0 billion aggregate principal amount of 3.625% senior unsecured notes due 2028 (the "Senior Notes"). The Senior Notes have a coupon rate of 3.625% and mature on September 1, 2028. Interest is paid semi-annually in arrears on September 1 and March 1 of each year, and commenced on March 1, 2021. The obligations under the Senior Notes are fully and unconditionally guaranteed, jointly and severally, on an unsecured basis by the same guarantors that guarantee the 2021 Credit Agreement (collectively, the “Guarantors”). The Senior Notes are effectively subordinated to any obligations that are secured, including obligations under the 2021 Credit Agreement, to the extent of the value of the assets securing those obligations. The Senior Notes are structurally subordinated to all liabilities of BKIS’ subsidiaries that do not guarantee the Senior Notes.

1,000.0

Other ~~Debt~~

On April 1, 2018, we entered into a financing agreement for $32.9 million, with a stated interest rate of 0% and an imputed interest rate of 3.4%, primarily related to certain data processing and maintenance services. On December 31, 2019, we entered into an amendment to the financing agreement for an additional $16.3 million, with a stated interest rate of 0% and an imputed interest rate of 3.3%. Under the terms of the amendment, quarterly payments are due beginning January 2, 2020 through January 2, 2023. On July 30, 2021, we entered into a financing agreement for $2.3 milion, with a stated interest rate of 0% and an imputed interest rate of 1.6%, primarily related to certain data processing and maintenance services. Under the terms of the financing agreement, annual payments are due beginning September 1, 2021 through September 1, 2023. As of September 30, 2021 and December 31, 2020, $3.1 million and $9.5 million, respectively, are included in Current

5.8

8.9

Total long-term debt principal

2,749.6

2,414.9

Less: current portion of long-term debt

(33.5)

(32.5)

Long-term debt before debt issuance costs and ~~$4.8 million~~discount

2,716.1

2,382.4

Less: debt issuance costs and ~~$6.4 million, respectively, are included in~~ discount

(18.9)

(19.8)

Long-term debt, net of current portion ~~in our Condensed Consolidated Balance Sheets (Unaudited).~~

~~Finance Leases~~

On December 31, 2019, we entered into one-year finance lease agreements, with a stated interest rate of 0%, an imputed interest rate of 3.3% and bargain purchase options for certain computer equipment. On March 31, 2021, we entered into one-year finance lease agreements, with a stated interest rate of 0%, an imputed interest rate of 1.6% and bargain purchase options for certain computer equipment. The leased equipment has a useful life of five years and is depreciated on a straight-line basis. The finance lease liabilities of $1.6 million and $1.2 million as of September 30, 2021 and December 31, 2020, respectively, are included in Current portion of debt on our Condensed Consolidated Balance Sheets (Unaudited). For the nine months ended September 30, 2021 and 2020, non-cash investing and financing activity was $1.6 million and $4.8 million, respectively, related to the unpaid portion of our finance lease agreements.

~~Table of Contents~~

~~BLACK KNIGHT, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)~~

~~Fair Value of Long-Term Debt~~

The fair values of our Facilities and Senior Notes are based upon established market prices for the securities using Level 2 inputs. The fair value of our Facilities approximates their carrying value at September 30, 2021. The fair value of our Senior Notes at September 30, 2021 was $1,007.6 million compared to its carrying value of $989.3 million, net of original issue discount and debt issuance costs.

~~Interest Rate Swaps~~

We enter into interest rate swap agreements to hedge forecasted monthly interest rate payments on our floating rate debt. As of September 30, 2021, we had the following interest rate swap agreements (collectively, the "Swap Agreements") (in millions):

Effective dates

Notional amount

Fixed rates

March 31, 2017 through March 31, 2022

$
200.0

2.08
%
April 30, 2018 through April 30, 2023

$
250.0

2.61
%
January 31, 2019 through January 31, 2023

$
300.0

2.65
%

2,697.2

~~Under the terms of the Swap Agreements, we receive payments based on the 1-month LIBOR (approximately 0.08% as of September 30, 2021).~~$

~~During the three and nine months ended September 30,~~2,362.6

As of March 31, 2022, principal maturities, including payments related to our finance leases, are as follows (in millions):


2022	$	22.4
2023		33.7
2024		57.5
2025		57.5
2026		1,578.5
Thereafter		1,000.0
Total	$	2,749.6

2021 Credit Agreement

On March 10, 2021, our indirect subsidiary Black Knight Infoserv, LLC (“BKIS”) entered into a second amended and restated credit and guaranty agreement (the “2021 Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent, the guarantors party thereto, the other agents party thereto and the lenders party thereto.

The 2021 Credit Agreement provides for (i) a $1,150.0 million term loan A facility (the “Term A Loan”) and (ii) a $1,000.0 million revolving credit facility (the “Revolving Credit Facility” and, together with the Term A Loan, collectively, the “Facilities”), the proceeds of which were used to repay in full the indebtedness outstanding under the previous term A facility and revolving credit facility. As a result of the refinancing, we recognized $2.5 million of expense during the three months ended March 31, 2021 in Other expense, net on the Condensed Consolidated Statement of Earnings and Comprehensive Earnings (Unaudited).

As of March 31, 2022, the interest rate for the Facilities was based on the Eurodollar rate plus a margin of 150 basis points and was approximately 1.9%. As of March 31, 2022, we had $399.0 million capacity on the Revolving Credit Facility, and the unused commitment fee was 20 basis points.

The Facilities are guaranteed by BKIS’s wholly-owned domestic restricted subsidiaries, as defined by the 2021 Credit Agreement, and Black Knight Financial Services, LLC, and are secured by associated collateral agreements that pledge a lien on the majority of BKIS’s assets and the assets of the guarantors, in each case, subject to customary exceptions.

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BLACK KNIGHT, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

Senior Notes

Other Debt

Other debt includes financing agreements primarily related to certain data processing and maintenance services and finance lease agreements for certain computer equipment. For the three months ended March 31, 2021, non-cash investing and financing activity was $3.3 million related to the unpaid portion of our finance lease agreements.

Fair Value of Long-Term Debt

The fair values of our Facilities and Senior Notes are based upon established market prices for the securities using Level 2 inputs. The fair value of our Facilities approximates their carrying value at March 31, 2022. The fair value of our Senior Notes at March 31, 2022 was $950.0 million compared to its carrying value of $990.0 million, net of original issue discount and debt issuance costs.

Interest Rate Swaps

We enter into interest rate swap agreements to hedge forecasted monthly interest rate payments on our floating rate debt. As of March 31, 2022, we had the following interest rate swap agreements (collectively, the "Swap Agreements") (in millions):


Effective dates	Notional amount		Fixed rates
April 30, 2018 through April 30, 2023	$	250.0	2.61	%
January 31, 2019 through January 31, 2023	$	300.0	2.65	%

Under the terms of the Swap Agreements, we receive payments based on the 1-month LIBOR (approximately 0.46% as of March 31, 2022).

During the three months ended March 31, 2022, the following interest rate swap agreement expired (in millions):


Effective dates	Notional amount		Fixed rate
March 31, 2017 through March 31, 2022	$	200.0	2.08	%

We entered into the Swap Agreements to convert a portion of the interest rate exposure on our floating rate debt from variable to fixed. We designated these Swap Agreements as cash flow hedges. A portion of the amount included in Accumulated other comprehensive loss is reclassified into Interest expense, net as a yield adjustment as interest is either paid or received on the hedged debt. The fair value of our Swap Agreements is based upon Level 2 inputs. We have considered our own credit risk and the credit risk of the counterparties when determining the fair value of our Swap Agreements.

It is our policy to execute such instruments with creditworthy banks and not to enter into derivative financial instruments for speculative purposes. We believe our interest rate swap counterparties will be able to fulfill their obligations under our agreements, and we believe we will have debt outstanding through the various expiration dates of the swaps such that the occurrence of future cash flow hedges remains probable.

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BLACK KNIGHT, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

The estimated fair values of our Swap Agreements are as follows (in millions):


	March 31, 2022		December 31, 2021
Other current liabilities	$	2.7	$	1.0
Other non-current liabilities	$	2.1	$	13.9

A cumulative loss of $4.8 million ($3.6 million net of tax) and $14.9 million ($11.1 million net of tax) is reflected in Accumulated other comprehensive loss on our Condensed Consolidated Balance Sheets (Unaudited) as of March 31, 2022 and December 31, 2021, ~~the following interest rate swap agreement expired (in millions):~~

Effective dates

Notional amount

Fixed rate

September 29, 2017 through September 30, 2021

$
200.0

1.69
%

~~The estimated fair values of our Swap Agreements are as follows (in millions):~~

Balance sheet accounts

September 30, 2021

December 31, 2020
Other current liabilities

$
2.0

$
2.4
Other non-current liabilities

$
19.6

$
35.2

A cumulative loss of $21.6 million ($16.1 million net of tax) and $37.6 million ($28.1 million net of tax) is reflected in Accumulated other comprehensive loss as of September 30, 2021 and December 31, 2020, respectively. Below is a summary of the effect of derivative instruments on amounts recognized in Other comprehensive earnings (loss) ("OCE") on the Condensed Consolidated Statements of Earnings and Comprehensive Earnings (Unaudited) (in millions):

Three months ended March 31,

2022

2021

Amount of loss

Amount of gain

reclassified from

Amount of gain

reclassified from

recognized

Accumulated OCE

recognized

Accumulated OCE

in OCE

into Net earnings

in OCE

into Net earnings

Swap agreements

4.3

3.2

0.5

3.9

Approximately $4.9 million ($3.6 million net of tax) of the balance in Accumulated other comprehensive loss as of March 31, 2022 is expected to be reclassified into Interest expense, net over the next 12 months.

(8)Fair Value Measurements

Fair Value of Financial Assets and Liabilities

Fair value represents the amount that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair values of financial assets and liabilities are determined using the following fair value hierarchy:

●

Level 1 inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that we have the ability to access.

●

Level 2 inputs to the valuation methodology include:

quoted prices for similar assets or liabilities in active markets;

quoted prices for identical or similar assets or liabilities in inactive markets;

inputs other than quoted prices that are observable for the asset or liability; and

inputs that are derived principally from or corroborated by observable market data by correlation or other means.

●

Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement.

Assets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. We believe our valuation methods are appropriate and consistent with other market participants. The use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

Table of Contents

BLACK KNIGHT, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

The following table presents our fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis (in millions):


	March 31, 2022								December 31, 2021
	Carrying		Fair value						Carrying		Fair value
	amount		Level 1		Level 2		Level 3		amount		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents (Note 2)	$	27.6	$	27.6	$	—	$	—	$	77.1	$	77.1	$	—	$	—

Liabilities:
Interest rate swaps (Note 7)		4.8		—		4.8		—		14.9		—		14.9		—
Contingent consideration		4.7		—		—		4.7		4.9		—		—		4.9

Redeemable noncontrolling interests		40.2		—		—		40.2		1,188.8		—		—		1,188.8

The following table presents a summary of the change in fair value of our Level 3 fair value measurements (in millions):


Beginning balance, December 31, 2021	$	1,193.7
Contingent consideration adjustments related to prior year acquisition⁽¹⁾		(0.2)
Acquisition of remaining outstanding Class A redeemable noncontrolling interests in Optimal Blue Holdco (Note 1)		(1,156.0)
Fair value adjustment to redeemable noncontrolling interests in Optimal Blue Holdco		7.4
Ending balance, March 31, 2022	$	44.9

(1)

Three months ended September 30,

2021

2020




Amount of loss



Amount of loss

Amount of loss

reclassified from

Amount of gain

reclassified from

recognized

Accumulated OCE

recognized

Accumulated OCE

in OCE

into Net earnings

  in OCE

into Net earnings
Swap agreements

$
(0.2)

$
4.0

$
0.1

$
3.9

~~Table of Contents~~

~~BLACK KNIGHT, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)~~

Nine months ended September 30,

2021

2020


Amount of loss



Amount of loss

Amount of gain

reclassified from

Amount of loss

reclassified from

recognized

Accumulated OCE

recognized

Accumulated OCE

in OCE

into Net earnings

in OCE

into Net earnings
Swap agreements

$
0.1

$
11.9

$
(24.1)

$
8.3

Approximately $15.9 million ($11.9 million net of tax) of the balance in Accumulated other comprehensive loss as of September 30, 2021 is expected to be reclassified into Interest expense, net over the next 12 months.

~~(11)~~~~Fair Value Measurements~~

~~Fair Value of Financial Assets and Liabilities~~

●

~~Level 1 inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that we have the ability to access.~~

●

~~Level 2 inputs to the valuation methodology include:~~.

~~quoted prices for similar assets or liabilities in active markets;~~

~~quoted prices for identical or similar assets or liabilities in inactive markets;~~

~~inputs other than quoted prices that are observable for the asset or liability; and~~

~~inputs that are derived principally from or corroborated by observable market data by correlation or other means.~~

●

~~Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement.~~

~~Table of Contents~~

~~BLACK KNIGHT, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)~~

~~The following table presents our fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis (in millions):~~

September 30, 2021

December 31, 2020


Carrying

Fair value

Carrying

Fair value

amount

Level 1

Level 2

Level 3

amount

Level 1

Level 2

Level 3
Assets:
















Cash and cash equivalents (Note 2)

$
78.1

$
78.1

$
0

$
0

$
34.7

$
34.7

$
0

$
0

Liabilities:
















Interest rate swaps (Note 10)

21.6

0

21.6

0

37.6

0

37.6

0
Contingent consideration (Note 3)

5.5

0

0

5.5

3.1

0

0

3.1

Redeemable noncontrolling interests

947.1

0

0

947.1

578.0

0

0

578.0

The fair value of redeemable noncontrolling interests and contingent consideration was primarily determined based on significant estimates and assumptions, including Level 3 inputs. The estimates and assumptions include the projected timing and amount of future cash flows and discount rates reflecting the rate inherent in the future cash flows. As of September 30, 2021 and December 31, 2020, the fair value of redeemable noncontrolling interests approximates its carrying amount. Refer to Note 1 — ~~Basis of Presentation and Overview~~ ~~and Note 3 —~~ ~~Business Acquisitions~~ ~~for additional information.~~

~~The following table presents a summary of the change in fair value of our Level 3 fair value measurements (in millions):~~

Beginning balance, December 31, 2020

$
581.1
Contingent consideration adjustments related to prior year acquisition⁽¹⁾

(2.2)
Contingent consideration increase related to current year acquisition

4.6
Fair value adjustment to redeemable noncontrolling interests in Optimal Blue Holdco, LLC

369.1
Ending balance, September 30, 2021

$
952.6

~~(1)~~

The adjustments to contingent consideration for prior year acquisitions are included in Transition and integration costs in the Condensed Consolidated Statement of Earnings and Comprehensive Earnings (Unaudited). Transition and integration costs for the three and nine months ended September 30, 2021 also include the reversal of $3.9 million of estimated compensation-related payments pursuant to purchase agreements.

~~(12)~~~~Income Taxes~~

Our effective tax rate for the three months ended September 30, 2021 and 2020 was 25.5% and 36.2%, respectively, and 20.4% and 23.1% for the nine months ended September 30, 2021 and 2020, respectively.

~~A reconciliation of the federal statutory income rate to our effective income tax rate for each period presented is as follows:~~

Three months ended September 30,

Nine months ended September 30,


2021

2020

2021

2020

Federal statutory rate

21.0
%
21.0
%
21.0
%
21.0
%
State income taxes, net of federal benefit

4.3

4.2

4.3

4.1

Redeemable noncontrolling interests

2.5

7.6

1.8

1.9

Non-deductible executive compensation

1.4

1.5

1.5

1.0

Tax credits

(5.2)

(5.7)

(5.3)

(3.5)

Restricted share vesting

—

(1.0)

(4.5)

(3.1)

Effect of Optimal Blue acquisition and related transactions

—

9.5

—

2.3

Other

1.5

(0.9)

1.6

(0.6)

Effective tax rate

25.5
%
36.2
%
20.4
%
23.1
%

~~Table of Contents~~

~~BLACK KNIGHT, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)~~

~~Certain reclassifications between Tax credits and Other have been made in the table above to the prior year amounts to conform to the classifications used in 2021.~~

~~(13)~~

(9)Income Taxes

Our effective tax rate for the three months ended March 31, 2022 and 2021 was (1.9)% and 11.7%, respectively. Our effective tax rate for the three months ended March 31, 2022, includes the effect of a $14.1 million discrete income tax benefit related to the establishment of a deferred tax asset as a result of our reorganization of certain wholly-owned subsidiaries within the Optimal Blue partnership investment structure. Our effective tax rate for the three months ended March 31, 2021 differs from our statutory rate primarily due to the effect of excess tax benefits related to the vesting of restricted shares of our common stock.

(10)Commitments and Contingencies

Legal and Regulatory Matters

In the ordinary course of business, we are involved in various pending and threatened litigation and regulatory matters related to our operations, some of which include claims for punitive or exemplary damages. Our ordinary course litigation may include class action lawsuits, which make allegations related to various aspects of our business. From time to time, we also receive requests for information from various state and federal regulatory authorities, some of which take the form of civil investigative demands or subpoenas. Some of these regulatory inquiries may result in the assessment of fines for violations of regulations or settlements with such authorities requiring a variety of remedies. We believe that none of these actions depart from customary litigation or regulatory inquiries incidental to our business.

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BLACK KNIGHT, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

We review lawsuits and other legal and regulatory matters (collectively "legal proceedings") on an ongoing basis when making accrual and disclosure decisions. When assessing reasonably possible and probable outcomes, management bases its decision on its assessment of the ultimate outcome assuming all appeals have been exhausted. For legal proceedings where it has been determined that a loss is both probable and reasonably estimable, a liability based on known facts and which represents our best estimate has been recorded. Actual losses may materially differ from the amounts recorded, and the ultimate outcome of our pending cases is generally not yet determinable. While some of these matters could be material to our operating results or cash flows for any particular period if an unfavorable outcome results, at present, we do not believe the ultimate resolution of currently pending legal proceedings, either individually or in the aggregate, will have a material adverse effect on our financial condition.

PennyMac Litigation

On November 5, 2019, Black Knight Servicing Technologies, LLC (“BKST”), an indirect, wholly-owned subsidiary of Black Knight, filed a Complaint and Demand for Jury Trial (the “Black Knight Complaint”) against PennyMac Loan Services, LLC (“PennyMac”) in the Circuit Court for the Fourth Judicial Circuit in and for Duval County, Florida. The Black Knight Complaint includes causes of action for breach of contract and misappropriation of MSP^® System trade secrets in order to develop an imitation mortgage processing system intended to replace the MSP^® System. The Black Knight Complaint seeks damages for breach of contract and misappropriation of trade secrets, injunctive relief under the Florida Uniform Trade Secrets Act and declaratory judgment that BKST owns all intellectual property and software developed by or on behalf of PennyMac as a result of its wrongful use of and access to the MSP^®System and related trade secret and confidential information. PennyMac filed a motion to compel arbitration of the action, and the court granted the motion on April 6, 2020. After the court denied BKST's motion for reconsideration of the court’s order compelling arbitration, BKST filed a notice of appeal with the Florida First District Court of Appeal on May 6, 2020. On January 6, 2021, the appellate court affirmed the trial court's ruling.

~~On October 21, 2020, PennyMac submitted a dispute regarding a Black Knight Origination Technologies, LLC LendingSpace~~^® ~~software audit request to the American Arbitration Association ("AAA") for arbitration. Black Knight moved to consolidate the LendingSpace~~^® arbitration with the existing trade secret/antitrust arbitrations, and on December 21, 2020, the arbitrator granted Black Knight’s motion to consolidate the arbitrations. On December 8, 2020, Black Knight and PennyMac filed motions for summary judgment concerning the LendingSpace^® audit, and responses to the competing motions for summary judgment were filed by both parties on January 7, 2021. On February 16, 2021, the arbitrator granted Black Knight’s motion for summary judgment and ordered that Black Knight may conduct an audit of PennyMac’s use of Black Knight’s LendingSpace^® ~~software.~~

Shortly after the filing of the Black Knight Complaint, on November 6, 2019, PennyMac filed an Antitrust Complaint (the “PennyMac Complaint”) against Black Knight in the United States District Court for the Central District of California. The PennyMac Complaint included causes of action for alleged monopolization and attempted monopolization under Section 2 of the Sherman Antitrust Act, violation of California’s Cartwright Act, violation of California’s Unfair Competition Law and common law unfair competition under California law. The PennyMac Complaint sought equitable remedies, damages and other monetary relief, including treble and punitive damages. Generally, PennyMac alleged that Black Knight relies on various anticompetitive, unfair and discriminatory practices to maintain and to enhance its

~~Table of Contents~~

~~BLACK KNIGHT, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)~~

dominance in the mortgage servicing platform market and in an attempt to monopolize the platform software applications market. Black Knight moved to dismiss the PennyMac Complaint or have the action transferred to Florida based upon a forum selection clause in the agreement with BKST. On February 13, 2020, the judge granted Black Knight's motion to transfer the case to Florida and denied as moot the motion to dismiss. On April 17, 2020, PennyMac filed a notice of dismissal of this action without prejudice and indicated that they intended to bring the claims raised in the dismissed PennyMac Complaint as defenses, third party claims and/or counterclaims in arbitration. On April 23, 2020, the court entered an order dismissing the action without prejudice and directing that the clerk close the case. On April 28, 2020, PennyMac submitted this matter to the ~~AAA~~American Arbitration Association ("AAA") for arbitration. On May 27, 2020, Black Knight filed its answering statement with the AAA. The arbitrator was confirmed by the AAA on July 21, 2020.

The arbitrator set Black Knight's trade secret case for a 10-day final hearing beginning on ~~October 24, 2022~~January 9, 2023 and set PennyMac's antitrust case for a ~~5-day~~10-day final hearing beginning on ~~November 14, 2022.~~

On June 26, 2020, Black Knight filed a complaint against PennyMac in the United States District Court for the Middle District of Florida seeking a declaratory judgment that PennyMac waived its right to arbitrate federal antitrust and related state law claims against Black Knight because PennyMac previously filed and litigated those claims in a court of law (the “BKI Declaratory Action”). The parties filed cross-motions for summary judgment, and on March 22, 2021, the Court denied BKI’s motion for summary judgment and granted PennyMac’s motion as to the waiver issue, finding that PennyMac has not waived its right to arbitrate the claims raised in the Black Knight Complaint.January 23, 2023.

As these cases continue to evolve, it is not possible to reasonably estimate the probability that we will ultimately prevail on our lawsuit or be held liable for the violations alleged in the PennyMac Complaint, nor is it possible to reasonably estimate the ultimate gain or loss, if any, or range of gain or loss that could result from these cases.

Indemnifications and Warranties

We often agree to indemnify our clients against damages and costs resulting from claims of patent, copyright, trademark infringement or breaches of confidentiality associated with use of our software through software licensing agreements. Historically, we have not made any payments under such indemnifications, but continue to monitor the conditions that are subject to the indemnifications to identify whether a loss has occurred that is both probable and estimable that would require recognition. In addition, we warrant to clients that our software operates substantially in accordance with the software specifications. Historically, no costs have been incurred related to software warranties and none are expected in the future, and as such, no accruals for warranty costs have been made.

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BLACK KNIGHT, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

Indemnification Agreement

We are party to a cross-indemnity agreement dated December 22, 2014 with ServiceLink Holdings, LLC ("ServiceLink"). Pursuant to this agreement, ServiceLink indemnifies us from liabilities relating to, arising out of or resulting from the conduct of ServiceLink’s business or any action, suit or proceeding in which we or any of our subsidiaries are named by reason of being a successor to the business of Lender Processing Services, Inc. and the cause of such action, suit or proceeding relates to the business of ServiceLink. In return, we indemnify ServiceLink for liabilities relating to, arising out of, or resulting from the conduct of our business.

~~Table of Contents~~

~~BLACK KNIGHT, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)~~

~~(14)~~(11)Revenues
Disaggregation of Revenues
The following tables summarize revenues from contracts with clients (in millions):


Three months ended September 30, 2021

Three months ended March 31, 2022


Servicing

Origination

Software

Data and

Corporate


Servicing

Origination

Software

Data and


Software

Software

Solutions

Analytics

and Other

Total

Software

Software

Solutions

Analytics

Total
Software and hosting solutions

$
190.3

$
93.1

$
283.4

$
9.5

$
0

$
292.9
Software solutions

$
204.0

$
92.5

$
296.5

$
9.5

$
306.0
Professional services

20.6

12.5

33.1

0.8

0

33.9

18.6

12.3

30.9

—

30.9
Data solutions

0

0.5

0.5

47.5

0

48.0

—

0.5

0.5

46.4

46.9
Other

0

2.6

2.6

0.6

0

3.2

—

2.8

2.8

0.6

3.4
Revenues

$
210.9

$
108.7

$
319.6

$
58.4

$
0

$
378.0

$
222.6

$
108.1

$
330.7

$
56.5

$
387.2


Three months ended September 30, 2020

Three months ended March 31, 2021


Servicing

Origination

Software

Data and

Corporate


Servicing

Origination

Software

Data and


Software

Software

Solutions

Analytics

and Other

Total

Software

Software

Solutions

Analytics

Total
Software and hosting solutions

$
174.4

$
48.6

$
223.0

$
8.6

$
0

$
231.6
Software solutions

$
184.1

$
77.8

$
261.9

$
8.7

$
270.6
Professional services

19.8

12.6

32.4

—

0

32.4

18.6

11.8

30.4

0.2

30.6
Data solutions

0

0.2

0.2

43.9

0

44.1

—

1.2

1.2

44.4

45.6
Other

0

3.9

3.9

0.6

0

4.5

—

2.3

2.3

0.6

2.9
Revenues

$
194.2

$
65.3

$
259.5

$
53.1

$
0

$
312.6

$
202.7

$
93.1

$
295.8

$
53.9

$
349.7


Nine months ended September 30, 2021

Servicing

Origination

Software

Data and

Corporate


Software

Software

Solutions

Analytics

and Other

Total
Software and hosting solutions

$
561.8

$
253.5

$
815.3

$
27.5

$
0

$
842.8
Professional services

59.6

36.7

96.3

1.1

0

97.4
Data solutions

0

2.2

2.2

137.8

0

140.0
Other

0

7.0

7.0

1.8

0

8.8
Revenues

$
621.4

$
299.4

$
920.8

$
168.2

$
0

$
1,089.0


Nine months ended September 30, 2020

Servicing

Origination

Software

Data and

Corporate


Software

Software

Solutions

Analytics

and Other

Total
Software and hosting solutions

$
517.9

$
129.5

$
647.4

$
25.5

$
0

$
672.9
Professional services

56.3

35.1

91.4

0.5

(0.3)
(1)

91.6
Data solutions

0

0.2

0.2

119.6

0

119.8
Other

0

10.3

10.3

1.8

0

12.1
Revenues

$
574.2

$
175.1

$
749.3

$
147.4

$
(0.3)

$
896.4
~~(1)~~ ~~Revenues for Corporate and Other represent deferred revenue purchase accounting adjustments recorded in accordance with GAAP.~~
Our Software Solutions segment offers leading software and hosting solutions that facilitate and automate many of the mission-critical business processes across the homeownership lifecycle. These solutions primarily consist of processing and workflow management software applications. Our servicing software solutions primarily include our core servicing software solution that automates loan servicing, including loan setup and ongoing processing, customer service, accounting, reporting to the secondary mortgage market and investors and web-based workflow information systems. Our origination software solutions primarily include our solutions that automate and facilitate the origination of mortgage loans, offer product, pricing and eligibility capabilities and provide an interconnected network allowing the various parties and systems associated with lending transactions to exchange data quickly and efficiently. Professional services consists of pre-implementation and post-implementation support and services and are primarily billed on a time and materials basis. Professional services may also include dedicated teams provided as part of agreements with software and hosting solutions clients.

~~Table of Contents~~

~~BLACK KNIGHT, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)~~

Table of Contents

BLACK KNIGHT, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

Transaction Price Allocated to Future Performance Obligations

Our disclosure of transaction price allocated to future performance obligations excludes the following:

●

Volume-based fees in excess of contractual minimums and other usage-based fees to the extent they are part of a single performance obligation and meet certain variable allocation criteria;

●

Performance obligations that are part of a contract with an original expected duration of one year or less; and

●

Transactional fees based on a fixed fee per transaction when we have the right to invoice once we have completed the performance obligation.

As of ~~September 30, 2021,~~March 31, 2022, the aggregate amount of the transaction price that is allocated to our future performance obligations was approximately ~~$2.4~~$2.7 billion and is expected to be recognized as follows: ~~7% by December 31,~~ ~~2021, 32%~~19% by December 31, 2022, ~~71%~~61% by December 31, 2024, 84% by December 31, 2026 and the rest thereafter.

~~(15)~~(12)Equity
Share Repurchase Program
On February 12, 2020, our Board of Directors approved a three-year share repurchase program authorizing us to repurchase up to 10.0 million shares of our outstanding common stock through February 12, 2023, through open market purchases, negotiated transactions or other means, in accordance with applicable securities laws and other restrictions.

~~A summary~~ During the three months ended March 31, 2021, we repurchased 0.6 million shares of our common stock for an aggregate of $46.7 million at an average price per share ~~repurchases~~of $75.19. We did not repurchase any shares during the three months ended March 31, 2022. As of March 31, 2022, we have 8.0 million shares remaining under our share repurchase ~~program during the three and nine months ended September 30, 2021 follows (in millions, except per share amounts):~~authorization.

Shares remaining under
Period

Total number of shares repurchased

Aggregate purchase price

Average price paid per share

repurchase authorization as of period end
January 2021 - March 2021

0.6

$
46.7

$
75.19

9.4
July 2021 - September 2021

1.4

100.0

$
73.32

8.0

2.0

$
146.7

$
73.91

~~Table of Contents~~

~~BLACK KNIGHT, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)~~

Omnibus Incentive Plan
A summary of restricted shares and RSUs granted in ~~2021~~2022 is as follows:

Number of shares

Grant date fair

Vesting period

Period

granted

value per share

(in years)

Vesting criteria
First quarter⁽¹⁾

518,219

$
76.00

3.0

Service and Performance
Second quarter

34,447

74.56 - 76.51

1 - 2.7

Service
Third quarter

47,792

72.00 - 78.44

2.0 - 3.0

Service

Number of shares

Grant date fair

Vesting period

Dates

granted

value per share

(in years)

Vesting criteria
March 10, 2022⁽¹⁾

809,166

$
57.18

3.0

Service and Performance
March 31, 2022

1,035

$
57.99

3.0

Service
(1) This award ~~was granted on March 10, 2021 and~~ is subject to an independent performance target for each of 3 consecutive 12-month measurement periods. Vesting of each tranche is independent of the satisfaction of the annual performance target for other tranches.
Activity related to restricted stock and RSUs in ~~2021~~2022 is as follows:

Weighted average

Weighted average

grant date

grant date


Shares

fair value

Shares

fair value
Balance, December 31, 2020

1,549,098

$
57.86
Balance, December 31, 2021

1,269,789

$
70.79
Granted

600,458

$
76.03

810,201

$
57.18
Forfeited

(31,811)

$
73.80

(20,429)

$
71.72
Vested

(878,442)

$
52.52

(562,223)

$
65.61
Balance, September 30, 2021

1,239,303

$
70.04
Balance, March 31, 2022

1,497,338

$
65.36

Equity-based compensation expense related to our restricted shares and RSUs was ~~$7.6~~$8.5 million and ~~$9.2~~$7.2 million for the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020, respectively, and $25.7 million and $29.4 million for the nine months ended September 30, 2021 and 2020,~~ respectively. Equity-based compensation includes accelerated recognition of $2.9 million for the nine months ended September 30, 2021 and $0.2 million and $0.4 million for the three and nine months ended September 30, 2020, respectively. There was 0 accelerated recognition of equity-based compensation during the three months ended September 30, 2021. These expenses are included in Operating expenses in the Condensed Consolidated Statements of Earnings and Comprehensive Earnings (Unaudited).
As of ~~September 30, 2021,~~March 31, 2022, total unrecognized compensation cost was ~~$54.1~~$89.1 million and is expected to be recognized over a weighted average period of approximately ~~2.1~~2.0 years.

Table of Contents

BLACK KNIGHT, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

Profits Interests Units

The fair value of OB PIUs is measured using the Black-Scholes model. The OB PIUs vest over three years, with cliff vesting after the third year. ~~Holders~~If no public offering has been consummated as of the third anniversary of the acquisition of Optimal Blue, holders of the OB PIUs have an option to put their profit interests to us ~~if no public offering has been consummated as of~~once per quarter for the twelve months that begins six months after the OB PIU holder’s vesting date, ~~that is 60 days prior to the fourth~~ and ~~each subsequent anniversary of the acquisition date of Optimal Blue.~~once per year thereafter. The units may be settled in cash or Black Knight common stock or a combination of both at our election and will be settled at the current fair value at the time we receive notice of the put election. As the OB PIUs provide for redemption features not solely within our control, we classify the redemption value outside of permanent equity in redeemable noncontrolling interests. The redemption value is equal to the difference in the per unit fair value of the underlying member units and the hurdle amount, based upon the proportionate required service period rendered to date. ~~As of September 30, 2021, we recognized an adjustment of $20.1 million related to the redemption value of the OB PIUs on our Condensed Consolidated Balance Sheets (Unaudited).~~

Equity-based compensation expense related to the OB PIUs was ~~$2.3 million and $6.7~~$2.2 million for the three ~~and nine~~ months ended ~~September 30, 2021, respectively.~~March 31, 2022 and 2021. As of ~~September 30, 2021,~~March 31, 2022, the total unrecognized compensation cost related to non-vested OB PIUs is ~~$19.3~~$14.5 million, which is expected to be recognized over a weighted average period of approximately ~~2.2~~1.7 years.

~~Table of Contents~~

~~BLACK KNIGHT, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)~~

~~(16)~~(13)Segment Information

Accounting Standards Codification (“ASC”) Topic 280, Segment Reporting ("ASC 280") establishes standards for reporting information about segments and requires that a public business enterprise reports financial and descriptive information about its segments. Segments are components of an enterprise for which separate financial information is available and are evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing performance. Our chief executive officer is identified as the CODM as defined by ASC 280. To align with the internal management of our business operations based on service offerings, our business is organized into 2 segments. Refer to Note 1411 — Revenues for a description of our Software Solutions and Data and Analytics segments.

Separate discrete financial information is available for these 2 segments, and the operating results of each segment are regularly evaluated by the CODM in order to assess performance and allocate resources. We use EBITDA as the primary profitability measure for making decisions regarding ongoing operations. EBITDA is earnings before Interest expense, net, Income tax (benefit) expense and Depreciation and amortization. It also excludes Equity in earnings of unconsolidated affiliates. We do not allocate Interest expense, net, Other expense, net, Income tax (benefit) expense, equity-based compensation and certain other items, such as purchase accounting adjustments and acquisition-related costs to the segments, since these items are not considered in evaluating the segments’ overall operating performance.

2418

Table of Contents

BLACK KNIGHT, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

Segment asset information is not included below because we do not use it to evaluate performance or allocate resources. Summarized financial information concerning our segments is shown in the tables below (in millions):

Three months ended September 30, 2021

Three months ended March 31, 2022

Software

Data and

Corporate and

Software

Data and

Corporate and


Solutions

Analytics

Other

Total

Solutions

Analytics

Other

Total
Revenues

$
319.6

$
58.4

$
0
(1)
$
378.0

$
330.7

$
56.5

$
0

$
387.2
Expenses:



















Operating expenses

137.1

37.5

28.4
(2)

203.0

142.5


37.5

27.9
(1)

207.9
Transition and integration costs

0

0

(1.3)
(3)

(1.3)

0


0

7.6
(2)

7.6
EBITDA

182.5

20.9

(27.1)


176.3

188.2

19.0

(35.5)


171.7
Depreciation and amortization

32.5

3.9

57.2
(4)

93.6

35.1


3.8

52.6
(3)

91.5
Operating income (loss)

150.0

17.0

(84.3)


82.7

153.1

15.2

(88.1)


80.2
Interest expense, net








(21.6)









(21.1)
Other expense, net








(1.1)









(1.2)
Earnings before income taxes and equity in earnings of unconsolidated affiliates








60.0









57.9
Income tax expense








15.3
Income tax benefit









(1.1)
Earnings before equity in earnings of unconsolidated affiliates








44.7









59.0
Equity in earnings of unconsolidated affiliates, net of tax








1.6









303.1
Net earnings








46.3









362.1
Net losses attributable to redeemable noncontrolling interests








7.1









2.5
Net earnings attributable to Black Knight







$
53.4








$
364.6

Three months ended September 30, 2020

Software

Data and

Corporate and


Solutions

Analytics

Other

Total
Revenues

$
259.5

$
53.1

$
—
(1)
$
312.6
Expenses:









Operating expenses

107.9

34.8

24.5
(2)

167.2
Transition and integration costs

0

0

21.9
(3)

21.9
EBITDA

151.6

18.3

(46.4)


123.5
Depreciation and amortization

30.6

3.6

29.8
(4)

64.0
Operating income (loss)

121.0

14.7

(76.2)


59.5
Interest expense, net








(14.7)
Other expense, net








(0.9)
Earnings before income taxes and equity in earnings of unconsolidated affiliates








43.9
Income tax expense








15.9
Earnings before equity in earnings of unconsolidated affiliates








28.0
Equity in earnings of unconsolidated affiliates, net of tax








86.6
Net earnings

114.6
Net losses attributable to redeemable noncontrolling interests

13.2
Net earnings attributable to Black Knight







$
127.8

~~Table of Contents~~

~~BLACK KNIGHT, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)~~

Nine months ended September 30, 2021

Software

Data and

Corporate and


Solutions

Analytics

Other

Total
Revenues

$
920.8

$
168.2

$
—
(1)
$
1,089.0
Expenses:










Operating expenses

392.6


106.8

86.8
(2)

586.2
Transition and integration costs

—


—

10.9
(3)

10.9
EBITDA

528.2

61.4

(97.7)


491.9
Depreciation and amortization

96.9


11.4

163.5
(4)

271.8
Operating income (loss)

431.3

50.0

(261.2)


220.1
Interest expense, net









(62.8)
Other expense, net









(5.3)
Earnings before income taxes and equity in earnings of unconsolidated affiliates









152.0
Income tax expense









31.0
Earnings before equity in earnings of unconsolidated affiliates









121.0
Equity in earnings of unconsolidated affiliates, net of tax









3.0
Net earnings









124.0
Net losses attributable to redeemable noncontrolling interests









23.2
Net earnings attributable to Black Knight








$
147.2

Nine months ended September 30, 2020

Three months ended March 31, 2021

Software

Data and

Corporate and


Software

Data and

Corporate and



Solutions

Analytics

Other

Total

Solutions

Analytics

Other

Total
Revenues

$
749.3

$
147.4

$
(0.3)
(1)
$
896.4

$
295.8

$
53.9

$
0

$
349.7
Expenses:


















Operating expenses

312.1

98.4

74.6
(2)

485.1

124.9

34.2

27.1
(1)

186.2
Transition and integration costs

—

—

26.8
(3)

26.8

0

0

7.9
(2)

7.9
EBITDA

437.2

49.0

(101.7)


384.5

170.9

19.7

(35.0)


155.6
Depreciation and amortization

91.1

11.4

77.8
(4)

180.3

31.2

3.8

52.8
(3)

87.8
Operating income (loss)

346.1

37.6

(179.5)


204.2

139.7

15.9

(87.8)


67.8
Interest expense, net








(42.4)








(20.3)
Other income, net








17.1
Other expense, net








(3.2)
Earnings before income taxes and equity in earnings of unconsolidated affiliates








178.9








44.3
Income tax expense








41.3








5.2
Earnings before equity in earnings of unconsolidated affiliates








137.6








39.1
Equity in earnings of unconsolidated affiliates, net of tax








66.2








6.4
Net earnings

203.8

45.5
Net losses attributable to redeemable noncontrolling interests

13.2

8.6
Net earnings attributable to Black Knight







$
217.0







$
54.1
(1) ~~Revenues for Corporate and Other represent deferred revenue purchase accounting adjustments recorded in accordance with GAAP.~~
~~(2)~~ Operating expenses for Corporate and Other includes equity-based compensation, including certain related payroll taxes, of ~~$9.8~~$11.2 million and ~~$9.3~~$10.5 million for the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020, respectively, and $33.5 million and $30.5 million for the nine months ended September 30, 2021 and 2020,~~ respectively.
~~(3)~~(2) Transition and integration costs primarily consists of costs associated with ~~acquisitions and expense reduction initiatives.~~acquisitions.
~~(4)~~(3) Depreciation and amortization for Corporate and Other primarily represents net incremental depreciation and amortization adjustments associated with the application of purchase accounting recorded in accordance with GAAP.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The statements contained in this Quarterly Report on Form 10-Q that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), including statements regarding expectations, hopes, intentions or strategies regarding the future. Forward-looking statements are based on Black Knight, Inc. and its subsidiaries ("Black Knight," the "Company," "we," "us" or "our") management’s beliefs, as well as assumptions made by, and information currently available to, them. Because such statements are based on expectations as to future financial and operating results and are not statements of fact, actual results may differ materially from those projected. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. The risks and uncertainties that forward-looking statements are subject to include, but are not limited to:
● ~~changes in general economic, business, regulatory~~the occurrence of any event, change, or other circumstance that could give rise to the right of us or Intercontinental Exchange, Inc. (“ICE”) to terminate the definitive merger agreement governing the terms and ~~political~~ conditions ~~including those resulting from pandemics such as COVID-19, particularly as they affect foreclosures and~~of the ~~mortgage industry;~~proposed transaction;
● the ~~outbreak~~outcome of ~~COVID-19~~any legal proceedings that may be instituted against us or ICE;
● the possibility that the proposed transaction does not close when expected or at all because required regulatory, stockholder, or other approvals and ~~measures~~other conditions to ~~reduce its spread, including~~closing are not received or satisfied on a timely basis or at all (and the ~~effect~~risk that such approvals may result in the imposition of ~~governmental~~conditions that could adversely affect us or ~~voluntary actions such as~~ICE or the expected benefits of the proposed transaction)
● the diversion of management’s attention and time from ongoing business ~~shutdowns~~operations and ~~stay-at-home orders;~~opportunities on merger-related matters;
● security breaches against our information systems or breaches involving our third-party vendors;
● our ability to maintain and grow our relationships with our clients;
● our ability to comply with or changes to the laws, rules and regulations that affect our and our clients’ businesses;
● our ability to adapt our solutions to technological changes or evolving industry standards or to achieve our growth strategies;
● our ability to protect our proprietary software and information rights;
● the effect of any potential defects, development delays, installation difficulties or system failures on our business and reputation;
● ~~risks associated with~~changes in general economic, business, regulatory and political conditions;
● impacts to our business operations caused by the ~~availability~~occurrence of ~~data;~~a catastrophe or global crisis, including the spread of COVID-19 variants;
● the effects of our existing leverage on our ability to make acquisitions and invest in our business;
● risks associated with the recruitment and retention of our skilled workforce;
● risks associated with the availability of data;
● our ability to successfully consummate, integrate and achieve the intended benefits of acquisitions;
● risks associated with our investment in ~~Dun & Bradstreet Holdings, Inc. ("DNB") and integrating and achieving the intended benefits of the acquisition of Optimal Blue, LLC (“Optimal Blue”);~~DNB; and
● other risks and uncertainties detailed in the "Statement Regarding Forward-Looking Information," "Risk Factors" and other sections of our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 and other filings with the Securities and Exchange Commission ("SEC").
The following discussion should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 filed with the SEC on February ~~26, 2021~~25, 2022 and other filings with the SEC.
Overview
~~We are an award-winning~~Black Knight is a premier provider of integrated, innovative, mission-critical, high-performance software solutions, data and analytics ~~company that drives innovation in~~to the U.S. mortgage ~~lending and servicing~~ and real estate ~~industries, as well as~~markets. Our mission is to transform the ~~capital~~markets we serve by delivering innovative solutions that are integrated across the homeownership lifecycle and ~~secondary markets. Businesses~~that result in realized efficiencies, reduced risk and new opportunities for our clients to help them achieve greater levels of success.
We believe businesses leverage our robust, integrated solutions across the entire homeownership ~~life cycle~~lifecycle to help retain existing clients, gain new clients, mitigate risk and operate more ~~effectively.~~efficiently. Our clients rely on our proven, comprehensive, scalable ~~products~~solutions and our unwavering commitment to delivering ~~superior~~exceptional client support to achieve their strategic goals and better serve their customers.
We have ~~market-leading vertical software solutions combined with comprehensive real estate data~~a focused strategy of continuous innovation across our business supported by strategic acquisitions – and ~~extensive analytic capabilities. Our solutions are utilized by U.S. mortgage loan originators~~even more importantly, the integration of those innovations and servicers, 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.
~~We believe the breadth and depth of~~acquisitions into our comprehensive end-to-end, integrated solutions and the insight we provide to our clients differentiate us from other software providers and position us particularly well for emerging opportunities. We have served the mortgage and real estate industries for over 55 years and utilize this experience to design and develop solutions that fit our clients’ ever-evolving needs. Our proprietary software solutions and data and analytics capabilities reduce manual processes, improve compliance and quality, mitigate risk and deliver significant cost savings to our clients.broader ecosystem. Our scale allows us to continually ~~and cost-effectively~~ invest in ~~our business in order to meet industry requirements and maintain our position as an industry-standard platform for mortgage market participants.~~

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our business, both to meet ever-changing industry requirements and to maintain our position as a leading provider of platforms for the mortgage and real estate markets.

Deep business and regulatory expertise and an unparalleled, holistic view of the markets we serve allow us the privilege of being a trusted advisor to our clients, who range from the nation’s largest lenders and mortgage servicers to institutional portfolio managers and government entities, to individual real estate agents and mortgage brokers. Clients leverage our software ecosystem across a range of real estate and housing finance verticals through multiple digital channels, using our offerings to drive more business, reduce risk and deliver a best-in-class customer experience, all while operating more efficiently and cost-effectively.

The table below summarizes active first and second lien mortgage loans on our mortgage loan servicing software solution and the related market data, reflecting our leadership in the mortgage loan servicing software solutions market (in millions):


	First lien						Second lien						Total first and second lien				First lien				Second lien				Total first and second lien
	as of September 30,						as of September 30,						as of September 30,				as of March 31,				as of March 31,				as of March 31,
	2021			2020			2021			2020			2021		2020		2022		2021		2022		2021		2022		2021
Active loans	32.5			32.7			3.1			3.4			35.6		36.1		33.4		32.3		3.1		3.4		36.5		35.7
Market size	52.9		(1)	53.1		(1)	12.3		(2)	12.9		(2)	65.2		66.0		53.3	(1)	53.2	(1)	12.3	(2)	12.3	(2)	65.6		65.5
Market share	61	%		62	%		25	%		26	%		55	%	55	%	63	%	61	%	26	%	28	%	56	%	55	%

Note: Percentages above may not recalculate due to rounding.

(1)	Estimates according to the Black Knight Mortgage Monitor Report as of ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ for U.S. first lien mortgage loans. These estimates are subject to change.

(2)	Estimates according to the ~~October~~April 2022 and 2021 ~~and August 2020~~ Equifax National Consumer Credit Trends Report as of ~~September 30,~~March 31, 2022 and 2021 ~~and July 31, 2020~~ for U.S. second lien mortgage loans. These estimates are subject to revision.

We ~~offer our solutions to a wide range of clients across the mortgage and consumer loan, real estate and capital markets verticals. The quality and breadth of our solutions contribute to the~~have long-standing ~~nature of our~~ relationships with our clients ~~the~~– a majority of whom enter into long-term contracts ~~across~~that include multiple, integrated products ~~that are~~ embedded ~~in their~~into mission-critical, client-side workflow and decision ~~processes, particularly~~processes. This speaks to the confidence our clients, which include some of the largest financial institutions in the ~~Software Solutions segment. Given the~~world, have in our solutions and our commitment to serve them. The contractual nature of our revenues and stickiness of our client relationships make our revenues ~~are~~both highly visible and recurring in nature. ~~Due to our~~Our scale and integrated ~~suite~~ecosystem of solutions ~~and our scale, we are able to~~ drive significant operating leverage ~~which we believe enables~~and cross-sell opportunities, enabling our clients to ~~operate more efficiently~~continually benefit from new and greater operational efficiencies while simultaneously allowing us to generate strong margins and cash flows.

Our Markets

The ~~U.S.~~Black Knight ecosystem stretches across four core “pillar” verticals: mortgage loan servicing, mortgage origination, capital markets and real estate; with our data and analytics flowing throughout and between the interconnected ecosystem of solutions. As we integrate our innovations and acquired technologies, we are committed to continually improving the end consumer experience, driving further efficiencies for our clients and helping them to win new customers and retain existing customers.

Recent Developments

Optimal Blue Transaction

On February 15, 2022, we entered into a purchase agreement with Cannae and THL and acquired all of their Class A units of Optimal Blue Holdco, LLC (“Optimal Blue Holdco”) through Optimal Blue I, LLC (“Optimal Blue I”), a Delaware limited liability company and our wholly-owned subsidiary, in exchange for aggregate consideration of 36.4 million shares of DNB common stock valued at $722.5 million and $433.5 million in cash, funded with borrowings under our revolving credit facility. The aggregate consideration of $1.156 billion and number of shares of DNB common stock paid to Cannae and THL was based on the 20-day volume-weighted average trading price of DNB for the period ended on February 14, 2022. As of February 15, 2022, we own 100% of the Class A units of Optimal Blue Holdco. Refer to Note 1 — Basis of Presentation and Overview for additional information.

Merger Agreement

On May 4, 2022, we entered into a definitive agreement to be acquired by ICE, a leading global provider of data, technology, and market ~~is large, and~~infrastructure, in a transaction valued at approximately $13.1 billion, or $85 per share, with consideration in the ~~loan lifecycle is complex and consists~~form of several stages. The mortgage loan lifecycle includes origination, servicing and default. Mortgage loans are originated to finance home purchases or refinance existing mortgage loans. Once a mortgage loan is originated, it is serviced on a periodic basis by mortgage servicers, which may not be the lenders that originated the mortgage loan. Furthermore, if a mortgage loan goes into default, it triggers a set of multifaceted processes with an assortment of potential outcomes depending on a mix of ~~variables.~~

Underlying the three major stages of the mortgage loan lifecycle are the software, data and analytics support behind each process, which have become integral to industry participants. As the industry has grown in complexity, participants have responded by outsourcing to large-scale specialty providers, automating manual processes and seeking end-to-end solutions that support the processes required to manage the entire mortgage loan lifecycle.

~~Business Trends and Conditions~~

~~COVID-19 Pandemic~~

~~COVID-19 and the U.S.’s response to the pandemic are significantly affecting the mortgage and real estate industries. The U.S. Department of Housing and Urban Development ("HUD"~~cash (80%), the Federal Housing Administration ("FHA”) and the Federal Housing Finance Agency ("FHFA") announced a moratorium on mortgage loan foreclosures and evictions. The FHFA also announced mortgage loan forbearance programs for certain borrowers that allow mortgage loan payments to be suspended for up to 12 months. The federal moratoriums expired on July 31, 2021. However, the Consumer Financial Protection Bureau (“CFPB”) has amended the federal mortgage servicing regulations to support the housing market’s smooth and orderly transition as federal foreclosure protections expire. The amendments establish temporary safeguards to help prevent a surge of foreclosures and ensure that borrowers have time before foreclosure to explore their options. In addition, many states have implemented additional guidance that extends their moratorium on mortgage loan foreclosures and evictions, and additional extensions of these moratoriums may be implemented in the future.

There are no comparable events that provide guidance as to the effect the COVID-19 pandemic may have, and, as a result, the ultimate effect of the pandemic is highly uncertain and subject to change. We do not yet know the full extent of the effects on the economy, the markets we serve, our business or our operations.

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and stock (20%) (the “Transaction”). The Transaction is expected to close in the first half of 2023, following the receipt of regulatory approvals, Black Knight ~~Response~~shareholder approval and the ~~Effect on Our Business~~

~~We continue to execute on our business continuity plans to address the challenges related to the ongoing COVID-19 pandemic. Since March 2020, substantially all~~satisfaction of ~~our employees have~~customary closing conditions. The Transaction has been ~~working from home. We are following the requirements and protocols published~~approved by the ~~U.S. Centers~~Boards of Directors of Black Knight and ICE. Refer to Note 1 — Basis of Presentation and Overview for ~~Disease Control, the WHO~~additional information.

Business Trends and country, state and local governments. Our most important priorities are the health and safety of our employees and helping the communities where we work and live. A phased return to office plan has been created, which outlines when and how we will slowly begin to lift the actions put in place as part of our business continuity plans. The plan includes a phased return to office, social distancing, travel restrictions and additional safety precautions and is being enacted at each location when the risk to re-open has been reduced to an acceptable level. We continue to monitor the effects of the pandemic on our global workforce and have contingency plans in place to mitigate business risks. We are prepared to adjust our phased return to office plan as necessary. We believe working from home has been successful and has not significantly affected our results of operations, financial condition, cash flows or control environment.

The extraordinary effects of the broad-based response to the COVID-19 pandemic have delayed the timing of certain revenues. Specifically, the mortgage loan foreclosure moratorium and forbearance plans have reduced the number of foreclosures being processed on our Bankruptcy^SM~~/Foreclosure~~^SM ~~and Invoicing~~^SM ~~software solutions for which revenue is recognized as transactions occur. Our teams are focused on supporting our clients in this shifting landscape and stand ready to deliver our solutions.~~

Our clients have experienced the significant changes in how their customers want to, or are able to, interact with them throughout the pandemic and have realized these changes will likely persist beyond the pandemic. In reaction to these changes, our clients are prioritizing automated technology solutions that enable them to remotely engage with their customers and provide streamlined ways of performing the core functions of their businesses, all while maintaining regulatory compliance in an environment that is rapidly changing. We believe our solutions are well-positioned to help our clients address these needs.

We partner with many of the industry’s best lenders and servicers and believe it is our duty to serve in a leadership role as we manage through this crisis and beyond. 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, including our monthly Mortgage Monitor report and our McDash Flash Forbearance Tracker. We have also published in-depth white papers, held town hall meetings with our clients and have had frequent meetings with senior executives at our clients, government agencies and industry associations. 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.

Our investment and innovation in digital mortgage loan solutions have made it possible for a majority of the mortgage application, underwriting and closing processes to happen online and remotely. Our industry-leading servicing system and a mortgage loan contributory data set represents a majority of the U.S. market and is modeled to represent the entire U.S. market. Our robust analytics and seamless integration ties them all together and allows for real-time visibility into the majority of active mortgage loans and a holistic view of the homeownership lifecycle. The depth of our integrated software, data and analytics enables clients to see what the effects of the pandemic mean for their business and industry. Our clients use these robust solutions for modeling, forecasting and reserve setting, which is critical, especially in this current environment.Conditions

Market Trends

Market trends that have spurred lenders and servicers to seek software, data and analytics solutions are as follows:

Integral role of technology in the U.S. mortgage loan industry. Over the past few years, the ~~homebuyers’~~homebuyer’s processes have become more digital, and banks and other lenders and servicers have become increasingly focused on automation and workflow management to operate more efficiently and meet their regulatory requirements as well as using technology to enhance the consumer experience during the mortgage loan origination, closing and servicing processes. Since the start of the COVID-19 pandemic, our clients have become increasingly aware that digital solutions are integral to their ability to stay connected with their customer base in times when face-to-face interactions are not possible. We believe technology providers must be able to support the complexity and dynamic nature of the market, display extensive industry knowledge and possess the financial resources to make the necessary investments in technology and software to support lenders and servicers. This includes an enhanced digital experience along with the application of artificial intelligence, robotic process automation and adaptive learning.

~~Table of Contents~~

Heightened demand for enhanced transparency and analytic insight. As U.S. mortgage loan market participants work to minimize the risk in lending, servicing and capital markets, they rely on the integration of data and analytics with solutions that enhance the decision-making process. These industry participants rely on large comprehensive third-party databases coupled with enhanced analytics to achieve these goals. The pandemic is putting pressure on the U.S. economy, affecting millions of American jobs and creating a high-level of uncertainty in the volume of work that our clients are facing with possible delinquent mortgage loans. Mortgage loan market participants are eager for timely data and insights to help them plan and react to the changing environment.

Regulatory changes and oversight. Most U.S. mortgage loan market participants are subject to a high level of regulatory oversight and regulatory requirements as federal and state governments have enacted various new laws, rules and regulations. It is our experience that mortgage lenders and servicers have become more focused on minimizing the risk of non-compliance with regulatory requirements and are looking toward solutions that assist them in complying with their regulatory requirements. We expect this trend to continue as additional governmental programs and regulations have been recently enacted to address the economic concerns resulting from the pandemic, and our clients have had to adapt their systems and processes in record time to the shifting landscape. In addition, our clients and our clients’ regulators have elevated their focus on privacy and data security while many of our clients’ employees are working from home and in light of an increased level of cybersecurity incidents. We expect the industry focus on privacy and data security to continue to increase.

Lenders increasingly focused on core operations. As a result of regulatory scrutiny, a decline in refinance origination volumes due to a rising interest rate environment and the higher cost of doing business, we believe lenders have become more focused on their core operations and customers. We believe lenders are increasingly shifting from in-house solutions to third-party solutions that provide a more comprehensive and efficient solution. Lenders require these providers to deliver best-in-class solutions and deep domain expertise and to assist them in maintaining regulatory compliance.

Our Business Segments

Our business is organized into two segments: Software Solutions and Data and Analytics.

Software Solutions

Our Software Solutions segment offers software ~~and hosting~~ solutions that ~~primarily~~ support loan servicing, loan origination and settlement ~~services~~services. Our software solutions revenues were 85% of our consolidated revenues for both of the three months ended March 31, 2022 and ~~secondary marketing activities.~~ 2021.

Table of Contents

The following table summarizes our software solutions revenues (in millions):


	Three months ended				% of segment				Nine months ended				% of segment				Three months ended				% of segment
	September 30,				revenues				September 30,				revenues				March 31,				revenues
	2021		2020		2021		2020		2021		2020		2021		2020		2022		2021		2022		2021
Servicing software solutions	$	210.9	$	194.2	66	%	75	%	$	621.4	$	574.2	67	%	77	%	$	222.6	$	202.7	67	%	69	%
Origination software solutions		108.7		65.3	34	%	25	%		299.4		175.1	33	%	23	%		108.1		93.1	33	%	31	%
Software Solutions	$	319.6	$	259.5	100	%	100	%	$	920.8	$	749.3	100	%	100	%	$	330.7	$	295.8	100	%	100	%

Our servicing software solutions primarily include our core servicing software solution that automates loan servicing, including loan setup and ongoing processing, customer service, accounting, reporting to the secondary mortgage market and investors and web-based workflow information systems. Our servicing software solutions primarily generate revenues based on the number of active loans outstanding on our system, which has been very stable; however, we have some exposure to foreclosure and bankruptcy loan volumes, which can fluctuate based on economic cycles and other factors.

As a result of the effects of the broad-based response to the COVID-19 pandemic, we have seen lower foreclosure-related transactional revenues due to the mortgage loan foreclosure moratorium ~~and~~in the prior year period. We expect ~~this trend to continue due to the mortgage loan forbearance plans offered~~higher foreclosure-related transactional revenues in 2022 as ~~part~~a result of the ~~CARES Act and the CFPB’s amendments to~~expiration of the federal ~~mortgage servicing regulations to support the housing market’s smooth and orderly transition as federal~~ foreclosure ~~protections expire.~~moratorium. As of ~~November 2, 2021,~~April 26, 2022, Black Knight’s McDash^SM Flash Forbearance Tracker estimated ~~1.1~~0.7 million homeowners, or ~~2.1%~~1.3% of all U.S. mortgage loans, were in COVID-19 mortgage loan forbearance plans.

Our origination software solutions primarily include our solutions that automate and facilitate the origination of mortgage loans and provide an interconnected network allowing the various parties and systems associated with lending transactions to exchange data quickly and efficiently. Our exposure to origination volumes is limited as our loan origination system revenues are based on closed loan volumes subject to minimum base software fees that are contractually obligated, and our secondary marketing technologies’ revenues are primarily subscription-based. Some of our origination software solutions are exposed to variances in origination volumes, primarily related to refinance volumes due to the nature of the services provided. While we ~~have seen~~saw elevated refinance origination volumes for a prolonged period of time, we ~~expect to see~~have seen lower refinance origination volumes ~~during the remainder of the year~~in 2022 due to record volumes in ~~the~~ prior ~~year periods~~years and a rising interest rate environment. We ~~have also seen improvement in~~expect the effect of lower refinance origination volumes to be partially offset by higher purchase origination volumes ~~primarily due to~~based on the ~~current interest rate environment and expect this trend to continue.~~most recent Mortgage Bankers Association forecast for 2022. Our origination software solutions that are more sensitive to origination volumes were approximately 5%3% of our consolidated revenues for the three months ended ~~September 30, 2021.~~March 31, 2022.

~~Table of Contents~~

Data and Analytics

Our Data and Analytics segment offers data and analytics solutions to the mortgage, real estate and capital markets verticals. These solutions include property ownership data, lien data, servicing data, automated valuation models, collateral risk scores, behavioral models, a multiple listing service software solution and other data solutions. Our data and analytics business is predominantly based on longer-term strategic data licenses, other data licenses and subscription-based revenues. For both of the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, our data and analytics revenues were 15% of our consolidated ~~revenues and 17% and 16% of our consolidated revenues for the three and nine months ended September 30, 2020, respectively.~~revenues. Our data and analytics solutions that are more sensitive to fluctuations in home buying activity and origination volumes were approximately 4%3% of our consolidated revenues for the three months ended ~~September 30, 2021~~March 31, 2022, and relate to services where we provide data necessary for title insurance and other settlement service activities.

Results of Operations

Key Performance Metrics

Revenues, EBITDA and EBITDA margin for the Software Solutions and Data and Analytics segments are presented in conformity with Accounting Standards Codification Topic 280, Segment Reporting. These measures are reported to the chief operating decision maker for purposes of making decisions about allocating resources to the segments and assessing their performance. For these reasons, these measures are excluded from the definition of non-GAAP financial measures under the SEC’s Regulation G and Item 10(e) of Regulation S-K.

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Consolidated Results of Operations

The following table presents certain financial data for the periods indicated (in millions, except per share data):


	Three months ended September 30,						Nine months ended September 30,						Three months ended March 31,
	2021			2020			2021			2020			2022			2021
Revenues	$	378.0		$	312.6		$	1,089.0		$	896.4		$	387.2		$	349.7
Expenses:
Operating expenses		203.0			167.2			586.2			485.1			207.9			186.2
Depreciation and amortization		93.6			64.0			271.8			180.3			91.5			87.8
Transition and integration costs		(1.3)			21.9			10.9			26.8			7.6			7.9
Total expenses		295.3			253.1			868.9			692.2			307.0			281.9
Operating income		82.7			59.5			220.1			204.2			80.2			67.8
Operating margin		21.9	%		19.0	%		20.2	%		22.8	%		20.7	%		19.4	%
Interest expense, net		(21.6)			(14.7)			(62.8)			(42.4)			(21.1)			(20.3)
Other (expense) income, net		(1.1)			(0.9)			(5.3)			17.1
Other expense, net														(1.2)			(3.2)
Earnings before income taxes and equity in earnings of unconsolidated affiliates		60.0			43.9			152.0			178.9			57.9			44.3
Income tax expense		15.3			15.9			31.0			41.3
Income tax (benefit) expense														(1.1)			5.2
Earnings before equity in earnings of unconsolidated affiliates		44.7			28.0			121.0			137.6			59.0			39.1
Equity in earnings of unconsolidated affiliates, net of tax		1.6			86.6			3.0			66.2			303.1			6.4
Net earnings		46.3			114.6			124.0			203.8			362.1			45.5
Net losses attributable to redeemable noncontrolling interests		7.1			13.2			23.2			13.2			2.5			8.6
Net earnings attributable to Black Knight	$	53.4		$	127.8		$	147.2		$	217.0		$	364.6		$	54.1

Net earnings per share attributable to Black Knight common shareholders:
Diluted	$	0.34		$	0.82		$	0.94		$	1.43		$	2.35		$	0.35
Weighted average shares of common stock outstanding:
Diluted		156.2			156.3			155.9			151.7			155.4			155.9

~~Table of Contents~~

Segment Financial Results

Revenues

The following table sets forth revenues by segment for the periods presented (in millions):

Three months ended

Nine months ended

September 30,

Variance

September 30,

Variance


2021

2020

$

%

2021

2020


$

%

Software Solutions

$
319.6

$
259.5

$
60.1

23
%
$
920.8

$
749.3

$
171.5

23
%
Data and Analytics

58.4

53.1

5.3

10
%

168.2

147.4

20.8

14
%
Corporate and Other⁽¹⁾

—

—

—

—

—

(0.3)

0.3

NM

Total

$
378.0

$
312.6

$
65.4

21
%
$
1,089.0

$
896.4

$
192.6

21
%
~~(1)~~ ~~Revenues for Corporate and Other represent deferred revenue purchase accounting adjustments recorded in accordance with GAAP.~~

Three months ended

March 31,

Variance

2022

2021


$

%

Software Solutions
$
330.7

$
295.8

$
34.9

12
%
Data and Analytics

56.5

53.9

2.6

5
%
Total
$
387.2

$
349.7

$
37.5

11
%

Software Solutions
Revenues were ~~$319.6~~$330.7 million in the three months ended ~~September 30, 2021~~March 31, 2022 compared to ~~$259.5~~$295.8 million in the ~~2020~~2021 period, an increase of ~~$60.1~~$34.9 million, or ~~23%~~12%. Our servicing software solutions revenues increased 9%10%, or ~~$16.7~~$19.9 million, primarily driven by an increase of $8.0 million in foreclosure-related revenues due to the expiration of the foreclosure moratorium, higher revenues from new clients, usage-based revenues on MSP^®~~, revenues from new clients~~ and sales of new innovative solutions. Our origination software solutions revenues increased ~~66%~~16%, or ~~$43.4~~$15.0 million, primarily driven by higher revenues from new clients, revenues of ~~$38.3~~$6.8 million related to acquired businesses, the network effect in Optimal Blue, ~~revenues from new clients and innovation sales,~~ partially offset by ~~attrition.~~
~~Revenues were $920.8 million in~~ the nine months ended September 30, 2021 compared to $749.3 million in the 2020 period, an increase of $171.5 million, or 23%. Our servicing software solutions revenues increased 8%, or $47.2 million, primarily driven by higher usage-based revenues on MSP^®~~, revenues from new clients and sales of new innovative solutions, partially offset by approximately $9 million~~effect of lower ~~foreclosure-related revenues due to the foreclosure moratorium~~refinance volumes on our Exchange and eLending platforms primarily as ~~part~~a result of ~~the CARES Act. Our~~a decline in refinancing origination ~~software solutions revenues increased 71%, or $124.3 million, primarily driven by revenues~~volumes.

Table of $112.5 million related to acquired businesses, increased revenues from new and existing clients, higher origination volumes and higher professional services, partially offset by higher software license revenues in the prior year period and attrition.Contents

Data and Analytics

Revenues were ~~$58.4~~$56.5 million in the three months ended ~~September 30, 2021~~March 31, 2022 compared to ~~$53.1~~$53.9 million in the ~~2020~~2021 period, an increase of ~~$5.3~~$2.6 million, or ~~10%~~5%. The increase was primarily driven by strong sales execution ~~across nearly all business lines~~ and revenues of $1.3 million from an acquired ~~business.~~

Revenues were $168.2 million in the nine months ended September 30, 2021 compared to $147.4 million in the 2020 period, an increase of $20.8 million, or 14%. The increase was primarily driven by strong sales execution across nearly all business, ~~lines, revenues of $4.1 million from acquired businesses and higher origination volumes,~~ partially offset by ~~attrition.~~the effect of lower origination volumes.

EBITDA and EBITDA margin

The following tables set forth EBITDA (in millions) and EBITDA margin by segment for the periods presented:


	Three months ended								Nine months ended								Three months ended
	September 30,				Variance				September 30,				Variance				March 31,				Variance
	2021		2020		$		%		2021		2020		$		%		2022		2021		$		%
Software Solutions	$	182.5	$	151.6	$	30.9	20	%	$	528.2	$	437.2	$	91.0	21	%	$	188.2	$	170.9	$	17.3	10	%
Data and Analytics		20.9		18.3		2.6	14	%		61.4		49.0		12.4	25	%		19.0		19.7		(0.7)	(4)	%

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	Three months ended					Nine months ended						Three months ended
	September 30,				Variance		September 30,				Variance		March 31,				Variance
	2021		2020		Basis points		2021		2020		Basis points		2022		2021		Basis points
Software Solutions	57.1	%	58.4	%	(130)		57.4	%	58.3	%	(90)		56.9	%	57.8	%	(90)
Data and Analytics	35.8	%	34.5	%	130		36.5	%	33.2	%	330		33.6	%	36.5	%	(290)

Software Solutions

EBITDA was ~~$182.5~~$188.2 million in the three months ended ~~September 30, 2021~~March 31, 2022 compared to ~~$151.6~~$170.9 million in the ~~2020~~2021 period, an increase of ~~$30.9~~$17.3 million, or ~~20%~~10%, with an EBITDA margin of ~~57.1%, a decrease of 130 basis points from~~56.9% compared to 57.8% in the ~~2020~~2021 period. The EBITDA margin decrease was primarily driven by revenue mix and increased investments in innovation and client support.

Data and Analytics

EBITDA was ~~$528.2~~$19.0 million in the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 compared to ~~$437.2~~$19.7 million in the ~~2020~~2021 period, ~~an increase~~a decrease of ~~$91.0~~$0.7 million, or ~~21%~~4%, with an EBITDA margin of ~~57.4%, a decrease of 90 basis points from~~33.6% compared to 36.5% in the ~~2020~~2021 period. The EBITDA margin decrease was primarily driven by revenue mix and ~~increased investments in innovation and client support.~~higher data costs.

~~Data and Analytics~~

EBITDA was $20.9 million in the three months ended September 30, 2021 compared to $18.3 million in the 2020 period, an increase of $2.6 million, or 14%, with an EBITDA margin of 35.8%, an increase of 130 basis points from the 2020 period. The EBITDA margin increase was primarily driven by incremental margins on revenue growth.

EBITDA was $61.4 million in the nine months ended September 30, 2021 compared to $49.0 million in the 2020 period, an increase of $12.4 million, or 25%, with an EBITDA margin of 36.5%, an increase of 330 basis points from the 2020 period. The EBITDA margin increase was primarily driven by incremental margins on revenue growth.

Consolidated Financial Results

Operating Expenses

The following table sets forth operating expenses by segment for the periods presented (in millions):


	Three months ended								Nine months ended								Three months ended
	September 30,				Variance				September 30,				Variance				March 31,				Variance
	2021		2020		$		%		2021		2020		$		%		2022		2021		$		%
Software Solutions	$	137.1	$	107.9	$	29.2	27	%	$	392.6	$	312.1	$	80.5	26	%	$	142.5	$	124.9	$	17.6	14	%
Data and Analytics		37.5		34.8		2.7	8	%		106.8		98.4		8.4	9	%		37.5		34.2		3.3	10	%
Corporate and Other⁽¹⁾		28.4		24.5		3.9	16	%		86.8		74.6		12.2	16	%		27.9		27.1		0.8	3	%
Total	$	203.0	$	167.2	$	35.8	21	%	$	586.2	$	485.1	$	101.1	21	%	$	207.9	$	186.2	$	21.7	12	%

(1)

Operating expenses for Corporate and Other include equity-based compensation, including certain related payroll taxes, of ~~$9.8~~$11.2 million and ~~$9.3~~$10.5 million for the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020, respectively, and $33.5 million and $30.5 million for the nine months ended September 30, 2021 and 2020,~~ respectively.

The increase in Operating expenses in the three months ended ~~September 30, 2021~~March 31, 2022 compared to the ~~2020~~2021 period was primarily driven by ~~the effect of prior year acquisitions,~~ higher ~~net personnel expense,~~compensation costs, including ~~higher medical costs,~~salary, benefits and ~~higher incentive compensation expense, including equity-based compensation.~~

The increase in Operating expenses in the nine months ended September 30, 2021 compared to the 2020 period was primarily driven by the effect of prior year acquisitions, higher net personnel expense, including higher medical costs, higher incentive compensation expense, including equity-based compensation, and higher software subscription and maintenance costs.

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Depreciation and Amortization

The following table sets forth depreciation and amortization by segment for the periods presented (in millions):


	Three months ended								Nine months ended								Three months ended
	September 30,				Variance				September 30,				Variance				March 31,				Variance
	2021		2020		$		%		2021		2020		$		%		2022		2021		$		%
Software Solutions	$	32.5	$	30.6	$	1.9	6	%	$	96.9	$	91.1	$	5.8	6	%	$	35.1	$	31.2	$	3.9	13	%
Data and Analytics		3.9		3.6		0.3	8	%		11.4		11.4		—	—	%		3.8		3.8		—	—	%
Corporate and Other⁽¹⁾		57.2		29.8		27.4	92	%		163.5		77.8		85.7	110	%		52.6		52.8		(0.2)	(0)	%
Total	$	93.6	$	64.0	$	29.6	46	%	$	271.8	$	180.3	$	91.5	51	%	$	91.5	$	87.8	$	3.7	4	%

(1)	Depreciation and amortization for Corporate and Other primarily represents net incremental depreciation and amortization adjustments associated with the application of purchase accounting recorded in accordance with GAAP.

The increase in Depreciation and amortization in the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 compared to the ~~2020 periods~~2021 period is primarily related to the amortization of ~~acquired intangible assets from acquisitions.~~software and deferred contract costs.

Transition and Integration Costs

Transition and integration costs were ~~$(1.3)~~$7.6 million in the three months ended ~~September 30, 2021~~March 31, 2022 compared to ~~$21.9~~$7.9 million in the ~~2020 period. Transition and integration costs were $10.9 million in the nine months ended September 30,~~ 2021 ~~compared to $26.8 million in the 2020~~ period. Transition and integration costs in the 2022 and 2021 ~~period~~periods primarily consisted of costs associated with acquisitions, including costs pursuant to purchase agreements. Transition and integration costs for the three months ending September 30, 2021 also include the reversal of $3.9 million of certain compensation related costs pursuant to purchase agreements and the reversal of $2.3 million of certain contingent consideration liabilities associated with prior years’ acquisitions. Transition and integration costs in the 2020 period primarily consisted of costs associated with acquisitions, including transaction costs of $14.6 million related to the acquisition of Optimal Blue, and expense reduction initiatives.

Interest Expense, Net

Interest expense, net was ~~$21.6~~$21.1 million in the three months ended ~~September 30, 2021~~March 31, 2022 compared to ~~$14.7~~$20.3 million in the ~~2020~~2021 period, an increase of ~~$6.9~~$0.8 million, or ~~47%~~4%. The increase was primarily driven by our higher average outstanding debt ~~balances primarily related to the Senior Notes and our Revolving Credit Facility.~~

Interest expense, net was $62.8 million in the nine months ended September 30, 2021 compared to $42.4 million in the 2020 period, an increase of $20.4 million, or 48%. The increase was primarily driven by our higher average outstanding debt balances primarily related to the Senior Notes, partially offset by lower interest rates.balances.

Other ~~(Expense) Income,~~Expense, Net

Other expense, net was ~~$1.1~~$1.2 million in the three months ended ~~September 30, 2021~~March 31, 2022 compared to ~~$0.9~~$3.2 million in the ~~2020~~2021 period. ~~Other expense, net was $5.3 million in the nine months ended September 30, 2021 compared~~The 2022 amounts primarily related to ~~Other income, net of $17.1 million in the 2020 period.~~legal fees. The 2021 amounts primarily related to ~~legal fees and~~ the debt ~~refinancing. The 2020 amounts primarily related to a~~ ~~recognized gain of $18.5 million for the resolution of a legacy~~refinancing and legal ~~matter~~.fees.

Income Tax (Benefit) Expense

Income tax (benefit) expense was ~~$15.3~~$ (1.1) million in the three months ended ~~September 30, 2021~~March 31, 2022 compared to ~~$15.9~~$5.2 million in the ~~2020~~2021 period. Our effective tax rate was ~~25.5%~~(1.9)% in ~~2021~~2022 compared to ~~36.2%~~11.7% in ~~2020. Income tax expense was $31.0 million in the nine months ended September 30, 2021 compared to $41.3 million in the 2020 period.~~2021. Our effective tax rate ~~was 20.4% in 2021 compared~~for the three months ended March 31, 2022, includes the effect of a $14.1 million discrete income tax benefit related to ~~23.1% in 2020. Refer to Note 12 –~~ ~~Income~~~~Taxes~~ ~~for~~the establishment of a ~~reconciliation~~deferred tax asset as a result of our reorganization of certain wholly-owned subsidiaries within the ~~federal statutory income rate to our~~Optimal Blue partnership investment structure. Our effective ~~income~~ tax rate for ~~each period.~~

~~Table~~the three months ended March 31, 2021 differs from our statutory rate primarily due to the effect of ~~Contents~~excess tax benefits related to the vesting of restricted shares of our common stock.

Equity in Earnings of Unconsolidated Affiliates, Net of Tax

Equity in earnings of unconsolidated affiliates, net of tax consists of the following (in millions):


	Three months ended September 30,				Nine months ended September 30,				Three months ended March 31,
	2021		2020		2021		2020		2022		2021
Equity in earnings (losses) of unconsolidated affiliates, net of tax	$	1.6	$	(1.6)	$	(6.9)	$	(27.0)
Equity in losses of unconsolidated affiliates, net of tax									$	(2.3)	$	(3.5)
Non-cash gain related to DNB's issuance of common stock, net of tax		—		88.2		9.9		88.2		—		9.9
Sale of an equity method investment, net of tax		—		—		—		5.0
Gain related to DNB investment, net of tax										305.4		—
Equity in earnings of unconsolidated affiliates, net of tax	$	1.6	$	86.6	$	3.0	$	66.2	$	303.1	$	6.4

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Refer to Note 4 — Investments in Unconsolidated Affiliates in Item 1 of Part I of this Quarterly Report on Form 10-Q, which is incorporated by reference into this Part I Item 2 for additional information.

Liquidity and Capital Resources

Cash Requirements

Our primary sources of liquidity are our existing cash balances, cash flows from operations and borrowings on our revolving credit facility. On March 10, 2021, we entered into an amended and restated credit agreement that extended the maturity of the facilities until 2026 and delayed mandatory term loan payments until 2022. Refer to Note 10 — ~~Long-Term Debt~~ ~~in Item 1 of Part I of this Quarterly Report on Form 10-Q for additional information.~~ As of ~~September 30, 2021,~~March 31, 2022, we had cash of ~~$78.1~~$27.6 million, debt principal of ~~$2,496.7~~$2,749.6 million and available capacity of ~~$663.0~~$399.0 million on our revolving credit facility.

Our primary cash requirements include operating expenses, debt service payments (principal and interest), capital expenditures (including software development, equipment and property related expenditures) and tax-related payments and may include business acquisitions and share repurchases.

We believe that our cash flows from operations and available cash and cash equivalents are sufficient to meet our liquidity needs, including the repayment of our outstanding debt, for at least the next 12 months. We anticipate that to the extent we require additional liquidity, it will be funded through borrowings on our revolving credit facility, the incurrence of other indebtedness, equity issuance or a combination thereof. The loss of the largest lender on our revolving credit facility would reduce our borrowing capacity by $90.0 million. Additionally, our liquidity and our ability to meet our obligations and fund our capital requirements are also dependent on our future financial performance, which is subject to general economic, financial and other factors that are beyond our control. Accordingly, we cannot be assured that our business will generate sufficient cash flows from operations or that future borrowings will be available from additional indebtedness or otherwise to meet our liquidity needs. Although we have no specific current plans to do so, if we decide to pursue one or more significant acquisitions, we may incur additional debt or issue additional equity to finance such acquisitions.

As of March 31, 2022, our income tax payable was $139.9 million compared to $11.8 million as of December 31, 2021. The increase is primarily related to the income taxes owed as a result of the shares of DNB common stock that we exchanged as part of the aggregate consideration for acquiring the remaining outstanding Class A Units in Optimal Blue Holdco from Cannae and THL. Refer to Note 1 — Basis of Presentation and Overview for additional information.

The CARES Act allows us to defer payments of our share of social security taxes until December 31, ~~2021 and~~ 2022. As of ~~September 30, 2021,~~March 31, 2022, we have deferred ~~$15.1~~$7.6 million of payments related to employer social security ~~taxes, $7.5 million of which is due on December 31, 2021.~~taxes.

DNB Investment

As of ~~September 30, 2021,~~March 31, 2022, we own ~~54.8~~18.5 million shares of DNB common stock for an ownership interest in DNB of approximately 4.3% of DNB’s outstanding common stock. As of ~~September 30, 2021,~~March 31, 2022, DNB’s closing share price was ~~$16.81~~$17.52 and the fair value of our investment in DNB was ~~$922.0~~$323.7 million before tax. Assuming a statutory tax rate of 25.3%, the estimated after-tax value of our investment in DNB is ~~$813.4~~$283.7 million. Refer to Note 4 — Investments in Unconsolidated Affiliates in Item 1 of Part I of this Quarterly Report on Form 10-Q for additional information.

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Cash Flows

The following table provides a summary of cash flows from operating, investing and financing activities for the periods presented (in millions):


	Nine months ended September 30,						Three months ended March 31,
	2021		2020		Variance		2022		2021		Variance
Cash flows provided by operating activities	$	331.4	$	265.9	$	65.5	$	85.1	$	77.4	$	7.7
Cash flows used in investing activities		(397.4)		(2,058.5)		1,661.1		(27.4)		(59.9)		32.5
Cash flows provided by financing activities		109.4		1,808.4		(1,699.0)
Net increase in cash and cash equivalents	$	43.4	$	15.8	$	27.6
Cash flows used in financing activities								(107.2)		(7.3)		(99.9)
Net (decrease) increase in cash and cash equivalents							$	(49.5)	$	10.2	$	(59.7)

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Operating Activities

The ~~$65.5~~$7.7 million increase in cash provided by operating activities in the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 compared to the ~~2020~~2021 period is primarily related to higher earnings adjusted for non-cash amortization and ~~a non-cash~~the gain related to our investment in DNB, inpartially offset by higher incentive compensation payments related to the prior ~~year period.~~year.

Investing Activities

The ~~$1,661.1~~$32.5 million decrease in cash used in investing activities in the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 compared to the ~~2020~~2021 period is primarily related to business and asset acquisitions in the prior year period.

Financing Activities

The $99.9 million increase in cash used in financing activities in the three months ended March 31, 2022 compared to the 2021 period is primarily related to the cash paid as part of the aggregate purchase consideration for acquiring the remaining outstanding Class A Units of Optimal Blue ~~acquisition~~Holdco from Cannae and ~~our investment in DNB in 2020,~~THL, partially offset by ~~our 2021 acquisitions. See Note 3 —~~ ~~Business Acquisitions~~ ~~in Item 1 of Part I of this Quarterly Report on Form 10-Q, which is incorporated by reference into this Part I Item 2.~~

~~Financing Activities~~

The $1,699.0 million decrease in cash provided by financing activities in the nine months ended September 30, 2021 compared to the 2020 period is primarily related to the issuance by our indirect, wholly-owned subsidiary Black Knight InfoServe, LLC (“BKIS”) of $1.0 billion in aggregate principal of 3.625% senior unsecured notes due 2028higher net borrowings and ~~contributions from affiliates of Cannae Holdings, LLC and Thomas H. Lee Partners, L.P. related to their redeemable noncontrolling interests in Optimal Blue Holdco, LLC~~share repurchases in the prior year ~~period, partially offset by share repurchases in 2021. See Note 10 —~~ ~~Long-Term Debt~~ ~~in Item 1 of Part I of this Quarterly Report on Form 10-Q, which is incorporated by reference into this Part I Item 2.~~period.

Financing

For a description of our financing arrangements, see Note 107 — Long-Term Debt in Item 1 of Part I of this Quarterly Report on Form 10-Q, which is incorporated by reference into this Part I Item 2.

Contractual Obligations

~~On March 10, 2021, BKIS entered into an amended and restated credit and guarantee agreement. Refer to Note 10 —~~ ~~Long-Term Debt~~ ~~in Item 1 of Part I of this Quarterly Report on Form 10-Q, which is incorporated by reference into this Part I Item 2.~~

Our long-term contractual obligations generally include our debt and related interest payments, ~~data processing~~software subscription, cloud computing and hardware and software maintenance commitments and operating and finance lease payments for our offices, data centers, property and equipment. There were no significant changes to our contractual obligations from those disclosed in the Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021. Our interest rate swaps represent our material off-balance sheet arrangements.

Share Repurchase Program

On February 12, 2020, our Board of Directors approved a three-year share repurchase program authorizing us to repurchase up to 10.0 million shares of our outstanding common stock through February 12, 2023, through open market purchases, negotiated transactions or other means, in accordance with applicable securities laws and other restrictions.

~~Table~~ Refer to Note 12 — Equity in Item 1 of ~~Contents~~

~~A summary~~Part I of ~~share repurchases under our share repurchase program during the three and nine months ended September 30, 2021~~this Quarterly Report on Form 10-Q, which is ~~as follows (in millions, except per share amounts):~~incorporated by reference into this Part I Item 2.

Shares remaining under
Period

Total number of shares repurchased

Aggregate purchase price

Average price paid per share

repurchase authorization as of period end
January 2021 - March 2021

0.6

$
46.7

$
75.19

9.4
July 2021 - September 2021

1.4

100.0

$
73.32

8.0

2.0

$
146.7

$
73.91

Indemnifications and Warranties
We often agree to indemnify our clients against damages and costs resulting from claims of patent, copyright, trademark infringement or breaches of confidentiality associated with use of our software through software licensing agreements. Historically, we have not made any payments under such indemnifications, but continue to monitor the conditions that are subject to the indemnifications to identify whether a loss has occurred that is both probable and estimable that would require recognition. In addition, we warrant to clients that our software operates substantially in accordance with the software specifications. Historically, no costs have been incurred related to software warranties and none are expected in the future, and as such no accruals for warranty costs have been made.
~~Off-Balance Sheet Arrangements~~
~~We do not have any material off-balance sheet arrangements other than interest rate swaps.~~
Critical Accounting Policies
There have been no material changes to our critical accounting policies and estimates described in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

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Item 3. Quantitative and Qualitative Disclosure about Market Risk
Market Risk
We regularly assess market risks and have established policies and business practices designed to protect against the adverse effects of these exposures. We are exposed to market risks primarily from changes in interest rates. We use interest rate swaps to manage interest rate risk. We do not use interest rate swaps for trading purposes, to generate income or to engage in speculative activity.
Interest Rate Risk
In addition to existing cash balances and cash provided by operating activities, we use fixed and variable rate debt to finance our operations.
Our Senior Notes represent our fixed-rate long-term debt. Refer to Note 107 — Long-Term Debt in Item 1 of Part I of this Quarterly Report on Form 10-Q. The carrying value of our Senior Notes was ~~$989.3~~$990.0 million as of ~~September 30, 2021.~~March 31, 2022. The fair value of our Senior Notes was approximately ~~$1,007.6~~$950.0 million as of ~~September 30, 2021.~~March 31, 2022. The potential reduction in fair value of the Senior Notes from a hypothetical 10 percent increase in market interest rates would not be material to the overall fair value of the debt.
We enter into interest rate swap agreements to hedge forecasted monthly interest rate payments on our variable rate debt. We are exposed to interest rate risk on our variable rate debt obligations and related interest rate swaps. As of ~~September 30, 2021,~~March 31, 2022, we had ~~$1,487.0~~$1,743.8 million in long-term debt principal outstanding from our Facilities, all of which is variable rate debt, as described in Note 107 — Long-Term Debt in Item 1 of Part I of this Quarterly Report on Form 10-Q.
As of ~~September 30, 2021,~~March 31, 2022, the Facilities represent our long-term debt obligations exposed to interest rate risk. We performed a sensitivity analysis on the principal amount of debt as of ~~September 30, 2021,~~March 31, 2022, as well as the effect of our interest rate swaps. Further, in this

~~Table of Contents~~

sensitivity analysis, the change in interest rates is assumed to be applicable for an entire year. An increase of 100 basis points in the applicable interest rate would cause an increase in interest expense of ~~$12.3~~$15.0 million on an annual basis ($~~7.1~~11.2 million including the effect of our current interest rate swaps). A decrease in the applicable interest rate to 0% would cause a decrease in interest expense of ~~$2.6~~$8.0 million on an annual basis ($~~1.4~~5.0 million including the effect of our current interest rate swaps) as the 1-week and 1-month LIBOR were approximately ~~0.07%~~0.36% and ~~0.08%~~0.46%, respectively, as of ~~September 30, 2021.~~March 31, 2022.

As of ~~September 30, 2021,~~March 31, 2022, we have the following interest rate swap agreements (collectively, the "Swap Agreements") (in millions):


Effective dates	Notional amount		Fixed rates		Notional amount		Fixed rates
March 31, 2017 through March 31, 2022	$	200.0	2.08	%
April 30, 2018 through April 30, 2023	$	250.0	2.61	%	$	250.0	2.61	%
January 31, 2019 through January 31, 2023	$	300.0	2.65	%	$	300.0	2.65	%

Under the terms of the Swap Agreements, we receive payments based on the 1-month LIBOR rate (approximately ~~0.08%~~0.46% as of ~~September 30, 2021)~~March 31, 2022).

During the three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022, the following interest rate swap agreement expired (in millions):


Effective dates	Notional amount		Fixed rate		Notional amount		Fixed rate
September 29, 2017 through September 30, 2021	$	200.0	1.69	%
March 31, 2017 through March 31, 2022					$	200.0	2.08	%

The Swap Agreements were designated as cash flow hedging instruments. A portion of the amount included in Accumulated other comprehensive loss is reclassified into Interest expense, net as a yield adjustment as interest is either paid or received on the hedged debt. The inputs used to determine the estimated fair value of our interest rate swaps are Level 2 inputs. We have considered our own credit risk and the credit risk of the counterparties when determining the fair value of our Swap Agreements.

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Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of ~~September 30, 2021,~~March 31, 2022, under the supervision and with the participation of our Chief Executive Officer ("CEO") and Executive Vice President and Chief Financial Officer ("CFO"), management has evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this Quarterly Report on Form 10-Q.
There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their control objectives.
Based on that evaluation, our CEO and CFO concluded that as of ~~September 30, 2021,~~March 31, 2022, our disclosure controls and procedures were effective to provide reasonable assurance that the information required to be disclosed by us in the reports we file or submit with the SEC are recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and is accumulated and communicated to our management, including the principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended ~~September 30, 2021~~March 31, 2022 covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Part II: OTHER INFORMATION
Item 1. Legal Proceedings
See discussion of legal proceedings in Note 1310 — Commitments and Contingencies in Item 1 of Part I of this Quarterly Report on Form 10-Q, which is incorporated by reference into this Item 1 of Part II.

Item 1A. Risk Factors
~~There have been no material changes~~In addition to the normal risks of business, we are subject to significant risks and uncertainties, including those listed under Item 1A- “Risk Factors” in ~~our risk factors since the filing of~~ our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021. Any of the risks described in our Annual Report on Form 10-K for the year ended December 31, 2021 could result in a significant or material adverse effect on our results of operations or financial condition.
Except as set forth below, there have been no material changes in our risk factors from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021.
Risks Related to the Proposed Merger with Intercontinental Exchange, Inc. (“ICE”)
Because the market price of ICE common stock may fluctuate, holders of our common stock cannot be certain of the market value of the consideration they will receive in the Merger.
On May 4, 2022, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Intercontinental Exchange, Inc. (“ICE”), pursuant to and subject to the terms of which a wholly-owned subsidiary of ICE (“Sub”) will merge with and into Black Knight, with Black Knight surviving as a wholly-owned subsidiary of ICE (the “Merger”). At the effective time of the Merger (the “Effective Time”), each share of our common stock issued and outstanding immediately prior to the Effective Time (other than shares of our common stock held by us as treasury stock, any of our subsidiaries (other than with respect to the Black Knight Employee Stock Purchase Plan), by ICE or any of ICE’s subsidiaries (including Sub), or by any holder who has properly exercised and perfected such holder’s demand for appraisal rights under Section 262 of the General Corporation Law of the State of Delaware and not effectively withdrawn or lost such holder’s rights to appraisal (collectively, “Excluded Shares”) will be converted into the right to receive, at the election of the holder thereof, the following consideration (the “Merger Consideration”):
● (i) an amount in cash equal to the sum, rounded to the nearest one tenth of a cent, of (x) $68.00 plus (y) the product, rounded to the nearest one tenth of a cent, of 0.1440 (the “Share Ratio”) multiplied by the average of the volume weighted averages of the trading prices of ICE common stock on the New York Stock Exchange on each of the ten consecutive trading days ending on (and including) the trading day that is three trading days prior to the date on which the Effective Time occurs (the “Average ICE Stock Price”) (such amount, the “Per Share Cash Consideration”);
● (ii) a number of validly issued, fully paid and nonassessable shares of ICE common stock as is equal to the quotient, rounded to the nearest one ten thousandth, of (x) the Per Share Cash Consideration divided by (y) the Average ICE Stock Price (such number of shares, the “Per Share Stock Consideration”); or
● (iii) if no election is made by such holder, such Per Share Stock Consideration or Per Share Cash Consideration as is determined in accordance with the proration mechanism described below.
The election right for the holders of shares of our common stock will be subject to proration in accordance with the terms of the Merger Agreement such that (a) the total number of shares of our common stock to be converted into the right to receive the Per Share Cash Consideration will be equal to the quotient, rounded down to the nearest whole share, of $10,505,000,000 divided by the Per Share Cash Consideration and (b) all shares of our common stock not receiving the Per Share Cash Consideration (other than Excluded Shares) will be converted into the right to receive the Per Share Stock Consideration.
This Share Ratio is fixed and will not be adjusted for changes in the market price of either ICE common stock or our common stock. Changes in the price of ICE common stock prior to the Merger will affect the value that holders of our common stock will receive in the

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Merger. We and ICE are not permitted to terminate the Merger Agreement as a result, in and of itself, of any increase or decrease in the market price of ICE common stock or our common stock.

There will be a time lapse between the date on which our stockholders vote to approve the Merger Agreement at the special meeting and the date on which our stockholders entitled to receive the Merger Consideration actually receive such consideration. The market value of ICE common stock may fluctuate during these periods as a result of a variety of factors, including general market and economic conditions, regulatory considerations, including changes in U.S. monetary policy and its effect on global financial markets and on interest rates, changes in ICE’s or our business, operations and prospects, the global coronavirus pandemic and the related disruption to local, regional and global economic activity and financial markets, and the impact that any of the foregoing may have on ICE, us or the customers or other constituencies of ICE or us, many of which factors are beyond ICE’s or our control. Therefore, at the time our stockholders must decide whether to approve the Merger Agreement at the special meeting, they will not know the market value of the consideration to be received by holders of our common stock at the Effective Time of the Merger.

We and ICE are expected to incur significant costs related to the Merger and integration.

We and ICE have incurred and expect to incur certain non-recurring costs associated with the Merger. These costs include legal, financial advisory, accounting, consulting and other advisory fees, severance/employee benefit-related costs, public company filing fees and other regulatory fees, printing costs and other related costs. Some of these costs are payable by either us or ICE regardless of whether or not the Merger is completed.

Regulatory approvals may not be received, may take longer than expected or may impose conditions that are not presently anticipated or that could have an adverse effect on ICE following the Merger.

Completion of the Merger is conditioned on, among other things, the expiration or termination of any waiting period applicable to the consummation of the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”). If regulatory approvals are granted, they may impose terms and conditions, limitations, obligations or costs, or place restrictions on the conduct of ICE’s business following the completion of the Merger or require changes to the terms of the transactions contemplated by the Merger Agreement. There can be no assurance that regulators will not impose any such conditions, limitations, obligations or restrictions and that such conditions, limitations, obligations or restrictions will not have the effect of preventing or delaying the completion of any of the transactions contemplated by the Merger Agreement, imposing additional material costs on or materially limiting the revenues of ICE following the Merger or otherwise reduce the anticipated benefits of the Merger if the Merger were consummated successfully within the expected timeframe. In addition, there can be no assurance that any such conditions, limitations, obligations or restrictions will not result in the delay or abandonment of the Merger.

Under the Merger Agreement, we and ICE have agreed to use our respective reasonable best efforts to cause the transactions contemplated by the Merger Agreement to be consummated as soon as practicable, including in connection with obtaining all consents required to be obtained from any governmental authority or third party that are necessary, proper or advisable to consummate the Merger. ICE has also agreed to use its reasonable best efforts to take promptly any and all steps necessary to avoid, eliminate or resolve each and every impediment and obtain all clearances, consents, approvals and waivers under U.S. antitrust laws so as to enable the parties to the Merger Agreement to close the Merger as soon as practicable. However, ICE is not obligated to agree to any structural or behavioral remedy required by any governmental authority.

The Merger Agreement may be terminated in accordance with its terms and the Merger may not be completed, which could negatively affect us.

If the Merger is not completed for any reason, including as a result of our stockholders failing to approve the transaction, there may be various adverse consequences and we may experience negative reactions from the financial markets and from our customers and employees. For example, our business may have been affected adversely by the failure to pursue other beneficial opportunities due to the focus of management on the Merger, without realizing any of the anticipated benefits of completing the Merger. Additionally, if the Merger Agreement is terminated, the market price of our common stock could decline to the extent that the current market prices reflect a market assumption that the Merger will be completed.

If the Merger Agreement is terminated under certain circumstances, we may be required to pay a termination fee of $398 million to ICE and/or we may be required to reimburse ICE for its reasonable and documented out-of-pocket costs and expenses incurred in connection

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with the Merger Agreement and the Merger in an amount not to exceed $40 million. Additionally, we and ICE have incurred and will incur substantial expenses in connection with the negotiation and completion of the transactions contemplated by the Merger Agreement, as well as the costs and expenses of filing, printing and mailing the proxy statement/prospectus, and all filing and other fees paid to the SEC in connection with the Merger. If the Merger is not completed, we and ICE would have to pay these expenses without realizing the expected benefits of the Merger.

We will be subject to business uncertainties and contractual restrictions while the Merger is pending.

Uncertainty about the effect of the Merger on employees and customers may have an adverse effect on us. These uncertainties may impair our ability to attract, retain and motivate key personnel until the Merger is completed, and could cause customers and others that deal with us to seek to change existing business relationships with us. In addition, subject to certain exceptions, we have agreed to use reasonable best efforts to carry on our business in the ordinary course and, to the extent consistent therewith, use reasonable best efforts to preserve substantially intact our current business organizations, to keep available the services of our current officers and employees and to preserve our relationships with significant customers, suppliers, licensors, licensees, distributors, lessors and others having significant business dealings with us during the period between the date of the Merger Agreement and the closing of the Merger, and we have agreed not to take certain actions, which could cause us to be unable to pursue other beneficial opportunities that may arise prior to the completion of the Merger.

Litigation related to the Merger could prevent or delay completion of the Merger or otherwise negatively affect our and ICE’s businesses and operations.

We and ICE may incur costs in connection with the defense or settlement of any stockholder or other lawsuits filed in connection with the Merger. Such litigation could have an adverse effect on our and ICE’s financial condition and results of operations and could prevent or delay the completion of the Merger.

The Merger Agreement limits our ability to pursue alternatives to the Merger and may discourage other companies from trying to acquire us.

The Merger Agreement contains covenants that restrict our ability to, directly or indirectly, initiate, solicit, knowingly encourage or knowingly facilitate any acquisition proposal, engage or participate in any negotiations or discussions with any person concerning any acquisition proposal, or provide any confidential or nonpublic information or data to any person relating to any acquisition proposal, subject to certain exceptions. In addition, subject to certain exceptions, our Board of Directors is required to recommend that our stockholders approve the Merger.

These provisions could discourage a potential third-party acquirer that might have an interest in acquiring all or a significant portion of us from considering or proposing that acquisition.

The Merger will not be completed unless important conditions are satisfied or waived, including approval of the Merger Agreement by our stockholders.

Specified conditions set forth in the Merger Agreement must be satisfied or waived to complete the Merger. If the conditions are not satisfied or, subject to applicable law, waived, the Merger will not occur or will be delayed and we and ICE may lose some or all of the intended benefits of the Merger. The following conditions must be satisfied or waived, if permissible, before we and ICE are obligated to complete the Merger: (i) the adoption of the Merger Agreement by the affirmative vote of the holders of a majority of the outstanding shares of our common stock entitled to vote thereon, (ii) the expiration or early termination of the applicable waiting period under the HSR Act; (iii) the absence of any law, injunction, order or other judgment, in each case whether temporary, preliminary or permanent, that restrains, enjoins or otherwise prohibits the consummation of the Merger, (iv) the effectiveness of the registration statement on Form S-4 to register the shares of ICE common stock to be issued pursuant to the Merger Agreement, (v) authorization for listing on the New York Stock Exchange of the shares of ICE common stock to be issued in the Merger, (vi) compliance by ICE and Black Knight in all material respects with their respective obligations under the Merger Agreement and (vii) subject in most cases to exceptions that do not rise to the level of a

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Material Adverse Effect or a Parent Material Adverse Effect (each as defined in the Merger Agreement), as applicable, the accuracy of representations and warranties made by Black Knight and ICE, respectively. The respective obligations of Black Knight and ICE to consummate the Merger are also subject to there not having occurred since the date of the Merger Agreement an event that has had or would reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect or a Material Adverse Effect, respectively.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
~~The following table summarizes share repurchases during the three months ended September 30, 2021:~~None.

Total number of shares

Maximum number of shares

Total number of

Average price

purchased as part of publicly

that may yet to be
Period

shares purchased

paid per share

announced program⁽¹⁾

purchased under the program⁽²⁾
July

-

$
-

-

9,379,000
August

34,745

75.76

34,745

9,344,255
September

1,329,000

73.26

1,329,000

8,015,255

1,363,745

$
73.32

1,363,745

~~(1)~~ On February 12, 2020, our Board of Directors approved a three-year share repurchase program authorizing us to repurchase up to 10.0 million shares of our outstanding common stock through February 12, 2023, through open market purchases, negotiated transactions or other means, in accordance with applicable securities laws and other restrictions.
~~(2)~~ ~~As of the last day of the applicable month.~~

Item 3. Defaults Upon Senior Securities
None.

Item 4. Mine Safety Disclosures
Not applicable.

Item 5. Other Information
None.

3934

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Item 6. Exhibits
(a) Exhibits

Exhibit

No.

Description
2.1

Purchase Agreement, dated as of February 15, 2022, by and among Black Knight, Optimal Blue I, Cannae, THL, Optimal Blue Holdco and Black Knight Technologies (incorporated by reference to Exhibit 2.1 to the Form 8-K filed by Black Knight, Inc. on February 15, 2022 (No. 001-37394))
2.2

Agreement and Plan of Merger, dated as of May 4, 2022, among Intercontinental Exchange, Inc., Sand Merger Sub Corporation and Black Knight, Inc. (incorporated by reference to Exhibit 2.1 to the Form 8-K filed by Black Knight, Inc. on May 5, 2022 (No. 001-37394))
10.1

Form of Notice of Restricted Stock and Restricted Stock Award Agreement (2022) under Black Knight, Inc. Amended and Restated 2015 Omnibus Incentive Plan (1)
31.1

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1

Certification by Chief Executive Officer of Periodic Financial Reports pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.
32.2

Certification by Chief Financial Officer of Periodic Financial Reports pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.
101.INS

Inline XBRL Instance Document*
101.SCH

Inline XBRL Taxonomy Extension Schema Document
101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document
101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document
104

Cover Page Interactive Data File formatted in Inline XBRL and contained in Exhibit 101

(1) A management or compensatory plan or arrangement required to be filed as an exhibit to this report pursuant to Item 601(b)(10)(ii) of Regulation S-K.
*
The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.

4035

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

BLACK KNIGHT, INC.

(registrant)

Date: ~~November 8, 2021~~May 9, 2022
By:
/s/ Kirk T. Larsen

Kirk T. Larsen

Executive Vice President and Chief Financial Officer

(Principal Financial and Accounting Officer)

~~Date: November 8, 2021~~
~~By:~~
~~/s/ Michele M. Meyers~~

~~Michele M. Meyers~~

~~Chief Accounting Officer and Treasurer~~

~~(Principal Accounting Officer)~~

4136


Delaware		81-5265638
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)
601 Riverside Avenue, Jacksoville, Florida		32204
(Address of principal executive offices)		(Zip Code)


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.0001 par value	BKI	New York Stock Exchange



Large accelerated filer	☑	Accelerated filer	☐	Non-accelerated filer	☐	Smaller reporting company	☐
						Emerging growth company	☐


☑		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Page
Part I: FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (Unaudited)
A. Condensed Consolidated Balance Sheets (Unaudited) as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021	1
B. Condensed Consolidated Statements of Earnings and Comprehensive Earnings (Unaudited) for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~	2
C. Condensed Consolidated Statements of Equity (Unaudited) for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~	3
D. Condensed Consolidated Statements of Cash Flows (Unaudited) for the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~	54
E. Notes to Condensed Consolidated Financial Statements (Unaudited)	65
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	2720
Item 3. Quantitative and Qualitative Disclosure About Market Risk	3729
Item 4. Controls and Procedures	3830
Part II: OTHER INFORMATION	3931
Item 1. Legal Proceedings	3931
Item 1A. Risk Factors	3931
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	3934
Item 3. Defaults Upon Senior Securities	3934
Item 4. Mine Safety Disclosures	3934
Item 5. Other Information	3934
Item 6. Exhibits	4035


	September 30, 2021			December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	78.1	$	34.7
Trade receivables, net		186.2		182.2
Prepaid expenses and other current assets		88.6		70.4
Total current assets		352.9		287.3
Property and equipment, net		153.9		163.1
Computer software, net		512.3		498.3
Other intangible assets, net		652.8		692.3
Goodwill		3,815.7		3,613.4
Investments in unconsolidated affiliates		475.2		470.5
Deferred contract costs, net		183.7		172.3
Other non-current assets		220.6		193.3
Total assets	$	6,367.1	$	6,090.5
LIABILITIES AND EQUITY
Current liabilities:
Trade accounts payable and other accrued liabilities	$	79.9	$	88.1
Accrued compensation and benefits		92.8		79.3
Current portion of debt		26.2		73.0
Deferred revenues		62.3		50.9
Total current liabilities		261.2		291.3
Deferred revenues		79.1		92.7
Deferred income taxes		290.7		284.0
Long-term debt, net of current portion		2,449.8		2,121.9
Other non-current liabilities		86.2		94.9
Total liabilities		3,167.0		2,884.8
Commitments and contingencies (Note 13)
Redeemable noncontrolling interests		947.1		578.0
Equity:
Common stock; $0.0001 par value; 550,000,000 shares authorized; 160,040,598 shares issued and 155,298,522 shares outstanding as of September 30, 2021, and 160,085,413 shares issued and 157,014,712 shares outstanding as of December 31, 2020		0		0
Preferred stock; $0.0001 par value; 25,000,000 shares authorized; issued and outstanding, NaN as of September 30, 2021 and December 31, 2020		0		0
Additional paid-in capital		1,653.2		2,053.7
Retained earnings		906.6		757.4
Accumulated other comprehensive loss		(31.7)		(38.8)
Treasury stock, at cost, 4,742,076 shares as of September 30, 2021 and 3,070,701 shares as of December 31, 2020		(275.1)		(144.6)
Total shareholders’ equity		2,253.0		2,627.7
Total liabilities, redeemable noncontrolling interests and shareholders’ equity	$	6,367.1	$	6,090.5


	2021		2020
	Acquisitions⁽²⁾		Optimal Blue⁽³⁾
Cash paid	$	307.5	$	1,828.3
Contingent consideration⁽¹⁾		4.4		—
Less: cash acquired		(5.0)		(29.3)
Total consideration, net	$	306.9	$	1,799.0

Trade receivables	$	2.9	$	11.3
Computer software		34.8		79.7
Other intangible assets		80.1		610.8
Goodwill		210.4		1,197.9
Other current and non-current assets		1.4		13.5
Total assets acquired		329.6		1,913.2
Deferred income taxes		16.3		93.5
Current and other non-current liabilities		6.4		20.7
Total liabilities assumed		22.7		114.2
Net assets acquired	$	306.9	$	1,799.0


			Weighted average
	Gross		estimated life
	carrying value		(in years)
Computer software	$	34.8	5
Other intangible assets:
Client relationships		76.3	10
Trade names		2.5	5
Non-compete agreements		1.3	3
Other intangible assets		80.1
Total gross carrying value	$	114.9


	September 30, 2021		December 31, 2020
Internally developed software	$	1,104.8	$	998.5
Purchased software		94.1		89.8
Computer software		1,198.9		1,088.3
Accumulated amortization		(686.6)		(590.0)
Computer software, net	$	512.3	$	498.3


	September 30, 2021						December 31, 2020
	Gross carrying		Accumulated		Net carrying		Gross carrying		Accumulated		Net carrying
	amount		amortization		amount		amount		amortization		amount
Client relationships	$	1,282.2	$	(642.3)	$	639.9	$	1,206.0	$	(525.9)	$	680.1
Other		23.0		(10.1)		12.9		19.2		(7.0)		12.2
Total intangible assets	$	1,305.2	$	(652.4)	$	652.8	$	1,225.2	$	(532.9)	$	692.3


	Software		Data and
	Solutions		Analytics		Total
Balance, December 31, 2020	$	3,415.8	$	197.6	$	3,613.4
Top of Mind acquisition (Note 3)		174.9		0		174.9
NexSpring acquisition (Note 3)		18.2		0		18.2
eMBS acquisition (Note 3)		0		17.3		17.3
Optimal Blue acquisition (Note 3)		(8.1)		0		(8.1)
Balance, September 30, 2021	$	3,600.8	$	214.9	$	3,815.7


2021	$	0.8
2022		32.7
2023		33.7
2024		57.5
2025		57.5
Thereafter		2,314.5
Total	$	2,496.7


Balance sheet accounts	September 30, 2021		December 31, 2020
Other current liabilities	$	2.0	$	2.4
Other non-current liabilities	$	19.6	$	35.2